As filed with the Securities and Exchange Commission on July 3, 2000
AMENDMENT NO. 1
FORM S-1
REGISTRATION STATEMENT
Under The Securities Act of 1933
ILLUMINA, INC.
(Exact name of Registrant as specified in its charter)
California 3826 33-0804655
(before reincorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification Number)
Delaware
(after reincorporation)
(State or other jurisdiction of
incorporation or organization)
|
9390 Towne Centre Drive, Suite 200
San Diego, CA 92121
(858) 587-4290
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Jay T. Flatley
President and Chief Executive Officer
9390 Towne Centre Drive, Suite 200
San Diego, CA 92121
(858) 587-4290
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Please send copies of all communications to:
Michael J. O'Donnell, Esq. Edwin D. Williamson, Esq.
Martin J. Waters III, Esq. Sullivan & Cromwell
Wilson Sonsini Goodrich & Rosati 1701 Pennsylvania Avenue, N.W.
Professional Corporation Washington, D.C. 20006
650 Page Mill Road (202) 956-7500
Palo Alto, CA 94304
(650) 493-9300
|
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement.
If the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), please check the following box. [_]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_]
Title of Each Class of
Securities to be Proposed Maximum Aggregate
Registered Offering Price(1) Amount of Registration Fee
----------------------------------------------------------------------------------
Common Stock, $0.01 par
value................. $100,000,000 $26,400
|
(1) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
(2) This amount has been previously paid.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this preliminary prospectus is not complete and may be + +changed. These securities may not be sold until the registration statement + +filed with the Securities and Exchange Commission is effective. This + +preliminary prospectus is not an offer to sell nor does it seek an offer to + +buy these securities in any jurisdiction where the offer or sale is not + +permitted. + |
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion. Dated July 3, 2000.
5,000,000 Shares
Illumina, Inc.
[LOGO] Common Stock
This is an initial public offering of shares of common stock of Illumina, Inc. All of the 5,000,000 shares of common stock are being sold by Illumina.
Prior to this offering, there has been no market for the common stock. It is currently estimated that the initial public offering price per share will be between $9.00 and $11.00 . Application has been made for quotation of the common stock on the Nasdaq National Market under the symbol "ILMN".
See "Risk Factors" beginning on page 8 to read about certain factors you should consider before buying shares of the common stock.
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Per Share Total
--------- -----
Initial public offering price................................... $ $
Underwriting discount........................................... $ $
Proceeds, before expenses, to Illumina.......................... $ $
|
To the extent that the underwriters sell more than 5,000,000 shares of common stock, the underwriters have the option to purchase up to an additional 750,000 shares from Illumina at the initial public offering price less the underwriting discount.
The underwriters expect to deliver the shares against payment in New York, New York on , 2000.
Goldman, Sachs & Co.
Chase H&Q
SG Cowen
Prospectus dated , 2000.
[ARTWORK]
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed information regarding our company and our financial statements and notes to those statements appearing elsewhere in this prospectus.
Our Business
Overview
We are a leading developer of next-generation tools for the large-scale analysis of genetic variation and function. Understanding genetic variation and function is critical to the development of personalized medicine, a key goal of genomics. Our tools will provide information that could be used to improve drugs and therapies, customize diagnoses and treatment, and cure disease.
Completion of the sequencing of the human genome will drive demand for tools that can assist researchers in processing the billions of tests necessary to convert raw genetic data into medically valuable information. This requires functional analysis of highly complex biological systems, involving a scale of experimentation not practical using currently available tools and technologies. Using our technologies, we are developing a comprehensive line of products that can address the scale of experimentation and the breadth of functional analysis required to achieve the goals of molecular medicine.
Our patented BeadArray technology uses fiber optics to achieve a level of array miniaturization that allows for a new scale of experimentation. An array is a collection of miniaturized test sites arranged on a surface that permits many tests, or assays, to be performed in parallel. By arranging our arrays in a pattern that matches the wells of industry standard containers called microtiter plates, we can simultaneously process up to 3 million assays, a throughput significantly beyond the capability of any technology known to us. We assemble our arrays using relatively inexpensive raw materials. Our proprietary manufacturing process allows us to easily adapt the arrays to a broad range of applications. These advances allow us to create next-generation arrays with a unique combination of high throughput, cost effectiveness and flexibility. In addition, our complementary Oligator technology permits parallel synthesis of the millions of different pieces of DNA necessary to perform large-scale genetic analysis on arrays.
We intend to provide both products and services that utilize our proprietary technologies. Our first products, developed in partnership with PE Biosystems, will include disposable BeadArray cassettes, reagent kits for analyzing variation in genetic sequences, and instruments that automatically read data from the BeadArray cassettes. An array cassette is a collection of individual arrays arranged in a pattern, and a reagent kit is a set of chemicals used for performing specific analyses. We also plan to commercialize services for the analysis of genetic variation.
Our Market Opportunity
We believe that advances in genomics will underpin the future of medicine. To date, billions of dollars have been spent on the sequencing of the human genome. We anticipate that during the next decade, a substantially greater amount will be spent on efforts to understand the function of the genome and to apply this information to medicine and related industries. A significant portion of these funds will likely be used to purchase tools for the analysis of genetic variation and function. We are initially focusing on the key techniques for performing these analyses:
. SNP genotyping - a method for analyzing genetic variation by determining which of the most common form of variation, called Single Nucleotide Polymorphisms, or SNPs, are present in genetic sequences;
. gene expression profiling - the analysis of which genes are active in a particular cell or group of cells; and
. proteomics - the process of determining which proteins are present in cells and how they interact.
The complexity of biology, with combinations of over one hundred thousand genes and potentially millions of genetic variations, will require an unprecedented level of experimentation using these techniques. Unlocking the full potential of the markets for these techniques requires a new generation of high-throughput, cost-effective technologies.
We believe our technologies will have broad applicability in a variety of other high-growth markets, such as high-throughput screening of pharmaceutical candidates and chemical detection. One of our initial collaborations outside of healthcare is with The Dow Chemical Company to design a system to qualify chemical solvents for use in manufacturing.
Our Technologies
Our proprietary BeadArray technology combines fiber optic bundles and specially prepared beads that self-assemble into an array. Each fiber optic bundle contains thousands to millions of individual fibers depending on the diameter of the bundle. In a separate process, we create sensors by affixing a specific type of molecule to each of the billions of microscopic beads in a given batch. The particular molecules on a bead define that bead's function as a sensor. We combine batches of beads coated with specific molecules to form a pool specific to the type of array we intend to create.
To form an array, we typically dip each fiber optic bundle into a pool of coated beads. The coated beads are drawn into the wells, one bead per well, on the end of each fiber in the bundle. The tens of thousands of beads at the end of the fiber optic bundle comprise our BeadArray. One may perform an experiment by then dipping the BeadArray into a prepared sample. The molecules in the sample bind to their matching molecules on the coated bead. Since each bead performs its own assay, we are able to make tens of thousands of quantitative measurements simultaneously on each sample.
Using our BeadArray technology, we have addressed the limitations of the tools for genetic analysis. We achieve high throughput with a high density of test sites per array and our ability to format arrays in a pattern arranged to match the wells of standard microtiter plates. We maximize
cost effectiveness by reducing consumption of expensive reagents and valuable samples, and through the low manufacturing cost associated with our BeadArray technology. Our ability to vary the size, shape and format of the fiber optic bundles and to create specific beads for various applications gives us the flexibility to address multiple markets and market segments.
Our proprietary Oligator technology complements our BeadArray technology. The Oligator synthesizes in parallel many different short segments of DNA to meet the requirements of large-scale genomics applications. We believe that our Oligator technology is substantially more cost effective and provides higher throughput than available commercial alternatives.
Our Strategy
Our goal is to make our BeadArray platform the industry standard for products and services utilizing array technologies. We plan to achieve this by:
. focusing on emerging high-growth markets;
. rapidly commercializing our BeadArray technology for SNP genotyping;
. partnering with multiple companies to expand our market opportunity;
. expanding our technologies into multiple product lines; and
. strengthening our technological leadership.
Company Information
We had no revenue during the period from our inception on April 28, 1998 through December 31, 1998. We recorded $0.5 million in revenue during the year ended December 31, 1999 and $83,205 during the three-month period ended March 31, 2000. Our net losses were approximately $1.1 million, $5.5 million and $3.9 million, respectively, during the same periods. As of March 31, 2000, our total accumulated deficit was $10.6 million. Substantially all our revenue has been from government grants. We do not expect to ship any products before 2001.
We were incorporated in California in April 1998. We intend to reincorporate in Delaware prior to the completion of this offering. Our principal executive offices are located at 9390 Towne Centre Drive, Suite 200, San Diego, California 92121. Our telephone number is (858) 587-4290.
Illumina, BeadArray, Array of Arrays and Oligator are trademarks of our company. This prospectus also contains brand names, trademarks or service marks of companies other than Illumina, and these brand names, trademarks and service marks are the property of their respective holders.
The Offering
Shares offered by Illumina..... 5,000,000 shares
Shares to be outstanding after
the offering.................. 30,541,095 shares
Proposed Nasdaq National Market
symbol........................ ILMN
Use of proceeds................ For general corporate purposes, including
commercialization of our BeadArray and Oligator
technologies, research and development, working
capital, funding our operating losses, capital
expenditures and potential acquisitions.
|
The above information is based on 25,541,095 shares outstanding as of March 31, 2000 and excludes:
. 932,485 shares issuable upon exercise of options then outstanding at a weighted average exercise price of $0.34 per share;
. 43,183 shares issuable upon exercise of warrants then outstanding at a weighted average exercise price of $0.926 per share; and
. a total of 1,022,384 shares available for future issuance under our various stock plans.
Unless otherwise noted, this prospectus assumes:
. our reincorporation in Delaware prior to this offering;
. the automatic conversion of our outstanding convertible preferred stock into common stock upon the closing of this offering;
. the filing of our amended and restated certificate of incorporation authorizing a class of 10,000,000 shares of undesignated preferred stock prior to the closing of this offering; and
. no exercise by the underwriters of their option to purchase additional shares of our common stock in the offering.
Summary Financial Information
(in thousands, except per share data)
The following tables summarize our financial data for the periods presented. The pro forma share data in the statement of operations data assumes the conversion of all of our outstanding preferred stock into 18,836,297 shares of common stock upon the closing of this offering. The as adjusted balance sheet data reflects the sale of 5,000,000 shares of our common stock in the offering at an estimated price of $10.00 per share, less estimated expenses payable by us and the underwriting discount. You should read the following financial information together with the "Selected Financial Information" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this prospectus.
Period from
April 28, 1998 Three months
(inception) ended March
through Year ended 31,
December 31, December 31, ---------------
1998 1999 1999 2000
-------------- ------------ ------ -------
(Unaudited)
Statement of Operations Data:
Total revenue..................... $ -- $ 474 $ 42 $ 83
Total operating expenses.......... 1,194 6,355 975 4,472
------- ------- ------ -------
Operating loss.................... (1,194) (5,881) (933) (4,389)
------- ------- ------ -------
Net loss.......................... (1,146) (5,518) (843) (3,901)
======= ======= ====== =======
Historical net loss per share,
basic and diluted................ $ (1.71) $ (3.91) $(1.21) $ (2.31)
======= ======= ====== =======
Historical weighted average shares
outstanding...................... 669 1,410 696 1,686
Pro forma net loss per share...... $ (0.40) $ (0.25)
======= =======
Pro forma weighted average shares
outstanding...................... 13,697 15,701
|
As of
March 31, 2000
-------------------
Actual As Adjusted
------- -----------
(Unaudited)
Balance Sheet Data:
Cash, cash equivalents
and short-term
investments............ $32,717 $77,917
Working capital......... 32,392 77,592
Total assets............ 34,430 79,630
Deferred revenue........ 2,500 2,500
Stockholders' equity.... 30,834 76,034
|
RISK FACTORS
Any investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and all of the information contained in this prospectus before deciding whether to purchase our common stock. If any of the following risks actually occur, our business, financial condition and results of operations would suffer. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock.
We Have Generated No Revenue from Product Sales to Date. We Expect to Continue to Incur Net Losses and We May Not Achieve or Maintain Profitability.
Since inception, we have recognized no revenue from product sales. We have incurred net losses since our inception. At March 31, 2000, our accumulated deficit was approximately $10.6 million. We expect to continue to have increasing net losses and negative cash flow. The magnitude of our net losses will depend, in part, on the rate of growth, if any, of our revenues and on the level of our expenses. To date, we have derived all of our revenues from grants and partnerships. We expect to incur significant expenses for research and development, for developing our manufacturing capabilities and for efforts to commercialize our products. As a result, we expect that our operating expenses will increase significantly in the near term and, consequently, we will need to generate significant additional revenues to achieve profitability. Even if we achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.
Our Success Depends Upon The Increasing Availability of Genetic Information and The Continued Emergence and Growth of Markets For Analysis of Genetic Variation and Function.
We design our products primarily for applications in the life sciences and pharmaceutical industries. The usefulness of our technology depends in part upon the availability of genetic data. We are initially focusing on markets for analysis of genetic variation and function, namely SNP genotyping, gene expression profiling and proteomics. These markets are new and emerging, and they may not develop as we anticipate, or reach their full potential. Other methods of analysis of genetic variation and function may emerge and displace the methods we are developing. Also, researchers may not seek or be able to convert raw genetic data into medically valuable information through the analysis of genetic variation and function. If genetic data is not available or if our target markets do not emerge in a timely manner, or at all, demand for our products will not develop as we expect, and we may never become profitable.
Our Success Depends on Market Acceptance of Our New and Unproven Technology.
Historically, life sciences and pharmaceutical companies have analyzed genetic variation and function using a variety of technologies. Compared to the existing technologies, our technologies are new and unproven. In order to be successful, our products must meet the commercial requirements of the life sciences and pharmaceutical industries as tools for the large-scale analysis of genetic variation and function. Market acceptance will depend on many factors, including:
. our ability and the ability of our collaborative partners to demonstrate to potential customers the benefits and cost effectiveness of our products and services relative to others available in the market;
. the extent of our partners' efforts to market, sell and distribute our products;
. our or our partners' ability to manufacture products in sufficient quantities with acceptable quality and reliability and at an acceptable cost; and
. the willingness and ability of customers to adopt new technologies requiring capital investments.
Our products may not gain market acceptance. If our BeadArray technology does not become widely used in the life sciences and pharmaceutical industries, demand for our products will not develop as expected and it is unlikely that we ever will become profitable.
We Are an Early Stage Company Deploying Unproven Technologies. If We Do Not Develop Commercially Successful Products, We May Be Forced to Cease Operations.
We currently have no commercially available products. Our technologies are in the early stages of development. You should evaluate us in light of the uncertainties and complexities affecting an early stage company developing tools for the life sciences and pharmaceutical industries.
We may not be successful in the commercial development of products. Prior to their commercialization, products will require significant research and development and investment, including testing, to demonstrate their technical benefits and cost effectiveness. We have not proven our ability to develop and commercialize products. We must conduct a substantial amount of additional research and development before any of our products will be ready for sale. Problems frequently encountered in connection with the development of commercial products using new and unproven technologies might limit our ability to develop and commercialize our products.
Commercialization of Our Technologies Depends On Partnerships and Collaborations with Other Companies. If Our Current Partnership and Collaborations Are Not Successful, or If We Are Not Able to Enter Into Additional Partnerships and Collaborations in the Future, We May Not Be Able to Develop Our Technologies or Products.
Since we currently do not possess all of the resources necessary to develop and commercialize products that may result from our technologies, we will need either to develop a sales, marketing and support group with relevant experience or make appropriate arrangements with strategic partners to market and sell our products. We have chosen to enter into arrangements to develop and commercialize our initial products. We have entered into an agreement with PE Biosystems to gain access to their proprietary chemistry format for use with the initial products of the partnership. PE Biosystems also will fund, in part, the development of these products. Our partnership agreement provides that PE Biosystems will develop the detection instrument and reagent kits required for use with these products, and will provide sales and marketing support for the products. If our partnership with PE Biosystems is not successful, or if PE Biosystems elects to terminate our partnership, we may not be able to develop or successfully commercialize our initial products on a timely basis, or at all. We intend to rely on other corporate partners and collaborators to develop other chemistry formats and to gain access to genetic data for use with our technologies. If we do not enter into additional partnership agreements, or if these agreements are not successful, our ability to develop and commercialize products will be impacted negatively and our revenues will decline.
We have limited or no control over the resources that any partner or collaborator may devote to our products. Any of our present or future partners or collaborators may not perform their obligations as expected. These partners or collaborators may breach or terminate their agreements with us or otherwise fail to meet their obligations or perform their collaborative activities successfully and in a timely manner. Further, any of our partners or collaborators may elect not to develop products arising
out of our partnerships or collaborations or devote sufficient resources to the development, manufacture or commercialization of these products. If any of these events occur, we may not be able to develop our technologies or commercialize our products and our ability to generate revenues will decrease.
We Have Limited Manufacturing Experience. If We Are Unable to Find Third-Party Manufacturers to Manufacture Our Products or Unless We Develop Our Product Capability, We May Not Be Able to Launch Our Products in a Timely Manner, or at All.
We have no experience manufacturing our products in the volumes that will be necessary for us to achieve significant commercial sales. To date, we have limited our manufacturing activities to the manufacturing of prototype systems for testing purposes and for internal use by our collaborative partners.
The nature of our products requires customized components that currently are available from a limited number of sources. For example, we currently obtain the fiber optic bundles included in our products from a single source. If we are unable to secure a sufficient supply of fiber optic bundles or other product components, we will be unable to meet future demand for our products. We will need to enter into contractual relationships with manufacturers for commercial scale production of our products, or develop these capabilities internally, and we cannot assure you that we will be able to do so on a timely basis, for sufficient quantities or on commercially reasonable terms. Accordingly, we may not be able to establish or maintain reliable, high-volume manufacturing at commercially reasonable costs.
We May Encounter Difficulties in Managing Our Growth That Could Increase Our Losses.
We have experienced a period of rapid and substantial growth that has strained our human and capital resources. If our growth continues and we are unable to manage it effectively, our business will suffer and our stock price could decline. The number of our employees increased from nine at December 31, 1998 to 60 at March 31, 2000. The need to effectively manage our operations and growth requires us to continue to expend funds to improve our operational, financial and management controls, reporting systems and procedures, and to attract and retain sufficient numbers of talented employees. If we are unable to successfully implement improvements to our management information and control systems in an efficient or timely manner, or if we encounter deficiencies in existing systems and controls, management may receive inadequate information to manage our day-to-day operations.
We Expect Intense Competition in Our Target Markets, Which Could Render Our Products Obsolete or Substantially Limit the Volume of Products That We Sell. This Would Limit Our Ability to Compete and Achieve Profitability.
We compete with life sciences companies that design, manufacture and market instruments for analysis of genetic variation and function and other applications using technologies such as two-dimensional electrophoresis, capillary electrophoresis, mass spectrometry, flow cytometry, microfluidics, and mechanically deposited, inkjet and photolithographic arrays. For an explanation of these technologies, see "Business--Current Technologies and Their Limitations." We anticipate that we will face increased competition in the future as new companies enter the market with new technologies. The markets for our products are characterized by rapidly changing technology, evolving industry standards, changes in customer needs, emerging competition and new product introductions. One or more of our competitors may render our technology obsolete or uneconomical. Many of our competitors have greater financial and personnel resources and more experience in research and development than we have. Furthermore, the life sciences and pharmaceutical companies, which are our potential customers and strategic partners, could develop competing products.
Our Technologies Can Be Applied to Many Different Industries, and We May Fail to Focus on the Most Profitable Areas.
Our technologies may be applicable to numerous, diverse industries. However, we have limited financial and managerial resources. Therefore, we will be required to focus on product candidates in selected industries and to forego efforts with regard to other products and industries. Our decisions may not produce viable commercial products and may divert our resources from more profitable market opportunities.
Any Inability to Adequately Protect Our Proprietary Technologies Could Harm Our Competitive Position.
Our success will depend in part on our ability to obtain patents and maintain adequate protection of our intellectual property in the United States and other countries. If we do not protect our intellectual property adequately, competitors may be able to use our technologies and thereby erode our competitive advantage. The laws of some foreign countries do not protect proprietary rights to the same extent as the laws of the United States, and many companies have encountered significant problems in protecting their proprietary rights abroad. These problems can be caused by the absence of rules and methods for defending intellectual property rights.
The patent positions of companies developing tools for the life sciences and pharmaceutical industries, including our patent position, generally are uncertain and involve complex legal and factual questions. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies are covered by valid and enforceable patents or are effectively maintained as trade secrets. We will apply for patents covering our technologies and products, as we deem appropriate. However, our applications may be challenged and may not result in issued patents. Our existing patents and any future patents we obtain may not be sufficiently broad to prevent others from practicing our technologies or from developing competing products. There also is risk that others may independently develop similar or alternative technologies or design around our patented technologies. In addition, others may challenge or invalidate our patents, or our patents may fail to provide us with any competitive advantage.
We also rely upon trade secret protection for our confidential and proprietary information. We have taken security measures to protect our proprietary information. These measures, however, may not provide adequate protection for our trade secrets or other proprietary information. We seek to protect our proprietary information by entering into confidentiality agreements with employees, collaborators and consultants. Nevertheless, employees, collaborators or consultants may still disclose our proprietary information, and we may not be able to meaningfully protect our trade secrets. In addition, others may independently develop substantially equivalent proprietary information or techniques or otherwise gain access to our trade secrets.
Litigation or Other Proceedings or Third Party Claims of Intellectual Property Infringement Could Require Us to Spend Time and Money and Could Shut Down Some of Our Operations.
Our commercial success depends in part on our non-infringement of the patents or proprietary rights of third parties. Third parties may assert that we are employing their proprietary technology without authorization. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes these patents. We could incur substantial costs and divert the attention of our management and technical personnel in defending ourselves against any of these claims. We may incur the same liabilities in enforcing our patents against others. Furthermore, parties making claims against us may be able to obtain injunctive or other equitable relief, which effectively could block our ability to further develop, commercialize and sell products, and could result in the award of substantial damages against us. In the event of a successful claim of infringement against us, we
may be required to pay damages and obtain one or more licenses from third parties. We may not be able to obtain these licenses at a reasonable cost, or at all. In that event, we could encounter delays in product introductions while we attempt to develop alternative methods or products. Defense of any lawsuit or failure to obtain any of these licenses could prevent us from commercializing available products.
If We Lose Our Key Personnel or Are Unable to Attract and Retain Additional Personnel, We May Be Unable to Achieve Our Goals.
We are highly dependent on our management and scientific personnel. The loss of their services could adversely impact our ability to achieve our business objectives. We will need to hire additional qualified personnel with expertise in molecular biology, chemistry and biological information processing. We compete for qualified management and scientific personnel with other biotechnology companies, universities and research institutions, particularly those focusing on genomics. Competition for these individuals, particularly in the San Diego area, is intense, and the turnover rate can be high. Failure to attract and retain management and scientific personnel would prevent us from pursuing collaborations or developing our products or technologies.
Our planned activities will require additional expertise in specific industries and areas applicable to the products developed through our technologies, including the life sciences and healthcare industries and molecular biology, chemistry and biological information processing. Thus, we will need to add new personnel, including management, and develop the expertise of existing management. The failure to do so could impair the growth of our business.
Our Collaborations With Outside Scientists May Be Subject to Change, Which Could Limit Our Access to Their Expertise.
We work extensively with scientific advisors and collaborators at academic and other institutions to develop applications of our technologies. These scientists are not our employees and may have other commitments that could limit their availability. Although our scientific advisors generally agree not to do competing work, if a conflict of interest between their work for us and their work for another entity arises, we may lose their services. Although our scientific advisors and collaborators sign agreements not to disclose our confidential information, it is possible that some of our valuable proprietary information could become publicly known through them.
We May Need Additional Capital in the Future. If Additional Capital is Not Available On Acceptable Terms, We May Have to Curtail or Cease Operations.
Our future capital requirements will be substantial and will depend on many factors including payments received under collaborative agreements and government grants, the progress and scope of our collaborative and independent research and development projects, and the filing, prosecution and enforcement of patent claims. Changes also may occur that would require our available capital resources to be consumed significantly sooner than we expect.
We expect that the proceeds from this offering, combined with our current cash and cash equivalents, investments and funding from existing strategic alliances and grants, will be sufficient to fund our anticipated operating needs for at least the next 24 months. If our capital resources are insufficient to meet future capital requirements, we may have to raise additional funds to continue the development of our technologies and complete the commercialization of products, if any, resulting from our technologies. We may be unable to raise sufficient additional capital. If we fail to do so, we may have to curtail or cease operations.
Management May Invest or Spend the Proceeds of This Offering in Ways With Which You May Not Agree and in Ways That May Not Yield a Return.
Management will have broad discretion over the use of proceeds from this offering. Stockholders may not agree with management's decisions, and our use of the proceeds may not yield a significant return, or any return at all. We intend to use a majority of the proceeds from this offering for research and development, working capital and other general corporate purposes and to finance potential acquisitions. Because of the number and variability of factors that determine our use of the net proceeds from this offering, we cannot assure you that our actual use will not vary substantially from our currently planned uses. Initially, we intend to invest the net proceeds from this offering in income producing, investment grade securities.
We Expect that Our Quarterly Results of Operations Will Fluctuate. This Fluctuation Could Cause Our Stock Price to Decline.
Our quarterly operating results have fluctuated in the past and are likely to do so in the future. These fluctuations could cause our stock price to fluctuate significantly or decline. A large portion of our expenses are relatively fixed, including expenses for facilities, equipment and personnel. In addition, we expect operating expenses to increase significantly in 2000. Accordingly, if revenues do not grow as anticipated, we may not be able to correspondingly reduce our operating expenses. Failure to achieve anticipated levels of revenues, therefore, could significantly harm our operating results for a particular fiscal period.
Due to the possibility of fluctuations in our revenues and expenses, we believe that quarter-to-quarter comparisons of our operating results are not a good indication of our future performance. Our operating results in some quarters may not meet the expectations of stock market analysts and investors. In that case, our stock price probably would decline.
If We Engage in Any Acquisition, We Will Incur a Variety of Costs, and May Never Realize the Anticipated Benefits of the Acquisition.
If appropriate opportunities become available, we may attempt to acquire businesses, technologies, services or products that we believe are a strategic fit with our business. We currently have no commitments or agreements with respect to any material acquisitions. If we do undertake any acquisition, the process of integrating an acquired business, technology, service or product may result in unforeseen operating difficulties and expenditures and may absorb significant management attention that would otherwise be available for ongoing development of our business. Moreover, we may fail to realize the anticipated benefits of any acquisition. Future acquisitions could reduce your ownership in Illumina and could cause us to incur debt, expose us to future liabilities and result in amortization expenses related to goodwill and other intangible assets.
In addition, recent proposed changes in the Financial Accounting Standards Board rules for merger accounting may affect the cost of making acquisitions or of being acquired. For example, if these proposed changes become effective, we likely would have to record goodwill or other intangible assets that we would amortize to earnings if we merge with another company. This amortization would adversely impact our future operating results. In addition, a prospective acquiror of Illumina might be less inclined to acquire us if they are required to amortize goodwill or other intangible assets. Further, accounting rules changes that reduce the availability of immediate write-offs of the value of in-process research and development in connection with an acquisition could result in the capitalization and amortization of these amounts, which would negatively impact our results of operations in future periods.
Our Stock Price Could Be Extremely Volatile. You May Not Be Able to Resell Your Shares at or Above the Initial Public Offering Price.
Prior to this offering, there has been no public market for shares of our common stock. An active trading market may not develop or be sustained following completion of this offering. The initial public offering price for the shares will be determined by negotiations between us and representatives of the underwriters. This price may bear no relationship to the price at which our common stock will trade upon completion of this offering. The stock market has experienced significant price and volume fluctuations, and the market prices of technology companies, particularly life sciences companies, have been highly volatile. You may not be able to resell your shares at or above the initial public offering price.
In the past, companies that have experienced volatility in the market price of their stock have been the objects of securities class action litigation. If we were the object of securities class action litigation, it could result in substantial costs and a diversion of management's attention and resources.
Future Sales of Our Common Stock May Depress Our Stock Price.
The market price of our common stock could decline as a result of sales of substantial amounts of our common stock in the public market after the closing of this offering, or the perception that these sales could occur. In addition, these factors could make it more difficult for us to raise funds through future offerings of common stock. There will be approximately 30,541,095 shares of common stock outstanding immediately after this offering, or approximately 31,291,095 shares if the representatives of the underwriters exercise their over-allotment option in full. These shares, other than the shares sold in the offering, will become available for sale in the public market as follows:
. 264,768 shares that become eligible for sale at various times between the date of this offering and the date 90 days after the effective date of this offering;
. an additional 15,862,985 shares that become eligible for sale beginning 180 days after the effective date of this offering;
. an additional 82,372 shares that become eligible for sale upon exercise of vested options 90 days after the date of this prospectus and an additional 41,755 shares that become eligible for sale upon the exercise of vested options 180 days after the date of this prospectus; and
. an additional 9,413,342 shares that become eligible for sale at various times thereafter upon the expiration of applicable holding periods.
Some of Our Existing Stockholders Can Exert Control Over Us, and May Not Make Decisions That Are in the Best Interests of All Stockholders.
After this offering, our officers, directors and principal stockholders (greater than 5% stockholders) together will control approximately 47.4% of our outstanding common stock. As a result, these stockholders, acting together, would be able to exert significant influence over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, this concentration of ownership may delay or prevent a change of control of our company, even when a change may be in the best interests of our stockholders. The interests of these stockholders may not always coincide with our interests as a company or the interests of other stockholders. Accordingly, these stockholders could cause us to enter into transactions or agreements that we would not otherwise consider.
Our Operations Must Comply With Environmental Statutes and Regulations, and Any Failure to Comply Could Result in Extensive Costs Which Would Harm Our Business.
The manufacture of our products involves the use, transportation, storage and disposal of hazardous substances and is subject to related environmental and health and safety statutes and regulations. Although we currently use fairly small quantities of hazardous substances, as we expand our operations, the increased use of hazardous substances will lead to additional and more stringent requirements. This may cause us to incur substantial costs to maintain compliance with applicable statutes and regulations. In addition, our failure to comply with laws and regulations and any costs associated with unexpected and unintended releases of hazardous substances by us into the environment, or at disposal sites used by us, could expose us to substantial liability in the form of fines, penalties, remediation costs or other damages, or could lead to a shut down of our operations. We are not aware of any current claims associated with our use of hazardous substances. It is our intent to remain at all times in full compliance with all applicable environmental and health and safety laws and regulations.
FORWARD-LOOKING STATEMENTS
You should not rely on forward-looking statements in this prospectus. This prospectus, including the sections entitled "Prospectus Summary", "Risk Factors", "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business", contains forward-looking statements within the meaning of the federal securities laws. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by the forward-looking statements. These risks and other factors include those listed under "Risk Factors" and elsewhere in this prospectus. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expect", "intend", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other comparable terminology. Examples of these forward-looking statements include, but are not limited to, statements regarding the following:
. the introduction and development of new products, product improvements and new services;
. the applicability and usefulness of our technologies in various markets and industries;
. the success of our technologies;
. emerging markets in functional genetic analysis, namely SNP genotyping, gene expression profiling and proteomics, and the future growth of these markets;
. demand for increased throughput in genetic analysis;
. continued advances in genomics;
. the potential to derive medically valuable information from raw genetic data and the further potential to use this information to improve drugs and therapies, to customize diagnosis and treatment, and cure disease;
. potential future partnerships, collaborations and acquisitions;
. growth in our research and development, general and administrative expenses;
. the proceeds of this offering, combined with our cash, cash equivalents, investments, and funding through grants and collaborations being sufficient to fund our anticipated operating needs for the next 24 months; and
. the lack of a material impact of the adoption of SFAS No. 133.
These statements are only predictions. In evaluating these statements, you should consider various factors, including the risks outlined under "Risk Factors." These factors may cause actual events or our results to differ materially from those expressed or implied by any forward-looking statement.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. We are under no duty and do not intend to update any of the forward-looking statements after the date of this prospectus or to conform our prior statements to actual results.
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the 5,000,000 shares of common stock that we are selling in this offering will be approximately $45.2 million ($52.2 million if the underwriters exercise their over-allotment option in full) based on an assumed public offering price of $10.00 per share and after deducting the estimated underwriting discount and estimated offering expenses payable by us.
We intend to use the net proceeds of this offering for general corporate purposes including:
. commercialization of our BeadArray and Oligator technologies;
. research and development;
. working capital;
. funding our operating losses;
. capital expenditures; and
. possible acquisitions.
The amounts that we actually expend for working capital purposes will vary significantly depending on a number of factors, including future revenue growth, if any, and the amount of cash we generate from operations. As a result, we will retain broad discretion in the allocation of the net proceeds of this offering. In addition, we may use a portion of the net proceeds for further development of our products through acquisitions of complementary businesses, products and technologies. However, we have no present commitments or agreements with respect to any acquisitions. Initially, we intend to invest the net proceeds in income producing, investment-grade securities.
DIVIDEND POLICY
We have never declared or paid any dividends on our capital stock. We currently expect to retain any future earnings for use in the operation and expansion of our business and do not anticipate paying any cash dividends.
CAPITALIZATION
The following table sets forth our actual capitalization as of March 31, 2000 and as adjusted to reflect the automatic conversion of our outstanding preferred stock into 18,836,297 shares of common stock upon the closing of this offering and the sale of 5,000,000 shares of our common stock at an estimated price of $10.00 per share, less estimated expenses payable by us and the underwriting discount. You should read this table in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the financial statements and the notes to those statements included elsewhere in this prospectus.
Actual As Adjusted
------- -----------
(in thousands,
except share data)
Stockholders' equity:
Convertible preferred stock: authorized--50,000,000
shares actual (no par value) and 10,000,000 shares as
adjusted ($0.01 par value); issued and outstanding--
18,836,297 shares actual and none as adjusted.......... $37,398 $ --
Common stock, $0.01 par value: authorized--60,000,000
shares actual and 120,000,000 shares as adjusted;
issued and outstanding--6,704,798 shares actual and
30,541,095 shares as adjusted.......................... 67 305
Additional paid-in capital.............................. 22,741 105,101
Deferred compensation................................... (18,768) (18,768)
Unrealized loss on investments.......................... (40) (40)
Accumulated deficit..................................... (10,564) (10,564)
------- -------
Total stockholders' equity................................ $30,834 $76,034
======= =======
|
The outstanding share information excludes the shares issuable upon exercise of the options and warrants referred to in the paragraph following the table under "Prospectus Summary--The Offering."
DILUTION
Our pro forma net tangible book value as of March 31, 2000 was $30.8 million, or $1.20 per share. Pro forma net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities and divided by the total number of shares of common stock outstanding after giving effect to the automatic conversion of our convertible preferred stock. Dilution in pro forma net tangible book value per share represents the difference between the amount per share paid by purchasers of shares of common stock in this offering and the pro forma net tangible book value per share of common stock immediately after the completion of this offering. After giving effect to the sale of the shares of common stock offered by us at an assumed initial public offering price of $10.00 per share, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma net tangible book value as of March 31, 2000 would have been approximately $76.0 million or $2.49 per share of common stock. This represents an immediate increase in pro forma net tangible book value of $1.29 per share to existing stockholders and an immediate dilution of $7.51 per share to new investors of common stock. The following table illustrates this dilution on a per share basis:
Assumed initial public offering price per share................ $10.00
Pro forma net tangible book value per share as of March 31,
2000........................................................ $1.20
Increase per share attributable to new investors............. 1.29
-----
Pro forma net tangible book value per share after this
offering...................................................... 2.49
------
Dilution per share to new investors............................ $ 7.51
======
|
The following table summarizes, on a pro forma basis after giving effect to the offering (based on an assumed initial public offering price of $10.00 per share), as of March 31, 2000, the differences between the existing stockholders and new investors with respect to the number of shares of common stock purchased from us, the total consideration paid to us and the average price per share paid:
Shares Purchased Total Consideration
------------------ ------------------- Average Price
Number Percent Amount Percent Per Share
---------- ------- ----------- ------- -------------
Existing stockholders.. 25,541,095 84% $39,940,480 44% $ 1.56
New investors.......... 5,000,000 16% 50,000,000 56% $10.00
---------- --- ----------- ---
Total................ 30,541,095 100% 89,940,480 100%
========== === =========== ===
|
The foregoing discussion and tables are based upon the number of shares actually issued and outstanding on March 31, 2000 and assume no exercise of the options and warrants then outstanding, which are referred to in the first paragraph following the table under "Prospectus Summary--The Offering". Assuming the exercise of all of these options and warrants, the number of shares purchased by existing shareholders would be 26,516,763, or 84%, the total consideration paid by existing shareholders would be $40,297,512, or 45%, for an average price per share of $1.52 and the dilution per share to new investors would be $7.58.
SELECTED FINANCIAL INFORMATION
(in thousands, expect per share data)
The statement of operations data set forth below for the period from April 28, 1998 (inception) to December 31, 1998 and for the year ended December 31, 1999 and the balance sheet data at December 31, 1998 and 1999 are derived from our financial statements that have been audited by Ernst & Young LLP, which are included elsewhere in this prospectus, and are qualified by reference to those financial statements. The data for the three months ended March 31, 1999 and 2000 and at March 31, 2000 are derived from unaudited financial statements included elsewhere in this prospectus. We have prepared this unaudited information on the same basis as the audited financial statements and have included all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair presentation of our financial position at such date and our operating results for these periods. You should read the selected financial information set forth below in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and related notes appearing elsewhere in this prospectus.
Period from
April 28,
1998 Three months
(inception) ended
through Year ended March 31,
December 31, December 31, ---------------
1998 1999 1999 2000
------------ ------------ ------ -------
(Unaudited)
Statement of Operations Data:
Grant and collaborative revenue..... $ -- $ 474 $ 42 $ 83
------- ------- ------ -------
Total revenue..................... -- 474 42 83
Operating expenses:
Selling, general and
administrative.................... 345 1,349 164 615
Research and development........... 771 4,048 711 2,671
Amortization of deferred
compensation, and other non-cash
compensation charges.............. 78 958 100 1,186
------- ------- ------ -------
Total operating expenses.......... 1,194 6,355 975 4,472
------- ------- ------ -------
Operating loss...................... (1,194) (5,881) (933) (4,389)
Other income, net................... 48 363 90 488
------- ------- ------ -------
Net loss............................ $(1,146) $(5,518) $ (843) $(3,901)
======= ======= ====== =======
Historical net loss per share, basic
and diluted........................ $ (1.71) $ (3.91) $(1.21) $ (2.31)
======= ======= ====== =======
Historical weighted average shares
outstanding........................ 669 1,410 696 1,686
Pro forma net loss per share........ $ (0.40) $ (0.25)
======= =======
Pro forma weighted average shares
outstanding........................ 13,697 15,701
|
As of
December 31, March 31,
1998 1999 2000
------ ------- ---------
(Unaudited)
Balance Sheet Data:
Cash, cash equivalents and short-term
investments..................................... $8,234 $33,088 $32,717
Working capital.................................. 8,231 32,881 32,392
Total assets..................................... 8,557 33,895 34,430
Deferred revenue................................. -- 1,250 2,500
Convertible preferred stock...................... 9,398 37,398 37,398
Stockholders' equity............................. 8,380 32,032 30,834
|
See our financial statements for a description of the computation of historical and pro forma net loss per share and the number of shares used in the historical and pro forma per share calculations in "Statement of Operations Data" above.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with "Selected Financial Data" and our financial statements and related notes included elsewhere in this prospectus. In addition to historical information, the discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated by these forward- looking statements due to factors including, but not limited to, those factors set forth under "Risk Factors" and elsewhere in this prospectus.
Overview
We were founded and began operations in April 1998. We are developing next- generation tools that will permit the large-scale analysis of genetic variation and function. To date, we have generated revenues primarily from government grants from the National Institutes of Health. We have entered into a strategic partnership with PE Biosystems and research collaborations with Dow Chemical, Third Wave Technologies and PyroSequencing. We expect to commercialize our first products in 2001 in partnership with PE Biosystems. We have not entered into any commercial agreements with our research collaborators, but we may do so in the future.
We have dedicated substantial resources to the development of our proprietary technologies. We have designed our technologies to provide the throughput, cost effectiveness and flexibility necessary to investigate and understand genetic variation and function on the large scale necessary to extract medically valuable information from raw genetic data.
Our revenues are primarily attributable to research funding. We recognize revenues related to research funding as we incur related research and development expenses. Our strategic partners often pay us before we recognize the related revenues, and we defer these payments until we earn them. As of March 31, 2000, we had deferred revenue of $2.5 million.
We have incurred substantial operating losses since our inception. As of March 31, 2000, our accumulated deficit was $10.6 million, and total stockholders' equity was $30.8 million. We expect to incur additional operating losses over the next several years as we continue to fund internal research and development, develop our technologies and commercialize products based on those technologies.
Results of Operations
Comparison of Three Months Ended March 31, 1999 and 2000
Revenue
Revenue for the three months ended March 31, 1999 and 2000 were $42,233 and $83,205, respectively. Government grants accounted for 100% and 89% of our total revenue for the three months ended March 31, 1999 and 2000, respectively.
Research and Development Expenses
Our research and development expenses consist primarily of salaries and other personnel-related expenses, facility costs and supplies. Research and development expenses increased $2.0 million to $2.7 million for the three months ended March 31, 2000, from $0.7 million for the
three months ended March 31, 1999. The increase was primarily due to increased staffing and other personnel-related costs to support our BeadArray technology. We expect that our research and development expenses will increase substantially to support our collaborative research programs, internal product research and development and technology development.
General and Administrative Expenses
Our general and administrative expenses consist primarily of personnel costs for finance, human resources, business development and general management, as well as professional fees, such as expenses for legal and accounting services. General and administrative expenses increased $0.4 million to $0.6 million for the three months ended March 31, 2000 from $0.2 million for the three months ended March 31, 1999. This increase was primarily attributable to an increase in staffing necessary to manage and support our growth. We expect that our general and administrative expenses will increase as we expand our legal and accounting staff, add infrastructure and incur additional costs to support our growth and requirements as a public company.
Amortization of Deferred Compensation and Other Non-Cash Compensation Charges
In connection with the grant of stock options and sale of restricted common stock to employees, founders and directors, we recorded deferred compensation of approximately $0.3 million and $12.6 million for the three months ended March 31, 1999 and 2000, respectively. We recorded this amount as a component of stockholders' equity and will amortize the amount as a charge to operations over the vesting period of the stock and options. We recorded amortization of this deferred compensation of approximately $48,000 and $0.8 million for the three months ended March 31, 1999 and 2000, respectively. We recorded an additional $52,000 and $0.3 million of expense related to restricted common stock sold to consultants for the three months ended March 31, 1999 and 2000, respectively, which was expensed as our rights to repurchase the common stock lapsed.
For employees, founders and directors, deferred compensation represents the difference between the exercise price of the option or purchase price of the stock and the deemed fair value of our common stock on the date of grant in accordance with Accounting Principles Board Opinion No. 25 and its related interpretations. For consultants, deferred compensation is recorded at the fair value for the options granted or stock sold in accordance with Statement of Financial Accounting Standards No. 123 and Emerging Issues Task Force No. 96- 18.
We recognize compensation expense over the vesting period for employees, founders and directors, using an accelerated amortization methodology in accordance with Financial Accounting Standards Board interpretation No. 28. In February 2000, we modified all our consultant agreements to include assurances that the contracts would be fulfilled. In accordance with these modifications, we recorded additional deferred compensation of $3.0 million as a component of stockholders' equity and will amortize this amount as a charge to operations over the vesting period of the stock and options. We recorded amortization of this deferred compensation of approximately $80,000 for the three months ended March 31, 2000.
Other Income
Other income, net of expenses, primarily consists of interest income, net of interest and amortization expense. Interest income, which represents income earned on our cash and cash equivalents and investments, was $0.5 million for the three months ended March 31, 2000 as compared to $0.1 million for the three months ended March 31, 1999. Changes in interest income were due primarily to changes in our average cash and investment balances during these periods. There was no interest expense in either period and amortization expense was approximately $9,500 in each period.
Comparison of Years Ended December 31, 1998 and 1999
Revenue
Revenue for the year ended December 31, 1999 was $0.5 million, 92% of which was from government grants. We had no revenue for the period from our inception on April 28, 1998 through December 31, 1998.
Research and Development
Research and development expenses increased $3.2 million to $4.0 million for the year ended December 31, 1999, from $0.8 million for the period from our inception on April 28, 1998 through December 31, 1998. The increase was primarily due to increased staffing and other personnel costs to support the development of our technologies.
General and Administrative Expenses
General and administrative expenses increased $1.0 million to $1.3 million for the year ended December 31, 1999 from $0.3 million for the period from our inception on April 28, 1998 through December 31, 1998. This increase was primarily attributable to an increase in staffing necessary to manage and support our growth.
Amortization of Deferred Compensation and Other Non-Cash Compensation Charges
In connection with the grant of stock options and sale of restricted common stock to employees, founders and directors, we recorded deferred compensation of approximately $0.3 million and $4.3 million for the period from our inception on April 28, 1998 through December 31, 1998 and the year ended December 31, 1999, respectively. We recorded this amount as a component of stockholders' equity and will amortize the amount as a charge to operations over the vesting period of the stock and options. We recorded amortization of this deferred compensation of approximately $33,000 and $0.6 million for the period from our inception on April 28, 1998 through December 31, 1998 and the year ended December 31, 1999, respectively. We recorded an additional $45,000 and $0.4 million of expense related to restricted common stock sold to consultants for the period from our inception on April 28, 1998 through December 31, 1998 and the year ended December 31, 1999, respectively, which is expensed as our rights to repurchase the common stock lapse.
Other Income
Interest income was $0.4 million for the year ended December 31, 1999 as compared to $48,000 for the period from our inception on April 28, 1998 through December 31, 1998. Interest expense was $48,000 for the year ended December 31, 1999. There was no interest expense for the period from our inception on April 28, 1998 through December 31, 1998.
Provision for Income Taxes
We incurred net operating losses for the period from our inception on April 28, 1998 through December 31, 1998 and the year ended December 31, 1999, and accordingly, we did not pay any federal or state income taxes. As of December 31, 1999, we had net operating loss carryforwards for federal tax purposes of approximately $5.1 million, which begin to expire in 2018.
As of December 31, 1999, we had net operating loss carryforwards for state tax purposes of approximately $5.3 million, which begin to expire in 2006. We also had federal and state research and development tax credit carryforwards of approximately $0.3 million and $0.2 million, respectively, which begin to expire in 2018, unless previously utilized.
Our utilization of the net operating losses and credits may be subject to substantial annual limitations pursuant to Section 382 and 383 of the Internal Revenue Code, and similar state provisions, as a result of changes in our ownership structure. These annual limitations may result in the expiration of net operating losses and credits prior to utilization.
Liquidity and Capital Resources
Since inception, we have financed our business primarily through private placements of preferred stock with net proceeds of $37.4 million, and funding from strategic partners and government grants. As of March 31, 2000, we had cash, cash equivalents and investments of approximately $32.7 million. We currently invest our funds in U.S. investment-grade corporate debt securities with maturities not exceeding 18 months.
Our operating activities used cash of $1.1 million and $2.9 million in the period from our inception on April 28, 1998 through December 31, 1998 and the year ended December 31, 1999 respectively, and $0.8 million and $0.7 million in the three months ended March 31, 1999 and 2000, respectively. Our use of cash for these periods primarily resulted from our losses from operations offset by receipt of funding from collaborators.
Our investing activities used cash of $12.3 million in the year ended December 31, 1999, and $5.3 million and $6.3 million in the three months ended March 31, 1999 and 2000, respectively, substantially all of which consisted of purchases of investment securities. We had minimal investing activities in the period from our inception on April 28, 1998 through December 31, 1998.
Our financing activities provided $9.3 million, $28.1 million and $0.9 million in the period from our inception on April 28, 1998 through December 31, 1998, the year ended December 31, 1999 and the three months ended March 31, 2000, respectively. We had minimal financing activities in the three months ended March 31, 1999. Our financing activities have consisted primarily of the sale of stock to both private investors and strategic partners.
We lease our primary office facility under an operating lease with options to renew under varying terms. In addition, we entered into a $1 million lease financing arrangement with a lease financing corporation in October 1998. As of December 31, 1999, we had utilized all funds available under this lease agreement. At March 31, 2000, the total of annual future minimum lease payments under these lease arrangements was $1.1 million. In April 2000, we entered into a $3 million loan arrangement to be used at our discretion to finance purchases of capital equipment, $1.7 million of which remains available.
Our existing facility lease will expire in August 2001. We are currently in negotiations to lease an additional 20,000 square feet in the same facility, through August 2002. We are also in negotiations to lease a total of 97,000 square feet in two buildings that will be constructed over the next year. The lease will contain an option to purchase the buildings together with additional land on the same site. If these negotiations are successfully completed we would be obligated to provide funding of approximately $6 million at the time the lease is executed, in the form of an interest bearing, secured loan with a term of approximately one year. In addition, we would be obligated to provide a secured letter of credit.
We expect that the proceeds from this offering, combined with our current cash and cash equivalents, investments and funding from existing strategic alliances and grants will be sufficient to fund our anticipated operating needs for at least the next 24 months. However, our future capital requirements and the adequacy of our available funds will depend on many factors, including scientific progress in our research and development programs, the magnitude of those programs,
competing technological and market developments and our ability to successfully commercialize our first products in partnership with PE Biosystems and to establish additional strategic relationships. Therefore, we may require additional funding within this time frame and the additional funding, if needed, may not be available on terms that are acceptable to us, or at all. Further, any additional equity financing may be dilutive to our then existing stockholders and may adversely affect their rights.
Recently Issued Accounting Standards
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, will be effective January 1, 2001. This statement establishes accounting and reporting standards requiring that every derivative instrument, including derivative instruments imbedded in other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement also requires that changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. We believe the adoption of SFAS No. 133 will not have an effect on our financial statements because we do not engage in derivative or hedging activities.
Quantitative and Qualitative Disclosure about Market Risk
Our exposure to market risk for changes in interest rates relates primarily to the increase or decrease in the amount of interest income we can earn on our investment portfolio and on the increase or decrease in the amount of interest expense we must pay with respect to our various outstanding debt instruments. Our risk associated with fluctuating interest expense is limited, however, to our capital lease obligations, the interest rates under which are closely tied to market rates, and our investments in interest rate sensitive financial instruments. Under our current policies, we do not use interest rate derivative instruments to manage exposure to interest rate changes. We ensure the safety and preservation of our invested principal funds by limiting default risk, market risk and reinvestment risk. We mitigate default risk by investing in investment grade securities. A hypothetical 100 basis point adverse move in interest rates along the entire interest rate yield curve would not materially affect the fair value of our interest sensitive financial instruments. Declines in interest rates over time will, however, reduce our interest income while increases in interest rates over time will increase our interest expense.
BUSINESS
Overview
We are developing next-generation tools that will permit the large-scale analysis of genetic variation and function. The information provided by these analyses will enable the development of personalized medicine, a key goal of genomics. Our proprietary BeadArray technology will provide the throughput, cost effectiveness and flexibility necessary to enable researchers in the life sciences and pharmaceutical industries to perform the billions of tests necessary to extract medically valuable information from advances in genomics. This information will correlate genetic variation and gene function with particular disease states, enhancing drug discovery, allowing diseases to be detected earlier and more specifically, and permitting better choices of drugs for individual patients. Our technology will have applicability across a wide variety of industries beyond life sciences and pharmaceuticals, including agriculture, food, chemicals and petrochemicals.
The Importance of SNPs, Gene Expression and Proteomics in Modern Medical Research
Background on Genes and Proteins
The human body is composed of billions of cells each containing deoxyribonucleic acid, or DNA, which encodes the basic instructions for cellular function. The complete set of an individual's DNA is called the genome, and is organized into 23 pairs of chromosomes, which are further divided into over 100,000 smaller regions called genes. Each cell uses or expresses only those genes required for its specific functions. Each gene is comprised of a string of four types of nucleotide bases, known as A, C, G and T. Human DNA has approximately 3 billion nucleotides and their precise order is known as the DNA sequence. When a gene is expressed, a copy of its DNA sequence, called messenger RNA, or mRNA, is used as a template to direct the synthesis of a protein. Proteins direct cell function and ultimately the development of individual traits. Any variation in any part of a gene, called a polymorphism, may result in a change in cell function leading to disease.
Genetic Variation and Function
Every person inherits two copies of each gene, one from each parent. The two copies of each gene may be identical, or they may be different. These differences are referred to as genetic variation. Examples of the physical consequences of genetic variation include differences in eye and hair color.
Genetic variation can also have important medical consequences, including predisposition to disease and differential response to drugs. Genetic variation affects diseases, including cancer, diabetes, cardiovascular disease and Alzheimer's disease. In addition, genetic variation may cause people to respond differently to the same drug. Some people may respond well, others may not respond at all, and still others may experience adverse side effects.
The most common form of genetic variation is a Single Nucleotide Polymorphism, or SNP. A SNP is a variation in a single position in a DNA sequence. It is estimated that the human genome contains between three and six million SNPs. The importance of SNPs is illustrated by the recent formation of the SNP Consortium, which includes nine major pharmaceutical companies, chartered to discover an initial set of approximately 300,000 SNPs.
While in some cases a single SNP will be responsible for medically important effects, it is now believed that the genetic component of most major diseases is the result of the interaction of many SNPs. Therefore, it will be important to investigate many SNPs together in order to discover medically valuable information.
In addition to the knowledge gained from the analysis of SNPs, the study of gene function will significantly contribute to clinical diagnosis and treatment. This study focuses on the physiological functions that are affected by medically relevant SNPs.
Current efforts to understand genetic variation and function have centered around three principal techniques: SNP genotyping, gene expression profiling and proteomics.
SNP Genotyping
SNP genotyping is the process of determining which SNPs are present in each of the two copies of a gene, or other portion of DNA sequence, within an individual or other organism. The use of SNP genotyping to obtain meaningful statistics on the effect of an individual SNP or a collection of SNPs, and to apply that information to clinical trials and diagnostic testing, will require the analysis of millions of SNP genotypes and the testing of large populations for each disease. For example, a single large clinical trial could involve genotyping 300,000 SNPs per patient in 1,000 patients, thus requiring 300 million assays. Using available technologies, this scale of SNP genotyping is both impractical and prohibitively expensive.
Large-scale SNP genotyping, when commercially feasible, will be used for a variety of applications, including genomics-based drug development, clinical trial analysis, disease predisposition testing, and disease diagnosis. SNP genotyping can also be used outside of healthcare, for example in the development of plants and animals with desirable commercial characteristics. These markets will require billions of SNP genotyping assays annually.
Gene Expression Profiling
Gene expression profiling is the process of determining which genes are active in a specific cell or group of cells and is accomplished by measuring mRNA, the intermediary between genes and proteins. Variation in gene expression can cause disease, or act as an important indicator of disease or predisposition to disease. By comparing gene expression patterns between cells from different environments, such as normal tissue compared to diseased tissue or in the presence or absence of a drug, specific genes or groups of genes that play a role in these processes can be identified. Studies of this type, used in drug discovery, require monitoring thousands, and preferably tens of thousands, of mRNAs in large numbers of samples. The high cost of large-scale gene expression profiling has limited the development of the gene expression profiling market.
Once gene expression patterns have been correlated to specific diseases, gene expression profiling is expected to become an important diagnostic tool. Diagnostic use of expression profiling tools is anticipated to grow rapidly with the combination of the sequencing of various genomes and the availability of more cost-effective technologies.
Proteomics
Proteomics is the process of determining which proteins are present in cells and how they interact with one another. Proteomics is another method of correlating the molecular state of a cell with disease or reaction to a stimulus such as a drug. This market remains undeveloped, as low cost, accurate technologies for analysis have not been available. We expect that proteomics will become valuable in drug discovery research as the technologies improve and that array technology will be critical in facilitating the growth of this market.
Current Technologies and Their Limitations
There are currently a variety of technologies available for analyzing genetic variation and function. These technologies lack the combination of high throughput, cost effectiveness and flexibility necessary to adequately address the rapidly evolving markets of SNP genotyping, gene expression profiling and proteomics. These technologies can be classified into three distinct groups:
Traditional Technologies. Traditional technologies perform assays individually, or serially. Serial processing is an inherent limitation to assay throughput. These technologies often require relatively large sample volumes, adding significantly to the costs of the assays. Most of them have limited flexibility to perform different applications. Examples of traditional technologies include 2D electrophoresis, capillary electrophoresis, mass spectrometry and flow cytometry.
. 2D Electrophoresis. Two-dimensional electrophoresis, or 2D electrophoresis, separates proteins on the basis of molecular characteristics and is the traditional method for detecting the presence of proteins. This process separates large numbers of proteins within a sample, but has poor reproducibility and requires an additional process to identify particular proteins.
. Capillary Electrophoresis. Capillary electrophoresis is a process for separating DNA in glass tubes and can be applied to SNP genotyping. While recent advances that include multiple capillaries have improved throughput, this technology is still fundamentally serial in nature, and thus has low throughput for genotyping applications. It also uses large sample sizes, contributing to assay cost.
. Mass Spectrometry. Mass spectrometry, a process that uses a sophisticated instrument to measure molecular weight, has recently been applied to SNP genotyping and proteomics. Provided sample preparation and purification are successful, the sample read out is accurate. However, as another serial detection process, mass spectrometry has limited throughput compared to array technologies and requires expensive instrumentation.
. Flow Cytometry. Flow cytometry, a technique for counting cells, has been modified for use in SNP genotyping and proteomics. For these applications, beads flow past a detector one bead at a time. While flow cytometry is a somewhat flexible and inexpensive technology, it has low throughput compared to array technologies because it analyzes SNPs and proteins serially. Moreover, flow cytometry can only perform a limited number of tests per bead pool.
Microfluidics. Microfluidics, a process for miniaturizing the scale of experimentation, offers some improvement over traditional techniques, although it remains a largely serial process with only moderate throughput compared to array technologies. Although multiple applications are possible using microfluidic systems, the practical implementation of applications using these systems is challenging.
Arrays. Arrays, which perform assays in parallel, were developed to achieve the high throughput required for large-scale genetic analysis. The spacing between test sites in an array defines the array's density. Higher density increases parallel processing. In addition to increasing the throughput, higher density reduces the required sample volume, and thereby lowers costs. Arrays offer parallel processing by performing multiple assays per sample simultaneously. However, they currently lack the ability to test multiple samples simultaneously, one more level of parallel processing necessary for large-scale genetic analysis. These array technologies also have limited applications outside of SNP genotyping and gene expression profiling. Manufacturing limitations have further prevented arrays from reaching their full potential. There are a number of current methodologies for manufacturing arrays, including mechanical deposition, inkjet printing and photolithography, each with its own set of limitations.
. Mechanical Deposition. This method of manufacturing arrays has centered around creating test sites by mechanically depositing material on a flat surface. These arrays can be easily modified and are relatively inexpensive. However, it is difficult to put the test sites close together, resulting in relatively low-density arrays that have limited throughput. In addition, the arrays cannot be mass produced and because they are made individually, they may vary in quality.
. Inkjet Printing. Inkjet printing is a new method for manufacturing arrays that deposits DNA on a surface in a manner similar to the way an inkjet printer deposits ink on paper. Although these arrays are flexible, they are unlikely to be used for large-scale genetic analysis because they are difficult to mass produce.
. Photolithography. Photolithography uses a process similar to semiconductor manufacturing to synthesize DNA on a surface. Test sites can be placed closer together using this process, creating high-density arrays, thereby increasing assay throughput. However, the photolithographic process requires very expensive capital equipment and has expensive tooling that greatly limits the ability to modify arrays.
Traditional technologies, microfluidics and arrays all use various chemistries to perform assays in SNP genotyping, gene expression profiling and proteomics. The specific chemistries and techniques used to perform an assay, known as an assay format, can be deployed using one or more of the above technologies. Often, assay formats are designed to perfom only one test per well of a microtiter plate, resulting in low throughput and adding significantly to expense.
Thus, while numerous technologies and assay formats are being applied to SNP genotyping, gene expression and proteomics, growth of these markets is currently limited by the absence of a cost-effective technology that enables billions of assays to be carried out annually.
Illumina's Solution
Illumina has developed a proprietary array technology that enables the large-scale analysis of genetic variation and function. Our BeadArray technology combines fiber optic bundles and microscopic beads in a simple proprietary manufacturing process to produce array cassettes that can perform up to 3 million assays simultaneously. Our BeadArray technology provides a unique combination of high throughput, cost effectiveness, and flexibility. We achieve high throughput with a high density of test sites per array and our ability to format arrays in a pattern arranged to match the wells of standard microtiter plates. We maximize cost effectiveness by reducing consumption of expensive reagents and valuable samples, and from the low manufacturing costs associated with our complementary technologies. Our ability to vary the size, shape and format of the fiber optic bundles and to create specific beads for different applications provides the flexibility to address multiple markets and market segments. We believe that these features will enable our BeadArray technology to become a leading platform for the emerging high-growth markets of SNP genotyping, gene expression profiling and proteomics.
Illumina's Strategy
Our goal is to make our BeadArray platform the industry standard for products and services using array technologies. We plan to achieve this by:
Focusing on Emerging High-Growth Markets
We are initially focusing on the SNP genotyping, gene expression profiling and proteomics markets. We believe these markets have the potential for high growth due to increasing demand for therapeutics and diagnostics based on newly available genomic information. To date, the lack of high-throughput, cost- effective technologies has limited the growth of these markets.
Rapidly Commercializing Our BeadArray Technology for SNP Genotyping
We intend to rapidly commercialize our BeadArray technology for SNP genotyping through partnerships. Our first partner, PE Biosystems, contributes extensive expertise in instrument and reagent development, as well as a large and experienced worldwide sales and marketing team. We believe that the combination of our BeadArray technology with PE Biosystems' leadership position in the genetic analysis market will enable us to capture a significant portion of the SNP genotyping market.
Partnering With Multiple Companies To Expand Our Market Opportunity
We plan to pursue multiple partnerships to facilitate the expansion of our BeadArray and Oligator technologies and to exploit large and diverse markets. We expect to enter into partnerships and collaborations to gain access to complementary technologies, distribution channels and information content. We intend to structure partnerships that maximize our long-term commercial benefit by maintaining control of our technologies.
Expanding Our Technologies into Multiple Product Lines
We intend to utilize the flexibility of our BeadArray and Oligator technologies to develop multiple product lines. In addition to providing new sources of revenue, we believe these product lines will further our goal of establishing our BeadArray technology as the industry standard for array-based analysis. We expect these product lines to include a lower-throughput array system, handheld instruments, and a high capacity BeadArray system that will allow more simultaneous assays per sample. We intend to expand our Oligator technology by continuing to increase the capacity and cost effectiveness of our instrumentation.
Strengthening Our Technological Leadership
We plan to continue advancing our proprietary technologies through our internal research efforts, collaborations with industry leaders and strategic licensing. We may also pursue opportunistic acquisitions of complementary technologies and leverage our technologies into other value-added businesses.
Illumina's Technology
BeadArray Technology
Our proprietary BeadArray technology combines fiber optic bundles and specially prepared beads that self-assemble into an array.
Fiber Optic Bundles. We have the fiber optic bundles manufactured to our specifications, which we cut into lengths of less than one inch. Each bundle contains thousands to millions of individual fibers depending on the size of the bundle. For example, a fiber optic bundle with a diameter of approximately one millimeter could contain up to 50,000 individual fibers. Dipping the fiber optic bundles into a chemical solution etches a microscopic well at the end of each individual fiber within a bundle. In the preceding example, this process would create 50,000 microscopic wells per bundle.
Microscopic Beads. In a separate process, we create sensors by affixing a specific type of molecule to each of the billions of microscopic beads in a batch. We make different batches of beads, with the beads in a given batch coated with one particular type of molecule. The particular molecules on a bead define that bead's function as a sensor. For example, we create a batch of SNP sensors by attaching a particular DNA sequence to each bead in the batch. We combine
batches of coated beads to form a pool specific to the type of array we intend to create. A bead pool one milliliter in volume contains sufficient beads to produce thousands of arrays.
Array Self-Assembly and Decoding. To form an array we typically dip each fiber optic bundle into a pool of coated beads. The coated beads are drawn into the wells, one bead per well, on the end of each fiber in the bundle. We call this process self-assembly. The tens of thousands of beads at the end of the fiber optic bundle comprise our BeadArray. Because the beads assemble randomly into the wells, we perform a final procedure called decoding in order to determine which bead type occupies which well in the array. We employ several proprietary methods for decoding, a process that requires only a few steps to identify all the beads in the array. One beneficial by-product of the decoding process is a validation of each bead in the array. This quality control test characterizes the performance of each bead and can identify and eliminate use of any empty wells. We ensure that each bead type on the array is sufficiently represented by having multiple copies of each bead type. This improves the reliability and accuracy of the resulting data by allowing statistical processing of the results of identical beads.
Array Use in Experiments. One performs an experiment on the BeadArray by preparing a sample, such as DNA from a patient, and introducing it to the array. The design features of our BeadArray allow it to be simply dipped into a solution containing the sample. The molecules in the sample bind to their matching molecules on the coated bead. An analytical instrument detects the matched molecules by shining a laser through the fiber optic bundle. Since the molecules in the sample have a structure that causes them to emit light in response to a laser, detection of a binding event is possible. This allows the measurement of the number of molecules bound to each coated bead, resulting in a quantitative analysis of the sample.
Oligator Technology
Genomic applications require many different short pieces of DNA that can be made synthetically, called oligonucleotides. For example, SNP genotyping typically requires three to four different oligonucleotides per assay. A SNP genotyping experiment analyzing 10,000 SNPs may therefore require 30,000 to 40,000 different oligonucleotides, contributing significantly to the expense of the experiment.
We have designed our proprietary Oligator technology for the parallel synthesis of many different oligonucleotides to meet the requirements of large- scale genomics applications. We believe that our Oligator technology is substantially more cost effective and provides higher throughput than available commercial alternatives. Our technology utilizes centrifugation for the automated parallel synthesis of 768 different oligonucleotides per machine per day. Using a similar approach, we expect to develop instruments in the future with substantially greater capacity.
Key Advantages of Our BeadArray and Oligator Technologies
We believe that our BeadArray and Oligator technologies provide distinct advantages, in a variety of applications, over competing technologies, by creating cost-effective, highly miniaturized arrays with the following advantages:
High Throughput. The miniaturization of our BeadArray provides a significantly greater information content per unit area than any other array known to us. To further increase throughput, we have formatted our arrays in a pattern arranged to match the wells of standard microtiter plates, allowing throughput levels of up to 3 million unique assays per microtiter plate. The Oligator's parallel synthesis capability allows us to manufacture the diversity of oligonucleotides necessary to support large-scale genomic applications.
Cost Effectiveness. Our BeadArray substantially reduces the cost of experiments as a result of our proprietary manufacturing process and our ability to capitalize on cost reductions generated by
advances in fiber optics, digital imaging and bead chemistry. In addition, our miniaturized BeadArray requires smaller volumes than other array technologies, and therefore reduces reagent costs. Our Oligator technology further reduces reagent costs, as well as the cost of coating beads.
Flexibility. A wide variety of conventional chemistries are available for attaching different molecules, such as DNA, RNA, proteins, and other chemicals to beads. By using beads, we are able to take advantage of these chemistries to create a wide variety of sensors, which we assemble into arrays using the same proprietary manufacturing process. In addition, we can have fiber optic bundles manufactured in multiple shapes and sizes and organized in various arrangements to optimize them for different markets and market segments. In combination, the use of beads and fiber optic bundles provides the flexibility and scalability for our BeadArray technology to be tailored to perform many applications in many different market segments, from drug discovery to diagnostics. Our Oligator technology allows us to manufacture a wide diversity of lengths and quantities of oligonucleotides.
Accuracy. The high density of beads in each array enables us to have multiple copies of each individual bead type. We measure the copies simultaneously and combine them into one data point. This allows us to make a comparison of each bead against its own population of identical beads, which permits the statistical calculation of a more reliable and accurate value for each data point. Finally, the manufacture of the array includes a proprietary decoding step that also functions as a quality control test of every bead on every array, improving the overall accuracy of the data.
Potential Fields of Application
We believe that the demand for increased throughput will continue in genetic analysis and will develop in new areas, including proteomics, high-throughput screening and chemical detection. The parallel processing capabilities of our BeadArray technology are applicable to the complex problems of many different industries, including the following:
Pharmaceutical Discovery and Development
. Cost-effective, rapid methods for gene discovery and function characterization
. Specific targeting of drug discovery efforts
. Customized drugs for patients
. Toxicological evaluation of potential drugs
. High-throughput screening for pharmaceutical candidates
Medicine
. Diagnostic methods for identifying, classifying and staging diseases
. Predictors of successful drug therapy for a particular patient
. Early recognition of potential adverse response to drug therapy
. Identification of predisposition to disease in order to prescribe preventative therapies
Agriculture and Food Production
. Development of plants and animals with desirable commercial characteristics
. Evaluation of foods to ensure safety
Chemical and Petrochemical
. Process monitoring
. Leak detection and environmental monitoring
Food, Beverage and Fragrance
. Quality control monitoring
. Identification of new products with appealing compositions
Products and Services
The first implementation of our BeadArray technology, the Array of Arrays, will be a disposable cassette with 96 fiber optic bundles arranged in a pattern that matches the standard 96-well microtiter plate. Each fiber optic bundle will perform approximately 2,000 unique assays. Therefore, one Array of Arrays can perform approximately 192,000 individual assays simultaneously, more than any other array system known to us.
By simply increasing the number of fiber optic bundles in the cassette, we will expand the Array of Arrays to match standard 384-well and 1,536-well microtiter plates. In these configurations, the Array of Arrays will be able to simultaneously perform approximately 768,000 and 3,072,000 unique assays, respectively.
We intend to provide both products and services using our proprietary BeadArray platform. In partnership with PE Biosystems, we are developing our first products based on our Array of Arrays. These products will include disposable Array of Arrays, reagent kits for SNP genotyping and instruments that automatically read data from our Array of Arrays. Our services may involve partnerships for early access to our technology prior to its general commercial release. In addition to early access, we may commercialize assay development and genotyping services.
SNP Genotyping
We are designing our first product based on the Array of Arrays for SNP genotyping. The first SNP genotyping assay format that we intend to commercialize will be PE Biosystems' proprietary OLA ZipCode assay format. This assay format enables the creation of a universal Array of Arrays that can be used to analyze any set of SNPs. We expect to commercialize our first product using this assay format in 2001. We plan to extend our BeadArray technology to create products using other assay formats. We expect one or more of these additional assay formats to be available on the Array of Arrays in 2002.
Gene Expression Profiling
We will design our first product for gene expression profiling to test selected sets of approximately 100 to 2,000 genes on large numbers of samples. We believe that there is currently a need for a cost-effective and high- throughput gene expression profiling technology to analyze the activity of selected sets of genes from many samples simultaneously. We expect our initial products in gene expression profiling, based on the Array of Arrays combined with specific assay formats, to be commercially available in 2001.
High-Throughput Synthesis
We plan to use our Oligator technology to build internal capacity to produce millions of oligonucleotides per year. In addition to their use to coat beads, these oligonucleotides may be components of the reagent kits for our BeadArray products and used for assay development.
Areas of Exploration
The increasing need for high-throughput experimentation will drive the use of array technology into other potentially large emerging markets, including:
Proteomics. We are currently investigating the use of our BeadArray technology for the analysis of proteins. This application has the potential to provide information that is complementary to gene expression profiling, because many important cellular processes are regulated at the level of proteins rather than at the level of genes. We have demonstrated the feasibility of carrying out assays for the detection and analysis of proteins on the BeadArray.
High-Throughput Screening. The synthesis of large libraries of chemicals and their high-throughput screening for potential as drugs are core technologies in drug development. These libraries contain more compounds than can be effectively screened using available technologies. We have developed a strategy for high-throughput screening using our BeadArray technology. We believe that we may be able to miniaturize high-throughput screening significantly, increase the throughput of screens, and increase the amount of information obtained for each compound.
Chemical Detection. We have demonstrated the use of our BeadArray technology for the detection of chemicals. For this application, the BeadArray generates a unique pattern for each chemical that it detects. Currently, we are working with Dow Chemical to design a system to qualify chemical solvents for use in manufacturing. We are exploring with Chevron the possibility of using this system for the detection of leaks at gasoline refineries. There are many other potential applications for this type of detector such as quality control monitoring in the food, beverage and fragrance industries.
Partnerships and Collaborations
We have entered into the following strategic agreements with commercial entities to expand the functionality of our BeadArray technology and to provide distribution channels for the commercialization of our products and services:
PE Biosystems, a Division of PE Corporation. In November 1999, we entered into a partnership with PE Biosystems, a leading supplier of instruments and reagents to the life sciences and pharmaceutical industries. Illumina and PE Biosystems will jointly implement PE Biosystems' proprietary OLA ZipCode assay format on Illumina's proprietary Array of Arrays initially for SNP genotyping. We will develop and manufacture the Array of Arrays and PE Biosystems will develop and manufacture the detection instrument and the reagent kits. PE Biosystems and Illumina will co-brand products and PE Biosystems will distribute them through their worldwide sales channels. Under the agreement, Illumina has rights to use and sell the instruments developed in the partnership for other applications.
In connection with this partnership, PE Corporation invested $5 million to purchase shares of our preferred stock and agreed to provide Illumina with substantial research and development support over two years. Illumina and PE Biosystems will divide the profits from all partnership products, including instruments, array cassettes and reagent kits, after both parties have received repayment for cost-of-goods, sales and marketing expenses, and ongoing research and development expenses.
The Dow Chemical Company. In June 1999, we entered into a research collaboration with Dow Chemical to develop a BeadArray designed for the identification of chemical solvents prior to entry into Dow Chemical's manufacturing facilities. If successful, Dow Chemical could use our technology as a rapid and reliable method for performing a quality control check on their incoming raw materials. We retain all rights to commercialize any resulting products.
Third Wave Technologies, Inc. In December 1999, we entered into a research collaboration with Third Wave Technologies to adapt their proprietary assay format, called Invader, to our BeadArray platform. If the research collaboration is successful, Illumina and Third Wave Technologies may negotiate a commercialization agreement. In January 2000, PE Biosystems announced plans to acquire Third Wave Technologies.
PyroSequencing, Inc. In November 1999, we entered into a research collaboration with PyroSequencing to adapt their proprietary assay format, called PyroSequencing, to our BeadArray platform. Pyrosequencing provides instrumentation and chemistry to perform DNA sequencing and SNP genotyping. If the research collaboration is successful, Illumina and PyroSequencing may negotiate a commercialization agreement.
We also have entered into collaborations with Tufts University, The Australian National University, Stanford University and The University of California, San Diego to develop new applications for our BeadArray technology.
Intellectual Property
We have an extensive patent portfolio, including ownership of, or exclusive licenses to, 12 issued U.S. patents and 44 pending U.S. patent applications, including two allowed applications, some of which derive from a common parent application. Our issued patents, which cover fiber optic arrays, bead array technology and chemical detection, expire between 2010 and 2017. We are seeking to extend this patent protection on our BeadArray, Oligator and related technologies. We have received or filed counterparts for many of these patents and applications in one or more foreign countries.
We also rely upon copyright protection, trade secrets, know-how, continuing technological innovation and licensing opportunities to develop and maintain our competitive position. Our success will depend in part on our ability to obtain patent protection for our products and processes, to preserve our copyrights and trade secrets, to operate without infringing the proprietary rights of third parties and to acquire licenses related to enabling technology or products used with our BeadArray and Oligator technologies.
We are party to various exclusive and non-exclusive license agreements with third parties which grant us rights to use key aspects of our BeadArray and Oligator technologies. For example, we have an exclusive license from Tufts University to patents filed by Dr. David Walt, a Director, the Chairman of our Scientific Advisory Board and one of our founders. Our exclusive licenses expire with the termination of the underlying patents, which will occur between 2010 and 2017. These exclusive licenses are critical to our business.
U.S. Government Grants
Government grants allow us to fund internal scientific programs and exploratory research. We retain ownership of all intellectual property and commercial rights generated during these projects, subject to a non-exclusive, non-transferable, paid-up license to practice, for or on behalf of the United States, inventions made with federal funds. This license is retained by the U.S. government as provided by applicable statutes and regulations. We have grants from the National Institutes of Health as outlined below.
Grant Title Grant Date
------------------------------------------------------------------------------
Decoding randomly ordered arrays.............................. February 1999
Gene expression analysis on randomly ordered DNA arrays....... March 1999
Parallel array processor...................................... August 1999
Randomly ordered arrays for SNP genotyping.................... September 1999
Compact device for solvent identification..................... September 1999
Pyrosequencing arrays......................................... March 2000
Optical binary encoding of assembled arrays................... June 2000
Automated DNA synthesizer using tilted plate technology....... July 2000
|
Manufacturing
We manufacture our BeadArrays and Array of Arrays in-house and intend to rely upon PE Biosystems to manufacture the imaging system and reagent kits for our first product. We currently depend upon outside suppliers for materials used in the manufacture of our BeadArrays and Array of Arrays. We intend to continue, and may extend, the outsourcing of portions of our manufacturing process to subcontractors where we determine it is in our best commercial interests.
We have designed our manufacturing facility to optimize material flow and personnel movement. We adhere to access and safety standards required by federal, state and local health ordinances, such as standards for the use, handling and disposal of hazardous substances. This year, we will implement a company-wide enterprise resource planning system to manage and control our manufacturing resources.
Competition
We are aware of other life sciences companies or companies with life sciences divisions, such as Affymetrix, Agilent, Aclara Biosciences, Caliper Technologies, Ciphergen, Genometrix, Luminex, Orchid Biosciences and Sequenom, that have, or are developing, assay technologies for the SNP genotyping, gene expression profiling and proteomics markets. Each of these markets is very competitive. Many of our potential competitors in these markets have greater commercial experience and substantially greater financial, technical and personnel resources than we do. We expect new competitors to emerge and the intensity of competition to increase in the future.
Employees
As of March 31, 2000, we had a total of 60 employees, 20 of whom hold Ph.D. or M.D. degrees and 44 of whom are engaged in full-time research and development activities. We plan to expand our research and development programs as well as corporate collaborations and will hire additional staff as these initiatives are implemented. None of our employees is represented by a labor union. We consider our employee relations to be good.
Facilities
We lease an aggregate of approximately 15,000 square feet of office and laboratory facilities at 9390 Towne Centre Drive in San Diego, California. Our lease expires in August 2001. We are currently in negotiations to lease an additional 20,000 square feet in the same facility, through August 2002. We are also in negotiations to lease a total of 97,000 square feet in two buildings that will be constructed over the next year. The lease will contain an option to purchase the buildings together with additional land on the same site. If these negotiations are successfully completed we would be obligated to provide funding of approximately $6 million at the time the lease is executed, in the form of an interest bearing, secured loan with a term of approximately one year. In addition, we would be obligated to provide a secured letter of credit.
Legal Proceedings
We are not currently a party to any material legal proceedings.
MANAGEMENT
Directors and Executive Officers
Our directors and executive officers as of March 31, 2000 are as follows:
Name Age Position
---- --- --------
Jay T. Flatley..................... 47 President, Chief Executive Officer and
Director
Timothy M. Kish.................... 48 Vice President, Chief Financial
Officer
David L. Barker, Ph.D.............. 59 Vice President, Chief Scientific
Officer
John R. Stuelpnagel, DVM........... 42 Founder, Vice President of Business
Development and Director
Mark S. Chee, Ph.D. ............... 38 Founder, Vice President of Genomics
Robert C. Kain..................... 39 Vice President of Engineering
Noemi C. Espinosa.................. 41 Vice President of Intellectual
Property
Anthony W. Czarnik, Ph.D. ......... 42 Founder, Research Fellow, Former Chief
Scientific Officer
Lawrence A. Bock................... 40 Founder
Charles M. Hartman(1).............. 58 Director
Robert T. Nelsen(2)................ 36 Director
George Poste, DVM, Ph.D. .......... 55 Director
William H. Rastetter, Ph.D.(1)(2).. 51 Director
David R. Walt, Ph.D. .............. 47 Founder, Director, Chairman of the
Scientific Advisory Board
|
Jay T. Flatley has served as our President, Chief Executive Officer and a Director since October 1999. Prior to joining Illumina, Mr. Flatley was co- founder, President, Chief Executive Officer and a Director of Molecular Dynamics, a life sciences company, from May 1994 to September 1999. He served in various other positions with that company from 1987 to 1994. From 1985 to 1987, Mr. Flatley was Vice President of Engineering and Vice President of Strategic Planning at Plexus Computers, a UNIX computer company. Mr. Flatley holds a B.A. in Economics from Claremont McKenna College and a B.S. and M.S. in Industrial Engineering from Stanford University.
Timothy M. Kish has served as our Vice President and Chief Financial Officer since May 2000. Prior to joining us, Mr. Kish was Vice President, Finance and Chief Financial Officer at Biogen, Inc., a biopharmaceutical company, from September 1993 to April 2000. He served as Corporate Controller of that company from 1986 to 1993. From 1983 to 1986, Mr. Kish was Director of Finance at Allied Health & Scientific Products Company, a subsidiary of Allied-Signal Corporation. Mr. Kish holds a B.B.A. from Michigan State University and an M.B.A. from the University of Minnesota.
David L. Barker, Ph.D. has served as our Vice President and Chief Scientific Officer since March 2000. Prior to joining us, Dr. Barker was Vice President and Chief Science Advisor at Amersham Pharmacia Biotech, a life sciences company, from September 1998 to March 2000. From May 1997 to September 1998, Dr. Barker was Vice President of Research and Business Development of Molecular Dynamics. From 1992 to 1997, he was Vice President of Scientific Development. From 1988 to 1995, he held various other positions with that company. Dr. Barker holds a B.S. in Chemistry from California Institute of Technology and received his Ph.D. in Biochemistry from Brandeis University.
John R. Stuelpnagel, D.V.M., one of our founders, is our Vice President of Business Development, acting Chief Financial Officer and a Director since April 1998. From April 1998 to
October 1999, he served as Illumina's acting President and Chief Executive Officer. While founding Illumina, Dr. Stuelpnagel was an associate with CW Group, a venture capital firm, from June 1997 to September 1998 and with Catalyst Partners, a venture capital firm, from August 1996 to June 1997. Dr. Stuelpnagel received his B.S. in Biochemistry and his Doctorate in Veterinary Medicine from the University of California, Davis and his M.B.A. from the University of California, Los Angeles.
Mark S. Chee, Ph.D., one of our founders, has served as our Vice President of Genomics since June 1998. Prior to founding Illumina, Dr. Chee served as Director of Genetics Research at Affymetrix, a life sciences company, from April 1997 to July 1997 and in other positions from 1993 to April 1997. Dr. Chee received his B.Sc. in Biochemistry from the University of New South Wales and his Ph.D. from the University of Cambridge.
Robert C. Kain has served as our Vice President of Engineering since December 1999. Prior to joining us, Mr. Kain was Senior Director of Engineering at Molecular Devices from July 1999 to December 1999. Previously, Mr. Kain served as Director of Microarray Engineering at Molecular Dynamics from August 1998 to July 1999 and in other positions from August 1996 to August 1998. From 1983 to 1988, Mr. Kain was employed at DatagraphiX, an information technology equipment company. Mr. Kain received his B.S. in Physics from San Diego State University and his M.B.A. from St. Mary's College.
Noemi C. Espinosa has served as our Vice President of Intellectual Property since May 2000. Prior to joining us, Ms. Espinosa was a partner with the firm of Brobeck, Phleger & Harrison LLP from January 1992 to April 2000, having joined the firm in 1990. From 1983 to 1990, Ms. Espinosa was associated with the intellectual property firm of Townsend & Townsend. Ms. Espinosa holds a B.S. in Chemical Engineering and a J.D. from the University of California, Hastings College of Law. She is registered to practice before the United States Patent and Trademark Office.
Anthony W. Czarnik, Ph.D., one of our founders, has been a Research Fellow at Illumina since March 2000. From June 1998 to March 2000, he served as Illumina's Chief Scientific Officer. Prior to joining Illumina, Dr. Czarnik was Vice President of Chemistry at IRORI Quantum Microchemistry from 1996 to 1998 and Director of Bioorganic Chemistry at Parke-Davis from 1993 to 1996. Previously, he was a professor at The Ohio State University. Dr. Czarnik received his B.S. in Biochemistry from the University of Wisconsin-Madison and his Ph.D. from the University of Illinois at Urbana/Champaign.
Lawrence A. Bock, one of our founders, served as a Director from June 1998 to March 2000. He has been a General Partner of CW Group, a medical venture capital fund, since June 1998. From 1988 to 1998, Mr. Bock was General Partner of Avalon Ventures, a venture capital firm. He is also founder and Director of FastTrack Systems, Inc. Mr. Bock holds a B.S. in Biochemistry from Bowdoin College and an M.B.A. from the University of California, Los Angeles.
Charles M. Hartman has been a Director since March 2000. He has been a General Partner of CW Group since April 1983. Mr. Hartman is a Director of Caliper Technologies Corp. (Nasdaq: CALP). From 1966 to 1983, Mr. Hartman served in various positions at Johnson & Johnson, a healthcare company, where he was responsible for identification, evaluation and negotiation of situations ranging from single product opportunities to company acquisitions, both domestically and internationally. Mr. Hartman is a Director of The Hastings Center, a non-profit organization devoted to the study of bioethical issues in medicine and the life sciences. Mr. Hartman holds a B.S. in Chemistry from the University of Notre Dame and an M.B.A. from the University of Chicago.
Robert T. Nelsen has been a Director since June 1998. Since July 1994, Mr. Nelsen has served as a senior principal of venture capital funds associated with ARCH Venture Partners, a venture capital firm, including ARCH Venture Fund III, L.P., a stockholder of the Company. From April 1987 to July 1994, Mr. Nelsen was Senior Manager at ARCH Development Corporation, a company affiliated with the University of Chicago, where he was responsible for new company formation.
Mr. Nelsen is a Director of Caliper Technologies Corp. (Nasdaq: CALP). Mr. Nelsen holds a B.S. in Biology and Economics from the University of Puget Sound and an M.B.A. from the University of Chicago.
George Poste, D.V.M., Ph.D. has been a Director since February 2000. Dr. Poste was Chief Science and Technology Officer at SmithKline Beecham, a biopharmaceutical company, from October 1981 to December 1999. Dr. Poste is a Director of SmithKline Beecham (Nasdaq: SBH) and Maxygen (Nasdaq: MAXY). Prior to being appointed Chief Science and Technology Officer, Dr. Poste was President of Research and Development at SmithKline Beecham. Dr. Poste is also a Research Professor at the University of Pennsylvania and holds the William Pitt Fellowship at Pembroke College, Cambridge University. He was awarded a D.Sc. for meritorious research contributions by the University of Bristol in 1987. Dr. Poste received his Doctorate in Veterinary Medicine and his Ph.D. in Virology from the University of Bristol.
William H. Rastetter, Ph.D. has been a Director since November 1998. Since December 1986, Dr. Rastetter has served as President and Chief Executive Officer of IDEC Pharmaceuticals, a biopharmaceutical company. Dr. Rastetter is a Director of Spiros Development (Nasdaq: SDCO). Additionally, he has served as Chairman of the Board of Directors of IDEC Pharmaceuticals since May 1996. From 1982 to 1986, Dr. Rastetter served in various positions at Genentech and previously he was a professor at the Massachusetts Institute of Technology. Dr. Rastetter holds a S.B. in Chemistry from the Massachusetts Institute of Technology and received his M.A. and Ph.D. in Chemistry from Harvard University.
David R. Walt, Ph.D. has been a Director and Chairman of the Scientific Advisory Board since June 1998. Dr. Walt has been the Robinson Professor of Chemistry at Tufts University since September 1995. Dr. Walt has published over 100 papers and holds over 20 patents. Dr. Walt holds a B.S. in Chemistry from the University of Michigan and received his Ph.D. in Organic Chemistry and Pharmacology from the State University of New York at Stony Brook.
Scientific Advisory Board
The following individuals are members of our Scientific Advisory Board:
Christopher C. Goodnow, Ph.D. is Professor at the John Curtin School of Medical Research at The Australian National University where he is the Founder and Director of the Medical Genome Centre. Previously, he was an Assistant Investigator of the Howard Hughes Medical Institute and Assistant Professor of Microbiology and Immunology at Stanford University Medical School. Dr. Goodnow has been a recipient of numerous awards and honors, including the Searle Scholar and the University Medal from the University of Sydney. Dr. Goodnow received his B.V.Sc. and B.Sc. (Vet) in Veterinary Science from the University of Sydney and his Ph.D. in Immunology from Stanford University.
Leroy Hood, M.D., Ph.D. is the William Gates III Professor of Biomedical Sciences, Director of a National Science Foundation Science and Technology Center and Chairman of the Department of Molecular Biotechnology at the University of Washington School of Medicine. Dr. Hood is a member of the National Academy of Sciences and the American Association of Arts and Sciences. Among his numerous honors and awards are the Louis Pasteur Award for Medical Innovation, the Albert Lasker Basic Medical Research Award, the Cetus Award for Biotechnology, the American College of Physician Award, Ciba-Geigy/Drew Award, Lynen Medal and the University Distinguished Alumnus Award from the Johns Hopkins University School of Medicine. Dr. Hood has a M.D. from the Johns Hopkins Medical School and a Ph.D. in Biochemistry from the California Institute of Technology.
Terrence J. Sejnowski, Ph.D. is an Investigator with the Howard Hughes Medical Institute and a Professor at The Salk Institute for Biological Studies where he directs the Computational
Neurobiology Laboratory. He is also Professor of Biology and Adjunct Professor in the Departments of Physics, Neurosciences, Psychology, Cognitive Science, and Computer Science and Engineering at the University of California, San Diego. Dr. Sejnowski has been the recipient of numerous honors and awards including the Presidential Young Investigator Award, the Wright Prize from the Harvey Mudd College and the Sherman Fairchild Distinguished Scholar Award at the California Institute of Technology. Dr. Sejnowski received a B.S. in Physics from the Case-Western Reserve University, a M.A. in Physics from Princeton University, and a Ph.D. in Physics from Princeton University.
Paul R. Schimmel, Ph.D. is Professor and Member at The Skaggs Institute for Chemical Biology at The Scripps Research Institute. He formerly was the John D. and Catherine T. MacArthur Professor of Biochemistry and Biophysics in the Department of Biology at The Massachusetts Institute of Technology. He received the Pfizer Award in enzyme chemistry from the American Chemical Society and was named co-recipient of the Biophysical Society Emily M. Gray Award. Dr. Schimmel is a member of the National Academy of Sciences and the American Academy of Arts and Sciences. Dr. Schimmel received his A.B. degree in pre-medicine from Ohio Weslyan University and his Ph.D. in Biophysical Chemistry from The Massachusetts Institute of Technology.
W. Clark Still, Ph.D. is Mitchell Professor of Chemistry at Columbia University. He is a recipient of numerous awards and honors including Science Digest's 100 Brightest Scientists Under 40, the National Science Foundation's Alan T. Waterman Award, the American Chemical Society's Cope Scholar and Computers in Chemistry Awards, California Institute of Technology's Buchman Award, Frankfurt University's Rolf Sammet Award, and Nagoya University's Nagoya Medal of Organic Chemistry. He is a Fellow of the American Academy of Arts and Sciences, the Japan Society for the Promotion of Science and the Alfred P. Sloan Society. He received his B.S. in Chemistry and his Ph.D. in Organic Chemistry from Emory University.
Board Composition and Committees
Our board of directors currently consists of seven members. Prior to the closing of this offering, our board of directors will be divided into three classes, with each director serving a three-year term and one class being elected at each year's annual meeting of stockholders. Directors Hartman and Walt will be in the class of directors whose initial term expires at the 2001 annual meeting of stockholders. Directors Stuelpnagel and Nelsen will be in the class of directors whose initial term expires at the 2002 annual meeting of the stockholders. Directors Flatley, Poste and Rastetter will be in the class of directors whose initial term expires at the 2003 annual meeting of stockholders.
Our board of directors currently has an audit committee and a compensation committee. Directors Hartman and Rastetter are currently members of the audit committee and we will be appointing a third member. The audit committee reviews our internal accounting procedures and consults with and reviews the services provided by our independent accountants. Directors Nelsen and Rastetter currently are members of the compensation committee. The compensation committee reviews and recommends to the board of directors the compensation and benefits for all of our officers and establishes and reviews general policies relating to compensation and benefits for our other employees.
Director Compensation
We reimburse our non-employee directors for their expenses incurred in connection with attending board and committee meetings but do not compensate them for their services as board or committee members. We have in the past granted non-employee directors options to purchase our common stock pursuant to the terms of our stock plan, and our board continues to have the discretion to grant options to new and continuing non-employee directors. In addition, several directors have purchased shares of our common stock pursuant to restricted stock purchase agreements, subject to a repurchase right in our favor. For a discussion of each director's restricted stock purchase agreement, see "Related Party Transactions."
In July 2000, our stockholders approved guidelines for the grant of stock options under our 2000 Stock Option Plan, as amended, to directors who are not our officers or employees. These guidelines provide that such directors will receive:
. one-time option grants of 20,000 shares vesting annually over four years upon joining the board which are to be granted on the date of the first board meeting attended at the fair market value of one share of our common stock on the date of grant; and
. annual option grants of 10,000 shares vesting annually over four years which are to be granted on the date of each annual stockholder meeting following the closing of this offering at the fair market value of one share of our common stock on the date of grant.
Executive Compensation
The following table sets forth the compensation earned for services rendered to us in all capacities by our chief executive officer and our four most highly compensated executive officers whose total cash compensation exceeded $100,000--collectively, the "Named Executive Officers"--for the year ended December 31, 1999.
Summary 1999 Compensation Table
Annual Compensation Long-Term
($) Compensation
--------------------- ------------
Securities
Underlying All Other
Name and Principal Positions Salary Bonus Other Options (#) Compensation
---------------------------- ------- ------ ------ ------------ ------------
Jay T. Flatley, President
and Chief Executive
Officer(1)................. 55,859 -- 11,179(2) -- --
John R. Stuelpnagel, Vice
President of Business
Development................ 141,500 12,000 -- -- --
Mark S. Chee, Vice President
of Genomics................ 145,000 7,000 -- -- --
Anthony W. Czarnik, former
Chief Scientific
Officer(3)................. 185,000 -- -- -- --
Richard J. Pytelewski,
former Vice President of
Operations................. 158,000 -- 55,025(4) -- --
|
(3) Dr. Czarnik is currently a Research Fellow.
(4) This amount represents reimbursement for relocation costs.
Purchases of Restricted Common Stock
We have not granted any options to the named executive officers. However, each named executive officer has purchased shares of our common stock subject to a repurchase right in our favor. The repurchase right entitles us to repurchase unvested shares at their original exercise price on termination of the executive officer's services with us. Our repurchase rights lapse over time on employment anniversary dates and upon achievement of business milestones. For a discussion of each executive officer's restricted stock purchase agreement, see "Related Party Transactions."
Stock Plans
1998 Incentive Stock Plan
Our 1998 Incentive Stock Plan was adopted by our board of directors in April 1998 and approved by our stockholders in April 1999. The stock plan was amended in October 1999 and
February 2000. A total of 5,750,000 shares of common stock have been reserved for issuance under our stock plan.
The 1998 Incentive Stock Plan provides for grants of incentive stock options to our employees including officers and employee directors and nonstatutory stock options to our consultants including nonemployee directors. The purpose of our stock plan is to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to our employees and consultants and to promote the success of our business. At the request of the board of directors, the compensation committee administers our stock plan and determines the optionees and the terms of options granted, including the exercise price, number of shares subject to the option and the exercisability thereof.
The term of options granted under the 1998 Incentive Stock Plan is stated in the option agreement. However, the term of an incentive stock option may not exceed ten years and, in the case of an option granted to an optionee who owns more than 10 percent of our outstanding stock at the time of grant, the term of an option may not exceed five years. Options granted under the 1998 Incentive Stock Plan vest and become exercisable as set forth in each option agreement.
With respect to any optionee who owns more than 10% of our outstanding stock, the exercise price of any stock option granted must be at least 110% of the fair market value on the grant date.
No incentive stock options may be granted to an optionee, which, when combined with all other incentive stock options becoming exercisable in any calendar year that are held by that person, would have an aggregate fair market value in excess of $100,000.
The 1998 Incentive Stock Plan will terminate in April 2008, unless our board of directors terminates it sooner.
As of March 31, 2000, we had issued 392,381 shares of common stock upon the exercise of options granted under our stock option plan, we had outstanding options to purchase 932,485 shares of common stock at a weighted average exercise price of $0.34 per share and 522,384 shares remain available for future option grants under our stock option plan. On the effective date of the Company's registration statement, the 1998 Plan shall terminate and all reserved but unissued shares shall be reserved for issuance under our 2000 Stock Plan.
2000 Stock Plan
Our board of directors adopted the 2000 Stock Plan in June 2000, and our stockholders subsequently approved it. This plan provides for the grant of incentive stock options to our employees and nonstatutory stock options and stock purchase rights to our employees, directors and consultants. As of June 2000, a total of 4,000,000 shares of our common stock were reserved for issuance pursuant to our 2000 Stock Plan.
No options have yet been issued pursuant to the 2000 Stock Plan. The number of shares reserved for issuance under our 2000 Stock Plan will increase annually on the first day of the Company's fiscal year beginning in 2001 by an amount equal to the lesser of 5% of the outstanding shares of our common stock on the last day of the immediately preceding fiscal year, 1,500,000 shares or such lesser amount as our board of directors may determine.
Our board of directors or a committee of our board administers the 2000 Stock Plan. The committee may consist of two or more "outside directors" to satisfy certain tax and securities requirements. The administrator has the power to determine the terms of the options or stock purchase rights granted, including the exercise price, the number of shares subject to each option or
stock purchase right, the exercisability of the options and the form of consideration payable upon exercise. The administrator determines the exercise price of options granted under our stock option plan, but with respect to incentive stock options, the exercise price must at least be equal to the fair market value of our common stock on the date of grant. Additionally, the term of an incentive stock option may not exceed ten years. The administrator determines the term of all other options. No optionee may be granted an option to purchase more than 500,000 shares in any fiscal year. In connection with his or her initial service, an optionee may be granted an additional option to purchase not more than 1,000,000 shares of our common stock. After termination of one of our employees, directors or consultants, he or she may exercise his or her option for the period of time stated in the option agreement. If termination is due to death or disability, the option will generally remain exercisable for 12 months following such termination. In all other cases, the option will generally remain exercisable for 3 months. However, an option may never be exercised later than the expiration of its term.
The administrator determines the exercise price of stock purchase rights granted under our 2000 Stock Plan. Unless the administrator determines otherwise, the restricted stock purchase agreement will grant us a repurchase option that we may exercise upon the voluntary or involuntary termination of the purchaser's service with us for any reason (including death or disability). The purchase price for shares we repurchase will generally be at the original price paid by the purchaser. The administrator determines the rate at which our repurchase option will lapse. Our stock option plan generally does not allow for the transfer of options or stock purchase rights and only the optionee may exercise an option and stock purchase right during his or her lifetime.
Our stock option plan provides that in the event of our merger with or into another corporation or a sale of substantially all of our assets, the successor corporation will assume or substitute for each option or stock purchase right. If the outstanding options or stock purchase rights are not assumed or substituted for, all outstanding options and stock purchase rights become fully vest and exercisable. Our stock option plan will automatically terminate in 2010, unless we terminate it sooner. In addition, our board of directors has the authority to amend, suspend or terminate the stock option plan provided it does not adversely affect any option previously granted under our stock option plan.
2000 Employee Stock Purchase Plan
Our 2000 employee stock purchase plan was adopted by our board of directors and approved by our stockholders in February 2000 and August 2000, respectively, and will become effective upon the closing of this offering. We have reserved a total of 300,000 shares of common stock for issuance under the 2000 employee stock purchase plan, together with an annual increase in the number of shares reserved thereunder beginning on the first day of our fiscal year commencing January 1, 2001 in an amount equal to the lesser of:
. 1.5 million shares;
. 3% of our outstanding common stock on the last day of the prior fiscal year; or
. an amount determined by our board of directors.
Our employee stock purchase plan is administered by the board of directors and is intended to qualify under Section 423 of the Internal Revenue Code. Our employees, including our officers and employee directors but excluding our five percent or greater stockholders, are eligible to participate if they are customarily employed for at least 20 hours per week and for more than five months in any calendar year. Our employee stock purchase plan permits eligible employees to purchase common stock through payroll deductions, which may not exceed the lesser of 15% of an employee's compensation, where compensation is defined on Form W-2, or $25,000.
Our employee stock purchase plan will be implemented in a series of overlapping 24 month offering periods, and each offering period consists of four six month purchase periods. The initial offering period under our employee stock purchase plan will begin on the effective date of this offering, and the subsequent offering periods will begin on the first trading day on or after February 1 and August 1 of each year. Each participant will be granted an option on the first day of the offering period and the option will be automatically exercised on the date six months later, the end of a purchase period, throughout the offering period. If the fair market value of our common stock on any purchase date is lower than the fair market value on the start date of that offering period, then all participants in that offering period will be automatically withdrawn from that offering period and re-enrolled in the immediately following offering period. The purchase price of our common stock under our employee stock purchase plan will be 85 percent of the lesser of the fair market value per share on the start date of the offering period or at the end of the purchase period. Employees may end their participation in an offering period at any time, and their participation ends automatically on termination of employment with our company.
Our employee stock purchase plan will terminate in 2010, unless our board of directors terminates it sooner.
401(k) Plan
In 1998, we adopted a Retirement Savings and Investment Plan, the 401(k)
Plan, covering our full-time employees located in the United States. The 401(k)
Plan is intended to qualify under Section 401(k) of the Internal Revenues Code,
so that contributions to the 401(k) Plan by employees or by us and the
investment earnings thereon are not taxable to the employees until withdrawn.
If our 401(k) Plan qualifies under Section 401(k) of the Internal Revenues
Code, our contributions will be deductible by us when made. Our employees may
elect to reduce their current compensation by up to the statutorily prescribed
annual limit of $10,500 in 2000 and to have those funds contributed to the
401(k) Plan. The 401(k) Plan permits us, but does not require us, to make
additional matching contributions on behalf of all participants. To date, we
have not made any contributions to the 401(k) Plan.
Employment Agreements and Change in Control Arrangements
We have not entered into employment or severance agreements with any of our officers or employees other than Dr. Czarnik. We have agreed to provide Dr. Czarnik with severance compensation for up to twelve months in an amount equal to his then annual base salary in the event of his termination without cause. We entered into an agreement with Richard Pytelewski, our former Vice President of Operations, to serve as a consultant to Illumina. Pursuant to that agreement, we paid Mr. Pytelewski his salary through the end of his consultancy in June 2000, and issued him 30,000 shares of common stock at that time.
RELATED PARTY TRANSACTIONS
Stock Issuances to our Directors, Officers and Principal Stockholders
In June 1998, we sold 2,499,998 shares of our Series A preferred stock at a price per share of $0.30. In November 1998, we sold 9,336,299 shares of our Series B preferred stock at $0.926 per share. In November and December 1999, we sold 7,000,000 shares of our Series C preferred stock at $4.00 per share. All of our preferred stock is convertible into shares of our common stock on a one- for-one basis.
Since our inception, we have from time to time sold shares of our common stock, at per share prices ranging from $0.01 per share to $1.00, to our directors, officers, founders and consultants, subject to repurchase rights in our favor that lapse over specified periods, usually five years, subject to earlier lapse in some cases upon the achievement of specified milestones by Illumina. The repurchase right entitles us to repurchase shares at their original purchase price on termination of a purchaser's services with us. Upon the closing of an acquisition of Illumina for cash or publicly traded securities, the lapsing of our repurchase right accelerates as to 50% of each officer's shares of common stock then subject to our repurchase right and, with respect to the remaining 50%, on the first anniversary of the closing date of the acquisition. If the acquirer terminates the officer without cause within one year of the closing date, our repurchase right lapses with respect to all shares.
Listed below are those persons who participated in the transactions described above who are our executive officers or directors or who beneficially own five percent or more of our securities.
Common Stock Convertible Preferred Stock
----------------------- -------------------------------------------
Aggregate Aggregate
Shares Consideration Series A Series B Series C Consideration
(#) ($) (#) (#) (#) ($)
--------- ------------- --------- --------- --------- -------------
Executive Officers &
Directors
Jay T. Flatley(1)....... 1,000,000 90,000 -- -- 12,500 50,000
Timothy M. Kish(2)...... 375,000 375,000 -- -- -- --
David L. Barker,
Ph.D.(3)............... 250,000 100,000 -- -- -- --
John R. Stuelpnagel,
DVM(4)................. 550,000 49,750 72,399 107,959 6,250 146,720
Mark S. Chee, Ph.D.(5).. 550,000 44,750 5,733 367,060 7,500 371,719
Anthony W. Czarnik,
Ph.D.(6)............... 425,000 6,250 6,551 -- -- 1,965
Robert C. Kain(7)....... 150,000 37,500 -- -- -- --
Noemi C. Espinosa(8).... 215,000 215,000 -- -- -- --
Richard J.
Pytelewski(9).......... 109,167 3,275 -- -- 5,000 20,000
Lawrence A. Bock(10).... 68,750 688 -- -- -- --
Charles M. Hartman(10).. 68,750 688 -- -- -- --
George Poste, DVM,
Ph.D(11)............... 100,000 40,000 -- -- -- --
William H. Rastetter,
Ph.D(12)............... 75,000 14,500 -- -- -- --
David R. Walt,
Ph.D.(13).............. 1,000,000 10,000 266,378 107,960 -- 179,914
5% Stockholders
Entities affiliated with
CW Group(14)........... -- -- 1,770,302 2,375,099 575,000 5,031,090
ARCH Venture Fund III,
L.P. (15).............. -- -- 345,302 2,644,997 625,000 5,053,590
Entities affiliated with
Venrock Associates..... -- -- -- 2,644,997 625,000 4,950,000
TGI Fund II, L.C. ...... -- -- -- 998,621 750,000 3,925,000
PE Corporation.......... -- -- -- -- 1,250,000 5,000,000
|
(1) Mr. Flatley purchased his shares of common stock in October 1999, at a per share price of $0.09. Our right to repurchase 750,000 of these shares lapses over a five-year period, and our right to repurchase 250,000 of these shares lapses over an eight-year period, subject to earlier lapse upon the achievement of specified milestones by Illumina. The right to repurchase had lapsed as to 20,000 shares as of March 31, 2000.
(2) Mr. Kish purchased his shares of common stock in March 2000, at a per share price of $1.00. Our right to repurchase these shares lapses over a five year period, subject to earlier lapse upon the achievement of specified milestones by Illumina.
(3) Dr. Barker purchased his shares of common stock in March 2000, at a per share price of $0.40. Our right to repurchase these shares lapses over a five-year period, subject to earlier lapse upon the achievement of specified milestones by Illumina.
(4) Dr. Stuelpnagel purchased his shares of common stock in June and August 1998, October 1999 and March 2000, at a per share price of $0.01 to $0.40. We have no repurchase right with respect to 100,000 shares, our right to repurchase 375,000 shares lapses over four- and five-year periods, and our right to repurchase 75,000 of these shares lapses over an eight-year period, subject to earlier lapse upon the achievement of specified milestones by Illumina. The right to repurchase had lapsed as to 92,706 shares as of March 31, 2000.
(5) Dr. Chee purchased his shares of common stock in June 1998, October 1999 and March 2000 at a per share price of $0.01 to $0.40. Our right to repurchase 450,000 of these shares lapses over four- and five-year periods, and our right to repurchase 100,000 of these shares lapses over an eight-year period, subject to earlier lapse upon the achievement of specified milestones by Illumina. The right to repurchase had lapsed as to 132,916 shares as of March 31, 2000.
(6) Dr. Czarnik purchased his shares of common stock in June 1998 and October 1999, at a per share price of $0.01 to $0.09. Our right to repurchase 400,000 of these shares lapses over a five-year period, and our right to repurchase 25,000 of these shares lapses over an eight-year period, subject to earlier lapse upon the achievement of specified milestones by Illumina. The right to repurchase had lapsed as to 140,000 shares as of March 31, 2000.
(7) Mr. Kain purchased his shares of common stock in January 2000, at a per share price of $0.25. Our right to repurchase these shares lapses over a five-year period, subject to earlier lapses.
(8) Ms. Espinosa purchased her shares of common stock in March 2000, at a per share purchase price of $1.00. Our right to repurchase these shares lapses over a five-year period, subject to earlier lapse upon the achievement of specified milestones by Illumina.
(9) Mr. Pytelewski purchased his shares of common stock in November 1998 and October 1999, at a per share price of $0.03 to $0.09. Our right to repurchase 250,000 of these shares lapses over a five-year period, and our right to repurchase 25,000 of these shares lapses over an eight-year period, subject to earlier lapse upon the achievement of specified milestones by Illumina. The right to repurchase had lapsed as to 66,666 shares as of March 31, 2000. In June 2000, we issued Mr. Pytelewski 30,000 shares of common stock in connection with the completion of his consultancy.
(10) Mr. Bock, a founder, and Mr. Hartman, a director, purchased their shares of common stock in May 1999 at a per price share of $0.01 upon the exercise of options. Mr. Bock and Mr. Hartman are general partners of CW Group.
(11) Dr. Poste purchased his shares of common stock in February 2000, at a per share price of $0.40. Our right to repurchase these shares lapses over a four-year period, subject to earlier lapse upon the achievement of specified milestones by Illumina. The right to repurchase had lapsed as to 2,083 shares as of March 31, 2000.
(12) Dr. Rastetter purchased his shares of common stock in February 1999 and March 2000, at a per share price of $0.09 to $0.40. Our right to repurchase these shares lapses over four- and five-year periods, subject to earlier lapse upon the achievement of specified milestones by Illumina. The right to repurchase had lapsed as to 12,500 shares as of March 31, 2000.
(13) Dr. Walt purchased his shares of common stock in April 1998, at a per share price of $0.01. Our right to repurchase these shares lapses over a five-year period. The right to repurchase had lapsed as to 533,333 shares as of March 31, 2000.
(14) Lawrence A. Bock and Charles M. Hartman are general partners of CW Group. Mr. Hartman is a Director of Illumina and Mr. Bock is a founder of Illumina.
(15) Robert T. Nelsen, a Director of Illumina, is a managing director of the general partner of ARCH Venture Fund III, L.P.
Upon closing of this offering, all shares of outstanding preferred stock will be automatically converted into shares of common stock. We have entered into an agreement pursuant to which these and other preferred stockholders will have registration rights with respect to their shares of common stock following this offering. For a description of these registration rights, see "Description of Capital Stock."
Other Transactions
We pay license fees to Tufts University in connection with our license of patents filed by Dr. David Walt, one of our directors. Dr. Walt is the Robinson Professor of Chemistry at Tufts. It is our understanding that Tufts University pays a portion of the license fees received from us to Dr. Walt. We have also provided Tufts University with $100,000 in funding for research relating to the development of our BeadArray technology. In addition, we and Tufts University are co-investigators under a research grant for DNA sequencing sponsored by the Department of Energy.
PRINCIPAL STOCKHOLDERS
The following table sets forth information known to us with respect to the beneficial ownership of our common stock as of March 31, 2000 and as adjusted to reflect the sale of common stock offered hereby by:
. each stockholder known by us to own beneficially more than five percent of our common stock;
. each of the named executive officers listed in the Summary Compensation Table on page 40;
. each of our directors; and
.all of our directors and the named executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to stock options and warrants currently exercisable or exercisable within 60 days are deemed to be outstanding for computing the percentage ownership of the person holding these options and the percentage ownership of any group of which the holder is a member, but are not deemed outstanding for computing the percentage of any other person. Except as indicated by footnote, and subject to community property laws where applicable, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. Some of the shares of common stock held by our directors, officers and consultants are subject to repurchase rights in our favor. For a discussion of these repurchase rights, see "Related Party Transactions."
Number of
Shares Percent of Shares
Beneficially Beneficially Owned
Owned Prior to ---------------------------------
Name and Address the Offering Before Offering(1) After Offering
---------------- -------------- ------------------ --------------
CW Group(2)................... 4,991,464 19.5% 16.3%
1041 Third Avenue
New York, NY 10021
ARCH Venture Fund III,
L.P.(3)...................... 3,615,299 14.2 11.8
8725 West Higgins Road, Suite
290
Chicago, IL 60631
Venrock Associates(4)......... 3,269,997 12.8 10.7
30 Rockefeller Plaza, Room
5508
New York, NY 10112
TGI Fund II, L.C. ............ 1,748,621 6.8 5.7
6501 Columbia Center
701 Fifth Avenue
Seattle, WA 98104
David R. Walt(5).............. 1,374,338 5.4 4.5
62 Talbot Avenue
Medford, MA 02155
PE Corporation................ 1,250,000 4.9 4.1
50 Danbury Road
Wilton, CT 06897
Jay T. Flatley(6)............. 992,000 3.9 3.2
Mark S. Chee.................. 921,793 3.6 3.0
John R. Stuelpnagel........... 716,608 2.8 2.3
Anthony W. Czarnik............ 421,551 1.7 1.4
Timothy M. Kish............... 375,000 1.5 1.2
Richard J. Pytelewski......... 280,000 1.1 *
David L. Barker............... 250,000 1.0 *
Noemi C. Espinosa............. 215,000 * *
|
Number of
Shares Percent of Shares
Beneficially Beneficially Owned
Owned Prior to ---------------------------------
Name and Address the Offering Before Offering(1) After Offering
---------------- -------------- ------------------ --------------
Robert C. Kain................ 150,000 * *
George Poste.................. 100,000 * *
709 Swedeland
King of Prussia, PA 19406
William H. Rastetter.......... 75,000 * *
1101 Torreyana Road
San Diego, CA 92121
Charles M. Hartman(2)......... 4,991,464 19.5 16.3
1041 Third Avenue
New York, NY 10021
Lawrence A. Bock (2).......... 4,991,464 19.5 16.3
2187 New Castle Avenue, Suite
101
Cardiff By the Sea, CA 92007
Robert T. Nelsen(3)........... 3,615,299 14.2 11.8
8725 West Higgins Road, Suite
290
Chicago, IL 60631
All directors and named
executive officers as a group
(14 persons)................. 14,478,053 56.7 47.4
|
(1) Percentage ownership before the offering is based on the 25,541,095 shares of common stock outstanding on March 31, 2000, after giving effect to the conversion of all of our preferred stock into shares of our common stock.
(2) Shares shown as owned by CW Group, Charles M. Hartman, a Director of Illumina and a general partner of CW Group and Lawrence A. Bock, a founder of Illumina and a general partner of CW Group; are owned by entities managed by CW Group, partners of CW Group and members of their families. Mr. Hartman and Mr. Bock disclaim beneficial ownership of the shares shown except shares owned directly or attributable to his partnership interest.
(3) Shares shown as owned by ARCH Venture Fund III, L.P. Robert T. Nelsen is a Director of Illumina and a managing director of the general partner of ARCH Venture Fund III, L.P. Mr. Nelsen disclaims beneficial ownership of the shares shown except to the extent of his pecuniary interest therein.
(4) Held by Venrock Associates or entities managed by it.
(5) Includes 303,980 shares owned by Dr. Walt's wife.
(6) Includes 12,000 shares owned by Mr. Flatley's children.
Except as otherwise noted above, the address of each person listed on the table is 9390 Towne Centre Drive, San Diego, California 92121.
DESCRIPTION OF CAPITAL STOCK
General
We are authorized to issue 120,000,000 shares of common stock, $0.01 par value, and 10,000,000 shares of undesignated preferred stock, $0.01 par value.
Common Stock
Assuming the conversion of all of our preferred stock into 18,836,297 shares of common stock, as of March 31, 2000 we had 25,541,095 shares of common stock outstanding that were held of record by approximately 101 stockholders.
The holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Subject to preferences that may be applicable to any outstanding preferred stock, the holders of common stock are entitled to receive ratably any dividends that may be declared from time to time by the board of directors out of funds legally available for that purpose. In the event of our liquidation, dissolution or winding up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities, subject to prior distribution rights of preferred stock then outstanding. The common stock has no preemptive or conversion rights or other subscription rights. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable, and the shares of common stock to be issued upon the closing of this offering will be fully paid and nonassessable.
Preferred Stock
Upon the closing of this offering, our board of directors will have the authority, without action by our stockholders, to designate and issue up to 10,000,000 shares of preferred stock in one or more series. The board of directors may also designate the rights, preferences and privileges of each series of preferred stock; any or all of which may be greater than the rights of the common stock. It is not possible to state the actual effect of the issuance of any shares of preferred stock upon the rights of holders of the common stock until the board of directors determines the specific rights of the holders of the preferred stock. However, these effects might include:
. restricting dividends on the common stock;
. diluting the voting power of the common stock;
. impairing the liquidation rights of the common stock; and
. delaying or preventing a change in control of our company without further action by the stockholders.
We have no present plans to issue any shares of preferred stock.
Warrants
As of March 31, 2000 we had outstanding warrants to purchase 43,183 shares of Series B preferred stock at an exercise price of $0.926 per share. The warrants will expire in November 2005.
Holders of Registration Rights Can Require Us to Register Shares of Our Stock for Resale
The holders of 18,836,297 shares of common stock and 43,183 shares of common stock issuable upon the exercise of warrants or their permitted transferees are entitled to rights with respect to registration of these shares under the Securities Act of 1933, as amended. These rights are provided under the terms of our agreement with the holders of registrable securities. Under these
registration rights, holders of at least a majority of the then outstanding registrable securities may require on two occasions that we register their shares for public resale. We are obligated to register, on two separate occasions, these shares if the holders of a majority of the eligible shares request registration and only if the shares to be registered have an anticipated public offering price of at least $5,000,000. In addition, holders of registrable securities may require that we register their shares for public resale on Form S-3 or similar short-form registration, if we are eligible to use Form S-3 or similar short-form registration, and the value of the securities to be registered is at least $1,000,000. If we elect to register any of our shares of common stock for any public offering, the holders of registrable securities are entitled to include shares of common stock in the registration. However we may reduce the number of shares proposed to be registered in view of market conditions. We will pay all expenses in connection with any registration, other than underwriting discounts and commissions.
Anti-Takeover Effects of Some Provisions of Delaware Law
Provisions of Delaware law and our amended and restated certificate of incorporation and amended bylaws to be in effect upon the closing of this offering could make the acquisition of our company through a tender offer, a proxy contest or other means more difficult and could make the removal of incumbent officers and directors more difficult. We expect these provisions to discourage coercive takeover practices and inadequate takeover bids and to encourage persons seeking to acquire control of our company to first negotiate with our board of directors. We believe that the benefits provided by our ability to negotiate with the proponent of an unfriendly or unsolicited proposal outweigh the disadvantages of discouraging these proposals. We believe the negotiation of an unfriendly or unsolicited proposal could result in an improvement of its terms.
We are subject to Section 203 of the Delaware General Corporation Law, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years following the date the person became an interested stockholder, unless:
. prior to the date of the transaction, the board of directors of the corporation approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
. the stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding (a) shares owned by persons who are directors and also officers, and (b) shares owned by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
. on or subsequent to the date of the transaction, the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66% of the outstanding voting stock which is not owned by the interested stockholder.
Generally, a "business combination" includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. An "interested stockholder" is a person who, together with affiliates and associates, owns or, within three years prior to the determination of interested stockholder status, did own 15% or more of a corporation's outstanding voting securities. We expect the existence of this provision to have an anti-takeover effect with respect to transactions our board of directors does not approve in advance. We also anticipate that Section 203 may also discourage attempts that might result in a premium over the market price for the shares of common stock held by stockholders.
Anti-Takeover Effects of Provisions of Our Charter Documents
Our amended and restated certificate of incorporation to be in effect upon the closing of this offering provides for our board of directors to be divided into three classes serving staggered terms. Approximately one-third of the board of directors will be elected each year. The provision for a classified board could prevent a party who acquires control of a majority of the outstanding voting stock from obtaining control of the board of directors until the second annual stockholders meeting following the date the acquirer obtains the controlling stock interest. The classified board provision could discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of our company and could increase the likelihood that incumbent directors will retain their positions. Our amended and restated certificate of incorporation to be in effect upon the closing of this offering provides that directors may be removed:
. with cause by the affirmative vote of the holders of at least a majority of the outstanding shares of voting stock; or
. without cause by the affirmative vote of the holders of at least 66 2/3% of the then-outstanding shares of the voting stock.
Our amended bylaws to be in effect upon the closing of this offering establish an advance notice procedure for stockholder proposals to be brought before an annual meeting of our stockholders, including proposed nominations of persons for election to the board of directors. At an annual meeting, stockholders may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors. Stockholders may also consider a proposal or nomination by a person who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given to our Secretary timely written notice, in proper form, of his or her intention to bring that business before the meeting. The amended bylaws do not give the board of directors the power to approve or disapprove stockholder nominations of candidates or proposals regarding other business to be conducted at a special or annual meeting of the stockholders. However, our bylaws may have the effect of precluding the conduct of business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer's own slate of directors or otherwise attempting to obtain control of our company.
Under Delaware law, a special meeting of stockholders may be called by the board of directors or by any other person authorized to do so in the amended and restated certificate of incorporation or the amended bylaws. Our amended bylaws authorize a majority of our board of directors, the chairman of the board or the chief executive officer to call a special meeting of stockholders. Because our stockholders do not have the right to call a special meeting, a stockholder could not force stockholder consideration of a proposal over the opposition of the board of directors by calling a special meeting of stockholders prior to such time as a majority of the board of directors believed or the chief executive officer believed the matter should be considered or until the next annual meeting provided that the requestor met the notice requirements. The restriction on the ability of stockholders to call a special meeting means that a proposal to replace the board also could be delayed until the next annual meeting.
Delaware law provides that stockholders may execute an action by written consent in lieu of a stockholder meeting. However, Delaware law also allows us to eliminate stockholder actions by written consent. Elimination of written consents of stockholders may lengthen the amount of time required to take stockholder actions since actions by written consent are not subject to the minimum notice requirement of a stockholder's meeting. However, we believe that the elimination of stockholders' written consents may deter hostile takeover attempts. Without the availability of stockholder's actions by written consent, a holder controlling a majority of our capital stock would not be able to amend our bylaws or remove directors without holding a stockholders meeting. The holder
would have to obtain the consent of a majority of the board of directors, the chairman of the board or the chief executive officer to call a stockholders' meeting and satisfy the notice periods determined by the board of directors. Our amended and restated certificate of incorporation to be in effect upon the closing of this offering provides for the elimination of actions by written consent of stockholders upon the closing of this offering.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is EquiServe.
Nasdaq Stock Market Listing
We have applied to have our common stock listed on the Nasdaq National Market for quotation under the symbol "ILMN".
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our stock. Future sales of substantial amounts of our common stock in the public market following this offering or the possibility of these sales occurring could adversely affect prevailing market prices for our common stock or could impair our ability to raise capital through an offering of equity securities.
After this offering, we will have outstanding 30,541,095 shares of common stock, based upon shares outstanding as of March 31, 2000. All of the shares sold in this offering will be freely tradable without restriction under the Securities Act except for any shares purchased by our "affiliates" as that term is defined in Rule 144 under the Securities Act. The remaining 25,541,095 shares of common stock held by existing stockholders are "restricted" shares as that term is defined in Rule 144 under the Securities Act. We issued and sold the restricted shares in private transactions in reliance upon exemptions from registration under the Securities Act. Restricted shares may be sold in the public market only if they are registered under the Securities Act or if they qualify for an exemption from registration, such as Rule 144 or 701 under the Securities Act, which are summarized below.
Our officers, directors and some of our stockholders, including business partners, who collectively hold an aggregate of 25,088,827 shares, and the underwriters have entered into lock-up agreements in connection with this offering. These lock-up agreements provide that, with limited exceptions, our officers, directors and other stockholders have agreed not to offer, sell, contract to sell, grant any option to purchase or otherwise dispose of any of our shares for a period of 180 days after the effective date of this offering. Goldman, Sachs & Co. may, in its sole discretion and at any time without prior notice, release all or any portion of the shares subject to these lock-up agreements. We have also entered into an agreement with Goldman, Sachs & Co. that we will not offer, sell or otherwise dispose of our common stock until 180 days after the effective date of this offering.
Taking into account the lock-up agreements, the number of shares, other than shares sold in the offering, that will be available for sale in the public market under the provisions of Rules 144 and 701, will be as follows:
. 264,768 shares that become eligible for sale at various times between the date of this offering and the date 90 days after the effective date of this offering;
. an additional 15,862,985 shares that become eligible for sale beginning 180 days after the effective date of this offering;
. an additional 82,372 shares that become eligible for sale upon exercise of vested options 90 days after the date of this prospectus and an additional 41,755 shares that become eligible for sale upon the exercise of vested options 180 days after the date of this prospectus; and
. an additional 9,413,342 shares that become eligible for sale at various times thereafter upon the expiration of applicable holding periods.
Following the expiration of the lock-up period, shares issued upon exercise of options granted by us prior to the completion of this offering will also be available for sale in the public market pursuant to Rule 701 under the Securities Act unless those shares are held by one of our affiliates, directors or officers.
Rule 701 permits resale of shares in reliance upon Rule 144 but without compliance with restrictions of Rule 144, including the holding period requirement. In general, under Rule 144 as currently in effect, a person, or persons whose shares are aggregated, who has beneficially owned restricted shares for at least one year, including the holding period of any prior owner except an
affiliate, would be entitled to sell within any three-month period a number of shares that does not exceed the greater of:
. one percent of the number of shares of common stock then outstanding, which will equal approximately 305,411 shares immediately after the offering, or
. the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a Form 144 with respect to such sale.
Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about us. Under Rule 144(k), a person who is not deemed to have been an affiliate of our company at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years including the holding period of any prior owner except an affiliate, is entitled to sell the shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.
Rule 701, as currently in effect, permits our employees, officers, directors or consultants who purchased shares under a written compensatory plan or contract to resell these shares in reliance upon Rule 144 but without compliance with specific restrictions. Rule 701 provides that affiliates may sell their Rule 701 shares under Rule 144 without complying with the holding period requirement and that non-affiliates may sell these shares in reliance on Rule 144 without complying with the holding period, public information, volume limitation or notice provisions of Rule 144.
We intend to file, shortly after the effectiveness of this offering, a registration statement on Form S-8 under the Securities Act covering all shares of common stock reserved for issuance under the stock plans and subject to outstanding options under our 1998 Incentive Stock Plan. See "Management--Stock Plans". Shares of common stock issued upon exercise of options under the Form S-8 will be available for sale in the public market, subject to Rule 144 volume limitations applicable to affiliates and subject to the contractual restrictions described above. As of March 31, 2000, options to purchase 932,485 shares of common stock were outstanding. Beginning 90 and 180 days after the effective date of this offering, approximately 82,372 shares and 41,755 shares, respectively, issuable upon the exercise of vested stock options will become eligible for sale in the public market, if the options are exercised.
Following this offering, the holders of an aggregate of 18,836,297 shares of outstanding common stock and 43,183 shares of common stock issuable upon the exercise of warrants have the right to require us to register their shares for sale upon meeting specific requirements. See "Description of Capital Stock-- Registration Rights" for additional information regarding registration rights.
UNDERWRITING
Illumina and the underwriters for the offering named below have entered into an underwriting agreement with respect to the shares being offered. Subject to specified conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co., Chase Securities Inc. and SG Cowen Securities Corporation are the representatives of the underwriters.
Number of
Underwriters Shares
------------ ---------
Goldman, Sachs & Co. ..............................................
Chase Securities Inc. .............................................
SG Cowen Securities Corporation ...................................
---------
Total............................................................ 5,000,000
=========
|
Under the terms and conditions of the underwriting agreement, the underwriters are committed to take and pay for all of the shares offered hereby, if any are taken. If the underwriters sell more shares than the total number set forth in the table above, the underwrites have an option to buy up to an additional 750,000 shares from Illumina to cover such sales. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.
The following table shows the per share and total underwriting discounts and commissions to be paid to the underwriters by Illumina. These amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase additional shares.
Paid by Illumina
----------------
No Exercise Full Exercise
----------- -------------
Per Share.......................................... $ $
Total.............................................. $ $
|
Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $ per share from the initial public offering price. The securities dealers may resell any shares purchased from the underwriters to other brokers or dealers at a discount of up to $ per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms.
Illumina and its directors, officers, and principal shareholders have agreed with the underwriters not to dispose of or hedge any of their common stock or securities convertible into or exchangeable for shares of common stock during the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives. This restriction does not apply to any issuances under existing employee benefit plans. See "Shares Eligible For Future Sale" for a discussion of transfer restrictions.
Prior to the offering, there has been no public market for the shares. The initial public offering price will be negotiated among Illumina and the representatives. Among the factors considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, are Illumina's historical performance, estimates of Illumina's business potential and earnings prospects, an assessment of Illumina's management and the consideration of the above factors in relation to market valuation of companies in related businesses.
Application has been made for quotation of the common stock on the Nasdaq National Market under the symbol "ILMN".
In connection with the offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. "Covered" short sales are sales made in an amount not greater than the underwriters' option to purchase additional shares from the issuer in the offering. The underwriters may close out any covered short position either by exercising their option to purchase additional shares or by purchasing shares in the open market. "Naked" short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering
The underwriters also may impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.
Purchases to cover a short position and stabilizing transactions may have the effect of preventing or retarding a decline in the market price of the issuer's stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the Nasdaq National Market, in the over-the-counter market or otherwise.
The underwriters do not expect sales to discretionary accounts to exceed five percent of the total number of shares offered.
At Illumina's request, the underwriters have reserved up to 250,000 shares of the common stock offered hereby for sale, at the initial public offering price, to customers and other friends of Illumina through a directed share program. The number of shares available for sale to the general public will be reduced to the extent these persons purchase the reserved shares. There can be no assurance that any of the reserved shares will be so purchased. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same basis as other shares offered hereby.
A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters. The underwriters may agree to allocate a number of shares to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.
Illumina estimates that its share of the total expenses of the offering, excluding the underwriting discount, will be approximately $1,300,000.
Illumina has agreed to indemnify the underwriters against liabilities, including liabilities under the Securities Act of 1933.
VALIDITY OF THE SECURITIES
The validity of the common stock offered hereby will be passed upon for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California, and for the underwriters by Sullivan & Cromwell, Washington, D.C.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our financial statements at December 31, 1998 and 1999, and for the period from April 28, 1998 (inception) through December 31, 1998 and the year ended December 31, 1999, as set forth in their report, which is included in this Prospectus and in the registration statement. Our financial statements are included in reliance on Ernst & Young LLP's report, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission, Washington, D.C., a registration statement on Form S-1 under the Securities Act with respect to the shares of common stock offered hereby. This prospectus does not contain all the information set forth in the registration statement and the exhibits and schedules thereto. For further information with respect to us and our common stock, you should refer to the registration statement and to the exhibits and schedules filed therewith. A copy of the registration statement may be inspected by anyone without charge at the Public Reference Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of all or any portion of the registration statement may be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of prescribed fees. The public may obtain information on the operation of the public reference room by calling the SEC at 1-800-SEC-0330. The Commission maintains a Web site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the Commission.
INDEX TO FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors.......................... F-2 Balance Sheets as of December 31, 1998 and 1999 and March 31, 2000 (unaudited)............................................................... F-3 Statements of Operations for the period from April 28, 1998 (inception) to December 31, 1998, the year ended December 31, 1999 and the three months ended March 31, 1999 and 2000 (unaudited)................................. F-4 Statements of Stockholders' Equity for the period from April 28, 1998 (inception) to March 31, 2000............................................. F-5 Statements of Cash Flows for the period from April 28, 1998 (inception) to December 31, 1998, the year ended December 31, 1999 and the three months ended March 31, 1999 and 2000 (unaudited)................................. F-7 Notes to Financial Statements.............................................. F-8 |
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Illumina, Inc.
We have audited the accompanying balance sheets of Illumina, Inc. as of December 31, 1998 and 1999, and the related statements of operations, stockholders' equity, and cash flows for the period from April 28, 1998 (inception) to December 31, 1998 and the year ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Illumina, Inc. at December 31, 1998 and 1999, and the results of its operations and its cash flows for the period from April 28, 1998 (inception) to December 31, 1998 and the year ended December 31, 1999, in conformity with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
San Diego, California
|
February 29, 2000,
ILLUMINA, INC.
BALANCE SHEETS
Pro forma
stockholders'
December 31, equity as of
------------------------ March 31, March 31,
1998 1999 2000 2000
----------- ----------- ----------- -------------
(Unaudited) (Unaudited)
ASSETS
Current assets:
Cash and cash
equivalents............ $ 8,233,729 $21,164,114 $15,067,452
Investments, available
for sale............... -- 11,924,163 17,649,664
Accounts receivable..... -- 49,818 22,701
Other receivable........ 102,988 259,117 349,285
Prepaid expenses and
other current assets... 71,532 95,833 398,433
----------- ----------- -----------
Total current assets.. 8,408,249 33,493,045 33,487,535
Property and equipment,
net...................... 1,000 291,314 802,031
Intangible assets, net.... 113,600 75,733 66,266
Other assets.............. 34,566 34,566 74,376
----------- ----------- -----------
Total assets.......... $ 8,557,415 $33,894,658 $34,430,208
=========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable........ $ 129,985 $ 318,219 $ 349,877
Accrued liabilities..... 45,685 292,689 745,974
Note payable............ 1,500 1,500 --
----------- ----------- -----------
Total current
liabilities.......... 177,170 612,408 1,095,851
Deferred revenue.......... -- 1,250,000 2,500,000
Commitments
Stockholders' equity:
Convertible preferred
stock, no par value,
50,000,000 shares
authorized, 11,836,297
and 18,836,297 shares
issued and outstanding
at December 31, 1998
and 1999, respectively;
18,836,297 shares
issued and outstanding
at March 31, 2000
(unaudited); 10,000,000
shares, $.01 par value,
authorized; no shares
issued and outstanding
pro forma (unaudited).. 9,397,998 37,397,998 37,397,998 $ --
Common stock, $.01 par
value, 60,000,000
shares authorized,
3,456,000 and 5,139,083
shares issued and
outstanding at December
31, 1998 and 1999,
respectively; 6,704,798
shares issued and
outstanding at March
31, 2000 (unaudited);
120,000,000 shares
authorized, 25,541,095
shares issued and
outstanding pro forma
(unaudited)............ 34,560 51,391 67,048 255,411
Additional paid-in
capital................ 380,202 5,288,231 22,741,071 59,950,706
Deferred compensation... (286,895) (4,026,916) (18,767,522) (18,767,522)
Unrealized loss on
investments............ -- (10,689) (40,120) (40,120)
Note receivable......... -- (4,500) -- --
Accumulated deficit..... (1,145,620) (6,663,265) (10,564,118) (10,564,118)
----------- ----------- ----------- -----------
Total stockholders'
equity............... 8,380,245 32,032,250 30,834,357 $30,834,357
----------- ----------- ----------- ===========
Total liabilities and
stockholders' equity. $ 8,557,415 $33,894,658 $34,430,208
=========== =========== ===========
|
See accompanying notes.
ILLUMINA, INC.
STATEMENTS OF OPERATIONS
Period from
April 28,
1998 Three months ended
(inception) Year ended March 31,
to December December ----------------------
31, 1998 31, 1999 1999 2000
----------- ----------- --------- -----------
(Unaudited)
Revenue.................. $ -- $ 474,026 $ 42,233 $ 83,205
Costs and expenses:
General and
administrative........ 345,080 1,348,870 164,529 615,341
Research and
development........... 770,901 4,047,876 710,594 2,670,574
Amortization of
deferred compensation
and other non-cash
compensation charges.. 78,187 957,822 100,303 1,185,825
----------- ----------- --------- -----------
Total costs and
expenses............ 1,194,168 6,354,568 975,426 4,471,740
----------- ----------- --------- -----------
Loss from operations..... (1,194,168) (5,880,542) (933,193) (4,388,535)
Interest income, net .... 48,548 400,764 99,221 497,149
Amortization expense..... -- (37,867) (9,467) (9,467)
----------- ----------- --------- -----------
Net loss................. $(1,145,620) $(5,517,645) $(843,439) $(3,900,853)
=========== =========== ========= ===========
Historical net loss per
share, basic and
diluted................. $ (1.71) $ (3.91) $ (1.21) $ (2.31)
=========== =========== ========= ===========
Shares used in
calculating historical
net loss per share,
basic and diluted....... 668,748 1,410,225 696,352 1,685,796
Pro forma net loss per
share, basic and
diluted................. $ (0.40) $ (0.25)
=========== ===========
Shares used in
calculating pro forma
net loss per share,
basic and diluted....... 13,696,522 15,701,190
|
See accompanying notes.
ILLUMINA, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Convertible preferred stock Common stock Additional Unrealized
--------------------------- ----------------- paid-in Deferred loss on Note Accumulated
Shares Amount Shares Amount capital compensation investments receivable deficit
------------- ------------- --------- ------ ---------- ------------ ----------- ---------- -----------
Balance at April
28, 1998......... -- $ -- -- $ -- $ -- $ -- $ -- $ -- $ --
Issuance of
common stock at
$.01 per share
for cash........ -- -- 600,000 6,000 -- -- -- -- --
Issuance of
restricted
common stock at
$.01 to $.03 per
share for cash.. -- -- 2,856,000 28,560 15,120 -- -- -- --
Issuance of
Series A
preferred stock
at $.30 per
share for cash.. 2,499,998 749,999 -- -- -- -- -- -- --
Issuance of
Series B
preferred stock
at $.926 per
share for cash.. 9,212,147 8,533,000 -- -- -- -- -- -- --
Issuance of
Series B
preferred stock
at $.926 per
share for
nGenetics
acquisition..... 124,152 114,999 -- -- -- -- -- -- --
Deferred
compensation
related to stock
options and
restricted
stock........... -- -- -- -- 319,818 (319,818) -- -- --
Amortization of
deferred
compensation.... -- -- -- -- -- 32,923 -- -- --
Deferred
compensation
related to
restricted stock
purchased by
consultants..... -- -- -- -- 45,264 -- -- -- --
Net loss and
comprehensive
loss............ -- -- -- -- -- -- -- -- (1,145,620)
------------- ------------- --------- ------ --------- ----------- ------- ------ ----------
Balance at
December 31,
1998............. 11,836,297 9,397,998 3,456,000 34,560 380,202 (286,895) -- -- (1,145,620)
Issuance of
common stock
including
exercise of
stock options
for cash and
note receivable. -- -- 297,416 2,974 167 -- -- -- --
Issuance of
restricted
common stock for
cash............ -- -- 1,367,000 13,670 109,360 -- -- (4,500) --
Issuance of
common stock for
technology...... -- -- 35,000 350 100,986 -- -- -- --
Repurchase of
restricted
common stock.... -- -- (16,333) (163) (327) -- -- -- --
Issuance of
Series C
preferred stock
at $4.00 per
share for cash.. 7,000,000 28,000,000 -- -- -- -- -- -- --
Deferred
compensation
related to stock
options and
restricted
stock........... -- -- -- -- 4,334,469 (4,334,469) -- -- --
Total
stockholders'
equity
-------------
Balance at April
28, 1998......... $ --
Issuance of
common stock at
$.01 per share
for cash........ 6,000
Issuance of
restricted
common stock at
$.01 to $.03 per
share for cash.. 43,680
Issuance of
Series A
preferred stock
at $.30 per
share for cash.. 749,999
Issuance of
Series B
preferred stock
at $.926 per
share for cash.. 8,533,000
Issuance of
Series B
preferred stock
at $.926 per
share for
nGenetics
acquisition..... 114,999
Deferred
compensation
related to stock
options and
restricted
stock........... --
Amortization of
deferred
compensation.... 32,923
Deferred
compensation
related to
restricted stock
purchased by
consultants..... 45,264
Net loss and
comprehensive
loss............ (1,145,620)
-------------
Balance at
December 31,
1998............. 8,380, 245
Issuance of
common stock
including
exercise of
stock options
for cash and
note receivable. 3,141
Issuance of
restricted
common stock for
cash............ 118,530
Issuance of
common stock for
technology...... 101,336
Repurchase of
restricted
common stock.... (490)
Issuance of
Series C
preferred stock
at $4.00 per
share for cash.. 28,000,000
Deferred
compensation
related to stock
options and
restricted
stock........... --
|
(continued on following page)
ILLUMINA, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (Continued)
Convertible
preferred stock Common stock Additional Unrealized
---------------------- ------------------ paid-in Deferred loss on Note Accumulated
Shares Amount Shares Amount capital compensation investments receivable deficit
---------- ----------- --------- ------- ----------- ------------ ----------- ---------- ------------
Amortization of
deferred
compensation... -- -- -- -- -- 594,448 -- -- --
Deferred
compensation
related to
restricted
stock purchased
by consultants. -- -- -- -- 363,374 -- -- -- --
Comprehensive
loss:
Unrealized loss
on investments. -- -- -- -- -- -- (10,689) -- --
Net loss........ -- -- -- -- -- -- -- -- (5,517,645)
Comprehensive
loss........... -- -- -- -- -- -- -- -- --
---------- ----------- --------- ------- ----------- ------------ -------- ------ ------------
Balance at
December 31,
1999............ 18,836,297 37,397,998 5,139,083 51,391 5,288,231 (4,026,916) (10,689) (4,500) (6,663,265)
Issuance of
common stock
including
exercise of
stock options
for cash
(unaudited).... -- -- 94,965 950 4,839 -- -- -- --
Issuance of
restricted
common stock
for cash
(unaudited).... -- -- 1,290,000 12,900 832,350 -- -- -- --
Issuance of
common stock
for technology
and services
(unaudited).... -- -- 186,000 1,860 689,640 -- -- -- --
Repurchase of
restricted
common stock
(unaudited).... -- -- (5,250) (53) (420) -- -- -- --
Repayment of
note receivable
(unaudited).... -- -- -- -- -- -- -- 4,500 --
Deferred
compensation
related to
stock options
and restricted
stock
(unaudited).... -- -- -- -- 15,611,350 (15,611,350) -- -- --
Amortization of
deferred
compensation
(unaudited).... -- -- -- -- -- 870,744 -- -- --
Deferred
compensation
related to
restricted
stock purchased
by consultants
(unaudited).... -- -- -- -- 315,081 -- -- -- --
Comprehensive
loss:
Unrealized loss
on investments
(unaudited).... -- -- -- -- -- -- (29,431) -- --
Net loss
(unaudited).... -- -- -- -- -- -- -- -- (3,900,853)
Comprehensive
loss
(unaudited).... -- -- -- -- -- -- -- -- --
---------- ----------- --------- ------- ----------- ------------ -------- ------ ------------
Balance at March
31, 2000
(unaudited)..... 18,836,297 $37,397,998 6,704,798 $67,048 $22,741,071 $(18,767,522) $(40,120) $ -- $(10,564,118)
========== =========== ========= ======= =========== ============ ======== ====== ============
Total
stockholders'
equity
-------------
Amortization of
deferred
compensation... 594,448
Deferred
compensation
related to
restricted
stock purchased
by consultants. 363,374
Comprehensive
loss:
Unrealized loss
on investments. (10,689)
Net loss........ (5,517,645)
-------------
Comprehensive
loss........... (5,528,334)
-------------
Balance at
December 31,
1999............ 32,032,250
Issuance of
common stock
including
exercise of
stock options
for cash
(unaudited).... 5,789
Issuance of
restricted
common stock
for cash
(unaudited).... 845,250
Issuance of
common stock
for technology
and services
(unaudited).... 691,500
Repurchase of
restricted
common stock
(unaudited).... (473)
Repayment of
note receivable
(unaudited).... 4,500
Deferred
compensation
related to
stock options
and restricted
stock
(unaudited).... --
Amortization of
deferred
compensation
(unaudited).... 870,744
Deferred
compensation
related to
restricted
stock purchased
by consultants
(unaudited).... 315,081
Comprehensive
loss:
Unrealized loss
on investments
(unaudited).... (29,431)
Net loss
(unaudited).... (3,900,853)
-------------
Comprehensive
loss
(unaudited).... (3,930,284)
-------------
Balance at March
31, 2000
(unaudited)..... $30,834,357
=============
|
See accompanying notes.
ILLUMINA, INC.
STATEMENTS OF CASH FLOWS
Period from
April 28, 1998 Three Months Ended
(inception) to Year ended March 31,
December 31, December -----------------------
1998 31, 1999 1999 2000
-------------- ----------- ---------- -----------
(Unaudited)
Operating activities
Net loss................. $(1,145,620) $(5,517,645) $ (843,439) $(3,900,853)
Adjustments to
reconcile net loss to
net cash used in
operating activities:
Write-off of assets
purchased in exchange
for Series B preferred
stock.................. 399 -- -- --
Write-off of note
payable................ -- -- -- (1,500)
Issuance of stock for
technology and
services............... -- 101,336 11,336 691,500
Depreciation and
amortization........... -- 42,841 9,467 39,243
Amortization of premium
on investments......... -- 53,526 23,436 (44,166)
Amortization of
deferred compensation
and other non-cash
compensation charges... 78,187 957,822 100,303 1,185,825
Changes in operating
assets and
liabilities:
Prepaid expenses and
other current assets. (71,532) (24,301) 23,668 (302,600)
Accounts receivable... -- (49,818) (42,233) 27,117
Other receivable...... (102,988) (156,129) (67,975) (90,168)
Deferred revenue...... -- 1,250,000 -- 1,250,000
Other assets.......... (34,566) -- -- (39,810)
Accounts payable...... 129,985 188,234 (8,465) 31,658
Accrued liabilities... 45,685 247,004 (25,685) 453,285
----------- ----------- ---------- -----------
Net cash used in
operating
activities......... (1,100,450) (2,907,130) (819,587) (700,469)
Investing activities
Purchase of investment
securities.............. -- (16,244,380) (5,324,791) (8,710,766)
Maturity of investment
securities.............. -- 4,256,000 -- 3,000,000
Purchase of property and
equipment............... -- (295,286) -- (540,493)
----------- ----------- ---------- -----------
Net cash used in
investing activities.... -- (12,283,666) (5,324,791) (6,251,259)
Financing activities
Proceeds from note
payable................. 1,500 -- -- --
Proceeds from stock
subscription receivable. -- -- -- 4,500
Proceeds from issuance of
common stock, net of
repurchased shares...... 49,680 121,181 -- 850,566
Net proceeds from
issuance of Series A
preferred stock......... 749,999 -- -- --
Net proceeds from
issuance of Series B
preferred stock......... 8,533,000 -- -- --
Net proceeds from
issuance of Series C
preferred stock......... -- 28,000,000 -- --
----------- ----------- ---------- -----------
Net cash provided by
financing activities.... 9,334,179 28,121,181 -- 855,066
----------- ----------- ---------- -----------
Net increase (decrease)
in cash and cash
equivalents............. 8,233,729 12,930,385 (6,144,378) (6,096,662)
Cash and cash equivalents
at beginning of the
period.................. -- 8,233,729 8,233,729 21,164,114
----------- ----------- ---------- -----------
Cash and cash equivalents
at end of the period.... $ 8,233,729 $21,164,114 $2,089,351 $15,067,452
=========== =========== ========== ===========
Non-cash investing and
financing transactions:
Purchase of property and
equipment and intangible
assets in exchange for
Series B preferred
stock................... $ 114,999 $ -- $ -- $ --
=========== =========== ========== ===========
Issuance of stock for
stock subscription
receivable.............. $ -- $ 4,500 $ -- $ --
=========== =========== ========== ===========
Issuance of stock for
technology and services. $ -- $ 101,336 $ 11,336 $ 691,500
=========== =========== ========== ===========
|
See accompanying notes.
ILLUMINA, INC.
NOTES TO FINANCIAL STATEMENTS
(Information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is unaudited)
1. Summary of Significant Accounting Policies
Organization and Business
Illumina, Inc. (the "Company") was incorporated on April 28, 1998. The Company is developing next-generation tools that will permit the large-scale analysis of genetic variation and function. The Company's proprietary BeadArray technology will provide the throughput, cost effectiveness and flexibility necessary to enable researchers in the life sciences and pharmaceutical industries to perform the billions of tests necessary to extract medically valuable information from advances in genomics. This information will correlate genetic variation and gene function with particular disease states, enhancing drug discovery, allowing diseases to be detected earlier and more specifically and permitting better choices of drugs for individual patients. In addition to the life sciences and pharmaceutical industries, the Company's technology will have applicability across a wide variety of industries, including agriculture, petrochemicals and food, flavor and beverages.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.
Interim Financial Information
The financial information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is unaudited and includes all adjustments, consisting only of normal recurring adjustments, that the Company's management considers necessary for a fair presentation of the Company's operating results and cash flows for such periods. Results for the three month period ended March 31, 2000 are not necessary indicative of results to be expected for the full fiscal year 2000 or any future period.
Cash and Cash Equivalents
Cash and cash equivalents are comprised of highly liquid investments with an original maturity of less than three months when purchased.
Investments
The Company applies Statement of Financial Accounting Standards ("SFAS") No. 115, Accounting for Certain Investments in Debt and Equity Securities, to its investments. Under SFAS No. 115, the Company classifies its investments as "Available-for-Sale" and records such assets at estimated fair value in the balance sheet, with unrealized gains and losses, if any, reported in stockholders' equity.
At December 31, 1999, investments consist of the following:
Unrealized
Amortized Market gain
Cost Value (loss)
----------- ----------- ----------
Corporate debt securities................ $11,935,562 $11,924,163 $(11,399)
----------- ----------- --------
$11,935,562 $11,924,163 $(11,399)
=========== =========== ========
|
ILLUMINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is unaudited)
The Company has an unrealized gain of $710 related to cash equivalents, resulting in total unrealized losses of $10,689 at December 31, 1999.
At March 31, 2000, investments consist of the following:
Unrealized
Amortized Market gain
cost value (loss)
----------- ----------- ----------
Corporate debt securities................ $17,691,229 $17,649,664 $(41,565)
----------- ----------- --------
$17,691,229 $17,649,664 $(41,565)
=========== =========== ========
|
The Company has an unrealized gain of $1,445 related to cash equivalents, resulting in total unrealized losses of $40,120 at March 31, 2000.
There were no material realized gains or losses for the year ended December 31, 1999 or for the three months ended March 31, 2000.
The amortized cost and estimated fair value of corporate debt securities at March 31, 2000, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.
Estimated
Cost Fair Value
----------- -----------
Due in one year or less............................. $ 7,107,984 $ 7,101,327
Due after one year through three years.............. 10,583,245 10,548,337
----------- -----------
$17,691,229 $17,649,664
=========== ===========
|
Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents and short-term investments. The Company limits its exposure to credit loss by placing its cash and investments with high credit quality financial institutions.
Fair Value of Financial Instruments
Financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, are carried at cost, which management believes approximates fair value.
Property and Equipment
Property and equipment are stated at cost and depreciated over the estimated useful lives of the assets (generally three to five years) using the straight- line method. Amortization of leasehold improvements is computed over the shorter of the lease term or the estimated useful life of the related assets.
ILLUMINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is unaudited)
Acquired Technology Rights
The intangible assets consist of acquired technology rights related to the acquisition of nGenetics in 1998. The purchase price was $114,999, consisting of 124,152 shares of Series B preferred stock, valued at $0.926 per shares, the selling price paid in cash by outside investors in a contemporaneous selling of stock.
In accordance with APB 17, Accounting for Intangible Assets, the acquired technology rights are recorded at cost. The rights related to the acquired technology are being amortized over its estimated useful life (four years) and the Company has amortized approximately $47,000 through March 31, 2000.
Long-Lived Assets
In accordance with SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of, if indicators of impairment exist, the Company assesses the recoverability of the affected long-lived assets by determining whether the carrying value of such assets can be recovered through undiscounted future operating cash flows. If impairment is indicated, the Company measures the future cash flows associated with the use of the asset. While the Company's current and historical operating and cash flow losses are indicators of impairment, the Company believes the future cash flows to be received from the long-lived assets will exceed the assets' carrying value, and accordingly the Company has not recognized any impairment losses through March 31, 2000.
Revenue Recognition
Revenue from grants is recognized on a percentage of completion basis as related costs are incurred, provided that amounts earned are not subject to refund if the research is unsuccessful. Payments received in advance of the performance or product sale requirements are deferred until the related performance or product sale requirements have been completed.
Research and Development
Expenditures relating to research and development are expensed in the period incurred.
Income Taxes
Current income tax expense is the amount of income taxes expected to be payable for the current year. A deferred income tax asset or liability is computed for the expected future impact of differences between the financial reporting and tax bases of assets and liabilities, as well as the expected future tax benefit to be derived from tax loss and credit carryforwards. Deferred income tax expense is generally the net change during the year in the deferred income tax asset or liability. Valuation allowances are established when realizability of deferred tax assets is uncertain. The effect of tax rate changes is reflected in tax expense during the period in which such changes are enacted.
ILLUMINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is unaudited)
Stock-Based Compensation
As permitted by SFAS No. 123, Accounting for Stock-Based Compensation, the Company accounts for common stock options granted, and restricted stock sold, to employees, founders and directors using the intrinsic value method and, thus, recognizes no compensation expense for options granted, or restricted stock sold, with exercise prices equal to or greater than the fair value of the Company's common stock on the date of the grant. The Company has recorded deferred stock compensation related to certain stock options, and restricted stock, which were granted with exercise prices below estimated fair value (see Note 3), which is being amortized on an accelerated amortization methodology in accordance with FIN 28.
Deferred compensation for options granted, and restricted stock sold, to consultants has been determined in accordance with SFAS No. 123 and EITF 96-18 as the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measured. Deferred charges for options granted, and restricted stock sold, to consultants are periodically remeasured as the underlying options vest.
Comprehensive Loss
In accordance with SFAS No. 130, Reporting Comprehensive Income, the Company has disclosed comprehensive loss as a component of stockholders' equity.
Net Loss Per Share
Basic and diluted net loss per common share are presented in conformity with SFAS No. 128, Earnings per Share, and SAB 98, for all periods presented. Under the provisions of SAB 98, common stock and convertible preferred stock that has been issued or granted for nominal consideration prior to the anticipated effective date of the initial public offering must be included in the calculation of basic and diluted net loss per common share as if these shares had been outstanding for all periods presented. To date, the Company has not issued or granted shares for nominal consideration.
In accordance with SFAS No. 128, basic and diluted net loss per share has been computed using the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase. Pro forma basic and diluted net loss per common share, as presented in the statements of operations, has been computed for the year ended December 31, 1999 as described above, and also gives effect to the assumed conversion of preferred stock which will automatically convert to common stock immediately prior to the completion of the Company's initial public offering (using the "as if converted" method) from the original date of issuance.
ILLUMINA, INC.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF MARCH 31, 2000 AND FOR THE THREE MONTHS ENDED MARCH 31, 1999
AND 2000 IS UNAUDITED)
The following table presents the calculation net loss per share:
PERIOD FROM
APRIL 28,
1998 THREE MONTHS ENDED
(INCEPTION) YEAR ENDED MARCH 31,
TO DECEMBER DECEMBER ----------------------
31, 1998 31, 1999 1999 2000
----------- ----------- --------- -----------
Net loss.................... $(1,145,620) $(5,517,645) $(843,439) $(3,900,853)
=========== =========== ========= ===========
Basic and diluted net loss
per share.................. $ (1.71) $ (3.91) $ (1.21) $ (2.31)
=========== =========== ========= ===========
Weighted-average shares used
in computing historical net
loss per share, basic and
diluted.................... 668,748 1,410,225 696,352 1,685,796
Pro forma net loss per
share, basic and diluted... $ (0.26) $ (0.40) $ (0.14) $ (0.25)
=========== =========== ========= ===========
Shares used above........... 668,748 1,410,225 696,352 1,685,796
Pro forma adjustment to
reflect weighted-average
effect of assumed
conversion of convertible
preferred stock.......... 3,784,570 12,286,297 5,482,121 14,015,394
----------- ----------- --------- -----------
Shares used in computing
pro forma net loss per
share, basic and diluted. 4,453,318 13,696,522 6,178,473 15,701,190
|
The Company has excluded all convertible preferred stock, outstanding stock options and warrants, and shares subject to repurchase from the calculation of diluted loss per common share because all such securities are antidilutive for all periods presented. The total number of shares excluded from the calculation of diluted net loss per share, prior to application of the treasury stock method for options and warrants, was 14,919,900, 22,649,271, 15,073,736 and 24,056,726 for the period from April 28, 1998 (inception) through December 31, 1998, the year ended December 31, 1999 and for the three months ended March 31, 1999 and 2000, respectively. Such securities, had they been dilutive, would have been included in the computation of diluted net loss per share.
PRO FORMA STOCKHOLDERS' EQUITY
Unaudited pro forma stockholders' equity at March 31, 2000 includes the conversion of all outstanding shares of preferred stock into common stock.
SEGMENT REPORTING
The Company has determined that it operates in only one segment.
EFFECT OF NEW ACCOUNTING STANDARDS
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, will be effective January 1, 2001. This statement establishes accounting and reporting standards requiring that every derivative instrument, including certain derivative instruments imbedded in other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement
ILLUMINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is unaudited)
also requires that changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. The Company believes the adoption of SFAS No. 133 will not have an effect on the financial statements because the Company does not engage in derivative or hedging activities.
2. Balance Sheet Account Details
Property and equipment consist of the following:
December 31,
--------------- March 31,
1998 1999 2000
------ -------- ---------
Laboratory equipment............................. $ -- $271,250 $658,518
Computer equipment............................... 1,000 24,487 161,264
Furniture and fixtures........................... -- 549 16,998
------ -------- --------
1,000 296,286 836,780
Accumulated depreciation and amortization........ -- (4,972) (34,749)
------ -------- --------
Total.......................................... $1,000 $291,314 $802,031
====== ======== ========
|
Accrued liabilities consist of the following:
December 31,
---------------- March 31,
1998 1999 2000
------- -------- ---------
Compensation...................................... $19,196 $ 94,236 $297,488
Professional fees................................. 26,489 103,771 340,187
Sponsored research................................ -- 74,667 90,917
Other............................................. -- 20,015 17,382
------- -------- --------
Total........................................... $45,685 $292,689 $745,974
======= ======== ========
|
3. Stockholders' Equity
Common stock
As of March 31, 2000, the Company has sold, net of repurchased shares, 2,989,083 shares of common stock at $0.01 per share, 797,749 shares at $0.03 per share, 1,441,234 shares at $0.09 per share, 175,000 shares at $0.25 per share, 711,732 shares at $0.40 per share and 590,000 shares at $1.00 per share, of which 5,491,417 shares were sold to employees and consultants subject to restricted stock agreements. The common shares vest in accordance with the provisions of the agreements, generally over five years. All unvested shares are subject to repurchase by the Company at the original purchase price. As of March 31, 2000, 4,244,761 shares of common stock were subject to repurchase.
ILLUMINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is unaudited)
Convertible Preferred Stock
A summary of convertible preferred stock issued and outstanding as of March 31, 2000 is as follows:
Liquidation
Shares Preference
---------- -----------
Series A.............................................. 2,499,998 $ 749,999
Series B.............................................. 9,336,299 8,647,999
Series C.............................................. 7,000,000 28,000,000
---------- -----------
18,836,297 $37,397,998
========== ===========
|
At March 31, 2000, the Company had 2,500,000 shares of Convertible Series A preferred stock and 2,500,000 shares of Convertible Series A-1 preferred stock authorized, of which 2,499,998 shares of the Series A preferred stock were issued and outstanding. The Series A preferred stock was issued at $0.30 per share for cash.
In addition, the Company had 12,000,000 shares of Convertible Series B preferred stock and 12,000,000 shares of Convertible Series B-1 preferred stock authorized, of which 9,336,299 shares of Series B preferred stock were issued and outstanding. The Company issued 9,212,147 shares of Series B preferred stock at $0.926 per share for cash and 124,152 shares of Series B preferred stock at $0.926 per share in conjunction with the purchase of the net assets of nGenetics in 1998.
The Company also has 7,000,000 shares of Convertible Series C preferred stock and 7,000,000 shares of Convertible Series C-1 preferred stock authorized. During November and December 1999, the Company sold 7,000,000 shares of Series C convertible preferred stock at $4.00 per share for cash. As more fully discussed in Note 4, the Company sold 1,250,000 of these shares as part of a collaborative agreement with PE Corporation. The remaining 5,750,000 Series C shares were sold to institutional investors after the completion of the PE collaboration.
The Series A, A-1, B, B-1, C, and C-1 preferred stock are convertible, at the option of the holder, at any time after the date of issuance, into shares of common stock. The preferred stock will automatically be converted into shares of common stock at the then effective conversion price (currently a one- for-one conversion ratio) (i) upon the closing of a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933 with a sale price per share of common stock of at least $4.50 and with aggregate proceeds of at least $15,000,000, or (ii) upon the approval of the holders of more than 66 2/3% of the outstanding shares of each series of preferred stock. Each holder of Series A, B and C convertible preferred stock is entitled to one vote for each share of common stock into which such convertible preferred share would convert.
In the event of any liquidation, dissolution or winding up of the Company, the holders of preferred stock are entitled to receive their liquidation value prior and in preference to any distribution of the assets or surplus funds of the Company to the holders of common stock. If, upon the occurrence of such event, the assets and funds distributed among the holders of preferred stock are insufficient to permit full payment, the entire assets and funds of the Company would be distributed
ILLUMINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is unaudited)
among the preferred stockholders in proportion to the product of the liquidation preference of each such share and the number of such shares owned by each such holder. The holders of Series A, B and C convertible preferred stock are entitled to receive liquidation preferences over the common stockholders at the rate of $0.30, $0.926, and $4.00 per share, respectively.
Warrants
In connection with a lease financing facility (Note 5), in 1998 the Company issued to Comdisco warrants to purchase 43,183 shares of common stock at $.926 per share. Comdisco may exercise the warrants, in whole or in part, until November 17, 2005, or 3 years after the closing date of the Company's initial public offering, whichever is later.
Stock Options
In 1998, the Company adopted the 1998 Incentive Stock Plan (the "Plan") and has reserved 4,500,000 shares of common stock for grants under the Plan. The Plan provides for the grant of incentive and nonstatutory stock options, stock bonuses and rights to purchase stock to employees, directors or consultants of the Company. The Plan provides that incentive stock options will be granted only to employees at no less than the fair value of the Company's common stock (no less than 110% of the fair value for nonstatutory stock options), as determined by the board of directors at the date of the grant. Options generally vest 20% one year from the date of grant and ratably each month thereafter for a period of 48 months and expire up to ten years from date of grant.
A summary of the Company's stock option activity from April 28, 1998 (inception) through March 31, 2000 follows:
Weighted-
Average
Options Exercise Price
-------- --------------
Outstanding at April 28, 1998 (inception)........... -- $ --
Granted............................................. 525,000 $0.02
--------
Outstanding at December 31, 1998.................... 525,000 $0.02
Granted............................................. 495,200 $0.10
Exercised........................................... (297,416) $0.01
Cancelled........................................... (77,584) $0.03
--------
Outstanding at December 31, 1999.................... 645,200 $0.08
Granted (unaudited)................................. 382,500 $0.70
Exercised (unaudited)............................... (94,965) $0.06
Cancelled (unaudited)............................... (250) $0.09
--------
Outstanding at March 31, 2000 (unaudited)........... 932,485 $0.34
========
|
ILLUMINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is unaudited)
At March 31, 2000, options to purchase approximately 7,525 shares were exercisable and 522,384 shares remain available for future grant.
Following is a further breakdown of the options outstanding as of March 31, 2000:
Weighted
Weighted average
average Weighted exercise price
Range of Options remaining life average Options of options
exercise prices outstanding in years exercise price exercisable exercisable
--------------- ----------- -------------- -------------- ----------- --------------
$0.03 115,251 3.5 $0.03 7,460 $0.03
$0.09 397,466 4.1 $0.09 65 $0.09
$0.25 38,000 4.7 $0.25 -- $0.25
$0.40 192,268 4.9 $0.40 -- $0.40
$1.00 189,500 5.0 $1.00 -- $1.00
------- -----
932,485 7,525
======= =====
|
Pro forma information regarding net loss is required by SFAS No. 123 and has been determined as if the Company had accounted for its employee stock options under the fair value method of that statement. The fair value for these options was estimated at the dates of grant using the fair value option pricing model (Black Scholes) with the following weighted-average assumptions for 1999 and 1998: (a) weighted average risk-free interest rate of 6.5%, (b) expected dividend yield of 0%, (c) anticipated volatility of 70% and (d) five year estimated life of the options.
For purposes of adjusted pro forma disclosures, the estimated fair value of the options is amortized to expense over the vesting period. The Company's adjusted pro forma information is as follows:
Period from Three
April 28, 1998 Months
(inception) to Year ended Ended
December 31, December March 31,
1998 31, 1999 2000
-------------- ----------- -----------
Adjusted pro forma net loss........ $(1,091,846) $(4,868,928) $(3,080,092)
Adjusted pro forma basic net loss
per share......................... $ (1.63) $ (3.45) $ (1.83)
|
The pro forma effect on net loss presented is not likely to be representative of the pro forma effects on reported net income or loss in future years because these amounts reflect less than five years of vesting.
2000 Employee Stock Purchase Plan
In February 2000, the board of directors adopted the 2000 Employee Stock Purchase Plan (the "Purchase Plan"). A total of 500,000 shares of the Company's common stock have been reserved for issuance under the Purchase Plan. The Purchase Plan permits eligible employees to purchase common stock at a discount, but only through payroll deductions, during defined offering periods. The price at which stock is purchased under the Purchase Plan is equal to 85% of the fair market value of the common stock on the first or last day of the offering period, whichever is lower. The initial offering period will commence on the effective date of the offering. In addition, the Purchase Plan provides for annual increases of shares available for issuance under the Purchase Plan beginning with fiscal 2001.
ILLUMINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is unaudited)
Deferred Stock Compensation
Since the inception of the Company, in connection with the grant of certain stock options and sales of restricted stock to employees, founders and directors through March 31, 2000, the Company has recorded deferred stock compensation totaling approximately $17.3 million, representing the difference between the exercise or purchase price and the fair value of the Company's common stock as estimated by the Company's management for financial reporting purposes on the date such stock options were granted or restricted common stock was sold. Deferred compensation is included as a reduction of stockholders' equity and is being amortized to expense over the vesting period of the options and restricted stock. During the three months ended March 31, 2000, the Company recorded amortization of deferred stock compensation expense of approximately $0.8 million.
In February 2000, the Company modified the consulting agreements with all of its outside consultants. Under the modified consulting agreements, the consultants agreed to pay a substantial financial penalty if they did not fulfill their performance obligations under the agreements. The amount of the penalty was determined for each consultant based on the intrinsic value of the unvested restricted common stock based on the original purchase price and the fair value of the common stock as estimated by the Company's management for financial reporting purposes on the date of modification. Each consultant had already vested in a portion of the original restricted common stock in accordance with the services already provided, and the amounts related to the vested common stock was expensed. The deferred consultant compensation related to the unvested stock of $3.0 million was recorded in February 2000 and will be amortized ratably over the contracted service periods. The Company amortized approximately $80,000 of this deferred compensation in the three months ended March 31, 2000.
The following is a breakdown of the amortization of deferred compensation and other non-cash charges:
Period from
April 28, 1998 Three Months Ended
(inception) to Year Ended March 31,
December 31, December 31, -------------------
1998 1999 1999 2000
-------------- ------------ -------- ----------
(Unaudited)
General and administrative...... $16,095 $345,970 $ 15,596 $ 380,496
Research and development........ 62,092 611,852 84,707 805,329
------- -------- -------- ----------
$78,187 $957,822 $100,303 $1,185,825
======= ======== ======== ==========
|
Shares Reserved for Future Issuance
At March 31, 2000, the Company has reserved shares of common stock for
future issuance as follows:
Conversion of convertible preferred stock......................... 18,836,297
1998 Incentive Stock Plan......................................... 1,454,869
Warrants.......................................................... 43,183
----------
20,334,349
==========
|
ILLUMINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is unaudited)
4. Collaborative Agreements
PE Corporation
In November 1999, the Company signed a collaborative agreement with PE Corporation ("PE") under which both companies will perform certain research activities with an objective of developing and commercializing products utilizing the Company's technology. In conjunction with the agreement, PE purchased 1,250,000 shares of Series C convertible preferred stock, at $4.00 per share. Under the agreement, PE will provide the Company with non-refundable research and development support, a portion of which is dependent on the achievement of certain scientific milestones. Upon commercialization of the products developed under the collaboration, the Company will share in the operating profits resulting from the sale of such products, which will be partially offset by the research funding amounts provided by PE to the Company. The Company has deferred recognition of income from the research funding provided by PE, and will recognize such amounts as revenue in conjunction with the sale of any commercial products resulting from the development efforts.
Other Agreements
The Company has various research agreements with governmental and academic organizations for which the Company performs research activities. These organizations fund the research efforts, the revenue for which is recognized as the procedures are performed.
5. Asset and Technology Purchase
In December 1999, the Company reached a preliminary agreement to acquire certain tangible assets and rights to certain in-process technologies in exchange for $100,000 and 175,000 shares of common stock valued at $630,000 ($3.60 per share, or 90% of the price at which the Series C Preferred Stock was sold in December 1999). In March 2000, a final asset purchase agreement was signed and the transaction closed, at which time the Company recorded the tangible assets at their fair value of approximately $50,000. As of the date these technologies were acquired, they had not achieved technological or commercial feasibility and there is no significant alternative future use should the Company's development efforts prove unsuccessful. Accordingly, the Company recorded an acquired in-process technology charge of $680,000 in March 2000 related to the purchase of these technologies.
6. Commitments
Leases
The Company leases its primary office facility under an operating lease with options to renew under varying terms. In addition, the Company entered into a $1,000,000 lease financing arrangement with a lease financing corporation. As of December 31, 1999, the Company had utilized all funds available under the lease arrangement.
At March 31, 2000, annual future minimum rental payments under the Company's operating leases for the years ending December 31 are as follows:
2000 (nine months)............................................... $ 549,669
2001............................................................. 379,718
2002............................................................. 177,655
----------
Total minimum lease payments................................... $1,107,042
==========
|
ILLUMINA, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
(Information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is unaudited)
Rent expense for the period from April 28, 1998 to December 31, 1998, the year ended December 31, 1999 and the three months ended March 31, 2000 was $138,264, $620,387, and $207,832, respectively.
7. Income Taxes
At December 31, 1999, the Company has federal and state tax net operating loss carryforwards of approximately $5,119,000 and $5,262,000, respectively. The federal and state tax loss carryforwards will begin expiring in 2018 and 2006, respectively, unless previously utilized. The Company also has federal and state research and development tax credit carryforwards of approximately $318,000 and $175,000, respectively, which will begin to expire in 2018, unless previously utilized.
Pursuant to Sections 382 and 383 of the Internal Revenue Code, annual use of the Company's net operating loss and credit carryforwards may be limited in the event of a cumulative change in ownership of more than 50% within a three year period.
Significant components of the Company's deferred tax assets as of December 31, 1999 are shown below. A valuation allowance has been recognized as of December 31, 1999 to offset the deferred tax assets as realization of such assets is uncertain.
Deferred tax assets:
Net operating loss carryforwards............................... $2,094,000
Research and development credit carryforwards.................. 431,000
Other.......................................................... 224,000
----------
Total deferred tax assets.................................... 2,749,000
Valuation allowance for deferred tax assets...................... (2,749,000)
----------
Net deferred taxes............................................... $ --
==========
|
8. Retirement Plan
The Company has a 401(k) savings plan covering substantially all of its employees. Company contributions to the plan are discretionary and no such contributions were made in 1999.
9. Subsequent Events (unaudited)
Loan and Security Agreement
In April 2000, the Company entered into a $3,000,000 loan arrangement to be used at its discretion to finance purchases of capital equipment. The loan is secured by the capital equipment financed.
No dealer, salesperson or other person is authorized to give any informa- tion or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the shares offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.
TABLE OF CONTENTS
Page
----
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 8
Forward-Looking Statements................................................ 16
Use of Proceeds........................................................... 17
Dividend Policy........................................................... 17
Capitalization............................................................ 18
Dilution.................................................................. 19
Selected Financial Information............................................ 20
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 21
Business.................................................................. 26
Management................................................................ 37
Related Party Transactions................................................ 45
Principal Stockholders.................................................... 47
Description of Capital Stock.............................................. 49
Shares Eligible for Future Sale........................................... 53
Underwriting.............................................................. 55
Validity of the Securities................................................ 57
Experts................................................................... 57
Where You Can Find Additional Information................................. 57
Index to Financial Statements............................................. F-1
|
Through and including , 2000 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospec- tus. This is in addition to a dealer's obligation to deliver a prospectus when acting as underwriter and with respect to an unsold allotment or subscription.
5,000,000 Shares
Illumina, Inc.
Common Stock
[LOGO]
Goldman, Sachs & Co.
Chase H&Q
SG Cowen
Representatives of the Underwriters
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than the underwriting discounts, payable by the Registrant in connection with the sale of the securities being registered. All amounts are estimates except the SEC registration fee, the NASD filing fee and the Nasdaq/NMS listing fee.
SEC Registration Fee............................................. $ 26,400
NASD Filing Fee.................................................. 10,500
Nasdaq National Market Listing Fee............................... 95,000
Printing Costs................................................... 225,000
Legal Fees and Expenses.......................................... 425,000
Accounting Fees and Expenses..................................... 325,000
Blue Sky Fees and Expenses....................................... 1,500
Transfer Agent and Registrar Fees................................ 10,500
Miscellaneous.................................................... 181,100
----------
Total.......................................................... $1,300,000
==========
|
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Section 204(a) of the California General Corporation Law, the Registrant's Amended and Restated Articles of Incorporation eliminate a director's personal liability for monetary damages to the Registrant and its shareholders arising from a breach or alleged breach of the director's fiduciary duty, except for liability arising under Sections 310 and 316 of the California General Corporation Law or liability for (i) acts or omissions that involve intentional misconduct or knowing and culpable violation of law, (ii) acts or omissions that a director believes to be contrary to the best interests of the Registrant or its shareholders or that involve the absence of good faith on the part of the director, (iii) any transaction from which a director derived an improper personal benefit, (iv) acts or omissions that show a reckless disregard for the director's duty to the Registrant or its shareholders in circumstances in which the director was aware, or should have been aware, in the ordinary course of performing a director's duties, of a risk of serious injury to the Registrant or its shareholders, (v) acts or omissions that constitute an unexcused pattern of inattention that amounts to an abdication of the director's duty to the Registrant or its shareholders, (vi) interested transactions between the corporation and a director in which a director has a material financial interest, and (vii) liability for improper distributions, loans or guarantees. This provision does not eliminate the directors' duty of care, and in appropriate circumstances equitable remedies such as an injunction or other forms of non-monetary relief would remain available under California law.
Sections 204(a) and 317 of the California General Corporation Law authorize a corporation to indemnify its directors, officers, employees and other agents in terms sufficiently broad to permit indemnification (including reimbursement for expenses) under certain circumstances for liabilities arising under the Securities Act of 1933, as amended (the "Securities Act"). The Registrant's Amended and Restated Articles of Incorporation and Bylaws contain provisions covering indemnification to the maximum extent permitted by the California General Corporation Law of corporate directors, officers and other agents against certain liabilities and expenses incurred as a result of proceedings involving such persons in their capacities as directors, officers employees or agents, including proceedings under the Securities Act or the Securities Exchange Act of 1934, as amended. Prior to the effective date of this Offering, the Registrant will enter into indemnification agreements with its directors and executive officers.
II-1
In connection with its reincorporation in Delaware, the Registrant will be
subject to Section 145 of the Delaware General Corporation Law ("Section 145").
Section 145 permits indemnification of officers and directors of the Company
under certain conditions and subject to certain limitations. Section 145 also
provides that a corporation has the power to maintain insurance on behalf of
its officers and directors against any liability asserted against such person
and incurred by him or her in such capacity, or arising out of his or her
status as such, whether or not the corporation would have the power to
indemnify him or her against such liability under the provisions of Section
145. Upon shareholder approval of such reincorporation, Article VI, Section
6.1, of the Registrant's Bylaws will provide for mandatory indemnification of
its directors and officers and permissible indemnification of employees and
other agents to the maximum extent not prohibited by the Delaware General
Corporation Law. The rights to indemnity thereunder continue as to a person who
has ceased to be a director, officer, employee or agent and inure to the
benefit of the heirs, executors and administrators of the person. In addition,
expenses incurred by a director or executive officer in defending any civil,
criminal, administrative or investigative action, suit or proceeding by reason
of the fact that he or she is or was a director or officer of the Registrant
(or was serving at the Registrant's request as a director or officer of another
corporation) shall be paid by the Registrant in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking
by or on behalf of such director or officer to repay such amount if it shall
ultimately be determined that he or she is not entitled to be indemnified by
the Registrant as authorized by the relevant section of the Delaware General
Corporation Law.
As permitted by Section 102(b)(7) of the Delaware General Corporation Law, the Registrant's Certificate of Incorporation provides that, pursuant to Delaware law, its directors shall not be personally liable for monetary damages for breach of the directors' fiduciary duty as directors to the Registrant and its stockholders. This provision in the Certificate of Incorporation does not eliminate the directors' fiduciary duty, and in appropriate circumstances equitable remedies such as injunctive or other forms of non-monetary relief will remain available under Delaware law. In addition, each director will continue to be subject to liability for breach of the director's duty of loyalty to the Registrant for acts or omission not in good faith or involving international misconduct, for knowing violations of law, for actions leading to improper personal benefit to the director, and for payment of dividends or approval of Stock repurchases or redemptions that are unlawful under Section 174 of the Delaware General Corporation Law. The provision also does not affect a director's responsibilities under any other law, such as the federal securities laws or state or federal environmental laws. The Registrant has entered into indemnification agreements with each of its directors and executive officers. Generally, the indemnification agreements attempt to provide the maximum protection permitted by Delaware law as it may be amended from time to time. Moreover, the indemnification agreements provide for certain additional indemnification. Under such additional indemnification provisions, however, an individual will not receive indemnification for judgments, settlements or expenses if he or she is found liable to the Registrant (except to the extent the court determines he or she is fairly and reasonably entitled to indemnity for expenses), for settlements not approved by the Registrant or for settlements and expenses if the settlement is not approved by the court. The indemnification agreements provide for the Registrant to advance to the individual any and all reasonable expenses (including legal fees and expenses) incurred in investigating or defending any such action, suit or proceeding. In order to receive an advance of expenses, the individual must submit to the Registrant copies of invoices presented to him or her for such expenses. Also, the individual must repay such advances upon a final judicial decision that he or she is not entitled to indemnification.
The Registrant intends to enter into additional indemnification agreements with each of its directors and executive officers to effectuate these indemnity provisions and to purchase directors' and officers' liability insurance.
II-2
In addition to the foregoing, the Underwriting Agreement contains certain provisions by which the Underwriters have agreed to indemnify the Registrant, each person, if any, who controls the Registrant within the meaning of Section 15 of the Securities Act, each director of the Registrant, each officer of the Registrant who signs the Registration Statement, with respect to information furnished in writing by or on behalf of the Underwriters for use in the Registration Statement.
At present, there is no pending litigation or proceeding involving a director, officer, employee or other agent of the Registrant in which indemnification is being sought, nor is the Registrant aware of any threatened litigation that may result in a claim for indemnification by any director, officer, employee or other agent of the Registrant.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since our incorporation in April 1998, we have sold and issued the following securities:
Common Stock
(1) In May 1998, we sold 1,075,000 shares of our Common Stock at a price of $0.01 per share to a founder and a consultant for $10,750.
(2) In June 1998, we sold 1,125,000 shares of our Common Stock at a price of $0.01 per share to officers and consultants for $11,250.
(3) In July 1998, we sold 500,000 shares of our Common Stock at a price of $0.01 per share to an investor for $5,000 and 220,000 shares of our Common Stock at a price of $0.03 per share to consultants for $6,600.
(4) In August 1998, we sold 20,000 shares of our Common Stock at a price of $0.03 per share to a consultant for $600.
(5) In September 1998, we sold 250,000 shares of Common Stock at a price of $0.03 per share to an officer for $7,500.
(6) In November 1998, we sold 266,000 shares of our Common Stock at a price of $0.03 per share to an officer and consultants for $7,980.
(7) In February 1999, we sold 50,000 shares of our Common Stock at a price of $0.09 per share to a director for $4,500.
(8) In May 1999, we sold 137,500 shares of our Common Stock at a price of $0.01 per share to a director and a consultant for $1,357 and 8,333 shares of our Common Stock at $0.03 per share to a consultant for $250. In connection with a technology purchase we issued 10,000 shares of our Common Stock valued at a price of $0.09 per share for a total value of $900.
(9) In June 1999, we sold 8,000 shares of our Common Stock at a price of $0.09 per share to an employee for $720.
(10) In July 1999, we sold 14,083 shares of our Common Stock at a price of $0.01 per share to an employee for $141.
(11) In August 1999, we sold 68,750 shares of our Common Stock at a price of $0.01 per share to an investor and 9,000 shares of our Common Stock at a price of $0.09 per share to a consultant for $810.
(12) In September 1999, we sold 68,750 shares of our Common Stock at a price of $0.01 per share to an investor for $688.
II-3
(13) In October 1999, we sold 1,300,000 shares of our Common Stock at a price of $0.09 per share to officers for $117,000.
(14) In November 1999, we sold 25,000 shares of our Common Stock at a price of $0.09 per share to an investor for $2,250.
(15) In January 2000, we sold 175,000 shares of our Common Stock at a price of $0.25 per share to an investor, consultants and an employee for $43,750.
(16) In February 2000, we sold 45,082 shares of our Common Stock at a price of $0.03 per share to employees for $1,352, 10,275 shares of our Common Stock at a price of $0.09 per share to employees for $925, and 110,299 shares of our Common Stock at a price of $0.40 per share to a director, a consultant and employees for $44,120.
(17) In March 2000, we sold 4,667 shares of our common stock at a price of $0.03 per share to employees for $140, 34,209 shares of our Common Stock at a price of $0.09 per share to employees for $3,079, 426,433 shares of our Common Stock at a price of $0.40 per share to a founder, consultants and employees for $170,573 and 590,000 shares of our common stock at a price of $1.00 per share to employees for $590,000. In connection with an asset purchase transaction, we issued 175,000 shares valued at $0.40 per share for $70,000.
The sales of the above securities were deemed to be exempt from registration in reliance on Section 4(2) of the Securities Act as transactions by an issuer not involving any public offering. All recipients were either accredited or sophisticated investors, as those terms are defined under the Securities Act. The recipients of securities in each such transaction represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the share certificates and other instruments issued in such transactions. All recipients either received adequate information about us or had access, through employment or other relationships, to such information.
Preferred Stock
(1) In June 1998, we sold an aggregate of 2,499,998 shares of our Series A Convertible Preferred Stock to investors at a price of $0.30 per share for an aggregate purchase price of $749,999.
(2) In November 1998, we sold an aggregate of 9,336,299 shares of our Series B Convertible Preferred Stock to investors at a price of $0.926 per share for an aggregate purchase price of $8,648,214.
(3) In November 1999, we sold 1,250,000 shares of our Series C Convertible Preferred Stock to an investor at a price of $4.00 per share for a purchase price of $5,000,000.
(4) In December 1999, we sold an aggregate of 5,750,000 shares of our Series C Convertible Preferred Stock to investors at a price of $4.00 per share for an aggregate purchase price of $23,000,000.
The sales of the above securities were deemed to be exempt from registration
in reliance on Regulation D under the Securities Act in the case of (1) and
Section 4(2) of the Securities Act in the case of (2), (3) and (4) promulgated
thereunder as transactions by an issuer not involving any public offering. All
recipients were either accredited or sophisticated investors, as those terms
are defined in the Securities Act. The recipients of securities in each such
transaction represented their intention to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the share
certificates and other instruments issued in such transactions. All recipients
either received adequate information about us or had access, through employment
or other relationships, to such information.
II-4
Stock Options and Stock Purchase Rights
(1) From inception through March 2000, we granted stock options and stock purchase rights to acquire an aggregate of 4,060,700 shares of our Common Stock at prices ranging from $0.01 to $1.00 per share to employees, consultants and directors pursuant to our 1998 Incentive Stock Plan.
(2) From inception through March 2000, we issued an aggregate of 3,050,381 shares of our Common Stock to employees, consultants and directors pursuant to the exercise of stock options and stock purchase rights under our 1998 Incentive Stock Plan, for aggregate consideration of $977,610.
The sales of the above securities were deemed to be exempt from registration in reliance on Rule 701 promulgated under Section 3(b) under the Securities Act as transactions pursuant to a compensatory benefit plan or a written contract relating to compensation.
Warrants
(1) In October 1998 we issued a warrant to acquire 43,183 shares of our Series B Convertible Preferred Stock at an exercise price of $0.926 per share to an investor.
The sales of the above securities were deemed to be exempt from registration in reliance on Section 4(2) of the Securities Act as transactions by an issuer not involving any public offering. The recipient was an accredited and sophisticated investor, as those terms are defined in the Securities Act. The recipient represented its intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the instruments issued in the transaction. The recipient received adequate information about us and had access, through their relationship with us, to such information.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
1.1** Form of Underwriting Agreement
2.1 Form of Merger Agreement between Illumina, Inc., a California
corporation, and Illumina, Inc., a Delaware corporation.
3.1 Form of Certificate of Incorporation of the Registrant to be
filed after the closing of the offering made under this
Registration Statement.
3.2 Form of Bylaws of the Registrant to be in effect after the
closing of the offering made under this Registration Statement.
4.1 Specimen Common Stock Certificate.
4.2 Amended and Restated Investors Rights Agreement, dated November
5, 1999, by and among the Registrant and certain stockholders of
the Registrant.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.
10.1 Form of Indemnification Agreement between the Registrant and
each of its directors and officers.
10.2 1998 Incentive Stock Plan.
10.3 2000 Employee Stock Purchase Plan.
10.4* Sublease Agreement dated August 1998 between Registrant and
Gensia Sicor Inc. for Illumina's principal offices.
+10.5* Joint Development Agreement dated November 1999 between
Registrant and PE Corporation.
+10.6* Asset Purchase Agreement dated November 1998 between Registrant
and nGenetics, Inc.
|
II-5
+10.7* Asset Purchase Agreement dated March 2000 between Registrant and
Spyder Instruments, Inc.
+10.8* License Agreement dated May 1998 between Tufts and Registrant.
10.9 Master Loan and Security Agreement, dated March 6, 2000, by and
between Registrant and FINOVA Capital Corporation.
10.10 2000 Stock Plan
23.1 Consent of Ernst & Young, LLP, Independent Auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1* Power of Attorney (see Page II-7 of the original filing).
27.1 Financial Data Schedule.
|
* Previously filed.
** To be filed by amendment
+ Confidential treatment requested.
(b) Financial Statement Schedules
Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto, State of California on July 3, 2000.
Illumina, Inc.
/s/ Jay T. Flatley
By: _________________________________
Jay T. Flatley
President and Chief Executive
Officer
|
POWER OF ATTORNEY
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED:
Signature Title Date
--------- ----- ----
/s/ Jay T. Flatley President, Chief Executive July 3, 2000
______________________________________ Officer and Director
Jay T. Flatley (Principal Executive
Officer)
/s/ Timothy M. Kish Vice President of Business July 3, 2000
______________________________________ Development (Principal
Timothy M. Kish Accounting Officer)
John R. Stuelpnagel* Director July 3, 2000
______________________________________
John R. Stuelpnagel
Charles M. Hartman* Director July 3, 2000
______________________________________
Charles M. Hartman
Robert T. Nelsen* Director July 3, 2000
______________________________________
Robert T. Nelsen
George Poste* Director July 3, 2000
______________________________________
George Poste, DVM, Ph.D.
William Rastetter* Director July 3, 2000
______________________________________
William Rastetter, Ph.D.
David R. Walt* Director July 3, 2000
______________________________________
David R. Walt, Ph.D.
|
/s/ Jay T. Flatley
*By: _____________________
|
Jay T. Flatley
Attorney-in-Fact
II-7
EXHIBIT INDEX
1.1** Form of Underwriting Agreement.
2.1 Form of Merger Agreement between Illumina, Inc., a California
corporation, and Illumina, Inc., a Delaware corporation.
3.1 Form of Certificate of Incorporation of the Registrant to be filed
after the closing of the offering made under this Registration
Statement.
3.2 Form of Bylaws of the Registrant to be in effect after the closing of
the offering made under this Registration Statement.
4.1 Specimen Common Stock Certificate.
4.2 Amended and Restated Investors Rights Agreement, dated November 5,
1999, by and among the Registrant and certain stockholders of the
Registrant.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1 Form of Indemnification Agreement between the Registrant and each of
its directors and officers.
10.2 1998 Incentive Stock Plan.
10.3 2000 Employee Stock Purchase Plan.
10.4* Sublease Agreement dated August 1998 between Registrant and Gensia
Sicor Inc. for Illumina's principal offices.
+10.5* Joint Development Agreement dated November 1999 between Registrant and
PE Corporation.
+10.6* Asset Purchase Agreement dated November 1998 between Registrant and
nGenetics, Inc.
+10.7* Asset Purchase Agreement dated March 2000 between Registrant and
Spyder Instruments, Inc.
+10.8* License Agreement dated May 1998 between Tufts and Registrant.
10.9 Master Loan and Security Agreement, dated March 6, 2000, by and
between Registration and FINOVA Capital Corporation.
10.10 2000 Stock Plan
23.1 Consent of Ernst & Young, LLP, Independent Auditors.
23.2 Consent of Counsel (included in Exhibit 5.1).
24.1* Power of Attorney (see Page II-7 of the original filing).
27.1 Financial Data Schedule.
|
* Previously filed.
** To be filed by amendment.
+ Confidential treatment requested.
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
OF ILLUMINA, INC.
A DELAWARE CORPORATION
AND
A CALIFORNIA CORPORATION
THIS AGREEMENT AND PLAN OF MERGER dated as of May __, 2000 (the "Agreement") is between Illumina, Inc., a Delaware corporation ("Illumina Delaware") and Illumina, Inc., a California corporation ("Illumina California"). Illumina Delaware and Illumina California are sometimes referred to herein as the "Constituent Corporations."
A. Illumina Delaware is a corporation duly organized and existing under the laws of the State of Delaware and has an authorized capital of 110,000,000 shares, 60,000,000 of which are designated "Common Stock," $0.01 par value, and 50,000,000 of which are designated "Preferred Stock," $0.01 par value. Of such authorized shares of Preferred Stock, 2,500,000 shares are designated "Series A Preferred Stock," 2,500,000 shares are designated Series A- 1 Preferred Stock ("Series A-1 Preferred"), 12,000,000 shares are designated Series B Preferred Stock ("Series B Preferred'), 12,000,000 are designed Series B-1 Preferred Stock ("Series B-1 Preferred"), 7,000,000 shares are designated Series C Preferred Stock ("Series C Preferred'), and 7,000,000 shares are designated Series C-1 Preferred Stock ("Series C-1 Preferred"). As of the date of this Agreement of Merger, 100 shares of Common Stock were issued and outstanding, all of which were held by Illumina California. No shares of Preferred Stock were outstanding.
B. llumina California is a corporation duly organized and existing under the laws of the State of California and has an authorized capital of 110,000,000 shares, 60,000,000 of which are designated "Common Stock," $0.01 par value, and 50,000,000 of which are designated "Preferred Stock," $0.01 par value. Of such authorized shares of Preferred Stock, 2,500,000 shares are designated "Series A Preferred Stock," 2,500,000 shares are designated Series A- 1 Preferred Stock ("Series A-1 Preferred"), 12,000,000 shares are designated Series B Preferred Stock ("Series B Preferred'), 12,000,000 are designed Series B-1 Preferred Stock ("Series B-1 Preferred"), 7,000,000 shares are designated Series C Preferred Stock ("Series C Preferred'), and 7,000,000 shares are designated Series C-1 Preferred Stock ("Series C-1 Preferred"). As of the date of this Agreement and Plan of Merger, 5,139,083 shares of Common Stock, 2,499,998 shares of Series A Preferred Stock, 9,336,299 shares of Series B Preferred Stock, and 7,000,000 shares of Series C Preferred Stock were issued and outstanding. No shares of Series A-1 Preferred Stock, Series B-1 Preferred Stock, or Series C-1 Preferred stock were issued and outstanding.
C. The Board of Directors of Illumina California has determined that, for the purpose of effecting the reincorporation of Illumina California in the State of Delaware, it is advisable and in
the best interests of Illumina California that Illumina California merge with and into Illumina Delaware upon the terms and conditions herein provided.
D. The respective Boards of Directors of Illumina Delaware and Illumina California have approved this Agreement and have directed that this Agreement be submitted to a vote of their respective shareholders and executed by the undersigned officers.
NOW, THEREFORE, in consideration of the mutual agreements and covenants set forth herein, Illumina Delaware and Illumina California hereby agree, subject to the terms and conditions hereinafter set forth, as follows:
I. MERGER
(a) This Agreement and Merger shall have been adopted and approved by the shareholders of each Constituent Corporation in accordance with the requirements of the Delaware General Corporation Law and the California Corporations Code;
(b) All of the conditions precedent to the consummation of the Merger specified in this Agreement shall have been satisfied or duly waived by the party entitled to satisfaction thereof; and
(c) An executed Agreement and Plan of Merger meeting the requirements of the Delaware General Corporation Law shall have been filed with the Secretary of State of the State of Delaware.
The date and time when the Merger shall become effective, as aforesaid, is herein called the "Effective Date of the Merger."
debts, liabilities and obligations of Illumina Delaware as constituted immediately prior to the Effective Date of the Merger, and (v) shall succeed, without other transfer, to all of the debts, liabilities and obligations of Illumina California in the same manner as if Illumina Delaware had itself incurred them, all as more fully provided under the applicable provisions of the Delaware General Corporation Law and the California Corporations Code.
II. CHARTER DOCUMENTS, DIRECTORS AND OFFICERS
III. MANNER OF CONVERSION OF STOCK
(a) Upon the Effective Date of the Merger, each share of Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock, Series B- 1 Preferred Stock, Series C Preferred Stock, and Series C-1 Preferred Stock of Illumina California, $0.01 par value, issued and outstanding immediately prior to the Merger, which shares are convertible into such number of shares of Illumina California Common Stock as set forth in the Illumina California Articles of Incorporation, as amended, shall, by virtue of the Merger, and without any action by the Constituent Corporations, by the holder of such shares or by any other person, be converted into or exchanged for one fully paid and nonassessable share of Series A Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock, Series B-1 Preferred Stock, Series C Preferred Stock, or Series C-1 Preferred Stock, $0.01 par value, of the Surviving Corporation, respectively, having such rights,
preferences and privileges as set forth in the Certificate of Incorporation of the Surviving Corporation, which share of Preferred Stock shall be convertible into the same number of shares of the Surviving Corporation's Common Stock, $0.01 par value, as such share of Illumina California Preferred Stock was so convertible into immediately prior to the Effective Date of the Merger, subject to adjustment pursuant to the terms of the Certificate of Incorporation of the Surviving Corporation.
(a) Upon the Effective Date of the Merger, the Surviving Corporation shall assume the obligations of Illumina California under, and continue, the option plans (including without limitation Illumina California's 1998 Incentive Stock Plan) and all other employee benefit plans of Illumina California. Each outstanding and unexercised option, other right to purchase, or security convertible into Illumina California Common Stock or Illumina California Preferred Stock (a "Right") shall become, subject to the provisions in paragraph (c) hereof, an option, right to purchase or a security convertible into the Surviving Corporation's Common Stock or Preferred Stock, respectively, on the basis of one share of the Surviving Corporation's Common Stock or Preferred Stock, as the case may be, for each one share of Illumina California Common Stock or Preferred Stock, as the case may be, issuable pursuant to any such Right, on the same terms and conditions and at an exercise price equal to the exercise price applicable to any such Illumina California Right at the Effective Date of the Merger. This paragraph 3.3(a) shall not apply to Illumina California Common Stock or Preferred Stock. Such Common Stock and Preferred Stock are subject to paragraph 3.1 and 3.2, respectively, hereof.
(b) A number of shares of the Surviving Corporation's Common Stock and Preferred Stock shall be reserved for issuance upon the exercise of options, stock purchase rights and convertible securities equal to the number of shares of Illumina California Common Stock and Illumina California Preferred Stock so reserved immediately prior to the Effective Date of the Merger.
(c) The assumed Rights shall not entitle any holder thereof to a fractional share upon exercise or conversion (unless the holder was entitled to a fractional interest immediately prior to the Merger). In lieu thereof, any fractional share interests to which a holder of an assumed Right (other than an option issued pursuant to Illumina California's 1998 Incentive Stock Plan) would otherwise be entitled upon exercise or conversion shall be aggregated (but only with other similar Rights which have the same per share terms). To the extent that after such aggregation, the holder would still be entitled to a fractional share with respect thereto upon exercise or conversion, the holder shall be entitled upon the exercise or conversion of all such assumed Rights pursuant to their terms (as modified herein), to one full share of Common Stock or Preferred Stock in lieu of such fractional share. With respect to each class of such similar Rights, no holder will be entitled to more than one full share in lieu of a fractional share upon exercise or conversion.
Notwithstanding the foregoing, with respect to options issued under the Illumina California 1998 Incentive Stock Plan that are assumed in the Merger, the number of shares of Common Stock
to which the holder would be otherwise entitled upon exercise of each such assumed option following the Merger shall be rounded down to the nearest whole number and the exercise price shall be rounded up to the nearest whole cent. In addition, no "additional benefits" (within the meaning of Section 424(a)(2) of the Internal Revenue Code of 1986, as amended) shall be accorded to the optionees pursuant to the assumption of their options.
The registered owner on the books and records of the Surviving Corporation or the Exchange Agent of any such outstanding certificate shall, until such certificate shall have been surrendered for transfer or conversion or otherwise accounted for to the Surviving Corporation or the Exchange Agent, have and be entitled to exercise any voting and other rights with respect to and to receive dividends and other distributions upon the shares of Common Stock or Preferred Stock of the Surviving Corporation represented by such outstanding certificate as provided above.
Each certificate representing Common Stock or Preferred Stock of the Surviving Corporation so issued in the Merger shall bear the same legends, if any, with respect to the restrictions on transferability as the certificates of Illumina California so converted and given in exchange therefore, unless otherwise determined by the Board of Directors of the Surviving Corporation in compliance with applicable laws.
If any certificate for shares of the Surviving Corporation's stock is to be issued in a name other than that in which the certificate surrendered in exchange therefor is registered, it shall be a condition of issuance thereof that the certificate so surrendered shall be properly endorsed and otherwise in proper form for transfer, that such transfer otherwise be proper and comply with applicable securities laws and that the person requesting such transfer pay to the Exchange Agent any transfer or other taxes payable by reason of issuance of such new certificate in a name other than
that of the registered holder of the certificate surrendered or establish to the satisfaction of the Surviving Corporation that such tax has been paid or is not payable.
IV. GENERAL
(a) Qualify to do business as a foreign corporation in the State of California and, in connection therewith, irrevocably appoint an agent for service of process as required under the provisions of Section 2105 of the California Corporations Code.
(b) File any and all documents with the California Franchise Tax Board necessary for the assumption by Illumina Delaware of all of the franchise tax liabilities of Illumina California.
(c) Take such other actions as may be required by the California Corporations Code.
(b) Illumina California shall deliver to the Internal Revenue Service a notice regarding the Statement in accordance with the requirements of Treasury Regulation Section 1.897-2(h)(2).
IN WITNESS WHEREOF, this Agreement having first been approved by the Boards of Directors of Illumina Delaware and Illumina California is hereby executed on behalf of each of such two corporations and attested by their respective officers thereunto duly authorized.
ILLUMINA, INC.
a Delaware corporation
By: ___________________________________
Jay T. Flatley, President and Chief
Executive Officer
ATTEST:
ILLUMINA, INC.
a California corporation
By:___________________________________
Jay T. Flatley, President and Chief
Executive Officer
ATTEST:
ILLUMINA, INC.
AGREEMENT & PLAN OF MERGER
May ___, 2000
TO THE SHAREHOLDERS OF ILLUMINA, INC.:
In connection with the reincorporation (the "Reincorporation") in Delaware of Illumina, Inc., a California corporation (the "Company"), pursuant to the Agreement and Plan of Merger (the "Agreement") dated as of May __, 2000 between the Company and Illumina, Inc., a Delaware corporation and wholly-owned subsidiary of the Company ("Illumina Delaware"), your shares of Company stock will be replaced by shares of stock in Illumina Delaware.
In order to establish that (i) you will not be subject to tax under Section
897 of the Internal Revenue Code of 1986, as amended (the "Code"), in
consequence of the Reincorporation and (ii) Illumina Delaware will not be
required under Section 1445 of the Code to withhold taxes from the Illumina
Delaware stock that you will receive in connection therewith, the Company hereby
represents to you that, as of the date of this letter, shares of Company stock
do not constitute a "United States real property interest" within the meaning of
Section 897(c) of the Code and the regulations issued thereunder.
A copy of this letter will be delivered to Illumina Delaware pursuant to
Section 4.8 of the Agreement.
Under penalties of perjury, the undersigned officer of the Company hereby declares that, to the best knowledge and belief of the undersigned, the facts set forth herein are true and correct.
Sincerely,
Officer and President
EXHIBIT 3.1
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ILLUMINA, INC.
Illumina, Inc., a corporation organized and existing under the laws of the State of Delaware, hereby certifies as follows:
A. The name of the corporation is Illumina, Inc. The corporation was originally incorporated under the same name, and the original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on _________, 2000.
B. Pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware, this Restated Certificate of Incorporation restates and amends the provisions of the Certificate of Incorporation of the corporation.
C. The text of the Certificate of Incorporation is hereby amended and restated in its entirety to read as follows:
ARTICLE I
The name of this corporation is Illumina, Inc.
ARTICLE II
The address of the corporation's registered office in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of Delaware.
ARTICLE IV
The corporation is authorized to issue two classes of shares of stock to be designated, respectively, Common Stock, $0.001 par value, and Preferred Stock, $0.001 par value. The total number of shares that the corporation is authorized to issue is 130,000,000 shares. The number of shares of Common Stock authorized is 120,000,000. The number of shares of Preferred authorized is 10,000,000.
The Preferred Stock may be issued from time to time in one or more series pursuant to a resolution or resolutions providing for such issue duly adopted by the board of directors (authority to do so being hereby expressly vested in the board). The board of directors is further authorized to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Preferred Stock and to fix the number of shares of any series of Preferred Stock and the designation of any such series of Preferred Stock. The board of directors, within the limits and restrictions stated in any resolution or resolutions of the board of directors originally fixing the number of shares constituting any series, may increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any series subsequent to the issue of shares of that series.
The authority of the board of directors with respect to each such class or series shall include, without limitation of the foregoing, the right to determine and fix:
(a) the distinctive designation of such class or series and the number of shares to constitute such class or series;
(b) the rate at which dividends on the shares of such class or series shall be declared and paid, or set aside for payment, whether dividends at the rate so determined shall be cumulative or accruing, and whether the shares of such class or series shall be entitled to any participating or other dividends in addition to dividends at the rate so determined, and if so, on what terms;
(c) the right or obligation, if any, of the corporation to redeem shares of the particular class or series of Preferred Stock and, if redeemable, the price, terms and manner of such redemption;
(d) the special and relative rights and preferences, if any, and the amount or amounts per share that the shares of such class or series of Preferred Stock shall be entitled to receive upon any voluntary or involuntary liquidation, dissolution or winding up of the corporation;
(e) the terms and conditions, if any, upon which shares of such class or series shall be convertible into, or exchangeable for, shares of capital stock of any other class or series, including the price or prices or the rate or rates of conversion or exchange and the terms of adjustment, if any;
(f) the obligation, if any, of the corporation to retire, redeem or purchase shares of such class or series pursuant to a sinking fund or fund of a similar nature or otherwise, and the terms and conditions of such obligation;
(g) voting rights, if any, on the issuance of additional shares of such class or series or any shares of any other class or series of Preferred Stock;
(h) limitations, if any, on the issuance of additional shares of such class or series or any shares of any other class or series of Preferred Stock; and
(i) such other preferences, powers, qualifications, special or relative rights and privileges thereof as the board of directors of the corporation, acting in accordance with this Restated Certificate of Incorporation, may deem advisable and are not inconsistent with law and the provisions of this Restated Certificate of Incorporation.
ARTICLE V
The corporation reserves the right to amend, alter, change, or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon the stockholders herein are granted subject to this right.
ARTICLE VI
The corporation is to have perpetual existence.
ARTICLE VII
ARTICLE VIII
In the event any shares of Preferred Stock shall be redeemed or converted pursuant to the terms hereof, the shares so converted or redeemed shall not revert to the status of authorized but unissued shares, but instead shall be canceled and shall not be re-issuable by the corporation.
ARTICLE IX
Holders of stock of any class or series of the corporation shall not be entitled to cumulate their votes for the election of directors or any other matter submitted to a vote of the stockholders, unless such cumulative voting is required pursuant to Sections 214 of the Delaware General Corporation Law, in which event each such holder shall be entitled to as many votes as shall equal the number of votes which (except for this provision as to cumulative voting) such holder would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected by him, and the holder may cast all of such votes for a single director or may distribute them among the number of directors to be voted for, or for any two or more of them as such holder may see fit, so long as the name of the candidate for director shall have been placed in nomination prior to the voting and the stockholder, or any other holder of the same class or series of stock, has given notice at the meeting prior to the voting of the intention to cumulate votes.
ARTICLE X
In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter, amend or repeal the Amended and Restated Bylaws of the corporation.
ARTICLE XI
No action shall be taken by the stockholders of the corporation except at an annual or special meeting of the stockholders called in accordance with the Amended and Restated Bylaws, no special meetings of the stockholders shall be called by stockholders without approval of the Board of
Directors, and no action, including the removal of directors without cause shall
be taken by the stockholders by written consent. The affirmative vote of sixty-
six and two-thirds percent (66 2/3%) of the then outstanding voting securities
of the corporation, voting together as a single class, shall be required for the
amendment, repeal or modification of the provisions of Article IX, Article X or
Article XII of this Amended and Restated Certificate of Incorporation or
Sections 2.3 (Special Meeting), 2.4 (Notice of Stockholders' Meeting), 2.4
(Advanced Notice of Stockholder Nominees and Stockholder Business), 2.8
(Voting), or 2.10 (Stockholder Action by Written Consent Without a Meeting), or
3.2 (Number of Directors) of the corporation's Amended and Restated Bylaws.
ARTICLE XII
Meetings of stockholders may be held within or without the State of Delaware, as the Amended and Restated Bylaws may provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Amended and Restated Bylaws of the corporation.
IN WITNESS WHEREOF, Illumina, Inc. has caused this certificate to be signed by Jay T. Flatley, its President and Chief Executive Officer, this ____ day of ____________, 2000.
President and Chief Executive Officer
Exhibit 3.2
BYLAWS
OF
ILLUMINA, INC.
TABLE OF CONTENTS
Page
----
ARTICLE I................................................................................................ 1
1.1 REGISTERED OFFICE............................................................................ 1
-----------------
1.2 OTHER OFFICES................................................................................ 1
-------------
ARTICLE II............................................................................................... 1
2.1 PLACE OF MEETINGS............................................................................ 1
-----------------
2.2 ANNUAL MEETING............................................................................... 1
--------------
2.3 SPECIAL MEETING.............................................................................. 2
---------------
2.4 NOTICE OF STOCKHOLDERS' MEETINGS............................................................. 2
--------------------------------
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE................................................. 2
--------------------------------------------
2.6 QUORUM....................................................................................... 2
------
2.7 ADJOURNED MEETING; NOTICE.................................................................... 2
-------------------------
2.8 VOTING....................................................................................... 3
------
2.9 WAIVER OF NOTICE............................................................................. 3
----------------
2.10 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.................................. 3
-----------------------------------------------------------
2.11 PROXIES...................................................................................... 4
-------
2.12 LIST OF STOCKHOLDERS ENTITLED TO VOTE........................................................ 4
-------------------------------------
ARTICLE III.............................................................................................. 4
3.1 POWERS....................................................................................... 4
------
3.2 NUMBER OF DIRECTORS.......................................................................... 5
-------------------
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS...................................... 5
-------------------------------------------------------
3.4 RESIGNATION AND VACANCIES.................................................................... 5
-------------------------
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE..................................................... 6
----------------------------------------
3.6 FIRST MEETINGS............................................................................... 6
--------------
3.7 REGULAR MEETINGS............................................................................. 7
----------------
3.8 SPECIAL MEETINGS; NOTICE..................................................................... 7
------------------------
3.9 QUORUM....................................................................................... 7
------
3.10 WAIVER OF NOTICE............................................................................. 7
----------------
3.11 ADJOURNED MEETING; NOTICE.................................................................... 7
-------------------------
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING............................................ 8
-------------------------------------------------
3.13 FEES AND COMPENSATION OF DIRECTORS........................................................... 8
----------------------------------
3.14 APPROVAL OF LOANS TO OFFICERS................................................................ 8
-----------------------------
3.15 REMOVAL OF DIRECTORS......................................................................... 8
--------------------
ARTICLE IV............................................................................................... 8
4.1 COMMITTEES OF DIRECTORS...................................................................... 8
-----------------------
|
TABLE OF CONTENTS
(continued)
Page
----
4.2 COMMITTEE MINUTES............................................................................ 9
-----------------
4.3 MEETINGS AND ACTION OF COMMITTEES............................................................ 9
---------------------------------
ARTICLE V................................................................................................ 10
5.1 OFFICERS..................................................................................... 10
--------
5.2 ELECTION OF OFFICERS......................................................................... 10
--------------------
5.3 SUBORDINATE OFFICERS......................................................................... 10
--------------------
5.4 REMOVAL AND RESIGNATION OF OFFICERS.......................................................... 10
-----------------------------------
5.5 VACANCIES IN OFFICES......................................................................... 10
--------------------
5.6 CHAIRMAN OF THE BOARD........................................................................ 11
---------------------
5.7 PRESIDENT.................................................................................... 11
---------
5.8 VICE PRESIDENT............................................................................... 11
--------------
5.9 SECRETARY.................................................................................... 11
---------
5.10 TREASURER.................................................................................... 12
---------
5.11 ASSISTANT SECRETARY.......................................................................... 12
-------------------
5.12 ASSISTANT TREASURER.......................................................................... 12
-------------------
5.13 AUTHORITY AND DUTIES OF OFFICERS............................................................. 12
--------------------------------
ARTICLE VI............................................................................................... 13
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.................................................... 13
-----------------------------------------
6.2 INDEMNIFICATION OF OTHERS.................................................................... 13
-------------------------
6.3 INSURANCE.................................................................................... 13
---------
ARTICLE VII.............................................................................................. 14
7.1 MAINTENANCE AND INSPECTION OF RECORDS........................................................ 14
-------------------------------------
7.2 INSPECTION BY DIRECTORS...................................................................... 14
-----------------------
7.3 ANNUAL STATEMENT TO STOCKHOLDERS............................................................. 15
--------------------------------
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS............................................... 15
----------------------------------------------
ARTICLE VIII............................................................................................. 15
8.1 CHECKS....................................................................................... 15
------
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS............................................. 15
------------------------------------------------
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES....................................................... 15
--------------------------------------
8.4 SPECIAL DESIGNATION ON CERTIFICATES.......................................................... 16
-----------------------------------
8.5 LOST CERTIFICATES............................................................................ 16
-----------------
8.6 CONSTRUCTION; DEFINITIONS.................................................................... 17
-------------------------
8.7 DIVIDENDS.................................................................................... 17
---------
8.8 FISCAL YEAR.................................................................................. 17
-----------
8.9 SEAL......................................................................................... 17
----
|
TABLE OF CONTENTS
(continued)
Page
----
8.10 TRANSFER OF STOCK............................................................................ 17
-----------------
8.11 STOCK TRANSFER AGREEMENTS.................................................................... 17
-------------------------
8.12 REGISTERED STOCKHOLDERS...................................................................... 18
-----------------------
ARTICLE IX............................................................................................... 18
ARTICLE X................................................................................................ 18
ARTICLE XI............................................................................................... 19
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES.................................................. 19
-------------------------------------------
11.2 DUTIES OF CUSTODIAN.......................................................................... 19
-------------------------------------------
|
ARTICLE I
The registered office of the corporation shall be 1209 Orange Street, in the City of Wilmington, County of New Castle, State of Delaware. The name of the registered agent of the corporation at such location is Corporation Trust Company.
The board of directors may at any time establish other offices at any place or places where the corporation is qualified to do business.
ARTICLE II
Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the board of directors. In the absence of any such designation, stockholders' meetings shall be held at the registered office of the corporation.
The annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors. In the absence of such designation, the annual meeting of stockholders shall be held on the Second Tuesday of May in each year at 10:00 a.m. However, if such day falls on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding full business day. At the meeting, directors shall be elected and any other proper business may be transacted.
A special meeting of the stockholders may be called, at any time for any purpose or purposes, by the board of directors.
All notices of meetings with stockholders shall be in writing and shall be sent or otherwise given in accordance with Section 2.5 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, date, and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.
Written notice of any meeting of stockholders, if mailed, is given when deposited in the United States mail, postage prepaid, directed to the stockholder at his address as it appears on the records of the corporation. An affidavit of the secretary or an assistant secretary or of the transfer agent of the corporation that the notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein.
The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.
When a meeting is adjourned to another time or place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.11 of these bylaws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners of stock and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder.
Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders need be specified in any written waiver of notice unless so required by the certificate of incorporation or these bylaws.
In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(a) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
(b) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the board of directors is necessary, shall be the day on which the first written consent is expressed.
(c) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the board of directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix a new record date for the adjourned meeting.
Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action may authorize another person or persons to act for him by a written proxy, signed by the stockholder and filed with the secretary of the corporation, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the stockholder or the stockholder's attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(c) of the General Corporation Law of Delaware.
The officer who has charge of the stock ledger of a corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.
ARTICLE III
Subject to the provisions of the General Corporation Law of Delaware and any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors.
The board of directors shall consist of seven (7) members. The number of directors may be changed by an amendment to this bylaw, duly adopted by the board of directors or by the stockholders, or by a duly adopted amendment to the certificate of incorporation. Upon the closing of the first sale of the corporation's common stock pursuant to a firmly underwritten registered public offering (the "IPO"), the directors shall be divided into three classes, with the term of office of the first class, which class shall initially consist of two (2) directors, to expire at the first annual meeting of stockholders held after the IPO; the term of office of the second class, which shall initially consist of two (2) directors, to expire at the second annual meeting of stockholders held after the IPO; the term of office of the third class, which class shall initially consist of three (3) directors, to expire at the third annual meeting of stockholders held after the IPO; and thereafter for each such term to expire at each third succeeding annual meeting of stockholders held after such election.
No reduction of the authorized number of directors shall have the effect of removing any director before that director's term of office expires.
Except as provided in Section 3.4 of these bylaws, directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting. Directors need not be stockholders unless so required by the certificate of incorporation or these bylaws, wherein other qualifications for directors may be prescribed. Each director, including a director elected to fill a vacancy, shall hold office until his successor is elected and qualified or until his earlier resignation or removal.
Elections of directors need not be by written ballot.
Any director may resign at any time upon written notice to the corporation. When one or more directors so resigns and the resignation is effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in this section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these bylaws:
(a) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.
(b) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected.
If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten (10) percent of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the General Corporation Law of Delaware as far as applicable.
The board of directors of the corporation may hold meetings, both regular and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors.
Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board.
Special meetings of the board may be called by the president on three (3) days' notice to each director, either personally or by mail, telegram, telex, or telephone; special meetings shall be called by the president or secretary in like manner and on like notice on the written request of two (2) directors unless the board consists of only one (1) director, in which case special meetings shall be called by the president or secretary in like manner and on like notice on the written request of the sole director.
At all meetings of the board of directors, a majority of the authorized number of directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.
Whenever notice is required to be given under any provision of the General Corporation Law of Delaware or of the certificate of incorporation or these bylaws, a written waiver thereof, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors, or members of a committee of directors, need be specified in any written waiver of notice unless so required by the certificate of incorporation or these bylaws.
If a quorum is not present at any meeting of the board of directors, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.
Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the board of directors, or of any committee thereof, may be taken without a meeting if all members of the board or committee, as the case may be, consent thereto in writing and the writing or writings are filed with the minutes of proceedings of the board or committee.
Unless otherwise restricted by the certificate of incorporation or these bylaws, the board of directors shall have the authority to fix the compensation of directors.
The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing contained in this section shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute.
Unless otherwise restricted by statute, by the certificate of incorporation or by these bylaws, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors.
No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director's term of office.
ARTICLE IV
The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, with each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the board of directors or in the bylaws of the corporation, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) amend the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, (iv) recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution, or (v) amend the bylaws of the corporation; and, unless the board resolution establishing the committee, the bylaws or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of Delaware.
Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required.
Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the provisions of Article III of these bylaws, Section 3.5
(place of meetings and meetings by telephone), Section 3.7 (regular meetings),
Section 3.8 (special meetings and notice), Section 3.9 (quorum), Section 3.10
(waiver of notice), Section 3.11 (adjournment and notice of adjournment), and
Section 3.12 (action without a meeting), with such changes in the context of
those bylaws as are necessary to substitute the committee and its members for
the board of directors and its members; provided, however, that the time of
regular meetings of committees may also be called by resolution of the board of
directors and that notice of special meetings of committees shall also be given
to all alternate members, who shall have the right to attend all meetings of the
committee. The board of directors may adopt rules for the government of any
committee not inconsistent with the provisions of these bylaws.
ARTICLE V
The officers of the corporation shall be a president, one or more vice
presidents, a secretary, and a treasurer. The corporation may also have, at the
discretion of the board of directors, a chairman of the board, one or more
assistant vice presidents, assistant secretaries, assistant treasurers, and any
such other officers as may be appointed in accordance with the provisions of
Section 5.3 of these bylaws. Any number of offices may be held by the same
person.
The officers of the corporation, except such officers as may be appointed in accordance with the provisions of Sections 5.3 or 5.5 of these bylaws, shall be chosen by the board of directors, subject to the rights, if any, of an officer under any contract of employment.
The board of directors may appoint, or empower the president to appoint, such other officers and agents as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine.
Subject to the rights, if any, of an officer under any contract of employment, any officer may be removed, either with or without cause, by an affirmative vote of the majority of the board of directors at any regular or special meeting of the board or, except in the case of an officer chosen by the board of directors, by any officer upon whom such power of removal may be conferred by the board of directors.
Any officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the officer is a party.
Any vacancy occurring in any office of the corporation shall be filled by the board of directors.
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
Subject to such supervisory powers, if any, as may be given by the board of directors to the chairman of the board, if there be such an officer, the president shall be the chief executive officer of the corporation and shall, subject to the control of the board of directors, have general supervision, direction, and control of the business and the officers of the corporation. He shall preside at all meetings of the stockholders and, in the absence or nonexistence of a chairman of the board, at all meetings of the board of directors. He shall have the general powers and duties of management usually vested in the office of president of a corporation and shall have such other powers and duties as may be prescribed by the board of directors or these bylaws.
In the absence or disability of the president, the vice presidents, if any, in order of their rank as fixed by the board of directors or, if not ranked, a vice president designated by the board of directors, shall perform all the duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors, these bylaws, the president or the chairman of the board.
The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of directors, committees of directors, and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors' meetings or committee meetings, the number of shares present or represented at stockholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation's transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the board of directors required to be given by law or by these bylaws. He shall keep the seal of the corporation, if one be adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by these bylaws.
The treasurer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings, and shares. The books of account shall at all reasonable times be open to inspection by any director.
The treasurer shall deposit all money and other valuables in the name and to the credit of the corporation with such depositaries as may be designated by the board of directors. He shall disburse the funds of the corporation as may be ordered by the board of directors, shall render to the president and directors, whenever they request it, an account of all of his transactions as treasurer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or these bylaws.
The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
The assistant treasurer, or, if there is more than one, the assistant treasurers, in the order determined by the stockholders or board of directors (or if there be no such determination, then in the order of their election), shall, in the absence of the treasurer or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors or the stockholders may from time to time prescribe.
In addition to the foregoing authority and duties, all officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors or the stockholders.
ARTICLE VI
The corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, indemnify each of its directors and officers against expenses (including attorneys' fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.1, a "director" or "officer" of the corporation includes any person (i) who is or was a director or officer of the corporation, (ii) who is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.
The corporation shall have the power, to the extent and in the manner permitted by the General Corporation Law of Delaware, to indemnify each of its employees and agents (other than directors and officers) against expenses (including attorneys' fees), judgments, fines, settlements, and other amounts actually and reasonably incurred in connection with any proceeding, arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.2, an "employee" or "agent" of the corporation (other than a director or officer) includes any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation.
The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of the General Corporation Law of Delaware.
ARTICLE VII
The corporation shall, either at its principal executive office or at such place or places as designated by the board of directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation's stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal place of business.
The officer who has charge of the stock ledger of a corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.
Any director shall have the right to examine the corporation's stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.
The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation.
The chairman of the board, the president, any vice president, the treasurer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.
ARTICLE VIII
From time to time, the board of directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments.
The board of directors, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.
The shares of a corporation shall be represented by certificates, provided that the board of directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock
represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the corporation by the chairman or vice-chairman of the board of directors, or the president or vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of such corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.
If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.
Except as provided in this Section 8.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation and cancelled at the same time. The corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the corporation may require the owner of the lost, stolen or destroyed certificate, or his legal representative, to give the corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.
Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the Delaware General Corporation Law shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term "person" includes both a corporation and a natural person.
The directors of the corporation, subject to any restrictions contained in the certificate of incorporation, may declare and pay dividends upon the shares of its capital stock pursuant to the General Corporation Law of Delaware. Dividends may be paid in cash, in property, or in shares of the corporation's capital stock.
The directors of the corporation may set apart out of any of the funds of the corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the corporation, and meeting contingencies.
The fiscal year of the corporation shall be fixed by resolution of the board of directors and may be changed by the board of directors.
The seal of the corporation shall be such as from time to time may be approved by the board of directors.
Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate, and record the transaction in its books.
The corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the corporation to restrict the transfer of shares of stock of the corporation of any one or more classes owned by such stockholders in any manner not prohibited by the General Corporation Law of Delaware.
The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner, shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.
ARTICLE IX
The original or other bylaws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws.
ARTICLE X
If it should be deemed advisable in the judgment of the board of directors of the corporation that the corporation should be dissolved, the board, after the adoption of a resolution to that effect by a majority of the whole board at any meeting called for that purpose, shall cause notice to be mailed to each stockholder entitled to vote thereon of the adoption of the resolution and of a meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate's
becoming effective in accordance with Section 103 of the General Corporation Law
of Delaware, the corporation shall be dissolved.
Whenever all the stockholders entitled to vote on a dissolution consent in writing, either in person or by duly authorized attorney, to a dissolution, no meeting of directors or stockholders shall be necessary. The consent shall be filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such consent's becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the corporation shall be
dissolved. If the consent is signed by an attorney, then the original power of attorney or a photocopy thereof shall be attached to and filed with the consent. The consent filed with the Secretary of State shall have attached to it the affidavit of the secretary or some other officer of the corporation stating that the consent has been signed by or on behalf of all the stockholders entitled to vote on a dissolution; in addition, there shall be attached to the consent a certification by the secretary or some other officer of the corporation setting forth the names and residences of the directors and officers of the corporation.
ARTICLE XI
The Court of Chancery, upon application of any stockholder, may appoint one or more persons to be custodians and, if the corporation is insolvent, to be receivers, of and for the corporation when:
(a) at any meeting held for the election of directors the stockholders are so divided that they have failed to elect successors to directors whose terms have expired or would have expired upon qualification of their successors; or
(b) the business of the corporation is suffering or is threatened with irreparable injury because the directors are so divided respecting the management of the affairs of the corporation that the required vote for action by the board of directors cannot be obtained and the stockholders are unable to terminate this division; or
(c) the corporation has abandoned its business and has failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets.
The custodian shall have all the powers and title of a receiver appointed under Section 291 of the General Corporation Law of Delaware, but the authority of the custodian shall be to continue the business of the corporation and not to liquidate its affairs and distribute its assets, except when the Court of Chancery otherwise orders and except in cases arising under Sections 226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware.
CERTIFICATE OF ADOPTION OF BYLAWS
OF
ILLUMINA, INC.
The undersigned person appointed in the Certificate of Incorporation to act as the Incorporator of Illumina, Inc. hereby adopts the foregoing bylaws, comprising 20 pages, as the Bylaws of the corporation.
Executed as of _______________, 2000.
The undersigned hereby certifies that he is the duly elected, qualified, and acting Secretary of Illumina, Inc. and that the foregoing Bylaws, comprising 20 pages, were adopted as the Bylaws of the corporation on _______________, 2000, by the person appointed in the Certificate of Incorporation to act as the Incorporator of the corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and affixed the corporate seal this _____ day of __________, 2000.
(ALTERNATIVE)
CERTIFICATE OF ADOPTION OF BYLAWS
OF
ILLUMINA, INC.
The undersigned hereby certifies that he is the duly elected, qualified, and acting Secretary of Illimina, Inc. and that the foregoing Bylaws, comprising 20 pages, were submitted to the stockholders at their first meeting held on _______________, 2000, and recorded in the minutes thereof and were ratified by the vote of stockholders entitled to exercise the majority of the voting power of the corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and affixed the corporate seal this ____ day of ____________ 2000.
EXHIBIT 4.1
COMMON STOCK
THIS CERTIFICATE IS TRANSFERABLE
IN BOSTON, MA AND NEW YORK, NY
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP 452327 10 9
This Certifies that
is the record holder of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, $.01 PAR VALUE, OF
Illumina, Inc.
transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney, upon surrender of this certificate properly endorsed. This certificate is not valid until countersigned and registered by the Transfer Agent and Registrar.
IN WITNESS WHEREOF the Corporation has caused this certificate to be signed in facsimile by its duly authorized officers and a facsimile of its corporate seal.
Dated: /s/ Michael J. O'Donnell SECRETARY /s/ Jay Flatley PRESIDENT AND CHIEF EXECUTIVE OFFICER |
COUNTERSIGNED AND REGISTERED:
EQUISERVE TRUST COMPANY, N.A.
TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE
Illumina, Inc.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO REQUESTS, A FULL STATEMENT OF THE DESIGNATIONS, RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF EACH CLASS OF STOCK OR SERIES THEREOF AUTHORIZED TO BE ISSUED AND THE AUTHORITY OF THE BOARD OF DIRECTORS OF THE CORPORATION TO DESIGNATE AND FIX THE RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS OF CLASSES OF PREFERRED STOCK IN SERIES.
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM * - as tenants in common
TEN ENT * - as tenants by the entities
JT WROS * - as joint tenants with rights of survivorship and not as tenants in
common
UNIF GIFT MIN ACT* Custodian
(Cust)
(Minor)
under Uniform Gifts to Minors
Act
(State)
|
Additional abbreviations may also be used though not in the above list.
For value received,
hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
(Please print or typewrite name and address including postal zip code of assignee)
Shares of the Common Stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
Attorney
to transfer the said Shares on the Books of the within-named Corporation with full power of substitution in the premises.
Dated:
NOTICE: The signature to this assignment must correspond with the name as written upon the face of the certificate in every particular, without alteration or enlargement, or any change whatever.
SIGNATURE(S) GUARANTEED:
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN
AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE
17Ad-15.
COMMON STOCK
Exhibit 4.2
EXECUTION COPY
ILLUMINA, INC.
SECOND AMENDED AND RESTATED
STOCKHOLDER RIGHTS AGREEMENT
Dated as of November 5, 1999
ILLUMINA, INC.
SECOND AMENDED AND RESTATED
STOCKHOLDER RIGHTS AGREEMENT
Whereas, the Company and the purchasers of the Company's Series C Preferred Stock (the "Purchasers") have entered into an agreement for sale by the Company and purchase by the Purchasers of the Company's Series C Preferred Stock of even date herewith; and
Whereas, in connection with the purchase and sale of the Company's securities, the Company and the Purchasers desire to provide for (i) the rights of the Purchasers with respect to registration of Common Stock issued upon conversion of the shares of the Company's stock held by the Purchasers according to the terms of this Agreement; and (ii) certain other provisions as set forth below.
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
SECTION 1
As used in this Agreement, the following terms shall have the following respective meanings:
SECTION 2
(a) As soon as practicable after the end of each month and fiscal quarter, and in any event within thirty (30) days and forty-five (45) days, respectively, thereafter, a consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such period, consolidated statements of income, consolidated statements of changes in financial condition, a consolidated statement of cash flow of the Company and its subsidiaries and a statement of stockholders' equity for such period and for the current fiscal year to date, and setting forth in each case in comparative form the figures for corresponding periods in the previous fiscal year, and setting forth in comparative form the budgeted figures, prepared in accordance with generally accepted accounting principles (other than for accompanying notes), subject to changes resulting from year-end audit adjustments, all in reasonable detail and signed by the principal financial or accounting officer of the Company.
(b) As soon as practicable after its adoption by the Board of Directors, a copy of the annual operating plan of the Company for the next fiscal year and an annual budget for the next fiscal year of the Company containing profit and loss projections, cash flow projections, and capital expenditures, all on a monthly basis.
SECTION 3
(a) "New Securities" shall mean any Common Stock of the Company,
whether now authorized or not, and any rights, options, or warrants to purchase
said Common Stock, and securities of any type whatsoever that are, or may
become, convertible into Common Stock; provided, however, that "New Securities"
does not include (i) shares of Common Stock issued upon conversion of the
Preferred; (ii) securities issued pursuant to the acquisition of another
corporation by the Company by merger, purchase of substantially all of the
assets, or other reorganization as approved by the Company's Board of Directors;
(iii) shares of the Company's Common Stock (or related options) issued to
employees, officers, directors, consultants or other persons performing services
for the Company (including, but not by way of limitation, distributors and sales
representatives) pursuant to any stock offering, plan, or arrangement as
approved by the Company's Board of Directors; (iv) securities issued to
financial institutions regularly engaged in the business of lending money or
providing equipment lease financing in the connection with the extension of
credit to the Company for the purpose of financing equipment, inventory, or
accounts receivable or in connection with the lease of equipment and in both
cases for other than equity financing purposes, as approved by the Company's
Board of Directors; (v) securities issued to customers or potential customers of
the Company in connection with participation in a product development consortium
or issued in connection with a strategic alliance or other corporate partner
transaction with the Company for purposes which are not primarily equity
financing, as approved by the Company's Board of Directors; or (vi) shares of
the Company's Common Stock issued in connection with any stock split, stock
dividend, or recapitalization by the Company.
(b) In the event that the Company proposes to issue New Securities, it shall give each Stockholder at least thirty (30) days prior written notice of its intention, describing the type of New Securities, the price, and the general terms upon which the Company proposes to issue the same. Each Stockholder shall have twenty (20) days from the date of mailing of any such notice to agree to purchase its pro rata share of such New Securities for the price and upon the general terms specified in the notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased.
(c) In the event that a Stockholder fails to exercise in full the right of first refusal within said twenty (20) day period, the Company shall have seventy-five (75) days thereafter to sell (or enter into an agreement pursuant to which the sale of New Securities covered thereby shall be closed, if at all, within thirty (30) days from the date of said agreement) the New Securities respecting which the Stockholder's rights were not exercised, at a price and upon general terms no more favorable to the purchasers thereof than specified in the Company's notice. In the event the Company has not sold the New Securities within said seventy-five (75) day period (or sold and issued New Securities in accordance with the foregoing within thirty (30) days from the date of said agreement), the Company shall not thereafter issue or sell any New Securities, without first offering such securities to the Stockholders in the manner provided above.
(d) The Stockholder's failure to exercise this right of first refusal on any issuance of New Securities shall not adversely affect the Stockholder's right of first refusal to purchase subsequent issuances of New Securities.
(e) The right of first refusal set forth in this Section 3.1 is nonassignable except to another Stockholder or another entity under common control with a Stockholder.
SECTION 4
(i) promptly give written notice of the proposed registration, qualification or compliance to all other Holders and afford each Holder the opportunity of including in the registration such Registrable Securities owned by such Holder; and
(ii) as soon as practicable, use its best efforts to effect such registration, qualification or compliance (including, without limitation, appropriate qualification under applicable blue sky or other state securities laws and appropriate compliance with applicable regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within twenty (20) days after receipt of such written notice from the Company;
Provided, however, that the Company shall not be obligated to take any action to effect any such registration, qualification or compliance pursuant to this Section 4.1:
(A) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification or compliance unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;
(B) Prior to the earlier to occur of (i) six (6) months after the effective date of the Company's first registered public offering of its stock or (ii) December 31, 2003;
(C) During the period starting with the sixty (60) days
prior to the Company's estimated date of filing of, and ending on the date six
(6) months immediately following the effective date of, a registration statement
in connection with the initial public offering of securities of the Company,
provided that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective;
(D) During the period starting with the date thirty (30)
days prior to the Company's estimated date of filing of, and ending on the date
three (3) months immediately following the effective date of, any registration
statement pertaining to securities of the Company sold by the Company (other
than a registration of securities in a Rule 145 transaction or with respect to
an employee benefit plan), provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to become
effective;
(E) After the Company has effected two registrations pursuant to this paragraph 4.1, and such registrations have been declared or ordered effective, provided that all Registrable Securities requested to be included in each such registration were in fact included in the registration; and provided further that any registration that is withdrawn because of negative information about the Company, which information is likely to have a material adverse effect on the price or amount at which the Initiating Holders can sell their Shares, shall not count toward such two registrations hereunder;
(F) If the Company shall furnish to such Holders a certificate signed by the President of the Company, and concurred to in writing by an underwriter or other
financial advisor of the Company, stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company or its stockholders for a registration statement to be filed in the near future, then the Company's obligation to use its best efforts to register, qualify or comply under this Section 4 shall be deferred for a period not to exceed ninety (90) days from the date of receipt of written request from the Initiating Holders, provided, however, that the Company shall not utilize this right more than once in any twelve (12) month period.
Subject to the foregoing clauses (A) through (F), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practicable, after receipt of the request or requests of the Initiating Holders.
The Company shall (together with all Holders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the managing underwriter selected for such underwriting by the Company, but subject to the reasonable approval of a majority in interest of the Initiating Holders. Notwithstanding any other provision of this Section 4.1, if the managing underwriter advises the Initiating Holders in writing that the number of shares to be underwritten exceeds the number that can be sold in such offering so as to be likely to have a material adverse effect on the price or amount at which the Initiating Holders can sell their Shares, then the Company shall so advise all Holders and Other Holders, and the number of shares that may be included in the registration and underwriting shall be allocated first among all Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders at the time of filing the registration statement and second among the Other Holders in proportion to the number of shares proposed to be included in such registration by such Other Holders. No Registrable Securities or other securities excluded from the underwriting by reason of the underwriter's marketing limitation shall be included in such registration. To facilitate the allocation of shares in accordance with the above provisions, the Company or the underwriters may round the number of shares allocated to any holder to the nearest one hundred (100) shares.
If any Holder of Registrable Securities or Other Holder disapproves of the terms of the underwriting, such person may elect to withdraw therefrom by written notice to the Company, the managing underwriter and the Initiating Holders. The Registrable Securities and/or other securities so withdrawn shall also be withdrawn from registration.
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made by any Holder within twenty (20) days after receipt of such written notice from the Company.
(a) keep each Holder advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof;
(b) as soon as practicable, prepare and file with the Commission a registration statement with respect to such securities and use its best efforts to cause such registration statement to become and remain effective until the earlier of (i) one hundred twenty (120) days or (ii) the distribution described in the Registration Statement has been completed; provided, however, that (i) such 120-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities) of the Company; and (ii) in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such 120-day period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold, provided that Rule 145, or any successor Rule under the Securities Act, permits an offering on a continuous or delayed basis, and, provided further, that applicable rules under the Securities Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (I) includes any prospectus required by Section 10(a)(3)
of the Securities Act or (II) reflects facts or events representing a material
or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included
in (I) and (II) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Exchange Act in the registration statement;
(c) furnish to the Holders participating in such registration and to the underwriters of the securities being registered such reasonable number of copies of the registration statement, preliminary prospectus, final prospectus and such other documents as such underwriters may reasonably request in order to facilitate the public offering of such securities;
(d) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement;
(e) in the event of an underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement;
(f) notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements made therein not misleading in the light of the circumstances then existing;
(g) provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;
(h) use its best efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any Holder reasonably requests and do any and all other acts and things which may be necessary or advisable to enable such holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller; provided, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (d), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service or process in any such jurisdiction, but the Company will be required to consent to service or process in actions arising out of or in connection with the sale of the Registrable Securities or any violation of state securities laws;
(i) use its best efforts to cause the Registrable Securities covered by such registration statement to be registered with or approved by any other governmental agencies or
authorities as may be necessary by virtue of the business and operations of the Company to enable the seller or sellers thereof to consummate the disposition of such Registrable Securities;
(j) use its best efforts to obtain a comfort letter from the Company's independent public accountants in customary form and covering such matters of the type customarily covered by comfort letters with respect to offerings of such type as the Holders may reasonably request;
(k) otherwise comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering a period of twelve months, beginning within three months after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; and
(l) cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed, provided that the applicable listing requirements are satisfied.
The Company may require each holder of Registrable Securities as to which any registration is being effected to furnish to the Company such information regarding the distribution of such Registrable Securities as the Company may from time to time reasonably request in writing.
In connection with the preparation and filing of each registration statement under the Securities Act pursuant to this Agreement, the Company will give each Holder of Registrable Securities, their underwriters, if any, and their respective counsel and accountants, the opportunity to participate in the preparation of such registration statement, each prospectus included therein or filed with the Commission, and each amendment, thereof or supplement thereto, and will give each of them such access to its books and records and such opportunities to discuss the business of the Company with its officers and the independent public accountants who have certified its financial statements as shall be necessary, in the opinion of such Holders' and such underwriters' respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act.
prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration, qualification or compliance, or based on 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 in which they were made, not misleading, or any violation by the Company of the Securities Act, the Exchange Act or any state or federal securities law, or any Rule or regulation promulgated under such Acts or law applicable to the Company in connection with any such registration, qualification or compliance, and the Company will reimburse each such Holder, each of its officers, directors and partners, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, each Stockholder, each of its officers, directors and partners and each person controlling such Stockholder, for any legal and any other expenses reasonably incurred in connection with investigating, preparing or defending any such claim, loss, damage, liability or action, provided that the Company will not be liable in any such case to any such Holder to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission or alleged untrue statement or omission, made in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such Holder, controlling person, underwriter or Stockholder and stated to be specifically for use therein. If the Holders and Stockholders are represented by counsel other than counsel for the Company, the Company will not be obligated under this Section 4.7(a) to reimburse legal fees and expenses of more than one separate counsel for all Holders and Stockholders.
in connection with the underwritten public offering are in conflict with the foregoing provisions of this Section 4.8, the provisions in the underwriting agreement shall control.
(a) Make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date that the Company becomes subject to the reporting requirements of the Securities Act or the Exchange Act.
(b) Use its best efforts to file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements);
(c) Furnish to any Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as such Holder may reasonably request in availing itself of any Rule or regulation of the Commission allowing such Holder to sell any such securities without registration.
the effective date of the Company's first registered public offering of its stock, at such time as such Holder may sell under Rule 144, or a successor rule, in a three month period all Registrable Securities then held by such Holder.
(i) The execution, delivery and performance of this Agreement by the Company have been duly authorized by all requisite corporate action and will not violate any provision of law, any order of any court or other agency of government, the Restated Certificate or By-laws of the Company or any provision of any indenture, agreement or other instrument to which it or any or its properties or assets is bound, conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any such indenture, agreement or other instrument or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Company.
(ii) This Agreement has been duly executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable in accordance with its terms.
SECTION 5
providing that such Common Stock shall be subject to a right of the Company to repurchase such Common Stock at the original purchase price in the event that the relationship of such person with the Company is terminated, which right shall lapse over a five-year period, or providing that such options shall become exercisable over a five-year period based upon continuing employment, or providing such other vesting arrangements as determined appropriate by the Company's Board of Directors.
SECTION 6
(a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
(b) "THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER OR HIS PREDECESSOR IN INTEREST. COPIES OF SUCH AGREEMENT MAY BE OBTAINED BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE COMPANY.
(c) Any legend required to be placed thereon by the California Commissioner of Corporations or any other applicable state securities laws.
SECTION 7
shall continue in full force and effect without said provision; provided that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.
[Signature pages follow]
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
"COMPANY" ILLUMINA, INC.
a California corporation
By: _________________________________
Jay Flatley
President and Chief Executive Officer
|
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
"STOCKHOLDER" PE CORPORATION
By:______________________________
Title:___________________________
|
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
"STOCKHOLDER" ARCH VENTURE FUND III, L.P.
By: ARCH Venture Partners, LLC
General Partner
By:__________________________________
Title:_______________________________
|
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
"STOCKHOLDER" CW VENTURES III, L.P.
By:____________________________________
CW Partners IV, LLC
General Partner
CW VENTURES III - A CO-INVESTMENT
FUND, L.P.
By:____________________________________
CW Partners IV, LLC
General Partner
CHASE/CW VENTURES III (ILLUMINA), L.P.
By:____________________________________
CW Partners IV, LLC
General Partner
|
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
"STOCKHOLDER" VENROCK ASSOCIATES
By:____________________________________
Name:__________________________________
Title: General Partner
VENROCK ASSOCIATES II, L.P.
By:____________________________________
Name:__________________________________
Title: General Partner
VENROCK ENTREPRENEURS FUND, L.P.
By: Venrock Management, L.L.C.
Its: General Partner
By:____________________________________
Name:__________________________________
Title: Member
|
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
"STOCKHOLDER" TGI FUND II, LC
By: Tredegar Investments, Inc.
By:____________________________________
Steve Johnson, President
|
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
"STOCKHOLDER" LOMBARD ODIER & CIE
By:____________________________________
Title:_________________________________
By:____________________________________
Title:_________________________________
|
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
"STOCKHOLDER" FOUR PARTNERS
By:____________________________________
Title:_________________________________
|
FBB ASSOCIATES
By:____________________________________
Title:_________________________________
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
"STOCKHOLDER" THE DOW CHEMICAL COMPANY
By:____________________________________
Title:_________________________________
|
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
"STOCKHOLDER" CHEVRON TECHNOLOGY VENTURES LLC
By:____________________________________
Title:_________________________________
|
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
"STOCKHOLDER" STATE FARM MUTUAL AUTOMOBILE
INSURANCE COMPANY
By:___________________________________
Title:________________________________
By:___________________________________
Title:________________________________
|
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
"STOCKHOLDER" COMDISCO, INC.
By:___________________________________
Title:________________________________
|
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
IN WITNESS WHEREOF, the parties have executed this Second Amended and Restated Stockholder Rights Agreement as of the day and date set forth above.
SCHEDULE OF STOCKHOLDERS
Series A Preferred Stock Financing (June 12, 1998)
Stockholder Security Number of Shares
---------------------------------------------------------------------------------------------------
CW Ventures III, L.P. Series A Preferred 1,770,302
ARCH Venture Fund III, L.P. Series A Preferred 345,302
MLPF&S Cust FPO Bain Capital Series A Preferred 250,000
SEP FBO Michele D. May
John R. Stuelpnagel Series A Preferred 72,399
Kevin J. Kinsella Trust dated Series A Preferred 33,333
November 2, 1994
David R. Walt Series A Preferred 16,378
Anthony W. Czarnik Series A Preferred 6,551
Mark S. Chee Series A Preferred 5,733
|
Series B Preferred Stock Financing (November 12, 1998)
Stockholder Security Number of Shares
-----------------------------------------------------------------------------------------------------------
ARCH Venture Fund III, L.P. Series B Preferred 2,644,997
CW Ventures III, L.P. Series B Preferred 2,375,099
Venrock Associates II, L.P. Series B Preferred 1,507,648
Venrock Associates Series B Preferred 1,137,349
TGI Fund II, LC Series B Preferred 998,621
Mark S. Chee Series B Preferred 367,060
John R. Stuelpnagel Series B Preferred 107,959
MLPF&S Cust FPO Bain Capital Series B Preferred 53,980
SEP FBO Michele D. May
David R. Walt Series B Preferred 53,980
Comdisco, Inc. Series B Preferred 53,980
Kevin J. Kinsella Trust dated Series B Preferred 35,626
November 2, 1994
|
Series C Preferred Stock Financing - First Closing (November 5, 1999)
Stockholder Security Number of Shares
---------------------------------- ------------------------------- ----------------------------
PE Corporation Series C Preferred 1,250,000
|
Series C Preferred Stock Financing - Second Closing (December 16, 1999)
Stockholder Security Number of Shares
---------------------------------- ------------------------------- ----------------------------
ARCH Venture Fund III, L.P. Series C Preferred 625,000
CW Ventures III, L.P. Series C Preferred 375,000
CW Ventures III - a Co-Investment Series C Preferred 150,000
Investment Fund, L.P.
Chase/CW Ventures III, L.P. Series C Preferred 50,000
Venrock Associates II, L.P. Series C Preferred 350,313
Venrock Associates, L.P. Series C Preferred 243,437
Venrock Entrepreneur's Fund Series C Preferred 31,250
TGI Fund II, L.C. Series C Preferred 750,000
Lombard Odier & Cie Series C Preferred 750,000
FBB Associates Series C Preferred 712,500
Four Partners Series C Preferred 37,500
The Dow Chemical Company Series C Preferred 687,500
Chevron Technology Ventures LLC Series C Preferred 500,000
State Farm Mutual Automobile Insurance Series C Preferred 375,000
Company
Comdisco, Inc. Series C Preferred 50,000
Jay and Sarah Flatley Series C Preferred 12,500
Katherine Sbicca Flatley Series C Preferred 6,250
C. Woodrow Rea Series C Preferred 12,500
Mark S. Chee Series C Preferred 7,500
John R. Stuelpnagel Series C Preferred 6,250
Harold B. Staff Series C Preferred 12,500
Richard J. Pytelewski Series C Preferred 5,000
|
June 30, 2000
Illumina, Inc.
9390 Towne Centre Drive, Suite 200
San Diego, CA 92121
Re: Registration on Form S-1
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 filed by you with the Securities and Exchange Commission on April 3, 2000 (Registration No. 333- 33922), as amended (the "Registration Statement"), in connection with the registration under the Securities Act of 1933, as amended, of up to 5,000,000 shares of your Common Stock, $0.01 par value per share (the "Shares"). The Shares include an over-allotment option granted to the underwriters of the offering to purchase up to 750,000 shares. We understand that the Shares are to be sold to the underwriters of the offering for resale to the public as described in the Registration Statement. As your legal counsel, we have examined the proceedings taken, and are familiar with the proceedings proposed to be taken, by you in connection with the sale and issuance of the Shares to be sold by you. It is our opinion that upon completion of the proceedings being taken or contemplated by us, as your counsel, to be taken prior to the issuance of the Shares, including the proceedings being taken in order to permit such transaction to be carried out in accordance with applicable state securities laws, the Shares, when issued and sold in the manner described in the Registration Statement, will be legally issued, fully paid and non-assessable. We are members of the Bar of the State of California only and express no opinion as to any matter relating to the laws of any jurisdiction other than the laws of the State of California and the federal laws of the United States. Without limiting the foregoing, we express no opinion as to the securities laws of the State of Delaware. We consent to the use of this opinion as an exhibit to the Registration Statement and further consent to the use of our name wherever appearing in the Registration Statement, including the Prospectus constituting a part thereof, and any amendments thereto.
Very truly yours,
/s/ Wilson Sonsini Goodrich & Rosati Wilson Sonsini Goodrich & Rosati |
Exhibit 10.1
ILLUMINA, INC.
FORM OF
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is effective as of May __, 2000 by and between Illumina, Inc., a Delaware corporation (the "Company"), and [name] ("Indemnitee").
WHEREAS, effective as of the date hereof, Illumina, Inc., a California corporation, is reincorporating into Delaware;
WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve the Company and its related entities;
WHEREAS, in order to induce Indemnitee to continue to provide services to the Company, the Company wishes to provide for the indemnification of, and the advancement of expenses to, Indemnitee to the maximum extent permitted by law;
WHEREAS, the Company and Indemnitee recognize the continued difficulty in obtaining liability insurance for the Company's directors, officers, employees, agents and fiduciaries, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers, employees, agents and fiduciaries to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited; and
WHEREAS, in connection with the Company's reincorporation, the Company and Indemnitee desire to continue to have in place the additional protection provided by an indemnification agreement, with such changes as are required to conform the existing agreement to Delaware law and to provide indemnification and advancement of expenses to the Indemnitee to the maximum extent permitted by Delaware law;
WHEREAS, in view of the considerations set forth above, the Company desires that Indemnitee shall be indemnified and advanced expenses by the Company as set forth herein;
NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth below.
a. "Change in Control" shall mean, and shall be deemed to have occurred if, on or after the date of this Agreement, (i) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended), other than a trustee or other fiduciary holding securities under an employee benefit plan of the Company acting in such capacity or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company, becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing more than 50% of the total voting power represented by the Company's then outstanding Voting Securities, (ii) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Company and any new director whose election by the Board of Directors or nomination for election by the Company's stockholders was approved by a vote of at least two thirds (2/3) of the directors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof, (iii) the stockholders of the Company approve a merger or consolidation of the Company with any other corporation other than a merger or consolidation which would result in the Voting Securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least 80% of the total voting power represented by the Voting Securities of the Company or such surviving entity outstanding immediately after such merger or consolidation, or (iv) the stockholders of the Company approve a plan of complete liquidation of the Company or an agreement for the sale or disposition by the Company of (in one transaction or a series of related transactions) all or substantially all of the Company's assets.
b. "Claim" shall mean with respect to a Covered Event: any threatened, pending or completed action, suit, proceeding or alternative dispute resolution mechanism, or any hearing, inquiry or investigation that Indemnitee in good faith believes might lead to the institution of any such action, suit, proceeding or alternative dispute resolution mechanism, whether civil, criminal, administrative, investigative or other.
c. References to the "Company" shall include, in addition to Illumina, Inc., any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger to which Illumina, Inc. (or any of its wholly owned subsidiaries) is a party which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees, agents or fiduciaries, so that if Indemnitee is or was a director, officer, employee, agent or fiduciary of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.
d. "Covered Event" shall mean any event or occurrence related to the fact that Indemnitee is or was a director, officer, employee, agent or fiduciary of the Company, or any subsidiary of the Company, or is or was serving at the request of the Company as a director, officer, employee, agent or fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action or inaction on the part of Indemnitee while serving in such capacity.
e. "Expenses" shall mean any and all expenses (including attorneys' fees and all other costs, expenses and obligations incurred in connection with investigating, defending, being a witness in or participating in (including on appeal), or preparing to defend, to be a witness in or to participate in, any action, suit, proceeding, alternative dispute resolution mechanism, hearing, inquiry or investigation), judgments, fines, penalties and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) of any Claim and any federal, state, local or foreign taxes imposed on the Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement.
f. "Expense Advance" shall mean a payment to Indemnitee pursuant to
Section 3 of Expenses in advance of the settlement of or final judgement in any
action, suit, proceeding or alternative dispute resolution mechanism, hearing,
inquiry or investigation which constitutes a Claim.
g. "Independent Legal Counsel" shall mean an attorney or firm of attorneys, selected in accordance with the provisions of Section 2(d) hereof, who shall not have otherwise performed services for the Company or Indemnitee within the last three years (other than with respect to matters concerning the rights of Indemnitee under this Agreement, or of other Indemnitees under similar indemnity agreements).
h. References to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; and references to "serving at the request of the Company" shall include any service as a director, officer, employee, agent or fiduciary of the Company which imposes duties on, or involves services by, such director, officer, employee, agent or fiduciary with respect to an employee benefit plan, its participants or its beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to in this Agreement.
i. "Reviewing Party" shall mean, subject to the provisions of Section
2(d), any person or body appointed by the Board of Directors in accordance with
applicable law to review the Company's obligations hereunder and under
applicable law, which may include a member or members of the Company's Board of
Directors, Independent Legal Counsel or any other person or body not a party to
the particular Claim for which Indemnitee is seeking indemnification.
j. "Section" refers to a section of this Agreement unless otherwise indicated.
k. "Voting Securities" shall mean any securities of the Company that vote generally in the election of directors.
Such counsel, among other things, shall render its written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee would be entitled to be indemnified hereunder under applicable law and the Company agrees to abide by such opinion. The Company agrees to pay the reasonable fees of the Independent Legal Counsel referred to above and to indemnify fully such counsel against any and all expenses (including attorneys' fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. Notwithstanding any other provision of this Agreement, the Company shall not be required to pay Expenses of more than one Independent Legal Counsel in connection with all matters concerning a single Indemnitee, and such Independent Legal Counsel shall be the Independent Legal Counsel for any or all other Indemnitees unless (i) the employment of separate counsel by one or more Indemnitees has been previously authorized by the Company in writing, or (ii) an Indemnitee shall have provided to the Company a written statement that such Indemnitee has reasonably concluded that there may be a conflict of interest between such Indemnitee and the other Indemnitees with respect to the matters arising under this Agreement.
written demand by Indemnitee is presented to the Company, except in the case of Expense Advances, which shall be made no later than ten (10) business days after such written demand by Indemnitee is presented to the Company.
separate counsel subsequently retained by or on behalf of Indemnitee with respect to the same Claim; provided that, (i) Indemnitee shall have the right to employ Indemnitee's separate counsel in any such Claim at Indemnitee's expense and (ii) if (A) the employment of separate counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense, or (C) the Company shall not continue to retain such counsel to defend such Claim, then the fees and expenses of Indemnitee's separate counsel shall be Expenses for which Indemnitee may receive indemnification or Expense Advances hereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the date first above written.
ILLUMINA, INC.
By: ____________________________________
Name: _________________________________
Title: _________________________________
Address: 9390 Towne Centre Drive, Suite 200
San Diego, CA 92121
INDEMNITEE:
By:_____________________________________
Name:___________________________________
Address:________________________________
ILLUMINA, INC.
INDEMNIFICATION AGREEMENT
EXHIBIT 10.2
ILLUMINA, INC.
1998 INCENTIVE STOCK PLAN
an Employee in the case of (i) any leave of absence approved by the Company or
(ii) transfers between locations of the Company or between the Company, its
Parent, any Subsidiary, or any successor. For purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless reemployment upon
expiration of such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so
guaranteed, on the 181st day of such leave any Incentive Stock Option held by
the Optionee shall cease to be treated as an Incentive Stock Option and shall be
treated for tax purposes as a Nonstatutory Stock Option. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation The Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination; or
(iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator.
If an Option or Stock Purchase Right expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). However, Shares that have actually been issued under the Plan, upon exercise of either an Option or Stock Purchase Right, shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if Shares of Restricted Stock are repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and Stock Purchase Rights may from time to time be granted hereunder;
(iii) to determine the number of Shares to be covered by each such award granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, of any Option or Stock Purchase Right granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or Stock Purchase Rights may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or Stock Purchase Right or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;
(vi) to determine whether and under what circumstances an Option may be settled in cash under subsection 9(e) instead of Common Stock;
(vii) to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option has declined since the date the Option was granted;
(viii) to initiate an Option Exchange Program;
(ix) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;
(x) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option or Stock Purchase Right that number of Shares having a Fair Market Value equal to the amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable; and
(xi) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan.
(a) Nonstatutory Stock Options and Stock Purchase Rights may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.
(b) Each Option shall be designated in the Option Agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 5(b), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(c) Neither the Plan nor any Option or Stock Purchase Right shall confer upon any Optionee any right with respect to continuing the Optionee's relationship as a Service Provider with the Company, nor shall it interfere in any way with his or her right or the Company's right to terminate such relationship at any time, with or without cause.
(a) The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as is determined by the Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(1) granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.
(2) granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(1) granted to a Service Provider who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.
(2) granted to any other Service Provider, the per Share exercise price shall be no less than 85% of the Fair Market Value per Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six months on the date of surrender, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which such Option shall be exercised, (5) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with
the Plan, or (6) any combination of the foregoing methods of payment. In making
its determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the
Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
(12) months following the Optionee's termination. If, at the time of death, the Optionee is not vested as to the entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.
paragraph, the Option or Stock Purchase Right shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option or Stock Purchase Right immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock subject to the Option or Stock Purchase Right, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets.
intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.
EXHIBIT 10.3
ILLUMINA, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 2000 Employee Stock Purchase Plan of Illumina, Inc.
(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean of the closing bid and asked prices for the Common Stock on the date of determination, as reported in The Wall Street Journal or such other source as the Board deems reliable;
(iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board; or
(iv) For purposes of the Enrollment Date of the first Offering Period under the Plan, the Fair Market Value shall be the initial price to the public as set forth in the final prospectus included within the registration statement in Form S-1 filed with the Securities and Exchange Commission for the initial public offering of the Company's Common Stock (the "Registration Statement").
(a) Any Employee who shall be employed by the Company on a given Enrollment Date shall be eligible to participate in the Plan.
(b) Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) to the extent that, immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company and/or hold outstanding options to purchase such stock possessing five percent (5%) or more of the total combined voting power or value of all classes of the capital stock of the Company or of any Subsidiary, or (ii) to the extent that his or her rights to purchase stock under all employee stock purchase plans of the Company and its subsidiaries accrues at a rate which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the fair market value of the shares at the time such option is granted) for each calendar year in which such option is outstanding at any time.
(a) An eligible Employee may become a participant in the Plan by completing a subscription agreement authorizing payroll deductions in the form of Exhibit A to this Plan and filing it with the Company's payroll office prior to the applicable Enrollment Date.
(b) Payroll deductions for a participant shall commence on the first payroll following the Enrollment Date and shall end on the last payroll in the Offering Period to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10 hereof.
(a) At the time a participant files his or her subscription agreement, he or she shall elect to have payroll deductions made on each pay day during the Offering Period in an amount not exceeding fifteen percent (15%) of the Compensation which he or she receives on each pay day during the Offering Period; provided, however, that should a pay day occur on an Exercise Date, a participant shall have the payroll deductions made on such day applied to his or her account under the new Offering Period or Purchase Period, as the case may be.
(b) All payroll deductions made for a participant shall be credited to his or her account under the Plan and shall be withheld in whole percentages only. A participant may not make any additional payments into such account.
(c) A participant may discontinue his or her participation in the Plan as provided in Section 10 hereof, or may increase or decrease the rate of his or her payroll deductions during the Offering Period by completing or filing with the Company a new subscription agreement authorizing a change in payroll deduction rate. The Company may, in its discretion, limit the nature and/or number of participation rate changes during any Offering Period, and may establish such other conditions or limitations as it deems appropriate for Plan administration. The change in rate shall be effective with the first full payroll period following five (5) business days after the Company's receipt of the new subscription agreement unless the Company elects to process a given change in participation more quickly. A participant's subscription agreement shall remain in effect for successive Offering Periods unless terminated as provided in Section 10 hereof.
(d) Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a participant's payroll deductions may be decreased to zero percent (0%) at any time during a Purchase Period. Payroll deductions shall recommence at the rate provided in such participant's subscription agreement at the beginning of the first Purchase Period which is scheduled to end in the following calendar year, unless terminated by the participant as provided in Section 10 hereof.
(e) At the time the option is exercised, in whole or in part, or at the time some or all of the Company's Common Stock issued under the Plan is disposed of, the participant must make adequate provision for the Company's federal, state, or other tax withholding obligations, if any, which arise upon the exercise of the option or the disposition of the Common Stock. At any time, the Company may, but shall not be obligated to, withhold from the participant's compensation the amount necessary for the Company to meet applicable withholding obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Employee.
(subject to any adjustment pursuant to Section 19), and provided further that
such purchase shall be subject to the limitations set forth in Sections 3(b)
and 12 hereof. The Board may, for future Offering Periods, increase or
decrease, in its absolute discretion, the maximum number of shares of the
Company's Common Stock an Employee may purchase during each Purchase Period of
such Offering Period. Exercise of the option shall occur as provided in
Section 8 hereof, unless the participant has withdrawn pursuant to Section 10
hereof. The option shall expire on the last day of the Offering Period.
(a) Unless a participant withdraws from the Plan as provided in
Section 10 hereof, his or her option for the purchase of shares shall be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option shall be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or
her account. No fractional shares shall be purchased; any payroll deductions
accumulated in a participant's account which are not sufficient to purchase a
full share shall be retained in the participant's account for the subsequent
Purchase Period or Offering Period, subject to earlier withdrawal by the
participant as provided in Section 10 hereof. Any other monies left over in a
participant's account after the Exercise Date shall be returned to the
participant. During a participant's lifetime, a participant's option to
purchase shares hereunder is exercisable only by him or her.
(b) If the Board determines that, on a given Exercise Date, the
number of shares with respect to which options are to be exercised may exceed
(i) the number of shares of Common Stock that were available for sale under
the Plan on the Enrollment Date of the applicable Offering Period, or (ii) the
number of shares available for sale under the Plan on such Exercise Date, the
Board may in its sole discretion (x) provide that the Company shall make a pro
rata allocation of the shares of Common Stock available for purchase on such
Enrollment Date or Exercise Date, as applicable, in as uniform a manner as
shall be practicable and as it shall determine in its sole discretion to be
equitable among all participants exercising options to purchase Common Stock
on such Exercise Date, and continue all Offering Periods then in effect, or
(y) provide that the Company shall make a pro rata allocation of the shares
available for purchase on such Enrollment Date or Exercise Date, as
applicable, in as uniform a manner as shall be practicable and as it shall
determine in its sole discretion to be equitable among all participants
exercising options to purchase Common Stock on such Exercise Date, and
terminate any or all Offering Periods then in effect pursuant to Section 20
hereof. The Company may make pro rata allocation of the shares available on
the Enrollment Date of any applicable Offering Period pursuant to the
preceding sentence, notwithstanding any authorization of additional shares for
issuance under the Plan by the Company's stockholders subsequent to such
Enrollment Date.
(a) A participant may withdraw all but not less than all the payroll deductions credited to his or her account and not yet used to exercise his or her option under the Plan at any time by giving written notice to the Company in the form of Exhibit B to this Plan. All of the participant's payroll deductions credited to his or her account shall be paid to such participant promptly after receipt of notice of withdrawal and such participant's option for the Offering Period shall be automatically terminated, and no further payroll deductions for the purchase of shares shall be made for such Offering Period. If a participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the succeeding Offering Period unless the participant delivers to the Company a new subscription agreement.
(b) A participant's withdrawal from an Offering Period shall not have any effect upon his or her eligibility to participate in any similar plan which may hereafter be adopted by the Company or in succeeding Offering Periods which commence after the termination of the Offering Period from which the participant withdraws.
Upon a participant's ceasing to be an Employee, for any reason, he or she shall be deemed to have elected to withdraw from the Plan and the payroll deductions credited to such participant's account during the Offering Period but not yet used to exercise the option shall be returned to such participant or, in the case of his or her death, to the person or persons entitled thereto under Section 15 hereof, and such participant's option shall be automatically terminated. The preceding sentence notwithstanding, a participant who receives payment in lieu of notice of termination of employment shall be treated as continuing to be an Employee for the participant's customary number of hours per week of employment during the period in which the participant is subject to such payment in lieu of notice.
(a) Subject to adjustment upon changes in capitalization of the Company as provided in Section 19 hereof, the maximum number of shares of the Company's Common Stock which shall be made available for sale under the Plan shall be 300,000 shares, plus an annual increase to be added on the first day of the Company's fiscal year, beginning in 2001, equal to the lesser of (i) 1,500,000 shares, (ii) 3% of the outstanding shares of Common Stock on the last day of the immediately preceding fiscal year, or (iii) an amount determined by the Board.
(b) The participant shall have no interest or voting right in shares covered by his option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan shall be registered in the name of the participant or in the name of the participant and his or her spouse.
(a) A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant's account under the Plan in the event of such participant's death subsequent to an Exercise Date on which the option is exercised but prior to delivery to such participant of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant's account under the Plan in the event of such participant's death prior to exercise of the option. If a participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a beneficiary validly designated under the Plan who is living at the time of such participant's death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant, or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.
(a) The Board of Directors of the Company may at any time and for any reason terminate or amend the Plan. Except as provided in Section 19 hereof, no such termination can affect options previously granted, provided that an Offering Period may be terminated by the Board of Directors on any Exercise Date if the Board determines that the termination of the Offering Period or the Plan is in the best interests of the Company and its stockholders. Except as provided in Section 19 and this Section 20 hereof, no amendment may make any change in any option theretofore granted which adversely affects the rights of any participant. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other applicable law, regulation or stock exchange rule), the Company shall obtain stockholder approval in such a manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether any participant rights may be considered to have been "adversely affected," the Board (or its committee) shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company's processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond with amounts withheld from the participant's Compensation, and establish such other limitations or procedures as the Board (or its committee) determines in its sole discretion advisable which are consistent with the Plan.
(c) In the event the Board determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Board may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to:
(i) altering the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price;
(ii) shortening any Offering Period so that Offering Period ends on a new Exercise Date, including an Offering Period underway at the time of the Board action; and
(iii) allocating shares.
Such modifications or amendments shall not require stockholder approval or the consent of any Plan participants.
amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.
ILLUMINA, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
_____ Original Application Enrollment Date:___________ _____ Change in Payroll Deduction Rate _____ Change of Beneficiary(ies) |
1. ____________________ hereby elects to participate in the Illumina, Inc. 2000 Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") and subscribes to purchase shares of the Company's Common Stock in accordance with this Subscription Agreement and the Employee Stock Purchase Plan.
2. I hereby authorize payroll deductions from each paycheck in the amount of ____% of my Compensation on each payday (from 0 to 15%) during the Offering Period in accordance with the Employee Stock Purchase Plan. (Please note that no fractional percentages are permitted.)
3. I understand that said payroll deductions shall be accumulated for the purchase of shares of Common Stock at the applicable Purchase Price determined in accordance with the Employee Stock Purchase Plan. I understand that if I do not withdraw from an Offering Period, any accumulated payroll deductions will be used to automatically exercise my option.
4. I have received a copy of the complete Employee Stock Purchase Plan. I understand that my participation in the Employee Stock Purchase Plan is in all respects subject to the terms of the Plan. I understand that my ability to exercise the option under this Subscription Agreement is subject to stockholder approval of the Employee Stock Purchase Plan.
5. Shares purchased for me under the Employee Stock Purchase Plan should be issued in the name(s) of (Employee or Employee and Spouse only).
from my compensation the amount necessary to meet any applicable withholding obligation including any withholding necessary to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by me. If I dispose of such shares at any time after the expiration of the 2-year and 1-year holding periods, I understand that I will be treated for federal income tax purposes as having received income only at the time of such disposition, and that such income will be taxed as ordinary income only to the extent of an amount equal to the lesser of (1) the excess of the fair market value of the shares at the time of such disposition over the purchase price which I paid for the shares, or (2) 15% of the fair market value of the shares on the first day of the Offering Period. The remainder of the gain, if any, recognized on such disposition will be taxed as capital gain.
7. I hereby agree to be bound by the terms of the Employee Stock Purchase Plan. The effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the Employee Stock Purchase Plan.
8. In the event of my death, I hereby designate the following as my beneficiary(ies) to receive all payments and shares due me under the Employee Stock Purchase Plan:
NAME: (Please print)_____________________________________________________
(First) (Middle) (Last)
_________________________ ________________________________
Relationship
________________________________
(Address)
Employee's Social
Security Number: ________________________________
Employee's Address: ________________________________
________________________________
________________________________
|
I UNDERSTAND THAT THIS SUBSCRIPTION AGREEMENT SHALL REMAIN IN EFFECT THROUGHOUT SUCCESSIVE OFFERING PERIODS UNLESS TERMINATED BY ME.
Dated:_________________________ ________________________________
Signature of Employee
________________________________
Spouse's Signature (If
beneficiary other than spouse)
|
ILLUMINA, INC.
2000 EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
The undersigned participant in the Offering Period of the Illumina, Inc. 2000 Employee Stock Purchase Plan which began on ____________, ______ (the "Enrollment Date") hereby notifies the Company that he or she hereby withdraws from the Offering Period. He or she hereby directs the Company to pay to the undersigned as promptly as practicable all the payroll deductions credited to his or her account with respect to such Offering Period. The undersigned understands and agrees that his or her option for such Offering Period will be automatically terminated. The undersigned understands further that no further payroll deductions will be made for the purchase of shares in the current Offering Period and the undersigned shall be eligible to participate in succeeding Offering Periods only by delivering to the Company a new Subscription Agreement.
Name and Address of Participant:
Signature:
Date:____________________________
EXHIBIT 10.9
FINANCIAL INNOVATORS
[FINOVA LOGO]
FINOVA Capital Corporation
10 Waterside Drive
Farmington, CT 06032-3065
(860) 676-1818
MASTER LOAN AND SECURITY AGREEMENT
Master Loan and Security Agreement No. S7680, dated March 6, 2000
FINOVA Capital Corporation ("we," "us" or "FINOVA"), having its principal place of business at FINOVA Corporate Center, 4800 North Scottsdale Road, Scottsdale, Arizona 85251-7623 is willing to make a loan (the "Loan") to Illumina, Inc. ("you" or "Borrower"), having its principal place of business at 9390 Towne Centre Drive, Suite 200, San Diego, CA 92121, in one or more advances made from time to time (individually, an "Advance" and collectively, the "Advances"), in the aggregate principal amount of up to Three Million Dollars ($3,000,000.00), under the terms and conditions contained in this Master Loan and Security Agreement (this "Master Agreement"). The entire Loan will be "cross collateralized" and secured by the collateral (the "Collateral") described in each schedule (individually, a "Schedule" and collectively, "Schedules") which will be executed in connection with each Advance and the related Note (as hereinafter defined). The Collateral includes the Equipment hereinafter described and any and all replacement parts, additions, accessories and accessions that you may add to the Equipment, as well as all replacements and substitutions of the Equipment and all proceeds of the Equipment, including, without limitation, insurance proceeds. We may treat any Schedule as a separate loan and security agreement containing all of the provisions of this Master Agreement.
1. THE CREDIT
(a) Advances. Each Advance shall be evidenced by and the specific terms applicable thereto set forth in a Note and related Schedule. All of the Notes and Schedules, taken together, will evidence the entire Loan. We will only make the Loan to you if all the conditions in this Master Agreement have been met to our satisfaction. We will rely on your representations and warranties contained in this Master Agreement, in making the Loan. The terms of this Master Agreement will each apply to the entire Loan.
(b) Use of Proceeds. The proceeds of the Advances will be used solely to reimburse you for your payment of the purchase price for equipment which is satisfactory to us and which is described in the applicable Schedule ("Equipment"). If you have not yet paid for the Equipment (but the same is otherwise satisfactory to us), the proceeds of the Advance will be paid by us directly to the supplier (which you have chosen) to pay the purchase price of the Equipment.
(c) Notes. Your obligation to repay the Advance and to pay interest thereon will be evidenced by separate secured promissory notes (individually, a "Note" and collectively, the "Notes"). Each Note will be dated the date of the
Schedule to which the Advance evidenced by the Note is related. The related Schedule will be deemed to be part of the Note.
(d) Term. The term ("Term") of each Schedule (and the related Advance) begins upon the date that we make payment for the Collateral covered under the Schedule (the "Closing Date"). The Term continues until you fully perform all of your obligations under this Master Agreement, each related Schedule and the related Note(s).
(e) Loan Account. We will keep a loan account on our books and records for the Loan. We will record all payments of principal and interest in the loan account. Unless the entries in the loan account are clearly in error, the loan account will definitively indicate the outstanding principal balance and accrued interest on the Loan.
(f) Payments. The scheduled payments of principal and interest (the "Payments") are indicated on and due and payable in accordance with the terms of the applicable Note and Schedule. The Payments are payable in advance and otherwise on the dates and in the amounts set forth on the applicable Schedule.
(g) First Payment and Subsequent Payments. The first Payment under a Note and Advance ("First Payment") is due at the beginning of its Term and shall, at our option, either be deducted from the proceeds of the Advance or paid directly to us by you. Subsequent Payments are due on the thirtieth (30th) day of each successive month as set forth on the Schedule until you pay to us in full all of the Payments and any other fees, costs, charges and expenses that you owe us.
(h) Interest. Prior to Maturity of an Advance, you will pay us interest on the Advance at the interest rate indicated in the applicable Schedule (the "Interest Rate"). "Maturity" means the scheduled maturity or any earlier date on which we accelerate the Loan. The Payment amount indicated in the Schedule includes interest at the applicable Interest Rate. Interest is calculated in advance using a year of 360 days with twelve months of 30 days.
(i) Interim Interest Payment. If an Advance is made on a day other than the
thirtieth (30th) or thirty-first (31st) day of a month, you will also pay to us,
together with the First Payment, interest on the Advance at the applicable
interest rate for the period from the date the Advance is made until the twenty-
ninth (29th) day of the month in which the Advance is made. If an Advance is
made on the thirty-first (31st) day of a month, you will also pay to us,
together with the First Payment, interest on the Advance at the applicable
interest rate for the period from the date the Advance is made until the twenty-
ninth (29th) day of the following month. If an Advance is made on the thirtieth
(30th) day of a month, no interim interest will be due.
(j) Default Interest Rate. After Maturity of the Loan or any Advance, you will pay us interest thereon at a rate of four (4%) percent per year above the applicable Interest Rate. This is referred to as the "Default Rate."
(k) Usury. You and we intend to obey the law. If the Interest Rate charged would exceed the maximum legal rate, you will only have to pay the maximum legal rate. You do not have to pay any excess interest over and above the maximum legal rate of interest. However, if it later becomes legal for you to pay all or part of any excess interest, you will then pay it to us upon our request.
(l) Payment Details. You will make all Payments due under this Master Agreement by 12:00 P.M., Connecticut time, on the day they are due. You will make all Payments in US Dollars (US$) in immediately available funds. We do not have to make or give "presentment, demand, protest or notice" to get paid. You waive "presentment, demand, protest and notice."
(m) Application of Payments. Each Payment under this Master Agreement is to be applied in the following order: first, to any fees, costs, expenses and charges you may owe us; second, to any interest due; and third to the principal balance.
(n) Prepayment. You may prepay the Loan as specifically permitted by Exhibit B to the applicable Schedule.
(o) No Setoffs. Your obligation to pay us all Payments is absolute and unconditional. You are not excused from making the Payments, in full, for any reason. You agree that you have no defense for failure to make the Payments and you will not make any counterclaims or setoffs to avoid making the Payments.
2. SECURITY INTEREST
(a) You grant us a first and only lien on and security interest in the Collateral. The Collateral secures the full and timely payment and performance of all of your now existing or hereafter arising indebtedness, liabilities and obligations to us, whether under this Master Agreement, the Schedules, the Notes and any other agreement, loan or lease that you may at any time or times have with us or otherwise (collectively, the "Obligations"). You also grant us a security interest in any additional collateral identified in any Schedule. Any additional collateral is considered to be "Collateral" and it secures all of the Obligations.
(b) If we request, you will put labels supplied by us stating "PROPERTY SUBJECT TO A SECURITY INTEREST HELD BY FINOVA CAPITAL CORPORATION" on the Collateral where they are clearly visible.
(c) You give us permission to add to this Master Agreement or any Schedule the serial numbers and other information about the Collateral.
(d) You give us permission to file this Master Agreement or Uniform Commercial Code financing statements, at your expense, in order to perfect our security interest in the Collateral. You also give us permission to sign your name on the Uniform Commercial Code financing statements where this is permitted by law.
(e) You will pay our fees and costs for documentation, closing, administration and termination of this Master Agreement, the Notes and Schedules. These fees include such items as reasonable attorneys fees and expenses incurred in preparing this Master Agreement and all agreements, instruments and documents executed in connection herewith, and all amendments, supplements and waivers hereto and thereto, as well as due diligence searches and fees for preparing and filing UCC terminations and releases. You will also pay any filing, recording or stamp fees or taxes resulting from filing this Master Agreement or Uniform Commercial Code financing statements.
(f) At your expense, you will defend our first priority security interest in the Collateral against, and keep the Collateral free of, any legal process, liens, other security interests, attachments, levies and executions. You will give us immediate written notice of any legal process, liens, attachments, levies or executions, and you will indemnify us against any loss that results to us from these causes.
(g) You will notify us at least 15 days before you change the address of your principal executive office or principal place of business. Your principal executive office and principal place of business are set forth at the beginning of this Master Agreement.
(h) You will notify us at least 15 days before you change your state of incorporation.
(i) You will promptly sign and return additional documents that we may reasonably request in order to protect our first priority security interest in the Collateral.
(j) Except as set forth in a Schedule, the Collateral is personal property and will remain personal property. Except as set forth in a Schedule, you will not incorporate it into real estate and will not do anything that will cause the Collateral to become part of real estate or a fixture.
3. CONDITIONS OF LENDING
(a) See our Commitment Letter to you dated February 28, 2000 (the "Commitment Letter"),
which you and we consider to be a part of this Master Agreement. The terms and conditions of the Commitment Letter continue following the making of the first Advance, including, without limitation, conditions to the Loan. However, if there is a conflict between the terms and conditions of this Master Agreement, any Schedule or any Note and the terms and conditions of the Commitment Letter, then you and we agree that the terms and conditions of this Master Agreement, the Schedules and the Notes control over the Commitment Letter terms and conditions.
(b) Before we disburse any proceeds of any Advance, we also require the following:
(i) That no payment is past due to us under any other agreement, loan or lease that you have with us.
(ii) That you are complying with all terms of this Master Agreement, the Schedules and the Notes and there are no defaults hereunder or thereunder.
(iii) That we have received all the documents we requested, including the signed Schedule and Note.
(iv) That there has been no material adverse change in your financial condition, business or operations, or that of any guarantor, from the financial condition that you have disclosed to us.
(v) All conditions contained in the Commitment Letter have been satisfied.
4. REPRESENTATIONS AND WARRANTIES
You represent and warrant to us as follows:
(a) You and each guarantor are duly organized, existing and in good standing wherever you or it are required by law to be so qualified. You and each guarantor have full power and authority to execute, deliver and carry out the provisions of this Master Agreement, the Schedules and the Notes and to borrow hereunder and thereunder. This Master Agreement, the Schedules and the Notes are validly executed and delivered by you and the guarantors and are the legal, valid and binding obligations of you and the guarantors, each enforceable in accordance with its terms.
(b) Neither you nor any guarantor is a defendant under any material litigation and there are no judgments outstanding against you.
(c) All of the Equipment has been delivered to you and installed at the location set forth on the Schedule and you have accepted all of the Equipment for all purposes of this Master Agreement.
(d) You have good title to all of your assets, including, without limitation, the Collateral, and in the case of the Collateral, free and clear of all security interests, liens and other encumbrances. Upon filing of UCC-1 financing statements in all applicable filing offices, we will be granted a first and only perfected lien on and security interest in all of the Collateral. There are no other security interests, liens or encumbrances covering the Collateral.
(e) You have supplied us with information about the Collateral. You promise to us that the amount of our Advance as to each item of Equipment is no more than the fair and usual price for this kind of Equipment, taking into account any discounts, rebates and allowances that you or any affiliate of yours may have been given for the Equipment.
(f) The Collateral is located at the premises set forth on the Schedule.
(g) All financial information and other information that you have given us is true and complete. You have not failed to tell us anything that would make the financial information not misleading. There has been no material adverse change in your financial condition, business or operations, or the financial condition of any guarantor, from the financial condition that you disclosed to us.
(h) You have complied with all "environmental laws" and will continue to
comply with all "environmental laws." No "hazardous substances" are used,
generated, treated, stored or disposed of by you or at your properties except in
compliance with all environmental laws. "Environmental laws" mean all federal,
state or local environmental laws and regulations, including the following laws:
CERCLA, RCRA, Hazardous Materials Transport Act and The Federal Water Pollution
Control Act. "Hazardous substances" means all hazardous or toxic wastes,
materials or substances, as defined in the environmental laws, as well as oil,
flammable substances, asbestos that is or could become friable, urea
formaldehyde insulation, polychlorinated biphenyls and radon gas.
(i) You have taken all action necessary to assure that there has been no material adverse change to your business by reason of the advent of the year 2000; this includes, without limitation, your representation that all computer- based systems, embedded microchips and other processing capabilities effectively recognize and process dates after December 31, 1999.
5. COVENANTS
You agree to do the following things (or not to do the following things if so stated) until full payment of all amounts due to us under this Master Agreement, the Schedules and the Notes:
(a) Care, Use, Location, Transfer, Encumbrance And Alteration of The Collateral.
(i) You will make sure that the Collateral is maintained in good operating condition, and that it is serviced, repaired and overhauled when this is necessary to keep the Collateral in good operating condition. All maintenance must be done according to the Supplier's or Manufacturer's requirements or recommendations. All maintenance must also comply with any legal or regulatory requirements.
(ii) You will maintain service logs for the Collateral, if applicable, and permit us or our agents to inspect the Collateral, the service logs and service reports. You give us and our agents permission to make copies of the service logs and service reports.
(iii) We will give you prior notice if we, or our agents, want to inspect the Collateral or the service logs or service reports. We may inspect it during regular business hours. If we find during an inspection that you are not complying with this Master Agreement or if you are otherwise in default under this Master Agreement, you (and not us) will pay our travel, meals and lodging costs, our salary costs, and our costs and fees and those of our agents for reinspection. You will promptly cure any problems with the Collateral that are discovered during our inspections.
(iv) You will use the Collateral only for business purposes. You will obey all legal and regulatory requirements in your use of the Collateral.
(v) You will make all additions, modifications and improvements to the Collateral that are required by law or government regulation. Otherwise, you will not alter the Collateral without our written permission. You will replace all worn, lost, stolen or destroyed parts of the Collateral with replacement parts that are as good or better than the original parts. The new parts will become subject to our security interest upon replacement.
(vi) You will not remove the Collateral from the location indicated in the Schedule.
(vii) You have and will have good and merchantable title to all of the Collateral.
(viii) You will not convey, assign, sell, mortgage, transfer, encumber, pledge, hypothecate, grant a security interest in, grant options with respect to, lease or otherwise dispose of all or any part of any interest whatsoever in or to any or all of the Collateral, or any interest therein.
(viiii) Borrower shall at all times have and maintain cash, cash equivalents and short term investments in bank or securities accounts in an aggregate amount of not less than 200% of the then outstanding principal balance of the Loan.
Borrower shall deliver to Lender such financial and other information and in such form as Lender shall from time to time request in order to evidence compliance with this section.
(b) Year 2000 Compliant.
You shall take all action necessary to assure that there will be no material adverse change to your business by reason of the advent of the year 2000, including, without limitation, that all computer-based systems, embedded microchips and other processing capabilities effectively recognize and process all dates after December 31, 1999. At our request, you shall provide to us assurance reasonably acceptable to us that your computer-based systems, embedded microchips and other processing capabilities are year 2000 compatible.
(c) Risk of Loss.
(i) You have the complete risk of loss or damage to the Collateral. Loss or damage to the Collateral will not relieve you of your obligation to make the Payments.
(ii) If any Collateral is lost or damaged, you have two choices although if you are in default under this Master Agreement, we and not you will have the two options. The choices are:
(A) Repair or replace the damaged or lost Collateral so that, once again, the Collateral is in good operating condition and we have a perfected first priority security interest in it.
(B) Pay us the present value (as of the date of payment) of the remaining Payments. We will calculate the present value using a discount rate of five (5%) percent per year. Once you have paid us this amount and any other amount that you may owe us, we will release our security interest in the damaged or lost Collateral and you (or your insurer) may keep the Collateral for salvage purposes, on an "AS IS, WHERE IS" basis and without any representation or warranty whatsoever.
(d) Insurance.
(i) Until you have made all Payments to us under this Master Agreement, the Schedules and the Notes and all Obligations have been satisfied in full, you will keep the Collateral insured. The amount of insurance, the coverage, and the insurance company must be acceptable to us.
(ii) If you do not provide us with written evidence of insurance that is acceptable to us, we may buy the insurance ourselves, at your expense. You will promptly pay us the cost of this insurance. We have no obligation to purchase any insurance. Any insurance that we purchase will be our insurance, and not yours, and we may insure the Collateral beyond the date of satisfaction of the Obligations.
(iii) Insurance proceeds may be used to repair or replace damaged or lost Collateral or to pay us the present value of the Payments, as provided above.
(iv) You appoint us as your "attorney-in-fact" to make claims under the insurance policies, to receive payments under the insurance policies, and to endorse your name on all documents, checks or drafts relating to insurance claims for Collateral.
(e) Taxes.
(i) You will pay all sales, use, excise, stamp, documentary and ad valorum taxes, license, recording and registration fees, assessments, fines, penalties and similar charges imposed on the ownership, possession, use, lease or rental of the Collateral or on the Loan.
(ii) You will pay all taxes (other than our federal or state net income taxes) imposed on you or on us regarding the Payments.
(iii) You will reimburse us for any of these taxes that we pay or advance.
(iv) You will file and pay for any personal property taxes on the Collateral.
(f) Information Supplied By You.
(i) During the Term you will promptly provide us with copies of any current, quarterly and annual reports and all proxy (or information) statements you file with the Securities and Exchange Commission ("SEC").
(ii) You will also provide us with the following financial statements:
(A) Quarterly balance sheet and statements of earnings and cash flow - within 45 days after the end of your first three fiscal quarters in each fiscal year. These may be internally prepared in accordance with GAAP will be certified by the Chief Financial Officer and accompanied by a Compliance Certificate.
(B) Annual balance sheet and statements of earnings and cash flow - within 90 days after the end of each fiscal year. These will be audited and prepared in accordance with GAAP accounting principles by independent auditors acceptable to us. Their audit report must be unqualified.
All financial statements will be prepared according to generally accepted accounting principles, consistently applied. All financial statements and SEC filings that you provide us will be true and complete. They will not fail to tell us anything that would make them not misleading.
(iii) At the same time you deliver the financial statements described in paragraph 5(f)(ii)(A), you will also provide us with a certificate of your chief financial officer stating that no default exists, or, if he cannot certify this because a default does exist, he must specify in reasonable detail the nature of the default.
(iv) The audited financial statements described in paragraph 5(f)(ii)(B), must be accompanied by a certificate of such independent auditor stating that no default exists, or, if it cannot certify this because a default does exist, it must specify in reasonable detail the nature of the default.
6. DEFAULTS
(a) Defaults. You are in default if any of the following happens:
(i) You do not pay us, when it is due, any Payment or other payment that you owe us under this Master Agreement, any Schedule or any Note or that you owe under any other agreement, loan, lease or other financial arrangement that you have with us.
(ii) Any of the financial information that you give us is not true and complete, or you fail to tell us anything that would make the financial information not misleading.
(iii) You do something you are not permitted to do, or you fail to do anything that is required of you, under this Master Agreement, any Schedule or any other lease, loan or other financial arrangement that you have with us.
(iv) An event of default occurs for any other lease, loan or obligation of yours that exceeds $50,000 in the aggregate.
(v) You file bankruptcy, or involuntary bankruptcy is filed against you and such involuntary bankruptcy is not dismissed within sixty (60) days.
(vi) You are subject to any other insolvency proceeding other than bankruptcy (for example, a receivership action or an assignment for the benefit of creditors) and such proceeding that is involuntary is not dismissed within sixty (60) days.
(vii) Without our permission, which shall not be unreasonably withheld provided that the transferee surviving or consolidated entity, as the case may be (1) assumes your obligations in writing satisfactory to us and (2) has a tangible net worth determined in accordance with the GAAP with no less than what your tangible net worth was immediately before the acquisition, you sell all or a substantial part of its assets, merge or consolidate, or a majority of your voting stock or interests are transferred.
(viii) There is a material adverse change in your financial condition, business or
operations, or that of any guarantor as noted in Section 5 subparagraph (viiii).
(b) Remedies, Default Interest, Late Fees.
If you are in default we may exercise one or more of our "remedies." Each of our remedies is independent. We may exercise any of our remedies, all of our remedies or none of our remedies. We may exercise them in any order we choose. Our exercise of any remedy will not prevent us from exercising any other remedy or be an "election of remedies." If we do not exercise a remedy, or if we delay in exercising a remedy, this does not mean that we are forgiving your default or that we are giving up our right to exercise the remedy. Our remedies allow us to do one or more of the following:
(i) "Accelerate" the Loan balance under any or all Notes. This means that we may require you to immediately pay us the entire outstanding principal balance of the entire Loan.
(ii) Require you to immediately pay us all amounts that you are required to pay us for the entire Term of any other agreements, loans, leases or financial arrangements that you have with us.
(iii) Sue you for the entire outstanding principal balance of the Loan and all other amounts you owe us (including, without limitation, all accrued and unpaid interest, including interest at the Default Rate), outstanding fees, costs, expenses and charges, plus all prepayment premiums.
(iv) Require you at your expense to assemble the Collateral at a location we request in the United States of America.
(v) Exercise any remedy under the Uniform Commercial Code or otherwise permitted by law including to the extent permitted retaking and removing the Collateral. If required, we may disconnect and separate the Collateral from your other property. You will not be entitled to any damages resulting from removal or repossession of the Collateral. We may use, ship, store, repair or lease any Collateral that we repossess. We may sell any repossessed Collateral at private or public sale. You give us permission to show the Collateral to buyers at your location free of charge during normal business hours. If we do this, we do not have to remove the Collateral from your location. If we repossess the Collateral and sell it, we will give you credit for the net sale price, after subtracting our costs of repossessing and selling the Collateral. If we rent the Collateral to somebody else, we will give you credit for the net rent received, after subtracting our costs of repossessing and renting the Collateral, but the credit will be discounted to present value using a discount rate equal to the Default Rate. The credit will be applied against what you owe us under this Master Agreement, the Schedules, the Notes and any other agreements, loans, leases and other financial arrangements that you have with us. If the credit exceeds the amount you owe under this Master Agreement, the Schedule, the Notes and any other agreements, loans, leases or financial arrangements that you have with us, we will refund the amount of the excess to you.
(vi) We will have all of our rights and remedies under this Master Agreement, the Notes, the Schedules and all agreements, instruments and documents executed in connection herewith and therewith and all of our rights and remedies under applicable law, whether as a secured party or otherwise.
(vii) Return conditions:
(A) Following a default, at our request you will return the Collateral, freight and insurance prepaid by you, to us at a location we request in the United States of America. It will be returned in good operating condition, as required by Section 5 above. The Collateral will not be subject to any liens when it is returned.
(B) You will pack or crate the Collateral for shipping in the original containers, or comparable ones. You will do this carefully and follow all recommendations of the Supplier and the Manufacturer as to packing or crating.
(C) You will also return to us the plans, specifications, operating manuals, software, documentation, discs, warranties and other
documents furnished by the Manufacturer or Supplier. You will also return to us all service logs and service reports, as well as all written materials that you may have concerning the maintenance and operation of the Collateral.
(D) At our request, you will provide us with up to 60 days free storage of the Collateral at your location, and will let us (or our agent) have access to the Collateral in order to inspect it, display it to others for purchase and sell it.
(E) You will pay us what it costs us to repair the Collateral if you do not return it in the required condition.
(viii) You will also pay us the following:
(A) All our expenses of enforcing our remedies. This includes all our expenses to repossess, store, ship, repair and sell the Collateral.
(B) Our reasonable attorney's fees and expenses.
(C) Default interest on everything you owe us from the date of your default to the date on which we are paid in full at the Default Rate.
(D) A premium in the amount of five percent (5%) of the outstanding principal balance of the Loan.
(ix) You will pay us a late fee whenever you pay any amount that you owe us more than ten (10) days after it is due. You will pay the late fee within one month after the late Payment was originally due. The late fee will be ten (10%) percent of the late Payment. If this exceeds the highest legal amount we can charge you, you will only be required to pay the highest legal amount. The late fee is intended to reimburse us for our collection costs that are caused by late Payment. It is charged in addition to all other amounts you are required to pay us, including Default Interest.
(x) You realize that the damages we could suffer as a result of your default are very uncertain. This is why we have agreed with you in advance on the Default Rate to be used in calculating the payments you will owe us if you default. You agree that, for these reasons, the payments you will owe us if you default are "agreed" or "liquidated" damages. You understand that these payments are not "penalties" or "forfeitures."
7. PERFORMING YOUR OBLIGATIONS IF YOU DO NOT
If you do not perform one or more of your obligations under this Master Agreement or a Schedule or Note, we may perform it for you. We will notify you in writing at least ten (10) days before we do this. We do not have to perform any of your obligations for you. If we do choose to perform them, you will pay us all of our expenses to perform the obligations. You will also reimburse us for any money that we advance to perform your obligations, together with interest at the Default Rate on that amount. These will be additional "Payments" that you will owe us and you will pay them at the same time that your next Payment is due.
8. INDEMNITY
(a) You will indemnify us, defend us and hold us harmless from and against any and all claims, expenses and attorney's fees concerning or arising from the Collateral, this Master Agreement, any Schedule or Note, or your breach of any representation, warranty or covenant. It includes, without limitation, any claims, losses or charges concerning, arising out of or in connection with the manufacture, selection, delivery, possession, use, operation or return of the Collateral and any claims, losses or damages concerning, arising out of or in connection with this Master Agreement, any Schedule or the Notes.
(b) This obligation of yours to indemnify us continues even after the Term is over.
9. MISCELLANEOUS
(a) Assignment.
WE MAY ASSIGN OR GRANT A SECURITY INTEREST IN THIS MASTER AGREEMENT, ANY SCHEDULE, ANY NOTE OR ANY PAYMENTS WITHOUT YOUR PERMISSION. THE PERSON TO WHOM WE ASSIGN IS CALLED THE "ASSIGNEE." THE ASSIGNEE WILL NOT HAVE ANY OF OUR OBLIGATIONS UNDER THIS MASTER AGREEMENT. YOU WILL NOT BE ABLE TO RAISE ANY DEFENSE, COUNTERCLAIM OR OFFSET AGAINST THE ASSIGNEE. NOTWITHSTANDING ANY SUCH ASSIGNMENT OR GRANTING OF A SECURITY INTEREST, WE WILL CONTINUE TO BE LIABLE FOR ALL OF OUR OBLIGATIONS UNDER THIS MASTER AGREEMENT.
UNLESS YOU RECEIVE OUR WRITTEN PERMISSION, YOU MAY NOT ASSIGN OR TRANSFER YOUR RIGHTS UNDER THIS MASTER AGREEMENT OR ANY SCHEDULE. YOU ALSO ARE NOT ALLOWED TO LEASE OR RENT THE COLLATERAL OR LET ANYBODY ELSE USE IT UNLESS WE GIVE YOU OUR WRITTEN PERMISSION.
(b) Acceptance By FINOVA, Governing Law, Jurisdiction, Venue, Service of Process, Waiver of Jury Trial.
THIS MASTER AGREEMENT WILL ONLY BE BINDING WHEN WE HAVE ACCEPTED IT IN WRITING.
THIS MASTER AGREEMENT IS GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF ARIZONA (NOT INCLUDING THE "CHOICE OF LAW" DOCTRINE), THE STATE IN WHICH OUR OFFICE IS LOCATED IN WHICH FINAL APPROVAL OF THE TERMS OR CONDITIONS OF THIS MASTER AGREEMENT OCCURRED AND FROM WHICH DISBURSEMENT OF THE LOAN PROCEEDS WILL BE ORDERED. HOWEVER, IF THIS MASTER AGREEMENT IS UNENFORCEABLE UNDER ARIZONA LAW, IT WILL INSTEAD BE GOVERNED BY THE LAWS OF THE STATE IN WHICH THE COLLATERAL IS LOCATED.
YOU MAY ONLY SUE US IN A FEDERAL OR STATE COURT THAT IS LOCATED IN MARICOPA COUNTY, ARIZONA. THIS APPLIES TO ALL LAWSUITS UNDER ALL LEGAL THEORIES, INCLUDING CONTRACT, TORT AND STRICT LIABILITY. YOU CONSENT TO THE PERSONAL JURISDICTION OF THESE ARIZONA COURTS. YOU WILL NOT CLAIM THAT MARICOPA COUNTY, ARIZONA, IS AN "INCONVENIENT FORUM" OR THAT IT IS NOT A PROPER "VENUE."
WE MAY SUE YOU IN ANY COURT THAT HAS JURISDICTION. WE MAY SERVE YOU WITH PROCESS IN A LAWSUIT BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO YOUR ADDRESS INDICATED AFTER YOUR SIGNATURE BELOW.
YOU AND WE EACH WAIVE ANY RIGHT YOU OR WE MAY HAVE TO A JURY TRIAL IN ANY LAWSUIT BETWEEN YOU AND US.
(c) Notices. Your address for notices is your address set forth below your name on the signature page of this Master Agreement. We may give you written notice in person, by mail, by overnight delivery service, or by fax. Mail notice will be effective three (3) days after we deposit it with the U.S. Postal Service. Overnight delivery notice requires a receipt and tracking number. Fax notice requires a receipt from the sending machine showing that it has been sent to your fax number and received.
Our address for notices is our address set forth below our name on the signature page of this Master Agreement, with Attention: Director, Contract Administration. You will also give copies of all notices to us at our principal place of business at the address set forth in the opening paragraph of this Master Agreement, with attention to Vice President, Law Department. You may give us notice the same way that we may give you notice.
(d) General.
This Master Agreement benefits our successors and assigns. This Master Agreement benefits only those successors and assigns of yours that we have approved in writing.
This Master Agreement binds your successors and assigns. This Master Agreement binds only those successors and assigns of ours that clearly assume our obligations in writing.
TIME IS OF THE ESSENCE OF THIS MASTER AGREEMENT
This Master Agreement, all of the Schedules and the Notes and the Commitment Letter are together the entire agreement between you and us concerning the Collateral.
Only an employee of FINOVA who is authorized by corporate resolution or policy may modify or amend this Master Agreement or any Schedule or Note on our behalf, and this must be in writing.
Only he or she may give up any of our rights, and this must be in writing. If more than one person is the Borrower under this Master Agreement, then each of you is jointly and severally liable for your obligations under this Master Agreement and all Schedules and Notes.
This Master Agreement is only for your benefit and for our benefit, as well as our successors and assigns. It is not intended to benefit any other person.
If any provision in this Master Agreement is unenforceable, then that provision must be deleted. Only unenforceable provisions are to be deleted. The rest of this Master Agreement will remain as written.
We may make press releases and publish a tombstone announcing this transaction and its total amount. You may publicize this transaction with our prior written consent.
LENDER: BORROWER:
FINOVA CAPITAL CORPORATION ILLUMINA, INC.
10 Waterside Drive 9390 TOWNE CENTRE DRIVE
Farmington, CT 06032-3065 SAN DIEGO, CA 92121
BY:____________________________ BY:_________________________
PRINTED NAME:__________________ PRINTED NAME:_______________
TITLE:_________________________ TITLE:______________________
FAX NUMBER: (860) 676-1814 Taxpayer ID#________________
DATE ACCEPTED:____________, 2000 FAX NUMBER:_________________
DATED:_________________, 2000
|
STATE OF _______________________
COUNTY OF ______________________
I acknowledge that ___________________, who stated that he/she is
_______________ of the Borrower named above, signed this Master Loan and
Security Agreement in my presence today: _______________. He/She acknowledged
to me that his/her signature on this Master Loan and Security Agreement was
authorized by a valid resolution or other valid authorization from Borrower's
board of directors or other governing body.
[SEAL]
Exhibit 10.10
ILLUMINA, INC.
2000 STOCK PLAN
. to attract and retain the best available personnel for positions of substantial responsibility,
. to provide additional incentive to Employees, Directors and Consultants, and
. to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant.
(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or the Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator.
If an Option expires or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated); provided, however, that Shares that have actually been issued under the Plan upon exercise of an Option shall not be returned to the Plan and shall not become available for future distribution under the Plan, except that if unvested Shares are
repurchased by the Company at their original purchase price, such Shares shall become available for future grant under the Plan.
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options may be granted hereunder;
(iii) to determine the number of shares of Common Stock to be covered by each Option granted hereunder;
(iv) to approve forms of agreement for use under the Plan;
(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Option granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;
(vi) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan;
(vii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;
(viii) to modify or amend each Option (subject to Section 15(c) of the Plan), including the discretionary authority to extend the post- termination exercisability period of Options longer than is otherwise provided for in the Plan;
(ix) to allow Optionees to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by an Optionee to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;
(x) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option previously granted by the Administrator;
(xi) to make all other determinations deemed necessary or advisable for administering the Plan.
(a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option shall confer upon an Optionee any right with respect to continuing the Optionee's relationship as a Service Provider with the Company, nor shall they interfere in any way with the Optionee's right or the Company's right to terminate such relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal year of the Company, Options to purchase more than 500,000 Shares.
(ii) In connection with his or her initial service, a Service Provider may be granted Options to purchase up to an additional 1,000,000 Shares, which shall not count against the limit set forth in subsection (i) above.
(iii) The foregoing limitations shall be adjusted proportionately in connection with any change in the Company's capitalization as described in Section 13.
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per Share exercise price shall be determined by the Administrator. In the case of a Nonstatutory Stock Option intended to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a merger or other corporate transaction.
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which, in the case of Shares acquired directly or indirectly from the Company, (A) have been owned by the Optionee for more than six (6) months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;
(v) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan;
(vi) a reduction in the amount of any Company liability to the Optionee, including any liability attributable to the Optionee's participation in any Company-sponsored deferred compensation program or arrangement;
(vii) any combination of the foregoing methods of payment; or
(viii) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.
Notwithstanding the foregoing, the Administrator may permit an Option to be exercised by delivery of a full-recourse promissory note secured by the purchased shares. All other terms of such promissory note shall be determined by the Administrator in its sole discretion.
An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.
nated prior to Optionee's death in a form acceptable by the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee's estate or by the person(s) to whom the Option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Option Agreement, the Option shall remain exercisable for twelve (12) months following Optionee's death. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.
(a) All Options granted pursuant to this Section shall be Nonstatutory Stock Options and, except as otherwise provided herein, shall be subject to the other terms and conditions of the Plan.
(b) Each individual shall be automatically granted an Option to purchase 20,000 Shares (the "First Option") on the date such individual first attends a board meeting as an Outside Director, whether through election by the stockholders of the Company or appointment by the Board to fill a vacancy; provided, however, that an Inside Director who ceases to be an Inside Director but who remains a Director shall not receive a First Option.
(c) Each Outside Director shall be automatically granted an Option to purchase 10,000 Shares (a "Subsequent Option") on each annual stockholder meeting following the effective date of the Company registration statement with the Securities and Exchange Commission.
(d) Notwithstanding the provisions of subsections (b) and (c) hereof, any exercise of an Option granted before the Company has obtained stockholder approval of the Plan in accordance with Section 19 hereof shall be conditioned upon obtaining such stockholder approval of the Plan in accordance with Section 19 hereof.
(e) The terms of a First Option granted pursuant to this Section shall be as follows:
(i) the term of the First Option shall be ten (10) years.
(ii) the First Option shall be exercisable only while the Outside Director remains a Director of the Company.
(iii) the exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of the First Option.
(iv) subject to Section 13, the First Option shall become exercisable as to 25% of the Shares subject to the First Option on each anniversary of its date of grant, provided that the Optionee continues to serve as a Director on such dates.
(f) The terms of a Subsequent Option granted hereunder shall be as follows:
(i) the term of the Subsequent Option shall be ten (10) years.
(ii) the Subsequent Option shall be exercisable only while the Outside Director remains a Director of the Company.
(iii) the exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of the Subsequent Option.
(iv) subject to Section 13 hereof, the Subsequent Option shall become exercisable as to 25% of the Shares subject to the Subsequent Option on each anniversary of its date of grant, provided that the Optionee continues to serve as a Director on such date.
Company repurchase option applicable to any Shares purchased upon exercise of an Option shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action.
exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination.
degree required under Applicable Laws.
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the references to our firm under the captions "Selected Financial Data" and "Experts" and to the use of our opinion dated February 29, 2000 in the Registration Statement (Form S-1) and related Prospectus of Illumina, Inc. for the registration of shares of its common stock.
/s/ Ernst & Young LLP
San Diego, California
June 29, 2000
|
| ARTICLE 5 |
| THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ILLUMINA, INC.'S BALANCE SHEETS AS OF DECEMBER 31, 1998, DECEMBER 31, 1999 AND MARCH 31, 2000 AND RELATED STATEMENTS OF OPERATIONS STOCKHOLDERS' EQUITY, AND CASH FLOWS FOR THE PERIOD FROM APRIL 28, 1998 (INCEPTION) TO DECEMBER 31, 1998, FOR THE YEAR ENDED DECEMBER 31, 1999 AND FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. |
| PERIOD TYPE | 8 MOS | YEAR | 3 MOS |
| FISCAL YEAR END | DEC 31 1998 | DEC 31 1999 | DEC 31 2000 |
| PERIOD START | APR 28 1998 | JAN 01 1999 | JAN 01 2000 |
| PERIOD END | DEC 31 1998 | DEC 31 1999 | MAR 31 2000 |
| CASH | 8,233,729 | 21,164,114 | 15,067,452 |
| SECURITIES | 0 | 11,924,163 | 17,649,664 |
| RECEIVABLES | 0 | 49,818 | 22,701 |
| ALLOWANCES | 0 | 0 | 0 |
| INVENTORY | 0 | 0 | 0 |
| CURRENT ASSETS | 8,408,249 | 33,493,045 | 33,487,535 |
| PP&E | 1,000 | 296,286 | 836,780 |
| DEPRECIATION | 0 | (4,972) | (34,749) |
| TOTAL ASSETS | 8,557,415 | 33,894,658 | 34,430,208 |
| CURRENT LIABILITIES | 177,170 | 612,408 | 1,095,851 |
| BONDS | 0 | 0 | 0 |
| PREFERRED MANDATORY | 0 | 0 | 0 |
| PREFERRED | 9,397,998 | 37,397,998 | 37,397,998 |
| COMMON | 34,560 | 51,391 | 67,048 |
| OTHER SE | (1,052,313) | (5,417,139) | (6,630,689) |
| TOTAL LIABILITY AND EQUITY | 8,557,415 | 33,894,658 | 34,430,208 |
| SALES | 0 | 0 | 0 |
| TOTAL REVENUES | 0 | 474,026 | 83,205 |
| CGS | 0 | 0 | 0 |
| TOTAL COSTS | 1,194,168 | 6,354,568 | 4,471,740 |
| OTHER EXPENSES | 0 | 0 | 0 |
| LOSS PROVISION | 0 | 0 | 0 |
| INTEREST EXPENSE | 0 | 48,517 | 0 |
| INCOME PRETAX | (1,145,620) | (5,517,645) | (3,900,853) |
| INCOME TAX | 0 | 0 | 0 |
| INCOME CONTINUING | (1,145,620) | (5,517,645) | (3,900,853) |
| DISCONTINUED | 0 | 0 | 0 |
| EXTRAORDINARY | 0 | 0 | 0 |
| CHANGES | 0 | 0 | 0 |
| NET INCOME | (1,145,620) | (5,517,645) | (3,900,853) |
| EPS BASIC | (1.71) | (3.91) | (2.31) |
| EPS DILUTED | (1.71) | (3.91) | (2.31) |