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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities and Exchange Act of 1934
(Amendment No. 3)1
Solexa, Inc.
------------------------------------------------
(Name of Issuer)
Common Stock, Par Value $0.01 per share
------------------------------------------------
(Title of Class of Securities)
83420X105
------------------------------------------------
(CUSIP Number)
Allison Bennington
ValueAct Capital
435 Pacific Avenue, Fourth Floor
San Francisco, CA 94133
(415) 362-3700
------------------------------------------------
(Name, address and telephone number of Person
Authorized to Receive Notices and Communications)
Christopher G. Karras, Esq.
Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, PA 19104-2808
(215) 994-4000
January 19, 2006
------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 240.13d-7 for other
parties to whom copies are to be sent.
1The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
This information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
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CUSIP NO. 83420X105 Page 2 of 43
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Master Fund, L.P.
-----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
-----------------------------------------------------------------------------
3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS (See Instructions)* WC*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION British Virgin Islands
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 3,043,270**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
3,043,270**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,043,270**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.4%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
PN
-----------------------------------------------------------------------------
*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 83420X105 Page 4 of 43
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
VA Partners, L.L.C.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
-----------------------------------------------------------------------------
3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 3,043,270**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
3,043,270**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,043,270**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.4%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
00 (LLC)
-----------------------------------------------------------------------------
*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 83420X105 Page 5 of 43
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Management, L.P.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
-----------------------------------------------------------------------------
3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 3,043,270**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
3,043,270**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,043,270**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.4%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
PN
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*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 83420X105 Page 6 of 43
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Management, LLC
-----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
-----------------------------------------------------------------------------
3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 3,043,270**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
3,043,270**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,043,270**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.4%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
00 (LLC)
-----------------------------------------------------------------------------
*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 83420X105 Page 7 of 43
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
Jeffrey W. Ubben
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
---------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 3,043,270**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
3,043,270**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,043,270**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.4%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------------------
*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 83420X105 Page 8 of 43
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
George F. Hamel, Jr.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 3,043,270**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
3,043,270**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,043,270**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.4%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------------------
*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 83420X105 Page 9 of 43
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
Peter H. Kamin
-----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
---------------------------------------------------------------------------
3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 3,043,270**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
3,043,270**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,043,270**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.4%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------------------
*See Item 3
**See Item 2 and 5
SCHEDULE 13D
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CUSIP NO. 83420X105 Page 9 of 43
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
G. Mason Morfit
-----------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
---------------------------------------------------------------------------
3. SEC USE ONLY
-----------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00*
-----------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
-----------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States
-----------------------------------------------------------------------------
7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 2,890**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
2,890**
-----------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,890**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
-----------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Less than 1%
-----------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
IN
-----------------------------------------------------------------------------
*See Item 3
**See Item 2 and 5
THE PURPOSE OF THIS AMENDMENT NO. 3 TO SCHEDULE 13D IS TO AMEND THE
OWNERSHIP REPORTS OF THE REPORTING PERSONS. THE INFORMATION BELOW
SUPPLEMENTS THE INFORMATION PREVIOUSLY PROVIDED.
Item 1. Security and Issuer
This Schedule 13D relates to the Common Stock, par value $0.01 per
share (the "Common Stock"), of Solexa, Inc., a Delaware corporation
(the "Issuer"). The address of the principal executive offices of the
Issuer is 25861 Industrial Blvd, Hayward, CA 94545.
Item 2. Identity and Background
This statement is filed jointly by (a) ValueAct Capital Master Fund,
L.P. ("ValueAct Master Fund"), (b) VA Partners, L.L.C. ("VA Partners"), (c)
ValueAct Capital Management, L.P. ("ValueAct Management L.P. "), (d)
ValueAct Capital Management, LLC ("ValueAct Management LLC"), (e) Jeffrey
W. Ubben, (f) George F. Hamel, Jr., (g) Peter H. Kamin and (h) G. Mason
Morfit (collectively, the "Reporting Persons").
ValueAct Master Fund is a limited partnership organized under the
laws of the British Virgin Islands. ValueAct Master Fund has a principal
business addres of 435 Pacific Avenue, Fourth Floor, San Francisco, CA
94133.
VA Partners is a Delaware limited liability company, the principal
business of which is to serve as the General Partner to ValueAct Master
Fund. VA Partners has a principal business address of 435 Pacific Avenue,
Fourth Floor, San Francisco, CA 94133.
ValueAct Management L.P. is a Delaware limited partnership which
renders management services to ValueAct Master Fund. ValueAct Management
LLC is a Delaware limited liability company, the principal business of
which is to serve as the General Partner to ValueAct Management L.P. Each
has a principal business address of 435 Pacific Avenue, Fourth Floor, San
Francisco, CA 94133.
(a), (b) and (c). Messrs. Ubben, Hamel and Kamin are each managing
members, principal owners and controlling persons of VA Partners and
ValueAct Management LLC, and such activities constitute their principal
occupations. Such individuals are sometimes collectively referred to
herein as the "Managing Members" or individually as a "Managing Member".
Messr. Morfit is a Non-Managing Member, sometimes referred to herein as a
"Member" of VA Partners and ValueAct Management LLC. Each Managing Member
and Member is a United States citizen and has a principal business address
of 435 Pacific Avenue, Fourth Floor, San Francisco, CA
94133.
(d) and (e). None of the entities or persons identified in this Item 2
has during the past five years been convicted of any criminal proceeding
(excluding traffic violations or similar misdemeanors), nor been a party to
a civil proceeding of a judicial or administrative body of competent
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Page 10 of 43
Item 3. Source and Amount of Funds or Other Consideration
The source of funds used for the purchase of the Issuer's securities
was the working capital of ValueAct Master Fund. The aggregate funds used
by these Reporting Persons to make the purchases were $1,500,005.00.
Item 4. Purpose of Transaction
The Reporting Persons have acquired the Issuer's Common Stock for
investment purposes, and such purchases have been made in the Reporting
Persons' ordinary course of business.
In pursuing such investment purposes, the Reporting Persons may
further purchase, hold, vote, trade, dispose or otherwise deal in the
Common Stock at times, and in such manner, as they deem advisable to
benefit from changes in market prices of such Common Stock, changes in the
Issuer's operations, business strategy or prospects, or from sale or merger
of the Issuer. To evaluate such alternatives, the Reporting Persons will
routinely monitor the Issuer's operations, prospects, business development,
management, competitive and strategic matters, capital structure, and
prevailing market conditions, as well as alternative investment
opportunities, liquidity requirements of the Reporting Persons and other
investment considerations. Consistent with its investment research methods
and evaluation criteria, the Reporting Persons may discuss such matters
with management or directors of the Issuer, other shareholders, industry
analysts, existing or potential strategic partners or competitors,
investment and financing professionals, sources of credit and other
investors. Such factors and discussions may materially affect, and result
in, the Reporting Persons' modifying their ownership of Common Stock,
exchanging information with the Issuer pursuant to appropriate
confidentiality or similar agreements, proposing changes in the Issuer's
operations, governance or capitalization, or in proposing one or more of
the other actions described in subsections (a) through (j) of Item 4 of
Schedule 13D.
In a Securities Purchase Agreement dated as of November 18,
2005 (the "Purchase Agreement") by and among the Issuer, ValueAct Master Fund
and various other investors (the "Investors") for a private placement of
common stock and warrants to purchase common stock. Pursuant to the Purchase
Agreement, the Issuer sold approximately 3,851,840 shares of common stock and
warrants to purchase up to approximately 1,348,145 shares of common stock on
November 23, 2005 in a first closing (the "First Closing"). And an additional
6,148,160 shares of common stock and warrants to purchase up to approximately
3,151,855 shares of common stock in a second closing (the "Second Closing").
At the First Closing, which occurred on November 23, 2005, ValueAct Master
Fund purchased 0 of the Issuer's common stock and warrants to purchase 0
shares of the Issuer's common stock. At the Second Closing, which occurred
on January 19, 2006, ValueAct Master Fund purchased 230,770 of the Issuer's
common stock at a price of $6.50 and warrants to purchase 80,770 shares of
the Issuer's common stock with an exercise price of $7.50 per share.
The foregoing description of certain provisions of the Purchase
Agreement is qualified in its entirety by reference to the Purchase
Agreement, which is attached hereto as Exhibit 2.
Page 12 of 43
The Reporting Persons reserve the right to formulate other plans
and/or make other proposals, and take such actions with respect to their
investment in the Issuer, including any or all of the actions set forth in
paragraphs (a) through (j) of Item 4 of Schedule 13D, or acquire additional
Common Stock or dispose of all the Common Stock beneficially owned by them,
in the public market or privately negotiated transactions. The Reporting
Persons may at any time reconsider and change their plans or proposals
relating to the foregoing.
Item 5. Interest in Securities of the Issuer
(a) and (b). Set forth below is the beneficial ownership of shares
of Common Stock of the Issuer for each person named in Item 2. Shares
reported as beneficially owned by ValueAct Master Fund are also reported as
beneficially owned by (i) VA Partners, as General Partner of each such
investment partnership,(ii) ValueAct Management L.P. as the manager of each
such investment partnership, (iii) ValueAct Management LLC, as General
Partner of ValueAct Management L.P. and (iv) the Managing Members as
controlling persons of VA Partners and ValueAct Management LLC. VA
Partners, ValueAct Management LLC and the Managing Members also, directly
or indirectly, may own interests in one or more than one of the
partnerships from time to time. Unless otherwise indicated below, by
reason of such relationships each of the ValueAct Master Fund is reported
as having shared power to vote or to direct the vote, and shared power to
dispose or direct the disposition of, such shares of Common Stock, with VA
Partners, ValueAct Management L.P., ValueAct Management LLC and the
Managing Members.
As of the date hereof, ValueAct Master Fund is the beneficial owner of
3,043,270 shares of Common Stock (which includes warrants to purchase
937,500 shares of common stock), representing approximately 8.4% of the
Issuer's outstanding Common Stock. VA Partners, ValueAct Management L.P.,
ValueAct Management LLC and the Managing Members may each be deemed the
beneficial owner of an aggregate of 3,043,270 shares of Common Stock (which
includes warrants to purchase 937,500 shares of common stock), representing
approximately 8.4% of the Issuer's outstanding Common Stock. Mr. Morfit is
the beneficial owner of 2,890 shares of Common Stock, acquired as director
of the Issuer and under an agreement with ValueAct Master Fund, Messr.
Morfit is deemed to hold the stock for the benefit of ValueAct Master Fund,
and indirectly for VA Partners, LLC as general partner of ValueAct Master
Fund, representing less than 1% of the Issuer's outstanding Common Stock.
All percentages set forth in this Schedule 13D are based upon the Issuer's
reported 36,300,335 outstanding shares of Common Stock reported as of
January 20, 2006.
(c) The following transactions in the Issuer's Common Stock were
effected by the Reporting Persons during the sixty (60) days preceding
the date of this report.
Reporting Person Trade Date Shares Price/Share
---------- --------- ------- -----------
ValueAct Master Fund 01/19/2006 230,770 $6.50
G. Mason Morfit 01/13/2006 2,890 $10.74
(d) and (e) Not applicable.
Page 12 of 43
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
Other than as described elsewhere in this Report and as previously
reported, the Reporting Persons have no understandings, arrangements,
relationships or contracts relating to the Issuer's Common Stock which are
required to be described hereunder.
Item 7. Material to Be Filed as Exhibits
(1) Joint Filing Agreement
(2) Securities Purchase Agreement
Page 13 of 43
SIGNATURE
After reasonable inquiry and to the best of his knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below on this Schedule 13D hereby constitutes and appoints Jeffrey W. Ubben,
George F. Hamel, Jr. and Peter H. Kamin, and each of them, with full power to
act without the other, his or its true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him or it and in his
or its name, place and stead, in any and all capacities (until revoked in
writing) to sign any and all amendments to this Schedule 13D, and to file the
same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in
fact and agents, and each of them, full power and authority to do and perform
each and every act and thing requisite and necessary fully to all intents and
purposes as he or it might or could do in person, thereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or
their or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
ValueAct Capital Master Fund L.P., by
VA Partners, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: January 30, 2006 George F. Hamel, Jr., Managing Member
VA Partners, L.L.C.
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: January 30, 2006 George F. Hamel, Jr., Managing Member
ValueAct Capital Management, L.P., by
ValueAct Capital Management, LLC its
General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: January 30, 2006 George F. Hamel, Jr., Managing Member
ValueAct Capital Management, LLC
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: January 30, 2006 George F. Hamel, Jr., Managing Member
Page 14 of 43
By: /s/ Jeffrey W. Ubben
--------------------------------------
Dated: January 30, 2006 Jeffrey W. Ubben, Managing Member
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: January 30, 2006 George F. Hamel, Jr., Managing Member
By: /s/ Peter H. Kamin
--------------------------------------
Dated: January 30, 2006 Peter H. Kamin, Managing Member
By: /s/ G. Mason Morfit
--------------------------------------
Dated: January 30, 2006 G. Mason Morfit, Member
Page 15 of 43
Exhibit 1
JOINT FILING UNDERTAKING
The undersigned parties hereby agree that the Schedule 13D filed herewith
(and any amendments thereto) relating to the Common Stock of Solexa, Inc. is
being filed jointly on behalf of each of them with the Securities and
Exchange Commission pursuant to Section 13(d) of the Securities Exchange Act
of 1934, as amended.
ValueAct Capital Master Fund L.P., by
VA Partners, L.L.C., its General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: January 30, 2006 George F. Hamel, Jr., Managing Member
VA Partners, L.L.C.
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: January 30, 2006 George F. Hamel, Jr., Managing Member
ValueAct Capital Management, L.P.,
by, ValueAct Capital Management, LLC
its General Partner
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: January 30, 2006 George F. Hamel, Jr., Managing Member
ValueAct Capital Management, LLC
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: January 30, 2006 George F. Hamel, Jr., Managing Member
Page 16 of 43
By: /s/ Jeffrey W. Ubben
--------------------------------------
Dated: January 30, 2006 Jeffrey W. Ubben, Managing Member
By: /s/ George F. Hamel, Jr.
--------------------------------------
Dated: January 30, 2006 George F. Hamel, Jr., Managing Member
By: /s/ Peter H. Kamin
--------------------------------------
Dated: January 30, 2006 Peter H. Kamin, Managing Member
By: /s/ G. Mason Morfit
--------------------------------------
Dated: January 30, 2006 G. Mason Morfit, Member
Page 17 of 43
Exhibit 2
SOLEXA, INC.
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "Agreement") is made as of
November 18, 2005, by and among SOLEXA, INC., a Delaware corporation (the
"Company") with its principal office at 25861 Industrial Boulevard,
Hayward, California 94545, and the individuals and entities identified on
the signature pages hereto (the "Purchasers").
RECITALS
WHEREAS, the Company has authorized the sale and issuance of the
Common Shares and the Warrants (each as defined herein);
WHEREAS, the Company and the Purchasers are executing and delivering
this Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D, as promulgated by the SEC (as
defined herein) under the Securities Act (as defined herein);
WHEREAS, at the First Closing (as defined herein), the Company
desires to sell, and each Purchaser desires severally, and not jointly, to
purchase, the Shares and the Warrants, each as indicated below such
Purchaser's name on the applicable signature page of this Agreement upon
the terms and conditions stated in this Agreement and at the Second Closing
(as defined herein), if Stockholder Approval (as defined herein) is
obtained, each Purchaser hereto desires severally, and not jointly, to
purchase, the Shares and the Warrants, each as indicated below such
Purchaser's name on the applicable signature page of this Agreement upon
the terms and conditions stated in this Agreement;
WHEREAS, concurrent with the execution and delivery of this
Agreement, as a material inducement to the Purchasers to enter into this
Agreement, certain principal stockholders of the Company are entering into
a Voting Agreement, in the form attached hereto as Exhibit F; and
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises, representations, warranties and covenants hereinafter set
forth and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Article 1
AUTHORIZATION AND SALE OF COMMON SHARES AND WARRANTS
1.1 Authorization. The Company has authorized (a) the sale and
issuance of up to ten million (10,000,000) shares (the "Common Shares") of
Company's common stock, par value $0.01 per share (the "Common Stock") at a
price per shares of six dollars and fifty cents ($6.50) and (b) the sale
and issuance of warrants, in the form attached hereto as Exhibit A, (the
"Warrants"), to purchase up to three million five hundred thousand
(3,500,000) shares of the Common Stock, at a price per share of seven
dollars and fifty cents ($7.50) (the "Warrant Price") pursuant to this
Agreement. The shares of Common Stock issuable upon exercise of or
Page 18 of 43
otherwise pursuant to the Warrants are referred to herein as the "Warrant
Shares. " The Common Shares and the Warrant Shares are collectively
referred to herein as the "Shares." The Shares and the Warrants are
collectively referred to herein as the "Securities."
(a) First Closing. Subject to the terms and conditions of
this Agreement, including without limitation, the conditions set forth in
Article 5 and Article 6 of this Agreement (excluding Stockholder Approval
in Section 7.8), there shall be a closing at which the Company shall issue
and sell, and each Purchaser, shall severally, and not jointly, purchase,
the number of shares of Common Stock and the number of Warrants, in each
case, in the respective amounts indicated below such Purchaser's name on
the applicable signature page of this Agreement, in exchange for the cash
consideration set forth as the "First Closing Purchase Price" indicated
below such Purchaser's name on the signature page of this Agreement (the
"First Closing").
(b) Second Closing. Subject to the terms and conditions of
this Agreement, including without limitation, the conditions set forth in
Article 5 and Article 6 of this Agreement (including Stockholder Approval
in Section 7.8), at the Second Closing, there shall be a closing at which
the Company shall issue and sell, and each Purchaser, shall severally, and
not jointly, purchase, the number of shares of Common Stock and the number
of Warrants, in each case, in the respective amounts indicated below such
Purchaser's name on the signature page of this Agreement, in exchange for
the cash consideration set forth as the "Second Closing Purchase Price"
indicated below such Purchaser's name on the applicable signature page of
this Agreement (the "Second Closing").
Article 2
CLOSING DATES; DELIVERY
2.1 Closing Dates. Delivery.
Location. The First Closing and Second Closing of the
purchase and sale of the Common Shares and Warrants hereunder (together,
the "Closings") shall be held at the offices of Cooley Godward LLP ("Cooley
Godward"), 3175 Hanover Street, Palo Alto, California 94304, or at such
other location upon which the Company and the Purchasers purchasing a
majority of the Common Shares at the applicable Closing shall agree, on the
applicable Closing Date.
(c) First Closing. Subject to the satisfaction (or waiver)
of the conditions thereto set forth in Article 5 and Article 6 of this
Agreement, on the date hereof or at such other time and place upon which
the Company and the Purchasers purchasing a majority of the Common Shares
at the First Closing shall agree, the Company will deliver or cause to be
delivered to each Purchaser, a duly executed Warrant and a certificate
representing the number of Common Shares purchased by such Purchaser,
registered in the Purchaser's name as indicated on the Stock Certificate
Questionnaire in the form attached hereto as Exhibit B-1. Such delivery
shall be against payment of the purchase price therefor by each such
Purchaser as set forth as the "First Closing Purchase Price" below their
respective names on the signature page attached hereto by wire transfer of
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immediately available funds to the Company in accordance with the Company's
written wiring instructions. The date of the First Closing is hereinafter
referred to as the "First Closing Date."
(d) Second Closing. Subject to the satisfaction (or waiver)
of the conditions thereto set forth in Article 5 and Article 6 of this
Agreement, on the date one (1) business day following the Company's receipt
of the Stockholder Approval (as defined herein), or at such other time and
place upon which the Company and the Purchasers purchasing a majority of
the Common Shares at the Second Closing shall agree, the Company will
deliver or cause to be delivered to each Purchaser, a duly executed Warrant
and a certificate representing the number of Common Shares purchased by
such Purchaser, registered in the Purchaser's name as indicated on the
Stock Certificate Questionnaire in the form attached hereto as Exhibit B-1.
Such delivery shall be against payment of the purchase price therefor by
each such Purchaser as set forth as the "Second Closing Purchase Price"
below their names on the signature page attached hereto by wire transfer of
immediately available funds to the Company in accordance with the Company's
written wiring instructions. The date of the Second Closing is hereinafter
referred to as the "Second Closing Date."
Article 3
Representations and Warranties of the Company
Except as set forth on the Disclosure Schedule delivered by the
Company to the Purchasers herewith, the Company represents and warrants to
the Purchasers on and as of the date hereof and on the applicable Closing
Date:
3.1 Organization and Standing. The Company is a corporation duly
organized and validly existing under, and by virtue of, the laws of the
State of Delaware and is in good standing as a domestic corporation under
the laws of said state. The Company does not own or control any equity
security or other interest of any corporation, limited partnership or other
business entity.
3.2 Corporate Power; Authorization. The Company has all requisite
legal and corporate power and has taken all requisite corporate action to
execute and deliver this Agreement, to sell and issue the Common Shares and
Warrants, to issue the Warrant Shares upon exercise of the Warrants in
accordance with the terms of such Warrants, and to carry out and perform
all of its obligations under this Agreement. This Agreement constitutes,
and upon execution and delivery by the Company of the Warrants, the
Warrants will constitute, legal, valid and binding obligations of the
Company, enforceable in accordance with their respective terms, except (a)
as limited by applicable bankruptcy, insolvency, reorganization or similar
laws relating to or affecting the enforcement of creditors' rights
generally and (b) as limited by equitable principles generally. The
execution and delivery of this Agreement does not, and the performance of
this Agreement and the compliance with the provisions hereof, the issuance,
sale and delivery of the Common Shares and the Warrants by the Company will
not materially conflict with, or result in a material breach or violation
of the terms, conditions or provisions of, or constitute a material default
under, or result in the creation or imposition of any material lien
Page 20 of 43
pursuant to the terms of, the Amended and Restated Certificate of
Incorporation, as amended (the "Restated Certificate") or Bylaws of the
Company or any statute, law, rule or regulation or any state or federal
order, judgment or decree or any indenture, mortgage, lease or other
material agreement or instrument to which the Company or any of its
properties is subject.
3.3 Issuance and Delivery of the Shares. When issued in compliance
with the provisions of this Agreement and the Restated Certificate, the
Common Shares will be validly issued, fully paid and nonassessable. Upon
exercise of the Warrants in accordance with the terms thereof, the Warrant
Shares will be validly issued, fully paid and nonassessable. The issuance
and delivery of the Common Shares and the Warrants is not subject to
preemptive or any other similar rights of the stockholders of the Company
or any liens or encumbrances.
3.4 SEC Documents; Financial Statements. The Company has filed in a
timely manner all documents that the Company was required to file with the
Securities and Exchange Commission (the "SEC") under Sections 13, 14(a) and
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), during the twelve (12) months preceding the date of this Agreement.
As of their respective filing dates, all such documents filed by the
Company with the SEC (the "SEC Documents") complied in all material
respects with the requirements of the Exchange Act or the Securities Act of
1933, as amended (the "Securities Act"), as applicable. None of the SEC
Documents as of their respective dates contained any untrue statement of
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents (the "Financial
Statements") comply as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the
SEC with respect thereto. The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently
applied and fairly present the consolidated financial position of the
Company and any subsidiaries at the dates thereof and the consolidated
results of their operations and consolidated cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal,
recurring adjustments or to the extent that such unaudited statements do
not include footnotes).
3.5 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration
or filing with, any federal, state, or local governmental authority on the
part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement except for (a) compliance with
the securities and blue sky laws in the states in which the Common Shares
and Warrants are offered and/or sold, which compliance will be effected in
accordance with such laws, (b) the filing of the Registration Statement (as
defined herein) and all amendments thereto with the SEC as contemplated by
Section 7.2 of this Agreement and (c) the filing of a Form D pursuant to
Securities and Exchange Commission Regulation D.
3.6 No Material Adverse Change. Except as otherwise disclosed
herein or in the SEC Documents, since December 31, 2004, there have not
Page 21 of 43
been any changes in the assets, liabilities, financial condition, business
prospects or operations of the Company from that reflected in the Financial
Statements except changes in the ordinary course of business which have not
been, either individually or in the aggregate, materially adverse.
3.7 Authorized Capital Stock. The authorized capital stock of the
Company consists of (a) sixty million (60,000,0000) shares of Common Stock,
$0.01 par value, of which, as of November 18, 2005, twenty-six million one
hundred eight thousand two hundred eighty six (26,108,286) shares were
outstanding, and (b) two million (2,000,000) shares of Preferred Stock,
$0.01 par value, none of which shares is currently outstanding. Except as
described on Schedule 3.7 of the Disclosure Schedule, there are no
outstanding warrants, options, convertible securities or other rights,
agreements or arrangements of any character under which the Company is or
may be obligated to issue any equity securities of any kind and except as
contemplated by this Agreement.
3.8 Litigation. Except as disclosed in the SEC Documents, there are
no actions, suits proceedings or investigations pending or, to the best of
the Company's knowledge, threatened against the Company or any of its
properties before or by any court or arbitrator or any governmental body,
agency or official in which there is a reasonable likelihood (in the
judgment of the Company) of an adverse decision that (a) could have a
material adverse effect on the Company's properties or assets or the
business of the Company as currently conducted or (b) could impair the
ability of the Company to perform in any material respect its obligations
under this Agreement.
3.9 Eligibility to Use Form S-3. The Company is eligible to use
Form S-3 for the registration of its securities under the Securities Act
which are offered in transactions involving secondary offerings.
3.10 Company not an "Investment Company." The Company has been
advised of the rules and requirements under the Investment Company Act of
1940, as amended (the "Investment Company Act"). The Company is not, and
immediately after receipt of payment for the Shares will not be, an
"investment company" or an entity "controlled" by an "investment company"
within the meaning of the Investment Company Act and shall conduct its
business in a manner so that it will not become subject to the Investment
Company Act.
3.11 NASDAQ Compliance. The Common Stock is registered pursuant to
Section 12(g) of the Exchange Act and is listed on The Nasdaq Stock Market,
Inc. Capital Market (the "Nasdaq Capital Market"), and the Company has
taken no action designed to, or likely to have the effect of, terminating
the registration of the Common Stock under the Exchange Act or de-listing
the Common Stock from the Nasdaq Capital Market, nor has the Company
received any notification that the SEC or the National Association of
Securities Dealers, Inc. (the "NASD") is contemplating terminating such
registration or listing.
3.12 Use of Proceeds. The proceeds of the sale of the Common Shares
and the Warrants hereunder shall be used by the Company for working capital
and general corporate purposes.
Page 22 of 43
3.13 Brokers and Finders. No person or entity will have, as a
result of the transactions contemplated by this Agreement, any valid right,
interest or claim against or upon the Company or a Purchaser for any
commission, fee or other compensation pursuant to any agreement,
arrangement or understanding entered into by or on behalf of the Company,
other than SG Cowen & Co., LLC as lead placement agent and Leerink, Swann &
Company as co-placement agent.
3.14 No Directed Selling Efforts or General Solicitation. Neither
the Company nor any person or entity acting on its behalf has conducted any
general solicitation or general advertising (as those terms are used in
Regulation D) in connection with the offer or sale of any of the
Securities.
3.15 No Integrated Offering. Neither the Company nor any of its
Affiliates, nor any person or entity acting on its or their behalf has,
directly or indirectly, made any offers or sales of any Company security or
solicited any offers to buy any security, under circumstances that would
adversely affect reliance by the Company on Section 4(2) for the exemption
from registration for the transactions contemplated hereby or would require
registration of the Securities under the Securities Act.
3.16 Private Placement. The offer and sale of the Securities to the
Purchasers as contemplated hereby is exempt from the registration
requirements of the Securities Act.
3.17 Internal Accounting Controls. Except as described in the SEC
Document, the Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles, (iii) access to assets is permitted only in
accordance with management's general or specific authorization, and (iv)
the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
3.18 Sarbanes-Oxley; Disclosure Controls and Procedures. To its
knowledge, the Company is in compliance in all material respects with all
of the provisions of the Sarbanes-Oxley Act of 2002 that are applicable to
it or any of its subsidiaries. Except as disclosed in the SEC Documents,
the Company has established and maintains disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that
are effective in all material respects to ensure that material information
relating to the Company, including any of its subsidiaries, is made known
to its chief executive officer and chief financial officer by others within
those entities. The Company's certifying officers have evaluated the
effectiveness of the Company's controls and procedures as of the end of the
period covered by the most recently filed quarterly or annual periodic
report under the Exchange Act (such date, the "Evaluation Date"). The
Company presented in its most recently filed quarterly or annual periodic
report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on
their evaluations as of the Evaluation Date. Since the Evaluation Date,
Page 23 of 43
there have been no significant changes in the Company's internal controls
over financial reporting (as defined in Item 307(b) of Regulation S-K under
the Exchange Act) or, to the Company's knowledge, in other factors that
could significantly affect the Company's internal controls over financial
reporting.
3.19 Intellectual Property.
(a) "Intellectual Property" shall mean patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses,
information and other proprietary rights and processes.
(b) Except as disclosed in the SEC Documents and to the
knowledge of the Company, the Company owns or has the valid right to use
all of the Intellectual Property that is necessary for the conduct of the
Company's business as currently conducted or as currently proposed to be
conducted as described in the SEC Documents, free and clear of all material
liens and encumbrances.
(c) Except as disclosed in the SEC Documents, the conduct of
the Company's business as currently conducted does not infringe or
otherwise conflict with (collectively, "Infringe") any Intellectual
Property rights of any third party or any confidentiality obligation owed
by the Company to a third party, and, to the knowledge of the Company, the
Intellectual Property and confidential information of the Company are not
being Infringed by any third party.
(d) Each employee, consultant and contractor of the Company
who has had access to confidential information of the Company that is
necessary for the conduct of Company's business as currently conducted or
as currently proposed to be conducted has executed an agreement to maintain
the confidentiality of such confidential information and has executed
appropriate agreements that are substantially consistent with the Company's
standard forms thereof.
3.20 Questionable Payments. Neither the Company nor, to the
knowledge of the Company, any of its current or former stockholders,
directors, officers, employees, agents or other persons acting on behalf of
the Company, has on behalf of the Company or in connection with its
business: (a) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity;
(b) made any direct or indirect unlawful payments to any governmental
officials or employees from corporate funds; (c) established or maintained
any unlawful or unrecorded fund of corporate monies or other assets; (d)
made any false or fictitious entries on the books and records of the
Company; or (e) made any unlawful bribe, rebate, payoff, influence payment,
kickback or other unlawful payment of any nature.
3.21 Transactions with Affiliates. Except as disclosed in the SEC
Documents and as contemplated pursuant to this Agreement, none of the
officers or directors of the Company and, to the knowledge of the Company,
none of the employees of the Company is presently a party to any
transaction with the Company or to a presently contemplated transaction
Page 24 of 43
(other than for services as employees, officers and directors) that would
be required to be disclosed pursuant to Item 404 of Regulation S-K
promulgated under the Securities Act.
3.22 Disclosure. Except as disclosed on Schedule 3.21 of the
Disclosure Schedule, the information contained in the Exchange Act
Documents as of the date hereof and as of the applicable Closing Date, did
not and shall not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. For purposes herein, "Exchange Act Documents" are
the documents filed by the Company under the Exchange Act, since the end
of its most recently completed fiscal year through the date hereof,
including, without limitation, its most recent report on Form 10-K. The
Company confirms that neither the Company nor, to the Company's knowledge,
any other person acting on its behalf has provided any of the Purchasers or
their agents or counsel with any information that constitutes or would
reasonably be expected to constitute material, non-public information other
than those Purchasers listed on Schedule 5.5 or Purchasers who have
executed a written agreement regarding the confidentiality and use of such
information. The Company acknowledges and agrees that no Purchaser makes
or has made any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in
Article IV hereof.
3.22 Dilution; Sales By Purchasers. The Company acknowledges that
the issuance of the Securities may result in dilution of the outstanding
shares of Common Stock, which dilution may be substantial under certain
market conditions. The Company further acknowledges that its obligations
under this Agreement and the Warrant, including without limitation its
obligation to issue the Warrant, are unconditional and absolute and not
subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may
have against any Purchaser and regardless of the dilutive effect that such
issuance may have on the ownership of the other stockholders of the
Company. Anything in this Agreement or elsewhere herein to the contrary
notwithstanding (except for Section 4.5 hereof and pursuant to those
certain Amended and Restated Support Agreements, dated as of the date
hereof), it is understood and agreed by the Company (i) that none of the
Purchasers have been asked by the Company to agree, nor has any Purchaser
agreed, to desist from purchasing or selling, long and/or short, securities
of the Company, or "derivative" securities based on securities issued by
the Company or to hold the Securities for any specified term; (ii) that
future open market or other transactions by any Purchaser, including short
sales, and specifically including, without limitation, short sales or
"derivative" transactions, before or after the closing of this or future
private placement transactions, may negatively impact the market price of
the Company's publicly-traded securities; (iii) that any Purchaser, and
counter parties in "derivative" transactions to which any such Investor is
a party, directly or indirectly, presently may have a "short" position in
the Common Stock, and (iv) that each Purchaser shall not be deemed to have
any affiliation with or control over any arm's length counter-party in any
"derivative" transaction.
Page 25 of 43
Article 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS
Each Purchaser hereby severally, and not jointly, represents and
warrants to the Company on and as of the date hereof and on the applicable
Closing Date:
4.1 Authorization. Purchaser represents and warrants to the Company
that: (a) Purchaser has all requisite legal and corporate or other power
and capacity and has taken all requisite corporate or other action to
execute and deliver this Agreement, to purchase the Common Shares and the
Warrants to be purchased by it and to carry out and perform all of its
obligations under this Agreement; and (b) this Agreement constitutes the
legal, valid and binding obligation of such Purchaser, enforceable in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization or similar laws relating to or affecting the
enforcement of creditors' rights generally and (ii) as limited by equitable
principles generally.
4.2 Investment Experience. Purchaser is an "accredited investor" as
defined in Rule 501(a) under the Securities Act. Purchaser is aware of the
Company's business affairs and financial condition and has had access to
and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Common Shares and the
Warrants. Purchaser has such business and financial experience as is
required to give it the capacity to protect its own interests in connection
with the purchase of the Common Shares and Warrants.
4.3 Investment Intent. Purchaser is purchasing the Common Shares
and the Warrants for its own account as principal, for investment purposes
only, and not with a present view to, or for, resale, distribution or
fractionalization thereof, in whole or in part, within the meaning of the
Securities Act, other than as contemplated by Article 7. Purchaser
understands that its acquisition of the Common Shares and the Warrants has
not been registered under the Securities Act or registered or qualified
under any state securities law in reliance on specific exemptions
therefrom, which exemptions may depend upon, among other things, the bona
fide nature of Purchaser's investment intent as expressed herein. Purchaser
has completed or caused to be completed the Purchaser Questionnaire
attached hereto as Exhibit B-2 (or has provided the information requested
thereon in the form otherwise acceptable to the Company) for use in
preparation of the Registration Statement, and the responses provided
therein shall be true and correct as of the applicable Closing Date and
will be true and correct as of the effective date of the Registration
Statement. Purchaser, in connection with its decision to purchase the
Common Shares and the Warrants, has relied solely upon the SEC Documents
and the representations and warranties of the Company contained herein.
Purchaser will not, directly or indirectly, offer, sell, pledge, transfer
or otherwise dispose of (or solicit any offers to buy, purchase or
otherwise acquire or take a pledge of) any of the Securities except in
compliance with the Securities Act, and the rules and regulations
promulgated thereunder.
4.4 Registration or Exemption Requirements. Purchaser further
acknowledges and understands that the Securities may not be resold or
Page 26 of 43
otherwise transferred except in a transaction registered under the
Securities Act or unless an exemption from such registration is available.
4.5 Dispositions.
(a) Purchaser will not, prior to the effectiveness of the
Registration Statement (as defined below), if then prohibited by law or
regulation: (a) sell, offer to sell, solicit offers to buy, dispose of,
loan, pledge or grant any right with respect to (collectively, a
"Disposition") the Securities; or (b) engage in any hedging or other
transaction which is designed or could reasonably be expected to lead to or
result in a Disposition of the Securities by such Purchaser or an
affiliate. In addition, Purchaser agrees that for so long as it owns any
Common Shares, it will not enter into any short sale of Shares executed at
a time when the Purchaser has no equivalent offsetting long position in the
Common Shares. For purposes of determining whether the Purchaser has an
equivalent offsetting long position in the Common Shares, shares that the
Purchaser is entitled to receive within sixty (60) days (whether pursuant
to contract or upon conversion or exercise of convertible securities) will
be included as if held long by the Purchaser.
(b) Purchaser has not directly or indirectly, nor has any
Person acting on behalf of or pursuant to any understanding with such
Purchaser, engaged in any transactions in the Company's securities
(including, without limitation, any Short Sales involving the Company's
securities) since the time that such Purchaser was first contacted by the
Company, SG Cowen & Co., LLC, Leerink, Swann & Company, or any other Person
regarding the transactions contemplated hereby. Such Purchaser covenants
that neither it nor any Person acting on its behalf or pursuant to any
understanding with it will engage in any transactions in the Company's
securities (including, without limitation, any Short Sales involving the
Company's securities) prior to the time that the transactions contemplated
by this Agreement are publicly disclosed.
For purposes of this Section 4.5(b), (i) "Person" shall include,
without limitation, any individual or corporation, partnership, trust,
incorporated or unincorporated association, joint venture, limited
liability company or joint stock company and (ii) "Short Sales" shall
include, without limitation, all "short sales" as defined in Rule 200
promulgated under Regulation SHO under the Exchange Act and all types of
direct and indirect stock pledges, forward sale contracts, options, puts,
calls, short sales, swaps and similar arrangements (including on a total
return basis), and sales and other transactions through non-U.S. broker-
dealers or foreign regulated brokers.
4.6 No Legal, Tax or Investment Advice. Purchaser understands that
nothing in this Agreement or any other materials presented to Purchaser in
connection with the purchase and sale of the Common Shares and the Warrants
constitutes legal, tax or investment advice. Purchaser has consulted such
legal, tax and investment advisors as it, in its sole discretion, has
deemed necessary or appropriate in connection with its purchase of the
Common Shares and the Warrants.
4.7 Confidentiality. Purchaser will hold in confidence all
information concerning this Agreement and the placement of the Securities
Page 27 of 43
hereunder until the earlier of such time as (a) the Company has made a
public announcement concerning the Agreement and the placement of the
Securities hereunder, which announcement shall be made in a press release
pursuant to Section 7.9, or (b) this Agreement is terminated.
4.8 Residency. Purchaser's principal executive offices are in the
jurisdiction set forth immediately below Purchaser's name on the applicable
signature page attached hereto.
4.9 Governmental Review. Purchaser understands that no United
States federal or state agency or any other government or governmental
agency has passed upon or made any recommendation or endorsement of the
Shares or the Warrants.
4.10 Legend. Purchaser understands that, until such time as the
Registration Statement has been declared effective or the Securities may be
sold pursuant to Rule 144 under the Securities Act without any restriction
as to the number of securities as of a particular date that can then be
immediately sold, the Securities may bear a restrictive legend in
substantially the following form (and a stop transfer order may be placed
against transfer of the certificates for the Shares):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR IN ANY OTHER JURISDICTION. THE
SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS UNLESS OFFERED, SOLD OR TRANSFERRED PURSUANT TO
AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS. "
(a) The Company agrees that following the effectiveness of
the Registration Statement or at such time as such legend is no longer
required under this Section 4.10, it will, no later than three business
days following the delivery by a Purchaser to the Company or the Company's
transfer agent of a certificate representing Common Shares or Warrant
Shares, as applicable, issued with a restrictive legend and a signed and
completed notice of sale in substantially the form of Exhibit E attached
hereto (such third Trading Day, the "Legend Removal Date"), deliver or
cause to be delivered to such Purchaser a certificate representing such
shares that is free from any legend referring to the Securities Act. The
Company may not make any notation on its records or give instructions to
any transfer agent of the Company that enlarge the restrictions on transfer
set forth in this Section. Certificates for Securities subject to legend
removal hereunder shall be transmitted by the transfer agent of the Company
to the Purchasers by crediting the account of the Purchaser's prime broker
with the Depository Trust Company System. All costs and expenses related
to the removal of the legends and the reissuance of any Securities shall be
borne by the Company.
(b) Each Purchaser, severally and not jointly with
the other Purchasers, agrees that the removal of the restrictive legend
from certificates representing Securities as set forth in this Section 4.10
is predicated upon the Company's reliance that the Purchaser will sell any
Securities pursuant to either (i) the registration requirements of the
Securities Act, and such Purchaser shall have delivered a current
Page 28 of 43
prospectus in connection with such sale; unless constructive delivery is
permitted at the time pursuant to Rule 172 under the Securities Act ("Rule
172") is then in effect, such Purchaser shall have confirmed that a current
prospectus is deemed to be delivered in connection with such sale, or (ii)
an exemption therefrom.
4.11 Foreign Investors. If Purchaser is not a United States person
(as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended), Purchaser hereby represents that it has satisfied itself as to
the full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Common Shares and the Warrants or any use
of this Agreement, including (a) the legal requirements within its
jurisdiction for the purchase of the Common Shares and the Warrants, (b)
any foreign exchange restrictions applicable to such purchase or
acquisition, (c) any government or other consents that may need to be
obtained, and (d) the income tax and other tax consequences, if any, that
may be relevant to the purchase, holding, redemption, sale or transfer of
the Securities. Purchaser's subscription and payment for and continued
beneficial ownership of the Securities will not violate any applicable
securities or other laws of Purchaser's jurisdiction.
Article 5
CONDITIONS TO CLOSING OBLIGATIONS OF PURCHASERS
Each Purchaser's obligation to purchase the Common Shares and the
Warrants at the relevant Closing is, at the option of such Purchaser,
subject to the fulfillment or waiver as of the relevant Closing Date of the
following conditions:
5.1 Representations and Warranties. The representations and
warranties made by the Company in Article 3 hereof qualified as to
materiality shall be true and correct at all times prior to and on the
applicable Closing Date, except to the extent any such representation or
warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct as of such earlier
date, and the representations and warranties made by the Company in Article
3 hereof not qualified as to materiality shall be true and correct in all
material respects at all times prior to and on the applicable Closing Date,
except to the extent any such representation or warranty expressly speaks
as of an earlier date, in which case such representation or warranty shall
be true and correct in all material respects as of such earlier date.
5.2 Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Company on or prior to the
applicable Closing Date shall have been performed or complied with in all
material respects.
5.3 Certificates. The Company shall deliver or cause to be
delivered to the Purchasers duly executed certificates for the Common
Shares and the Warrants (in such denominations as set forth below each
Purchaser's name on the applicable signature page attached hereto.)
5.4 Legal Opinion. The Purchasers shall have received on the
applicable Closing Date an opinion of Cooley Godward, counsel for the
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Company, dated the applicable Closing Date, in substantially the form of
Exhibit C.
5.5 Voting Agreement. A Voting Agreement, in the form of Exhibit F
shall have been executed by each of the entities set forth on Schedule 5.5.
5.6 Listing. The Company shall have complied with all requirements
with respect to the listing of the Shares on the Nasdaq Capital Market,
except for such requirements not required until after the issuance of the
Shares, such requirements to be complied with promptly after the applicable
Closing.
5.7 Officer's Certificate. The Company shall have delivered a
Certificate, executed on behalf of the Company by its Chief Executive
Officer or its Chief Financial Officer, dated as of the applicable Closing
Date, certifying to the fulfillment of the conditions specified in Sections
5.1 and 5.2.
5.8 Judgments. No judgment, writ, order, injunction, award or
decree of or by any court, or judge, justice or magistrate, including any
bankruptcy court or judge, or any order of or by any governmental
authority, shall have been issued, and no action or proceeding shall have
been instituted by any governmental authority, enjoining or preventing the
consummation of the transactions contemplated hereby.
5.9 Secretary's Certificate. The Company shall have delivered a
Certificate, executed on behalf of the Company by its Secretary or Chief
Financial Officer, dated as of the applicable Closing Date, certifying the
resolutions adopted by the Board of Directors of the Company approving the
transactions contemplated by this Agreement and the issuance of the
Securities, certifying the current versions of the Restated Certificate and
Bylaws of the Company and certifying as to the signatures and authority of
persons signing this Agreement and related documents on behalf of the
Company.
5.10 Stop Orders. No stop order or suspension of trading shall have
been imposed by the Nasdaq Capital Market, the SEC or any other
governmental regulatory body with respect to public trading in the Common
Stock.
5.11 Stockholder Approval. In the case of the Second Closing, the
Company shall have obtained Stockholder Consent prior to the 120th day
following the date hereof.
Article 6
CONDITIONS TO CLOSING OBLIGATIONS OF COMPANY
The Company's obligation to sell and issue the Common Shares and the
Warrants at the relevant Closing is, at the option of the Company, subject
to the fulfillment or waiver of the following conditions:
6.1 Receipt of Payment. The Purchasers shall have delivered payment
of the purchase price to the Company for the Common Shares and the Warrants
being issued at the applicable Closing.
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6.2 Representations and Warranties. The representations and
warranties made by the Purchasers in Article 4 hereof qualified as to
materiality shall be true and correct at all times prior to and on the
applicable Closing Date, except to the extent any such representation or
warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct as of such earlier
date, and, the representations and warranties made by the Purchasers in
Article 4 hereof not qualified as to materiality shall be true and correct
in all material respects at all times prior to and on the applicable
Closing Date, except to the extent any such representation or warranty
expressly speaks as of an earlier date, in which case such representation
or warranty shall be true and correct in all material respects as of such
earlier date.
6.3 Covenants. All covenants, agreements and conditions contained
in this Agreement to be performed by the Purchasers on or prior to the
applicable Closing Date shall have been performed or complied with in all
material respects.
6.4 Delivery of Purchaser Questionnaire. The Company shall have
received from each Purchaser a fully completed Purchaser Questionnaire in
the form attached hereto as Exhibit B (or shall have received the
information requested thereon in the form otherwise acceptable to the
Company) prior to the Second Closing for the Company's use in preparing the
Registration Statement pursuant to Article 7 below; provided, however, in
the event that the Second Closing does not take place, such Purchaser
Questionnaire (or the information requested thereon in the form otherwise
acceptable to the Company) shall have been received from each Purchaser
within ten (10) days following notification by the Company of the filing of
such Registration Statement.
Article 7
COVENANTS
7.1 Definitions. For the purpose of this Article 7:
(a) the term "Registration Statement" shall mean any
registration statement required to be filed by Section 7.2 below, and shall
include any preliminary prospectus, final prospectus, exhibit or amendment
included in or relating to such registration statements; and
(b) the term "Registrable Shares" shall mean all of the
Common Shares issued pursuant to this Agreement and the Warrant Shares
issuable upon exercise of the Warrants issued pursuant to this Agreement.
7.2 Registration Procedures and Expenses. The Company shall:
(a) use its best efforts to file a Registration Statement
with the SEC within ten (10) days following the Second Closing Date, but in
no event after the date that is eighty (80) days after the First Closing
Date (the "Filing Date"), to register the Registrable Shares and shares of
the Common Stock listed on Schedule 7.2 attached hereto on Form S-3 under
the Securities Act (providing for shelf registration of such Registrable
Shares and shares of the Common Stock listed on Schedule 7.2 under SEC Rule
415) or on such other form which is appropriate to register such
Page 31 of 43
Registrable Shares for resale from time to time by the Purchasers;
provided, however, if a Registration Statement covering the Registrable
Shares is not filed with the SEC on or prior to the Filing Date, the
Company will make payments to each Holder, as liquidated damages and not as
a penalty, in an amount equal to one percent (1%) of the aggregate purchase
price paid by such Holder for the Common Shares purchased hereunder for
each 30 day period (or a portion thereof) following the date by which such
Registration Statement should have been filed for which no Registration
Statement is filed with respect to the Registrable Securities;
(b) use its best efforts, subject to receipt of necessary
information from the Purchasers, to cause any such Registration Statement
filed pursuant to Section 7.2(a) above to become effective as promptly
after filing of such Registration Statement as practicable but in any event
by the date that is one hundred (100) days following the First Closing
Date; provided, however, that in the event that a Registration Statement is
reviewed by the SEC, then such date shall be the date that is one hundred
fifty (150) days following the First Closing Date; If (i) the Company fails
to file with the SEC a request for acceleration in accordance with Rule 461
promulgated under the Securities Act, within five business days of the date
that the Company is notified (orally or in writing, whichever is earlier)
by the SEC that a Registration Statement will not be "reviewed, " or is not
subject to further review, or (ii) the Registration Statement has not been
declared effective by the appropriate date in the preceding sentence, then
the Company will make payments to each Holder, as liquidated damages and
not as a penalty, in an amount equal to one percent (1%) of the aggregate
purchase price paid by such Holder for the Common Shares purchased
hereunder for each thirty (30) day period (or a portion thereof) following
the date by which such Registration Statement should have been effective as
described above had the Company used its best efforts to have the
Registration Statement declared effective;
(c) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement continuously effective until termination of such obligation as
provided in Section 7.5 below, subject to the Company's right to suspend
pursuant to Section 7.4;
(d) furnish to each Purchaser (and to each underwriter, if
any, of such Registrable Shares) such number of copies of prospectuses in
conformity with the requirements of the Securities Act and such other
documents as the Purchasers may reasonably request, in order to facilitate
the public sale or other disposition of all or any of the Registrable
Shares by the Purchasers, including a copy of the prospectus to be
furnished to each Purchaser pursuant to Section 7.2(g);
(e) file such documents as may be required of the Company for
normal securities law clearance for the resale of the Registrable Shares in
such states of the United States as may be reasonably requested by each
Purchaser; provided, however, that the Company shall not be required in
connection with this paragraph (e) to qualify as a foreign corporation or
execute a general consent to service of process in any jurisdiction;
(e) upon notification by the SEC that that the Registration
Statement will not be reviewed or is no longer subject to further review
Page 32 of 43
and comments by the SEC, the Company shall within five business days
request acceleration of such Registration Statement such that it becomes
effective at 5:00 p.m. New York Time on the date that effectiveness is
requested (the "Effective Date");
(g) deliver to each Purchaser, by 9:00 a.m. New York time on
the day following the Effective Date, without charge, an electronic copy of
each prospectus or prospectuses (including each form of prospectus) and
each amendment or supplement thereto. The Company hereby consents to the
use of such prospectus and each amendment or supplement thereto by each of
the selling Holders in connection with the offering and sale of the
Registrable Securities covered by such prospectus and any amendment or
supplement thereto;
(h) advise each Purchaser promptly:
(i) of the effectiveness of the Registration
Statement or any post-effective amendments thereto;
(ii) of any request by the SEC for amendments to the
Registration Statement or amendments to the prospectus or for additional
information relating thereto;
(iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement under the
Securities Act or of the suspension by any state securities commission of
the qualification of the Registrable Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for any of the preceding
purposes; and
(iv) of the existence of any fact and the happening
of any event that makes any statement of a material fact made in the
Registration Statement, the prospectus and amendment or supplement thereto,
or any document incorporated by reference therein, untrue, or that requires
the making of any additions to or changes in the Registration Statement or
the prospectus in order to make the statements therein not misleading;
(i) use its best efforts to cause all Registrable Shares to
be listed on each securities exchange, if any, on which equity securities
by the Company are then listed;
(j) bear all expenses in connection with the procedures in
paragraphs (a) through (I) of this Section 7.2 and the registration of the
Registrable Shares on such Registration Statement and the satisfaction of
the blue sky laws of such states; and
(k) otherwise use commercially reasonable efforts to make
available to its security holders no later than the Availability Date (as
defined below), an earnings statement covering a period of at least twelve
(12) months, beginning after the effective date of each Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act, including Rule 158 promulgated thereunder (for
the purpose of this subsection 7.2(k), "Availability Date" means the 45th
day following the end of the fourth fiscal quarter after the fiscal quarter
that includes the effective date of such Registration Statement, except
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that, if such fourth fiscal quarter is the last quarter of the Company's
fiscal year, "Availability Date" means the 90th day after the end of such
fourth fiscal quarter).
7.3 Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Purchaser, the partners, members, officers and directors of each Purchaser
and each person, if any, who controls such Purchaser within the meaning of
the Securities Act or the Exchange Act, from and against any losses,
claims, damages or liabilities to which they may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or
are based upon, any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or arise out of
any failure by the Company to fulfill any undertaking included in the
Registration Statement and the Company will, as incurred, reimburse such
Purchaser, partner, member, officer, director or controlling person for any
legal or other expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim; provided,
however, that the Company shall not be liable in any such case to the
extent that such loss, claim, damage or liability (collectively, "Loss")
arises out of, or is based upon, an untrue statement or omission or alleged
untrue statement or omission made in such Registration Statement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Purchaser, partner, member, officer,
director or controlling person specifically for use in preparation of the
Registration Statement or any breach of this Agreement by such Purchaser;
and provided further, however, that the Company shall not be liable to any
Purchaser of Registrable Shares (or any partner, member, officer, director
or controlling person of such Purchaser) to the extent that any such Loss
is caused by an untrue statement or omission or alleged untrue statement or
omission made in any preliminary prospectus if either (i)(A) such Purchaser
failed to send or deliver a copy of the final prospectus with or prior to,
or, if Rule 172 is then in effect, such Purchaser failed to confirm that a
final prospectus was deemed to be delivered prior to, the delivery of
written confirmation of the sale by such Purchaser to the person asserting
the claim from which such Loss resulted and (B) the final prospectus
corrected such untrue statement or omission, (ii) (X) such untrue statement
or omission is corrected in an amendment or supplement to the prospectus
and (Y) having previously been furnished by or on behalf of the Company
with copies of the prospectus as so amended or supplemented, or if Rule 172
is then in effect, notified by the Company that such amended or
supplemented prospectus has been filed with the SEC, such Purchaser
thereafter fails to deliver such prospectus as so amended or supplemented,
with or prior to, or, if Rule 172 is then in effect, such Purchaser fails
to confirm that the prospectus so amended or supplemented was deemed to be
delivered prior to, the delivery of written confirmation of the sale of a
Registrable Share to the person asserting the claim from which such Loss
resulted or (iii) such Purchaser sold Registrable Shares in violation of
such Purchaser's covenant contained in Section 7.4 of this Agreement.
Page 34 of 43
(b) Each Purchaser, severally and not jointly, agrees to
indemnify and hold harmless the Company (and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act, each officer of the Company who signs
the Registration Statement and each director of the Company), from and
against any losses, claims, damages or liabilities to which the Company (or
any such officer, director or controlling person) may become subject (under
the Securities Act or otherwise), insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) arise out of,
or are based upon, any breach of this Agreement by such Purchaser or any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading in each case, on the effective date thereof, if, and
to the extent, such untrue statement or omission or alleged untrue
statement or omission was made in reliance upon and in conformity with
written information furnished by or on behalf of such Purchaser
specifically for use in preparation of the Registration Statement, and such
Purchaser will reimburse the Company (and each of its officers, directors
or controlling persons) for any legal or other expenses reasonably incurred
in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that in no event shall any
indemnity under this Section 7.3(b) be greater in amount than the dollar
amount of the proceeds (net of the amount of any damages such Purchaser has
otherwise been required to pay by reason of such untrue statement or
omission or alleged untrue statement or omission) received by such
Purchaser upon the sale of the Registrable Securities included in the
Registration Statement giving rise to such indemnification obligation.
(b) Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which
indemnity is to be sought against an indemnifying person pursuant to this
Section 7.3, such indemnified person shall notify the indemnifying person
in writing of such claim or of the commencement of such action, and,
subject to the provisions hereinafter stated, in case any such action shall
be brought against an indemnified person and such indemnifying person shall
have been notified thereof, such indemnifying person shall be entitled to
participate therein, and, to the extent that it shall wish, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
person. After notice from the indemnifying person to such indemnified
person of its election to assume the defense thereof, such indemnifying
person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection
with the defense thereof; provided, however, that if there exists or shall
exist a conflict of interest that would make it inappropriate in the
reasonable judgment of the indemnified person for the same counsel to
represent both the indemnified person and such indemnifying person or any
affiliate or associate thereof, the indemnified person shall be entitled to
retain its own counsel at the expense of such indemnifying person;
provided, further, that no indemnifying person shall be responsible for the
fees and expense of more than one separate counsel for all indemnified
parties. The indemnifying party shall not settle an action without the
consent of the indemnified party, which consent shall not be unreasonably
withheld.
Page 35 of 43
(d) If after proper notice of a claim or the commencement of
any action against the indemnified party, the indemnifying party does not
choose to participate, then the indemnified party shall assume the defense
thereof and upon written notice by the indemnified party requesting advance
payment of a stated amount for its reasonable defense costs and expenses,
the indemnifying party shall advance payment for such reasonable defense
costs and expenses (the "Advance Indemnification Payment") to the
indemnified party. In the event that the indemnified party's actual
defense costs and expenses exceed the amount of the Advance Indemnification
Payment, then upon written request by the indemnified party, the
indemnifying party shall reimburse the indemnified party for such
difference; in the event that the Advance Indemnification Payment exceeds
the indemnified party's actual costs and expenses, the indemnified party
shall promptly remit payment of such difference to the indemnifying party.
(e) If the indemnification provided for in this Section 7.3
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or
liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the extent
permitted by applicable law contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the
other, as well as any other relevant equitable considerations; provided,
that in no event shall any contribution by an indemnifying party hereunder
be greater in amount than the dollar amount of the proceeds (net of the
amount of any damages such indemnifying party has otherwise been required
to pay by reason of such untrue statement or omission or alleged untrue
statement or omission) received by such indemnifying party upon the sale of
the Registrable Securities included in the Registration Statement giving
rise to such indemnification obligation.
7.4 Prospectus Delivery. Each Purchaser hereby covenants with the
Company not to make any sale of the Registrable Shares without complying
with Section 8.3. The Purchaser acknowledges that there may be times when
the Company must suspend the use of the prospectus forming a part of the
Registration Statement until such time as an amendment to the Registration
Statement has been filed by the Company and declared effective by the SEC,
or until such time as the Company has filed an appropriate report with the
SEC pursuant to the Exchange Act. The Purchaser hereby covenants that it
will not sell any Registrable Shares pursuant to said prospectus during the
period commencing at the time at which the Company gives the Purchaser
written notice of the suspension of the use of said prospectus and ending
at the time the Company gives the Purchaser written notice that the
Purchaser may thereafter effect sales pursuant to said prospectus; provided
that such suspension periods shall in no event exceed thirty (30) days in
any twelve (12) month period and that, in the good faith judgment of the
Company's Board of Directors, the Company would, in the absence of such
delay or suspension hereunder, be required under state or federal
securities laws to disclose any corporate development, a potentially
significant transaction or event involving the Company, or any
negotiations, discussions, or proposals directly relating thereto, in
either case the disclosure of which would reasonably be expected to have a
material adverse effect upon the Company or its stockholders; provided
Page 36 of 43
further, that the Company may suspend the use of the prospectus forming a
part of the Registration Statement to the extent necessary to file any
post-effective amendment to the Registration Statement in order to amend
the table of selling stockholders within the Registration Statement to
reflect transfers of the Securities pursuant to Sections 8.3(a) and 8.3(b).
If, after the Registration Statement has been declared effective by the
SEC, sales cannot be made pursuant to such Registration Statement, except
as excused pursuant to this Section 7.4, then the Company will make pro
rata payments to each Holder, as liquidated damages and not as a penalty,
in an amount equal to one percent (1%) of the aggregate purchase price paid
by such Holder for the Common Shares purchased hereunder for each thirty
(30) day period following the date sales cannot be made pursuant to such
Registration Statement after it has been declared effective.
7.5 Termination of Obligations. The obligations of the Company
pursuant to Section 7.2 hereof shall cease and terminate upon the earlier
to occur of (a) such time as all of the Registrable Shares have been
resold, (b) such time as all of the Registrable Shares may be resold in a
three-month period pursuant to Rule 144(k), or (c) the fifth anniversary of
the Second Closing Date or, if the Second Closing does not occur, the First
Closing Date.
7.6 Reporting Requirements.
(a) With a view to making available the benefits of certain
rules and regulations of the SEC that may at any time permit the sale of
the Securities to the public without registration or pursuant to a
registration statement on Form S-3, the Company agrees to use its best
efforts to:
(i) make and keep public information available, as
those terms are understood and defined in Rule 144 under the Securities
Act;
(ii) file with the SEC in a timely manner all reports
and other documents required of the Company under the Securities Act and
the Exchange Act; and
(iii) so long as any of the Purchasers own
Registrable Shares, to furnish to such Purchaser upon request (A) a written
statement by the Company as to whether it is in compliance with the
reporting requirements of Rule 144, the Securities Act and the Exchange
Act, or whether it is qualified as a registrant whose securities may be
resold pursuant to SEC Form S-3, and (B) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so
filed by the Company.
7.7 Blue Sky. The Company shall obtain and maintain all necessary
blue sky law permits and qualifications, or secured exemptions therefrom,
required by any state for the offer and sale of Securities.
7.8 Stockholder Approval. Promptly following the First Closing
Date, the Company shall take all action necessary to call a special meeting
of its stockholders (the "Special Stockholders Meeting") and seek the
approval of the Company's stockholders for, among other matters, the
Page 37 of 43
authorization and issuance of the Common Shares and Warrants at the Second
Closing and the issuance of the Warrant Shares upon exercise of such
Warrants in compliance with Rule 4350(i) of the Marketplace Rules of the
NASD (the "Stockholder Approval"), to the extent required by The Nasdaq
Stock Market, Inc. In connection therewith, the Company will promptly
prepare and file with the SEC proxy materials (including a proxy statement
and form of proxy) for use at the Special Stockholders Meeting and,
promptly after receiving clearance from the SEC, shall promptly mail such
proxy materials to the stockholders of the Company.
7.9 Publicity. The Company shall, on or before 9:30 a.m. New York
City time on the first business day following the date hereof, issue a
press release disclosing the material terms of the transactions
contemplated hereby. Except with respect to the press release contemplated
by this section, the Company agrees that it will not use in advertising or
publicity the names of Fidelity Securities Fund: Fidelity OTC Portfolio
("Fidelity"), any of its partners or employees, any of the funds or
accounts managed by it or any of its affiliates, or any trade name,
trademark, trade device, service mark, symbol or any abbreviation,
contraction or simulation thereof, in any case without the prior written
consent of Fidelity.
7.10 Limitation of Liability. A copy of the Agreement and
Declaration of Trust of Fidelity is on file with the Secretary of State of
the Commonwealth of Massachusetts, and notice is hereby given that this
Agreement is executed on behalf of the Trustees of Fidelity as Trustees and
not individually and that the obligations of this Agreement are not binding
upon any of the Trustees, officers or stockholders of Fidelity individually
but are binding only upon the assets and property of Fidelity. The Company
is expressly put on notice that the rights and obligations of each series
of shares of each affiliate of Fidelity under its Declaration of Trust are
separate and distinct from those of any and all other entities.
Article 8
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES;
COMPLIANCE WITH SECURITIES ACT
8.1 Restrictions on Transferability. The Securities shall not be
transferable in the absence of a registration under the Securities Act or
an exemption therefrom. The Company shall be entitled to give stop transfer
instructions to its transfer agent with respect to the Securities in order
to enforce the foregoing restrictions.
8.2 Instruction Sheet. Each certificate representing Registrable
Shares shall bear the Instruction Sheet attached hereto as Exhibit D (in
addition to any legends required under applicable securities laws).
8.3 Transfer of Securities.
(a) Each Purchaser hereby covenants with the Company not to
make any sale of the Securities except:
(i) in accordance with the Registration Statement, in
which case such Purchaser shall have delivered a current prospectus in
connection with such sale; provided, however, that if Rule 172 is then in
Page 38 of 43
effect, such Purchaser shall have confirmed that a current prospectus is
deemed to be delivered in connection with such sale; or
(ii) in accordance with Rule 144, in which case
Purchaser covenants to comply with Rule 144; or
(iii) (A) If the transferee has agreed in writing to
be bound by the terms of this Agreement, (B) such Purchaser shall have
notified the Company of the proposed disposition and shall have furnished
the Company with a reasonably detailed statement of the circumstances
surrounding the proposed disposition and (C) if reasonably requested by the
Company, such Purchaser shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company, that such disposition will
not require registration of such shares under the Securities Act.
(b) Notwithstanding the provisions of subsection (a) above,
no such restriction shall apply to a transfer by a Purchaser that is (i) a
partnership transferring to its partners or former partners in accordance
with partnership interests, (ii) a corporation transferring to a wholly-
owned subsidiary or a parent corporation that owns all of the capital stock
of the Purchaser, (iii) a limited liability company transferring to its
members or former members in accordance with their interest in the limited
liability company or (iv) an individual transferring to the Purchaser's
family member or trust for the benefit of an individual Purchaser; provided
that in each case the transferee will agree in writing to be subject to the
terms of this Agreement to the same extent as if he were an original
Purchaser hereunder.
(c) Purchaser further acknowledges and agrees that, if a
Purchaser is selling the Securities using the prospectus forming a part of
the Registration Statement, such Securities are not transferable on the
books of the Company unless the certificate evidencing such Securities is
submitted to the Company's transfer agent and a separate certificate
executed by an officer of, or other person duly authorized by, the
Purchaser in the form attached hereto as Exhibit E is submitted to Cooley
Godward or the Company's transfer agent.
8.4 Purchaser Information. Each Purchaser covenants that it will
promptly notify the Company of any changes in the information set forth in
the Registration Statement regarding such Purchaser or such Purchaser's
"Plan of Distribution."
8.5 Material Non-Public Information. Except with respect to those
Purchasers listed on Schedule 5.5 hereof, the Company covenants and agrees
that neither it nor any other person acting on its behalf will provide any
Purchaser or its agents or counsel with any information that the Company
believes constitutes material non-public information, unless either prior
thereto such Purchaser shall have executed a written agreement regarding
the confidentiality and use of such information. The Company understands
and confirms that each Purchaser shall be relying on the foregoing
representations in effecting transactions in securities of the Company.
Page 39 of 43
Article 9
MISCELLANEOUS
9.1 Termination.
(a) This Agreement may be terminated and the sale and
purchase of the Common Shares and the Warrants abandoned at any time prior
to the First Closing, by written notice of any individual Purchaser if the
First Closing has not occurred within five (5) business days of the date
hereof (other than as a result of the failure on the part of the party
giving such notice of termination to perform its covenants and obligations
under this Agreement in all material respects); provided, however, that the
abandonment of the sale and purchase of the Common Shares and the Warrants
shall be applicable only to such Purchaser providing such written notice.
(b) If this Agreement is terminated pursuant to this Section
9.1 all further obligations of the Company to such Purchaser and of such
Purchaser to the Company shall terminate and the Company shall notify the
Purchasers in writing of such notice and termination; provided, however,
that (i) no party shall be relieved of any liability arising from any
breach by such party of any provision of this Agreement and (ii) the
parties shall, in all events, remain bound by and continue to be subject to
the provisions set forth in this Article 9.
(c) The sale and purchase of the Common Shares and the
Warrants at the Second Closing may be abandoned, and the obligations of any
individual Purchaser with respect to the Second Closing may be terminated
by written notice of such Purchaser if the Second Closing has not occurred
within 120 days of the date of this Agreement (other than as a result of
the failure on the part of the party giving such notice to perform its
covenants and obligations under this Agreement in all material respects).
The Company shall notify the remaining Purchasers in writing of any such
notice.
9.2 Waivers and Amendments. With the exception of Article 7 hereof,
the terms of this Agreement may be waived or amended with the written
consent of the Company and the holders of a majority in interest of the
Shares issued or issuable hereunder. With respect to Article 7 hereof, with
the written consent of the Company and the record holders of a majority in
interest of the Registrable Shares issued or issuable hereunder, the terms
of this Agreement may be waived or amended and any such amendment or waiver
shall be binding upon the Company and all holders of Registrable Shares.
9.3 Broker's Fee. Each Purchaser acknowledges that the Company
intends to pay a fee in respect of the sale of the Securities to SG Cowen &
Co., LLC as lead agent, to Leerkink, Swann & Company and to the entities
listed on Schedule 3.13 of the Disclosure Schedule. Each of the parties to
this Agreement represents that, on the basis of any actions and agreements
by it, there are no other brokers or finders entitled to compensation in
connection with the sale of Securities to the Purchasers.
Page 40 of 43
9.4 Governing Law. This Agreement shall be governed in all respects
by and construed in accordance with the laws of the State of California
without any regard to conflicts of laws principles.
9.5 Survival. The representations, warranties, covenants and
agreements made in this Agreement shall survive any investigation made by
the Company or the Purchasers and the Closing.
9.6 Successors and Assigns. The provisions hereof shall inure to
the benefit of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties to this Agreement. Upon a
permitted transfer of a Purchaser's Securities on the books of the Company
in accordance with the terms of Sections 8.3(a)(iii) or 8.3(b), the
Purchaser may assign this Agreement to the permitted transferee upon prior
written notice to the Company. Except as set forth in the previous
sentence, no Purchaser shall assign this Agreement without the prior
written consent of the Company.
9.7 Entire Agreement. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects thereof.
9.8 Notices, etc. All notices and other communications required or
permitted under this Agreement shall be in writing and may be delivered in
person, by telecopy, overnight delivery service or registered or certified
United States mail, addressed to the Company or the Purchasers, as the case
may be, at their respective addresses set forth on the applicable signature
pages hereto, or at such other address as the Company or the Purchasers
shall have furnished to the other party in writing. All notices and other
communications shall be effective upon the earlier of actual receipt
thereof by the person to whom notice is directed or (a) in the case of
notices and communications sent by personal delivery or telecopy, one
business day after such notice or communication arrives at the applicable
address or was successfully sent to the applicable telecopy number, (b) in
the case of notices and communications sent by overnight delivery service,
at noon (local time) on the second business day following the day such
notice or communication was sent, and (c) in the case of notices and
communications sent by United States mail, seven days after such notice or
communication shall have been deposited in the United States mail.
9.9 Severability of this Agreement. If any provision of this
Agreement shall be judicially determined to be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
9.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
9.11 Further Assurances. Each party to this Agreement shall do and
perform or cause to be done and performed all such further acts and things
and shall execute and deliver all such other agreements, certificates,
instruments and documents as the other party hereto may reasonably request
in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated hereby.
Page 41 of 43
9.12 Currency. All references to "dollars" or "$" in this Agreement
shall be deemed to refer to United States dollars.
9.13 Waiver of Conflicts. Each party to this Agreement acknowledges
that legal counsel for the Company, Cooley Godward, has in the past and may
continue in the future to perform legal services for one or more of the
Purchasers or their affiliates in matters unrelated to the transactions
contemplated by this Agreement, including, but not limited to, the
representation of the Purchasers in matters of a similar nature to the
transactions contemplated herein. Each party to this Agreement hereby: (a)
acknowledges that they have had an opportunity to ask for and have obtained
information relevant to such representation, including disclosure of the
reasonably foreseeable adverse consequences of such representation; (b)
acknowledges that with respect to the transactions contemplated herein,
Cooley Godward has represented the Company and not any individual Purchaser
or any individual stockholder, director or employee of the Company; and (c)
gives its informed consent to Cooley Godward's representation of the
Company in the transactions contemplated by this Agreement.
The foregoing agreement is hereby executed as of the date first
above written.
SOLEXA, INC. , a Delaware corporation
By: /s/ John West
-------------------------------
Name: John West
Title: CEO
Page 42 of 43
IN WITNESS WHEREOF, the undersigned has executed this Purchase
Agreement or caused its duly authorized officers to execute this Purchase
Agreement as of the date first above written.
IF AN INDIVIDUAL: IF A CORPORATION, PARTNERSHIP,
TRUST, ESTATE OR OTHER ENTITY:
----------------------- ValueAct Capital Master Fund, L.P.
(Signature) ------------------------------
Print name of entity
-----------------------
(Printed Name) By: /s/ G. Mason Morfit
-------------------------------
Name: G. Mason Morfit
Title: Member of General
Partner, VA Partners, LLC
British Virgin Islands
--------------------------------------------
Print jurisdiction of organization of entity
Address: Address:
435 Pacific Avenue, 4th Floor
------------------------- ----------------------------
San Francisco, CA 94133
------------------------- ----------------------------
Aggregate dollar amount of Common Shares and Warrants committed to be
purchased pursuant to the terms of the Agreement:
Common Shares Warrant Shares
First Closing Purchase Price $0 0 0
Second Closing Purchase Price $1,500,005 230,770 80,770
Page 43 of 43