def14a
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to § 240.14a-12 |
SOLEXA, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule
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Identify the previous filing by registration statement number, or the Form or Schedule
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Date Filed: |
SOLEXA,
INC.
25861 Industrial Blvd.
Hayward, California 94545
NOTICE OF SPECIAL MEETING OF
STOCKHOLDERS
To Be
Held on January 17, 2006
Dear Stockholder:
You are cordially invited to attend the Special Meeting of
Stockholders of Solexa, Inc., a Delaware corporation (the
Company). The meeting will be held on
January 17, 2006 at 9:00 a.m., local time, at the
Companys principal executive offices, located at 25861
Industrial Blvd., Hayward, California 94545, for the following
purposes:
1. To approve the issuance of common stock and warrants to
purchase common stock in connection with a financing transaction.
2. To conduct any other business properly brought before
the meeting.
These items of business are more fully described in the Proxy
Statement accompanying this Notice.
The record date for the Special Meeting is December 1,
2005. Only stockholders of record at the close of business on
that date may vote at the meeting or any adjournment thereof.
By Order of the Board of Directors
Linda M. Rubinstein
Secretary
Hayward, California
December 19, 2005
You are cordially invited to attend the meeting in person.
Whether or not you expect to attend the meeting, please
complete, date, sign and return the enclosed proxy, or vote over
the telephone or the Internet as instructed in these materials,
as promptly as possible in order to ensure your representation
at the meeting. A return envelope (which is postage prepaid if
mailed in the United States) is enclosed for your convenience.
Even if you have voted by proxy, you may still vote in person if
you attend the meeting. Please note, however, that if your
shares are held of record by a broker, bank or other nominee and
you wish to vote at the meeting, you must obtain a proxy issued
in your name from that record holder.
TABLE OF CONTENTS
SOLEXA,
INC.
25861 Industrial Blvd.
Hayward, California 94545
PROXY STATEMENT
FOR THE SPECIAL MEETING OF
STOCKHOLDERS
January 17,
2006
QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
Why am I
receiving these materials?
We sent you this proxy statement and the enclosed proxy card
because the Board of Directors of Solexa, Inc. (sometimes
referred to as the Company or
Solexa) is soliciting your proxy to
vote at the Special Meeting of Stockholders. You are invited to
attend the special meeting, and we request that you vote on the
proposal described in this proxy statement. However, you do not
need to attend the meeting to vote your shares. Instead, you may
simply complete, sign and return the enclosed proxy card, or
follow the instructions below to submit your proxy over the
telephone or on the Internet.
We intend to mail this proxy statement and accompanying proxy
card on or about December 19, 2005 to all stockholders of
record entitled to vote at the special meeting.
Who can
vote at the special meeting?
Only stockholders of record at the close of business on
December 1, 2005 will be entitled to vote at the special
meeting. On this record date, there were 29,961,633 shares
of common stock outstanding and entitled to vote.
Stockholder
of Record: Shares Registered in Your Name
If on December 1, 2005 your shares were registered directly
in your name with Solexas transfer agent, ComputerShare,
then you are a stockholder of record. As a stockholder of
record, you may vote in person at the meeting or vote by proxy.
Whether or not you plan to attend the meeting, we urge you to
fill out and return the enclosed proxy card or vote by proxy
over the telephone or on the Internet as instructed below to
ensure your vote is counted.
Beneficial
Owner: Shares Registered in the Name of a Broker or
Bank
If on December 1, 2005 your shares were held, not in your
name, but rather in an account at a brokerage firm, bank, dealer
or other similar organization, then you are the beneficial owner
of shares held in street name, and these proxy
materials are being forwarded to you by that organization. The
organization holding your account is considered the stockholder
of record for purposes of voting at the special meeting. As a
beneficial owner, you have the right to direct your broker or
other agent on how to vote the shares in your account. You are
also invited to attend the special meeting. However, since you
are not the stockholder of record, you may not vote your shares
in person at the meeting unless you request and obtain a valid
proxy from your broker or other agent.
What am I
voting on?
There is one matter scheduled for a vote:
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Issuance of common stock and warrants to purchase common stock
in connection with a financing transaction.
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1
How do I
vote?
You may vote For or Against or abstain
from voting. The procedures for voting are as follows:
Stockholder
of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in person at
the special meeting or vote by proxy using the enclosed proxy
card. Whether or not you plan to attend the meeting, we urge you
to vote by proxy to ensure your vote is counted. You may still
attend the meeting and vote in person if you have already voted
by proxy.
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To vote in person, come to the special meeting and we will give
you a ballot when you arrive.
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To vote using the proxy card, simply complete, sign and date the
enclosed proxy card and return it promptly in the envelope
provided. If you return your signed proxy card to us before the
special meeting, we will vote your shares as you direct.
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Beneficial
Owner: Shares Registered in the Name of a Broker or
Bank
If you are a beneficial owner of shares registered in the name
of your broker, bank or other agent, you should have received a
proxy card and voting instructions with these proxy materials
from that organization rather than from Solexa. Simply complete
and mail the proxy card to ensure that your vote is counted.
A number of brokers and banks are participating in a program
provided through ADP Investor Communication Services that offers
the means to grant proxies to vote shares by means of the
telephone and Internet. If your shares are held in an account
with a broker or bank participating in the ADP Investor
Communications Services program, you may grant a proxy to vote
those shares telephonically by calling the telephone number
shown on the instruction form received from your broker or bank,
or via the Internet at ADP Investor Communication Services
web site at (www.proxyvote.com). To vote in person at the
meeting, you must obtain a valid proxy from your broker, bank or
other agent. Follow the instructions from your broker or bank
included with these proxy materials, or contact your broker or
bank to request a proxy form.
Votes submitted via the Internet or by telephone must be
received by 11:59 p.m., Eastern Time, on January 16,
2006, by submitting your proxy via the Internet or by telephone
will not affect your right to vote in person should you decide
to attend the special meeting.
The telephone and Internet voting procedures are designed to
authenticate stockholders identities, to allow
stockholders to give their voting instructions and to confirm
that stockholders instructions have been recorded
properly. Please be aware that you must bear any costs
associated with your Internet access, such as usage charges from
Internet access providers and telephone companies.
How many
votes do I have?
On each matter to be voted upon, you have one vote for each
share of common stock you own as of December 1, 2005.
What if I
return a proxy card but do not make specific choices?
If you return a signed and dated proxy card without marking any
voting selections, your shares will be voted For the
approval of the issuance of common stock and warrants to
purchase common stock in connection with a financing
transaction. If any other matter is properly presented at the
meeting, your proxy (one of the individuals named on your proxy
card) will vote your shares using his or her best judgment.
Who is
paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In
addition to these mailed proxy materials, our directors and
employees may also solicit proxies in person, by telephone or by
other means of communication. Directors and employees will not
be paid any additional compensation for soliciting proxies. We
will also reimburse brokerage firms, banks and other agents for
the cost of forwarding proxy materials to beneficial owners.
2
What does
it mean if I receive more than one proxy card?
If you receive more than one proxy card, your shares are
registered in more than one name or are registered in different
accounts. Please complete, sign and return each proxy
card to ensure that all of your shares are voted.
Can I
change my vote after submitting my proxy?
Yes. You can revoke your proxy at any time before the final vote
at the meeting. You may revoke your proxy in any one of three
ways:
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You may submit another properly completed proxy card with a
later date.
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You may send a written notice that you are revoking your proxy
to Solexas Secretary at 25861 Industrial Blvd., Hayward,
California 94545.
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You may attend the special meeting and vote in person. Simply
attending the meeting will not, by itself, revoke your proxy.
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How are
votes counted?
Votes will be counted by the inspector of election appointed for
the meeting, who will separately count For and
Against votes, abstentions and broker non-votes. A
broker non-vote occurs when a nominee holding shares
for a beneficial owner does not vote on a particular proposal
because the nominee does not have discretionary voting power
with respect to that proposal and has not received instructions
with respect to that proposal from the beneficial owner (despite
voting on at least one other proposal for which it does have
discretionary authority or for which it has received
instructions). Discretionary items are proposals considered
routine under the rules of the New York Stock Exchange on which
your broker may vote shares held in street name in the absence
of your voting instructions. On non-discretionary items for
which you do not give your broker instructions, the shares will
be treated as broker non-votes. Abstentions will be counted
towards the vote total for the proposal and will have the same
effect as Against votes. Broker non-votes have no
effect and will not be counted towards the vote total for the
proposal.
How many
votes are needed to approve the proposal?
To be approved, Proposal No. 1, the issuance of common
stock and warrants to purchase common stock in connection with a
financing transaction, must receive a For vote from
the majority of shares present and entitled to vote either in
person or by proxy, excluding shares sold and issued at the
first closing of the financing. If you Abstain from
voting, it will have the same effect as an Against
vote. Broker non-votes will have no effect.
What is
the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A
quorum will be present if at least a majority of the outstanding
shares are represented by votes at the meeting or by proxy. On
the record date, there were 29,961,633 shares outstanding
and entitled to vote. Thus, 14,980,817 shares must be
represented by votes at the meeting or by proxy to have a quorum.
Your shares will be counted towards the quorum only if you
submit a valid proxy vote or vote at the meeting. Abstentions
and broker non-votes will be counted towards the quorum
requirement. If there is no quorum, a majority of the votes
present at the meeting may adjourn the meeting to another date.
How can I
find out the results of the voting at the special
meeting?
Preliminary voting results will be announced at the special
meeting. Final voting results will be published in the
Companys quarterly report on
Form 10-Q for the
first quarter of 2006.
3
PROPOSAL 1
APPROVAL OF ISSUANCE OF COMMON STOCK AND WARRANTS TO
PURCHASE
COMMON STOCK IN CONNECTION WITH A FINANCING TRANSACTION
Introduction
On November 23, 2005, we completed the first part of a
two-part sale of our securities to investors in a private
placement pursuant to Purchase Agreements, dated
November 18, 2005, by and among the Company and the
purchasers of the common stock and warrants named therein
(together the Purchase Agreement).
Pursuant to the Purchase Agreement, we agreed to sell up to an
aggregate of 10,000,000 shares of our common stock, par
value $0.01 per share, at a price per share of $6.50 and
warrants to purchase up to 3,500,000 shares of our common
stock at an exercise price of $7.50 per share (the
Financing). The price per share of the
common stock and the exercise price of the warrants were
approved by a pricing committee of the board of directors of the
Company (the Board) composed of
directors who are not affiliated with any of the participants in
the Financing.
The sale and issuance of our common stock and warrants to
purchase our common stock has been structured to close in two
closings. The first closing (the First
Closing) was completed on November 23, 2005,
pursuant to which we sold and issued an aggregate of
3,851,840 shares of our common stock and warrants to
purchase up to an aggregate of 1,348,145 shares of our
common stock. We expect to sell an additional
6,148,160 shares of our common stock and warrants to
purchase up to 2,151,855 shares of our common stock at the
second closing (the Second Closing).
The Second Closing is subject to the approval of this
Proposal 1 by our stockholders. If stockholder approval of
the Second Closing is obtained, the Second Closing is expected
to occur promptly after the special meeting.
In connection with the Financing, certain of the stockholders of
the Company beneficially owning approximately
14,503,719 shares of Companys outstanding common
stock have entered into voting agreements, whereby they have
agreed to vote all outstanding shares of the Companys
capital stock beneficially held by them in favor of the Second
Closing.
THIS PROXY STATEMENT IS NEITHER AN OFFER TO SELL NOR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OF THE COMPANY.
THE SECURITIES REFERRED TO IN THIS PROXY STATEMENT HAVE NOT BEEN
REGISTERED FOR SALE BY THE COMPANY UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE SECURITIES ACT),
OR ANY STATE SECURITIES LAWS AND MAY NOT BE SO OFFERED OR SOLD
ABSENT SUCH REGISTRATION UNDER THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF.
Assuming stockholder approval of this Proposal 1, we would
receive approximately $40.0 million from the sale of
approximately 6,150,000 shares of our common stock, or
$6.50 per share, at the Second Closing. Upon exercise of the
warrants to purchase up to approximately 2,150,000 shares
of our common stock, to be issued at the Second Closing, we
would receive proceeds of approximately $16.1 million, or
$7.50 per share.
The purchasers in the Financing consist of a limited number of
accredited investors, and the sale of our common stock and
warrants is being made in reliance on Regulation D
promulgated under the Securities Act, which offers exemptions
from the registration requirements under the Securities Act. SG
Cowen & Co. LLC is serving as lead placement agent and
Leerlink, Swann & Company is serving as co-placement
agent for the Company in connection with the Financing.
The
Purchasers; Interests of Certain Persons
Certain purchasers in the transactions are affiliated with
Abingworth Management Limited (defined below), Amadeus Capital
Partners Limited (defined below), OBP Management IV L.P.
(defined below) and ValueAct Capital Management, L.P.
(ValueAct) and are affiliated with
certain directors of the Company as follows: certain entities
affiliated with Abingworth Management Limited are affiliated
with Genghis Lloyd-Harris; certain entities affiliated with
Amadeus Capital Partners Limited are affiliated with Hermann
Hauser; certain entities affiliated with OBP Management IV L.P.
are affiliated with Douglas Fambrough; and ValueAct is
affiliated with G. Mason Morfit.
4
Abingworth
Management Limited
Abingworth Management Limited is the investment advisor to
Abingworth Bioventures II SICAV and the investment manager of
Abingworth Bioventures II A LP, Abingworth Bioventures III A LP,
Abingworth Bioventures III C LP, Abingworth Bioventures III
Executives LP and Abingworth Bioequities Master Fund Limited.
Therefore, for purposes of this proxy statement, these entities
affiliated with Abingworth Management Limited are collectively
referred to as Abingworth Management Limited
and shares of the Company beneficially owned by these
entities have been aggregated.
Amadeus
Capital Partners Limited
Entities affiliated with Amadeus Capital Partners Limited are
Amadeus II A LP, Amadeus II B LP, Amadeus II C LP, Amadeus II D
GmbH & Co KG and Amadeus II Affiliates LP. For purposes
of this proxy statement, these entities are collectively
referred to as Amadeus Capital Partners
Limited and shares of the Company beneficially
owned by these entities have been aggregated.
OBP
Management IV L.P.
Entities affiliated with OBP Management IV L.P. are Oxford
Bioscience Partners IV L.P. and mRNA Fund II L.P. For
purposes of this proxy statement, these entities are
collectively referred to as OBP Management IV
L.P. and shares of the Company beneficially owned
by these entities have been aggregated.
Ownership
Percentages
The following table indicates the beneficial ownership of our
voting securities held by investors who may be considered to be
affiliates of the Company: (1) upon the First Closing, and
(2) upon the Second Closing:
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Total Shares
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% Voting Securities
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Beneficially Owned
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Beneficially Owned
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Common Stock
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Warrants
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(See Note Below)
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(See Note Below)
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(1) First
Closing
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Abingworth
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5,323,480
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414,820
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5,738,300
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18.9
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Amadeus
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4,259,496
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384,626
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4,644,122
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15.3
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Oxford
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3,045,743
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275,000
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3,320,743
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11.0
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ValueAct
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1,875,000
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937,500
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2,812,500
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9.1
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(2) Second
Closing
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Abingworth
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5,631,180
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522,515
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6,046,000
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16.6
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Amadeus
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4,644,111
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519,241
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5,028,737
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13.8
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Oxford
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3,353,436
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382,693
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3,628,436
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10.0
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%
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ValueAct
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2,105,770
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1,018,270
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3,043,270
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8.2
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Percentage ownership is based on 29,961,633 shares of
common stock outstanding as of December 1, 2005, assumes
the issuance of an aggregate of 6,148,160 shares of common
stock at the Second Closing and includes shares exercisable
currently or within 60 days following the date of this
proxy statement by each of the above-listed investors, and
excludes shares underlying the warrants to be issued at the
Second Closing, which will not be exercisable until
180 days after the date of issuance. These investors did
not participate in the First Closing of the Financing, but are
expected to participate in the Second Closing of the Financing
following stockholder approval.
Voting
Agreements
Entities affiliated with Abingworth Management Limited, Amadeus
Capital Partners Limited, OBP Management IV L.P. and ValueAct
have entered into voting agreements, whereby they have agreed to
vote all outstanding shares of the Companys capital stock
beneficially held by them in favor of the Second Closing. These
entities are also parties to the Purchase Agreement and have
agreed to purchase shares of common stock and warrants at the
Second Closing.
5
Reason
for Stockholder Approval
Our common stock is listed on The NASDAQ Capital Market, and, as
a result, we are subject to NASDAQs rules. We are required
to seek stockholder approval for the Second Closing in order to
ensure compliance with Rule 4350 of the NASDAQ rules.
NASDAQ Marketplace Rule 4350(i)(1)(A) requires stockholder
approval prior to the issuance of securities to officers or
directors of the issuer at a price below the book or market
value of the common stock. Several of the potential investors in
the Second Closing are current stockholders of the Company and
are affiliated with certain individuals who are on the Board as
follows: certain entities affiliated with Abingworth Management
Limited are affiliated with Dr. Lloyd-Harris; certain
entities affiliated with Amadeus Capital Partners are affiliated
with Dr. Hauser; certain entities affiliated with OBP
Management IV L.P. are affiliated with Dr. Fambrough; and
ValueAct is affiliated with Mr. Morfit. We are seeking
stockholder approval to ensure compliance with the rule and
allow participation in the Financing by entities affiliated with
each of Abingworth Management Limited, Amadeus Capital Partners
Limited, OBP Management IV L.P. and ValueAct.
In addition, NASDAQ Marketplace Rule 4350(i)(1)(D) requires
stockholder approval prior to the sale or issuance or potential
issuance of shares of common stock (or of securities convertible
into or exercisable for shares of common stock) in a transaction
other than a public offering (as defined by NASDAQ), where the
number of shares of common stock issued or to be issued is equal
to 20% or more of a companys outstanding common stock or
20% or more of the voting power of the company outstanding
before the issuance, and where the effective sale price of the
common stock is less than the greater of the book or market
value of the common stock price. All of our common stock sold or
to be sold and issued in the Financing has been priced at $6.50
per share (excluding shares issuable upon exercise of the
Warrants issued or issuable in connection with the Financing).
This price was less than the price of our common stock as
reported on The NASDAQ Capital Market prior to the pricing of
such securities and, as such, the Second Closing requires
stockholder consent pursuant to NASDAQ Marketplace
Rule 4350(i)(1)(D).
If approved, this proposal would likely result in a significant
increase in the number of shares of our common stock
outstanding, and, as a result, current stockholders who are not
participating in the Financing would own a smaller percentage of
our outstanding common stock and, accordingly, a smaller
percentage interest in the voting power, liquidation value and
book value of the Company. The sale or resale of any of our
common stock issued pursuant to the financing could cause the
market price of our common stock to decline.
Reasons
for the Financing
The Board has determined that obtaining additional funds is
critical to the Companys ability to execute on its current
business plan. However, because of the restrictions of NASDAQ
Marketplace Rule 4350, the Company is limited in the amount
it may raise through the private sale of its equity securities
without obtaining stockholder approval. If the approval sought
hereby is obtained and the other conditions to the Second
Closing of the Financing are satisfied, the Company will raise
up to $65 million in the Financing, including approximately
$40.0 million at the Second Closing, but excluding the
exercise of the warrants issued or issuable in connection with
the Financing.
Summary
of the Financing
The terms of the Financing and a description of the common stock
and warrants are summarized below. Copies of the Purchase
Agreement and the forms of warrant (collectively, the
Financing Documents) have been filed
by the Company as exhibits to the Current Report on
Form 8-K, filed
with the Securities and Exchange Commission (the
SEC) on November 23, 2005, and
you are encouraged to review the full text of the Financing
Documents.
The following summary is qualified in its entirety by reference
to the more detailed terms set forth in the Financing Documents.
Warrants
For each share of common stock purchased in the Financing, each
purchaser shall receive a warrant to purchase thirty five
percent of one share of common stock. The warrants issued
pursuant to the Purchase Agreement are exercisable 180 days
after the date of issuance and remain exercisable until the five
year anniversary of the date of
6
issuance. The warrants are exercisable at a per share price of
$7.50, subject to proportional adjustments for stock splits,
stock dividends, recapitalizations and the like. The exercise
price is also adjustable if, at any time prior to the one and
one-half year anniversary of the date of issuance, Solexa issues
additional shares of common stock, warrants or other securities
exercisable or exchangeable for shares of common stock at a
price of less than $6.50 per share of common stock. If not
exercised after five years, the warrants will terminate. In the
event of a fundamental transaction (as defined in the warrants),
each warrant will be exchanged for the cash value thereof, if
applicable, or will remain outstanding until expiration and
exercisable for shares of stock of the surviving or acquiring
corporation as determined in accordance with the Black-Scholes
formula set forth in each warrant.
Registration
Rights
Pursuant to the Purchase Agreement, we agreed to use our best
efforts to prepare and file a registration statement on
Form S-3 (the
Registration Statement) for the resale
of the shares of common stock issued pursuant to the Purchase
Agreement and shares of common stock issuable upon exercise of
the warrants issued pursuant to the Purchase Agreement
(collectively, the Registrable Shares)
within 10 days following the Second Closing, but in no
event later than 80 days following the First Closing, and
to use our best efforts to cause the Registration Statement to
become effective within 100 days following the First
Closing or within 150 days following the First Closing if
the Registration Statement is reviewed by the SEC. We also
agreed to make such filings as necessary to keep the
Registration Statement effective until such time as all of the
Registrable Shares have been resold, such time as all of the
Registrable Shares may be resold in a three-month period
pursuant to Rule 144(k), or the fifth anniversary of later
of the First Closing Date or Second Closing Date.
We are entitled to suspend the effectiveness of the Registration
Statement for no more than 30 days in any 12 month
period. In the event we fail to cause the Registration Statement
to be timely filed, timely declared effective, or to be kept
effective (other than pursuant to the permissible suspension
periods), we agreed to pay as liquidated damages the amount of
one percent per month of the aggregate purchase price paid by
each purchaser for the common stock in the Financing. The
stockholder approval being sought hereby will constitute consent
to the payment of these cash penalties, if any.
Description
of Common Stock
Our authorized capital stock consists of 60,000,000 shares
of common stock, $0.01 par value, and 2,000,000 shares of
preferred stock, $0.01 par value.
As of December 1, 2005, there were 29,961,633 shares
of common stock outstanding, held of record by approximately
998 stockholders. In addition, as of December 1, 2005,
there were 3,122,649 shares of common stock subject to
outstanding options with a weighted average exercise price of
approximately $6.13 per share and 6,157,171 shares of
common stock subject to outstanding warrants with a weighted
average exercise price of approximately $7.95 per share. We
currently have no preferred stock outstanding.
Each share of our common stock entitles its holder to one vote
on all matters to be voted upon by our stockholders. Holders of
our common stock may receive ratably any dividends that the
Board may declare out of funds legally available for that
purpose. In the event of liquidation, dissolution or winding up
of the Company, the holders of our common stock are entitled to
share ratably in all assets remaining after payment of
liabilities and any liquidation preference of any preferred
stock that may be issued in the future. Our common stock has no
preemptive rights, conversion rights, subscription rights or
redemption or sinking fund provisions. All outstanding shares of
our common stock are fully paid and non-assessable.
Anti-Takeover
Provisions
Delaware
Law
We are subject to Section 203 of the Delaware General
Corporation Law, which regulates acquisitions of some Delaware
corporations. In general, Section 203 prohibits, with some
exceptions, a publicly held Delaware
7
corporation from engaging in a business combination with an
interested stockholder for a period of three years following the
date the person becomes an interested stockholder, unless:
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the board of directors approved the business combination or the
transaction in which the person became an interested stockholder
prior to the date the person attained this status;
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upon consummation of the transaction that resulted in the person
becoming an interested stockholder, the person owned at least
85% of the companys voting stock outstanding at the time
the transaction commenced, excluding shares owned by persons who
are directors and also officers and 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
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on or subsequent to the date the person became an interested
stockholder, the board of directors approved the business
combination and the stockholders other than the interested
stockholder authorized the transaction at an annual or special
meeting of stockholders by the affirmative vote of at least
66.67% of the outstanding stock not owned by the interested
stockholder.
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Section 203 defines a business combination to
include:
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any merger or consolidation involving us and the interested
stockholder;
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any sale, transfer, pledge or other disposition involving the
interested stockholder of 10% or more of our assets;
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in general, any transaction that results in the issuance or
transfer by us of any of our stock to the interested stockholder
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any transaction involving the corporation that has the effect of
increasing the proportionate share of our stock owned by the
interested stock holders; or
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the receipt by the interested stockholder of the benefit of any
loans, advances, guarantees, pledges or other financial benefits
provided by or through us.
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In general, Section 203 defines an interested
stockholder as any person who, together with the
persons affiliates and associates, owns, or within three
years prior to the determination of interested stockholder
status did own, 15% or more of a corporations voting stock.
Certificate
of Incorporation and Bylaws Provisions
Our certificate of incorporation and bylaws include a number of
provisions that may have the effect of deterring hostile
takeovers or delaying or preventing changes in control or
management of us. First, the bylaws provide that special
meetings of the stockholders may be called only by our board of
directors pursuant to a resolution adopted by a majority of the
total number of authorized directors. Second, the certificate of
incorporation provides that our board of directors can issue
shares of preferred stock. Finally, the bylaws establish
procedures, including advance notice procedures with regard to
the nomination of candidates for election as directors and
stockholder proposals. These provisions of our certificate of
incorporation and bylaws could discourage potential acquisition
proposals and could delay or prevent a change in control or
management of us.
Use of
Proceeds
The funds that may be raised are expected to be used for general
corporate purposes, more specifically, the development and
commercialization of a new genetic analysis instrument system to
be sold to customers for use in their own research laboratories
and in the Companys genomics service business.
Overall
Effect of the Proposal
If the proposal is approved by the stockholders, we, in
compliance with the NASDAQ rules, will complete the sale or
issuance of up to approximately 13,500,000 shares of our
common stock (including warrants exercisable for or convertible
into our common stock) at a discount to market price and to book
value of our common stock, in an
8
offering that is not a public offering as defined by
NASDAQ and in a transaction involving investors who will include
affiliates of certain individuals who are on the Board. This
approval would not limit our ability to engage in a public
offering, as defined by NASDAQ, or to issue or sell a number of
shares of our common stock (including shares issuable upon
conversion or exercise of convertible debt, warrants or other
securities exercisable for or convertible into our common stock)
that is less than 20% of the outstanding shares on terms that
might or might not be similar to those in this proposal.
The issuance of our common stock in the financing subject to
this proposal is not intended to have an anti-takeover effect
and is not part of a plan by management to institute
anti-takeover measures. We do not have knowledge of any effort
to accumulate our securities or to obtain control of us by means
of a merger, tender offer, solicitation in opposition to
management or otherwise.
Required
Vote
The affirmative vote of a majority of all of the votes present
or represented and entitled to vote at the special meeting,
excluding for this purpose any shares sold and issued at the
First Closing of the Financing, is required to approve the
Second Closing of the Financing.
THE BOARD
OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 1.
9
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
beneficial ownership of our common stock as of December 1,
2005 by: (i) each stockholder who is known by us to own
beneficially more than five percent of the common stock;
(ii) each executive officer of the Company, (iii) each
director of the Company; and (iv) all of our current
directors and executive officers as a group. Unless otherwise
indicated, the address of each of the individuals and entities
below is: c/o Solexa, Inc., 25861 Industrial Blvd., Hayward,
California 94545.
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Beneficial
Ownership(1)
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Name of Beneficial
Owner
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Number of Shares
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Percent of Total
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Entities affiliated with
Abingworth Management Limited(2)
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5,738,300
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18.9
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%
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38 Jermyn Street
London SW1Y 6DN
Great Britain
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Entities affiliated with Amadeus
Capital Partners Limited(3)
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4,644,122
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15.3
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%
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Mount Pleasant House, 2 Mount
Pleasant
Huntington Road, Cambridge CB3 ORN
Great Britain
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Entities affiliated with Schroder
Venture Managers Limited(4)
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3,902,114
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12.9
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%
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c/o Church Street
Hamilton HM 11
Bermuda
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Entities affiliated with OBP
Management IV L.P.(5)
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3,320,743
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11.0
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%
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222 Berkeley Street,
Suite 1650
Boston, Massachusetts 02116
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ValueAct Capital Master Fund,
L.P.(6)
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2,812,500
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9.1
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%
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436 Pacifica Avenue,
4th
Floor
San Francisco, CA 94133
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Hermann Hauser, Ph.D.(7)
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4,654,122
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15.3
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%
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c/o Amadeus Capital Partners
Limited
Mount Pleasant House, 2 Mount Pleasant
Huntington Road, Cambridge CB3 ORN
Great Britain
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John West(8)
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322,027
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1.1
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%
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Craig C. Taylor(9)
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77,430
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*
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Stephen D. Allen, Ph.D.(10)
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14,436
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*
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Genghis Lloyd-Harris, M.D.,
Ph.D.(11)
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10,000
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*
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G. Mason Morfit(12)
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10,000
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*
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Douglas M. Fambrough, Ph.D.(13)
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10,000
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*
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c/o OBP Management IV L.P.
222 Berkeley St., Suite 1650
Boston, Massachusetts 02116
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Peter Lundberg(14)
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2,666
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*
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Omead Ostadan
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*
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Linda Rubinstein(15)
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31,458
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*
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Kathy A. San Roman(16)
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22,802
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*
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Mary J. Schramke, Ph.D.(17)
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9,057
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*
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Tony Smith, Ph.D.(18)
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70,982
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*
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All directors and officers as a
group (13 persons)(19)
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5,209,559
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17.1
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%
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10
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(1) |
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Beneficial ownership is determined in accordance with the rules
of the SEC and, unless otherwise indicated, includes voting or
investment power with respect to securities. Percentage of
beneficial ownership is based on 29,961,633 shares of
common stock outstanding as of December 1, 2005, except as
otherwise noted in the footnotes. Shares of common stock subject
to options and/or warrants currently exercisable or exercisable
within 60 days of December 1, 2005, are deemed
outstanding for computing the percentage of beneficial ownership
of the person holding such options and/or warrants but are not
deemed outstanding for computing the percentage of beneficial
ownership of any other person. |
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(2) |
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Includes 2,266,436 shares of common stock held by
Abingworth Bioventures II SICAV; 613,278 shares of common
stock and warrants to purchase 125,000 shares of common
stock held by Abingworth Bioventures II A LP;
1,226,769 shares of common stock and warrants to purchase
145,489 shares of common stock held by Abingworth
Bioventures III A LP; 748,869 shares of common stock and
warrants to purchase 88,812 shares of common stock held by
Abingworth Bioventures III B LP; 448,578 shares of common
stock and warrants to purchase 53,200 shares of common
stock held by Abingworth Bioventures III C LP; and
19,550 shares of common stock and warrants to purchase
2,319 shares of common stock held by Abingworth Bioventures
III Executives LP. |
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(3) |
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Includes 1,916,772 shares of common stock and warrants to
purchase 173,081 shares of common stock held by Amadeus II
A LP; 1,277,849 shares of common stock and warrants to
purchase 115,387 shares of common stock held by Amadeus II
B LP; 894,495 shares of common stock and warrants to
purchase 80,772 shares of common stock held by Amadeus II C
LP; 42,596 shares of common stock and warrants to purchase
3,847 held by Amadeus II D GmbH & Co KG; and
127,784 shares of common stock and warrants to purchase
11,539 shares of common stock held by Amadeus II Affiliates
LP. |
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(4) |
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Includes 2,120,920 shares of common stock and warrants to
purchase 165,365 shares of common stock held by Schroder
Ventures International Life Sciences Fund II L.P.1;
903,290 shares of common stock and warrants to purchase
70,428 shares of common stock held by Schroder Ventures
International Life Sciences Fund II L.P.2;
240,722 shares of common stock and warrants to purchase
18,769 shares of common stock held by Schroder Ventures
International Life Sciences Fund II L.P.3;
32,720 shares of common stock and warrants to purchase
2,551 shares of common stock held by Schroder Ventures
International Life Sciences Fund II Strategic Partners
L.P.; 60,993 shares of common stock and warrants to
purchase 4,756 shares of common stock held by Schroder
Ventures International Life Sciences Fund II Group
Co-Investment Scheme; and 261,232 shares of common stock
and warrants to purchase 20,368 shares of common stock held
by SV (nominees) Limited as Nominee to Schroder Ventures
Investments Limited. |
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(5) |
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Includes 3,015,488 shares of common stock and warrants to
purchase 272,268 shares of common stock held by Oxford
Bioscience Partners IV L.P. and 30,255 shares of common
stock and warrants to purchase 2,732 shares of common stock
held by mRNA Fund II L.P. |
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(6) |
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Includes 1,875,000 shares of common stock and warrants to
purchase 937,500 shares of common stock held by ValueAct Capital
Master Fund, L.P. G. Mason Morfit is a non-managing member
of VA Partners, LLC, which is the general partner of ValueAct
Capital Master Fund, L.P. Mr. Morfit disclaims beneficial
ownership of the shares owned by ValueAct Capital Master Fund,
L.P. |
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(7) |
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Includes 1,916,772 shares of common stock and warrants to
purchase 173,081 shares of common stock held by Amadeus II
A LP; 1,277,849 shares of common stock and warrants to
purchase 115,387 shares of common stock held by Amadeus II
B LP; 894,495 shares of common stock and warrants to
purchase 80,772 shares of common stock held by Amadeus II C
LP; 42,596 shares of common stock and warrants to purchase
3,847 held by Amadeus II D GmbH & Co KG; and
127,784 shares of common stock and warrants to purchase
11,539 shares of common stock held by Amadeus II Affiliates
LP. Dr. Hauser shares the power to vote and control the
disposition of shares held by Amadeus II A LP, Amadeus II B LP,
Amadeus II C LP, Amadeus II D GmbH & Co KG and Amadeus
II Affiliates LP. Dr. Hauser disclaims beneficial ownership
of such shares, except to the extent of his pecuniary interest
therein. This number also includes 10,000 shares of common
stock issuable upon exercise of stock options held by
Dr. Hauser that are exercisable within 60 days of
December 1, 2005. |
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(8) |
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Includes 322,027 shares of common stock issuable upon
exercise of stock options held by Mr. West that are
exercisable within 60 days of December 1, 2005. |
11
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(9) |
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Includes 8,303 shares of common stock, 15,178 shares
of common stock issuable upon exercise of stock options that are
exercisable within 60 days of December 1, 2005, and
2,521 shares of common stock issuable upon exercise of
warrants held by Mr. Taylor. Also includes
51,428 shares of common stock held by Asset Management
Associates 1989 L.P. Mr. Taylor, the Chairman of the board
of directors of Solexa, is a general partner of AMC Partners 89,
which is the general partner of Asset Management Associates 1989
L.P. Mr. Taylor shares the power to vote and control the
disposition of shares held by Asset Management Associates 1989
L.P. and, therefore, may be deemed to be the beneficial owner of
such shares. Mr. Taylor disclaims beneficial ownership of
such shares, except to the extent of his pecuniary interest
therein. |
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(10) |
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Includes 14,436 shares of common stock issuable upon
exercise of stock options held by Dr. Allen that are
exercisable within 60 days of December 1, 2005. |
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(11) |
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Includes 10,000 shares of common stock issuable upon
exercise of stock options held by Dr. Lloyd-Harris that are
exercisable within 60 days of December 1, 2005.
Dr. Lloyd-Harris is affiliated with Abingworth Bioventures
II SICAV, Abingworth Bioventures II A LP, Abingworth Bioventures
III A LP, Abingworth Bioventures III B LP, Abingworth
Bioventures III C LP, and Abingworth Bioventures III Executives
LP but does not possess voting and/or investment power of the
shares held by these entities. |
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(12) |
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Includes 10,000 shares of common stock issuable upon
exercise of stock options held by Mr. Morfit that are
exercisable within 60 days of December 1, 2005.
Mr. Morfit is a non-managing member of VA Partners, LLC,
which is the general partner of ValueAct Capital Master Fund,
L.P. Mr. Morfit disclaims beneficial ownership of the
shares owned by ValueAct Capital Master Fund, L.P. |
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(13) |
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Includes 10,000 shares of common stock issuable upon
exercise of stock options held by Dr. Fambrough that are
exercisable within 60 days of December 1, 2005.
Dr. Fambrough is affiliated with Oxford Bioscience Partners
IV, LP and mRNA Fund II LP and does not possess voting
and/or investment power of the shares held by these entities.
Dr. Fambrough disclaims beneficial ownership of such shares
except to the extent of his pecuniary interest therein. |
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(14) |
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Includes 2,666 shares of common stock issuable upon
exercise of stock options held by Mr. Lundberg that are
exercisable within 60 days of December 1, 2005. |
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(15) |
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Includes 31,458 shares of common stock issuable upon
exercise of stock options held by Ms. Rubinstein that are
exercisable within 60 days of December 1, 2005. |
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(16) |
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Includes 22,802 shares of common stock issuable upon
exercise of stock options held by Ms. San Roman that are
exercisable within 60 days of December 1, 2005. |
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(17) |
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Includes 9,057 shares of common stock issuable upon
exercise of stock options held by Dr. Schramke that are
exercisable within 60 days of December 1, 2005. |
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(18) |
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Includes 70,982 shares of common stock issuable upon
exercise of stock options held by Dr. Smith that are
exercisable within 60 days of December 1, 2005. |
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(19) |
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Includes 4,678,432 shares of common stock (including shares
of common stock held by entities affiliated with certain
directors), 523,775 shares of common stock issuable upon
exercise of stock options that are exercisable within
60 days of December 1, 2005 and 2,521 shares of
common stock issuable upon exercise of warrants held by current
directors and officers. See Notes 2 through 18 above. |
12
HOUSEHOLDING
OF PROXY MATERIALS
The SEC has adopted rules that permit companies and
intermediaries (e.g., brokers) to satisfy the delivery
requirements for proxy statements and annual reports with
respect to two or more stockholders sharing the same address by
delivering a single proxy statement addressed to those
stockholders. This process, which is commonly referred to as
householding, potentially means extra convenience
for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are
Solexa stockholders may be householding our proxy
materials. A single proxy statement will be delivered to
multiple stockholders sharing an address unless contrary
instructions have been received from the affected stockholders.
Once you have received notice from your broker that they will be
householding communications to your address,
householding will continue until you are notified
otherwise or until you revoke your consent. If, at any time, you
no longer wish to participate in householding and
would prefer to receive a separate proxy statement and annual
report, please notify your broker, direct your written request
to: Investor Relations, Solexa, Inc., 25861 Industrial Blvd.,
Hayward, CA 94545 at
(510) 670-9300.
Stockholders who currently receive multiple copies of the proxy
statement at their address and would like to request
householding of their communications should contact
their broker.
13
OTHER
MATTERS
The Board of Directors knows of no other matters that will be
presented for consideration at the Special Meeting. If any other
matters are properly brought before the meeting, it is the
intention of the persons named in the accompanying proxy to vote
on such matters in accordance with their best judgment.
By Order of the Board of Directors
Linda M. Rubinstein
Secretary
December 19, 2005
Copies of the Companys Annual Report to the Securities
and Exchange Commission on
Form 10-K for the
fiscal year ended December 31, 2004 and Current Report to
the Securities and Exchange Commission on
Form 8-K/A filed
with the Securities and Exchange Commission on May 20,
2005, are available without charge upon written request to:
Investor Relations, Solexa, Inc., 25861 Industrial Blvd.,
Hayward, California 94545.
14
DETACH HERE ZSOL52
PROXY SOLEXA, INC. PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE
SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON January 17, 2006
The undersigned hereby appoints John West and Linda Rubinstein, and each of them, as attorneys and
proxies of the undersigned, with full power of substitution, to vote all of the shares of stock of
Solexa, Inc. (the Company) that the undersigned may be entitled to vote at the Special Meeting of
Stockholders of Solexa, Inc. to be held at the Companys offices located at 25861 Industrial Blvd.,
Hayward, California 94545 on January 17, 2006 at 9:00 a.m., local time, and at any and all postponements,
continuations and adjournments thereof, with all powers that the undersigned would possess if
personally present, upon and in respect of the following matters and in accordance with the
following instructions, with discretionary authority as to any and all other matters that may
properly come before the meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 AS MORE
SPECIFICALLY DESCRIBED IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY
WILL BE VOTED IN ACCORDANCE THEREWITH.
SEE REVERSE SIDE
CONTINUED AND TO BE SIGNED AND DATED ON REVERSE
SEE REVERSE SIDE |
SOLEXA, INC.
C/O COMPUTERSHARE
P.O. BOX 8694
EDISON, NJ 08818-8694
DETACH HERE IF YOU ARE RETURNING YOUR PROXY CARD BY MAIL
Please mark votes as in this example. ZSOL51 #LYT
THE BOARD RECOMMENDS A VOTE FOR PROPOSAL 1.
1. To approve the issuance of common stock and warrants to purchase common stock in connection with
a financing transaction. FOR AGAINST ABSTAIN
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT
Pleas vote, date and promptly return this proxy in the enclosed return envelope that is postage
prepaid if mailed in the United States.
Signature: Date: Signature: Date: |