EXHIBIT 99.2
COMPANY SUPPORT AGREEMENT
This Company Support Agreement (the "AGREEMENT") is made and entered into
as of September 28, 2004, between Lynx Therapeutics, Inc., a Delaware
corporation ("PARENT"), and the undersigned shareholder ("HOLDER") of Solexa
Limited, a company registered in England and Wales (the "COMPANY").
RECITALS
Pursuant to an Acquisition Agreement dated as of September 28, 2004 (the
"ACQUISITION AGREEMENT") by and between Parent and the Company, it is proposed
that Parent shall make the Offer and the Option Offer within the meanings set
forth in the Acquisition Agreement. Concurrently with the execution and delivery
of the Acquisition Agreement and as a condition and inducement to Parent
entering into the Acquisition Agreement, Parent has required that Holder enter
into this Agreement. The Holder is the registered owner of: (1) such number of
issued B Preferred Shares, (2) such number of issued A Ordinary Shares, (3) such
number of issued Ordinary Shares (clauses (1), (2) and (3) collectively, the
"SHARES") and (4) such number of options to purchase Ordinary Shares, each as is
indicated beneath Holder's signature on the last page of this Agreement. Terms
used herein and not defined herein shall have the meaning set forth in the
Acquisition Agreement.
AGREEMENT
The parties agree as follows:
1. AGREEMENT TO RETAIN SHARES.
(a) TRANSFER AND ENCUMBRANCE. Except as contemplated by the
Acquisition Agreement, and except as provided in Sections 1(b), 2, 3 and 4
below, during the period beginning on the date hereof and ending on the earlier
to occur of (i) one hundred eighty (180) days following the First Closing Date,
and (ii) the Expiration Date (as defined below), Holder agrees not to, directly
or indirectly, (x) transfer (except as may be specifically required by court
order), sell, exchange, tender, pledge, assign, contribute to the capital of any
entity, hypothecate or otherwise dispose of (including by merger, consolidation
or otherwise by operation of law) or encumber the Shares or any New Shares (as
defined below), including any shares of Parent Common Stock received in exchange
for such Shares pursuant to the Offer, enter into any short sale with respect to
the Shares or any New Shares, enter into or acquire an offsetting derivative
contract with respect to such Shares or any New Shares, enter into or acquire a
futures or forward contract to deliver such Shares or any New Shares or enter
into any other hedging or other derivative transaction that has the effect of
materially changing the economic benefits and risks of ownership of the Shares
or any New Shares, or to, directly or indirectly, make any offer or agreement
relating thereto, (y) grant any proxies or powers of attorney, deposit any of
such Shares or New Shares into a voting trust or enter into a voting agreement
with respect to any of such Shares or New Shares, or enter into any agreement or
arrangement providing for any of the actions described in this clause (y), or
(z) take any action that could reasonably be expected to have the effect of
preventing or disabling Holder from performing Holder's obligations under this
Agreement, and Holder warrants that it has not agreed to carry out any of the
foregoing
matters in relation to the Shares or any New Shares. As used herein, the term
"EXPIRATION DATE" shall mean the date of termination of the Acquisition
Agreement in accordance with the terms and provisions thereof.
(b) PERMITTED TRANSFERS. Section 1(a) shall not prohibit a transfer
of Shares or New Shares by Holder (i) if Holder is an individual (A) to any
member of Holder's immediate family, or to a trust for the benefit of Holder or
any member of Holder's immediate family, or (B) upon the death of Holder, or
(ii) if Holder is a partnership or limited liability company, to one or more
partners or members of Holder or to an affiliated Person under common control or
common management with Holder; provided, however, that any such transfer
pursuant to either clause (i) or (ii) of this Section 1(b) shall be permitted
only if, as a precondition to such transfer, the transferee agrees in writing to
be bound by all of the terms of this Agreement.
(c) NEW SHARES. Holder agrees that any shares of capital stock or
interests in shares or other securities of the Company or Parent. including any
shares of Parent Common Stock received in exchange for such Shares pursuant to
the Offer, that Holder purchases or with respect to which Holder otherwise
acquires registered or beneficial ownership after the date of this Agreement and
prior to the earlier to occur of (i) one hundred eighty (180) days following the
First Closing Date and (ii) the Expiration Date ("NEW SHARES") shall be subject
to the terms and conditions of this Agreement to the same extent as if they
constituted Shares.
2. IRREVOCABLE UNDERTAKING TO ACCEPT OFFER. Holder hereby irrevocably
undertakes, represents and warrants to Parent that Holder shall accept or
procure acceptance of the Offer and make an election under the Option Offer in
accordance with their respective terms in respect of all the Shares or Company
Options, as appropriate, held or owned by Holder by not later than 5:00 p.m.
California time on the tenth Business Day after the dispatch of the Offer
Documents, and forward or procure that there is forwarded with such acceptance
the share certificates or other documents of title in respect of the Shares and
the Company Options in accordance with the terms of the Offer and the Option
Offer. Holder shall not withdraw Holder's acceptance and shall procure that
Holder's acceptance is not withdrawn in respect of all or any of the Shares and
that Holder's election is not withdrawn in respect of any or all Company Options
held or owned by Holder. Until the earlier of the First Closing Date or the
Expiration Date, Holder shall not accept or solicit any exchange offer commenced
by a third party other than Parent or any Subsidiary of Parent with respect to
the Shares. Parent acknowledges and agrees that this Agreement shall not be
binding upon Holder in the event the Acquisition Agreement is amended by the
parties thereto to lower or change the form of consideration set forth in the
Acquisition Agreement.
3. AGREEMENT TO VOTE SHARES. Until the earlier to occur of (x) the First
Closing Date and (y) the Expiration Date, Holder shall, at any meeting (whether
annual or extraordinary and whether or not an adjourned or postponed meeting) of
shareholders of the Company or of any class of shareholders of the Company,
however called, or in connection with any written resolution of the holders of
shares or any class of shares in the capital of the Company, vote the Shares and
any New Shares (i) in favor of (A) to the extent deemed necessary or appropriate
by the Board of Directors of the Company, delivery of a Selling Notice (as that
term is defined in the Company's Articles of Association) to invoke the
compulsory transfer to Parent of the
2
remaining share capital of the Company pursuant to Article 7 of the Company's
Articles of Association, and (B) approving any other matters that could
reasonably be expected to facilitate the transactions contemplated by the
Acquisition Agreement, and (ii) against any of the following actions (other than
the Offer and any other transactions contemplated by the Acquisition Agreement):
(A) any merger, consolidation, business combination, takeover, sale of assets,
reorganization or recapitalization of the Company with any party, (B) any sale,
lease or transfer of any significant part of the assets of the Company, (C) any
reorganization, recapitalization, dissolution, liquidation or winding up of the
Company, (D) any material change in the capitalization of the Company or the
corporate structure of the Company, (E) the requisition (and the Holder shall
not propose such a requisition) of any general or separate class meeting of the
Company for the purposes of considering any resolution relating to the Offer
(including without limitation, a resolution to enable the Offer to become
unconditional), except with the prior written consent of Parent, or (F) any
other action or agreement that could reasonably be expected to result in a
breach of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Acquisition Agreement or Holder under this
Agreement or which could reasonably be expected to result in any of the
conditions to the obligations of the Company under the Acquisition Agreement not
being fulfilled. This Agreement is intended to bind Holder as a shareholder of
the Company only with respect to the specific matters set forth herein. Except
as set forth in clauses (i) and (ii) of this Section 3, Holder shall not be
restricted from voting in favor of, against or abstaining with respect to any
other matter presented to the shareholders of the Company.
4. IRREVOCABLE PROXY. Concurrently with the execution of this Agreement,
Holder agrees to deliver to the Company a proxy in the form attached hereto as
Exhibit A (the "PROXY"), which shall be irrevocable to the fullest extent
permitted by law.
5. AFFILIATE AGREEMENT.
(a) GENERAL. Holder has been advised that, as of the date hereof,
Holder may be deemed to be an "affiliate" of the Company, as the term
"affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
rules and regulations (the "RULES AND REGULATIONS") of the SEC under the
Securities Act. Pursuant to the terms of the Offer, Parent will acquire all of
the issued share capital of Company. As a result of the Offer, Holder will
receive Parent Common Stock in exchange for the Shares or any New Shares.
Notwithstanding anything to the contrary set forth in this Section 5, the
execution of this Agreement should not be considered an admission on Holder's
part that Holder is an "affiliate" of Company, nor as a waiver of any rights
Holder may have to object to any claim that Holder is such an affiliate on or
after the date of this Agreement.
(b) HOLDER REPRESENTATIONS; RESTRICTIONS ON TRANSFER; LEGENDS.
Holder represents, warrants and covenants to Parent that in the event Holder
receives any Parent Common Stock upon consummation of the Offer:
(i) Holder shall not make any sale, transfer or other
disposition of the Parent Common Stock in violation of the Securities Act.
3
(ii) Holder has carefully read this Agreement and discussed
the requirements of this Agreement and other applicable limitations upon
Holder's ability to sell, transfer or otherwise dispose of Parent Common Stock
received in exchange for the Shares, to the extent Holder has felt necessary,
with Holder's counsel.
(iii) Holder has been advised that the issuance of Parent
Common Stock in connection with the Offer will be registered on a registration
statement on Form S-4 promulgated under the Securities Act (the "REGISTRATION
STATEMENT") and the resale of such Parent Common Stock may be subject to
restrictions set forth in Rule 145 under the Securities Act. Holder has been
advised that, because Holder may be deemed to be an "affiliate" of the Company,
Holder may not sell, transfer or otherwise dispose of the Parent Common Stock
issued to Holder in the Offer, unless (i) such sale, transfer or other
disposition is made in conformity with the limitations of Rule 145 promulgated
by the SEC under the Securities Act, (ii) such sale, transfer or other
disposition has been registered under the Securities Act or (iii) in the opinion
of counsel reasonably acceptable to Parent, such sale, transfer or other
disposition is otherwise exempt from registration under the Securities Act.
(iv) Holder understands and agrees that stop transfer
instructions will be given to Parent's transfer agent with respect to the Parent
Common Stock issued to Holder and that there will be placed on the certificates
for the Parent Common Stock issued to Holder, or any substitutions therefor, a
legend stating in substance: "THE SHARES REPRESENTED BY THIS CERTIFICATE WERE
ISSUED IN A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, APPLIES. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF A COMPANY SUPPORT AGREEMENT
DATED SEPTEMBER 28, 2004 BETWEEN THE REGISTERED HOLDER HEREOF AND LYNX
THERAPEUTICS, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICES OF LYNX THERAPEUTICS, INC." If a sale or transfer is made prior to such
legend being removed pursuant to Section 5(c) below, certificates with the above
legend will be substituted by delivery of certificates without such legend upon
delivery of a declaration to Parent (the "DECLARATION"), which Declaration shall
be reasonably satisfactory in form and substance to Parent, that the
requirements of Rule 145(d)(1) have been complied with.
(v) Holder understands and agrees that stop transfer
instructions will be given to Parent's transfer agent with respect to the Parent
Common Stock issued to Holder and there will be placed on the certificates for
the Parent Common Stock issued to Holder, or any substitutions therefore, a
legend stating in substance: "THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE TRANSFERRED UNTIL THE DATE THAT IS 180 DAYS FOLLOWING THE FIRST CLOSING DATE
(AS DEFINED IN THE ACQUISITION AGREEMENT DATED SEPTEMBER 28, 2004 BETWEEN LYNX
THERAPEUTICS, INC. AND SOLEXA LIMITED) IN ACCORDANCE WITH THE TERMS OF A COMPANY
SUPPORT AGREEMENT DATED SEPTEMBER 28, 2004 BETWEEN THE REGISTERED HOLDER HEREOF
AND LYNX THERAPEUTICS, INC., A COPY OF WHICH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICES OF LYNX THERAPEUTICS, INC."
4
(c) PARENT REPRESENTATIONS.
(i) Parent hereby agrees that, unless previously sold pursuant
to the applicable requirements of Rule 145, it is understood and agreed that
certificates with the legend set forth in Section 5(b)(iv) above will be
substituted by delivery of certificates without such legend, and any stop
transfer instructions then in effect will be terminated, if (i) one year shall
have elapsed from the date Holder acquired the Parent Common Stock received in
the Offer and the provisions of Rule 145(d)(2) are then available to Holder,
(ii) two years shall have elapsed from the date Holder acquired the Parent
Common Stock received in the Offer and the provisions of Rule 145(d)(3) are then
available to Holder, or (iii) Parent has received either an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to Parent, or a "no
action" letter obtained by Holder from the staff of the SEC, to the effect that
the restrictions imposed by Rule 145 under the Securities Act no longer apply to
Holder. For as long as resales of any shares of Parent Common Stock owned by
Holder are subject to Rule 145, Parent will use its reasonable efforts to make
all filings of the nature specified in paragraph (c)(1) of Rule 144 under the
Securities Act. Upon receipt of a properly completed Declaration, Parent shall
use its reasonable efforts to instruct its transfer agent to deliver shares of
Parent Common Stock without the legend set forth in Section 5(b)(iv) above in
accordance with the terms of the transfer set forth in the Declaration as soon
as practicable following receipt of such Declaration.
(ii) Parent hereby agrees that it is understood and agreed
that certificates with the legend set forth in Section 5(b)(v) above will, to
the extent required to enable the shares represented by such certificate to be
transferred by the holder thereof, be substituted by delivery of certificates
without such legend upon the written request of the Holder if 180 days shall
have elapsed from the First Closing Date. Upon receipt of any such written
request, Parent shall use its reasonable efforts to instruct its transfer agent
to deliver shares of Parent Common Stock without the legend set forth in Section
5(b)(v) above as soon as practicable following receipt of such written request.
6. RESALE REGISTRATION RIGHTS.
(a) REGISTRABLE SHARES. For purposes of this Agreement, "REGISTRABLE
SHARES" shall mean the shares of Parent Common Stock issued to the Company
shareholders who have executed a Company Support Agreement (the "ORIGINAL HOLDER
GROUP"), including Holder, pursuant to the Offer.
(b) REQUIRED REGISTRATION. Parent shall use its commercially
reasonable efforts to (i) file a post-effective amendment to the Registration
Statement on Form S-3 registering the resale of the Registrable Shares within 60
days following the First Closing Date (the "AMENDMENT"), so long as the holders
of such Registrable Shares shall provide the information necessary for inclusion
therein in a timely manner to enable Parent to file the Amendment within such
period, (ii) to cause such Amendment to be declared effective by the SEC as soon
thereafter as possible and in any event no later than one hundred eighty (180)
days following the First Closing Date, (iii) to file such amendments or
supplements as may be necessary so that the prospectus contained in the
Amendment will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or
5
necessary to make the statements therein not misleading in light of the
circumstances then existing, and (iv) to effect all such registrations,
qualifications and compliances (including, without limitation, obtaining
appropriate qualifications under applicable state securities or "blue sky" laws
and compliance with any other applicable governmental requirements or
regulations) as Holder may reasonably request and that would permit or
facilitate the sale of all Holder's Registrable Shares (provided, however, that
Parent shall not be required in connection therewith to qualify to do business
or to file a general consent to service of process in any such state or
jurisdiction), and in each case Parent will use its commercially reasonable
efforts to cause such Amendment and all other such registrations, qualifications
and compliances to be declared effective as promptly as practicable thereafter.
As soon as reasonably practicable after the First Closing Date, Parent will
provide to each holder of Registrable Securities a questionnaire setting forth
the information that Parent will require from each such holder to include such
holder's Registrable Shares in the Registration Statement. If Holder shall fail
to furnish such information to Parent within twenty (20) days following the date
on which such questionnaire shall be delivered to the Holders, Parent may
exclude Holder from the Registration Statement.
(c) EFFECTIVENESS; DELIVERY OF PROSPECTUS; SUSPENSION RIGHT.
(i) Parent will use its commercially reasonable efforts to
maintain the effectiveness of the Amendment and other applicable registrations,
qualifications and compliances until such time as fewer than 25% of the
Registrable Securities remain held by the Original Holder Group, calculated on
an aggregate basis (the "REGISTRATION EFFECTIVE PERIOD"). As soon as practicable
following the effectiveness of the Amendment, Parent will furnish to each holder
of Registrable Shares such number of copies of the prospectus contained in the
Amendment in conformity with the requirements of the Securities Act, and such
other documents as such holder may reasonably request in order to facilitate the
public sale or other disposition of such shares.
(ii) For any offer or sale of any of the Registrable Shares by
a shareholder in a transaction that is not exempt under the Securities Act, the
shareholder, in addition to complying with any other federal securities laws,
will deliver a copy of the final prospectus (or amendment of or supplement to
such prospectus) of Parent covering the Registrable Shares in the form furnished
to the shareholder by Parent to the purchaser of any of the Registrable Shares
on or before the settlement date for the purchase of such Registrable Shares.
(iii) Following the date on which the Amendment is first
declared effective, the holder of Registrable Shares will be permitted (subject
in all cases to Section 7 below) to offer and sell Registrable Shares pursuant
to the Amendment during the Registration Effective Period in the manner
described in the Amendment provided that the Amendment remains effective and has
not been suspended.
(iv) Notwithstanding any other provision of this Section 6 but
subject to Section 7, Parent shall have the right at any time to require that
all holders of Registrable Shares suspend further open market offers and sales
of Registrable Shares pursuant to the Amendment whenever, and for so long as, in
the reasonable judgment of Parent after consultation with counsel there is or
may be in existence material undisclosed information or
6
events with respect to Parent (the "SUSPENSION RIGHT") ; provided, however, that
Parent shall not be entitled to invoke the Suspension Right unless such right or
an equivalent restriction has been imposed on, and is then applicable to, all of
Parent's executive officers, directors and other holders of Parent Common Stock
which are registered for resale under the Securities Act. In the event Parent
exercises the Suspension Right, such suspension will continue for the period of
time reasonably necessary for disclosure (including any necessary filings with
the SEC) to occur at a time that is not detrimental to Parent and its
shareholders or until such time as the information or event is no longer
material, each as determined in good faith by Parent (it being understood that
Parent will use all reasonably commercial efforts to minimize the duration of
the suspension period). The termination of the Registration Effective Period
will extend by one (1) day for each day during which the holders of Registrable
Shares suspend further open market offers and sales of Registrable Shares
pursuant to the Parent's exercise of the Suspension Right.
(d) EXPENSES. The costs and expenses to be borne by Parent for
purposes of this Section 6 shall include, without limitation, printing expenses
(including a reasonable number of prospectuses for circulation by the selling
holders of Registrable Shares, including the Holder (the "SELLING
SHAREHOLDERS")), legal fees and disbursements of counsel for Parent, "blue sky"
expenses, accounting fees and filing fees, but shall not include underwriting
commissions or similar charges, or any legal fees and disbursements of counsel
to the Selling Shareholders.
(e) INDEMNIFICATION.
(i) To the extent permitted by law, Parent will indemnify and
hold harmless each holder of Registrable Shares, any underwriter (as defined in
the Securities Act) for such shareholder, its officers, directors, shareholders
or partners and each person, if any, who controls such shareholder or
underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages, or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "VIOLATION"): (A)
any untrue statement or alleged untrue statement of a material fact contained in
the Amendment, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (B) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (C) any violation
or alleged violation by Parent of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and Parent will pay to each
such shareholder (and its officers, directors, shareholders or partners),
underwriter or controlling person, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 6(e)(i) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of Parent; nor shall Parent be liable
in any such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon (a) a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in the Amendment by any such shareholder, or (b) a Violation that would not
have occurred if such shareholder had
7
delivered to the purchaser the version of the Prospectus most recently provided
by Parent to the shareholder as of the date of such sale.
(ii) To the extent permitted by law, each Selling Shareholder
will indemnify and hold harmless Parent, each of its directors, each of its
officers who has signed the Amendment, each person, if any, who controls Parent
within the meaning of the Securities Act, any underwriter, any other Selling
Shareholder selling securities pursuant to the Amendment and any controlling
person of any such underwriter or other shareholder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation (which
includes without limitation the failure of the shareholder to comply with the
prospectus delivery requirements under the Securities Act, and the failure of
the shareholder to deliver the most current prospectus provided by Parent prior
to such sale), in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Selling Shareholder expressly for use in the Amendment or such
Violation is caused by the shareholder's failure to deliver to the purchaser of
the Selling Shareholder's Registrable Shares a prospectus (or amendment or
supplement thereto) that had been made available to the shareholder by Parent;
and each such Selling Shareholder will pay any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
Section 6(e)(ii) in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 6.5(e)(ii) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Selling Shareholder, which
consent shall not be unreasonably withheld. The aggregate indemnification
liability of each Selling Shareholder under this Section 6(e)(ii) shall not
exceed the net proceeds received by such Selling Shareholder in connection with
sale of shares pursuant to the Amendment.
(iii) Each person entitled to indemnification under this
Section 6(e) (the "INDEMNIFIED PARTY") shall give notice to the party required
to provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought and shall permit the Indemnifying Party to assume the defense of any such
claim and any litigation resulting therefrom, provided that counsel for the
Indemnifying Party who conducts the defense of such claim or any litigation
resulting therefrom shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified Party may participate
in such defense at such party's expense, and provided further that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 6.5 unless the
Indemnifying Party is materially prejudiced thereby. No Indemnifying Party, in
the defense of any such claim or litigation, shall (except with the consent of
each Indemnified Party) consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably
8
request in writing and as shall be reasonably required in connection with the
defense of such claim and litigation resulting therefrom.
(iv) To the extent that the indemnification provided for in
this Section 6(e) is held by a court of competent jurisdiction to be unavailable
to an Indemnified Party with respect to any loss, liability, claim, damage or
expense referred to herein, then the Indemnifying Party, in lieu of indemnifying
such Indemnified Party hereunder, shall contribute to the amount paid or payable
by such Indemnified Party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party on the one hand and of the Indemnified Party on the other
in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The aggregate contribution liability of each
Selling Shareholder under this Section 6.5(e)(iv) shall not exceed the net
proceeds received by such Selling Shareholder in connection with sale of shares
pursuant to the Amendment.
7. PROCEDURES FOR SALE OF SHARES UNDER REGISTRATION STATEMENT.
(a) NOTICE AND APPROVAL. If any shareholder shall propose to sell
any Registrable Shares pursuant to the Amendment, it shall notify Parent of its
intent to do so (including the proposed manner and timing of all sales) at least
three (3) full trading days prior to such sale, and the provision of such notice
to Parent shall conclusively be deemed to reestablish and reconfirm an agreement
by such Selling Shareholder to comply with the registration provisions set forth
in this Agreement. Unless otherwise specified in such notice, such notice shall
be deemed to constitute a representation that any information previously
supplied by such Selling Shareholder expressly for inclusion in the Amendment
(as the same may have been superseded by subsequent such information) is
accurate as of the date of such notice. Parent may delay the resale by such
Selling Shareholder of any Registrable Shares pursuant to the Amendment by
delivering to such Selling Shareholder a written notification that Parent's
Suspension Right has been exercised and is then in effect (the "SUSPENSION
NOTICE"); provided, however, that the Suspension Notice must be delivered within
the three (3) trading-day period following receipt of such Selling Shareholder's
notice of intent to sell Registrable Securities under the Amendment so long as
such notice included a working facsimile number for purposes of delivery of
Parent's response. Upon receipt of the Suspension Notice, such Selling
Shareholder shall refrain from selling any Registrable Shares pursuant to the
Amendment in the open market until his, her or its receipt of a supplemented or
amended prospectus pursuant to Section 7(b) below or written notice from Parent
that the suspension period has ended and use of the prospectus previously
furnished to such Selling Shareholder may be resumed.
(b) COPIES OF PROSPECTUS. Subject to the provisions of this Section
7, when a Selling Shareholder is entitled to sell and gives notice of its intent
to sell Registrable Shares
9
pursuant to the Amendment, Parent shall, within two (2) trading days following
the request or, in the event that Parent's Suspension Right has been exercised
and is then in effect, as soon as practicable following the termination of the
suspension period, furnish to such Selling Shareholder a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such Registrable Shares,
such prospectus shall not as of the date of delivery to the Selling Shareholder
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or incomplete in the light of the circumstances then existing.
8. WAIVER OF RIGHTS OF FIRST REFUSAL.
(a) Holder irrevocably undertakes represents and warrants to the
Parent that in transferring any Shares to Parent pursuant to the Offer it will
transfer to Parent all accrued dividend rights and entitlements attaching to the
Shares (whether or not declared, due or owing) including any debts due by the
Company in respect thereof.
(b) In the event that Holder is the registered holder of any B
Preferred Shares, Holder hereby irrevocably undertakes to the Parent that it
shall not following receipt of a Notice of a Company-Building Merger (as each is
defined in the Articles of Association of the Company) or otherwise in
contemplation of the Offer elect or vote in favor of Article 2.5(a)(ii) of the
Articles of Association of the Company.
(c) In the event that Holder is the registered holder of any A
Ordinary Shares, Holder hereby irrevocably undertakes to the Parent that it
shall not following receipt of a Notice of a Company-Building Merger (as each is
defined in the Articles of Association of the Company) or otherwise in
contemplation of the Offer elect or vote in favor of Article 2.5(b)(ii) of the
Articles of Association of the Company.
(d) Solely in connection with the exchange of Shares pursuant to the
Offer, Holder hereby waives any and all rights of pre-emption or first refusal
that it may have (including, without limitation, under the Articles of
Association of the Company, the Subscription and Shareholders' Agreement dated
July 30, 2004 relating to the Company, or otherwise) with respect to the
proposed transfer of any shares in the capital of the Company to Parent pursuant
to the terms of the Offer, or any Shares or other securities in the share
capital of the Company owned by, or issuable to, any person.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF HOLDER. Holder hereby
represents, warrants and covenants to Parent that Holder (i) is the registered
owner and, as set forth on the signature page, beneficial owner, of the Shares
and options to purchase Ordinary Shares, if any, indicated below Holder's
signature on the signature page to this Agreement, which at the date of this
Agreement and at all times up until the earlier to occur of (A) one hundred
eighty (180) days following the First Closing Date, and (B) the Expiration Date,
are, and will be, free and clear of any liens, claims, options, charges or other
encumbrances, and (ii) is not the registered owner of any shares, options or
other securities in, or convertible into, share capital of the Company, other
than the Shares and the options to purchase Ordinary Shares, if any, indicated
below Holder's signature on the last page of this Agreement. Holder has the
10
legal capacity, power and authority to enter into and perform all of Holder's
obligations under this Agreement (including under the Proxy). This Agreement
(including the Proxy) has been duly and validly executed and delivered by Holder
and constitutes a valid and binding agreement of Holder, enforceable against
Holder in accordance with its terms, subject to (a) laws of general application
relating to bankruptcy, insolvency and the relief of debtors and (b) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
10. FURTHER ASSURANCES. Holder shall perform such further acts and execute
such further documents and instruments as may reasonably be required to vest in
Parent the power to carry out and give effect to the provisions of this
Agreement.
11. CONSENT AND WAIVER. Holder hereby gives any consents or waivers that
are reasonably required for the consummation of the Offer under the terms of any
agreement (including, without limitation, the Articles of Association of the
Company and the Subscription and Shareholders' Agreement dated July 30, 2004
relating to the Company, or otherwise) to which Holder is a party or pursuant to
any rights Holder may have.
12. FIDUCIARY DUTIES. Notwithstanding anything in this Agreement to the
contrary: (i) Holder makes no agreement or understanding herein in any capacity
other than in Holder's capacity as a registered owner of the Shares and, to the
extent applicable, any New Shares, (ii) nothing in this Agreement shall be
construed to limit or affect any action or inaction by Holder, or any officer,
partner, member or employee, as applicable, of Holder, serving on the Company's
Board of Directors acting in such person's capacity as a director or fiduciary
of the Company, and (iii) Holder shall have no liability to Parent or any its
affiliates under this Agreement as a result of any action or inaction by Holder,
or any officer, partner, member or employee, as applicable, of Holder, serving
on the Company's Board of Directors acting in such person's capacity as a
director or fiduciary of the Company.
13. MISCELLANEOUS.
(a) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or waived with the written consent of the parties or their respective
successors and assigns. Any amendment or waiver effected in accordance with this
Section 13(a) shall be binding upon the parties and their respective successors
and assigns.
(b) GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
Delaware, without giving effect to principles of conflicts of law.
(c) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(d) TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
11
(e) NOTICES. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received (i) when delivered by hand;
(ii) on the day sent by facsimile, provided that the sender has received
confirmation of transmission as of or prior to 5:00 p.m. local time of the
recipient, on such day; (iii) the first Business Day after sent by facsimile (to
the extent that (A) the sender has received confirmation of transmission after
5:00 p.m. local time of the recipient on the day sent by facsimile, or (B)
notice is sent on a day that is not a Business Day); or (iv) the third Business
Day after sent by registered mail or by courier or express delivery service, in
each case to the address or facsimile number set forth on the signature page to
this Agreement beneath the name of such party, or to such other address or
facsimile number as such party shall have specified in a written notice given to
the other party hereto).
(f) SEVERABILITY. If one or more provisions of this Agreement are
held to be invalid or unenforceable under the applicable law of any
jurisdiction, the parties agree to renegotiate such provision in good faith, in
order to maintain the economic position enjoyed by each party as close as
possible to that under the provision rendered unenforceable. In the event that
the parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (i) such provision shall be excluded from this Agreement,
(ii) the balance of the Agreement shall be interpreted as if such provision were
so excluded and (iii) the balance of the Agreement shall be valid and
enforceable in accordance with its terms. Each provision of this Agreement is
separable from any other provisions of this Agreement, and each part of each
provision of this Agreement is severable from every other part of such
provision.
(g) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach of any covenants or agreements contained in this
Agreement will cause Parent to sustain damages for which it would not have an
adequate remedy at law for money damages, and therefore each of the parties
hereto agrees that in the event of any such breach Parent shall be entitled to
the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
they may be entitled, at law or in equity.
(h) DISCLOSURE. Holder hereby agrees to permit Parent and the
Company to publish and disclose in the Registration Statement (including all
documents and schedules filed with the SEC), the Amendment and the Proxy
Statement, and in any press release or other disclosure document in which Parent
or the Company reasonably determines in its good faith judgment that such
disclosure is required by law, including the rules and regulations of the SEC,
the Financial Services and Markets Xxx 0000 and the Companies Xxx 0000 (as
amended), as appropriate, in connection with the Offer and any transactions
related thereto, such Holder's identity and ownership of the Shares and New
Shares and the nature of the commitments, arrangements and undertakings under
this Agreement.
(i) ACKNOWLEDGEMENT. Holder hereby agrees and acknowledges that the
terms and provisions of Section 7.6 of the Subscription and Shareholders'
Agreement dated July 30, 2004 shall survive and remain in full force and effect
following the consummation of the Offer.
12
[SIGNATURE PAGE FOLLOWS]
13
The parties have caused this Agreement to be duly executed on the date
first above written.
PARENT
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Address: Lynx Therapeutics, Inc.
00000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: President and Chief Executive Officer
Facsimile No.: 650.670.9303
SIGNATURE PAGE TO COMPANY SUPPORT AGREEMENT
HOLDER
By:___________________________________________
[Name]
Holder's Address for Notice:
______________________________________________
______________________________________________
______________________________________________
Attention:
Facsimile No.:
Shares owned of record: Beneficially owned shares:
Class of Shares Number Class of Shares Number
--------------- ------ --------------- ------
B Preferred Shares B Preferred Shares
A Ordinary Shares A Ordinary Shares
Ordinary Shares Ordinary Shares
Options to Purchase Options to Purchase
Ordinary Shares Ordinary Shares
SIGNATURE PAGE TO COMPANY SUPPORT AGREEMENT
CONSENT OF SPOUSE
[TO BE EXECUTED WHERE RELEVANT.]
The undersigned is the spouse of [_____________], the Holder (as such term
is defined in the Company Support Agreement) in the foregoing Company Support
Agreement dated as of September 28, 2004 (the "COMPANY SUPPORT AGREEMENT")
between Lynx Therapeutics, Inc. and Holder. Capitalized terms used herein and
not defined herein have the meaning set forth in the Company Support Agreement.
I hereby acknowledge that I have carefully reviewed the Company Support
Agreement and such other documents as I have deemed appropriate. I have
discussed the contents of the Company Support Agreement, to the extent I felt
necessary, with my legal counsel. I understand fully the transactions described
in the Company Support Agreement, and I hereby approve of and consent to all
such transactions. I am aware that by the provisions of the Company Support
Agreement, my spouse agrees, among other things, to vote all of the outstanding
shares of Company capital stock that he or she now owns or hereafter acquires,
including my community property interest therein, if any, in accordance with the
Company Support Agreement, and that my spouse agrees, among other things, to
certain matters related to the control and disposition of Company capital stock.
I hereby agree, on behalf of myself and all persons who may claim on my behalf,
that prior to fulfillment of all of my spouse's obligations under the Company
Support Agreement in accordance with the terms and provisions of the Company
Support Agreement, upon any legal separation from or dissolution of my marriage
to my present spouse, or upon the death of my spouse, neither I nor anyone
claiming on my behalf will seek to partition my or my spouse's community
property interest in the Company capital stock and that in any such event I
shall be entitled only to the value of my interest in such Company capital
stock, if any, and that I shall have no claim or right to the Company capital
stock itself.
EXECUTED this ____ day of September, 2004
_________________________________________
EXHIBIT A
IRREVOCABLE PROXY
TO VOTE SHARES OF
SOLEXA LIMITED
The undersigned shareholder ("HOLDER") of Solexa Limited, a company
incorporated under the laws of England and Wales (the "COMPANY"), hereby
irrevocably (to the fullest extent permitted under the laws of England and
Wales) appoints the Chief Executive Officer and each of the other members of the
Board of Directors of Lynx Therapeutics, Inc., a Delaware corporation
("PARENT"), and each of them, as the sole and exclusive attorneys and proxies of
the undersigned, with full power of substitution and resubstitution, to vote and
exercise all voting and related rights (to the full extent that the undersigned
is entitled to do so) with respect to all of the shares in the capital of the
Company that now are or hereafter may be owned of record by and/or registered in
the name of the undersigned, and any and all other shares or securities of the
Company issued or issuable in respect thereof on or after the date hereof
(collectively, the "SHARES") in accordance with the terms of this Proxy, the
Shares and that certain Company Support Agreement of even date herewith, by and
between Parent and the undersigned (the "COMPANY SUPPORT AGREEMENT"). The shares
of, and/or options over, the share capital of the Company owned by the
undersigned shareholder of the Company as of the date of this Proxy are listed
beneath the undersigned's signature on the final page of this Proxy. Upon the
undersigned's execution of this Proxy, any and all prior proxies given by the
undersigned with respect to any Shares are hereby revoked and the undersigned
agrees not to grant any subsequent proxies with respect to the Shares until
after the earlier to occur of (i) the Expiration Date (as defined below) and
(ii) the First Closing Date. Terms used herein and not defined herein shall have
the meaning set forth in the Company Support Agreement.
This Proxy is coupled with an interest, is irrevocable (to the fullest
extent permitted by law), is granted pursuant to the Company Support Agreement
and is granted in consideration of Parent entering into that certain Acquisition
Agreement, of even date herewith, by and between the Company and Parent (the
"ACQUISITION AGREEMENT"). Pursuant to the Acquisition Agreement it is proposed
that Parent shall (a) make an offer (the "SHARE OFFER") to acquire all of the
issued and to be issued shares in the share capital of the Company and (b)
simultaneously therewith, make an offer (the "OPTION OFFER" and, together with
the Share Offer, the "OFFER") to have each Company Option under the Company
Share Option Schemes, whether vested or unvested, at the election of the holder
of each Company Option, either (i) be exercised in accordance with the rules of
the relevant Company Share Option Scheme and such Ordinary Shares received upon
the exercise be exchanged for shares of Parent Common Stock on the same terms as
those offered under the Share Offer or (ii) become an option to acquire, on the
same terms and conditions as were applicable under the relevant Company Share
Option Scheme immediately prior to the First Closing Date, including the same
vesting schedule, a
number of shares of Parent Common Stock equal to the number of Ordinary shares
issuable upon the exercise of each such Company Option prior to the First
Closing Date multiplied by the Ordinary Share Exchange Ratio. As used herein,
the term "EXPIRATION DATE" shall mean the date of termination of the Acquisition
Agreement in accordance with the terms and provisions thereof.
The attorneys and proxies named above, and each of them, are hereby
further authorized and empowered by the undersigned, at any time prior to the
earlier to occur of (i) the First Closing Date and (ii) the Expiration Date, to
act as the undersigned's attorney and proxy to vote the Shares, and to exercise
all voting and other rights of the undersigned with respect to the Shares
(including, without limitation, the power to execute and deliver written
resolutions), at every annual, extraordinary or adjourned meeting of the
shareholders or any class of shareholders of the Company and in every written
resolution in lieu of any such meeting (i) in favor of: (A) delivery of a
Selling Notice (as that term is defined in the Company's Articles of
Association) to invoke the compulsory transfer to Parent of the remaining share
capital of the Company pursuant to Article 7 of the Company's Articles of
Association, and (B) approving any other matters that could reasonably be
expected to facilitate the transactions contemplated by the Acquisition
Agreement, and (ii) against any of the following actions (other than the Offer
and any other transactions contemplated by the Acquisition Agreement): (A) any
merger, consolidation, business combination, takeover, sale of assets,
reorganization or recapitalization of the Company with any party, (B) any sale,
lease or transfer of any significant part of the assets of the Company, (C) any
reorganization, recapitalization, dissolution, liquidation or winding up of the
Company, (D) any material change in the capitalization of the Company, of the
corporate structure of the Company, (E) the requisition (and the Holder shall
not propose such a requisition) of any general or separate class meeting of the
Company for the purposes of considering any resolution relating to the Offer
(including without limitation, a resolution to enable the Offer to become
unconditional) except with the prior written consent of Parent, or (F) any other
action or agreement that could reasonably be expected to result in a breach of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Acquisition Agreement or Holder under the Company Support
Agreement or which could reasonably be expected to result in any of the
conditions to the obligations of the Company under the Acquisition Agreement not
being fulfilled.
This Proxy and all acts and transactions pursuant hereto and the rights
and obligations of the parties hereto shall be governed, construed and
interpreted in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of law.
Any obligation of the undersigned hereunder shall be binding upon the
successors and assigns of the undersigned.
This Proxy is irrevocable to the fullest extent permitted by law.
[SIGNATURE PAGE FOLLOWS]
2
Dated: September __, 2004
__________________________
[Name]
Shares owned of record: Beneficially owned shares:
Class of Shares Number Class of Shares Number
--------------- ------ --------------- ------
B Preferred Shares B Preferred Shares
A Ordinary Shares A Ordinary Shares
Ordinary Shares Ordinary Shares
Options to Purchase Options to Purchase
Ordinary Shares Ordinary Shares
1
