<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. 1)
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
AFFYMETRIX, INC.
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(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(2) Aggregate number of securities to which transaction
applies:
----------------------------------------------------------
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
----------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
----------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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</TABLE>
<PAGE>
AFFYMETRIX, INC.
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 8, 2000
------------------------
TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Affymetrix, Inc., a Delaware
corporation ("Affymetrix" or the "Company"), will be held on Thursday, June 8,
2000 at 4:00 p.m. local time, at 3380 Central Expressway, Santa Clara,
California, for the following purposes:
1. To elect directors to serve until the next annual meeting of
stockholders or until their successors are elected.
2. To ratify the appointment of Ernst & Young LLP as independent auditors
of the Company for the fiscal year ending December 31, 2000.
3. To approve and ratify the amendment of the Company's Certificate of
Incorporation to increase the number of authorized shares of Common Stock
of the Company.
4. To approve and ratify the Company's 2000 Equity Incentive Plan.
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
These items of business are more fully described in the Proxy Statement
accompanying this notice.
Our Board of Directors has fixed the close of business on April 12, 2000 as
the record date for determination of the stockholders entitled to notice of, and
to vote at, the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, please mark, sign, date
and return the enclosed proxy card as soon as possible in the postage-prepaid
envelope enclosed for that purpose. Any stockholder attending the meeting may
vote in person even if the stockholder has returned a proxy.
By Order of the Board of Directors,
Vern Norviel
SECRETARY
Santa Clara, California
May 5, 2000
<PAGE>
AFFYMETRIX, INC.
3380 CENTRAL EXPRESSWAY
SANTA CLARA, CALIFORNIA 95051
------------------------
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
------------------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board") of Affymetrix, Inc., a Delaware corporation ("Affymetrix" or the
"Company"), for use at the annual meeting of stockholders to be held on
Thursday, June 8, 2000 at 4:00 p.m., local time, or at any adjournment of the
meeting, for the purposes set forth in this Proxy Statement and in the
accompanying Notice of Annual Meeting of Stockholders. The annual meeting will
be held at 3380 Central Expressway, Santa Clara, California 95051. The Company's
telephone number is (408) 731-5000.
These proxy solicitation materials were mailed on or about May 5, 2000,
together with the Company's 1999 Annual Report to Stockholders and the Company's
Form 10-K, to all stockholders of record on April 12, 2000.
RECORD DATE
Stockholders of record at the close of business on April 12, 2000 (the
"Record Date") are entitled to notice of and to vote at the meeting. At the
Record Date, there were approximately twenty-seven million three hundred eighty
thousand four hundred eighteen (27,380,418) shares of Common Stock and no shares
of Preferred Stock (the "Preferred Stock") outstanding.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before its use by delivering to the Company a written
notice of revocation or a duly executed proxy bearing a later date or time, or
by attending the meeting and voting in person. Any stockholder holding shares
through a bank or brokerage firm may revoke a previously granted proxy or change
previously given voting instructions by contacting the bank or brokerage firm,
or by obtaining a legal proxy from the bank or brokerage firm and voting at the
meeting.
VOTING AND SOLICITATION
Holders of Common Stock are entitled to vote at the meeting. Each share of
Common Stock entitles the holder to one vote on each matter to come before the
meeting. The Company's Certificate of Incorporation does not provide for
cumulative voting.
The cost of soliciting proxies will be borne by the Company. Proxies may
also be solicited by certain of the Company's directors, officers and employees,
without additional compensation, personally or by telephone, facsimile or
letter.
QUORUM; ABSTENTIONS AND BROKER NON-VOTES
The required quorum for the transaction of business at the annual meeting is
a majority of the shares of Common Stock and Preferred Stock outstanding on the
Record Date. Broker non-votes and shares held by persons abstaining will be
counted in determining whether a quorum is present at the annual meeting.
However, abstentions are counted as votes against a proposal for purposes of
determining whether or not a proposal has been approved, whereas broker
non-votes are not counted as shares entitled to vote. Thus,
<PAGE>
broker non-votes can have the effect of preventing approval of proposals where
the affirmative vote of the majority of outstanding shares is required.
Accordingly, in the election of directors an abstention or broker non-vote will
have no effect on the outcome. Abstentions from voting will have the same effect
as voting against the proposal to amend the Company's Certificate of
Incorporation and against the proposal to approve and ratify the Company's 2000
Equity Incentive Plan. Broker non-votes will have the same effect as voting
against the proposal to amend the Company's Certificate of Incorporation but
will have no effect on the proposal to approve and ratify the Company's 2000
Equity Incentive Plan since they are not considered shares entitled to vote.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at next year's annual meeting must be received by the
Company no later than January 6, 2001 in order that they may be included in the
proxy statement and form of proxy relating to the 2001 annual meeting.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
NOMINEES
The Bylaws of the Company provide for a Board consisting of not fewer than
six nor more than eleven directors. The size of the Board is currently set at
nine and all nine directors are to be elected at the meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
Company's nine nominees named below, all of whom are presently directors of the
Company. If any nominee of the Company is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee designated by the present Board to fill the vacancy. If additional
persons are nominated for election as directors, the proxy holders intend to
vote all proxies received by them for the nominees listed below. The Company is
not presently aware of any nominee who will be unable or will decline to serve
as a director. The term of office of each person elected as a director will
continue until the next annual meeting of stockholders or until a successor has
been elected and qualified.
The names of the nominees, and certain information about them as of the
Record Date, are set forth below.
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION DIRECTOR SINCE
- ---- -------- -------------------- --------------
<S> <C> <C> <C>
Stephen P.A. Fodor, Ph.D............. 46 Chairman and Chief Executive Officer 1993
Paul Berg, Ph.D...................... 73 Cahill Professor of Cancer and Biochemistry 1993
and Director of the Stanford University
Medical School's Beckman Center
John D. Diekman, Ph.D................ 57 Managing Director, Bay City Capital LLC 1992
Adrian Hennah........................ 42 Senior Vice President and Chief Financial 1999
Officer, Glaxo Wellcome, Inc.
Vernon R. Loucks, Jr................. 65 Chairman, InLight, Inc. 1993
Barry C. Ross, Ph.D.................. 51 Director, Group Research Strategy and 1995
Alliances, Glaxo Wellcome Research and
Development Limited
David B. Singer...................... 37 President and Chief Executive Officer, 1993
GeneSoft, Inc.
Lubert Stryer, M.D................... 62 Winzer Professor in the School of Medicine, 1996
Stanford University
John A. Young........................ 67 President and Chief Executive Officer 1993
(Retired), Hewlett-Packard Company
</TABLE>
STEPHEN P.A. FODOR, PH.D., is the Chairman and Chief Executive Officer of
the Company. Dr. Fodor has served as a Director of the Company since
January 1993 and Chairman of the Company since August 1999. At various times
between 1993 and March 1997, Dr. Fodor served as President, Chief Operating
Officer and Chief Technology Officer of the Company. Dr. Fodor was Vice
President and Director of Physical Sciences at the Affymax Research Institute
from 1992 to 1993. Dr. Fodor also serves as a director of EOS
Biotechnology, Inc.
PAUL BERG, PH.D., has served as a Director of the Company since
August 1993. Dr. Berg is Cahill Professor in Cancer Research, Professor of
Biochemistry and Director of the Beckman Center for Molecular and Genetic
Medicine at the Stanford University School of Medicine. He received the Nobel
Prize in Chemistry in 1980, the National Medal of Science in 1983 and is a
member of the National Academy of Sciences, the Royal Society, London, and the
French Academy of Sciences. Dr. Berg also
3
<PAGE>
serves as a member of the Company's Scientific Advisory Board. Dr. Berg also
serves as a director of Transgene S.A. and Gilead Sciences, Inc. and on the
Policy Board of DNAX, a subsidiary of Schering-Plough Corp.
JOHN D. DIEKMAN, PH.D., has served as a Director of the Company since the
Company's inception. Dr. Diekman served as Chairman of the Company from its
inception to August 1999 and has served as Vice Chairman since August 1999.
Dr. Diekman served as Chief Executive Officer of the Company from July 1995 to
March 1997. Prior to such time, Dr. Diekman served as President and Chief
Operating Officer of Affymax N.V. ("Affymax") from 1991 to March 1995 and as
Chairman of the Affymax Board from 1994 to July 1995. Dr. Diekman has served as
a partner of Bay City Capital LLC, a life sciences merchant bank, since
March 1997. Dr. Diekman also serves as a director of Quidel Corp. and LJL
Biosystems, Inc.
ADRIAN HENNAH has served as a Director of the Company since June 1999.
Mr. Hennah is Senior Vice President and Chief Financial Officer of Glaxo
Wellcome, Inc. Mr. Hennah has held various financial management positions at
Glaxo Wellcome plc ("Glaxo Wellcome") since 1984 and was designated by Glaxo
Wellcome as a nominee to serve on the Board. Mr. Hennah also serves as a
director of Maxygen, Inc.
VERNON R. LOUCKS, JR. has served as a Director of the Company since
August 1993. Mr. Loucks has served as Chairman of InLight, Inc. since
February 1998. Mr. Loucks served as Chief Executive Officer of Baxter
International, Inc. ("Baxter") from 1980 to December 1998 and Chairman of Baxter
from 1980 to December 1999. Mr. Loucks also serves as a director of
Anheuser-Busch Companies, Inc., Emerson Electric Co. and The Quaker Oats
Company.
BARRY C. ROSS, PH.D., has served as a Director of the Company since
March 1995. Dr. Ross has served as Director of Group Research Strategy and
Alliances at Glaxo Wellcome Research and Development Ltd. since 1995. Dr. Ross
has served as Chief Executive Officer and Scientific Director at Affymax
Research Institute since February 2000. Dr. Ross joined Glaxo in 1984 and served
as Director of Medicinal Chemistry from 1989 to 1993 and Director of Research
and Development from 1993 to 1995. Dr. Ross was designated by Glaxo Wellcome as
its nominee to serve on the Board.
DAVID B. SINGER has served as a Director of the Company since February 1993
and served as Vice Chairman from July 1995 to April 1996. He has served as
President and Chief Executive Officer of GeneSoft, Inc. since September 1998.
From May 1996 to July 1998, he served as Senior Vice President and Chief
Financial Officer of Heartport, Inc. Mr. Singer was President and Chief
Executive Officer of the Company from 1993 to June 1995.
LUBERT STRYER, M.D., has served as a Director of the Company since
September 1996. Dr. Stryer has served as Chief Science Officer at Ambryx Inc., a
biotechnology company, since September 1999. Dr. Stryer has been Winzer
Professor in the School of Medicine and a Professor of Neurobiology at Stanford
University since 1976. Dr. Stryer received the American Chemical Society Award
in Biological Chemistry (Eli Lilly Award), is a member of the National Academy
of Sciences and received an honorary Doctor of Science from the University of
Chicago. Dr. Stryer also serves as Chairman of the Company's Scientific Advisory
Board.
JOHN A. YOUNG has served as a Director of the Company since August 1993.
Mr. Young retired as President and Chief Executive Officer of Hewlett-Packard
Company in October 1992. Mr. Young also serves as a director of Wells Fargo &
Company, Chevron Corp., SmithKline Beecham Corp., Novell, Inc., International
Integration, Inc., and Lucent Technologies, and is a member of the Business
Council and the National Academy of Engineering.
There are no family relationships among directors or executive officers of
the Company.
4
<PAGE>
REQUIRED VOTE
The nine nominees receiving the highest number of affirmative votes of the
shares present or represented and entitled to be voted for them will be elected
as directors.
THE BOARD RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE ELECTION OF THE
NOMINEES.
BOARD MEETINGS AND COMMITTEES
The Board of the Company held a total of 11 meetings during the fiscal year
ended December 31, 1999. Each director other than Dr. Berg, Mr. Loucks,
Mr. Hennah and Dr. Ross attended at least seventy-five percent of the meetings
of the Board and each committee on which the director served during 1999.
The Board has an Audit Committee, a Compensation Committee and a Nominating
Committee.
The Audit Committee of the Board, which consisted of Mr. Singer and
Mr. Young, held two meetings during 1999. The Audit Committee oversees the
actions taken by the Company's independent auditors and reviews the Company's
internal financial and accounting controls and policies.
The Compensation Committee of the Board, which consisted of Dr. Berg and
Mr. Young, held six meetings during 1999. The Compensation Committee is
responsible for determining salaries, incentives and other forms of compensation
for officers and other employees of the Company and administers various
incentive compensation and benefit plans.
The Nominating Committee, which consisted of Dr. Fodor, Dr. Diekman,
Mr. Loucks and Mr. Young, did not meet in 1999.
COMPENSATION OF DIRECTORS
Each non-employee director receives a fee of $2,500 per Board meeting
attended as well as reimbursement of expenses incurred in attending Board
meetings. In addition, the Company's 1996 Nonemployee Directors Stock Option
Plan (the "Directors Plan") provides for the grant of 33,333 shares of Common
Stock if a person who is neither an officer nor an employee of the Company and
who has not previously been a member of the Board is elected or appointed
director. Each such option vests at the rate of one-fifth of the number of
shares covered by the option on each anniversary of the grant date so long as
the director is serving on the Board with full vesting over five years. In
addition, the Directors Plan calls for the grant on the date of each annual
meeting of the stockholders of the Company held after January 1, 2001 of an
option to purchase 6,667 shares of the Company's Common Stock to be vested in
full one year after the date of grant for the following nonemployee directors:
- nonemployee directors elected prior to March 1996 who continue to serve on
the Board; and
- nonemployee directors elected after March 1996 who continue to serve on
the Board; provided such stock option will not be granted until fifty-four
(54) months after the initial option grant to such nonemployee director.
The exercise price of all options granted pursuant to the Directors Plan is
the fair market value of the Company's Common Stock at the time of grant.
5
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PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board has selected Ernst & Young LLP, independent auditors, to audit the
financial statements of the Company for the fiscal year ending December 31,
2000. Ernst & Young LLP has audited the Company's financial statements since
inception. Representatives of Ernst & Young LLP are expected to be present at
the meeting with the opportunity to make a statement if they desire to do so,
and are expected to be available to respond to appropriate questions.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock voting in person or by proxy on this proposal at the
annual meeting is required to approve the appointment of the independent
auditors.
THE BOARD RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE APPOINTMENT OF
ERNST & YOUNG LLP AS INDEPENDENT AUDITORS.
6
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PROPOSAL NO. 3
AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
The Board has determined that it is in the best interests of the Company and
its stockholders to amend the Company's Certificate of Incorporation to increase
the number of authorized shares of Common Stock of the Company from seventy-five
million (75,000,000) shares to two hundred million (200,000,000) shares.
Accordingly, the Board has unanimously approved the proposed Restated
Certificate of Incorporation of the Company, in the form attached hereto as
APPENDIX A (the "Restated Certificate"), and hereby solicits the approval of the
Company's stockholders of the Restated Certificate. If the stockholders approve
the Restated Certificate, the Board currently intends to file the Restated
Certificate with the Secretary of State of the State of Delaware as soon as
practicable following such stockholder approval. If the Restated Certificate is
not approved by the stockholders, the existing Certificate of Incorporation will
continue in effect.
The objective of the increase in the authorized number of shares of Common
Stock is to ensure that the Company has sufficient shares available for future
issuances of Common Stock or securities convertible into Common Stock. The Board
believes that it is prudent to increase the authorized number of shares of
Common Stock to the proposed levels in order to provide a reserve of shares
available for issuance to meet business needs as they arise. Such future
activities may include, without limitation, financings, establishing strategic
relationships with corporate partners, providing equity incentives to employees,
officers or directors, or effecting stock splits or dividends. The additional
shares of authorized Common Stock may also be used to acquire or invest in
complementary businesses or products. Although the Company has no current plans
or proposals to issue additional shares of Common Stock (except pursuant to
employee stock incentive plans or upon conversion of its subordinated debt
securities), the Company may continue to evaluate potential acquisitions of or
investments with third parties. In the event that the Board does undertake a
plan, or otherwise enters into an agreement, understanding or arrangement, to
issue additional shares of Common Stock or securities convertible into shares of
the Common Stock, the Board intends to issue such shares of its capital stock
only upon terms and conditions that the Board deems advisable and in the best
interests of the Company and its stockholders.
SUMMARY OF AUTHORIZED AND OUTSTANDING CAPITAL STOCK
The Company's authorized capital stock currently consists of seventy-five
million (75,000,000) shares of Common Stock and five million (5,000,000) shares
of Preferred Stock. The Company's Common Stock is not subject to any preemptive
rights. The Company's Certificate of Incorporation provides that the Company's
Preferred Stock may be issued in any number of series, and that the Company's
Board may fix the number of, and determine the rights, preferences, privileges
and restrictions granted to or imposed upon, any such series. As of April 12,
2000, there were twenty-seven million three hundred eighty thousand four hundred
eighteen (27,380,418) shares of the Company's Common Stock issued and
outstanding. Accordingly, the total number of shares of the Company's Common
Stock available for future issuance, whether upon the conversion of outstanding
convertible securities of the Company, the exercise of outstanding options to
purchase shares of the Company's Common Stock, or otherwise, is forty-seven
million six hundred nineteen thousand five hundred eighty-two (47,619,582)
shares, and the total number of shares of the Company's Preferred Stock
available for future issuance is five million (5,000,000) shares. If the
proposed Restated Certificate of Incorporation is adopted by the Company's
stockholders at the Annual Meeting, the Company will have available for issuance
one hundred sixty-six million five hundred two thousand three hundred thirty-six
(166,502,336) shares of Common Stock, assuming full conversion of all
outstanding convertible securities or options to purchase such securities, and
five million (5,000,000) shares of Preferred Stock.
7
<PAGE>
EFFECTS OF THE PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
If the stockholders approve the proposed Restated Certificate, the Board may
cause the issuance of additional shares of Common Stock without further vote of
the stockholders of the Company, except as provided under Delaware corporate law
or under the rules of any securities exchange on which shares of Common Stock of
the Company are then listed. Current holders of Common Stock have no preemptive
or similar rights, which means that current stockholders do not have a prior
right to purchase any new issue of Common Stock of the Company in order to
maintain their proportionate ownership thereof. The issuance of additional
shares of Common Stock would decrease the proportionate equity interest of the
Company's current stockholders and, depending upon the price paid for those
additional shares, could result in dilution to the Company's current
stockholders.
The proposed Restated Certificate's increase in the authorized number of
shares of the Company's Common Stock could also have certain anti-takeover
effects. For example, although the Company has no present intention to do so,
shares of the Company's Common Stock and/or securities convertible into the
Company's Common Stock could be issued in a private placement or public
offering, or rights to purchase shares of the Company's Common Stock and/or
securities convertible into the Company's Common Stock could be issued, to
create voting impediments to or otherwise frustrate third party attempts to
effect a takeover or otherwise gain control of the Company through a public
tender offer, proxy contest or other means. In addition, the proposed Restated
Certificate could discourage an attempt by a third party to acquire control of
the Company through a public tender offer, proxy contest or other means and,
therefore, could deprive the Company's stockholders of benefits that could
result from such an attempt to takeover, or otherwise gain control of, the
Company. Those benefits could include, among other things, the realization of a
premium over the market price of their shares of the Company's capital stock in
a tender offer, or even the temporary increase in the market price for such
shares that such an attempt could cause. The Board, however, is not aware of any
present efforts or attempt to takeover, or otherwise gain control of, the
Company through a public tender offer, proxy contest or any other means.
Despite the potential anti-takeover effects of the proposed Restated
Certificate described above, the Board believes that the increased financial
flexibility and other benefits offered by the proposed amendment far outweigh
any of the disadvantageous anti-takeover effects of such amendment. To the
extent that the proposed amendment may have certain anti-takeover effects, the
Board believes that the proposed amendment and the anti-takeover effects thereof
may encourage third parties seeking to acquire or otherwise gain control over
the Company to negotiate directly with the Board. In this regard, the Board
further believes that these negotiations will enable the Board to consider a
takeover transaction proposed by a third party in a non-disruptive atmosphere
and to effectively discharge its fiduciary obligation to consider and act upon
any proposed takeover transaction in a manner that best serves the interests of
the Company's stockholders by maximizing stockholder value.
REQUIRED VOTE
The affirmative vote of the holders of a majority of the outstanding shares
of the Company's Common Stock is required to approve the amendment to the
Company's Certificate of Incorporation.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE
COMPANY'S CERTIFICATE OF INCORPORATION.
8
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PROPOSAL NO. 4
APPROVAL OF THE 2000 EQUITY INCENTIVE PLAN
The Company currently has three stock option plans under which the Board is
empowered to grant options: (1) the Amended and Restated 1993 Stock Plan (the
"1993 Plan"), (2) the Amended and Restated 1996 Nonemployee Directors Stock
Option Plan (the "1996 Plan") and (3) the 1998 Stock Incentive Plan (the "1998
Plan"). The 1993 Plan and the 1998 Plan empower the Board to grant options and
restricted stock to employees and consultants of the Company, and the 1996 Plan
empowers the Board to grant options to outside directors of the Company.
Pursuant to the merger of the Company with Genetic MicroSystems, Inc. ("GMS"),
the Company adopted the GMS/Affymetrix 1998 Stock Plan ("GMS Plan"). As of
April 12, 2000, the Company had two million eight hundred eighty thousand six
hundred eighty-three (2,880,683) options outstanding and two hundred forty-four
thousand nine hundred forty-eight (244,948) options available for future
issuance under the 1993 Plan, no options outstanding and three hundred thousand
(300,000) options available for future issuance under the 1996 Plan and one
million four hundred seventy-one thousand eight hundred seventy (1,471,870)
options outstanding and three hundred seven thousand nine hundred fifty
(307,950) options available for future issuance under the 1998 Plan. The GMS
Plan has been terminated, but such termination will not affect any options that
remain outstanding under the GMS Plan.
The 2000 Equity Incentive Plan, in the form attached hereto as APPENDIX B
(the "2000 Plan"), was adopted by the Board effective March 9, 2000, subject to
approval by the stockholders. The purpose of the 2000 Plan is to promote the
long-term success of the Company and the creation of stockholder value by
(a) encouraging employees, outside directors and consultants to focus on
critical long-range objectives, (b) encouraging the attraction and retention of
employees, outside directors and consultants with exceptional qualifications and
(c) linking employees, outside directors and consultants directly to stockholder
interests through increased stock ownership. The 2000 Plan seeks to achieve this
purpose by providing for awards in the form of restricted shares, stock units,
stock options and stock appreciation rights ("SARs"). Approval of the 2000 Plan
will not affect the status of, and will not cause the termination of, the 1993
Plan, the 1996 Plan or the 1998 Plan.
The primary features of the 2000 Plan are summarized below. This summary is
qualified in its entirety by reference to the specific provisions of the 2000
Plan.
1. SHARES RESERVED. The Company has reserved 2,500,000 shares of common
stock for issuance under the 2000 Plan. In general, if options or SARs awarded
under the 2000 Plan are forfeited, then the corresponding common stock will
again become available for grant under the 2000 Plan.
2. ELIGIBILITY. Directors, officers, other key employees and consultants
of the Company, its subsidiaries and its affiliates who are responsible for the
management, growth and profitability of the business of the Company, its
subsidiaries and its affiliates are eligible to be granted stock options, SARs,
restricted shares and stock units under the 2000 Plan.
3. ADMINISTRATION. The 2000 Plan is administered by a committee of the
Board of Directors. The committee has full power to select, from among the
persons eligible for awards, the individuals to whom awards will be granted,
determine the type, number, vesting requirements and other features and
conditions of each award, interpret the 2000 Plan and make all other decisions
relating to the operation of the 2000 Plan.
4. STOCK OPTIONS. The 2000 Plan permits the granting of stock options that
are intended to qualify as incentive stock options ("ISOs") under section 422 of
the Internal Revenue Code of 1986 and nonstatutory stock options ("NSOs") that
do not so qualify. The option exercise price for each share covered by an option
shall be determined by the committee but shall not be less than 100% of the fair
market value of the share on the date of grant. The term of each option will be
fixed by the committee, but may not exceed 10 years from the date of the grant
in the case of an ISO. The committee may modify,
9
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extend or assume outstanding options, and may repurchase options previously
granted. The 2000 Plan provides that no optionee may receive options covering
more than 100,000 shares in the same year.
5. STOCK APPRECIATION RIGHTS. SARs may be granted, entitling the holder
upon exercise to receive an amount in any combination of cash or common stock of
the Company (as determined by the committee), not greater in value than the
increase since the date of grant in the value of the shares covered by such
right. The 2000 Plan provides that no participant may receive SARs covering more
than 100,000 shares in the same year.
6. RESTRICTED STOCK. Restricted shares of the common stock may be sold or
awarded by the committee subject to such conditions and restrictions as they may
determine, which may include the attainment of performance goals. To the extent
that an award consists of newly issued restricted shares, the consideration
shall consist of cash, cash equivalents, full-recourse promissory notes or past
services rendered, as the committee may determine. The holders of restricted
shares awarded under the 2000 Plan shall have the same voting, dividend and
other rights as holders of common stock, except that restrictions on the use of
dividends may be imposed.
7. STOCK UNITS. Stock units representing, through bookkeeping entries, the
equivalent of shares of common stock may be granted. Stock units have no voting
rights. Vesting and dividend rights of stock units are determined by the
committee. No cash consideration is required to be paid by stock unit award
recipients.
8. CHANGE OF CONTROL. The committee may determine, at the time of granting
an award or thereafter, that such award shall become exercisable or vested as to
all or part of the shares of common stock subject to such award in the event
that a change in control occurs with respect to the Company or in the event that
the recipient is subject to an involuntary termination after a change in
control.
9. ANTI-DILUTION PROVISIONS. In the event of a stock-split of the
outstanding common stock or a dividend payable in common stock, a corresponding
adjustment shall be automatically made to the number or exercise price of the
options, restricted shares, stock units or SARs awarded pursuant to the 2000
Plan. The Committee may also make such adjustments as it deems appropriate in
the event of a recapitalization, spin-off or other similar occurrence.
10. FUTURE OF THE PLAN. The Board may amend or terminate the 2000 Plan at
any time. If the Board amends the plan, it does not need to ask for stockholder
approval of the amendment unless applicable law requires it. The 2000 Plan will
continue in effect for 10 years, unless the Board decides to terminate the plan.
11. NEW PLAN BENEFITS. Awards under the 2000 Plan are discretionary.
Therefore, it is not possible to determine the benefits that will be received in
the future by participants in the 2000 Plan. To date, no grants have been made
under the 2000 Plan.
12. FEDERAL INCOME TAX CONSEQUENCES OF OPTIONS. Neither the optionee nor
we incur any federal tax consequences as a result of the grant of an option. The
optionee has no taxable income upon exercising an ISO (except that the
alternative minimum tax may apply), and we receive no deduction when an ISO is
exercised. Upon exercising an NSO, the optionee generally must recognize
ordinary income equal to the "spread" between the exercise price and the fair
market value of our common stock on the date of exercise; we ordinarily will be
entitled to a deduction for the same amount. In the case of an employee, the
option spread when an NSO is exercised is subject to income tax withholding, but
the optionee generally may elect to satisfy the withholding tax obligation by
having shares of common stock withheld from those purchased under the option.
The tax treatment of a disposition of option shares acquired under the 2000 Plan
depends on how long the shares have been held and on whether the shares were
acquired by exercising an ISO or by exercising an NSO. We are not entitled to a
deduction in connection with a disposition of option shares, except in the case
of a disposition of shares acquired under an ISO before the applicable holding
periods have been satisfied.
10
<PAGE>
REQUIRED VOTE
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock voting in person or by proxy on this proposal at the
annual meeting is required to approve the 2000 Plan. Should such stockholder
approval not be obtained, then the 2000 Plan will not be implemented.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL AND RATIFICATION OF THE
COMPANY'S 2000 EQUITY INCENTIVE PLAN.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE COMPLETE AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED.
11
<PAGE>
STOCK OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock of
the Company as of March 31, 2000 by: (a) each person known to the Company who
beneficially owns five percent or more of the outstanding shares of its Common
Stock; (b) each director; (c) each of the officers named in the Summary
Compensation Table below; and (d) all directors and executive officers as a
group. Unless otherwise indicated, the address of each of the individuals named
below is: c/o Affymetrix, Inc., 3380 Central Expressway, Santa Clara, California
95051.
<TABLE>
<CAPTION>
PERCENTAGE OF
SHARES SHARES
BENEFICIALLY BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1) OWNED(1)(2)
- ------------------------------------ ------------ -------------
<S> <C> <C>
Glaxo Wellcome plc(3)....................................... 8,055,626 29.5%
Greenford Road
Greenford, Middleex, UBG OHE, UK
FMR Corp.(4)................................................ 1,616,320 5.9%
82 Devonshire Street
Boston, MA 02109
Paul A. Berg, Ph.D.(5)...................................... 67,988 *
John D. Diekman, Ph.D.(6)................................... 158,540 *
Stephen P.A. Fodor,Ph.D.(7)................................. 291,442 1.1%
Karen H. Haynes(8).......................................... 11,035 *
Adrian Hennah(9)............................................ 8,055,626 29.5%
Edward M. Hurwitz(10)....................................... 25,000 *
Thane Kreiner(11)........................................... 16,332 *
Vernon R. Loucks, J.(12).................................... 61,665 *
Vern Norviel(13)............................................ 44,575 *
Kenneth J. Nussbacher(14)................................... 41,109 *
Richard P. Rava, Ph.D.(15).................................. 39,557 *
Barry C. Ross, Ph.D.(16).................................... 8,055,626 29.5%
Susan E. Siegel(17)......................................... 82,500 *
David B. Singer(18)......................................... 68,807 *
Lubert Stryer, M.D.(19)..................................... 84,584 *
Ronald D. Verdoorn(20)...................................... 40,000 *
John A. Young(21)........................................... 67,999 *
All directors and executive officers as a group (17
persons)(22).............................................. 9,156,759 33.5%
</TABLE>
- --------------------------
* Represents beneficial ownership of less than one percent of the Common
Stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage of ownership of that
person, shares of Common Stock subject to options held by that person that
are currently exercisable or exercisable within 60 days of March 31, 2000
are deemed outstanding. Those shares, however, are not deemed outstanding
for the purpose of computing the percentage ownership of each other person.
The persons named in this table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable and except as indicated
in the other footnotes to this table.
(2) Percentage of beneficial ownership is based on 27,323,120 shares of Common
Stock outstanding as of March 31, 2000.
(3) Includes 7,962,296 shares held by Glaxo Wellcome through its subsidiaries,
Affymax N.V., Affymax Technologies N.V. and Glaxo Wellcome Americas Inc.,
39,998 shares held by Douglas M. Hurt and
12
<PAGE>
53,332 shares issuable upon exercise of options exercisable within 60 days
of March 31, 2000 granted to Dr. Ross. Mr. Hurt and Dr. Ross disclaim
beneficial ownership of the shares held by or issuable to them.
(4) In a filing on Schedule 13G, dated February 14, 2000, FMR Corp. reported
sole dispositive power with respect to 1,616,320 shares of Common Stock and
sole voting power with respect to 343,490 shares of Common Stock. Fidelity
Management & Research Company ("Fidelity") (a wholly-owned subsidiary of
FMR Corp.) is the beneficial owner of 1,261,430 shares, which includes
24,390 shares of Common Stock resulting from the assumed conversion of
$3,000,000 principal amount of the Company's 5% Convertible Subordinated
Notes Due 2006. Edward C. Johnson 3d (Chairman of FMR Corp.), FMR Corp.
(through its control of Fidelity) and certain investment funds each has
sole power to dispose of 1,261,430 shares owned by the funds. Neither FMR
Corp. nor Edward C. Johnson 3d has sole power to vote or direct the voting
of shares owned directly by the investment funds for which Fidelity acts as
investment adviser. Fidelity Management Trust Company ("FMTC") (a
wholly-owned subsidiary of FMR Corp.) is the beneficial owner of 187,100
shares. Edward C. Johnson 3d and FMR Corp. (through its control of FMTC)
each has sole dispositive power over 187,100 shares, sole power to vote or
direct the voting of 175,700 shares and no power to vote or direct the
voting of 11,400 shares owned by certain institutional accounts. FMR Corp's
beneficial ownership may include shares beneficially owned through
Strategic Advisers, Inc., a wholly-owned subsidiary of FMR Corp. Edward C.
Johnson 3d owns 12.0% of the outstanding voting stock of FMR Corp. and
Abigail Johnson (a director of FMR Corp.) owns 24.5% of the outstanding
voting stock of FMR Corp. Members of the Johnson family and trusts for
their benefit, which collectively control approximately 49% of the voting
power of FMR Corp., may be deemed to form a "controlling group" under the
Investment Company Act of 1940. Fidelity International Limited is the
beneficial owner of 167,790 shares and has sole dispositive power over
167,790 shares and sole power to vote or direct the voting of 167,790
shares. The foregoing information is based solely on a review of the
referenced Schedule 13G.
(5) Includes 28,334 shares issuable upon exercise of options exercisable within
60 days of March 31, 2000.
(6) Includes 31,667 shares issuable upon exercise of options exercisable within
60 days of March 31, 2000.
(7) Includes 271,109 shares issuable upon exercise of options exercisable
within 60 days of March 31, 2000.
(8) Includes 10,667 shares issuable upon exercise of options exercisable within
60 days of March 31, 2000.
(9) Includes 8,002,294 shares of Common Stock and 53,332 shares issuable upon
exercise of options exercisable within 60 days of March 31, 2000
beneficially owned by Glaxo Wellcome, of which Mr. Hennah disclaims
beneficial ownership.
(10) Includes 25,000 shares issuable upon exercise of options exercisable
within 60 days of March 31, 2000.
(11) Includes 12,534 shares issuable upon exercise of options exercisable
within 60 days of March 31, 2000.
(12) Includes 26,666 shares issuable upon exercise of options exercisable
within 60 days of March 31, 2000.
(13) Includes 33,575 shares issuable upon exercise of options exercisable
within 60 days of March 31, 2000.
(14) Includes 23,759 shares issuable upon exercise of options exercisable
within 60 days of March 31, 2000.
(15) Includes 27,557 shares issuable upon exercise of options exercisable
within 60 days of March 31, 2000.
(16) Includes 8,002,294 shares of Common Stock beneficially owned by Glaxo
Wellcome, of which Dr. Ross disclaims beneficial ownership, and 53,332
shares issuable upon exercise of options exercisable within 60 days of
March 31, 2000 granted to Dr. Ross in consideration of acting as a
director on the Board, of which Dr. Ross also disclaims beneficial
ownership.
(17) Includes 82,500 shares issuable upon exercise of options exercisable
within 60 days of March 31, 2000.
13
<PAGE>
(18) Includes 26,666 shares issuable upon exercise of options exercisable
within 60 days of March 31, 2000 and 1,475 shares held by Chevy Chase
Circle Foundation, a charitable trust controlled by Mr. Singer.
(19) Includes 10,001 shares issuable upon exercise of options exercisable
within 60 days of March 31 2000.
(20) Includes 40,000 shares issuable upon exercise of options exercisable
within 60 days of March 31, 2000.
(21) Includes 26,666 shares issuable upon exercise of options exercisable
within 60 days of March 31, 2000.
(22) Includes 730,033 shares issuable upon exercise of options exercisable
within 60 days of March 31, 2000. Also includes 8,002,294 shares owned by
Glaxo Wellcome, of which Mr. Hennah and Dr. Ross disclaim beneficial
ownership.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors and persons who own more than ten percent of a
registered class of the Company's equity securities, to file with the Securities
and Exchange Commission (the "SEC") initial reports of ownership and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Executive officers, directors and ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
To the Company's knowledge (based solely on review of the copies of such
reports furnished to the Company or written representations that no other
reports were required), during the year ended December 31, 1999, all executive
officers, directors and ten percent stockholders complied with all
Section 16(a) filing requirements.
14
<PAGE>
MANAGEMENT
The executive officers of the Company, and their ages and position as of the
Record Date, are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- -------- ----------------------------------------------------------
<S> <C> <C>
Stephen P.A. Fodor, Ph.D.... 46 Chairman and Chief Executive Officer
Susan E. Siegel............. 39 President
Karen H. Haynes............. 39 Vice President, Human Resources and Administration
Edward M. Hurwitz........... 36 Vice President and Chief Financial Officer
Thane Kreiner, Ph.D......... 38 Vice President, Sales and Marketing
Vern Norviel................ 41 Senior Vice President, General Counsel and Corporate
Secretary
Kenneth J. Nussbacher....... 47 Executive Vice President
Richard P. Rava, Ph.D....... 42 Senior Vice President and Chief Technology Officer
Ronald D. Verdoorn.......... 49 Executive Vice President, Global Manufacturing
</TABLE>
STEPHEN P.A. FODOR, PH.D. See "Election of Directors."
SUSAN E. SIEGEL was appointed President in August 1999. From April 1998 to
August 1999, Ms. Siegel was Senior Vice President, Marketing and Sales. Prior to
joining Affymetrix, Ms. Siegel was part of the Amersham Pharmacia Biotech
organization where she served most recently as President for the Hoefer
Pharmacia Biotech business unit. She served previously in various capacities
during her nine year tenure with Amersham Pharmacia Biotech, including Vice
President, Business Development and Licensing, Director of Marketing for North
America and Director of Sales and Marketing for the Molecular Science Business
Unit, and was instrumental in building the sales organization in North America.
Prior to Amersham Pharmacia Biotech, Ms. Siegel was with E.I. Du Pont, Bio
Image/Kodak and Bio Rad Laboratories.
KAREN H. HAYNES was appointed Vice President, Human Resources and
Administration in March 1997. From 1993 to March 1997, Ms. Haynes held various
human resources management positions at Affymax and Affymetrix, most recently as
Director of Human Resources for Affymetrix from 1995 to March 1997. Prior to
1993, Ms. Haynes held human resources positions at Lattice Semiconductor and
Measurex Corporation.
EDWARD M. HURWITZ, ESQ., joined Affymetrix in May 1997 as Vice President and
Chief Financial Officer. From April 1994 to March 1997, Mr. Hurwitz served as
Senior Biotechnology Analyst at Robertson Stephens & Company. From 1992 to 1994,
Mr. Hurwitz held the position of Senior Biotechnology Analyst at Smith Barney
Shearson.
THANE KREINER, PH.D, was appointed Vice President, Marketing in August 1998
and Vice President, Sales and Marketing in August 1999. From 1994 to 1998,
Dr. Kreiner held various management positions with Affymetrix including
Director, Marketing and Strategic Planning. Dr. Kreiner worked part-time for the
Company from 1993 to 1994, and joined the Company full-time in 1994.
VERN NORVIEL, ESQ., was appointed Vice President and General Counsel of the
Company in February 1996 and Senior Vice President, General Counsel and
Corporate Secretary in December 1997. From 1987 to July 1996, Mr. Norviel was an
associate and then a partner with Townsend and Townsend and Crew LLP. In 1995
and for a portion of 1996 (prior to becoming a full-time employee of the
Company), Mr. Norviel worked part-time for the Company.
KENNETH J. NUSSBACHER, ESQ., has been Executive Vice President since joining
the Company in September 1995. From September 1995 to May 1997, Mr. Nussbacher
also served as Chief Financial Officer. From 1989 to September 1995,
Mr. Nussbacher held various management positions at Affymax
15
<PAGE>
Technologies N.V., most recently as Executive Vice President for Business and
Legal Affairs and Managing Director.
RICHARD P. RAVA, PH.D., was appointed Senior Vice President and Chief
Technology Officer in January 1999. From September 1996 to January 1999, he
served as Senior Vice President, Operations and Technology. From 1994 to
September 1996, Dr. Rava served as Vice President, Research and Engineering.
Dr. Rava joined the Company in 1993 as Director of Biomedical Engineering. From
1992 to 1993, Dr. Rava served as a Senior Scientist at Affymax Research
Institute.
RONALD D. VERDOORN joined Affymetrix in January 1999 as Executive Vice
President, Global Manufacturing. From October 1997 to December 1999,
Mr. Verdoorn was self-employed as a consultant. From 1983 to September 1997,
Mr. Verdoorn served in various capacities at Seagate Technology, Inc., most
recently as Executive Vice President and Chief Operating Officer and before that
in positions including Senior Vice President, Worldwide Manufacturing
Operations; Vice President and General Manager, Thailand Operations; Vice
President, Far East Manufacturing, Singapore; and Vice President, Manufacturing.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
compensation of the Company's Chief Executive Officer ("CEO") and each of the
four other most highly compensated executive officers during 1999 (collectively,
the "Named Executive Officers") for services in all capacities as officers to
the Company during fiscal years 1997, 1998 and 1999.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL AWARDS
COMPENSATION ----------------------
YEAR ENDING -------------------- SECURITIES
NAME AND PRINCIPAL POSITION 12/31 SALARY($) BONUS($) UNDERLYING OPTIONS (#)
- --------------------------- ----------- --------- -------- ----------------------
<S> <C> <C> <C> <C>
Stephen P.A. Fodor, Ph.D..................... 1999 344,116 105,000 150,000
Chairman and Chief Executive Officer 1998 331,709 33,000 --
1997 292,323 -- 100,000
Susan E. Siegel.............................. 1999 264,856 145,000(1) 50,000
President 1998 164,725 274,000(2) 225,000
Kenneth J. Nussbacher........................ 1999 253,535 105,000 100,000
Executive Vice President 1998 251,464 25,000 --
1997 220,583 -- 50,000
Richard P. Rava.............................. 1999 247,061 105,000 100,000
Senior Vice President and Chief Technology 1998 240,430 24,000 --
Officer 1997 200,045 -- 50,000
Ronald D. Verdoorn........................... 1999 254,176 205,000(3) 200,000
Executive Vice President, Global
Manufacturing
</TABLE>
- ------------------------
(1) Includes $40,000 representing a bonus based on the achievement of certain
sales targets.
(2) Includes a $130,000 signing bonus received by Ms. Siegel upon her joining
the Company in April 1998 and $120,000 representing a bonus based on the
achievement of certain sales targets.
(3) Includes a $100,000 signing bonus received by Mr. Verdoorn upon joining the
Company in January 1999.
16
<PAGE>
OPTION GRANTS AND EXERCISES IN LAST FISCAL YEAR
The following tables set forth information regarding stock options granted
to and exercised by the Named Executive Officers during the last fiscal year, as
well as options held by such officers as of December 31, 1999, the last day of
the Company's 1999 fiscal year.
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS(1) VALUE AT ANNUAL
-------------------------------- RATES OF STOCK PRICE
EXERCISE OR APPRECIATION FOR
% OF TOTAL OPTIONS BASE PRICE OPTION TERM(2)
OPTIONS GRANTED TO EMPLOYEES PER SHARE ----------------------
NAME GRANTED IN FISCAL YEAR ($/SHARE) EXPIRATION DATE 5% ($) 10% ($)
- ---- -------- -------------------- ----------- --------------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stephen P.A. Fodor, Ph.D..... 150,000(3) 8.42% 48.8750 06/30/09 4,608,988 11,679,160
Susan E. Siegel.............. 50,000 2.81% 48.8750 06/30/09 1,536,329 3,893,053
Kenneth J. Nussbacher........ 100,000(4) 5.62% 48.8750 06/30/09 3,072,658 7,786,106
Richard P. Rava.............. 100,000(4) 5.62% 48.8750 06/30/09 3,072,658 7,786,106
Ronald D. Verdoorn........... 200,000(5) 11.23% 28.0625 01/10/09 3,529,671 8,944,879
</TABLE>
- ------------------------
(1) Each of these options was granted pursuant to the Company's 1993 Plan and is
subject to the terms of such plan.
(2) In accordance with the rules of the SEC, shown are the hypothetical gains or
"option spreads" that would exist for the respective options. These gains
are based on assumed rates of annual compounded stock price appreciation of
5% and 10% from the date the option was granted over the full option term.
The 5% and 10% assumed rates of appreciation are mandated by the rules of
the SEC and do not represent the Company's estimate or projection of future
increase in the price of its Common Stock.
(3) Consists of two option grants, one of 145,908 shares and the other of 4,092
shares of Common Stock.
(4) Consists of two option grants, one of 95,908 shares and the other of 4,092
shares of Common Stock.
(5) Consists of two option grants, one of 182,185 shares and the other of 17,815
shares of Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION
VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED
ACQUIRED VALUE UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
ON REALIZED OPTIONS AT DECEMBER 31, 1999 DECEMBER 31, 1999
NAME EXERCISE ($)(1) EXERCISABLE/UNEXERCISABLE(#) EXERCISABLE/UNEXERCISABLE($)(2)
- ---- -------- --------- ---------------------------- -------------------------------
<S> <C> <C> <C> <C>
Stephen P.A. Fodor,
Ph.D.................... -- -- 242,221/274,446 43,062,307/39,255,670
Susan E. Siegel........... 37,500 2,247,812 57,500/180,000 8,584,062/26,610,621
Kenneth J. Nussbacher..... 52,350 4,150,316 14,871/164,446 2,453,869/23,417,420
Richard P. Rava........... 19,556 1,001,453 13,334/152,446 2,384,453/21,290,467
Ronald D. Verdoorn........ -- -- 0/200,000 0/30,287,500
</TABLE>
- ------------------------
(1) Based on the value of the Company's Common Stock on the date of exercise
minus the exercise price of the options multiplied by the number of shares
underlying the option.
(2) Assuming a stock price of $179.50 per share, which was the average of the
high and the low trading price of a share of Common Stock reported on the
Nasdaq National Market on December 31, 1999.
17
<PAGE>
COMPENSATION COMMITTEE REPORT(1)
The Compensation Committee (the "Committee") of the Board of Directors is
generally responsible for the design, structure and administration of the
executive officers' compensation program. The Committee consists of two
non-employee directors, Dr. Paul Berg and Mr. John Young. The Committee reviews
compensation and stock grants recommended by the Chief Executive
Officer/Chairman (other than for himself) along with the basis for such
recommendations, including performance reviews and competitive base salary data,
and separately evaluates the performance of the Chief Executive Officer/
Chairman. In determining compensation policies, the Committee has access to
compensation and benefit surveys for regional biotechnology companies that
compete with the Company in the recruitment of senior personnel.
COMPENSATION POLICIES
The Committee has developed, with the Board, an executive compensation
philosophy which relates the level of compensation to Affymetrix's success in
meeting annual and long-term performance goals, rewards individual achievement
and seeks to attract and retain highly qualified executives. Affymetrix
positions its executive compensation to be competitive with the compensation for
similar management positions at peer companies, which consist primarily of
regional biotechnology and other high technology companies. The level of
compensation paid to executive officers of the Company also takes into account
the technological achievements of the Company during the year, the offering of
new products to customers and the individual performance and contribution of
each executive to the Company's performance for the year. The Compensation
Committee does not use either the profitability of the Company or the market
value of its stock as a primary factor in setting executive officer base
compensation.
Compensation for senior management consists of (i) cash compensation,
including base salary and bonus components, which is based on factors such as
the individual officer's level of responsibility for meeting the Company's
strategic, technological, and financial objectives and (ii) long-term incentives
afforded by stock options. The Company's stock option program is intended to
align the interests of executives with the interests of the shareholders with
respect to the long-term performance of the Company. Guidelines for executive
stock option grants are developed through analysis of long-term incentive awards
based on each individual executive's position, responsibilities, performance and
contribution to the achievement of the Company's long-term goals and competitive
stock option data from regional biotechnology companies.
CHIEF EXECUTIVE OFFICER'S COMPENSATION
In determining Dr. Fodor's 1999 compensation the Compensation Committee
considered the above policies as well as Dr. Fodor's overall compensation
package relative to that of other chief executives in the Company's industry.
Other considerations included the effectiveness of Dr. Fodor's leadership of the
Company and the resulting success of the Company in attainment of specific
milestones. These milestones included continuing to build the business in three
main areas, expression, genotyping and disease management, by expanding chip
product offerings, aggressively growing the installed base of instrument systems
and launching the licensing strategy. Additional progress has been made in
increasing manufacturing capacity to meet increasing customer demand and
investing in new research initiatives for the long term. The Committee believes
that the total compensation of the Company's Chief Executive Officer is near the
middle of the range of compensation packages for chief executive officers at
peer companies.
- ------------------------
(1) The Compensation Committee Report is not deemed to be filed with the SEC,
and is not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933, as amended, or the Securities Exchange Act
of 1934, as amended, whether made before or after the date of this proxy
statement and irrespective of any general incorporation language in such
filing.
18
<PAGE>
COMPENSATION OF OTHER EXECUTIVE OFFICERS
The 1999 compensation of other Affymetrix executive officers also took into
account the above policies, including the individual contribution of each
executive to the Company's performance during the year. With respect to cash
compensation payable to its executive officers for 1999, the Committee
benchmarked its (i) total compensation structure to salary survey data at the
75th percentile and (ii) base salary structure to salary survey data at the
median of structures at peer companies. The Compensation Committee believes
compensation for the Company's executive officers is within the range of
compensation paid to executives with comparable qualifications, experience and
responsibilities in the same or similar businesses of comparable size. The
Committee also strives to achieve equitable relationships both among the
compensation of individual officers and between the compensation of officers and
other employees throughout the Company.
SECTION 162(M) COMPLIANCE
The Company's policy is to utilize available tax deductions whenever
appropriate, and the Committee, when determining executive compensation
programs, considers all relevant factors, including the tax deductions that may
result from such compensation.
Stock options granted under the 1993 Plan, the 1996 Plan, the 1998 Plan and
the 2000 Plan qualify as performance-based compensation under Section 162(m) of
the Code. The Committee believes that the best interests of the Company and its
stockholders are served by executive compensation programs which encourage and
promote the Company's principal compensation objective, enhancement of
shareholder value, and permit the Committee to exercise discretion in the design
and implementation of compensation packages. Accordingly, the Company may from
time to time pay compensation to its executive officers that may not be fully
deductible. The Committee will continue to review the Company's executive
compensation plans periodically to determine what changes, if any, should be
made as the result of the limitation on deductibility.
Dr. Paul Berg
Mr. John Young
19
<PAGE>
CERTAIN TRANSACTIONS
In April 1998, the Company sold one million six hundred thirty-four thousand
five hundred twenty-two (1,634,522) shares of Series AA Stock at $30.59 per
share to Glaxo Wellcome Americas Inc. ("GWA") in a private placement. All of the
Series AA Stock was converted into one million two hundred fifty-seven thousand
two hundred twenty-nine (1,257,229) shares of Common Stock in August 1999. These
shares of Common Stock have not been registered under the Securities Act of
1933.
In connection with the issuance of the Series AA Stock, the Company and
Glaxo Wellcome agreed to amend the Governance Agreement, which was originally
entered into as of July 1995. Pursuant to the Governance Agreement, Glaxo
Wellcome currently has the right to designate three of the nine directors of the
Company. Glaxo Wellcome also agreed that any merger, consolidation or business
combination whereby the Company would become a direct or indirect wholly-owned
subsidiary of Glaxo Wellcome and any material transaction between the Company
and Glaxo Wellcome must be approved by a majority of the independent directors
of the Company. In addition, pursuant to the Governance Agreement, the Company
granted Glaxo Wellcome certain registration rights with respect to its shares.
In addition, the Company and Glaxo Wellcome amended the Governance Agreement,
effective September 29, 1998, to (a) give Glaxo Wellcome the right to call a
special meeting of the stockholders, so long as Glaxo Wellcome continues to hold
at least ten percent (10%) of the outstanding capital stock of the Company, and
(b) clarify the number of directors Glaxo Wellcome has the right to designate in
the event of a change in the size of the Board. In connection with the issuance
and sale of Series AA Stock, the Company and GWA also entered into the Voting
Trust Agreement. The Voting Trust Agreement terminated in August 1999 upon
conversion of all the Series AA Stock into Common Stock.
From 1994 to October 1995, the Company issued warrants to two subsidiaries
of Glaxo Wellcome, Affymax N.V. and Affymax Technologies N.V., which were
exercised in November 1999 for two hundred three thousand eight hundred
eight-one (203,881) shares of Common Stock.
In April 1997, the Company made a $500,000 secured loan to Dr. Fodor to
assist him in purchasing a house. The loan bears an interest rate of 6.49% and
is due on the first to occur of April 11, 2002, the sale of the house, or
termination of Dr. Fodor's employment.
In April 1997, the Company made a $100,000 secured loan to Martin J.
Goldberg, Ph.D., to assist him in purchasing a house. The loan bears an interest
rate of 6.49% and is due on the first to occur of April 27, 2002, the sale of
Dr. Goldberg's house, or termination of Dr. Goldberg's employment.
In October 1999, the Company made a $100,000 secured loan to Christian Henry
to assist him in purchasing a house. The loan bears an interest rate of 6.02%
and is due on the first to occur of October 21, 2004, the sale of Mr. Henry's
house, or termination of Mr. Henry's employment.
The Company has entered into indemnification agreements with each of its
directors and executive officers. Such agreements require the Company to
indemnify such persons to the fullest extent permitted by Delaware law.
In 1998, the Company adopted a change in control policy which provides for
the treatment of the outstanding options to purchase shares of the Company's
capital stock ("Options"). Pursuant to the policy, in the event of (i) a merger
of the Company resulting in the transfer of fifty percent (50%) or more of the
outstanding voting power of the Company, (ii) a sale of all or substantially all
of the Company's assets, or (iii) the complete liquidation of the Company (each
an "Acquisition Event"), then the Company shall take any one or more of the
following actions with respect to the Options:
- Provide that the Options shall be assumed by the acquiring or succeeding
corporation;
- Except in the case of an Acquisition Event which is accounted for as a
"pooling of interests" transaction, provide that all such Options become
fully exercisable prior to the Acquisition Event;
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- In the event that, upon the consummation of the Acquisition Event, the
stockholders of the Company shall receive a cash payment for any shares of
capital stock then held by such stockholders, provide that all Options be
terminated as of the Acquisition Event and that all holders of Options
receive a cash payment for each such Option; and/or
- Provide that any other outstanding stock-based awards become (i) except in
the case of a "pooling of interests" transaction, exercisable or
realizable as of the Acquisition Event, or (ii) assumed or substituted by
the acquiring or succeeding corporation.
The policy further provides that it is subject to amendment by the Board any
time prior to a change of control.
In April 1998, the Company entered into a series of agreements with EOS
Biotechnology, Inc. ("EOS") pursuant to which the Company received three million
seven hundred fifty thousand (3,750,000) shares of EOS Preferred Series C
Preferred Stock valued at $6,000,000 in exchange for gene chip probe arrays,
collaborative work and rights to certain of the Company's technology. In
connection with these agreements, the Company received the right to designate
one nominee to EOS' Board of Directors. Currently, such director is Dr. Fodor,
the Company's Chief Executive Officer. The Company also received certain
registration and information rights from EOS. In January 1999, the Company
entered into an Internal License Agreement with EOS pursuant to which the
Company licensed certain of its intellectual property to EOS. In
September 1999, the Company purchased seventy-six thousand nine hundred twenty-
three (76,923) shares of Series D Preferred Stock for $100,000.
In January 1999, the Company and Symyx Technologies, Inc. ("Symyx") entered
into a collaborative agreement to investigate the potential joint application of
certain Symyx technology in connection with Affymetrix array technology.
Mr. Nussbacher is a director of Symyx and Executive Vice President of the
Company.
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STOCK PERFORMANCE GRAPH(1)
STOCKHOLDER RETURN COMPARISON
The graph below compares the cumulative total return* on the Company's
Common Stock for the period commencing June 6, 1996 (the date on which the
Company's Common Stock was first publicly traded) and ending December 31, 1999
compared to the CRSP Total Return Index for the Nasdaq National Market (U.S.
companies) and the CRSP Total Return Index for the NASDAQ Pharmaceutical Stocks
(SIC 283). The stock price performance shown on the graph below is not
necessarily indicative of future price performance.
COMPARISON OF CUMULATIVE STOCKHOLDER RETURN(*)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NASDAQ STOCK NASDAQ
<S> <C> <C> <C>
AFFYMETRIX, INC. MARKET-US PHARMACEUTICAL
6/6/96 $100.00 $100.00 $100.00
6/28/96 $101.70 $96.31 $89.82
12/31/96 $134.60 $104.67 $89.14
6/30/97 $231.70 $117.13 $91.40
12/31/97 $207.50 $128.25 $92.07
6/30/98 $160.42 $154.21 $93.61
12/31/98 $162.50 $180.83 $117.13
6/30/99 $139.17 $221.77 $130.92
12/31/99 $1,131.25 $334.65 $217.93
</TABLE>
- ------------------------
(1) The Stock Performance Graph and related disclosure are not soliciting
material, are not deemed to be filed with the SEC, and are not to be
incorporated by reference in any filing of the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended,
whether made before or after the date of this proxy statement and
irrespective of any general incorporation language in such filing.
* Assumes $100 invested on June 6, 1996 in the Company's Common Stock and in
each index listed above. The total return for the Company's Common Stock and
the indices used assumes the reinvestment of dividends, even though
dividends have never been declared on the Company(1)s Common Stock.
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OTHER MATTERS
The Company knows of no other matters to be submitted at the meeting. If any
other matters properly come before the meeting, it is the intention of the
persons named in the enclosed proxy to vote the shares they represent as the
Board may recommend.
It is important that your shares be represented at the meeting, regardless
of the number of shares which you hold. Please complete, date, execute and
return, at your earliest convenience, the accompanying proxy card in the
envelope which has been enclosed.
BY ORDER OF THE BOARD OF DIRECTORS
Vern Norviel
SECRETARY
Dated: May 5, 2000
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APPENDIX A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF AFFYMETRIX, INC., A DELAWARE CORPORATION
(PURSUANT TO SECTIONS 228, 242 AND 245
OF THE DELAWARE GENERAL CORPORATION LAW)
Affymetrix, Inc. (the "Corporation"), a corporation organized and existing
under the General Corporation Law of the State of Delaware (the "General
Corporation Law") originally incorporated on September 29, 1998, DOES HEREBY
CERTIFY:
FIRST: The name of the corporation is Affymetrix, Inc.
SECOND: The address of the Corporation's registered office in the State of
Delaware is 9 E. Lockerman Street, City of Dover, County of Kent. The name of
the Corporation's registered agent at such address is National Corporate
Research.
THIRD: The nature of the business or purposes to be conducted or promoted by
the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the Delaware General Corporation Law.
FOURTH: I. The Corporation is authorized to issue two classes of stock to be
designated, respectively, Common Stock, par value $0.01 per share ("Common
Stock"), and Preferred Stock, par value $0.01 per share ("Preferred Stock"). The
total number of shares of all classes of stock which the Corporation shall have
authority to issue is two hundred five million (205,000,000), consisting of two
hundred million (200,000,000) shares of Common Stock and five million
(5,000,000) shares of Preferred Stock.
II. The board of directors is authorized from time to time, subject to any
limitations prescribed by law, to provide for the issuance of shares of
Preferred Stock in one or more series, and in connection with the creation of
any such series, by resolution or resolutions providing for the issuance of
shares thereof, to establish from time to time the number of shares to be
included in each such series, to determine and fix such voting powers, full or
limited or no voting powers, and to fix the designation, preferences, and
relative, participating, optional or other special rights of the shares of each
such series, and any qualifications, limitations or restrictions thereof. The
number of authorized shares of Preferred Stock may be increased or decreased
(but not below the number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the Common Stock, without a vote of the
holders of the Preferred Stock, or of any series thereof, unless a vote of any
such holders is required pursuant to the terms of any resolution or resolutions
providing for the issue of such stock adopted by the board of directors of the
Corporation.
FIFTH: There shall be a series of Preferred Stock designated as "Series AA
Preferred Stock" and the number of shares constituting such series shall be one
million six hundred thirty-four thousand five hundred twenty-two (1,634,522)
shares (the "Series AA Preferred Stock"). The rights, preferences, privileges,
and restrictions granted to and imposed on the Series AA Preferred Stock are
asset forth below:
1. DIVIDEND PROVISIONS.
(a) Subject to the rights of any series of Preferred Stock that may from
time to time come into existence, the holders of shares of Series AA
Preferred Stock shall be entitled to receive dividends payable in cash, out
of any assets legally available therefor, prior and in preference to any
declaration or payment of any dividend (payable other than in Common Stock
or other securities and rights convertible into or entitling the holder
thereof to receive, directly or indirectly, additional shares of Common
Stock of this Corporation) on the Common Stock of this Corporation, at the
rate per share per annum of $1.99 (as adjusted for any stock splits, stock
dividends, combinations, recapitalizations or the like with respect to the
Series AA Preferred Stock) payable in two equal installments on
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June 30 and December 31 of each year so long as such share of Series AA
Preferred Stock is then outstanding. Such dividends shall accrue on each
share from the Purchase Date (as defined below), and shall accrue from day
to day, whether or not earned or declared. Such dividends shall be
cumulative so that, except as provided below, if such dividends in respect
of any previous or current dividend period, at the annual rate specified
above, shall not have been paid, the deficiency shall first be fully paid
before any dividend or other distribution shall be paid on or declared and
set apart for the Common Stock. Cumulative dividends with respect to a share
of Series AA Preferred Stock which are accrued, payable and/or in arrears
shall, upon conversion of such share to Common Stock or redemption of such
share, be paid to the extent assets are legally available therefor pursuant
to the provisions of Section 2 and Section 3, respectively, and any amounts
for which assets are not legally available shall be paid promptly as assets
become legally available therefor; any partial payment will be made pro rata
among the holders of such shares. The holders of the outstanding Series AA
Preferred Stock can waive any dividend preference that such holders shall be
entitled to receive under this Section 1 upon the affirmative vote or
written consent of the holders of at least a majority of the Series AA
Preferred Stock then outstanding.
(b) Subject to the rights of any shares of Preferred Stock that may from
time to time come into existence and in addition to the amounts paid
pursuant to subsection 1(a) above, the holders of shares of Series AA
Preferred Stock shall be entitled to receive an amount equal to any dividend
paid (other than dividends paid in Common Stock or other securities and
rights convertible into or entitling the holder thereof to receive, directly
or indirectly, additional shares of Common Stock of this Corporation) on the
Common Stock of this Corporation (as determined on a per annum basis and on
as a converted basis for the Series AA Preferred Stock), payable when, as
and if declared by the Board of Directors. Such dividends shall not be
cumulative.
2. LIQUIDATION PREFERENCE.
(a) In the event of any liquidation, dissolution or winding up of this
Corporation, either voluntary or involuntary, subject to the rights of
series of Preferred Stock that may from time to time come into existence,
the holders of Series AA Preferred Stock shall be entitled to receive, prior
and in preference to any distribution of any of the assets of this
Corporation to the holders of Common Stock by reason of their ownership
thereof, an amount per share equal to the sum of (i) $30.59 for each
outstanding share of Series AA Preferred Stock (the "Original Series AA
Issue Price") (subject to adjustment of such fixed dollar amounts for any
stock splits, stock dividends, combinations, recapitalizations or the like
with respect to the Series AA Preferred Stock), (ii) accrued but unpaid
dividends on such share, and (iii) a per share amount equal to the
difference obtained by subtracting (A) the product of ten percent of the
annual per share dividend multiplied by a fraction, the numerator of which
is the number of days elapsed since the date upon which the first share of
Series AA Preferred Stock was first issued (the "Purchase Date") and the
denominator of which is 365, from (B) the annual per share dividend. The sum
obtained by adding the amounts described in clauses (i), (ii) and (iii) of
the preceding sentence is referred to herein as the "Series AA Liquidation
Preference". If upon the occurrence of such event, the assets and funds thus
distributed among the holders of the Series AA Preferred Stock shall be
insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then, subject to the rights of series of Preferred
Stock that may from time to time come into existence, the entire assets and
funds of this Corporation legally available for distribution shall be
distributed ratably among the holders of the Series AA Preferred Stock in
proportion to the amount of such stock owned by each such holder.
(b) Upon the completion of the distribution required by subparagraph (a)
of this Section 2 and any other distribution that may be required with
respect to series of Preferred Stock that may from time to time come into
existence, if assets remain in this Corporation, the holders of the Common
Stock of this Corporation, shall receive an amount per share of Common Stock
equal to the quotient obtained by dividing (i) the Series AA Liquidation
Preference, by (ii) the number of shares of
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Common Stock into which one (1) share of Series AA Preferred Stock could
then be converted pursuant to Section 4 hereof. If upon the occurrence of
such event, the assets and funds thus distributed among the holders of the
Common Stock shall be insufficient to permit the payment to such holders of
the full aforesaid preferential amount, then, subject to the rights of
series of Preferred Stock that may from time to time come into existence,
the entire remaining assets and funds of this Corporation legally available
for distribution shall be distributed ratably among the holders of the
Common Stock in proportion to the amount of such stock owned by each such
holder.
(c) After the distributions described in subsection (a) and (b) above
have been paid, subject to the rights of series of Preferred Stock that may
from time to time come into existence, the remaining assets of this
Corporation available for distribution to stockholders shall be distributed
among the holders of Series AA Preferred Stock and Common Stock pro rata
based on the number of shares of Common Stock held by each (assuming full
conversion of all such Series AA Preferred Stock).
(d)(i)The following events shall be deemed to be a liquidation,
dissolution or winding up within the meaning of this Section 2: (A) a
consolidation or merger of this Corporation with or into any other
corporation or corporations as a result of which the holders of voting stock
of this Corporation immediately prior to such transaction do not own,
directly or indirectly, more than 50% of the voting power of the surviving
corporation or its parent corporation immediately after such transaction, or
(B) a sale, conveyance or disposition of all or substantially all of the
assets of this Corporation.
(ii) In any of such events, the value of the assets distributed to
the stockholders of this Corporation shall be determined as set forth
herein. If the assets distributed to the stockholders of this Corporation
consist of other than cash or securities, the value of such assets shall
be the fair market value thereof, as determined by this Corporation and
the holders of at least a majority of the voting power of all the then
outstanding shares of Preferred Stock. If the assets distributed to the
stockholders of this Corporation consist of securities, such securities
shall be valued as follows:
A. Securities not subject to investment letter or other similar
restrictions on free marketability covered by (B) below:
(1) If traded on a securities exchange or through the Nasdaq National
Market, the value shall be deemed to be the average of the closing prices
of the securities on such exchange or system over the twenty (20) trading
day period ending three (3) trading days prior to the closing;
(2) If actively traded over-the-counter, the value shall be deemed to
be the average of the closing bid or sale prices (whichever is
applicable) over the twenty (20) trading day period ending three (3)
trading days prior to the closing; and
(3) If there is no active public market, the value shall be the fair
market value thereof, as mutually determined by this Corporation and the
holders of at least a majority of the voting power of all then
outstanding shares of Preferred Stock.
B. The method of valuation of securities subject to investment letter
or other restrictions on free marketability (other than restrictions arising
solely by virtue of a stockholder's status as an affiliate or former
affiliate) shall be to make an appropriate discount from the market value
determined as above in (A) (1), (2) or (3) to reflect the approximate fair
market value thereof, as mutually determined by this Corporation and the
holders of at least a majority of the voting power of all then outstanding
shares of such Preferred Stock.
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3. REDEMPTION.
(a) REDEMPTION AT THE OPTION OF THIS CORPORATION.
(i) Subject to the rights of series of Preferred Stock that may from
time to time come into existence, at any time on or prior to March 9,
2001, this Corporation may at any time it may lawfully do so, at the
option of the Board of Directors, redeem in whole or in part the Series
AA Preferred Stock by paying in cash therefor a sum equal to (A) the
Original Series AA Issue Price (subject to adjustment of such fixed
dollar amount for any stock splits, stock dividends, combinations,
recapitalizations or the like with respect to the Series AA Preferred
Stock), plus (B) accrued but unpaid dividends on such share (the "Early
Redemption Price"); provided that the closing sale price of this
Corporation's Common Stock on the Nasdaq National Market (or such other
national securities exchange on which the Common Stock is then listed)
has been at or above $52.00 (subject to adjustment of such fixed dollar
amount for any stock splits, stock dividends, combinations,
recapitalizations or the like with respect to the Common Stock) for
twenty (20) of thirty (30) consecutive trading days prior to the
applicable Corporation Redemption Date (as defined below), which thirty
(30) day period shall have ended not more than ten (10) trading days
prior to the date of the Corporation Redemption Notice (as defined
below). Any redemption effected pursuant to this subsection 3(a)(i) shall
be made on a pro rata basis among the holders of the Series AA Preferred
Stock in proportion to the number of shares of Series AA Preferred Stock
then held by them.
(ii) Subject to the rights of series of Preferred Stock that may from
time to time come into existence, at any time after March 9, 2001, this
Corporation may at any time it may lawfully do so, at the option of the
Board of Directors, redeem in whole or in part the Series AA Preferred
Stock by paying in cash therefor a sum equal to the Series AA Liquidation
Preference (the "Late Redemption Price"). Any redemption effected
pursuant to this subsection 3(a)(ii) shall be made on a pro rata basis
among the holders of the Series AA Preferred Stock in proportion to the
number of shares of Series AA Preferred Stock then held by them.
(iii) Subject to the rights of series of Preferred Stock that may
from time to time come into existence, at least twenty (20) but no more
than thirty (30) days prior to the date on which this Corporation
proposes to redeem any shares of Series AA Preferred Stock (each a
"Corporation Redemption Date"), written notice shall be personally
delivered, sent by reliable international courier, or sent by confirmed
facsimile to each holder of record (at the close of business on the
business day next preceding the day on which notice is given) of the
Series AA Preferred Stock to be redeemed, at the address last shown on
the records of this Corporation for such holder, notifying such holder of
the redemption to be effected on the applicable Corporation Redemption
Date, specifying the number of shares to be redeemed from such holder,
the applicable Corporation Redemption Date, the Early or Late Redemption
Price, as applicable, the place at which payment may be obtained and
calling upon such holder to surrender to this Corporation, in the manner
and at the place designated, his, her or its certificate or certificates
representing the shares to be redeemed (the "Corporation Redemption
Notice"). Except as provided in subsection 3(a)(iv) or 3(a)(v), on or
after each Corporation Redemption Date, each holder of Series AA
Preferred Stock to be redeemed on such Corporation Redemption Date shall
surrender to this Corporation the certificate or certificates
representing such shares, in the manner and at the place designated in
the Corporation Redemption Notice, and thereupon the Early or Late
Redemption Price, as applicable, of such shares shall be payable to the
order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall
be cancelled. In the event less than all the shares represented by any
such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. Any shares of Series AA Preferred
Stock that are not redeemed shall remain subject to redemption by this
Corporation pursuant to this Section 3(a).
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(iv) Each holder of Series AA Preferred Stock may, at anytime up to
two (2) trading days prior to the applicable Corporation Redemption Date,
elect to convert all shares of Series AA Preferred Stock designated for
redemption in the Corporation Redemption Notice into shares of Common
Stock pursuant to Section 4 below.
(v) From and after each Corporation Redemption Date, unless there
shall have been a default in payment of the Early or Late Redemption
Price, as applicable, all rights of the holders of shares of Series AA
Preferred Stock designated for redemption on such Corporation Redemption
Date in the Corporation Redemption Notice as holders of Series AA
Preferred Stock (except the right to receive the Early or Late Redemption
Price, as applicable, without interest upon surrender of their
certificate or certificates) shall cease with respect to such shares, and
such shares shall not thereafter be transferred on the books of this
Corporation or be deemed to be outstanding for any purpose whatsoever.
Subject to the rights of series of Preferred Stock that may from time to
time come into existence, if the funds of this Corporation legally
available for redemption of shares of Series AA Preferred Stock on any
Corporation Redemption Date are insufficient to redeem the total number
of shares of Series AA Preferred Stock to be redeemed on such date, those
funds that are legally available will be used to redeem the maximum
possible number of such shares ratably among the holder(s) of such shares
to be redeemed such that an equal percentage of the number of shares held
by each holder of Series AA Preferred Stock is redeemed (provided that
this Corporation shall have no obligation to issue or redeem any
fractional shares). The shares of Series AA Preferred Stock not redeemed
shall remain outstanding and entitled to all the rights and preferences
provided herein. Subject to the rights of series of Preferred Stock that
may from time to time come into existence, at any time thereafter when
additional funds of this Corporation are legally available for the
redemption of shares of Series AA Preferred Stock, such funds will
immediately be used to redeem the balance of the shares that this
Corporation has become obliged to redeem on any Corporation Redemption
Date but that it has not redeemed.
(b) REDEMPTION AT OPTION OF STOCKHOLDERS.
(i) Subject to the rights of series of Preferred Stock that may from
time to time come into existence, at any time on or after March 9, 2005,
provided that this Corporation shall have received a written request from
the holders of not less than a majority of the then outstanding Series AA
Preferred Stock that a specified percentage of such holders' shares of
Series AA Preferred Stock be redeemed, and concurrently with surrender by
such holders of the certificates representing such shares, this
Corporation shall, to the extent it may lawfully do so, redeem the shares
specified in such request by paying in cash therefor a sum per share
equal to (A) $30.59 per share of Series AA Preferred Stock (as adjusted
for any stock splits, stock dividends, recapitalizations or the like)
plus (B) accrued but unpaid dividends on such share (the "Series AA
Redemption Price"); provided, however, in no event shall this Corporation
be required to redeem more than 817,261 shares of Series AA Preferred
Stock (as adjusted for any stock splits, stock dividends,
recapitalizations or the like) during any twelve month period. Any
request made pursuant to this subsection 3(b)(i) shall be delivered at
least one hundred and eighty (180) days prior to the date on which the
redemption is requested to occur (a "Stockholder Redemption Date"). Any
redemption of Series AA Preferred Stock effected pursuant to this
subsection 3(b)(i) shall be made on a pro rata basis among the holders of
the Series AA Preferred Stock in proportion to the number of shares of
Series AA Preferred Stock proposed to be redeemed by such holders.
(ii) Subject to the rights of series of Preferred Stock that may from
time to time come into existence, at least twenty (20) but no more than
thirty (30) days prior to a Stockholder Redemption Date, written notice
shall be personally delivered, sent by reliable international courier, or
sent by confirmed facsimile to each holder of record (at the close of
business on the
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business day next preceding the day on which notice is given) of the
Series AA Preferred Stock to be redeemed, at the address last shown on
the records of this Corporation for such holder, notifying such holder of
the redemption to be effected on the Stockholder Redemption Date,
specifying the number of shares to be redeemed from such holder, the
Stockholder Redemption Date, the Series AA Redemption Price, the place at
which payment may be obtained and calling upon such holder to surrender
to this Corporation, in the manner and at the place designated, his, her
or its certificate or certificates representing the shares to be redeemed
(the "Stockholder Redemption Notice"). Except as provided in subsection
(3)(b)(iii), on or after the Stockholder Redemption Date, each holder of
Series AA Preferred Stock to be redeemed on such Redemption Date shall
surrender to this Corporation the certificate or certificates
representing such shares, in the manner and at the place designated in
the Stockholder Redemption Notice, and thereupon the Series AA Redemption
Price for such shares shall be payable to the order of the person whose
name appears on such certificate or certificates as the owner thereof and
each surrendered certificate shall be cancelled. In the event less than
all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
(iii) From and after the Stockholder Redemption Date, unless there
shall have been a default in payment of the Series AA Redemption Price,
all rights of the holders of shares of Series AA Preferred Stock
designated for redemption on the Stockholder Redemption Date in the
Stockholder Redemption Notice as holders of Series AA Preferred Stock
(except the right to receive the Series AA Redemption Price without
interest upon surrender of their certificate or certificates) shall cease
with respect to such shares, and such shares shall not thereafter be
transferred on the books of this Corporation or be deemed to be
outstanding for any purpose whatsoever. Subject to the rights of series
of Preferred Stock that may from time to time come into existence, if the
funds of this Corporation legally available for redemption of shares of
Series AA Preferred Stock on the Stockholder Redemption Date are
insufficient to redeem the total number of shares of Series AA Preferred
Stock to be redeemed on such date, those funds that are legally available
will be used to redeem the maximum possible number of such shares ratably
among the holders of such shares to be redeemed such that an equal
percentage of the number of shares held by each holder of Series AA
Preferred Stock is redeemed (provided that this Corporation shall have no
obligation to issue or redeem any fractional shares). The shares of
Series AA Preferred Stock not redeemed shall remain outstanding and
entitled to all the rights and preferences provided herein. Subject to
the rights of series of Preferred Stock that may from time to time come
into existence, at any time thereafter when additional funds of this
Corporation are legally available for the redemption of shares of Series
AA Preferred Stock, such funds will immediately be used to redeem the
balance of the shares that this Corporation has become obliged to redeem
on the Stockholder Redemption Date but that it has not redeemed.
4. CONVERSION. The holders of the Series AA Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):
(a) RIGHT TO CONVERT. Each share of Series AA Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the
Purchase Date of such share and on or prior to the second trading day prior
to the Redemption Date, if any, as may have been fixed in any Redemption
Notice with respect to such share of the Series AA Preferred Stock, at the
office of this Corporation or any transfer agent for such stock, into such
number of fully paid and nonassessable shares of Common Stock as is
determined by dividing the Original Series AA Issue Price by the Conversion
Price applicable to such share, determined as hereafter provided, in effect
on the date the certificate is surrendered for conversion (the "Conversion
Ratio"). The initial Conversion Price per share for shares of Series AA
Preferred Stock shall be $39.77 per share; provided, however, that the
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Conversion Price for the Series AA Preferred Stock shall be subject to
adjustment as set forth in subsection 4(d).
(b) AUTOMATIC CONVERSION. Each share of Series AA Preferred Stock shall
automatically be converted into shares of Common Stock at the Conversion
Ratio at the time in effect for such Series AA Preferred Stock immediately
upon the date specified by written consent or agreement of the holders of a
majority of the then outstanding shares of Series AA Preferred Stock.
(c) MECHANICS OF CONVERSION. Before any holder of Series AA Preferred
Stock shall be entitled to convert the same into shares of Common Stock, he
or she shall surrender the certificate or certificates therefor, duly
endorsed, at the office of this Corporation or of any transfer agent for the
Series AA Preferred Stock, and shall give written notice to this Corporation
at its principal corporate office, of the election to convert the same and
shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. This Corporation
shall, as soon as practicable thereafter, issue and deliver at such office
to such holder of Series AA Preferred Stock, or to the nominee or nominees
of such holder, a certificate or certificates for the number of shares of
Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Series AA
Preferred Stock to be converted, and the person or persons entitled to
receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock as of such date. If the conversion is in connection with an
underwritten offering of securities registered pursuant to the Securities
Act of 1933, the conversion may, at the option of any holder tendering
Series AA Preferred Stock for conversion, be conditioned upon the closing
with the underwriters of the sale of securities pursuant to such offering,
in which event the persons entitled to receive the Common Stock upon
conversion of the Series AA Preferred Stock shall not be deemed to have
converted such Series AA Preferred Stock until immediately prior to the
closing of such sale of securities.
(d) CONVERSION PRICE ADJUSTMENTS OF PREFERRED STOCK FOR SPLITS, STOCK
DIVIDENDS, COMBINATIONS AND THE LIKE. The Conversion Price of the Series AA
Preferred Stock shall be subject to adjustment from time to time as follows:
(i) In the event this Corporation should at any time or from time to
time after the Purchase Date fix a record date for the effectuation of a
split or subdivision of the outstanding shares of Common Stock or the
determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or
other securities or rights convertible into, or entitling the holder
thereof to receive directly or indirectly, additional shares of Common
Stock (hereinafter referred to as "Common Stock Equivalents") without
payment of any consideration by such holder for the additional shares of
Common Stock or the Common Stock Equivalents (including the additional
shares of Common Stock issuable upon conversion or exercise thereof),
then, as of such record date (or the date of such dividend distribution,
split or subdivision if no record date is fixed), the Conversion Price of
the Series AA Preferred Stock shall be appropriately decreased so that
the number of shares of Common Stock issuable on conversion of each share
of such series shall be increased in proportion to such increase of the
aggregate of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents.
(ii) If the number of shares of Common Stock outstanding at any time
after the Purchase Date is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Series AA Preferred Stock shall
be appropriately increased so that the number of shares of Common Stock
issuable on conversion of each share of such series shall be decreased in
proportion to such decrease in outstanding shares.
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(e) OTHER DISTRIBUTIONS. In the event this Corporation shall declare a
distribution payable in securities of other persons, evidences of
indebtedness issued by this Corporation or other persons, assets (excluding
cash dividends) or other options or rights not referred to in subsection
4(d)(i), then, in each such case for the purpose of this Subsection 4(e),
the holders of the Series AA Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders
of the number of shares of Common Stock of this Corporation into which their
shares of Series AA Preferred Stock are convertible as of the record date
fixed for the determination of the holders of Common Stock of this
Corporation entitled to receive such distribution.
(f) RECAPITALIZATIONS. If at any time or from time to time there shall
be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere
in this Section 4 or Section 2) provision shall be made so that the holders
of the Series AA Preferred Stock shall thereafter be entitled to receive
upon conversion of the Series AA Preferred Stock the number of shares of
stock or other securities or property of this Corporation or otherwise, to
which a holder of Common Stock deliverable upon conversion would have been
entitled on such recapitalization. In any such case, appropriate adjustment
shall be made in the application of the provisions of this Section 4 with
respect to the rights of the holders of the Series AA Preferred Stock after
the recapitalization to the end that the provisions of this Section 4
(including adjustment of the Conversion Price then in effect and the number
of shares purchasable upon conversion of the Series AA Preferred Stock)
shall be applicable after that event as nearly equivalent as may be
practicable.
(g) NO IMPAIRMENT. This Corporation will not, by amendment of its
Amended and Restated Articles of Incorporation or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to
be observed or performed hereunder by this Corporation, but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series AA Preferred Stock against impairment.
(h) NO FRACTIONAL SHARES AND CERTIFICATE AS TO ADJUSTMENTS.
(i) No fractional shares shall be issued upon the conversion of any
share or shares of the Series AA Preferred Stock, and the number of
shares of Common Stock to be issued shall be rounded down to the nearest
whole share. This Corporation shall provide the holder of any fractional
interest with an amount of cash equal to the fair market value of one
share of this Corporation's Common Stock multiplied by such fractional
interest. Whether or not fractional shares are issuable upon such
conversion shall be determined on the basis of the total number of shares
of Series AA Preferred Stock the holder is at the time converting into
Common Stock and the number of shares of Common Stock issuable upon such
aggregate conversion.
(ii) Upon the occurrence of each adjustment or readjustment of the
Conversion Price of Series AA Preferred Stock pursuant to this Section 4,
this Corporation, at its expense, shall promptly compute such adjustment
or readjustment in accordance with the terms hereof and prepare and
furnish to each holder of Series AA Preferred Stock a certificate setting
forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based. This Corporation
shall, upon the written request at any time of any holder of Series AA
Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (A) such adjustment and readjustment, (B) the
Conversion Price for such series of Preferred Stock at the time in
effect, and (C) the number of shares of Common Stock and the amount, if
any, of other property that at the time would be received upon the
conversion of a share of Series AA Preferred Stock.
8
<PAGE>
(i) NOTICES OF RECORD DATE. In the event of any taking by this
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any
class or any other securities or property, or to receive any other right,
this Corporation shall mail to each holder of Series AA Preferred Stock, at
least twenty (20) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken for the purpose
of such dividend, distribution or right, and the amount and character of
such dividend, distribution or right.
(j) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. This Corporation
shall at all times reserve and keep available out of its authorized but
unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Series AA Preferred Stock, such number of
its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series AA Preferred
Stock; and if at any time the number of authorized but unissued shares of
Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Series AA Preferred Stock, in addition to such
other remedies as shall be available to the holder of such Preferred Stock,
this Corporation will take such corporate action as may, in the opinion of
its counsel, be necessary to increase its authorized but unissued shares of
Common Stock to such number of shares as shall be sufficient for such
purposes, including, without limitation, engaging in best efforts to obtain
the requisite stockholder approval of any necessary amendment to this
Certificate of Designation or the Amended and Restated Articles of
Incorporation.
(k) NOTICES. Any notice required by the provisions of this Section 4 to
be given to the holders of shares of Series AA Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of
this Corporation.
5. VOTING RIGHTS. The holder of each share of Series AA Preferred Stock
shall have the right to one vote for each share of Common Stock into which such
Series AA Preferred Stock could then be converted at the record date for
determination of the stockholders entitled to vote thereon, and with respect to
such vote, such holder shall have full voting rights and powers equal to the
voting rights and powers of the holders of Common Stock, and shall be entitled,
notwithstanding any provision hereof, to notice of any stockholders' meeting in
accordance with the bylaws of this Corporation, and shall be entitled to vote,
together with holders of Common Stock, with respect to any question upon which
holders of Common Stock have the right to vote and otherwise as required by law.
Fractional votes shall not, however, be permitted and any fractional voting
rights available on an as-converted basis (after aggregating all shares into
which shares of Series AA Preferred Stock held by each holder could be
converted) shall be rounded to the nearest whole number (with one-half be in
grounded upward).
SIXTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:
A. The business and affairs of the Corporation shall be managed by or
under the direction of the board of directors. In addition to the powers and
authority expressly conferred upon them by statute or by this Certificate of
Incorporation or the Bylaws of the Corporation, the directors are hereby
empowered to exercise all such powers and do all such acts and things as may
be exercised or done by the Corporation.
B. The directors of the Corporation need not be elected by written
ballot unless the Bylaws of the Corporation so provide. Directors need not
be stockholders.
9
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C. Any action required or permitted to be taken by the stockholders of
the Corporation must be effected at a duly called annual or special meeting
of stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders.
D. Advance notice of stockholder nominations for the election of
directors and of business to be brought by stockholders before any meeting
of the stockholders of the Corporation shall be given in the manner provided
in the Bylaws of the Corporation.
E. Special meetings of stockholders of the Corporation may be called
only by the Chairman of the Board or the President or by the board of
directors acting pursuant to a resolution adopted by a majority of the
entire board of directors. For purposes of this Certificate of
Incorporation, the term "entire board of directors" shall mean the total
number of authorized directors whether or not there exist any vacancies in
previously authorized directorships.
SEVENTH: The board of directors is expressly empowered to adopt, alter,
amend or repeal Bylaws of the Corporation. Any adoption, alteration, amend
mentor repeal of the Bylaws of the Corporation by the board of directors shall
require the approval of a majority of the entire board of directors. The
stockholders shall also have power to adopt, amend or repeal the Bylaws of the
Corporation; provided, however, that, in addition to any vote of the holders of
any class or series of stock of the Corporation required by law or by this
Certificate of Incorporation, the affirmative vote of the holders of at least a
majority of the voting power of all of the then-outstanding shares of the
capital stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to adopt, alter,
amend or repeal any provision of the Bylaws of the Corporation.
EIGHTH: The corporation reserves the right to amend and repeal any provision
contained in this Certificate of Incorporation in the manner from time to time
prescribed by the laws of the State of Delaware. All rights herein conferred are
granted subject to this reservation.
NINTH: To the fullest extent permitted by Delaware General Corporation Law,
a director of the corporation shall not be personally liable to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or
(iv) for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law is amended to authorize
corporate action further eliminating or limiting the personal liability of
directors, then the liability of a director of the corporation shall be
eliminated or limited to the fullest extent permitted by the Delaware General
Corporation Law, as so amended. Any repeal or modification of this provision
shall not adversely affect any right or protection of a director of the
corporation existing at the time of such repeal or modification.
IN WITNESS WHEREOF, the undersigned have executed this Certificate this
day of , 1999.
------------------------------------------------------------------
Stephen P.A. Fodor
PRESIDENT
ATTEST:
------------------------------------------------------------------
SECRETARY
10
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APPENDIX B
AFFYMETRIX, INC.
2000 EQUITY INCENTIVE PLAN
(AS ADOPTED EFFECTIVE MARCH 9, 2000)
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<C> <S> <C>
ARTICLE 1. INTRODUCTION................................................... 1
ARTICLE 2. ADMINISTRATION................................................. 1
2.1 Committee Composition....................................... 1
2.2 Committee Responsibilities.................................. 1
2.3 Committee for Non-Officer Grants............................ 1
ARTICLE 3. SHARES AVAILABLE FOR GRANTS.................................... 1
3.1 Basic Limitation............................................ 1
3.2 Additional Shares........................................... 1
3.3 Dividend Equivalents........................................ 2
ARTICLE 4. ELIGIBILITY.................................................... 2
4.1 Incentive Stock Options..................................... 2
4.2 Other Grants................................................ 2
ARTICLE 5. OPTIONS........................................................ 2
5.1 Stock Option Agreement...................................... 2
5.2 Number of Shares............................................ 2
5.3 Exercise Price.............................................. 2
5.4 Exercisability and Term..................................... 2
5.5 Effect of Change in Control................................. 2
5.6 Modification or Assumption of Options....................... 3
5.7 Buyout Provisions........................................... 3
ARTICLE 6. PAYMENT FOR OPTION SHARES...................................... 3
6.1 General Rule................................................ 3
6.2 Surrender of Stock.......................................... 3
6.3 Exercise/Sale............................................... 3
6.4 Exercise/Pledge............................................. 3
6.5 Promissory Note............................................. 3
6.6 Other Forms of Payment...................................... 3
ARTICLE 7. STOCK APPRECIATION RIGHTS...................................... 4
7.1 SAR Agreement............................................... 4
7.2 Number of Shares............................................ 4
7.3 Exercise Price.............................................. 4
7.4 Exercisability and Term..................................... 4
7.5 Effect of Change in Control................................. 4
7.6 Exercise of SARs............................................ 4
7.7 Modification or Assumption of SARs.......................... 4
ARTICLE 8. RESTRICTED SHARES.............................................. 4
8.1 Restricted Stock Agreement.................................. 4
8.2 Payment for Awards.......................................... 5
8.3 Vesting Conditions.......................................... 5
8.4 Voting and Dividend Rights.................................. 5
</TABLE>
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<TABLE>
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ARTICLE 9. STOCK UNITS.................................................... 5
9.1 Stock Unit Agreement........................................ 5
9.2 Payment for Awards.......................................... 5
9.3 Vesting Conditions.......................................... 5
9.4 Voting and Dividend Rights.................................. 5
9.5 Form and Time of Settlement of Stock Units.................. 6
9.6 Death of Recipient.......................................... 6
9.7 Creditors' Rights........................................... 6
ARTICLE 10. PROTECTION AGAINST DILUTION................................... 6
10.1 Adjustments................................................. 6
10.2 Dissolution or Liquidation.................................. 6
10.3 Reorganizations............................................. 6
ARTICLE 11. DEFERRAL OF AWARDS............................................ 7
ARTICLE 12. AWARDS UNDER OTHER PLANS...................................... 7
ARTICLE 13. PAYMENT OF DIRECTOR'S FEES IN SECURITIES...................... 7
13.1 Effective Date.............................................. 7
13.2 Elections to Receive NSOs, Restricted Shares or Stock
Units....................................................... 7
13.3 Number and Terms of NSOs, Restricted Shares or Stock
Units....................................................... 7
ARTICLE 14. LIMITATION ON RIGHTS.......................................... 8
14.1 Retention Rights............................................ 8
14.2 Stockholders' Rights........................................ 8
14.3 Regulatory Requirements..................................... 8
ARTICLE 15. WITHHOLDING TAXES............................................. 8
15.1 General..................................................... 8
15.2 Share Withholding........................................... 8
ARTICLE 16. FUTURE OF THE PLAN............................................ 8
16.1 Term of the Plan............................................ 8
16.2 Amendment or Termination.................................... 8
ARTICLE 17. LIMITATION ON PAYMENTS........................................ 8
17.1 Scope of Limitation......................................... 8
17.2 Basic Rule.................................................. 9
17.3 Reduction of Payments....................................... 9
17.4 Overpayments and Underpayments.............................. 9
17.5 Related Corporations........................................ 10
ARTICLE 18. DEFINITIONS................................................... 10
ARTICLE 19. EXECUTION..................................................... 12
</TABLE>
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AFFYMETRIX, INC.
2000 EQUITY INCENTIVE PLAN
ARTICLE 1. INTRODUCTION.
The Plan was adopted by the Board effective March 9, 2000. The purpose of
the Plan is to promote the long-term success of the Company and the creation of
stockholder value by (a) encouraging Employees, Outside Directors and
Consultants to focus on critical long-range objectives, (b) encouraging the
attraction and retention of Employees, Outside Directors and Consultants with
exceptional qualifications and (c) linking Employees, Outside Directors and
Consultants directly to stockholder interests through increased stock ownership.
The Plan seeks to achieve this purpose by providing for Awards in the form of
Restricted Shares, Stock Units, Options (which may constitute incentive stock
options or nonstatutory stock options) or stock appreciation rights.
The Plan shall be governed by, and construed in accordance with, the laws of
the State of Delaware (except for choice-of-law provisions).
ARTICLE 2. ADMINISTRATION.
2.1 COMMITTEE COMPOSITION. The Plan shall be administered by the
Committee. The Committee shall consist exclusively of two or more directors of
the Company, who shall be appointed by the Board. In addition, except as
otherwise determined by the Board, the composition of the Committee shall
satisfy:
(a) Such requirements as the Securities and Exchange Commission may
establish for administrators acting under plans intended to qualify for
exemption under Rule 16b-3 (or its successor) under the Exchange Act; and
(b) Such requirements as the Internal Revenue Service may establish for
outside directors acting under plans intended to qualify for exemption under
section 162(m)(4)(C) of the Code.
2.2 COMMITTEE RESPONSIBILITIES. The Committee shall (a) select the
Employees, Outside Directors and Consultants who are to receive Awards under the
Plan, (b) determine the type, number, vesting requirements and other features
and conditions of such Awards, (c) interpret the Plan and (d) make all other
decisions relating to the operation of the Plan. The Committee may adopt such
rules or guidelines as it deems appropriate to implement the Plan. The
Committee's determinations under the Plan shall be final and binding on all
persons.
2.3 COMMITTEE FOR NON-OFFICER GRANTS. The Board may also appoint another
committee of the Board, which shall be composed of one or more directors of the
Company who need not satisfy the requirements of Section 2.1. Such other
committee may administer the Plan with respect to Employees and Consultants who
are not considered officers or directors of the Company under section 16 of the
Exchange Act, may grant Awards under the Plan to such Employees and Consultants
and may determine all features and conditions of such Awards. Within the
limitations of this Section 2.3, any reference in the Plan to the Committee
shall include such secondary committee.
ARTICLE 3. SHARES AVAILABLE FOR GRANTS.
3.1 BASIC LIMITATION. Common Shares issued pursuant to the Plan may be
authorized but unissued shares or treasury shares. The aggregate number of
Options, SARs, Stock Units and Restricted Shares awarded under the Plan shall
not exceed (a) 2,500,000 plus (b) the additional Common Shares described in
Section 3.2. The limitations of this Section 3.1 and Section 3.2 shall be
subject to adjustment pursuant to Article 10.
3.2 ADDITIONAL SHARES. If Restricted Shares are forfeited, then such
Common Shares shall again become available for Awards under the Plan. If Stock
Units, Options or SARs are forfeited or terminate for any other reason before
being exercised, then the corresponding Common Shares shall again become
available for Awards under the Plan. If Stock Units are settled, then only the
number of Common Shares (if any) actually issued in settlement of such Stock
Units shall reduce the number available under Section 3.1 and the balance shall
again become available for Awards under the Plan. If SARs are exercised,
<PAGE>
then only the number of Common Shares (if any) actually issued in settlement of
such SARs shall reduce the number available under Section 3.1 and the balance
shall again become available for Awards under the Plan. The foregoing
notwithstanding, the aggregate number of Common Shares that may be issued under
the Plan upon the exercise of ISOs shall not be increased when Restricted Shares
are forfeited or Common Shares are not issued pursuant to Stock Units, Options
or SARs.
3.3 DIVIDEND EQUIVALENTS. Any dividend equivalents paid or credited under
the Plan shall not be applied against the number of Restricted Shares, Stock
Units, Options or SARs available for Awards, whether or not such dividend
equivalents are converted into Stock Units.
ARTICLE 4. ELIGIBILITY.
4.1 INCENTIVE STOCK OPTIONS. Only Employees who are common-law employees
of the Company, a Parent or a Subsidiary shall be eligible for the grant of
ISOs. In addition, an Employee who owns more than 10% of the total combined
voting power of all classes of outstanding stock of the Company or any of its
Parents or Subsidiaries shall not be eligible for the grant of an ISO unless the
requirements set forth in section 422(c)(6) of the Code are satisfied.
4.2 OTHER GRANTS. Employees, Outside Directors and Consultants shall be
eligible for the grant of Restricted Shares, Stock Units, NSOs or SARs.
ARTICLE 5. OPTIONS.
5.1 STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the Company.
Such Option shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are not inconsistent with the Plan. The Stock
Option Agreement shall specify whether the Option is an ISO or an NSO. The
provisions of the various Stock Option Agreements entered into under the Plan
need not be identical. Options may be granted in consideration of a reduction in
the Optionee's other compensation. A Stock Option Agreement may provide that a
new Option will be granted automatically to the Optionee when he or she
exercises a prior Option and pays the Exercise Price in the form described in
Section 6.2.
5.2 NUMBER OF SHARES. Each Stock Option Agreement shall specify the number
of Common Shares subject to the Option and shall provide for the adjustment of
such number in accordance with Article 10. Options granted to any Optionee in a
single fiscal year of the Company shall not cover more than 100,000 Common
Shares. The limitation set forth in the preceding sentence shall be subject to
adjustment in accordance with Article 10.
5.3 EXERCISE PRICE. Each Stock Option Agreement shall specify the Exercise
Price; provided that the Exercise Price shall in no event be less than 100% of
the Fair Market Value of a Common Share on the date of grant. In the case of an
NSO, a Stock Option Agreement may specify an Exercise Price that varies in
accordance with a predetermined formula while the NSO is outstanding.
5.4 EXERCISABILITY AND TERM. Each Stock Option Agreement shall specify the
date or event when all or any installment of the Option is to become
exercisable. The Stock Option Agreement shall also specify the term of the
Option; provided that the term of an ISO shall in no event exceed 10 years from
the date of grant. A Stock Option Agreement may provide for accelerated
exercisability in the event of the Optionee's death, disability or retirement or
other events and may provide for expiration prior to the end of its term in the
event of the termination of the Optionee's service. Options may be awarded in
combination with SARs, and such an Award may provide that the Options will not
be exercisable unless the related SARs are forfeited.
5.5 EFFECT OF CHANGE IN CONTROL. The Committee may determine, at the time
of granting an Option or thereafter, that such Option shall become exercisable
as to all or part of the Common Shares subject to such Option in the event that
a Change in Control occurs with respect to the Company or in the event that
2
<PAGE>
the Optionee is subject to an Involuntary Termination after a Change in Control.
In addition, acceleration of exercisability may be required under Section 10.3.
5.6 MODIFICATION OR ASSUMPTION OF OPTIONS. Within the limitations of the
Plan, the Committee may modify, extend or assume outstanding options or may
accept the cancellation of outstanding options (whether granted by the Company
or by another issuer) in return for the grant of new options for the same or a
different number of shares and at the same or a different exercise price. The
foregoing notwithstanding, no modification of an Option shall, without the
consent of the Optionee, alter or impair his or her rights or obligations under
such Option.
5.7 BUYOUT PROVISIONS. The Committee may at any time (a) offer to buy out
for a payment in cash or cash equivalents an Option previously granted or
(b) authorize an Optionee to elect to cash out an Option previously granted, in
either case at such time and based upon such terms and conditions as the
Committee shall establish.
ARTICLE 6. PAYMENT FOR OPTION SHARES.
6.1 GENERAL RULE. The entire Exercise Price of Common Shares issued upon
exercise of Options shall be payable in cash or cash equivalents at the time
when such Common Shares are purchased, except as follows:
(a) In the case of an ISO granted under the Plan, payment shall be made
only pursuant to the express provisions of the applicable Stock Option
Agreement. The Stock Option Agreement may specify that payment may be made
in any form(s) described in this Article 6.
(b) In the case of an NSO, the Committee may at any time accept payment
in any form(s) described in this Article 6.
6.2 SURRENDER OF STOCK. To the extent that this Section 6.2 is applicable,
all or any part of the Exercise Price may be paid by surrendering, or attesting
to the ownership of, Common Shares that are already owned by the Optionee. Such
Common Shares shall be valued at their Fair Market Value on the date when the
new Common Shares are purchased under the Plan. The Optionee shall not
surrender, or attest to the ownership of, Common Shares in payment of the
Exercise Price if such action would cause the Company to recognize compensation
expense (or additional compensation expense) with respect to the Option for
financial reporting purposes.
6.3 EXERCISE/SALE. To the extent that this Section 6.3 is applicable, all
or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) an irrevocable direction to a
securities broker approved by the Company to sell all or part of the Common
Shares being purchased under the Plan and to deliver all or part of the sales
proceeds to the Company.
6.4 EXERCISE/PLEDGE. To the extent that this Section 6.4 is applicable,
all or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) an irrevocable direction to
pledge all or part of the Common Shares being purchased under the Plan to a
securities broker or lender approved by the Company, as security for a loan, and
to deliver all or part of the loan proceeds to the Company.
6.5 PROMISSORY NOTE. To the extent that this Section 6.5 is applicable,
all or any part of the Exercise Price and any withholding taxes may be paid by
delivering (on a form prescribed by the Company) a full-recourse promissory
note. However, the par value of the Common Shares being purchased under the
Plan, if newly issued, shall be paid in cash or cash equivalents.
6.6 OTHER FORMS OF PAYMENT. To the extent that this Section 6.6 is
applicable, all or any part of the Exercise Price and any withholding taxes may
be paid in any other form that is consistent with applicable laws, regulations
and rules.
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ARTICLE 7. STOCK APPRECIATION RIGHTS.
7.1 SAR AGREEMENT. Each grant of an SAR under the Plan shall be evidenced
by an SAR Agreement between the Optionee and the Company. Such SAR shall be
subject to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan. The provisions of the various SAR
Agreements entered into under the Plan need not be identical. SARs may be
granted in consideration of a reduction in the Optionee's other compensation.
7.2 NUMBER OF SHARES. Each SAR Agreement shall specify the number of
Common Shares to which the SAR pertains and shall provide for the adjustment of
such number in accordance with Article 10. SARs granted to any Optionee in a
single calendar year shall in no event pertain to more than 100,000 Common
Shares. The limitation set forth in the preceding sentence shall be subject to
adjustment in accordance with Article 10.
7.3 EXERCISE PRICE. Each SAR Agreement shall specify the Exercise Price.
An SAR Agreement may specify an Exercise Price that varies in accordance with a
predetermined formula while the SAR is outstanding.
7.4 EXERCISABILITY AND TERM. Each SAR Agreement shall specify the date
when all or any installment of the SAR is to become exercisable. The SAR
Agreement shall also specify the term of the SAR. An SAR Agreement may provide
for accelerated exercisability in the event of the Optionee's death, disability
or retirement or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Optionee's service. SARs may be
awarded in combination with Options, and such an Award may provide that the SARs
will not be exercisable unless the related Options are forfeited. An SAR may be
included in an ISO only at the time of grant but may be included in an NSO at
the time of grant or thereafter. An SAR granted under the Plan may provide that
it will be exercisable only in the event of a Change in Control.
7.5 EFFECT OF CHANGE IN CONTROL. The Committee may determine, at the time
of granting an SAR or thereafter, that such SAR shall become fully exercisable
as to all Common Shares subject to such SAR in the event that the Company is
subject to a Change in Control or in the event that the Optionee is subject to
an Involuntary Termination after a Change in Control. In addition, acceleration
of exercisability may be required under Section 10.3.
7.6 EXERCISE OF SARS. Upon exercise of an SAR, the Optionee (or any person
having the right to exercise the SAR after his or her death) shall receive from
the Company (a) Common Shares, (b) cash or (c) a combination of Common Shares
and cash, as the Committee shall determine. The amount of cash and/or the Fair
Market Value of Common Shares received upon exercise of SARs shall, in the
aggregate, be equal to the amount by which the Fair Market Value (on the date of
surrender) of the Common Shares subject to the SARs exceeds the Exercise Price.
If, on the date when an SAR expires, the Exercise Price under such SAR is less
than the Fair Market Value on such date but any portion of such SAR has not been
exercised or surrendered, then such SAR shall automatically be deemed to be
exercised as of such date with respect to such portion.
7.7 MODIFICATION OR ASSUMPTION OF SARS. Within the limitations of the
Plan, the Committee may modify, extend or assume outstanding SARs or may accept
the cancellation of outstanding SARs (whether granted by the Company or by
another issuer) in return for the grant of new SARs for the same or a different
number of shares and at the same or a different exercise price. The foregoing
notwithstanding, no modification of an SAR shall, without the consent of the
Optionee, alter or impair his or her rights or obligations under such SAR.
ARTICLE 8. RESTRICTED SHARES.
8.1 RESTRICTED STOCK AGREEMENT. Each grant of Restricted Shares under the
Plan shall be evidenced by a Restricted Stock Agreement between the recipient
and the Company. Such Restricted Shares shall be
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subject to all applicable terms of the Plan and may be subject to any other
terms that are not inconsistent with the Plan. The provisions of the various
Restricted Stock Agreements entered into under the Plan need not be identical.
8.2 PAYMENT FOR AWARDS. Subject to the following sentence, Restricted
Shares may be sold or awarded under the Plan for such consideration as the
Committee may determine, including (without limitation) cash, cash equivalents,
full-recourse promissory notes, past services and future services. To the extent
that an Award consists of newly issued Restricted Shares, the consideration
shall consist exclusively of cash, cash equivalents or past services rendered to
the Company (or a Parent or Subsidiary) or, for the amount in excess of the par
value of such newly issued Restricted Shares, full-recourse promissory notes, as
the Committee may determine.
8.3 VESTING CONDITIONS. Each Award of Restricted Shares may be subject to
vesting as determined by the Committee. Vesting shall occur, in full or in
installments, upon satisfaction of the conditions specified in the Restricted
Stock Agreement. A Restricted Stock Agreement may provide for accelerated
vesting in the event of the Participant's death, disability or retirement or
other events. The Committee may determine, at the time of granting Restricted
Shares or thereafter, that all or part of such Restricted Shares shall become
vested in the event that a Change in Control occurs with respect to the Company
or in the event that the Participant is subject to an Involuntary Termination
after a Change in Control.
8.4 VOTING AND DIVIDEND RIGHTS. The holders of Restricted Shares awarded
under the Plan shall have the same voting, dividend and other rights as the
Company's other stockholders. A Restricted Stock Agreement, however, may require
that the holders of Restricted Shares invest any cash dividends received in
additional Restricted Shares. Such additional Restricted Shares shall be subject
to the same conditions and restrictions as the Award with respect to which the
dividends were paid.
ARTICLE 9. STOCK UNITS.
9.1 STOCK UNIT AGREEMENT. Each grant of Stock Units under the Plan shall
be evidenced by a Stock Unit Agreement between the recipient and the Company.
Such Stock Units shall be subject to all applicable terms of the Plan and may be
subject to any other terms that are not inconsistent with the Plan. The
provisions of the various Stock Unit Agreements entered into under the Plan need
not be identical. Stock Units may be granted in consideration of a reduction in
the recipient's other compensation.
9.2 PAYMENT FOR AWARDS. To the extent that an Award is granted in the form
of Stock Units, no cash consideration shall be required of the Award recipients.
9.3 VESTING CONDITIONS. Each Award of Stock Units may be subject to
vesting as determined by the Committee. Vesting shall occur, in full or in
installments, upon satisfaction of the conditions specified in the Stock Unit
Agreement. A Stock Unit Agreement may provide for accelerated vesting in the
event of the Participant's death, disability or retirement or other events. The
Committee may determine, at the time of granting Stock Units or thereafter, that
all or part of such Stock Units shall become vested in the event that the
Company is subject to a Change in Control or in the event that the Participant
is subject to an Involuntary Termination after a Change in Control. In addition,
acceleration of vesting may be required under Section 10.3.
9.4 VOTING AND DIVIDEND RIGHTS. The holders of Stock Units shall have no
voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under
the Plan may, at the Committee's discretion, carry with it a right to dividend
equivalents. Such right entitles the holder to be credited with an amount equal
to all cash dividends paid on one Common Share while the Stock Unit is
outstanding. Dividend equivalents may be converted into additional Stock Units.
Settlement of dividend equivalents may be made in the form of cash, in the form
of Common Shares, or in a combination of both. Prior to distribution, any
dividend equivalents which are not paid shall be subject to the same conditions
and restrictions as the Stock Units to which they attach.
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9.5 FORM AND TIME OF SETTLEMENT OF STOCK UNITS. Settlement of vested Stock
Units may be made in the form of (a) cash, (b) Common Shares or (c) any
combination of both, as determined by the Committee. The actual number of Stock
Units eligible for settlement may be larger or smaller than the number included
in the original Award, based on predetermined performance factors. Methods of
converting Stock Units into cash may include (without limitation) a method based
on the average Fair Market Value of Common Shares over a series of trading days.
Vested Stock Units may be settled in a lump sum or in installments. The
distribution may occur or commence when all vesting conditions applicable to the
Stock Units have been satisfied or have lapsed, or it may be deferred to any
later date. The amount of a deferred distribution may be increased by an
interest factor or by dividend equivalents. Until an Award of Stock Units is
settled, the number of such Stock Units shall be subject to adjustment pursuant
to Article 10.
9.6 DEATH OF RECIPIENT. Any Stock Units Award that becomes payable after
the recipient's death shall be distributed to the recipient's beneficiary or
beneficiaries. Each recipient of a Stock Units Award under the Plan shall
designate one or more beneficiaries for this purpose by filing the prescribed
form with the Company. A beneficiary designation may be changed by filing the
prescribed form with the Company at any time before the Award recipient's death.
If no beneficiary was designated or if no designated beneficiary survives the
Award recipient, then any Stock Units Award that becomes payable after the
recipient's death shall be distributed to the recipient's estate.
9.7 CREDITORS' RIGHTS. A holder of Stock Units shall have no rights other
than those of a general creditor of the Company. Stock Units represent an
unfunded and unsecured obligation of the Company, subject to the terms and
conditions of the applicable Stock Unit Agreement.
ARTICLE 10. PROTECTION AGAINST DILUTION.
10.1 ADJUSTMENTS. In the event of a subdivision of the outstanding Common
Shares, a declaration of a dividend payable in Common Shares or a combination or
consolidation of the outstanding Common Shares (by reclassification or
otherwise) into a lesser number of Common Shares, corresponding adjustments
shall automatically be made in each of the following:
(a) The number of Options, SARs, Restricted Shares and Stock Units
available for future Awards under Article 3;
(b) The limitations set forth in Sections 5.2 and 7.2;
(c) The number of Common Shares covered by each outstanding Option and
SAR;
(d) The Exercise Price under each outstanding Option and SAR; or
(e) The number of Stock Units included in any prior Award which has not
yet been settled.
In the event of a declaration of an extraordinary dividend payable in a form
other than Common Shares in an amount that has a material effect on the price of
Common Shares, a recapitalization, a spin-off or a similar occurrence, the
Committee shall make such adjustments as it, in its sole discretion, deems
appropriate in one or more of the foregoing. Except as provided in this
Article 10, a Participant shall have no rights by reason of any issuance by the
Company of stock of any class or securities convertible into stock of any class,
any subdivision or consolidation of shares of stock of any class, the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class.
10.2 DISSOLUTION OR LIQUIDATION. To the extent not previously exercised or
settled, Options, SARs and Stock Units shall terminate immediately prior to the
dissolution or liquidation of the Company.
10.3 REORGANIZATIONS. In the event that the Company is a party to a merger
or other reorganization, outstanding Awards shall be subject to the agreement of
merger or reorganization. Such agreement shall provide for (a) the continuation
of the outstanding Awards by the Company, if the Company is a surviving
corporation, (b) the assumption of the outstanding Awards by the surviving
corporation or its
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parent or subsidiary, (c) the substitution by the surviving corporation or its
parent or subsidiary of its own awards for the outstanding Awards, (d) full
exercisability or vesting and accelerated expiration of the outstanding Awards
or (e) settlement of the full value of the outstanding Awards in cash or cash
equivalents followed by cancellation of such Awards.
ARTICLE 11. DEFERRAL OF AWARDS.
The Committee (in its sole discretion) may permit or require a Participant
to:
(a) Have cash that otherwise would be paid to such Participant as a
result of the exercise of an SAR or the settlement of Stock Units credited
to a deferred compensation account established for such Participant by the
Committee as an entry on the Company's books;
(b) Have Common Shares that otherwise would be delivered to such
Participant as a result of the exercise of an Option or SAR converted into
an equal number of Stock Units; or
(c) Have Common Shares that otherwise would be delivered to such
Participant as a result of the exercise of an Option or SAR or the
settlement of Stock Units converted into amounts credited to a deferred
compensation account established for such Participant by the Committee as an
entry on the Company's books. Such amounts shall be determined by reference
to the Fair Market Value of such Common Shares as of the date when they
otherwise would have been delivered to such Participant.
A deferred compensation account established under this Article 11 may be
credited with interest or other forms of investment return, as determined by the
Committee. A Participant for whom such an account is established shall have no
rights other than those of a general creditor of the Company. Such an account
shall represent an unfunded and unsecured obligation of the Company and shall be
subject to the terms and conditions of the applicable agreement between such
Participant and the Company. If the deferral or conversion of Awards is
permitted or required, the Committee (in its sole discretion) may establish
rules, procedures and forms pertaining to such Awards, including (without
limitation) the settlement of deferred compensation accounts established under
this Article 11.
ARTICLE 12. AWARDS UNDER OTHER PLANS.
The Company may grant awards under other plans or programs. Such awards may
be settled in the form of Common Shares issued under this Plan. Such Common
Shares shall be treated for all purposes under the Plan like Common Shares
issued in settlement of Stock Units and shall, when issued, reduce the number of
Common Shares available under Article 3.
ARTICLE 13. PAYMENT OF DIRECTOR'S FEES IN SECURITIES.
13.1 EFFECTIVE DATE. No provision of this Article 13 shall be effective
unless and until the Board has determined to implement such provision.
13.2 ELECTIONS TO RECEIVE NSOS, RESTRICTED SHARES OR STOCK UNITS. An
Outside Director may elect to receive his or her annual retainer payments and/or
meeting fees from the Company in the form of cash, NSOs, Restricted Shares or
Stock Units, or a combination thereof, as determined by the Board. Such NSOs,
Restricted Shares and Stock Units shall be issued under the Plan.
13.3 NUMBER AND TERMS OF NSOS, RESTRICTED SHARES OR STOCK UNITS. The
number of NSOs, Restricted Shares or Stock Units to be granted to Outside
Directors in lieu of annual retainers and meeting fees that would otherwise be
paid in cash shall be calculated in a manner determined by the Board. The terms
of such NSOs, Restricted Shares or Stock Units shall also be determined by the
Board.
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ARTICLE 14. LIMITATION ON RIGHTS.
14.1 RETENTION RIGHTS. Neither the Plan nor any Award granted under the
Plan shall be deemed to give any individual a right to remain an Employee,
Outside Director or Consultant. The Company and its Parents, Subsidiaries and
Affiliates reserve the right to terminate the service of any Employee, Outside
Director or Consultant at any time.
14.2 STOCKHOLDERS' RIGHTS. A Participant shall have no dividend rights,
voting rights or other rights as a stockholder with respect to any Common Shares
covered by his or her Award prior to the time when a stock certificate for such
Common Shares is issued or, if applicable, the time when he or she becomes
entitled to receive such Common Shares by filing any required notice of exercise
and paying any required Exercise Price. No adjustment shall be made for cash
dividends or other rights for which the record date is prior to such time,
except as expressly provided in the Plan.
14.3 REGULATORY REQUIREMENTS. Any other provision of the Plan
notwithstanding, the obligation of the Company to issue Common Shares under the
Plan shall be subject to all applicable laws, rules and regulations and such
approval by any regulatory body as may be required. The Company reserves the
right to restrict, in whole or in part, the delivery of Common Shares pursuant
to any Award prior to the satisfaction of all legal requirements relating to the
issuance of such Common Shares, to their registration, qualification or listing
or to an exemption from registration, qualification or listing.
ARTICLE 15. WITHHOLDING TAXES.
15.1 GENERAL. A Participant or his or her successor shall make
arrangements satisfactory to the Company for the satisfaction of any obligations
of the Company to withhold income and employment taxes under applicable federal,
state, local or foreign law in connection with Awards under the Plan. The
Company shall not be required to issue any Common Shares or make any cash
payment under the Plan until such obligations are satisfied.
15.2 WITHHOLDING IN SHARES. The Committee may permit such Participant to
satisfy all or part of such tax withholding obligations by having the Company
withhold all or a portion of any Common Shares that otherwise would be issued to
him or her or by surrendering all or a portion of any Common Shares that he or
she previously acquired. Such Common Shares shall be valued at their Fair Market
Value on the date when they are withheld or surrendered.
ARTICLE 16. FUTURE OF THE PLAN.
16.1 TERM OF THE PLAN. The Plan, as set forth herein, shall become
effective on March 9, 2000. The Plan shall remain in effect until it is
terminated under Section 16.2 or after the 10(th) anniversary of the later of
(a) the date when the Board adopted the Plan or (b) the date when the Board
adopted the most recent increase in the number of Common Shares available under
Article 3 which was approved by the Company's stockholders.
16.2 AMENDMENT OR TERMINATION. The Board may, at any time and for any
reason, amend or terminate the Plan. An amendment of the Plan shall be subject
to the approval of the Company's stockholders only to the extent required by
applicable laws, regulations or rules. No Awards shall be granted under the Plan
after the termination thereof. The termination of the Plan, or any amendment
thereof, shall not affect any Award previously granted under the Plan.
ARTICLE 17. LIMITATION ON PAYMENTS.
17.1 SCOPE OF LIMITATION. This Article 17 shall apply to an Award only if:
(a) The independent auditors most recently selected by the Board (the
"Auditors") determine that the after-tax value of such Award to the
Participant, taking into account the effect of all federal,
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state and local income taxes, employment taxes and excise taxes applicable
to the Participant (including the excise tax under section 4999 of the
Code), will be greater after the application of this Article 17 than it was
before the application of this Article 17; or
(b) The Committee, at the time of making an Award under the Plan or at
any time thereafter, specifies in writing that such Award shall be subject
to this Article 17 (regardless of the after-tax value of such Award to the
Participant).
If this Article 17 applies to an Award, it shall supersede any contrary
provision of the Plan or of any Award granted under the Plan.
17.2 BASIC RULE. In the event that the Auditors determine that any payment
or transfer by the Company under the Plan to or for the benefit of a Participant
(a "Payment") would be nondeductible by the Company for federal income tax
purposes because of the provisions concerning "excess parachute payments" in
section 280G of the Code, then the aggregate present value of all Payments shall
be reduced (but not below zero) to the Reduced Amount. For purposes of this
Article 17, the "Reduced Amount" shall be the amount, expressed as a present
value, which maximizes the aggregate present value of the Payments without
causing any Payment to be nondeductible by the Company because of section 280G
of the Code.
17.3 REDUCTION OF PAYMENTS. If the Auditors determine that any Payment
would be nondeductible by the Company because of section 280G of the Code, then
the Company shall promptly give the Participant notice to that effect and a copy
of the detailed calculation thereof and of the Reduced Amount, and the
Participant may then elect, in his or her sole discretion, which and how much of
the Payments shall be eliminated or reduced (as long as after such election the
aggregate present value of the Payments equals the Reduced Amount) and shall
advise the Company in writing of his or her election within 10 days of receipt
of notice. If no such election is made by the Participant within such 10-day
period, then the Company may elect which and how much of the Payments shall be
eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall notify the
Participant promptly of such election. For purposes of this Article 17, present
value shall be determined in accordance with section 280G(d)(4) of the Code. All
determinations made by the Auditors under this Article 17 shall be binding upon
the Company and the Participant and shall be made within 60 days of the date
when a Payment becomes payable or transferable. As promptly as practicable
following such determination and the elections hereunder, the Company shall pay
or transfer to or for the benefit of the Participant such amounts as are then
due to him or her under the Plan and shall promptly pay or transfer to or for
the benefit of the Participant in the future such amounts as become due to him
or her under the Plan.
17.4 OVERPAYMENTS AND UNDERPAYMENTS. As a result of uncertainty in the
application of section 280G of the Code at the time of an initial determination
by the Auditors hereunder, it is possible that Payments will have been made by
the Company which should not have been made (an "Overpayment") or that
additional Payments which will not have been made by the Company could have been
made (an "Underpayment"), consistent in each case with the calculation of the
Reduced Amount hereunder. In the event that the Auditors, based upon the
assertion of a deficiency by the Internal Revenue Service against the Company or
the Participant which the Auditors believe has a high probability of success,
determine that an Overpayment has been made, such Overpayment shall be treated
for all purposes as a loan to the Participant which he or she shall repay to the
Company, together with interest at the applicable federal rate provided in
section 7872(f)(2) of the Code; provided, however, that no amount shall be
payable by the Participant to the Company if and to the extent that such payment
would not reduce the amount which is subject to taxation under section 4999 of
the Code. In the event that the Auditors determine that an Underpayment has
occurred, such Underpayment shall promptly be paid or transferred by the Company
to or for the benefit of the Participant, together with interest at the
applicable federal rate provided in section 7872(f)(2) of the Code.
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17.5 RELATED CORPORATIONS. For purposes of this Article 17, the term
"Company" shall include affiliated corporations to the extent determined by the
Auditors in accordance with section 280G(d)(5) of the Code.
ARTICLE 18. DEFINITIONS.
18.1 "AFFILIATE" means any entity other than a Subsidiary, if the Company
and/or one or more Subsidiaries own not less than 50% of such entity.
18.2 "AWARD" means any award of an Option, an SAR, a Restricted Share or a
Stock Unit under the Plan.
18.3 "BOARD" means the Company's Board of Directors, as constituted from
time to time.
18.4 "CAUSE" shall mean (a) the unauthorized use or disclosure of the
confidential information or trade secrets of the Company, which use or
disclosure causes material harm to the Company, (b) conviction of, or a plea of
"guilty" or "no contest" to, a felony under the laws of the United States or any
State thereof, (c) gross negligence, (d) willful misconduct or (e) a failure to
perform assigned duties that continues after the Participant has received
written notice of such failure from the Board. The foregoing, however, shall not
be deemed an exclusive list of all acts or omissions that the Company (or the
Parent, Subsidiary or Affiliate employing the Participant) may consider as
grounds for the discharge of the Participant without Cause.
18.5 "CHANGE IN CONTROL" shall mean:
(a) The consummation of a merger or consolidation of the Company with or
into another entity or any other corporate reorganization, if persons who
were not stockholders of the Company immediately prior to such merger,
consolidation or other reorganization own immediately after such merger,
consolidation or other reorganization 50% or more of the voting power of the
outstanding securities of each of (i) the continuing or surviving entity and
(ii) any direct or indirect parent corporation of such continuing or
surviving entity;
(b) The sale, transfer or other disposition of all or substantially all
of the Company's assets;
(c) A change in the composition of the Board, as a result of which fewer
than 80% of the incumbent directors are directors who either (i) had been
directors of the Company on the date 24 months prior to the date of the
event that may constitute a Change in Control (the "original directors") or
(ii) were elected, or nominated for election, to the Board with the
affirmative votes of at least a majority of the aggregate of the original
directors who were still in office at the time of the election or nomination
and the directors whose election or nomination was previously so approved;
or
(d) Any transaction as a result of which any person is the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing at least 50% of the
total voting power represented by the Company's then outstanding voting
securities. For purposes of this Paragraph (d), the term "person" shall have
the same meaning as when used in sections 13(d) and 14(d) of the Exchange
Act but shall exclude(i) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or of a Parent or Subsidiary
and (ii) a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of the
common stock of the Company.
A transaction shall not constitute a Change in Control if its sole purpose is to
change the state of the Company's incorporation or to create a holding company
that will be owned in substantially the same proportions by the persons who held
the Company's securities immediately before such transaction.
18.6 "CODE" means the Internal Revenue Code of 1986, as amended.
18.7 "COMMITTEE" means a committee of the Board, as described in
Article 2.
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18.8 "COMMON SHARE" means one share of the common stock of the Company.
18.9 "COMPANY" means Affymetrix, Inc., a Delaware corporation.
18.10 "CONSULTANT" means a consultant or adviser who provides bona fide
services to the Company, a Parent, a Subsidiary or an Affiliate as an
independent contractor. Service as a Consultant shall be considered employment
for all purposes of the Plan, except as provided in Section 4.1.
18.11 "EMPLOYEE" means a common-law employee of the Company, a Parent, a
Subsidiary or an Affiliate.
18.12 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
18.13 "EXERCISE PRICE," in the case of an Option, means the amount for
which one Common Share may be purchased upon exercise of such Option, as
specified in the applicable Stock Option Agreement. "Exercise Price," in the
case of an SAR, means an amount, as specified in the applicable SAR Agreement,
which is subtracted from the Fair Market Value of one Common Share in
determining the amount payable upon exercise of such SAR.
18.14 "FAIR MARKET VALUE" means the market price of Common Shares,
determined by the Committee in good faith on such basis as it deems appropriate.
Whenever possible, the determination of Fair Market Value by the Committee shall
be based on the prices reported in THE WALL STREET JOURNAL. Such determination
shall be conclusive and binding on all persons.
18.15 "INVOLUNTARY TERMINATION" means the termination of the Participant's
service by reason of:
(a) The involuntary discharge of the Participant by the Company (or the
Parent, Subsidiary or Affiliate employing him or her) for reasons other than
Cause; or
(b) The voluntary resignation of the Participant following (i) a
material adverse change in his or her title, stature, authority or
responsibilities with the Company (or the Parent, Subsidiary or Affiliate
employing him or her), (ii) a material reduction in his or her base salary
or (iii) receipt of notice that his or her principal workplace will be
relocated by more than 30 miles.
18.16 "ISO" means an incentive stock option described in section 422(b) of
the Code.
18.17 "NSO" means a stock option not described in sections 422 or 423 of
the Code.
18.18 "OPTION" means an ISO or NSO granted under the Plan and entitling the
holder to purchase Common Shares.
18.19 "OPTIONEE" means an individual or estate who holds an Option or SAR.
18.20 "OUTSIDE DIRECTOR" shall mean a member of the Board who is not an
Employee. Service as an Outside Director shall be considered employment for all
purposes of the Plan, except as provided in Section 4.1.
18.21 "PARENT" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, if each of the
corporations other than the Company owns stock possessing 50% or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain. A corporation that attains the status of a Parent on
a date after the adoption of the Plan shall be considered a Parent commencing as
of such date.
18.22 "PARTICIPANT" means an individual or estate who holds an Award.
18.23 "PLAN" means this Affymetrix, Inc. 2000 Equity Incentive Plan, as
amended from time to time.
18.24 "RESTRICTED SHARE" means a Common Share awarded under Article 8 of
the Plan.
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18.25 "RESTRICTED STOCK AGREEMENT" means the agreement between the Company
and the recipient of a Restricted Share which contains the terms, conditions and
restrictions pertaining to such Restricted Share.
18.26 "SAR" means a stock appreciation right granted under the Plan.
18.27 "SAR AGREEMENT" means the agreement between the Company and an
Optionee which contains the terms, conditions and restrictions pertaining to his
or her SAR.
18.28 "STOCK OPTION AGREEMENT" means the agreement between the Company and
an Optionee that contains the terms, conditions and restrictions pertaining to
his or her Option.
18.29 "STOCK UNIT" means a bookkeeping entry representing the equivalent of
one Common Share, as awarded under the Plan.
18.30 "STOCK UNIT AGREEMENT" means the agreement between the Company and
the recipient of a Stock Unit which contains the terms, conditions and
restrictions pertaining to such Stock Unit.
18.31 "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company, if each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a Subsidiary on a date after the adoption of the Plan shall be
considered a Subsidiary commencing as of such date.
ARTICLE 19. EXECUTION.
To record the adoption of the Plan by the Board on March 9, 2000, the
Company has caused its duly authorized officer to execute this document in the
name of the Company.
AFFYMETRIX, INC.
By:
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Title:
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PROXY AFFYMETRIX, INC. PROXY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
JUNE 8, 2000
The undersigned stockholder of Affymetrix, Inc. (the "Company") hereby
appoints Vernon Norviel and Stephen P. A. Fodor and each of them with full
power of substitution to each, the true and lawful attorneys, agents and
proxyholders of the undersigned, and hereby authorizes them to represent and
vote, as specified herein, all of the shares of Common Stock of the Company
held of record by the undersigned on April 12, 2000, at the Annual Meeting of
Stockholders of the Company to be held on June 8, 2000 (the "Annual Meeting")
at 4:00 p.m. at 3380 Central Expressway, Santa Clara, California and any
adjournments or postponements thereof.
Check here for
address change / /
NEW ADDRESS:__________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
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/X/ PLEASE MARK VOTES AS IN THIS EXAMPLE
1. To elect as directors, to hold office until the next meeting of
stockholders and until their successors are elected, the nine (9)
nominees listed to the right:
NOMINEES: Stephen P.A. Fodor, Ph.D.
Paul Berg, Ph.D.
John D. Diekman, Ph.D.
Adrian Hennah
Vernon R. Loucks, Jr.
Barry C. Ross, Ph.D.
David B. Singer
Lubert Stryer, M.D.
John A. Young
VOTE FOR ALL THE NOMINEES VOTE WITHHELD
(EXCEPT AS DIRECTED FROM ALL
TO THE CONTRARY) NOMINEES
/ / / /
INSTRUCTIONS: To withhold vote for any individual nominee, write the
nominee's name in the space provided below:
2. To ratify the appointment of Ernst & Young LLP as independent auditors of
the Company for the fiscal year ending December 31, 2000.
FOR AGAINST ABSTAIN
/ / / / / /
3. To approve and ratify this amendment to the Company's Certificate of
Incorporation to increase the number of authorized shares of Common
Stock of the Company.
FOR AGAINST ABSTAIN
/ / / / / /
4. To approve and ratify the Company's 2000 Equity Incentive Plan.
FOR AGAINST ABSTAIN
/ / / / / /
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED. IN
THE ABSENCE OF DIRECTION, THE SHARES WILL BE VOTED FOR THE PROPOSALS. THE
UNDERSIGNED ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS RELATING TO THE ANNUAL MEETING.
Please sign exactly as name appears hereon. Joint owners should each sign.
Trustees and others acting in a representative capacity should indicate the
capacity in which they sign and give their full title. If a corporation,
please have an authorized officer sign and indicate the full corporate name.
If a partnership, please sign in partnership name by an authorized person.
Please mark, sign and date this proxy and return it promptly whether you plan
to attend the meeting or not. If you do attend, you may vote in person if you
desire.
SIGNATURE(S)_________________________________________ DATE____________________
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