CHANGE IN CONTROL
SEVERANCE AGREEMENT
This
CHANGE IN CONTROL SEVERANCE AGREEMENT, made as of the date of the
last signature shown below (the “ Effective Date
”), by and between ILLUMINA, INC., a Delaware corporation
(the “ Company ”) and Gregory F. Heath, Ph.D.
(the “ Executive ”).
WHEREAS,
the Executive is a key member of the management of the Company, and
the Board of Directors of the Company (the “Board”)
considers it to be in the best interests of the Company and its
stockholders to foster the retention of its key management
personnel;
WHEREAS,
it is expected that from time to time the Board may consider the
possibility of a Change in Control of the Company, and the Board
recognizes that a Change in Control and the uncertainties that it
may raise among management could result in the departure or
distraction of management personnel to the detriment of the
Company; and
WHEREAS,
this Agreement is intended to create an incentive for the Executive
to remain in the employ of the Company and to maximize the value of
the Company for the benefit of the stockholders in connection with
a Change in Control.
NOW,
THEREFORE, in consideration of the covenants herein contained and
the continued employment of the Executive, the parties hereto agree
as follows:
This
Agreement shall be effective during the period beginning with the
Effective Date and ending on August 21, 2009 (the
“Initial End Date”), provided that such period shall be
automatically extended for an additional year on each anniversary
of the Initial End Date, unless written notice of non-extension is
provided by either party to the other party at least 90 days
prior to such anniversary (the “ Agreement Term
”).
In
the event of a Change in Control occurring during the Agreement
Term, the provisions of this Agreement relating to severance rights
and benefits of the Executive shall apply with respect to any
Covered Termination that occurs during the Protection Period that
follows the Change in Control, as provided in Section 3
hereof. The obligations of the Company hereunder with respect to
any such Covered Termination shall survive the expiration of the
Agreement Term.
For
purposes of this Agreement, “ Change in Control
” shall mean the occurrence of one of the following during
the Agreement Term:
(a) any
merger or consolidation in which the Company shall not be the
surviving entity (or survives only as a subsidiary of another
entity whose stockholders did not own all or substantially all of
the Company’s common stock in substantially the same
proportions as immediately prior to such transaction);
(b) the
sale of all or substantially all of the Company’s assets to
any other person or entity (other than a wholly-owned
subsidiary);
(c) the
acquisition of beneficial ownership of a controlling interest
(including, without limitation, power to vote) in the outstanding
shares of the Company’s common stock by any person or entity
(including a “group” as defined by or under
Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended);
(d) a
contested election of directors of the Company, as a result of
which or in connection with which the persons who were directors
before such election or their nominees (the “ Incumbent
Directors ”) cease to constitute a majority of the Board;
provided , however that if the election, or
nomination for election by the Company’s stockholders, of any
new director was approved by a vote of at least fifty percent (50%)
of the Incumbent Directors, such new director shall be considered
as an Incumbent Director, or
(e) any
other event specified by the Board.
(a)
General . For purposes of this Agreement, “ Covered
Termination ” shall mean the occurrence of one of the
following during the period beginning on the date of the event that
constitutes a Change in Control and ending on the second
anniversary of such date (the “ Protection Period
”):
(i) termination
of employment by the Company other than for “ Cause
” (as defined in Section 3(b) below); or
(ii) termination
of employment by the Executive on account of “ Good
Reason ” (as defined in Section 3(c) below).
In addition, if
the Executive is terminated by the Company other than for Cause
following the execution of a definitive agreement or the occurrence
of such other definitive event which if consummated will result in
a Change in Control, but prior to the consummation of the Change in
Control, such termination will be deemed a Covered Termination to
the extent the Board, in its discretion, determines such
termination to be at the direction or request of a party to the
Change in Control transaction or is otherwise related to such
pending Change in Control.
A Covered
Termination shall not include termination of employment of the
Executive for Cause or by reason of death or Disability, nor a
termination of employment by the Executive other than for Good
Reason. For purposes of this Agreement, “ Disability
” shall mean the inability to perform the Executive’s
duties due to physical or mental illness or impairment continuing
for a period of six consecutive months.
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(b)
Termination For Cause . For purposes of this Agreement, a
termination of the Executive’s employment by the Company
shall be deemed a termination for “ Cause ” in
the event of:
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(i)
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the
Executive’s repeated failure or refusal to materially perform
the Executive’s duties to the Company (other than by reason
of temporary illness or other excused absence), as such duties
existed immediately prior to the Change in Control;
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(ii)
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the
Executive’s criminal conviction or a plea of nolo contendere
with respect to a crime constituting a felony or a crime of moral
turpitude; or
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(iii)
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the
Executive’s engagement in an act of malfeasance, fraud or
dishonesty in connection with the Company that materially damages
the business or reputation of the Company.
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Notwithstanding
the foregoing, the Executive’s employment shall be considered
to have been terminated for Cause only if, prior to such
termination for Cause, (1) the Company shall have given to the
Executive written notice stating with specificity the reason for
the Executive’s termination and the provision of this Section
3(b) that is relied upon, and (2) if such reason for
termination is item (i) or (iii) above, then a period of
15 days from the giving of such notice shall have elapsed
without the Executive’s having cured or remedied such reason
for termination during such 15-day period, unless such reason for
termination cannot be cured or remedied within 15 days, in
which case the period for remedy or cure shall be extended for a
reasonable time (not to exceed 15 days), provided the Executive has
made and continues to make a diligent effort to effect such remedy
or cure.
(c) Good
Reason . For purposes of this Agreement, the termination of
employment by the Executive shall be deemed on account of “
Good Reason ” in the event of:
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(i)
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any
reduction in the Executive’s annual base salary amount or
annual target bonus percentage from that in effect immediately
prior to the Change in Control;
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(ii)
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any
reduction or other adverse change in the position, title, duties,
responsibilities, level of authority or reporting relationships of
the Executive from that in effect immediately prior to the Change
in Control, including, without limitation, (a) in the event
the Executive is the most senior executive in a particular Company
function at the time of the Change in Control, the Executive ceases
to be the most senior executive in such function, (b) in the
event the Executive performs at the time of the Change in Control
external duties typical in a public company, the Executive ceases
to perform such duties or (c) any other such reduction
attributable to the fact that the Company ceases to be a public
company as a result of the Change in Control; or
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(iii)
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a
relocation, without the Executive’s written consent, of the
Executive’s principal place of business by more than 35 miles
from the Executive’s principal place of business immediately
prior to the Change in Control.
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Notwithstanding
the foregoing, the Executive’s employment shall be considered
to have been terminated on account of Good Reason only if, prior to
such termination on account of Good Reason, (1) the Executive
shall have given to the Company written notice stating with
specificity
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