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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 19, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INFORMATICA CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 7372 77-0333710
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
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3350 W. BAYSHORE ROAD
PALO ALTO, CALIFORNIA 94303
(650) 687-6200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
GAURAV S. DHILLON
CHIEF EXECUTIVE OFFICER
3350 W. BAYSHORE ROAD
PALO ALTO, CALIFORNIA 94303
(650) 687-6200
(NAME, ADDRESS AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
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MICHAEL C. PHILLIPS, ESQ. MARK A. BERTELSEN, ESQ.
MORRISON & FOERSTER LLP WILSON SONSINI GOODRICH & ROSATI
755 PAGE MILL ROAD PROFESSIONAL CORPORATION
PALO ALTO, CA 94304-1018 650 PAGE MILL ROAD
PALO ALTO, CA 94304-1050
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any of the securities being registered in this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ___________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ___________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ___________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE
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Common Stock, par value $.001 per share................. $36,400,000 $10,120
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES, IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED FEBRUARY 19, 1999
Shares
[INFORMATICA LOGO -- Caption: POWERING THE INTELLIGENT ENTERPRISE]
INFORMATICA CORPORATION
Common Stock
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Prior to this offering, there has been no public market for our common stock.
The initial public offering price of our common stock is expected to be between
$ and $ per share. We have made application to list our common
stock on The Nasdaq Stock Market's National Market under the symbol "INFA."
The underwriters have an option to purchase a maximum of additional shares
to cover over-allotments of shares.
INVESTING IN OUR COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
STARTING ON PAGE 5.
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UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS INFORMATICA
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Per Share............................................ $ $ $
Total................................................ $ $ $
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Delivery of the shares of common stock will be made on or about
, 1999, against payment in immediately available funds.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
CREDIT SUISSE FIRST BOSTON
BANCBOSTON ROBERTSON STEPHENS
SOUNDVIEW TECHNOLOGY GROUP
FAC/EQUITIES
Prospectus dated , 1999.
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TABLE OF CONTENTS
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PAGE
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PROSPECTUS SUMMARY................... 3
RISK FACTORS......................... 5
USE OF PROCEEDS...................... 15
DIVIDEND POLICY...................... 15
CAPITALIZATION....................... 16
DILUTION............................. 17
SELECTED CONSOLIDATED FINANCIAL
DATA............................... 18
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS...................... 19
BUSINESS............................. 29
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MANAGEMENT........................... 46
CERTAIN TRANSACTIONS................. 54
PRINCIPAL STOCKHOLDERS............... 57
DESCRIPTION OF CAPITAL STOCK......... 60
SHARES ELIGIBLE FOR FUTURE SALE...... 63
UNDERWRITING......................... 65
NOTICE TO CANADIAN RESIDENTS......... 66
LEGAL MATTERS........................ 66
EXPERTS.............................. 66
ADDITIONAL INFORMATION............... 66
INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS......................... F-1
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO
WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS DOCUMENT MAY ONLY BE USED WHERE IT IS LEGAL
TO SELL THESE SECURITIES. THE INFORMATION IN THIS DOCUMENT MAY ONLY BE ACCURATE
ON THE DATE OF THIS DOCUMENT.
Informatica(R) and PowerMart(R) are our registered trademarks.
Additionally, PowerCenter(TM), PowerConnect(TM), PowerPlugs(TM) and
PowerPartner(TM) are our trademarks. This prospectus contains other product
names and trade names and trademarks of Informatica and of other organizations.
UNTIL , 1999 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS THAT EFFECT TRANSACTIONS IN THESE SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS
IN ADDITION TO THE DEALER'S OBLIGATION TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITER AND WITH RESPECT TO UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
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PROSPECTUS SUMMARY
The following summary highlights information that we present more fully in
the rest of this prospectus. Unless otherwise indicated, the information in this
prospectus reflects the conversion of all outstanding shares of preferred stock
effective automatically upon the closing of this offering and assumes no
exercise of the underwriters' over-allotment option.
INFORMATICA CORPORATION
We are a leading provider of software solutions that help companies deploy,
manage, maintain and grow enterprise decision support systems.
As companies have made significant investments over the past few decades in
applications and infrastructure that automate basic business processes, they
have amassed volumes of data stored in underlying databases. We expect that
continued growth in e-commerce and Internet applications will generate
ever-increasing amounts of data. As a result, the challenge is no longer how to
capture information effectively, but rather how to consolidate, distill and
channel that information to those business managers, knowledge workers,
customers and suppliers who can leverage business insight gained from that
information to drive revenue growth and profitability.
We believe this demand for business insight is driving growth in the market
for front-end query and reporting tools and creating an emerging market for
analytic applications. By themselves, however, these tools and applications
cannot access historical, consolidated data located in multiple transaction data
systems throughout the enterprise. To take full advantage of these analytic
resources, companies need a software platform to deploy and manage a wide range
of business intelligence and analytic applications across the enterprise. Such a
platform will allow them to gain better insight into business trends and to make
more accurate and informed business decisions.
We provide a highly adaptable, functionally rich platform for deploying,
managing and maintaining enterprise decision support systems that help companies
gain competitive advantage through analysis of customer and heterogeneous
transactional data. Our platform products help streamline and simplify that task
by providing a packaged, off-the-shelf solution. The core of our platform is
PowerCenter, our enterprise data integration hub, which automates the process of
retrieving, organizing and consolidating data from multiple transaction systems.
Our platform's other key product is PowerMart, which can be deployed in
conjunction with PowerCenter, for building and managing line-of-business data
marts and analytic applications.
Our strategy is to provide the leading software platform for analytic
applications. The key elements of our strategy include expanding our position as
a leading independent platform vendor, targeting enterprise deployments within
existing customer sites, leveraging the installed base of enterprise resource
planning applications, expanding strategic partnerships and sales through
indirect channels and increasing our technological lead.
We have more than 350 customers primarily within large, global companies
across a range of industries including financial services, insurance,
manufacturing, health care and telecommunications. We market and sell software
and services through a direct sales force in the United States, the United
Kingdom and Germany, as well as through distributors.
Our principle executive offices are located at 3350 W. Bayshore Road, Palo
Alto, California 94303, and our telephone number is (650) 687-6200. We were
incorporated in California in February 1993 and reincorporated in Delaware in
February 1999.
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THE OFFERING
Common stock offered by Informatica............ shares
Common stock to be outstanding after this
offering....................................... shares(1)
Use of proceeds................................ For general corporate
purposes, including working
capital.
Proposed Nasdaq National Market symbol......... INFA
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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YEAR ENDED DECEMBER 31,
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1996 1997 1998
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CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Total revenues................................. $ 2,060 $12,186 $28,745
Total cost of revenues......................... 158 2,353 4,975
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Gross profit................................... 1,902 9,833 23,770
Loss from operations........................... (4,556) (6,985) (8,176)
Net loss....................................... (4,548) (6,764) (7,915)
Pro forma basic and diluted net loss per
share(2).................................... $ (0.71)
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Shares used in calculation of pro forma basic
and diluted net loss per share(1)(2)........ 11,133
=======
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DECEMBER 31, 1998
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PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED(3)
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CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.................. $ 6,059 $ 6,059 $
Working capital (deficit).................. (2,304) (2,304)
Total assets............................... 10,764 10,764
Long-term obligations, net of current
portion................................. 217 217
Redeemable convertible preferred stock..... 17,586 -- --
Total stockholders' equity (deficit)....... (19,469) (1,883)
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(1) Based on the number of shares of common stock outstanding (on a pro forma
basis to give effect to the conversion of all shares of preferred stock upon
completion of this offering) as of December 31, 1998. Excludes 2,994,209
shares of common stock issuable upon exercise of options outstanding as of
December 31, 1998 having a weighted average exercise price of $2.93 and
2,269,258 additional shares authorized or expected to be authorized for
issuance under our stock plans. See "Management -- Stock Plans" and Note 4
of Notes to Consolidated Financial Statements.
(2) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in computing pro
forma net income (loss) per share.
(3) Adjusted to reflect the sale of shares in this offering
hereby, based on an assumed initial public offering price of $ per
share.
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RISK FACTORS
In addition to the other information contained in this prospectus,
investors should carefully consider the following risk factors in evaluating an
investment in our common stock. This prospectus contains certain forward-looking
statements that involve risks and uncertainties. We have based these
forward-looking statements on current expectations and projections about future
events. Our actual results could differ materially from the results discussed in
the forward-looking statements as a result of certain of the risk factors set
forth below and elsewhere in this prospectus. We undertake no obligation to
update any forward-looking statement or any statement of any reason why actual
results might differ.
WE HAVE A LIMITED OPERATING HISTORY; OUR FUTURE PROFITABILITY IS UNCERTAIN
We were incorporated in 1993 and therefore have a limited operating history
upon which investors can evaluate our operations, products and prospects. We
have incurred significant net losses since our inception. We incurred net losses
of $4.5 million, $6.8 million and $7.9 million in 1996, 1997 and 1998,
respectively. As of December 31, 1998, we had an accumulated deficit of $19.7
million. While we achieved significant quarter-to-quarter revenue growth in 1997
and 1998, you should not take these recent quarterly results to be indicative of
our future performance. We do not expect to sustain this same rate of sequential
quarterly revenue growth in future periods, and it is possible we may never
achieve profitability. In addition, we intend to increase our operating expenses
significantly in 1999; therefore, our operating results will be adversely
affected if revenues do not increase significantly.
OUR OPERATING RESULTS FLUCTUATE FROM QUARTER TO QUARTER
We expect to experience significant fluctuations in our future quarterly
operating results due to many factors, including:
- the size and timing of customer orders, which can be affected by customer
order deferrals in anticipation of future new product introductions or
product enhancements and customer budgeting and purchasing cycles;
- market acceptance of our products;
- the length and variability of our sales cycle for our products;
- introduction or enhancement of our products or our competitors' products
and changes in our or our competitors' pricing policies;
- our ability to develop, introduce and market new products on a timely
basis;
- the mix of our products and services sold and the mix of distribution
channels utilized;
- our success in expanding our sales and marketing programs;
- technological changes in computer systems and environments; and
- general economic conditions, which may affect our customers' capital
investment levels.
Our product revenues are not predictable with any significant degree of
certainty. Historically, we have recognized a substantial portion of our
revenues in the last month of the quarter. If customers cancel or delay orders,
it can have a material adverse impact on our revenues and results of operations
for the quarter. To the extent any such cancellations
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or delays are for large orders, this impact will be greater. To the extent that
the average size of our orders increases, customers' cancellations or delays of
orders will more likely have a material adverse impact on our revenues and
results of operations.
We have historically operated with minimal order backlog because our
software products typically are shipped shortly after orders are received. Our
product license revenues in each quarter are substantially dependent on orders
booked and shipped in that quarter. Our product license revenues are also
difficult to forecast because the market for our products is rapidly evolving,
and sales cycles, which may last many months, vary substantially from customer
to customer. Our sales cycle is subject to a number of factors over which we
have little or no control, including customers' budgetary constraints and
internal acceptance review procedures, the timing of budget cycles, concerns
about the introduction of our or our competitors' new products or product
enhancements and potential downturns in general economic conditions, which may
be associated with reductions in demand for enterprise decision support
software. See "-- We Have a Lengthy Sales Cycle." Service revenues depend in
substantial part on maintenance revenues from existing customers, and to the
extent that existing customers do not require ongoing maintenance, our total
revenues would be adversely affected. Seasonal factors may also impact revenue
trends. For example, European sales may tend to be relatively lower during the
summer months than during other periods.
We have experienced, and expect to continue to experience, seasonality with
respect to product license revenues. In recent years, there has been a
relatively greater demand for our products in the fourth quarter than in each of
the first three quarters of the year, particularly the first quarter. As a
result, we have historically experienced relatively higher bookings in the
fourth quarter and relatively lighter bookings in the first quarter. While some
of this effect can be attributed to the rapid growth of revenues in recent
years, we believe that these fluctuations are caused by customer buying patterns
(often influenced by year-end budgetary pressures) and the efforts of our direct
sales force to meet or exceed year-end sales quotas. We expect that seasonal
trends will continue for the foreseeable future. This seasonal impact may
increase as we continue to focus our sales efforts on large corporations and
large enterprise decision support solutions.
Due to the uncertainty surrounding our revenues and expenses, we believe
that quarter-to-quarter comparisons of our operating results are not a good
indication of our future performance. Moreover, it is likely that in some future
quarter, our operating results will fall below the expectations of stock
analysts and investors. If this happens, the price of our common stock may fall.
OUR REVENUES DEPEND ON GROWTH IN AN EMERGING MARKET
Substantially all of our revenues are attributable to the sale of products
and services in the enterprise decision support software market. This market is
relatively new, and we believe that many companies are not yet fully aware of
the benefits of enterprise decision support solutions in general or of our
specific product solutions. As a result, we believe companies to date have
deployed enterprise decision support solutions on a relatively limited basis.
Although we have devoted and intend to continue to devote significant resources
promoting market awareness of the benefits of these solutions, our efforts may
be unsuccessful or insufficient. If the market for these solutions and related
services does not grow at the rate we anticipate, our business, results of
operations and financial condition will be adversely affected.
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CONCENTRATION OF PRODUCTS; PRODUCTS MAY NOT ACHIEVE MARKET ACCEPTANCE
In 1998, substantially all of our revenues were derived from our
PowerCenter and PowerMart products and related services. We expect revenues
derived from these products to comprise substantially all of our revenues for
the foreseeable future. Even if the emerging enterprise decision support
software market in which these products are sold grows adequately, our future
revenues and operating results are dependent upon the acceptance of these
products within this market. Market acceptance of our products could be
materially adversely affected if, among other things, applications suppliers
integrate their products to such a degree that the utility of the data
integration functionality that our products provide is minimized or rendered
unnecessary.
WE DEPEND ON CERTAIN KEY PERSONNEL AND NEED TO HIRE ADDITIONAL PERSONNEL
We believe our future success will depend upon our ability to attract and
retain highly skilled personnel, including Gaurav S. Dhillon, our Chief
Executive Officer, and Diaz H. Nesamoney, our President, and other key members
of management. We currently do not have any key-man life insurance relating to
our key personnel, and these employees are at-will and not subject to employment
contracts. In addition, we are currently seeking a new Vice President of
Engineering for our management team. We may not be successful in attracting,
assimilating and retaining key personnel in the future. As we seek to expand our
operations, the hiring of qualified sales and technical personnel will be
difficult due to the limited number of qualified professionals. Competition for
these types of employees is intense. We have in the past experienced difficulty
in recruiting qualified sales and technical personnel. Failure to attract,
assimilate and retain personnel, particularly sales and technical personnel,
would have a material adverse effect on our business, results of operations and
financial condition.
OUR MARKET IS HIGHLY COMPETITIVE
The market for our products is highly competitive and subject to rapidly
changing technology. We compete principally against providers of decision
support, data warehousing and enterprise application software. Such competitors
include Acta Technology, Inc., Ardent Software, Inc., Broadbase Information
Systems, Inc., Epiphany Marketing Software, Evolutionary Technologies, Inc.,
Information Builders, Inc., PLATINUM technology, inc. and Sagent Technology,
Inc. In addition, we compete or may compete against database vendors that
currently offer, or may develop, products with functionalities that compete with
our solutions. These products typically operate specifically with these
competitors' proprietary databases. Such competitors include IBM Corporation,
Microsoft Corporation and Oracle Corporation.
Many of our competitors have longer operating histories, substantially
greater financial, technical, marketing or other resources, or greater name
recognition than we do. Our competitors may be able to respond more quickly than
we can to new or emerging technologies and changes in customer requirements.
Competition could seriously impede our ability to sell additional products and
services on terms favorable to us. Our current and potential competitors may
develop and market new technologies that render our existing or future products
obsolete, unmarketable or less competitive. Our current and potential
competitors may make strategic acquisitions or establish cooperative
relationships among themselves or with other solution providers, thereby
increasing the ability of their products to address the needs of our prospective
customers. Our current and potential competitors may establish or strengthen
cooperative relationships with our current or future
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channel or strategic partners, thereby limiting our ability to sell products
through these channels. Competitive pressures could reduce our market share or
require us to reduce our prices, either of which could materially and adversely
affect our business, results of operations or financial condition.
We compete on the basis of certain factors, including:
- product performance;
- product features;
- user scalability;
- open architecture;
- ease of use;
- product reliability;
- analytical capabilities;
- time to market;
- customer support; and
- product pricing.
We believe that we presently compete favorably with respect to each of
these factors. However, the market for our products is still rapidly evolving,
and we may not be able to compete successfully against current and potential
competitors.
WE RELY SUBSTANTIALLY ON OUR CHANNEL AND STRATEGIC PARTNERS
In addition to our direct sales force, we rely on established relationships
with a variety of channel partners, such as systems integrators, resellers and
distributors, for marketing, licensing and support of our products in the United
States and internationally. We also rely on relationships with strategic
technology partners, such as enterprise resource planning providers, for the
promotion of our solutions. In particular, our ability to market our products
depends substantially on our relationships with such significant partners as
Cambridge Technology Partners, KPMG, PeopleSoft, PricewaterhouseCoopers and SAP.
We believe that our ability to increase the sales of our products and our future
success will depend in part upon maintaining and strengthening successful
relationships with our current or future partners. In addition, our channel
partners may offer products of several different companies, including, in some
cases, products that compete with our products. We have limited control, if any,
as to whether these strategic partners devote adequate resources to promoting
and selling our products.
We may not be able to maintain our channel or strategic partnerships or
attract sufficient additional channel or strategic partners who are able to
market our products effectively or who are qualified to provide timely and
cost-effective customer support and service. Further, we can give no assurance
that our relationships with our channel and strategic partners will generate
enough revenue to offset the significant resources used to develop these
channels.
WE HAVE A LENGTHY SALES CYCLE
Due to the enterprise-wide functionality and complexity of our products and
the significant investment required to purchase our products, our potential
customers often
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must make executive-level investment and systems architecture decisions in
determining whether to purchase our products. In addition, to successfully sell
our products, we frequently must educate our potential customers about the full
benefits of our products, which can require significant time. Due to these
factors, the sales cycle associated with the purchase of our products is subject
to a number of significant risks over which we have little or no control,
including customers' budgetary constraints and internal acceptance review
procedures, the timing of budget cycles, concerns about the introduction of our
or our competitors' new products or product enhancements and potential downturns
in general economic conditions. Our sales cycle may lengthen as we continue to
focus our sales efforts on large corporations and large enterprise decision
support solutions. Further, to the extent that potential customers divert
resources and attention to Year 2000 issues, the sales cycle could be further
lengthened.
WE MAY HAVE DIFFICULTY MANAGING GROWTH
We have experienced a period of rapid and substantial growth that has
placed and, if such growth continues, will continue to place a strain on our
administrative and operational infrastructure. We have increased the number of
our employees from 50 at December 31, 1996, to approximately 173 at December 31,
1998. Our revenues increased from $2.1 million in 1996 to $28.7 million in 1998.
Our ability to manage our operations and growth effectively requires us to
continue to improve our operational, financial and management controls,
reporting systems and procedures and hiring programs. We may not be able to
successfully implement improvements to our management information and control
systems in an efficient or timely manner and may discover deficiencies in
existing systems and controls. If we are unable to manage growth effectively,
our business, results of operations or financial condition may be materially
adversely affected.
RAPID TECHNOLOGY CHANGE AND EVOLVING INDUSTRY STANDARDS COULD ADVERSELY IMPACT
OUR PRODUCTS
The market for our products is characterized by continuing technological
development, evolving industry standards and changing customer requirements. The
introduction of products by our direct competitors or others embodying new
technologies, the emergence of new industry standards or changes in customer
requirements could render our existing products obsolete, unmarketable or less
competitive. In particular, an industry-wide adoption of uniform open standards
across heterogeneous analytic applications could minimize the importance of the
integration functionality of our products and materially adversely affect the
competitiveness and market acceptance of our products. Our success depends upon
our ability to enhance existing products, to respond to changing customer
requirements and to develop and introduce in a timely manner new products that
keep pace with technological and competitive developments and emerging industry
standards. There can be no assurance that our products will adequately address
the changing needs of the marketplace or that we will be successful in
developing and marketing enhancements to our existing products or products
incorporating new technology on a timely basis. We have in the past experienced
delays in releasing new products and product enhancements and may experience
similar delays in the future. Future delays or problems in the installation or
implementation of our new releases may cause customers to forego purchases of
our products and purchase those of our competitors instead. Failure to develop
and introduce new products, or enhancements to existing products, in a timely
manner in response to changing market conditions or customer requirements, will
materially and adversely affect our business, results of operations and
financial condition.
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WE FACE RISKS FROM OUR INTERNATIONAL OPERATIONS
International revenues accounted for 8%, 7% and 13% of our total
consolidated revenues in 1996, 1997 and 1998, respectively. We sell our products
and services through direct sales offices in the United Kingdom and Germany and
through distribution partners in Europe. We believe that our success depends
upon continued expansion of our international operations. Our international
business is subject to a number of risks, including the following:
- greater difficulty in protecting intellectual property;
- greater difficulty in staffing and managing foreign operations;
- longer collection cycles;
- potential unexpected changes in regulatory practices and tariffs;
- potential unexpected changes in tax laws;
- sales seasonality;
- the impact of fluctuating exchange rates between the U.S. dollar and
foreign currencies in markets where we do business; and
- general economic and political conditions in these foreign markets.
It is difficult to predict the extent of the future impact of these
conditions. These factors and other factors could have a material adverse effect
on our future international revenues and consequently on our business, results
of operations and financial condition.
OUR PRODUCTS COULD CONTAIN SIGNIFICANT DEFECTS
The software products we offer are inherently complex and, despite
extensive testing and quality control, have in the past and may in the future
contain errors or defects, especially when we first introduce them. We have in
the past and may in the future need to issue corrective releases of our software
products to fix these defects or errors. These defects and errors could cause
damage to our reputation, loss of revenue, product returns, order cancellations
or lack of market acceptance of our products. Accordingly, these defects and
errors could have a material adverse effect on our business, results of
operations or financial condition.
Our license agreements with our customers typically contain provisions
designed to limit our exposure to potential product liability claims. It is
possible, however, that the limitation of liability provisions contained in our
license agreements may not be effective as a result of existing or future
national, federal, state or local laws or ordinances or unfavorable judicial
decisions. Although we have not experienced any product liability claims to
date, sale and support of our products entails the risk of such claims, which
could be substantial in light of the use of our products in enterprise-wide
applications. If a claimant successfully brings a product liability claim
against us, it could have a material adverse effect on our business, results of
operations or financial condition.
WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR PROPRIETARY TECHNOLOGY
Our success depends upon our proprietary technology. We rely on a
combination of patent, copyright, trademark and trade secret rights,
confidentiality procedures and licensing arrangements to establish and protect
our proprietary rights. We have four patent applications pending and one patent
application allowed in the United States. It is possible
10
<PAGE> 12
that our pending applications will not be allowed or that competitors will
successfully challenge the validity or scope of our allowed patent or any future
allowed patents. Our patents alone may not provide us with any significant
competitive advantage.
As part of our confidentiality procedures, we generally enter into
non-disclosure agreements with our employees, distributors and corporate
partners and into license agreements with respect to our software, documentation
and other proprietary information. Despite these precautions, third parties
could copy or otherwise obtain and use our products or technology without
authorization, or develop similar technology independently. It is difficult for
us to police unauthorized use of our products, and, although we are unable to
determine the extent to which piracy of our software products exists, software
piracy is a prevalent problem in our industry in general. Effective protection
of intellectual property rights is unavailable or limited in certain foreign
countries. There can be no assurance that the protection of our proprietary
rights will be adequate or that our competitors will not independently develop
similar technology, duplicate our products or design around any patents or other
intellectual property rights we hold.
We do not believe that any of our products infringes the proprietary rights
of third parties. There can be no assurance, however, that third parties will
not claim our current or future products infringe their rights. Any such claims,
with or without merit, could cause costly litigation that could absorb
significant management time, which could materially adversely affect our
business, operating results or financial condition. Such claims also might
require us to enter into royalty or license agreements. If required, we may not
be able to obtain such royalty or license agreements, or obtain them on terms
acceptable to us, which could have a material adverse effect upon our business,
operating results or financial condition.
WE FACE YEAR 2000 RISKS
Many currently installed computer systems are not capable of distinguishing
21st century dates from 20th century dates. As a result, beginning on
January 1, 2000, computer systems and software used by many companies and
organizations in a wide variety of industries, including technology,
transportation, utilities, finance and telecommunications, will produce
erroneous results or fail unless they have been modified or upgraded to process
date information correctly. Year 2000 compliance efforts may involve significant
time and expense, and uncorrected problems could materially adversely affect our
business, financial condition or operating results. Although we believe the
current versions of our software products are Year 2000 compliant, our products
operate across the enterprise with multiple, heterogeneous third party software
systems. We may therefore face claims based on Year 2000 issues arising from the
integration and operation of our products within an enterprise system. We may
also experience reduced sales of our products as potential customers reduce
their budgets for enterprise decision support software due to increased
expenditures on their own Year 2000 compliance efforts. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations -- Year
2000 Compliance."
CERTAIN EXISTING STOCKHOLDERS CAN EXERT CONTROL OVER INFORMATICA
After this offering, our officers, directors and principal stockholders
(i.e., greater than 5% stockholders) will together control approximately %
of our outstanding common stock. As a result, these stockholders, if they act
together, will be able to control the management and affairs of Informatica and
all matters requiring stockholder approval, including the election of directors
and approval of significant corporate transactions. This
11
<PAGE> 13
concentration of ownership may have the effect of delaying or preventing a
change in control of Informatica and might affect the market price of our common
stock.
OUR STOCK PRICE MAY FLUCTUATE SUBSTANTIALLY
Prior to this offering, there has been no public market for shares of our
common stock. An active public trading market may not develop following
completion of this offering or, if developed, may not be sustained. The initial
public offering price of the shares of common stock will be determined by
negotiation between us and representatives of the underwriters. This price will
not necessarily reflect the market price of the common stock following this
offering. See "Underwriting" for a discussion of the factors to be considered in
determining the initial public offering price.
The market price for the common stock following this offering will be
affected by a number of factors, including the following:
- the announcement of new products or product enhancements by us or our
competitors;
- quarterly variations in our or our competitors' results of operations;
- changes in earnings estimates or recommendations by securities analysts;
- developments in our industry; and
- general market conditions and other factors, including factors unrelated
to our operating performance or the operating performance of our
competitors.
In addition, stock prices for many companies in the technology and emerging
growth sectors have experienced wide fluctuations that have often been unrelated
to the operating performance of such companies. Such factors and fluctuations,
as well as general economic, political and market conditions, may materially
adversely affect the market price of our common stock.
POTENTIAL SALES OF SHARES ELIGIBLE FOR FUTURE SALE AFTER THIS OFFERING COULD
CAUSE OUR STOCK PRICE TO DECLINE
If our stockholders sell substantial amounts of our common stock (including
shares issued upon the exercise of outstanding options and warrants) in the
public market following this offering, the market price of our common stock
could fall. Such sales also might make it more difficult for us to sell equity
or equity-related securities in the future at a time and price that we deem
appropriate. Upon completion of this offering, we will have outstanding
shares of common stock (based upon shares outstanding as of
January 31, 1999), assuming no exercise of the underwriters' over-allotment
option and no exercise of outstanding options or warrants after January 31,
1999. Of these shares, the shares sold in this offering will be
freely tradable. The remaining shares
12
<PAGE> 14
of common stock outstanding after this offering will be available for sale in
the public market as follows:
<TABLE>
<CAPTION>
DATE OF AVAILABILITY FOR SALE NUMBER OF SHARES
----------------------------- ----------------
<S> <C>
The date of this prospectus............................
90 days after the date of this prospectus..............
180 days after the date of this prospectus.............
At various times thereafter upon the expiration of
one-year holding periods.............................
----------
==========
</TABLE>
OUR CERTIFICATE OF INCORPORATION AND BYLAWS CONTAIN PROVISIONS THAT COULD
DISCOURAGE A TAKEOVER
Our basic corporate documents and Delaware law contain provisions that
might enable our management to resist a takeover. These provisions might
discourage, delay or prevent a change in the control of Informatica or a change
in our management. Our amended and restated certificate of incorporation filed
in connection with this offering provides for a classified board of directors
with each class of directors subject to re-election every three years. This
classified board when implemented will have the effect of making it more
difficult for third parties to insert their representatives on our board of
directors and gain control of Informatica. These provisions could also
discourage proxy contests and make it more difficult for you and other
stockholders to elect directors and take other corporate actions. The existence
of these provisions could limit the price that investors might be willing to pay
in the future for shares of the common stock. For more information, see
"Description of Capital Stock."
CHANGES IN ACCOUNTING STANDARDS COULD AFFECT THE CALCULATION OF OUR FUTURE
OPERATING RESULTS
Statement of Position 97-2, "Software Revenue Recognition," was issued in
October 1997 by the American Institute of Certified Public Accountants and
amended by Statement of Position 98-4. We adopted Statement of Position 97-2
effective January 1, 1998. Based on our interpretation of Statement of Position
97-2 and Statement of Position 98-4, we believe our current revenue recognition
policies and practices, as discussed in "Management's Discussion and Analysis of
Financial Condition and Result of Operations -- Overview," are consistent with
Statement of Position 97-2 and Statement of Position 98-4. The American
Institute of Certified Public Accountants has also issued Statement of Position
98-9 which will be effective for us for transactions entered into beginning
January 1, 2000. However, full implementation guidelines for these standards
have not yet been issued. Once available, such implementation guidelines could
lead to unanticipated changes in our current revenue recognition policies, which
changes could materially adversely affect our business, financial condition or
operating results. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Source of Revenues and Revenue
Recognition Policy."
IMMEDIATE AND SUBSTANTIAL DILUTION
If you purchase shares of our common stock in this offering, you will incur
immediate and substantial dilution in pro forma net tangible book value. If the
holders of outstanding options or warrants exercise those options or warrants,
you will incur further dilution. See "Dilution."
13
<PAGE> 15
WE HAVE BROAD DISCRETION IN THE USE OF PROCEEDS
We currently have no specific plans for using substantially all of the
proceeds of this offering. As a consequence, we will have broad discretion to
allocate a large percentage of the proceeds to uses which the stockholders may
not deem desirable. See "Use of Proceeds."
14
<PAGE> 16
USE OF PROCEEDS
The net proceeds from the sale of shares of our common stock, at an assumed
initial offering price of $ per share, are estimated to be approximately
$ ($ if the underwriters' over-allotment option is exercised
in full).
The principal purposes of this offering are to obtain additional working
capital, to create a public market for our common stock and to facilitate future
access by Informatica to public equity markets. The net proceeds to Informatica
are expected to be used for general corporate purposes, including working
capital. Pending such uses, the net proceeds of this offering will be invested
in investment grade, interest-bearing instruments.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock. We
currently intend to retain earnings, if any, to support the development of our
business and do not anticipate paying cash dividends for the foreseeable future.
Payment of future dividends, if any, will be at the discretion of our board of
directors after taking into account various factors, including our financial
condition, operating results and current and anticipated cash needs.
15
<PAGE> 17
CAPITALIZATION
The following table sets forth the capitalization of Informatica as of
December 31, 1998, (1) on an actual basis, (2) on a pro forma basis to give
effect to the conversion into common stock of all outstanding shares of
redeemable convertible preferred stock and the filing of our amended and
restated certificate of incorporation to increase the authorized shares of
common stock and to adjust the authorized shares of preferred stock prior to the
closing of this offering and (3) on a pro forma as adjusted to give effect to
the sale by us of shares of our common stock offered hereby at an
assumed initial public offering price of $ per share and the receipt of
estimated net proceeds therefrom. This table should be read in conjunction with
the consolidated financial statements and notes thereto and "Selected
Consolidated Financial Data" included elsewhere in this prospectus.
<TABLE>
<CAPTION>
DECEMBER 31, 1998
------------------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ------------------- -------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C>
Long-term obligations, including current
portion................................. $ 459 $ 459 $ 459
Redeemable convertible preferred stock, no
par value; 8,170,000 shares authorized,
7,940,000 shares issued and outstanding,
(actual); no shares authorized, issued
and outstanding (pro forma and pro forma
as adjusted)............................ 17,586 -- --
Stockholders' equity (deficit):
Preferred stock: no par value, none
authorized, issued and outstanding
(actual); $0.001 par value, 2,000,000
shares authorized, no shares issued
or outstanding (pro forma and pro
forma as adjusted)................... -- -- --
Common stock: no par value, 14,770,000
shares authorized, 3,426,605 shares
issued and outstanding, actual; $.001
par value, 100,000,000 shares
authorized, 11,366,605 shares issued
and outstanding pro forma;
100,000,000 shares authorized,
shares issued and
outstanding, pro forma as
adjusted(1).......................... 289 17,875
Cumulative foreign currency translation
adjustment........................... 19 19 19
Notes receivable from stockholders...... (40) (40) (40)
Deferred compensation................... (33) (33) (33)
Accumulated deficit..................... (19,704) (19,704) (19,704)
-------- -------- --------
Total stockholders' equity
(deficit).................... (19,469) (1,883)
-------- -------- --------
Total capitalization............ $ (1,424) $ (1,424) $
======== ======== ========
</TABLE>
- -------------------------
(1) Excludes 2,994,209 shares of common stock issuable upon exercise of options
outstanding as of December 31, 1998 having a weighted average exercise price
of $2.93 and 2,269,258 additional shares authorized or expected to be
authorized for issuance under our stock plans. See "Management -- Stock
Plans" and Note 4 of Notes to Consolidated Financial Statements.
16
<PAGE> 18
DILUTION
If you invest in our common stock, your interest will be diluted to the
extent of the difference between the public offering price per share of our
common stock and the pro forma as adjusted net tangible book value per share of
our common stock after this offering. Net tangible book value dilution per share
represents the difference between the amount per share paid by purchasers of
shares of common stock in this offering and the pro forma net tangible book
value per share of common stock immediately after completion of this offering.
At December 31, 1998, our pro forma net tangible book value was
$(1,883,000) or approximately $(0.55) per share. Pro forma net tangible book
value per share represents the amount of our stockholders' equity divided by
11,366,605 shares of common stock (on a pro forma basis to give effect to the
conversion upon completion of this offering of all shares of redeemable
convertible preferred stock). After giving effect to the sale by us of
shares of common stock offered hereby at an assumed initial
public offering price of $ per share, and the application of the estimated
net proceeds therefrom, our pro forma as adjusted net tangible book value as of
December 31, 1998 would have been $ or $ per share. This represents
an immediate increase in net tangible book value of $ per share to existing
stockholders and an immediate dilution in net tangible book value of $ per
share to the purchasers of common stock in this offering, as illustrated in the
following table:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share....... $
Pro forma net tangible book value per share as of
December 31, 1998.............................. $(0.55)
Increase per share attributable to new
investors......................................
------
Pro forma as adjusted net tangible book value per
share after this offering...........................
-----
Dilution per share to new investors................... $
=====
</TABLE>
The following table sets forth, on a pro forma basis as of December 31,
1998, the differences between the existing stockholders and the purchasers of
shares in this offering (at an assumed initial public offering price of
$ per share) with respect to the number of shares purchased from
Informatica, the total consideration paid and the average price per share paid:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- --------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders...... 11,366,605 % $17,889,000 % $1.57
New investors(1)...........
---------- ----- ----------- -----
Total............ 100.0% $ 100.0%
========== ===== =========== =====
</TABLE>
The above computations assume no exercise of options after December 31,
1998. Excludes 2,994,209 shares of common stock issuable upon exercise of
options outstanding as of December 31, 1998 having a weighted average exercise
price of $2.93 per share and 2,269,258 additional shares authorized or expected
to be authorized for issuance under our stock plans. To the extent that
outstanding options are exercised, there will be further dilution to new
investors. See "Capitalization," "Management -- Stock Plans" and Note 4 of Notes
to Consolidated Financial Statements.
17
<PAGE> 19
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data and other operating
information are derived from our consolidated financial statements, which have
been audited by Ernst & Young LLP, independent auditors, except that the
statement of operations data for 1994 is unaudited. When you read this selected
consolidated financial data, it is important that you also read the historical
consolidated financial statements and related notes included in this prospectus,
as well as the section of this prospectus related to "Management's Discussion
and Analysis of Financial Condition and Results of Operations." Historical
results are not necessarily indicative of future results.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1994 1995 1996 1997 1998
------- ----- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Revenues:
License.................................. $ 11 $ 44 $ 1,843 $10,041 $21,148
Service.................................. 446 545 217 2,145 7,597
------- ----- ------- ------- -------
Total revenues...................... 457 589 2,060 12,186 28,745
Cost of revenues:
License.................................. -- -- 34 190 376
Service.................................. 158 180 124 2,163 4,599
------- ----- ------- ------- -------
Total cost of revenues.............. 158 180 158 2,353 4,975
------- ----- ------- ------- -------
Gross profit................................ 299 409 1,902 9,833 23,770
Operating expenses:
Research and development................. 132 641 2,119 3,831 7,075
Sales and marketing...................... 37 203 3,676 10,951 22,235
General and administrative............... 91 89 663 2,036 2,636
------- ----- ------- ------- -------
Total operating expenses............ 260 933 6,458 16,818 31,946
------- ----- ------- ------- -------
Income (loss) from operations............... 39 (524) (4,556) (6,985) (8,176)
Interest income(expense), net............... 2 6 8 221 261
------- ----- ------- ------- -------
Income (loss) before income taxes........... 41 (518) (4,548) (6,764) (7,915)
Income tax provision........................ -- -- -- -- --
------- ----- ------- ------- -------
Net income (loss)........................... $ 41 $(518) $(4,548) $(6,764) $(7,915)
======= ===== ======= ======= =======
Pro forma basic and diluted net loss per
share(1)................................. $ (0.71)
=======
Shares used in calculation of pro forma
basic and diluted net loss per
share(1)................................. 11,133
=======
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------------
1994 1995 1996 1997 1998
------- ------ ------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................. $ 27 $ 906 $ 3,023 $ 8,440 $ 6,059
Working capital (deficit)................. 48 896 3,218 5,040 (2,304)
Total assets.............................. 48 1,104 5,056 12,692 10,764
Long-term obligations, net of current
portion................................ -- -- 270 102 217
Redeemable convertible preferred stock.... -- 1,472 8,593 17,586 17,586
Total stockholders' equity (deficit)...... 48 (469) (5,011) (11,772) (19,469)
</TABLE>
- -------------------------
(1) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the method used to determine the number of shares used in computing pro
forma net loss per share.
18
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and our results of
operations should be read in conjunction with the Consolidated Financial
Statements and the Notes thereto included elsewhere in this prospectus. This
discussion contains forward-looking statements which involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in the forward-looking statements as a result of certain factors, including, but
not limited to, those discussed in "Risk Factors" and elsewhere in this
prospectus.
OVERVIEW
We are a leading provider of software solutions that help companies deploy,
manage, maintain and grow enterprise decision support systems.
Informatica was founded in February 1993. We initially generated revenues
and cash flow through consulting contracts for data extraction and data
warehousing assignments while our engineering team developed our initial
software product. The first prototype version of our PowerMart product was
completed in 1994, and we closed our first equity financing shortly afterwards
in 1995. We shipped the first commercial release of PowerMart in May 1996. With
the initial release and early acceptance of PowerMart, we accelerated the
recruitment of personnel, purchased additional operating assets, commenced
marketing our products and substantially invested in building a direct sales
force and a service and support capability.
In 1997, we invested heavily in expanding our business by growing our
product development team, opening a sales office and incorporating a subsidiary
in the United Kingdom. We also expanded our distribution to include original
equipment manufacturer and reseller channels. In 1998, we shipped the first
commercial release of our PowerCenter product, targeted for enterprise decision
support systems. We also incorporated a subsidiary in Germany in 1998 to further
expand our international sales. Our total headcount increased from 50 to 121 to
173 at year-end 1996, 1997 and 1998, respectively. These investments contributed
to revenue increases from $2.1 million to $12.2 million to $28.7 million in
1996, 1997 and 1998, respectively, representing growth of 492% from 1996 to 1997
and 136% from 1997 to 1998. Operating expenses grew from $6.5 million to $16.8
million to $31.9 million in 1996, 1997 and 1998, respectively. Operating
expenses as a percentage of revenues decreased from 313% to 138% to 111% in
1996, 1997 and 1998, respectively. Our investments in our sales force and
infrastructure described above contributed to net losses of $4.5 million, $6.8
million and $7.9 million in 1996, 1997 and 1998, respectively.
We sell through direct sales forces in the United Kingdom and Germany and
also through resellers throughout Europe. Sales outside of North America and
Europe to date have been less than 1% of total consolidated revenues, although
we anticipate expanding outside of these two regions in the future.
International total consolidated revenues from both our direct sales force and
foreign indirect channel partners accounted for 8%, 7% and 13% of our total
consolidated revenues for 1996, 1997 and 1998, respectively. See "Risk
Factors -- We Face Risks from Our International Operations" and Note 8 of Notes
to Consolidated Financial Statements.
19
<PAGE> 21
SOURCE OF REVENUES AND REVENUE RECOGNITION POLICY
We generate revenues from sales of software licenses and services. Our
license revenues are derived from our PowerMart and PowerCenter software
products and, to a much lesser extent, from our PowerConnect and PowerPlugs
software products. We receive software license revenues from licensing our
products directly to end users and indirectly through resellers and original
equipment manufacturers. We receive service revenues from maintenance contracts
and training and consulting services that we perform for customers that license
our products either directly from us or indirectly through resellers.
We recognize license revenues when a noncancelable license agreement has
been signed, the product has been shipped, the fees are fixed and determinable,
collectibility is probable and vendor-specific objective evidence exists to
allocate the total fee to elements of the arrangement. Vendor-specific objective
evidence is based on the price charged when an element is sold separately. In
the case of an element not sold separately, the price is established by
authorized management. If an acceptance period is required, we recognize revenue
upon customer acceptance or the expiration of the acceptance period. We also
enter into reseller arrangements that typically provide for sublicense fees
based on a percentage of list price. We recognize revenue upon shipment to the
reseller or end user and when collectibility is probable, or upon cash
collections based on credit history with the reseller.
We recognize revenues from services, which consist of fees for ongoing
support and product updates, ratably over the term of the contract, typically
one year. Consulting revenues are primarily related to implementation services
performed on a time-and-materials basis under separate service arrangements
related to the installation of our software products. We recognize revenues from
consulting and training services as the services are performed.
Statement of Position 97-2, "Software Revenue Recognition," was issued in
October 1997 by the American Institute of Certified Public Accountants and
amended by Statement of Position 98-4. We adopted Statement of Position 97-2
effective January 1, 1998. Based on our interpretation of Statement of Position
97-2 and Statement of Position 98-4, we believe our current revenue recognition
policies and practices, as discussed in "Management's Discussion and Analysis of
Financial Condition and Result of Operations -- Overview," are consistent with
Statement of Position 97-2 and Statement of Position 98-4. The American
Institute of Certified Public Accountants has also issued Statement of Position
98-9 which will be effective for us for transactions entered into beginning
January 1, 2000. However, full implementation guidelines for these standards
have not yet been issued. Once available, such implementation guidelines could
lead to unanticipated changes in our current revenue recognition policies, which
changes could materially adversely affect our business, financial condition or
operating results. See "Risk Factors -- Our Operating Results Fluctuate from
Quarter to Quarter" and Note 1 of Notes to Consolidated Financial Statements.
20
<PAGE> 22
The following table presents certain financial data as a percentage of
total revenues:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
Revenues:
License.............................. 2% 7% 89% 82% 74%
Service.............................. 98 93 11 18 26
--- --- ---- --- ---
Total revenues.................. 100 100 100 100 100
Cost of revenues:
License(1)........................... -- -- 2 2 1
Service(2)........................... 35 31 6 18 16
--- --- ---- --- ---
Total cost of revenues.......... 35 31 8 20 17
--- --- ---- --- ---
Gross margin............................ 65 69 92 80 83
Operating expenses:
Research and development............. 29 109 103 31 25
Sales and marketing.................. 8 34 178 90 77
General and administrative........... 20 15 32 17 9
--- --- ---- --- ---
Total operating expenses........ 57 158 313 138 111
--- --- ---- --- ---
Income (loss) from operations........... 8 (89) (221) (58) (28)
Interest income (expense), net.......... -- 1 -- 2 1
--- --- ---- --- ---
Income (loss) before income taxes....... 8 (88) (221) (56) (27)
Income tax provision.................... -- -- -- -- --
--- --- ---- --- ---
Net income (loss)....................... 8% (88)% (221)% (56)% (27)%
=== === ==== === ===
</TABLE>
- -------------------------
(1) As a percentage of license revenues, costs of license revenues have been
0.0%, 0.0%, 1.8%, 1.9% and 1.8%, respective to the years presented
chronologically above.
(2) As a percentage of service revenues, costs of service revenues have been
35.4%, 33.0%, 57.1%, 100.8%, and 60.5%, respective to the years presented
chronologically above.
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
REVENUES
Our total revenues increased from $2.1 million to $12.2 million to $28.7
million in 1996, 1997 and 1998, respectively, representing growth of 492% from
1996 to 1997 and 136% from 1997 to 1998. Our license revenues increased from
$1.8 million to $10.0 million to $21.1 million in 1996, 1997 and 1998,
respectively, representing growth of 445% from 1996 to 1997 and 111% from 1997
to 1998. These increases were due primarily to increases in the number of
licenses sold and the average transaction size, reflecting increased acceptance
of PowerMart and PowerCenter and expansion of our direct sales organization and
reseller channels. Service revenues increased from $217,000 to $2.1 million to
$7.6 million in 1996, 1997 and 1998, respectively, representing growth of 888%
from 1996 to 1997 and 254% from 1997 to 1998. These increases were due primarily
to an increase in sales and a larger installed license base in each successive
year. We expect service revenues will increase as a percentage of total revenues
in future periods to the extent our installed license base grows and as we
continue to provide additional services to our customer base.
21
<PAGE> 23
COST OF REVENUES
Cost of License Revenues
Our cost of license revenues consists primarily of product packaging,
documentation, production costs and software royalties. Cost of license revenues
were $34,000, $190,000 and $376,000 in 1996, 1997 and 1998, respectively. The
increase in absolute dollar amount was due primarily to increases in license
revenues. Cost of license revenues has remained relatively constant at
approximately 2% of license revenues.
Cost of Service Revenues
Our cost of service revenues is a combination of costs of maintenance,
training and consulting revenues. Our cost of maintenance revenues consists
primarily of costs associated with software upgrades, telephone support services
and on-site visits. Cost of training revenues consists primarily of the costs of
providing training classes and materials, which are provided both off-site and
at our headquarters. Cost of consulting revenues consists primarily of personnel
costs and expenses incurred in providing consulting services at customers'
facilities. Because we believe that providing a high level of support to
customers is a strategic advantage, we have invested significantly in
infrastructure and personnel. Cost of service revenues was $124,000, $2.2
million and $4.6 million, in 1996, 1997 and 1998, respectively, representing
57%, 101% and 61% of service revenues. Cost of service revenues increased on a
percentage basis from 1996 to 1997 due primarily to the cost of additional
consulting personnel hired in 1997 as we built our consulting organization in
anticipation of increased demand for our services. Cost of service revenues as a
percent of service revenues declined in 1998 due primarily to economies of scale
achieved as our revenues and operations grew. We expect service revenues to
increase as a percentage of total revenues and, as a consequence, our cost of
service revenues to increase in absolute dollars and as a percentage of total
revenues.
OPERATING EXPENSES
Research and Development
Our research and development expenses consist primarily of salaries and
other personnel-related expenses and depreciation of computer equipment and
supplies. Research and development expenses increased from $2.1 million to $3.8
million to $7.1 million in 1996, 1997 and 1998, respectively. The increase in
each of these periods was due primarily to an increase in personnel costs in
each such period. Research and development expenses represented 103%, 31% and
25% of total revenues in 1996, 1997 and 1998, respectively. The decrease as a
percentage of total revenues was due primarily to growth in our total revenues.
We believe that a significant level of investment for product research and
development is required to remain competitive and, accordingly, we expect to
continue to devote substantial resources to product research and development
such that research and development expenses will increase in absolute dollars.
To date, all research and development costs have been expensed as incurred in
accordance with Financial Accounting Standards Board Statement No. 86. See Note
1 of Notes to Consolidated Financial Statements.
22
<PAGE> 24
Sales and Marketing
Our sales and marketing expenses consist primarily of personnel costs,
including commissions, as well as costs of public relations, seminars, marketing
programs, lead generation and trade shows. Sales and marketing expenses
increased from $3.7 million to $11.0 million to $22.2 million in 1996, 1997 and
1998, respectively. The increases reflect the hiring of additional sales and
marketing personnel in connection with the building of our direct, original
equipment manufacturer and reseller channels, and higher sales commissions
associated with increased sales volume. Sales and marketing expenses represented
178%, 90% and 77% of our total revenues in 1996, 1997 and 1998, respectively.
The decrease as a percentage of total revenues was due primarily to growth in
total revenues. We expect to continue hiring additional sales and marketing
personnel and to increase promotion and other marketing expenditures in the
future. Accordingly, we expect that sales and marketing expenses will increase
in absolute dollars in future periods.
General and Administrative
Our general and administrative expenses consist primarily of personnel
costs for finance, human resources, legal and general management, as well as
professional expenses, such as legal and accounting. General and administrative
expenses increased from $663,000 to $2.0 million to $2.6 million in 1996, 1997
and 1998, respectively, representing 32%, 17% and 9% of our total revenues in
1996, 1997 and 1998, respectively. Expenses increased in each period due
primarily to increased staffing necessary to manage and support our growth. The
decrease as a percentage of our total revenues was due primarily to the growth
in our total revenues. We believe that our general and administrative expenses
will increase in absolute dollar amounts as we expand our administrative staff,
add infrastructure and incur additional costs related to being a public company,
such as expenses related to directors' and officers' insurance, investor
relations programs and increased professional fees.
INTEREST INCOME (EXPENSE)
Interest income (expense) represents interest income earned on our cash and
cash equivalents and interest expense on capital equipment leases. Foreign
exchange gains and losses have been immaterial to date.
PROVISION FOR INCOME TAXES
We incurred net operating losses in 1996, 1997 and 1998 and consequently
paid no federal, state and foreign income taxes in each of those years.
As of December 31, 1998, we had federal and state net operating loss
carryforwards of approximately $9.8 million and $2.3 million, respectively. We
also had federal and state research and development tax credit carryforwards of
approximately $500,000 and $300,000, respectively. Our net operating loss
carryforwards will expire at various dates beginning in 1999 through 2018, if
not utilized.
As of December 31, 1997 and 1998, we had deferred tax assets of
approximately $4.4 million and $7.8 million, respectively. Our net deferred tax
assets have been fully offset by a valuation allowance. Our net valuation
allowance increased by $2.6 million and $3.4 million during 1997 and 1998,
respectively. Deferred tax assets relate primarily to net operating loss
carryforwards and capitalized research and development costs. See Note 6 of
Notes to Consolidated Financial Statements.
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<PAGE> 25
QUARTERLY RESULTS OF OPERATIONS
The following tables set forth our unaudited quarterly results of
operations data for each of the eight quarters in 1997 and 1998 as well as such
data expressed as a percentage of our total revenues for the quarters presented.
You should read the following table in conjunction with our Consolidated
Financial Statements and related Notes thereto included elsewhere in this
prospectus. We have prepared this unaudited information on the same basis as the
audited Consolidated Financial Statements. These tables include all adjustments,
consisting only of normal recurring adjustments, that we consider necessary for
a fair presentation of our financial position and operating results for the
quarters presented. You should not draw any conclusions about our future results
from the results of operations for any quarter.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------------------
MAR. 31, JUN. 30, SEPT. 30, DEC. 31, MAR. 31, JUN. 30, SEPT. 30, DEC. 31,
1997 1997 1997 1997 1998 1998 1998 1998
-------- -------- --------- -------- -------- -------- --------- --------
(IN THOUSANDS, EXCEPT AS A PERCENTAGE OF TOTAL REVENUES)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
Revenues:
License............................. $ 1,489 $ 2,092 $ 2,672 $ 3,788 $ 4,217 $ 4,704 $ 5,445 $ 6,782
Service............................. 201 434 592 918 1,383 1,696 2,094 2,424
------- ------- ------- ------- ------- ------- ------- -------
Total revenues.................. 1,690 2,526 3,264 4,706 5,600 6,400 7,539 9,206
------- ------- ------- ------- ------- ------- ------- -------
Cost of revenues:
License............................. 40 37 42 71 28 179 81 88
Service............................. 247 440 635 841 920 1,002 1,173 1,504
------- ------- ------- ------- ------- ------- ------- -------
Total cost of revenues.......... 287 477 677 912 948 1,181 1,254 1,592
------- ------- ------- ------- ------- ------- ------- -------
Gross profit.......................... 1,403 2,049 2,587 3,794 4,652 5,219 6,285 7,614
Operating expenses:
Research and development............ 738 761 896 1,436 1,613 1,676 1,727 2,059
Sales and marketing................. 1,768 2,293 3,092 3,798 4,715 5,472 5,934 6,114
General and administrative.......... 357 412 545 722 634 643 625 734
------- ------- ------- ------- ------- ------- ------- -------
Total operating expenses........ 2,863 3,466 4,533 5,956 6,962 7,791 8,286 8,907
------- ------- ------- ------- ------- ------- ------- -------
Loss from operations.................. (1,460) (1,417) (1,946) (2,162) (2,310) (2,572) (2,001) (1,293)
Interest income (expense), net........ 9 33 100 79 81 73 65 42
------- ------- ------- ------- ------- ------- ------- -------
Loss before income taxes.............. (1,451) (1,384) (1,846) (2,083) (2,229) (2,499) (1,936) (1,251)
Income tax provision.................. -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net loss.............................. $(1,451) $(1,384) $(1,846) $(2,083) $(2,229) $(2,499) $(1,936) $(1,251)
======= ======= ======= ======= ======= ======= ======= =======
AS A PERCENTAGE OF TOTAL REVENUES:
Revenues:
License............................. 88% 83% 82% 80% 75% 73% 72% 74%
Service............................. 12 17 18 20 25 27 28 26
------- ------- ------- ------- ------- ------- ------- -------
Total revenues.................. 100 100 100 100 100 100 100 100
------- ------- ------- ------- ------- ------- ------- -------
Cost of revenues:
License(1).......................... 2 2 1 1 1 3 1 1
Service(2).......................... 15 17 20 18 16 15 16 16
------- ------- ------- ------- ------- ------- ------- -------
Total cost of revenues.......... 17 19 21 19 17 18 17 17
------- ------- ------- ------- ------- ------- ------- -------
Gross margin.......................... 83 81 79 81 83 82 83 83
Operating expenses:
Research and development............ 44 30 27 31 29 26 23 22
Sales and marketing................. 104 91 95 81 84 86 79 67
General and administrative.......... 21 16 17 15 11 10 8 8
------- ------- ------- ------- ------- ------- ------- -------
Total operating expenses........ 169 137 139 127 124 122 110 97
------- ------- ------- ------- ------- ------- ------- -------
Loss from operations.................. (86) (56) (60) (46) (41) (40) (27) (14)
Interest income (expense), net........ -- 1 3 2 1 1 1 --
------- ------- ------- ------- ------- ------- ------- -------
Loss before income taxes.............. (86) (55) (57) (44) (40) (39) (26) (14)
Income tax provision.................. -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- -------
Net loss.............................. (86)% (55)% (57)% (44)% (40)% (39)% (26)% (14)%
======= ======= ======= ======= ======= ======= ======= =======
</TABLE>
- -------------------------
(1) As a percentage of license revenues, costs of license revenues have been
2.7%, 1.8%, 1.6%, 1.9%, 0.7%, 3.8%, 1.5% and 1.3%, respective to the
quarters presented chronologically above.
(2) As a percentage of service revenues, costs of service revenues have been
122.9%, 101.4%, 107.3%, 91.6%, 66.5%, 59.1%, 56.0% and 62.0%, respective to
the quarters presented chronologically above.
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<PAGE> 26
The trends discussed in the annual comparisons of operating results from
1996 through 1998 generally apply to the comparison of results of operations for
the eight quarters in 1997 and 1998, adjusted for certain seasonality we have
experienced as discussed below. Our total revenues increased in every quarter
during this period, as did both our license revenues and service revenues. Our
service revenues, as a percentage of total revenues, increased from 12% in the
first quarter of 1997 to 26% in the fourth quarter of 1998. Maintenance revenues
increased as our installed customer base grew, while consulting revenues
increased as we have found it strategically advantageous to provide more
consulting in connection with sales of our software products. We expect
consulting revenues to continue to increase as a percentage of total revenues.
Overall, although the increase in service revenues as a percent of total
revenues has been more moderate in recent quarters, we expect service revenues
will increase as a percentage of total revenues in future periods to the extent
our installed license base grows and as we continue to provide additional
services to our customer base. This percentage may also increase due to our
adoption on January 1, 1999 of the Software Revenue Recognition policy SOP 98-4.
Our adoption of this policy may also require us to defer recognition of some of
our revenues in future periods.
During the eight quarters in 1997 and 1998, cost of revenues remained
relatively constant as a percentage of total revenues, although these costs
increased every quarter in absolute dollar terms. We expect service revenues to
increase as a percentage of total revenues and, as a consequence, our cost of
service revenues to increase on an absolute dollar and percentage of total
revenues basis. Operating expenses, in absolute dollar terms, also increased in
every quarter during this period, while operating expenses as a percentage of
total revenues declined due primarily to efficiencies created as our departments
grew to support the revenue growth. The decline in sales and marketing expenses
as a percentage of total revenues, particularly in the quarters ended September
30, 1998 and December 31, 1998, was positively impacted by selling efficiencies
resulting from higher average sales prices, larger transactions and growth in
follow-on sales to existing customers, as well as by the allocation of marketing
expenses over a substantially increased revenue base. In absolute dollar terms,
our net loss generally increased during this period through the second quarter
of 1998, then decreased in each of the quarters ended September 30, 1998 and
December 31, 1998. Although our net loss as a percentage of total revenues
generally decreased from quarter to quarter during this period, there can be no
assurance that this will continue in future periods. Our quarterly operating
results varied widely in the past, and we expect that they will continue to
fluctuate in the future as a result of a number of factors, many of which are
outside our control. See "Risk Factors -- Our Operating Results Fluctuate from
Quarter to Quarter."
We have experienced, and expect to continue to experience, seasonality with
respect to software license revenues. In recent years, there has been a
relatively greater demand for our products in the fourth quarter than in each of
the first three quarters of the year, particularly the first quarter. As a
result, we have historically experienced relatively higher bookings in the
fourth quarter and relatively lighter bookings in the first quarter. While some
of this effect can be attributed to the rapid growth of revenues in recent
years, we believe that these fluctuations are caused by customer buying patterns
(often influenced by year-end budgetary pressures) and the efforts of our direct
sales force to meet or exceed year-end sales quotas. We expect that seasonal
trends will continue for the foreseeable future.
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<PAGE> 27
LIQUIDITY AND CAPITAL RESOURCES
We have funded our operations to date primarily through private sales of
preferred equity securities, totaling $17.6 million and, to a lesser extent,
capital equipment leases. As of December 31, 1998, we had $6.1 million in cash
and cash equivalents.
Our operating activities resulted in net cash outflows of $4.8 million,
$2.8 million and $1.4 million in 1996, 1997 and 1998, respectively. The sources
of cash were primarily increases in accounts payable and accrued liabilities,
increases in accrued compensation and related expenses and increases in deferred
revenue in 1997 and 1998. Uses of cash in operating activities were primarily
due to net operating losses and accounts receivable for 1996, 1997 and 1998.
Investing activities used cash of $100,000 in 1996, $584,000 in 1997 and
$872,000 in 1998 primarily for the purchase of capital equipment.
Financing activities provided cash of $7.1 million in 1996 and $8.8 million
in 1997 primarily through the issuance of preferred stock and proceeds from the
exercise of stock options, partially offset by payments on capital lease
obligations. Financing activities used cash totaling $97,000 in 1998 primarily
from the payments on capital lease obligations partially offset by proceeds from
the exercise of stock options.
As of December 31, 1998, our principal commitments consisted of obligations
under operating and capital leases. As of December 31, 1998, we had $459,000 in
outstanding borrowings under capital lease agreements which are payable through
2001. During 1998, we maintained a revolving line of credit which provided for
borrowings of up to $3.0 million based on 80% of eligible accounts receivable.
Borrowings under this line of credit bore interest, payable monthly, at 0.25%
above prime rate. Borrowings were secured by substantially all of our assets,
and the agreement also required us to comply with certain financial covenants.
We chose not to renew this line of credit when it expired in December 1998. See
Notes 2 and 3 of Notes to Consolidated Financial Statements.
Deferred revenues consists primarily of the unrecognized portion of
revenues received under maintenance contracts. Capital expenditures were
primarily for computer workstations used for product development, product
demonstrations and customer support.
We believe that the net proceeds from this offering, together with our
current cash balances and the cash flows generated by operations and tax
refunds, if any, will be sufficient to satisfy our anticipated cash needs for
working capital and capital expenditures for at least the next 12 months.
Thereafter, we may require additional funds to support our working capital
requirements, or for other purposes, and may seek to raise such additional funds
through public or private equity financings or from other sources. We may not be
able to obtain adequate or favorable financing at that time. Any financing we
obtain may dilute your ownership interests.
A portion of our cash may be used to acquire or invest in complementary
businesses or products or to obtain the right to use complementary technologies.
From time to time, in the ordinary course of business, we may evaluate potential
acquisitions of such businesses, products or technologies. We have no current
plans, agreements or commitments, and are not currently engaged in any
negotiations with respect to any such transaction.
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<PAGE> 28
YEAR 2000 COMPLIANCE
Many currently installed computer systems are not capable of distinguishing
21st century dates from 20th century dates. As a result, beginning on January
1, 2000, computer systems and software used by many companies and organizations
in a wide variety of industries (including technology, transportation,
utilities, finance and telecommunications) will produce erroneous results or
fail unless they have been modified or upgraded to process date information
correctly. Significant uncertainty exists in the software industry and other
industries concerning the scope and magnitude of problems associated with the
century change. We recognize the need to ensure our operations will not be
adversely affected by Year 2000 software failures.
We have completed our initial assessment of the potential overall impact of
the impending century change on our business, financial condition and operating
results. Based on our current assessment, we believe the current versions of our
software products are Year 2000 compliant -- that is, they are capable of
adequately distinguishing 21st century dates from 20th century dates.
However, our products are generally integrated into enterprise systems involving
sophisticated hardware and complex software products that we cannot adequately
evaluate for Year 2000 compliance. We may face claims based on Year 2000
problems in other companies' products, or based on issues arising from the
integration of multiple products within an overall system. Although we have not
been a party to any litigation or arbitration proceeding involving our products
or services related to Year 2000 compliance issues, we may in the future be
required to defend our products or services in such proceedings or to negotiate
resolutions of claims based on Year 2000 issues. The costs of defending and
resolving Year 2000-related disputes, regardless of the merits of such disputes,
and any liability we have for Year 2000-related damages, including consequential
damages, could materially adversely affect our business, financial condition or
operating results. In addition, we believe that the purchasing patterns of
customers and potential customers may be affected by Year 2000 issues as
companies expend significant resources to correct or upgrade their current
software systems for Year 2000 compliance. These expenditures may result in
reduced funds available to purchase software products such as those we offer. To
the extent Year 2000 issues cause a significant delay in, or cancellation of,
decisions to purchase our products or services, our business, financial
condition and operating results would be materially adversely affected.
We have reviewed our internal management information and other critical
business systems to identify any Year 2000 problems. We also have communicated
with the external vendors that supply us with material software and information
systems and with our significant suppliers to determine their Year 2000
readiness. In the course of these investigations, we have not encountered any
material Year 2000 problems with these third-party products.
We have completed our evaluation of whether the infrastructure and building
systems in our headquarters facility, such as security and sprinkler systems,
and all information technology systems, such as telephony and computer network
systems, are Year 2000 compliant.
To date, we have not incurred any material costs directly associated with
our Year 2000 compliance efforts, except for compensation expense associated
with our salaried employees who have devoted some of their time to our Year 2000
assessment and remediation efforts. As discussed above, we do not expect the
total cost of Year 2000 problems to be material to our business, financial
condition and operating results. However,
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<PAGE> 29
during the months prior to the century change, we will continue to evaluate new
versions of our software products, new software and information systems provided
to us by third parties and any new infrastructure systems that we acquire to
determine whether they are Year 2000 compliant. Despite our current assessment,
we may not identify and correct all significant Year 2000 problems on a timely
basis. Year 2000 compliance efforts may involve significant time and expense,
and unremediated problems could materially adversely affect our business,
financial condition or operating results. We currently have no contingency plans
to address the risks associated with unremediated Year 2000 problems.
28
<PAGE> 30
BUSINESS
INTRODUCTION
We are a leading provider of software solutions that help companies deploy,
manage, maintain and grow enterprise decision support systems. Companies across
a range of industries are seeking to improve their ability to gain insight into
customer, market, financial and competitive trends by unlocking the volumes of
data stored in their enterprise transaction systems. Our products help
streamline and simplify that task by providing a packaged, off-the-shelf
solution -- a critical benefit in a market that has historically been plagued by
technical complexity and system incompatibility. We design, develop, market and
support PowerCenter, PowerMart and related products that are used by companies
to gain competitive advantage through analysis of customer and other data.
INDUSTRY BACKGROUND
Over the past few decades, organizations have made significant investments
in applications and infrastructure, including packaged mainframe and distributed
application and database software, to automate their basic business processes.
For example, enterprise resource planning applications from vendors such as SAP,
PeopleSoft and others now automate many companies' financial, manufacturing and
human resource functions. New enterprise applications are emerging in the areas
of supply chain automation, e-commerce and customer self-service. Underlying
these enterprise and Internet-based applications are transaction databases from
vendors, such as IBM, Oracle and Microsoft, that capture and store the
substantial amounts of data sourced from these applications. As the number and
size of transaction databases have grown, so too has the volume of data stored
in these applications. As a result, the challenge is no longer how to capture
information effectively, but how to consolidate, distill and channel it to those
business managers, knowledge workers, customers and suppliers who can leverage
this information to drive revenue growth and profitability.
Companies across a range of industries are using enterprise decision
support applications to gain greater insight from their corporate information
systems. For example, retailers track customer buying behavior to respond
quickly with new products. Financial services firms perform risk management and
fraud detection. Companies in newly deregulated industries create new
competitive services and find new customers. E-commerce vendors track site
activities and analyze buying patterns. Across industry, business insight
provides knowledge workers with greater decision-making power. In today's
increasingly decentralized enterprises, getting the right information quickly
and efficiently to the desktops of employees is key to gaining greater
competitive advantage.
Numerous new and established vendors are responding to this need for
business insight with wide-ranging product offerings. For example, a large
market exists for front-end query and reporting tools, as well as for supporting
infrastructure software. Moreover, an entirely new market for "analytic
applications" -- often tied closely to specific enterprise resource planning
systems -- is forming quickly. Analytic applications are typically pre-
packaged, off-the-shelf software programs specifically designed to aid in
performing sophisticated business analysis. Some enterprise resource planning
vendors have introduced new suites of analytic applications to build upon their
existing enterprise resource planning transaction systems. According to
International Data Corporation, the combined market for
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<PAGE> 31
analytic applications and their underlying deployment infrastructure is
estimated to reach $11.6 billion by 2002.
While front-end query and reporting tools and emerging analytic
applications are helping companies access data directly from specific
transactional systems, these tools and applications, by themselves, have several
key limitations:
- they do not provide access to standardized, consolidated historical data;
- they cannot interoperate within an enterprise deployment without
specialized programming; and
- they cannot access all critical data sources within an enterprise.
To take full advantage of their analytic resources, companies need a
software backbone, or platform, for enterprise decision support that will
integrate data, tools and analytic applications across the entire organization.
Such a software platform should provide comprehensive capabilities for data
integration -- and user-specific data customization -- in a flexible,
distributed architecture. It should broaden access to a wider range of
information sources, maintain compatibility among the increasing types and
numbers of front-end query and reporting tools and analytic applications and
support rapid growth and change, in user numbers as well as in application
initiatives. With such a platform in place, knowledge workers will be able to
gain better insight into business trends and will be able to make more accurate
and informed business decisions.
INFORMATICA'S SOLUTION
We provide a highly adaptable, functionally rich platform for deploying,
managing and maintaining enterprise decision support systems. At the center of
this platform is our enterprise data integration hub, which automates the
process of retrieving, organizing and consolidating data from multiple systems.
This data is then made available to end users throughout the enterprise. Our
platform is comprised of this enterprise data integration "hub," as well as any
number of "spokes," or data marts and analytic applications, that permit users
to customize data to suit their precise analytic needs.
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[POWERCENTER GRAPHIC -- Set forth is a graphic depicting the PowerCenter logo
surrounded by icons labeled "Mainframe," "IBM," "Oracle," "PeopleSoft," "SAP"
and "e-Commerce," on the left, and two boxes labeled "Data Warehouse" and "Data
Mart," on the right. Branching off of these two boxes, further to the right, are
three icons labeled "Financial Forecasting & Budgeting," "Customer Relationship
Management" and "Manufacturing Demand Planning," respectively, along with the
PowerMart logo]
Our PowerCenter and PowerMart software products provide a highly adaptable,
functionally rich platform for deploying, managing and maintaining enterprise
decision support systems. Our platform supports a wide range of analytic
applications, including customer relationship management, key performance
indicators and financial forecasting, among others.
We believe our solution offers the following key benefits:
Automation of Enterprise Data Integration
Traditionally, deploying and managing enterprise decision support systems
frequently requires extensive custom program development and consulting. In
contrast, we deliver a packaged, off-the-shelf solution that automates key
processes for system deployment and management, including the steps required for
accessing enterprise resource planning and other transaction systems. We believe
this packaged approach significantly reduces the cost and time associated with
deployment and management.
In addition, our packaged solution helps protect our customers' systems
investment by shielding them from changes in their technology environment
related to obsolescence and upgrades in hardware, operating systems, networks
and applications. Over the lifetime of a decision support system deployed using
our platform, these benefits are compounded, because ongoing system
modifications can be made without custom programming and consulting.
Furthermore, we believe our automated approach provides customers with
additional protection from business changes, such as those resulting from
mergers and acquisitions, currency fluctuations and ongoing regulatory change.
Our rules-based software engine,
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<PAGE> 33
which is at the heart of our platform, makes it easy for customers to modify the
decision support systems used to address these changing business dynamics.
Optimized for Analytic Applications
Analytic applications have unique data content, models, data structures and
other special infrastructure requirements to function at peak performance. Our
solution is designed to optimize and customize data for analytic computing in
ways that software solutions designed for transaction processing cannot. Our
rules-based, parallel-engine architecture executes key infrastructure
tasks -- extracting, transforming and loading the data -- with speed and
efficiency. Further, our automation features, as well as a wide array of rich,
predefined analytic functions, enhance user productivity and deployment speed.
Incremental Deployment; Rapid Return on Investment
Unlike traditional, hand-coded decision support systems that are expensive
and time-intensive to deploy, we believe our solution allows users to achieve a
faster return on investment through incremental, business-unit-size deployments.
These successful deployments can then easily be extended across the enterprise
via the integration hub. Additionally, our products' productivity-enhancing
features and the modular capability of the hub-and-spoke architecture help
companies reduce information technology expenses, retain customers and grow
revenues.
Multi-level Scalability
Our solution addresses decision support scalability on many levels. This
includes scaling from an early-stage, data mart-based analytic application to an
enterprise-wide deployment and addressing the large data volume and high
throughput required for robust analytic computing. Taking advantage of the
distributed, parallel technologies widely available today, our platform is
designed to significantly improve performance by allowing users to bring
multiple clusters of servers to bear on large, complex analytic problems.
Architecture Openness and Extensibility
Our open architecture gives users access to data locked in numerous
transaction systems, and it enables them to address many different types of
analytical requirements. Also, our products permit users to add customized
functions to extend our pre-programmed general-purpose functions to address
specific business problems. These customized functions are then able to take
advantage of all of the capabilities of our platform, including its deployment
flexibility and multi-level scalability.
Deployment Flexibility
Our platform is designed to support a wide range of computing platforms and
applications found in large organizations and to collect data from transaction
sources employing varying combinations of computer hardware and database
software. Our rules-based transformation engine resolves the idiosyncrasies of
different operating systems, hardware and database platforms. In addition, our
high-performance, customized software drivers are designed to leverage the
strengths and mitigate the weaknesses of different vendors' platforms. All of
our products run on UNIX (HP-UX, IBM AIX, Sun Solaris) and Microsoft NT servers,
use Windows 95 and Windows NT clients, and support all
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major relational databases, including Oracle, IBM DB2/UDB, Informix, Sybase and
Microsoft SQL Server.
INFORMATICA'S STRATEGY
Our objective is to provide the leading software platform for analytic
applications. The following are key elements of our strategy:
Expand Position as a Leading Independent Platform Vendor
We believe our position in the industry is unique because of our
vendor-neutral platform design and the ability of our products to access a wide
range of operational data sources. As a result, many leading decision support
tools vendors -- who compete among themselves -- partner with us for critical
infrastructure technology. We intend to enhance and expand this position by
adding new vendor partners in the current decision-support markets for business
intelligence tools and analytic applications and by extending our support for
providers of customer information and e-commerce applications.
Target Enterprise-wide Deployments Within Existing Customer Sites
We intend to expand the use of our products and services within existing
customer accounts. Today, we have sold our products to more than 350 customers,
primarily large global companies across a range of industries, including
finance, banking, insurance, manufacturing, health care and telecommunications.
A number of these customers, who first used our platform for departmental and
business-unit applications, are now expanding their deployments across the
enterprise. Our strategy is to further penetrate these customer accounts by
converting more departmental deployments into enterprise decision support
systems.
Leverage Enterprise Resource Planning Installed Base
Companies have invested heavily in enterprise resource planning
applications. AMR Research estimates that organizations have spent approximately
$39 billion on enterprise resource planning software since 1995. We believe a
sizable opportunity exists to help these customers leverage the large volumes of
transaction data in these systems for analytic computing. Using our platform,
users can consolidate the data from their enterprise resource planning and other
transactional systems for new analytic applications, thus helping them to
achieve the most comprehensive and accurate business analysis.
Expand Strategic Partnerships and Indirect Channels
To accelerate adoption of our products as the standard platform for
analytic applications within large enterprises, we continue to form strategic
relationships with leading enterprise software and analytic application vendors,
as well as with leading resellers and system integrators. We have marketing
programs and sales force partnerships with SAP and PeopleSoft and intend to add
other such partners. We intend to build upon these relationships to penetrate
additional vertical markets and expand into new geographic markets.
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Increase Technology Leadership
We intend to continually increase our technological and product leadership
by enhancing our products' core functionality and current high-performance
analytical features. In addition, we intend to extend our products' scalability
to handle ever-increasing volumes of data. Further, we will continue to develop
our platform to facilitate and support e-commerce and other emerging Internet
applications.
PRODUCTS AND SERVICES
Our products enable large, global organizations to build software platforms
for deploying and managing business intelligence and analytic applications
across the enterprise. These products are designed to reduce the complexities of
building and maintaining decision support infrastructure and to enhance the
quality and performance of information analysis.
Our software products comprise a strong platform that is designed to enable
enterprises to implement multi-tier decision support architectures that can be
as sophisticated -- or as simple -- as necessary. Large enterprises can use
PowerCenter, for instance, to create a data integration hub that will
synchronize and manage wide-ranging decision support resources. Other
organizations can start small, through PowerMart, by creating independent
line-of-business data warehouses and analytic systems. Then, as business needs
grow and change, they can add the synchronization and sophisticated management
capabilities of PowerCenter.
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The following table summarizes the key features and benefits of our
products:
<TABLE>
<CAPTION>
PRODUCT DESCRIPTION BENEFIT
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------
POWERCENTER An enterprise data integration hub Reduces the complexity of
for deploying and managing scalable, implementing enterprise decision
[POWERCENTER LOGO] enterprise decision support systems support solutions
- Manages consolidation, cleansing - Integrates decision support
and customization of data components and tools
- Enables integration of operational - Creates and enforces consistent
systems and analytic applications data definitions throughout the
- Allows centralized management of architecture
distributed resources - Synchronizes disparate data marts
- Enables optimized performance and and data warehouses
reliability - Re-uses transformation logic and
other important analytical formulas
- -------------------------------------------------------------------------------------------------------
POWERMART An integrated product suite for Enables rapid deployment of data
building and managing marts and analytic applications
[POWERMART LOGO] line-of-business data marts and - Enables faster reporting cycles and
analytic applications more sophisticated business
- Addresses the complete life-cycle analysis to improve return on
for data mart development, production investment
and ongoing management - Enables high ongoing productivity
- Provides a rules-based engine that and ease of maintenance
accelerates data mart and analytic
application deployment
- -------------------------------------------------------------------------------------------------------
POWERCONNECT A mainframe-compatibility bridge that Allows difficult to access legacy
facilitates high-speed access to DB2 data to be more easily and quickly
databases running on IBM MVS and integrated into enterprise decision
OS/390 systems support systems
- -------------------------------------------------------------------------------------------------------
POWERPLUGS Third-party software programs that Helps maximize investment in other
"plug in" additional functionality to decision support products by enabling
our products through open application tight integration with our
programming interfaces PowerCenter and PowerMart products
- -------------------------------------------------------------------------------------------------------
</TABLE>
PowerCenter
As part of our software platform, PowerCenter serves as an enterprise data
integration hub for deploying and managing scalable decision support systems.
Within PowerCenter, a global repository functions as the central synchronization
point, extracting data from diverse operational sources, including mainframe,
relational database and popular enterprise resource planning applications.
PowerCenter then transforms and distributes that data downstream to data
warehouses and data marts in preparation for end-user analysis. PowerCenter
includes software to design and manage the global repository, to set up data
extraction processes from operational databases and to synchronize data sharing
among distributed analytic applications.
PowerCenter has a number of innovative and essential features that enable
it to function effectively as an enterprise data integration hub. PowerCenter's
robust native mainframe file support allows mainframe database files to be
imported directly into the PowerCenter hub, eliminating the need for, and the
added expense of, additional software. Parallel processing capabilities within
this product allow users to roll-out multiple instances of PowerCenter's
transformation engine to maximize system performance for the most complex data
extractions and transformations. PowerCenter's systems management capabilities
are designed to allow administrators to more efficiently manage, monitor and
control multiple repositories and servers in the network from a central console.
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PowerMart
PowerMart is an integrated product suite for building and managing
line-of-business data marts and analytic applications. PowerMart can be used in
conjunction with PowerCenter, or it can be employed to create independent,
standalone data marts and data warehouses. PowerMart features integrated
warehouse-design, repository-design and management components that share a
common, intuitive graphical user interface. Through a variety of software
wizards and other productivity-enhancing tools, PowerMart supports the full
life-cycle for data mart/data warehouse deployment, development, production and
ongoing management.
The PowerMart integrated product suite includes five standard components:
- PowerMart Designer is a powerful, multi-faceted tool for visually
defining mappings and transformations;
- PowerMart Repository is an open metadata store for definitions about
mappings, transformations and other data mart details;
- PowerMart Repository Manager is a facility for managing user activities
and metadata storage in the repository;
- PowerMart Server is a pipelined, multi-threaded server engine that is
able to overlap data extraction, transformation and loading; and
- PowerMart Server Manager is an administrative interface to the PowerMart
Server for configuring data marts and scheduling jobs.
PowerMart includes a number of key features that enable organizations to
implement data marts and analytic applications for a fraction of the cost of a
large, centralized data warehouse. For example, PowerMart gives users the option
of combining disk staging with in-memory server-side caching to fully leverage
system resources and achieve peak performance during any stage of data
processing. PowerMart also provides a "Deploy Folder" wizard that guides
developers through a step-by-step process for moving from test to development to
full production. In addition, advanced session management facilities help data
warehouse administrators maintain operational efficiency.
Platform Extensions
We also market and sell two additional software products which extend the
capabilities of PowerCenter and PowerMart. PowerConnect is a mainframe software
bridge that facilitates access to IBM DB2 databases running on IBM MVS and
OS/390 systems. With PowerConnect, organizations get fast, transparent access to
operational data. PowerPlugs are third-party software programs that add
functionality via open application programming interfaces that permit exchange
of metadata and data transformation information.
Pricing Model
We have a server-based pricing model in which PowerCenter and PowerMart are
priced according to the capabilities of the server upon which they will be
running. For example, a customer who installs our product on a 4 CPU Windows NT
machine pays less than a customer who installs our products on a 16 CPU UNIX
machine. Our value-based
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pricing results in higher license fees from a customer who installs our products
on higher capacity servers.
Technology Differentiators
The following key technologies differentiate our software platform from
other industry offerings, and we believe they are critical to deploying and
managing enterprise decision support systems:
- METADATA-BASED ARCHITECTURE -- Metadata is "data about data," in that it
describes the business rules and cataloging information needed for the
decision support applications to function. It also enables users to
understand the context and meaning of data that they are analyzing.
Through the global repository, PowerCenter permits synchronization and
sharing of metadata among distributed repositories that are located in
various enterprise departments and are used for different decision
support applications. The global repository employs a system of shared
folders and hotlinked pointers, available to all registered local
repositories, to enable sharing of public metadata and specific data
transformations.
For example, the enterprise customer may define certain key values, such
as "customer" or "revenue," for use throughout all analytic applications.
By keeping these values in shared folders, the system ensures that users
throughout the enterprise will be working with consistent data
definitions. Through the system of hotlinked pointers, shared information
is automatically kept up to date.
Our products also feature open, distributed metadata exchange with other
decision support products, such as back-end data modeling tools, front-end
query and reporting tools and analytic applications. This contributes
greatly to interoperability, quality of analysis and scalability.
- NATIVE CONNECTIVITY TO OPERATIONAL SOURCES -- We are an industry leader
in source-database access capabilities. Through PowerCenter and
PowerMart, users can access UNIX and Windows NT databases, IBM DB2
databases and leading enterprise resource planning systems. For instance,
PowerCenter extends the effectiveness of SAP Business Information
Warehouse(TM) by giving users access to all non-SAP data throughout their
enterprise. In addition, PowerMart provides a similar capability to users
of PeopleSoft's Enterprise Performance Management suite, giving users
access to both PeopleSoft and non-PeopleSoft operational data.
- CENTRALIZED MANAGEMENT -- Enterprise decision support architectures
require the power of distributed, parallel servers combined with the
convenience of centralized management. PowerCenter supports multiple
parallel servers and provides a single interface for configuring and
monitoring them. Additionally, PowerCenter provides a single interface
for viewing and configuring metadata in the PowerCenter repository and
any local, registered repositories.
- ENGINE-BASED PERFORMANCE -- The heart of our platform is a high-end
performance server, or engine, that automates data movement and
transformation. The server employs advanced techniques, such as parallel,
overlapped operations, to give users the high-performance data throughput
required for enterprise-class implementations. Our platform's
engine-based high performance allows users to construct analytic
applications and perform analyses according to their real business needs,
without
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<PAGE> 39
having to hand-code transformations or continually modify their
objectives because of technology limitations.
Services
We offer comprehensive professional services in implementation consulting,
as well as in customer support and training. As of December 31, 1998, we
employed 38 people worldwide in services related activities.
Our professional services range from designing and deploying enterprise
decision support architectures to data transformation and performance tuning.
Our professional services consultants possess expertise in databases and
operating systems, enterprise resource systems, business process design and
management and major vertical industry issues.
We offer high-quality, timely technical support to customers via phone,
e-mail and the Internet. We also publish a comprehensive web-based journal on
infrastructure issues, with technical detail that expands on existing
documentation and presents implementation options. Additionally, we publish
online versions of manuals, release notes and updates to existing documentation.
We provide a number of customer training programs in the United States and
Europe. Courses cover topics such as designing target data tables, analyzing
operational sources, tuning and troubleshooting and understanding enterprise
decision support.
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<PAGE> 40
STRATEGIC PARTNERS
Our partners include industry leaders in enterprise software,
query/analysis applications and systems integration. We pursue a comprehensive
partnership program with major vendors in these areas so that they can provide
complementary products and services to our joint customers with effective
best-of-breed enterprise solutions. Our partnership program is called the
PowerPartner Program, and our strategic partners include:
Enterprise Software Partners
BMC Software
NEON Systems
IBM
PeopleSoft
Microsoft
SAP
Query/Analysis Partners
Brio Technology
Hummingbird Comm.
Business Objects
Hyperion Solutions
Cognos
MicroStrategy
Systems Integration Partners
American Management Systems
Application Consulting Group
Application Partners
Apex Solutions
Archer Decision Sciences
Braun Technology Group
BTG Technology Systems
C3i
Cambridge Technology Partners
Case Logical Data
Clark Information Systems
Client Server Associates
Connect Systems
Core Integration Partners
Cotelligent
CSC Ploenzke
Daman Consulting
Descartes Systems Group
DEC
DMR Consulting
DSS Solution
EDS
Epsilon
Encompass Business Solutions
Ernst & Young
Gamut Technologies
Geac Computers
Grace Technologies
Infocrest Solutions
IPI GrammTech
Knightsbridge Solutions
KnowledgeBase Marketing
KPMG
Lancet Software Development
LGS Group
Logan/Britton
Metamor
Migration Software
NetBase Computing
New Technology Management
Newport Technology Group
NexGen SI
Octet Consulting
Parallogic
Perot Systems
PricewaterhouseCoopers
Profound Solutions
Retail Dynamics Inc.
The Revere Group
REZsolutions
R&Z Software
Saphir
Saturn Business Systems
Siemens Nixdorf
Softmaster
Software House International
Softworks Consulting
Solution Builders
SQL*Liason
Strategic Technologies
Strategic Information Systems
Sybertech
Sysix Technologies
Talent Software Services
Tessera Enterprise Systems
WebSoft
Xenon
Yaletown Technology
ZYGA
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<PAGE> 41
CUSTOMERS
Our customers represent a wide, cross-industry spectrum of large global
organizations, plus major governmental and educational institutions. A
representative sampling of customers who have purchased at least $100,000 of
software license since January 1996 includes:
Communications
AirTouch Cellular*
AT&T Corp.*
Bell South
Lucent Technologies/Octel Communications
Pacific Bell Directory
Qualcomm*
Sprint
Tele-Communications, Inc. (TCI)
Telenor*
US West Communications
Government
Bureau of Land Management
U.S. Navy
State of Texas
US Postal Service
Financial Services
The Capital Group Companies*
Charles Schwab
SG Cowen
First Union National Bank*
GM Acceptance Corp.
Invesco Funds Group
Merrill Lynch*
Oppenheimer Funds*
Providian Financial*
Prudential Insurance*
Salomon Smith Barney
Stein, Roe & Farnham
UBS
High Technology
3Com*
Autodesk*
Automatic Data Processing*
Intel*
LSI Logic*
National Semiconductor
Silicon Graphics*
Western Digital
Internet Software-Service
CompuServe
e.spire
Netscape
Prodigy
UUNET
Insurance
Abbey National*
Allstate Insurance
The Equitable Companies*
Hartford Insurance
John Hancock
Liberty Mutual Insurance Companies*
MassMutual*
MetLife Insurance*
Zurich Insurance*
Utilities/Energy
Commonwealth Edison Company
Chevron Corporation
Entergy Services/Entergy Corporation*
KN Energy*
Pacific Gas & Electric*
Philadelphia Power and Light*
Southern Company
Manufacturing/Distribution
ABB*
Avery-Dennison
Boeing
GCI*
General Electric*
Honeywell
Motorola
Siemens Medical Systems
Thomson Publishing
Toyota USA*
Media/Entertainment/Hospitality
British Sky Broadcasting Group
Carlson Wagonlit Travel*
Fox Entertainment Group
Hearst Corporation
Ultarmar Diamond Shamrock*
Universal Studios
Warner Brothers*
Yorkshire Cable
Pharmaceuticals/Health Care
Amgen*
American Home Products Corporation
Blue Cross Blue Shield*
Dura Pharmaceuticals
MedData Health
Pharmacia & Upjohn
Zeneca (ICI)
Retail/Consumer Packaged Goods
Campbell Soup
Dial
Dreyer's Grand Ice Cream
First Brands
The Gap*
Liz Claiborne
M&M Mars*
Polo Ralph Lauren
Transportation
BAX Global*
Bridgepoint (CSX)
Roadway Express
Ryder
Other
Stanford University
*Over $200,000 since January 1996.
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SELECTED CUSTOMER APPLICATIONS
<TABLE>
<S> <C>
- -------------------------------------------------------------------------------------
CUSTOMER APPLICATION
- -------------------------------------------------------------------------------------
FIRST UNION First Union Direct, a subsidiary of First Union
Corporation -- the nation's sixth largest bank -- receives
more than 2 million calls per week to its customer call
center agents.
First Union realized a need for additional call analysis
and chose our PowerCenter as a platform to build a system
to help enable the company to feed call center customer
data into analytic applications that generate reports on
performance issues and service optimization. The system
allows First Union to enhance its resource allocation
using insight gained from such reports. Our software made
it possible for the system to provide First Union with
intra-day performance data at a far greater level of
detail than was previously possible. In addition, the
system identifies opportunities to realign call routing
priorities between 800# calls and calls from the branch
customers so both call types are optimized to provide
better service and shorter wait times. The new system will
also measure and report agent performance by identifying
specific training and feedback opportunities to provide
top level service and to build lasting financial
relationships with customers.
- -------------------------------------------------------------------------------------
CARLSON WAGONLIT Carlson Wagonlit Travel is a world leader in business
travel and expense management, with over 3,000 locations
in 141 countries and more than $11 billion in annual
sales.
Carlson Wagonlit Travel chose our platform to build an
enterprise information delivery system. This system
enables Carlson Wagonlit Travel to mine the large
quantities of data in its transaction systems, and provide
its clients with valuable analysis and reports on travel
spending volumes and patterns. In addition, corporate
travel managers use this information to streamline
processes and policies, often resulting in cost savings.
With the eventual goal of consolidating customer travel
data from around the world for analysis, we are working
with Carlson Wagonlit Travel to help them provide their
travel clients with better service through a wealth of
tailored information.
- -------------------------------------------------------------------------------------
3COM 3Com, one of the largest network solutions companies in
the world serving over 200 million customers, has more
than five transactional systems from which it pulls
operational data into its data center in Santa Clara, CA.
3Com is currently implementing a powerful enterprise
resource planning solution, R/3 from SAP. 3Com turned to
us to provide a data warehouse platform to enable it to
develop a common data transformation architecture for its
data center and to leverage its new enterprise resource
planning solution.
Currently, PowerCenter has enabled 3Com to build a 24x7
data warehouse environment that automatically uploads
point-of-sale and channel inventory data from its North
American, Asia Pacific and European operations. 3Com
intends to extend this data warehouse environment to
extract data from additional sources and integrate
business intelligence tools for additional analysis and
reporting.
</TABLE>
- --------------------------------------------------------------------------------
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RESEARCH AND DEVELOPMENT
As of December 31, 1998, we employed 42 people in our research and
development organization. This team is responsible for the design, development
and release of our products. The group is organized into four disciplines:
development, quality assurance, documentation and program management. Members
from each discipline, along with a product marketing manager from our marketing
department, form separate product teams that work closely with sales, marketing,
services, customers and prospects to better understand market needs and user
requirements.
When appropriate, we also utilize third-parties to expand the capacity and
technical expertise of our internal research and development team. On occasion,
we have licensed third-party technology. We believe this approach shortens time
to market without compromising competitive position or product quality, and we
plan to continue to draw on third-party resources as needed in the future.
We have a well-defined software development methodology that we believe
enables us to deliver products that satisfy real business needs for the global
market while also meeting commercial quality expectations. Our methodology
involves specifying and reviewing business requirements, functional
requirements, prototypes, technical designs, test plans and documentation plans.
We then perform iterative, scheduled quality assurance of code and
documentation, followed by frequent stabilization of code and documentation. We
test automation definition, instrumentation and execution as well as functions,
components, systems, integration, performance, stress and international and Year
2000 compliance. A key component of our methodology is full product regression
testing before beta or general availability releases and trial deployments in an
internal production environment prior to release, external beta releases and
general availability release. Failure to develop and introduce new products, or
enhancements to existing products, in a timely manner in response to changing
market conditions or customer requirements, may materially adversely affect our
business, results of operations or financial condition.
We emphasize quality assurance throughout the software development
life-cycle. We believe that a strong emphasis placed on analysis and design
early in the project life reduces the number and costs of defects that may be
found in later stages.
SALES, MARKETING AND DISTRIBUTION
We market and sell software and services through a direct sales force in
the United States, the United Kingdom and Germany, as well as through
distributors. As of December 31, 1998, we employed 75 people worldwide in our
sales and marketing organization.
Marketing programs are focused on creating awareness as well as lead
generation and customer references for our products. These programs are targeted
at key executives such as chief executive officers, chief information officers
and presidents of engineering, research and development, sales, service and
marketing. Our marketing personnel engage in a variety of activities, including
positioning our software products and services, conducting public relations
programs, establishing and maintaining relationships with industry analysts and
generating qualified sales leads, among others.
Our sales process consists of several phases: lead generation, initial
contact, lead qualification, needs assessment, enterprise overview, product
demonstration, proposal generation and contract negotiation. Although the
typical sales cycle has been up to
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<PAGE> 44
120 days, certain sales cycles in the past have lasted substantially longer. In
a number of instances, our relationships with systems integrators and other
strategic partners have reduced sales cycles by generating qualified sales
leads, making initial customer contacts and assessing needs prior to our
introduction to the customer. Also, partners have assisted in the creation of
presentations and demonstrations, which we believe enhances our competitive
position.
We distribute our products through system integrators in the United States
and distributors in Europe. Systems integrators typically possess expertise in
vertical markets. They resell our products, bundling them in some cases with
system-wide solutions. In other cases, they influence direct sales of our
products. Distributors sublicense our products and provide service and support
within their territories.
INTELLECTUAL PROPERTY AND OTHER PROPERTY RIGHTS
Our success depends upon our proprietary technology. We rely on a
combination of patent, copyright, trademark and trade secret rights,
confidentiality procedures and licensing arrangements to establish and protect
our proprietary rights. We have four patent applications pending and one patent
application allowed in the United States. It is possible that our pending
applications will not be allowed or that competitors will successfully challenge
the validity or scope of our allowed patent or any future allowed patents. Our
patents alone may not provide us with any significant competitive advantage.
As part of our confidentiality procedures, we generally enter into
non-disclosure agreements with our employees, distributors and corporate
partners and into license agreements with respect to our software, documentation
and other proprietary information. Despite these precautions, third parties
could copy or otherwise obtain and use our products or technology without
authorization, or develop similar technology independently. It is difficult for
us to police unauthorized use of our products, and, although we are unable to
determine the extent to which piracy of our software products exists, software
piracy is a prevalent problem in our industry in general. Effective protection
of intellectual property rights is unavailable or limited in certain foreign
countries. There can be no assurance that the protection of our proprietary
rights will be adequate or that our competitors will not independently develop
similar technology, duplicate our products or design around any patents or other
intellectual property rights we hold.
We do not believe that any of our products infringes the proprietary rights
of third parties. There can be no assurance, however, that third parties will
not claim our current or future products infringe their rights. Any such claims,
with or without merit, could cause costly litigation that could absorb
significant management time, which could materially adversely affect our
business, operating results or financial condition. Such claims also might
require us to enter into royalty or license agreements. If required, we may not
be able to obtain such royalty or license agreements, or obtain them on terms
acceptable to us, which could have a material adverse effect upon our business,
operating results or financial condition.
COMPETITION
The market for our products is highly competitive and subject to rapidly
changing technology. We compete principally against providers of decision
support, data warehousing and enterprise application software. Such competitors
include Acta Technology, Inc., Ardent Software, Inc., Broadbase Information
Systems, Inc., Epiphany Marketing
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<PAGE> 45
Software, Evolutionary Technologies, Inc., Information Builders, Inc., PLATINUM
technology, inc. and Sagent Technology, Inc. In addition, we compete or may
compete against database vendors that currently offer, or may develop, products
with functionalities that compete with our solutions. These products typically
operate specifically with these competitors' proprietary databases. Such
competitors include IBM Corporation, Microsoft Corporation and Oracle
Corporation.
Many of our competitors have longer operating histories, substantially
greater financial, technical, marketing or other resources, or greater name
recognition than we do. Our competitors may be able to respond more quickly than
we can to new or emerging technologies and changes in customer requirements.
Competition could seriously impede our ability to sell additional products and
services on terms favorable to us. Our current and potential competitors may
develop and market new technologies that render our existing or future products
obsolete, unmarketable or less competitive. Our current and potential
competitors may make strategic acquisitions or establish cooperative
relationships among themselves or with other solution providers, thereby
increasing the ability of their products to address the needs of our prospective
customers. Our current and potential competitors may establish or strengthen
cooperative relationships with our current or future channel or strategic
partners, thereby limiting our ability to sell products through these channels.
Competitive pressures could reduce our market share or require us to reduce our
prices, either of which could materially and adversely affect our business,
results of operations or financial condition.
We compete on the basis of certain factors, including:
- product performance;
- product features;
- user scalability;
- open architecture;
- ease of use;
- product reliability;
- analytical capabilities;
- time to market;
- customer support; and
- product pricing.
We believe that we presently compete favorably with respect to each of
these factors. However, the market for our products is still rapidly evolving,
and we may not be able to compete successfully against current and potential
competitors.
EMPLOYEES
As of December 31, 1998, we had a total of 173 employees, including 42
people in research and development, 75 people in sales and marketing, 38 people
in consulting, customer support and training and 18 people in general and
administrative services. None
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of our employees is represented by a labor union, and we consider employee
relations to be good.
FACILITIES
Our primary offices are located in approximately 45,000 square feet of
space in Palo Alto, California under a lease expiring on January 31, 2001. We
also lease space for our significant sales and support offices in High Wycombe,
United Kingdom, Munich, Germany, and in the United States in New York,
Pennsylvania, Missouri and the District of Columbia.
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MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information concerning our executive
officers and directors as of January 31, 1999:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
Gaurav S. Dhillon............... 33 Chief Executive Officer and Director
Diaz H. Nesamoney............... 33 President and Director
Clive A. Harrison............... 41 Executive Vice President, Worldwide Sales
Craig L. Klosterman............. 44 Chief Financial Officer, Senior Vice President
David W. Pidwell(2)............. 51 Director
A. Brooke Seawell(1)............ 51 Director
Arnold N. Silverman(2).......... 60 Director
Vincent R. Worms(1)............. 46 Director
</TABLE>
- -------------------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
Mr. Dhillon is one of the founders of Informatica and has been our Chief
Executive Officer and a member of our board of directors since our inception.
Prior to co-founding Informatica in February 1993, Mr. Dhillon was employed by
Sterling Software, a software company, from December 1991 to November 1992,
where his last position was project manager. Prior to that, he was a Systems
Architect with Unisys Corporation. Mr. Dhillon holds a B.S.E.E. from Punjab
University, India.
Mr. Nesamoney is also one of the founders of Informatica and has been a
member of our board of directors and an officer since our inception. He is
currently our President. Prior to co-founding Informatica in February 1993, Mr.
Nesamoney was employed by Unisys Corporation from May 1988 to February 1993,
where his last position was Development Manager. Mr. Nesamoney holds an M.S.C.S.
degree from Birla Institute of Technology & Science.
Mr. Harrison joined us in January 1996 as senior vice president, sales and
became Executive Vice President, Worldwide Sales in January 1999. Mr. Harrison
held sales management responsibility at Oracle Systems from June 1995 to January
1996. From September 1989 to June 1995, he was regional vice president of sales
at Information Resources, an enterprise decision support software company. Mr.
Harrison holds a B.S. degree in operational research and economics from Aston
University in England.
Mr. Klosterman has been our Chief Financial Officer and a Senior Vice
President since August 1998. From February 1993 to August 1998, Mr. Klosterman
worked at Lumisys, a medical products company, and held a number of positions,
including chief operating officer, chief financial officer and executive vice
president. Prior to February 1993, he held executive and financial positions at
Voysys and KLA Instruments. Mr. Klosterman currently serves on the board of
directors of Lumisys. Mr. Klosterman holds a B.S. in mechanical engineering from
the University of Wisconsin and an M.B.A. in Finance from The Wharton School.
Mr. Pidwell has been one of our directors since February 1996. From January
1988 to January 1996, Mr. Pidwell was president and chief executive officer of
Rasna Corporation,
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a software company. Mr. Pidwell is currently a venture partner with Asset
Management Associates and serves on the boards of directors of a number of
private companies. Mr. Pidwell holds a B.S.E.E. in electrical engineering and a
M.S.I.S.E. degree in computer systems engineering from Ohio University.
Mr. Seawell has been one of our directors since December 1997. From January
1997 to August 1998, Mr. Seawell was executive vice president of NetDynamics, an
Internet applications server company. From March 1991 to January 1997, Mr.
Seawell was senior vice president and chief financial officer of Synopsys. Mr.
Seawell holds a B.A. degree in Economics and an M.B.A. degree in Finance and
Accounting from Stanford University. Mr. Seawell serves on the board of
directors of NVIDIA Corporation, a 3D (three-dimensional) graphics processor
company, and several privately held companies.
Mr. Silverman has been one of our directors and chairman of our board since
September 1995. Mr. Silverman is a managing partner of Discovery Ventures I,
LLC, a venture investment fund and one of our investors. In addition to serving
as a director at Business Objects, a software company, he is on the boards of
directors of a number of private companies. Mr. Silverman holds a B.S.E.E. and
an M.S.E.E. from the University of California at Berkeley and an M.B.A. from
Columbia University.
Mr. Worms has been one of our directors since September 1995. From 1982 to
the present, Mr. Worms has served as co-president of Partech International
Capital Management, a venture capital firm that manages one of our investors.
Mr. Worms holds a M.S. degree in science from the Ecole Polytechnique in Paris,
France and the Massachusetts Institute of Technology. Mr. Worms serves on the
boards of directors of SangStat Medical Corporation and Business Objects, a
software company, in addition to serving on the board of a number of private
companies.
BOARD OF DIRECTORS
We currently have authorized six directors. Currently all directors hold
office until the next annual meeting of stockholders or until their successors
are duly qualified. Our amended and restated certificate of incorporation filed
in connection with this offering provides that as of the first annual meeting of
stockholders where we have at least 800 stockholders, our board of directors
will be divided into three classes, each with staggered three-year terms. As a
result, only one class of directors will be elected at each annual meeting of
our stockholders, with the other classes continuing for the remainder of their
respective three-year terms.
Committees
Our board of directors has an audit committee and a compensation committee.
The audit committee reviews the results and scope of the annual audit and other
services provided by our independent accountants, reviews and evaluates our
internal audit and control functions and monitors transactions between us and
our employees, officers and directors. The compensation committee administers
the 1999 Stock Incentive Plan, the 1999 Employee Stock Purchase Plan, the 1996
Flexible Stock Incentive Plan and the 1993 Flexible Stock Incentive Plan, and
reviews the compensation and benefits for our executive officers.
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Compensation Committee Interlocks and Insider Participation
Prior to February 1999, the compensation committee was composed of Mr.
Dhillon, Mr. Pidwell and Mr. Silverman. This committee is currently composed of
Mr. Pidwell and Mr. Silverman. No interlocking relationship exists between any
member of our board of directors or compensation committee and any member of the
board of directors or compensation committee of any other company, nor has any
such interlocking relationship existed in the past.
Compensation
Our non-employee directors are reimbursed for expenses incurred in
connection with attending board and committee meetings but are not compensated
for their services as board members. We have in the past granted directors
options to purchase our common stock pursuant to the terms of our 1993 Flexible
Stock Incentive Plan and 1996 Flexible Stock Incentive Plan. See "Certain
Transactions -- Option Grants." We may also grant directors options to purchase
our common stock pursuant to the terms of our 1999 Stock Incentive Plan. See
"-- Stock Plans -- 1999 Stock Incentive Plan."
EXECUTIVE OFFICERS
Our executive officers are elected by, and serve at the discretion of, our
board of directors. There are no family relationships among our directors and
officers.
Compensation
The following table sets forth certain information concerning compensation
of our chief executive officer and each other most highly compensated executive
officers whose aggregate cash compensation exceeded $100,000 during the year
ended December 31, 1998 (collectively, our "Named Executive Officers").
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
------------------- UNDERLYING
NAME AND PRINCIPAL POSITION SALARY BONUS OPTIONS
--------------------------- -------- -------- ------------
<S> <C> <C> <C>
Gaurav S. Dhillon
Chief Executive Officer and Director........... $130,000 $ 52,114(1) 100,000
Diaz H. Nesamoney
President and Director......................... 130,000 52,114(1) 100,000
Clive A. Harrison
Executive Vice President, Worldwide Sales...... 140,000 109,942(2) 50,000
</TABLE>
- -------------------------
(1) Excludes bonus amounts of $8,919 earned in 1997 and paid in 1998.
(2) Includes sales commissions earned in 1998 and excludes commissions of
$34,010 and bonus amounts of $9,500, each earned in 1997 and paid in 1998.
48
<PAGE> 50
Option Grants In Fiscal Year 1998
The following table sets forth certain information for each of our Named
Executive Officers concerning stock options granted to them during the fiscal
year ended December 31, 1998.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES
SECURITIES TOTAL OF STOCK PRICE APPRECIATION
UNDERLYING OPTIONS EXERCISE FOR OPTION TERM(4)
OPTIONS GRANTED TO PRICE EXPIRATION ----------------------------
NAME GRANTED(1) EMPLOYEES(2) PER SHARE DATE(3) 5% 10%
---- ---------- ------------ ------------ ---------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Gaurav S. Dhillon..... 100,000 6.24% $4.00 02/12/08 $251,558 $637,497
Diaz H. Nesamoney..... 100,000 6.24 4.00 02/12/08 251,558 637,497
Clive A. Harrison..... 50,000 3.12 4.00 02/12/08 125,779 318,749
</TABLE>
- -------------------------
(1) 25% of the options granted vest one year from the date of grant. Thereafter,
the remaining 75% of the options granted vest monthly over the next three
years.
(2) In the last fiscal year, we granted options to employees to purchase an
aggregate of 1,601,803 shares.
(3) Options may terminate before their expiration dates if the optionee's status
as an employee is terminated or upon the optionee's death or disability.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission and do not
represent our estimate or projection of our future common stock prices.
Aggregate Option Exercises In Last Fiscal Year and Year-End Option Values
The following table sets forth certain information concerning exercises of
stock options during the fiscal year ended December 31, 1998 by each of our
Named Executive Officers and the number and value of unexercised options held by
each of our Named Executive Officers on December 31, 1998. No options were
exercised by our Named Executive Officers in 1998.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
NAME AT DECEMBER 31, 1998 AT DECEMBER 31, 1998(1)
---- ---------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Gaurav S. Dhillon............... 100,000 100,000 $ 875,000 $500,000
Diaz H. Nesamoney............... 100,000 100,000 875,000 500,000
Clive A. Harrison............... 128,541 111,459 1,141,140 793,860
</TABLE>
- -------------------------
(1) The value of "in-the-money" stock options represents the positive spread
between the exercise price of stock options and the fair market value for
our common stock of $9.00 per share as of December 31, 1998, as determined
by our board of directors.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
Our bylaws provide that we will indemnify our directors and executive
officers and may indemnify our other officers, employees and other agents to the
fullest extent permitted by the General Corporations Law of the State of
Delaware, as amended. We are
49
<PAGE> 51
also empowered under our bylaws to enter into indemnification agreements with
our directors and officers and to purchase insurance on behalf of any person
whom we are required or permitted to indemnify. We have entered into
indemnification agreements with each of our directors and executive officers and
intend to obtain a policy of directors' and officers' liability insurance that
insures such persons against the cost of defense, settlement or payment of a
judgment under certain circumstances.
In addition, our amended and restated certificate of incorporation filed in
connection with this offering provides that the liability of our directors for
monetary damages shall be eliminated to the fullest extent permissible under the
General Corporation Law of the State of Delaware, as amended. This provision in
our amended and restated certificate of incorporation does not eliminate a
director's duty of care, and, in appropriate circumstances, equitable remedies
such as an injunction or other forms of non-monetary relief would remain
available. Each director will continue to be subject to liability for breach of
the director's duty of loyalty to us, for acts or omissions not in good faith or
involving intentional misconduct or knowing violations of law, for acts or
omissions that the director believes to be contrary to our best interests or our
stockholders, for any transaction from which the director derived an improper
personal benefit, for improper transactions between the director and us and for
improper distributions to stockholders and loans to directors and officers. This
provision also does not affect a director's responsibilities under any other
laws, such as the federal securities laws or state or federal environmental
laws.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers and controlling persons pursuant to
the foregoing provisions, or otherwise, we have been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
There is no pending litigation or proceeding involving any of our directors
or officers as to which indemnification is being sought, nor are we aware of any
pending or threatened litigation that may result in claims for indemnification
by any director or officer.
STOCK PLANS
1993 Flexible Stock Incentive Plan
Our 1993 Flexible Stock Incentive Plan was adopted by our board of
directors in April 1993 and approved by our stockholders in May 1993. The 1993
Flexible Stock Incentive Plan provides for the granting to our employees or
employees of our subsidiaries of incentive stock options within the meaning of
Section 422A of the Internal Revenue Code of 1986, as amended (the "Code"), and
for the granting to employees and independent contractors of nonstatutory stock
options. Our board of directors and our stockholders have authorized a total of
1,500,000 shares of common stock for issuance pursuant to the 1993 Incentive
Plan. As of December 31, 1998, there were options to purchase 528,620 shares
outstanding. No grants were made under this plan after the adoption of the 1996
Flexible Stock Incentive Plan.
1996 Flexible Stock Incentive Plan
Our 1996 Flexible Stock Incentive Plan was adopted by our board of
directors and approved by our stockholders in July 1996. The 1996 Incentive Plan
provides for the granting to our employees, and employees of our subsidiaries,
of incentive stock options
50
<PAGE> 52
within the meaning of Section 422A of the Code, and for the granting to
employees and independent contractors of nonstatutory stock options. Our board
of directors and our stockholders have authorized a total of 3,727,250 shares of
common stock for issuance pursuant to the 1996 Incentive Plan. As of December
31, 1998, there were options to purchase 2,209,339 shares outstanding. We do not
anticipate granting options under this plan after completion of this offering
and adoption of the 1999 Flexible Stock Incentive Plan.
1999 Stock Incentive Plan
Our 1999 Stock Incentive Plan is expected to be adopted by our board of
directors and approved by our stockholders in March 1999. The 1999 Stock
Incentive Plan provides for the granting to employees of incentive stock options
within the meaning of Section 422 of the Code and the granting of nonstatutory
stock options, stock appreciation rights, dividend equivalent rights, restricted
stock, performance units, performance shares, and other equity-based rights to
our employees, directors and consultants. Initially, 650,000 shares of our
common stock are reserved for issuance under the plan. The number of shares
initially reserved will be increased by the number of shares (1) reserved under
our 1996 Flexible Stock Incentive Plan, but not granted as of the date of
completion of this offering, and (2) represented by grants under our 1996
Flexible Stock Incentive Plan which expire, are forfeited or cancelled after
completion of this offering. Commencing January 1, 2000, the number of shares of
stock reserved for issuance under the 1999 Stock Incentive Plan will be
increased annually by a number equal to 5% of the fully-diluted number of shares
of common stock outstanding as of December 31 of the immediately preceding
calendar year or such lesser number as determined by the administrator. Where
the award agreement permits the exercise or purchase of the award for a certain
period of time following the recipient's termination of service with us, or the
recipient's disability or death, the award will terminate to the extent not
exercised or purchased on the last day of the specified period or the last day
of the original term of the award, whichever occurs first. To date, no awards
have been granted under our 1999 Stock Incentive Plan.
With respect to awards granted to our directors or officers, the 1999 Stock
Incentive Plan is administered by our board of directors or a committee
designated by our board of directors constituted to permit such awards to be
exempt from Section 16(b) of the Securities Exchange Act of 1934, as amended, in
accordance with Rule 16b-3 thereunder. With respect to awards granted to other
participants, the 1999 Stock Incentive Plan is administered by our board of
directors or a committee designated by it. In each case, our board of directors
or the committee it designates shall determine the provisions, terms and
conditions of each award, including, but not limited to, the award vesting
schedule, repurchase provisions, rights of first refusal, forfeiture provisions,
form of payment upon settlement of the award, payment contingencies and
satisfaction of any performance criteria. Incentive stock options are not
transferable by the optionee other than by will or the laws of descent or
distribution, and each incentive stock option is exercisable during the lifetime
of the optionee only by such optionee. Other awards shall be transferable to the
extent provided in the agreement evidencing the award. The exercise price of
incentive stock options must be at least equal to the fair market value of our
common stock on the date of grant, and the term of the option must not exceed
ten years. The term of other awards will be determined by the 1999 Stock
Incentive Plan administrator. With respect to an employee who owns stock
possessing more than 10% of the voting power of all classes of our outstanding
capital stock, the exercise price of any incentive stock option must equal at
least 110% of the fair market value of our common stock on the grant date and
the
51
<PAGE> 53
term of the option must not exceed five years. The exercise or purchase price of
other awards will be such price as determined by the administrator. The
consideration to be paid for the shares of our common stock upon exercise or
purchase of an award will be determined by the administrator and may include
cash, check, shares of common stock, a promissory note, or the assignment of
part of the proceeds from the sale of shares acquired upon exercise or purchase
of the award.
In the event a third party acquires us through the purchase of all or
substantially all of our assets, a merger or other business combination, all
unexercised options shall terminate unless assumed by the successor corporation.
Unless terminated sooner, the 1999 Stock Incentive Plan will terminate
automatically in 2009. Our board has the authority to amend, suspend or
terminate the 1999 Stock Incentive Plan subject to stockholder approval of
certain amendments and provided no such action may affect awards previously
granted under the 1999 Stock Incentive Plan.
1999 Employee Stock Purchase Plan
Our 1999 Employee Stock Purchase Plan, which is expected to be approved by
our board of directors and by our stockholders in March 1999, is intended to
qualify as an "employee stock purchase plan" under Section 423 of the Code and
to provide our employees with an opportunity to purchase common stock through
payroll deductions. Initially an aggregate of 400,000 shares of our common stock
are reserved for issuance under the 1999 Employee Stock Purchase Plan and
available for purchase thereunder, subject to adjustment in the event of a stock
split, stock dividend or other similar change in our common stock or our capital
structure. Commencing on January 1, 2000, the number of shares reserved under
this plan will be increased by a number equal to the lesser of 2% of the
fully-diluted number of shares outstanding on such date, 800,000 shares, or such
lesser number as determined by the administrator. All of our employees and the
employees of our subsidiaries (including officers) whose customary employment is
for more than 5 months in any calendar year and more than 20 hours per week are
eligible to participate in the 1999 Employee Stock Purchase Plan. Employees
subject to the rules or laws of a foreign jurisdiction that prohibit or make
impractical the participation of such individuals in the 1999 Employee Stock
Purchase Plan are not eligible to participate in the 1999 Employee Stock
Purchase Plan.
The 1999 Employee Stock Purchase Plan designates offer periods, purchase
periods and exercise dates. Offer periods are generally overlapping periods of
24 months. An offer period will initiate on the effective date of this
Registration Statement and additional offer periods will commence each
subsequent February 1 and August 1. The initial offer period will end on January
31, 2001. Purchase periods are generally six-month periods initially commencing
on the effective date of this offering and ending on January 31, 2000.
Thereafter purchase periods will commence each February 1 and August 1, as
appropriate. The exercise date is the last day of each purchase period.
On the first day of each offer period, a participating employee is granted
purchase rights which are a form of option to be automatically exercised on the
forthcoming exercise dates within the offer period during which deductions are
to be made from the pay of participants (in accordance with their
authorizations) and credited to their accounts under the 1999 Employee Stock
Purchase Plan. When a purchase right is exercised, the participant's withheld
salary is used to purchase shares of our common stock. The price per share at
which shares of common stock are to be purchased under the 1999 Employee
52
<PAGE> 54
Stock Purchase Plan during any offer period is the lesser of (a) 85% of the fair
market value of our common stock on the date of the grant of the option (the
commencement of the offer period) or (b) 85% of the fair market value of our
common stock on the applicable exercise date. The participant's purchase right
is exercised in this manner on all four exercise dates arising in the offer
period unless, on the first day of any purchase period, the fair market value of
our common stock is lower than the fair market value of the common stock on the
first day of the new offer period. If so, the participant's participation in the
original offer period is terminated, and the participant is automatically
enrolled in the new offer period commencing on such day.
Payroll deductions may range from 1% to 10% (in whole percentage
increments) of a participant's regular base pay, including commissions,
overtime, bonuses, annual awards and other incentive payments. Participants may
not make direct cash payments to their accounts. The maximum number of shares of
common stock which any employee may purchase under the 1999 Employee Stock
Purchase Plan during a purchase period is 2,500 shares. Certain additional
limitations on the amount of common stock which may be purchased during any
calendar year are imposed by the Code.
The 1999 Employee Stock Purchase Plan will be administered by our board of
directors or a committee designated by our board, which will have the authority
to administer the 1999 Employee Stock Purchase Plan and to resolve all questions
relating to its administration.
53
<PAGE> 55
CERTAIN TRANSACTIONS
VENTURE FINANCINGS
In March 1996, we sold an aggregate of 1,000,000 shares of our Series B
preferred stock at a price per share of $1.00. In May 1996, investors in the
next equity financing made loans to us aggregating $2,050,000 and purchased
warrants to purchase 205,000 shares of our Series C preferred stock at a price
per share of $2.50. The aggregate purchase price of these warrants was
$2,562.50. In July 1996, we sold an aggregate of 2,440,000 shares of our Series
C preferred stock at a price per share of $2.50. In June 1997, we sold an
aggregate of 2,250,000 shares of our Series D preferred stock at a price per
share of $4.00. Upon the effectiveness of the Registration Statement, all shares
of our outstanding preferred stock will be automatically converted into shares
of common stock, and outstanding warrants will be exercisable for shares of
common stock. Listed below are those executive officers, directors and
stockholders who beneficially own five percent or more of our securities who
participated in such financings.
<TABLE>
<CAPTION>
SHARES AGGREGATE
SERIES B SERIES C SERIES D UNDERLYING CONSIDERATION
STOCKHOLDER PREFERRED PREFERRED PREFERRED WARRANTS PAID
----------- --------- --------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Partech Entities(1)........ 400,000 560,000 585,000 80,000 $4,141,000
Bay Partners SBIC,
L.P.(2).................. 400,000 560,000 187,500 80,000 2,551,000
Integral Capital
Entities(3).............. 1,000,000 315,000 3,760,000
Weiss, Peck & Greer
Entities(4).............. 1,125,000 4,500,000
Discovery Ventures I,
L.L.C.(5)................ 200,000 280,000 25,000 40,000 1,000,500
The Pidwell Family Living
Trust(6)................. 40,000 12,500 5,000 150,063
</TABLE>
- -------------------------
(1) Includes Partech U.S. Partners III, C.V., Parvest U.S. Partners II, C.V.,
Tradeinvest Limited, Multinvest Limited, C.V., U.S. Growth Fund Partners
C.V., Axa U.S. Growth Fund LLC, Double Black Diamond II LLC and Partech
International Profit Sharing Plan. The consideration paid by Parvest U.S.
Partners II, C.V., Tradeinvest Limited, Multinvest Limited, C.V., Partech
International Profit Sharing Plan and Partech U.S. Partners III, C.V., for
shares of Series C preferred stock in July 1996 included the conversion and
cancellation of short-term, interest free convertible promissory notes,
which notes we issued to each such entity on May 7, 1996, in the principal
amount of $360,000, $42,000, $28,000, $10,000 and $360,000, respectively.
Mr. Worms, one of our directors, is a general partner, managing member,
attorney-in-fact or trustee of each Partech entity. Mr. Worms disclaims
beneficial ownership of the shares held by each such entity, except to the
extent of his pecuniary interest therein.
(2) The aggregate consideration paid by such entity for shares of Series C
preferred stock in July 1996 included the conversion and cancellation of a
short-term, interest free convertible promissory note, which note we issued
to such entity on May 7, 1996, in the principal amount of $800,000.
(3) Includes Integral Capital Partners III, L.P. and Integral Capital Partners
International III, L.P.
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<PAGE> 56
(4) Includes WPG Enterprise Fund, III, L.L.C., Weiss, Peck & Greer Venture
Associates IV, L.L.C. and Weiss, Peck & Greer Venture Associates IV Cayman,
L.P.
(5) Mr. Silverman, one of our directors, is a manager of Discovery Ventures I,
L.L.C. Mr. Silverman disclaims beneficial ownership of the shares held by
such entity, except to the extent of his pecuniary interest therein. The
aggregate consideration paid by such entity for shares of Series C
preferred stock in July 1996 included the conversion and cancellation of a
short-term, interest free convertible promissory note, which note are
issued to such entity on May 7, 1996, in the principal amount of $400,000.
(6) Mr. Pidwell, one of our directors, is the trustee of The Pidwell Family
Living Trust. The aggregate consideration paid by such entity for shares of
Series C preferred stock in July 1996 included the conversion and
cancellation of a short-term, interest-free convertible promissory note
which note we issued to such entity on May 7, 1996, in the principal amount
of $50,000.
OPTION GRANTS
On various occasions during 1998 and the three preceding fiscal years, we
granted options to purchase our common stock to the following officers,
directors and stockholders who beneficially own five percent or more of our
securities:
- on March 18, 1997 and February 12, 1998, Mr. Dhillon was granted two
options to purchase 100,000 shares of common stock in each grant, with an
exercise price per share of $0.25 and $4.00, respectively;
- on March 18, 1997 and February 12, 1998, Mr. Nesamoney was granted two
options to purchase 100,000 shares of common stock in each grant, with an
exercise price per share of $0.25 and $4.00, respectively;
- on February 20, 1996, March 18, 1997 and February 12, 1998, Mr. Harrison
was granted options to purchase 150,000, 40,000 and 50,000 shares of
common stock, respectively, with an exercise price per share of $0.10,
$0.25 and $4.00, respectively;
- on August 21, 1998, Mr. Klosterman was granted options to purchase an
aggregate of 225,000 shares of common stock with an exercise price per
share of $6.50;
- on May 22, 1996 and November 23, 1998, Mr. Pidwell was granted options to
purchase 56,250 and 15,000 shares of common stock, respectively, with an
exercise price per share of $0.10 and $7.50, respectively;
- on September 11, 1995, Discovery Ventures I, LLC was assigned an option,
which option was granted to Mr. Silverman on such date, to purchase
56,250 shares of common stock with an exercise price per share of $0.10;
- on September 11, 1995, certain Partech Entities were assigned an option,
which option was granted to Mr. Worms on such date, to purchase 56,250
shares of common stock with an exercise price per share of $0.10; and
- on December 10, 1997 and November 23, 1998, Mr. Seawell was granted
options to purchase 35,000 and 15,000 shares of common stock,
respectively, with an exercise price per share of $1.50 and $7.50,
respectively.
55
<PAGE> 57
OTHER TRANSACTIONS
We have entered into an indemnification agreement with each of our
executive officers and directors.
Mr. Dhillon, Mr. Nesamoney and the holders of preferred stock are entitled
to certain registration rights with respect to the common stock issued to them,
or issuable upon conversion of the preferred stock held by them as applicable.
See "Description of Capital Stock -- Registration Rights."
We believe that the shares issued in the above described transactions were
sold at the then fair market value and that the terms of all of the above
described transactions were no less favorable than we could have obtained from
unaffiliated third parties.
56
<PAGE> 58
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to us with respect
to beneficial ownership of our common stock as of January 31, 1999 as adjusted
to reflect the sale of shares offered hereby, by (a) each person known by us to
own beneficially more than 5% of the outstanding shares of common stock, (b)
each of our directors, (c) each Named Executive Officer (see
"Management -- Executive Compensation"), and (d) all current executive officers
and directors as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF SHARES OUTSTANDING
------------------------------------
NAME OF BENEFICIAL OWNER NUMBER(1)(2) BEFORE OFFERING AFTER OFFERING(3)
------------------------ --------------- --------------- -----------------
<S> <C> <C> <C>
Partech Entities(4)
50 California Street, Suite
3200
San Francisco, CA 94111...... 2,581,250 22.4% %
Vincent R. Worms(5)............ 2,581,250 22.4
Bay Partners SBIC, L.P.(6)
10600 North DeAnza Boulevard
Cupertino, CA 95014.......... 2,127,500 18.5
Integral Capital Entities(7)
2750 Sand Hill Road
Menlo Park, CA 94025......... 1,315,000 11.5
Diaz H. Nesamoney(8)........... 1,302,085 11.3
Gaurav S. Dhillon(9)........... 1,299,419 11.2
Weiss, Peck & Greer
Entities(10)
555 California Street, Suite
3130
San Francisco, CA 94l04...... 1,125,000 9.8
Discovery Ventures I, LLC(11)
3000 Sand Hill Road,
Building 3 #210
Menlo Park, CA 94025......... 1,051,250 9.2
Arnold N. Silverman(12)........ 1,051,250 9.2
Clive A. Harrison (13)......... 153,957 1.3
David W. Pidwell (14).......... 100,859 *
A. Brooke Seawell (15)......... 10,937 *
All executive officers and
directors as a group (8
persons)..................... 3,998,507 33.3
</TABLE>
- -------------------------
* Less than 1% of the outstanding 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 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 January 31, 1999 are
deemed outstanding. Percentage of beneficial ownership is based upon
11,425,706 shares of common stock outstanding prior to this offering and
shares of common stock outstanding after this offering. To
our knowledge, except as set forth in the footnotes to this table and
subject to applicable community property laws, each person named in the
table has sole voting and investment power with respect to the shares set
forth opposite such person's name. Except as otherwise indicated, the
address of each of the persons in this table
57
<PAGE> 59
is as follows: c/o Informatica Corporation, 3350 W. Bayshore Road, Palo
Alto, California 94303.
(2) Includes 7,940,000 shares of common stock issuable upon conversion of
shares of Series A preferred stock, Series B preferred stock, Series C
preferred stock and Series D preferred stock on a one-for-one basis which
will occur automatically upon the closing of this offering.
(3) Assumes no exercise of the underwriters' over-allotment option. If the
over-allotment option is exercised in full, we will sell an aggregate of
shares of common stock.
(4) Includes 978,880 shares held by Partech U.S. Partners III, C.V., 978,879
shares held by Parvest U. S. Partners II, C.V., 120,112 shares held by
Tradeinvest Limited, 67,928 shares held by Multinvest Limited, C.V.,
200,000 shares held by U.S. Growth Fund Partners, C.V., 100,000 shares held
by Axa U.S. Growth Fund, LLC, 28,125 shares held by Par SF II, LLC, 18,750
shares held by Double Black Diamond II, LLC., and 8,576 shares held by
Partech International Profit Sharing Plan. Includes 80,000 shares subject
to warrants exercisable within 60 days from January 31, 1999.
(5) Includes 978,880 shares held by Partech U.S. Partners III, C.V., 978,879
shares held by Parvest U.S. Partners II, C.V., 120,112 shares held by
Tradeinvest Limited, 67,928 shares held by Multinvest Limited, C.V.,
200,000 shares held by U.S. Growth Fund Partners, C.V., 100,000 shares held
by Axa U.S. Growth Fund, LLC, 28,125 shares held by Par SF II, LLC, 18,750
shares held by Double Black Diamond II, LLC, and 8,576 shares held by
Partech International Profit Sharing Plan, of which Mr. Worms, one of our
directors, is either a general partner, managing member, attorney-in-fact
or trustee. Also includes 80,000 shares subject to warrants exercisable
within 60 days from January 31, 1999. Mr. Worms disclaims beneficial
ownership of such shares except to the extent of his pecuniary interest
therein.
(6) Includes 80,000 shares subject to warrants exercisable within 60 days from
January 31, 1999.
(7) Includes 1,063,669 shares held by Integral Capital Partners III, L.P. and
251,331 shares held by Integral Capital Partners International III, L.P. of
which Integral Capital Management III, L.P. is the general partner of
Integral Capital Partners III, L.P. and the investment general partner of
Integral Capital Partners International III, L.P.
(8) Includes 127,083 shares subject to options exercisable within 60 days of
January 31, 1999. Includes 2,666 shares held by Mr. Nesamoney's spouse.
(9) Includes 127,083 shares subject to options exercisable within 60 days of
January 31, 1999.
(10) Includes 22,500 shares held by WPG Informational Sciences Entrepreneur
Fund, L.P., 488,959 shares held by WPG Enterprise Fund III, L.L.C., 542,982
shares held by Weiss, Peck & Greer Venture Associates IV, L.L.C. and 70,559
shares held by Weiss, Peck & Greer Venture Associates IV Cayman, L.P.
(11) Includes 40,000 shares subject to warrants exercisable within 60 days from
January 31, 1999.
(12) Includes 1,051,250 shares held by Discovery Ventures I, LLC, of which Mr.
Silverman is a manager. Mr. Silverman, a director of Informatica, disclaims
beneficial ownership of such shares except to the extent of his pecuniary
interest therein.
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<PAGE> 60
(13) Includes 153,957 shares subject to options exercisable within 60 days of
January 31, 1999.
(14) Represents 52,500 shares held of record by the Pidwell Family Living Trust
dated June 25, 1987, of which David Pidwell is trustee. Includes 5,000
shares subject to warrants exercisable within 60 days from January 31, 1999
and 43,359 shares subject to options exercisable within 60 days of January
31, 1999.
(15) Represents 10,937 shares subject to options exercisable within 60 days of
January 31, 1999.
59
<PAGE> 61
DESCRIPTION OF CAPITAL STOCK
Prior to the closing of this offering, we will be authorized to issue up to
shares, $.001 par value, to be divided into two classes to be
designated, respectively, "common stock" and "preferred stock." Of such shares
authorized, 100,000,000 shares shall be designated as common stock, and
2,000,000 shares shall be designated as preferred stock.
COMMON STOCK
As of January 31, 1999, there were 11,425,706 shares of common stock
outstanding that were held of record by approximately 111 stockholders (assuming
conversion of all shares of preferred stock outstanding as of January 31, 1999).
There will be shares of common stock outstanding (assuming no
exercise of the underwriters' over-allotment option and no exercise of
outstanding options) after giving effect to the sale of common stock offered by
us to the public in this offering. In addition to options to purchase our common
stock issued under the 1993 Flexible Stock Incentive Plan and 1996 Flexible
Stock Incentive Plan, there are outstanding options to purchase a total of
256,250 shares of our common stock.
The holders of common stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. We do not have
cumulative voting rights in the election of directors, and accordingly, holders
of a majority of the shares voting are able to elect all of the directors.
Subject to preferences that may be granted to any then outstanding preferred
stock, holders of common stock are entitled to receive ratably such dividends as
may be declared by the board of directors out of funds legally available
therefor as well as any distributions to the stockholders. See "Dividend
Policy." In the event of a liquidation, dissolution or winding up of
Informatica, holders of common stock are entitled to share ratably in all assets
of Informatica remaining after payment of liabilities and the liquidation
preference of any then outstanding preferred stock. Holders of common stock have
no preemptive or other subscription of conversion rights. There are no
redemption or sinking fund provisions applicable to the common stock.
PREFERRED STOCK
Effective upon the closing of this offering and pursuant to our amended and
restated certificate of incorporation filed in connection with this offering,
our board of directors will have the authority, without further action by the
stockholders, to issue up to 2,000,000 shares of preferred stock in one or more
series and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, conversion rights, voting rights, terms of
redemption, liquidation preferences, sinking fund terms and the number of shares
constituting any series or the designation of such series, any or all of which
may be greater than the rights of common stock, without any further vote or
action by stockholders. The issuance of preferred stock could adversely affect
the voting power of holders of common stock and the likelihood that such holders
will receive dividend payments and payments upon liquidation and could have the
effect of delaying, deferring or preventing a change in control of Informatica.
We have no present plan to issue any shares of preferred stock after
consummation of this offering.
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<PAGE> 62
COMMON STOCK WARRANTS
Upon completion of this offering, we will have eight warrants outstanding
to purchase an aggregate of 205,000 shares of common stock at a price per share
of $2.50. See "Certain Transactions -- Venture Financings."
REGISTRATION RIGHTS
Pursuant to stock purchase agreements between us and Mr. Dhillon and Mr.
Nesamoney, respectively, such holders are entitled to certain rights with
respect to the registration of an aggregate of approximately 2,347,338 shares of
common stock. Pursuant to an investor rights agreement entered into in June 1997
between us and holders of 2,250,000 shares of our Series A preferred stock,
1,000,000 shares of our Series B preferred stock, 2,440,000 shares of our Series
C preferred stock and 2,250,000 shares of our Series D preferred stock, such
holders are entitled to certain registration rights regarding shares of common
stock issued or issuable upon conversion of such preferred shares. The
registration rights for all such holders provide that if we propose to register
any securities under the Securities Act, either for our own account or for the
account of other security holders exercising registration rights, such holders
are entitled to notice of such registration and are entitled to include shares
of common stock in the registration. The rights are subject to certain
conditions and limitations, among them the right of the underwriters to limit
the number of shares included in such registration. The holders of these rights
may also require us to file a registration statement under the Securities Act at
our expense with respect to their shares of common stock, and we are required to
use our best efforts to effect such registration, subject to certain conditions
and limitation. Furthermore, the holders may require us to file additional
registration statements on Form S-3, subject to certain conditions and
limitations. See "Certain Transactions -- Venture Financings."
ANTITAKEOVER EFFECTS OF PROVISIONS OF INFORMATICA'S CHARTER AND BYLAWS
Upon completion of this offering, our amended and restated certificate of
incorporation will provide for our board of directors to be divided into three
classes, with staggered three-year terms, which division will be effective as of
our first stockholders meeting at which we have more than 800 stockholders of
record. As a result of this division, only one class of directors will be
elected at each annual meeting of our stockholders, with the other classes
continuing for the remainder of their respective three-year terms. Stockholders
will have no cumulative voting rights and our stockholders representing a
majority of the shares of common stock outstanding will be able to elect all of
the directors. Our amended and restated bylaws, also filed in connection with
this offering, will also provide that all stockholder action must be effected at
a duly called meeting of stockholders and not by a consent in writing. The
amended and restated bylaws will additionally provide that only our chief
executive officer and president may call a special meeting of stockholders.
The classification of our board of directors and lack of cumulative voting
will make it more difficult for our existing stockholders to replace our board
of directors as well as for another party to obtain control of Informatica by
replacing our board of directors. Since the board of directors has the power to
retain and discharge our officers, these provisions could also make it more
difficult for existing stockholders or another party to effect a change in
management.
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<PAGE> 63
These and other provisions may have the effect of deterring hostile
takeovers or delaying changes in control or management of Informatica. These
provisions are intended to enhance the likelihood of continued stability in the
composition of our board of directors and in the policies furnished them and to
discourage certain types of transactions that may involve an actual or
threatened change of control of Informatica. These provisions are designed to
reduce our vulnerability to an unsolicited acquisition proposal. The provisions
also are intended to discourage certain tactics that may be used in proxy
fights. However, such provisions could have the effect of discouraging others
from making tender offers for our shares and, as a consequence, they also may
inhibit fluctuations in the market price of our shares that could result from
actual or rumored takeover attempts. Such provisions also may have the effect of
preventing changes in our management.
SECTION 203 OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
We are subject to Section 203 of the General Corporation Law of the State
of Delaware, which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder, unless: (i) prior to such date, the board of
directors of the corporation approved either the business combination or the
transaction that resulted in the stockholder becoming an interested holder, (ii)
upon consummation of the transaction that resulted in the stockholder becoming
an interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of shares
outstanding those shares owned (a) by persons who are directors and also
officers and (b) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or (iii) on or subsequent
to such date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of the stockholders, and not by
written consent, by the affirmative vote of at least 66 2/3% of the outstanding
voting stock that is not owned by the interested stockholder.
Section 203 defines business combination to include: (i) any merger or
consolidation involving the corporation and the interested stockholder, (ii) any
sale, transfer, pledge or other disposition of 10% or more of the assets of the
corporation involving the interested stockholder, (iii) subject to certain
exceptions, any transaction that results in the issuance or transfer by the
corporation of any stock of the corporation to the interested stockholder, (iv)
any transaction involving the corporation that has the effect of increasing the
proportionate share of the stock or any class or series of the corporation
beneficially owned by the interested stockholder or (v) the receipt by the
interested stockholder of the benefit of any loss, advances, guarantees, pledges
or other financial benefits by or through the corporation. In general, Section
203 defines interested stockholder as an entity or person beneficially owning
15% or more of the outstanding voting stock of the corporation or any entity or
person affiliated with or controlling or controlled by such entity or person.
LISTING
Application has been made for quotation of our common stock on the Nasdaq
National Market under the symbol "INFA."
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<PAGE> 64
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for our common stock is American Stock
Transfer & Trust. Its address is 40 Wall Street, New York, NY 10005, and its
telephone number is (212) 936-5100.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, we will have shares of
common stock outstanding based on shares outstanding as of , 1999. Of
these shares, the shares sold in this offering will be freely
transferable without restriction under the Securities Act, unless they are held
by "affiliates" of Informatica as that term is used under the Securities Act and
the Regulations promulgated thereunder.
The remaining outstanding shares were sold by us in reliance on
exemptions from the registration requirements of the Securities Act and are
restricted securities within the meaning of Rule 144 under the Securities Act.
Approximately of those shares of common stock will be eligible for
sale in the public market immediately upon completion of this offering in
reliance on Rule 144(k) under the Securities Act. Beginning 90 days after the
effective date, approximately additional shares will become eligible
for sale subject to the provisions of Rules 144 and 701. Beginning 180 days
after the date of this prospectus, approximately additional shares
will become eligible for sale subject to the provisions of Rule 144, Rule 144(k)
or Rule 701 upon the expiration of agreements not to sell such shares entered
into between the underwriters and such stockholders. Beginning 180 days after
the date of this prospectus, approximately additional shares subject
to vested options as of the date of completion of this offering will be
available for sale subject to compliance with Rule 701 and upon the expiration
of agreements not to sell such shares entered into between the underwriters and
such stockholders. In addition, 205 additional shares subject to outstanding
warrants will be available 180 days after the date of this prospectus. Any
shares subject to lock-up agreements may be released at any time without notice
by the underwriters.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
restricted shares for at least one year is entitled to sell, within any
three-month period commencing 90 days after the date of completion of this
offering, a number of shares that does not exceed the greater of 1% of the then
outstanding shares of common stock (approximately shares
immediately after this offering), or the average weekly trading volume in the
common stock during the four calendar weeks preceding such sale, subject to the
filing of a Form 144 with respect to such sale and certain other limitations and
restrictions. In addition, a person who is not deemed to have been an affiliate
of Informatica at any time during the 90 days preceding a sale and who has
beneficially owned the shares proposed to be sold for at least two years, would
be entitled to sell such shares under Rule 144(k) without regard to the
requirements described above.
Any employee, officer or director of or consultant to Informatica who
purchased his or her shares prior to the date of completion of this offering or
who holds vested options as of that date pursuant to a written compensatory plan
or contract is entitled to rely on the resale provisions of Rule 701, which
permits non-affiliates to sell their Rule 701 shares without having to comply
with the public-information, holding-period, volume-limitation or notice
provisions of Rule 144 and permits affiliates to sell their Rule 701 shares
without
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<PAGE> 65
having to comply with Rule 144's holding-period restrictions, in each case
commencing 90 days after the date of completion of this offering. However, we
and certain officers, directors and other stockholders have agreed not to sell
or otherwise dispose of any shares of our common stock for the 180-day period
after the date of this prospectus without the prior written consent of the
underwriters. See "Underwriting."
As soon as practicable after the date of completion of this offering, we
intend to file a registration statement on Form S-8 under the Securities Act to
register shares of Common Stock reserved for issuance under the 1993 Flexible
Stock Incentive Plan, 1996 Flexible Stock Incentive Plan, the 1999 Stock
Incentive Plan, and the 1999 Employee Stock Purchase Plan, thus permitting the
resale of such shares by non-affiliates in the public market without restriction
under the Securities Act. Such registration statements will become effective
immediately upon filing.
Prior to this offering, there has been no public market for our common
stock, and any sale of substantial amounts in the open market may adversely
affect the market price of our common stock offered hereby.
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<PAGE> 66
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated , 1999, we have agreed to sell to the
underwriters named below, for whom Credit Suisse First Boston Corporation,
BancBoston Robertson Stephens Inc., SoundView Technology Group, Inc. and First
Albany Corporation are acting as representatives, the following respective
numbers of shares of common stock:
<TABLE>
<CAPTION>
Number
Underwriter of Shares
----------- ---------
<S> <C>
Credit Suisse First Boston Corporation......................
BancBoston Robertson Stephens Inc. .........................
SoundView Technology Group, Inc. ...........................
First Albany Corporation....................................
---------
Total.............................................
=========
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in this offering if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that if an underwriter defaults the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common stock may be terminated.
We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to additional shares at the initial public offering
price less the underwriting discounts and commissions. The option may be
exercised only to cover any over-allotments of common stock.
The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The
underwriters and selling group members may allow a discount of $ per share
on sales to other broker/dealers. After the initial public offering, the public
offering price and concession and discount to dealers may be changed by the
representatives.
The following table summarizes the compensation and estimated expenses we
will pay.
<TABLE>
<CAPTION>
Total
--------------------------------
Without With
Per Share Over-allotment Over-allotment
--------- -------------- --------------
<S> <C> <C> <C>
Underwriting discounts and commissions
paid by us........................... $
Expenses payable by us................. $
</TABLE>
The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.
We and our executive officers, directors and certain other securityholders
of Informatica have agreed that we will not offer, sell, contract to sell,
announce our intention
65
<PAGE> 67
to sell, pledge or otherwise dispose of, directly or indirectly, or file with
the Securities and Exchange Commission a registration statement under the
Securities Act relating to, any shares of our common stock or securities
convertible into or exchangeable or exercisable for any of our common stock
without the prior written consent of Credit Suisse First Boston Corporation for
a period of 180 days after the date of this prospectus.
The underwriters have reserved for sale, at the initial public offering
price up to shares of the common stock for employees,
directors and certain other persons associated with us who have expressed an
interest in purchasing common stock in this offering. The number of shares
available for sale to the general public in this offering will be reduced to the
extent such persons purchase such reserved shares. Any reserved shares not so
purchased will be offered by the underwriters to the general public on the same
terms as the other shares.
We have agreed to indemnify the underwriters against certain liabilities
under the Securities Act or to contribute to payments which the underwriters may
be required to make in that respect.
We have made application to list the shares of common stock on The Nasdaq
Stock Market's National Market under the symbol "INFA."
Prior to this offering, there has been no public market for the common
stock. The initial public offering price will be determined by negotiation
between us and the underwriters. The principal factors to be considered in
determining the public offering price include: the information set forth in this
prospectus and otherwise available to the underwriters; the history and the
prospects for the industry in which we will compete; the ability of our
management; the prospects for our future earnings; the present state of our
development and our current financial condition; the general condition of the
securities markets at the time of this offering; and the recent market prices
of, and the demand for, publicly traded common stock of generally comparable
companies.
The representatives, may engage in over-allotment, stabilizing
transactions, syndicate covering transactions and penalty bids in accordance
with Regulation M under the Exchange Act. Over-allotment involves syndicate
sales in excess of the offering size, which creates a syndicate short position.
Stabilizing transactions permit bids to purchase the underlying security so long
as the stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the common stock in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the representatives to reclaim a selling concession from a
syndicate member when the common stock originally sold by such syndicate member
are purchased in a syndicate covering transaction to cover syndicate short
positions. These stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the common stock to be higher than it would
otherwise be in the absence of these transactions. These transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
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<PAGE> 68
NOTICE TO CANADIAN RESIDENTS
RESALE RESTRICTIONS
The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common stock
in Canada must be made in accordance with applicable securities laws which will
vary depending on the relevant jurisdiction, and which may require resales to be
made in accordance with available statutory exemptions or pursuant to a
discretionary exemption granted by the applicable Canadian securities regulatory
authority. Purchasers are advised to seek legal advice prior to any resale of
the common stock.
REPRESENTATIONS OF PURCHASERS
Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom the
purchase confirmation is received that (i) the purchaser is entitled under
applicable provincial securities laws to purchase the common stock without the
benefit of a prospectus qualified under the securities laws, (ii) where required
by law, that the purchaser is purchasing as principal and not as agent, and
(iii) the purchaser has reviewed the text above under "Resale Restrictions."
RIGHTS OF ACTION (ONTARIO PURCHASERS)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario Securities Law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
ENFORCEMENT OF LEGAL RIGHTS
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Canadian purchasers to effect service of process within Canada upon the
issuer or these persons. All or a substantial portion of the assets of the
issuer and these persons may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against the issuer or these persons in
Canada or to enforce a judgment obtained in Canadian courts against the issuer
or these persons outside of Canada.
NOTICE TO BRITISH COLUMBIA RESIDENTS
A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that the purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser in this offering. This report must be in
the form attached to British Columbia Securities Commission Blanket Order BOR
#95/17, a copy of which may be obtained from us. Only one report must be filed
in respect of common stock acquired on the same date and under the same
prospectus exemption.
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<PAGE> 69
TAXATION AND ELIGIBILITY FOR INVESTMENT
Canadian purchasers of common stock should consult with their own legal and
tax advisors with respect to the tax consequences of an investment in our common
stock in their particular circumstances and with respect to the eligibility of
our common stock for investment by the purchaser under relevant Canadian
legislation.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Morrison & Foerster LLP, Palo Alto, California. Certain legal matters in
connection with this offering will be passed upon for the underwriters by Wilson
Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto, California.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements at December 31, 1997 and 1998, and for each of the three
years in the period ended December 31, 1998, as set forth in their report. We
have included our financial statements in the prospectus and elsewhere in the
registration statement in reliance on Ernst & Young LLP's report, given on their
authority as experts in accounting and auditing.
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement on Form S-1
under the Securities Act of 1933, as amended, with respect to the Common Stock
offered hereby. This prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto.
Certain items are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to Informatica and the Common
Stock offered hereby, reference is made to the Registration Statement and the
exhibits and schedules filed as a part thereof. Statements contained in this
prospectus as to the contents of any contract or any other document referred to
are not necessarily complete, and, in each instance, if such contract or
document is filed as an exhibit, reference is made to the copy of such contract
or document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference to such exhibit. The
Registration Statement, including exhibits and schedules thereto, may be
inspected without charge at the public reference facilities maintained by the
Commission in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices located at the North Western Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World
Trade Center, 13th Floor, New York, NY 10048, and copies of all or any part
thereof may be obtained from such office after payment of fees prescribed by the
Commission. The Commission maintains a web site at http://www.sec.gov that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission.
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<PAGE> 70
INFORMATICA CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Ernst & Young LLP, Independent Auditors........... F-2
Consolidated Balance Sheets................................. F-3
Consolidated Statements of Operations....................... F-4
Consolidated Statements of Redeemable Convertible Preferred
Stock and Stockholders' Equity (Deficit).................. F-5
Consolidated Statements of Cash Flows....................... F-6
Notes to Consolidated Financial Statements.................. F-7
</TABLE>
F-1
<PAGE> 71
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors
Informatica Corporation
We have audited the accompanying consolidated balance sheets of Informatica
Corporation as of December 31, 1997 and 1998, and the related consolidated
statements of operations, redeemable convertible preferred stock and
stockholders' equity (deficit), and cash flows for each of the three years in
the period ended December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Informatica Corporation at December 31, 1997 and 1998, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
Palo Alto, California
February 2, 1999
F-2
<PAGE> 72
INFORMATICA CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY (DEFICIT)
------------------- DECEMBER 31,
1997 1998 1998
-------- -------- ----------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................. $ 8,440 $ 6,059
Accounts receivable, net of allowances of $600 and
$1,841 in 1997 and 1998, respectively.............. 3,133 3,515
Prepaid expenses and other current assets............. 243 552
-------- --------
Total current assets.......................... 11,816 10,126
Property and equipment, net of accumulated depreciation
and amortization of $530 and $367 in 1997 and 1998,
respectively.......................................... 754 512
Other assets............................................ 122 126
-------- --------
Total assets.................................. $ 12,692 $ 10,764
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities.............. $ 2,432 $ 4,165
Accrued compensation and related expenses............. 1,545 3,486
Current portion of capital lease obligations.......... 155 242
Deferred revenue...................................... 2,644 4,537
-------- --------
Total current liabilities..................... 6,776 12,430
Capital lease obligations, less current portion......... 102 217
Commitments
Redeemable convertible preferred stock, no par value,
issuable in series:
8,170,000 shares authorized; 7,940,000 issues and
outstanding at December 31, 1997 and 1998 (none pro
forma) (liquidation preference -- $17,600)......... 17,586 17,586 $ --
Stockholders' equity (deficit):
Common stock, no par value; 14,770,000 shares
authorized; 2,881,838 and 3,426,605 shares issued
and outstanding at December 31, 1997 and 1998,
respectively (11,366,605 pro forma)................ 151 289 17,875
Notes receivable from stockholders.................... (40) (40) (40)
Deferred compensation................................. (83) (33) (33)
Accumulated deficit................................... (11,789) (19,704) (19,704)
Accumulated other comprehensive income (loss)......... (11) 19 19
-------- -------- --------
Total stockholders' equity (deficit).......... (11,772) (19,469) $ (1,883)
-------- -------- ========
Total liabilities, redeemable convertible
preferred stock and stockholders' equity
(deficit)................................... $ 12,692 $ 10,764
======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE> 73
INFORMATICA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1996 1997 1998
---------- ---------- -----------
<S> <C> <C> <C>
Revenues:
License............................... $ 1,843 $ 10,041 $ 21,148
Service............................... 217 2,145 7,597
---------- ---------- -----------
Total revenues................ 2,060 12,186 28,745
Cost of revenues:
License............................... 34 190 376
Service............................... 124 2,163 4,599
---------- ---------- -----------
Total cost of revenues........ 158 2,353 4,975
---------- ---------- -----------
Gross profit............................ 1,902 9,833 23,770
Operating expenses:
Research and development.............. 2,119 3,831 7,075
Sales and marketing................... 3,676 10,951 22,235
General and administrative............ 663 2,036 2,636
---------- ---------- -----------
Total operating expenses...... 6,458 16,818 31,946
---------- ---------- -----------
Loss from operations.................... (4,556) (6,985) (8,176)
Interest income (expense), net.......... 8 221 261
---------- ---------- -----------
Loss before income taxes................ (4,548) (6,764) (7,915)
Income tax provision.................... -- -- --
---------- ---------- -----------
Net loss................................ $ (4,548) $ (6,764) $ (7,915)
========== ========== ===========
Net loss per share:
Basic and diluted..................... $ (1.69) $ (2.44) $ (2.48)
========== ========== ===========
Pro forma basic and diluted........... $ (0.71)
===========
Shares used in calculation of net loss
per share:
Basic and diluted..................... 2,698 2,769 3,193
========== ========== ===========
Pro forma basic and diluted........... 11,133
===========
</TABLE>
See accompanying notes.
F-4
<PAGE> 74
INFORMATICA CORPORATION
CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
STOCKHOLDERS' EQUITY (DEFICIT)
------------------------------------------------
NOTES
PREFERRED STOCK COMMON STOCK RECEIVABLE
------------------- ------------------ FROM DEFERRED
SHARES AMOUNT SHARES AMOUNT STOCKHOLDERS COMPENSATION
--------- ------- --------- ------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1995............ 2,250,000 $ 1,472 2,666,260 $ 48 $(40) $ --
Issuance of common stock............... -- -- 28,125 3 -- --
Common stock options exercised......... -- -- 45,625 3 -- --
Issuance of Series B preferred stock,
net of issuance costs................ 1,000,000 993 -- -- -- --
Issuance of Series C preferred stock,
net of issuance costs................ 2,440,000 6,128 -- -- -- --
Net loss............................... -- -- -- -- -- --
--------- ------- --------- ---- ---- ----
BALANCES AT DECEMBER 31, 1996............ 5,690,000 8,593 2,740,010 54 (40) --
Common stock options exercised......... -- -- 141,828 12 -- --
Issuance of Series D preferred stock,
net of issuance costs................ 2,250,000 8,993 -- -- -- --
Foreign currency translation
adjustment........................... -- -- -- -- -- --
Deferred compensation.................. -- -- -- 85 -- (85)
Amortization of deferred
compensation......................... -- -- -- -- -- 2
Net loss............................... -- -- -- -- -- --
--------- ------- --------- ---- ---- ----
BALANCES AT DECEMBER 31, 1997............ 7,940,000 17,586 2,881,838 151 (40) (83)
Common stock options exercised......... -- -- 544,767 138 -- --
Foreign currency translation
adjustment........................... -- -- -- -- -- --
Amortization of deferred
compensation......................... -- -- -- -- -- 50
Net loss............................... -- -- -- -- -- --
--------- ------- --------- ---- ---- ----
BALANCES AT DECEMBER 31, 1998............ 7,940,000 $17,586 3,426,605 $289 $(40) $(33)
========= ======= ========= ==== ==== ====
<CAPTION>
STOCKHOLDERS' EQUITY (DEFICIT)
--------------------------------------
ACCUMULATED
OTHER
COMPREHENSIVE
ACCUMULATED INCOME
DEFICIT (LOSS) TOTAL
----------- ------------- --------
<S> <C> <C> <C>
BALANCES AT DECEMBER 31, 1995............ $ (477) $ -- $ (469)
Issuance of common stock............... -- -- 3
Common stock options exercised......... -- -- 3
Issuance of Series B preferred stock,
net of issuance costs................ -- -- --
Issuance of Series C preferred stock,
net of issuance costs................ -- -- --
Net loss............................... (4,548) -- (4,548)
-------- ---- --------
BALANCES AT DECEMBER 31, 1996............ (5,025) -- (5,011)
Common stock options exercised......... -- -- 12
Issuance of Series D preferred stock,
net of issuance costs................ -- -- --
Foreign currency translation
adjustment........................... -- (11) (11)
Deferred compensation.................. -- -- --
Amortization of deferred
compensation......................... -- -- 2
Net loss............................... (6,764) -- (6,764)
-------- ---- --------
BALANCES AT DECEMBER 31, 1997............ (11,789) (11) (11,772)
Common stock options exercised......... -- -- 138
Foreign currency translation
adjustment........................... -- 30 30
Amortization of deferred
compensation......................... -- -- 50
Net loss............................... (7,915) -- (7,915)
-------- ---- --------
BALANCES AT DECEMBER 31, 1998............ $(19,704) $ 19 $(19,469)
======== ==== ========
</TABLE>
See accompanying notes.
F-5
<PAGE> 75
INFORMATICA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss......................................... $(4,548) $(6,764) $(7,915)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization.................. 133 394 1,551
Accounts receivable allowances................. 21 579 1,241
Amortization of deferred compensation.......... -- 2 50
Changes in operating assets and liabilities:
Accounts receivable......................... (1,245) (2,428) (1,623)
Prepaid expenses and other assets........... (154) (180) (313)
Accounts payable and accrued liabilities.... 376 2,052 1,733
Accrued compensation and related expenses... 254 1,194 1,941
Deferred revenue............................ 322 2,322 1,893
------- ------- -------
Net cash used in operating activities............ (4,841) (2,829) (1,442)
INVESTING ACTIVITIES
Purchase of property and equipment............... (100) (584) (872)
------- ------- -------
Net cash used in investing activities............ (100) (584) (872)
FINANCING ACTIVITIES
Proceeds from issuance of preferred stock........ 5,071 8,993 --
Proceeds from issuance of common stock........... 6 12 138
Proceeds from notes payable to stockholders...... 2,050 -- --
Payments on capital lease obligations............ (69) (164) (235)
------- ------- -------
Net cash provided by (used in) financing
activities..................................... 7,058 8,841 (97)
------- ------- -------
Effect of foreign currency translation on cash
and cash equivalents........................... -- (11) 30
------- ------- -------
Increase (decrease) in cash and cash
equivalents.................................... 2,117 5,417 (2,381)
Cash and cash equivalents at beginning of year... 906 3,023 8,440
------- ------- -------
Cash and cash equivalents at end of year......... $ 3,023 $ 8,440 $ 6,059
======= ======= =======
SUPPLEMENTAL DISCLOSURES:
Interest paid.................................. $ 41 $ 40 $ 48
======= ======= =======
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Capital lease obligations incurred............. $ 490 $ -- $ 437
======= ======= =======
Issuance of warrants to purchase preferred
stock in connection with bridge financing... $ 55 $ -- $ --
======= ======= =======
Conversion of notes payable to stockholders of
Series C preferred stock.................... $ 2,050 $ -- $ --
======= ======= =======
</TABLE>
See accompanying notes.
F-6
<PAGE> 76
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE COMPANY AND A SUMMARY OF ITS SIGNIFICANT ACCOUNTING
POLICIES
DESCRIPTION OF THE COMPANY
Informatica Corporation (the "Company"), was incorporated in California in
February 1993. The Company operates in one business segment which provides
software solutions that help companies deploy, manage, maintain and grow
enterprise decision support systems.
BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
The functional currency of the Company's foreign subsidiaries is the local
currency. The Company translates all assets and liabilities to U.S. dollars at
the current exchange rates as of the applicable balance sheet date. Revenue and
expenses are translated at the average exchange rate prevailing during the
period. Gains and losses resulting from the translation for the foreign
subsidiaries' financial statements are reported as a separate component of
stockholders' equity. Net gains and losses resulting from foreign exchange
transactions were not significant during any of the periods presented.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Changes in these estimates and assumptions may have a
material impact on the financial statements.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents, which consist of cash and highly liquid
short-term government securities with insignificant interest rate risk and
original maturities of three months or less at date of purchase, are stated at
cost, which approximates fair value.
PROPERTY AND EQUIPMENT
Property and equipment is stated at cost less accumulated depreciation.
Depreciation is provided using the straight-line method over estimated useful
lives of the related assets, generally three years or less.
SOFTWARE DEVELOPMENT COSTS
The Company accounts for software development costs in accordance with
Financial Accounting Standards Board ("FASB") Statement No. 86, "Accounting for
the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed" ("FASB
86"), under which certain software development costs incurred subsequent to the
establishment of
F-7
<PAGE> 77
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
technological feasibility are capitalized and amortized over the estimated lives
of the related products. Technological feasibility is established upon
completion of a working model. As of December 31, 1998, costs incurred
subsequent to the establishment of technological feasibility have not been
significant and all software development costs have been charged to research and
development expense in the accompanying consolidated statements of operations.
REVENUE RECOGNITION
Statement of Position 97-2, Software Revenue Recognition ("SOP 97-2"), was
issued in October 1997 by the American Institute of Certified Public Accountants
("AICPA") and was amended by Statement of Position 98-4 ("SOP 98-4"). The
Company adopted SOP 97-2 effective January 1, 1998. Based on its interpretation
of SOP 97-2 and SOP 98-4, the Company believes its current revenue recognition
policies and practices are consistent with SOP 97-2 and SOP 98-4. Additionally,
the AICPA issued SOP 98-9 in December 1998, which provides certain amendments to
SOP 97-2, and is effective for transactions entered into beginning January 1,
2000. Implementation guidelines for these standards have not yet been issued.
Once available, such implementation guidelines could lead to unanticipated
changes in our current revenue recognition policies, which changes could affect
the timing of the Company's future revenues and earnings.
The Company generates revenues through two sources, software licenses and
services. The Company's license revenues are generated from licensing the
Company's products directly to end users and indirectly through resellers and
original equipment manufacturers. Service revenues are generated from
maintenance contracts and training and consulting services performed for
customers that license the Company's products directly and indirectly through
resellers.
License revenues are recognized when a noncancelable license agreement has
been signed, the product has been shipped, the fees are fixed and determinable,
collectibility is probable and vendor-specific objective evidence exists to
allocate the total fee to elements of the arrangement. Vendor-specific objective
evidence is based on the price charged when an element is sold separately. In
the case of an element not sold separately, the price is established by
authorized management. If an acceptance period is required, revenue is
recognized upon customer acceptance or the expiration of the acceptance period.
The Company also enters into reseller arrangements that typically provide for
sublicense fees based on a percentage of list price. Revenue is recognized upon
shipment to the reseller or end user and when collectibility is probable or upon
cash collections based on credit history with the reseller. The Company's
agreements with its customers and resellers do not contain product return
rights.
Revenues from maintenance, which consist of fees for ongoing support and
product updates, are recognized ratably over the term of the contract, typically
one year. Consulting revenues are primarily related to implementation services
performed on a time-and-materials basis under separate service arrangements
related to the installation of the Company's software products. Training
revenues are generated from classes offered both on-site and at customer
locations. Revenues from consulting and training services are recognized as the
services are performed.
F-8
<PAGE> 78
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The Company performs ongoing credit evaluations of its customers, which are
primarily located in the U.S., Europe and Canada, and generally does not require
collateral. Allowances for credit risks and for estimated future returns are
provided upon shipment. Returns to date have not been material. Actual credit
losses and returns may differ from the Company's estimates and such differences
could be material to the financial statements.
Deferred revenue includes deferred maintenance revenue and prepaid training
and consulting fees.
STOCK-BASED COMPENSATION
The Company grants stock options for a fixed number of shares to employees
with an exercise price equal to the fair value of the shares at the date of
grant. The Company accounts for stock option grants in accordance with
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees," and, accordingly, recognizes no compensation expense for the
stock option grants.
NET LOSS PER SHARE AND PRO FORMA NET LOSS PER SHARE
Basic net loss per share is computed by dividing net loss by the weighted
average number of common shares outstanding for the period. Diluted earnings per
share reflects the potential dilution of securities by adding other common stock
equivalents, including stock options, warrants and convertible preferred stock,
in the weighted average number of common shares outstanding for a period, if
dilutive. Potentially dilutive securities have been excluded from the
computation as their effect is antidilutive.
Pro forma net loss per share is computed by dividing net loss by the
weighted average number of common shares outstanding plus the weighted average
number of redeemable convertible preferred shares outstanding as if such shares
had been converted into common stock at the date of issuance.
F-9
<PAGE> 79
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The calculation of historical and pro forma basic and diluted net loss per
share is as follows (in thousands, except per share amounts):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Historical:
Net loss....................................... $(4,548) $(6,764) $(7,915)
======= ======= =======
Weighted average shares of common stock
outstanding used in computing basic and
diluted net per loss share.................. 2,698 2,769 3,193
======= ======= =======
Basic and diluted net loss per share........... $ (1.69) $ (2.44) $ (2.48)
======= ======= =======
Pro forma:
Net loss....................................... $(7,915)
=======
Shares used in computing basic and diluted net
loss per share (from above)................. 3,193
Adjustment to reflect the effect of the assumed
conversion of preferred stock from the date
of issuance................................. 7,940
-------
Weighted average shares of common stock
outstanding used in computing pro forma
basic and diluted net loss share............ 11,133
=======
Pro forma basic and diluted net loss per
share....................................... $ (0.71)
=======
</TABLE>
If the Company had reported net income, the calculation of diluted earnings
per share (historical and pro forma) would have included the shares used in the
computation of pro forma net loss per share as well as an additional
approximately 524,000, 1,676,000 and 2,101,000 common equivalent shares related
to the outstanding options and warrants not included in the calculations above
(determined using the treasury stock method at the estimated fair value) for
1996, 1997 and 1998, respectively.
COMPREHENSIVE INCOME (LOSS)
In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income," which establishes standards for reporting
and display of comprehensive income and its components in the financial
statements. The only item of other comprehensive income (loss) which the Company
currently reports is foreign currency translation adjustments, which are
included in accumulated other comprehensive income (loss) in the consolidated
statements of redeemable convertible preferred stock and stockholders' equity
(deficit).
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes," which
requires the use of the liability method in accounting for income taxes. Under
this method,
F-10
<PAGE> 80
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
deferred tax assets and liabilities are measured using enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
Valuation allowances are established, when necessary, to reduce the deferred tax
assets to the amounts expected to be realized.
2. BANK LINE OF CREDIT
During 1997, the Company entered into a revolving line of credit with a
bank which provided for borrowings of up to $3,000,000 based on 80% of eligible
accounts receivable, as defined. Borrowings under the line of credit bore
interest, payable monthly, at 0.25% above the bank's prime rate. Borrowings were
secured by substantially all of the Company's assets. The agreement also
required the Company to comply with certain financial covenants. The line of
credit expired in December 1998.
3. LEASE OBLIGATIONS
The Company has an equipment financing agreement providing up to $564,000
for the purchase of property and equipment which expired in January 1998. In
February 1998, the Company entered into another equipment financing agreement
with the same lender which increases the line to $1,510,000 for the purchase of
property and equipment. Borrowings under these agreements bear interest at a
rate of 3.07% and 3.19%, respectively, for 36 months. The Company is also
required to choose to either pay a supplemental additional interest portion of
20% of the original purchase price due and payable at the end of the agreement
term or to extend the agreement term for an additional year at a monthly
interest rate of 2.05% of the original purchase amount. As of December 31, 1998,
borrowing under these agreements amounted to $927,000 of which $459,000 was
outstanding.
Included in property and equipment are assets acquired under capital lease
obligations with an original cost of approximately $490,000 and $927,000 of
December 31, 1997 and 1998, respectively. The related amortization is included
with depreciation expense.
The Company leases its office facilities and certain office equipment under
noncancelable lease agreements which require the Company to pay operating costs,
including property taxes, normal maintenance and insurance. Rent expense
amounted to $158,000, $458,000 and $1,552,000 for 1996, 1997 and 1998,
respectively.
F-11
<PAGE> 81
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Future minimum lease payments under noncancelable operating and capital
leases are summarized as follows (in thousands):
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
--------- -------
<S> <C> <C>
Years ending December 31:
1999.............................................. $1,890 $262
2000.............................................. 2,141 161
2001.............................................. 177 67
------ ----
Total minimum lease payments........................ $4,208 490
======
Less interest....................................... 31
----
Present value of minimum lease payments............. 459
Less current portion................................ 242
----
$217
====
</TABLE>
4. STOCKHOLDERS' EQUITY
PREFERRED STOCK
Preferred stock at December 31, 1997 and 1998 consists of the following by
series (in thousands):
<TABLE>
<CAPTION>
SHARES ISSUED
-----------------------------
DECEMBER 31,
AUTHORIZED -------------- LIQUIDATION
SERIES SHARES 1997 1998 PREFERENCE
------ ---------- ----- ----- -----------
<S> <C> <C> <C> <C>
A.............................. 2,250 2,250 2,250 $ 1,500
B.............................. 1,000 1,000 1,000 $ 1,000
C.............................. 2,645 2,440 2,440 $ 6,100
D.............................. 2,275 2,250 2,250 $ 9,000
----- ----- ----- -------
8,170 7,940 7,940 $17,600
===== ===== ===== =======
</TABLE>
Each share of the Series A, Series B, Series C and Series D preferred stock
is convertible, at the option of the holder, into one share of the Company's
common stock, subject to certain anti-dilution provisions. The Series A, Series
B, Series C and Series D preferred stock will be automatically converted into
common stock upon completion of an initial public offering of the Company's
common stock with proceeds to the Company of a minimum of $18,000,000 at a
minimum offering price of $9.00 per share of common stock. The holders of
preferred stock are entitled to the number of votes equal to the number of
shares of common stock into which their preferred stock is convertible.
On or at any time after June 3, 2002, upon receipt of written consent as to
the approval of the holders of more than 50% of the then outstanding shares of
the Series A, Series B, Series C and Series D preferred stock, the Company shall
fix a date upon which it shall commence the redemption of the applicable series
of preferred stock. The Company shall redeem from each holder of shares of such
series of preferred stock one-third of the shares of each series of preferred
stock to be redeemed held by each such
F-12
<PAGE> 82
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
holder on the redemption commencement date, an additional one-third of such
shares on the first anniversary of the redemption commencement date, and the
remaining such shares on the second anniversary of the redemption commencement
date at a price equal to original issue price per share, plus all declared but
unpaid dividends on such shares.
The holders of the Series A, Series B, Series C, and Series D preferred
stock are entitled to receive noncumulative dividends of $0.0533, $0.0800,
$0.2000 and $0.3200 per share, respectively, when and if declared by the Board
of Directors. These dividends are in preference to any declaration or payment of
any dividend on the common stock of the Company. No such dividends have been
declared.
In the event of any liquidation, dissolution, or winding up of the Company,
the holders of the Series A, Series B, Series C and Series D preferred stock
have a liquidation preference of $0.67, $1.00, $2.50 and $4.00 per share,
respectively, over holders of common stock plus any declared but unpaid
dividends.
BRIDGE FINANCING
In connection with short-term promissory notes in May 1996, the Company
granted warrants to the lenders to purchase up to 205,000 shares of Series C
preferred stock at $2.50 per share. The warrants expire May 1, 2001. The Company
deemed the fair value of the warrants to be $55,000, which was recorded as a
discount on the notes. This discount was amortized to interest expense over the
term of the notes during 1996.
COMMON STOCK
At December 31, 1998, the Company has reserved the following shares of its
common stock for future issuance:
<TABLE>
<S> <C>
Outstanding stock options.......................... 2,994,209
Reserved for future stock option grants............ 193,455
Redeemable convertible preferred stock:
Issued and outstanding........................... 7,940,000
Outstanding warrants (assuming conversion)....... 205,000
----------
11,332,664
==========
</TABLE>
STOCK OPTIONS
Under the Company's 1993 and 1996 Stock Incentive Plans, 4,227,250 shares
of common stock have been reserved for the issuance of incentive stock options
(ISO), non-statutory stock options (NSO), or the sale of common stock to
employees, officers, directors, and consultants. The ISOs may be granted at a
price per share not less than the fair market value on the date of the grant.
The NSOs may be granted at a price per share not less than 85% of the fair
market value at the date of grant. Options granted are exercisable over a
maximum term of ten years from the date of grant and generally vest over a
period of up to four years. In the event optionholders cease to be employed by
the Company, all unvested options are forfeited and all vested options may be
exercised within
F-13
<PAGE> 83
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
a 90-day period after termination; under the restricted stock portion of the
plans, the Company also has the right to repurchase at the original purchase
price any unvested shares if the holder is no longer employed by the Company. At
December 31, 1998, no outstanding common shares are subject to such repurchase
rights.
A summary of the Company's stock option activity is set forth below:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF EXERCISE PRICE
SHARES PER SHARE
--------- --------------
<S> <C> <C>
Outstanding at December 31, 1995................ 602,625 $ .06
Granted....................................... 966,950 .13
Exercised..................................... (45,625) .08
Canceled...................................... (35,000) .04
--------- -----
Outstanding at December 31, 1996................ 1,488,950 .11
Granted....................................... 1,198,390 .67
Exercised..................................... (141,828) .09
Canceled...................................... (101,350) .34
--------- -----
Outstanding at December 31, 1997................ 2,444,162 .38
Granted....................................... 1,601,803 5.60
Exercised..................................... (544,767) .25
Canceled...................................... (506,989) 1.91
--------- -----
Outstanding at December 31, 1998................ 2,994,209 $2.93
========= =====
Exercisable at December 31, 1998................ 917,924 $0.24
========= =====
Available for grant at December 31, 1998........ 193,455
=========
</TABLE>
The following table summarizes information concerning currently outstanding
and exercisable options at December 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------- ------------------------
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
REMAINING AVERAGE AVERAGE
RANGE OF CONTRACTUAL EXERCISE PRICE EXERCISE PRICE
EXERCISE PRICES NUMBER LIFE (YEARS) PER SHARE NUMBER PER SHARE
--------------- --------- ------------ -------------- ------- --------------
<S> <C> <C> <C> <C> <C>
$0.01 - $0.10 706,969 5.85 $0.07 518,962 $0.06
$0.25 - $0.75 633,043 7.91 $0.36 362,565 $0.31
$1.50 - $4.00 735,634 9.05 $3.26 33,397 $1.75
$5.50 - $6.50 695,563 9.52 $6.34 3,000 $6.50
$7.00 - $9.00 223,000 9.86 $7.57 -- --
--------- ---- ----- ------- -----
$0.01 - $9.00 2,994,209 8.23 $2.93 917,924 $0.24
========= =======
</TABLE>
Pro forma information regarding results of operations and net loss per
share is required by FASB Statement No. 123, "Accounting for Stock-Based
Compensation," ("FASB 123") which also requires that the information be
determined as if the Company had accounted for its employee stock options under
the fair value method of FASB 123.
F-14
<PAGE> 84
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The fair value for these options was estimated at the date of grant using the
minimum value method with the following weighted average assumptions: a
risk-free interest rate of 6.0%, 6.0% and 5.0% for 1996, 1997 and 1998,
respectively, no dividend yield or volatility factors of the expected market
price of the Company's common stock, and a weighted average expected life of the
option of 5 years.
The option valuation models are developed for use in estimating the fair
value of traded options that have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions, including the expected life of the options. Because the
Company's employee stock options have characteristics significantly different
from those of traded options and because changes in the subjective input
assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.
Had compensation cost for the Company's stock-based compensation plans been
determined using the fair value at the grant dates for awards under those plans
calculated using the minimum value method of FASB 123, the Company's net loss
and pro forma basic and diluted net loss per share would have been increased to
the pro forma amounts indicated below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1996 1997 1998
------- ------- -------
<S> <C> <C> <C>
Pro forma net loss (in thousands)........ $(4,555) $(6,792) $(8,230)
======= ======= =======
Pro forma basic and diluted net loss per
share.................................. $ (1.69) $ (2.45) $ (2.58)
======= ======= =======
</TABLE>
The weighted average fair value of options granted, which is the value
assigned to the options under FASB 123, was $0.04, $0.18 and $0.85 for options
granted during the years ended December 31, 1996, 1997 and 1998.
The pro forma impact of options on the net loss for the years ended
December 31, 1996, 1997 and 1998 is not representative of the effects on net
loss for future years, as future years will include the effects of additional
years of stock option grants.
The difference between the exercise price and the value for financial
reporting purposes of the Company's common stock at the grant date of certain
stock options granted in 1997 totaling $85,000 has been recorded as deferred
compensation. The related compensation is being recognized as expense over the
vesting period of the options, generally 4 years.
5. NOTES RECEIVABLE FROM STOCKHOLDERS
During 1995, certain officers of the Company purchased a total of 400,000
shares of the Company's common stock in exchange for promissory notes. The notes
bear interest at 7.12% per annum, with interest and principal payable on May 5,
2000. The notes are secured by the common shares purchased by these officers.
F-15
<PAGE> 85
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
6. INCOME TAXES
Significant components of the Company's deferred tax assets are as follows
(in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1997 1998
------- -------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards.......................... $ 3,550 $ 3,400
Tax credit carryforwards.................................. 400 700
Deferred revenue.......................................... -- 1,100
Reserves and accruals not currently deductible............ 235 2,400
Other..................................................... 255 200
------- -------
Total deferred tax assets................................... 4,440 7,800
Valuation allowance......................................... (4,440) (7,800)
------- -------
Net deferred tax assets..................................... $ -- $ --
======= =======
</TABLE>
Due to operating losses and the inability to recognize the benefits
therefrom, there is no provision for income taxes for 1996, 1997 or 1998. FASB
109 provides for the recognition of deferred tax assets if realization of such
assets is more likely than not. Based upon the weight of available evidence,
which includes the Company's historical operating performance and the reported
cumulative net losses in all prior years, the Company has provided a full
valuation allowance against its net deferred tax assets. The valuation allowance
increased by $2,640,000 and $3,360,000 during the years ended December 31, 1997
and 1998, respectively.
At December 31, 1998, the Company had net operating loss carryforwards for
federal and state tax purposes of approximately $9,800,000 and $2,300,000,
respectively. The Company also had federal and state research and development
tax credit carryforwards of approximately $500,000 and $300,000, respectively.
The net operating loss and tax credit carryforwards will expire at various dates
beginning in 1999 through 2018, if not utilized.
Utilization of net operating loss and tax credit carryforwards may be
subject to a substantial annual limitation due to the ownership change
limitations provided by the Internal Revenue Code and similar state provisions.
The annual limitation may result in the expiration of the net operating loss and
credit carryforwards before utilization.
7. PROFIT SHARING PLAN
The Company has a profit sharing plan and trust under Section 401(k) of the
Internal Revenue Code which covers substantially all employees. Eligible
employees may contribute amounts to the plan via payroll withholdings, subject
to certain limitations. Contributions by the Company are at the discretion of
the Board of Directors. No discretionary contributions have been made by the
Company to date.
F-16
<PAGE> 86
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
8. MAJOR CUSTOMERS AND REVENUE BY GEOGRAPHIC AREA
No one customer accounted for more than 10% of revenue in 1996, 1997 and
1998. Revenue was derived from customers in the following geographic areas (in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1996 1997 1998
------ ------- -------
<S> <C> <C> <C>
North America..................... $1,890 $11,360 $25,112
Europe............................ 170 826 3,633
------ ------- -------
$2,060 $12,186 $28,745
====== ======= =======
</TABLE>
9. SUBSEQUENT EVENTS (UNAUDITED)
On February 5, 1999, the Board approved a resolution to increase the number
of shares reserved for issuance under the 1996 Stock Incentive Plan by
1,000,000.
On February 5, 1999, the Board of Directors also authorized the Company to
proceed with an initial public offering of its common stock. If the offering is
consummated as presently anticipated, all of the outstanding preferred stock
will automatically convert into common stock. The unaudited pro forma
stockholders' equity (deficit) at December 31, 1998 gives effect to the
conversion of all outstanding shares of redeemable convertible preferred stock
at December 31, 1998 into 7,940,000 shares of common stock upon completion of
the offering. The Board also approved, subject to stockholder approval, the
amendment of the Company's Articles of Incorporation, which included, among
other things, reincorporation of the Company in the State of Delaware and a
change in the total number of shares which the Company is authorized to issue to
24,590,000 shares, of which 16,420,000 will be common stock and 8,170,000 will
be preferred stock.
F-17
<PAGE> 87
APPENDIX -- DESCRIPTION OF GRAPHICS
INFORMATICA PROSPECTUS WRAPPER
DRAFT 3.0
FRONT inside cover
- --------------------------------------------------------------------------------
- - Headline:
"With 10 times more eyeballs on analysis than on transaction screens,
users' strategic focus will shift from ERP to analysis." --Forrester
Research
- - Main Text:
Companies across industries are turning their attention toward gaining
greater insight into customer, market, financial and competitive trends.
Operational database applications, both inside and outside the
enterprise, capture billions of bits of transaction data every day -
valuable information that can inform the decision support process. And
varieties of analytical tools, from OLAP engines to analytic
applications, help decision-makers evaluate and act on that information.
To take advantage of the full complement of business intelligence and
analytic applications available companies need a software platform
capable of integrating their data, tools and analytic applications
across the entire enterprise.
Such a platform should broaden the diversity of information sources; it
should maintain compatibility among the increasing types and numbers of
analytical tools; and it should support rapid growth and change, in user
numbers as well as application initiatives. With such a platform in
place, knowledge workers will be able to gain better insight into
business trends, and will be able to make more accurate and informed
business decisions.
For many organizations, the platform of choice has been Informatica's
PowerCenter and PowerMart products.
- POWERCENTER is an enterprise data integration hub that
integrates and unifies the many diverse tools - and the various
user groups - that populate today's enterprises. Within an
enterprise decision support solution, PowerCenter is responsible
for extracting data from operational sources, enriching it for
decision support, cataloging it for use and re-use, and
delivering it to powerful business intelligence and analytic
applications.
- POWERMART is an integrated software suite for deploying and
managing line-of-business data marts and analytic applications.
PowerMart has extended the state-of-the-art in decision support
by delivering sophisticated design and build capabilities, and
by addressing the complete life cycle for data mart and analytic
application development, production and management. PowerMart
can be deployed alongside PowerCenter as part of Informatica's
enterprise platform, or independently to build and manage
line-of-business applications.
Set forth underneath the text above are the PowerCenter and PowerMart
logos.
<PAGE> 88
2/
INSIDE FRONT GATEFOLD
- --------------------------------------------------------------------------------
- - Headline:
Informatica's Vision: Powering the Intelligent Enterprise
Main text:
What do you need to know today?
You're the CEO of a leading regional communications provider and
the latest deregulation initiatives have just opened your market
to a slate of new competitors. What do you need to know today?
You're the VP of Marketing for one of the world's largest
retailers and, despite strong short-term profitability, metrics
for repeat sales and customer loyalty show a steady downward
trend. What do you need to know today?
You're the CIO of a global financial services firm that's just
acquired a major bank, bringing together disparate workforces
and vastly different and incompatible enterprise software
systems. What do you need to know today?
The "must-have" information pertaining to corporate performance is
unique to each company and the executives who make them run. However,
common obstacles prevent them from harnessing the information required
to gain real business insight - insight that drives top-line growth,
helps expand into new markets, produces customer loyalty and improves
global competitiveness:
- Information sources are substantial, diverse and difficult to
integrate
- Infrastructure elements are not always compatible or
interoperable
- Business intelligence tools cannot always gain access to the
varieties of information sources available across the enterprise
The possibilities for effective decision support are greater today than
ever before. But delivering on the promise of an "intelligent
enterprise" - an organization that has timely access to all the critical
information it needs to gain insight into its performance - will bring
about compelling demands on each enterprise's decision support
infrastructure.
Informatica's PowerCenter and PowerMart products deliver an integrated
software platform that simplifies the task of deploying and maintainig
enterprise decision support systems and that helps companies build
their own intelligent enterprise.
The platform brings together the essential components for ensuring
enterprise-class decision support, including:
- Enterprise resource planning systems - many organizations rely
on ERP systems to run their most critical business applications
<PAGE> 89
3/
- Operational legacy data sources - for accurate analysis, ERP
data typically must be merged with data from other company and
external sources
- Data warehouses and departmental data marts - these typically
form the core storage vehicles for decision support
- End-user query tools and analytic applications - these help
business managers and knowledge workers perform the tasks
required to turn raw data into business insight
At a time when the possibilities for effective decision support are
greater than ever before, Informatica's PowerCenter and PowerMart will
help organizations establish a lasting infrastructure, intelligent
enough to grow and adapt as new technologies come into use.
CAPTION:
Informatica's PowerCenter and PowerMart software products provide a highly
adaptable, functionally rich platform for deploying, managing and maintaining
enterprise decision support systems. This software platform supports a wide
range of analytic applications, including customer relationship management, key
performance indicators and financial forecasting, among others.
[GRAPHIC DIAGRAM]
Set forth to the right of this text above is a graphic depicting the PowerCenter
logo surrounded by logos for IBM, Oracle, PeopleSoft, SAP and e-Commerce, on
the left, and boxes, on the right, labeled "Customer Relationship Management,"
"Financial Forecasting & Budgeting," "Business Score Card", and "Manufacturing
Demand Planning" containing graphics depicting a face, a dollar sign, a
business score card and a wrench, respectively, along with the PowerMart logo.
<PAGE> 90
4/
INSIDE BACK cover
- --------------------------------------------------------------------------------
- - Headline:
Partnerships that bring a multitude of strengths.
- - Main text:
Informatica's Enterprise Partners represent leading firms in their
industries -- enterprise software, application software and systems
integration.
HYPERION -- Integrated support for the Hyperion Integration Server
brings joint customers a powerful solution through a dynamic metadata
bridge that simplifies implementation.
MICROSOFT -- A 2-year relationship with the manufacturer of SQL
Server--the best-selling relational database management system for
Windows NT(R)-- has produced metadata integration and management.
IBM -- Each year, Informatica has enhanced its support of IBM's DB2
culminating in the recent initiative to deliver scalable data
warehousing solutions to users of IBM's DB2 Universal Database, the
industry's first multimedia, Internet-ready RDBMS.
SAP -- Support for SAP Business Information Warehouse(TM) gives users
seamless access to all of their non-SAP data, bringing them powerful
enterprise-class analytic capabilities.
BMC SOFTWARE -- Integration with BMC's bulk-extraction and
change-capture software adds increased functionality to Informatica's
solution for IBM operational systems.
PEOPLESOFT -- Informatica's product line is fully integrated and
certified for use in PeopleSoft's new Enterprise Performance Management
initiative.
<PAGE> 91
5/
CAMBRIDGE TECHNOLOGY PARTNERS - Informatica partners with Cambridge
Technology Partners to help customers nationwide design and deploy decision
support systems based on a unique fixed time/fixed cost model.
PRICEWATERHOUSECOOPERS - Informatica supports PricewaterhouseCoopers' data
warehousing practice, which offers clients a selection of high-quality data
warehouse and decision support solutions.
KPMG - Informatica partners with KPMG's data warehousing practice. KPMG uses
Informatica's PowerMart software as the decision support component of its
Performance Executive financial applications suite for the public sector.
Set forth above each of the paragraphs listed above are the respective logos
for each of Hyperion, Microsoft, IBM, SAP, BMC Software, PeopleSoft,
Cambridge Technology Partners, PricewaterhouseCoopers and KPMG.
The text contained on this page is superimposed over a PowerCenter and
PowerMart logo.
<PAGE> 92
6/
INSIDE BACK GATEFOLD:
- --------------------------------------------------------------------------------
- - Headline
Customer Success Powered By Informatica
- - Main Text:
3Com, one of the largest network solutions companies in the world
serving over 200 million customers, has over five transactional systems
from which it pulls operational data into its data center in Santa
Clara, CA. In addition, 3Com is currently implementing a powerful
enterprise resource planning solution, R/3 from SAP. 3Com turned to
Informatica to provide a data warehouse platform to enable it to develop
a common data transformation architecture for its data center and to
leverage its new ERP solution. Currently, PowerCenter has enabled 3Com
to build a 24x7 data warehouse environment that automatically uploads
point-of-sale and channel inventory data from its North American, Asia
Pacific, and European operations. 3Com intends to extend this data
warehouse environment to extract data from additional sources and
integrate business intelligence tools for additional analysis and
reporting.
Carlson Wagonlit Travel is a world leader in business travel and expense
management, with over 3,000 locations in 141 countries and more than $11
billion in annual sales. Carlson Wagonlit Travel chose our platform to
build an enterprise information delivery system. This system enables
Carlson Wagonlit Travel to mine the large quantities of data in its
transaction systems, and provide its clients with valuable analysis and
reports on travel spending volumes and patterns. In addition, corporate
travel managers use this information to streamline processes and
policies, often resulting in cost savings. With the eventual goal of
consolidating customer travel data from around the world for analysis,
we are working with Carlson Wagonlit Travel to help them provide their
travel clients with better service through a wealth of tailored
information.
First Union Direct, a subsidiary of First Union Corporation - the
nation's sixth largest bank, receives more than 2 million calls per week
to its customer call center agents. First Union realized a need for
additional call analysis and chose our PowerCenter as a platform to
build a system to help enable the company feed call center customer data
into analytic applications that generate reports on performance issues
and service optimization. The system allows First Union to enhance its
resource allocation using insight gained from such reports. Our software
made it possible for the system to provide First Union with intraday
performance data at a far greater level of detail than was previously
possible. In addition, the system identifies opportunities to realign
call routing priorities between 800# calls and calls from the branch
customers so both call types are optimized to provide better service and
shorter wait times. The new system will also measure and report agent
performance by identifying specific training and feedback opportunities
to provide top level service and to build lasting financial
relationships with customers.
<PAGE> 93
[INFORMATICA -- POWERING THE INTELLIGENT ENTERPRISE]
<PAGE> 94
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be paid by the Registrant in connection with the
distribution of the securities being registered, other than underwriting
discounts and commissions, are as follows:
<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
Securities and Exchange Commission Filing Fee............... $ 10,120
NASD Filing Fee............................................. 4,140
Nasdaq National Market Listing Fee.......................... 87,000
Accounting Fees and Expenses................................ 225,000
Blue Sky Fees and Expenses.................................. 15,000
Legal Fees and Expenses..................................... 225,000
Transfer Agent and Registrar Fees and Expenses.............. 6,000
Printing Expenses........................................... 160,000
Miscellaneous Expenses...................................... 52,740
--------
Total....................................................... $785,000
========
</TABLE>
- -------------------------
* All amounts are estimates except the SEC filing fee, the NASD filing fee and
the Nasdaq National Market listing fee.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the General Corporation Law of the State of Delaware,
the Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). The Registrant's
Amended and Restated Bylaws (Exhibit 3.4 hereto) also provide for mandatory
indemnification of its directors and executive officers, and permissive
indemnification of its employees and agents, to the fullest extent permissible
under Delaware law.
The Registrant's Amended and Restated Certificate of Incorporation (Exhibit
3.2 hereto) provides that the liability of its directors for monetary damages
shall be eliminated to the fullest extent permissible under Delaware law.
Pursuant to Delaware law, this includes elimination of liability for monetary
damages for breach of the directors' fiduciary duty of care to the Registrant
and its stockholders. These provisions do not eliminate the directors' duty of
care and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to the Registrant, for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of law,
for any transaction from which the director derived an improper personal
benefit, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other laws, such as the federal
securities laws or state or federal environmental laws.
II-1
<PAGE> 95
Prior to the effective date of the Registration Statement, the Registrant
will have entered into agreements with its directors and certain of its
executive officers that require the Registrant to indemnify such persons against
expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred (including expenses of a derivative action) in connection
with any proceeding, whether actual or threatened, to which any such person may
be made a party by reason of the fact that such person is or was a director or
officer of the Registrant or any of its affiliated enterprises, provided such
person acted in good faith and in a manner such person reasonably believed to be
in or not opposed to the best interests of the Registrant and, with respect to
any criminal proceeding, had no reasonable cause to believe his conduct was
unlawful. The indemnification agreements also set forth certain procedures that
will apply in the event of a claim for indemnification thereunder.
The Registrant intends to obtain in conjunction with the effectiveness of
the Registration Statement a policy of directors' and officers' liability
insurance that insures our directors and officers against the cost of defense,
settlement or payment of a judgment under certain circumstances.
The Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement provides for indemnification by the underwriters of the Registrant and
its officers and directors for certain liabilities arising under the Securities
Act or otherwise.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
For the period from January 1, 1996 to January 31, 1999, the Registrant has
issued and sold the following unregistered securities:
1. During the period, the Registrant granted stock options to
employees, directors and consultants under its Stock Incentive Plans
covering an aggregate of 3,767,143 shares of the Registrant's common stock,
at exercise prices ranging from $.10 to $9.00 with an average exercise
price of $2.63 per share.
2. During the period, the Registrant issued and sold an aggregate of
819,446 shares of its common stock to 79 employees, directors and
consultants for cash and promissory notes in the aggregate amount of
$168,427 upon exercise of stock options granted pursuant to the
Registrant's Stock Incentive Plans.
3. During the period, the Registrant issued and sold an aggregate of
1,000,000 shares of its Series B preferred stock for an aggregate purchase
price of $1,000,000, an aggregate of 2,440,000 shares of its Series C
preferred stock for an aggregate consideration of $6,100,000, and an
aggregate of 2,250,000 shares of its Series D preferred stock for an
aggregate consideration of $9,000000.
4. During the period, the Registrant issued and sold warrants,
convertible into 205,000 shares of its Series C preferred stock, or upon
the completion of this offering, common stock, for an aggregate
consideration of $2,562.50.
The sale and issuance of securities in the transactions described in
paragraphs 1, 2, 3 and 4 above were deemed to be exempt from registration under
the Securities Act by virtue of Rule 701 promulgated thereunder in that they
were offered and sold either pursuant to written compensatory benefit plans or
pursuant to a written contract relating to compensation, as provided by Rule 701
or were deemed to be exempt from registration under the Securities Act by virtue
of Section 4(2) thereof.
II-2
<PAGE> 96
Appropriate legends were affixed to the stock certificates issued in the
above transactions. Similar legends were imposed in connection with any
subsequent sales of any such securities. No underwriters were employed in any of
the above transactions.
ITEM 16. EXHIBITS AND CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
The exhibits are as set forth in the Exhibit Index.
(b) Consolidated Financial Statement Schedules
All schedules have been omitted since they are not required or are not
applicable or the required information is shown in the consolidated financial
statements or related notes.
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes to provide the underwriters at the closing
specified in the Underwriting Agreement certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
The Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time the Commission declared it effective.
(2) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities therein, and
this offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE> 97
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto,
State of California on February 19, 1999.
INFORMATICA CORPORATION
By: /s/ GAURAV S. DHILLON
-----------------------------------
Gaurav S. Dhillon
Chief Executive Officer and
Director
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Gaurav S. Dhillon, Diaz H. Nesamoney and
Craig L. Klosterman as his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments to this Registration Statement and sign any
registration statement for the same offering covered by the Registration
Statement that is to be effective upon filing pursuant to Rule 462(b)
promulgated under the Securities Act of 1993, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GAURAV S. DHILLON Chief Executive Officer February 19, 1999
- --------------------------------------------- and Director
Gaurav S. Dhillon
/s/ DIAZ H. NESAMONEY President and Director February 19, 1999
- ---------------------------------------------
Diaz H. Nesamoney
/s/ CLIVE A. HARRISON Executive Vice President, February 19, 1999
- --------------------------------------------- Worldwide Sales
Clive A. Harrison
</TABLE>
II-4
<PAGE> 98
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ CRAIG L. KLOSTERMAN Senior Vice President and February 19, 1999
- --------------------------------------------- Chief Financial Officer
Craig L. Klosterman (Principal Financial and
Accounting Officer)
/s/ DAVID W. PIDWELL Director February 19, 1999
- ---------------------------------------------
David W. Pidwell
/s/ A. BROOKE SEAWELL Director February 19, 1999
- ---------------------------------------------
A. Brooke Seawell
/s/ ARNOLD N. SILVERMAN Director February 19, 1999
- ---------------------------------------------
Arnold N. Silverman
/s/ VINCENT WORMS Director February 19, 1999
- ---------------------------------------------
Vincent Worms
</TABLE>
II-5
<PAGE> 99
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DOCUMENT
NUMBER- --------
<S> <C>
1.1* Form of Underwriting Agreement.
3.1* Certificate of Incorporation of the Registrant, as currently
in effect.
3.2* Form of Registrant's Amended and Restated Certificate of
Incorporation to be adopted upon completion of this
offering.
3.3* Registrant's Bylaws, as currently in effect.
3.4* Form of Registrant's Amended and Restated Bylaws, to be
adopted upon completion of this offering.
4.1 Reference is made to Exhibits 3.1 and 3.2, 3.3 and 3.4.
5.1* Opinion of Morrison & Foerster LLP.
10.1 Form of Restricted Stock Purchase Agreement with Gaurav S.
Dhillon and Diaz H. Nesamoney, respectively, dated as of May
5, 1995.
10.2 Series D Preferred Stock Purchase Agreement with the
investors listed on Exhibit A thereto, dated as of June 3,
1997.
10.3 Seconded Amended and Restated Investor Rights Agreement with
the investors listed on Exhibits A and B thereto, dated as
of June 3, 1997.
10.4 Loan and Warrant Agreement with the investors listed on
Schedule of Lenders attached thereto, dated as of May 7,
1996.
10.5 Form of Warrant issued by the Registrant to Bay Partners
SBIC, L.P., Discovery Ventures I, LLC, Parvest U.S. Partners
II C.V., Tradeinvest Limited, Multinvest Limited C.V.,
Partech U.S. Partners III C.V., David Pidwell and Partech
International Profit Sharing Plan U/A, respectively, dated
January 1, 1992 FBO: Thomas G. McKinley in connection with
loan principal amounts of $800,000, $400,000, $360,000,
$42,000, $28,000, $360,000, $50,000 and $10,000,
respectively.
10.6* Form of Indemnification Agreement between the Registrant and
each of its executive officers and directors.
10.7 Lease Agreement regarding Sublease, dated January 29, 1998,
by and among the Registrant, Informix Corporation and Palo
Alto Bayshore Investors, LLC.
10.8 Registrant's 1993 Flexible Stock Incentive Plan, including
forms of agreements thereunder.
10.9 Registrant's 1996 Flexible Stock Incentive Plan, including
forms of agreements thereunder.
10.10* Registrant's 1999 Stock Incentive Plan, including forms of
agreements thereunder.
10.11* Registrant's 1999 Employee Stock Purchase Plan, including
forms of agreements thereunder.
21.1 List of Significant Subsidiaries.
23.1 Consent of Morrison & Foerster LLP. Reference is made to
Exhibit 5.1.
23.2 Consent of Ernst & Young LLP, Independent Auditors.
24.1 Powers of Attorney. Reference is made to Page II-4.
27 Financial Data Schedule.
</TABLE>
- -------------------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 10.1
FORM OF
INFORMATICA CORPORATION
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is entered into as of the 5th day of May, 1995, between
Informatica Corporation, a California corporation (the "Company") and Gaurav S.
Dhillon (the "Recipient").
W I T N E S S E T H:
WHEREAS, the Company regards Recipient as a valuable contributor to the
Company, and has determined that it would be in the interest of the Company and
its shareholders to sell or grant the Stock provided for in this Agreement to
the Recipient as an incentive for continued service with the Company or its
Affiliates and increased achievements in the future by Recipient;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties to this Agreement hereby agree as follows:
1. Restricted Stock Purchase. Contemporaneously with the execution of
this Agreement, the Company will issue to Recipient 200,000 shares of Common
Stock of the Company (the "Stock") for an aggregate consideration of $20,000.00
("Purchase Price"). Payment for the Stock in the amount of the Purchase Price
shall be made to the Company upon execution of this Agreement by execution of a
five year promissory note and a security agreement in the forms attached hereto.
Recipient shall have all rights of a shareholder with respect to all
shares of Stock issued hereunder, including the right to vote, receive dividends
(including stock dividends), participate in stock splits or other
recapitalizations, and exchange such shares in a merger, consolidation or other
reorganization. The Company shall pay any applicable stock transfer taxes. The
term "Stock" also refers to the purchased Stock and all securities received in
replacement of the Stock, as a stock dividend or as a result of any stock split,
recapitalization, merger, reorganization, exchange or the like, and all new,
substituted or additional securities or other properties to which Recipient is
entitled by reason of Recipient's ownership of the Stock.
2. Restrictions. No Stock issued to the Recipient hereunder shall be
sold, transferred by gift, pledged, hypothecated, or otherwise transferred or
disposed of by the
1
<PAGE> 2
Recipient prior to the date when the Recipient shall become vested in such Stock
pursuant to Section 3 hereof, and such Stock shall constitute "Non-Vested Stock"
until such date. Any attempt to transfer Stock in violation of this Section 2
shall be null and void and shall be disregarded by the Company. In addition,
Non-Vested Stock shall be subject to a repurchase option in favor of the Company
(the "Repurchase Option").
The Repurchase Option shall be subject to the following terms and
conditions. In the event of the voluntary or involuntary termination of
employment of Recipient with the Company for any reason, with or without cause
(including death or disability), the Company shall, upon the date of such
termination, have an irrevocable, exclusive option for a period of ninety (90)
days from such date to repurchase the Non-Vested Stock from Recipient or any
person receiving the Non-Vested Stock by operation of law of other involuntary
transfer, at the original Purchase Price for the Non-Vested Stock.
The Repurchase Option shall be exercised by written notice by the
Company to Recipient or his executor and, at the Company's option, (i) by
delivery to the Recipient or his executor, with such notice, of a check in the
amount of the Purchase Price for the Non-Vested Stock being repurchased, or (ii)
in the event the Recipient is indebted to the Company, by cancellation by the
Company of an amount of such indebtedness equal to the Purchase Price for the
Non-Vested Stock being repurchased, or (iii) by a combination of (i) and (ii) so
that the combined payment and cancellation of indebtedness equals such Purchase
Price. Upon delivery by the Company of such notice and payment of the Purchase
Price in any of the ways described above, the Company shall become the legal and
beneficial owner of the Non-Vested Stock being repurchased and all rights and
interest therein or related thereto, and the Company shall have the right to
transfer to its own name the number of shares of Non-Vested Stock being
repurchased by the Company, without further action by Recipient.
For purposes of facilitating the enforcement of the provisions of this
Section 2, Recipient agrees, immediately upon receipt of the certificate(s) for
his Stock, to deliver such certificate(s), together with a stock power executed
in blank by Recipient and Recipient's spouse (if required for transfer) with
respect to each such stock certificate, to the Secretary or Assistant Secretary
of the Company, or their designee, to hold in escrow for so long as such stock
remains as Non-Vested Stock, with the authority to take all such actions and to
effectuate all such transfers and/or releases as may be necessary or appropriate
to accomplish the objectives of this Agreement in accordance with the terms
hereof. Recipient hereby acknowledges that the appointment of the Secretary or
Assistant Secretary of the Company (or their designee) as the escrow holder
hereunder with
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the stated authorities is a material inducement to the Company to make this
Agreement and that such appointment is coupled with an interest and is
accordingly irrevocable. Recipient agrees that such escrow holder shall not be
liable to any party hereto (or to any other party) for any actions or omissions
unless such escrow holder is grossly negligent relative thereto. The escrow
holder may rely upon any letter, notice or other document executed by any
signature purported to be genuine and may resign at any time.
3. Vesting. For purposes of this Agreement, the term "vest" shall mean
with respect to any share of the Stock that such share is no longer subject to
the restrictions on transfer set forth in Section 2 and that such share is
released from the Repurchase Option. If Recipient would become vested in any
fraction of a share of Stock on any date, such fractional share shall not vest
and shall remain Non-Vested Stock until the Recipient becomes vested in the
entire share. The Stock subject to this Agreement shall vest as follows:
(a) Commencing on October 1, 1994 and on the first day of each
succeeding month, for 47 months 4,166 of the shares covered by this
Agreement shall vest in Recipient, and on the first day of the next
succeeding months 4,151 shares shall vest in Recipient so that on September
1, 1998, the Stock shall be fully-vested.
Notwithstanding the foregoing, in the event that the Company shall be
acquired by way of (i) a sale, merger, exchange, reorganization or other form of
business combination that results in the shareholders of the Company immediately
prior to such transaction owning shares representing less than fifty percent
(50%) of the outstanding voting securities of the Company or other surviving
entity after such transaction; or (ii) the sale of all or substantially all of
the Company's assets, the Stock shall fully vest as of the closing of such
acquisition.
4. Withholding of Taxes. Recipient shall provide the Company with a copy
of any timely election made pursuant to Section 83(b) of the Internal Revenue
Code or similar provision of state law (collectively, an "83(b) Election"). If
Recipient makes a timely 83(b) Election, Recipient shall immediately pay Company
(or the Affiliate that employs Recipient) the amount necessary to satisfy any
applicable federal, state, and local income tax withholding requirements and
social security tax withholding requirements. If Recipient does not make a
timely 83(b) Election, Recipient shall, either at the time that the restrictions
lapse under this Agreement or at the time withholding is otherwise required by
any applicable law, pay Company (or the Affiliate that employs Recipient) the
amount necessary to satisfy any applicable federal, state, and local income tax
withholding requirements and social security tax withholding requirements.
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5. Acceleration of Time for Vesting. The Company may, in the sole
discretion of its Board of Directors, accelerate, in whole or in part, the time
for vesting of Stock as set forth in Section 3 above.
6. Additional Securities. Any securities received as the result of
ownership of Non-Vested Stock (hereinafter called "Additional Securities"),
including, but not by way of limitation, warrants, options and securities
received as a stock dividend or stock split, or as a result of a
recapitalization or reorganization, shall be retained by the Company in the same
manner and subject to the same conditions as the Non-Vested Stock with respect
to which they were issued. Recipient shall be entitled to direct the Company to
exercise any warrant or option received as Additional Securities upon supplying
the funds necessary to do so, in which event the securities so purchased shall
constitute Additional Securities, but the Recipient may not direct Company to
sell any such warrant or option. If Additional Securities consist of a
convertible security, Recipient may exercise any conversion right, and any
securities so acquired shall be deemed Additional Securities. Additional
Securities shall be subject to the provisions of Sections 2, 3 and 5 above in
the same manner as the Non-Vested Stock.
7. Investment Representations.
(a) This Agreement is made in reliance upon the Recipient's
representation to the Company, which by its acceptance hereof the Recipient
hereby confirms, that the shares of Stock to be received by him will be
acquired for investment for his own account and not with a view to the sale
or distribution of any part thereof within the meaning of the Securities
Act of 1933, as amended (the "1933 Act").
(b) The Recipient understands that the Stock is not registered under
the 1933 Act, on the basis that the sale provided for in this Agreement and
the issuance of securities hereunder is exempt from registration under the
1933 Act pursuant to Section 4(2) and/or Section 3(b) thereof, and that the
Company's reliance on such exemption is predicated on the Recipient's
representations set forth herein.
(c) The Recipient understands that the Stock may not be sold,
transferred, or otherwise disposed of without registration under the 1933
Act or an exemption therefrom, and that in the absence of an effective
registration statement covering the Stock or an available exemption from
registration under the 1933 Act, the Stock must be held indefinitely. In
particular, the Recipient is aware that the Stock (and any Common Stock
issued on conversion thereof) may not be sold pursuant to Rule 144 or Rule
701 promulgated under the 1933 Act unless all of the conditions
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of the applicable Rules are met. Among the conditions for use of Rule 144
is the availability of current information to the public about the Company.
Such information is not now available, and the Company has no present plans
to make such information available. The Recipient represents that, in the
absence of an effective registration statement covering the Stock, it will
sell, transfer, or otherwise dispose of the Stock only in a manner
consistent with its representations set forth herein and then only in
accordance with the provisions of Section 7(d) hereof.
(d) The Recipient agrees that in no event will it make a transfer or
disposition of any of the Stock (other than pursuant to an effective
registration statement under the 1933 Act), unless and until (i) the
Recipient shall have notified the Company of the proposed disposition and
shall have furnished the Company with a statement of the circumstances
surrounding the disposition, and (ii) if requested by the Company, at the
expense of the Recipient or transferee, the Recipient shall have furnished
to the Company either (A) an opinion of counsel, reasonably satisfactory to
the Company, to the effect that such transfer may be made without
registration under the 1933 Act or (B) a "no action" letter from the
Securities and Exchange Commission to the effect that the transfer of such
securities without registration will not result in a recommendation by the
staff of the Securities and Exchange Commission that action be taken with
respect thereto. The Company will not require such a legal opinion or "no
action" letter (a) in any transaction in compliance with Rule 144, (b) in
any transaction in which the Recipient which is a partnership distributes
Stock after six months after the purchase of such securities hereunder
solely to partners or retired partners (including spouses and ancestors,
descendants and siblings of such partners or spouses who acquire Stock by
gift, will or intestate succession) thereof for no consideration, provided
that each transferee agrees in writing to be subject to the terms of this
Section 7(d), (c) in any transaction in which the Recipient transfers any
or all shares held by such Recipient by gift to such Recipient's immediate
family ("immediate family" used herein shall mean spouse, father, mother,
brother, sister, or lineal descendant), (d) in any transaction in
compliance with Rule 701(c), or (e) in any transfer of unlegended
securities.
8. Legends; Stop Transfer California Securities Law.
(a) All certificates for shares of the Stock shall bear the following
legends:
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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE TERMS
OF THAT CERTAIN RESTRICTED STOCK PURCHASE AGREEMENT BETWEEN THE
COMPANY AND THE NAMED SHAREHOLDER. THE SHARES REPRESENTED BY THIS
CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH SUCH AGREEMENT,
A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.
(b) The certificates for shares of the Stock shall also bear any
legend required by any applicable state securities law.
(c) THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS
AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF
THE STATE OF CALIFORNIA, AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT
OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE
SALE IS SO EXEMPT.
9. Grant of "Piggy-Back" Registration Rights.
(a) If the Company at any time within ten (10) years of the date
hereof proposes to register any of its securities under the Securities Act
(other than pursuant to a registration statement on Forms S-8, S-14 or S-15
or similar form) (the "Shares"), it shall each such time promptly give
written notice to Recipient of its intention to do so, and, upon the
written request of Recipient given within thirty (30) days after his
receipt of any such notice from the Company (which request shall specify
the number of such Stock he intends to have registered and sell as part of
such registration), the Company shall use its best efforts to register
under the Securities Act all Stock requested to be so registered by
Recipient so as to permit the sale or other disposition of such Stock in
such offering. If the
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proposed registration by the Company is in whole or in part an underwritten
public offering of Shares of the Company, any Stock of the Recipient to be
included in such underwriting shall be offered and sold on the same terms
and conditions as the shares of Common Stock, if any, otherwise being sold
through the underwriters under such registration; provided, however, that
if the managing underwriter determines and advises in writing that the
inclusion of all Stock of Recipient requested to be registered and all
other issued and outstanding shares of Common Stock to be included therein
by other shareholders in such underwritten public offering would interfere
with the successful marketing and sale of the Shares by the Company, then
(i) the number of shares of Common Stock to be included in the underwritten
public offering shall be reduced in such manner as the Company and such
managing underwriter shall determine in good faith to permit the success of
such underwritten public offering and as necessary for the Company to
comply with contractual registration rights granting priorities as to
inclusion in Company registrations, and (ii) those shares of Common Stock
excluded from the underwritten public offering shall be withheld from the
market by Recipient for a period, not to exceed one-hundred-eighty (180)
days, which the managing underwriter reasonably determines as necessary in
order to effect the underwritten public offering.
(b) All expenses incurred by the Company in complying with Paragraph
6(a), including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National Association of
Securities Dealers, Inc.), fees and expenses of complying with securities
and blue sky laws, premium on any securities act insurance required by the
managing underwriter naming it as beneficiary, printing expenses and fees
and disbursements of counsel, reasonable fees and disbursements of not more
than one counsel for the seller or sellers requesting registration
thereunder, and the independent certified public accountants shall be paid
by the Company; provided, however, that all underwriting discounts and
selling commissions applicable to the Stock covered by such registration
shall be borne by Recipient.
10. Lock-Up Agreement. Recipient, if requested of Recipient and all
employees of the Company holding equal or larger numbers of shares of the
Company's Common Stock, by an underwriter of Common Stock or other securities of
the Company, shall agree not to sell or otherwise transfer or dispose of any
Common Stock of the Company held by the Recipient (except Common Stock included
in such registration) during the 180 day period following the effective date of
a registration statement of the Company filed under the 1933 Act, or such
shorter period of time as the underwriter shall require. Such agreement shall be
in
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writing in the form satisfactory to such underwriter. The Company may impose
stop-transfer instructions with respect to such Common Stock subject to the
foregoing restriction until the end of said period.
11. NO EMPLOYMENT RIGHTS. THIS AGREEMENT SHALL NOT CONFER UPON RECIPIENT
ANY RIGHT WITH RESPECT TO CONTINUATION OF HIS EMPLOYMENT WITH THE COMPANY OR ITS
SUBSIDIARIES, NOR SHALL IT INTERFERE IN ANY WAY WITH THE RIGHT OF RECIPIENT OR
THE COMPANY, OR ANY OF ITS SUBSIDIARIES, TO TERMINATE RECIPIENT'S EMPLOYMENT
WITH THE COMPANY AT ANY TIME OR CHANGE THE TERMS OF EMPLOYMENT OF RECIPIENT.
12. Distributions. Company shall disburse to Recipient all dividends,
interest and other distributions paid or made in cash or property (other than
Additional Securities) with respect to Non-Vested Stock and Additional
Securities, less any applicable federal or state withholding taxes.
13. Successors. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
14. Notice. Any notice or other paper required to be given or sent
pursuant to the terms of this Agreement shall be sufficiently given or served
hereunder to any party when transmitted by registered or certified mail, postage
prepaid, addressed to the party to be served as follows:
Company: Informatica Corporation
120 Independence Drive
Menlo Park, California 94025
Recipient: At Recipient's address as it appears under Recipient's
signature to this Agreement, or to such other address as
Recipient may specify in writing to the Company
Any party may designate another address for receipt of notices so long
as notice is given in accordance with this paragraph.
15. California Law. The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of California.
16. Section 83(b) Election. Recipient hereby represents that he
understands (a) the contents and requirements of the 83(b) Election; (b) the
application of Section 83(b) to the purchase of Shares by Recipient pursuant to
this Agreement;
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(c) the nature of the election to be made by Recipient under Section 83(b); and
(d) the effect and requirements of the 83(b) Election under relevant state and
local tax laws. Recipient further represents that he intends to file an election
pursuant to Section 83(b) with the Internal Revenue Service within thirty (30)
days following purchase of the Shares hereunder, and a copy of such election
with his federal tax return for the calendar year in which the date of this
Agreement falls. Recipient covenants to inform the Company of any change in
Recipient's state of residency.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Restricted Stock Purchase Agreement as of the date first above written.
INFORMATICA CORPORATION, a
California corporation
By: [SIG]
------------------------------------
Its: Chairman
-----------------------------------
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Gaurav S. Dhillon
Address:
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<PAGE> 1
EXHIBIT 10.2
INFORMATICA CORPORATION
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
This Agreement is made as of June 2, 1997 among Informatica
Corporation, a California corporation (the "Company"), and the persons and
entities listed on the Schedule of Purchasers attached hereto as Exhibit A (the
"Purchasers").
In consideration of the mutual promises, conditions and covenants
hereinafter set forth, the parties hereto agree as follows:
SECTION 1
AUTHORIZATION AND SALE OF PREFERRED STOCK
1.1 Authorization of Series D Preferred Stock. On or before the Closing
(as defined in Section 2.1 below), the Company will authorize the sale and
issuance of up to 2,275,000 shares (the "Shares") of its Series D Preferred
Stock (the "Series D Preferred") with such series having the rights,
preferences, privileges and restrictions as set forth in the Restated Articles
of Incorporation (the "Restated Articles") in the form attached to this
Agreement as Exhibit B.
1.2 Sale of Series D Preferred. Subject to the terms and conditions
hereof and at the Closing (as defined below), the Company will issue and sell to
each of the Purchasers, and the Purchasers will severally buy from the Company,
the total number of shares of Series D Preferred specified opposite such
Purchaser's name on the Schedule of Purchasers, at a purchase price of $4.00 per
share of the Series D Preferred for the aggregate purchase price set forth on
the Schedule of Purchasers opposite the name of each Purchaser. The Company's
agreements with each of the Purchasers are separate agreements, and sales of the
Series D Preferred to each of the Purchasers are separate sales.
SECTION 2
CLOSING DATE; DELIVERY
2.1. Closing. The closing of the purchase and sale of the Series D
Preferred hereunder shall be held at the offices of Morrison & Foerster LLP, 755
Page Mill Road, Palo Alto, California at 11:00 a.m., local time, on June 2, 1997
(the "Closing") or at such other time and place upon which the Company and the
Purchasers shall agree. The date of the Closing is hereinafter referred to as
the "Closing Date".
2.2. Delivery. At the Closing, the Company shall deliver to each
Purchaser a certificate or certificates, registered in such Purchaser's name set
forth on the Schedule of Purchasers, representing the number of Shares
designated on the Schedule of Purchasers to be purchased by such Purchaser,
against payment of the purchase price therefor, by check payable to the Company,
wire transfer per the Company's instructions, cancellation of indebtedness, or
any combination thereof.
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SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in that certain Schedule of Exceptions
attached hereto as Exhibit C ("Schedule of Exceptions"), the Company represents
and warrants to the Purchasers, as of the Closing Date, as follows:
3.1 Organization and Standing. The Company is a corporation duly
organized and existing under, and by virtue of, the laws of the State of
California and is in good standing under such laws. The Company has requisite
corporate power and authority to own and operate its properties and assets, and
to carry on its business as currently conducted and as proposed to be conducted.
The Company is duly qualified to transact business and is in good standing in
each jurisdiction in which the failure so to qualify would have a material
adverse effect on its business or properties. The Company has furnished copies
of its Articles of Incorporation and By-Laws, as amended. Said copies are true,
correct and complete and contain all amendments through the Closing Date.
3.2 Corporate Power. The Company has now, or will have at the Closing
Date, as applicable, all requisite legal and corporate power and authority to
execute and deliver this Agreement, that certain Second Amended and Restated
Investor Rights Agreement in substantially the form attached hereto as Exhibit D
(the "Rights Agreement") that certain Second Amended and Restated Shareholders
Agreement in substantially the form attached hereto as Exhibit E (the
"Shareholders Agreement"), to sell and issue the Shares hereunder, to issue the
shares of its Common Stock (the "Common Stock") issuable upon conversion of the
Shares (the "Conversion Shares"), and to carry out and perform all of its
obligations under the terms of this Agreement and such other agreements and
instruments.
3.3 Subsidiaries. The Company has no subsidiaries or affiliated
companies and does not otherwise control, directly or indirectly, or have any
ownership interest in any corporation, partnership, business trust, association
or business entity.
3.4 Capitalization. The authorized capital stock of the Company
consists, or will, upon the filing of the Restated Articles, which will be filed
prior to the Closing Date, consist, of Thirteen Million Four Hundred Seventy
Thousand (13,470,000) shares of Common Stock, of which up to 2,740,010 shares
will be issued and outstanding immediately prior to the Closing, and Eight
Million One Hundred Seventy Thousand (8,170,000) shares of Preferred Stock.
2,250,000 shares of Preferred Stock of the Company shall have been designated
"Series A Preferred Stock," all of which will be issued and outstanding prior to
the Closing. One Million (1,000,000) shares of Preferred Stock of the Company
shall have been designated "Series B Preferred Stock," all of which will be
issued and outstanding prior to the Closing, and 2,645,000 shares of Preferred
Stock of the Company shall have been designated "Series C Preferred Stock,"
2,440,000 of which will be issued and outstanding prior to the Closing and
2,275,000 shares of Preferred Stock of the Company shall have been designated
"Series D Preferred," none of which will be issued and outstanding prior to the
Closing. All outstanding shares have been duly authorized and validly issued,
are fully paid and nonassessable, were issued in compliance with
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all federal and state securities laws, and were not issued in violation of any
preemptive rights. The Company has reserved 2,559,990 shares of its Common Stock
for issuance to employees, consultants, or directors under stock option plans,
stock purchase plans or arrangements approved by the Board of Directors of the
Company (the "Board"). The Series D Preferred shall have the rights,
preferences, privileges and restrictions set forth in the Restated Articles.
Except as set forth above or in the Rights Agreement, there are no other
authorized or outstanding subscription, warrant, option or other rights or
commitments (including, without limitation, preemptive rights or rights of first
refusal) to purchase or acquire from the Company any shares of any class of
capital stock of the Company or securities convertible into or exchangeable for
such capital stock. The Company is under no duty to redeem or to repurchase any
shares of any class or series of stock.
3.5 Authorization. All corporate action on the part of the Company, its
directors and shareholders necessary for the authorization, execution, delivery
and performance of this Agreement, the Rights Agreement and the Shareholders
Agreement by the Company, the authorization, sale, issuance and delivery of the
Shares, the Conversion Shares and the performance of all of the Company's
obligations hereunder and thereunder has been taken or will be taken prior to
the Closing, as applicable. Each of this Agreement and the Rights Agreement,
when each is executed and delivered by the Company, shall constitute a valid and
binding obligation of the Company, enforceable in accordance with its terms,
except this Agreement and the Rights Agreement may be limited by principles of
public policy, and subject to laws of general application relating to
bankruptcy, insolvency and the relief of debtors and rules of law governing
specific performance, injunctive relief or other equitable remedies. The Shares
when issued in compliance with the provisions of this Agreement, will be validly
issued, fully paid and nonassessable, and will have the rights, preferences,
privileges and restrictions described in the Restated Articles. The Conversion
Shares have been duly and validly reserved and, when issued in compliance with
the provisions of this Agreement and the Restated Articles, as the case may be,
will be validly issued, fully paid and nonassessable. The issuance and delivery
of the Shares and the Conversion Shares, as applicable, are not subject to any
preemptive rights or any liens or encumbrances; provided, however, that the
Shares and the Conversion Shares, as applicable, may be subject to restrictions
on transfer under state and/or federal securities laws as set forth herein or in
the Rights Agreement or in the Shareholders Agreement.
3.6 Title to Properties and Assets; Liens, etc. The Company has good and
marketable title to its properties and assets, and has good title to all its
leasehold interests, in each case subject to no mortgage, lien, or encumbrance,
other than the lien of current taxes not yet due and payable. All leases
pursuant to which the Company leases real or personal property are valid and
effective in accordance with their respective terms, and there exists no
material default on the part of the Company under any thereof.
3.7 Compliance with Other Instruments, None Burdensome, etc. The Company
is not in breach or violation of any term of its Articles of Incorporation or
By-Laws, of any term or provision of any mortgage, deed of trust, indebtedness,
indenture, contract, agreement, instrument, judgment or decree, or any order,
statute, rule or regulation, in each case where such breach or violation would
have a material adverse effect on the Company. No event or failure of
performance has occurred that, with the passage of time or the giving of notice,
would constitute
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such a breach or violation by the Company. The execution, delivery and
performance of and compliance with this Agreement and the Rights Agreement and
the issuance, sale and delivery of the Shares and the Conversion Shares, do not
conflict with, and will not result in a breach or violation of the terms,
conditions or provisions of, or constitute a default (or an event that, with the
giving of notice or passage of time, or both, could result in a default) under,
or result in the creation or imposition of any lien pursuant to the terms of,
the Company's Articles of Incorporation or Bylaws, or any statute, law, rule or
regulation, any state or federal order, judgment or decree, or any indenture,
mortgage, deed of trust, lease or other agreement or instrument to which the
Company, or any of its properties, is subject.
3.8 Litigation, etc. There is no action, proceeding or investigation
pending or threatened against the Company or any of its properties or assets or
that questions the validity of this Agreement, the Rights Agreement or the
Shareholders Agreement or any action taken or to be taken in connection
herewith. The foregoing includes, without limitation, actions pending or
threatened involving the prior employment of any of the Company's employees,
their use in connection with the Company's business of any information or
techniques allegedly proprietary to any of their former employers, or their
obligations under any agreements with prior employers. The Company is not a
party or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality. No action, suit or
proceeding has been instituted or is threatened by the Company.
3.9 Registration Rights. Except as set forth in the Rights Agreement,
the Company is not under any contractual obligation to register (as defined in
Section 1 of the Rights Agreement) any of its currently outstanding securities
or any of its securities which hereafter may be issued.
3.10 Certain Transactions. Neither the Company nor, to the Company's
knowledge, any of its officers has any interest (other than as holders of less
than 1% of the voting securities of a publicly-traded company), either directly
or indirectly, in any entity that currently (i) provides any services or
designs, produces or sells any products or product lines that are the same,
similar to or competitive with any activity or business in which the Company is
engaged or proposes to engage; (ii) is a supplier, customer, or creditor of the
Company; or (iii) has any direct or indirect interest in any asset or property,
real or personal, tangible or intangible, of the Company or any property, real
or personal, tangible or intangible, that is necessary for the Company's
business as currently conducted or proposed to be conducted. No employee,
shareholder, officer or director of the Company, or their spouses or children,
is indebted to the Company in any amount in excess of $5,000, nor is the Company
indebted to any of them other than for payment of salary for services rendered
and reasonable expenses.
3.11 Intangible Property. The Company has taken all appropriate security
measures to protect the secrecy, confidentiality and value of all trade secrets,
know-how, inventions, designs, masks, processes and technical data required to
conduct its business. To the Company's knowledge, the Company has sufficient
right, title and interest in and to all intangible property and technology or is
able to obtain on reasonable terms sufficient permits, licenses and other
authority necessary for its business as currently conducted or proposed to be
conducted. The Company has not received any communication alleging that the
Company has violated any third party's patent, maskwork right, moral right,
trademark, trade secret, trade name or copyright. To
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the Company's knowledge, the Company owns and possesses or is licensed under all
patents, patent applications, licenses, trademarks, service marks, trade names,
inventions, processes and copyrights necessary for the operation of its business
as currently conducted or proposed to be conducted. To the Company's knowledge,
none of the Company's officers or employees has improperly used or is making
improper use of any confidential information or trade secrets of others,
including those of any former employer of such officer or employee. The Company
is not aware of any violation by a third party of any of its patents, licenses,
trademarks, trade names, service marks, copyrights, trade secrets or other
proprietary rights.
3.12 Employees. The Company does not have any collective bargaining
agreements with any of its employees, and no labor union organizing activity is
pending or threatened with respect to the Company. To the Company's knowledge,
no employee is obligated under any agreement or judgment that would conflict
with such employee's obligation to use his or her best efforts to promote the
interests of the Company or that would conflict with the Company's business as
currently conducted or proposed to be conducted. To the Company's knowledge, no
employee is in violation of any term of any employment agreement, proprietary
information agreement, non-competition agreement or any other agreement relating
to such employee's relationship with any previous employer. To the Company's
knowledge, neither the execution nor delivery of this Agreement or the Rights
Agreement nor the carrying on of the Company's business by the employees of the
Company, nor the conduct of the Company's business as proposed, will conflict
with or result in a breach of the terms, conditions or provisions of, or
constitute a default under, any contract, covenant or instrument under which any
of such employee is now obligated. The Company does not believe it is or will be
necessary to utilize any inventions of any of its employees (or people it
currently intends to hire) made prior to their employment by the Company.
3.13 Insurance. The Company has fire, casualty and liability insurance
policies sufficient in amount to allow it to replace any of its tangible
properties that might be damaged or destroyed and adequate to protect the
Company and its financial condition against the risks involved in the business
of the Company.
3.14 Securities Laws; Governmental Consent. Based in part on the
accuracy of the Purchasers' representations and warranties set forth in Section
4, the offer, sale and issuance of the Shares as provided in this Agreement are
and will be exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933 as amended (the "Securities Act"), and have been
qualified (or are exempt from qualification) under all applicable state
securities qualification requirements. Except for the filing of (a) the Restated
Articles with the Secretary of State of the State of California, and (b) notices
required or permitted to be filed after the Closing Date with certain United
States federal and state securities commissions, which notices the Company will
file on a timely basis, no consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority on the part
of the Company is required in connection with the valid execution, delivery and
performance of this Agreement or the Rights Agreement, the offer, sale or
issuance of the Shares (and the issuance of the Common Stock issuable upon
conversion of the Shares) or the consummation of any other transaction
contemplated hereby or by the Rights Agreement.
5
<PAGE> 6
3.15 Contracts and Other Commitments. The Company is not a party to any:
(a) agreement for the purchase of fixed assets that involves an
expenditure by the Company in excess of $50,000 or for the purchase of
materials, supplies or equipment in excess of that amount;
(b) lease or agreement under which the Company is lessee of or
holds or operates any property, real or personal, owned by any other person
under which payments to such person exceed $50,000 per year;
(c) agreement or other commitment or arrangement with any person
continuing for a period of more than three months from the Closing Date which
involves an expenditure or receipt by the Company in excess of $50,000.
3.16 Disclosure. The Company has fully provided the Purchasers with all
the information that the Purchasers have requested for deciding whether to
purchase the Shares. This Agreement with the Exhibits hereto, when taken as a
whole, do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein not
misleading.
3.17 Environmental and Safety Laws. To the best of its knowledge, the
Company is not in violation of any applicable statute, law, or regulation
relating to the environment or occupational health and safety, and to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law, or regulation.
3.18 Manufacturing and Marketing Rights. The Company has not granted
rights to manufacture, produce, assemble, license, market, or sell its products
to any other person and is not bound by any agreement that affects the Company's
exclusive right to develop, manufacture, assemble, distribute, market, or sell
its products.
3.19 Section 83(b) Elections. To the best of the Company's knowledge,
all elections and notices required by Section 83(b) of the Internal Revenue Code
and any analogous provisions of applicable state tax laws have been timely filed
by all individuals who have purchased shares of the Company's Common Stock.
3.20 Qualified Small Business Stock. The Company qualifies as a
"Qualified Small Business" as defined in Section 1202(d) of the Internal Revenue
Code of 1986, as amended (the "Code"), and covenants that so long as the shares
of Series D Preferred are held by a Purchaser (or a transferee in whose hands
the Shares are eligible to qualify as "Qualified Small Business Stock" as
defined in Section 1202(c) of the Code), it will use its reasonable efforts to
cause the Shares, Series A, Series B and Series C Preferred Stock of the Company
to qualify as Qualified Small Business Stock.
3.21 Small Business Concern. The Company with its "affiliates" (as that
term is defined in Section 121.401 of Title 13 of the Code of Federal
Regulations) is a "small business concern" within the meaning of the Small
Business Act and Section 121.802 of said Regulations.
6
<PAGE> 7
The information pertaining to the Company set forth in Small Business
Administration Forms 480, 652 and 1031 is accurate and complete.
3.22 SBA Requirements. The Company will promptly furnish to Bay Partners
SBIC, L.P. ("Bay"), upon request from Bay, all forms that may be required to be
filed with the Small Business Administration ("SBA") from time to time with
respect to the transactions contemplated by this Agreement and Bay's ownership
of the Shares, and will provide to Bay and the SBA such other information and
forms as Bay may reasonably request or the SBA may from time to time request
with respect to the transactions contemplated by this Agreement and Bay's
ownership of the Shares. The Company will not engage in any activities
prohibited by 13 C.F.R. Section 113 and will not directly or indirectly use the
proceeds from the issuance and sale of the Shares for any purpose for which a
small business investment company is prohibited from providing funds under 13
C.F.R. Section 107.901.
3.23 Company Representation. The Company agrees to use its best efforts
to cooperate with Bay in meeting its obligations under the Small Business
Investment Act of 1958, as amended, and the regulations thereunder. Proceeds of
Bay's investment will be used for working capital purposes or to otherwise
finance the anticipated growth of the Company. Failure to apply the proceeds for
such purposes shall give Bay the right to rescind its investment pursuant to SBA
Regulation Section 107.305.
3.24 Section 1202 Representation. The Company represents and warrants to
the purchasers that it qualifies as a "Qualified Small Business" as defined in
Section 1202(d) of the Code.
3.25 Section 1202 Covenant. After the Closing, the Company shall (a) not
make any purchase of its stock during the one-year period following the Closing
having an aggregate value, when added to the aggregate value of stock purchased
by the Company during the one-year period preceding the Closing, exceeding 5% of
the aggregate value of all of the Company's stock (such value determined as of
the date one year prior to the Closing) without having given the holders of the
Series D Preferred prior notice of such purchase and the opportunity to discuss
with the Company means of achieving such purchase without adversely affecting
the qualification of the Series D Preferred as "qualified small business stock"
set forth in Section 1202(c) of the Code and without such repurchase having been
approved by the Board, (b) use commercially reasonable efforts to use at least
80% (by value) of its assets in the active conduct of one or more qualified
trades or businesses for substantially all of the five-year period following the
Closing, and (c) not cease to be a C corporation which is an eligible
corporation, as defined by Section 1202(e)(4) of the Code. To the extent not
otherwise prohibited by applicable law or regulatory authorities, the Company
will include in all future stock option and stock purchase agreements providing
for the sale of unvested stock (subject to a right of repurchase) with employees
and consultants a provision that permits the Company to delay any repurchase of
shares under vesting provisions by a period of time sufficient to facilitate
compliance with the covenant contained in clause (a) hereof or to assign its
right to repurchase shares to a third party. Notwithstanding anything to the
contrary in this Section 3.25, the Company shall not be obligated to take any
action or refrain from taking any action which the Company has determined, in
good faith, is not in its best business interests.
7
<PAGE> 8
3.26 Financial Statements. The Company has furnished to the Purchasers
its unaudited balance sheet as of March 31, June 30, September 30, and December
31, 1996, respectively, and the related statements of operations, shareholders'
equity and cash flows for the quarters ended March 31, June 30, September 30,
and December 31, 1996, respectively (the "Financial Statements"). The Financial
Statements have been prepared in accordance with generally accepted accounting
principles (except for the omission of footnotes) and fairly present the
financial position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended. Except for liabilities and
obligations that are accrued or reserved against in the Financial Statements,
the Company has no material liabilities or obligations, absolute or contingent
(individually or in the aggregate), except liabilities and obligations which
have been incurred in the ordinary course of business subsequent to December 31,
1996 which have not been, either in any case or in the aggregate, materially
adverse.
3.27 Not a Real Property Holder. The Company is not a real property
holding corporation within the meaning of Internal Revenue Code 897(c)(2) and
any regulations promulgated thereunder.
3.28 No Accelerated Vesting. The Company is not party to any agreements,
regarding employee or consultant compensation or otherwise, pursuant to which
the vesting of an individual's right to exercise options, the lapsing of the
Company's right of repurchase or any other means of acquiring Common Stock or
Preferred Stock of the Company is accelerated upon the occurrence of a certain
event or events, including without limitation, a merger or acquisition of the
Company or any other event which results in a change in control of the Company.
No employee of the Company has the right to have the vesting of any rights to
acquire any Common Stock or Preferred Stock of the Company accelerated upon the
occurrence of a certain event or events, including without limitation, the
merger of acquisition of the Company which results in a change in control of the
Company.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby severally represents and warrants to the
Company with respect to the purchase of the Shares as follows:
4.1 Investment Experience. It is aware of the Company's business affairs
and financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the Shares
and the underlying Common Stock.
4.2 Investment Intent. It is acquiring the Shares and the underlying
Common Stock for investment only for its own account, and not with the view to,
or for resale in connection with, any distribution thereof. It understands that
the Shares to be purchased and the underlying Common Stock have not been, and
will not be, registered under the Securities Act by reason of a specific
exemption from the registration provisions of the Securities Act, the
availability of
8
<PAGE> 9
which depends upon, among other things, the bona fide nature of the investment
intent of such Purchaser as expressed herein.
4.3 Rule 144. It acknowledges that the Shares and the underlying Common
Stock must be held indefinitely unless subsequently registered under the
Securities Act or unless an exemption from such registration is available. It is
aware of the provisions of Rule 144 promulgated under the Securities Act ("Rule
144") which permit limited resale of shares purchased in a private placement
subject to the satisfaction of certain conditions, including, among other
things, the existence of a public market for the shares, the availability of
certain current public information about the Company, the resale occurring not
less than two years after the security was last held by the Company or an
affiliate of the Company, the sale being effected through a "broker's
transaction" or in transactions directly with a "market maker" and the number of
shares being sold during any three-month period not exceeding specified
limitations.
4.4 No Public Market. It understands that no public market now exists
for any of the securities issued by the Company, and that the Company has made
no assurances that a public market will ever exist for the Company's securities.
4.5 Access to Data. It has had an opportunity to discuss the Company's
business, management and financial affairs with the Company's management and the
opportunity to review the Company's facilities. It has also had an opportunity
to ask questions of officers of the Company.
4.6 Authorization. Each of this Agreement, the Rights Agreement and the
Shareholders Agreement when executed and delivered by such Purchaser will
constitute a valid and legally binding obligation of the Purchaser, enforceable
in accordance with its terms, except as the indemnification provisions of
Section 5(f) of the Rights Agreement may be limited by principles of public
policy, and subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and rules of law governing specific
performance, injunctive relief or other equitable remedies.
4.7 Legend.
(a) Each certificate representing (i) the Shares purchased
hereunder, (ii) the Conversion Shares and (iii) any other securities issued in
respect of the Shares upon any stock split, stock dividend, recapitalization,
merger or similar event (unless no longer required in the opinion of counsel for
the Company) shall be stamped or otherwise imprinted with a legend substantially
in the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN
EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
9
<PAGE> 10
SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT."
(b) Such certificates shall also bear any legend required by the
laws of the State of California, including any legend required by the California
Department of Corporations and Sections 417 and 418 of the California
Corporations Code.
SECTION 5
CONDITIONS TO CLOSING
5.1 Conditions to Both the Purchasers' and the Company's Obligations.
The obligations of the Purchasers to purchase and of the Company to issue and
sell the Shares are subject to the fulfillment, on or prior to the Closing Date,
of all of the following conditions, any of which may be waived in whole or in
part by mutual agreement of the Purchasers and the Company:
(a) The Company shall have obtained all consents, permits and
waivers necessary or appropriate on the part of the Company for consummation of
the transactions contemplated by this Agreement, the Rights Agreement and the
Shareholders Agreement. Except for the notices required to be filed after the
Closing Date with certain federal and state securities commissions, which
notices the Company will file on a timely basis, the Company shall have obtained
all approvals of any federal or state governmental authority or regulatory body
that are required on the part of the Company in connection with the lawful sale
and issuance of the Shares and the Conversion Shares issuable upon conversion
thereof.
(b) At the Closing, the purchase of the Shares by the Purchasers
hereunder shall be legally permitted by all laws and regulations to which the
Purchasers or the Company is subject.
(c) The Restated Articles shall have been filed with the
Secretary of State of the State of California.
(d) The Company and the Purchasers shall have entered into the
Rights Agreement.
(e) The Company, the Purchasers, the holders of a majority of
outstanding shares of Series A, Series B and Series C Preferred Stock of the
Company, Gaurav Dhillon and Diaz Nesamoney shall have entered into that certain
Amended and Restated Shareholders Agreement in the form attached hereto as
Exhibit E.
5.2 Additional Conditions to the Purchasers' Obligations at the Closing.
In addition to the conditions set forth in Section 5.1 hereof, each Purchaser's
obligation to purchase the Shares is subject to the fulfillment, on or prior to
the Closing Date, of all of the following conditions (except as otherwise
provided below), any of which may be waived in whole or in part by such
Purchaser:
10
<PAGE> 11
(a) The representations and warranties made by the Company in
Section 3 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date with the same force and effect as if they had been
made on and as of the same date.
(b) The Company shall have performed all obligations and
conditions herein required to be performed or observed by it on or prior to the
Closing Date.
(c) The Purchasers shall have received from Morrison & Foerster
LLP, counsel to the Company, an opinion letter addressed to them, dated as of
the Closing Date and in substantially the form attached hereto as Exhibit F.
(d) The Company shall have delivered to the Purchasers a
certificate, executed by the Chief Executive Officer of the Company and dated
the Closing Date, certifying to the fulfillment of the conditions specified in
Sections 5.1(a), 5.2(a) and 5.2(b).
(e) There shall have been no material adverse change in the
Company's business condition or prospects since December 31, 1996.
5.3 Additional Condition to Obligations of the Company at the Closing.
In addition to the conditions set forth in Section 5.1 hereof, the Company's
obligation to issue and sell the Shares to each Purchaser is subject to the
fulfillment to the Company's satisfaction, on or prior to the Closing Date, of
the conditions, which may be waived in whole or in part by the Company:
(a) The representations and warranties made by such Purchaser in
Section 4 hereof shall be true and correct when made, and shall be true and
correct on the Closing Date with the same force and effect as if they had been
made on and as of the same date.
(b) Such Purchaser shall have performed all obligations and
conditions herein required to be performed or observed by it on or prior to the
Closing Date.
(c) Such Purchaser shall have paid the consideration for the
Shares to be sold to such Purchaser as set forth on Exhibit A hereto.
SECTION 6
MISCELLANEOUS
6.1 Governing Law. This Agreement shall be governed in all respects by
the laws of the State of California as such laws are applied to agreements
between California residents entered into and to be performed entirely within
California.
6.2 Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by the Purchaser and the
closing of the transactions contemplated hereby. All statements as to factual
matters contained in any certificate or other instrument delivered by or on
behalf of the Company pursuant hereto or in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder as of the date of such certificate or instrument.
11
<PAGE> 12
6.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successor and assigns of the parties hereto.
6.4 Entire Agreement; Amendment. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
Neither this Agreement nor any provision hereof may be amended, changed, waived,
discharged or terminated other than by a written instrument signed by the party
against who enforcement of any such amendment, change, waiver, discharge or
termination is sought; provided, however, that holders of a majority of the
outstanding Shares (or Conversion Shares or a combination thereof) may waive or
amend (either generally or in a particular instance and either retroactively or
prospectively), on behalf of all Purchasers and other holders of Shares, any
provisions hereof benefiting the Purchasers so long as the effect thereof will
be that all such Purchasers and other holders of Shares will be treated equally
in accordance with their pro rata share ownership. Any amendment or waiver
effected in accordance with this section shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities have been converted), each future holder
of all such securities and the Company.
6.5 Notices, etc. All notices and other communications required or
permitted hereunder shall be effective upon receipt and shall be in writing and
may be delivered in person, by telecopy, electronic mail, express delivery
service or U.S. mail, in which event it may be mailed by first-class, certified
or registered, postage prepaid, addressed (a) if to a Purchaser, at the address
set forth on Exhibit A or at such other address as such Purchaser shall have
furnished the Company in writing, with a copy to Henry V. Barry, Esq., Wilson,
Sonsini, Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California 94304, or
(b) if to the Company, at its address set forth at the beginning of this
Agreement, or at such other address as the Company shall have furnished to the
Purchaser in writing, with a copy to Michael C. Phillips, Esq., Morrison &
Foerster LLP, 755 Page Mill Road, Palo Alto, California 94304.
6.6 Severability. If any provision of this Agreement shall be judicially
determined to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
6.7 Finder's Fees.
(a) The Company (i) represents and warrants that it has retained
no finder or broker in connection with the transactions contemplated by this
Agreement and (ii) hereby agrees to indemnify and to hold the Purchasers
harmless of and from any liability for commission or compensation in the nature
of a finder's fee to any broker or other person or firm (and the costs and
expenses of defending against such liability or asserted liability) for which
the Company, or any of its employees or representatives, is responsible.
(b) Each Purchaser (i) represents and warrants that it has
retained no finder or broker in connection with the transactions contemplated by
this Agreement and (ii) hereby agrees to indemnify and to hold the Company and
the other Purchasers harmless of and from any
12
<PAGE> 13
liability for commission or compensation in the nature of a finder's fee to any
broker or other person or firm (and the costs and expenses of defending against
such liability or asserted liability) for which such Purchaser, or any of its
employees or representatives, is responsible.
6.8 California Corporate Securities Law. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT MAY NOT HAVE BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
6.9 Titles and Subtitles. The titles of the Articles and Sections of
this Agreement are for convenience of reference only and in no way define,
limit, extend, or describe the scope of this Agreement or the intent of any of
its provisions.
6.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.11 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party upon any breach or
default of any other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed to be a waiver of any such breach or
default, or any acquiescence therein, or of any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. It is further agreed that any waiver, permit, consent or approval of
any kind or character of any breach or default under this Agreement, or any
waiver of any provisions or conditions of this Agreement must be in writing and
shall be effective only to the extent specifically set forth in writing, and
that all remedies, either under this Agreement, by law or otherwise, shall be
cumulative and not alternative.
6.12 Consents. Any permission, consent, or approval of any kind or
character under this Agreement shall be in writing or detrimentally relied upon
and proved by clear and convincing evidence (other than alleged reliance) and
shall be effective only to the extent specifically set forth in such writing or
proved.
6.13 Payment of Fees and Expenses. Each party shall be responsible for
paying its own fees, costs and expenses in connection with this Agreement and
the transactions herein contemplated; provided however, that if the Closing is
effected, the Company agrees to pay the reasonable fees and expenses of special
counsel to the Purchasers in an amount not to exceed $7,500.
6.14 Construction of Agreement. No provision of this Agreement shall be
construed against either party as the drafter thereof.
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<PAGE> 14
6.15 Section References. Unless otherwise stated, any reference
contained herein to a Section or subsection refers to the provisions of this
Agreement.
6.16 Variations of Pronouns. All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine, or neuter, singular or
plural, as the context in which they are used may require.
6.17 Exhibits. All Exhibits and attachments hereto shall be deemed to be
a part of this Agreement and are fully incorporated herein by this reference.
14
<PAGE> 15
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first written above.
"COMPANY"
Informatica Corporation,
a California corporation
By:_______________________________
Name: Gaurav Dhillon
Title: Chief Executive Officer
"PURCHASERS"
BAY PARTNERS SBIC, L.P. DISCOVERY VENTURES I, L.L.C.
By:_______________________________ By:______________________________________
Name:_____________________________ Name:____________________________________
Title:____________________________ Title:___________________________________
PARTECH U.S. PARTNERS III C.V. PARVEST U.S. PARTNERS II C.V.
By:_______________________________ By:______________________________________
Name:_____________________________ Name:____________________________________
Title:____________________________ Title:___________________________________
MULTINVEST LIMITED C.V. TRADEINVEST LIMITED
By:_______________________________ By:______________________________________
Name:_____________________________ Name:____________________________________
Title:____________________________ Title:___________________________________
<PAGE> 16
PARTECH INTERNATIONAL PROFIT
SHARING PLAN
U/A Dated 1/1/92
FBO: Thomas G. McKinley DAVID PIDWELL
By:_______________________________ By:______________________________________
Name:_____________________________ Name:____________________________________
Title:____________________________ Title:___________________________________
INTEGRAL CAPITAL PARTNERS III, L.P. INTEGRAL CAPITAL PARTNERS
INTERNATIONAL III, L.P.
By: Integral Capital Management III, By: Integral Capital Management III,
L.P. its General Partner L.P. its Investment General Partner
By:_______________________________ By:______________________________________
a General Partner a General Partner
WPG ENTERPRISE FUND III, L.P. WEISS, PECK & GREER VENTURE
ASSOCIATES IV, L.P.
By: WPG Venture Partners IV, L.L.C., By: WPG Venture Partners IV, L.L.C.,
General Partner General Partner
By:_______________________________ By:______________________________________
Gill Cogan, Managing Member Gill Cogan, Managing Member
WEISS, PECK & GREER VENTURE
ASSOCIATES IV CAYMAN, L.P.
By: WPG Venture Advisers, Ltd.,
Administrative General Partner _________________________________________
By:_______________________________ By:______________________________________
, Director Name:____________________________________
Title:___________________________________
<PAGE> 17
EXHIBIT A
SCHEDULE OF PURCHASERS
<TABLE>
<CAPTION>
Number of Aggregate
Series D Shares Purchase Price
--------------- --------------
<S> <C> <C>
Bay Partners SBIC, L.P. 187,500 $ 750,000
10600 North De Anza Boulevard
Cupertino, California 95014
Discovery Ventures I, LLC. 25,000 $ 100,000
3000 Sand Hill Road, Building 3
Suite 210
Menlo Park, California 94025
U.S. Growth Fund Partners C.V. 200,000 $ 800,000
50 California Street, Suite 3200
San Francisco, California 94111
Axa U.S. Growth Fund LLC 100,000 $ 400,000
50 California Street, Suite 3200
San Francisco, California 94111
Double Black Diamond II LLC 18,750 $ 75,000
50 California Street, Suite 3200
San Francisco, California 94111
Parvest U.S. Partners II C.V. 127,817 $ 511,268
50 California Street, Suite 3200
San Francisco, California 94111
Tradeinvest Limited 6,212 $ 24,848
50 California Street, Suite 3200
San Francisco, California 94111
Multinvest Limited C.V. 2,828 $ 11,312
50 California Street, Suite 3200
San Francisco, California 94111
Partech U.S. Partners III C.V. 127,817 $ 511,268
50 California Street, Suite 3200
San Francisco, California 94111
</TABLE>
<PAGE> 18
<TABLE>
<S> <C> <C>
Partech International Profit Sharing Plan 1,576 $ 6,304
U/A Dated 1/1/92
FBO: Thomas G. McKinley
50 California Street, Suite 3200
San Francisco, California 94111
David Pidwell 12,500 $ 50,000
20628 Vickery Lane
Saratoga, California 95070
Integral Capital Partners III, L.P. 254,795 $1,019,180
2750 Sand Hill Road
Menlo Park, California 94025
Integral Capital Partners International III, L.P. 60,205 $ 240,820
2750 Sand Hill Road
Menlo Park, California 94025
WPG Enterprise Fund III, L.P. 498,937 $1,995,748
555 California Street, Suite 3130
San Francisco, California 94104
Weiss, Peck & Greer Venture Associates IV, L.P. 554,063 $2,216,252
555 California Street, Suite 3130
San Francisco, California 94104
Weiss, Peck & Greer Venture Associates IV 72,000 $ 288,000
Cayman, L.P.
555 California Street, Suite 3130
================================
Total 2,250,000 $9,000,000
</TABLE>
<PAGE> 1
EXHIBIT 10.3
INFORMATICA CORPORATION
SECOND AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Second Amended and Restated Investor Rights Agreement (the
"Agreement") is entered into as of this 2nd day of June, 1997, by and among
Informatica Corporation, a California corporation (the "Company"), those parties
to the Amended and Restated Investor Rights Agreement, dated as of July 25, 1997
(the "Rights Agreement"), listed in Exhibit A hereto (the " Prior Investors")
and the persons and entities listed in Exhibit B hereto (the "Series D
Investors" and collectively with the Prior Investors as the "Investors").
RECITALS
1. The Company and the Prior Investors are parties to the Rights
Agreement, which provides at Section 9 thereof for certain rights of first
refusal in favor of certain holders of Registrable Securities of the Company set
forth therein with respect to proposed new issuances by the Company of its
equities securities (or rights to acquire such equity securities) and which
provides at Section 5(j) thereof for certain limitations on subsequent
registration rights for new issuances of securities of the Company.
2. The Company is contemplating the offering to all or certain of the
Series D Investors of up to 2,275,000 shares of its Series D Preferred Stock
(the "Series D Shares") pursuant to that certain Series D Preferred Stock
Purchase Agreement dated as of the date hereof (the "Purchase Agreement").
3. The Company and the Investors wish to enter into this Agreement to
(i) waive the rights of first refusal and limitations on subsequent registration
rights set forth in the Rights Agreement and (ii) amend and supersede the Rights
Agreement so as to modify the registration rights, first refusal rights and
additional covenants contained therein to be as set forth herein and to extend
such rights along with the information rights and visitation rights to the
Series D Investors.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and in the Purchase Agreement, all parties hereto agree as
follows:
1. CERTAIN DEFINITIONS. All capitalized terms used and not otherwise
defined herein shall have the meanings given them in the Purchase Agreement. As
used in this Agreement, the following terms shall have the following respective
meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
(b) "Conversion Stock" means the Common Stock of the Company (the
"Common Stock") issued or issuable pursuant to conversion of the Preferred
Stock.
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(c) "Holder" shall mean (i) any Investor holding Registrable
Securities, and (ii) any person holding Registrable Securities to whom the
rights under this Agreement have been transferred in accordance with Section
5(i) hereof.
(d) "Initiating Holders" shall mean any Holders who in the
aggregate hold not less than 50% of the Registrable Securities.
(e) "Preferred Stock" shall mean the Series D Shares issued or
issuable pursuant to the Purchase Agreement, the Series C Preferred Stock of the
Company issued pursuant to that certain Series C Purchase Agreement dated as of
July 25, 1996, or issuable pursuant to those Warrants issued in accordance with
that certain Loan and Warrant Agreement dated as of May 7, 1996, and the Series
A and Series B Preferred Stock of the Company issued pursuant to that certain
Series A and Series B Preferred Stock Purchase Agreement dated as of September
7, 1995 or that certain Note issued in accordance with such agreement.
(f) "Registrable Securities" means the Conversion Stock and any
Common Stock issued or issuable in respect of the Conversion Stock upon any
stock split, dividend, recapitalization, or similar event, or any Common Stock
otherwise issuable with respect to the Conversion Stock; provided, however, that
shares of Conversion Stock or other securities shall only be treated as
Registrable Securities if and so long as they have not been (a) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (b) sold in a single transaction exempt from the
registration and prospectus delivery requirements of the Securities Act, so that
all transfer restrictions and restrictive legends with respect thereto are
removed prior to any such sale.
(g) The terms "register," "registered" and "registration" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(h) "Registration Expenses" shall mean all expenses, except as
otherwise stated below, incurred by the Company in complying with Sections 5(a),
5(b) and 5(c) hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company, which shall
be paid in any event by the Company) and the fees and disbursements of one
counsel for all Holders.
(i) "Restricted Securities" shall mean the securities of the
Company required to bear the legend set forth in Section 3 hereof.
(j) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
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(k) "Securities Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended, or any similar federal statute and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
(l) "Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and, except as set forth under "Registration
Expenses," all fees and disbursements of counsel for any Holder.
2. RESTRICTIONS ON TRANSFERABILITY. The Preferred Stock, the Conversion
Stock and any other securities issued in respect of the Preferred Stock or the
Conversion Stock upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event shall not be sold, assigned, transferred or
pledged except upon the conditions specified in this Agreement, which conditions
are intended to ensure compliance with the provisions of the Securities Act. The
Investors will cause any proposed purchaser, assignee, transferee, or pledgee of
any such shares held by the Investors to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this Agreement.
3. RESTRICTIVE LEGEND. Each certificate representing (i) the Preferred
Stock, (ii) the Conversion Stock, and (iii) any other securities issued in
respect of the Preferred Stock or the Conversion Stock upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event, shall
(unless otherwise permitted by the provisions of Section 4 below) be stamped or
otherwise imprinted with a legend in substantially the following form (in
addition to any legend required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. SUCH SHARES
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT.
COPIES OF THE AGREEMENT RESTRICTING THE TRANSFER OF THESE SHARES
MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION.
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Each Investor and/or Holder consents to the Company making a notation on its
records and giving instructions to any transfer agent of the Preferred Stock or
the Common Stock in order to implement the restrictions on transfer established
in this Agreement.
4. NOTICE OF PROPOSED TRANSFER. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (i) a
transfer not involving a change in beneficial ownership, (ii) in transactions
involving the distribution without consideration of Restricted Securities by the
Investor to any of its partners, or retired partners, or to the estate of any of
its partners or retired partners, (iii) in transactions involving the transfer
without consideration of Restricted Securities by the Investor during his
lifetime by way of gift or on death by will or intestacy, (iv) in transactions
involving the transfer or distribution of Restricted Securities by a corporation
to any subsidiary, parent or affiliated corporation of such corporation, or (v)
in transactions in compliance with Rule 144 promulgated under the Securities Act
("Rule 144"), unless there is in effect a registration statement under the
Securities Act covering the proposed transfer, the holder thereof shall give
written notice to the Company of such holder's intention to effect such
transfer, sale, assignment or pledge. Each such notice shall describe the manner
and circumstances of the proposed transfer, sale, assignment or pledge in
sufficient detail, and shall be accompanied, at such holder's expense by either
(i) an unqualified written opinion of legal counsel who shall be, and whose
legal opinion shall be, reasonably satisfactory to the Company addressed to the
Company, to the effect that the proposed transfer of the Restricted Securities
may be effected without registration under the Securities Act, or (ii) a "no
action" letter from the Commission to the effect that the transfer of such
securities without registration will not result in a recommendation by the staff
of the Commission that action be taken with respect thereto, whereupon the
holder of such Restricted Securities shall be entitled to transfer such
Restricted Securities in accordance with the terms of the notice delivered by
the holder to the Company. Each certificate evidencing the Restricted Securities
transferred as above provided shall bear, except if such transfer is made
pursuant to Rule 144, the appropriate restrictive legend set forth in Section 3
above, except that such certificate shall not bear such restrictive legend if,
in the opinion of counsel for such holder and the Company, such legend is not
required in order to establish compliance with any provision of the Securities
Act.
5. REGISTRATION.
(a) Demand Registration.
(i) Demand for Registration. In case the Company shall
receive from Initiating Holders a written request that the Company effect any
registration, qualification or compliance with respect to not less than forty
(40) percent of the shares of Preferred Stock or Conversion Stock, the Company
will:
a. promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
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b. as soon as practicable, use its best efforts to
effect such registration, qualification or compliance (including, without
limitation, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request received by the Company within twenty (20) days after receipt
of such written notice from the Company; provided, however, that the Company
shall not be obligated to take any action to effect any such registration,
qualification or compliance pursuant to this Section 5(a):
(1) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(2) Prior to the earlier of June 2, 1999 or six
months after the effective date of the Company's first bona fide, firm
commitment underwriting pursuant to a registration statement filed pursuant to
the Securities Act, the public offering price of which is not less than $9.00
per share (adjusted to reflect subsequent stock dividends, stock splits,
combinations or other recapitalizations) and the proceeds thereof (net of
underwriting commissions and offering expenses) equal or exceed $18,000,000;
(3) If the Company, within ten (10) days of the
receipt of the request of the Initiating Holders, gives notice of its bona fide
intention to effect the filing of a registration statement with the Commission
within ninety (90) days of receipt of such request;
(4) During the period starting with the date of
filing of, and ending on the date 180 days immediately following the effective
date of, any registration statement pertaining to securities of the Company,
provided that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective;
(5) After the Company has effected two such
registrations pursuant to this Section 5(a)(i);
(6) Within twelve (12) months after the Company
has effected such a registration pursuant to this Section 5(a)(i); or
(7) If the Company shall furnish to such
Initiating Holders a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors of the Company (the
"Board") it would be seriously detrimental to the Company or its shareholders
for a registration statement to be filed at the date filing would be required,
in which case the Company's obligation to use its best efforts to
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register, qualify or comply under this Section 5(a) shall be deferred for a
period not to exceed 120 days from the date of receipt of written request from
the Initiating Holders, provided that the Company may not exercise this deferral
right more than once during any twelve (12) month period.
Subject to the foregoing clauses (1) through (7), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.
(ii) Underwriting. Any registration pursuant to Section
5(a) shall be firmly underwritten by an underwriter of national recognition. In
the event that a registration pursuant to Section 5(a) is for a public offering
involving an underwriting, the Company shall so advise the Holders as part of
the notice given pursuant to Section 5(a)(i)a., and the right of any Holder to
registration pursuant to Section 5(a) shall be conditioned upon such Holder's
participation in such underwriting arrangements, and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent requested
shall be limited to the extent provided herein.
The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by a majority in interest of the Initiating Holders, but subject to the
Company's reasonable approval. Notwithstanding any other provision of this
Section 5(a), if the managing underwriter advises the Initiating Holders in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the Company shall so advise all holders of Registrable
Securities, and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Holders in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by such Holders at the time of filing the
registration statement. No Registrable Securities excluded from the underwriting
by reason of the underwriter's marketing limitation shall be included in such
registration. To facilitate the allocation of shares in accordance with the
above provisions, the Company or the underwriters may round the number of shares
allocated to any Holder to the nearest 100 shares.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to 180 days after the effective date
of such registration, or such other shorter period of time as the underwriters
may require. If the underwriter has not limited the number of Registrable
Securities to be underwritten, the Company may include securities for its own
account (or for the account of other shareholders) in such registration if the
underwriter so agrees and if the number of Registrable Securities that would
otherwise have been included in such registration and underwriting will not
thereby be limited.
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(b) Company Registration.
(i) Notice of Registration. If at any time or from time to
time the Company shall determine to register any of its equity securities,
either for its own account or for the account of a security holder or holders,
other than (A) a registration relating solely to employee benefit plans, or (B)
a registration relating solely to a Rule 145 transaction, the Company will:
a. promptly give to each Holder written notice
thereof; and
b. include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within thirty (30) days after receipt of such written notice
from the Company by any Holder.
(ii) Underwriting. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to Section 5(b)(i)a. In such event the right of any Holder
to registration pursuant to Section 5(b) shall be conditioned upon such Holder's
participation in such underwriting, and the inclusion of Registrable Securities
in the underwriting shall be limited to the extent provided herein.
All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by the Company. Notwithstanding any other provision of this Section 5(b), if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
number of the Registrable Securities to be included in such registration (i) in
the case of the Company's initial public offering, to zero, and (ii) in the case
of any other offering, to an amount no less than 25% of all shares to be
included in such offering; provided however, that (x) any such limitation or
"cutback" shall be first applied to all shares proposed to be sold in such
offering other than for the account of the Company which are not Registrable
Securities, and (y) notwithstanding clause (x), in no event shall any shares
being sold by a shareholder exercising a demand registration right similar to
that granted in Section 5(a) be excluded from such offering. The Company shall
so advise all Holders and other holders distributing their securities through
such underwriting, and the number of shares of Registrable Securities or other
securities that may be included in the registration and underwriting shall be
first allocated among all the Holders in proportion, as nearly as practicable,
to the respective amounts of Registrable Securities held by such Holder at the
time of filing of a registration statement. To facilitate the allocation of
shares in accordance with the above provisions, the Company may round the number
of shares allocated to any Holder or holder to the nearest 100 shares.
If any Holder disapproves of the terms of any such underwriting, he may
elect to withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such
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registration, and shall not be transferred in a public distribution prior to 180
days after the effective date of the registration statement thereto, or such
other shorter period of time as the underwriters may require.
(iii) Right to Terminate Registration. The Company shall
have the right to terminate or withdraw any registration initiated by it under
this Section 5(b) prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration.
(c) Registration on Form S-3.
(i) If any Holder or Holders of not less than thirty
percent (30%) of the Registrable Securities request that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of the shares of Registrable Securities, the reasonably
anticipated aggregate price to the public of which would equal or exceed Five
Hundred Thousand dollars ($500,000), and the Company is a registrant entitled to
use Form S-3 to register the Registrable Securities for such an offering, the
Company shall use its best efforts to cause such Registrable Securities to be
registered for the offering on such form and to cause such Registrable
Securities to be qualified in such jurisdictions as such Holder or Holders may
reasonably request; provided, however, that the Company shall not be required to
effect more than one registration pursuant to this Section 5(c) in any twelve
(12) month period. The Company shall inform other Holders of the proposed
registration and offer them the opportunity to participate. In the event the
registration is proposed to be part of a firm commitment underwritten public
offering, the substantive provisions of Section 5(a)(ii) shall be applicable to
each such registration initiated under this Section 5(c).
(ii) Notwithstanding the foregoing, the Company shall not
be obligated to take any action pursuant to this Section 5(c):
a. in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
b. if the Company, within ten (10) days of the
receipt of the request of such initiating Holders, gives notice of its bona fide
intention to effect the filing of a registration statement with the Commission
within ninety (90) days of receipt of such request;
c. during the period starting with the date of
filing of, and ending on the date 180 days immediately following the effective
date of, any registration statement pertaining to securities of the Company,
provided that the Company is actively employing in good faith all reasonable
efforts to cause such registration statement to become effective; or
d. if the Company shall furnish to such Holder or Holders
a certificate signed by the President of the Company stating that in the good
faith judgment of the
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Board it would be seriously detrimental to the Company or its shareholders for
registration statements to be filed at the date filing would be required, in
which case the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed 120 days
from the receipt of the request to file such registration by such Holder or
Holders, provided that the Company may not exercise this deferral right more
than once during any twelve (12) month period.
(d) Expenses of Registration. All Registration Expenses incurred
in connection with (i) two registrations pursuant to Section 5(a) and (ii) all
registrations pursuant to Section 5(b) shall be borne by the Company. Unless
otherwise stated, all expenses incurred in connection with the registrations
pursuant to Section 5(c) of this Agreement and all other Selling Expenses
relating to securities registered on behalf of the Holders shall be borne by the
Holders pro rata on the basis of the number of shares so registered.
Notwithstanding the foregoing, the Company shall not be required to effect or to
pay any Registration Expenses of any registration begun pursuant to Sections
5(a) or 5(c), the request of which has been subsequently withdrawn by Holders of
a number of shares of Registrable Securities such that there are no Holders of
Registrable Securities intending to participate in the registration sufficient
to request such a registration, in which case such expenses shall be borne by
the Holders of securities (including Registrable Securities) requesting or
causing such withdrawal; provided further, however, that if at the time of such
withdrawal, the Holders have learned of a material adverse change in the
condition, business or prospects of the Company from that known to the Holders
at the time of their request, then the Holders shall not be required to pay any
of such Registration Expenses and shall retain their rights pursuant to Sections
5(a) and 5(c).
(e) Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(i) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
twenty (180) days or until the distribution described in the registration
statement has been completed, whichever first occurs; and
(ii) Furnish to the Holders participating in such
registration and to the underwriters of the securities being registered such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus and such other documents as such Holders and
underwriters may reasonably request in order to facilitate the public offering
of such securities.
(iii) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
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(iv) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(v) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(f) Indemnification.
(i) The Company will indemnify each Holder of Registrable
Securities included in a registration pursuant to this Agreement, each of its
officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Securities Act, the Securities Exchange Act, state securities law or any rule or
regulation promulgated under the such laws applicable to the Company in
connection with any such registration, qualification or compliance, and the
Company will reimburse each such Holder, each of its officers, directors and
partners, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred, as such expenses are incurred, in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by any Holder,
controlling person or underwriter and stated to be specifically for use therein;
provided, however, that the foregoing indemnity agreement is subject to the
condition that, insofar as it relates to any such untrue statement, alleged
untrue statement, omission or alleged omission made in a preliminary prospectus,
such indemnity agreement shall not inure to the benefit of any underwriter, or
any Holder, if there is no underwriter, if a copy of the final prospectus filed
with the Commission pursuant to its Rule 424(b) was not furnished to the person
asserting the loss, liability, claim or damage at or prior to the time such
action is required by the Securities Act, and if such final prospectus cured the
untrue statement, alleged untrue statement, omission of alleged omission giving
rise to the loss, liability, claim or damage.
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(ii) Each Holder will, if Registrable Securities held by
such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such registration statement, each person who controls the
Company or such underwriter within the meaning of Section 15 of the Securities
Act, and each other such Holder, each of its officers, directors and partners
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages and liabilities
(or actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company, such Holders, such directors, officers, partners,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred, as such expenses are incurred, in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by an instrument duly executed by such Holder and stated to be
specifically for use therein. Notwithstanding the foregoing, the liability of
each Holder under this Section 5(f)(ii) shall be limited in an amount equal to
the net proceeds of the shares sold by such Holder, unless such liability arises
out of or is based on willful misconduct by such Holder. In no event will any
Holder be required to enter into any agreement or undertaking for the benefit of
the Company in connection with any registration under this Section 5 providing
for any indemnification or contribution obligations on the part of such Holder
greater than such Holder's obligations under this Section 5(f)(ii).
(iii) Each party entitled to indemnification under this
Section 5(f) (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action, and provided further that the Indemnifying Party shall not
assume the defense for matters as to which representation of both the
Indemnifying Party and the Indemnified Party by the same counsel would be
inappropriate due to actual or potential differing interests between them, but
shall instead in such event pay the fees and costs of separate counsel for the
Indemnified Party. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
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(g) Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
(h) Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to use its best efforts to:
(i) Make and keep public information available, as those
terms are understood and defined in Rule 144, at all times after the effective
date that the Company becomes subject to the reporting requirements of the
Securities Act or the Securities Exchange Act;
(ii) File with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Securities Exchange Act (at any time after it has become subject to such
reporting requirements); and
(iii) So long as a Holder owns any Restricted Securities
to furnish to such Holder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public) and of the Securities Act and the Securities Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as the Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing the Holder
to sell any such securities without registration.
(i) Transfer of Registration Rights. The rights to cause the
Company to register securities granted Investors under Sections 5(a), 5(b) and
5(c) may be assigned to a transferee or assignee in connection with any transfer
or assignment of Registrable Securities by the Investor provided that: (i) such
transfer may otherwise be effected in accordance with applicable securities
laws, (ii) such assignee or transferee acquires at least 100,000 shares of
Registrable Securities held by the assignor or transferor (appropriately
adjusted for recapitalizations, stock splits and the like) (iii) written notice
is promptly given to the Company and (iv) such transferee agrees to be bound by
the provisions of this Agreement. Notwithstanding the foregoing, the rights to
cause the Company to register securities may be assigned to (A) any affiliated
partnership or constituent partner or retired partner of an Investor which is a
partnership, or (B) a family member or trust for the benefit of an Investor who
is an individual, provided written notice thereof is promptly given to the
Company and the transferee agrees to be bound by the provisions of this
Agreement.
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<PAGE> 13
(j) Limitations on Subsequent Registration Rights. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of Holders holding more than fifty percent (50%) of the Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder to (i) require the Company to effect a registration, prior to the date
set forth in Section 5(a)(i)b.(2) or (ii) include any securities in any
registration filed under Section 5(a) hereof, unless, under the terms of such
agreement, such holder or prospective holder may include such securities in any
such registration only to the extent that the inclusion of such securities will
not diminish the amount of Registrable Securities which are included in such
registration and includes the equivalent of Section 11 as a term.
(k) Termination of Registration Rights. The rights granted
pursuant to Section 5(a) of this Agreement shall terminate as to any Holder at
such time as such Holder (i) can sell all of his Registrable Securities pursuant
to Rule 144(k) promulgated under the Securities Act or (ii) can sell all of his
Registrable Securities pursuant to Rule 144 in any single ninety (90) day
period. The rights granted pursuant to Sections 5(a), 5(b) and 5(c) of this
Agreement shall terminate as to all Holders five (5) years after the
consummation of a bona fide, firm commitment underwriting pursuant to a
registration statement filed pursuant to the Securities Act, the public offering
price of which is not less than $9.00 per share (adjusted to reflect subsequent
stock dividends, stock splits, combinations or other recapitalizations) and the
proceeds thereof (net of underwriting commissions and offering expenses) equal
or exceed $18,000,000.
6. FINANCIAL INFORMATION.
(a) The Company will provide the following reports to each holder
of Preferred Stock and/or Conversion Stock:
(i) As soon as practicable after the end of each fiscal
year, and in any event within 90 days thereafter, consolidated balance sheets of
the Company, as of the end of such fiscal year, and consolidated statements of
operations and of cash flows and shareholders' equity of the Company, for such
year, prepared in accordance with generally accepted accounting principles, all
in reasonable detail and audited by independent public accountants of national
standing selected by the Company.
(b) The Company will provide the following reports to each holder
of at least One Hundred Thousand (100,000) shares of Preferred Stock and/or
Conversion Stock (appropriately adjusted for recapitalizations, stock splits and
the like):
(i) At least thirty days prior to the beginning of each
fiscal year, a budget and business plan adopted by the Board for the fiscal
year, and, as soon as prepared, any other budgets or revised budgets prepared by
the Company;
(ii) Within 30 days after the end of each quarterly
accounting period, an unaudited consolidated condensed balance sheet of the
Company, as of the end of each such monthly period, an unaudited consolidated
condensed statement of operations of the Company
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<PAGE> 14
for such period and for the current fiscal year to date, prepared in accordance
with generally accepted accounting principles (other than for accompanying
notes), subject to changes resulting from year-end audit adjustment and a
comparison of the results of such quarterly accounting period to the budget
delivered under Section 6(b)(i) above.
(iii) Such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as such
holder may from time to time request.
7. VISITATION AND INSPECTION.
(a) The Company will afford each holder of Preferred Stock and/or
Conversion Stock reasonable access during normal business hours to the Company's
accounting books and records and minutes of proceedings of the shareholders and
the Board and committees of the Board, and all information distributed to the
Board, for a purpose reasonably related to such holder's interests as a
shareholder of the Company.
(b) As long as Integral Capital Partners III, L.P. and Integral
Capital Partners International III, L.P. (collectively, "Integral") owns not
less than thirty percent (30%) of the shares of the Series C Preferred Stock of
the Company issued to it pursuant to that certain Series C Preferred Stock
Purchase Agreement dated as of July 25, 1996 (or an equivalent amount of Common
Stock issued upon conversion thereof), the Company shall permit a representative
of Integral to attend all meetings of the Board in a nonvoting observer capacity
and, in this respect, shall give such representative copies of all notices,
minutes, consents, and other materials that it provides to its directors;
provided, however, that such representative shall agree to hold in confidence
and trust and to act in a fiduciary manner with respect to all information so
provided; and, provided further, that the Company reserves the right to withhold
any information and to exclude such representative from any meeting or portion
thereof if access to such information or attendance at such meeting could
adversely affect the attorney-client privilege between the Company and its
counsel or would result in disclosure of trade secrets to such representative or
if Integral or its representative is a direct competitor of the Company.
(c) As long as WPG Enterprise Fund III, L.P., Weiss, Peck & Greer
Venture Associates IV, L.P., and Weiss, Peck & Greer Venture Associates IV
Cayman, L.P. (collectively, "Weiss Peck") owns not less than thirty percent
(30%) of the shares of the Series D Preferred Stock of the Company issued to it
pursuant to that certain Series D Preferred Stock Purchase Agreement dated as of
June 2, 1997 (or an equivalent amount of Common Stock issued upon conversion
thereof), the Company shall permit a representative of Weiss Peck to attend all
meetings of the Board in a nonvoting observer capacity and, in this respect,
shall give such representative copies of all notices, minutes, consents, and
other materials that it provides to its directors; provided, however, that such
representative shall agree to hold in confidence and trust and to act in a
fiduciary manner with respect to all information so provided; and, provided
further, that the Company reserves the right to withhold any information and to
exclude such representative from any meeting or portion thereof if access to
such information or attendance at such meeting could adversely affect the
attorney-client privilege between the Company and its counsel or would result in
disclosure of trade secrets to such representative or if Weiss Peck or its
representative is a direct competitor of the Company.
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<PAGE> 15
8. CONFIDENTIALITY. Notwithstanding the foregoing, the Company is not
required to disclose trade secrets or confidential information pursuant to
Section 6 or Section 7 if not covered by an appropriate non-disclosure
agreement.
9. RIGHT OF FIRST REFUSAL.
(a) The Company hereby grants to each holder of at least 100,000
shares of Preferred Stock and/or Conversion Stock (appropriately adjusted for
recapitalizations, stock splits and the like) (each such holder referred to
herein as a "Qualified Investor"), the right of first refusal to purchase its
Pro Rata Share of New Securities (as defined in this Section 9) which the
Company may, from time to time, propose to sell and issue. A "Pro Rata Share,"
for purposes of this right of first refusal, is the ratio that (i) the sum of
the number of shares of Common Stock then held by each Qualified Investor and
the number of shares of Common Stock issuable upon conversion of the Preferred
Stock then held by such Qualified Investor bears to (ii) the sum of the total
number of shares of Common Stock then outstanding and the number of shares of
Common Stock issuable upon exercise or conversion of all then outstanding
securities exercisable for or convertible into, directly or indirectly, Common
Stock.
(b) Except as set forth below, "New Securities" shall mean any
securities issued after the date hereof including any shares of capital stock of
the Company, including Common Stock and any series of preferred stock, whether
now authorized or not, and rights, options or warrants to purchase said shares
of Common Stock or preferred stock, and securities of any type whatsoever that
are, or may become, convertible into or exchangeable for said shares of Common
Stock or preferred stock. Notwithstanding the foregoing, "New Securities" does
not include (i) the Conversion Stock, (ii) Common Stock offered to the public
generally pursuant to a registration statement under the Securities Act in
connection with the Company's initial public offering, (iii) securities issued
pursuant to the acquisition of another corporation by the Company by merger,
purchase of all or substantially all of the assets or other reorganization
whereby the Company or its shareholders own more than fifty percent (50%) of the
voting power of the surviving or successor corporation, (iv) shares of the
Common Stock or related options, warrants or other rights to purchase such
Common Stock issued after the date hereof to employees, officers and directors
of, and consultants to, the Company, pursuant to a stock grant, option plan, or
purchase plan or other employee stock incentive program or other arrangements
approved by the Board and a majority of the then-outstanding shares of capital
stock of the Company, (v) stock issued pursuant to any rights, agreements or
convertible securities, including without limitation options and warrants, so
long as the rights of first refusal established by this Section 9 applied with
respect to the initial sale or grant by the Company of such rights, agreements
or convertible securities, or (vi) stock issued in connection with any stock
split, stock dividend or recapitalization by the Company.
(c) In the event the Company proposes to undertake an issuance of
New Securities, it shall give each Qualified Investor written notice of its
intention, describing the amount and type of New Securities, and the price and
terms upon which the Company proposes to issue the same. Each Qualified Investor
shall have fifteen (15) business days from the date of receipt of any such
notice to agree to purchase up to its respective Pro Rata Share of such New
15
<PAGE> 16
Securities for the price and upon the terms specified in the notice by giving
written notice to the Company and stating therein the quantity of New Securities
to be purchased.
(d) In the event all of the New Securities are not elected to be
purchased by Qualified Investors within fifteen (15) business days after the
notice pursuant to Section 9(c) above, the Company shall have ninety (90) days
thereafter to sell the New Securities not elected to be purchased by Qualified
Investors at the price and upon the terms no more favorable to the purchasers of
such securities than specified in the Company's notice. In the event the Company
has not sold the New Securities within said ninety (90) day period, the Company
shall not thereafter issue or sell any New Securities without first offering
such securities in the manner provided above.
(e) The right of first refusal hereunder is not assignable except
by each of such Qualified Investors to any party who acquires at least 100,000
shares of the Preferred Stock and/or Conversion Stock (appropriately adjusted
for recapitalizations, stock splits and the like).
10. TERMINATION OF COVENANTS. The covenants set forth in Sections 6, 7
and 9 shall terminate and be of no further force or effect upon the consummation
of a bona fide, firm commitment underwriting pursuant to a registration
statement filed pursuant to the Securities Act, the public offering price of
which is not less than $9.00 per share (adjusted to reflect subsequent stock
dividends, stock splits, combinations or other recapitalizations) and the
proceeds thereof (net of underwriting commissions and offering expenses) equal
or exceed $18,000,000 or at such time as the Company is required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act, whichever shall
occur first.
11. STANDOFF AGREEMENT. In connection with the initial public
offering of the Company's securities, each Investor and Holder agrees, upon
request of the Company or the underwriters managing any underwritten offering of
the Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities
of the Company (other than those included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed one hundred eighty (180) days) from the
effective date of such registration as may be requested by the underwriters,
provided that all officers and directors of the Company who own stock of or hold
options to purchase stock of the Company also agree to such restrictions. The
Investors and Holders agree that the Company may instruct its transfer agent to
place stop-transfer notations in its records to enforce the provisions of this
Section 11.
12. ADDITIONAL COVENANTS OF THE COMPANY.
(a) Reserved Employee Shares. The 2,633,740 shares of Common
Stock reserved for management, directors, employees and consultants (the
"Employee Shares") shall be issued from time to time under a Stock Option and
Restricted Stock Plan (the "Stock Plan") approved by the Board or such other
arrangements, contracts or plans as are reasonably recommended by management and
approved by the Board. The number of shares reserved for management, directors,
employees and consultants shall be increased to the extent that any of the
2,400,000 shares of Common Stock held by Gaurav Dhillon and Diaz Nesamoney as of
the date
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<PAGE> 17
of this Agreement are repurchased by the Company upon termination of employment
or pursuant to the Company's right of first refusal. Unless otherwise agreed to
by a majority of the directors who are not then employees of the Company,
Employee Shares subject to options issued after the date hereof under the Stock
Plan or other approved plans will vest, until the option holder's employment
with or service to the Company terminates, over a four year period on terms no
more favorable than 2.1% at the end of the first month and on an equal monthly
basis thereafter, provided, however, that the first twelve (12) months vesting
shall occur only at the expiration of the first year of vesting, and not
monthly. Unless otherwise agreed to by a majority of the directors who are not
then employees of the Company, all officers, directors and employees of or
consultants to, the Company acquiring Employee Shares after the date hereof
other than pursuant to an option will execute a stock restriction agreement with
the Company under which the Company will retain the right to repurchase the
unvested shares, over a four-year vesting period which shall lapse on terms no
more favorable than 2.1% at the end of the first month and on an equal monthly
basis thereafter, for the original purchase price in the event the holder's
employment with or service to the Company terminates, provided, however, that
the first twelve (12) months vesting shall occur only at the expiration of the
first year of vesting, and not monthly. Pursuant to the option agreement or
restricted stock agreement, as the case may be, the Company shall retain a right
of first refusal with respect to all such Employee Shares subject to such
agreement (which right shall terminate and be of no further force or effect upon
the consummation of a firm commitment underwritten public offering or at such
time as the Company is required to file reports pursuant to Section 13 or 15(d)
of the Exchange Act, whichever shall first occur), and the holder shall agree to
a market standoff provision substantially identical to the market standoff
provision contained in Section 11 hereof.
13. DETERMINATION OF SHARE AMOUNTS AND PERCENTAGES. For the purposes of
determining the minimum holdings set forth in this Agreement, including without
limitation the minimum holdings pursuant to Sections 5(i), 6(b), 7(b), 9(a) and
9(e), the following rules shall govern:
(a) All shares held by entities affiliated with the holder shall
be deemed held by such holder, and any holder which is a partnership shall be
deemed to hold any shares of Preferred Stock and/or Conversion Stock originally
purchased by such holder and subsequently distributed to partners of such
holder, which have not been resold by such partners.
(b) When shares of Preferred Stock are counted together with
shares of Conversion Stock or shares of Common Stock, shares of Preferred Stock
shall be counted on an as-converted into Common Stock basis, and the term
"Conversion Stock" shall mean only the shares of Common Stock which have been
issued pursuant to conversion of Preferred Stock.
14. AMENDMENT. Any provision of this Agreement may be amended or the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company and the holders of a majority of the Registrable Securities then
outstanding or deemed to be outstanding. Notwithstanding the foregoing, any
amendment or waiver of Section 7(b) or 7(c) above shall also require the written
consent of Integral or Weiss Peck, respectively. Any amendment or waiver
effected in accordance with this Section 14 shall be binding upon each Investor
and Holder of
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<PAGE> 18
Registrable Securities at the time outstanding or deemed to be outstanding
(including securities into which such securities are convertible), each future
holder of all such securities, and the Company.
15. GOVERNING LAW. This Agreement and the legal relations between the
parties arising hereunder shall be governed by and interpreted in accordance
with the laws of the State of California. The parties hereto agree to submit to
the jurisdiction of the federal and state courts of the State of California with
respect to the breach or interpretation of this Agreement or the enforcement of
any and all rights, duties, liabilities, obligations, powers, and other
relations between the parties arising under this Agreement.
16. ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties regarding the matters set forth
herein. Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon the successors, assigns,
heirs, executors and administrators of the parties hereto.
17. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery to the party to be notified or three (3) days after
deposit with the United States mail, by registered or certified mail, postage
prepaid, addressed (a) if to a Series D Investor, at such investor's address as
set forth in Exhibit C attached hereto, or at such other address as such
investor shall have furnished to the Company in writing in accordance with this
Section 17, (b) if to any other holder of Preferred Stock or Conversion Stock,
at such address as such holder shall have furnished the Company in writing in
accordance with this Section 17, or, until any such holder so furnishes an
address to the Company, then to and at the address of the last holder thereof
who has so furnished an address to the Company, or (c) if to the Company, at its
principal office.
18. ATTORNEYS' FEES. In the event that any suit or action is instituted
to enforce any provision in this Agreement, the prevailing party shall be
entitled to all costs and expenses of maintaining such suit or action, including
reasonable attorney's fees.
19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
20. BINDING EFFECT. Effective as of the first closing pursuant to the
Purchase Agreement and subject to Section 14 of the Rights Agreement, (i) the
Company and the Prior Investors hereby agree to waive the rights of first offer
set forth in Section 9 of the Rights Agreement and the limitations on subsequent
registrations rights set forth in Section 5(j) of the Rights Agreement with
respect to the issuance of Series D Shares to the Series D Investors; (ii) the
Rights Agreement shall be amended and restated in its entirety as herein
provided; and (iii) the Series D Investors shall become a party to the
Agreement.
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<PAGE> 19
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
Informatica Corporation
a California corporation
Gaurav Dhillon
Chief Executive Officer
"SERIES D INVESTORS"
BAY PARTNERS SBIC, L.P. DISCOVERY VENTURES I, L.L.C.
By:_________________________________ By:___________________________
Name:_______________________________ Name:_________________________
Title:______________________________ Title:________________________
PARVEST U.S. PARTNERS II, C.V. PARTECH U.S. PARTNERS III,
C.V.
By:_________________________________ By:___________________________
Name:_______________________________ Name:_________________________
Title:______________________________ Title:________________________
MULTINVEST LIMITED C.V. TRADEINVEST LIMITED
By:_________________________________ By:___________________________
Name:_______________________________ Name:_________________________
Title:______________________________ Title:________________________
<PAGE> 20
PARTECH INTERNATIONAL PROFIT
SHARING PLAN
U/A Dated 1/1/92
FBO: Thomas G. McKinley DAVID PIDWELL
By:_________________________________ By:___________________________
Name:_______________________________ Name:_________________________
Title:______________________________ Title:________________________
INTEGRAL CAPITAL PARTNERS III, L.P. INTEGRAL CAPITAL PARTNERS
INTERNATIONAL III, L.P.
By: Integral Capital Management III, L.P.
its General Partner By: Integral Capital
Management III, L.P.
its Investment General
Partner
By:_________________________________
a General Partner By:___________________________
a General Partner
WPG ENTERPRISE FUND III, L.P. WEISS, PECK & GREER VENTURE
ASSOCIATES IV, L.P.
By: WPG Venture Partners IV, L.L.C., By: WPG Venture Partners IV,
General Partner L.L.C.,
General Partner
By:_________________________________ By:___________________________
Gill Cogan, Managing Member Gill Cogan, Managing Member
WEISS, PECK & GREER VENTURE ______________________________
ASSOCIATES IV CAYMAN, L.P.
By: WPG Venture Advisers, Ltd., By:___________________________
Administrative General Partner Name:_________________________
Title:________________________
By:__________________________________
, Director
"PRIOR INVESTORS"
BAY PARTNERS SBIC, L.P. DISCOVERY VENTURES I, L.L.C.
By:_________________________________ By:___________________________
Name:_______________________________ Name:_________________________
Title:______________________________ Title:________________________
<PAGE> 21
PARVEST U.S. PARTNERS II, C.V. PARTECH U.S. PARTNERS III,
C.V.
By:_________________________________ By:___________________________
Name:_______________________________ Name:_________________________
Title:______________________________ Title:________________________
MULTINVEST LIMITED C.V. TRADEINVEST LIMITED
By:_________________________________ By:___________________________
Name:_______________________________ Name:_________________________
Title:______________________________ Title:________________________
PARTECH INTERNATIONAL PARTECH INTERNATIONAL PROFIT
SHARING PLAN
U/A Dated 1/1/92
By: FBO: Thomas G. McKinley
Name:
Title: By:
Name:
Title:
INTEGRAL CAPITAL PARTNERS III, L.P. INTEGRAL CAPITAL PARTNERS
INTERNATIONAL III, L.P.
By: Integral Capital Management III, L.P.
its General Partner By: Integral Capital
Management III, L.P.
its Investment General
Partner
By:__________________________________
a General Partner By:___________________________
a General Partner
DAVID PIDWELL ______________________________
By:_________________________________ By:___________________________
Name:_______________________________ Name:_________________________
Title:______________________________ Title:________________________
<PAGE> 22
EXHIBIT A
Bay Partners SBIC, L.P.
10600 North De Anza Boulevard
Cupertino, California 95014
Parvest U.S. Partners II C.V.
50 California Street, Suite 3200
San Francisco, California 94111
Discovery Ventures I, LLC.
3000 Sand Hill Road, Building 3
Suite 210
Menlo Park, California 94025
Tradeinvest Limited
50 California Street, Suite 3200
San Francisco, California 94111
Multinvest Limited C.V.
50 California Street, Suite 3200
San Francisco, California 94111
Partech U.S. Partners III C.V.
50 California Street, Suite 3200
San Francisco, California 94111
Partech International Profit Sharing Plan
U/A Dated 1/1/92
FBO: Thomas G. McKinley
50 California Street, Suite 3200
San Francisco, California 94111
Partech International
50 California Street, Suite 3200
San Francisco, CA 94111
David Pidwell
20628 Vickery Lane
Saratoga, California 95070
Integral Capital Partners III, L.P.
2750 Sand Hill Road
Menlo Park, California 94025
<PAGE> 23
Integral Capital Partners International III, L.P.
2750 Sand Hill Road
Menlo Park, California 94025
<PAGE> 1
EXHIBIT 10.4
LOAN AND WARRANT AGREEMENT
THIS LOAN AND WARRANT AGREEMENT (this "Agreement") is made as of
the 7th day of May, 1996, by and among Informatica Corporation, a California
corporation (the "Company"), and the investors named on the Schedule of Lenders
attached hereto (individually a "Lender" and collectively the "Lenders").
WHEREAS, the Company is currently considering a proposed equity
financing which is scheduled to be completed on or before November 1, 1996.
WHEREAS, the Lenders are familiar with the Company and its
operations, the Company has requested Lenders to advance funds to the Company
based on the representations herein contained as an accommodation prior to
consummation of the further equity financing and Lenders are willing to make
such advances subject to the terms hereof.
AGREEMENT
In consideration of the mutual undertakings hereinafter set forth, the
parties hereto agree as follows:
1.1 Loan. Subject to the terms and conditions set forth in this
Agreement, Lenders hereby each severally agree to loan to the Company the amount
set forth opposite each Lender's name on Exhibit A hereto to be evidenced as to
each Lender by a Convertible Promissory Note in the form attached hereto as
Exhibit B (the "Notes" and each a "Note"). The closing of the loans evidenced by
the Notes hereunder shall be held at the offices of Morrison & Foerster, 755
Page Mill Road, Palo Alto, CA at 1:00 p.m., local time, on May 7, 1996 (the
"Closing") or at such other time and place upon which the Company and the
Lenders shall agree (the date of the Closing is hereinafter referred to as the
"Closing Date").
1.2 Warrants. Subject to the terms and conditions set forth in
this Agreement, the Company hereby agrees to issue and sell to each Lender on
the Closing Date at the purchase price set forth opposite each Lender's name on
Exhibit A hereto, a Warrant in the form attached hereto as Exhibit C (the
"Warrants" and each a "Warrant") to purchase the number of units of the
Additional Securities equal to (a) the Warrant Coverage Amount (as defined
below) for such Lender divided by (b) the per unit purchase price of the
Additional Securities. The term "Additional Securities" shall mean any equity
securities, or securities convertible into equity securities (including, without
limitation, any Series C Preferred Stock of the Company authorized by the Board
of Directors and the shareholders of the Company), or any package of equity
securities or of debt and equity securities, sold to investors (excluding
directors, employees or others performing services for the Company) in any
transaction or series of related transactions for an aggregate amount of
$2,000,000 or more in consideration (exclusive of amounts paid for Additional
Securities upon cancellation of the Notes) at any time on or prior to November
1, 1996 ("New Financing"). In the event Additional Securities are issued and are
<PAGE> 2
issued in unpackaged form, the Warrant holder may determine to purchase part of
each or all of the one of the items in such package. In the event Additional
Securities are not issued on or prior to November 1, 1996, each Warrant shall
entitle the holder thereof to purchase the number of shares of the Series B
Preferred Stock of the Company equal to (a) the Warrant Coverage Amount (as
defined below) for such Lender divided by (b) One Dollar ($1.00). The Warrants
shall be exercisable from the date of issuance until May 1, 2001. The term
"Warrant Coverage Amount" for each Lender shall be an amount equal to 25% of the
original principal balance of such Lender's Note.
1.3 Payment of Notes; Conversion of Notes.
(a) In the event the Company enters into a definitive
agreement to consummate the New Financing at a date of closing (the "New
Financing") on or prior to November 1, 1996, then (i) if the Board of Directors
of the Company shall so elect by resolution duly adopted, the Company shall have
the right to pay (or place in escrow for payment subject to surrender of Notes)
all outstanding principal on the Notes at the Equity Closing, and (ii) if the
Company shall not have elected to pay the Notes as provided in (i) above, each
Lender shall be given at least 15 days' written notice prior to the Equity
Closing of the terms of the sale of Additional Securities and an opportunity to
elect within such period to have the principal of the Notes held by such Lenders
either (x) converted into Additional Securities in the manner and for the price
stated below or (y) paid in cash at the Equity Closing. (In the event of failure
to make an election by a Lender, the Note held by such Lender shall be converted
into Additional Securities).
In the event a Lender elects to convert its Note into
Additional Securities (through affirmative action or failure to elect), the Note
shall be converted into an amount of Additional Securities equal to the
principal amount on such Note divided by the unit price to investors of the
Additional Securities issued in the Equity Closing. In the event Additional
Securities are issued, and are issued in unpackaged form, the holder of the Note
may at any time at least five days prior to the Equity Closing give written
notice to the Company specifying whether the purchase is of part of each or all
of one of the items in the package. In default of such notice, such election may
be made by the Company. Upon such conversion, the Note shall cease to represent
the indebtedness of the Company stated therein and the sole right of the holder
thereof shall be to receive certificates or instruments evidencing the
Additional Securities to which such holder is entitled. Upon such conversion,
such Lender agrees to promptly surrender to the Company the Note held by it in
exchange for the Additional Securities. Fractional shares or units of the
Additional Securities shall not be issued and fractions shall be settled in cash
at the value established in the Equity Closing.
(b) In the event that holders of sixty percent (60%) or
more of the outstanding principal amount of the Notes elect to convert (through
affirmative action or failure to elect) such principal into Additional
Securities pursuant to Section 1.3(a) above, then all outstanding Notes shall
automatically and without further action on the part of the Lender be
2
<PAGE> 3
converted effective upon, subject to, and concurrently with, the issuance and
sale of Additional Securities, into an amount of Additional Securities equal to
the outstanding principal amount on such Note divided by the unit price to
investors of the Additional Securities issued in the Equity Closing
notwithstanding any election by any such Lenders to the contrary. Upon such
conversion, the Note shall cease to represent the indebtedness of the Company
stated therein and the sole right of the holder thereof shall be to receive
certificates or instruments evidencing the Additional Securities to which such
holder is entitled. Upon such conversion, such Lender agrees to promptly
surrender to the Company the Note held by it in exchange for the Additional
Securities. Fractional shares or units of the Additional Securities shall not be
issued and fractions shall be settled in cash at the value established in the
Equity Closing.
(c) In the event the Equity Closing does not occur on or
prior to November 1, 1996, then each Lender shall have the right, exercisable on
notice to the Company within the thirty (30) day period following November 1,
1996, to convert such Lender's Note into Series B Preferred Stock of the Company
at a conversion price of $1.00 per share. In the event Lenders holding sixty
percent (60%) or more of the outstanding principal amount of the Notes elect to
so convert their Notes into Series B Preferred Stock of the Company pursuant to
this Section 1.3(c), then all outstanding Notes shall automatically and without
further action on the part of the Lender by converted into Series B Preferred
Stock of the Company at a conversion price of $1.00 per share, notwithstanding
any election by any Lender to the contrary. Such conversion shall occur at such
time and date as the Company and Lenders holding sixty percent (60%) or more of
the outstanding principal amount of the Notes shall agree and in any event not
later than thirty (30) days after the election of said sixty percent (60%) of
the Lender's to so convert. Upon such conversion, the Note shall cease to
represent the indebtedness of the Company stated therein and the sole right of
the holder thereof shall be to receive certificates or instruments evidencing
the Series B Preferred Stock of the Company to which such holder is entitled.
Upon such conversion, such Lender agrees to promptly surrender to the Company
the Note held by it in exchange for Series B Preferred Stock of the Company.
Fractional shares of Series B Preferred Stock of the Company shall not be issued
and fractions shall be settled in cash at the value established in this Section
1.3(c). In the event all or any of the Notes are not converted pursuant to this
Section 1.3(c), such Notes shall be repaid in accordance with their terms.
2. Representations and Warranties of the Company. The Company hereby
represents and warrants to each Lender that, except as set forth on a Schedule
of Exceptions attached hereto as Exhibit D, which exceptions shall be deemed to
be representations and warranties as if made hereunder:
2.1 Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California and has all requisite corporate power and authority to carry
on its business as now conducted and as proposed to be conducted. The Company is
duly qualified to transact business and is in good
3
<PAGE> 4
standing in each jurisdiction in which the failure so to qualify would have a
material adverse effect on its business.
2.2 Authorization. All corporate action on the part of the
Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the Notes and the
Warrants, the performance of all obligations of the Company hereunder or
thereunder has been taken or will be taken prior to each Closing (except for
board and shareholder approvals and appropriate amendments to the Company's
Restated Articles of Incorporation (the "Restated Articles") for the purpose of
amending the authorized capital to provide for those equity securities to be
subject to the Warrant or converted from the Note which action the Company
covenants to perform and obtain when and as necessary), and this Agreement, the
Notes and the Warrants constitute valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms.
2.3 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, local or provincial governmental authority on
the part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except for the filing pursuant to
Section 25102(f) of the California Corporate Securities Law of 1968, as amended,
and the rules thereunder, which filing will be effected within 15 days of the
issuance of the Notes and Warrants hereunder.
2.4 Compliance with Other Instruments. The Company is not in
violation or default of any provisions of its Restated Articles or its Bylaws or
in any material respect or of any instrument or contract to which it is a party
or by which it is bound or, to its knowledge, of any provision of federal or
state statute, judgment, decree, order, rule or regulation applicable to the
Company. The execution, delivery and performance of this Agreement, the Notes
and the Warrants and the consummation of the transactions contemplated hereby
will not result in any such violation or be in conflict with or constitute, with
or without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, decree or contract.
3. Representations and Warranties of the Lenders. Each Lender, severally
and not jointly, hereby represents and warrants to the Company that:
3.1 Authorization. Lender has full power and authority to enter
into this Agreement and that certain Waiver and Amendment to Investor Rights
Agreement in substantially the form attached hereto as Exhibit E. All action on
the party of Lender necessary for the execution, delivery and performance of
this Agreement and the Investor Rights Agreement and the consummation of the
transactions contemplated hereby and thereby has been taken. This Agreement
constitutes the valid and legally binding obligation of Lender, enforceable in
accordance with their respective terms.
4
<PAGE> 5
3.2 Purchase Entirely for Own Account. This Agreement is made
with Lender in reliance upon Lender's representation to the Company, which by
Lender's execution of this Agreement such Lender hereby confirms, that the
Notes, the Warrants, the Additional Securities or the Series B Preferred Stock
of the Company (the "Series B Preferred Stock") to be received by such Lender
upon exercise of the Warrants or conversion of the Notes and the Common Stock of
the Company (the "Common Stock") issuable upon exercise or conversion thereof
(collectively, the "Securities") will be acquired for investment for Lender's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Lender has no present intention of
selling, granting any participation in, or otherwise distributing the same. By
executing this Agreement, Lender further represents that Lender does not have
any contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person, with
respect to any of the Securities.
3.3 Disclosure of Information. Lender believes it has received
all the information it considers necessary or appropriate for deciding whether
to become a party to this Agreement and acquire the Note and Warrant to be
issued to that Lender hereunder. Lender further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the loans contemplated herein. The foregoing, however,
does not limit or modify the representations and warranties of the Company in
Section 2 of this Agreement or the right of Lender to rely thereon.
3.4 Investment Experience. Lender acknowledges that it is able to
fend for itself, can bear the economic risk of its investment and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the transactions contemplated by this
Agreement. If other than an individual, Lender also represents it has not been
organized for the purpose of acquiring the Note, the Warrant, the Additional
Securities, the Series B Preferred Stock or the Common Stock.
3.5 Accredited Investor. Lender is an "accredited investor"
within the meaning of Rule 501 of Regulation D under the Securities Act of 1933,
as presently in effect.
3.6 Restricted Securities. Lender understands that the shares of
Additional Securities, the Series B Preferred Stock and the Common Stock are and
will be characterized as "restricted securities" under the federal securities
laws inasmuch as they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act of
1933, as amended (the "Act"), only in certain limited circumstances. In this
connection, Lender represents that it is familiar with Securities and Exchange
Commission Rule 144 under the Act, as presently in effect ("Rule 144"), and
understands the resale limitations imposed thereby and by the Act.
5
<PAGE> 6
3.7 No Public Market. Lender understands that no public market
now exists for any securities issued by the Company and that the Company has
made no assurances that a public market will ever exist for the Company's
securities.
3.8 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, Lender further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3 and:
(a) There is then in effect a registration statement under
the Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(b) (i) Such Lender shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, at the expense of such Lender or its
transferee, such Lender shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company, that such disposition will not
require registration of such shares under the Act. It is agreed that the Company
will not require opinions of counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and
(b) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Lender which is a partnership to a partner of such
partnership or a retired partner of such partnership who retires after the date
hereof, or to the estate of any such partner or retired partner or the transfer
by gift, will or intestate succession of any partner to his spouse or lineal
descendants or ancestors, if the transferee agrees in writing to be subject to
the terms hereof to the same extent as if he were an original Lender hereunder.
3.9 Legends.
(a) The Warrants and each certificate representing (i) the
Additional Securities or Series B Preferred Stock acquired on exercise of the
Warrants or on conversion of the Notes, (ii) shares of Common Stock issuable
upon conversion of the Additional Securities or Series B Preferred Stock (the
"Conversion Stock") and (iii) any other securities issued in respect of the
Additional Securities or Series B Preferred Stock upon any stock split, stock
dividend, recapitalization, merger or similar event (unless no longer required
in the opinion of counsel for the Company) shall be stamped or otherwise
imprinted with a legend substantially in the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, OFFERED FOR
6
<PAGE> 7
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT."
(b) Any legend required by applicable state blue sky laws.
3.10 Due Diligence. Lender has been solely responsible for
Lender's "due diligence" investigation of the Company and its management and
business, for the analysis of the merits and risks of this investment and of the
fairness and desirability of the terms of the investment; that in taking any
action or performing any role relative to the arranging of the proposed
investment, such Lender has acted solely in such Lender's interest; and that
neither the Lender nor any of its agents or employees has acted as an agent of
the Company, or as an issuer, underwriter, broker, dealer or investment advisor
relative to any of the Securities.
4. California Commissioner of Corporations.
4.1 Corporate Securities Law. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA, AND IN THE ABSENCE OF AN EXEMPTION
FROM SUCH QUALIFICATION REQUIREMENT, THE ISSUANCE OF SUCH SECURITIES OR THE
PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED OR AN EXEMPTION
FROM SUCH QUALIFICATION BEING APPLICABLE.
5. Conditions of Lenders' Obligations at Closing. The obligations of
each Lender under Section 1 of this Agreement at the Closing are subject to the
fulfillment of each of the following conditions on or before the Closing Date.
5.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of each
Closing with the same effect as though such representations and warranties had
been made on and as of the same date; subject to (i) the issuance of options
(and Common Stock on the exercise of options) pursuant to the Company's stock
option plan; and (ii) changes in the ordinary course of the Company's business
operations which shall not be materially adverse in the aggregate.
7
<PAGE> 8
5.2 Performance. The Company shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing.
5.3 Compliance Certificate. The Chief Executive Officer or
President of the Company shall deliver to each Lender a certificate dated the
Closing Date, certifying that the conditions specified in Sections 5.1 and 5.2
have been fulfilled.
5.4 Qualifications. The Commissioner of Corporations of the State
of California shall have issued a permit qualifying the offer and sale of the
Notes and the Warrants to the Lenders pursuant to this Agreement, or such offer
and sale shall be exempt from such qualification under the California Corporate
Securities Law of 1968, as amended.
5.5 Proceedings and Documents. All corporate and other
proceedings in connection with the transactions contemplated at the Closing and
all documents incident thereto shall be reasonably satisfactory in form and
substance to the Lenders, and they shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably
request.
5.6 Consents and Waivers. The Company shall have obtained any and
all consents and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement which need to be obtained prior to
the Closing.
6. Conditions of the Company's Obligations at Closing. The obligations
of the Company to the Lenders under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions:
6.1 Representations and Warranties. The representations and
warranties of the Lenders contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the same date.
6.2 California Qualification. The Commissioner of Corporations of
the State of California shall have issued a permit qualifying the offer and sale
to the Lenders of the Warrants and the Notes (and the Additional Securities or
Series B Preferred Stock issuable upon exercise of the Warrants and the Common
Stock issuable upon the conversion thereof) or such offer and sale shall be
exempt from such qualification under the California Corporate Securities Law of
1968, as amended.
6.3 Consents and Waivers. The Company shall have obtained any and
all consents and waivers necessary or appropriate for consummation of the
transactions contemplated by this Agreement which need to be obtained prior to
the Closing.
8
<PAGE> 9
6.4 Payment. The Lender shall have delivered the amount specified
opposite such Lender's name on the Schedule of Lenders attached hereto.
7. Miscellaneous.
7.1 Survival of Warranties. The warranties, representations and
covenants of the Company and the Lenders contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
closings of the transactions contemplated hereby and shall in no way be affected
by any investigation of the subject matter thereof made by or on behalf of the
Lenders or the Company.
7.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
7.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
7.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed if to the Company, at the address indicated on the
signature page hereof, and if to an Lender, at the address set forth below such
Lender's name on the Schedule of Lenders attached hereto, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties.
7.7 Finder's Fee. Each Lender represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction. Each Lender agrees to indemnify and to hold harmless the Company
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Lender or any of its officers, partners,
employees, or representatives is responsible.
9
<PAGE> 10
The Company agrees to indemnify and hold harmless the Lenders from any
liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.
7.8 Expenses. Each party shall pay all costs and expenses that it
incurs with respect to the negotiation, execution, delivery and performance of
this Agreement. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement or the Restated Articles, the prevailing
party shall be entitled to reasonable attorney's fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
7.9 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and Lenders who provided in excess
of 60% of the aggregate loan amount pursuant to Section 1.1 hereof. Any
amendment or waiver effected in accordance with this Section 7.9 shall be
binding upon each holder of Notes and Warrants issued pursuant to this
Agreement, each future holder of such Additional Securities or Series B
Preferred Stock and Conversion Stock, and the Company; provided, that the terms
of each Note and the rights of payment thereunder may only be modified upon the
prior written consent of the Lender and/or holder of such Note.
7.10 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
7.11 Entire Agreement. This Agreement and the other documents and
agreements referred to herein constitute the entire understanding and agreement
among the parties with regard to the subjects hereof and thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
INFORMATICA CORPORATION
By: /s/ GAURAV DHILLON
---------------------------------------------
Gaurav Dhillon
Chief Executive Officer
10
<PAGE> 11
LENDERS:
Bay Partners SBIC, L.P.
By: /s/ JOHN FREIDENRICH
---------------------------------------------
Name: John Freidenrich
-------------------------------------------
Title: General Partner
------------------------------------------
Address: 10600 North De Anza Boulevard
Cupertino, California 95014
Discovery Ventures I, L.L.C.
By: /s/ ARNOLD N. SILVERMAN
---------------------------------------------
Name: Arnold N. Silverman
-------------------------------------------
Title: Manager
------------------------------------------
Address: 3000 Sand Hill Road, Building 3,
Suite 210
Menlo Park, California 94025
Parvest U.S. Partners II C.V.
By: /s/ VINCENT WORMS
---------------------------------------------
Name: Vincent Worms
-------------------------------------------
Title: General Partner
------------------------------------------
Address: 101 California Street, Suite 3150
San Francisco, California 94111
<PAGE> 12
Tradeinvest Limited
By: /s/ VINCENT WORMS
---------------------------------------------
Name: Vincent Worms
-------------------------------------------
Title: Director
------------------------------------------
Address: 101 California Street, Suite 3150
San Francisco, California 94111
Multinvest Limited C.V.
By: /s/ VINCENT WORMS
---------------------------------------------
Name: Vincent Worms
-------------------------------------------
Title: General Partner
------------------------------------------
Address: 101 California Street, Suite 3150
San Francisco, California 94111
Partech U.S. Partners III C.V.
By: /s/ VINCENT WORMS
---------------------------------------------
Name: Vincent Worms
-------------------------------------------
Title: General Partner
------------------------------------------
Address: 101 California Street, Suite 3150
San Francisco, California 94111
David Pidwell
/s/ DAVID PIDWELL
-------------------------------------------------
Address:
<PAGE> 13
Partech International Profit Sharing Plan
U/A Dated 1/1/92
FBO: Thomas G. McKinley
By: /s/ VINCENT WORMS
---------------------------------------------
Name: Vincent Worms
-------------------------------------------
Title: General Partner
------------------------------------------
Address: 101 California Street, Suite 3150
San Francisco, California 94111
<PAGE> 14
SCHEDULE OF LENDERS
<TABLE>
<CAPTION>
Warrant
Loan Amount Purchase Price
----------- --------------
<S> <C> <C>
Bay Partners SBIC, L.P. $800,000 $1000.00
Discovery Ventures I, L.L.C. $400,000 $ 500.00
Parvest U.S. Partners II C.V. $360,000 $ 450.00
Tradeinvest Limited $ 42,000 $ 52.50
Multinvest Limited C.V. $ 28,000 $ 35.00
Partech U.S. Partners III C.V. $360,000 $ 450.00
David Pidwell $ 50,000 $ 62.50
Partech International Profit Sharing Plan $ 10,000 $ 12.50
U/A Dated 1/1/92
FBO: Thomas G. McKinley
</TABLE>
<PAGE> 1
EXHIBIT 10.5
FORM OF
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE
THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS
NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT
TO RULE 144 UNDER SUCH ACT.
WARRANT
Warrant No.___ Void after May 1, 2001
INFORMATICA CORPORATION
WARRANT TO PURCHASE PREFERRED STOCK
This Warrant is issued to __________________ by Informatica
Corporation, a California corporation (the "Company"), pursuant to the terms of
that certain Loan and Warrant Agreement dated as of May 7, 1996 (the "Loan
Agreement") in connection with the Company's issuance to the holder of this
Warrant of a Note dated as of May 7, 1996 (the "Note"). All provisions of the
Loan Agreement applicable hereto are incorporated herein by reference. Unless
otherwise indicated herein, defined terms shall have the same meaning for the
purpose of this Warrant as set forth in the Loan Agreement.
1. Purchase of Shares. Subject to the terms and conditions of the
Loan Agreement and as hereinafter set forth, the holder of this Warrant is
entitled, upon surrender of this Warrant at the principal office of the Company
(or at such other place as the Company shall notify the holder hereof in
writing), to purchase from the Company up to the number of fully paid and
nonassessable shares of Additional Securities (as defined in the Loan Agreement)
or Series B Preferred Stock of the Company (the "Series B Preferred Stock") as
provided in Section 1.2 of the Loan Agreement, or the number of shares of Common
Stock of the Company (the "Common Stock") that would have been issuable upon
conversion of the Additional Securities or Series B Preferred Stock, as
applicable, if this Warrant is exercised following the Company's initial public
offering of its securities pursuant to an effective registration statement (the
"IPO") (such Common Stock is referred to herein as, the "Conversion Stock"). The
shares of the Additional Securities, Series B Preferred Stock or Conversion
Stock issuable pursuant to this Section 1 (collectively, the "Shares") shall
also be subject to adjustment pursuant to Section 8 hereof.
1
<PAGE> 2
2. Purchase Price. The purchase price for the Additional
Securities or Common Stock that would have been issuable upon conversion of the
Additional Securities shall be the per unit purchase price of the Additional
Securities and the purchase price for the Series B Preferred Stock or Common
Stock that would have been issuable upon conversion of the Series B Preferred
Stock shall be One Dollar ($1.00). Such price shall be subject to adjustment
pursuant to Section 8 hereof (such price, as adjusted from time to time, is
herein referred to as the "Exercise Price").
3. Exercise Period. This Warrant shall be and remain exercisable
from the date hereof until and including May 1, 2001.
4. Method of Exercise. While this Warrant remains outstanding and
exercisable in accordance with Section 3 above, the holder may exercise, in
whole or in part, the purchase rights evidenced hereby. Such exercise shall be
effected by:
(i) the surrender of the Warrant, together with a duly
executed copy of the form of subscription attached hereto, to the Secretary of
the Company at its principal offices; and
(ii) the payment to the Company of an amount equal to the
aggregate Exercise Price for the number of Shares being purchased.
5. Net Issue Exercise.
(i) In addition to and without limiting the rights of the
holder under the terms hereof, the holder may elect to receive Shares equal to
the value of this Warrant (or the portion thereof being canceled) by surrender
of this Warrant at the principal office of the Company together with notice of
such election in which event the Company shall issue to holder a number of
shares of the Company's Additional Securities, Series B Preferred Stock or
Conversion Stock, as applicable, computed using the following formula:
X=Y(A-B)
------
A
Where X - The number of shares of Additional Securities, Series B
Preferred Stock or Conversion Stock as applicable, to
be issued to holder of this Warrant.
Y - The number of shares of Additional Securities, Series B
Preferred Stock or Conversion Stock as applicable,
purchasable under this Warrant.
2
<PAGE> 3
A - If such exercise is prior to Company's IPO, the fair
market value of one share of the Company's
Common Stock issuable on conversion of the
Additional Securities or Series B Preferred Stock as
applicable; and if such exercise occurs following the
Company's IPO, the fair market value of one share of
the Company's Common Stock.
B - Exercise Price on the date of this calculation.
(ii) No payment of any cash or other consideration to the
Company shall be required from the holder of this Warrant in connection with any
exercise of this Warrant by exchange pursuant to this Section 5. Such exchange
shall be effective upon the later of (i) the date of receipt by the Company of
the Warrant surrendered for cancellation or (ii) the date of receipt by the
Company of a written request from the holder that the exchange pursuant to this
Section 5 be made or (iii) a later date as may be specified in such request. No
fractional shares arising out of the above formula for determining the number of
shares issuable in such exchange shall be issued, and the Company shall in lieu
thereof make payment to the holder of cash in the amount of such fraction
multiplied by the fair market value of one share of Common Stock issuable upon
the conversion of the Additional Securities or Series B Preferred Stock, as
applicable, on the date of the exchange.
(iii) For the purpose of this Section 5, the "fair market
value" of the shares of Additional Securities or Series B Preferred Stock, as
applicable, shall be calculated on the basis of (a) if the Common Stock issuable
upon the conversion thereof is then traded on a securities exchange, the average
of the closing prices of such Common Stock on such exchange over the 30-day
period ending three (3) days prior to the date of exercise, (b) if the Common
Stock issuable upon the conversion thereof is then regularly traded
over-the-counter, the average of the sale prices or secondarily the closing bid
of such Common Stock over the 30-day period ending three (3) days prior to the
date of exercise, or (c) if there is no active public market for the Common
Stock issuable upon the conversion thereof, the fair market value thereof as
determined in good faith by the Board of Directors of the Company.
6. Certificates for Shares. Upon the exercise of the purchase
rights evidenced by this Warrant, one or more certificates for the number of
Shares so purchased shall be issued as soon as practicable thereafter, and in
any event within thirty (30) days of the delivery of the subscription notice.
7. Valid Issuance of Shares. The Company covenants that the
Shares, when issued pursuant to the exercise of this Warrant, will be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issuance thereof.
8. Adjustment of Exercise Price and Number of Shares. The number
of and kind of securities purchasable upon exercise of this Warrant and the
Exercise Price shall be subject to adjustment from time to time as follows:
3
<PAGE> 4
(a) Subdivisions, Combinations and Other Issuances. If the
Company shall at any time prior to the expiration of this Warrant subdivide the
Additional Securities or Series B Preferred Stock, as applicable, by split-up or
otherwise, or combine or issue additional shares thereof, or issue Common Stock
as a dividend with respect to any shares thereof, the number of Shares issuable
on the exercise of this Warrant shall forthwith be proportionately increased in
the case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination. Appropriate adjustments shall also be made to the
purchase price payable per share, but the aggregate purchase price payable for
the total number of Shares purchasable under this Warrant (as adjusted) shall
remain the same. Any adjustment under this Section 8(a) shall become effective
at the close of business on the date the subdivision or combination becomes
effective, or as of record date of such dividend, or in the event that no record
date is fixed, upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In
case of any reclassification, capital reorganization, or change in the
Additional Securities or Series B Preferred Stock, as applicable, (other than as
a result of a subdivision, combination or stock dividend provided for in Section
8(a) above), then, as a condition of such reclassification, reorganization or
change, lawful provision shall be made, and duly executed documents evidencing
the same from the Company or its successor shall be delivered to the holder of
this Warrant, so that the holder of this Warrant shall have the right at any
time prior to the expiration of this Warrant to purchase, at a total price equal
to that payable upon the exercise of this Warrant, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization or change by a holder of the same number of
shares of the Additional Securities or Series B Preferred Stock, as applicable,
as were purchasable by the holder of this Warrant immediately prior to such
reclassification, reorganization or change. In any such case, appropriate
provisions shall be made with respect to the rights and interest of the holder
of this Warrant so that the provisions hereof shall thereafter be applicable
with respect to any shares of stock or other securities and property deliverable
upon exercise hereof, and appropriate adjustments shall be made to the purchase
price per share payable hereunder, provided the aggregate purchase price shall
remain the same.
(c) Notice of Adjustment. When any adjustment is required
to be made in the number or kind of shares purchasable upon exercise of the
Warrant, the Company shall promptly notify the holder of such event and of the
number of shares of Additional Securities, Series B Preferred Stock or other
securities or property thereafter purchasable upon exercise of the Warrant.
9. No Fractional Shares or Scrip. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of this
Warrant, but in lieu of such fractional shares the Company shall make a cash
payment therefor on the basis of the Exercise Price then in effect.
10. No Shareholder Rights. Prior to exercise of this Warrant, the
holder shall not be entitled to any rights of a shareholder with respect to the
Shares, including (without limitation) the right to vote such Shares, receive
dividends or other distributions thereon, exercise
4
<PAGE> 5
preemptive rights or be notified of shareholder meetings, and such holder shall
not be entitled to any notice or other communication concerning the business or
affairs of the Company.
11. Successors and Assigns. The terms and provisions of this
Warrant and the Loan Agreement shall inure to the benefit of, and be binding
upon, the Company and the holders hereof and their respective successors and
assigns.
12. Amendments and Waivers. Each time the holder of this Warrant
and the Company proposes to amend any term of this Warrant or waive the
observance of any term of this Warrant (either generally or in a particular
instance and either retroactively or prospectively), the Company shall first
provide notice of such proposed amendment or waiver to each holder of warrants
issued pursuant to the Loan Agreement (individually a "Warrantholder" and
collectively, "Warrantholders"). Within ten (10) calendar days after receipt of
such notice, each Warrantholder may elect to accept such amendment or waiver by
providing written notice to the Company. Any waiver or amendment so accepted by
a Warrantholder shall be binding upon each holder of any Shares purchased under
the Warrant of such Warrantholder (including securities into which such Shares
have been converted), each future holder of all such Shares and securities and
the Company.
This Warrant is issued effective as of May 7, 1996.
INFORMATICA CORPORATION
By: [SIG]
---------------------------------------------
5
<PAGE> 6
SUBSCRIPTION
Informatica Corporation
Attention: Corporate Secretary
The undersigned, the holder of the attached Warrant, hereby
irrevocably elects to purchase pursuant to the provisions of the attached
Warrant, _______ shares of _______________________________ of Informatica
Corporation (or such securities issuable hereunder).
Payment of the exercise price per share required under such
Warrant accompanies this Subscription.
The undersigned hereby represents and warrants that the
undersigned is acquiring such shares for its own account for investment purposes
only, and not for resale or with a view to distribution of such shares or any
part thereof.
WARRANTHOLDER:
-------------------------------------------
Date: By:
------------------------- ----------------------------------------
Title
--------------------------------------
Address:
-----------------------------------
6
<PAGE> 1
EXHIBIT 10.6
FORM OF
PROMISSORY NOTE
Menlo Park, California
$20,000.00 May 5, 1995
FOR VALUE RECEIVED, promises to pay to Informatica
Corporation, a California corporation (the "Company"), or order, the principal
sum of Twenty Thousand Dollars ($20,000), together with interest on the unpaid
principal hereof from the date hereof at the rate of seven percent (7%) per
annum, compounded semiannually.
Principal and interest shall be due and payable as follows: Principal and
accrued but unpaid interest shall be due and payable on the fifth anniversary of
this Note, May 1, 2000. Should the undersigned fail to make full payment of any
installment of principal or interest for a period of 10 days or more after the
due date thereof, or should the undersigned's employment or consulting
relationship with the Company be terminated for any reason (or for no reason),
the whole unpaid balance on this Note of principal and interest shall become
immediately due at the option of the holder of this Note. Payments of principal
and interest shall be made in lawful money of the United States of America.
The undersigned may at any time prepay all or any portion of the principal
or interest owing hereunder.
This Note is delivered upon the purchase of Common Stock of the Company
pursuant to the Restricted Stock Purchase Agreement dated May 1, 1995 and is
subject to the terms of such Agreement. This Note is secured by a pledge of the
Company's Common Stock under the terms of a Security Agreement of even date
herewith and is subject to all the provisions thereof.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.
The holder of this Note shall have full recourse against the maker, and
shall not be required to proceed against the collateral securing this Note in
the event of default.
The undersigned understands that the two-year holding period under Rule 144
of the Securities Act of 1933 generally will not begin to run until this Note
has been paid in full.
----------------------------------------
<PAGE> 1
EXHIBIT 10.8
AGREEMENT REGARDING SUBLEASE
THIS AGREEMENT REGARDING SUBLEASE (this "Agreement") is entered into
as of the __ day of February, 1998, by and among INFORMIX CORPORATION
("lnformix"), INFORMATICA CORPORATION ("Informatica"), and PALO ALTO BAYSHORE
INVESTORS, LLC ("Owner"), with reference to the following facts:
A. Informix leases certain premises commonly identified as 3350 West
Bayshore Road, Palo Alto, CA (the "Premises") from Owner, pursuant to a certain
Agreement of Lease dated February 22, 1996, as amended March 1, 1996 (the
"Lease").
B. Informatica desires to sublease portions of the Premises from
Informix, pursuant to a Sublease dated January 29,1998 (the "Sublease").
C. Informix has requested Owner's consent to the Sublease pursuant to
the terms and conditions of the Lease, and Owner is willing to provide such
consent, subject to and upon the terms and conditions of this Agreement.
NOW, THEREFORE, the undersigned parties hereby agree as follows:
1. Without relieving Informix from any of its responsibilities,
liabilities and obligations under the Lease, Owner hereby consents to the
execution and delivery of the Sublease and the performance and observance by the
parties thereto of the terms and conditions thereof.
2. Owner agrees that the release and waiver of subrogation provided
in Section 24 of the Lease shall also apply as between Owner and Informatica,
and Informatica agrees that such release and waiver shall also apply as between
Informatica and Owner.
3. Notwithstanding anything in the Sublease to the contrary, the
parties agree that all rents, additional rent, operating expense reimbursements
or other sums payable under the Sublease by Informatica to Informix shall
instead be paid directly to Owner. Such payments shall satisfy the obligations
of Informatica to Informix under the Sublease, and of Informix to Owner under
the Lease, to the extent actually received by Owner. Within fifteen (15) days of
Owner's receipt of such payments by Informatica, Owner shall remit to Informix
such portion of the Informatica payment as is owed to Informix pursuant to the
terms of the Lease.
1
<PAGE> 2
4. Notwithstanding anything in the Sublease to the contrary, the
parties agree that the security deposit (the "Security Deposit") being paid by
Informatica to Informix shall be paid to Owner, and retained, reduced,
reimbursed to Informatica, and/or applied by Owner, pursuant to the terms of
Paragraph 13 of the Sublease and in accordance with applicable law. If
Informatica fails to pay "rent" (as defined in the Sublease) or other charges
due under the Sublease, or otherwise defaults with respect to any provision of
the Sublease, then notwithstanding anything to the contrary contained in this
Agreement, the Lease or the Sublease, the Security Deposit funds shall be
applied by Owner in the following order of priority:
A. First, to satisfy all monthly base rent, additional rent
and any other monetary obligations due and payable by Informix to Owner under
the Lease, but excluding any excess rent due and payable in connection with the
Sublease pursuant to Paragraph 5.B of the Lease.
B. Second, to reimburse Informix for all out-of-pocket costs
and expenses incurred by Informix as a result of any default by Informatica
under the Sublease, including without limitation, attorneys' fees, court costs
and other costs of suit, costs incurred in curing any defaults by Informatica,
and costs incurred by Informix in resubletting the Premises (including without
limitation, brokerage commissions, attorneys' fees and tenant improvement
costs). The reimbursement of such costs and expenses shall be made by Owner
within ten (10) days after its receipt of a written request from Informix (which
request shall include invoices, receipts and any other available supporting
documentation reasonably requested by Owner).
C. Third, any Security Deposit funds remaining after the first
to occur of (i) the releasing and occupancy of all of the Premises by a
replacement subtenant or subtenants, or (ii) the termination of the Master
Lease, shall be applied to reimburse Owner and Informix for any unmitigated
damages (including, without limitation, the loss of any excess rent as
determined under Paragraph 5B of the Lease) each has suffered as a result of
Informatica's default under the Sublease. If any remaining Security Deposit
funds are insufficient to pay all such unmitigated damages, then the remainder
shall be shared by Owner and Informix in proportion to the damage each has
suffered.
5. In consideration of Owner's review of the Sublease and negotiation
and preparation of this Agreement, Informix shall pay Owner the sum of One
Thousand Five Hundred Dollars ($1,500) upon execution of this Agreement by all
parties.
6. The consent of Owner to the Sublease, as provided in this
Agreement shall not be deemed effective until this Agreement has been fully
executed, an original copy and the Sublease have been delivered to Owner, and
Owner has received (i) the first mouth's rent payment from Informatica in the
amount of One Hundred Twenty-Three Thousand Seven Hundred Fifty Dollars
($123,750), (ii) the security deposit in the amount of Three
2
<PAGE> 3
Hundred Fifty-four Thousand Dollars ($354,000), and the Sublease review fee of
One Thousand Five Hundred Dollars ($1,5OO).
IN WITNESS WHEREOF, the undersigned have executed this Agreement as
of the day and year first above written.
INFORMIX:
INFORMIX CORPORATION
By: [SIGNATURE}
---------------------------------
Its:
---------------------------------
INFORMATICA:
INFORMATICA CORPORATION
By: [SIGNATURE]
---------------------------------
Its: CEO
---------------------------------
OWNER:
PALO ALTO BAYSHORE INVESTORS, LLC
a California limited liability company
By: Matteson Real Estate Equities, Inc.
Its Manager
By: [SIGNATURE]
--------------------------------
Its: [TITLE]
--------------------------------
3
<PAGE> 4
SUBLEASE
1. PARTIES. This sublease (this "Sublease") is entered into as of January
29th, 1998 by and between Informix Software, Inc., a Delaware
corporation ("Sublessor") and Informatica Corporation, a California
corporation ("Sublessee").
2. SUBLEASE.
(a) Sublessor hereby subleases to Sublessee, and Sublessee hereby
subleases from Sublessor, for the term, at the rental and upon
all of the conditions set forth herein, the Premises described
below. This Sublease is and shall at all times be subject and
subordinate to the terms and conditions of the Agreement of
Lease dated February 22, 1996, as amended by that certain
Amendment to Lease dated March 1, 1996, between Palo Alto
Bayshore Investors, LLC, successor in interest to Menlo Palo
Alto Investors, as landlord ("Landlord"), and Sublessor, as
tenant (the "Master Lease"). A copy of the Master Lease is
attached hereto as Exhibit A.
(b) Except to the extent set forth below, the terms, conditions and
respective obligations of Sublessor and Sublessee to each other
under this Sublease shall be the terms and conditions of the
Master Lease, and such terms are incorporated into this Sublease
as if fully set forth herein, except for those provisions of the
Master Lease that are directly contradicted by this Sublease, in
which event the terms and conditions of this Sublease shall
control over the Master Lease, and except that: (i) each
reference in such incorporated sections to "Lease" shall be
deemed a reference to "Sublease"; (ii) each reference to the
"Premises" shall be deemed a reference to the Premises then
being subleased hereunder; (iii) each reference to "Landlord"
and "Tenant" shall be deemed a reference to "Sublessor" and
"Sublessee", respectively, except as otherwise expressly set
forth herein; (iv) with respect to work, services, repairs,
restoration, insurance, indemnities, representations, warranties
or the performance of any other obligation of Landlord under the
Master Lease, except as set forth in Section 9 hereof, the sole
obligation of Sublessor shall be to request the same in writing
from Landlord as and when requested to do so by Sublessee, and
to use Sublessor's reasonable efforts (not including the payment
of money, the incurring of liabilities or the filing of legal
proceedings) to obtain Landlord's performance; (v) with respect
to any obligation of Sublessee to be performed under this
Sublease, wherever the Master Lease grants to Sublessor a
specified number of days to perform its obligations under the
Lease, except as otherwise provided herein, Sublessee shall have
one-half of the specified number of days to perform the
obligation, including, without limitation, curing any defaults,
unless the specified number of days is seven (7) or less, in
which case Sublessee shall have three (3) fewer days to perform
the obligation; (vi) with respect to any approval required to be
obtained from the "Landlord" under the Master Lease, such
consent must be obtained from both Landlord and Sublessor, and
the approval of Sublessor may be withheld if Landlord's consent
is not obtained; (vii) in any case where the "Landlord" reserves
or is granted the right to manage, supervise, control, repair,
alter, regulate the use of, enter or use the Premises or any
areas beneath, above or adjacent thereto, such reservation or
grant of right of entry shall be deemed to be for the benefit of
both Landlord and Sublessor; (viii) in an case where "Tenant" is
to indemnify, release or waive claims against "Landlord", such
indemnity, release or waiver shall be deemed to run from
Sublessee to both Landlord and Sublessor; and (ix) in any case
<PAGE> 5
where "Tenant" is to execute and deliver certain documents or
notices to "Landlord", such obligation shall be deemed to run
from Sublessee to both Landlord and Sublessor.
Notwithstanding the foregoing, (a) the following provisions of
the Master Lease shall not be incorporated herein: introductory
paragraph, Sections 1-3, 12, 21 (the last sentence of the first
paragraph only), 22 (the last sentence of subsection (A) and (B)
only), 34, 36 (the first sentence only), 39 (the balance of the
first sentence after the first comma only), 42-47, Exhibit B and
the Amendment to Lease; (b) references in the following
provisions to "Landlord" shall mean Landlord only: Sections
4(B)(i)(the last sentence only), 6(A), 8 (except the first
sentence of subsection (A) and subsection (E)), 9 (except the
fifth and eleventh sentences), 11 (the eighth sentence only),
21(D)(2), 23, 32 (the second and third sentences only) and 36
(the second sentence only); (c) references in the following
provisions to "Landlord" shall mean Landlord and Sublessor:
Sections 5(D), 5(F) (the reference in the eighteenth line only),
8(A)(the first sentence only), 8(E), 9 (the eleventh sentence
only), 11 (the ninth sentence only) and 28; (d) references in
the following provisions to "Landlord" shall mean Landlord or
Sublessor: Sections 5(F) (the reference in the eleventh line
only), 11 (the sixth sentence only), 18, 19 (all but the second
to last reference in the second sentence), 21(D)(1), 22(A), 29,
30 and 37; (e) the "excess" rent under Section 5(B) shall be
payable 50% to Sublessor and 50% to Sublessee, after first
paying to Landlord all amounts due Landlord under the Master
Lease as a result of any sublease by Sublessee (as determined by
Sublessor in its sole discretion); (f) as incorporated herein,
"Tenant's Share of estimated Project Taxes and Expenses" shall
be equal to a fraction, the numerator of which is the square
footage of those portions of the Premises then being subleased
under this Sublease and the denominator of which is the total
square footage of the Building; (g) the subordination in Section
22(A) shall only be subject to Sublessee obtaining
nondisturbance agreements in favor of Sublessee for liens placed
on the Premises by Sublessor, provided Sublessor has obtained a
nondisturbance agreement from Landlord's lender or lessor which
will adequately protect Sublessee's interest in the event of
foreclosure or lease termination; (h) references in Section 24
to insurance shall only apply to property insurance; and (i) in
Section 4(B)(ii), lines 27-29 shall be deleted and replaced with
"including attorneys' fees and costs, to the extent due to
Sublessor's release or emission".
(c) Sublessor does hereby expressly assume and agree to perform and
comply with, for the benefit of Sublessor and Landlord, each and
every obligation of Sublessor under the Master Lease with
respect to the premises then being subleased by Sublessee
hereunder, except to the extent set forth in subsection (b)
hereof. This Sublease is and at all times shall be subject and
subordinate to the Master Lease and the rights of Landlord
thereunder. In the event of a conflict between the provisions of
this Sublease and the Master Lease, as between Sublessor and
Sublessee, the provisions of this Sublease shall control.
3. PREMISES. The "Premises" are in the City of Palo Alto, State of
California, located at 3350 West Bayshore Road ("Building"), and consist
of the following premises: (a) the second floor of the Building,
consisting of approximately 30,000 rentable square feet, as outlined on
the floor plan attached as Exhibit B-1 hereto (the "Second Floor
Premises"); (b) the eastern portion of the first floor of the of the
Building consisting of approximately 15,000 rentable square feet, as
outlined on the floor plan attached hereto as Exhibit B-2 hereto (the
"East First Floor Premises"); and (c) the western portion of the first
floor
-2-
<PAGE> 6
of the Building consisting of approximately 15,000 rentable square feet,
as outlined on the floor plan attached hereto ad Exhibit B-3 (the "West
First Floor Premises"). The Second Floor Premises and the East First
Floor Premises shall be collectively referred to herein as the "Initial
Premises".
4. TERM.
(a) The term of this Sublease (the "Term") and the duty to pay rent
as to the Initial Premises shall both commence on the later of
(i) January 21, 1998, (ii) the fifth business day after the date
Landlord delivers its written consent to this Sublease and (iii)
the date Sublessor has delivered the keys for the Initial
Premises to Sublessee and removed Sublessor's personal property
from the Initial Premises (the "Commencement Date"). The Term
and the duty to pay rent shall both commence as to the West
First Floor Premises on the later of (i) July 1, 1999 and (ii)
the date Sublessor has delivered the keys for the West First
Floor Premises to Sublessee and removed Sublessor's personal
property from the West First Floor Premises. The Term as to the
entire Premises shall end on January 31, 2001, unless sooner
terminated pursuant to any provision hereof.
(b) If Sublessor permits Sublessee to occupy any Premises prior to
the Commencement Date, such occupancy (i) shall be subject to
all of the provisions of this Sublease, except for the
obligation to pay rent; and (ii) shall not advance the
expiration date of this Sublease.
(c) If Sublessor fails to deliver possession of any of the Premises
to Sublessee for any reason on the dates set forth in subsection
(a) hereof, Sublessor shall not be subject to any liability
therefor, nor shall such failure affect the validity of this
Sublease or the obligations of Sublessee hereunder or extend the
term hereof. However, Sublessee shall not be obligated to pay
any rent until possession of the Premises is offered to
Sublessee. By taking possession of the Premises, Sublessee
conclusively shall be deemed to have accepted the Premises in
their as-is, then-existing condition, without any warranty
whatsoever of Sublessor with respect thereto, except as
expressly set forth in this Sublease. Notwithstanding the
foregoing, if the Initial Premises are not delivered to
Sublessee by March 15, 1998, Sublessee may terminate this
Sublease by giving written notice of termination to Sublessor at
any time prior to such delivery.
5. BASE RENT.
(a) Sublessee shall pay to Sublessor base rent for the Premises ("Base
Rent") in the following amounts, in equal monthly installments, in
advance, on the first day of each month during the Term:
<TABLE>
<CAPTION>
APPROXIMATE SQUARE
PERIOD FOOTAGE OF PREMISES MONTHLY RENT
------ ------------------- ------------
<S> <C> <C>
To 1/31/99 45,000 $123,750
2/1/99-6/30/99 45,000 $128,250
7/1/99-1/31/00 60,000 $171,000
2/1/00-1/31/01 60,000 $177,000
</TABLE>
-3-
<PAGE> 7
Base Rent for any period during the Term which is for less than one
month shall be a pro rata portion of the monthly installment. Base
Rent shall be payable without notice or demand and without any
deduction, offset, or abatement, in lawful money of the United State
of America to Sublessor at the Sublessor's address stated herein or
at such other place as Sublessor may designate in writing. In
addition, Sublessee shall be liable for, and shall pay when due, all
additional costs and expenses required of Sublessor with respect to
the Premises then subleased under this Sublease under the Master
Lease. During the period prior to the commencement of the Term of the
West First Floor Premises, Sublessee shall be responsible for a pro
rata portion of the total expenses payable by Sublessor under the
Master Lease equal to a fraction, the numerator of which is the
square footage of the Premises then subleased under this Sublease and
the denominator of which is the total square footage of the premises
leased by Sublessor under the Master Lease. Sublessee shall reimburse
Sublessor for its pro rata share of maintenance, janitorial costs,
insurance expenses, security costs and other services which are
incurred by Sublessor for the Common Areas or for operation of the
building in which the Premises are located. All such costs and
expenses shall be deemed "Additional Rent," which together with the
Base Rent is referred to herein as "rent."
(b) Upon execution hereof by Sublessee, Sublessee shall pay to
Sublessor the sum of One Hundred Twenty-Three Thousand Seven
Hundred Fifty Dollars ($123,750), which shall constitute Base
Rent for the first month of the Term.
6. IMPROVEMENTS.
(a) As of the date hereof, to Sublessor's actual knowledge, the roof
of the Building is in water-tight condition. As of the
Commencement Date, the electrical, plumbing, lighting and
heating, ventilating and air conditioning systems serving the
Premises shall be in good, working condition. The parties
acknowledge and agree that Sublessee is subleasing the Premises
on an "as is" basis, and that Sublessor has made no
representations or warranties with respect to the condition of
the Premises except as set forth in this paragraph. Except as
expressly set forth in this Sublease, Sublessor shall have no
obligation whatsoever to make or pay the cost of any
alterations, improvements or repairs to the Premises, including,
without limitation, any improvement or repair required to comply
with any law, regulation, building code or ordinance (including
the Americans with Disabilities Act of 1990). Sublessee shall
look solely to Landlord for performance of any repairs required
to be performed by Landlord under the terms of the Master Lease.
In no event shall Sublessee be responsible for performing
structural repairs to the Premises except to the extent set
forth in Section 6(A) of the Master Lease (as incorporated
herein).
(b) All Sublessee improvements are subject to the prior written
approval of Landlord and Sublessor and shall be performed by
Sublessee in accordance with the provisions of the Master Lease.
Sublessee shall, subject to the terms of the Master Lease, be
responsible for any restoration costs to the Premises, to the
extent such costs are attributable to Sublessee's improvements.
-4-
<PAGE> 8
7. INDEMNIFICATION.
(a) Sublessee shall indemnify, defend, protect and hold Sublessor
and Landlord harmless against all losses, costs, liabilities,
damages, claims and the expense of defending the same, to the
extent resulting from the act, failure to act, negligence or
other fault of Sublessee or its agents, employees, contractors,
licensees or invitees. Sublessee further agrees to indemnify,
defend, protect and hold harmless Sublessor and Landlord against
any and all losses, costs, liabilities, damages and claims by or
on behalf of any persons, firm or corporation arising from the
conduct or management of any work done by Sublessee in or about
the Premises or from any transaction of Sublessee concerning the
Premises, and will further indemnify, defend, protect and hold
Sublessor and Landlord harmless against and from any and all
losses, costs, liabilities, damages and claims to the extent
arising from any breach or default on the part of Sublessee
under this Sublease.
(b) Sublessor shall indemnify, defend, protect and hold Sublessee
harmless against all losses, costs, liabilities, damages, claims
and the expense of defending the same, to the extent arising
from any breach or default on the part of the Sublessor under
this Sublease.
(c) The indemnifications in this section shall survive termination
of this Sublease.
8. PARKING. Sublessee may use a pro rata portion of the parking spaces
allocated to Sublessor under the Master Lease equal to a fraction, the
numerator of which is the square footage of the Premises then Subleased
by Sublessee under this Sublease, the denominator of which is the square
footage of the premises leased by Sublessor under the Master Lease.
9. REPAIRS AND MAINTENANCE. During the Term, Sublessor shall use
commercially reasonable efforts to cause Landlord to perform all of its
maintenance, repair and replacement responsibilities under the Master
Lease. Such reasonable efforts shall include, without limitation: (a)
upon Sublessee's written request, promptly notifying Landlord of its
nonperformance under the Master Lease, and requesting that Landlord
perform its obligations under the Master Lease; and (b) if Landlord's
failure to perform materially interferes with Sublessee's use of the
Premises and the commencement of legal proceedings is necessary under
the circumstances (as determined in Sublessor's reasonable discretion),
the commencement and prosecution of legal proceedings in the name of
Sublessor or otherwise against Landlord, with counsel reasonably
satisfactory to Sublessee. Sublessor shall coordinate any such
enforcement proceedings with Sublessee, but control of such proceedings
shall be with Sublessor. Sublessee shall pay all costs incurred by
Sublessor in connection with its efforts to obtain Landlord's
performance, and shall indemnify, defend, protect and hold harmless
Sublessor from all costs, claims, liabilities and damages (including
reasonable attorneys' fees) associated therewith. Sublessee shall be
responsible for all the maintenance and repair of the Premises as
required of the "Tenant" under the Master Lease.
10. DEFAULT BY SUBLESSEE.
(a) Notwithstanding any conflicting terms of the Master Lease, the
occurrence of any one or more of the following matters, in
addition to the terms stated in Section 14(A) of the Master
Lease,
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<PAGE> 9
as incorporated herein, shall also constitute a default by
Sublessee under this Sublease (an "Event of Default"):
(i) Sublessee's failure to pay rent within three (3) business
days after receipt of written notice of such failure to pay on
the due date, provided however, if Sublessor has given Sublessee
notice three (3) times, no further notice shall be required of
rent not paid on the due date;
(ii) Sublessee's failure to observe or perform any other
covenant, agreement, condition or provision of this Sublease or
the Master Lease, if such failure shall continue for twenty (20)
days after receipt of written notice from Sublessor to
Sublessee, except that if such default cannot be cured within
such twenty (20) day period, it shall not be considered a
default if Sublessee commences to cure such default within five
(5) days after such notice is given, gives Sublessor a weekly
report of Sublessee's actions to cure the default and proceeds
diligently to effect such cure.
(iii) Sublessee's assignment of this Sublease or sublet of any
portion of the Premises without the prior written consent of
Sublessor and Landlord.
(iv) If Sublessee shall be dispossessed by or under authority
other than Sublessor, or if Sublessee shall file a voluntary
petition in bankruptcy, or file any petition or institute any
proceeding under any insolvency or bankruptcy act, or if a
receiver or trustee shall be appointed for the assets of
Sublessee or the Premises, or if any action shall be filed for
the reorganization of Sublessee.
(b) If an Event of Default by Sublessee occurs, Sublessor shall have
all the rights and remedies described in Section 14(B) of the
Master Lease with respect to Sublessee, Sublessee's occupancy of
the Premises and this Sublease and by applicable law.
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<PAGE> 10
11. NOTICES. Any notice by either party to the other shall be in writing and
shall be deemed to be duly given only if delivered personally or sent by
registered or certified mail, return receipt requested, or overnight
delivery service, to the following address:
If to Sublessee: If to Sublessor:
Informatica Corporation Informix Software, Inc.
3350 West Bayshore Road 4100 Bohannon Drive
Palo Alto, CA 94303 Menlo Park, CA 94025
Attn.: Chief Financial Officer Attn.: General Counsel
and to:
Informix Software, Inc.
4100 Bohannon Drive
Menlo Park, CA 94025
Attn.: Director, Real Estate &
Facilities
(Two Separate Notices Required)
Notice shall be deemed to have been given on the date received, if
delivered personally or by overnight delivery service, or, if mailed,
three (3) business days after the date marked. Unless at least five (5)
days' prior written notice is given in the manner set forth in this
paragraph, the address of each party for all purposes connected with
this Sublease shall be the address set forth above. All notices given to
Landlord shall be considered received only when delivered in accordance
with the Master Lease.
12. BROKER'S FEES. The Parties represent to each other that they are each
represented by agents as follows: Sublessor by Cushman & Wakefield and
Sublessee by BT Commercial. Each party agrees to hold the other party
harmless from and against all claims for brokerage commissions, finder's
fees or other compensation made by any other agent, broker, salesman or
finder as a consequence of said party's actions or dealings with such
agent, broker, salesman, or finder.
13. SECURITY DEPOSIT. Sublessee shall pay to Sublessor, upon execution of
this Sublease, the sum of Three Hundred Fifty-Four Thousand Dollars
($354,000), in cash or in the form of a letter of credit in form and
from a bank reasonably acceptable to Sublessor, which shall be held as a
security deposit under this Sublease (the "Security Deposit"). If
Sublessee fails to pay rent or other charges due hereunder or otherwise
defaults with respect to any provision of this Sublease, then Sublessor
may draw upon, use, apply or retain all or any portion of the Security
Deposit for the payment of any rent or other charge in default, for the
payment of any other sum which Sublessor has become obligated to pay by
reason of Sublessee's default, or to compensate Sublessor for any loss
or damage which Sublessor has suffered thereby. If Sublessor so uses or
applies all or any portion of the Security Deposit, then Sublessee,
within ten (10) days after demand therefor, shall deposit cash with
Sublessor in the amount required to restore the Security Deposit to the
full amount stated above. In the event that Sublessee defaults under
this Sublease, Sublessee shall immediately thereafter deposit and
maintain the Security Deposit in cash. Provided Sublessee has not
defaulted under this Sublease, the amount of the Security Deposit
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<PAGE> 11
shall be reduced to One Hundred Seventy-Seven Thousand Dollars
($177,000) upon Sublessee's presentation of evidence reasonably
satisfactory to Sublessor that Sublessee has experienced a profit in two
(2) consecutive fiscal quarters, including, without limitation,
financial statements certified by the Chief Financial Officer of
Sublessee and, if audited financial statements are available, certified
by an independent certified public accountant. Notwithstanding the
foregoing, if audited financial statements are not available at the time
Sublessee receives a reduction in its Security Deposit as set forth
herein, Sublessee shall deliver to Sublessor financial statements for
the applicable period certified by an independent certified public
accountant as soon as audited financial statements are available. If
such audited financial statements do not show that Sublessee experienced
a profit in two (2) consecutive fiscal quarters, the amount of the
Security Deposit shall immediately be returned to Three Hundred
Fifty-Four Thousand Dollars ($354,000) and Sublessee shall promptly
deposit with Sublessor funds adequate to restore the amount of the
Security Deposit to Three Hundred Fifty-Four Thousand Dollars
($354,000).
14. USE. Sublessee shall not use, store, transport or dispose of any Toxic
Materials (as defined in the Master Lease) in or about the Premises
except for standard office products in amounts normally found in general
offices.
15. SIGNAGE. Subject to the prior written consent of Sublessor (which
consent shall not be unreasonably withheld) and Landlord and compliance
with the provisions of Section 45 of the Master Lease, Sublessee shall
have the right to display its corporate name and logo near the entrance
to the Premises on a monument sign and on the Building facade in a
manner similar to Sublessor's existing signage.
16. OPTION TO EXTEND.
(a) Sublessor hereby grants to Sublessee one (1) option (the
"Option") to extend the Term, for an additional term of two (2)
years and four (4) months (or the earlier termination of the
Master Lease), commencing when the current Term expires, upon
the terms and conditions set forth in this section. Provided
Sublessee is not in default under this Sublease and has not
defaulted under this Sublease more than three (3) times in the
previous twelve (12) month period, Sublessee may exercise such
option by giving Sublessor written notice of its intention not
less than one hundred fifty (150) days prior to the expiration
of the current Term of this Sublease. If this Option is
exercised, the Base Rent for the Premises shall be as follows:
<TABLE>
<CAPTION>
APPROXIMATE SQUARE
PERIOD FOOTAGE OF PREMISES MONTHLY RENT
------ ------------------- ------------
<S> <C> <C>
2/1/01-1/31/02 60,000 $183,000
2/1/02-5/23/03 60,000 $189,000
</TABLE>
All other terms and conditions contained in this Sublease, as
the same may be amended from time to time by the parties in
accordance with the provisions of this Sublease, shall remain in
full force and effect and shall apply during the Option term.
The extension of the Term contained herein shall be exercisable
only to all of the Premises subleased under this Sublease.
(b) Notwithstanding any of the foregoing, Sublessor shall have the
right to terminate Sublessee's
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<PAGE> 12
right to exercise the foregoing Option by delivering to
Sublessee written notice of its intent to terminate such Option
no later than one hundred eighty (180) days prior to the
expiration of the current Term.
17. EFFECT OF CONVEYANCE. As used in this Sublease, the term "Sublessor"
means the holder of the tenants interest under the Master Lease. In the
event of any assignment, transfer or termination of the tenant's
interest under the Master Lease, which assignment, transfer or
termination may occur at any time during the Term hereof in Sublessor's
sole discretion, and provided the transferee has assumed Sublessor's
obligations hereunder in writing, Sublessor shall be and hereby is
entirely relieved of all covenants and obligations of Sublessor
hereunder, and it shall be deemed and construed, without further
agreement between the parties, that any transferee has assumed and shall
carry out all covenants and obligations thereafter to be performed by
Sublessor hereunder. Sublessor may transfer and deliver any security of
Sublessee to the transferee of the tenant s interest under the Master
Lease, and thereupon Sublessor shall be discharged from any further
liability with respect thereto.
18. CONSENT OF LANDLORD. This Sublease and Sublessor's and Sublessee's
obligations hereunder are conditioned upon (i) the written consent of
Landlord and (ii) Landlord's agreement to waive subrogation rights for
the benefit of Sublessee consistent with the waiver in Section 24 of the
Master Lease. If Sublessor fails to obtain Landlord's consent and waiver
by March 9, 1998 then Sublessor or Sublessee may terminate this Sublease
by giving the other party written notice thereof, and Sublessor shall
return to Sublessee its payment of the first month's Base Rent paid by
Sublessee and the Security Deposit. If requested by Landlord, Sublessee
shall promptly agree to waive subrogation rights against Landlord as set
forth in Section 24 hereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Sublease as of the date above written.
INFORMIX SOFTWARE, INC., INFORMATICA CORPORATION,
a Delaware corporation a California corporation
By: [SIGNATURE] By: [SIGNATURE]
---------------------------- --------------------------------------
Title: Title: VICE PRESIDENT, FINANCE
------------------------- -----------------------------------
Date: Date: JAN 29, 1998
-------------------------- ------------------------------------
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<PAGE> 13
EXHIBIT A
MASTER LEASE
<PAGE> 14
AGREEMENT OF LEASE
THIS LEASE is entered into as of February 22, 1996, between MENLO
PALO ALTO INVESTORS, a general partnership ("Landlord") and INFORMIX SOFTWARE,
INC., a Delaware corporation ("Tenant").
PREMISES
1. Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, upon
the terms and conditions hereinafter set forth, those premises (hereinafter
"Premises") comprised of the entire building, which includes approximately
60,000 rentable square feet as shown on Exhibit A attached hereto, known as 3350
West Bayshore Road, Palo Alto, California 94303 (hereinafter "the Building").
The Building is located on that real property commonly known as PALO ALTO PLACE
(hereinafter "the Project"), which includes one building, adjacent parking
areas, landscaping and related improvements.
LEASE TERM
2. A. TERM. The term of this Lease shall be seven (7) years commencing on
the Commencement Date, as defined below.
B. COMMENCEMENT DATE. The Commencement Date of this Lease shall be the
earlier to occur of the following:
(i) Substantial completion of the Tenant Improvements and other work
to be constructed or installed by Tenant pursuant to Exhibit B ("Tenant
Improvements");
(ii) Ninety (90) days after execution and delivery of this Lease by
the parties hereto; or
(iii) the date Tenant commences business operations from the
Premises.
C. COMMENCEMENT DATE MEMORANDUM. When the actual Commencement Date is
determined, the parties shall execute a Commencement Date Memorandum setting
forth such date in the form attached hereto as Exhibit C.
RENT
3. Tenant agrees to pay to Landlord as monthly base rent for the Premises during
the initial seven (7) years of the lease term the amount of $96,000 per month.
Monthly rent shall be payable in advance on the first day of the term of this
Lease and on the first day of each calendar month thereafter during the term,
except that if the first day of the term shall not be the first day of the
month, the rental for any partial months at the beginning and the end of the
term shall be appropriately prorated. All installments of rent shall be paid at
the office of Landlord, or at such other place as may be designated in writing
from time to time by Landlord, in lawful money of the United States and without
deduction or offset for any cause whatsoever. The first month's rent due
hereunder shall be paid to Landlord upon execution of this Lease.
All other sums which are to be paid to Landlord by Tenant pursuant to the terms
of this Lease shall be deemed additional rent, and shall be paid by Tenant to
Landlord within 10 days after receipt by Tenant of a billing, therefor or at
such other time as is specifically provided in this Lease. As additional rent,
Tenant shall pay Tenant's Share of Project Taxes and Operating Expenses as
provided in Paragraph 21 hereof.
<PAGE> 15
USE
4. A. TENANT USE. The Premises are to be used for general office
purposes and for other incidental and legal uses appropriate for Tenant to
conduct its business (provided, however, that Tenant conforms to all applicable
city, county, state, and federal laws, regulations and ordinances in connection
with Tenant's particular business and use and occupancy of the Premises), and
for no other business or purpose without the written consent of Landlord.
B. COMPLIANCE.
(i) Tenant shall not use the Premises or suffer or permit
anything to be done in or about the Premises which will in any way conflict with
any law, statute, zoning restriction, ordinance or governmental law, rule,
regulation or requirement of duly constituted public authorities now in force or
which may hereafter be in force, or the requirements of the Board of Fire
Underwriters or other similar body now or hereafter constituted relating to or
affecting the condition, use or occupancy of the Premises. Tenant shall not
commit any public or private nuisance or any other act or thing which might or
would disturb the quiet enjoyment of any other tenant of Landlord or any
occupancy of nearby property. Tenant shall place no loads upon the floors, walls
or ceilings in excess of the maximum designed load determined by Landlord or
which endanger the structure; nor place any harmful liquids in the drainage
systems; nor dump or store waste materials or refuse or allow such to remain
outside the Building proper, except in the enclosed trash areas provided. Tenant
shall not store or permit to be stored or otherwise placed any other materials
of any nature whatsoever outside the Building. Tenant shall, at its own cost and
expense, promptly and properly observe and comply with, including the making by
Tenant of any Alteration (as defined in Paragraph 6 below) to the Premises or
any change to the Tenant Improvements, all present and future orders,
regulations, directions, rules, laws, ordinances, and requirements of all
governmental authorities (including, without limitation, state, municipal,
county and federal governments and their departments, bureaus, boards and
officials) arising from the use or occupancy of, or applicable to, the Premises
or privileges appurtenant to or in connection with the enjoyment of the
Premises. Notwithstanding the foregoing, except for alterations, improvements,
costs, expenses and liabilities arising out of Tenant's specific business or use
of the Premises or arising out of Tenant's installations, alterations or
improvements to the Premises, which shall be at Tenant's sole cost, Landlord
shall bear the cost of compliance with the requirements of the Americans with
Disabilities Act, Title 24, seismic code and any other applicable building code
applicable to (a) the foundation, floor slab, roof, and structural components of
the Premises, and (b) the portions of the Building retained for future
multi-tenant common use of restrooms, lobby and common corridors; provided,
however, that Landlord shall only be obligated to bear such costs to the extent
such costs exceed the amount to be borne by Tenant for the Common Improvements,
as provided in Exhibit B hereto.
(ii) In particular, Tenant, at its sole cost, shall comply with
all laws relating to the storage, use, generation, transportation, disposal and
release of hazardous, toxic or radioactive matter and asbestos, including those
materials identified in Sections 66680 through 66685 of Title 22 of the
California Administrative Code, Division 4, Chapter 30 ("Title 22"), as they
may be amended from time to time (collectively, "Toxic Materials"). If Tenant
does store, use, generate, transport or dispose of any Toxic Materials, Tenant
shall notify Landlord in writing at least ten (10) days prior to their first
appearance on the Premises. Tenant shall defend, indemnify and hold Landlord and
its Agents harmless from and against all claims, costs and liabilities,
including attorneys' fees and costs, arising out of or in connection with
Tenant's storage, use, generation, transportation, disposal or release of Toxic
Materials, including without limitation, any such claims, costs, damages and
liabilities, including attorneys' fees and costs, arising out of or in
connection with any investigation, testing, removal, clean-up and/or restoration
services, work, materials and equipment necessary to return the Premises and any
other property of whatever nature to their condition existing prior to
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<PAGE> 16
Tenant's or its Agents' use, storage, generation, transport, disposal or release
of the Toxic Materials in, on or around the Premises or the Project, and to
otherwise satisfactorily investigate and remediate the contamination arising
therefrom. Tenant's obligations hereunder shall survive the termination of this
Lease. If at any time during or after the term of this Lease, as it may be
extended, Tenant becomes aware of any inquiry, investigation, administrative
proceeding, or judicial proceeding by any governmental agency regarding the
storage, use or disposition of any Toxic Materials by Tenant or its Agents on or
about the Premises or the Project, Tenant shall within five (5) days after first
learning of such inquiry, investigation or proceeding give Landlord written
notice advising Landlord of same. Landlord shall defend, indemnify and hold
Tenant and its Agents harmless from and against all claims, costs and
liabilities, including attorneys' fees and costs, arising out of the presence of
Toxic Materials existing in, on or about the Premises or the Building prior to
the date of this Lease, or in connection with Landlord's storage, use,
generation, transportation, disposal or release of Toxic Materials, including
without limitation any such claims, costs, damages and liabilities, including
attorneys' fees and costs, arising out of or in connection with any
investigation, testing, removal, cleanup and/or restoration services, work,
materials and equipment necessary to return the Premises to their condition
existing prior to Landlord's use, storage, generation, transport, disposal or
release of Toxic Materials in, on or around the Premises or the Project.
ASSIGNMENT AND SUBLETTING
5. A. Tenant shall not sell, assign, mortgage, encumber or transfer (herein
collectively called "assign") this Lease, sublet the Premises or any part
thereof, or allow any other person (excepting Tenant's agents and employees) to
occupy the Premises or any portion thereof, without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. Tenant shall give
Landlord advance written notice of any assignment or subletting to one of its
subsidiary or affiliated corporations (meaning any corporation which controls,
is controlled by, or is under common control with Tenant), and provided that any
such assignee or sublessee assumes, in full, the obligations of Tenant under
this Lease pursuant to a written instrument reasonably acceptable to Landlord,
Landlord's consent shall not be required to such an assignment or subletting. If
Tenant desires to assign this Lease or to sublet any part or all of the Premises
for any part of the term hereof, Tenant shall so advise Landlord by written
notice to Landlord. Said notice shall state the proposed commencement date of
the desired assignment or subletting (which shall not be less than twenty (20)
days nor more than ninety (90) days after the date of Tenant's notice), all
material terms of the proposed sublease or assignment, the name and address of
the proposed assignee or subtenant, and Tenant shall deliver to Landlord with
said notice a true and complete copy of all agreements relating to the proposed
assignment or sublease (including the proposed assignment or sublease agreement)
together with current complete financial statements of the proposed assignee or
subtenant. Thereafter, Tenant shall immediately furnish Landlord with any other
information concerning the proposed assignee or subtenant as Landlord shall
request. Landlord may grant its consent on reasonable conditions, including but
not limited to a condition that rentals and other payments under sublease shall
be paid directly to Landlord.
B. To the extent that rent payable under any sublease exceeds the rent
payable by Tenant hereunder, such excess shall be shared equally between
Landlord and Tenant, after deducting Landlord's and Tenant's reasonable costs
and expenses incurred in connection with such subletting.
C. Any assignment or subletting hereunder by Tenant shall not result in
Tenant being released or discharged from any liability under this Lease. As a
condition to Landlord's prior written consent as provided for in this paragraph,
the assignee or subtenant or subtenants shall agree in writing to comply with
and be bound by all of the terms, covenants, conditions, provisions and
agreements of this Lease, and Tenant shall deliver to Landlord, promptly after
execution, an executed copy of each sublease and an agreement of said compliance
by each assignee or sublessee.
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<PAGE> 17
D. If Landlord consents to any such subletting or assignment, Tenant
shall pay to Landlord the amount of all Landlord's actual costs of processing
such proposed assignments or subletting (including, without limitation, the
costs of attorney's and other professional fees and administrative, accounting
and clerical time), and the amount of any and all direct and indirect expense
incurred by Landlord arising from the assignee or sublessee taking occupancy
(including without limitation freight elevator operation for moving of
furnishings and trade fixtures).
E. Any sale, assignment, mortgage, transfer of this Lease or subletting
which does not comply with the provisions of this paragraph shall be void and,
at the option of Landlord, shall terminate this Lease.
F. Without limiting the other instances in which it may be reasonable for
Landlord to withhold Landlord's consent to an assignment or subletting, Landlord
and Tenant acknowledge that it shall be reasonable for Landlord to withhold
Landlord's consent in the following instances: the use of the Premises by such
proposed assignee or subtenant would not be a permitted use under Paragraph 4
hereof; the proposed assignee or subtenant is not in compliance with Paragraph
35 hereof (Financial Covenants)(which provisions shall be applicable to such
assignee or subtenant as though such entity were tenant hereunder); the proposed
assignee or subtenant is a governmental agency; the proposed assignee or
subtenant does not have a good reputation as a tenant of property; the proposed
assignee or subtenant is a corporation, partnership, etc. with whom Landlord is
negotiating to lease space in the Building; the assignment or subletting would
entail any alterations which would lessen the value of the leasehold
improvements in the Premises; or Tenant is in default of any obligation of
Tenant under the Lease (beyond the applicable cure period for cure of the
default specified in Paragraph 14 hereof), or Tenant has defaulted under
economic terms of the Lease on three (3) or more occasions during the twelve
(12) months preceding the date that Tenant shall request consent. Any assignment
or subletting of the Premises shall also be subject to the prior written consent
of Landlord's first lien mortgagee, currently Aetna Life Insurance Company
("Lender").
G. If Tenant is a corporation, a transfer of corporate shares by sale,
assignment, bequest, inheritance, operation of law or other disposition
(including such a transfer to or by a receiver or trustee in federal or state
bankruptcy, insolvency or other proceedings), so as to result in a change in the
present control of such corporation or any of its parent corporations by the
person or persons owning a majority of said corporate shares, shall constitute
an assignment for purposes of the Lease.
H. If Tenant is a partnership, joint venture or other incorporated
business form, a transfer of the interest of persons, firms or entities
responsible for managerial control of Tenant by sale, assignment, bequest,
inheritance, operation of law or other disposition, so as to result in a change
in the present control of said entity and/or a change in the identity of the
persons responsible for the general credit obligations of said entity shall
constitute an assignment for all purposes of this Lease.
REPAIRS, MAINTENANCE AND ALTERATIONS
6. A. LANDLORD'S OBLIGATIONS. Landlord, at Landlord's expense, shall keep
in good order, condition and repair the structural parts of the Building, which
structural parts include only the foundation, exterior walls (excluding the
interior of all walls and the exterior and interior of all windows, doors,
plateglass, showcases and interior ceiling), exterior painting, roof and
subflooring of the Building, except for any damage thereto caused by the
negligence or willful acts or omissions of Tenants or its Agents, or by reason
of the failure of Tenant to perform or comply with any terms, conditions or
covenants in this Lease, or caused by Alterations made by Tenant or its Agents.
B. TENANT'S OBLIGATIONS. Tenant agrees by taking possession of the
Premises as herein set forth that such Premises are then in a tenantable and
good condition and conform with the requirements of this Lease, that Tenant will
repair and maintain the
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<PAGE> 18
Premises, including without limitation, all plumbing and sewage facilities
within the Premises, fixtures, interior walls, floors, ceilings, windows, store
front, doors, entrances, plateglass, showcases, skylights, all electrical
facilities and equipment, including lighting fixtures, lamps, heating,
ventilation and air conditioning equipment, fans and any exhaust equipment and
systems, any automatic fire extinguisher equipment within the Premises,
electrical motors and all other appliances and equipment of every kind and
nature located in, upon or about the Premises. All glass, both interior and
exterior, is at the sole risk of Tenant, and any broken glass shall promptly be
replaced by Tenant and at Tenant's expense with glass of the same kind, size and
quality. If any condition arises in the Premises or the Project which may be
unsafe or dangerous to persons or property in the Project, Tenant shall
immediately notify Landlord of such condition, regardless of whether the
obligation to repair such condition is Tenant's obligation or Landlord's
obligation. Tenant shall, at its own expense, provide, install and maintain in
good condition all of its trade fixtures, furniture, equipment and other
personal property ("Tenant's Personal Property") required in the conduct of its
business in the Premises. As part of the consideration for rental hereunder,
Tenant agrees that all alterations, improvements, repairs or maintenance of the
Premises shall, except as otherwise herein agreed, be made either by or under
the direction of Landlord but at the expense of Tenant (including a reasonable
charge for Landlord's overhead and administration, not to exceed an amount equal
to four percent (4%) of the cost of the subject work) and Tenant hereby waives
the provisions of Subdivision (1) of Section 1932 and of Sections 1941 and
1941.1 of the Civil Code of California, and all rights to make repairs at
Landlord's expense under the provisions of Section 1942 and 1942.1 of said Civil
Code or any other provision of law. In addition, Tenant agrees that it shall not
be permitted to make any structural, exterior alterations, improvements, repairs
or maintenance to the Premises without the prior written consent of Lender,
which consent Lender has represented to Tenant shall not be unreasonably
withheld or delayed. Unless otherwise provided by written agreement, all
alterations, improvements and changes that may be permitted by Landlord shall at
the termination of the Lease become the property of Landlord, and shall remain
upon and be surrendered with the Premises, provided however, that at Landlord's
option Tenant shall, at Tenant's expense, when surrendering the Premises,
restore the same to their original condition at the commencement of this Lease,
provided that Landlord has stipulated at the time of approval that such
restoration is required at the expiration or earlier termination of the Lease.
Tenant shall not be obligated by this provision to remove the initial
improvements made to the Premises in accordance with Exhibit B hereof. Tenant
shall, at the termination of this Lease, by the expiration of time or otherwise,
surrender and deliver up the Premises to Landlord in as good condition as when
received by Tenant from Landlord, reasonable wear and tear excepted. Tenant
shall pay for all damage to the Building, the Project, or appurtenant areas or
equipment, as well as all damage to tenants or occupants thereof or their
property caused by Tenant or by any person who may be in or around the Premises
with the consent of Tenant.
TRADE FIXTURES
7. Subject to the provisions of Paragraphs 4 and 6 hereof, Tenant may
install and maintain its trade fixtures on the Premises, provided that such
fixtures, by reason of the manner in which they are affixed, do not become an
integral part of the Building or Premises. Tenant, if not in default hereunder,
may at any time or from time to time during the term hereof, or upon the
expiration or termination of this Lease, alter or remove any such trade fixtures
so installed by Tenant. If not so removed by Tenant on or before the expiration
or termination of this Lease, Tenant, upon the request of Landlord, shall remove
the same. Any damage to the Premises caused by any such installation, alteration
or removal of such trade fixtures shall be promptly repaired at the expense of
Tenant.
DESTRUCTION
8. A. GENERAL. If the Premises or the Building should be damaged or
destroyed by fire or other casualty, Tenant shall give immediate written notice
thereof to
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<PAGE> 19
Landlord. Within thirty (30) days after Landlord's receipt of such notice,
Landlord shall notify Tenant whether in Landlord's reasonable opinion repairs to
or rebuilding of the Premises or the Building, as the case may be, can
reasonably be completed either: (1) within ninety (90) days; (2) in more than
ninety (90) days but in less than one hundred eighty (180) days; or (3) in more
than one hundred eighty (180) days from the date of such notice. Landlord's
determination shall be binding on Tenant.
B. LESS THAN 90 DAYS. If the Premises or the Building should be damaged
by fire or other casualty but only to such extent that rebuilding or repairs can
in Landlord's estimation be reasonably completed within ninety (90) days after
the date of such notice, this Lease shall not terminate, and provided that
insurance proceeds are available to fully repair the damage, Landlord shall
proceed to rebuild and repair the Premises to substantially the condition in
which they existed prior to such damage, except that Landlord shall not be
required to rebuild, repair or replace any part of the partitions, fixtures,
additions and other leasehold improvements which may have been placed in, on or
about the Premises. If the Premises are untenantable in whole or in part
following such damage, the Rent payable hereunder during the period in which
they are untenantable shall be abated proportionately.
C. GREATER THAN 90 DAYS. If the Premises or the Building should be damaged
by fire or other casualty but only to such extent that rebuilding or repairs can
in Landlord's estimation be reasonably completed in more than ninety (90) days
but in less than one hundred eighty (180) days after the date of such notice,
then Landlord shall have the option of either: (1) terminating the Lease
effective upon the date of the occurrence of such damage, in which event the
Rent payable hereunder shall be abated during the unexpired portion of the
Lease; (2) electing to rebuild or repair the Premises to substantially the
condition in which they existed prior to such damage provided that insurance
proceeds are available to fully repair the damage, except that Landlord shall
not be required to rebuild, repair or replace any part of the partitions,
fixtures, additions and other improvements which may have been placed in, on or
about the Premises. If the Premises are untenantable in whole or in part
following such damage, the Rent payable hereunder during the period in which
they are untenantable shall be abated proportionately, but only to the extent of
rental abatement insurance proceeds received by Landlord during the time and to
the extent the Premises are unfit for occupancy. In the event that Landlord
should fail to complete such repairs and rebuilding within one hundred eighty
(180) days after the date upon which Landlord is notified by Tenant of such
damage, such period of time to be extended for delays caused by the fault or
neglect of Tenant or because of acts of God, acts of public agencies, labor
disputes, strikes, fires, freight embargoes, rainy or stormy weather, inability
to obtain materials, supplies or fuels, or any other causes or contingencies
beyond the reasonable control of Landlord, Tenant may, at Tenant's option,
within thirty (30) days after the expiration of such one hundred eighty (180)
day period (as such period may be extended), terminate this Lease by delivering
written notice of termination to Landlord as Tenant's exclusive remedy,
whereupon all rights hereunder shall cease and terminate thirty (30) days after
Landlord's receipt of such termination notice.
D. GREATER THAN 180 DAYS. If the Premises or the Building should be so
damaged by fire or other casualty that rebuilding or repairs cannot in
Landlord's estimation be completed within one hundred eighty (180) days after
the date upon which Landlord is notified by Tenant of such damage, this Lease
shall terminate and the Rent payable hereunder shall be abated during the
unexpired portion of this Lease, effective upon the date of the occurrence of
such damage.
E. TENANT'S FAULT. If the Premises or any other portion of the Building is
damaged by fire or other casualty resulting from the fault, negligence, or
breach of this Lease by Tenant or any of Tenant's Parties (as defined in
Paragraph 18 hereof), rent and additional rent payable hereunder shall not be
diminished during the repair of such damage and Tenant shall be liable to
Landlord for the cost and expense of the repair and restoration of the Premises
and/or the Building caused thereby to the extent such cost and expense is not
covered by insurance proceeds.
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F. UNINSURED CASUALTY. Notwithstanding anything herein to the contrary, in
the event that the Premises or the Building are materially damaged or destroyed
and are not fully covered by the insurance proceeds received by Landlord or in
the event that the holder of any indebtedness secured by a mortgage or deed of
trust covering the Premises requires that the insurance proceeds be applied to
such indebtedness, then in either case Landlord shall have the right to
terminate this Lease by delivering written notice of termination to Tenant
within thirty (30) days after the date of notice to Landlord that said damage or
destruction is not fully covered by insurance or such requirement is made by any
such holder, as the case may be, whereupon all rights and obligations hereunder
shall terminate.
G. LOSS DURING LAST PART OF TERM. If the Premises or the Building are
damaged by fire or other casualty during the last one (1) year of the term of
this Lease, either Landlord or Tenant may terminate this Lease by giving notice
to the other within thirty (30) days after the occurrence of the fire or other
casualty.
H. WAIVER. Except as otherwise provided in this Paragraph 8 and to the
extent allowed by law, Tenant hereby waives the provisions of Section
1932,1933(4), 1941 and 1942 of the Civil Code of California.
SERVICES
9. Landlord shall furnish the Premises, during reasonable and usual
business hours as determined by Landlord and subject to the regulations of the
Project, with a reasonable amount of water and electricity suitable for general
office uses including a normal complement of electrical office equipment, daily
janitor service (subject to Tenant's right to provide its own janitorial
services as provided below) except on Saturdays, Sundays and public holidays,
window washing with reasonable frequency, replacement of fluorescent tubes and
light bulbs, toilet room supplies, and elevator service consisting of
non-attended automatic elevators. Such heat and air-conditioning as may be
required for the comfortable occupation of the Premises will be provided during
the hours of 8:00 AM to 5:30 PM daily except Saturdays, Sundays and public
holidays. With respect to heating, air conditioning and electricity used by
Tenant during other hours, Landlord shall install separate meters showing
Tenant's utility usage during other hours. The cost of installing such meters
shall be a Tenant Improvement cost, as described in Exhibit B. Tenant, upon
presentation of a bill therefor, shall pay Landlord a reasonable hourly rate for
such heating and air conditioning and shall pay actual electrical usage based on
the average unit cost per month. Notwithstanding, the foregoing, so long as
Informix Software, Inc. leases and occupies the entire Building hereunder and
has not exercised any right to terminate this Lease as to all or any portion of
the Premises (including its early termination rights under Paragraph 43), then
Tenant shall have the right to set the hours of operation for the heating,
ventilation and air conditioning equipment, and to contract for and provide its
own janitorial services. If Tenant elects to provide its own janitorial
services, Tenant shall give Landlord no less than thirty (30) days' written
notice of such election, in which case Landlord shall be excused from any
obligations hereunder to provide such services to Tenant. Tenant shall be solely
responsible for the provision of such services and shall indemnify and protect
Landlord from and against all claims, losses, liabilities, damages and injury,
to the full extent provided by Tenant's indemnity set forth in Paragraph 10, in
connection with such services. If the provision of such janitorial services by
Tenant's contractor causes any loss, injury or damage to persons or property on
or about the Project, then, by written notice to Tenant, Landlord shall have the
right to require Tenant to terminate such contract.
Landlord shall not be liable for failure to furnish any of the foregoing
services when such failure is caused by accidents or conditions beyond the
control of Landlord, or by repairs, labor disturbances, or labor disputes of any
character, whether resulting from or caused by acts of Landlord, or otherwise,
provided, however, that in any of such events Landlord shall make a prompt and
diligent effort to cause the resumption of such services.
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Landlord shall not be liable under any circumstances for loss of or injury to
person or property, or loss of business, however occurring, through or in
connection with or incidental to the furnishing of any of the foregoing, nor
shall any such failure relieve Tenant from the duty to pay the full amount of
rent herein reserved, or constitute or be construed as a constructive or other
eviction of Tenant. Landlord's obligations hereunder are subject to adoption by
Landlord of energy conservation measures required or requested by any
governmental entity or reasonably determined by Landlord, and Tenant shall
cooperate fully in effectuating such energy conservation measures upon request
of Landlord including without limitation those measures specified in the Project
Rules and Regulations.
HOLD HARMLESS AND NON-LIABILITY OF LANDLORD
10. Except insofar as such injury or damage may result from the sole
negligence or willful misconduct of Landlord or its employees, Landlord shall
not be liable to Tenant for any death or injury or damage that may result to any
person or property in or about the Premises, or the Project, from any cause
whatsoever, including but not limited to injury or damage resulting from any
defects in the Project or any equipment located therein, or from fire, water,
gas, oil, electricity or other cause or any failure in the supply of same, or
from the acts or omissions of any persons, including co-tenants, or any acts or
omissions of Landlord.
Tenant agrees to Indemnify and hold Landlord harmless against all claims, and
the expense of defending against claims, for death or for injury or damage to
persons or property occurring in or about the Premises or occurring outside the
Premises but resulting in whole in the part by the act, failure to act,
negligence or other fault of Tenant or its agents, employees, contractors,
licensees or invitees. Tenant further agrees to indemnify and hold harmless
Landlord against any and all claims by or on behalf of any person, firm or
corporation arising from the conduct or management of any work or thing
whatsoever done by Tenant in or about or from transactions of Tenant concerning
the Premises, and will further indemnify and hold Landlord harmless against and
from any and all claims arising from any breach or default on the part of the
Tenant to be performed pursuant to the terms of this Lease. Tenant shall also
indemnify and hold harmless Landlord against all cost, counsel fees, expenses
and liabilities incurred in connection with any such claims or actions or
proceedings brought thereon. If any action or proceeding is brought against
Landlord by reason of any such claims or liability, Tenant agrees to defend such
action or proceeding at Tenant's sole expense by counsel reasonably satisfactory
to Landlord. The provisions of this Paragraph 10 shall survive the expiration or
termination of this Lease.
INSURANCE
11. Notwithstanding any other provision of this Lease, Tenant at its expense
shall maintain adequate worker's compensation insurance, adequate rental or
business interruption insurance, adequate comprehensive general liability with
"extended liability" endorsement and adequate all risk property damage insurance
(including without limitation plate glass coverage) in a form equivalent to the
current Insurance Services Office "all risk" form, and issued by an insurer
reasonable satisfactory to Landlord, with a combined single liability limit for
bodily injury and property damage of not less than Three Million Dollars
($3,000,000) insuring against all liability of Tenant and its authorized
representatives arising out of and in connection with Tenant's use or occupancy
of the Premises. In the event Tenant's insurance contains a split limit of
liability, the liability limit shall not be less than Three Million Dollars
($3,000,000) for bodily injury and One Million Dollars ($1,000,000) for
property damage. Tenant shall insure all personal property and fixtures of
Tenant and all of Tenant's improvements to the Premises. Tenant's property
policies shall not provide for deductible amounts in excess of $5,000 without
the prior written consent of Landlord. Landlord and all parties holding
interests to which this Lease subordinate (including, without limitation,
Lender) shall be named as additional insureds with Tenant on such liability
policy, and such policy shall include cross-liability endorsements. Tenant's
liability policy of
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insurance shall be primary and noncontributory to any insurance carried by
Landlord. Landlord may, without diminishing or affecting in any way Tenant's
obligations to maintain insurance as herein provided, maintain any insurance
coverage on the Building, the Project or the Premises deemed appropriate by
Landlord in its sole discretion, including without limitation lessor's risk or
comprehensive general liability insurance, workman's compensation insurance,
extended coverage, fire or casualty insurance with replacement cost riders,
flood or earthquake insurance rental or business interruption insurance, and
such insurance may provide for such deductible amounts as deemed appropriate by
Landlord. Landlord shall maintain full replacement cost property insurance on
the building and such other insurance as may be required from time to time by
Landlord's lender. At the commencement of the Lease term, and annually on
renewal of its insurance, Tenant shall deliver to Landlord an original
certificate of such insurance from the insurer, which certificate shall show the
coverages required by this Lease (including, without limitation, that Tenant's
insurance is primary and noncontributory with respect to any insurance of
Landlord), that Landlord shall be an additional insured, and shall provide that
such policy shall not be canceled without thirty (30) days prior written notice
by the insurer to Landlord, except that the policy may provide for ten (10)
days' notice to Landlord of cancellation for nonpayment of premium. If Tenant
fails to obtain such insurance or to furnish such certificate as required in
this Lease, Landlord may, but shall not be obligated to, obtain such insurance
at the expense of Tenant, and Tenant shall promptly pay such expense to
Landlord.
NOTICES
12. All notices, demands, requests, consents, or approvals ("notices"
hereafter) which are required or authorized to be given by Landlord or Tenant
pursuant to this Lease or by law, or which Landlord or Tenant may desire to give
to the other or to Lender, shall be in writing. All notices to Landlord shall be
addressed to Landlord c/o The Courson Company, 2882 Sand Hill Road, Suite 250,
Menlo Park, California 94025, or such other address as Landlord may from time to
time request, and shall be personally delivered to an employee of The Courson
Company or served by mail.
All notices to Tenant shall be addressed to Tenant at the Premises, with a
separate copy to each of:
Informix Software, Inc.
4600 Bohannon Drive
Menlo Park, CA 94026
Attention: Legal Counsel and [separate copy to]
Attention: Real Estate Director
and shall be personally delivered to the Premises or served by mail addressed to
the Premises whether or not Tenant has departed from, abandoned, or vacated the
Premises, or to such other address as Tenant may from time to time designate in
writing. Tenant waives the provisions of Section 1162 of the California Code of
Civil Procedure, provided that any notice to Tenant under Section 1161 of the
California Code of Civil Procedure is given in compliance with this Paragraph.
All notices to Lender shall be addressed to Lender c/o Aetna Investment Group,
Real Estate Investments, 242 Trumbull Street - IG4M, Hartford, CT 06156, or such
other address as Lender may from time to time request, and shall be personally
delivered to such address or served by mail.
All notices served by mail shall be deposited in the United States mail, first
class postage prepaid (or, at the option of the party giving notice, may be by
certified or registered mail, postage prepaid), addressed as herein provided,
and shall be effective two days after the day deposited in the mail, as
determined by the postmark, or if there is no postmark then by other competent
evidence. Notices hereunder may also be given
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by reliable overnight mail delivery services, such as Federal Express, in which
case notice so given shall be deemed effective on the date received by the
addressee.
INSOLVENCY OR RECEIVERSHIP
13. Either the appointment of a receiver to take possession of all, or
substantially all, of the assets of Tenant or a general assignment by Tenant for
the benefit of creditors, or any action taken or suffered by Tenant under any
insolvency or bankruptcy or reorganization act, the attachment, execution or
other judicial seizure of Tenant's interest in this Lease or in any substantial
amount of Tenant's assets located on the Premises, which such seizure is not
discharged within thirty (30) days, or failure by Tenant to pay its debts as
they become due, shall constitute a breach of this Lease by Tenant.
DEFAULT
14. A. DEFAULT. Occurrence of any of the following shall constitute a
default by Tenant: (1) failure of Tenant to pay rent or other payments when due
hereunder; (2) assignment, sublease or transfer of Tenant's interest in this
Lease, or any part thereof, either voluntarily or by operation of law, whether
by judgment, execution, death, receivership or other means, without the consent
of Landlord; (3) occurrence of a breach of this Lease under Paragraph 13 or
Paragraph 35 hereof, relating to the financial condition of Tenant; or (4)
failure of Tenant to perform any other covenant, condition, or representation of
Tenant under this Lease. If Tenant's default is a failure to pay rent or other
payments when due hereunder, Tenant shall not be deemed in default and Landlord
shall exercise no remedies provided in subparagraph 14(b) hereof for such
default, unless Tenant fails to cure such default within five (5) business days
after Landlord gives Tenant written notice of such default. If Tenant's default
is a default included in item (4) of the first sentence of this subparagraph
14(a), Tenant shall not be deemed in default and Landlord shall exercise no
remedies provided in subparagraph 14(b) hereof for such default unless Tenant
fails to cure such default within thirty (30) days after Landlord gives Tenant
written notice of such default, provided, however, that such cure period shall
terminate if Tenant fails to do the following: Tenant shall diligently commence
to cure such failure within seven (7) days after such notice is given and shall
give Landlord a weekly report of Tenant's actions to cure such failure each week
until such failure is cured. Any notice by Landlord under this Paragraph shall
be sufficient if it informs Tenant of the general nature of Tenant's failure to
perform Tenant's obligations hereunder.
B. REMEDIES. In the event Tenant is in default under this Lease,
Landlord shall have the following rights and remedies, which shall be
cumulative, and any other remedies provided by law:
Landlord shall have the immediate right of re-entry and may remove all persons
and property from the Premises and may store such property at the cost of and
for the account and risk of Tenant. Should Landlord elect to re-enter as herein
provided, or should Landlord take the possession pursuant to legal proceedings
or pursuant to any notice provided for by law, it may either terminate this
Lease or it may from time to time, without terminating this Lease, as
attorney-in-fact for tenant, sublet the Premises, or any part thereof, for such
term or terms (which may be for a term extending beyond the term of this Lease)
and at such rental or rentals and upon such other terms and conditions as
Landlord, in its sole discretion, may deem advisable, with the right to make
alterations and repairs to the Premises. Upon any such re-entry Landlord may, at
Tenant's expense, take all necessary actions to maintain or preserve the
Premises (including, without limitation, changing the locks on the Premises). No
such re-entry or taking possession of said Premises by Landlord or acts of
maintenance and preservation or subletting shall be construed as a termination
of Tenant's right to possession of the Premises under Section 1951.4 of the
California Civil Code, or any successor law thereto, nor shall any such act be
construed as an election on Landlord's part to
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terminate this Lease unless a written notice of such intention be given to
Tenant or unless the termination thereof be decreed by a court of competent
jurisdiction.
If Landlord elects to sublet the Premises without terminating this Lease, then
upon each such subletting, Tenant shall immediately pay to Landlord (in addition
to any other amounts due hereunder) all costs and expenses of such subletting,
including without limitation reasonable attorneys' fees and any real estate
commissions actually paid or incurred (provided that any commission paid to a
company owned by Landlord shall not exceed the prevailing market rate for such
commissions) and any costs and expenses of such alterations and repairs, and the
present worth of the amount, if any, by which the unpaid rentals and other
amounts due hereunder for any portion of the balance of the term of this Lease
included in the period of such subletting exceed the rental reserved in such
sublease (computing present worth by assuming the legal rate of interest), less
the amount, if any, of said rental loss which Tenant proves could have been
reasonably avoided, with interest on all such sums at the rate herein provided.
Rents received by Landlord from such re-letting shall be applied; first, to the
payment of any unpaid sums due to Landlord from Tenant under the preceding
sentence hereof; second, to the payment of any indebtedness, other than monthly
rent, due hereunder from Tenant to Landlord (including interest on defaulted
payments hereunder); third, to the payment of rent due and unpaid hereunder and
the residue, if any, shall be held by Landlord and applied in payment of future
rent or other obligations as the same may become due and payable hereunder. If
rentals received from such subletting during any month are less than rentals and
other payments to be paid during or prior to that month by Tenant hereunder,
Tenant shall pay any such deficiency to Landlord. Any such deficiency shall be
calculated and paid monthly. For purposes of any subletting under this Paragraph
14, and for all related purposes, Landlord is hereby irrevocably appointed
attorney-in-fact for Tenant.
Whether or not Landlord sublets the Premises as permitted above, Landlord may at
any time after Tenant's default, elect to terminate this Lease for such previous
default, in which even Landlord may recover all amounts provided in Section
1951.2 of the California Civil Code (including, without limitation, the costs
and expenses of subletting or re-letting the Premises including reasonable
attorneys' fees and any real estate commissions actually paid or incurred,
provided that any commission paid to a company owned by Landlord shall not
exceed the prevailing market rate for such commission, and any costs and
expenses of repairs or alterations for such sub-letting or re-letting) with
interest thereon at the rate herein provided, and any additional amounts which
may now or hereafter be authorized by law. Any proof by Tenant under this
Paragraph or subparagraph (2) or (3) of subdivision (a) of Section 1951.2 of the
California Civil Code, or any successor law pertaining to mitigation of damages,
as to the amount of rental loss that could have been or could be reasonably
avoided, shall be made in the following manner. Landlord and Tenant shall each
select a licensed real estate broker in the business of renting property of the
same type and use of the leased Premises and in the same geographic vicinity and
such two real estate brokers shall select a third licensed real estate broker
and the three licensed real estate brokers so selected shall determine the
amount of the rental loss that could have been or could be reasonably avoided
from the balance of the term of this Lease after the time of Tenant's default.
The decision of the majority of said licensed real estate brokers shall be final
and binding upon the parties hereto and the fees charged by such brokers for
providing such determination shall be borne by Tenant.
Landlord shall have the right to cure any default of Tenant at Tenant's expense.
Any amount paid or incurred by Landlord in curing any such default shall be
immediately paid by Tenant to Landlord. No such cure by Landlord shall
constitute a waiver by Landlord of the default of Tenant or prevent Landlord
from exercising the other remedies herein provided for default by Tenant.
C. LATE CHARGES. Tenant acknowledges that late payment by Tenant to
Landlord of rent or other sums due hereunder will cause Landlord to incur costs
not contemplated by this Lease, including without limitation processing and
accounting
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charges, administrative expense and additional interest expense or late charges
to Landlord resulting from late payment by Landlord of payments due on
obligations of Landlord, whether or not secured by an encumbrance on the
Premises. Tenant acknowledges that the Exact amount of such damages would be
extremely difficult and impractical to ascertain, and that the expense of
attempting to ascertain the exact amount of such damages would be an additional
cost not contemplated by this Lease. Accordingly, in the event that Tenant shall
fail to pay any installment of rent or any sum due hereunder on the date such
amount is due, and provided Tenant fails to cure such failure within five (5)
business days after Landlord gives Tenant written notice of such failure, Tenant
shall pay to Landlord as additional rent a late charge equal to the greater of
three percent (3%) of each such installment or other sum, or one hundred
dollars ($100.00), for each such installment or other sum. Landlord and Tenant
agree that the late charge herein provided is a reasonable estimate of the
damages which Landlord shall incur by reason of late payment by Tenant.
Landlord's acceptance of any late charge shall not constitute a waiver of
Tenant's default with respect to the overdue amount if Tenant fails to pay such
amount within any applicable grace period provided in this Lease, nor shall such
acceptance prevent Landlord from exercising any rights or remedies herein
provided for default by Tenant.
D. OTHER. In addition to the foregoing, and regardless of whether
Landlord has exercised any remedies for default hereunder, if Tenant is in
default and such default is not cured within the applicable cure period
specified herein then, unless otherwise agreed by Landlord in writing, Tenant
shall have no right to exercise any right, option, or privilege granted to
Tenant hereunder or in any other agreement relating to the Premises, the
Building or the Project, and any attempt to exercise such a right, option or
privilege shall be void and of no effect whatsoever, provided, however, that
Tenant's right to possession of the Premises, and Tenant's rights to sublet the
Premises or assign its lease pursuant to the provisions of Paragraph 5 hereof,
shall not be deemed terminated unless Landlord terminates the Lease by written
notice as herein provided. Any period provided herein for the exercise by Tenant
of any right, option or privilege hereunder shall not be tolled, extended, or
otherwise affected to the benefit of Tenant by reason of any such disability of
Tenant hereunder regardless of any attempt by Tenant to exercise a right, option
or privilege hereunder while Tenant is in default hereunder. Any defaulted
payments hereunder shall bear interest at 5% per annum plus the greater of (a)
the Federal Reserve Bank rate, specified in Article 15, Section 1 of the
California Constitution, prevailing on the 25th day of the month preceding
execution of this Lease (it being understood that this Lease is not a contract
to make a loan or forbearance), or (b) such Federal Reserve Bank rate prevailing
on the 25th day of the month preceding the date such defaulted payment was due
hereunder, regardless of whether Landlord exercises any remedies hereunder.
Tenant hereby waives all claims for damages that may be caused by Landlord's
re-entering and taking possession of the Premises or removing and storing the
property of Tenant as authorized in this Paragraph and Paragraph 15 hereof, and
will hold Landlord harmless against all loss, costs or damages occasioned
thereby, and no such re-entry shall be considered or construed to be a forcible
entry.
REMOVAL OF PROPERTY
15. Whenever Landlord shall remove any property of Tenant from the Premises
and store the same elsewhere for the account, and at the expense and risk, as
Tenant, as provided in Paragraph 14 hereof, and Tenant shall fail to pay the
cost of storing any such property after it has been stored for a period of
ninety (90) days or more, Landlord may sell any or all such property at public
or private sale, in such manner and at such times and places as Landlord, in its
sole discretion, may deem proper, without notice to or demand upon Tenant, for
the payment of any part of such charges or the removal of any such property, and
shall apply the proceeds of such sale; first, to all costs and expenses of such
sale, including reasonable attorneys' fees actually incurred; second, to the
payment of all costs of or charges for removing or storing any such property;
third, to the payment of any other sums of money which may then or thereafter be
due to
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Landlord from Tenant under any of the terms hereof or otherwise; and fourth, the
balance, if any, to Tenant.
WAIVER
16. No provision of this Lease shall be deemed waived by Landlord except by
a writing signed by Landlord. The waiver by Landlord of any breach of any term,
covenant, or condition herein contained shall not be deemed to be a waiver of
such term, covenant, or condition or of any subsequent breach of the same or any
other term, covenant, or condition herein contained. The subsequent acceptance
of rent hereunder by Landlord shall not be deemed to be a wavier of any
preceding breach by Tenant of any term, covenant, or condition of this Lease,
other than the failure of Tenant to pay the particular rental so accepted,
regardless of Landlord's knowledge of such preceding breach at the time of
acceptance of such rent. Any consent by Landlord to any act or omission by
Tenant for which Landlord's consent is required hereunder shall not be deemed to
be a consent to any subsequent act or omission of the same or different nature,
nor shall any such consent be deemed to be a waiver of the requirement of
Landlord's consent to any subsequent act or omission of the same or different
nature.
COSTS OF SUIT
17. If Tenant or Landlord shall bring any action for any relief against the
other, declaratory or otherwise, arising out of this Lease or Tenant's occupancy
of the Premises, including any suit by Landlord for the recovery of rent or
possession of the Premises, the losing party shall pay the successful party a
reasonable sum for attorneys' fees in such suit, which may be determined by the
court, and such attorneys' fees shall be deemed to have accrued on the
commencement of such action and shall be paid whether or not such action is
prosecuted to judgment.
LITIGATION AGAINST TENANT
18. Should Landlord, without fault on Landlord's part, be made a party to
any litigation instituted by or against Tenant, or by or against any person
holding under or using the Premises by license of Tenant ("Tenant's Parties"),
or for the foreclosure of any lien for labor or material furnished to or for
Tenant or any such other person or otherwise arising out of or resulting from
any act or transaction of Tenant or any such other person, Tenant shall pay to
Landlord the amount of any judgment rendered against Landlord or the Premises or
any part thereof, and all costs and expenses, including reasonable attorneys'
fees, incurred by Landlord in or in connection with such litigation.
TAXES PAYABLE BY TENANT
19. Tenant shall pay, before delinquency, all taxes levied against, imposed
upon, measured by, or resulting from or with respect to (a) any personal
property or trade fixtures placed by Tenant in or about the Premises; (b) any
improvements ("Special Improvements") to the Premises in excess of Building
standard improvements, whether owned by Landlord or Tenant; (c) the possession,
lease, operation, management, maintenance, alteration, improvement, repair, use
or occupancy of the Premises or any portion thereof; (d) this transaction or any
document to which Tenant is a party creating or transferring any interest or
estate in the Premises; (e) the cost and expenses of contesting the amount or
validity of any of the foregoing taxes. If such taxes are levied against
Landlord or Landlord's property, and if Landlord pays the same, which Landlord
shall have the right to do regardless of the validity of such levy, or if the
assessed value of Landlord's property is increased by the inclusion therein of a
value placed upon such personal property, trade fixtures or Special Improvements
of Tenant, and if Landlord pays the taxes based upon such increased assessment,
which Landlord shall have the right to do regardless of the validity thereof,
Tenant shall, upon demand, repay to Landlord the taxes so levied against
Landlord, or the proportion of such taxes resulting from such increase in the
assessment, as the case may be. In the event that it
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shall not be lawful for Tenant so to reimburse Landlord, the rent payable to
Landlord under this Lease shall be revised to yield to Landlord the same net
rent from the Premises after imposition of any such tax upon Landlord as would
have been received by Landlord from the Premises prior to the imposition of such
tax. The amount of any tax upon Tenant's personal property attached to the
Premises, trade fixtures or Special Improvements which is included in the
property tax assessment for the Building shall be determined on the basis of the
records of the County Assessor if such records are sufficiently detailed to
allow such determination, and if not, then the amount shall be determined on the
basis of the actual cost of construction or installation thereof. Tenant shall
have the right to contest with the applicable taxing authority the amount and
validity of any of the foregoing taxes, provided that Tenant shall indemnify and
hold Landlord harmless from and against any and all claims, liabilities, costs,
expenses (including reasonable attorneys' fees) arising out of such contest, and
such contest shall not affect Tenant's obligations with respect to Landlord
under this Lease.
LIENS
20. Tenant shall keep the Premises, Building and the Project, free from any
liens arising out of any work performed, materials furnished or obligations
incurred by Tenant.
TENANT'S SHARE OF PROJECT TAXES AND OPERATING EXPENSES
21. In addition to the base monthly rent specified in Paragraph 3 hereof,
Tenant shall pay to Landlord Tenant's Share of Project Taxes and Operating
Expenses, as determined in this Paragraph 21. Tenant's Share of estimated
Project Taxes and Operating Expenses shall be payable monthly in advance on the
same day of the month and in the same manner that Tenant shall pay the base
monthly rent hereunder. As of the Lease commencement date, Tenant's Share of
estimated Project Taxes and Expenses shall be One Hundred percent (100%).
A. Additional rent due hereunder for any fractional month at the
beginning or end of the Lease term shall be appropriately pro-rated. Landlord
shall, as soon as practicable after the start of each calendar year commencing
during the term of this Lease, notify Tenant in writing of the amount which
Landlord estimates will be Tenant's Share of Project Taxes and Operating
Expenses for the full calendar year subject to such notice, and one-twelfth
(1/12th) thereof shall be the additional monthly rental payment required to be
made by Tenant during such calendar year under this Paragraph 21. If during any
calendar year during the term of this Lease it appears in the reasonable
judgment of Landlord that Project Taxes and Operating Expenses payable under
this Paragraph will exceed its estimate, Landlord may, by written notice to
Tenant, revise its estimate for such year, and Tenant's Share of such Project
Taxes and Operating Expenses and the additional monthly rental hereunder shall
be adjusted accordingly. If after any, calendar year it proves that Tenant's
Share of Project Taxes and Operating Expenses for such calendar year is greater
or less than the estimated Share actually billed to and paid for by Tenant, an
adjustment shall be made within sixty (60) days following the commencement of
the next calendar year and Tenant shall forthwith pay Landlord such amount or be
credited accordingly, regardless of whether this Lease is still then in effect.
B. Landlord shall, as soon as practicable after the close of each
calendar year wholly or partially within the Lease term deliver to Tenant a
written statement summarizing actual Project Taxes and Operating Expenses for
such calendar year and showing, Tenant's Share of such Project Taxes and
Operating Expenses. Provided that Tenant is not in default hereunder, if Tenant
disputes the amount set forth in such statement, Tenant shall have the right, by
written request made not later than sixty (60) days following receipt of such
statement, to cause Landlord's books and records with respect to such calendar
year to be audited by independent certified public accountants mutually
acceptable to Landlord and Tenant. Prior to any such audit, Tenant shall pay to
Landlord a deposit equal to the full amount of any unpaid amount in dispute and
a
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sum specified by Landlord's accountant for the estimated fees of Landlord's
accountant in connection with such audit. The amounts payable under Paragraph
21.A by Landlord to Tenant or Tenant to Landlord, as the case may be, shall be
appropriately adjusted on the basis of such audit. If such audit discloses a
liability for further refund by Landlord to Tenant in excess of ten percent of
the amount determined by Landlord pursuant to this subparagraph 21.B hereof as
Tenant's Share of actual Project Taxes and Operating Expenses for such calendar
year, the cost of such audit shall be borne by Landlord. Tenant shall pay all
reasonable expenses of Landlord in connection with any inspection or audit of
Landlord's books and records hereunder (including without limitation accounting
or legal fees incurred by Landlord in connection therewith), unless under the
terms of this subparagraph 21.B Landlord is required to pay the cost of an audit
for the calendar year covered by Tenant's inspection or audit. If Tenant shall
not request an audit in accordance with the provisions of this subparagraph 21.B
within sixty (60) days of receipt of Landlord's statement, such statement shall
be conclusively binding upon Tenant. In addition, upon reasonable request by
Tenant, Landlord shall provide reasonable backup data supporting charges for
Project Taxes and Operating Expenses, and shall, upon reasonable request by
Tenant, and upon notice at least three (3) business days in advance, make
available Landlord's books and records pertaining to such Project Taxes and
Operating Expenses for inspection by Tenant, provided that Tenant shall pay all
reasonable expenses of Landlord in connection with the provision of such backup
data and/or inspection of Landlord's books and records.
C. Tenant's obligation under this Paragraph 21 for any fraction of a
calendar year at the commencement or the end of the Lease term shall be
determined by prorating Tenant's obligation hereunder on the basis which the
number of days in such fractional calendar year in the Lease term bears to 365.
If the Lease term terminates during a calendar year or calendar month,
additional rent payable hereunder, as prorated, shall be due and payable when
determined notwithstanding the termination by Landlord pursuant to the default
provisions of Paragraph 14, Tenant's liability under this Paragraph 21 shall
immediately be due and payable, based upon Landlord's current projection as to
likely excess actual Project Tax and Operating Expense if the same are not yet
then ascertainable with certainty, with any such projection and payment by
Tenant subject to subsequent adjustment if such projection shall thereafter
prove to be less than 95% accurate. For purposes or this Paragraph 21, Project
Taxes and Operating Expenses for any year during which the Project is not
substantially fully occupied shall be calculated by projection as if the Project
were so occupied during the entire calendar year.
D. For the purposes of this Paragraph the following definitions shall
apply:
(1) "Taxes" shall include (a) all real estate taxes, possessory
interest taxes, personal property taxes levied upon, measured by, or assessed to
Landlord in connection with the Project other than taxes covered by Paragraph
19, and any other taxes, charges and assessments (including, without limitation,
any taxes, charges or assessment for public improvements, services or benefits,
whether or not commenced or completed prior to the commencement of the Lease
term or not to be completed during the Lease term, transit development fees,
housing funds, education funds, street highway or traffic fees, environmental
charges, fees or penalties imposed as a means of controlling or abating
environmental degradation or energy use and taxes, charges or assessments upon
or measured by or for parking facilities) which are levied with respect to or in
connection with the Project, and any improvements, fixtures and equipment and
all other property of Landlord, real or personal, located in or around the
Project and used in connection with the operation of the Project; and (b) any
other tax, charge, assessment, fee or governmental imposition or charge of every
kind or nature whatsoever assessed to Landlord in connection with the Project,
any part thereof, or the Premises (other than estate taxes, inheritance taxes,
or net income taxes payable against nonrental as well as rental income) whether
or not in addition to or in lieu of such real estate and possessory interest or
personal property taxes, whether or not now customary or within the
contemplation of the parties hereto, ordinary or extraordinary, foreseen or
unforeseen, or similar or dissimilar to any of the foregoing, including by
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way of illustration but not limitation any and all taxes, impositions, charges,
fees or assessment (i) upon, allocable to, or measured by the area of the
Premises or the Project or on the rent payable hereunder or the rent payable on
the Premises or the Project or any portion thereof, including without limitation
any gross income tax, excise tax or value added tax, levied by any governmental
or quasi-governmental entity with respect to the Project, any part thereof, or
such rent, and (ii) upon or with respect to the possession, leasing, operation,
management, maintenance, alteration, repair, energy consumption, use or
occupancy by Landlord or Tenant of the Premises or the Project or any portion
thereof; and (c) the cost and expenses of contesting the amount or validity of
any of the foregoing taxes. In the event that it shall not be lawful for Tenant
to reimburse Landlord for Tenant's Share of any tax, as defined herein, the rent
payable to Landlord under this Lease shall be revised to yield to Landlord the
same net rent from the Premises after imposition of any such tax upon landlord
as would have been received by Landlord hereunder prior to the imposition of
such tax. Notwithstanding the foregoing to the contrary, Tenant shall not be
obligated to pay Tenant's share of any increases in Taxes resulting from the
sale by Landlord of Landlord's fee title interest in the Project.
(2) "Operating Expenses" shall mean all costs and expenses of
ownership, operation and maintenance of the Project (excluding depreciation on
the buildings, all amounts paid on loans of Landlord, real estate brokers'
commissions, and expenses capitalized for federal income tax purposes except as
specified herein) including by way of illustration but not limited to:
utilities; supplies; insurance (including payment of deductibles); business
license, permit, inspection and other authorization fees, charges, exactions and
taxes; special charges or assessments for services provided to the Project,
including without limitation sewer, water, fire or police protection; cost of
services of independent contractors (including without limitation accounting and
legal services and property management fees, provided that if landlord provides
such services landlord may include a reasonable charge for such services in
operating expenses); cost of reasonable market compensation (including
employment taxes and fringe benefits) of all persons who perform regular and
recurring duties connected with day-to-day operation, maintenance and repair of
Project buildings, their equipment and the adjacent walks, malls, parking and
landscaped areas, including without limitation janitorial, scavenger, gardening
and landscaping, security, operating engineer, elevator, painting, plumbing,
electrical, carpentry, heating, ventilation, air conditioning, window washing,
signing and advertising (but excluding persons performing services not uniformly
available to or performed for substantially all Project tenants); maintenance
and repair expenses, including but not limited to capital expenditures required
to meet changed government regulations and governmental regulations for
environmental protection or energy conservation, (whether or not capitalized for
income tax purposes), and rental expenses or a reasonable allowance for
depreciation of personal-property used in the maintenance, operation and repair
of the Project; Landlord's reasonable administration expense; and the cost of
contesting the validity, amount, or applicability of any governmental enactments
or other expenses which may affect Operating Expenses. If Landlord makes capital
improvements which have the effect of reducing operating expenses or which are
required to meet governmental regulations, Landlord may amortize the cost of
such improvements (together with interest thereon at the actual cost of such
funds to Landlord or, if such funds were not borrowed, at the prime rate then in
effect for the Bank of America) as an operating expense in accordance with
reasonable accounting procedures, provided that such amortization shall not be
at a rate which exceeds the anticipated savings in Operating Expenses, or in the
event of a governmentally-required capital improvement, the useful life of the
improvement. Landlord shall be responsible for the professional property
management of the Premises during the term hereof, to be paid for by Tenant. The
management fee and administrative fee shall not exceed four percent of the base
and additional rents payable hereunder. Operating Expenses shall not include
Landlord's share, to the extent provided in Exhibit B, of costs incurred by
Landlord on account of Excess Common Cost, as provided in Exhibit B, including
the remodeling of restrooms to meet current ADA requirements in effect as of the
Commencement Date, painting and remodeling the lobby and painting the exterior
of the Building, or any
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costs incurred by Landlord to deliver the Premises at the Commencement Date with
the existing electrical, mechanical, plumbing systems and roof in good working
order; provided, however, that Landlord shall only be obligated to bear such
costs to the extent such costs exceed the amount to be borne by Tenant for the
Common Improvements, as provided in Exhibit B hereto.
SUBORDINATION
22. A. Tenant agrees that this Lease shall be subject and subordinate to
any mortgage, deed of trust or like encumbrance heretofore or hereafter placed
upon the Project or the Premises by Landlord or its successors in interest to
secure the payment of monies loaned, interest thereon and/or other obligations,
and this Lease also shall be subject and subordinate to any ground lease or
underlying lease hereafter entered into, or a transaction whereby Landlord or
its successors shall sell the Project or any part thereof and lease the Project
or any part thereof back (as lessee) for a term of at least ten (10) years or
the remaining term of this Lease, whichever is shorter, provided that Landlord
obtains from such mortgagor or lessor a written agreement in form acceptable to
such mortgagor or lessor, providing substantially that Tenant's rights under
this Lease shall not be affected by any foreclosure or deed in lieu of
foreclosure, or sale under such encumbrances for so long as Tenant performs its
obligations under this Lease (or, in the case of a ground lease or underlying
lease, Tenant's rights shall not be affected by any termination of such lease
for so long as Tenant performs its obligations under this Lease). Tenant agrees
to execute and deliver, upon demand of Landlord, any and all instruments desired
by Landlord, subordinating in the manner requested by Landlord, this Lease to
such mortgage, deed of trust, like encumbrance, ground lease, or underlying
lease. Landlord shall obtain and provide to Tenant a commercially reasonable
nondisturbance and attornment agreement from all current and future lenders
holding a mortgage, deed of trust or like encumbrance upon the Project or the
Premises.
B. Tenant hereby agrees to execute and deliver to Landlord a Subordination,
Non-Disturbance and Attornment Agreement and a Tenant Estoppel Certificate in
the forms attached hereto as Exhibits E and F, respectively. Tenant's execution
and delivery of the aforementioned documents shall be a condition precedent to
the effectiveness of this Lease.
MORTGAGEE PROTECTION
23. Tenant agrees to give Lender, by registered mail, a copy of any notice
of default served upon Landlord, provided that prior to such notice Tenant has
been notified in writing (by way of Notice of Assignment of Rents and Leases, or
otherwise) of the address of Lender. Tenant further agrees that if Landlord
shall have failed to cure such default within the time provided for in this
Lease, then Lender shall have an additional sixty (60) days within which to cure
such default or if such default cannot be cured within that time, then such
additional time as may be necessary to cure such default (including, but not
limited to, commencement of foreclosure proceedings, if necessary to effect such
cure), in which event the Lease shall be terminated while such remedies are
being so diligently pursued.
SUBROGATION
24. Anything in this Lease to the contrary notwithstanding, Landlord and
Tenant hereby waive and release any and all rights of recovery, claims, actions
or causes of action against each other and their respective partners, officers
and employees for any loss or damage that may occur to the premises, the
Building and personal property within the Premises or the Building by reason of
fire or other causes insured against under any insurance policies maintained or
required to be maintained by the parties hereto, regardless of cause, including,
the act or negligence of a party hereto, or their agents, officers, employees,
contractors or representatives. Landlord and Tenant acknowledge that this
paragraph will preclude assignment of any claim mentioned in it
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by way of subrogation to an insurance company. Each party hereby represents and
warrants to the other that this waiver of subrogation does not invalidate its
insurance coverage.
CONDEMNATION
25. Should the whole or any part of the Premises be condemned and taken by
any competent authority for any public or quasi-public use or purpose, all
awards payable on account of such condemnation and taking shall be payable to
Landlord, and Tenant hereby waives all interest in or claim to said awards, or
any part thereof. Notwithstanding the foregoing, Tenant shall have the right to
appear, claim, prove and receive compensation from the condemning authority for
such compensation as may be separately awarded to Tenant for compensation for
loss of business by Tenant due to such condemnation and for the expenses
incurred by Tenant in connection therewith. If the whole of the Premises shall
be so condemned and taken, then this Lease shall terminate. If a part only of
the Premises is condemned and taken and the remaining portion thereof is not
suitable for the purposes of which Tenant had leased said Premises, Tenant shall
have the right to terminate this Lease. If by such condemnation and taking a
part only of the Premises is taken, and the remaining part thereof is suitable
for the purposes for which Tenant has leased said Premises, this Lease shall
continue, but the rental shall be reduced in an amount proportionate to the
value of the portion taken as it related to the total value of the Premises.
WAIVER OF REDEMPTION BY TENANT; HOLDING OVER
26. Tenant hereby waives for Tenant and all those claiming under tenant, all
right now or hereafter existing to redeem the leased Premises after termination
of Tenant's right of occupancy by notice of such termination by Landlord
pursuant to Paragraph 14 hereof or by order or judgement of any court or by any
legal process or writ. If Tenant holds over after the term hereof, with or
without the express or implied consent of Landlord, such tenancy shall be from
month to month only, and not a renewal hereof or an extension for any further
term, and in such case rental and all other payments provided herein shall be
payable in the amount (as adjusted hereunder) and at the time specified in
Paragraph 3 hereof, and in other provisions hereof, and such month to month
tenancy shall be subject to every other term, covenant, and agreement contained
herein except as to the term of this Lease. The rental payable by Tenant during
any such holdover period shall be one hundred forty percent (140%) of the rental
in effect immediately prior to the expiration of the Lease Term.
ENTRY AND INSPECTION
27. Landlord and its agents shall have the right to enter into and upon the
Premises at all reasonable times with reasonable notice (except in emergencies,
in which case no notice shall be required) for the purpose of inspecting the
same, or for the purpose of showing same to prospective purchasers, mortgagees,
or tenants, or for the purpose of protecting the interest therein of Landlord or
to post notices of non-responsibility, or to make alterations or additions to
the Premises or to any other portion of the Building in which the Premises are
situated, including the erection of scaffolding or other mechanical devices, or
to provide any service provided by Landlord to Tenant hereunder, including
window cleaning and janitor service, without any rebate of rent to Tenant for
any loss of occupancy or quiet enjoyment of the Premises, or damage, inquiry or
inconvenience thereby occasioned. For each of the aforesaid purposes, Landlord
shall at all times have and retain a key with which to unlock all of the doors
in, upon, and about the Premises, excluding Tenant's vaults and safes, or
special security areas (designated in a writing signed by Tenant and Landlord
in advance), and Landlord shall have the right to use any and all means which
Landlord may deem necessary or proper to open said doors in an emergency, in
order to obtain entry to any portions of the Premises, and any entry to the
Premises, or portions thereof obtained by Landlord by any of said means, or
otherwise, shall not under any circumstances be construed or deemed to be a
forcible or unlawful entry into, or a detainer of, the
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Premises, or an eviction, actual or constructive, of Tenant from the Premises or
any portions thereof.
BUILDING AND PLANNING
28. Landlord shall have the right at any time, without the same constituting
an actual or constructive eviction and without incurring any liability to Tenant
therefor, to change the arrangement and/or location of entrances or passageways,
doors and doorways, and corridors, elevators, stairs, toilets, or other public
parts of the Building and the Project, and to change the name, number or
designation by which the Building or the Project is commonly known. Landlord
agrees that so long as Informix Software leases and occupies the entire
Building, and has not exercised an early termination right (including the early
termination right specified in Paragraph 43), Landlord will not exercise any of
the foregoing rights to the extent the same would unreasonably interfere with
the conduct of Tenant's business, except to the extent Landlord is required by
governmental authority to take any such action.
OFFSET STATEMENT
29. Within ten (10) business days after request therefor by Landlord, or in
the event of any sale, assignment or hypothecation of the Premises and/or the
Project or any portion thereof by Landlord, Tenant agrees to deliver in
recordable form a certificate to any proposed mortgagee, trust deed beneficiary
or purchaser, or to Landlord, in form satisfactory to the addressee, certifying
as to (a) the date of this Lease and any amendments thereto, (b) the date upon
which this Lease term commenced and will end, (c) the fact this Lease, as so
amended, is in full force and effect and has not been modified except as stated,
(d) whether any rentals are then prepaid or unpaid hereunder, (e) whether any
defaults then exist hereunder, (f) whether Tenant claims any offsets or defenses
to any obligation imposed hereunder and (g) any other information reasonably
requested of Tenant. If Tenant is provided with a proposed form of such
certificate, and fails to execute same within ten (10) business days after
receipt thereof, Tenant agrees that all statements made in such proposed
certificate shall be deemed true and binding upon Tenant for all purposes.
Tenant acknowledges that any proposed mortgagee, trust deed beneficiary,
purchaser or Landlord, may rely on the truth of statements set forth in such
certificate as executed by Tenant or may rely upon the failure of Tenant to
execute such statement within said ten (10) business day period as conclusive
evidence of the truth thereof.
MANAGER
30. Landlord shall have the right to entrust active management of the
Project to a property management company. In such event Tenant agrees that
Tenant shall conduct all of its dealings with respect to this Lease and the
Premises solely with such property manager and its officers or employees or
such other person or persons who may subsequently be designated in writing by
Landlord as the manager of the Project or Premises, and Tenant shall not
directly communicate with Landlord concerning such matters.
ATTORNMENT
31. In the event of a termination of all or any part of Landlord's interest
in the Building or the Project due to sale or other disposition, or from any
cause whatsoever or in the event of the foreclosure of or exercise of a power of
sale under any mortgage or deed of trust made by Landlord covering the Premises,
Tenant shall attorn to and recognize as Landlord hereunder, Landlord's assignee
or successor in interest or the purchaser at such foreclosure or sale in lieu
thereof, as the case may be. Any such sale, disposition, or other termination of
Landlord's interest in the Premises shall operate to release Landlord from any
future liability under any of the covenants or conditions of this Lease, express
or implied, in favor of Tenant, and in such event Tenant agrees to
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look solely to the responsibility of Landlord's successor in interest under this
Lease, as limited by Paragraph 3.2 hereof.
LIMITATION ON LANDLORD'S LIABILITY
32. In the event of any actual or alleged failure, breach or default by
Landlord hereunder pertaining to the Premises, the Building, or the Project,
Tenant shall give Landlord written notice of such default and Landlord shall not
be deemed in default hereunder unless Landlord fails to diligently commence to
cure such default within thirty (30) days after receipt of such written notice.
In consideration of the benefits accruing to Tenant hereunder, Tenant agrees for
itself and its successors and assigns that in the event of any such failure,
breach or default, or of any damage to Tenant from any act or omission of
Landlord or Landlord's agents pertaining to the Premises or the Project, the
sole and exclusive remedy of Tenant shall be against Landlord's interest in the
Project, that any judgment obtained against Landlord, any person who owns an
interest in the Building or land or any agent of Landlord, or such other person
shall be satisfied solely by execution of the judgement and levy against the
right, title and interest of Landlord or such person in the Project, and rentals
therefrom. Neither Landlord, any person who owns any interest whatsoever in the
Project, nor any agent of Landlord or such person shall be personally liable for
any deficiency after such execution and levy.
SUCCESSORS AND ASSIGNS
33. Subject to the provisions hereof relating to assignment, mortgaging,
pledging and subletting, this Lease is intended to and does bind the heirs,
executors, administrators, successors and assigns of any and all of the parties
hereto.
SECURITY
34. No security deposit shall be required.
FINANCIAL COVENANTS
35. Tenant represents and warrants that all financial information provided by
Tenant to Landlord prior to execution by Landlord of this Lease is true and
complete and fairly represents the actual financial condition of Tenant as of
the date that Tenant executes this Lease. Tenant shall furnish Landlord with all
publicly available financial information concerning Tenant upon Landlord's
request. In addition, upon request by Landlord, Tenant shall deliver to Landlord
a copy of its most recently filed Form 10Q and/or Form 10K as filed with the
Securities and Exchange Commission. If for any reason Tenant is not required to
file a Form 10Q and/or 10K describing its current assets and current
liabilities, then Tenant shall provide Landlord with equivalent financial
information describing in reasonable detail its current assets and liabilities,
upon request. Tenant agrees that any misrepresentation to Landlord as to
Tenant's financial condition, or any failure to provide financial information
required to be provided by Tenant hereunder, shall constitute a default under
this Lease.
PARKING
36. Landlord agrees that Tenant shall have the use of all parking areas
located on the Project at no additional cost. Landlord shall keep the parking
area lighted and in good repair. All parking areas provided by Landlord
hereunder shall be deemed a part of the Premises for purposes of Tenant's
obligations under Paragraphs 10 and 11 hereof.
RULES AND REGULATIONS
37. The rules and regulations attached to this Lease, as well as such
reasonable rules and regulations as may be hereafter adopted by Landlord for the
safety, care and cleanliness of the Premises and the operation of the Project,
and the preservation of good order thereon, are hereby expressly made a part
hereof, and Tenant agrees to
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comply with them. Landlord shall not be liable to any person, including Tenant,
for the failure of any other tenant or person to observe such rules and
regulations.
TIME
38. Time is of the essence of this Lease.
LEASE EXAMINATION AND EXECUTION
39. Tenant acknowledges that submission of this Lease for examination and
signature by Tenant does not constitute a reservation or option for lease, and
that this Lease is not and shall not be effective until (a) Tenant has delivered
to Landlord at least three originals of this Lease, fully executed by Tenant,
accompanied by payment to Landlord of a sum equal to the sum of one month's rent
hereunder, which shall be applied toward Tenant's rental obligations under
Paragraph 3 hereof upon commencement of this Lease; and (b) Landlord has
thereafter delivered to Tenant at least one fully executed original of this
Lease, executed by both Tenant and Landlord. Tenant, and each person executing
this Lease on behalf of Tenant, represent and warrant that this Lease is duly
executed by Tenant, and the persons executing this Lease on behalf of Tenant are
duly authorized so to do and to bind Tenant to the obligations set forth in this
Lease.
MISCELLANEOUS
40. This Lease shall constitute the entire agreement of the parties
pertaining to the Premises and all prior agreements and representations of the
parties (except representations of Tenant concerning its financial condition),
whether written or oral, shall be superseded by this Lease. This Lease may not
be amended or modified except by written agreement duly executed by the parties
hereto. This Lease shall be interpreted as follows: (a) according to the fair
meaning of the language without strict construction against either party; (b)
under the laws of the State of California; (c) by disregarding captions, which
shall have no significance except convenience; (d) by substituting appropriate
gender where required; and (e) by substituting the plural for the singular, and
vice versa, where the context requires. If any provision of this Lease is found
to be unenforceable or otherwise invalid, such unenforceable provision shall be
deemed separable and the remaining provisions of this Lease shall remain in full
force and effect. Tenant's covenants shall survive termination of this Lease
where reasonably appropriate to accomplish the purpose thereof. Neither this
Lease nor any memorandum thereof shall be recorded without the prior written
consent of Landlord.
EXHIBITS
41. Exhibits A-F attached hereto, and any other Exhibit or Addendum which is
initialed or signed by Landlord and Tenant and attached hereto shall be
considered a part of this Lease for all purposes.
OPTION TO EXTEND
42. A. Notice. Landlord hereby grants to Tenant the option to extend the
term of the Lease for one additional term of five (5) years, at a rental rate
equal to the then prevailing Fair Market Rental Rate (as determined under
Paragraph B below), provided that Tenant must give Landlord written notice of
the exercise of this option to extend no later than six (6) months prior to the
expiration of the initial term of this Lease, and provided that Landlord may, at
its option, cancel Tenant's exercise of this option if Tenant fails to cure a
default under this Lease within the applicable cure period provided in this
Lease, where such default occurs or exists at the time that the option is
exercised, or at any time until the commencement date of the extended term
(subject to any applicable cure period specified herein for such default). In no
event, however, shall the monthly base rent during the option term be less than
the monthly base rent
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due and payable during the last month immediately preceding the commencement
date of the option term.
B. Determination of Rent. Landlord shall inform Tenant of its initial
determination of the Fair Market Rental Rate within thirty (30) days after its
receipt of Tenant's notice of its intention to extend the term, whereupon
Landlord and Tenant shall attempt in good faith to agree on the Fair Market
Rental Rate. If the parties are unable to reach agreement within sixty (60) days
after Landlord's receipt of Tenant's notice of its intention to extend the term,
then the Fair Market Rental Rate shall be determined by a commercial real estate
broker with not less than five (5) years experience leasing buildings similar to
the Premises in the geographic market in which the Premises are located
(hereinafter, a "Qualified Broker"), the identity of whom shall be agreed upon
by Landlord and Tenant or, if they fail to so agree, by three (3) such Qualified
Brokers, one of whom shall be chosen by Landlord, one of whom shall be chosen by
Tenant, and the third of whom shall be chosen by the other two Qualified
Brokers. Landlord and Tenant shall each bear one-half of the expenses of a
single Qualified Broker, or the expenses of the Qualified Broker each chooses
and one-half of the expenses of the third Qualified Broker, as the case may be.
In the event the Fair Market Rental Rate is not determined as provided herein
prior to the commencement of the extended term, Tenant shall continue to pay the
same rent being paid hereunder just prior to the commencement of the extended
term until such time as the Fair Market Rental Rate is determined, at which time
Tenant shall be credited or charged, as the case may be, with the difference
between the rent payable hereunder for the extended term, as finally determined
in accordance with this provision, and the amounts actually paid in lieu thereof
pending such determination.
C. Addendum. Promptly upon determination of the rent to be paid for the
renewal term, Landlord shall prepare and deliver to Tenant a lease addendum
setting forth the rent and Tenant shall execute and deliver the same to Landlord
within 10 days after receipt thereof.
D. Termination. The option granted in this Paragraph shall terminate and
be of no further force and effect if, (i) Tenant shall be in default which
remains uncured as specified in Paragraph A above, or (ii) Tenant shall fail to
exercise this option by giving notice to Landlord within the time stated in
Paragraph A. Tenant shall have no right to extend the term of this Lease beyond
the additional term set forth herein.
EARLY TERMINATION RIGHTS
43. Provided that Tenant is not in default of any of its obligations under
this Lease (beyond the applicable cure period specified herein) at the time it
wishes to exercise the right to terminate provided herein or at the intended
effective date thereof, Tenant shall have the right, exercisable by giving
Landlord notice at least six months in advance of the effective date of such
termination, to terminate this Lease as to a portion of the Premises as follows:
(a) as of the end of the sixtieth (60th) month of the Lease term, Tenant
may terminate its lease obligations with respect to up to a maximum of 30,000
contiguous square feet of the Premises; and
(b) as of the end of the seventy-second (72nd) month of the Lease term,
Tenant may terminate its lease obligations with respect to a maximum of an
additional 15,000 contiguous square feet of space.
Tenant may exercise either or both of the foregoing options in (a) or (b). In
any event, Tenant shall continue to perform all of its obligations under this
Lease with respect to the terminated portion of the Premises until the effective
date of such termination, including the payment of all rent and other charges
due with respect thereto. Tenant's notice of termination must be accompanied by
Tenant's payment of an amount equal to three months of rent payable hereunder.
In addition to these payments, Tenant shall be
22
<PAGE> 36
responsible for and shall pay on demand the costs of separating the terminated
space from the Premises (including electrical, HVAC and other utility separation
costs and separate utility metering costs) and all costs related to preserving
Tenant's access to the Building. If Tenant does not elect to terminate this
Lease in accordance with the provisions set forth herein, then this early
termination option shall be deemed waived and of no further force and effect.
Tenant acknowledges that if Tenant so elects to terminate its obligations as to
portions of the Premises pursuant to this paragraph, Landlord will suffer
damages due to the fact that Landlord will have incurred expenses based on the
full term of the Lease, including tenant improvement costs and leasing
commissions and Landlord will lose the benefit of the rentals provided for the
balance of the Lease term. The payments specified above shall constitute
compensation for such damages and payment for the privilege of exercising such
termination rights. Such payments shall be made by Tenant's corporate check
supported by good funds with Tenant's written notice of termination, and such
notice of termination shall be of no force or effect unless such notice is
accompanied by such payment. Upon termination of this Lease as to the portion of
the premises specified as provided herein, Landlord and Tenant shall be relieved
of any further obligations hereunder with respect thereto, provided, however,
that this shall not be construed to release Landlord or Tenant from any
liabilities arising out of acts, omissions or events occurring prior to such
termination.
In the event that Tenant exercises either or both of the foregoing options in
(a) or (b), then Landlord shall have the right to terminate this Lease with
respect to the entire Premises by giving written notice to Tenant within thirty
(30) days of Landlord's receipt of Tenant's termination notice, it being
understood that if Landlord gives such notice, Landlord's notice of termination
shall be effective as of the date that Tenant's partial termination would have
been effective (e.g., if Tenant exercises its option pursuant to subparagraph
(a) above and if Landlord gives its notice of election to terminate the Lease as
to the entire premises, then Landlord's notice shall be effective as of the end
of the 60th month of the Lease term).
BROKERS
44. Tenant represents and warrants to Landlord that Tenant has dealt with no
broker in connection with this Lease other than Cushman & Wakefield, and
Landlord represents and warrants to Tenant that Landlord has dealt with no
broker in connection with this Lease other than BT Commercial. Each party agrees
that it shall be liable for and shall pay its own brokerage commissions.
Landlord and Tenant also each (as "Indemnitor") agree to indemnify, defend and
hold harmless the other against and from any claims, demands, liabilities,
costs, and expenses, including without limitation attorneys' fees, arising out
of or resulting from a claim by any person (other than BT Commercial and Cushman
& Wakefield) that it is entitled to a commission, finder's fee or other
compensation in connection with this Lease transaction based on the acts or
omissions of the Indemnitor or a claim by BT Commercial or Cushman & Wakefield
resulting from a failure by a party to pay its brokerage commissions.
SIGNAGE
45. Tenant, at Tenant's expense, shall be allowed (1) to place appropriate
signage on the monument sign on the Property, and (ii) to place signs on the
exterior of the Premises; provided, however, that the size, exact location and
appearance of all such signage shall be subject to the prior written consent of
Landlord, which consent shall not be unreasonably withheld. All such signage
shall be in compliance with any City of Palo Alto requirements. Tenant, at its
own expense, shall obtain all necessary permits for any such signs, shall
maintain and repair such signs, and shall remove same upon expiration or earlier
termination of this Lease. Landlord shall have the trees in front of the
Building trimmed to Tenant's reasonable satisfaction to improve the visibility
of the
23
<PAGE> 37
signage and, if Tenant requests that the tree presently blocking the signage in
front of the Building be removed, then, provided such removal is permissible
under all applicable laws, codes and regulations, Landlord shall have the tree
removed.
COMMUNICATIONS EQUIPMENT
46. Subject to all governmental laws, rules and regulations, Tenant shall
have the right to install, operate and maintain so-called "satellite dishes" or
other similar devices, such as antennae (collectively "Communication
Equipment"), for the purpose of receiving and sending computer, telephone or
other communication signals, at a location on the roof of the Building as
requested by Tenant and approved by Landlord in writing. The installation and
operation of the Communication Equipment shall be governed by the following
terms and conditions:
(a) Tenant's right to operate and maintain the Communication Equipment
shall be subject to all governmental laws, rules and regulations, and Landlord
makes no representations that such laws, rules and regulations permit such
installation and operation;
(b) all costs of installation, operation and maintenance of the
Communication Equipment and any necessary related equipment (including, without
limitation, costs of obtaining any necessary permits) shall be borne by Tenant;
(c) Landlord retains the right to install other Communication Equipment
and to use the roof of the Building for any purpose whatsoever, provided that
Landlord shall not unduly interfere with Tenant's use of the Communication
Equipment, and that Tenant's use of the Communication Equipment shall not
prohibit Landlord from leasing Project space, including roof space, to other
users, including telecommunications providers such as Pacific Bell Mobile
Services or Cellular One and the like;
(d) Tenant shall use the Communication Equipment so as not to cause any
interference to other tenants in the Building or with any communication
equipment owned by Landlord or a third party, and not to damage or interfere
with the normal operation of the Building,
(e) Landlord shall not have any obligations with respect to the
Communication Equipment. Landlord makes no representation that the Communication
Equipment will be able to receive or transmit communication signals without
interference or disturbance (whether or not by reason of the installation or use
of similar equipment by others on the roof of the Building), and Tenant agrees
that Landlord shall not be liable to Tenant therefor;
(f) Tenant shall (i) be solely responsible for any damage caused as a
result of the Communication Equipment, (ii) promptly pay any tax, license or
permit fees charged pursuant to any laws or regulations in connection with the
installation, maintenance or use of the Communication Equipment and comply with
all precautions and safeguards recommended by all governmental authorities, and
(iii) pay for all necessary repairs, replacements to or maintenance of the
Communication Equipment; and
(g) if Tenant shall fail to do so, Landlord shall have the right to
remove the Communication Equipment and related equipment at Tenant's sole
expense upon the expiration or sooner termination of this Lease or upon the
imposition of any governmental law or regulation which may require removal and
to repair the Building upon such removal to the extent required due to removal
of the Communication Equipment within thirty (30) days after the expiration or
earlier termination of this Lease. The provisions of this Paragraph shall
survive the expiration or earlier termination of this Lease.
24
<PAGE> 38
EARLY OCCUPANCY
47. Tenant desires to occupy approximately 20% to 25% of the Building commencing
as soon as reasonably possible, recognizing that the Tenant Improvement work to
be performed in accordance with Exhibit B is unlikely to be completed and is
likely to be on-going, with the associated disruptions and interferences
associated with construction. It is understood that any delay in the Substantial
Completion of the Tenant Improvements occasioned by interference due to such
early occupancy shall not delay Tenant's obligation to commence paying rent
hereunder, which shall commence as provided below in part (3), upon occupancy of
any portion of the Premises. The parties have agreed that such early occupancy
shall be upon the following terms and conditions:
(1) Lease Terms Applicable. Tenant agrees that any such early occupancy
shall be subject to all of the terms and conditions of this Lease.
(2) Utility Charges. Tenant agrees to pay to Landlord on request all
utility charges reasonably allocated to Tenant by Landlord as a result of
Tenant's early entry upon and occupancy of the Premises.
(3) Rent. Commencing upon the date takes occupancy of any portion of the
Premises, Tenant shall be charged its prorated share of the rent and its pro
rata share of Project Taxes and Operating Expenses on a pro rata basis for the
portion(s) of the Premises so utilized.
(4) Insurance. Prior to any entry upon or occupancy of any portion of
the Premises, Tenant shall provide to Landlord certificates evidencing the
existence and amounts of insurance carried by Tenant, which coverage shall
comply with the provisions of the Lease relating to insurance.
(5) Laws. Tenant shall comply with all applicable laws, regulations,
permits and other approvals required in connection with such early entry and
occupancy of the Premises.
(6) Indemnity. Tenant shall indemnify and save Landlord and the Premises
harmless from and against any and all liens, liabilities, losses, damages,
costs, expenses, demands, actions, causes of action and claims (including,
without limitation, attorneys, fees and legal costs) arising out of the use or
occupancy of the Premises and arising from or relating to such early entry
and/or occupancy, or arising from any work in the Premises performed by Tenant
(with any such work being subject to the provisions of this Lease pertaining to
improvements, alterations, installations, repairs and maintenance by Tenant).
CONSENT OF LENDER
48. This Lease may not be amended without the prior consent of Lender, which
consent Lender has represented to Tenant shall not be unreasonably withheld.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease the day and
year first above written.
LANDLORD: TENANT:
MENLO PALO ALTO INVESTORS INFORMIX SOFTWARE, INC.
a Delaware corporation
By: [SIG] By: [SIG]
------------------------ ------------------------
General Partner Title:
---------------------
By: [SIG]
------------------------
General Partner
25
<PAGE> 39
EXHIBIT A
[Description Of Premises]
<PAGE> 40
EXHIBIT B-2
East First Floor Premises
<PAGE> 41
EXHIBIT B
Tenant Improvements
(a) Improvements. The parties have agreed that Tenant shall bear the cost of the
improvements to the Premises as described herein, and for expediency and
efficiency, the parties have further agreed that Landlord shall not require that
Landlord's contractor be used, or that Landlord be paid a construction
management fee. Instead, Tenant shall, through its contractor (who shall be
subject to Landlord's reasonable approval), cause to be constructed improvements
to the Premises and the common areas of the Project in accordance with plans and
specifications approved by Landlord and Tenant. The Premises shall be delivered
to Tenant in their present condition and Tenant shall bear all costs (except as
provided below) pertaining to improvements to the Premises to make the Premises
suitable for Tenant's use (collectively, all of the work to be performed to the
interior and to the common areas shall be referred to in the Lease as hereby
amended as the "Tenant Improvements"), including certain common area work
("Common Improvements") for (a) remodeling restrooms in compliance with current
requirements of the Americans with Disabilities Act, (b) painting and remodeling
the lobby, and (c) painting the exterior of the Building. The Tenant
Improvements and the Common Improvements shall be made in accordance with plans
and specifications approved by Landlord and Tenant, and completed by Tenant
through a contractor who shall be subject to Landlord's reasonable approval, in
a good and workmanlike manner and in accordance with all applicable laws, rules
and regulations. Tenant shall not be required to pay to Landlord a construction
management fee, but shall reimburse Landlord for the actual cost (without
mark-up) of professional services rendered to Landlord by Landlord's architect
and/or contractor (collectively "Landlord's Consultant") to review and approve
the plans and specifications for the above-described work on Landlord's behalf.
Landlord shall not be liable for the costs or construction of any improvements
or alterations to the Premises or the Project, except as provided hereinbelow.
In the event the actual cost of construction of the Common Improvements exceeds
$150,000, Tenant shall be reimbursed such excess amount (the "Excess Common
Cost"). The Excess Common Cost shall be reimbursed to Tenant upon completion of
the Tenant Improvements in accordance with the Final Plans, and Landlord's
receipt of (i) a certificate of occupancy from the City of Menlo Park, (ii)
unconditional lien waivers from all contractors and subcontractors, and (iii)
copies of all invoices pertaining to the work. Landlord's Consultant shall in
good faith determine the costs allocable to the Tenant Improvements and to the
Common Improvements. Should Tenant disagree with the determination by Landlord's
Consultant ("Landlord's Determination"), Tenant shall have the right to dispute
such determination by providing written notice within five (5) days after
receipt of Landlord's Determination that Tenant elects to have such dispute
arbitrated. If Tenant fails to give such notice, Tenant shall be deemed to have
accepted Landlord's Determination. If Tenant elects to have the matter
arbitrated, the matter shall be arbitrated in accordance with Paragraph (e)
below. Notwithstanding the foregoing, Landlord shall not be responsible for any,
and Tenant shall bear the responsibility for all costs associated with,
alterations and improvements required due to Tenant's particular business or
particular use of the Premises. Upon completion of the Tenant Improvements,
Tenant shall provide to Landlord a full set of as-built plans depicting all of
the Tenant Improvements. Tenant shall guarantee lien-free completion of all such
improvements.
(b) Plans. Tenant shall prepare and submit to Landlord two (2) sets of final
plans and specifications showing the architectural design of the Premises,
including the basic mechanical system and electrical system within the
Premises, plumbing, partitions and doors, complete fixturing information, and
material selections and finishes. Within five (5) working days after receipt of
such final plans and specifications, Landlord shall approve or suggest
modifications to such final plans and specifications. Tenant may object to any
of the suggested modifications by notice to Landlord within five (5) working
days after receipt of such suggested modifications, and unless Tenant so objects
such suggested modifications shall be deemed approved by Tenant. Tenant
<PAGE> 42
shall also submit all proposed change orders in writing (with sufficient detail
to enable Landlord to understand the nature of the proposed change) to Landlord
for Landlord's prior written approval, which shall not be unreasonably refused
or delayed. Any proposed change order shall be deemed approved by Landlord
unless Landlord disapproves same within five (5) business days after the
proposed change order is submitted to Landlord, provided that Tenant's notice
requesting approval of such change order clearly notifies Landlord that the
proposed change order shall be deemed approved if not disapproved within five
(5) business days. Tenant shall bear the cost of all change orders (including
labor and material costs required thereby) at its sole cost. While Landlord has
the right to approve the plans and specifications, Landlord's sole interest in
doing so is to protect the Building and Landlord's interests. Accordingly,
Tenant shall not rely on Landlord's approvals and Landlord shall not be the
guarantor of, nor in any way responsible for, the accuracy or correctness of any
such plans and specifications, and Landlord shall incur no liability of any kind
by reason of granting any such approvals.
(c) Delays. Notwithstanding the provisions of Paragraph 2 of this Lease, the
commencement of the term of this Lease shall not be delayed, and the
Commencement Date shall be advanced to the date it would have been but for the
delay, if substantial completion is delayed because: (1) construction to be
furnished hereunder has not been completed if such construction has been delayed
at the instruction of or due to the act or neglect of Tenant, its employees or
its contractors; (2) construction has been delayed by Tenant's failure to
promptly approve plans, or to accommodate the installation of Tenant's trade
fixtures, equipment or improvements; or (3) Tenant has ordered additional
improvements not shown in preliminary plans reviewed at the time of the
execution of this Lease, or has made changes to the plans after approval thereof
by Landlord. Substantial completion of the Premises shall occur when the work to
be done in accordance with the approved plans and specifications is
substantially completed, notwithstanding that minor details of construction,
mechanical adjustments or decorations which do not materially interfere with the
use of the Premises remain to be performed, and the Premises shall be deemed
substantially complete even though certain portions of the Building, which do
not interfere with Tenant's conduct of its business, have not been fully
completed, and even though Tenant's furniture, telephones, telecopiers,
computers and other office equipment and machines have not been installed, the
purchase and installation of which shall be Tenant's sole responsibility.
(d) Early Access. Upon execution and delivery of this Lease accompanied by
Tenant's payment of its first month's rent hereunder, and provided that Tenant
has in place the insurance required by this Lease, Tenant shall be granted
reasonable access to the Premises for the purpose of installing its fixtures,
communications cabling and the like. Tenant and Landlord shall use their best
efforts to coordinate such installation with the Tenant Improvement work
construction schedules to endeavor to avoid delays or interference in the
construction of the Tenant Improvement work. Any delay in the Substantial
Completion of the Tenant Improvements occasioned by interference due to such
early access shall not delay Tenant's obligation to commence paying rent
hereunder, which shall commence upon the date that Substantial Completion would
have been achieved but for such interference.
(e) Arbitration of Landlord's Determination. In the event Tenant disputes
Landlord's Determination as provided in Paragraph (a) above, Tenant's notice of
its election to submit the matter to arbitration shall be accompanied by
Tenant's determination ("Tenant's Determination") of the cost allocable to the
Tenant Improvements and to the Common Improvements. The parties shall resolve
this disagreement as follows:
(i) Within ten (10) days after Tenant delivers Tenant's Determination to
Landlord, Landlord and Tenant shall, meet by conference call or in person no
less than two (2) times, at a mutually agreeable time and place, to attempt to
resolve the disagreement.
<PAGE> 43
(ii) If, within such ten-day period, the parties cannot reach an
agreement, they shall select a neutral, mutually agreeable architect to resolve
the dispute. The architect's sole charge shall be to decide which of the two
determinations, Landlord's Determination and Tenant's Determination, more
accurately describes the cost allocable to the Tenant Improvements and to the
Common Improvements. The architect shall be instructed to deliver its decision
within ten (10) days after his or her appointment. The determination by such
neutral architect shall be conclusive and binding on the parties. Each party
shall bear one-half (1/2) the cost, if any, incurred by the architect in
resolving this disagreement.
<PAGE> 44
EXHIBIT C
COMMENCEMENT DATE MEMORANDUM
LANDLORD: Menlo Palo Alto Investors
TENANT: Informix Software, Inc.
LEASE DATE:
----------------------------
PREMISES:
----------------------------
Pursuant to Paragraph 3 of the above referenced Lease, the Commencement Date is
hereby established as _______________________, 19______.
LANDLORD:
Menlo Palo Alto Investors,
a California limited partnership
By:
----------------------------
General Partner
TENANT:
Informix Software, Inc.
a Delaware corporation
By:
----------------------------
Its:
----------------------------
<PAGE> 45
EXHIBIT D
RULES AND REGULATIONS
1. Sidewalks, halls, passages, exits, entrances, elevator and stairways shall
not be obstructed by tenants or used by them for any purpose other than for the
ingress to and egress from their respective premises. The halls, passages,
exits, entrances, elevator and stairways are not for the use of the general
public and Landlord shall in all cases retain the right to control and prevent
access thereto by all persons whose presence, in the judgment of Landlord, shall
be prejudicial to the safety, character, reputation and interests of the
Building and its tenants, provided that nothing herein contained shall be
construed to prevent such access to persons with whom any tenant normally deals
in the ordinary course of such tenant's business unless such persons are engaged
in illegal activities. No tenant, and no employee or invitees of any tenant,
shall go upon the roof of the Building, except as authorized by Landlord.
2. No sign, placard, picture, name, advertisement or notice visible from the
exterior of any tenant's premises shall be inscribed, painted, affixed,
installed or otherwise displayed by any tenant either on its premises or any
part of the Building without the prior written consent of Landlord, and Landlord
shall have the right to remove any such sign, placard, picture, name,
advertisement, or notice without notice to and at the expense of the tenant. If
Landlord shall have given such consent to any tenant at any time, whether before
or after the execution of the Lease, such consent shall in no way operate as a
waiver or release of any of the provisions hereof or of such Lease, and shall be
deemed to relate only to the particular sign, placard, picture, name,
advertisement or notice so consented to by Landlord and shall not be construed
as dispensing with the necessity of obtaining the specific written consent of
Landlord with respect to any other such sign, placard, picture, name,
advertisement or notice. All approved signs or lettering on doors and walls
shall be printed, painted, affixed or inscribed at the expense of the tenant by
a person approved by Landlord.
3. The bulletin board or directory of the Building will be provided exclusively
for the display of the name and location of tenants only and Landlord reserves
the right to exclude any other names therefrom. Tenant shall have the right to
its share of the directory commensurate with (in proportion to) the square
footage of space leased and occupied by Tenant.
4. No curtains, draperies, blinds, shutters, shades, screens or other coverings,
awnings, hangings or decorations shall be attached to, hung or placed in, or
used in connection with, any window or door on any premises without the prior
written consent of Landlord. In any event, all such items shall be installed
inboard of Landlord's standard window covering and shall in no way be visible
from the exterior of the Building. No articles shall be placed against glass
partitions or doors which might appear unsightly from outside tenant's premises.
5. Landlord reserves the right to exclude from the Building between the hours of
6:00 p.m. and 8:00 p.m. and at all hours on Saturdays, Sundays and holidays, all
persons who are not tenants or their accompanied guests in the Building. Each
tenant shall be responsible for all persons whom it allows to enter the Building
and shall be liable to Landlord for all acts of such persons. Landlord shall in
no case be liable for damages for error with regard to the admission to or
exclusion from the Building of any person. During the continuance of any
invasion, mob, riot, public excitement or other circumstance rendering such
action advisable in Landlord's opinion, Landlord reserves the right to prevent
access to the Building by closing the doors, or otherwise, for the safety of
tenants and protection of the Building and property in the Building.
6. No tenant shall employ any person or persons other than the janitor of
Landlord for the purpose of cleaning Premises unless otherwise agreed to by
Landlord in writing. Except with the written consent of Landlord no person or
persons other than those approved by Landlord shall be permitted to enter the
Building for the purpose of
<PAGE> 46
cleaning the same. No tenant shall cause any unnecessary labor by reason of such
tenant's carelessness or indifference in the preservation of good order and
cleanliness of the Premises. Landlord shall in no way be responsible to any
tenant for any loss of property on the Premises, however occurring, or for any
damage done to the effects of any tenant by the janitor or any other employee or
any other person.
7. [Deleted]
8. Each tenant shall see that the doors of its Premises are closed and securely
locked and must observe strict care and caution that all water faucets or water
apparatus are entirely shut off before the tenant or its employees leave such
Premises, and that all utilities shall be likewise be carefully shut off, so as
to prevent waste or damage, and for any default or carelessness that the tenant
shall make good all injuries sustained by other tenants or occupants of the
Building or Landlord. On multiple-tenancy floors, all tenants shall keep the
door or doors to the Building corridors closed at all times except for ingress
and egress.
9. As more specifically provided in each tenant's Lease of the Premises, tenant
shall not waste electricity, water or air-conditioning and agrees to cooperate
fully with Landlord to assure the most effective operation of the Building's
HVAC system, and shall refrain from attempting to adjust any controls other than
the room thermostats installed for tenant's use.
10. No tenant shall alter any lock or access device or install a new or
additional lock or access device or any bolt on any door of its Premises without
the prior written consent of Landlord, which shall not unreasonably be withheld.
If Landlord shall give its consent, the tenant shall in each case employ a
contractor approved in writing by Landlord for such work, and shall furnish
Landlord with a key or access code for any such lock or device.
11. Tenant shall have the right to make additional copies of any keys or access
devices provided by Landlord. Each tenant, upon the termination of the tenancy,
shall deliver to Landlord all the keys or access devices for the Building,
offices, rooms and toilet rooms which shall have been furnished the tenant or
which the tenant shall have had made. In the event of the loss of any keys or
access devices so furnished by Landlord, tenant shall pay Landlord therefor.
12. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not
be used for any purpose other than for which they were constructed and no
foreign substance of any kind whatsoever shall be thrown therein, and the
expense of any breakage, stoppage or damage resulting from the violation of this
rule shall be borne by the tenant who, or whose employees or invitees, shall
have caused it.
13. No tenant shall use or keep in its Premises or the Building any kerosene,
gasoline or inflammable or combustible fluid or material other than limited
quantities necessary for the operation or maintenance of office or office
equipment. No tenant shall use any method of heating or air-conditioning other
than that supplied by Landlord.
14. No tenant shall use, keep or permit to be used or kept in its Premises any
foul or noxious gas or substance or permit or suffer such Premises to be
occupied or used in a manner offensive or objectionable to Landlord or other
occupants of the Building by reason of noise, odor and/or vibrations or
interference in any way with other tenants or those having business therein, nor
shall any animals or birds be brought or kept in or about any Premises of the
Building.
15. No cooking shall be done or permitted by any tenant on its Premises (except
that use by the tenant of Underwriter's Laboratory approved equipment for the
preparation of coffee, tea, hot chocolate and similar beverages for tenants and
their employees shall be permitted, provided that such equipment and use is in
accordance with all applicable
2
<PAGE> 47
federal, state and city laws, codes, ordinances, rules and regulations), nor
shall the Premises be used for lodging.
16. Except with the prior written consent of Landlord, no tenant shall sell or
permit the sale at retail, of newspapers, magazines, periodicals, theatre
tickets or any other goods or merchandise in or on any Premises, nor shall
tenant carry on, or permit or allow any employee or other person to carry on,
the business of stenography, typewriting or any similar business in or from any
Premises for the service of accommodation of occupants of any other portion of
the Building, nor shall the Premises of any tenants be used for the storage of
merchandise or for manufacturing of any kind, or the business of a public barber
shop, beauty parlor, nor shall the Premises of any tenant be used for any
improper, immoral or objectionable purpose, or any business or activity other
than that specifically provided for in such tenant's lease.
17. If tenant requires telegraphic, telephonic, burglar alarm or similar
services, it shall first obtain, and comply with, Landlord's instructions in
their installation.
18. Landlord will direct electricians as to where and how telephone, telegraphic
and electrical wires are to be introduced or installed. No boring or cutting for
wires will be allowed without the prior written consent of Landlord. The
location of burglar alarms, telephones, call boxes and other office equipment
affixed to all Premises shall be subject to the reasonable written approval of
Landlord.
19. No tenant shall install any radio or television antenna, loudspeaker or any
other devise on the exterior walls or the roof of the Building. Tenant shall not
interfere with radio or television broadcasting or reception for or in the
Building or elsewhere.
20. No tenant shall lay linoleum, tile, carpet or any other floor covering so
that the same shall be affixed to floor of its Premises in any manner except as
approved in writing by Landlord. The expense of repairing any damage resulting
from a violation of this rule or the removal of any floor covering shall be
borne by the tenant by whom, or by whose contractors, employees or invitees, the
damage shall have been caused.
21. The elevator shall be available for use by all tenants in the Building,
subject to such reasonable scheduling as Landlord in its discretion shall deem
appropriate. No furniture, freight, equipment, materials, supplies, packages,
merchandise or other property will be received in the Building or carried up or
down the elevators except between such hours and in such elevators as shall be
designated by Landlord.
22. Landlord shall have the right to prescribe the weight, size and position of
all safes, furniture or other heavy equipment brought into the Building. Safes
or other heavy objects shall, if considered necessary by Landlord, stand on wood
strips of such thickness as determined by landlord to be necessary to properly
distribute the weight thereof. Landlord will not be responsible for loss of or
damage to any such safe, equipment or property from any cause, and all damage
done to the Building by moving or maintaining any such safe, equipment or
property from any cause, and all damage done to the Building by moving or
maintaining any such safe, equipment or other property shall be repaired at the
expense of tenant.
23. Business machines and other mechanical equipment belonging to Tenant which
cause noise or vibration that may be transmitted to the structure of the
Building or to any space therein to such a degree as to be objectionable to any
tenants in the Building shall be placed and maintained by Tenant, at Tenant's
expense, upon vibration eliminators or other devices sufficient to eliminate
noise or vibration. The persons employed to move equipment in or out of the
Building must be acceptable to Landlord.
24. No tenant shall place a load upon any floor of the Premises which exceeds
the load per square foot which such floor was designed to carry and which is
allowed by law. No tenant shall mark, or drive nails, screws or drill into, the
partitions, woodwork or plaster or in any way deface such Premises or any part
thereof.
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<PAGE> 48
25. [Deleted]
26. There shall not be used in any space, or in the public areas of the
Building, either by any tenant or others, any hand trucks except those equipped
with rubber tires and side guards or such other material-handling equipment as
Landlord may approve. No other vehicles of any kind shall be brought by any
tenant into or kept in or about the Premises.
27. Each tenant shall store all its trash and garbage within the interior of its
Premises. No material shall be placed in the trash boxes or receptacles if such
material is of such nature that it may not be disposed of in the ordinary and
customary manner of removing and disposing of trash and garbage in the city
without violation of any law or ordinance governing such disposal. All trash,
garbage and refuse disposal shall be made only through entryways and elevator
provided for such purposes and at such time as Landlord shall designate.
28. Canvassing, soliciting, distribution of handbills or any other written
material, and peddling in the Building are prohibited and each tenant shall
cooperate to prevent the same. No tenant shall make room-to-room solicitation of
business from other tenants in the Building.
29. Landlord shall have the right, exercisable without notice and without
liability to any tenant, to change the name and address of the Building.
30. Landlord reserves the right to exclude or expel from the Building any person
who, in Landlord's judgment, is intoxicated or under the influence of liquor or
drugs or who is in violation of any of the rules and regulations of the
Building.
31. Without the prior written consent of Landlord, tenant shall not use the name
of the Building in connection with or in promoting or advertising the business
of tenant except as tenant's address.
32. Tenant shall comply with all safety, fire protection and evacuation
procedures and regulations established by Landlord or any governmental agency.
33. Tenant assumes any and all responsibility for protecting its Premises from
theft, robbery and pilferage, which includes keeping doors locked and other
means of entry to the Premises closed.
34. The requirements of tenants will be attended to only upon application at the
office of the Building by an authorized individual. Employees of Landlord shall
not perform any work or do anything outside of their regular duties unless under
special instructions from Landlord, and no employees will admit any person
(tenant or otherwise) to any office without specific instructions from Landlord.
35. Landlord may waive any one or more of these Rules and Regulations for the
benefit of any particular tenant or tenants, but no such waiver by landlord
shall be construed as a waiver of such Rules and Regulations in favor of any
other tenant or tenants, not prevent Landlord from-thereafter enforcing any such
Rules and Regulations against any or all tenants of the Building.
36. Landlord reserves the right to make such other reasonable rules and
regulations as in its judgment may from time to time be needed for safety and
security, for care and cleanliness of the Building and for the preservation of
good order therein.
37. Tenant shall be responsible for observance of all the foregoing Rules and
Regulations by tenant's employees, agents, clients, customers, invitees and
guests.
38. These Rules and Regulations are in addition to, and shall not be construed
to in any way modify, alter or amend, in whole or in part, the terms, covenants,
agreements and conditions of any Lease of Premises in the Building.
4
<PAGE> 49
39. Landlord reserves the right to designate the use of the parking spaces on
the Premises.
40. Tenant shall use carpet protectors under all desk chairs.
5
<PAGE> 50
EXHIBIT E
FORM OF
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
(ATTACHED]
1
<PAGE> 51
EXHIBIT F
FORM OF
TENANT ESTOPPEL CERTIFICATE
[ATTACHED]
1
<PAGE> 52
TENANT ESTOPPEL CERTIFICATE
TO: Aetna Life Insurance Company ("Aetna") and/or whom else it may concern:
THIS IS TO CERTIFY THAT:
1. The undersigned is the lessee ("Tenant") under that certain lease dated
___________ 19__ (the "Lease") by and between _______________________ as lessor
("Landlord") and ____________________________ as Tenant covering those certain
premises commonly known and designated as ______________________________________
____________________________________________________ (the "Premises").
2. The Lease is not in default and is valid and in full force and effect on
the date hereof. The Lease is the only Lease or agreement between Tenant and
Landlord affecting or relating to the Premises. The Lease represents the entire
Agreement between Landlord and Tenant with respect to the Premises. The Lease
has not been modified, changed, altered, assigned, supplemented or amended in
any respect, except as indicated below (if none, state "none").
- --------------------------------------------------------------------------------
3. Tenant is not entitled to, and has made no agreement(s) with Landlord or
its agents or employees concerning free rent, partial rent, release of rent
payments, credit or offer or deduction in rent, or any other type of rental
concession, including, without limitation, lease support payments or lease
buy-out, except as indicated below (if none, state "none").
- --------------------------------------------------------------------------------
4. Tenant has accepted and now occupies the Premises, and is and has been
open for business since ________________ 19__. The Lease term begins ___________
19__. The termination date of the present term of the Lease, excluding
unexercised renewal is ______________ 19__.
5. Tenant's security deposit is $__________. Tenant has paid rent for the
Premises for the period up to and including _________________ 19__. The fixed
minimum rent and any additional rent (including Tenant's shares of tax increases
and cost of living increases) payable by Tenant presently is $________ per
month. No such rent has been paid more than two (2) months in advance of its due
date, except as indicated below (if none, state "none").
- --------------------------------------------------------------------------------
6. No event has occurred and no condition exists which, with the giving of
notice or the lapse of time or both, will constitute a default under the Lease.
Tenant has no existing defenses or offsets against the enforcement of this Lease
by Landlord.
7. All conditions under this Lease to be performed by Landlord have been
satisfied. All required contributions by the Landlord to Tenant on account of
Tenant's tenant improvements have been received by Tenant. Tenant has received
or will receive payment or credit for tenant improvement work in the total
amount of $___________ or if other than cash, describe below (if none state,
"none").
- --------------------------------------------------------------------------------
8. The Lease contains and Tenant has, no outstanding options or rights of
first refusal to purchase the Premises or any part thereof or all or any part of
the real property of which the Premises are a part, except as described below
(if none, state "none").
- --------------------------------------------------------------------------------
9. No actions, whether voluntary or otherwise, are pending against Tenant
or any general partner of Tenant under the bankruptcy laws of the United States
or any sums thereof.
10. No one except Tenant and its employees occupies the Premises. Tenant has
not sublet the Premises to any sublessee and has not assigned any of its rights
under the Lease, except as indicated below (if none, state "none").
- --------------------------------------------------------------------------------
11. The address for notices to be sent to Tenant is as set forth in the
Lease.
<PAGE> 53
12. To the best of Tenant's knowledge, the use, maintenance or operation of
the Premises complies with, and will at all times comply with, all applicable
federal, state, county or local statutes, laws, rules and regulations of any
governmental authorities relating to environmental, health or safety matters
(being hereinafter collectively referred to as the Environmental Laws).
13. The Premises have not been used and Tenant does not plan to use the
Premises for any activities which, directly or indirectly, involve the use,
generation, treatment, storage, transportation or disposal of any petroleum
product or any toxic or hazardous chemical, material, substance, pollutant or
waste.
14. Tenant has not received any notices, written or oral, of violation of any
Environmental Law or of any allegation which, if true, would contradict
anything contained herein and there are no writs, injunctions, decrees, orders
or judgments outstanding, no lawsuits, claims, proceedings or investigations
pending or threatened, relating to the use, maintenance or operation of the
Premises, nor is Tenant aware of a basis for any such proceeding.
15. [INCLUDE THIS PARAGRAPH FOR LOAN TRANSACTIONS.] Tenant acknowledges that
all the interest of Landlord in and to the Lease is being duly assigned to
Aetna, and that pursuant to the terms thereof, all rent payments under the
Lease shall continue to be paid to Landlord in accordance with the terms of the
Lease unless and until Tenant is notified otherwise in writing by Aetna or its
successors or assigns.
It is particularly noted that:
(a) Under the provisions of this assignment, the Lease cannot be
terminated (either directly or by the exercise of any option which could lead
to termination) or modified in any of its terms, or consent be given to the
release of any party having liability thereon, without the prior written
consent of Aetna or its successors or assigns, and without such consent, no
rent may be collected or accepted more than two (2) months in advance.
(b) The interest of Landlord in the Lease has been assigned to Aetna for
the purposes specified in the assignment. Aetna, or its successors or assigns,
assumed no duty, liability or obligations whatever under the Lease or any
extension or renewal thereof.
(c) Any notices sent to Aetna or its affiliates should be sent by
registered mail and addressed to: c/o Aetna Investment Group, 242 Trumbull
Street (JG4M), Hartford, Connecticut 06103.
16. Tenant agrees to give any Mortgagee and/or Trust Deed Holders
("Mortgagee"), by registered mail, a copy of any notice of default served upon
the Landlord, provided that prior to such notice Tenant has been notified in
writing, (by way of Notice of Assignment of Rents and Leases, or otherwise) of
the address of such Mortgagee. Tenant further agrees that if Landlord shall
have failed to cure such default within the time provided for in this Lease,
then Mortgagee shall have an additional sixty (60) days within which to cure
such default or if such default cannot be cured within that time, then such
additional time as may be necessary to cure such default shall be granted if
within such sixty (60) days Mortgagee has commenced and is diligently pursuing
the remedies necessary to cure such default (including, but not limited to,
commencement of foreclosure proceedings, if necessary to effect such cure), in
which event the Lease shall not be terminated while such remedies are being so
diligently pursued.
17. This certification is made to induce Aetna to make certain fundings,
knowing that Aetna relies upon the truth of this certification in disbursing
said funds.
18. The undersigned is authorized to execute this Tenant Estoppel Certificate
on behalf of Tenant.
Dated this ________ day of __________, 19 ___.
___________________ (TENANT)
By: ________________________
Date: _______________________ Its:
The undersigned hereby certifies that the certifications set forth above are
true as of the date hereof.
___________________ (OWNER)(LANDLORD)
By: ________________________
Date: _______________________ Its:
<PAGE> 54
AMENDMENT TO LEASE
This is an Amendment to Lease made with reference to that certain
Agreement of Lease dated February 22, 1996 (the "Lease") between Menlo Palo Alto
Investors, a general partnership ("Landlord"), and Informix Software, Inc., a
Delaware corporation ("Tenant"). The provisions of this Amendment shall
supersede any conflicting or inconsistent provisions in the Lease. Landlord and
Tenant have agreed that the Common Improvements, as described in the Lease, are
to be constructed by Tenant at its cost, the cost limitation heretofore
expressed in Exhibit B to the Lease with respect to the Common Improvements is
hereby deleted, and accordingly, the parties have agreed to amend the Lease as
provided herein.
1. Amendment. The parties have agreed that Tenant shall perform all the
work described in Exhibit B to the Lease as the Tenant Improvements and the
Common Improvements, at its sole cost. Accordingly, Exhibit B to the Lease is
amended as follows: (1) the phrase "(except as provided below)" is deleted from
the third sentence of Paragraph (a), (2) the phrase "except as provided
hereinbelow" is deleted from the sixth sentence of Paragraph (a), (3) the
seventh through and including the eleventh sentences are deleted from Paragraph
(a), and (4) Paragraph (e), Arbitration of Landlord's Determination, is deleted
from Exhibit B. The specifications for painting the exterior of the Building
shall be subject to the approval of the parties, as provided in Exhibit B to the
Lease, and shall be of a quality at least equivalent to the recommendations made
in the letter from Woodson/Barkdale Architects dated July 18, 1994 to Roger
Stuhlmuller (a copy of which has been provided to Landlord and Tenant). Tenant
shall provide Landlord at least fifteen (15) days prior notice before commencing
any work at the Premises to permit Landlord to post such notices as Landlord
deems appropriate, including notices of nonresponsibility. Except as amended
hereby, the terms and provisions of the Lease shall govern.
IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment
to Lease as of March 1, 1996.
LANDLORD: TENANT:
MENLO PALO ALTO INVESTORS INFORMIX SOFTWARE, INC.
A Delaware corporation
By: [SIG] By: [SIG]
----------------------- ----------------------
Title:
-------------------
By: [SIG]
-----------------------
<PAGE> 55
EXHIBIT B-1
Second Floor Premises
<PAGE> 56
EXHIBIT B-3
West First Floor Premises
<PAGE> 1
EXHIBIT 10.9
INFORMATICA CORPORATION
1993 FLEXIBLE STOCK INCENTIVE PLAN
1. Establishment, Purpose, and Definitions.
(a) There is hereby adopted the 1993 Flexible Stock Incentive
Plan (the "Plan") of Informatica Corporation, a California corporation (the
"Company").
(b) The purpose of the Plan is to provide a means whereby
eligible individuals (as defined in paragraph 4, below) can acquire Common Stock
of the Company (the "Stock"). The Plan provides employees (including officers
and directors who are employees) of the Company and of its Affiliates an
opportunity to purchase shares of Stock pursuant to options which may qualify as
incentive stock options (referred to as "incentive stock options") under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), and
employees, officers, directors, independent contractors, and consultants of the
Company and of its Affiliates an opportunity to purchase shares of Stock
pursuant to options which are not described in Sections 422 or 423 of the Code
(referred to as "nonqualified stock options"). The Plan also provides for the
sale or bonus of Stock to eligible individuals in connection with the
performance of services for the Company or its Affiliates.
(c) The term "Affiliates" as used in the Plan means parent or
subsidiary corporations, as defined in Sections 424(e) and (f) of the Code (but
substituting "the Company" for "employer corporation"), including parents or
subsidiaries which become such after adoption of the Plan.
2. Administration of the Plan.
(a) The Plan shall be administered by the Board of Directors
of the Company (the "Board"). The Board may delegate the responsibility for
administering the Plan to a committee, under such terms and conditions as the
Board shall determine (the "Committee"). The Committee shall consist of two or
more members of the Board or such lesser number of members of the Board as
permitted by Rule 16b-3 promulgated under the Securities Exchange Act of 1934,
as amended ("Rule 16b-3"). None of the members of the Committee shall receive,
while serving on the Committee, or during the one-year period preceding
appointment to the Committee, a grant or award of equity securities under (i)
the Plan or (ii) any other plan of the Company or its affiliates under which the
participants are
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<PAGE> 2
entitled to acquire Stock (including restricted Stock), stock options, stock
bonuses, related rights or stock appreciation rights of the Company or any of
its affiliates, other than pursuant to transactions in any such other plan which
do not disqualify a director from being a disinterested person under Rule 16b-3.
The limitations set forth in this Section 2(a) shall automatically incorporate
any additional requirements that may in the future be necessary for the Plan to
comply with Rule 16b-3. Members of the Committee shall serve at the pleasure of
the Board. The Committee shall select one of its members as chairman, and shall
hold meetings at such times and places as it may determine. A majority of the
Committee shall constitute a quorum and acts of the Committee at which a quorum
is present, or acts reduced to or approved in writing by all the members of the
Committee, shall be the valid acts of the Committee. If the Board does not
delegate administration of the Plan to the Committee, then each reference in
this Plan to "the Committee" shall be construed to refer to the Board.
(b) The Committee shall determine which eligible individuals
(as defined in paragraph 4, below) shall be granted options under the Plan, the
timing of such grants, the terms thereof (including any restrictions on the
Stock), and the number of shares subject to such options.
(c) The Committee may amend the terms of any outstanding
option granted under this Plan, but any amendment which would adversely affect
the optionee's rights under an outstanding option shall not be made without the
optionee's written consent. `Without limitation of the foregoing, the Committee
shall have the right, with the optionee's consent, to accelerate the exercise
date of any option issued pursuant to the Plan. The Committee may, with the
optionee's written consent, cancel any outstanding stock option or accept any
outstanding stock option in exchange for a new option.
(d) The Committee shall also determine which eligible
individuals (as defined in paragraph 4, below) shall be issued Stock under the
Plan, the timing of such grants, the terms thereof (including any restrictions),
and the number of shares to be granted. The Stock shall be issued for such
consideration (if any) as the Committee deems appropriate. Stock issued subject
to restrictions shall be evidenced by a written agreement (the "Restricted Stock
Purchase Agreement" or the "Restricted Stock Bonus Agreement"). The Committee
may amend any Restricted Stock Purchase Agreement, but any amendment which would
adversely affect the individuals rights to the Stock shall not be made without
his or her written consent.
(e) The Committee shall have the sole authority, in its
absolute discretion to adopt, amend, and rescind such rules and regulations as,
in its opinion, may be advisable in the
2
<PAGE> 3
administration of the Plan, to construe and interpret the Plan, the rules and
the regulations, and the instruments evidencing options or Stock granted under
the Plan and to make all other determinations deemed necessary or advisable for
the administration of the Plan. All decisions, determinations, and
interpretations of the Committee shall be binding on all participants.
3. Stock Subject to the Plan.
(a) An aggregate of not more than 600,000 shares of Stock
shall be available for the grant of stock options or the issuance of Stock under
the Plan. If an option is surrendered (except surrender for shares of Stock) or
for any other reason ceases to be exercisable in whole or in part, the shares
which were subject to such option but as to which the option had not been
exercised shall continue to be available under the Plan. In addition, any Stock
which is retained by the Company upon exercise of an option in order to satisfy
the exercise price for such option or any withholding taxes due with respect to
such option exercise shall be treated as not issued to the optionee and will
therefore continue to be available under the Plan.
(b) If there is any change in the Stock subject to the Plan,
the Stock subject to a Restricted Stock Purchase Agreement or Restricted Stock
Bonus Agreement or the Stock subject to any option granted under the Plan,
through merger, consolidation, reorganization, recapitalization,
reincorporation, stock split, stock dividend, or other change in the corporate
structure of the Company, appropriate adjustments shall be made by the Committee
in order to preserve but not to increase the benefits to the individual,
including adjustments to the aggregate number and kind of shares subject to the
Plan, or to a Restricted Stock Purchase Agreement, Restricted Stock Bonus
Agreement, and the number and kind of shares and the price per share subject to
outstanding options.
4. Eligible Individuals. Individuals who shall be eligible to have
granted to them the options or Stock provided for by the Plan shall be such
employees, officers, directors, independent contractors, and consultants of the
Company or an Affiliate as the Committee, in its discretion, shall designate
from time to time. Notwithstanding the foregoing, only employees of the Company
or an Affiliate (including officers and directors who are bona fide employees)
shall be eligible to receive incentive stock options.
5. The Option Price. The exercise price of the Stock covered by each
incentive stock option shall be not less than the per share fair market value of
such Stock on the date the option is granted. The exercise price of the Stock
covered by each
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nonqualified stock option shall be as determined by the Committee.
Notwithstanding the foregoing, in the case of an incentive stock option granted
to a person possessing more than ten percent of the combined voting power of the
Company or an Affiliate, the exercise price shall be not less than 110 percent
of the fair market value of the Stock on the date the option is granted. The
exercise pride of an option shall be subject to adjustment to the extent
provided in paragraph 3(b) above.
6. Terms and Conditions of Options.
(a) Each option granted pursuant to the Plan will be evidenced
by a written Stock Option Agreement executed by the Company and the person to
whom such option is granted.
(b) The Committee shall determine the term of each option
granted under the Plan; provided, however, that the term of an incentive stock
option shall not be for more than 10 years and that, in the case of an incentive
stock option granted to a person possessing more than ten percent of the
combined voting power of the Company or an Affiliate, the term of each incentive
stock option shall be for no more than five years.
(c) In the case of incentive stock options, the aggregate fair
market value (determined as of the time such option is granted) of the Stock
with respect to which incentive stock options are exercisable for the first time
by an eligible employee in any calendar year (under this Plan and any other
plans of the Company or its Affiliates) shall not exceed $100,000. In the event
an acceleration of any exercise date of incentive stock options by the Committee
pursuant to Section 2(c) above causes the aggregate fair market value of the
stock subject to such incentive stock options to exceed the $100,000 limit
described in the immediately preceding sentence, that portion of such incentive
stock options which exceeds the $100,000 limit shall be deemed to be
nonqualified stock options under the Plan.
(d) The Stock Option Agreement may contain such other terms,
provisions, and conditions as may be determined by the Committee (not
inconsistent with this Plan). If an option, or any part thereof is intended to
qualify as an incentive stock option, the Stock Option Agreement shall contain
those terms and conditions which are necessary to so qualify it. Notwithstanding
the foregoing, no option granted under the Plan may vest at less than 20% per
year over five consecutive years.
7. Terms and Conditions of Stock Purchase and Bonus.
(a) Each sale or grant of stock pursuant to the Plan will be
evidenced by either a written Restricted Stock Purchase Agreement executed by
the Company and the person to whom such stock is sold or a written Restricted
Stock Bonus Agreement
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<PAGE> 5
executed by the Company and the person to whom such stock is granted.
(b) The Restricted Stock Purchase Agreement or Restricted
Stock Bonus Agreement may contain such other terms, provisions, and conditions
as may be determined by the Committee (not inconsistent with this Plan),
including not by way of limitation, restrictions on transfer, forfeiture
provisions, repurchase provisions, and vesting provisions.
8. Use of Proceeds. Cash proceeds realized from the sale of Stock under
the Plan or pursuant to options granted under the Plan shall constitute general
funds of the Company.
9. Amendment, Suspension, or Termination of the Plan.
(a) The Board may at any time amend, suspend or terminate the
Plan as it deems advisable; provided that such amendment, suspension or
termination complies with all applicable requirements of state and federal law,
including any applicable requirement that the Plan or an amendment to the Plan
be approved by the stockholders, and provided further that, except as provided
in paragraph 3(b), above, the Board shall in no event amend the Plan in the
following respects without the consent of stockholders then sufficient to
approve the Plan in the first instance:
(b) To increase the maximum number of shares subject to
incentive stock options issued under the Plan; or
(i) To change the designation or class of persons eligible to
receive incentive stock options under the Plan.
(ii) No option may be granted nor any Stock issued under the
Plan during any suspension or after the termination of the Plan, and no
amendment, suspension, or termination of the Plan shall, without the
affected individuals consent, alter or impair any rights or obligations
under any option previously granted under the Plan. The Plan shall
terminate with respect to the grant of incentive stock options on March
31, 2003, unless previously terminated by the Board pursuant to this
paragraph 9.
10. Assignability. Each option granted pursuant to this Plan shall,
during optionee's lifetime, be exercisable only by him, and neither the option
nor any right hereunder shall be transferable by optionee by operation of law or
otherwise other than by will or the laws of descent and distribution. Stock
subject to a Restricted Stock Purchase Agreement or a Restricted Stock Bonus
Agreement shall be transferable only as provided in such Agreement.
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<PAGE> 6
11. Payment Upon Exercise of Options. Payment of the purchase price
upon exercise of any option granted under this Plan shall be made in cash;
provided, however, that the Committee, in its sole discretion, may permit an
optionee to pay the option price in whole or in part (i) with shares of Stock
owned by the Optionee; (ii) by delivery on a form prescribed by the Committee of
an irrevocable direction to a securities broker approved by the Committee to
sell shares and deliver all or a portion of the proceeds to the Company in
payment for the Stock; (iii) by delivery of the optionee's promissory note with
such recourse, interest, security, and redemption provisions as the Committee in
its discretion determines appropriate; or (iv) in any combination of the
foregoing. Any Stock used to exercise options shall be valued at its fair market
value on the date of the exercise of the option. In addition, the Committee, in
its sole discretion, may authorize the surrender by an optionee of all or part
of an unexercised option and authorize a payment in consideration thereof of an
amount equal to the difference between the aggregate fair market value of the
Stock subject to such option and the aggregate option price of such Stock. In
the Committee's discretion, such payment may be made in cash, shares of Stock
with a fair market value on the date of surrender equal to the payment amount,
or some combination thereof.
12. Withholding Taxes. No Stock shall be granted or sold under the Plan
to any participant, until the participant has made arrangements acceptable to
the Committee for the satisfaction of federal, state, and local income and
social security tax withholding obligations, including without limitation
obligations incident to the receipt of Stock under the Plan, the lapsing of
restrictions applicable to such Stock, the failure to satisfy the conditions for
treatment as incentive stock options under applicable tax law, or the receipt of
cash payments. Upon exercise of a stock option or lapsing or restriction on
stock issued under the Plan, the Company shall withhold from the Optionee or
require the Stockholder to surrender shares of the Company's Stock sufficient to
satisfy federal, state and local income and social security tax withholding
obligations.
13. Restrictions on Transfer of Shares. The Stock acquired pursuant to
the Plan shall be subject to such restrictions and agreements regarding sale,
assignment, encumbrances, or other transfer as are in effect among the
stockholders of the Company at the time such Stock is acquired, as well as to
such other restrictions as the Committee shall deem advisable.
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<PAGE> 7
14. Corporate Transaction.
(a) For purposes of this Section 14 a "Corporate Transaction"
shall include any of the following stockholder-approved transactions to which
the Company is a party:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the state of the Company's incorporation;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in liquidation or
dissolution of the Company; or
(iii) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%)
of the total combined voting power of the Company's outstanding
securities are transferred to holders different from those who held
such securities immediately prior to such merger.
(b) In the event of any Corporate Transaction, any option
shall terminate as of the closing date of the Corporate Transaction to the
extent unexercised, unless assumed by the successor corporation or its parent
company, pursuant to options providing substantially equal value and having
substantially equivalent provisions as the options granted pursuant to this
Plan.
15. Stockholder Approval. This Plan shall only become effective with
regard to incentive stock options upon its approval by a majority of the
stockholders voting (in person or by proxy) at a stockholders, meeting held
within 12 months of the Board's adoption of the Plan. Such stockholder approval
may alternatively be obtained within said twelve (12) month period by way of a
written consent instrument duly executed by a majority of the stockholders. The
Committee may grant incentive stock options under the Plan prior to the
stockholders, meeting, but until stockholder approval of the Plan is obtained,
no incentive stock option shall be exercisable.
16. Information to Optionees. The Company shall provide to each
Optionee, during any period for which such optionee has one or more options
outstanding, copies of all annual reports provided to stockholders of the
Company.
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<PAGE> 8
INFORMATICA CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
This Agreement is made as of ___________________, 1993 (the "Grant
Date"), between INFORMATICA CORPORATION (the "Company") and
______________________________, ("0ptionee").
WITNESSETH:
WHEREAS, the Company has adopted the Informatica Corporation 1993
Flexible Stock Incentive Plan (the "Plan"), which Plan is incorporated in this
Agreement by reference and made a part of it; and
WHEREAS, the Company regards Optionee as a valuable employee of the
Company, and has determined that it would be to the advantage and interest of
the Company and its stockholders to grant the options provided for in this
Agreement to Optionee as an inducement to remain in the service of the Company
and its Affiliates (as defined in the Plan) and as an incentive for increased
efforts during such service;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties to this Agreement hereby agree as follows:
1. Option Grant. The Company hereby grants to optionee the right and
option to purchase from the Company on the terms and conditions hereinafter set
forth, all or any part of an aggregate of _______________ shares of the Common
Stock of the Company (the "Stock"). This option is intended to satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code").
2. Option Price. The purchase price of the Stock subject to this option
shall be $__________ per share, which price is not less than the per share fair
market value of such Stock as of the Grant Date as determined by the Board of
Directors of the Company (the "Board"), or, if Optionee possesses more than ten
percent of the combined voting power of the Company or any of its Affiliates,
not less than 110 percent of the per share fair market value of the Stock as of
the Grant Date as determined by the Board. The term "Option Price" as used in
this agreement refers to the purchase price of the Stock subject to this option.
1
<PAGE> 9
3. Option Period. This option shall be exercisable only during the
Option Period, and during such Option Period, the exercisability of the option
shall be subject to the limitations of paragraph 4 and the vesting provisions of
paragraph 5. The Option Period shall commence on the Grant Date and except as
provided in paragraph 4, shall terminate ten years from the Grant Date (the
"Termination Date").
4. Limits on Option Period. The Option Period may end before the
Termination Date, as follows:
(a) If Optionee ceases to be a bona fide employee of the
Company or an Affiliate for any reason other than disability (within
the meaning of subparagraph (c)) or death during the Option Period, the
Option Period shall terminate ninety (90) days after the date of such
cessation of employment or on the Termination Date, whichever shall
first occur, and the option shall be exercisable only to the extent
exercisable under paragraph 5 on the date of Optionee's cessation of
employment.
(b) If Optionee dies while in the employ of the Company or any
of its Affiliates, the Option Period shall end one year after the date
of death or on the Termination Date, whichever shall first occur, and
Optionee's executor or administrator or the person or persons to whom
Optionee's rights under this option shall pass by will or by the
applicable laws of descent and distribution may exercise this option
only to the extent exercisable under paragraph 5 on the date of
Optionee's death.
(c) If Optionee's employment is terminated by reason of
disability (within the meaning of Section 422(c)(6) of the Code), the
Option Period shall end one year after the date of Optionee's cessation
of employment or on the Termination Date, whichever shall first occur,
and the option shall be exercisable only to the extent exercisable
under paragraph 5 on the date of Optionee's cessation of employment.
(d) If Optionee is on a leave of absence from the Company or
an Affiliate because of his disability, or for the purpose of serving
the government of the country in which the principal place of
employment of optionee is located, either in a military or civilian
capacity, or for such other purpose or reason as the Board may approve,
optionee shall not be deemed during the period of such absence, by
virtue of such absence alone, to have terminated employment with the
Company or an Affiliate except as the Board may otherwise expressly
provide.
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<PAGE> 10
5. Vesting of Right to Exercise Options. Subject to other limitations
contained in this Agreement, the optionee shall have the right to exercise the
option in accordance with the following schedule:
(a) As to _____% of the number of shares covered by the
option, at any time after ________ from date of this Agreement;
(b) As to an additional of the remaining number of shares
covered by the option, at any time after the end of each month thereafter until
the option shall be fully exercisable.
(c) Any portion of the option that is not exercised shall
accumulate and may be exercised at any time during the Option Period prior to
the Termination Date. No partial exercise of this option may be for less than 5
percent of the total number of shares then available under this option. In no
event shall the Company be required to issue fractional shares.
(d) Notwithstanding the foregoing, the aggregate fair market
value (determined as of the time such option is granted) of the Stock with
respect to which incentive stock options are exercisable for the first time in
any calendar year (under the Plan and any other incentive stock option plans of
the Company or its Affiliates) shall not exceed $100,000. In the event an
acceleration of any exercise date of incentive stock options by the Committee
pursuant to Section 2(c) of the Plan causes the aggregate fair market value of
the stock subject to such incentive stock options to exceed the $100,000 limit
described in the immediately preceding sentence, that portion of such incentive
stock options which exceeds the $100,000 limit shall be deemed to be
nonqualified stock options under the Plan.
6. Method of Exercise. Optionee may exercise the option with respect to
all or any part of the shares of Stock then subject to such exercise as follows:
(a) By giving the Company written notice of such exercise,
specifying the number of such shares as to which this option is
exercised. Such notice shall be accompanied by an amount equal to the
Option Price of such shares, in the form of any one or combination of
the following: (i) cash; a certified check, bank draft, postal or
express money order payable to the order of the Company in lawful money
of the United States; (ii) shares of Stock valued at fair market value;
(iii) notes, or (iv) in any combination of the foregoing. The shares of
Stock shall be valued in accordance with procedures established by the
committee appointed by the Board to administer the Plan (the
3
<PAGE> 11
"Committee"). (If the Board does not delegate administration of the
Plan to the Committee, then each reference in this Agreement to "the
Committee" shall be construed to refer to the Board.) Any note used to
exercise this option shall be a full recourse, interest-bearing
obligation containing such terms as the Committee shall determine. If a
note is used, the optionee agrees to execute such further documents as
the Company may deem necessary or appropriate in connection with
issuing the note, perfecting a security interest in the Stock purchased
with the note, and any related terms or conditions that the Company may
propose. Such further documents may include, not by way of limitation,
a security agreement, an escrow agreement, a voting trust agreement and
an assignment separate from certificate.
(b) Optionee (and Optionee's spouse, if any) shall be
required, as a condition precedent to acquiring Stock through exercise
of the option, to execute one or more agreements relating to
obligations in connection with ownership of the Stock or restrictions
on transfer of the Stock no less restrictive than the obligations and
restrictions to which the other stockholders of the Company are subject
at the time of such exercise.
(c) If required by the Company, Optionee shall give the
Company satisfactory assurance in writing, signed by optionee or his
legal representative, as the case may be, that such shares are being
purchased for investment and not with a view to the distribution
thereof, provided that such assurance shall be deemed inapplicable to
(1) any sale of such shares by such optionee made in accordance with
the terms of a registration statement covering such sale, which may
hereafter be filed and become effective under the Securities Act of
1933, as amended, and with respect to which no stop order suspending
the effectiveness thereof has been issued, and (2) any other sale of
such shares with respect to which in the opinion of counsel for the
Company, such assurance is not required to be given in order to comply
with the provisions of the Securities Act of 1933, as amended. As soon
as practicable after receipt of the notice required in paragraph 6(a)
and satisfaction of the conditions set forth in paragraphs 6(b), 6(c)
and 6(d), the Company shall, without transfer or issue tax and without
other incidental expense to Optionee, deliver to optionee at the office
of the Company, at 131 Seaspray Way, Port Hueneme, California 93041,
attention of the Secretary, or such other place as may be mutually
acceptable to the Company and Optionee, a certificate or certificates
of such shares of Stock; provided, however, that the time of such
delivery may be postponed by the Company for such period as may be
required for it with reasonable diligence to comply
4
<PAGE> 12
with applicable registration requirements under the Securities Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, any
applicable listing requirements of any national securities exchange,
and requirements under any other law or regulation applicable to the
issuance or transfer of such shares.
7. Corporate Transactions.
(a) If there should be any change in a class of Stock subject
to this option, through merger, consolidation, reorganization, recapitalization,
reincorporation, stock split, stock dividend (in excess of 2 percent) or other
change in the corporate structure of the Company, the Company may make
appropriate adjustments in order to preserve, but not to increase, the benefits
to Optionee, including adjustments in the number of shares of such Stock subject
to this option and in the price per share. Any adjustment made pursuant to this
paragraph 7 as a consequence of a change in the corporate structure of the
Company shall not entitle Optionee to acquire a number of shares of such Stock
of the Company or shares of stock of any successor company greater than the
number of shares optionee would receive if, prior to such change, Optionee had
actually held a number of shares of such Stock equal to the number of shares
subject to this option.
(b) For purposes of this paragraph 7, a "Corporate
Transaction" shall include any of the following stockholder-approved
transactions to which the Company Is a party:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the state of the Company's incorporation;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in liquidation or
dissolution of the Company; or
(iii) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%)
of the total combined voting power of the Company's outstanding
securities are transferred to holders different from those who held
such securities immediately prior to such merger.
(c) In the event of any Corporate Transaction, this option
shall terminate as of the closing of the Corporate Transaction to the extent
unexercised, unless assumed by the successor corporation or its parent company,
pursuant to options providing substantially equal value and having substantially
or
5
<PAGE> 13
equivalent provisions as the options granted pursuant to this Agreement.
8. Limitations on Transfer. This option shall, during Optionee's
lifetime, be exercisable only by optionee, and neither this option nor any right
hereunder shall be transferable by Optionee by operation of law or otherwise
other than by will or the laws of descent and distribution. In the event of any
attempt by Optionee to alienate, assign, pledge, hypothecate, or otherwise
dispose of this option or of any right hereunder, except as provided for in this
Agreement, or in the event of the levy of any attachment, execution, or similar
process upon the rights or interest hereby conferred, the Company at its
election may terminate this option by notice to optionee and this option shall
thereupon become null and void. 9. No Stockholder Rights. Neither Optionee nor
any person entitled to exercise Optionee's rights in the event of his death
shall have any of the rights of a stockholder with respect to the shares of
Stock subject to this option except to the extent the certificates for such
shares shall have been issued upon the exercise of this option.
9. No Stockholder Rights. Neither Optionee nor any person entitled to
exercise Optionee's rights in the event of his death shall have any of the
rights of a stockholder with respect to the shares of Stock subject to this
option except to the extent the certificates for such shares shall have been
issued upon the exercise of this option.
10. No Effect on Terms of Employment. Subject to the terms of any
written employment contract to the contrary, the Company (or its Affiliate which
employs Optionee) shall have the right to terminate or change the terms of
employment of Optionee at any time and for any reason whatsoever, with or
without cause
11. Notice. Any notice required to be given under the terms of this
Agreement shall be addressed to the Company in car of its Secretary at the
Office of the Company at 131 Seaspray Way, Port Hueneme, California 93041, and
any notice to be given to Optionee shall be addressed to him at the address
given by hi beneath his signature to this Agreement, or such other address a
either party to this Agreement may hereafter designate in writing to the other.
Any such notice shall be deemed to have been duly given when enclosed in a
properly sealed envelope or wrapper addressed as aforesaid, registered or
certified and deposited (postage or registration or certification fee prepaid)
in a post office or branch post office regularly maintained by the United
States.
12. Committee Decisions Conclusive. All decisions of the Committee upon
any question arising under the Plan or under this Agreement shall be conclusive.
13. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include optionee's executor,
administrator or other legal representative or the person or persons to whom
6
<PAGE> 14
Optionee's rights pass by will or the applicable laws of descent and
distribution.
14. Early Dispositions. Optionee agrees, as partial consideration for
the designation of this option as an incentive stock option under Section 422 of
the Code, to notify the Company in writing within thirty (30) days of any
disposition of any shares acquired by exercise of this option if such
disposition occurs within two (2) years from the Grant Date or within one (1)
year from the date Optionee purchased such shares by exercise of this option.
15. California Law. The interpretation performance, and enforcement of
this Agreement shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, the Company has caused these presents to be
executed on its behalf, and Optionee has hereunto set his hand as of the day and
year first above written.
INFORMATICA CORPORATION
By:__________________________________
Its__________________________________
_____________________________________
Optionee
Address:_____________________________
_____________________________________
_____________________________________
7
<PAGE> 15
ATTACHMENT A
CONSENT OF SPOUSE
I, ____________________, spouse of ____________________ have read and
approved the foregoing Agreement. In consideration of granting of the right of
my spouse to purchase shares of INFORMATICA CORPORATION as set forth in the
Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the
exercise of any rights of the Agreement insofar as I may have any rights under
such community property laws of the State of California or similar laws relating
to marital property in effect in the state of our residence as of the date of
the signing of the foregoing Agreement.
Dated:____________________________ By:_________________________________
<PAGE> 16
INFORMATICA CORPORATION
NONQUALIFIED STOCK OPTION AGREEMENT
(Employee Version)
This Agreement is made as of ____________________, 1993 (the "Grant
Date"), between INFORMATICA CORPORATION (the "Company")
___________________________ _______________ and ("Optionee").
WITNESSETH:
WHEREAS, the Company has adopted the Informatica Corporation 1993
Flexible Stock Incentive Plan (the "Plan"), which Plan is incorporated in this
Agreement by reference and made a part of it; and
WHEREAS, the Company regards optionee as a valuable employee of the
Company, and has determined that it would be to the advantage and in the
interest of the Company and its stockholders to grant the options provided for
in this Agreement to Optionee as an inducement to remain in the service of the
Company and its Affiliates (as defined in the Plan) and as an incentive for
increased efforts during such service;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, the parties to this Agreement hereby agree as follows:
1. Option Grant. The Company hereby grants to optionee the right and
option to purchase from the Company on the terms and conditions hereinafter set
forth, all or any part of an aggregate of _____ shares of the Common Stock of
the Company (the "Stock"). This option is not intended to satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code").
2. Option Price. The purchase price of the Stock subject to this option
shall be $__________ per share, which price is not less than [____] percent of
the per share fair market value of such Stock as of the Grant Date as determined
by the Board of Directors of the Company (the "Board"). The term "Option Price"
as used in this agreement refers to the purchase price of the Stock subject to
this option.
3. Option Period. This option shall be exercisable only during the
Option Period, and during such Option Period, the exercisability of the option
shall be subject to the limitations of paragraph 4 and the vesting provisions of
paragraph 5. The
1
<PAGE> 17
Option Period shall commence on the Grant Date and except as provided in
paragraph 4, shall terminate _____ years from the Grant Date (the "Termination
Date").
4. Limits on Option Period. The Option Period may end before the
Termination Date, as follows:
(a) If Optionee ceases to be a bona fide employee of the
Company or an Affiliate for any reason other than disability (within
the meaning of subparagraph (c)) or death during the Option Period, the
Option Period shall terminate [three] months after the date of such
cessation of employment or on the Termination Date, whichever shall
first occur, and the option shall be exercisable only to the extent
exercisable under paragraph 5 on the date of Optionee's cessation of
employment and shall thereafter cease to be exercisable.
(b) If Optionee dies while in the employ of the Company or any
of its Affiliates, the Option Period shall end one year after the date
of death or on the Termination Date, whichever shall first occur, and
Optionee's executor or administrator or the person or persons to whom
Optionee's rights under this option shall pass by will or by the
applicable laws of descent and distribution may exercise this option
only to the extent exercisable under paragraph 5 on the date of
Optionee's death.
(c) If Optionee's employment is terminated by reason of
disability (within the meaning of Section 422(c)(6) of the Code), the
Option Period shall end one year after the date of Optionee's cessation
of employment or on the Termination Date, whichever shall first occur,
and the option shall be exercisable only to the extent exercisable
under paragraph 5 on the date of Optionee's cessation of employment.
(d) If Optionee is on a leave of absence from the Company or
an Affiliate because of his disability, or for the purpose of serving
the government of the country in which the principal place of
employment of optionee is located, either in a military or civilian
capacity, or for such other purpose or reason as the Board may approve,
Optionee shall not be deemed during the period of such absence, by
virtue of such absence alone, to have terminated employment with the
Company or an Affiliate except as the Board may otherwise expressly
provide.
5. Vesting of Right to Exercise Options. Subject to other limitations
contained in this Agreement, the Optionee shall have the right to exercise the
options in accordance with the following schedule:
2
<PAGE> 18
(a) As to ____% of the number of shares covered by the option,
at any time after one year from date of this Agreement;
(b) As to an additional _____ of the remaining number of
shares covered by the option, at any time after the end of each month thereafter
until the option shall be fully exercisable.
(c) Any portion of the option that is not exercised shall
accumulate and may be exercised at any time during the Option Period prior to
the Termination Date. No partial exercise of this option may be for less than 5
percent of the total number of shares then available under this option. In no
event shall the Company be required to issue fractional shares.
6. Method of Exercise. Optionee may exercise the option with respect to
all or any part of the shares of Stock then subject to such exercise as follows:
(a) By giving the Company written notice of such exercise,
specifying the number of such shares as to which this option is exercised. Such
notice shall be accompanied by an amount equal to the Option Price of such
shares, in the form of any one or combination of the following: (i) cash; a
certified check, bank draft, postal or express money order payable to the order
of the Company in lawful money of the United States; (ii) shares of Stock valued
at fair market value; (iii) a promissory note of the Optionee, or (iv) in any
combination of the foregoing. The shares of Stock shall be valued in accordance
with procedures established by the committee appointed by the Board to
administer the Plan (the "Committee"). (If the Board does not delegate
administration of the Plan to the Committee, then each reference in this
Agreement to "the Committee" shall be construed to refer to the Board.) Any note
used to exercise this option shall be a full recourse, interest-bearing
obligation containing such terms as the Committee shall determine. If a note is
used, the Optionee agrees to execute such further documents as the Company may
deem necessary or appropriate in connection with issuing the note, perfecting a
security interest in the Stock purchased with the note, and any related terms or
conditions that the Company may propose. Such further documents may include, not
by way of limitation, a security agreement, an escrow agreement, a voting trust
agreement and an assignment separate from certificate. In the event that the
exercise price is satisfied by the Committee retaining from the shares of Stock
otherwise to be issued to Optionee shares of Stock having a value equal to the
exercise price, the Committee may issue Optionee an additional option, with
terms identical to this option agreement, entitling Optionee to purchase
additional Stock in an amount equal to the number of shares so retained.
3
<PAGE> 19
(b) Optionee (and Optionee's spouse, if any) shall be
required, as a condition precedent to acquiring Stock through exercise of the
option, to execute one or more agreements relating to obligations in connection
with ownership of the Stock or restrictions on transfer of the Stock no less
restrictive than the obligations and restrictions to which the other
stockholders of the Company are subject at the time of such exercise.
(c) If required by the Company, Optionee shall give the
Company satisfactory assurance in writing, signed by Optionee or his legal
representative, as the case may be, that such shares are being purchased for
investment and not with a view to the distribution thereof, provided that such
assurance shall be deemed inapplicable to (1) any sale of such shares by such
Optionee made in accordance with the terms of a registration statement covering
such sale, which may hereafter be filed and become effective under the
Securities Act of 1933, as amended, and with respect to which no stop order
suspending the effectiveness thereof has been issued, and (2) any other sale of
such shares with respect to which in the opinion of counsel for the Company,
such assurance is not required to be given in order to comply with the
provisions of the Securities Act of 1933, as amended.
As soon as practicable after receipt of the notice required in
paragraph 6(a) and satisfaction of the conditions set forth in paragraphs 6(b)
and 6(c), the Company shall, without transfer or issue tax and without other
incidental expense to optionee, deliver to Optionee at the office of the
Company, at 131 Seaspray Way, Port Hueneme, California 93041, attention of the
Secretary, or such other place as may be mutually acceptable to the Company and
Optionee, a certificate or certificates of such shares of Stock; provided,
however, that the time of such delivery may be postponed by the Company for such
period as may be required for it with reasonable diligence to comply with
applicable registration requirements under the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, any applicable listing
requirements of any national securities exchange, and requirements under any
other law or regulation applicable to the issuance or transfer of such shares.
7. Corporate Transactions.
(a) If there should be any change in a class of Stock subject
to this option, through merger, consolidation, reorganization, recapitalization,
reincorporation, stock split, stock dividend (in excess of 2 percent) or other
change in the corporate structure of the Company, the Company may make
appropriate adjustments in order to preserve, but not to increase, the benefits
to Optionee, including adjustments in the number of shares of such Stock subject
to this option and in the price per share. Any adjustment made pursuant to this
4
<PAGE> 20
paragraph 7 as a consequence of a change in the corporate structure of the
Company shall not entitle Optionee to acquire a number of shares of such Stock
of the Company or shares of stock of any successor company greater than the
number of shares Optionee would receive if, prior to such change, optionee had
actually held a number of shares of such Stock equal to the number of shares
subject to this option.
(b) For purposes of this paragraph 7, a "Corporate
Transaction" shall include any of the following stockholder-approved
transactions to which the Company is a party:
(i) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the state of the Company's incorporation;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company in liquidation or
dissolution of the Company; or
(iii) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than fifty percent (50%)
of the total combined voting power of the Company's outstanding
securities are transferred to holders different from those who held
such securities immediately prior to such merger.
(c) In the event of any Corporate Transaction, this option
shall terminate as of the closing of the Corporate Transaction to the extent
unexercised, unless assumed by the successor corporation or its parent company,
pursuant to options providing substantially equal value and having substantially
equivalent provisions as the options granted pursuant to this Agreement.
8. Limitations on Transfer. This option shall, during Optionee's
lifetime, be exercisable only by optionee, and neither this option nor any right
hereunder shall be transferable by Optionee by operation of law or otherwise
other than by will or the laws of descent and distribution. In the event of any
attempt by Optionee to alienate, assign, pledge, hypothecate, or otherwise
dispose of this option or of any right hereunder, except as provided for in this
Agreement, or in the event of the levy of any attachment, execution, or similar
process upon the rights or interest hereby conferred, the Company at its
election may terminate this option by notice to optionee and this option shall
thereupon become null and void.
9. No Stockholder Rights. Neither Optionee nor any person entitled to
exercise Optionee's rights in the event of his death shall have any of the
rights of a stockholder with respect
5
<PAGE> 21
to the shares of Stock subject to this option except to the extent the
certificates for such shares shall have been issued upon the exercise of this
option.
10. No Effect on Terms of Employment. Subject to the terms of any
written employment contract to the contrary, the Company (or its Affiliate which
employs optionee) shall have the right to terminate or change the terms of
employment of Optionee at any time and for any reason whatsoever, with or
without cause.
11. Notice. Any notice required to be given under the terms of this
Agreement shall be addressed to the Company in care of its Secretary at the
office of the Company in 131 Seaspray Way, Port Hueneme, California 93041, and
any notice to be given to optionee shall be addressed to him at the address
given by him beneath his signature to this Agreement, or such other address as
either party to this Agreement may hereafter designate in writing to the other.
Any such notice shall be deemed to have been duly given when enclosed in a
properly sealed envelope or wrapper addressed as aforesaid, registered or
certified and deposited (postage or registration or certification fee prepaid)
in a post office or branch post office regularly maintained by the United
States.
12. Committee Decisions Conclusive. All decisions of the Committee upon
any question arising under the Plan or under this Agreement shall be conclusive.
13. Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
14. Withholding. Optionee agrees to withholding o shares from exercise
for satisfaction of any applicable federal, state or local income tax or
employment tax withholding requirements. The Committee may issue optionee an
additional option, with terms identical to this option agreement, entitling
Optionee to purchase additional Stock in an amount equal to the number of shares
so retained.
15. California Law. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of California.
6
<PAGE> 22
IN WITNESS WHEREOF, the Company has caused these presents to be
executed on its behalf, and Optionee has hereunto set his hand as of the day and
year first above written.
INFORMATICA CORPORATION
By:__________________________________
Its__________________________________
_____________________________________
Optionee
Address:_____________________________
_____________________________________
7
<PAGE> 23
ATTACHMENT A
CONSENT OF SPOUSE
I, ____________________, spouse of ____________________ have read and
approved the foregoing Agreement. In consideration of granting of the right of
my spouse to purchase shares of INFORMATICA CORPORATION as set forth in the
Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the
exercise of any rights of the Agreement insofar as I may have any rights under
such community property laws of the State of California or similar laws relating
to marital property in effect in the state of our residence as of the date of
the signing of the foregoing Agreement.
Dated:____________________________ By:_________________________________
<PAGE> 1
EXHIBIT 10.10
INFORMATICA CORPORATION
1996 FLEXIBLE STOCK INCENTIVE PLAN
1. ESTABLISHMENT, PURPOSE, AND DEFINITIONS.
(a) There is hereby adopted the 1996 Flexible Stock Incentive
Plan (the "Plan") of Informatica Corporation, a California corporation (the
"Company").
(b) The purpose of the Plan is to provide a means whereby
eligible individuals (as defined in Section 4, below) can acquire Common Stock
of the Company (the "Stock"). The Plan provides employees (including officers
and directors who are employees) of the Company and of its Affiliates (as
defined below) an opportunity to purchase shares of Stock pursuant to options
which may qualify as incentive stock options (referred to as "incentive stock
options") under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), and employees, officers, directors, independent contractors, and
consultants of the Company and of its Affiliates (as defined below) an
opportunity to purchase shares of Stock pursuant to options which are not
described in Sections 422 or 423 of the Code (referred to as "nonqualified stock
options"). The Plan also provides for the sale of Stock to eligible individuals
in connection with the performance of services for the Company or its Affiliates
(as defined below).
(c) The term "Affiliates" as used in the Plan means parent or
subsidiary corporations, as defined in Sections 424(e) and (f) of the Code (but
substituting the "Company" for "employer corporation"), including parents or
subsidiaries which become such after adoption of the Plan.
2. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Board of Directors of
the Company (the "Board"). The Board may delegate the responsibility for
administering the Plan to a committee, under such terms and conditions as the
Board shall determine (the "Committee"). References in this Plan to the
"Committee" shall mean the Board if the Board has not delegated responsibility
to a separate committee. Members of the Committee shall serve at the pleasure of
the Board. The Committee shall select one of its members as chairman, and shall
hold meetings at such times and places as it may determine. A majority of the
Committee shall constitute a quorum and acts of the Committee at which a quorum
is present, or acts reduced to or approved in writing by all the members of the
Committee, shall be the valid acts of the Committee.
(b) In the event that the Company becomes subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended, the
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Committee shall consist of two or more members of the Board or such lesser
number of members of the Board as permitted by Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended ("Rule 16b-3"). None of the members
of the Committee shall receive, while serving on the Committee, or during the
one-year period preceding appointment to the Committee, a grant or award of
equity securities under (i) the Plan or (ii) any other plan of the Company or
its Affiliates under which the participants are entitled to acquire Stock
(including restricted Stock), stock options, stock bonuses, or related rights of
the Company or any of its Affiliates, other than pursuant to transactions in any
such other plan which do not disqualify a director from being a disinterested
person under Rule 16b-3. The limitations set forth in this Section 2(b) shall
automatically incorporate any additional requirements that may in the future be
necessary for the Plan to comply with Rule 16b-3.
(c) The Committee shall determine which eligible individuals (as
defined in Section 4, below) shall be granted options under the Plan, the timing
of such grants, the terms thereof (including any restrictions on the Stock), and
the number of shares subject to such options.
(d) The Committee may amend the terms of any outstanding option
granted under this Plan, but any amendment which would adversely affect the
participant's rights under an outstanding option shall not be made without the
participant's written consent. The Committee may, with the participant's written
consent, cancel any outstanding stock option or accept any outstanding stock
option in exchange for a new option.
(e) The Committee shall also determine which eligible individuals
(as defined in Section 4, below) shall be issued Stock under the Plan, the
timing of such grants, the terms thereof (including any restrictions), and the
number of shares to be granted. The Stock shall be issued for such consideration
(if any) as the Committee deems appropriate. Stock issued subject to
restrictions shall be evidenced by a written agreement (the "Restricted Stock
Purchase Agreement"). The Committee may amend any Restricted Stock Purchase
Agreement, but any amendment which would adversely affect the shareholder's
rights to the Stock shall not be made without his or her written consent.
(f) The Committee shall have the sole authority, in its absolute
discretion to adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable for the administration of the Plan, to construe and
interpret the Plan, the rules and the regulations, and the instruments
evidencing options or Stock granted under the Plan and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
All decisions, determinations, and interpretations of the Committee shall be
binding on all participants.
(g) Without limitation of the foregoing, the Committee shall have
the right, with the participant's consent, to accelerate the exercise date of
any options
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issued pursuant to the Plan or terminate the restrictions applicable to any
stock issued pursuant to the Plan.
3. STOCK SUBJECT TO THE PLAN.
(a) An aggregate of not more than 827,250 shares of Stock shall
be available for the grant of stock options or the issuance of Stock under the
Plan. If an option is surrendered (except surrender for shares of Stock) or for
any other reason ceases to be exercisable in whole or in part, the shares which
were subject to such option but as to which the option had not been exercised
shall continue to be available under the Plan. Any Stock which is retained by
the Company upon exercise of an option in order to satisfy the exercise price
for such option or any withholding taxes due with respect to such option
exercise shall be treated as issued to the participant and will thereafter not
be available under the Plan.
(b) If there is any change in the Stock subject to the Plan, a
Stock Option Agreement, or a Restricted Stock Purchase Agreement through merger,
consolidation, reorganization, recapitalization, reincorporation, stock split,
stock dividend, or other change in the capital structure of the Company,
appropriate adjustments shall be made by the Committee in order to preserve but
not to increase the benefits to the individual, including adjustments to the
aggregate number, kind and price per share of shares subject to the Plan, a
Stock Option Agreement or a Restricted Stock Purchase Agreement.
4. ELIGIBLE INDIVIDUALS.
(a) Individuals who shall be eligible to have granted to them the
options, or Stock provided for by the Plan shall be such employees, officers,
directors, independent contractors and consultants of the Company or an
Affiliate as the Committee, in its discretion, shall designate from time to
time. Notwithstanding the foregoing, only employees of the Company or an
Affiliate (including officers and directors who are bona fide employees) shall
be eligible to receive incentive stock options.
5. THE OPTION PRICE.
(a) The exercise price of the Stock covered by each incentive
stock option shall be not less than the per share fair market value of such
Stock on the date the option is granted. The exercise price of the Stock covered
by each nonqualified stock option shall be as determined by the Committee and
shall be not less than 85% of the per share fair market value of such Stock on
the date the option is granted. Notwithstanding the foregoing, in the case of a
stock option granted to a person possessing more than 10% of the combined voting
power of the Company or an Affiliate, the exercise price shall be not less than
110% of the fair market value of the Stock on the
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date the option is granted. The exercise price of an option shall be subject to
adjustment to the extent provided in Section 3(b), above.
6. TERMS AND CONDITIONS OF OPTIONS.
(a) Each option granted pursuant to the Plan will be evidenced by
a written stock option agreement (the "Stock Option Agreement") executed by the
Company and the person to whom such option is granted.
(b) The Committee shall determine the term of each option granted
under the Plan; provided, however, that the term of an incentive stock option
shall not be for more than 10 years and that, in the case of an incentive stock
option granted to a person possessing more than 10% of the combined voting power
of the Company or an Affiliate, the term shall be for no more than five years.
(c) In the case of incentive stock options, the aggregate fair
market value (determined as of the time such option is granted) of the Stock
with respect to which incentive stock options are exercisable for the first time
by an eligible employee in any calendar year (under this Plan and any other
plans of the Company or its Affiliates) shall not exceed $100,000.
(d) The Stock Option Agreement may contain such other terms,
provisions and conditions consistent with this Plan as may be determined by the
Committee. If an option, or any part thereof is intended to qualify as an
incentive stock option, the Stock Option Agreement shall contain those terms and
conditions which are necessary to so qualify it. Notwithstanding the foregoing,
no option granted under the Plan may vest at less than the rate required by
California Department of Corporations rules as in effect on the date of grant.
7. TERMS AND CONDITIONS OF STOCK PURCHASES AND BONUSES.
(a) Each sale or grant of stock pursuant to the Plan will be
evidenced by a written Restricted Stock Purchase Agreement executed by the
Company and the person to whom such stock is sold or granted.
(b) The Restricted Stock Purchase Agreement may contain such
other terms, provisions and conditions consistent with this Plan as may be
determined by the Committee, including not by way of limitation, restrictions on
transfer, forfeiture provisions, repurchase provisions and vesting provisions.
Notwithstanding the foregoing, no restricted stock purchase or restricted stock
bonus granted under the Plan may vest at less than the rate required by the
California Department of Corporations rules as in effect on the date of grant.
(c) The purchase price of Stock sold hereunder pursuant to a
Restricted Stock Purchase Agreement shall be the price determined by the
Committee on the date the right to purchase Stock is granted; provided, however
that (i) such price shall
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not be less than 85% of the per share fair market value of such Stock on the
date the right to purchase Stock is granted and (ii) in the case of any person
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or an Affiliate, such price shall be not less than 100% of
the per share fair market value of such Stock at the time the right to purchase
Stock is granted, or at the time the purchase is consummated.
8. USE OF PROCEEDS.
(a) Cash proceeds realized from the sale of Stock under the Plan
shall constitute general funds of the Company.
9. AMENDMENT, SUSPENSION, OR TERMINATION OF THE PLAN.
(a) The Board may at any time amend, suspend or terminate the
Plan as it deems advisable; provided that such amendment, suspension or
termination complies with all applicable requirements of state and federal law,
including any applicable requirement that the Plan or an amendment to the Plan
be approved by the Company's shareholders, and provided further that, except as
provided in Section 3(b), above, the Board shall in no event amend the Plan in
the following respects without the consent of shareholders then sufficient to
approve the Plan in the first instance:
(i) To increase the maximum number of shares subject to
incentive stock options issued under the Plan; or
(ii) To change the designation or class of persons
eligible to receive incentive stock options under the Plan.
(b) No option may be granted nor any Stock issued under the Plan
during any suspension or after the termination of the Plan, and no amendment,
suspension or termination of the Plan shall, without the affected individual's
consent, alter or impair any rights or obligations under any option previously
granted under the Plan. The Plan shall terminate on July 23, 2006 unless
previously terminated by the Board pursuant to this Section 9.
10. ASSIGNABILITY.
(a) Each option granted pursuant to this Plan shall, during
participant's lifetime, be exercisable only by participant, and neither the
option nor any right hereunder shall be transferable by participant by operation
of law or otherwise other than by will or the laws of descent and distribution.
Stock subject to a Restricted Stock Purchase Agreement shall be transferable
only as provided in such Agreement.
11. PAYMENT UPON EXERCISE OF OPTIONS.
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(a) Payment of the purchase price upon exercise of any option
granted under this Plan shall be made in cash, certified check or wire transfer;
provided, however, that the Committee, in its sole discretion, may permit a
participant to pay the option price in whole or in part (i) with shares of Stock
owned by the participant; (ii) by delivery on a form prescribed by the Committee
of an irrevocable direction to a securities broker approved by the Committee to
sell shares and deliver all or a portion of the proceeds to the Company in
payment for the Stock; (iii) by delivery of the participant's promissory note
with such recourse, interest, security, and redemption provisions as the
Committee in its discretion determines appropriate; or (iv) in any combination
of the foregoing. Any Stock used to exercise options shall be valued at its fair
market value on the date of the exercise of the option. In addition, the
Committee, in its sole discretion, may authorize the surrender by a participant
of all or part of an unexercised option and authorize a payment in consideration
thereof of an amount equal to the difference between the aggregate fair market
value of the Stock subject to such option and the aggregate option price of such
Stock. In the Committee's discretion, such payment may be made in cash, shares
of Stock with a fair market value on the date of surrender equal to the payment
amount, or some combination thereof.
(b) In the event that the exercise price is satisfied by the
Committee retaining from the shares of Stock otherwise to be issued to
participant shares of Stock having a value equal to the exercise price, the
Committee may, in its sole discretion, issue participant an additional option,
entitling participant to purchase additional Stock in an amount equal to the
number of shares so retained.
12. WITHHOLDING TAXES.
(a) No Stock shall be granted or sold under the Plan to any
participant, until the participant has made arrangements acceptable to the
Committee for the satisfaction of federal, state, and local income and social
security tax withholding obligations, including without limitation obligations
incident to the receipt of Stock under the Plan, the lapsing of restrictions
applicable to such Stock, the failure to satisfy the conditions for treatment as
incentive stock options under applicable tax law, or the receipt of cash
payments. Upon exercise of a stock option or lapsing or restriction on Stock
issued under the Plan, the Company may satisfy its withholding obligations by
withholding from the participant or requiring the participant to surrender
shares of the Company's Stock sufficient to satisfy federal, state, and local
income and social security tax withholding obligations.
(b) In the event that such withholding is satisfied by the
Company or the participant's employer retaining from the shares of Stock
otherwise to be issued to participant shares of Stock having a value equal to
such withholding tax, the Committee may, in its sole discretion, issue
participant an additional option, entitling participant to purchase additional
Stock in an amount equal to the number of shares so retained.
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13. RESTRICTIONS ON TRANSFER OF SHARES.
(a) The Stock acquired pursuant to the Plan shall be subject to
such restrictions and agreements regarding sale, assignment, encumbrances or
other transfer as are in effect among the shareholders of the Company at the
time such Stock is acquired, as well as to such other restrictions as the
Committee shall deem advisable.
14. SHAREHOLDER APPROVAL.
(a) This Plan shall only become effective with regard to
incentive stock options upon its approval by a majority of the shareholders
within 12 months of the Board's adoption of the Plan. The Committee may grant
incentive stock options under the Plan prior to such approval by the
shareholders, but until shareholder approval of the Plan is obtained, no
incentive stock option shall be exercisable. Any nonqualified stock option that
is exercised before shareholder approval is obtained must be rescinded if
shareholder approval is not obtained within 12 months before or after the Plan
is adopted.
15. INFORMATION TO PLAN PARTICIPANTS.
(a) The Company shall provide, at least annually, to each Plan
participant, during any period for which said participant has one or more
options or shares acquired pursuant to the Plan outstanding, copies of financial
statements of the Company issued during said period.
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INFORMATICA CORPORATION
1996 FLEXIBLE STOCK INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
This Agreement is made as of ____________, 199__, between
Informatica Corporation, a California corporation (the "Company") and
________________________ ("Optionee").
RECITALS:
WHEREAS, the Company has adopted the 1996 Flexible Stock
Incentive Plan (the "Plan"), which Plan is incorporated in this Agreement by
reference and made a part of it; and
WHEREAS, the Company regards Optionee as a valuable employee of
the Company, and has determined that it would be to the advantage and in the
interests of the Company and its shareholders to grant the options provided for
in this Agreement to Optionee as an inducement to remain in the service of the
Company (as defined in the Plan) and as an incentive for increased efforts
during such service;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties to this Agreement hereby agree as follows:
1. Option Grant. The Company hereby grants to Optionee the right
and option to purchase from the Company on the terms and conditions hereinafter
set forth, all or any part of an aggregate of ____________ shares of the Common
Stock of the Company (the "Stock"). This option is intended to satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") and qualify as an incentive stock option.
2. Option Price. The purchase price of the Stock subject to this
option shall be $__________ per share, which price is not less than the per
share fair market value of such Stock as of _______________ (the "Grant Date")
as determined by the Board of Directors of the Company or a committee designated
by it (the "Committee"), or, if Optionee possesses more than ten percent of the
combined voting power of the Company or any of its Affiliates, not less than 110
percent of the per share fair market value of the Stock as of the Grant Date as
determined by the Committee. The term "Option Price" as used in this Agreement
refers to the purchase price of the Stock subject to this option.
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3. Option Period. This option shall be exercisable only during
the Option Period, and during such Option Period, the exercisability of the
option shall be subject to the limitations of Section 4 and the vesting
provisions of Section 5. The Option Period shall commence on the Grant Date and
except as provided in Section 4, shall terminate (the "Termination Date") ten
years from the Grant Date; provided, however, that the Option Period for a
person possessing more than ten percent of the combined voting power of the
Company or an Affiliate shall terminate five years from the Grant Date.
4. Limits on Option Period. The Option Period may end before the
Termination Date, as follows:
(a) Termination of Employment. If Optionee ceases to be
a bona fide employee of the Company or an Affiliate for any reason other than
disability (within the meaning of subsections (c) and (d)) or death during the
Option Period, the Option Period shall terminate three months after the date of
such cessation of employment or on the Termination Date, whichever shall first
occur, and the option shall be exercisable only to the extent exercisable under
Section 5 on the date of Optionee's cessation of employment.
(b) Death. If Optionee dies while in the employ of the
Company or any of its Affiliates, the Option Period shall end one year after the
date of death or on the Termination Date, whichever shall first occur, and
Optionee's executor or administrator or the person or persons to whom Optionee's
rights under this option shall pass by will or by the applicable laws of descent
and distribution may exercise this option only to the extent exercisable under
Section 5 on the date of Optionee's death.
(c) Disability. If Optionee's employment is terminated
by reason of disability, the Option Period shall end one year after the date of
Optionee's cessation of employment or on the Termination Date, whichever shall
first occur, and the option shall be exercisable only to the extent exercisable
under Section 5 on the date of Optionee's cessation of employment. OPTIONEE
UNDERSTANDS THAT EXERCISE OF THE OPTION, IF OPTIONEE'S EMPLOYMENT IS TERMINATED
BY REASON OF DISABILITY THAT IS NOT DEEMED TOTAL AND PERMANENT DISABILITY WITHIN
THE MEANING OF SECTION 22(E)(3) OF THE CODE, MORE THAN 90 DAYS AFTER TERMINATION
WILL RESULT IN THE DISQUALIFICATION OF THIS OPTION AS AN INCENTIVE STOCK OPTION
FOR TAX PURPOSES.
(d) Leave of Absence. If Optionee is on a leave of
absence from the Company or an Affiliate because of his disability, or for the
purpose of serving the government of the country in which the principal place of
employment of Optionee is located, either in a military or civilian capacity, or
for such other purpose or reason as the Committee may approve, Optionee shall
not be deemed during the period of such absence, by virtue of such absence
alone, to have terminated employment with the Company or an Affiliate except as
the Committee may otherwise expressly provide.
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5. Vesting of Right to Exercise Options. Subject to other
limitations contained in this Agreement, the Optionee shall have the right to
exercise the options in accordance with the following schedule:
(i) As to _____% of the number of shares covered by this
Agreement at any time after __________ from the date of this Agreement;
(ii) As to an additional 1/48 of the number of shares
covered by this Agreement, on the last day of each month thereafter until the
option is fully exercisable.
Any portion of the option that is not exercised shall accumulate
and may be exercised at any time during the Option Period prior to the
Termination Date. No partial exercise of this option may be for less than 5
percent of the total number of shares then available under this option. In no
event shall the Company be required to issue fractional shares. Notwithstanding
the foregoing, the aggregate fair market value (determined as of the time such
option is granted) of the Stock with respect to which incentive stock options
are exercisable for the first time in any calendar year (under the Plan and any
other incentive stock option plans of the Company or its Affiliates) shall not
exceed $100,000.
6. Method of Exercise. Optionee may exercise the option with
respect to all or any part of the shares of Stock then subject to such exercise
as follows:
(a) Delivery of Written Notice and Option Price. By
giving the Company written notice of such exercise, specifying the number of
such shares as to which this option is exercised. Such notice shall be
accompanied by an amount equal to the Option Price of such shares, in the form
of any one or combination of the following: (i) cash, a certified check, or wire
transfer payable to the order of the Company in lawful money of the United
States; (ii) by delivery on a form prescribed by the Committee of an irrevocable
direction to a securities broker approved by the Committee to sell shares and
deliver all or a portion of the proceeds to the Company in payment for the
Stock; (iii) shares of Stock valued on the date of exercise at fair market
value; or (iv) if authorized for Optionee by the Committee, notes. The shares of
Stock shall be valued in accordance with procedures established by the
Committee. Any note used to exercise this option shall be a full recourse,
interest-bearing obligation containing such terms as the Committee shall
determine. If a note is used, the Optionee agrees to execute such further
documents as the Committee may deem necessary or appropriate in connection with
issuing the note, perfecting a security interest in the Stock purchased with the
note, and any related terms or conditions that the Committee may propose. Such
further documents may include, not by way of limitation, a security agreement,
an escrow agreement, a voting trust agreement and an assignment separate from
certificate.
(b) Execution of Agreements. Optionee (and Optionee's
spouse, if any) shall be required, as a condition precedent to acquiring Stock
through
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exercise of the option, to execute one or more agreements relating to
obligations in connection with ownership of the Stock or restrictions on
transfer of the Stock no less restrictive than the obligations and restrictions
to which the other shareholders of the Company are subject at the time of such
exercise.
(c) Investment Representations. If required by the
Committee, Optionee shall give the Company satisfactory assurance in writing,
signed by Optionee or his legal representative, as the case may be, that such
shares are being purchased for investment and not with a view to the
distribution thereof, provided that such assurance shall be deemed inapplicable
to (1) any sale of such shares by such Optionee made in accordance with the
terms of a registration statement covering such sale, which may hereafter be
filed and become effective under the Securities Act of 1933, as amended (the
"Securities Act"), and with respect to which no stop order suspending the
effectiveness thereof has been issued, and (2) any other sale of such shares
with respect to which in the opinion of counsel for the Company, such assurance
is not required to be given in order to comply with the provisions of the
Securities Act.
(d) Delivery of Certificates. As soon as practicable
after receipt of the notice required in Section 6(a) and satisfaction of the
conditions set forth in Sections 6(b) and 6(c), the Company shall, without
transfer or issue tax and without other incidental expense to Optionee, deliver
to Optionee at the office of the Company, at 1200 Chrysler Drive, Menlo Park, CA
94025, or such other place as may be mutually acceptable to the Company and
Optionee, a certificate or certificates of such shares of Stock; provided,
however, that the time of such delivery may be postponed by the Company for such
period as may be required for it with reasonable diligence to comply with
applicable registration requirements under the Securities Act, the Securities
Exchange Act of 1934, as amended, any applicable listing requirements of any
national securities exchange, and requirements under any other law or regulation
applicable to the issuance or transfer of such shares.
7. Corporate Transactions.
(a) Definition. For purposes of this Section 7, a
"Corporate Transaction" shall include any of the following shareholder-approved
transactions to which the Company is a party:
(i) a merger or consolidation in which the
Company is not the surviving entity, except for (1) a transaction the principal
purpose of which is to change the state of the Company's incorporation, or (2) a
transaction in which the Company's shareholders immediately prior to such merger
or consolidation hold (by virtue of securities received in exchange for their
shares in the Company) securities of the surviving entity representing more than
fifty percent (50%) of the total voting power of such surviving entity
immediately after such transaction;
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(ii) the sale, transfer or other disposition of
all or substantially all of the assets of the Company unless the Company's
shareholders immediately prior to such sale, transfer or other disposition hold
(by virtue of securities received in exchange for their shares in the Company)
securities of the purchaser or other transferee representing more than fifty
percent (50%) of the total voting power of such entity immediately after such
transaction; or
(iii) any merger in which the Company is the
surviving entity but in which the Company's shareholders immediately prior to
such merger do not hold (by virtue of their shares in the Company held
immediately prior to such transaction) securities of the surviving entity (by
virtue of their shares in the Company held immediately prior to such
transaction) representing more than fifty percent (50%) of the total voting
power of the surviving entity immediately after such transaction.
(b) Effect. In the event of any Corporate Transaction,
this option shall terminate immediately prior to the specified effective date of
the Corporate Transaction unless assumed by the successor corporation or its
parent company, pursuant to options providing substantially equal value and
having substantially equivalent provisions as the options granted pursuant to
this Agreement.
8. Adjustments for Changes in Stock. If there should be any
change in a class of Stock subject to this option, through merger,
consolidation, reorganization, recapitalization, reincorporation, stock split,
stock dividend or other change in the capital structure of the Company (except
for a Corporate Transaction described in Section 7), the Company shall make
appropriate adjustments in order to preserve, but not to increase, the benefits
to Optionee, including adjustments in the number of shares of such Stock subject
to this option and in the price per share. Any adjustment made pursuant to this
Section 8 as a consequence of a change in the capital structure of the Company
shall not entitle Optionee to acquire a number of shares of such Stock of the
Company or shares of stock of any successor company greater than the number of
shares Optionee would receive if, prior to such change, Optionee had actually
held a number of shares of such Stock equal to the number of shares then subject
to this option.
9. Limitations on Transfer of Option. This option shall, during
Optionee's lifetime, be exercisable only by Optionee, and neither this option
nor any right hereunder shall be transferable by Optionee by operation of law or
otherwise other than by will or the laws of descent and distribution. In the
event of any attempt by Optionee to alienate, assign, pledge, hypothecate, or
otherwise dispose of this option or of any right hereunder, except as provided
for in this Agreement, or in the event of the levy of any attachment, execution,
or similar process upon the rights or interest hereby conferred, the Company at
its election may terminate this option by notice to Optionee and this option
shall thereupon become null and void.
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10. No Shareholder Rights. Neither Optionee nor any person
entitled to exercise Optionee's rights in the event of his death shall have any
of the rights of a shareholder with respect to the shares of Stock subject to
this option except to the extent the certificates for such shares shall have
been issued upon the exercise of this option.
11. NO EFFECT ON TERMS OF EMPLOYMENT. SUBJECT TO THE TERMS OF ANY
WRITTEN EMPLOYMENT CONTRACT TO THE CONTRARY, THE COMPANY (OR ITS AFFILIATE WHICH
EMPLOYS OPTIONEE) SHALL HAVE THE RIGHT TO TERMINATE OR CHANGE THE TERMS OF
EMPLOYMENT OF OPTIONEE AT ANY TIME AND FOR ANY REASON WHATSOEVER, WITH OR
WITHOUT CAUSE.
12. Notice. Any notice required to be given under the terms of
this Agreement shall be addressed to the Company in care of its Secretary at the
Office of the Company at 1200 Chrysler Drive, Menlo Park, CA 94025, and any
notice to be given to Optionee shall be addressed to him at the address given by
him beneath his signature to this Agreement, or such other address as either
party to this Agreement may hereafter designate in writing to the other. Any
such notice shall be deemed to have been duly given when enclosed in a properly
sealed envelope or wrapper addressed as aforesaid, express or certified and
deposited (postage or certification fee prepaid) in a post office or branch post
office regularly maintained by the United States.
13. Lock-Up Agreement.
(a) Agreement. Optionee, if requested by the Company and
the lead underwriter of any public offering of the Common Stock or other
securities of the Company (the "Lead Underwriter"), hereby irrevocably agrees
not to sell, contract to sell, grant any option to purchase, transfer the
economic risk of ownership in, make any short sale of, pledge or otherwise
transfer or dispose of any interest in any Common Stock or any securities
convertible into or exchangeable or exercisable for or any other rights to
purchase or acquire Common Stock (except Common Stock included in such public
offering or acquired on the public market after such offering) during the
180-day period following the effective date of a registration statement of the
Company filed under the Securities Act, or such shorter period of time as the
Lead Underwriter shall specify. Optionee further agrees to sign such documents
as may be requested by the Lead Underwriter to effect the foregoing and agrees
that the Company may impose stop-transfer instructions with respect to such
Common Stock until the end of such period. The Company and Optionee acknowledge
that each Lead Underwriter of a public offering of the Company's stock, during
the period of such offering and for the 180-day period thereafter, is an
intended beneficiary of this Section 13.
(b) Permitted Transfers. Notwithstanding the foregoing,
Section 13(a) shall not prohibit Optionee from transferring any shares of Common
Stock or securities convertible into or exchangeable or exercisable for the
Company's Common
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<PAGE> 14
Stock either during Optionee's lifetime or on death by will or intestacy to
Optionee's immediate family or to a trust the beneficiaries of which are
exclusively Optionee and/or a member or members of Optionee's immediate family;
provided, however, that prior to any such transfer, each transferee shall
execute an agreement pursuant to which each transferee shall agree to receive
and hold such securities subject to the provisions of Section 13 hereof. For the
purposes of this Section, the term "immediate family" shall mean spouse, lineal
descendant, father, mother, brother or sister of the transferor.
(c) No Amendment Without Consent of Underwriter. During
the period from identification as a Lead Underwriter in connection with any
public offering of the Company's Common Stock until the earlier of (i) the
expiration of the lock-up period specified in Section 13(a) in connection with
such offering or (ii) the abandonment of such offering by the Company and the
Lead Underwriter, the provisions of Section 13 may not be amended or waived
except with the consent of the Lead Underwriter.
14. Committee Decisions Conclusive. All decisions of the
Committee upon any question arising under the Plan or under this Agreement shall
be conclusive.
15. Successors. This Agreement shall be binding upon and inure to
the benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
16. Early Dispositions.
(a) Loss of ISO Treatment. OPTIONEE UNDERSTANDS THAT ANY
DISPOSITION OF ANY SHARES ACQUIRED BY EXERCISE OF THIS OPTION OCCURRING WITHIN
TWO (2) YEARS FROM THE GRANT DATE OR WITHIN ONE (1) YEAR FROM THE DATE OPTIONEE
PURCHASED SUCH SHARES BY EXERCISE OF THIS OPTION MAY HAVE ADVERSE TAX
CONSEQUENCES. UNDER SUCH CIRCUMSTANCES, OPTIONEE IS ADVISED TO CONSULT A TAX
ADVISOR.
(b) Notification Requirement. Optionee agrees, as
partial consideration for the designation of this option as an incentive stock
option under Section 422 of the Code, to notify the Company in writing within
thirty (30) days of any disposition of any shares acquired by exercise of this
option if such disposition occurs within two (2) years from the Grant Date or
within one (1) year from the date Optionee purchased such shares by exercise of
this option. If the Company is required to withhold an amount for the purpose of
income and employment taxes as a result of an early disposition, Optionee
acknowledges that it will be required to satisfy the amount of such withholding
in a manner that the Company prescribes.
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<PAGE> 15
17. Restrictive Legends. All certificates for shares of the Stock
shall bear the following legends, in addition to any other legends required by
applicable state securities law and securities commissioners:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY
THE TERMS OF, AND ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION
IN FAVOR OF THE COMPANY, AS PROVIDED IN THE BYLAWS OF THE
COMPANY, A COPY OF WHICH IS AVAILABLE FROM THE COMPANY."
"THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON EXERCISE OF AN
INCENTIVE STOCK OPTION AS DEFINED IN SECTION 422 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED. THE TRANSFER AGENT FOR THE
SHARES EVIDENCED HEREBY SHALL NOTIFY THE CORPORATION IMMEDIATELY
OF ANY TRANSFER OF THE
8
<PAGE> 16
SHARES BY THE REGISTERED HOLDER HEREOF MADE WITHIN ONE YEAR OF
THE EXERCISE OF SUCH OPTION AND WITHIN TWO YEARS OF THE DATE OF
GRANT OF SUCH OPTION. THE REGISTERED HOLDER SHALL HOLD ALL
SHARES PURCHASED UNDER THE OPTION IN THE REGISTERED HOLDER'S
NAME (AND NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE."
18. California Law. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
California.
19. Copy of Plan. Optionee hereby acknowledges receipt of a copy
of the Plan.
IN WITNESS WHEREOF, the Company and Optionee have executed this
Agreement as of the day and year first above written.
INFORMATICA CORPORATION OPTIONEE
a California corporation
By
------------------------------ --------------------------------
________________, President
Address:
-------------------------
-------------------------
9
<PAGE> 17
ATTACHMENT A
CONSENT OF SPOUSE
I, _____________________, spouse of __________________, have read
and approved the foregoing Agreement. In consideration of granting of the right
of my spouse to purchase shares of Informatica Corporation, as set forth in the
Agreement, I hereby appoint my spouse as my attorney-in-fact with respect to the
exercise of any rights of the Agreement insofar as I may have any rights under
such community property laws of the State of California or similar laws relating
to marital property in effect in the state of our residence as of the date of
the signing of the foregoing Agreement.
Dated: By:
-------------------- ---------------------------------
10
<PAGE> 18
INFORMATICA CORPORATION
1996 FLEXIBLE STOCK INCENTIVE PLAN
NONQUALIFIED STOCK OPTION AGREEMENT
This Agreement is made as of ____________, 199__ between
Informatica Corporation, a California corporation (the "Company") and
_________________________ ("Optionee").
RECITALS:
WHEREAS, the Company has adopted the 1996 Flexible Stock
Incentive Plan (the "Plan"), which Plan is incorporated in this Agreement by
reference and made a part of it; and
WHEREAS, the Company regards Optionee as a valuable employee of
the Company, and has determined that it would be to the advantage and in the
interests of the Company and its shareholders to grant the options provided for
in this Agreement to Optionee as an inducement to remain in the service of the
Company (as defined in the Plan) and as an incentive for increased efforts
during such service;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties to this Agreement hereby agree as follows:
1. Option Grant. The Company hereby grants to Optionee the right
and option to purchase from the Company on the terms and conditions hereinafter
set forth, all or any part of an aggregate of ____________ shares of the Common
Stock of the Company (the "Stock"). This option is not intended to satisfy the
requirements of Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code") nor to qualify as an incentive stock option.
2. Option Price. The purchase price of the Stock subject to this
option shall be $__________ per share, which price is not less than eighty five
percent of the per share fair market value of such Stock as of _____________
(the "Grant Date") as determined by the Board of Directors of the Company or a
committee designated by it (the "Committee"), or, if Optionee possesses more
than ten percent of the combined voting power of the Company or any of its
Affiliates, not less than 110 percent of the per share fair market value of the
Stock as of the Grant Date as determined by the Committee. The term "Option
Price" as used in this Agreement refers to the purchase price of the Stock
subject to this option.
3. Option Period. This option shall be exercisable only during
the Option Period, and during such Option Period, the exercisability of the
option shall be subject to the limitations of Section 4 and the vesting
provisions of Section 5. The
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<PAGE> 19
Option Period shall commence on the Grant Date and except as provided in Section
4, shall terminate (the "Termination Date") ten years from the Grant Date.
4. Limits on Option Period. The Option Period may end before the
Termination Date, as follows:
(a) Termination of Employment. If Optionee ceases to be
a bona fide employee of the Company or an Affiliate for any reason other than
disability (within the meaning of subsections (c) and (d)) or death during the
Option Period, the Option Period shall terminate three months after the date of
such cessation of employment or on the Termination Date, whichever shall first
occur, and the option shall be exercisable only to the extent exercisable under
Section 5 on the date of Optionee's cessation of employment.
(b) Death. If Optionee dies while in the employ of the
Company or any of its Affiliates, the Option Period shall end one year after the
date of death or on the Termination Date, whichever shall first occur, and
Optionee's executor or administrator or the person or persons to whom Optionee's
rights under this option shall pass by will or by the applicable laws of descent
and distribution may exercise this option only to the extent exercisable under
Section 5 on the date of Optionee's death.
(c) Disability. If Optionee's employment is terminated
by reason of disability, the Option Period shall end one year after the date of
Optionee's cessation of employment or on the Termination Date, whichever shall
first occur, and the option shall be exercisable only to the extent exercisable
under Section 5 on the date of Optionee's cessation of employment.
(d) Leave of Absence. If Optionee is on a leave of
absence from the Company or an Affiliate because of his disability, or for the
purpose of serving the government of the country in which the principal place of
employment of Optionee is located, either in a military or civilian capacity, or
for such other purpose or reason as the Committee may approve, Optionee shall
not be deemed during the period of such absence, by virtue of such absence
alone, to have terminated employment with the Company or an Affiliate except as
the Committee may otherwise expressly provide.
5. Vesting of Right to Exercise Options. Subject to other
limitations contained in this Agreement, the Optionee shall have the right to
exercise the options in accordance with the following schedule:
(i) As to ____% of the number of shares covered by this
Agreement on, at any time after __________ from the date of this Agreement;
(ii) As to an additional ____% of the remaining number
of shares covered by this Agreement, on the last day of each month thereafter
until the option is fully exercisable.
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<PAGE> 20
Any portion of the option that is not exercised shall accumulate
and may be exercised at any time during the Option Period prior to the
Termination Date. No partial exercise of this option may be for less than 5
percent of the total number of shares then available under this option. In no
event shall the Company be required to issue fractional shares. Notwithstanding
the foregoing, the aggregate fair market value (determined as of the time such
option is granted) of the Stock with respect to which incentive stock options
are exercisable for the first time in any calendar year (under the Plan and any
other incentive stock option plans of the Company or its Affiliates) shall not
exceed $100,000.
6. Method of Exercise. Optionee may exercise the option with
respect to all or any part of the shares of Stock then subject to such exercise
as follows:
(a) Delivery of Written Notice and Option Price. By
giving the Company written notice of such exercise, specifying the number of
such shares as to which this option is exercised. Such notice shall be
accompanied by an amount equal to the Option Price of such shares, in the form
of any one or combination of the following: (i) cash, a certified check, or wire
transfer payable to the order of the Company in lawful money of the United
States; (ii) by delivery on a form prescribed by the Committee of an irrevocable
direction to a securities broker approved by the Committee to sell shares and
deliver all or a portion of the proceeds to the Company in payment for the
Stock; (iii) shares of Stock valued on the date of exercise at fair market
value; or (iv) if authorized for Optionee by the Committee, notes. The shares of
Stock shall be valued in accordance with procedures established by the
Committee. Any note used to exercise this option shall be a full recourse,
interest-bearing obligation containing such terms as the Committee shall
determine. If a note is used, the Optionee agrees to execute such further
documents as the Committee may deem necessary or appropriate in connection with
issuing the note, perfecting a security interest in the Stock purchased with the
note, and any related terms or conditions that the Committee may propose. Such
further documents may include, not by way of limitation, a security agreement,
an escrow agreement, a voting trust agreement and an assignment separate from
certificate.
(b) Execution of Agreements. Optionee (and Optionee's
spouse, if any) shall be required, as a condition precedent to acquiring Stock
through exercise of the option, to execute one or more agreements relating to
obligations in connection with ownership of the Stock or restrictions on
transfer of the Stock no less restrictive than the obligations and restrictions
to which the other shareholders of the Company are subject at the time of such
exercise.
(c) Investment Representations. If required by the
Committee, Optionee shall give the Company satisfactory assurance in writing,
signed by Optionee or his legal representative, as the case may be, that such
shares are being purchased for investment and not with a view to the
distribution thereof, provided that such assurance shall be deemed inapplicable
to (1) any sale of such shares by such Optionee made in
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<PAGE> 21
accordance with the terms of a registration statement covering such sale, which
may hereafter be filed and become effective under the Securities Act of 1933, as
amended (the "Securities Act"), and with respect to which no stop order
suspending the effectiveness thereof has been issued, and (2) any other sale of
such shares with respect to which in the opinion of counsel for the Company,
such assurance is not required to be given in order to comply with the
provisions of the Securities Act.
(d) Delivery of Certificates. As soon as practicable
after receipt of the notice required in Section 6(a) and satisfaction of the
conditions set forth in Sections 6(b) and 6(c), the Company shall, without
transfer or issue tax and without other incidental expense to Optionee, deliver
to Optionee at the office of the Company, at 1200 Chrysler Drive, Menlo Park, CA
94025, or such other place as may be mutually acceptable to the Company and
Optionee, a certificate or certificates of such shares of Stock; provided,
however, that the time of such delivery may be postponed by the Company for such
period as may be required for it with reasonable diligence to comply with
applicable registration requirements under the Securities Act, the Securities
Exchange Act of 1934, as amended, any applicable listing requirements of any
national securities exchange, and requirements under any other law or regulation
applicable to the issuance or transfer of such shares.
7. Corporate Transactions.
(a) Definition. For purposes of this Section 7, a
"Corporate Transaction" shall include any of the following shareholder-approved
transactions to which the Company is a party:
(i) a merger or consolidation in which the
Company is not the surviving entity, except for (1) a transaction the principal
purpose of which is to change the state of the Company's incorporation, or (2) a
transaction in which the Company's shareholders immediately prior to such merger
or consolidation hold (by virtue of securities received in exchange for their
shares in the Company) securities of the surviving entity representing more than
fifty percent (50%) of the total voting power of such surviving entity
immediately after such transaction;
(ii) the sale, transfer or other disposition of
all or substantially all of the assets of the Company unless the Company's
shareholders immediately prior to such sale, transfer or other disposition hold
(by virtue of securities received in exchange for their shares in the Company)
securities of the purchaser or other transferee representing more than fifty
percent (50%) of the total voting power of such entity immediately after such
transaction; or
(iii) any merger in which the Company is the
surviving entity but in which the Company's shareholders immediately prior to
such merger do not hold (by virtue of their shares in the Company held
immediately prior to such transaction)
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<PAGE> 22
securities of the surviving entity (by virtue of their shares in the Company
held immediately prior to such transaction) representing more than fifty percent
(50%) of the total voting power of the surviving entity immediately after such
transaction.
(b) Effect. In the event of any Corporate Transaction,
this option shall terminate immediately prior to the specified effective date of
the Corporate Transaction unless assumed by the successor corporation or its
parent company, pursuant to options providing substantially equal value and
having substantially equivalent provisions as the options granted pursuant to
this Agreement.
8. Adjustments for Changes in Stock. If there should be any
change in a class of Stock subject to this option, through merger,
consolidation, reorganization, recapitalization, reincorporation, stock split,
stock dividend or other change in the capital structure of the Company (except
for a Corporate Transaction described in Section 7), the Company shall make
appropriate adjustments in order to preserve, but not to increase, the benefits
to Optionee, including adjustments in the number of shares of such Stock subject
to this option and in the price per share. Any adjustment made pursuant to this
Section 8 as a consequence of a change in the capital structure of the Company
shall not entitle Optionee to acquire a number of shares of such Stock of the
Company or shares of stock of any successor company greater than the number of
shares Optionee would receive if, prior to such change, Optionee had actually
held a number of shares of such Stock equal to the number of shares then subject
to this option.
9. Limitations on Transfer of Option. This option shall, during
Optionee's lifetime, be exercisable only by Optionee, and neither this option
nor any right hereunder shall be transferable by Optionee by operation of law or
otherwise other than by will or the laws of descent and distribution. In the
event of any attempt by Optionee to alienate, assign, pledge, hypothecate, or
otherwise dispose of this option or of any right hereunder, except as provided
for in this Agreement, or in the event of the levy of any attachment, execution,
or similar process upon the rights or interest hereby conferred, the Company at
its election may terminate this option by notice to Optionee and this option
shall thereupon become null and void.
10. No Shareholder Rights. Neither Optionee nor any person
entitled to exercise Optionee's rights in the event of his death shall have any
of the rights of a shareholder with respect to the shares of Stock subject to
this option except to the extent the certificates for such shares shall have
been issued upon the exercise of this option.
11. NO EFFECT ON TERMS OF EMPLOYMENT. SUBJECT TO THE TERMS OF ANY
WRITTEN EMPLOYMENT CONTRACT TO THE CONTRARY, THE COMPANY (OR ITS AFFILIATE WHICH
EMPLOYS OPTIONEE) SHALL HAVE THE RIGHT TO TERMINATE OR CHANGE THE TERMS OF
EMPLOYMENT OF OPTIONEE AT ANY TIME AND FOR ANY REASON WHATSOEVER, WITH OR
WITHOUT CAUSE.
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<PAGE> 23
12. Notice. Any notice required to be given under the terms of
this Agreement shall be addressed to the Company in care of its Secretary at the
Office of the Company at 1200 Chrysler Drive, Menlo Park, CA 94025, and any
notice to be given to Optionee shall be addressed to him at the address given by
him beneath his signature to this Agreement, or such other address as either
party to this Agreement may hereafter designate in writing to the other. Any
such notice shall be deemed to have been duly given when enclosed in a properly
sealed envelope or wrapper addressed as aforesaid, express or certified and
deposited (postage or certification fee prepaid) in a post office or branch post
office regularly maintained by the United States.
13. Lock-Up Agreement.
(a) Agreement. Optionee, if requested by the Company and
the lead underwriter of any public offering of the Common Stock or other
securities of the Company (the "Lead Underwriter"), hereby irrevocably agrees
not to sell, contract to sell, grant any option to purchase, transfer the
economic risk of ownership in, make any short sale of, pledge or otherwise
transfer or dispose of any interest in any Common Stock or any securities
convertible into or exchangeable or exercisable for or any other rights to
purchase or acquire Common Stock (except Common Stock included in such public
offering or acquired on the public market after such offering) during the
180-day period following the effective date of a registration statement of the
Company filed under the Securities Act, or such shorter period of time as the
Lead Underwriter shall specify. Optionee further agrees to sign such documents
as may be requested by the Lead Underwriter to effect the foregoing and agrees
that the Company may impose stop-transfer instructions with respect to such
Common Stock until the end of such period. The Company and Optionee acknowledge
that each Lead Underwriter of a public offering of the Company's stock, during
the period of such offering and for the 180-day period thereafter, is an
intended beneficiary of this Section 13.
(b) Permitted Transfers. Notwithstanding the foregoing,
Section 13(a) shall not prohibit Optionee from transferring any shares of Common
Stock or securities convertible into or exchangeable or exercisable for the
Company's Common Stock either during Optionee's lifetime or on death by will or
intestacy to Optionee's immediate family or to a trust the beneficiaries of
which are exclusively Optionee and/or a member or members of Optionee's
immediate family; provided, however, that prior to any such transfer, each
transferee shall execute an agreement pursuant to which each transferee shall
agree to receive and hold such securities subject to the provisions of Section
13 hereof. For the purposes of this Section, the term "immediate family" shall
mean spouse, lineal descendant, father, mother, brother or sister of the
transferor.
(c) No Amendment Without Consent of Underwriter. During
the period from identification as a Lead Underwriter in connection with any
public offering of the Company's Common Stock until the earlier of (i) the
expiration of the lock-up period specified in Section 13(a) in connection with
such offering or (ii) the
6
<PAGE> 24
abandonment of such offering by the Company and the Lead Underwriter, the
provisions of Section 13 may not be amended or waived except with the consent of
the Lead Underwriter.
14. Committee Decisions Conclusive. All decisions of the
Committee upon any question arising under the Plan or under this Agreement shall
be conclusive.
15. Successors. This Agreement shall be binding upon and inure to
the benefit of any successor or successors of the Company. Where the context
permits, "Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal representative or the person or persons to whom
Optionee's rights pass by will or the applicable laws of descent and
distribution.
16. Restrictive Legends. All certificates for shares of the Stock
shall bear the following legends, in addition to any other legends required by
applicable state securities law and securities commissioners:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH,
THE SALE OR DISTRIBUTION THEREOF. THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY
THE TERMS OF, AND ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION
IN FAVOR OF THE COMPANY, AS PROVIDED IN THE BYLAWS OF THE
COMPANY, A COPY OF WHICH IS AVAILABLE FROM THE COMPANY."
17. California Law. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
California.
18. Copy of Plan. Optionee hereby acknowledges receipt of a copy
of the Plan.
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<PAGE> 25
IN WITNESS WHEREOF, the Company and Optionee have executed this
Agreement as of the day and year first above written.
INFORMATICA CORPORATION OPTIONEE
a California corporation
By
---------------------------- --------------------------------
________________, President
Address:
-------------------------
-------------------------
8
<PAGE> 26
ATTACHMENT A
CONSENT OF SPOUSE
I, _____________________, spouse of __________________, have read
and approved the foregoing Agreement. In consideration of granting of the right
of my spouse to purchase shares of Informatica Corporation as set forth in the
Agreement, I hereby appoint my spouse as my attorney-in-fact with respect to the
exercise of any rights of the Agreement insofar as I may have any rights under
such community property laws of the State of California or similar laws relating
to marital property in effect in the state of our residence as of the date of
the signing of the foregoing Agreement.
Dated: By:
---------------------- -------------------------------------
9
<PAGE> 27
INCENTIVE (NONQUALIFIED) STOCK OPTION EXERCISE FORM
- ---------------
(date)
_____ Incentive Stock Option Exercise
_____ Nonqualified Stock Option Exercise
I hereby notify Informatica Corporation (the "Company") that I elect to
exercise the following stock options to purchase the number of shares (the
"Stock") indicated pursuant to the Company's 1996 Flexible Stock Incentive Plan
(the "Plan"):
<TABLE>
<CAPTION>
GRANT # OF PRICE/ TOTAL OPTION PRICE
DATE SHARES SHARE (EXCLUDING TAXES)
----- ------ ------ -----------------
<S> <C> <C> <C>
- ----------------- --------------- ---------- ------------------------------
- ----------------- --------------- ---------- ------------------------------
- ----------------- --------------- ---------- ------------------------------
Total: Total $
- ---------------- --------------- ---------- ------------------------------
</TABLE>
Concurrently with the delivery of this Exercise Form to the Company, I
shall hereby pay to the Company the Total Option Price for the stock purchased
in accordance with the provisions of my agreement with the Company evidencing
the option(s) specified above (the "Stock Option Agreement"). Furthermore, I
understand that any taxes which may be due at the time of this exercise will be
calculated and added to the Total Option Price listed above.
The payment of the Total Option Price will be made by delivery of:
a) _____ Cash, Certified Check or Wire Transfer.
b) _____ Shares of the Company's stock valued at fair market value (if
approved by the Board of Directors of the Company or a committee designated
by such Board).
c) _____ Execution of a secured promissory note and stock pledge agreement for
$___________ (if approved by the Board of Directors of the Company or a
committee designated by such Board). I hereby consent to monthly payroll
deductions in the amount of the monthly payments due under the note until
the note has been paid in full.
Please note the following:
_____ Yes I wish to have taxes withheld at the following rate (above any
minimum required):
Federal _______% State ________%
b) _____ No I do not wish to have taxes withheld above the minimum required
(if any).
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<PAGE> 28
Investment Representations
a) I understand that this sale of the Stock is made in reliance upon the
following representation to the Company that the Stock to be received by me will
be acquired for investment for my own account and not with a view to the sale or
distribution of any part thereof within the meaning of the Securities Act of
1933, as amended (the "Securities Act").
b) I hereby represent that I am a resident of the state of ______________.
c) I hereby represent that I have received a copy of the Plan and understand
the restrictions imposed on the Stock I am purchasing, including but not limited
to, the Company's right of first refusal under the terms of the Company's
Bylaws.
d) I understand that the Stock may not be sold, transferred, or otherwise
disposed of without registration under the Securities Act or an exemption
therefrom, and that in the absence of an effective registration statement
covering the Stock or an available exemption from registration under the
Securities Act, the Stock must be held indefinitely. In particular, I am aware
that the Stock may not be sold pursuant to Rule 144 ("Rule 144") or Rule 701
("Rule 701") promulgated under the Securities Act unless all of the conditions
of those Rules are met. In the event that the Company becomes subject to the
reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (which would most likely result from a public offering of the
Company's securities), the Stock may be resold ninety days thereafter under Rule
701 by persons other than affiliates of the Company in a "broker's transaction"
or in a transaction directly with a "market maker" as those terms are defined in
the securities laws. (I understand that I may not be permitted to sell the Stock
at such time pursuant to a lock-up agreement contained in my Stock Option
Agreement.) Among the conditions for use of Rule 144 is the availability of
current information to the public about the Company. Such information is not now
available, and the Company has no present plans to make such information
available. I represent that, in the absence of an effective registration
statement covering the Stock, I will sell, transfer, or otherwise dispose of the
Stock only in a manner consistent with the representations set forth herein.
e) I agree that in no event will I make a transfer or disposition of any of
the Stock (other than pursuant to an effective registration statement under the
Securities Act), unless and until (i) I have notified the Company of the
proposed disposition and have furnished the Company with a statement of the
circumstances surrounding the disposition, (ii) such transfer is made in
accordance with the provisions of the Plan and the Agreement and (iii) if
requested by the Company, at my expense or the expense of the transferee, I
shall have furnished to the Company either (A) an opinion of counsel, reasonably
satisfactory to the Company, to the effect that such transfer may be made
without registration under the Securities Act or (B) a "no action" letter from
the Securities and Exchange Commission to the effect that the transfer of such
securities without registration will not result in a recommendation by the staff
of the Securities and Exchange Commission that action be
2
<PAGE> 29
taken with respect thereto. The Company will not require such a legal opinion or
"no action" letter in any transaction in compliance with Rule 144.
Signature of Optionee ________________________________________
Please print
Optionee's Name: ________________________________________
Address: ________________________________________
________________________________________
________________________________________
Social Security Number: ________________________________________
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<PAGE> 30
INFORMATICA CORPORATION
1996 FLEXIBLE STOCK INCENTIVE PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
THIS AGREEMENT is entered into as of the ____ day of
______________, 199__, between Informatica Corporation, a California corporation
(the "Company"), and _________________________ (the "Recipient").
RECITALS:
WHEREAS, the Company has adopted the 1996 Flexible Stock
Incentive Plan (the "Plan"), which Plan is hereby incorporated in this Agreement
by reference and made a part of it; and
WHEREAS, the Company regards Recipient as a valuable contributor
to the Company, and has determined that it would be in the interest of the
Company and its shareholders to sell the Stock (as defined below) to the
Recipient as a reward for past efforts and an incentive for continued service
with the Company or its Affiliates (as defined in the Plan) and increased
achievements in the future by Recipient;
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth, the parties to this Agreement hereby agree as follows:
1. Restricted Stock Purchase. Contemporaneously with the
execution of this Agreement, the Company will issue to Recipient ____________
shares of Common Stock of the Company (the "Stock") for a consideration of
$_______ per share ("Purchase Price"). Payment for the Stock in the amount of
the Purchase Price multiplied by the number of shares issued hereunder,
$__________, shall be made to the Company upon execution of this Agreement. Such
payments shall be made in cash, certified check or wire transfer acceptable to
the Board of Directors of the Company (the "Board") or a committee designated by
it to administer the Plan (the "Committee"). Payment may also be made by a
promissory note, in the form attached hereto as Exhibit A. In the event of a
purchase by promissory note, Recipient shall pledge the Stock as security for
the promissory note pursuant to a security agreement in the form attached hereto
as Exhibit B. All shares of Stock issued hereunder shall be deemed issued to
Recipient as fully paid and nonassessable shares, and Recipient shall have all
rights of a shareholder with respect thereto, including the right to vote,
receive dividends (including stock dividends), participate in stock splits or
other recapitalizations, and exchange such shares in a merger, consolidation or
other reorganization. The Company shall pay any applicable stock transfer taxes.
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<PAGE> 31
2. Repurchase Right.
(a) Transfer Restrictions. No Stock issued to the Recipient
hereunder shall be sold, transferred by gift, pledged, hypothecated, or
otherwise transferred or disposed of by the Recipient in contravention of this
Section 2 hereof other than by will or the laws of descent and distribution (the
"Permitted Transfers"). Except for Permitted Transfers, no Stock issued to the
Recipient hereunder shall be sold, transferred by gift, pledged, hypothecated,
or otherwise transferred or disposed of by the Recipient prior to the date when
the Recipient shall become vested in such Stock pursuant to Section 3 hereof,
and such Stock shall constitute "Non-Vested Stock" until such date. Any attempt
to transfer Stock in violation of this Section 2 shall be null and void and
shall be disregarded by the Company.
(b) Repurchase Right. Non-Vested Stock shall be subject to a
repurchase option in favor of the Company (the "Repurchase Right"). The
Repurchase Right shall be subject to the following terms and conditions. In the
event of the voluntary or involuntary termination of employment of Recipient
with the Company for any reason, with or without cause (including death or
disability) or a Corporate Transaction (as defined below), the Company shall,
upon the date of such termination, have an irrevocable, exclusive option for a
period of three months from such date to repurchase any or all of the Non-Vested
Stock from Recipient or any person receiving the Non-Vested Stock by operation
of law or other involuntary transfer, at the original Purchase Price for the
Non-Vested Stock.
(c) Exercise of Repurchase Right. The Repurchase Right shall
be exercised by written notice by the Company to Recipient or his or her
executor and, at the Company's option, (i) by delivery to the Recipient or his
or her executor, with such notice, of a check in the amount of the original
Purchase Price for the Non-Vested Stock being repurchased (the "Repurchase
Amount"), or (ii) in the event the Recipient is indebted to the Company for all
or a portion of the Repurchase Amount, by cancellation by the Company of an
amount of such purchase money indebtedness equal to the Repurchase Amount for
the Stock being repurchased, or (iii) by a combination of (i) and (ii) so that
the combined payment and cancellation of indebtedness equals such Repurchase
Amount. Upon delivery by the Company of such notice and payment of the
Repurchase Amount in any of the ways described above, the Company shall become
the legal and beneficial owner of the Stock being repurchased and all rights and
interest therein or related thereto, and the Company shall have the right to
transfer to its own name the number of shares of Stock being repurchased by the
Company, without further action by Recipient.
(d) Assignment of Repurchase Right. The Repurchase Right may
be assigned by the Company to any third party, provided that in the event the
aggregate Purchase Price of the Stock being assigned is less than the fair
market value of such Stock at the time of assignment, the assignee shall pay to
the Company upon assignment cash equal to the difference between the aggregate
Purchase Price and such fair market value.
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<PAGE> 32
(e) Escrow of Stock. For purposes of facilitating the
enforcement of the provisions of this Section 2, Recipient agrees, immediately
upon receipt of the certificate(s) for the Stock, to deliver such
certificate(s), together with an Assignment Separate from Certificate in the
form attached hereto as Exhibit C, executed in blank by Recipient and
Recipient's spouse (if required for transfer) with respect to each such stock
certificate, to the Secretary or Assistant Secretary of the Company, or their
designee, to hold in escrow for so long as such Stock remains subject to any
Repurchase Right of the Company pursuant to this Section 2, with the authority
to take all such actions and to effectuate all such transfers and/or releases as
may be necessary or appropriate to accomplish the objectives of this Agreement
in accordance with the terms hereof. Stock may be held for an additional period
if subject to a Security Agreement as provided in this Agreement. Recipient
hereby acknowledges that the appointment of the Secretary or Assistant Secretary
of the Company (or their designee) as the escrow holder hereunder with the
stated authorities is a material inducement to the Company to make this
Agreement and that such appointment is coupled with an interest and is
accordingly irrevocable. Recipient agrees that such escrow holder shall not be
liable to any party hereto (or to any other party) for any actions or omissions
unless such escrow holder is grossly negligent relative thereto. The escrow
holder may rely upon any letter, notice or other document executed by any
signature purported to be genuine and may resign at any time.
3. Vesting. For purposes of this Agreement, the term "vest" shall
mean with respect to any share of the Stock that such share is no longer
Non-Vested Stock subject to repurchase at the original Purchase Price set forth
in Section 2. If Recipient would become vested in any fraction of a share of
Stock on any date, such fractional share shall not vest and shall remain
Non-Vested Stock until the Recipient becomes vested in the entire share. The
Stock subject to this Agreement shall vest in accordance with the following
schedule:
(a) As to ___% of the number of shares covered by this
Agreement, at any time after _______________ from the date of this Agreement.
(b) As to an additional ___% of the remaining number of shares
covered by this Agreement, on the last day of each month thereafter until the
Stock is fully vested.
4. Corporate Transactions.
(a) Definition. For purposes of this Section 6, a "Corporate
Transaction" shall include any of the following shareholder-approved
transactions to which the Company is a party:
(i) a merger or consolidation in which the Company
is not the surviving entity, except for (1) a transaction the
principal purpose of which is to change the state of the
Company's incorporation, or (2) a transaction in which the
Company's shareholders immediately prior to
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<PAGE> 33
such merger or consolidation hold (by virtue of securities
received in exchange for their shares in the Company) securities
of the surviving entity representing more than fifty percent
(50%) of the total voting power of such surviving entity
immediately after such transaction;
(ii) the sale, transfer or other disposition of
all or substantially all of the assets of the Company unless the
Company's shareholders immediately prior to such sale, transfer
or other disposition hold (by virtue of securities received in
exchange for their shares in the Company) securities of the
purchaser or other transferee representing more than fifty
percent (50%) of the total voting power of such entity
immediately after such transaction; or
(iii) any merger in which the Company is the
surviving entity but in which the Company's shareholders
immediately prior to such merger do not hold (by virtue of their
shares in the Company) securities of the surviving entity held
immediately prior to such transaction representing more than
fifty percent (50%) of the total voting power of the surviving
entity immediately after such transaction.
(b) Effect. In the event of any Corporate Transaction, any
Non-Vested Stock shall be reconveyed to or repurchased by the Company
immediately prior to the specified effective date of the Corporate Transaction
unless assumed by the successor corporation or its parent company, pursuant to
restricted stock providing substantially equal value and having substantially
equivalent provisions as such Non-Vested Stock.
5. Additional Securities. The term "Stock" also refers to all
securities received in replacement of the Stock, as a stock dividend or as a
result of any stock split, recapitalization, merger, reorganization, exchange or
the like, and all new or additional securities or other properties to which
Recipient is entitled by reason of Recipient's ownership of the Stock
(hereinafter called "Additional Securities"). Recipient shall be entitled to
direct the Company to exercise any warrant or option received as Additional
Securities upon supplying the funds necessary to do so, in which event the
securities so purchased shall constitute Additional Securities, but the
Recipient may not direct Company to sell any such warrant or option. If
Additional Securities consist of a convertible security, Recipient may exercise
any conversion right, and any securities so acquired shall be deemed Additional
Securities. All Stock shall be subject to the restrictions contained in this
Agreement.
6. Investment Representations.
(a) Investment Representations. This Agreement is made in
reliance upon the Recipient's representation to the Company, which by its
acceptance hereof the Recipient hereby confirms, that the shares of Stock to be
received by the Recipient will be acquired for investment for his or her own
account and not with a view
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<PAGE> 34
to the sale or distribution of any part thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act").
(b) Availability of Exemptions. The Recipient understands that
the Stock is not registered under the Securities Act on the basis that the sale
provided for in this Agreement and the issuance of securities hereunder is
exempt from registration under the Securities Act pursuant to Section 4(2)
thereof, and that the Company's reliance on such exemption is predicated on the
Recipient's representations set forth herein.
(c) Restrictions on Transfer. The Recipient understands that
the Stock may not be sold, transferred, or otherwise disposed of without
registration under the Securities Act or an exemption therefrom, and that in the
absence of an effective registration statement covering the Stock or an
available exemption from registration under the Securities Act, the Stock must
be held indefinitely. In particular, the Recipient is aware that the Stock may
not be sold pursuant to Rule 144 ("Rule 144") or Rule 701 ("Rule 701")
promulgated under the Securities Act unless all of the conditions of the
applicable Rules are met. Among the conditions for use of Rule 144 is the
availability of current information to the public about the Company. Such
information is not now available, and the Company has no present plans to make
such information available. The Recipient represents that, in the absence of an
effective registration statement covering the Stock, it will sell, transfer, or
otherwise dispose of the Stock only in a manner consistent with its
representations set forth herein and then only in accordance with the provisions
of Section 6(d) hereof.
(d) Procedure for Transfer. The Recipient agrees that in no
event will it make a transfer or disposition of any of the Stock (other than
pursuant to an effective registration statement under the Securities Act),
unless and until (i) the Recipient shall have notified the Company of the
proposed disposition and shall have furnished the Company with a statement of
the circumstances surrounding the disposition, (ii) such transfer is made in
accordance with the provisions of Section 2 and Section 3 above and (iii) if
requested by the Company, at the expense of the Recipient or transferee, the
Recipient shall have furnished to the Company either (A) an opinion of counsel,
reasonably satisfactory to the Company, to the effect that such transfer may be
made without registration under the Securities Act or (B) a "no action" letter
from the Securities and Exchange Commission to the effect that the transfer of
such securities without registration will not result in a recommendation by the
staff of the Securities and Exchange Commission that action be taken with
respect thereto. The Company will not require such a legal opinion or "no
action" letter in any transaction in compliance with Rule 144.
7. Legends; Stop Transfer.
(a) Required Legends. All certificates for shares of the Stock
shall bear the following legends:
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<PAGE> 35
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE
SALE OR DISTRIBUTION THEREOF. THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER
SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE
TERMS OF, AND ARE SUBJECT TO A RIGHT OF REPURCHASE IN FAVOR OF
THE COMPANY, AS PROVIDED IN A RESTRICTED STOCK PURCHASE AGREEMENT
BETWEEN THE COMPANY AND THE HOLDER HEREOF, OR ITS SUCCESSOR, AND
THE BYLAWS OF THE COMPANY, A COPY OF WHICH IS AVAILABLE FROM THE
COMPANY."
(b) Additional Legends. The certificates for shares of the
Stock shall also bear any legend required by any applicable state securities
law.
8. Lock-Up Agreement.
(a) Agreement. Recipient, if requested by the Company and the
lead underwriter of any public offering of the Common Stock or other securities
of the Company (the "Lead Underwriter"), hereby irrevocably agrees not to sell,
contract to sell, grant any option to purchase, transfer the economic risk of
ownership in, make any short sale of, pledge or otherwise transfer or dispose of
any interest in any Common Stock of the Company (the "Common Stock") or any
securities convertible into or exchangeable or exercisable for or any other
rights to purchase or acquire Common Stock (except Common Stock included in such
public offering or acquired on the public market after such offering) during the
180-day period following the effective date of a registration statement of the
Company filed under the Securities Act, or such shorter period of time as the
Lead Underwriter shall specify. Recipient further agrees to sign such documents
as may be requested by the Lead Underwriter to effect the foregoing and agrees
that the Company may impose stop-transfer instructions with respect to such
Common Stock subject until the end of such period. The Company and Recipient
acknowledge that each Lead Underwriter of a public offering of the Company's
stock, during the period of such offering and for the 180-day period thereafter,
is an intended beneficiary of this Section 8.
(b) Permitted Transfers. Notwithstanding the foregoing,
Section 8(a) shall not prohibit Recipient from transferring any shares of Common
Stock
6
<PAGE> 36
or securities convertible into or exchangeable or exercisable for the Company's
Common Stock to the extent such transfer is not otherwise prohibited by this
Agreement, either during Recipient's lifetime or on death by will or intestacy
to Recipient's immediate family or to a trust the beneficiaries of which are
exclusively Recipient and/or a member or members of Recipient's immediate
family; provided, however, that prior to any such transfer, each transferee
shall execute an agreement pursuant to which each transferee shall agree to
receive and hold such securities subject to the provisions of Section 8 hereof.
For the purposes of this paragraph, the term "immediate family" shall mean
spouse, lineal descendant, father, mother, brother or sister of the transferor.
(c) No Amendment Without Consent of Underwriter. During the
period from identification as a Lead Underwriter in connection with any public
offering of the Company's Common Stock until the earlier of (i) the expiration
of the lock-up period specified in Section 8(a) in connection with such offering
or (ii) the abandonment of such offering by the Company and the Lead
Underwriter, the provisions of the Section 8 may not be amended or waived except
with the consent of the Lead Underwriter.
9. NO EMPLOYMENT RIGHTS. THIS AGREEMENT SHALL NOT CONFER UPON
RECIPIENT ANY RIGHT WITH RESPECT TO CONTINUATION OF HIS OR HER EMPLOYMENT WITH
THE COMPANY OR ITS AFFILIATES, NOR SHALL IT INTERFERE IN ANY WAY WITH THE RIGHT
OF RECIPIENT OR THE COMPANY, OR ANY OF ITS AFFILIATES, TO TERMINATE RECIPIENT'S
EMPLOYMENT WITH THE COMPANY AT ANY TIME FOR ANY REASON WITH OR WITHOUT CAUSE OR
CHANGE THE TERMS OF EMPLOYMENT OF RECIPIENT.
10. Section 83(b) Election. Recipient hereby represents that he
or she understands (a) the contents and requirements of a timely election made
pursuant to Section 83(b) of the Internal Revenue Code or similar provision of
state law (collectively, an "83(b) Election"), (b) the application of Section
83(b) of such code to the purchase of Stock by Recipient pursuant to this
Agreement, (c) the nature of the election to be made by Recipient under Section
83(b) of such code and (d) the effect and requirements of the 83(b) Election
under relevant state and local tax laws. Recipient further represents that he or
she intends to file an election pursuant to Section 83(b) of such code, the form
of which election is attached hereto as Exhibit D, with the Internal Revenue
Service within thirty (30) days following purchase of the Stock hereunder, and a
copy of such election with his or her federal tax return for the calendar year
in which the date of this Agreement falls. Recipient covenants to inform the
Company of any change in Recipient's state of residency. Recipient shall provide
the Company with a copy of any timely 83(b) Election. If Recipient makes a
timely 83(b) Election, Recipient shall immediately pay Company (or the Affiliate
that employs Recipient) the amount necessary to satisfy any applicable federal,
state, and local income and employment tax withholding requirements. If
Recipient does not make a timely 83(b) Election, Recipient shall, either at the
time that the restrictions lapse under this Agreement and the Plan or at the
time withholding is
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<PAGE> 37
otherwise required by any applicable law, pay the Company (or the Affiliate that
employs Recipient) the amount necessary to satisfy any applicable federal,
state, and local income and employment tax withholding requirements.
11. Withholding. Recipient agrees to withholding of shares from
exercise of the rights under this Agreement for satisfaction of any applicable
federal, state or local income tax or employment tax withholding requirements.
12. Distributions. The Company shall disburse to Recipient all
dividends, interest and other distributions paid or made in cash or property
(other than Additional Securities) with respect to Stock and Additional
Securities, less any applicable federal or state withholding taxes.
13. Successors. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors and assigns.
14. Notice. Any notice or other paper required to be given or
sent pursuant to the terms of this Agreement shall be sufficiently given or
served hereunder to any party when transmitted by express or certified mail,
postage prepaid, addressed to the party to be served as follows:
Company: Informatica Corporation
1200 Chrysler Drive
Menlo Park, CA 94025
Attn: Secretary
Recipient: At Recipient's address as it appears under
Recipient's signature to this Agreement, or to such
other address as Recipient may specify in writing
to the Company
Any party may designate another address for receipt of notices so long as notice
is given in accordance with this Section.
15. Committee Decisions Conclusive. All decisions of the
Committee arising under the Plan or under this Agreement shall be conclusive.
16. Spousal Consent. Recipient shall cause his or her spouse to
execute the Consent of Spouse attached hereto as Exhibit E concurrently with the
execution of this Agreement or, if later, at the time Recipient becomes married.
17. California Law. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
California.
18. Copy of Plan. Recipient hereby acknowledges receipt of a copy
of the Plan.
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<PAGE> 38
IN WITNESS WHEREOF, the parties hereto have duly executed this
Restricted Stock Purchase Agreement as of the date first above written.
INFORMATICA CORPORATION
a California corporation
By _____________________________________
Its ____________________________________
Recipient:
_________________________________________
[Name]
Address:
_________________________________________
_________________________________________
9
<PAGE> 39
EXHIBIT A
SECURED PROMISSORY NOTE
$________ [Date]
FOR VALUE RECEIVED, the undersigned [name] , an individual
residing at [address] ("Maker"), hereby promises to pay to __________________, a
California corporation ("Payee"), on the earlier of (i) ______________ or (ii)
the date Maker ceases to be an employee of Payee, for any reason, the principal
sum of ________________ Dollars ($______), in lawful money of the United States
of America and in immediately available funds, plus interest from the date
hereof at the rate of _____ percent (__%) per annum, payable in arrears on [each
of] __________ [,__________, __________ and __________] provided however, that
the last said installment shall be in an amount necessary to repay in full the
unpaid principal and interest hereof.
Interest shall be computed on the basis of a year of 365 days for
the actual number of days elapsed. Should interest not be paid when due
hereunder, it shall be added to the principal and thereafter bear like interest
as the principal, but such unpaid interest so compounded shall not exceed an
amount equal to simple interest on the unpaid principal at the maximum rate
permitted by law.
This Promissory Note is secured by that certain Security
Agreement of even date herewith between Maker and Payee, and Payee is entitled
to all the benefits provided in the Security Agreement.
(i) Prepayments. Maker shall have the right to prepay any and all
amounts owed under this Note in full or in part at any time without notice and
without penalty, premium or bonus.
(ii) Events of Default and Remedies. Any one of the following
occurrences shall constitute an "Event of Default" under this Note:
(a) Maker fails to pay any installment of principal or
interest under this Note when the same becomes due in accordance with the terms
hereof or otherwise fails to perform its obligations under this Note or the
Security Agreement.
(b) Maker (i) becomes insolvent or bankrupt, commits any
act of bankruptcy, generally fails to pay its debts as they become due, (ii)
makes an assignment for the benefit of its creditors, or (iii) enters into any
agreement for the composition, extension, or readjustment of all or
substantially all of his or her obligations, or any proceeding is commenced
either by Maker or against Maker under bankruptcy or insolvency laws or a
receiver is appointed for all or substantially all of Maker's property.
<PAGE> 40
(c) Maker ceases to be an employee of Payee for any
reason.
Upon the occurrence of any Event of Default hereunder, the
entire unpaid principal balance of this Note (including accrued interest) shall,
at the option of the Payee and without notice or demand of any kind to Maker or
any other person, immediately become due and payable, and Payee shall have and
may exercise any and all rights and remedies available to it at law or in
equity.
(iii) Attorneys' Fees and Costs. Maker promises to pay on demand
all reasonable out-of-pocket costs of and expenses of Payee in connection with
the collection of amounts due hereunder, including, without limitation,
attorneys' fees incurred in connection therewith, whether or not any lawsuit is
ever filed with respect thereto.
(iv) Miscellaneous.
(a) Waiver. Maker waives diligence, presentment, protest
and demand and also notice of protest, demand, dishonor and nonpayment of this
Note. No extension of time for the payment of this Note shall affect the
original liability under this Note of Maker. The pleading of any statute of
limitations as a defense to any demand against Maker is expressly waived by
Maker to the full extent permitted by law.
(b) Setoff. The obligation to pay Payee shall be absolute
and unconditional and the rights of Payee shall not be subject to any defense,
setoff, counterclaim or recoupment or by reason of any indebtedness or liability
at any time owing by Payee to Maker.
(c) Governing Law. This Note shall be construed and
enforced in accordance with the laws of the state of California, excluding its
conflict of laws rules to the extent such rules would apply the law of another
jurisdiction.
IN WITNESS WHEREOF, the undersigned has executed and delivered
this Note as of the date first above written.
MAKER
_________________________________________
[Name]
<PAGE> 41
EXHIBIT B
SECURITY AGREEMENT
THIS SECURITY AGREEMENT is made and entered into as of this ____
day of ______________, 199__, by and between Informatica Corporation, a
California corporation ("Secured Party"), and , an individual residing at
("Debtor").
In consideration of the mutual covenants contained herein and for
other good and valuable consideration, the adequacy and receipt of which is
hereby acknowledged, the parties hereby agree as follows:
1. Definitions. The following terms have the following meanings:
(a) The term "Collateral" shall mean (i) ___________
shares of Common Stock in Secured Party owned by Debtor and (ii) all Proceeds
(as defined below) of the foregoing shares. For purposes of this Security
Agreement, the term "Proceeds" includes whatever is receivable or received when
Collateral or proceeds thereof is sold, collected, exchanged or otherwise
disposed of, whether such disposition is voluntary or involuntary, and includes,
without limitation, all rights to payment, including return premiums, with
respect to any insurance relating thereto.
(b) The term "Obligations" shall mean all obligations of
Debtor to Secured Party pursuant to that certain Secured Promissory Note in the
original principal amount of $______ of even date herewith (the "Note")
evidencing the indebtedness of Debtor to Secured Party.
(c) The term "UCC" shall mean the Uniform Commercial Code
as the same may, from time to time, be in effect in the State of California.
(d) Capitalized terms used herein shall have the meaning
set forth in the UCC unless otherwise set forth herein.
(e) The term "Event of Default" shall have the meaning set
forth in the Note.
2. Grant of Security Interest. As security for prompt and
complete payment and performance under the Obligations, Debtor hereby assigns,
conveys, grants, pledges and transfers to and creates in favor of Secured Party
a security interest in the Collateral, including all accessions to,
substitutions and replacements for the foregoing. Debtor shall, upon execution
of this Security Agreement, and of the Note as Maker (as such term is defined in
the Note), deliver all certificates representing the Collateral together with a
stock power executed in blank by Debtor and Debtor's spouse with respect
<PAGE> 42
to such stock certificates to the Secretary of Secured Party to be held in
escrow until full satisfaction of Debtor's obligations hereunder and under the
Note with the authority to take all such actions and to effectuate all such
transfers and/or releases as may be necessary or appropriate to accomplish the
objectives of this Security Agreement and the Note. In the event that the
proceeds from the disposition of the Collateral are insufficient to fully
satisfy the amounts due and owing under the Note, Debtor shall, subject to the
limitations set forth in the UCC, be liable for any deficiency.
3. Representations, Warranties and Covenants. Debtor represents,
warrants and covenants that:
(a) Title. Apart from the security interest in the
Collateral granted to Secured Party hereunder, Debtor has good and valid title
to the Collateral, free and clear of any and all liens, charges, claims,
security interests or encumbrances of any kind whatsoever.
(b) Transfer of Collateral. Debtor shall not sell, assign,
transfer, encumber or otherwise dispose of any of the Collateral or any interest
therein without the prior written consent of Secured Party. If any such
encumbrance is imposed, Debtor shall give Secured Party immediate written
notice.
(c) Perfection. Debtor shall, upon demand, do all such
acts as Secured Party may reasonably request to establish and maintain a
perfected security interest in the Collateral, including, without limitation,
executing a financing statement in the form prescribed by the California
Secretary of State.
(d) Authority. Debtor has the power and authority to make
this pledge and to perform his obligations hereunder.
4. Remedies. Upon the occurrence of any Event of Default
hereunder, the entire unpaid principal balance of the Note shall, at the option
of the Payee (as defined in the Note) and without notice or demand of any kind
to Debtor or any other person, immediately become due and payable, and Secured
Party may proceed to exercise any and all of the rights and remedies of a
secured party under the UCC and any other remedies available at law or in
equity, with respect to the Collateral.
5. Cumulative Rights. The rights, powers and remedies of Secured
Party under this Agreement shall be in addition to all rights, powers and
remedies given to Secured Party by virtue of any statute or rule of law or any
other agreement, all of which rights, powers and remedies shall be cumulative
and may be exercised successively or concurrently without impairing Secured
Party's security interest in the Collateral.
6. Continued Rights of Maker. Without diminishing the rights and
security interests granted hereunder, so long as no default exists hereunder or
under the
<PAGE> 43
Note, Maker (as defined in the Note) may use, take advantage of and have all of
the benefits of the Collateral (including, but not limited to, the right to vote
and to receive dividends), but not including the right, without Secured Party's
prior written consent, to sell or transfer the Collateral. Secured Party, in
Secured Party's sole discretion, may terminate and revoke the rights of Maker
described in the foregoing clauses (i) and (ii) upon any default hereunder or an
Event of Default under the Note. Any attempted sale or transfer of the
Collateral not otherwise consented to by Secured Party in writing are void and
of no force or effect.
7. Waiver. Any forbearance or delay by Secured Party in
exercising any right, power or remedy shall not preclude the further exercise
thereof, and every right, power or remedy of Secured Party shall continue in
full force and effect until such right, power or remedy is specifically waived
in a writing executed by Secured Party. Debtor waives any right to require
Secured Party to proceed against any person or to exhaust any Collateral or to
pursue any remedy in Secured Party's power.
8. Term and Release. Subject to the terms of the Note, the grant
of security interest in the Collateral shall continue until the payment of all
indebtedness secured hereby. Subject to the terms of the Note, the Collateral
shall be released from this pledge upon payment in full of Debtor's obligations
to Secured Party.
9. Invalidity of Particular Provisions. Debtor and Secured Party
agree that the enforceability or invalidity of any provision or provisions of
this Agreement shall not render any other provision or provisions herein
contained unenforceable or invalid.
10. Successors or Assigns. Debtor and Secured Party agree that
all of the terms of this Agreement shall be binding on their respective
successors and assigns, and that the term "Debtor" and the term "Secured Party"
as used herein shall be deemed to include, for all purposes, the respective
designees, successors, assigns, heirs, executors and administrators.
11. Governing Law. This Agreement shall be interpreted and
governed under the laws of the State of California.
12. Notice. Any written notice, consent or other communication
provided for in this Agreement must be in writing and will be served effectively
upon delivery, or if mailed, upon the first to occur of receipt or the
expiration of forty-eight (48) hours after deposit in certified United States
mail, postage prepaid, sent to the party at its address appearing below:
<PAGE> 44
Secured Party:
Debtor:
Such addresses may be changed by written notice given as provided herein.
13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instruments.
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be executed as of the date first above written.
SECURED PARTY
By:_____________________________________
DEBTOR
_________________________________________
[Name]
<PAGE> 45
EXHIBIT C
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, ___________________ hereby sells, assigns and
transfers unto Informatica Corporation, a California corporation (the
"Company"), __________________ (__________) shares of the Common Stock of the
Company, standing in his or her name on the books of ________________,
represented by Certificate No. __ herewith, and does hereby irrevocably
constitute and appoint ________________ attorney to transfer the said stock in
the books of _____________ with full power of substitution.
DATED: ________________, 199__
_________________________________________
(Signature)
_________________________________________
(Printed Name)
<PAGE> 46
EXHIBIT D
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to the Internal
Revenue Code, to include in gross income for 19__ the amount of any compensation
taxable in connection with the taxpayer's receipt of the property described
below;
1. The name, address, taxpayer identification number and taxable
year of the undersigned are:
TAXPAYER'S NAME:
SPOUSE'S NAME:
TAXPAYER'S SOCIAL SECURITY NO.:
SPOUSE'S SOCIAL SECURITY NO.:
TAXABLE YEAR: Calendar Year 19__
ADDRESS:
2. The property which is the subject of this election is: ______
shares of common stock of ___________________.
3. The property was transferred to the undersigned on
______________, 19___.
4. The property is subject to the following restriction:
____________________________.
5. The fair market value of the property at the time of transfer
(determined without regard to any restriction other than a restriction which by
its terms will never lapse) is: $_______ per share x ________ shares =
$____________.
6. The undersigned paid $________ per share x _______ shares for
the property transferred or a total of $__________.
The undersigned has submitted a copy of this statement to the
person for whom the services were performed in connection with the undersigned's
receipt of the above-described property. The undersigned taxpayer is the person
performing the services in connection with the transfer of said property.
<PAGE> 47
The undersigned will file this election with the Internal Revenue
Service office in which he or she files his or her annual income tax return not
later than 30 days after the date of transfer of the property. A copy of the
election also will be furnished to the person for whom the services were
performed. Additionally, the undersigned will include a copy of the election
with his or her income tax return for the taxable year in which property is
transferred. The undersigned understands that this election will also be
effective as an election under California law.
Dated:_________________________ _________________________________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated:_________________________ _________________________________________
Spouse of Taxpayer
<PAGE> 48
EXHIBIT E
CONSENT OF SPOUSE
I, _____________________, spouse of __________________, have read
and approved the foregoing Agreement. In consideration of the right of my spouse
to purchase shares of Informatica Corporation, as set forth in the Agreement, I
hereby appoint my spouse as my attorney-in-fact in respect to the exercise of
any rights of the Agreement insofar as I may have any rights under such
community property laws of the State of California or similar laws relating to
marital property in effect in the state of our residence as of the date of the
signing of the foregoing Agreement.
Dated:_________________________ By:______________________________________
[Signature]
_________________________________________
[Printed Name]
<PAGE> 1
Exhibit 21.1
LIST OF SIGNIFICANT SUBSIDIARIES
Informatica GmbH, a German limited liability company
Informatica Software Limited, an English limited company
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Consolidated Financial Data" and "Experts" and to the use of our report dated
February 2, 1999, in the Registration Statement (Form S-1, No. 333- ) and
related Prospectus of Informatica Corporation dated February 19, 1999.
/s/ ERNST & YOUNG LLP
Palo Alto, California
February 19, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997 DEC-31-1998
<PERIOD-START> JAN-01-1996 JAN-01-1997 JAN-01-1998
<PERIOD-END> DEC-31-1996 DEC-31-1997 DEC-31-1998
<CASH> 0 8,440 6,059
<SECURITIES> 0 0 0
<RECEIVABLES> 0 3,733 5,356
<ALLOWANCES> 0 600 1,841
<INVENTORY> 0 0 0
<CURRENT-ASSETS> 0 11,816 10,126
<PP&E> 0 1,284 879
<DEPRECIATION> 0 530 367
<TOTAL-ASSETS> 0 12,692 10,764
<CURRENT-LIABILITIES> 0 6,776 12,430
<BONDS> 0 0 0
0 0 0
0 17,586 17,586
<COMMON> 0 151 289
<OTHER-SE> 0 (11,923) (19,758)
<TOTAL-LIABILITY-AND-EQUITY> 0 12,692 10,764
<SALES> 2,060 12,186 28,745
<TOTAL-REVENUES> 2,060 12,186 28,745
<CGS> 158 2,353 4,975
<TOTAL-COSTS> 158 2,353 4,975
<OTHER-EXPENSES> 6,458 16,818 31,946
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 0 0 0
<INCOME-PRETAX> (4,548) (6,764) (7,915)
<INCOME-TAX> 0 0 0
<INCOME-CONTINUING> 0 0 0
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (4,548) (6,764) (7,915)
<EPS-PRIMARY> (1.69) (2.44) (2.48)
<EPS-DILUTED> (1.69) (2.44) (2.48)
</TABLE>
