<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 8, 1999
REGISTRATION NO. 333-72677
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
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.
CORI M. ALLEN, ESQ. JON C. GONZALES, ESQ.
ROCHELLE A. KRAUSE, ESQ. S. DAWN SMITH, ESQ.
MORRISON & FOERSTER LLP WILSON SONSINI GOODRICH & ROSATI
755 PAGE MILL ROAD PROFESSIONAL CORPORATION
PALO ALTO, CA 94304-1018 650 PAGE MILL ROAD
(650) 813-5600 PALO ALTO, CA 94304-1050
(650) 493-9300
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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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AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $0.001 per
share............................ 2,600,000 $14.00 $36,400,000 $10,120(3)
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(1) Includes 340,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(a) under the Securities Act of 1933.
(3) This amount was previously paid with the initial filing of this Registration
Statement.
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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<PAGE> 2
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 APRIL 8, 1999
2,260,000 Shares
[INFORMATICA LOGO -- Caption: POWERING THE INTELLIGENT ENTERPRISE]
INFORMATICA CORPORATION
Common Stock
------------------
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
$12.00 and $14.00 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 340,000 additional
shares
to cover over-allotments of shares.
INVESTING IN OUR COMMON STOCK INVOLVES 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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<S> <C> <C> <C>
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.
<PAGE> 3
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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....................... 15
Dilution............................. 17
Selected Consolidated Financial
Data............................... 18
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 20
Business............................. 32
Management........................... 48
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PAGE
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Certain Transactions................. 57
Principal Stockholders............... 59
Description of Capital Stock......... 61
Shares Eligible For Future Sale...... 64
Underwriting......................... 66
Notice to Canadian Residents......... 68
Legal Matters........................ 69
Experts.............................. 69
Additional Information............... 69
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.
<PAGE> 4
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 large companies
deploy, manage, maintain and grow systems that enable more effective business
decision making.
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-business 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, decision-makers, 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 software products that allow decision-makers to extract data from their
computer systems, and creating an emerging market for analytic applications. By
themselves, however, these products and applications cannot access historical,
consolidated data located in multiple transaction data systems throughout a
company's enterprise. To take full advantage of these analytic resources,
companies need scalable software products that can help them efficiently deploy
and manage a wide range of business intelligence and analytic applications. They
need a software solution that 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 software solution for
deploying, managing and maintaining systems that enable more effective business
decision making. These systems can help companies gain competitive advantage
through analysis of customer and heterogeneous transactional data. Our software
products help streamline and simplify the deployment, management and maintenance
of these systems by providing a packaged, off-the-shelf solution. Our core
software product is PowerCenter, our enterprise data integration hub, which
automates the process of retrieving, organizing and consolidating data from
multiple transaction data systems. Our 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 solution, or platform, on
which analytic applications are deployed. The key elements of our strategy
include expanding our position as a leading independent software 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 principal 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
April 1999.
3
<PAGE> 5
THE OFFERING
Common stock offered by Informatica............ 2,260,000 shares
Common stock to be outstanding after this
offering....................................... 13,850,327 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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THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
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1996 1997 1998 1998 1999
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CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
Total revenues............ $ 2,060 $12,186 $28,745 $ 5,600 $10,337
Total cost of revenues.... 158 2,353 4,975 948 1,836
------- ------- ------- ------- -------
Gross profit.............. 1,902 9,833 23,770 4,652 8,501
Loss from operations...... (4,556) (6,985) (8,176) (2,310) (771)
Net loss.................. (4,548) (6,764) (7,915) (2,229) (894)
Pro forma basic and
diluted net loss per
share(2)............... $ (0.71) $ (0.08)
======= =======
Shares used in calculation
of pro forma basic and
diluted net loss per
share(1)(2)............ 11,133 11,470
======= =======
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MARCH 31, 1999
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PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED(3)
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CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.................. $ 6,783 $ 6,783 $33,321
Working capital (deficit).................. (3,122) (3,122) 23,416
Total assets............................... 10,988 10,988 37,526
Long-term obligations, net of current
portion................................. 217 217 217
Redeemable convertible preferred stock..... 17,586 -- --
Total stockholders' equity (deficit)....... (20,299) (2,713) 23,825
</TABLE>
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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 March 31, 1999. Excludes 3,572,413 shares
of common stock issuable upon exercise of options outstanding as of March
31, 1999 having a weighted average exercise price of $5.06 and 1,791,529
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 2,260,000 shares in this offering hereby,
based on an assumed initial public offering price of $13.00 per share.
4
<PAGE> 6
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.
WE CANNOT ASSURE YOU THAT WE WILL EVER BE PROFITABLE BECAUSE WE HAVE OPERATED
OUR BUSINESS FOR ONLY A RELATIVELY LIMITED PERIOD OF TIME
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, and it is possible we
may never achieve profitability. We incurred net losses of $4.5 million, $6.8
million, $7.9 million and $894,000 in 1996, 1997, 1998 and the three months
ended March 31, 1999, respectively. As of March 31, 1999, we had an accumulated
deficit of $20.6 million. 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.
THE EXPECTED FLUCTUATION OF OUR QUARTERLY RESULTS COULD CAUSE OUR STOCK PRICE TO
EXPERIENCE SIGNIFICANT FLUCTUATIONS OR DECLINES
Our future quarterly operating results have fluctuated in the past and are
likely to do so in the future. These fluctuations could cause our stock price to
also significantly fluctuate or experience declines. Some of the factors which
could cause our operating results to fluctuate include:
- 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 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.
5
<PAGE> 7
Our quarterly product license revenues are difficult to forecast because we
historically have not had a substantial backlog of orders, and therefore
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 our sales
cycles, which may last many months, vary substantially from customer to customer
and vary in general due to a number of factors over which we have little or no
control. Nonetheless, our short-term expense levels are relatively fixed and
based, in part, on our expectations of future revenues. The difficulty we have
in predicting our quarterly revenue means revenues shortfalls are likely to
occur at some time, and our inability to adequately reduce short-term expenses
means such shortfalls will affect not only our revenue, but also our overall
business, results of operations and financial conditions.
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. 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. 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.
IF THE MARKET IN WHICH WE SELL OUR PRODUCTS AND SERVICES DOES NOT GROW AS WE
ANTICIPATE, IT WILL ADVERSELY AFFECT OUR REVENUES
The market for software solutions that enable more effective business
decision making by helping companies aggregate and utilize data stored
throughout an organization is relatively new and still emerging. Substantially
all of our revenues are attributable to the sale of products and services in
this market. If this market does not grow at the rate we anticipate, our
business, results of operations and financial condition will be adversely
affected. One of the reasons this market might not grow as we anticipate is that
many companies are not yet fully aware of the benefits of using these software
solutions to help make business decisions or the benefits of our specific
product solutions. As a result, we believe large companies to date have deployed
these software solutions to make business decisions 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.
WE EXPECT SEASONAL TRENDS TO CAUSE OUR QUARTERLY REVENUES TO FLUCTUATE
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. In addition, European sales
may tend to be relatively lower during the summer months than during other
periods. 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.
6
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BECAUSE WE SELL ONLY TWO MAIN PRODUCTS, IF EITHER DOES NOT ACHIEVE BROAD MARKET
ACCEPTANCE, OUR REVENUES WILL BE ADVERSELY AFFECTED
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 software market in which these
products are sold grows substantially, if either of these products does not
achieve market acceptance, our revenues will be adversely affected. 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.
THE LOSS OF KEY PERSONNEL OR THE INABILITY TO ATTRACT AND RETAIN ADDITIONAL
PERSONNEL COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS
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. 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, rapidly evolving and
subject to rapidly changing technology. 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. We
believe we currently compete more on the basis of our products' functionality
than on the basis of price. If our competitors develop products with similar or
superior functionality, we may have difficulty competing on the basis of price.
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.
7
<PAGE> 9
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. See "Business -- Competition."
IF WE DO NOT MAINTAIN AND STRENGTHEN OUR RELATIONSHIPS WITH OUR CHANNEL AND
STRATEGIC PARTNERS, OUR ABILITY TO GENERATE REVENUE WILL BE ADVERSELY AFFECTED
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 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. 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.
THE LENGTHY SALES CYCLE FOR OUR PRODUCTS MAKES OUR REVENUES SUSCEPTIBLE TO
FLUCTUATIONS
Our sales cycle is generally long because the expense, complexity, broad
functionality and company-wide deployment of our products typically require
executive-level approval for investment in 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.
If our sales cycle lengthens unexpectedly, it could adversely affect the timing
of our revenues. Our sales cycle may lengthen as we continue to focus our sales
efforts on large
8
<PAGE> 10
corporations. To the extent that potential customers divert resources and
attention to Year 2000 issues, the sales cycle could be further lengthened.
DIFFICULTIES WE MAY ENCOUNTER MANAGING OUR GROWTH COULD ADVERSELY AFFECT OUR
RESULTS OF OPERATIONS
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. If we are unable to manage this
growth effectively, our business, results of operations or financial condition
may be materially adversely affected. We increased the number of our employees
from 50 at December 31, 1996, to approximately 200 at March 31, 1999. 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.
TECHNOLOGICAL ADVANCES AND EVOLVING INDUSTRY STANDARDS COULD ADVERSELY IMPACT
OUR FUTURE PRODUCT SALES
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. We have in the past experienced delays in releasing new products and
product enhancements and may experience similar delays in the future. For
example, the upgrade to PowerMart 3.5, which was scheduled to be released in
December 1997, was not shipped until February 1998. As a result, some of our
customers deferred purchasing the PowerMart product until this upgrade was
released. 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.
OUR INTERNATIONAL OPERATIONS EXPOSE US TO GREATER INTELLECTUAL PROPERTY,
COLLECTIONS, REGULATORY AND OTHER RISKS
International revenues accounted for 8%, 7% and 13% of our total
consolidated revenues in 1996, 1997 and 1998, respectively. 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;
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- 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.
IF OUR PRODUCTS CONTAIN SIGNIFICANT DEFECTS, THESE DEFECTS COULD CAUSE US TO
LOSE REVENUE AND EXPOSE US TO PRODUCT LIABILITY CLAIMS
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. 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. 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. For example, we issued corrective
releases to fix problems with our PowerMart 4.0 product released in the first
quarter of 1998. As a result, we had to allocate significant customer support
resources to address these problems.
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.
OUR INABILITY TO ADEQUATELY PROTECT OUR PROPRIETARY TECHNOLOGY COULD HAVE A
MATERIAL ADVERSE EFFECT ON OUR BUSINESS
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. It is possible that our pending patent 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.
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
10
<PAGE> 12
unavailable or limited in certain foreign countries. The protection of our
proprietary rights may be inadequate and our competitors could 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. We have been advised by another company that it is evaluating
our PowerMart product to determine whether that product infringes its U.S.
patent. This company has filed litigation against one of our competitors,
alleging infringement of its patent. Third parties, including the company that
is currently evaluating our PowerMart product, could claim that our current or
future products infringe their rights. These 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. These claims also might require us to enter into royalty or
license agreements. If required, we may not be able to obtain 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. See "Business -- Intellectual Property and Other Proprietary Rights."
YEAR 2000 ISSUES COULD NEGATIVELY AFFECT OUR BUSINESS
Many currently installed computer systems are not capable of distinguishing
21(st) century dates from 20(th) 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 systems that enable more effective business decisions due to
increased expenditures on their own Year 2000 compliance efforts. In addition,
during the remainder of 1999, our existing or potential customers may choose to
defer new software product purchases until after January 1, 2000 to avoid the
possibility of introducing any new Year 2000 issues. 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 80% 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 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.
11
<PAGE> 13
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
13,850,327 shares of common stock (based upon shares outstanding as of March 31,
1999), assuming no exercise of the underwriters' over-allotment option and no
exercise of outstanding options or warrants after March 31, 1999. Of these
shares, the 2,260,000 shares sold in this offering will be freely tradable. The
remaining shares 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............................ 0
90 days after the date of this prospectus.............. 10,000
180 days after the date of this prospectus............. 11,546,327
At various times thereafter upon the expiration of
one-year holding periods............................. 34,000
----------
11,590,327
==========
</TABLE>
12
<PAGE> 14
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 that when we are eligible, we will
have 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 and Statement of Position 98-4 effective March 31,
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 this standard 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."
AS A NEW INVESTOR YOU WILL EXPERIENCE 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 FROM THIS OFFERING
We currently have no specific plans for using 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."
FORWARD-LOOKING STATEMENTS
Some of the statements under "Prospectus Summary," "Risk Factors,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," "Business" and elsewhere in this prospectus constitute
forward-looking statements. These statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance, or achievements expressed or implied
by such forward-looking statements. Such factors include, among other things,
those listed under "Risk Factors" and elsewhere in this prospectus.
In some cases, you can identify forward-looking statements by terminology
such as "may," "will," "should," "could," "expects," "plans," "intends,"
"anticipates," "believes," "estimates," "predicts," "potential" or "continue" or
the negative of such terms and other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor anyone else
assumes responsibility for the accuracy and completeness of such statements. We
are under no duty to update any of the forward-looking statements after the date
of this prospectus.
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 $13.00 per share, are estimated to be approximately
$26.5 million (approximately $30.6 million if the underwriters' over-allotment
option is exercised in full), after deducting underwriters discounts and
commissions and estimated offering expenses.
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.
CAPITALIZATION
The following table sets forth the capitalization of Informatica as of
March 31, 1999, on the following three bases:
- on an actual basis;
- 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
- on a pro forma as adjusted basis to give effect to the sale by us of
2,260,000 shares of our common stock offered hereby at an assumed initial
public offering price of $13.00 per share, less underwriters discounts
and commissions and estimated offering expenses.
15
<PAGE> 17
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>
MARCH 31, 1999
------------------------------------------------
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................................. $ 346 $ 346 $ 346
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, $0.001 par value: none
authorized, issued and outstanding
(actual); 2,000,000 shares
authorized, no shares issued or
outstanding (pro forma and pro forma
as adjusted)......................... -- -- --
Common stock, $0.001 par value:
14,770,000 shares authorized,
3,650,327 shares issued and
outstanding, actual; 100,000,000
shares authorized, 11,590,327 shares
issued and outstanding pro forma;
100,000,000 shares authorized,
13,850,327 shares issued and
outstanding, pro forma as
adjusted(1).......................... 381 17,967 44,505
Cumulative foreign currency translation
adjustment........................... (16) (16) (16)
Notes receivable from stockholders...... (40) (40) (40)
Deferred compensation................... (26) (26) (26)
Accumulated deficit..................... (20,598) (20,598) (20,598)
-------- -------- --------
Total stockholders' equity
(deficit).................... (20,299) (2,713) 23,825
-------- -------- --------
Total capitalization............ $ (2,367) $ (2,367) $ 24,171
======== ======== ========
</TABLE>
- -------------------------
(1) Excludes 3,572,413 shares of common stock issuable upon exercise of options
outstanding as of March 31, 1999 having a weighted average exercise price of
$5.06 and 1,791,529 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 March 31, 1999, our pro forma net tangible book value was $(2,713) or
approximately $(0.23) per share. Pro forma net tangible book value per share
represents the amount of our stockholders' equity divided by 11,590,327 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 2,260,000 shares of common
stock offered hereby at an assumed initial public offering price of $13.00 per
share (less underwriting discounts and commissions and estimated offering
expenses), our pro forma as adjusted net tangible book value as of March 31,
1999 would have been $23,825 or $1.72 per share. This represents an immediate
increase in net tangible book value of $1.95 per share to existing stockholders
and an immediate dilution in net tangible book value of $11.28 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...... $13.00
Pro forma net tangible book value per share as
of March 31, 1999............................. $(0.23)
Increase per share attributable to new
investors..................................... 1.95
Pro forma as adjusted net tangible book value per
share after this offering.......................... 1.72
------
Dilution per share to new investors.................. $11.28
======
</TABLE>
The following table sets forth, on a pro forma basis as of March 31, 1999,
the differences between the existing stockholders and the purchasers of shares
in this offering (at an assumed initial public offering price of $13.00 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..... 11,590,327 83.7% $18,010,000 38.0% $ 1.55
New investors(1).......... 2,260,000 16.3 29,380,000 62.0 $13.00
----------- ----- ----------- -----
Total........... 13,850,327 100.0% $47,390,000 100.0%
=========== ===== =========== =====
</TABLE>
The above computations assume no exercise of options after March 31, 1999.
The number of shares outstanding as of March 31, 1999 excludes 3,572,413 shares
of common stock issuable upon exercise of options outstanding as of March 31,
1999 having a weighted average exercise price of $5.06 per share and 1,791,529
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 as of and for the years ended December 31, 1994, 1995, 1996, 1997
and 1998, 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. The consolidated financial
data as of and for the three months ended March 31, 1998 and 1999 were derived
from unaudited financial statements included elsewhere in this prospectus. We
have prepared this unaudited information on the same basis as the audited
Consolidated Financial Statements and have included all adjustments, consisting
only of normal recurring adjustments that we consider necessary for a fair
presentation of our financial position and operating results for such periods.
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>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------- -----------------
1994 1995 1996 1997 1998 1998 1999
------- ------- ------- ------- ------- ------- -------
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS
DATA:
Revenues:
License............................... $ 11 $ 44 $ 1,843 $10,041 $21,148 $ 4,217 $ 7,114
Service............................... 446 545 217 2,145 7,597 1,383 3,223
------- ------- ------- ------- ------- ------- -------
Total revenues................... 457 589 2,060 12,186 28,745 5,600 10,337
Cost of revenues:
License............................... -- -- 34 190 376 28 142
Service............................... 158 180 124 2,163 4,599 920 1,694
------- ------- ------- ------- ------- ------- -------
Total cost of revenues........... 158 180 158 2,353 4,975 948 1,836
------- ------- ------- ------- ------- ------- -------
Gross profit............................ 299 409 1,902 9,833 23,770 4,652 8,501
Operating expenses:
Research and development.............. 132 641 2,119 3,831 7,075 1,613 2,032
Sales and marketing................... 37 203 3,676 10,951 22,235 4,715 6,413
General and administrative............ 91 89 663 2,036 2,636 634 827
------- ------- ------- ------- ------- ------- -------
Total operating expenses......... 260 933 6,458 16,818 31,946 6,962 9,272
------- ------- ------- ------- ------- ------- -------
Income (loss) from operations........... 39 (524) (4,556) (6,985) (8,176) (2,310) (771)
Interest income(expense), net........... 2 6 8 221 261 81 27
------- ------- ------- ------- ------- ------- -------
Income (loss) before income taxes....... 41 (518) (4,548) (6,764) (7,915) (2,229) (744)
Income tax provision.................... -- -- -- -- -- -- (150)
------- ------- ------- ------- ------- ------- -------
Net income (loss)....................... $ 41 $ (518) $(4,548) $(6,764) $(7,915) $(2,229) $ (894)
======= ======= ======= ======= ======= ======= =======
Pro forma basic and diluted net loss
per share(1).......................... $ (0.71) $ (0.08)
======= =======
Shares used in calculation of pro forma
basic and diluted net loss per
share(1).............................. 11,133 11,470
======= =======
</TABLE>
18
<PAGE> 20
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------------------------------------------- -----------
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............... $ 27 $ 906 $ 3,023 $ 8,440 $ 6,059 $ 6,783
Working capital (deficit)............... 48 896 3,218 5,040 (2,304) (3,122)
Total assets............................ 48 1,104 5,056 12,692 10,764 10,988
Long-term obligations, net of current
portion............................... -- -- 270 102 217 217
Redeemable convertible preferred
stock................................. -- 1,472 8,593 17,586 17,586 17,586
Total stockholders' equity (deficit).... 48 (469) (5,011) (11,772) (19,469) (20,299)
</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.
19
<PAGE> 21
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 systems that enable more effective business decision
making.
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 design concept for 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. 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. 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. Substantially all of our international sales were in
Europe. Sales outside of North America and Europe to date have been less than 1%
of total consolidated revenues during the last three fiscal years, although we
anticipate expanding outside of these two regions in the future. See "Risk
Factors -- We Face Risks from Our International Operations" and Note 8 of Notes
to Consolidated Financial Statements.
20
<PAGE> 22
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. For direct sales, we recognize revenue upon
shipment to the end user and when collectibility is probable. For sales through
resellers, we recognize revenue upon shipment to the reseller and when
collectibility is probable, or upon cash collections based on credit history
with the reseller. Our agreements with our customers and resellers do not
contain product return rights.
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 and Statement of Position 98-4 effective March 31,
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 this standard 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.
21
<PAGE> 23
The following table presents certain financial data as a percentage of
total revenues:
<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
------------------------------------ ----------------
1994 1995 1996 1997 1998 1998 1999
---- ---- ---- ---- ---- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
Revenues:
License................. 2% 7% 89% 82% 74% 75% 69%
Service................. 98 93 11 18 26 25 31
---- ---- ---- ---- ---- ---- ----
Total revenues..... 100 100 100 100 100 100 100
Cost of revenues:
License(1).............. -- -- 2 2 1 1 1
Service(2).............. 35 31 6 18 16 16 16
---- ---- ---- ---- ---- ---- ----
Total cost of
revenues......... 35 31 8 20 17 17 17
---- ---- ---- ---- ---- ---- ----
Gross margin............... 65 69 92 80 83 83 83
Operating expenses:
Research and
development........... 29 109 103 31 25 29 20
Sales and marketing..... 8 34 178 90 77 84 62
General and
administrative........ 20 15 32 17 9 11 8
---- ---- ---- ---- ---- ---- ----
Total operating
expenses......... 57 158 313 138 111 124 90
---- ---- ---- ---- ---- ---- ----
Income (loss) from
operations.............. 8 (89) (221) (58) (28) (41) (7)
Interest income (expense),
net..................... -- 1 -- 2 1 1 --
---- ---- ---- ---- ---- ---- ----
Income (loss) before income
taxes................... 8 (88) (221) (56) (27) (40) (7)
Income tax provision....... -- -- -- -- -- -- (1)
---- ---- ---- ---- ---- ---- ----
Net income (loss).......... 8% (88)% (221)% (56)% (27)% (40)% (8)%
==== ==== ==== ==== ==== ==== ====
</TABLE>
- -------------------------
(1) As a percentage of license revenues, costs of license revenues have been
0.0%, 0.0%, 1.8%, 1.9%, 1.8%, 0.7% and 2.0%, respective to the periods
presented chronologically above.
(2) As a percentage of service revenues, costs of service revenues have been
35.4%, 33.0%, 57.1%, 100.8%, 60.5%, 66.5% and 52.6%, respective to the
periods presented chronologically above.
THREE MONTHS ENDED MARCH 31, 1998 AND 1999
REVENUES
Our total revenues increased from $5.6 million in the three months ended
March 31, 1998 to $10.3 million in the three months ended March 31, 1999,
representing growth of 85%. Our license revenues increased from $4.2 million in
the three months ended March 31, 1998 to $7.1 million in the three months ended
March 31, 1999, representing growth of 69%. 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 $1.4 million in the three months ended March 31, 1998 to $3.2 million in
the three months ended March 31, 1999, representing growth of 133%. These
increases were due primarily to an increase in consulting, training and
maintenance fees
22
<PAGE> 24
associated with both the increased number of licenses sold and the increased
average transaction size, along with a larger installed license base. 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.
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
was $28,000 and $142,000 in the three months ended March 31, 1998 and the three
months ended March 31, 1999, respectively. The increase in absolute dollar
amount was due primarily to increases in 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 personnel
and infrastructure. Cost of service revenues was $920,000 and $1.7 million in
the three months ended March 31, 1998 and the three months ended March 31, 1999,
respectively, representing 67% and 53% of service revenues. Cost of service
revenues as a percent of service revenues declined in the three months ended
March 31, 1999 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 $1.6 million in the
three months ended March 31, 1998 to $2.0 million in the three months ended
March 31, 1999. 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 29% and 20% of total revenues in the three months ended
March 31, 1998 and the three months ended March 31, 1999, respectively. The
decrease as a percentage of total revenues was due primarily to growth in our
total revenues. 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. 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.
23
<PAGE> 25
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 $4.7 million in the three months ended March 31, 1998 to $6.4
million in the three months ended March 31, 1999. The increases were due
primarily to 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 84% and 62% of total sales in
the three months ended March 31, 1998 and the three months ended March 31, 1999,
respectively. The decline in sales and marketing expenses as a percentage of
total revenues from the quarter ended March 31, 1998 to the quarter ended March
31, 1999 was positively impacted by selling efficiencies resulting from an
increase in the size and number of 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. 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 administrative
expenses increased from $634,000 in the three months ended March 31, 1998 to
$827,000 in the three months ended March 31, 1999, representing 11% and 8% of
our total revenues, 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. From the
three months ended March 31, 1998 to the three months ended March 31, 1999,
interest income decreased from $81,000 to $27,000 as our cash balance decreased.
PROVISION FOR INCOME TAXES
We incurred a net operating loss in the three months ended March 31, 1998
and consequently paid no federal, state or foreign income taxes. In the three
months ended March 31, 1999, we recorded a provision of $150,000 for state and
foreign income taxes.
24
<PAGE> 26
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 consulting, training and maintenance fees associated with both
the increased number of licenses sold and the increased average transaction
size, along with a larger installed license base in each successive year.
COST OF REVENUES
Cost of License Revenues
Cost of license revenues was $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 Service Revenues
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.
OPERATING EXPENSES
Research and Development
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.
Sales and Marketing
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,
25
<PAGE> 27
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.
General and Administrative
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.
INTEREST INCOME (EXPENSE)
From 1997 to 1998, interest income increased marginally on an absolute
basis from approximately $221,000 to $261,000, despite the lower year end cash
balance in 1998. This increase was due primarily to our completion of a $9.0
million financing at the end of our second quarter 1997, which resulted in a
higher average cash balance in 1998 than in 1997.
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> 28
QUARTERLY RESULTS OF OPERATIONS
The following tables set forth our unaudited quarterly results of
operations data for our nine most recent quarters ended March 31, 1999, 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, MAR. 31,
1997 1997 1997 1997 1998 1998 1998 1998 1999
-------- -------- --------- -------- -------- -------- --------- -------- --------
(IN THOUSANDS, EXCEPT AS A PERCENTAGE OF TOTAL REVENUES)
<S> <C> <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 $ 7,114
Service.................. 201 434 592 918 1,383 1,696 2,094 2,424 3,223
------- ------- ------- ------- ------- ------- ------- ------- -------
Total revenues....... 1,690 2,526 3,264 4,706 5,600 6,400 7,539 9,206 10,337
------- ------- ------- ------- ------- ------- ------- ------- -------
Cost of revenues:
License.................. 40 37 42 71 28 179 81 88 142
Service.................. 247 440 635 841 920 1,002 1,173 1,504 1,694
------- ------- ------- ------- ------- ------- ------- ------- -------
Total cost of
revenues........... 287 477 677 912 948 1,181 1,254 1,592 1,836
------- ------- ------- ------- ------- ------- ------- ------- -------
Gross profit............... 1,403 2,049 2,587 3,794 4,652 5,219 6,285 7,614 8,501
Operating expenses:
Research and
development............ 738 761 896 1,436 1,613 1,676 1,727 2,059 2,032
Sales and marketing...... 1,768 2,293 3,092 3,798 4,715 5,472 5,934 6,114 6,413
General and
administrative......... 357 412 545 722 634 643 625 734 827
------- ------- ------- ------- ------- ------- ------- ------- -------
Total operating
expenses........... 2,863 3,466 4,533 5,956 6,962 7,791 8,286 8,907 9,272
------- ------- ------- ------- ------- ------- ------- ------- -------
Loss from operations....... (1,460) (1,417) (1,946) (2,162) (2,310) (2,572) (2,001) (1,293) (771)
Interest income (expense),
net...................... 9 33 100 79 81 73 65 42 27
------- ------- ------- ------- ------- ------- ------- ------- -------
Loss before income taxes... (1,451) (1,384) (1,846) (2,083) (2,229) (2,499) (1,936) (1,251) (744)
Income tax provision....... -- -- -- -- -- -- -- -- (150)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net loss................... $(1,451) $(1,384) $(1,846) $(2,083) $(2,229) $(2,499) $(1,936) $(1,251) $ (894)
======= ======= ======= ======= ======= ======= ======= ======= =======
AS A PERCENTAGE OF TOTAL
REVENUES:
Revenues:
License.................. 88% 83% 82% 80% 75% 73% 72% 74% 69%
Service.................. 12 17 18 20 25 27 28 26 31
------- ------- ------- ------- ------- ------- ------- ------- -------
Total revenues....... 100 100 100 100 100 100 100 100 100
------- ------- ------- ------- ------- ------- ------- ------- -------
Cost of revenues:
License(1)............... 2 2 1 1 1 3 1 1 1
Service(2)............... 15 17 20 18 16 15 16 16 16
------- ------- ------- ------- ------- ------- ------- ------- -------
Total cost of
revenues........... 17 19 21 19 17 18 17 17 17
------- ------- ------- ------- ------- ------- ------- ------- -------
Gross margin............... 83 81 79 81 83 82 83 83 83
Operating expenses:
Research and
development............ 44 30 27 31 29 26 23 22 20
Sales and marketing...... 104 91 95 81 84 86 79 67 62
General and
administrative......... 21 16 17 15 11 10 8 8 8
------- ------- ------- ------- ------- ------- ------- ------- -------
Total operating
expenses........... 169 137 139 127 124 122 110 97 90
------- ------- ------- ------- ------- ------- ------- ------- -------
Loss from operations....... (86) (56) (60) (46) (41) (40) (27) (14) (7)
Interest income (expense),
net...................... -- 1 3 2 1 1 1 -- --
------- ------- ------- ------- ------- ------- ------- ------- -------
Loss before income taxes... (86) (55) (57) (44) (40) (39) (26) (14) (7)
Income tax provision....... -- -- -- -- -- -- -- -- (1)
------- ------- ------- ------- ------- ------- ------- ------- -------
Net loss................... (86)% (55)% (57)% (44)% (40)% (39)% (26)% (14)% (8)%
======= ======= ======= ======= ======= ======= ======= ======= =======
</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%, 1.3% and 2.0%, 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%, 62.0% and 52.6%,
respective to the quarters presented chronologically above.
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<PAGE> 29
The trends discussed in the annual comparisons of operating results from
1996 through 1998 generally apply to the comparison of results of operations for
our nine most recent quarters ended March 31, 1999, 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 31% in the first quarter of
1999. 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.
Service revenues as a percentage of total revenues increased on a slightly
accelerated basis in the quarter ended March 31, 1999 due primarily to:
- a substantial increase in service revenues resulting from our success in
hiring additional service personnel; and
- increased maintenance revenues resulting from annual maintenance contract
revenues related to the seasonally higher level of license transactions
entered into in the last quarter of the prior 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. This percentage
may also increase due to our adoption on January 1, 2000 of the Software Revenue
Recognition policy SOP 98-9. Our adoption of this policy may also require us to
defer recognition of some of our revenues in future periods.
During the nine quarters ended March 31, 1999, 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 three quarters ended
March 31, 1999, was positively impacted by selling efficiencies resulting from
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
three quarters ended March 31, 1999. 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
28
<PAGE> 30
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. In addition, European sales may
tend to be relatively lower during the summer months than during other periods.
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.
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 March 31, 1999, we had $6.8 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.
Our operating activities resulted in a net cash inflow of $861,000 in the
three months ended March 31, 1999. The sources of cash were due primarily to
increases in deferred revenue and decreases in accounts receivable. Uses of cash
in operating activities were due primarily to net operating losses.
Investing activities used cash of $100,000 in 1996, $584,000 in 1997,
$872,000 in 1998 and $81,000 in the three months ended March 31, 1999, due
primarily to 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 and $21,000
in the three months ended March 31, 1999, due primarily to the payments on
capital lease obligations partially offset by proceeds from the exercise of
stock options.
As of December 31, 1998 and March 31, 1999, our principal commitments
consisted of obligations under operating and capital leases. As of December 31,
1998 and March 31, 1999, we had $459,000 and $346,000, respectively, 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
29
<PAGE> 31
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.
YEAR 2000 COMPLIANCE
Many currently installed computer systems are not capable of distinguishing
21(st)century dates from 20(th) 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 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 21(st)century dates from 20(th) 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
30
<PAGE> 32
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. Our voice-mail system was the only system we
identified as non-compliant, and we expect to replace this system in connection
with other communication systems upgrades that are not related to the Year 2000
problem.
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, 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 intend to initiate in the second quarter of 1999
contingency planning to address the risks associated with unremediated Year 2000
problems, which planning we currently anticipate completing by the end of the
third quarter of 1999.
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<PAGE> 33
BUSINESS
INTRODUCTION
We are a leading provider of software solutions that help companies deploy,
manage, maintain and grow systems that enable more effective business decision
making. 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-business 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, decision-makers, customers and suppliers who can leverage
this information to drive revenue growth and profitability.
Companies across a range of industries are using applications that enable
more effective business decision making and, thus, gaining greater insight from
their corporate information systems. For example, retailers track customer
buying behavior to respond quickly with new products. Financial services firms
use data to 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 decision-makers with greater power to make
more informed business decisions. In today's increasingly decentralized
enterprises, getting the right information to the desktops of employees quickly
and efficiently 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 desktop, pc-based software for information access and analysis
and for tools to build and manage the underlying data marts and data warehouses.
This is the custom-built analytic applications market. Moreover, a new market
for "packaged analytic applications" -- often tied closely to specific
enterprise resource planning systems -- is forming quickly. These analytic
applications are typically pre-packaged, off-the-shelf software programs
specifically designed to aid in performing sophisticated business analysis. Some
enterprise resource
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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 analytic applications
(both packaged and custom built) and the tools to build, manage and access the
underlying data warehouses and data marts is estimated to reach $11.8 billion by
2002.
While existing software tools and applications are helping companies access
data directly from specific transactional systems, by themselves they 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 solution to support decision-makers 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;
- broaden access to a wider range of information sources;
- maintain compatibility among the increasing types and numbers of software
tools and applications; and
- support rapid growth and change, in user numbers as well as in
application initiatives.
With such a platform in place, decision-makers 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 software solution, or
platform, for deploying, managing and maintaining systems that enable more
effective business decision making. 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]
Our PowerCenter and PowerMart software products provide a highly adaptable,
functionally rich solution, or platform, for deploying, managing and maintaining
systems that enable more effective business decision making. 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 systems that enable more effective
business decision making 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 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 makes it easy for customers to modify a system
used to address these changing business dynamics.
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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 solution 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 major relational
databases, including Oracle, IBM DB2/UDB, Informix, Sybase and Microsoft SQL
Server.
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INFORMATICA'S STRATEGY
Our objective is to provide the leading software solution to help companies
deploy, manage, maintain and grow systems that enable more effective business
decision making. 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-business 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-wide 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.
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
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volumes of data. Further, we will continue to develop our platform to facilitate
and support e-business and other emerging Internet applications.
PRODUCTS AND SERVICES
Our products enable large, global organizations to build the necessary
infrastructure for deploying and managing business intelligence and analytic
applications across the enterprise. These products are designed to reduce the
complexities of deploying and maintaining this infrastructure and to enhance the
quality and performance of information analysis.
Our solution enables 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.
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 solutions that enable
[POWERCENTER LOGO] systems that enable more effective more effective business decision
business decision making making
- 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 systems that enable
OS/390 systems more effective business decision
making
- -------------------------------------------------------------------------------------------------------
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>
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PowerCenter
As part of our solution, 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.
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
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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 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 products from other
industry offerings, and we believe they are critical to deploying and managing
systems that enable more effective business decision making:
- 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.
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- 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 -- Architectures that enable more effective
business decision making 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 solution 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 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 March 31, 1999, we employed
41 people worldwide in services related activities.
Our professional services range from designing and deploying architectures
that enable more effective business decision making 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 systems used
to support business decision making.
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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
SQLiason
Strategic Technologies
Strategic Information Systems
Sybertech
Sysix Technologies
Talent Software Services
Tessera Enterprise Systems
WebSoft
Xenon
Yaletown Technology
ZYGA
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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.*
Lucent Technologies/Octel Communications
Pacific Bell Directory
Qualcomm*
Sprint
Tele-Communications, Inc. (TCI)
Telenor*
Government
Bureau of Land Management
State of Texas
U.S. Navy*
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*
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
Thomson Publishing
Toyota USA*
Media/Entertainment/Hospitality
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
First Brands
The Gap*
Liz Claiborne
M&M Mars*
Polo Ralph Lauren*
Transportation
BAX Global*
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 "1-800" 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 and 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
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 March 31, 1999, we employed 48 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 March 31, 1999, we employed 91 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 120 days, certain
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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 PROPRIETARY 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. The protection of our proprietary rights may be inadequate and our
competitors could 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. We have been advised by another company that it is evaluating
our PowerMart product to determine whether that product infringes its U.S.
patent. This company has filed litigation against one of our competitors,
alleging infringement of its patent. Third parties, including the company that
is currently evaluating our PowerMart product, could claim that our current or
future products infringe their rights. These 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. These 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, rapidly evolving 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
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<PAGE> 47
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. We currently compete more on the
basis of our products' functionality than on the basis of price. If our
competitors develop similar or superior functionality, we may have difficulty
competing more substantially on the basis of price. 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 March 31, 1999, we had a total of 200 employees, including 48 people
in research and development, 91 people in sales and marketing, 41 people in
consulting, customer support and training and 20 people in general and
administrative services. None of our employees is represented by a labor union,
and we consider employee relations to be good.
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<PAGE> 48
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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<PAGE> 49
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth certain information concerning our executive
officers and directors as of March 31, 1999:
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
---- --- -----------
<S> <C> <C>
Gaurav S. Dhillon............... 33 Chief Executive Officer, Secretary and
Director
Diaz H. Nesamoney............... 34 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, our Secretary 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.
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<PAGE> 50
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, 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, 1999 Employee Stock Purchase Plan, 1996 Flexible
Stock Incentive Plan and 1993 Flexible Stock Incentive Plan, and reviews the
compensation and benefits for our executive officers.
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<PAGE> 51
Compensation Committee Interlocks and Insider Participation
Prior to February 1999, the compensation committee was composed of Messrs.
Dhillon, Pidwell and Silverman. This committee is currently composed of Messrs.
Pidwell and 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. We will also grant
directors options to purchase our common stock pursuant to the terms of our 1999
Stock Incentive Plan or our 1999 Non-Employee Director Stock Incentive Plan. See
"-- Stock Plans."
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, Secretary 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.
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<PAGE> 52
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 $1,717,563 $2,971,865
Diaz H. Nesamoney..... 100,000 6.24 4.00 02/12/08 1,717,563 2,971,865
Clive A. Harrison..... 50,000 3.12 4.00 02/12/08 858,781 1,485,933
</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. The
potential realizable values are calculated by assuming that an assumed
initial public offering price of $13.00 per share was the fair market value
of our common stock at the time of grant, that the common stock appreciates
at the indicated rate for the entire term of the option and that the option
is exercised at the exercise price and sold on the last day of the option
term at the appreciated price.
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
AT DECEMBER 31, 1998 AT DECEMBER 31, 1998(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Gaurav S. Dhillon............... 100,000 100,000 $1,275,000 $ 900,000
Diaz H. Nesamoney............... 100,000 100,000 1,275,000 900,000
Clive A. Harrison............... 128,541 111,459 1,655,304 1,239,696
</TABLE>
- -------------------------
(1) The value of "in-the-money" stock options represents the positive spread
between the exercise price of stock options and an assumed initial public
offering price per share of $13.00.
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<PAGE> 53
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 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.
We have entered into agreements with our directors and executive officers
regarding indemnification. Under these agreements we are required to indemnify
them against expenses, judgments, fines, settlements and other amounts actually
and reasonably incurred (including expenses of a derivative action) in
connection with an actual, or a threatened, proceeding if any of them may be
made a party because he or she is or was one of our directors or officers. We
are obligated to pay these amounts only if the officer or director acted in good
faith and in a manner that he or she reasonably believed to be in (or not
opposed to) our best interests. With respect to any criminal proceeding, we are
obligated to pay these amounts only if the officer or director had no reasonable
cause to believe his or her conduct was unlawful. The indemnification agreements
also set forth procedures that will apply in the event of a claim for
indemnification thereunder.
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.
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<PAGE> 54
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, and
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 March 31, 1999, there were options to purchase 455,061 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 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 March 31, 1999, there were options to purchase 2,817,352 shares
outstanding. We do not anticipate granting options under this plan after
completion of this offering and adoption of the 1999 Stock Incentive Plan.
1999 Stock Incentive Plan
Our 1999 Stock Incentive Plan was adopted by our board of directors in
February 1999, and is expected to be approved by our stockholders at the next
annual meeting. 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. However, the maximum number of shares available for
issuance as incentive stock options shall be increased by the lesser of either
5% of the fully-diluted number of shares of common stock outstanding on December
31 of the immediately preceding calendar year, 4,000,000 shares 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
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<PAGE> 55
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 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,
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<PAGE> 56
1,600,000 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 July
15, 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 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 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 may be administered by either 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.
1999 Non-Employee Director Stock Incentive Plan
In March 1999, our board of directors adopted the 1999 Non-Employee
Director Stock Incentive Plan, and we expect our stockholders to approve this
plan at the next annual stockholders' meeting. The total number of shares
available for grant under the
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<PAGE> 57
1999 Non-Employee Director Plan is 250,000 shares of common stock. No awards
will be made under this plan until completion of this offering.
The purposes of the 1999 Non-Employee Director Plan are to attract and
retain the best available non-employee directors, to provide them additional
incentives and, therefore, to promote the success of our business.
The 1999 Non-Employee Director Plan establishes an automatic option grant
program for the grant of awards to non-employee directors. Under this program,
each non-employee director first elected to our board of directors following the
completion of this offering will automatically be granted an option to acquire
25,000 shares of our common stock at an exercise price per share equal to the
fair market value of our common stock at the date of grant. These options will
vest and become exercisable in four equal installments on each yearly
anniversary of the grant date. Upon the date of each annual stockholders'
meeting, each non-employee director, who has been a member of our board of
directors for at least six months prior to the date of the stockholders'
meeting, will receive automatic annual grants of options to acquire 5,000 shares
of our common stock at an exercise price equal to the fair market value of our
common stock at the date of grant. Such options will vest and become fully
exercisable on the first anniversary of the grant date.
Each automatic option grant will have a term of five years and will be
transferable to the extent provided in the agreement evidencing the option. The
consideration for exercising an option may consist of cash, check, shares of our
common stock, the assignment of part of the proceeds from the sale of shares
acquired upon exercise of the option or any combination thereof.
The 1999 Non-Employee Director Plan is administered by our board of
directors or a committee designated by our board of directors constituted to
permit non-employee director awards to be exempt from Section 16(b) of the
Exchange Act in accordance with Rule 16b-3 thereunder. The administrator shall
approve forms of award agreements for use under the 1999 Non-Employee Director
Plan, determine the terms and conditions of awards, and construe and interpret
the terms of the plan and awards granted pursuant thereto.
Unless terminated sooner, the 1999 Non-Employee Director Plan will
terminate automatically in 2019. Our board of directors has the authority to
amend, suspend or terminate the 1999 Non-Employee Director Plan subject to
stockholder approval of certain amendments and provided no such action may
affect awards to non-employee directors previously granted under the plan,
unless agreed to by the affected non-employee directors.
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<PAGE> 58
CERTAIN TRANSACTIONS
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 completion of this offering, all shares of our
outstanding preferred stock will be automatically converted into an equal number
of shares of common stock, and outstanding warrants for preferred stock will be
exercisable for an equal number of shares of common stock. Listed below are
those 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 either 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.
(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.
57
<PAGE> 59
(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.
On various occasions during 1998 and the three preceding fiscal years, we
granted the following options to purchase our common stock to some of the
stockholders, or, in the case of Mr. Pidwell, the person associated with the
stockholder, that participated in the above venture financings:
- on September 11, 1995, the Partech Entities were assigned an option,
originally granted to Mr. Worms on the same date, to purchase 56,250
shares of common stock with an exercise price per share of $0.10;
- on September 11, 1995, Discovery Ventures I, LLC was assigned an option,
originally granted to Mr. Silverman on the same date, to purchase 56,250
shares of common stock with an exercise price per share of $0.10; and
- on May 22, 1996 and November 23, 1998, Mr. Pidwell, trustee of the
Pidwell Family Living Trust, was personally 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.
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.
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<PAGE> 60
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information known to us with respect
to beneficial ownership of our common stock as of March 31, 1999 as adjusted to
reflect the sale of shares offered hereby (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>
NUMBER OF SHARES
UNDERLYING PERCENTAGE OF SHARES OUTSTANDING
NUMBER OF OPTIONS -----------------------------------
NAME OF BENEFICIAL OWNER SHARES(1)(2) AND WARRANTS(3) BEFORE OFFERING AFTER OFFERING(4)
------------------------ ------------ ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
Partech Entities
50 California Street, Ste. 3200
San Francisco, CA 94111(5)...... 2,581,250 80,000 22.1% 18.5%
Vincent R. Worms(6)............... 2,581,250 80,000 22.1 18.5
Bay Partners SBIC, L.P.
10600 North DeAnza Blvd.
Cupertino, CA 95014(7).......... 2,183,750 80,000 18.7 15.7
Integral Capital Entities
2750 Sand Hill Road
Menlo Park, CA 94025(8)......... 1,315,000 11.3 9.5
Diaz H. Nesamoney(9).............. 1,306,252 131,250 11.1 9.3
Gaurav S. Dhillon................. 1,303,586 131,250 11.1 9.3
Weiss, Peck & Greer Entities
555 California Street, Ste. 3130
San Francisco, CA 94l04(10)..... 1,125,000 -- 9.7 8.1
Discovery Ventures I, LLC
3000 Sand Hill Road, Bldg. 3
#210
Menlo Park, CA 94025(11)........ 1,051,250 40,000 9.0 7.6
Arnold N. Silverman(12)........... 1,051,250 40,000 9.0 7.6
Clive A. Harrison................. 163,958 163,958 1.4 1.2
David W. Pidwell(13).............. 103,203 10,860 * *
A. Brooke Seawell................. 12,395 12,395 * *
All executive officers and
directors as a group (8
persons)........................ 6,521,894 569,713 53.6 45.2
</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 March 31, 1999 are
deemed outstanding. Percentage of beneficial ownership is based upon
11,590,327 shares of common stock outstanding prior to this offering and
13,850,327 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 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. Also includes
shares subject to options and warrants exercisable within 60 days of March
31, 1999.
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<PAGE> 61
(3) Represents shares subject to options and warrants exercisable within 60
days of March 31, 1999.
(4) Assumes no exercise of the underwriters' over-allotment option. If the
over-allotment option is exercised in full, we will sell an aggregate of
2,600,000 shares of common stock.
(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. Mr. Worms, one of our directors,
is either a general partner, managing member, attorney-in-fact or trustee
of each Partech Entity. Mr. Worms disclaims beneficial ownership of such
shares except to the extent of his pecuniary interest therein.
(6) Represents all of the shares and shares subject to warrants and options
held by the Partech Entities.
(7) Neal Dempsey is a general partner of Bay Management Co. 1995, a general
partner of Bay Partners SBIC, L.P.
(8) 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.
(9) Includes 2,666 shares held by Mr. Nesamoney's spouse.
(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) Mr. Silverman, one of our directors, is a manager of Discovery Ventures I,
LLC. Mr. Silverman disclaims beneficial ownership of such shares except to
the extent of his pecuniary interest therein.
(12) Includes all of the shares and shares subject to warrants and options held
by Discovery Ventures I, LLC.
(13) Includes 52,500 shares held of record by the Pidwell Family Living Trust
dated June 25, 1987, of which David Pidwell, one or our directors, is
trustee.
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<PAGE> 62
DESCRIPTION OF CAPITAL STOCK
Upon the completion of this offering, we will be authorized to issue up to
102,000,000 shares, $0.001 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 March 31, 1999, there were 11,590,327 shares of common stock
outstanding that were held of record by approximately 119 stockholders (assuming
conversion of all shares of preferred stock outstanding as of March 31, 1999).
There will be 13,850,327 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 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 300,000 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. Our stockholders
do not have cumulative voting rights in the election of directors. 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 only
those 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 we pay our liabilities and distribute the
liquidation preference of any then outstanding preferred stock. Holders of
common stock have no preemptive or other subscription or conversion rights.
There are no redemption or sinking fund provisions applicable to the common
stock.
PREFERRED STOCK
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. These rights, preferences and privileges include 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. 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. In addition, the
issuance of preferred stock 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.
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<PAGE> 63
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."
REGISTRATION RIGHTS
Pursuant to stock purchase agreements between us and Messrs. Dhillon and
Nesamoney, respectively, they are entitled to 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, the
holders of the shares of this preferred stock are entitled to registration
rights regarding shares of common stock issued or issuable upon conversion of
these preferred shares. The registration rights of Messrs. Dhillon and Nesamoney
and the holders of our shares of preferred stock 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, they
are entitled to notice 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. Messrs. Dhillon and Nesamoney and the holders of our
shares of preferred stock may also require us to file a registration statement
under the Securities Act at our expense with respect to their shares of common
stock issued or issuable upon conversion of the preferred shares held by them,
as applicable. We are required to use our best efforts to effect this
registration, subject to some conditions and limitation. Furthermore, the
holders may require us to file additional registration statements on Form S-3,
subject to some conditions and limitations. See "Certain Transactions."
ANTITAKEOVER EFFECTS OF PROVISIONS OF INFORMATICA'S CHARTER AND BYLAWS
Our amended and restated bylaws provide for our board of directors to be
divided into three classes, with staggered three-year terms, when we become
eligible. When this division is effective, 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. However,
until this classification of our board of directors is effective, and because
our stockholders have no cumulative voting rights, 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 provide that all
stockholder action must be effected at a duly called meeting of stockholders and
not by a consent in writing, and that only our chief executive officer and
president may call a special meeting of stockholders.
The combination of the classification of our board of directors, when
effective, 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> 64
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 may also 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 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, with
the following exceptions:
- 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;
- 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 by persons who are
directors and also officers and by employee stock plans in which employee
participants do not have the right to determine confidentially whether
shares held subject to the plan will be tendered in a tender or exchange
offer; or
- 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 the following:
- any merger or consolidation involving the corporation and the interested
stockholder;
- any sale, transfer, pledge or other disposition of 10% or more of the
assets of the corporation involving the interested stockholder;
- 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;
- 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
- the receipt by the interested stockholder of the benefit of any loss,
advances, guarantees, pledges or other financial benefits by or through
the corporation.
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<PAGE> 65
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."
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 13,850,327 shares of common
stock outstanding based on shares outstanding as of March 31, 1999. Of these
shares, the 2,260,000 shares sold in this offering will be freely transferable
without restriction under the Securities Act, unless they are held by our
"affiliates" as that term is used under the Securities Act and the Regulations
promulgated thereunder.
Of these shares, the remaining 11,590,327 shares were sold by us in
reliance on exemptions from the registration requirements of the Securities Act,
are restricted securities within the meaning of Rule 144 under the Securities
Act and become eligible for sale in the public market as follows:
- beginning 90 days after the effective date, 10,000 shares will become
eligible for sale subject to the provisions of Rules 144 and 701;
- beginning 180 days after the date of this prospectus, 11,546,327
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; and
- beginning one year from the date of this prospectus, the remaining 34,000
shares will become eligible for sale, subject to the provisions of Rule
144.
Beginning 180 days after the date of this prospectus, 1,580,355 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, 205,000 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 138,503 shares
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<PAGE> 66
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 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> 67
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............................................. 2,260,000
=========
</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 340,000 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
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<PAGE> 68
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 200,000 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.
67
<PAGE> 69
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.
68
<PAGE> 70
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 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.
69
<PAGE> 71
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> 72
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> 73
INFORMATICA CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
DECEMBER 31, EQUITY (DEFICIT)
------------------- MARCH 31, MARCH 31,
1997 1998 1999 1999
-------- -------- ----------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................... $ 8,440 $ 6,059 $ 6,783
Accounts receivable, net of allowances of
$600, $1,841 and $1,901 in 1997, 1998 and
1999, respectively....................... 3,133 3,515 2,840
Prepaid expenses and other current assets... 243 552 739
-------- -------- --------
Total current assets................ 11,816 10,126 10,362
Property and equipment, net of accumulated
depreciation and amortization of $530, $367
and $439 in 1997, 1998 and 1999,
respectively................................ 754 512 521
Other assets.................................. 122 126 105
-------- -------- --------
Total assets........................ $ 12,692 $ 10,764 $ 10,988
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)
Current liabilities:
Accounts payable and accrued liabilities.... $ 2,432 $ 4,165 $ 3,915
Accrued compensation and related expenses... 1,545 3,486 3,581
Current portion of capital lease
obligations.............................. 155 242 129
Deferred revenue............................ 2,644 4,537 5,859
-------- -------- --------
Total current liabilities........... 6,776 12,430 13,484
Capital lease obligations, less current
portion..................................... 102 217 217
Commitments
Redeemable convertible preferred stock, no par
value, issuable in series:
8,170,000 shares authorized; 7,940,000
issues and outstanding in 1997 and 1998
(none pro forma) (liquidation
preference -- $17,600)................... 17,586 17,586 17,586 $ --
Stockholders' equity (deficit):
Common stock, no par value; 14,770,000
shares authorized; 2,881,838, 3,426,605
and 3,650,327 shares issued and
outstanding in 1997, 1998 and 1999,
respectively (11,590,327 pro forma)...... 151 289 381 17,967
Notes receivable from stockholders.......... (40) (40) (40) (40)
Deferred compensation....................... (83) (33) (26) (26)
Accumulated deficit......................... (11,789) (19,704) (20,598) (20,598)
Accumulated other comprehensive income
(loss)................................... (11) 19 (16) (16)
-------- -------- -------- --------
Total stockholders' equity
(deficit)......................... (11,772) (19,469) (20,299) $ (2,713)
======== ======== ======== ========
Total liabilities, redeemable
convertible preferred stock and
stockholders' equity (deficit).... $ 12,692 $ 10,764 $ 10,988
======== ======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE> 74
INFORMATICA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------ -------------------------
1996 1997 1998 1998 1999
---------- ---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
License.............. $ 1,843 $ 10,041 $ 21,148 $ 4,217 $ 7,114
Service.............. 217 2,145 7,597 1,383 3,223
---------- ---------- ---------- ---------- ----------
Total
revenues... 2,060 12,186 28,745 5,600 10,337
Cost of revenues:
License.............. 34 190 376 28 142
Service.............. 124 2,163 4,599 920 1,694
---------- ---------- ---------- ---------- ----------
Total cost of
revenues... 158 2,353 4,975 948 1,836
---------- ---------- ---------- ---------- ----------
Gross profit........... 1,902 9,833 23,770 4,652 8,501
Operating expenses:
Research and
development....... 2,119 3,831 7,075 1,613 2,032
Sales and
marketing......... 3,676 10,951 22,235 4,715 6,413
General and
administrative.... 663 2,036 2,636 634 827
---------- ---------- ---------- ---------- ----------
Total
operating
expenses... 6,458 16,818 31,946 6,962 9,272
---------- ---------- ---------- ---------- ----------
Loss from operations... (4,556) (6,985) (8,176) (2,310) (771)
Interest income
(expense), net....... 8 221 261 81 27
---------- ---------- ---------- ---------- ----------
Loss before income
taxes................ (4,548) (6,764) (7,915) (2,229) (744)
Income tax provision... -- -- -- -- (150)
---------- ---------- ---------- ---------- ----------
Net loss............... $ (4,548) $ (6,764) $ (7,915) $ (2,229) $ (894)
========== ========== ========== ========== ==========
Net loss per share:
Basic and diluted.... $ (1.69) $ (2.44) $ (2.48) $ (0.75) $ (0.25)
========== ========== ========== ========== ==========
Pro forma basic and
diluted........... $ (0.71) $ (0.08)
========== ==========
Shares used in
calculation of net
loss per share:
Basic and diluted.... 2,698 2,769 3,193 2,982 3,530
========== ========== ========== ========== ==========
Pro forma basic and
diluted........... 11,133 11,470
========== ==========
</TABLE>
See accompanying notes.
F-4
<PAGE> 75
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)
Common stock options exercised
(unaudited).......................... -- -- 223,722 92 -- --
Foreign currency translation adjustment
(unaudited).......................... -- -- -- -- -- --
Amortization of deferred compensation
(unaudited).......................... -- -- -- -- -- 7
Net loss (unaudited)................... -- -- -- -- -- --
--------- ------- --------- ---- ---- ----
BALANCES AT MARCH 31, 1999 (UNAUDITED)... 7,940,000 $17,586 3,650,327 $381 $(40) $(26)
========= ======= ========= ==== ==== ====
<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)
Common stock options exercised
(unaudited).......................... -- -- 92
Foreign currency translation adjustment
(unaudited).......................... -- (35) (35)
Amortization of deferred compensation
(unaudited).......................... -- -- 7
Net loss (unaudited)................... (894) -- (894)
-------- ---- --------
BALANCES AT MARCH 31, 1999 (UNAUDITED)... $(20,598) $(16) $(20,299)
======== ==== ========
</TABLE>
See accompanying notes.
F-5
<PAGE> 76
INFORMATICA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
--------------------------- -------------------------
1996 1997 1998 1998 1999
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net loss................................ $(4,548) $(6,764) $(7,915) $(2,229) $ (894)
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation and amortization......... 133 394 1,551 599 72
Accounts receivable allowances........ 21 579 1,241 287 60
Amortization of deferred
compensation........................ -- 2 50 -- 7
Changes in operating assets and
liabilities:
Accounts receivable................. (1,245) (2,428) (1,623) (662) 615
Prepaid expenses and other assets... (154) (180) (313) (132) (166)
Accounts payable and accrued
liabilities....................... 376 2,052 1,733 531 (250)
Accrued compensation and related
expenses.......................... 254 1,194 1,941 84 95
Deferred revenue.................... 322 2,322 1,893 577 1,322
------- ------- ------- ------- ------
Net cash provided by (used in) operating
activities............................ (4,841) (2,829) (1,442) (945) 861
INVESTING ACTIVITIES
Purchase of property and equipment...... (100) (584) (872) (402) (81)
------- ------- ------- ------- ------
Net cash used in investing activities... (100) (584) (872) (402) (81)
FINANCING ACTIVITIES
Proceeds from issuance of preferred
stock................................. 5,071 8,993 -- -- --
Proceeds from issuance of common
stock................................. 6 12 138 20 92
Proceeds from notes payable to
stockholders.......................... 2,050 -- -- -- --
Payments on capital lease obligations... (69) (164) (235) (41) (113)
------- ------- ------- ------- ------
Net cash provided by (used in) financing
activities............................ 7,058 8,841 (97) (21) (21)
------- ------- ------- ------- ------
Effect of foreign currency translation
on cash and cash equivalents.......... -- (11) 30 17 (35)
------- ------- ------- ------- ------
Increase (decrease) in cash and cash
equivalents........................... 2,117 5,417 (2,381) (1,351) 724
Cash and cash equivalents at beginning
of period............................. 906 3,023 8,440 8,440 6,059
------- ------- ------- ------- ------
Cash and cash equivalents at end of
period................................ $ 3,023 $ 8,440 $ 6,059 $ 7,089 $6,783
======= ======= ======= ======= ======
SUPPLEMENTAL DISCLOSURES:
Interest paid......................... $ 41 $ 40 $ 48 $ 7 $ 8
======= ======= ======= ======= ======
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> 77
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
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 large companies deploy, manage, maintain and grow
systems that enable more effective business decision making.
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.
INTERIM FINANCIAL INFORMATION
The interim financial information as of March 31, 1999 and for the three
months ended March 31, 1998 and 1999 is unaudited but includes all adjustments,
consisting only of normal recurring adjustments, that the Company considers
necessary for a fair presentation of its financial position at such date and its
results of operations and cash flows for those periods. Operating results for
the three months ended March 31, 1999 are not necessarily indicative of results
that may be expected for any future periods.
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.
F-7
<PAGE> 78
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
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 technological feasibility are capitalized and amortized over
the estimated lives of the related products. Technological feasibility is
established upon completion of a working model. Through March 31, 1999, 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 and SOP 98-4 effective March
31, 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 this standard 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
F-8
<PAGE> 79
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
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. For
direct sales, revenue is recognized upon shipment to the end user and when
collectibility is probable. For sales through resellers, revenue is recognized
upon shipment to the reseller 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.
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
F-9
<PAGE> 80
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
convertible preferred shares outstanding as if such shares had been converted
into common stock at the date of issuance.
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>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------- --------------------------
1996 1997 1998 1998 1999
------- ------- ------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Historical:
Net loss................ $(4,548) $(6,764) $(7,915) $(2,229) $ (894)
======= ======= ======= ======= =======
Weighted average shares
of common stock
outstanding used in
computing basic and
diluted net per loss
share................ 2,698 2,769 3,193 2,982 3,530
======= ======= ======= ======= =======
Basic and diluted net
loss per share....... $ (1.69) $ (2.44) $ (2.48) $ (0.75) $ (0.25)
======= ======= ======= ======= =======
Pro forma:
Net loss................ $(7,915) $ (894)
======= =======
Shares used in computing
basic and diluted net
loss per share (from
above)............... 3,193 3,530
Adjustment to reflect
the effect of the
assumed conversion of
preferred stock from
the date of
issuance............. 7,940 7,940
------- -------
Weighted average shares
of common stock
outstanding used in
computing pro forma
basic and diluted net
loss share........... 11,133 11,470
======= =======
Pro forma basic and
diluted net loss per
share................ $ (0.71) $ (0.08)
======= =======
</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 619,000, 1,726,000, 2,176,000, 2,215,000 and 2,233,000 common
equivalent shares related to the outstanding options and warrants not included
in the calculations above (determined using the treasury
F-10
<PAGE> 81
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
stock method at the estimated fair value) for 1996, 1997 and 1998 and the three
months ended March 31, 1998 and 1999, 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 displaying 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, 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.
F-11
<PAGE> 82
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
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.
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 consists of the following by series (in thousands):
<TABLE>
<CAPTION>
SHARES ISSUED
--------------------------------------------
DECEMBER 31, MARCH 31,
AUTHORIZED -------------- ----------- LIQUIDATION
SERIES SHARES 1997 1998 1999 PREFERENCE
------ ---------- ----- ----- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
A.................... 2,250 2,250 2,250 2,250 $ 1,500
B.................... 1,000 1,000 1,000 1,000 $ 1,000
C.................... 2,645 2,440 2,440 2,440 $ 6,100
D.................... 2,275 2,250 2,250 2,250 $ 9,000
----- ----- ----- ----- -------
8,170 7,940 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
F-12
<PAGE> 83
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
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 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. The fair value was determined using a Black-Scholes
option pricing model with the following assumptions: a risk-free interest rate
of 6.0%, no dividend yield or volatility factor, and an expected life of the
warrant of five years. This discount was amortized to interest expense over the
term of the notes during 1996.
F-13
<PAGE> 84
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
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 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.
F-14
<PAGE> 85
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
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
Granted (unaudited)........................... 885,750 11.14
Exercised (unaudited)......................... (223,722) 0.41
Canceled (unaudited).......................... (83,824) 5.71
--------- ------
Outstanding at March 31, 1999 (unaudited)....... 3,572,413 $ 5.06
========= ======
Exercisable at December 31, 1998................ 926,674 $ 0.25
========= ======
Exercisable at March 31, 1999 (unaudited)....... 938,900 $ 0.85
========= ======
</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 - $0.01 207,900 4.34 $0.01 207,900 $0.01
$0.10 - $0.10 499,069 6.48 $0.10 311,062 $0.10
$0.25 - $0.30 466,880 8.15 $0.25 313,576 $0.25
$0.45 - $0.75 166,163 7.24 $0.68 48,989 $0.66
$1.50 - $4.00 735,634 9.05 $3.26 42,147 $1.70
$5.50 - $7.50 880,063 9.59 $6.53 3,000 $6.50
$9.00 - $9.00 38,500 9.96 $9.00 -- --
--------- ---- ----- ------- -----
2,994,209 8.23 $2.93 926,674 $0.25
========= =======
</TABLE>
F-15
<PAGE> 86
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
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. The fair value for these options was
estimated at the date of grant using a Black-Scholes option pricing model 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.
F-16
<PAGE> 87
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
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.
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.
F-17
<PAGE> 88
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
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.
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>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------- ------------------
1996 1997 1998 1999
------ ------- ------- ----
(UNAUDITED)
<S> <C> <C> <C> <C>
North America................ $1,890 $11,360 $25,112 $ 8,675
Europe....................... 170 826 3,633 1,662
------ ------- ------- -------
$2,060 $12,186 $28,745 $10,337
====== ======= ======= =======
</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.
Proposed Public Offering of Common Stock
On February 5, 1999, the Board of Directors 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 March 31, 1999 gives effect to the conversion
of all outstanding shares of redeemable convertible preferred stock at March 31,
1999 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. Upon completion of the Company's initial public offering of its common
stock, the Company will be authorized to issue up to 102,000,000 shares, $0.001
par value, of which 100,000,000 shares will be designated as common stock and
2,000,000 shares will be designated as preferred stock.
F-18
<PAGE> 89
INFORMATICA CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(INFORMATION AS OF MARCH 31, 1999 AND FOR THE THREE MONTHS ENDED
MARCH 31, 1998 AND 1999 IS UNAUDITED)
1999 Stock Incentive Plan
On March 23, 1999, the Company's Board of Directors adopted, subject to
stockholder approval, the 1999 Stock Incentive Plan which amends and restates
the Company's existing stock option plan. There are 650,000 shares of common
stock authorized for issuance under the plan. The plan will become effective
upon completion of the Company's initial public offering of its common stock.
1999 Non-Employee Director Stock Incentive Plan
On March 23, 1999, the Company's Board of Directors adopted, subject to
stockholder approval, the 1999 Non-Employee Director Stock Incentive Plan and
reserved an aggregate of 250,000 shares of common stock for grants of stock
options under such plan.
1999 Employee Stock Purchase Plan
On March 23, 1999, the Company's Board of Directors adopted, subject to
stockholder approval, the 1999 Employee Stock Purchase Plan to be effective upon
the completion of the Company's initial public offering of its common stock. The
Company has initially reserved a total of 400,000 shares of common stock for
issuance under the plan. Eligible employees may purchase common stock at 85% of
the lesser of the fair market value of the Company's common stock on the first
day of the applicable two year offering period or the last day of each
applicable six month purchase period.
F-19
<PAGE> 90
[INFORMATICA -- POWERING THE INTELLIGENT ENTERPRISE]
<PAGE> 91
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> 92
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 March 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 4,652,893 shares of the Registrant's common stock,
at exercise prices ranging from $.10 to $12.00 with an average exercise
price of $4.25 per share.
2. During the period, the Registrant issued and sold an aggregate of
984,067 shares of its common stock to approximately 89 employees, directors
and consultants for cash and promissory notes in the aggregate amount of
$4,293,925 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 $9,000,000.
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> 93
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
The following consolidated financial statement schedule of the Registrant
is filed as part of this Registration Statement and should be read in
conjunction with the Consolidated Financial Statements and Notes thereto.
<TABLE>
<CAPTION>
SCHEDULE PAGE
-------- ----
<S> <C>
II Valuation and Qualifying Accounts.............
</TABLE>
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable and therefore have been
omitted.
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.
II-3
<PAGE> 94
(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-4
<PAGE> 95
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this amendment to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Palo Alto, State of California on April 7, 1999.
INFORMATICA CORPORATION
By: /s/ *GAURAV S. DHILLON
-----------------------------------
Gaurav S. Dhillon
Chief Executive Officer and
Director
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the 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 April 7, 1999
- --------------------------------------------- and Director
Gaurav S. Dhillon
/s/ *DIAZ H. NESAMONEY President and Director April 7, 1999
- ---------------------------------------------
Diaz H. Nesamoney
/s/ CRAIG L. KLOSTERMAN Senior Vice President and April 7, 1999
- --------------------------------------------- Chief Financial Officer
Craig L. Klosterman (Principal Financial and
Accounting Officer)
/s/ *DAVID W. PIDWELL Director April 7, 1999
- ---------------------------------------------
David W. Pidwell
/s/ *A. BROOKE SEAWELL Director April 7, 1999
- ---------------------------------------------
A. Brooke Seawell
/s/ *ARNOLD N. SILVERMAN Director April 7, 1999
- ---------------------------------------------
Arnold N. Silverman
/s/ *VINCENT WORMS Director April 7, 1999
- ---------------------------------------------
Vincent Worms
*By: /s/ CRAIG L. KLOSTERMAN April 7, 1999
---------------------------------------
Craig L. Klosterman
Attorney-in-Fact
</TABLE>
II-5
<PAGE> 96
INFORMATICA CORPORATION
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
ACCOUNTS RECEIVABLE ALLOWANCES
<TABLE>
<CAPTION>
BALANCES AT CHARGED TO BALANCES AT
BEGINNING COSTS AND END OF
OF PERIOD EXPENSES DEDUCTIONS PERIOD
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Year ended December 31, 1996.... $ -- $ 21,000 $ -- $ 21,000
======== ========== ======== ==========
Year ended December 31, 1997.... $ 21,000 $ 661,208 $(82,208) $ 600,000
======== ========== ======== ==========
Year ended December 31, 1998.... $600,000 $1,336,500 $(95,250) $1,841,250
======== ========== ======== ==========
</TABLE>
<PAGE> 97
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 Amended and Restated Bylaws.
4.1 Reference is made to Exhibits 3.1 and 3.2 and 3.3.
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 Form of Secured Promissory Note by each of Gaurav S. Dhillon
and Diaz H. Nesamoney, respectively, each dated May 5, 1995.
10.8* Lease Agreement regarding Sublease, dated January 29, 1998,
by and among the Registrant, Informix Corporation and Palo
Alto Bayshore Investors, LLC.
10.9* Registrant's 1993 Flexible Stock Incentive Plan, including
forms of agreements thereunder.
10.10* Registrant's 1996 Flexible Stock Incentive Plan, including
forms of agreements thereunder.
10.11 Registrant's 1999 Stock Incentive Plan.
10.12 Registrant's 1999 Employee Stock Purchase Plan, including
forms of agreements thereunder.
10.13 Registrant's 1999 Non-Employee Director Stock Incentive
Plan.
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>
- -------------------------
* Previously filed.
<PAGE> 1
EXHIBIT 1.1
________ SHARES
INFORMATICA CORPORATION
COMMON STOCK, PAR VALUE $0.001 PER SHARE
UNDERWRITING AGREEMENT
April __, 1999
CREDIT SUISSE FIRST BOSTON CORPORATION
BANCBOSTON ROBERTSON STEPHENS, INC.
SOUNDVIEW TECHNOLOGY GROUP, INC.
FIRST ALBANY CORPORATION,
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation,
Eleven Madison Avenue,
New York, N.Y. 10010-3629
Dear Sirs:
1. Introductory. Informatica Corporation, a Delaware corporation
("Company"), proposes to issue and sell _________shares ("Firm Securities") of
its Common Stock, par value $0.001 per share ("Securities") and also proposes to
issue and sell to the Underwriters, at the option of the Underwriters, an
aggregate of not more than ________additional shares ("Optional Securities") of
its Securities as set forth below. The Firm Securities and the Optional
Securities are herein collectively called the "Offered Securities." The Company
hereby agrees with the several Underwriters named in Schedule A hereto
("Underwriters") as follows:
2. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the several Underwriters that:
(a) A registration statement (No. 333-_________) relating to the
Offered Securities, including a form of prospectus, has been filed with the
Securities and Exchange Commission ("Commission") and either (i) has been
declared effective under the Securities Act of 1933 ("Act") and is not proposed
to be amended or (ii) is proposed to be amended by amendment or post-effective
amendment. If such registration statement ("initial registration statement") has
been declared effective, either (i) an additional registration statement
("additional registration statement") relating to the Offered Securities may
have been filed with the Commission pursuant to Rule 462(b) ("Rule 462(b)")
under the Act and, if so filed, has become effective upon filing pursuant to
such Rule and the Offered Securities all have been duly registered under the Act
pursuant to the initial registration statement and, if applicable, the
additional registration statement or (ii) such an additional registration
statement is proposed to be filed with the Commission pursuant to Rule 462(b)
and will become effective upon filing pursuant to such Rule and upon
<PAGE> 2
such filing the Offered Securities will all have been duly registered under the
Act pursuant to the initial registration statement and such additional
registration statement. If the Company does not propose to amend the initial
registration statement or if an additional registration statement has been filed
and the Company does not propose to amend it, and if any post-effective
amendment to either such registration statement has been filed with the
Commission prior to the execution and delivery of this Agreement, the most
recent amendment (if any) to each such registration statement has been declared
effective by the Commission or has become effective upon filing pursuant to Rule
462(c) ("Rule 462(c)") under the Act or, in the case of the additional
registration statement, Rule 462(b). For purposes of this Agreement, "Effective
Time" with respect to the initial registration statement or, if filed prior to
the execution and delivery of this Agreement, the additional registration
statement means (i) if the Company has advised the Representatives that it does
not propose to amend such registration statement, the date and time as of which
such registration statement, or the most recent post-effective amendment thereto
(if any) filed prior to the execution and delivery of this Agreement, was
declared effective by the Commission or has become effective upon filing
pursuant to Rule 462(c), or (ii) if the Company has advised the Representatives
that it proposes to file an amendment or post-effective amendment to such
registration statement, the date and time as of which such registration
statement, as amended by such amendment or post-effective amendment, as the case
may be, is declared effective by the Commission. If an additional registration
statement has not been filed prior to the execution and delivery of this
Agreement but the Company has advised the Representatives that it proposes to
file one, "Effective Time" with respect to such additional registration
statement means the date and time as of which such registration statement is
filed and becomes effective pursuant to Rule 462(b). "Effective Date" with
respect to the initial registration statement or the additional registration
statement (if any) means the date of the Effective Time thereof. The initial
registration statement, as amended at its Effective Time, including all
information contained in the additional registration statement (if any) and
deemed to be a part of the initial registration statement as of the Effective
Time of the additional registration statement pursuant to the General
Instructions of the Form on which it is filed and including all information (if
any) deemed to be a part of the initial registration statement as of its
Effective Time pursuant to Rule 430A(b) ("Rule 430A(b)") under the Act, is
hereinafter referred to as the "Initial Registration Statement". The additional
registration statement, as amended at its Effective Time, including the contents
of the initial registration statement incorporated by reference therein and
including all information (if any) deemed to be a part of the additional
registration statement as of its Effective Time pursuant to Rule 430A(b), is
hereinafter referred to as the "Additional Registration Statement". The Initial
Registration Statement and the Additional Registration Statement are herein
referred to collectively as the "Registration Statements" and individually as a
"Registration Statement". The form of prospectus relating to the Offered
Securities, as first filed with the Commission pursuant to and in accordance
with Rule 424(b) ("Rule 424(b)") under the Act or (if no such filing is
required) as included in a Registration Statement, is hereinafter referred to as
the "Prospectus". No document has been or will be prepared or distributed in
reliance on Rule 434 under the Act.
(b) If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement: (i) on the Effective
Date of the Initial Registration Statement, the Initial Registration Statement
conformed in all respects to the requirements of the Act and the rules and
regulations of the Commission ("Rules and Regulations") and did not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
(ii) on the Effective Date of the Additional Registration Statement (if any),
each Registration Statement conformed, or will conform, in all respects to the
requirements of the Act and the Rules and Regulations and did not include, or
will not include, any untrue statement of a material fact and did not omit, or
will not omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) on the date of
this Agreement, the Initial Registration Statement and, if the Effective Time of
the Additional Registration Statement is prior to the execution and
-2-
<PAGE> 3
delivery of this Agreement, the Additional Registration Statement each conforms,
and at the time of filing of the Prospectus pursuant to Rule 424(b) or (if no
such filing is required) at the Effective Date of the Additional Registration
Statement in which the Prospectus is included, each Registration Statement and
the Prospectus will conform, in all respects to the requirements of the Act and
the Rules and Regulations, and neither of such documents includes, or will
include, any untrue statement of a material fact or omits, or will omit, to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading. If the Effective Time of the Initial
Registration Statement is subsequent to the execution and delivery of this
Agreement: on the Effective Date of the Initial Registration Statement, the
Initial Registration Statement and the Prospectus will conform in all respects
to the requirements of the Act and the Rules and Regulations, neither of such
documents will include any untrue statement of a material fact or will omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, and no Additional Registration Statement has
been or will be filed. The two preceding sentences do not apply to statements in
or omissions from a Registration Statement or the Prospectus based upon written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information is that described as such in Section 7(b) hereof.
(c) The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with power
and authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus; and the Company is duly qualified to do
business as a foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its business requires
such qualification.
(d) Each subsidiary of the Company has been duly incorporated and
is an existing corporation in good standing under the laws of the jurisdiction
of its incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus; and each
subsidiary of the Company is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such qualification;
all of the issued and outstanding capital stock of each subsidiary of the
Company has been duly authorized and validly issued and is fully paid and
nonassessable; and the capital stock of each subsidiary owned by the Company,
directly or through subsidiaries, is owned free from liens, encumbrances and
defects.
(e) The Offered Securities and all other outstanding shares of
capital stock of the Company have been duly authorized; all outstanding shares
of capital stock of the Company are, and, when the Offered Securities have been
delivered and paid for in accordance with this Agreement on each Closing Date
(as defined below), such Offered Securities will have been, validly issued,
fully paid and nonassessable and will conform to the description thereof
contained in the Prospectus; and the stockholders of the Company have no
preemptive rights with respect to the Securities.
(f) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any person that
would give rise to a valid claim against the Company or any Underwriter for a
brokerage commission, finder's fee or other like payment in connection with this
offering.
(g) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any person
granting such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company owned or
to be owned by such person or to require the Company to include such securities
in the securities
-3-
<PAGE> 4
registered pursuant to a Registration Statement or in any securities being
registered pursuant to any other registration statement filed by the Company
under the Act.
(h) The Offered Securities have been approved for listing on The
Nasdaq Stock Market's National Market, subject to notice of issuance.
(i) No consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement in connection
with the issuance and sale of the Offered Securities by the Company, except such
as have been obtained and made under the Act and such as may be required under
state securities laws.
(j) The execution, delivery and performance of this Agreement,
and the issuance and sale of the Offered Securities will not result in a breach
or violation of any of the terms and provisions of, or constitute a default
under, any statute, any rule, regulation or order of any governmental agency or
body or any court, domestic or foreign, having jurisdiction over the Company or
any subsidiary of the Company or any of their properties, or any agreement or
instrument to which the Company or any such subsidiary is a party or by which
the Company or any such subsidiary is bound or to which any of the properties of
the Company or any such subsidiary is subject, or the charter or by-laws of the
Company or any such subsidiary, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by this
Agreement.
(k) This Agreement has been duly authorized, executed and
delivered by the Company.
(l) Except as disclosed in the Prospectus, the Company and its
subsidiaries have good and marketable title to all real properties and all other
properties and assets owned by them, in each case free from liens, encumbrances
and defects that would materially affect the value thereof or materially
interfere with the use made or to be made thereof by them; and except as
disclosed in the Prospectus, the Company and its subsidiaries hold any leased
real or personal property under valid and enforceable leases with no exceptions
that would materially interfere with the use made or to be made thereof by them.
(m) The Company and its subsidiaries possess adequate
certificates, authorities or permits issued by appropriate governmental agencies
or bodies necessary to conduct the business now operated by them and have not
received any notice of proceedings relating to the revocation or modification of
any such certificate, authority or permit that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the aggregate have
a material adverse effect on the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries taken as
a whole ("Material Adverse Effect").
(n) No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that might
have a Material Adverse Effect.
(o) The Company and its subsidiaries own, possess or can acquire
on reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property, including applications licensed directly from third
parties (collectively, "intellectual property rights") necessary to conduct the
business now operated by them, or presently employed by them, and have not
received any notice of infringement of or conflict with asserted rights of
others with respect to any intellectual property rights that, if determined
adversely to the
-4-
<PAGE> 5
Company or any of its subsidiaries, would individually or in the aggregate have
a Material Adverse Effect. The discoveries, inventions, products or processes of
the Company referred to in the Prospectus do not, to the Company's knowledge,
infringe or conflict with any intellectual property right of any third party,
where such infringement or conflict could have a Material Adverse Effect.
(p) Except as disclosed in the Prospectus, neither the Company
nor any of its subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any court,
domestic or foreign, relating to the use, disposal or release of hazardous or
toxic substances or relating to the protection or restoration of the environment
or human exposure to hazardous or toxic substances (collectively, "environmental
laws"), owns or operates any real property contaminated with any substance that
is subject to any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any claim
relating to any environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material Adverse Effect; and
the Company is not aware of any pending investigation which might lead to such a
claim.
(q) Except as disclosed in the Prospectus, there are no pending
actions, suits or proceedings against or affecting the Company, or any of its
subsidiaries or any of their respective properties that, if determined adversely
to the Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect, or would materially and adversely
affect the ability of the Company to perform its obligations under this
Agreement, or which are otherwise material in the context of the sale of the
Offered Securities; and no such actions, suits or proceedings are threatened or,
to the Company's knowledge, contemplated.
(r) The financial statements included in each Registration
Statement and the Prospectus present fairly the financial position of the
Company and its consolidated subsidiaries as of the dates shown and their
results of operations and cash flows for the periods shown, and such financial
statements have been prepared in conformity with the generally accepted
accounting principles in the United States applied on a consistent basis and the
schedule included in each Registration Statement presents fairly the information
required to be stated therein.
(s) Except as disclosed in the Prospectus, since the date of the
latest audited financial statements included in the Prospectus there has been no
material adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries taken as
a whole, and, except as disclosed in or contemplated by the Prospectus, there
has been no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(t) The execution and delivery of the Agreement and Plan of
Merger dated as of February __, 1999 (the "Merger Agreement") between
Informatica Corporation, a California corporation (the "California
Corporation"), and the Company, effecting the reincorporation of the California
Corporation under the laws of the State of Delaware, was duly authorized by all
necessary corporate action on the part of each of the California Corporation and
the Company. Each of the California Corporation and the Company had all
corporate power and authority to execute and deliver the Merger Agreement, to
file the Merger Agreement with the Secretary of State of California and the
Secretary of State of Delaware and to consummate the reincorporation
contemplated by the Merger Agreement, and the Merger Agreement at the time of
execution and filing constituted a valid and binding obligation of each of the
California Corporation and the Company.
-5-
<PAGE> 6
(u) The Company is not and, after giving effect to the offering
and sale of the Offered Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" as defined
in the Investment Company Act of 1940.
(v) The Company (i) has notified each holder of a currently
outstanding option issued under the 1996 Flexible Stock Incentive Plan and the
1999 Stock Incentive Plan and each person who has acquired Securities pursuant
to the exercise of any option granted under such option plans that pursuant to
the terms of such option plans, none of such options or shares may be sold or
otherwise transferred or disposed of for a period of 180 days after the date of
the initial public offering of the Offered Securities and (ii) has imposed a
stop-transfer instruction with the Company's transfer agent in order to enforce
the foregoing lock-up provision imposed pursuant to the Option Plan.
(w) Except as disclosed in the Prospectus, all outstanding
Securities, and all securities convertible into or exercisable or exchangeable
for Securities, are subject to valid and binding agreements (collectively,
"Lock-up Agreements") that restrict the holders thereof from selling, making any
short sale of, granting any option for the purchase of, or otherwise
transferring or disposing of, any of such Securities, or any such securities
convertible into or exercisable or exchangeable for Securities, for a period of
180 days after the date of the Prospectus without the prior written consent of
Credit Suisse First Boston Corporation ("CSFBC").
(x) The Company (i) has notified each stockholder who is party to
the Second Amended and Restated Investor Rights Agreement dated June 3, 1997
(the "Rights Agreement"), that pursuant to the terms of the Rights Agreement,
none of the shares of the Company's capital stock held by such stockholder may
be sold or otherwise transferred or disposed of for a period of 180 days after
the date of the initial public offering of the Offered Securities and (ii) has
imposed a stop-transfer instruction with the Company's transfer agent in order
to enforce the foregoing lock-up provision imposed pursuant to the Rights
Agreement.
(y) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes and the Company agrees
to comply with such Section if prior to the completion of the distribution of
the Offered Securities it commences doing such business.
3. Purchase, Sale and Delivery of Offered Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell to the
Underwriters, and the Underwriters agree, severally and not jointly, to purchase
from the Company, at a purchase price of $_____per share, the respective numbers
of shares of Firm Securities set forth opposite the names of the Underwriters in
Schedule A hereto.
The Company will deliver the Firm Securities to the Representatives for
the accounts of the Underwriters, at the office of CSFBC, Eleven Madison Avenue,
New York, New York, against payment of the purchase price in Federal (same day)
funds by official bank check or checks or wire transfer to an account at a bank
acceptable to CSFBC drawn to the order of the Company at the office of Morrison
& Foerster LLP, 755 Page Mill Road, Palo Alto, California, at 10:00 A.M., New
York time, on ________________, 1999 or at such other time not later than seven
full business days thereafter as CSFBC and the Company determine, such time
being herein referred to as the "First Closing Date." For purposes of Rule
15c6-1 under the Securities Exchange Act of 1934, the First Closing Date (if
later than the otherwise applicable settlement date) shall be the settlement
date for payment of funds and delivery of securities for all the Offered
Securities sold pursuant to the offering. The certificates for the Firm
Securities
-6-
<PAGE> 7
so to be delivered will be in definitive form, in such denominations and
registered in such names as CSFBC requests and will be made available for
checking and packaging at the above office of CSFBC in New York at least 24
hours prior to the First Closing Date.
In addition, upon written notice from CSFBC given to the Company from
time to time not more than 30 days subsequent to the date of the Prospectus, the
Underwriters may purchase all or less than all of the Optional Securities at the
purchase price per Security to be paid for the Firm Securities. The Company
agrees to sell to the Underwriters the number of shares of Optional Securities
specified in such notice and the Underwriters agree, severally and not jointly,
to purchase such Optional Securities. Such Optional Securities shall be
purchased for the account of each Underwriter in the same proportion as the
number of shares of Firm Securities set forth opposite such Underwriter's name
bears to the total number of shares of Firm Securities (subject to adjustment by
CSFBC to eliminate fractions) and may be purchased by the Underwriters only for
the purpose of covering over-allotments made in connection with the sale of the
Firm Securities. No Optional Securities shall be sold or delivered unless the
Firm Securities previously have been, or simultaneously are, sold and delivered.
The right to purchase the Optional Securities or any portion thereof may be
exercised from time to time and to the extent not previously exercised may be
surrendered and terminated at any time upon notice by CSFBC to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as an "Optional Closing Date," which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFBC
but shall be not later than five full business days after written notice of
election to purchase Optional Securities is given. The Company will deliver the
Optional Securities being purchased on each Optional Closing Date to the
Representatives for the accounts of the several Underwriters, at the above
office of CSFBC in New York, against payment of the purchase price therefor in
Federal (same day) funds by official bank check or checks or wire transfer to an
account at a bank acceptable to CSFBC drawn to the order of the Company at the
above office of Morrison & Foerster LLP in Palo Alto, California. The
certificates for the Optional Securities being purchased on each Optional
Closing Date will be in definitive form, in such denominations and registered in
such names as CSFBC requests upon reasonable notice prior to such Optional
Closing Date and will be made available for checking and packaging at the above
office of CSFBC in New York at a reasonable time in advance of such Optional
Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Securities for sale to the public as
set forth in the Prospectus.
5. Certain Agreements of the Company. The Company agrees with the
several Underwriters that:
(a) If the Effective Time of the Initial Registration Statement
is prior to the execution and delivery of this Agreement, the Company will file
the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by CSFBC, subparagraph
(4)) of Rule 424(b) not later than the earlier of (A) the second business day
following the execution and delivery of this Agreement or (B) the fifteenth
business day after the Effective Date of the Initial Registration Statement.
The Company will advise CSFBC promptly of any such filing pursuant to
Rule 424(b). If the Effective Time of the Initial Registration Statement is
prior to the execution and delivery of this Agreement and an additional
registration statement is necessary to register a portion of the Offered
Securities under the Act but the Effective Time thereof has not occurred as of
such execution and delivery, the Company will
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<PAGE> 8
file the additional registration statement or, if filed, will file a
post-effective amendment thereto with the Commission pursuant to and in
accordance with Rule 462(b) on or prior to 10:00 P.M., New York time, on the
date of this Agreement or, if earlier, on or prior to the time the Prospectus is
printed and distributed to any Underwriter, or will make such filing at such
later date as shall have been consented to by CSFBC.
(b) The Company will advise CSFBC promptly of any proposal to
amend or supplement the initial or any additional registration statement as
filed or the related prospectus or the Initial Registration Statement, the
Additional Registration Statement (if any) or the Prospectus and will not effect
such amendment or supplementation without CSFBC's consent; and the Company will
also advise CSFBC promptly of the effectiveness of each Registration Statement
(if its Effective Time is subsequent to the execution and delivery of this
Agreement) and of any amendment or supplementation of a Registration Statement
or the Prospectus and of the institution by the Commission of any stop order
proceedings in respect of a Registration Statement and will use its best efforts
to prevent the issuance of any such stop order and to obtain as soon as possible
its lifting, if issued.
(c) If, at any time when a prospectus relating to the Offered
Securities is required to be delivered under the Act in connection with sales by
any Underwriter or dealer, any event occurs as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Prospectus to comply
with the Act, the Company will promptly notify CSFBC of such event and will
promptly prepare and file with the Commission, at its own expense, an amendment
or supplement which will correct such statement or omission or an amendment
which will effect such compliance. Neither CSFBC's consent to, nor the
Underwriters' delivery of, any such amendment or supplement shall constitute a
waiver of any of the conditions set forth in Section 6.
(d) As soon as practicable, but not later than the Availability
Date (as defined below), the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12 months
beginning after the Effective Date of the Initial Registration Statement (or, if
later, the Effective Date of the Additional Registration Statement) which will
satisfy the provisions of Section 11(a) of the Act. For the purpose of the
preceding sentence, "Availability Date" means the 45th day after the end of the
fourth fiscal quarter following the fiscal quarter that includes such Effective
Date, except that, if such fourth fiscal quarter is the last quarter of the
Company's fiscal year, "Availability Date" means the 90th day after the end of
such fourth fiscal quarter.
(e) The Company will furnish to the Representatives copies of
each Registration Statement (five of which will be signed and will include all
exhibits), each related preliminary prospectus, and, so long as a prospectus
relating to the Offered Securities is required to be delivered under the Act in
connection with sales by any Underwriter or dealer, the Prospectus and all
amendments and supplements to such documents, in each case in such quantities as
CSFBC requests. The Prospectus shall be so furnished on or prior to 3:00 P.M.,
New York time, on the business day following the later of the execution and
delivery of this Agreement or the Effective Time of the Initial Registration
Statement. All other documents shall be so furnished as soon as available. The
Company will pay the expenses of printing and distributing to the Underwriters
all such documents.
(f) The Company will arrange for the qualification of the Offered
Securities for sale under the laws of such jurisdictions as CSFBC designates and
will continue such qualifications in effect so long as required for the
distribution.
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<PAGE> 9
(g) During the period of five years hereafter, the Company will
furnish to the Representatives and, upon request, to each of the other
Underwriters, as soon as practicable after the end of each fiscal year, a copy
of its annual report to stockholders for such year; and the Company will furnish
to the Representatives (i) as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission under the
Securities Exchange Act of 1934 or mailed to stockholders, and (ii) from time to
time, such other information concerning the Company as CSFBC may reasonably
request.
(h) The Company will pay all expenses incident to the performance
of its obligations under this Agreement, for any filing fees and other expenses
(including fees and disbursements of counsel) incurred in connection with
qualification of the Offered Securities for sale under the laws of such
jurisdictions as CSFBC designates and the printing of memoranda relating
thereto, for the filing fee incident to, and the reasonable fees and
disbursements of counsel to the Underwriters in connection with, the review by
the National Association of Securities Dealers, Inc. of the Offered Securities,
for any travel expenses of the Company's officers and employees and any other
expenses of the Company in connection with attending or hosting meetings with
prospective purchasers of the Offered Securities and for expenses incurred in
distributing preliminary prospectuses and the Prospectus (including any
amendments and supplements thereto) to the Underwriters.
(i) For a period of 180 days after the date of the initial public
offering of the Offered Securities, the Company will not offer, sell, contract
to sell, pledge or otherwise dispose of, directly or indirectly, or file with
the Commission a registration statement under the Act relating to, any
additional shares of its Securities or securities convertible into or
exchangeable or exercisable for any shares of its Securities, or publicly
disclose the intention to make any such offer, sale, pledge, disposition or
filing, without the prior written consent of CSFBC, except issuances of
Securities pursuant to the exercise of convertible securities and the exercise
of options, in each case outstanding on the date hereof, grants of employee
stock options pursuant to the terms of a plan in effect on the date hereof,
issuances of Securities pursuant to the exercise of such options or the exercise
of any other employee stock options outstanding on the date hereof.
(j) The Company agrees to use its best efforts to cause (i) each
of its directors, officers and shareholders and (ii) each person who acquires
Securities of the Company pursuant to the exercise of any option granted under
the Company's 1993 Flexible Stock Plan, the 1996 Flexible Stock Incentive Plan,
the 1999 Stock Incentive Plan or the 1999 Employee Stock Purchase Plan to sign
an agreement that restricts such person from selling, making any short sale of,
granting any option for the purchase of, or otherwise transferring or disposing
of, any of such Securities, or any such securities convertible into or
exercisable or exchangeable for Securities, for a period of 180 days after the
date of the Prospectus without the prior written consent of CSFBC; and the
Company will issue and impose a stop-transfer instruction with the Company's
transfer agent in order to enforce the foregoing lock-up agreements.
(k) The Company will (i) enforce the terms of each Lock-up
Agreement, and (ii) issue stop-transfer instructions to the transfer agent for
the Securities with respect to any transaction or contemplated transaction that
would constitute a breach of or default under the applicable Lock-up Agreement.
In addition, except with the prior written consent of CSFBC, the Company agrees
(i) not to amend or terminate, or waive any right under, any Lock-up Agreement,
or take any other action that would directly or indirectly have the same effect
as an amendment or termination, or waiver of any right under any Lock-up
Agreement, that would permit any holder of Securities, or any securities
convertible into, or exercisable or exchangeable for, Securities, to make any
short sale of, grant any option for the purchase of,
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<PAGE> 10
or otherwise transfer or dispose of, any such Securities or other securities,
prior to the expiration of the 180 days after the date of the Prospectus and
(ii) not to consent to any sale, short sale, grant of an option for the purchase
of, or other disposition or transfer of shares of Securities, or securities
convertible into or exercisable or exchangeable for Securities, subject to a
Lock-up Agreement.
6. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Firm Securities on the
First Closing Date and the Optional Securities to be purchased on each Optional
Closing Date will be subject to the accuracy of the representations and
warranties on the part of the Company herein, to the accuracy of the statements
of Company officers made pursuant to the provisions hereof, to the performance
by the Company of its obligations hereunder and to the following additional
conditions precedent:
(a) The Representatives shall have received a letter, dated the
date of delivery thereof (which, if the Effective Time of the Initial
Registration Statement is prior to the execution and delivery of this Agreement,
shall be on or prior to the date of this Agreement (but in no event earlier than
the Effective Time) or, if the Effective Time of the Initial Registration
Statement is subsequent to the execution and delivery of this Agreement, shall
be prior to the filing of the amendment or post-effective amendment to the
registration statement to be filed shortly prior to such Effective Time), of
Ernst & Young LLP confirming that they are independent public accountants within
the meaning of the Act and the applicable published Rules and Regulations
thereunder and stating to the effect that:
(i) in their opinion the financial statements and
schedules examined by them and included in the Registration
Statements comply as to form in all material respects with the
applicable accounting requirements of the Act and the related
published Rules and Regulations;
(ii) they have performed the procedures specified by
the American Institute of Certified Public Accountants for a
review of interim financial information as described in Statement
of Auditing Standards No. 71, Interim Financial Information, on
the unaudited financial statements included in the Registration
Statements;
(iii) on the basis of the review referred to in
clause (ii) above, a reading of the latest available interim
financial statements of the Company, inquiries of officials of
the Company who have responsibility for financial and accounting
matters and other specified procedures, nothing came to their
attention that caused them to believe that:
(A) the unaudited financial statements included in
the Registration Statements do not comply as to form in
all material respects with the applicable accounting
requirements of the Act and the related published Rules
and Regulations or any material modifications should be
made to such unaudited financial statements for them to
be in conformity with generally accepted accounting
principles;
(B) at the date of the latest available balance
sheet read by such accountants, or at a subsequent
specified date not more than three business days prior to
the date of such letter, there was any change in the
capital stock or any increase in short-term indebtedness
or long-term debt of the Company and its consolidated
subsidiaries or, at the date of the latest available
balance sheet read by such accountants, there was any
decrease in consolidated
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<PAGE> 11
current assets or total assets, or any increase in
stockholders' deficit as compared with amounts shown on
the latest balance sheet included in the Prospectus; or
(C) for the period from the closing date of the
latest statement of operations included in the
Prospectus to the closing date of the latest available
statement of operations read by such accountants there
were any decreases, as compared with the corresponding
period of the previous year and with the period of
corresponding length ended the date of the latest
statement of operations included in the Prospectus, in
consolidated revenues, increases in loss from
operations, net operating income, or in the total or per
share amounts of consolidated net loss;
except in all cases set forth in clauses (B) and (C) above
for changes, increases or decreases which the Prospectus discloses have occurred
or may occur or which are described in such letter; and
(iv) they have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statements (in each
case to the extent that such dollar amounts, percentages and
other financial and statistical information are derived from the
general accounting records of the Company and its subsidiaries
subject to the internal controls of the Company's accounting
system or are derived directly from such records by analysis or
computation) with the results obtained from inquiries, a reading
of such general accounting records and other procedures specified
in such letter and have found such dollar amounts, percentages
and other financial and statistical information to be in
agreement with such results, except as otherwise specified in
such letter.
For purposes of this subsection, (i) if the Effective Time of the
Initial Registration Statement is subsequent to the execution and delivery of
this Agreement, "Registration Statements" shall mean the initial registration
statement as proposed to be amended by the amendment or post-effective amendment
to be filed shortly prior to its Effective Time, (ii) if the Effective Time of
the Initial Registration Statement is prior to the execution and delivery of
this Agreement but the Effective Time of the Additional Registration is
subsequent to such execution and delivery, "Registration Statements" shall mean
the Initial Registration Statement and the additional registration statement as
proposed to be filed or as proposed to be amended by the post-effective
amendment to be filed shortly prior to its Effective Time, and (iii)
"Prospectus" shall mean the prospectus included in the Registration Statements.
(b) If the Effective Time of the Initial Registration Statement
is not prior to the execution and delivery of this Agreement, such Effective
Time shall have occurred not later than 10:00 P.M., New York time, on the date
of this Agreement or such later date as shall have been consented to by CSFBC.
If the Effective Time of the Additional Registration Statement (if any) is not
prior to the execution and delivery of this Agreement, such Effective Time shall
have occurred not later than 10:00 P.M., New York time, on the date of this
Agreement or, if earlier, the time the Prospectus is printed and distributed to
any Underwriter, or shall have occurred at such later date as shall have been
consented to by CSFBC. If the Effective Time of the Initial Registration
Statement is prior to the execution and delivery of this Agreement, the
Prospectus shall have been filed with the Commission in accordance with the
Rules and Regulations and Section 5(a) of this Agreement. Prior to such Closing
Date, no stop order suspending the effectiveness of a Registration Statement
shall have been issued and no proceedings for that purpose
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<PAGE> 12
shall have been instituted or, to the knowledge of the Company or the
Representatives, shall be contemplated by the Commission.
(c) Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) any change, or any development or event
involving a prospective change, in the condition (financial or other), business,
properties or results of operations of the Company or its subsidiaries taken as
one enterprise which, in the judgment of a majority in interest of the
Underwriters including the Representatives, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the public offering or
the sale of and payment for the Offered Securities; (ii) any downgrading in the
rating of any debt securities of the Company by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Act), or any public announcement that any such organization has under
surveillance or review its rating of any debt securities of the Company (other
than an announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating); (iii) any material
suspension or material limitation of trading in securities generally on the New
York Stock Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market; (iv) any banking moratorium declared
by U.S. Federal or New York authorities; or (v) any outbreak or escalation of
major hostilities in which the United States is involved, any declaration of war
by Congress or any other substantial national or international calamity or
emergency if, in the judgment of a majority in interest of the Underwriters
including the Representatives, the effect of any such outbreak, escalation,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment for
the Offered Securities.
(d) The Representatives shall have received an opinion, dated
such Closing Date, of Morrison & Foerster LLP, counsel for the Company, to the
effect that:
(i) The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State
of Delaware, with corporate power and authority (corporate and
other) to own its properties and conduct its business as
described in the Prospectus; and the Company is duly qualified to
do business as a foreign corporation in good standing in all
other jurisdictions in which its ownership or lease of property
or the conduct of its business requires such qualification;
(ii) Each subsidiary of the Company has been duly
incorporated and is an existing corporation in good standing
under the laws of the jurisdiction of its incorporation, with
power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectus; and each
subsidiary of the Company is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions
in which its ownership or lease of property or the conduct of its
business requires such qualification; all of the issued and
outstanding capital stock of each subsidiary of the Company has
been duly authorized and validly issued and is fully paid and
nonassessable, and the capital stock of each subsidiary owned by
the Company, directly or through subsidiaries, is owned free from
liens, encumbrances and defects;
(iii) The Offered Securities delivered on such Closing
Date and all other outstanding shares of the capital stock of the
Company have been duly authorized and validly issued, are fully
paid and nonassessable and conform to the description thereof
contained in the Prospectus; and the stockholders of the Company
have no preemptive rights with respect to the Securities;
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<PAGE> 13
(iv) Except as disclosed in the Prospectus, there are
no contracts, agreements or understandings known to such counsel
between the Company and any person granting such person the right
to require the Company to file a registration statement under the
Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such
securities in the securities registered pursuant to the
Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company
under the Act;
(v) The Company is not and, after giving effect to the
offering and sale of the Offered Securities and the application
of the proceeds thereof as described in the Prospectus, will not
be an "investment company" as defined in the Investment Company
Act of 1940.
(vi) No consent, approval, authorization or order of,
or filing with, any governmental agency or body or any court is
required for the consummation of the transactions contemplated by
this Agreement in connection with the issuance or sale of the
Offered Securities by the Company, except such as have been
obtained and made under the Act and such as may be required under
state securities laws;
(vii) The execution, delivery and performance of this
Agreement and the issuance and sale of the Offered Securities
will not result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any statute, any
rule, regulation or order of any governmental agency or body or
any court having jurisdiction over the Company or any subsidiary
of the Company or any of their properties, or any agreement or
instrument to which the Company or any such subsidiary is a party
or by which the Company or any such subsidiary is bound or to
which any of the properties of the Company or any such subsidiary
is subject, or the charter or by-laws of the Company or any such
subsidiary, and the Company has full power and authority to
authorize, issue and sell the Offered Securities as contemplated
by this Agreement;
(viii) The Initial Registration Statement was declared
effective under the Act as of the date and time specified in such
opinion, the Additional Registration Statement (if any) was filed
and became effective under the Act as of the date and time (if
determinable) specified in such opinion, the Prospectus either
was filed with the Commission pursuant to the subparagraph of
Rule 424(b) specified in such opinion on the date specified
therein or was included in the Initial Registration Statement or
the Additional Registration Statement (as the case may be), and,
to the best of the knowledge of such counsel, no stop order
suspending the effectiveness of a Registration Statement or any
part thereof has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the
Act, and each Registration Statement and the Prospectus, and each
amendment or supplement thereto, as of their respective effective
or issue dates, complied as to form in all material respects with
the requirements of the Act and the Rules and Regulations; such
counsel have no reason to believe that any part of a Registration
Statement or any amendment thereto, as of its effective date or
as of such Closing Date, contained any untrue statement of a
material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not
misleading or that the Prospectus or any amendment or supplement
thereto, as of its issue date or as of such Closing Date,
contained any untrue statement of a material
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<PAGE> 14
fact or omitted to state any material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; the descriptions in
the Registration Statements and Prospectus of statutes, legal and
governmental proceedings and contracts and other documents are
accurate and fairly present the information required to be shown;
and such counsel do not know of any legal or governmental
proceedings required to be described in a Registration Statement
or the Prospectus which are not described as required or of any
contracts or documents of a character required to be described in
a Registration Statement or the Prospectus or to be filed as
exhibits to a Registration Statement which are not described and
filed as required; it being understood that such counsel need
express no opinion as to the financial statements or other
financial data contained in the Registration Statements or the
Prospectus; and
(ix) The execution and delivery of the Merger
Agreement, effecting the reincorporation of the California
Corporation under the laws of the State of Delaware, was duly
authorized by all necessary corporate action on the part of each
of the California Corporation and the Company;
(x) This Agreement has been duly authorized, executed
and delivered by the Company; and
(e) The Representatives shall have received from Wilson Sonsini
Goodrich & Rosati, counsel for the Underwriters, such opinion or opinions, dated
such Closing Date, with respect to the incorporation of the Company, the
validity of the Offered Securities delivered on such Closing Date, the
Registration Statements, the Prospectus and other related matters as the
Representatives may require, and the Company shall have furnished to such
counsel such documents as they request for the purpose of enabling them to pass
upon such matters.
(f) The Representatives shall have received a certificate, dated
such Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Company in which such officers, to the
best of their knowledge after reasonable investigation, shall state that: the
representations and warranties of the Company in this Agreement are true and
correct; the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or prior to
such Closing Date; no stop order suspending the effectiveness of any
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are contemplated by the Commission; the Additional
Registration Statement (if any) satisfying the requirements of subparagraphs (1)
and (3) of Rule 462(b) was filed pursuant to Rule 462(b), including payment of
the applicable filing fee in accordance with Rule 111(a) or (b) under the Act,
prior to the time the Prospectus was printed and distributed to any Underwriter;
and, subsequent to the date of the most recent financial statements in the
Prospectus, there has been no material adverse change, nor any development or
event involving a prospective material adverse change, in the condition
(financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(g) The Representatives shall have received a letter, dated such
Closing Date, of Ernst & Young LLP which meets the requirements of subsection
(a) of this Section, except that the specified date referred to in such
subsection will be a date not more than three days prior to such Closing Date
for the purposes of this subsection.
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<PAGE> 15
The Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
request. CSFBC may in its sole discretion waive on behalf of the Underwriters
compliance with any conditions to the obligations of the Underwriters hereunder,
whether in respect of an Optional Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Company will indemnify and
hold harmless each Underwriter, its partners, directors and officers and each
person, if any, who controls such Underwriter within the meaning of Section 15
of the Act, against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement,
the Prospectus, or any amendment or supplement thereto, or any related
preliminary prospectus, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through the
Representatives specifically for use therein, it being understood and agreed
that the only such information furnished by any Underwriter consists of the
information described as such in subsection (b) below.
(b) Each Underwriter will severally and not jointly indemnify and
hold harmless the Company, its directors and officers and each person, if any
who controls the Company within the meaning of Section 15 of the Act, against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any Registration Statement, the Prospectus, or any amendment or supplement
thereto, or any related preliminary prospectus, or arise out of or are based
upon the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for use
therein, and will reimburse any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the following information in the Prospectus furnished on behalf of each
Underwriter: the concession and reallowance figures appearing in the fourth
paragraph under the caption "Underwriting" and the information contained in the
sixth and twelfth paragraphs under the caption "Underwriting".
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under subsection (a) or (b) above, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not relieve it from any liability which it may have to any indemnified party
otherwise than under subsection (a) or (b) above. In case any such action is
brought against any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that
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<PAGE> 16
it may wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
(d) If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and the Underwriters on the other from the offering
of the Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received
by the Company bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company, to each officer of the Company
who has signed a Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act.
-16-
<PAGE> 17
8. Default of Underwriters. If any Underwriter or Underwriters default
in their obligations to purchase Offered Securities hereunder on either the
First or any Optional Closing Date and the aggregate number of shares of Offered
Securities that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of shares of Offered Securities
that the Underwriters are obligated to purchase on such Closing Date, CSFBC may
make arrangements satisfactory to the Company for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by such Closing Date, the non-defaulting Underwriters
shall be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Offered Securities that such defaulting Underwriters
agreed but failed to purchase on such Closing Date. If any Underwriter or
Underwriters so default and the aggregate number of shares of Offered Securities
with respect to which such default or defaults occur exceeds 10% of the total
number of shares of Offered Securities that the Underwriters are obligated to
purchase on such Closing Date and arrangements satisfactory to CSFBC and the
Company for the purchase of such Offered Securities by other persons are not
made within 36 hours after such default, this Agreement will terminate without
liability on the part of any non-defaulting Underwriter or the Company, except
as provided in Section 9 (provided that if such default occurs with respect to
Optional Securities after the First Closing Date, this Agreement will not
terminate as to the Firm Securities or any Optional Securities purchased prior
to such termination). As used in this Agreement, the term "Underwriter" includes
any person substituted for an Underwriter under this Section. Nothing herein
will relieve a defaulting Underwriter from liability for its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Company or its officers and of the several Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Underwriter, the Company or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities. If this Agreement is terminated pursuant
to Section 8 or if for any reason the purchase of the Offered Securities by the
Underwriters is not consummated, the Company shall remain responsible for the
expenses to be paid or reimbursed by it pursuant to Section 5 and the respective
obligations of the Company and the Underwriters pursuant to Section 7 shall
remain in effect, and if any Offered Securities have been purchased hereunder
the representations and warranties in Section 2 and all obligations under
Section 5 shall also remain in effect. If the purchase of the Offered Securities
by the Underwriters is not consummated for any reason other than solely because
of the termination of this Agreement pursuant to Section 8 or the occurrence of
any event specified in clause (iii), (iv) or (v) of Section 6(c), the Company
will reimburse the Underwriters for all out-of-pocket expenses (including fees
and disbursements of counsel) reasonably incurred by them in connection with the
offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to the Representatives c/o Credit Suisse First Boston Corporation, Eleven
Madison Avenue, New York, N.Y. 10010-3629, Attention: Investment Banking
Department--Transactions Advisory Group, or, if sent to the Company, will be
mailed, delivered or telegraphed and confirmed to it at 3350 West Bayshore Road,
Palo Alto, California 94303, Attention: Gaurav S. Dhillon; provided, however,
that any notice to an Underwriter pursuant to Section 7 will be mailed,
delivered or telegraphed and confirmed to such Underwriter.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7, and no other
person will have any right or obligation hereunder.
-17-
<PAGE> 18
12. Representation of Underwriters. The Representatives will act for the
several Underwriters in connection with this financing, and any action under
this Agreement taken by the Representatives jointly or by CSFBC will be binding
upon all the Underwriters.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
The Company hereby submits to the non-exclusive jurisdiction of
the Federal and state courts in the Borough of Manhattan in The City of New York
in any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
-18-
<PAGE> 19
If the foregoing is in accordance with the Representatives'
understanding of our agreement, kindly sign and return to the Company one of the
counterparts hereof, whereupon it will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
INFORMATICA CORPORATION
By:______________________________________
Title:___________________________________
The foregoing Underwriting Agreement is hereby confirmed and accepted
as of the date first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
BANCBOSTON ROBERTSON STEPHENS, INC.
SOUNDVIEW TECHNOLOGY GROUP, INC.
FIRST ALBANY CORPORATION,
Acting on behalf of themselves and as the
Representatives of the several Underwriters
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By:_______________________________________
Title:____________________________________
<PAGE> 20
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER FIRM SECURITIES
----------- ---------------
<S> <C>
Credit Suisse First Boston Corporation................. $
BancBoston Robertson Stephens, Inc.
Soundview Technology Group, Inc.
First Albany Corporation
Total.................................... --------------
$
==============
</TABLE>
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
INFORMATICA CORPORATION-DELAWARE
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and know, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
ARTICLE I
The name of the Corporation is Informatica Corporation-Delaware
(hereinafter called the "Corporation").
ARTICLE II
The address, including street, number, city, and county, of the
registered office of the Corporation in the State of Delaware is 1209 Orange
Street, City of Wilmington, County of New Castle, DE 19801. The name of its
registered agent at such address is The Corporation Trust Company.
ARTICLE III
The nature of the business and the purposes to be conducted and promoted
by the Corporation shall be: To conduct any lawful business, to promote any
lawful purpose, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
ARTICLE IV
A. CLASSES OF STOCK
This Corporation is authorized to issue two classes of shares to be
designated, respectively, "Common Stock" with a par value of $0.001 per share
("Common Stock") and "and "Preferred Stock." with a par value of $0.001 per
share ("Preferred Stock"). The total number of shares which the Corporation is
authorized to issue is One Hundred Ten Million One Hundred Seventy Thousand
(110,170,000) shares, of which One Hundred Million (100,000,000) shares shall be
Common Stock and Ten Million One Hundred Seventy Thousand (10,170,000) shares
shall be Preferred Stock.
<PAGE> 2
The Preferred Stock authorized by this Certificate of Incorporation may
be issued from time to time in one or more series. Subject to applicable
protective voting rights which have been or may be granted to the Preferred
Stock, the Board of Directors is authorized to determine or alter any or all of
the rights, preferences, privileges and restrictions granted to or imposed upon
any wholly unissued series of Preferred Stock, and to fix, alter or reduce the
number of shares comprising any such series (but not below the number of such
shares outstanding for any such series) and the designation thereof, or any of
them, and to provide for rights and terms of redemption or conversion of the
shares of any such series.
B. RIGHTS, PREFERENCES AND RESTRICTIONS OF PREFERRED STOCK.
The Preferred Stock may be issued from time to time in series. The
rights, preferences, privileges, and restrictions granted to and imposed on the
Series A Preferred Stock, which series shall consist of Two Million Two Hundred
Fifty Thousand (2,250,000) shares, the Series B Preferred Stock, which series
shall consist of One Million (1,000,000) shares; the Series C Preferred Stock,
which series shall consist of Two Million Six Hundred Forty Five Thousand
(2,645,000) and the Series D Preferred Stock which series shall consist of Two
Million Two Hundred Seventy-Five Thousand (2,275,000) shares are as set forth
below in this Article IV(B).
The Board of Directors of this Corporation (the "Board") is hereby
authorized to fix or alter the rights, preferences, privileges and restrictions
granted to or imposed upon additional series of Preferred Stock, and the number
of shares constituting any such series and the designation thereof, or any of
them. Subject to compliance with applicable protective voting rights as set
forth in Section 8 hereof which have been or may be granted to Preferred Stock
or series thereof in Certificates of Determination or the Corporation's
Certificate of Incorporation ("Protective Provisions"), the rights, privileges,
preferences and restrictions of any such additional series may be subordinate
to, pari passu with (including, without limitation, inclusion in provisions with
respect to liquidation and acquisition preferences, redemption and/or approval
of matters by vote or written consent) or senior to any of those of any present
or future class or series of Preferred or Common Stock. Subject to compliance
with applicable Protective Provisions, the Board is also authorized to increase
or decrease the number of shares of any series (other than Series A, Series B,
Series C and Series D Preferred Stock), prior or subsequent to the issuance of
that series, but not below the number of shares of such series then outstanding.
In case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of shares of such
series.
The rights, preferences, restrictions and other matters relating to the
Series A, Series B, Series C and Series D Preferred Stock are as follows:
<PAGE> 3
1. DIVIDEND PROVISIONS.
(a) Subject to the provisions for adjustment hereinafter set
forth, the holders of shares of Series A, Series B, Series C and Series D
Preferred Stock shall be entitled to receive dividends, out of any assets
legally available therefor, prior and in preference to any declaration or
payment of any dividend (payable other than in Common Stock of this Corporation)
on the Common Stock of this Corporation, in an amount per share equal to
$0.0533, $0.08, $0.20 and $0.32 per annum, respectively, (as adjusted to reflect
any stock split, stock dividend, combination, recapitalization and the like
(each, individually, a "Recapitalization") with respect to the Series A, Series
B, Series C and Series D Preferred Stock, respectively), when, as and if
declared by the Board. Dividends on the Series A, Series B, Series C and Series
D Preferred Stock, when, as and if declared, shall be paid pro rata to the
holders of such shares on the basis of the relative preference to which each
such series is entitled. Such dividends shall not be cumulative.
(i) Subject to the provisions for adjustment hereinafter
set forth, the holders of shares of Series A, Series B, Series C and Series D
Preferred Stock shall be entitled to receive dividends payable in Common Stock
of the Corporation, out of any assets legally available therefor, pro rata based
on the number of shares of Common Stock held by each (assuming conversion of all
such Series A, Series B, Series C and Series D Preferred Stock), when, as and if
declared by the Board.
(b) Notwithstanding Section 1(a) hereof, the Corporation may at
any time, out of funds legally available therefor, repurchase shares of Common
Stock of the Corporation (i) issued to or held by employees, directors or
consultants of the Corporation or its subsidiaries upon termination of their
employment or services, pursuant to any agreement providing for such right of
repurchase at cost or (ii) issued to or held by any person subject to the
Corporation's right of first refusal to purchase such shares where the purchase
is pursuant to the exercise of such right of first refusal in either case
whether or not dividends on the Preferred Stock shall have been declared and
paid or funds set aside therefor.
2. LIQUIDATION RIGHTS. In the event of any liquidation, dissolution or
winding up of the Corporation, whether voluntary or involuntary, distributions
shall be made to the holders of Preferred Stock in respect of such Preferred
Stock before any amount shall be paid to the holders of Common Stock in respect
of such Common Stock, in the following manner:
(a) The holders of Series A Preferred Stock shall be entitled to
receive an amount per share equal to $0.67 for each outstanding share of Series
A Preferred Stock then held by each such holder (the "Original Series A Issue
Price") plus all declared but unpaid dividends thereon, the holders of Series B
Preferred Stock shall be entitled to receive an amount per share equal to $1.00
for each outstanding share of Series B Preferred Stock then held by each such
holder (the
<PAGE> 4
"Original Series B Issue Price") plus all declared but unpaid dividends thereon,
the holders of Series C Preferred Stock shall be entitled to receive an amount
per share equal to $2.50 for each outstanding share of Series C Preferred Stock
then held by each such holder (the "Original Series C Issue Price") plus all
declared but unpaid dividends thereon, and the holders of Series D Preferred
Stock shall be entitled to receive an amount per share equal to $4.00 for each
outstanding share of Series D Preferred Stock then held by each such holder (the
"Original Issue Price") plus all declared but unpaid dividends thereon (as
adjusted to reflect any Recapitalization with respect to the Series A, Series B,
Series C and Series D Preferred Stock, respectively). If upon the occurrence of
such event, the assets and funds thus distributed among the holders of the
Series A, Series B, Series C and Series D Preferred Stock shall be insufficient
to permit the payment to such holders of the full aforesaid preferential
amounts, then the entire assets and funds of the Corporation legally available
for distribution shall be distributed ratably among the holders of the Series A,
Series B, Series C and Series D Preferred Stock in proportion to the aggregate
preferential amounts owed to each such holder.
(b) After the distributions described in Section 2(a) above have
been paid, the holders of Common Stock shall be entitled to receive an amount
per share equal to the Weighted Average of the Original Series A Issue Price,
the Original Series B Issue Price, the Original Series C Issue Price and the
Original Series D Issue Price (as defined below) for each outstanding share of
Common Stock, plus all declared but unpaid dividends thereon. The "Weighted
Average of the Original Series A Issue Price, the Original Series B Issue Price,
the Original Series C Issue Price and the Original Series D Issue Price" shall
be the quotient of i) the sum of the product of the Original Series A Issue
Price and the number of shares of Series A Preferred Stock outstanding, the
product of the Original Series B Issue Price and the number of shares of Series
B Preferred Stock outstanding, the product of the Original Series C Issue Price
and the number of shares of Series C Preferred Stock outstanding and the product
of the original Series D Issue Price and the number of Series D Preferred Stock
outstanding; and ii) the sum of the number of shares of Series A Preferred Stock
outstanding, the number of shares of Series B Preferred Stock outstanding, the
number of shares of Series C Preferred Stock outstanding and the number of
shares of Series D Preferred Stock outstanding. If upon the occurrence of such
event, and after the distributions described in Section 2(a) hereof have been
paid, the assets and funds thus distributed among the holders of the Common
Stock shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amounts, then the remaining assets and funds of the
Corporation legally available for distribution shall be distributed ratably
among the holders of the Common Stock in proportion to the aggregate
preferential amounts owed to each such holder.
(c) After the distributions described in Section 2(b) above have
been paid, the remaining assets of the Corporation available for distribution to
shareholders shall be distributed among the holders of Series A, Series B,
Series C and Series D Preferred Stock and Common Stock pro rata based on the
number of shares of Common Stock held by each (assuming conversion of all such
Series A, Series B, Series C and Series D Preferred Stock).
(d) EVENTS DEEMED A LIQUIDATION. For purposes of this Section 2,
a liquidation, dissolution or winding up of the Corporation shall be deemed to
be occasioned by and to include the consolidation, reorganization or merger of
the Corporation with or into any other corporation or the sale by the
Corporation of all or substantially all of its assets (or any series of related
transactions resulting in the sale or other transfer of all or substantially all
of its assets) unless the shareholders of the Corporation immediately prior to
any such transaction are
<PAGE> 5
holders of a majority of the voting securities of the surviving or acquiring
corporation immediately thereafter (and for purposes of this calculation equity
securities which any shareholder or the Corporation owned immediately prior to
such merger or reorganization as a shareholder of another party to the
transaction shall be disregarded).
(e) VALUATION OF SECURITIES AND PROPERTY. In the event the
Corporation proposes to distribute assets other than cash in connection with any
liquidation, dissolution or winding up of the Corporation, the value of the
assets to be distributed to the holders of shares of Preferred Stock and Common
Stock shall be determined in good faith by the Board. Any securities not subject
to investment letter or similar restrictions on free marketability shall be
valued as follows:
(i) If traded on a securities exchange, the value shall
be deemed to the average of the security's closing prices on such exchange over
the thirty (30) day period ending three (3) days prior to the distribution;
(ii) If actively traded over-the-counter, the value
shall be deemed to be the average of the closing bid prices over the thirty (30)
day period ending three (3) days prior to the distribution; and
(iii) If there is no active public market, the value
shall be the fair market value thereof as determined in good faith by the Board.
The method of valuation of securities subject to investment
letter or other restrictions on free marketability shall be adjusted to make an
appropriate discount from the market value determined as above in clauses (i),
(ii) or (iii) to reflect the fair market value thereof as determined in good
faith by the Board. The holders of at least 50% of the outstanding Preferred
Stock shall have the right to challenge any determination by the Board of fair
market value pursuant to this Section 2(e), in which case the determination of
fair market value shall be made by an independent appraiser selected jointly by
the Board and the challenging parties, the cost of such appraisal to be borne
equally by the Corporation and the challenging parties.
(f) The Corporation shall give each holder of record of
Preferred Stock written notice of such impending transaction not later than
twenty (20) days prior to the shareholders' meeting called to approve such
transaction, or twenty (20) days prior to the closing of such transaction,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such transaction. The first of such notices shall describe the
material terms and conditions of the impending transaction and the provisions of
this paragraph IV(B)(2), and the Corporation shall thereafter give such holders
prompt notice of any material changes. The transaction shall in no event take
place sooner than twenty (20) days after the Corporation has given the first
notice provided for herein or sooner than ten (10) days after the Corporation
has given notice of any material changes provided for herein; provided, however,
that such periods may be shortened upon the written consent of the holders of
Preferred Stock which is entitled to such notice rights or similar notice rights
and which represents at least a majority of the voting power of all then
outstanding shares of such Preferred Stock.
<PAGE> 6
3. REDEMPTION.
(a) On or at any time after the day that is five (5) years after
the Original Issue Date (as defined in Section 4(c)(i)(4) below), on the date
upon which the Corporation receives the written consent of the holders of more
than fifty percent (50%) of the Series A Preferred Stock, Series B Preferred
Stock, Series C or Series D Preferred Stock then outstanding with respect to a
proposed redemption hereunder, this Corporation shall fix a date upon which it
shall commence the redemption of the applicable series of Preferred Stock (the
"Redemption Commencement Date"). This Corporation shall redeem from each holder
of shares of such series of Preferred Stock, out of legally available funds,
one-third (1/3) of the shares of each series of Preferred Stock to be redeemed
held by each such holder on the Redemption Commencement Date, an additional
one-third (1/3) 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 the Original Series A Issue Price, Original
Series B Issue Price, Original Series C Issue Price or Original Series D Issue
Price, as applicable. Each such redemption shall be effected pro-rata within
such series of Preferred Stock by paying in cash therefor a sum equal to the
Original Series A Issue Price, Original Series B Issue Price, Original Series C
Issue Price or Original Series D Issue Price, as applicable, per share of such
series of Preferred Stock, plus any declared but unpaid dividends to the date of
the redemption of such shares (such total amount is hereinafter referred to as
the "Redemption Price").
(b) (I) At least 45 but no more than 60 days prior to the date
fixed for any redemption of Preferred Stock (the "Redemption Date"), written
notice shall be mailed, postage prepaid, to each holder of record (at the close
of business on the business day next preceding the day on which notice is given)
of the Preferred Stock to be redeemed, at the address last shown on the records
of this Corporation for such holder or given by the holder to this Corporation
for the purpose of notice or if no such address appears or is given at the place
where the principal executive office of this Corporation is located, notifying
such holder of the redemption to be effected, specifying the Redemption Date,
the Redemption Price, the place at which payment may be obtained and the date on
which such holder's Conversion Rights (as hereinafter defined) as to such shares
terminate and calling upon such holder to surrender to this Corporation, in the
manner and at the place designated, his certificate or certificates representing
the shares to be redeemed (the "Redemption Notice"). Except as provided in
Section 3(b)(ii), on or after the Redemption Date, each holder of Preferred
Stock to be redeemed shall surrender to this Corporation the certificate or
certificates representing such shares, in the manner and at the place designated
in the Redemption Notice, and thereupon the Redemption Price of such shares
shall be payable to the order of the person whose name appears on such
certificate or certificates as the owner thereof and each surrendered
certificate shall be canceled. In the event less than all the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(ii) From and after the Redemption Date, unless there
shall have been a default in payment of the Redemption Price, all rights of the
holders of such shares as holders of Preferred Stock (except the right to
receive the Redemption Price without interest upon surrender of their
certificate or certificates) shall cease with respect to such shares, and such
shares shall not thereafter be transferred on the books of this Corporation or
be deemed to be outstanding for
<PAGE> 7
any purpose whatsoever. If the funds of the Corporation legally available for
redemption of shares of Preferred Stock on any Redemption Date are insufficient
to redeem the total number of shares of Preferred Stock to be redeemed on such
date, those funds which are legally available will be used to redeem the maximum
possible number of such shares ratably among the holders of such shares to be
redeemed. The shares of Preferred Stock not redeemed shall remain outstanding
and entitled to all the rights and preferences provided here. At any time
thereafter when additional funds of the Corporation are legally available for
the redemption of shares of Preferred Stock, such funds will immediately be used
to redeem the balance of the shares which the Corporation has become obligated
to redeem on any Redemption Date but which it has not redeemed.
(iii) Three days prior to the Redemption Date, this
Corporation shall deposit the Redemption Price of all outstanding shares of
Preferred Stock designated for redemption in the Redemption Notice, and not yet
redeemed or converted, with a bank or trust company having aggregate capital and
surplus in excess of $50,000,000 as a trust fund for the benefit of the
respective holders of the shares designated for redemption and not yet redeemed.
Simultaneously, this Corporation shall deposit irrevocable instruction and
authority to such bank or trust company to publish the notice of redemption
thereof (or to complete such publication if theretofore commenced) and to pay,
on and after the date fixed for redemption or prior thereto, the Redemption
Prices of the Preferred Stock to the holders thereof upon surrender of their
certificates. Any moneys deposited by this Corporation pursuant to this Section
3(b)(iii) for the redemption of shares which are thereafter converted into
shares of Common Stock pursuant to Section 4 hereof no later than the Redemption
Date shall be returned to this Corporation forthwith upon such conversion. The
balance of any moneys deposited by this Corporation pursuant to this Section
3(b)(iii) remaining unclaimed at the expiration of two years following the
Redemption Date shall thereafter be returned to this Corporation, provided that
the shareholder to which such monies would be payable hereunder shall be
entitled, upon proof of its ownership of the Preferred Stock and payment of any
bond requested by the Company, to receive such monies but without interest from
the Redemption Date.
(iv) In the event of a call for redemption of any shares of
Preferred Stock pursuant to this Section 3, the Conversion Rights provided in
Section 4 below shall terminate as to the shares designated for redemption at
the close of business on the Redemption Date, unless the Corporation defaults in
payment of the Redemption Price.
4. CONVERSION. The holders of the Series A, Series B, Series C and
Series D Preferred Stock shall have conversion rights as follows (the
"Conversion Rights"):
(a) OPTIONAL CONVERSION.
(i) Each share of Series A, Series B, Series C and
Series D Preferred Stock shall be convertible, at the option of the holder
thereof, at any time after the date of issuance of such share and prior to the
close of business on any Redemption Date as may have been fixed in any
Redemption Notice with respect to such share, at the office of this Corporation
or any transfer agent for such Preferred Stock, into such number of fully paid
and nonassessable shares of Common Stock as is determined by dividing the
Original Issue Price for such series of
<PAGE> 8
Preferred Stock by the Conversion Price (as defined below) at the time in effect
for such share. The initial Conversion Price per share for shares of Series A,
Series B, Series C and Series D Preferred Stock shall be the Original Series A
Issue Price, the Original Series B Issue Price, the Original Series C Issue
Price and the Original Series D Issue Price, respectively; provided, however,
that the Conversion Price for each series of Preferred Stock shall be subject to
adjustment as set forth in Section 4(c). Upon conversion, all declared and
unpaid dividends on the Preferred Stock shall be paid in cash, to the extent
legally permitted.
(ii) Mechanics of Conversion. Before any holder of
Preferred Stock shall be entitled to convert the same into shares of Common
Stock and to receive certificates therefor, he or she shall surrender the
certificate or certificates therefor, duly endorsed, at the office of the
Corporation or of any transfer agent for the Preferred Stock and shall give
written notice to the Corporation at such office that he or she elects to
convert the same; provided, however, that in the event of an automatic
conversion pursuant to Section 4(b) hereof, the outstanding shares of Preferred
Stock shall be converted automatically without any further action by the holders
of such shares and whether or not the certificates representing such shares are
surrendered to the Corporation or its transfer agent; and provided further that
the Corporation shall not be obligated to issue certificates evidencing the
shares of Common Stock issuable upon such automatic conversion unless and until
the certificates evidencing such shares of Preferred Stock are either delivered
to the Corporation or its transfer agent as provided above, or the holder
notifies the Corporation or its transfer agent that such certificates have been
lost, stolen or destroyed and executes an agreement satisfactory to the
Corporation to indemnify the Corporation from any loss incurred by it in
connection with such certificates. The Corporation shall, as soon as practicable
after such delivery, or after such agreement and indemnification, issue and
deliver at such office to such holder of Preferred Stock, a certificate or
certificates for the number of shares of Common Stock to which he or she shall
be entitled as aforesaid and a check payable to the holder in the amount of any
declared and unpaid dividends payable pursuant to Section 1(a) hereof, if any.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Preferred Stock to be
converted, or, in the case of automatic conversion, immediately prior to the
occurrence of the event leading to such automatic conversion, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
(b) AUTOMATIC CONVERSION ON INITIAL PUBLIC OFFERING. Each share
of Preferred Stock shall automatically be converted into shares of Common Stock
at the Conversion Price at the time in effect for such series of Preferred Stock
immediately upon the consummation of the Corporation's sale of its Common Stock
in a bona fide, firm commitment underwriting pursuant to a registration
statement filed pursuant to the Securities Act of 1933, as amended, the public
offering price of which is not less than $9.00 per share (adjusted to reflect
any Recapitalizations) and the proceeds thereof (net of underwriting commissions
and offering expenses) exceed $18,000,000. Any conversion of Preferred Stock
pursuant to this Section 4(b) may, at the option of any holder tendering
Preferred Stock for conversion, be conditioned upon the closing with the
underwriter of the sale of securities pursuant to such offering, in which event
the person(s) entitled to receive the Common Stock issuable upon such conversion
of the
<PAGE> 9
Preferred Stock shall not be deemed to have converted such Preferred Stock until
immediately prior to the closing of such sale of securities.
(c) ADJUSTMENTS TO CONVERSION PRICE.
(i) SPECIAL DEFINITIONS. For purposes of this Section
4(c), the following definitions shall apply:
(1) "OPTIONS" shall mean rights, options or
warrants to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(2) "CONVERTIBLE SECURITIES" shall mean any
evidences of indebtedness, shares or other securities convertible into or
exchangeable for Common Stock.
(3) "ADDITIONAL SHARES OF COMMON STOCK" shall
mean all shares of Common Stock issued (or, pursuant to Section 4(c)(iii),
deemed to be issued) by the Corporation after the incorporation of the
Corporation, other than shares of Common Stock issued or issuable:
(A) upon conversion of shares of Preferred
Stock;
(B) to officers, directors or employees of,
or consultants to, the Corporation pursuant to a stock grant, option plan or
purchase plan or other employee stock incentive program or other agreement
approved by the Board, and the majority of the then-outstanding shares of
capital stock.
(C) as a dividend or distribution on a
series of Preferred Stock;
(D) in an event described in Section
4(c)(vi);
(E) as a dividend on Common Stock where the
Corporation declares or pays a Common Stock dividend on a series of Preferred
Stock in the same manner as declared or paid on the Common Stock; or
(F) by way of dividend or other distribution
on shares of Common Stock excluded from the definition of Additional Shares of
Common Stock by the foregoing clauses (A), (B), (C), (D), (E) or this clause
(F).
(4) "ORIGINAL ISSUE DATE" shall mean, with
respect to each series of Preferred Stock, the date on which the first share of
Series D Preferred Stock was issued.
(ii) NO ADJUSTMENT OF CONVERSION PRICE. No adjustment in
the Conversion Price of a series of Preferred Stock shall be made in respect of
the issuance of Additional Shares of Common Stock unless the consideration per
share for an Additional Share
<PAGE> 10
of Common Stock issued or deemed to be issued by the Corporation is less than
the Conversion Price for such series of Preferred Stock in effect immediately
prior to such issue.
(iii) DEEMED ISSUE OF ADDITIONAL SHARES OF COMMON STOCK.
(1) OPTIONS AND CONVERTIBLE SECURITIES. In the
event the Corporation at any time or from time to time after the Original Issue
Date shall issue any Options or Convertible Securities or shall fix a record
date for the determination of holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the maximum number of
shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such number) of
Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the exercise of such Options and
conversions or exchange of such Convertible Securities shall be deemed to be
Additional Shares of Common Stock issued as of the time of such issue or, in
case such a record date shall have been fixed, as of the close of business on
such record date, further that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
(A) except as provided in Section
4(c)(iii)(B), no further adjustment in the Conversion Price shall be made upon
the subsequent issue of Convertible Securities or shares of Common Stock upon
the exercise of such Options or conversion or exchange of such Convertible
Securities; and
(B) if such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any change in the consideration payable to the Corporation, or change in the
number of shares of Common Stock issuable, upon the exercise, conversion or
exchange thereof (other than under or by reason of provisions designed to
protect against dilution), the Conversion Price computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto) and any
subsequent adjustments based thereon, shall, upon any such increase or decrease
becoming effective, be recomputed to reflect such increase or decrease insofar
as it affects such Options or the rights of conversion or exchange under such
Convertible Securities; and
(C) no readjustment pursuant to clause (B)
above shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (1) the Conversion Price on the original adjustment
date or (2) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date.
(iv) ADJUSTMENT OF CONVERSION PRICE UPON ISSUANCE OF
ADDITIONAL SHARES OF COMMON STOCK. In the event this Corporation shall issue
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Section 4(c)(iii)) without consideration or for
a consideration per share less than the Conversion Price of a series of
Preferred Stock in effect on the date of and immediately prior to such issue
(such issuance price being referred to herein as the "Dilution Price"), then and
in each such event the Conversion Price of the such series of Preferred Stock
shall be reduced to a price (calculated
<PAGE> 11
to the nearest cent) determined by multiplying such Conversion Price by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding immediately prior to such issue plus the number of shares of Common
Stock which the aggregate consideration received by the Corporation for the
total number of Additional Shares of Common Stock so issued would purchase at
such Conversion Price; and the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issue plus the
number of such Additional Shares of Common Stock so issued; provided that, for
the purposes of this Section 4(c)(iv), all shares of Common Stock issuable upon
conversion of all outstanding Preferred Stock and all outstanding Options and
Convertible Securities shall be deemed to be outstanding, and, immediately after
any Additional Shares of Common Stock are deemed issued pursuant to Section
4(c)(iii), such Additional Shares of Common Stock shall be deemed to be
outstanding.
(v) DETERMINATION OF CONSIDERATION. For purposes of this
Section 4(c), the consideration received by the Corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(1) CASH AND PROPERTY. Such consideration shall:
(A) insofar as it consists of cash, be
computed at the aggregate amount of cash received by the Corporation before
deducting any reasonable discounts, commissions or other expenses allowed, paid
or incurred by the Corporation for any underwriting or otherwise in connection
with the issuance and sale thereof;
(B) insofar as it consists of property other
than cash, be computed at the fair value thereof at the time of such issue, as
determined by the Board in the good faith exercise of its reasonable business
judgment; and
(C) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
Corporation for consideration which converts both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board.
(2) OPTIONS AND CONVERTIBLE SECURITIES. The
consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 4(c)(iii)(1),
relating to Options and Convertible Securities, shall be determined by dividing
(A) the total amount, if any, received or
receivable by the Corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the Corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
<PAGE> 12
(B) the maximum number of shares of Common
Stock as set forth in the instruments relating thereto (without regard to any
provisions contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or their conversion or exchange of
such Convertible Securities.
(vi) OTHER ADJUSTMENTS TO CONVERSION PRICE.
(1) SUBDIVISIONS, COMBINATIONS, OR
CONSOLIDATIONS OF COMMON STOCK. In the event the outstanding shares of Common
Stock shall be subdivided, combined or consolidated, by stock split, stock
dividend, combination or like event, into a greater or lesser number of shares
of Common Stock, the Conversion Price of each series of Preferred Stock in
effect immediately prior to such subdivision, combination, consolidation or
stock dividend shall, concurrently with the effectiveness of such subdivision,
combination or consolidation, be proportionately adjusted.
Notwithstanding the foregoing, any adjustment of the Conversion
Price of a series of Preferred Stock pursuant to this paragraph (1) shall not be
made if the outstanding shares of such Preferred Stock are combined or
consolidated in the same manner and at the same time and ratio as the
outstanding shares of Common Stock.
(2) DISTRIBUTION OTHER THAN CASH DIVIDENDS OUT
OF RETAINED EARNINGS. In case the Corporation shall declare a cash dividend upon
its Common Stock payable otherwise than out of retained earnings or shall
distribute to holders of its Common Stock shares of its capital stock (other
than Common Stock), stock or other securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding cash
dividends) or options or rights (excluding options to purchase and rights to
subscribe for Common Stock or other securities of the Corporation convertible
into or exchangeable for Common Stock), then, in each such case, the holders of
shares of a series of Preferred Stock shall, concurrently with the distribution
to holders of Common Stock, receive a like distribution based upon the number of
shares of Common Stock into which the shares of such series of Preferred Stock
then held by each such holder is then convertible.
(3) RECLASSIFICATIONS. In the case, at any time
after the date thereof, of any capital reorganization or any reclassification of
the stock of the Corporation (other than as a result of a stock dividend or
subdivision, split-up or combination of shares), or the consolidation or merger
of the Corporation with or into another person (other than a consolidation or
merger in which the Corporation is the continuing entity and which does not
result in any change in the Common Stock or which is treated as a liquidation
pursuant to Section 2(d)), or of the sale or other disposition of all or
substantially all the properties and assets of the Corporation, the shares of
the Preferred Stock shall, after such reorganization, reclassification,
consolidation, merger, sale or other disposition, be convertible into the kind
and number of shares of stock or other securities or property of the Corporation
or otherwise to which such holder would have been entitled if immediately prior
to such reorganization, reclassification, consolidation, merger, sale or other
disposition he had converted his shares of the Preferred Stock into Common
Stock. The provisions of this clause 4(c)(vi)(3) shall similarly
<PAGE> 13
apply to successive reorganizations, reclassifications, consolidations, mergers,
sales or other dispositions.
(d) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of each
adjustment or readjustment of the Conversion Price of any series of Preferred
Stock pursuant to this Section 4, the Corporation at its expense shall promptly
compute such adjustment or readjustment in accordance with the terms hereof and
furnish to each holder of such Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Price of the Series A, Series B, Series C
or Series D Preferred Stock at the time in effect, and (iii) the number of
shares of Common Stock and the amount, if any, of other property which at the
time would be received by such holder upon the conversion of the Series A,
Series B, Series C or Series D Preferred Stock.
(e) STATUS OF CONVERTED STOCK. In case any shares of Preferred
Stock shall be converted pursuant to this Section 4 hereof, the shares of
Preferred Stock so converted shall be canceled, shall not be reissuable and
shall cease to be a part of the authorized capital stock of the Corporation.
(f) FRACTIONAL SHARES. In lieu of any fractional shares to which
the holder of Preferred Stock would otherwise be entitled upon conversion, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value of one share of Common Stock as determined by the Board. The number of
whole shares issuable to each holder upon such conversion shall be determined on
the basis of the number of shares of Common Stock issuable upon conversion of
the total number of shares of a series of Preferred Stock held by such holder at
the time of converting into Common Stock.
(g) MISCELLANEOUS.
(i) All calculations under this Section 4 shall be made
to the nearest cent or to the nearest one hundredth (1/100) of a share, as the
case may be.
(ii) No adjustment in the Conversion Price of a series
of Preferred Stock need be made if such adjustment would result in a change in
such Conversion Price of less than $0.01. Any adjustment of less than $0.01
which is not made shall be carried forward and shall be made at the time of and
together with any subsequent adjustment which, on a cumulative basis, amounts to
an adjustment of $0.01 or more in such Conversion Price.
(h) NO IMPAIRMENT. The Corporation will not through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance of performance of any of the terms to be observed
or performed hereunder by the Corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this Section 4 and in the
taking of all such
<PAGE> 14
action as may be necessary or appropriate in order to protect the Conversion
Rights of the holders of Preferred Stock against impairment.
(i) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of Preferred Stock, such number of its shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Preferred Stock. If at any time the number of authorized
but unissued shares of Common Stock shall not be sufficient to effect the
conversion of all then-outstanding shares of Preferred Stock, the Corporation
will take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.
5. VOTING RIGHTS. Except as otherwise required by law or by Section 8
hereof and subject to the provisions of Sections 5(a), 5(b) and 5(c) below, the
holder of each share of Common Stock issued and outstanding shall have one vote,
and the holder of each share of Preferred Stock issued and outstanding shall be
entitled to the number of votes equal to the number of shares of Common Stock
into which such share of Preferred Stock could be converted at the record date
for determination of the shareholders entitled to vote on such matters, or, if
no such record date is established, at the date such vote is taken or any
written consent of shareholders is solicited, such votes to be counted together
with all other shares of stock of the Corporation having general voting power
and not separately as a class. Fractional votes by the holders of Preferred
Stock shall not, however, be permitted, and any fractional voting rights shall
(after aggregating all shares into which shares of Preferred Stock held by each
holder could be converted) be rounded to the nearest whole number.
(a) At each annual election of directors of the Corporation, the
holders of the Preferred Stock shall be entitled, voting as a single class, to
elect two (2) directors of the Corporation. In the case of any vacancy in the
office of a director elected by the holders of the Preferred Stock, a successor
shall be elected to hold office for the unexpired term of such director by the
affirmative vote of the holders of a majority of the Preferred Stock, voting as
a single class, given at a special meeting of such shareholders duly called for
that purpose or by the unanimous written consent of such shareholders. Any
director who shall have been elected by the holders of the Preferred Stock may
appoint a director to serve as such until the holders of the Preferred Stock
duly elect a successor director. Any director who shall have been elected by the
holders of the Preferred Stock may be removed during the aforesaid term of
office, either for or without cause, by, and only by, the affirmative vote of
the holders of that percentage of the Preferred Stock required by Section 141(k)
of the Delaware General Corporation Law, given at a special meeting of such
shareholders duly called for that purpose or by the unanimous written consent of
such shareholders, and any such vacancy thereby created may be filled by the
holders of a majority of the Preferred Stock represented at such meeting or by
such unanimous written consent.
(b) At each annual election of directors of the Corporation, the
holders of the Common Stock shall be entitled, voting as a single class, to
elect two (2) directors of the Corporation. In the case of any vacancy in the
office of a director elected by the holders of the
<PAGE> 15
Common Stock, a successor shall be elected to hold office for the unexpired term
of such director by the affirmative vote of the holders of a majority of the
Common Stock, voting as a single class, given at a special meeting of such
shareholders duly called for that purpose or by the unanimous written consent of
such shareholders. Any director who shall have been elected by the holders of
the Common Stock may appoint a director to serve as such until the holders of
the Common Stock duly elect a successor director. Any director who shall have
been elected by the holders of the Common Stock may be removed during the
aforesaid term of office, either for or without cause, by, and only by, the
affirmative vote of the holders of that percentage of the Common Stock required
by Section 141(k) of the Delaware General Corporation Law, given at a special
meeting of such shareholders duly called for that purpose or by the unanimous
written consent of such shareholders, and any such vacancy thereby created may
be filled by the holders of a majority of the Common Stock represented at such
meeting or by such unanimous written consent.
(c) At each annual election of directors of the Corporation, the
holders of the Preferred Stock and Common Stock shall be entitled, voting as a
single class, to elect two (2) directors of the Corporation. In the case of any
vacancy in the office of a director elected by the holders of the Preferred
Stock and Common Stock, a successor shall be elected to hold office for the
unexpired term of such director by the affirmative vote of the holders of a
majority of the Preferred Stock and Common Stock, voting as a single class,
given at a special meeting of such shareholders duly called for that purpose or
by the unanimous written consent of such shareholders. Any director who shall
have been elected by the holders of the Preferred Stock and Common Stock voting
together as a single class, may appoint a director to serve as such until the
holders of the Preferred Stock and Common Stock voting together as a single
class, duly elect a successor director. Any director who shall have been elected
by the holders of the Preferred Stock and Common Stock voting together as a
single class, may be removed during the aforesaid term of office, either for or
without cause, by, and only by, the affirmative vote of the holders of that
percentage of the Preferred Stock and Common Stock required by Section 141(k) of
the Delaware General Corporation Law, given at a special meeting of such
shareholders duly called for that purpose or by the unanimous written consent of
such shareholders, and any such vacancy thereby created may be filled by the
holders of a majority of the Preferred Stock and Common Stock voting together as
a single class, represented at such meeting or by such unanimous written
consent.
6. NOTICES OF RECORD DATE. In the event of any taking by the Corporation
of any action enumerated in Section 8 hereof or of a record of the holders of
any class of securities for the purpose of determining the holders thereof who
are entitled to receive any dividend (other than a cash dividend) or other
distribution, any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities or property, or to receive
any other right, the Corporation shall mail to each holder of Preferred Stock,
at least thirty (30) days prior to the date specified therein, a notice
specifying the date on which any such record is to be taken from the purpose of
such dividend, distribution or right, and the amount and character of such
dividend, distribution or right.
7. NOTICES. Any notice required by the provisions of the Certificate to
be given to the holders of Preferred Stock shall be deemed given when deposited
in the United States mail,
<PAGE> 16
postage prepaid, and addressed to each holder of record at his or her address
appearing on the books of this Corporation.
8. PROTECTIVE PROVISIONS.
(a) So long as any shares of Preferred Stock are outstanding,
the Corporation shall not, without first obtaining the approval of the holders
of a majority of the then-outstanding shares of such Preferred Stock, voting as
a separate class, take any action that:
(i) alters, amends or changes the rights, preferences or
privileges of the Preferred Stock in any manner that is materially adverse to
the holders thereof;
(ii) increases the authorized number of directors of the
Corporation to a number greater than six;
(iii) results in the consolidation or merger with or
into any other corporation or the sale of all or substantially all of the assets
of this Corporation (or any series of related transactions resulting in the sale
or other transfer of all or substantially all of the assets of this Corporation)
unless the shareholders of this Corporation immediately prior to any such
transaction are holders of a majority of the voting securities of the surviving
or acquiring corporation immediately thereafter (and for purposes of this
calculation equity securities which any shareholder or the Corporation owned
immediately prior to such merger or consolidation as a shareholder of another
party to the transactions shall be disregarded);
(iv) creates any new class of shares that has a
preference over or is on a parity with any series of Preferred Stock with
respect to voting, dividends or liquidation preferences;
(v) increases the authorized number of shares of the
capital stock of the Corporation;
(vi) repurchase any share or shares of Common Stock;
provided however, that this restriction shall not apply to the repurchase of
shares of Common Stock from employees, officers, directors, consultants or other
persons performing services for the Corporation pursuant to agreements under
which the Corporation has the option to repurchase such shares at cost upon the
occurrence of certain events, such as the termination of employment; or
(vii) perform any act which would result in taxation of
the holders of shares of Preferred Stock under Section 305 of the Internal
Revenue Code of 1986, as amended.
(b) So long as any shares of Series C Preferred Stock are
outstanding, the Corporation shall not, without first obtaining the approval of
the holders of two-thirds (2/3) of the then-outstanding shares of Series C
Preferred Stock, voting as a separate class, take any action that:
<PAGE> 17
(i) alters the rights, preferences or privileges of the
Series C Preferred Stock in any manner that is materially adverse to the holders
thereof;
(ii) results in the consolidation or merger with or into
any other corporation or the sale of all or substantially all of the assets of
this Corporation (or any series of related transactions resulting in the sale or
other transfer of all or substantially all of the assets of this Corporation)
unless the shareholders of this Corporation immediately prior to any such
transaction are holders of a majority of the voting securities of the surviving
or acquiring corporation immediately thereafter (and for purposes of this
calculation equity securities which any shareholder or the Corporation owned
immediately prior to such merger or consolidation as a shareholder of another
party to the transactions shall be disregarded) or unless the holders of Series
C Preferred Stock receive consideration valued at or greater than Four Dollars
($4.00) pursuant to Section 2(e) hereof for each share of Series C Preferred
Stock held by each such holder (as adjusted for any Recapitalizations with
respect to the Series C Preferred Stock); or
(iii) amends the automatic conversion provisions set
forth in Section 4(b) hereof.
9. [INTENTIONALLY OMITTED]
C. COMMON STOCK.
1. DIVIDEND RIGHTS. Subject to the prior rights of holders of all
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board, out of any assets of the Corporation legally available
therefor, such dividends as may be declared from time to time by the Board.
2. LIQUIDATION RIGHTS. Upon the liquidation, dissolution or winding up
of the Corporation, the assets of the Corporation shall be distributed as
provided in Section 2 of Article IV(B).
3. MERGER OR SALE OF ASSETS. Upon the merger of the Corporation with or
into any other corporation or other entity or person, or any other corporate
reorganization in which the Corporation shall not be the continuing or surviving
entity of such transactions, or any transaction or series of related
transactions of the Corporation in which in excess of 50% of the Corporation's
voting power is transferred, or a sale of all or substantially all of the assets
of the Corporation, the holders of the Common Stock shall participate in such
transaction as provided in Section 2 of this Article IV(B).
4. REDEMPTION. The Common Stock is not redeemable as a matter of right
by any holder thereof.
5. VOTING RIGHTS. The holder of each share of Common Stock shall have
the right to one vote, and shall be entitled to notice of any shareholders'
meeting in accordance with the Bylaws of this Corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.
<PAGE> 18
ARTICLE V
The name and mailing address of the sole incorporator is as follows:
Name Mailing Address
Janet S. Herman c/o Morrison & Foerster, LLP
755 Page Mill Road
Palo Alto, CA 94304-1018
ARTICLE VI
The Corporation is to have perpetual existence.
ARTICLE VII
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
ARTICLE VIII
For the management of the business and for the conduct of the affairs of
the Corporation, and in further definition, limitation, and regulation of the
powers of the Corporation and of its directors and of its stockholders or any
class thereof, as the case may be, it is further provided:
The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed by, or in the
manner provided in, the Bylaws. The phrase "whole Board" and the phrase "total
number of directors" shall be deemed to have the same
<PAGE> 19
meaning, to wit, the total number of directors which the Corporation would have
if there were no vacancies. No election of directors need be by written ballot.
After the original or other Bylaws of the Corporation have been adopted,
amended, or repealed, as the case may be, in accordance with the provisions of
Section 109 of the General Corporation Law of the State of Delaware, and, after
the Corporation has received any payment for any of its stock, the power to
adopt, amend, or repeal the Bylaws of the Corporation may be exercised by the
Board of directors of the Corporation; provided, however, that any provision for
the classification of directors of the Corporation for staggered terms pursuant
to the provisions of subsection (d) of Section 141 of the General Corporation
Law of the State of Delaware shall be set forth in an initial Bylaw adopted by
the stockholders entitled to vote of the Corporation unless provisions for such
classification shall be set forth in this Certificate of Incorporation.
Whenever the Corporation shall be authorized to issue only one class of
stock, each outstanding share shall entitle the holder thereof to notice of, and
the right to vote at, any meeting of stockholders. Whenever the Corporation
shall be authorized to issue more than one class of stock, no outstanding share
of any class of stock which is denied voting power under the provisions of the
Certificate of Incorporation shall entitle the holder thereto to the right to
vote any meeting of stockholders except as the provisions of paragraph (2) of
subsection (b) of Section 242 of the General Corporation Law of the State of
Delaware shall otherwise require; provided, that no share of any such class
which is otherwise denied voting power shall entitle the holder thereof to vote
upon the increase or decrease in the number of authorized shares of said class.
ARTICLE IX
The personal liability of the directors of the Corporation is hereby
eliminated to the fullest extent permitted by the provisions of Paragraph (7) of
subsection (b) of Section 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented.
ARTICLE X
The Corporation shall, to the fullest extent permitted by the provisions
of Section 145 of the General Corporation Law of the State of Delaware, as the
same may be amended and supplemented, indemnify any and all persons whom it
shall have power to indemnify under said section from and against any and all of
the expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such person.
<PAGE> 20
ARTICLE XI
From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by this
Certificate of Incorporation are granted subject to the provisions of this
Article XI.
The undersigned, as the incorporator hereinbefore named, for the purpose
of forming a corporation pursuant to the General Law of the State of Delaware,
makes this certificate, hereby declaring and certifying that this act and deed
and the facts herein stated are true, and accordingly, have hereunto set may
hand this 4th day of March, 1999.
/s/ JANET S. HERMAN
------------------------------------
Janet S. Herman,
Sole Incorporator
<PAGE> 1
EXHIBIT 3.2
FORM OF
INFORMATICA CORPORATION
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
INFORMATICA CORPORATION, a corporation organized and existing under
the laws of the State of Delaware, hereby certify as follows:
1. The name of the corporation is Informatica Corporation. The
original Certificate of Incorporation was filed with the Secretary of State of
the State of Delaware on March 4, 1999, and the corporation's original name at
the time the Certificate of Incorporation was filed was Informatica
Corporation-Delaware.
2. Pursuant to Section 242 and 245 of the General Corporation Law of
the State of Delaware, this Amended and Restated Certificate of Incorporation
restates and integrates and further amends the provisions of this corporation's
Certificate of Incorporation.
3. The terms and provisions of this Amended and Restated Certificate
of Incorporation have been duly approved by vote of the required number of
shares of outstanding stock of this corporation pursuant to Subsection 242 of
the General Corporation Laws of the State of Delaware.
4. The text of the Amended and Restated Certificate of Incorporation
is as hereby restated and further amended to read in its entirety as set forth
in Exhibit A attached hereto.
IN WITNESS WHEREOF, this Amended and Restated Certificate of
Incorporation has been signed this _____ day of April, 1999.
INFORMATICA CORPORATION
-------------------------------------------
Gaurav S. Dhillon, Chief Executive
Officer and Secretary
-------------------------------------------
Diaz H. Nesamoney, President
<PAGE> 2
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
INFORMATICA CORPORATION
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of the
State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code and the
acts amendatory thereof and supplemental thereto, and know, identified, and
referred to as the "General Corporation Law of the State of Delaware"), hereby
certifies that:
ARTICLE I
The name of the Corporation is Informatica Corporation (hereinafter
called the "Corporation").
ARTICLE II
The address, including street, number, city, and county, of the
registered office of the Corporation in the State of Delaware is 1209 Orange
Street, City of Wilmington, County of New Castle, DE 19801. The name of its
registered agent at such address is The Corporation Trust Company.
ARTICLE III
The nature of the business and the purposes to be conducted and
promoted by the Corporation shall be: To conduct any lawful business, to promote
any lawful purpose, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
ARTICLE IV
This Corporation is authorized to issue two classes of shares to be
designated, respectively, "Common Stock" with a par value of $0.001 per share
("Common Stock") and "and "Preferred Stock." with a par value of $0.001 per
share ("Preferred Stock"). The total number of shares which the Corporation is
authorized to issue is One Hundred Two Million (102,000,000)
1
<PAGE> 3
shares, of which One Hundred Million (100,000,000) shares shall be Common Stock
and Two Million (2,000,000) shares shall be Preferred Stock.
The Preferred Stock authorized by this Amended and Restated
Certificate of Incorporation may be issued from time to time in one or more
series. Subject to applicable protective voting rights which have been or may be
granted to the Preferred Stock, the Board of Directors is authorized to
determine or alter any or all of the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued series of Preferred
Stock, and to fix, alter or reduce the number of shares comprising any such
series (but not below the number of such shares outstanding for any such series)
and the designation thereof, or any of them, and to provide for rights and terms
of redemption or conversion of the shares of any such series.
ARTICLE V
The Corporation is to have perpetual existence.
ARTICLE VI
Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof, or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs. If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.
ARTICLE VII
For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation, and
regulation of the powers of the Corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed by, or in the
manner provided in, the Bylaws. The
2
<PAGE> 4
phrase "whole Board" and the phrase "total number of directors" shall be deemed
to have the same meaning, to wit, the total number of directors which the
Corporation would have if there were no vacancies. No election of directors need
be by written ballot.
After the original or other Bylaws of the Corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
provisions of Section 109 of the General Corporation Law of the State of
Delaware, and, after the Corporation has received any payment for any of its
stock, the power to adopt, amend, or repeal the Bylaws of the Corporation may be
exercised by the Board of directors of the Corporation; provided, however, that
any provision for the classification of directors of the Corporation for
staggered terms pursuant to the provisions of subsection (d) of Section 141 of
the General Corporation Law of the State of Delaware shall be set forth in an
initial Bylaw adopted by the stockholders entitled to vote of the Corporation
unless provisions for such classification shall be set forth in this Certificate
of Incorporation.
Whenever the Corporation shall be authorized to issue only one class
of stock, each outstanding share shall entitle the holder thereof to notice of,
and the right to vote at, any meeting of stockholders. Whenever the Corporation
shall be authorized to issue more than one class of stock, no outstanding share
of any class of stock which is denied voting power under the provisions of the
Certificate of Incorporation shall entitle the holder thereto to the right to
vote any meeting of stockholders except as the provisions of paragraph (2) of
subsection (b) of Section 242 of the General Corporation Law of the State of
Delaware shall otherwise require; provided, that no share of any such class
which is otherwise denied voting power shall entitle the holder thereof to vote
upon the increase or decrease in the number of authorized shares of said class.
ARTICLE VIII
The personal liability of the directors of the Corporation is hereby
eliminated to the fullest extent permitted by the provisions of Paragraph (7) of
subsection (b) of Section 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented.
ARTICLE IX
The Corporation shall, to the fullest extent permitted by the
provisions of Section 145 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented, indemnify any and all
persons whom it shall have power to indemnify under said section from and
against any and all of the expenses, liabilities, or other matters referred to
in or covered by said section, and the indemnification provided for herein shall
not be deemed exclusive of any other rights to which those indemnified may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director, officer, employee, or agent and shall
inure to the benefit of the heirs, executors, and administrators of such person.
3
<PAGE> 5
ARTICLE X
From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by this
Certificate of Incorporation are granted subject to the provisions of this
Article X.
<PAGE> 1
EXHIBIT 3.3
AMENDED AND RESTATED
BYLAWS
OF
INFORMATICA CORPORATION
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I OFFICES....................................................................1
Section 1.1 Registered Office..........................................................1
Section 1.2 Other Offices..............................................................1
ARTICLE II STOCKHOLDERS' MEETINGS.....................................................1
Section 2.1 Place of Meetings..........................................................1
Section 2.2 Annual Meetings............................................................1
Section 2.3 Special Meetings...........................................................1
Section 2.4 Notice of Meetings.........................................................2
Section 2.5 Quorum and Voting..........................................................2
Section 2.6 Voting Rights..............................................................3
Section 2.7 Voting Procedures and Inspectors of Elections..............................4
Section 2.8 List of Stockholders.......................................................5
Section 2.9 Stockholder Proposals at Annual Meetings...................................5
Section 2.10 Nominations of Persons for Election to the Board of Directors..............6
ARTICLE III DIRECTORS..................................................................7
Section 3.1 Number and Term of Office..................................................7
Section 3.2 Powers.....................................................................8
Section 3.3 Vacancies..................................................................8
Section 3.4 Resignations and Removals..................................................8
Section 3.5 Meetings...................................................................9
Section 3.6 Quorum and Voting..........................................................9
Section 3.7 Action Without Meeting....................................................10
Section 3.8 Fees and Compensation.....................................................10
Section 3.9 Committees................................................................10
ARTICLE IV OFFICERS..................................................................11
Section 4.1 Officers Designated.......................................................11
Section 4.2 Tenure and Duties of Officers.............................................11
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE V EXECUTION OF CORPORATE INSTRUMENTS, AND VOTING OF SECURITIES
OWNED BY THE CORPORATION..................................................13
Section 5.1 Execution of Corporate Instruments........................................13
Section 5.2 Voting of Securities Owned by Corporation.................................13
ARTICLE VI SHARES OF STOCK...........................................................13
Section 6.1 Form and Execution of Certificates........................................13
Section 6.2 Lost Certificates.........................................................14
Section 6.3 Transfers.................................................................14
Section 6.4 Fixing Record Dates.......................................................14
Section 6.5 Registered Stockholders...................................................15
ARTICLE VII OTHER SECURITIES OF THE CORPORATION.......................................15
ARTICLE VIII CORPORATE SEAL............................................................16
ARTICLE IX INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS..............16
Section 9.1 Right to Indemnification..................................................16
Section 9.2 Authority to Advance Expenses.............................................17
Section 9.3 Right of Claimant to Bring Suit...........................................17
Section 9.4 Provisions Nonexclusive...................................................18
Section 9.5 Authority to Insure.......................................................18
Section 9.6 Survival of Rights........................................................18
Section 9.7 Settlement of Claims......................................................18
Section 9.8 Effect of Amendment.......................................................18
Section 9.9 Subrogation...............................................................18
Section 9.10 No Duplication of Payments................................................19
ARTICLE X NOTICES...................................................................19
ARTICLE XI AMENDMENTS................................................................20
</TABLE>
ii
<PAGE> 4
AMENDED AND RESTATED
BYLAWS
OF
INFORMATICA CORPORATION
ARTICLE I
OFFICES
SECTION 1.1 REGISTERED OFFICE.
The registered office of the Informatica Corporation (the "Corporation")
in the State of Delaware shall be in the City of Wilmington, County of New
Castle.
SECTION 1.2 OTHER OFFICES.
The corporation shall also have and maintain an office or principal
place of business at 3350 West Bayshore Road, Palo Alto, California 94303 and
may also have offices at such other places, both within and without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the corporation may require.
ARTICLE II
STOCKHOLDERS' MEETINGS
SECTION 2.1 PLACE OF MEETINGS.
Meetings of the stockholders of the corporation shall be held at such
place, either within or without the State of Delaware, as may be designated from
time to time by the Board of Directors, or, if not so designated, then at the
office of the corporation required to be maintained pursuant to Section 1.2 of
Article I hereof.
SECTION 2.2 ANNUAL MEETINGS.
The annual meetings of the stockholders of the corporation, commencing
with the year 1999, for the purpose of election of directors and for such other
business as may lawfully come before it, shall be held on such date and at such
time as may be designated from time to time by the Board of Directors.
SECTION 2.3 SPECIAL MEETINGS.
Special Meetings of the stockholders of the corporation may be called,
for any purpose or purposes, by the Chairman of the Board or the President or
the Board of Directors at any time.
<PAGE> 5
SECTION 2.4 NOTICE OF MEETINGS.
(a) Except as otherwise provided by law or the Certificate of
Incorporation, written notice of each meeting of stockholders shall be given not
less than ten nor more than sixty days before the date of the meeting to each
stockholder entitled to vote thereat, directed to his address as it appears upon
the books of the corporation; except that where the matter to be acted on is a
merger or consolidation of the Corporation or a sale, lease or exchange of all
or substantially all of its assets, such notice shall be given not less than 20
nor more than 60 days prior to such meeting. Such notice shall state the place,
date, and hour of the meeting and (a) in the case of a special meeting, the
general nature of the business to be transacted, and no other business may be
transacted, or (b) in the case of the annual meeting, those matters which the
Board of Directors, at the time of the mailing of the notice, intends to present
for action by the stockholders, and, subject to the provisions of this Section
2.4 and Section 2.9 hereof, any proper matter may be presented at the meeting
for such action. The notice of any meeting at which directors are to be elected
shall include the names of nominees intended at the time of the notice to be
presented by the Board of Directors for election.
(b) If at any meeting action is proposed to be taken which, if taken,
would entitle shareholders fulfilling the requirements of section 262(d) of the
Delaware General Corporation Law to an appraisal of the fair value of their
shares, the notice of such meeting shall contain a statement of that purpose and
to that effect and shall be accompanied by a copy of that statutory section.
(c) When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken unless the
adjournment is for more than thirty days, or unless after the adjournment a new
record date is fixed for the adjourned meeting, in which event a notice of the
adjourned meeting shall be given to each stockholder of record entitled to vote
at the meeting.
(d) Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, either before or after such meeting, and to the extent
permitted by law, will be waived by any stockholder by his attendance thereat,
in person or by proxy. Any stockholder so waiving notice of such meeting shall
be bound by the proceedings of any such meeting in all respects as if due notice
thereof had been given.
(e) Unless and until voted, every proxy shall be revocable at the
pleasure of the person who executed it or of his legal representatives or
assigns, except in those cases where an irrevocable proxy permitted by statute
has been given.
SECTION 2.5 QUORUM AND VOTING.
(a) At all meetings of stockholders, except where otherwise provided by
law, the Certificate of Incorporation, or these Bylaws, the presence, in person
or by proxy duly authorized, of the holders of a majority of the outstanding
shares of stock entitled to vote shall constitute a quorum for the transaction
of business. Shares, the voting of which at said meeting have been enjoined, or
which for any reason cannot be lawfully voted at such meeting, shall not
<PAGE> 6
be counted to determine a quorum at said meeting. In the absence of a quorum,
any meeting of stockholders may be adjourned, from time to time, by vote of the
holders of a majority of the shares represented thereat, but no other business
shall be transacted at such meeting. At such adjourned meeting at which a quorum
is present or represented any business may be transacted which might have been
transacted at the original meeting. The stockholders present at a duly called or
convened meeting, at which a quorum is present, may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
(b) Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, all action taken by the holders of a majority of
the voting power represented at any meeting at which a quorum is present shall
be valid and binding upon the corporation.
(c) Where a separate vote by a class or classes is required, a majority
of the outstanding shares of such class or classes, present in person or
represented by proxy, shall constitute a quorum entitled to take action with
respect to that vote on that matter and the affirmative vote of the majority of
shares of such class or classes present in person or represented by proxy at the
meeting shall be the act of such class.
SECTION 2.6 VOTING RIGHTS.
(a) Except as otherwise provided by law, only persons in whose names
shares entitled to vote stand on the stock records of the corporation on the
record date for determining the stockholders entitled to vote at said meeting
shall be entitled to vote at such meeting. Shares standing in the names of two
or more persons shall be voted or represented in accordance with the
determination of the majority of such persons, or, if only one of such persons
is present in person or represented by proxy, such person shall have the right
to vote such shares and such shares shall be deemed to be represented for the
purpose of determining a quorum.
(b) Every person entitled to vote or execute consents shall have the
right to do so either in person or by an agent or agents authorized by a written
proxy executed by such person or his duly authorized agent, which proxy shall be
filed with the Secretary of the corporation at or before the meeting at which it
is to be used. Said proxy so appointed need not be a stockholder. No proxy shall
be voted on after three years from its date unless the proxy provides for a
longer period.
(c) Without limiting the manner in which a stockholder may authorize
another person or persons to act for him as proxy pursuant to subsection (b) of
this section, the following shall constitute a valid means by which a
stockholder may grant such authority:
(1) A stockholder may execute a writing authorizing another
person or persons to act for him as proxy. Execution may be accomplished by the
stockholder or his authorized officer, director, employee or agent signing such
writing or causing his or her signature to be affixed to such writing by any
reasonable means including, but not limited to, by facsimile signature.
<PAGE> 7
(2) A stockholder may authorize another person or persons to act
for him as proxy by transmitting or authorizing the transmission of a telegram,
cablegram, or other means of electronic transmission to the person who will be
the holder of the proxy or to a proxy solicitation firm, proxy support service
organization or like agent duly authorized by the person who will be the holder
of the proxy to receive such transmission, provided that any such telegram,
cablegram or other means of electronic transmission must either set forth or be
submitted with information from which it can be determined that the telegram,
cablegram or other electronic transmission was authorized by the stockholder.
Such authorization can be established by the signature of the stockholder on the
proxy, either in writing or by a signature stamp or facsimile signature, or by a
number or symbol from which the identity of the stockholder can be determined,
or by any other procedure deemed appropriate by the inspectors or other persons
making the determination as to due authorization. If it is determined that such
telegrams, cablegrams or other electronic transmissions are valid, the
inspectors or, if there are no inspectors, such other persons making that
determination shall specify the information upon which they relied.
(d) Any copy, facsimile telecommunication or other reliable reproduction
of the writing or transmission created pursuant to subsection (c) of this
section may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission.
SECTION 2.7 VOTING PROCEDURES AND INSPECTORS OF ELECTIONS.
(a) The corporation shall, in advance of any meeting of stockholders,
appoint one or more inspectors to act at the meeting and make a written report
thereof. The corporation may designate one or more persons as alternate
inspectors to replace any inspector who fails to act. If no inspector or
alternate is able to act at a meeting of stockholders, the person presiding at
the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector with strict impartiality
and according to the best of his ability.
(b) The inspectors shall (i) ascertain the number of shares outstanding
and the voting power of each, (ii) determine the shares represented at a meeting
and the validity of proxies and ballots, (iii) count all votes and ballots, (iv)
determine and retain for a reasonable period a record of the disposition of any
challenges made to any determination by the inspectors, and (v) certify their
determination of the number of shares represented at the meeting, and their
count of all votes and ballots. The inspectors may appoint or retain other
persons or entities to assist the inspectors in the performance of the duties of
the inspectors.
(c) The date and time of the opening and the closing of the polls for
each matter upon which the stockholders will vote at a meeting shall be
announced at the meeting. No ballot, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the Inspectors after the
closing of the polls unless the Court of Chancery upon application by a
stockholder shall determine otherwise.
<PAGE> 8
(d) In determining the validity and counting of proxies and ballots, the
inspectors shall be limited to an examination of the proxies, any envelopes
submitted with those proxies, any information provided in accordance with
Section 212(c)(2) of the Delaware General Corporation Law, ballots and the
regular books and records of the corporation, except that the inspectors may
consider other reliable information for the limited purpose of reconciling
proxies and ballots submitted by or on behalf of banks, brokers, their nominees
or similar persons which represent more votes than the holder of a proxy is
authorized by the record owner to cast or more votes than the stockholder holds
of record. If the inspectors consider other reliable information for the limited
purpose permitted herein, the inspectors at the time they make their
certification pursuant to subsection (b)(v) of this section shall specify the
precise information considered by them including the person or persons from whom
they obtained the information, when the information was obtained, the means by
which the information was obtained and the basis for the inspectors' belief that
such information is accurate and reliable.
SECTION 2.8 LIST OF STOCKHOLDERS.
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at said meeting, arranged in
alphabetical order, showing the address of and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held and which place shall
be specified in the notice of the meeting, or, if not specified, at the place
where said meeting is to be held, and the list shall be produced and kept at the
time and place of meeting during the whole time thereof, and may be inspected by
any stockholder who is present.
SECTION 2.9 STOCKHOLDER PROPOSALS AT ANNUAL MEETINGS.
At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, otherwise properly brought before the meeting by or at the direction
of the Board of Directors or otherwise properly brought before the meeting by a
stockholder. In addition to any other applicable requirements, for business to
be properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
corporation. To be timely, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the corporation, not less
than 45 days nor more than 75 days prior to the date on which the corporation
first mailed its proxy materials for the previous year's annual meeting of
shareholders (or the date on which the corporation mails its proxy materials for
the current year if during the prior year the corporation did not hold an annual
meeting or if the date of the annual meeting was changed more than 30 days from
the prior year). A stockholder's notice to the Secretary shall set forth as to
each matter the stockholder proposes to bring before the annual meeting (i) a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual meeting, (ii)
the name and record address of the stockholder
<PAGE> 9
proposing such business, (iii) the class and number of shares of the corporation
which are beneficially owned by the stockholder, and (iv) any material interest
of the stockholder in such business.
Notwithstanding anything in these Bylaws to the contrary, no business
shall be conducted at the annual meeting except in accordance with the
procedures set forth in this Section 2.9, provided, however, that nothing in
this Section 2.9 shall be deemed to preclude discussion by any stockholder of
any business properly brought before the annual meeting in accordance with said
procedure.
The Chairman of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of this Section 2.9, and if he should
so determine he shall so declare to the meeting, and any such business not
properly brought before the meeting shall not be transacted.
Nothing in this Section 2.9 shall affect the right of a stockholder to
request inclusion of a proposal in the corporation's proxy statement to the
extent that such right is provided by an applicable rule of the Securities and
Exchange Commission.
SECTION 2.10 NOMINATIONS OF PERSONS FOR ELECTION TO THE BOARD OF DIRECTORS.
In addition to any other applicable requirements, only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors. Nominations of persons for election to the Board of
Directors of the corporation may be made at a meeting of stockholders by or at
the direction of the Board of Directors, by any nominating committee or person
appointed by the Board of Directors or by any stockholder of the corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section 2.10. Such nominations, other
than those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the corporation. To be
timely, a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation, not less than 45 days nor
more than 75 days prior to the date on which the corporation first mailed its
proxy materials for the previous year's annual meeting of shareholders (or the
date on which the corporation mails its proxy materials for the current year if
during the prior year the corporation did not hold an annual meeting or if the
date of the annual meeting was changed more than 30 days from the prior year).
Such stockholder's notice shall set forth (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, (i)
the name, age, business address and residence address of the person, (ii) the
principal occupation or employment of the person, (iii) the class and number of
shares of the corporation which are beneficially owned by the person, and (iv)
any other information relating to the person that is required to be disclosed in
solicitations for proxies for election of directors pursuant to Rule 14a under
the Securities Exchange Act of 1934; and (b) as to the stockholder giving the
notice, (i) the name and record address of the stockholder, and (ii) the class
and number of shares of the corporation which are beneficially owned by the
stockholder. The corporation may require any proposed nominee to furnish such
other information as may reasonably be required by the corporation to determine
the eligibility of such proposed nominee to serve as a director of the
corporation. No person shall be
<PAGE> 10
eligible for election as a director of the corporation unless nominated in
accordance with the procedures set forth herein. These provisions shall not
apply to nomination of any persons entitled to be separately elected by holders
of preferred stock.
The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting and the defective nomination shall be disregarded.
ARTICLE III
DIRECTORS
SECTION 3.1 NUMBER AND TERM OF OFFICE.
The number of directors which shall constitute the whole of the Board of
Directors shall be six (6). With the exception of the first Board of Directors,
which shall be elected by the incorporators, and except as provided in Section
3.3 of this Article III, the directors shall be elected by a plurality vote of
the shares represented in person or by proxy, at the stockholders annual meeting
in each year and entitled to vote on the election of directors. Elected
directors shall hold office until the next annual meeting and until their
successors shall be duly elected and qualified. Directors need not be
stockholders. If, for any cause, the Board of Directors shall not have been
elected at an annual meeting, they may be elected as soon thereafter as
convenient at a special meeting of the stockholders called for that purpose in
the manner provided in these Bylaws.
At the first annual meeting of stockholder after becoming eligible
according to Delaware General Corporate Law to have a classified board, the
Corporation shall divide its Board of Directors into three classes, designated
Class I, Class II, and Class III, as nearly equal in number as the then total
number of directors permits. At such annual meeting of stockholders, Class I
directors shall be elected for a one-year term, Class II directors for a
two-year term and Class III directors for a three-year term. At each annual
meeting of stockholders thereafter, successors to the class of directors whose
terms expires at that annual meeting shall be elected for a three-year term. If
the number of directors is changed, any increase or decrease shall be
apportioned among the classes so as to maintain the number of directors in each
class as nearly equal as possible, and any additional directors of any class
elected to fill a vacancy resulting from an increase in such class shall hold
office for a term that shall coincide with the remaining term of that class, but
in no case will a decrease in the number of directors shorten the term of any
incumbent director. Notwithstanding the foregoing, whenever the holders of any
one or more classes or series of Preferred Stock issued by the Corporation shall
have the right, voting separately by class or series, to elect directors at an
annual or special meeting of stockholders, the election, term of office, filling
of vacancies and other features of such directorships shall be governed by the
terms of these Bylaws applicable thereto, and such directors so elected shall
not be divided into classes pursuant to this Section 3.1 unless expressly
provided by such terms.
<PAGE> 11
Any amendment, change or repeal of this Section 3.1, or any other
amendment to these Bylaws that will have the effect of permitting circumvention
of or modifying this Section 3.1, shall require the favorable vote, at a
stockholders' meeting, of the holders of at least 80% of the then-outstanding
shares of stock of the Corporation entitled to vote.
With the exception of the first Board of Directors, which shall be
elected by the incorporators, and except as provided in Section 3.3 of this
Article III, the directors shall be elected by a plurality vote of the shares
represented in person or by proxy, at the stockholders annual meeting in each
year and entitled to vote on the election of directors. Elected directors shall
hold office until the next annual meeting for the years in which their terms
expire and until their successors shall be duly elected and qualified. Directors
need not be stockholders. If, for any cause, the Board of Directors shall not
have been elected at an annual meeting, they may be elected as soon thereafter
as convenient at a special meeting of the stockholders called for that purpose
in the manner provided in these Bylaws.
SECTION 3.2 POWERS.
The powers of the corporation shall be exercised, its business conducted
and its property controlled by or under the direction of the Board of Directors.
SECTION 3.3 VACANCIES.
Vacancies and newly created directorships resulting from any increase in
the authorized number of directors may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director,
and each director so elected shall hold office for the unexpired portion of the
term of the director whose place shall be vacant, and until his successor shall
have been duly elected and qualified. A vacancy in the Board of Directors shall
be deemed to exist under this section in the case of the death, removal or
resignation of any director, or if the stockholders fail at any meeting of
stockholders at which directors are to be elected (including any meeting
referred to in Section 3.4 below) to elect the number of directors then
constituting the whole Board.
SECTION 3.4 RESIGNATIONS AND REMOVALS.
(a) Any director may resign at any time by delivering his written
resignation to the Secretary, such resignation to specify whether it will be
effective at a particular time, upon receipt by the Secretary or at the pleasure
of the Board of Directors. If no such specification is made it shall be deemed
effective at the pleasure of the Board of Directors. When one or more directors
shall resign from the Board, effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have power
to fill such vacancy or vacancies, the vote thereon to take effect when such
resignation or resignations shall become effective, and each director so chosen
shall hold office for the unexpired portion of the term of the director whose
place shall be vacated and until his successor shall have been duly elected and
qualified.
(b) At a special meeting of stockholders called for the purpose in the
manner hereinabove provided, the Board of Directors, or any individual director,
may be removed from
<PAGE> 12
office, with or without cause, and a new director or directors elected by a vote
of stockholders holding a majority of the outstanding shares entitled to vote at
an election of directors.
SECTION 3.5 MEETINGS.
(a) The annual meeting of the Board of Directors shall be held
immediately after the annual stockholders' meeting and at the place where such
meeting is held or at the place announced by the Chairman at such meeting. No
notice of an annual meeting of the Board of Directors shall be necessary and
such meeting shall be held for the purpose of electing officers and transacting
such other business as may lawfully come before it.
(b) Except as hereinafter otherwise provided, regular meetings of the
Board of Directors shall be held in the office of the corporation required to be
maintained pursuant to Section 1.2 of Article I hereof. Regular meetings of the
Board of Directors may also be held at any place within or without the State of
Delaware which has been designated by resolutions of the Board of Directors or
the written consent of all directors.
(c) Special meetings of the Board of Directors may be held at any time
and place within or without the State of Delaware whenever called by the
Chairman of the Board or, if there is no Chairman of the Board, by the
President, or by any of the directors.
(d) Written notice of the time and place of all regular and special
meetings of the Board of Directors shall be delivered personally to each
director or sent by telegram or facsimile transmission at least 48 hours before
the start of the meeting, or sent by first class mail at least 120 hours before
the start of the meeting. Notice of any meeting may be waived in writing at any
time before or after the meeting and will be waived by any director by
attendance thereat.
SECTION 3.6 QUORUM AND VOTING.
(a) A quorum of the Board of Directors shall consist of a majority of
the exact number of directors fixed from time to time in accordance with Section
3.1 of Article III of these Bylaws, but not less than one; provided, however, at
any meeting whether a quorum be present or otherwise, a majority of the
directors present may adjourn from time to time until the time fixed for the
next regular meeting of the Board of Directors, without notice other than by
announcement at the meeting.
(b) At each meeting of the Board at which a quorum is present all
questions and business shall be determined by a vote of a majority of the
directors present, unless a different vote be required by law, the Certificate
of Incorporation, or these Bylaws.
(c) Any member of the Board of Directors, or of any committee thereof,
may participate in a meeting by means of conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by such means shall
constitute presence in person at such meeting.
(d) The transactions of any meeting of the Board of Directors, or any
committee thereof, however called or noticed, or wherever held, shall be as
valid as though had at a meeting
<PAGE> 13
duly held after regular call and notice, if a quorum be present and if, either
before or after the meeting, each of the directors not present shall sign a
written waiver of notice, or a consent to holding such meeting, or an approval
of the minutes thereof. All such waivers, consents or approvals shall be filed
with the corporate records or made a part of the minutes of the meeting.
SECTION 3.7 ACTION WITHOUT MEETING.
Unless otherwise restricted by the Certificate of Incorporation or these
Bylaws, any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a meeting, if all
members of the Board or of such committee, as the case may be, consent thereto
in writing, and such writing or writings are filed with the minutes of
proceedings of the Board or committee.
SECTION 3.8 FEES AND COMPENSATION.
Directors and members of committees may receive such compensation, if
any, for their services, and such reimbursement for expenses, as may be fixed or
determined by resolution of the Board of Directors.
SECTION 3.9 COMMITTEES.
(a) EXECUTIVE COMMITTEE: The Board of Directors may appoint an Executive
Committee of not less than one member, each of whom shall be a director. The
Executive Committee, to the extent permitted by law, shall have and may exercise
when the Board of Directors is not in session all powers of the Board in the
management of the business and affairs of the Corporation, except such committee
shall not have the power or authority to amend these Bylaws or to approve or
recommend to the stockholders any action which must be submitted to stockholders
for approval under the General Corporation Law.
(b) OTHER COMMITTEES: The Board of Directors may, by resolution passed
by a majority of the whole Board, from time to time appoint such other
committees as may be permitted by law. Such other committees appointed by the
Board of Directors shall have such powers and perform such duties as may be
prescribed by the resolution or resolutions creating such committee, but in no
event shall any such committee have the powers denied to the Executive Committee
in these Bylaws.
(c) TERM: The members of all committees of the Board of Directors shall
serve a term coexistent with that of the Board of Directors which shall have
appointed such committee. The Board, subject to the provisions of subsections
(a) or (b) of this Section 3.9, may at any time increase or decrease the number
of members of a committee or terminate the existence of a committee; provided,
that no committee shall consist of less than one member. The membership of a
committee member shall terminate on the date of his death or voluntary
resignation, but the Board may at any time for any reason remove any individual
committee member and the Board may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any
<PAGE> 14
meeting of the committee, and, in addition, in the absence or disqualification
of any member of a committee, the member or members thereof present at any
meeting and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in the place of any such absent or disqualified member.
(d) MEETINGS: Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive Committee or any other committee appointed
pursuant to this Section 3.9 shall be held at such times and places as are
determined by the Board of Directors, or by any such committee, and when notice
thereof has been given to each member of such committee, no further notice of
such regular meetings need be given thereafter; special meetings of any such
committee may be held at the principal office of the corporation required to be
maintained pursuant to Section 1.2 of Article I hereof; or at any place which
has been designated from time to time by resolution of such committee or by
written consent of all members thereof, and may be called by any director who is
a member of such committee, upon written notice to the members of such committee
of the time and place of such special meeting given in the manner provided for
the giving of written notice to members of the Board of Directors of the time
and place of special meetings of the Board of Directors. Notice of any special
meeting of any committee may be waived in writing at any time after the meeting
and will be waived by any director by attendance thereat. A majority of the
authorized number of members of any such committee shall constitute a quorum for
the transaction of business, and the act of a majority of those present at any
meeting at which a quorum is present shall be the act of such committee.
ARTICLE IV
OFFICERS
SECTION 4.1 OFFICERS DESIGNATED.
The officers of the corporation shall be a President, a Secretary, and a
Treasurer. The Board of Directors or the President may also appoint a Chairman
of the Board, one or more Vice Presidents, assistant secretaries, assistant
treasurers, and such other officers and agents with such powers and duties as it
or he shall deem necessary. The order of the seniority of the Vice Presidents
shall be in the order of their nomination, unless otherwise determined by the
Board of Directors. The Board of Directors may assign such additional titles to
one or more of the officers as they shall deem appropriate. Any one person may
hold any number of offices of the corporation at any one time unless
specifically prohibited therefrom by law. The salaries and other compensation of
the officers of the corporation shall be fixed by or in the manner designated by
the Board of Directors.
SECTION 4.2 TENURE AND DUTIES OF OFFICERS.
(a) GENERAL: All officers shall hold office at the pleasure of the Board
of Directors and until their successors shall have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors. If the office
of any officer becomes vacant for any reason, the vacancy may
<PAGE> 15
be filled by the Board of Directors. Nothing in these Bylaws shall be construed
as creating any kind of contractual right to employment with the corporation.
(b) DUTIES OF THE CHAIRMAN OF THE BOARD OF DIRECTORS: The Chairman of
the Board of Directors (if there be such an officer appointed) shall be the
chief executive officer of the corporation and, when present, shall preside at
all meetings of the shareholders and the Board of Directors. The Chairman of the
Board of Directors shall perform such other duties and have such other powers as
the Board of Directors shall designate from time to time.
(c) DUTIES OF PRESIDENT: The President shall be the chief executive
officer of the corporation in the absence of the Chairman of the Board and shall
preside at all meetings of the shareholders and at all meetings of the Board of
Directors, unless the Chairman of the Board of Directors has been appointed and
is present. The President shall perform such other duties and have such other
powers as the Board of Directors shall designate from time to time.
(d) DUTIES OF VICE PRESIDENTS: The Vice Presidents, in the order of
their seniority, may assume and perform the duties of the President in the
absence or disability of the President or whenever the office of the President
is vacant. The Vice President shall perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time.
(e) DUTIES OF SECRETARY: The Secretary shall attend all meetings of the
shareholders and of the Board of Directors and any committee thereof, and shall
record all acts and proceedings thereof in the minute book of the corporation.
The Secretary shall give notice, in conformity with these Bylaws, of all
meetings of the shareholders, and of all meetings of the Board of Directors and
any Committee thereof requiring notice. The Secretary shall perform such other
duties and have such other powers as the Board of Directors shall designate from
time to time. The President may direct any Assistant Secretary to assume and
perform the duties of the Secretary in the absence or disability of the
Secretary, and each Assistant Secretary shall perform such other duties and have
such other powers as the Board of Directors or the President shall designate
from time to time.
(f) DUTIES OF TREASURER: The Treasurer shall keep or cause to be kept
the books of account of the corporation in a thorough and proper manner, and
shall render statements of the financial affairs of the corporation in such form
and as often as required by the Board of Directors or the President. The
Treasurer, subject to the order of the Board of Directors, shall have the
custody of all funds and securities of the corporation. The Treasurer shall
perform all other duties commonly incident to his office and shall perform such
other duties and have such other powers as the Board of Directors or the
President shall designate from time to time. The President may direct any
Assistant Treasurer to assume and perform the duties of the Treasurer in the
absence or disability of the Treasurer, and each Assistant Treasurer shall
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time.
<PAGE> 16
ARTICLE V
EXECUTION OF CORPORATE INSTRUMENTS, AND
VOTING OF SECURITIES OWNED BY THE CORPORATION
SECTION 5.1 EXECUTION OF CORPORATE INSTRUMENTS.
(a) The Board of Directors may, in its discretion, determine the method
and designate the signatory officer or officers, or other person or persons, to
execute any corporate instrument or document, or to sign the corporate name
without limitation, except where otherwise provided by law, and such execution
or signature shall be binding upon the corporation.
(b) Unless otherwise specifically determined by the Board of Directors
or otherwise required by law, formal contracts of the corporation, promissory
notes, deeds of trust, mortgages and other evidences of indebtedness of the
corporation, and other corporate instruments or documents requiring the
corporate seal, and certificates of shares of stock owned by the corporation,
shall be executed, signed or endorsed by the Chairman of the Board (if there be
such an officer appointed) or by the President; such documents may also be
executed by any Vice President and by the Secretary or Treasurer or any
Assistant Secretary or Assistant Treasurer. All other instruments and documents
requiring the corporate signature, but not requiring the corporate seal, may be
executed as aforesaid or in such other manner as may be directed by the Board of
Directors.
(c) All checks and drafts drawn on banks or other depositaries on funds
to the credit of the corporation, or in special accounts of the corporation,
shall be signed by such person or persons as the Board of Directors shall
authorize so to do.
SECTION 5.2 VOTING OF SECURITIES OWNED BY CORPORATION.
All stock and other securities of other corporations owned or held by
the corporation for itself, or for other parties in any capacity, shall be
voted, and all proxies with respect thereto shall be executed, by the person
authorized so to do by resolution of the Board of Directors or, in the absence
of such authorization, by the Chairman of the Board (if there be such an officer
appointed), or by the President, or by any Vice President.
ARTICLE VI
SHARES OF STOCK
SECTION 6.1 FORM AND EXECUTION OF CERTIFICATES.
Certificates for the shares of stock of the corporation shall be in such
form as is consistent with the Certificate of Incorporation and applicable law.
Every holder of stock in the corporation shall be entitled to have a certificate
signed by, or in the name of the corporation by, the Chairman of the Board (if
there be such an officer appointed), or by the President or any Vice President
and by the Treasurer or Assistant Treasurer or the Secretary or Assistant
Secretary,
<PAGE> 17
certifying the number of shares owned by him in the corporation. Any or all of
the signatures on the certificate may be a facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed upon a certificate shall have ceased to be such officer, transfer
agent, or registrar before such certificate is issued, it may be issued with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue. If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate which the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the Delaware General Corporation Law, in
lieu of the foregoing requirements, there may be set forth on the face or back
of the certificate which the corporation shall issue to represent such class or
series of stock, a statement that the corporation will furnish without charge to
each stockholder who so requests the powers, designations, preferences and
relative, participating, optional or other special rights of each class of stock
or series thereof and the qualifications, limitations or restrictions of such
preferences and/or rights.
SECTION 6.2 LOST CERTIFICATES.
The Board of Directors may direct a new certificate or certificates to
be issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to indemnify the
corporation in such manner as it shall require and/or to give the corporation a
surety bond in such form and amount as it may direct as indemnity against any
claim that may be made against the corporation with respect to the certificate
alleged to have been lost or destroyed.
SECTION 6.3 TRANSFERS.
Transfers of record of shares of stock of the corporation shall be made
only upon its books by the holders thereof, in person or by attorney duly
authorized, and upon the surrender of a certificate or certificates for a like
number of shares, properly endorsed.
SECTION 6.4 FIXING RECORD DATES.
(a) In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
date is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding
<PAGE> 18
the day on which notice is given, or, if notice is waived, at the close of
business on the day next preceding the date on which the meeting is held. A
determination of stockholders of record entitled notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
(b) In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by the Delaware General Corporation Law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation by delivery to its registered office in
Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining stockholders
for any such purpose shall be at the close of business on the day on which the
Board of Directors adopts the resolution relating thereto.
SECTION 6.5 REGISTERED STOCKHOLDERS.
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends, and
to vote as such owner, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE VII
OTHER SECURITIES OF THE CORPORATION
All bonds, debentures and other corporate securities of the corporation,
other than stock certificates, may be signed by the Chairman of the Board (if
there be such an officer appointed),
<PAGE> 19
or the President or any Vice President or such other person as may be authorized
by the Board of Directors and the corporate seal impressed thereon or a
facsimile of such seal imprinted thereon and attested by the signature of the
Secretary or an Assistant Secretary, or the Treasurer or an Assistant Treasurer;
provided, however, that where any such bond, debenture or other corporate
security shall be authenticated by the manual signature of a trustee under an
indenture pursuant to which such bond, debenture or other corporate security
shall be issued, the signature of the persons signing and attesting the
corporate seal on such bond, debenture or other corporate security may be the
imprinted facsimile of the signatures of such persons. Interest coupons
appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an
Assistant Treasurer of the corporation, or such other person as may be
authorized by the Board of Directors, or bear imprinted thereon the facsimile
signature of such person. In case any officer who shall have signed or attested
any bond, debenture or other corporate security, or whose facsimile signature
shall appear thereon or before the bond, debenture or other corporate security
so signed or attested shall have been delivered, such bond, debenture or other
corporate security nevertheless may be adopted by the corporation and issued and
delivered as though the person who signed the same or whose facsimile signature
shall have been used thereon had not ceased to be such officer of the
corporation.
ARTICLE VIII
CORPORATE SEAL
The corporate seal shall consist of a die bearing the name of the
corporation and the state and date of its incorporation. Said seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.
ARTICLE IX
INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
SECTION 9.1 RIGHT TO INDEMNIFICATION.
Each person who was or is a party or is threatened to be made a party to
or is involved (as a party, witness, or otherwise), in any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter a "Proceeding"), by reason of the
fact that he, or a person of whom he is the legal representative, is or was a
director, officer, employee, or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee, or agent of
another corporation or of a partnership, joint venture, trust, or other
enterprise, including service with respect to employee benefit plans, whether
the basis of the Proceeding is alleged action in an official capacity as a
director, officer, employee, or agent or in any other capacity while serving as
a director, officer, employee, or agent (hereafter an "Agent"), shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended or interpreted (but, in the case of any such amendment or
interpretation,
<PAGE> 20
only to the extent that such amendment or interpretation permits the corporation
to provide broader indemnification rights than were permitted prior thereto)
against all expenses, liability, and loss (including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties, and amounts paid or to be paid in
settlement, and any interest, assessments, or other charges imposed thereon, and
any federal, state, local, or foreign taxes imposed on any Agent as a result of
the actual or deemed receipt of any payments under this Article) reasonably
incurred or suffered by such person in connection with investigating, defending,
being a witness in, or participating in (including on appeal), or preparing for
any of the foregoing in, any Proceeding (hereinafter "Expenses"); provided,
however, that except as to actions to enforce indemnification rights pursuant to
Section 9.3 of this Article, the corporation shall indemnify any Agent seeking
indemnification in connection with a Proceeding (or part thereof) initiated by
such person only if the Proceeding (or part thereof) was authorized by the Board
of Directors of the corporation. The right to indemnification conferred in this
Article shall be a contract right.
SECTION 9.2 AUTHORITY TO ADVANCE EXPENSES.
Expenses incurred by an officer or director (acting in his capacity as
such) in defending a Proceeding shall be paid by the corporation in advance of
the final disposition of such Proceeding, provided, however, that if required by
the Delaware General Corporation Law, as amended, such Expenses shall be
advanced only upon delivery to the corporation of an undertaking by or on behalf
of such director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Article or otherwise. Expenses incurred by other Agents of
the corporation (or by the directors or officers not acting in their capacity as
such, including service with respect to employee benefit plans) may be advanced
upon such terms and conditions as the Board of Directors deems appropriate. Any
obligation to reimburse the corporation for Expense advances shall be unsecured
and no interest shall be charged thereon.
SECTION 9.3 RIGHT OF CLAIMANT TO BRING SUIT.
If a claim under Section 9.1 or 9.2 of this Article is not paid in full
by the corporation within 90 days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense
(including attorneys' fees) of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending a Proceeding in advance of its final disposition where the
required undertaking has been tendered to the corporation) that the claimant has
not met the standards of conduct that make it permissible under the Delaware
General Corporation Law for the corporation to indemnify the claimant for the
amount claimed. The burden of proving such a defense shall be on the
corporation. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper under the circumstances because he has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant had not met
such applicable standard of conduct, shall be a
<PAGE> 21
defense to the action or create a presumption that claimant has not met the
applicable standard of conduct.
SECTION 9.4 PROVISIONS NONEXCLUSIVE.
The rights conferred on any person by this Article shall not be
exclusive of any other rights that such person may have or hereafter acquire
under any statute, provision of the Certificate of Incorporation, agreement,
vote of stockholders or disinterested directors, or otherwise, both as to action
in an official capacity and as to action in another capacity while holding such
office. To the extent that any provision of the Certificate, agreement, or vote
of the stockholders or disinterested directors is inconsistent with these
bylaws, the provision, agreement, or vote shall take precedence.
SECTION 9.5 AUTHORITY TO INSURE.
The corporation may purchase and maintain insurance to protect itself
and any Agent against any Expense, whether or not the corporation would have the
power to indemnify the Agent against such Expense under applicable law or the
provisions of this Article.
SECTION 9.6 SURVIVAL OF RIGHTS.
The rights provided by this Article shall continue as to a person who
has ceased to be an Agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
SECTION 9.7 SETTLEMENT OF CLAIMS.
The corporation shall not be liable to indemnify any Agent under this
Article (a) for any amounts paid in settlement of any action or claim effected
without the corporation's written consent, which consent shall not be
unreasonably withheld; or (b) for any judicial award if the corporation was not
given a reasonable and timely opportunity, at its expense, to participate in the
defense of such action.
SECTION 9.8 EFFECT OF AMENDMENT.
Any amendment, repeal, or modification of this Article shall not
adversely affect any right or protection of any Agent existing at the time of
such amendment, repeal, or modification.
SECTION 9.9 SUBROGATION.
In the event of payment under this Article, the corporation shall be
subrogated to the extent of such payment to all of the rights of recovery of the
Agent, who shall execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such documents
necessary to enable the corporation effectively to bring suit to enforce such
rights.
<PAGE> 22
SECTION 9.10 NO DUPLICATION OF PAYMENTS.
The corporation shall not be liable under this Article to make any
payment in connection with any claim made against the Agent to the extent the
Agent has otherwise actually received payment (under any insurance policy,
agreement, vote, or otherwise) of the amounts otherwise indemnifiable hereunder.
ARTICLE X
NOTICES
Whenever, under any provisions of these Bylaws, notice is required to be
given to any stockholder, the same shall be given in writing, timely and duly
deposited with the United States Postal Service, postage prepaid, and addressed
to his last known post office address as shown by the stock record of the
corporation or its transfer agent. Any notice required to be given to any
director may be given by the method hereinabove stated, or by telegram or other
means of electronic transmission, except that such notice other than one which
is delivered personally, shall be sent to such address or (in the case of
facsimile telecommunication) facsimile telephone number as such director shall
have filed in writing with the Secretary of the corporation, or, in the absence
of such filing, to the last known post office address of such director. If no
address of a stockholder or director be known, such notice may be sent to the
office of the corporation required to be maintained pursuant to Section 1.2 of
Article I hereof. An affidavit of mailing, executed by a duly authorized and
competent employee of the corporation or its transfer agent appointed with
respect to the class of stock affected, specifying the name and address or the
names and addresses of the stockholder or stockholders, director or directors,
to whom any such notice or notices was or were given, and the time and method of
giving the same, shall be conclusive evidence of the statements therein
contained. All notices given by mail, as above provided, shall be deemed to have
been given as at the time of mailing and all notices given by telegram or other
means of electronic transmission shall be deemed to have been given as at the
sending time recorded by the telegraph company or other electronic transmission
equipment operator transmitting the same. It shall not be necessary that the
same method of giving be employed in respect of all directors, but one
permissible method may be employed in respect of any one or more, and any other
permissible method or methods may be employed in respect of any other or others.
The period or limitation of time within which any stockholder may exercise any
option or right, or enjoy any privilege or benefit, or be required to act, or
within which any director may exercise any power or right, or enjoy any
privilege, pursuant to any notice sent him in the manner above provided, shall
not be affected or extended in any manner by the failure of such a stockholder
or such director to receive such notice. Whenever any notice is required to be
given under the provisions of the statutes or of the Certificate of
Incorporation, or of these Bylaws, a waiver thereof in writing signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent thereto. Whenever notice is required
to be given, under any provision of law or of the Certificate of Incorporation
or Bylaws of the corporation, to any person with whom communication is unlawful,
the giving of such notice to such person shall not be required and there shall
be no duty to apply to any governmental authority or agency for a license or
permit to give such notice to such person. Any
<PAGE> 23
action or meeting which shall be taken or held without notice to any such person
with whom communication is unlawful shall have the same force and effect as if
such notice had been duly given. In the event that the action taken by the
corporation is such as to require the filing of a certificate under any
provision of the Delaware General Corporation Law, the certificate shall state,
if such is the fact and if notice is required, that notice was given to all
persons entitled to receive notice except such persons with whom communication
is unlawful.
ARTICLE XI
AMENDMENTS
These Bylaws may be repealed, altered or amended or new Bylaws adopted
by written consent of stockholders in the manner authorized by Section 2.11 of
Article II, or at any meeting of the stockholders, either annual or special, by
the affirmative vote of a majority of the stock entitled to vote at such
meeting, unless a larger vote is required by these Bylaws or the Certificate of
Incorporation. The Board of Directors shall also have the authority to repeal,
alter or amend these Bylaws or adopt new Bylaws (including, without limitation,
the amendment of any Bylaws setting forth the number of directors who shall
constitute the whole Board of Directors) by unanimous written consent or at any
annual, regular, or special meeting by the affirmative vote of a majority of the
whole number of directors, subject to the power of the stockholders to change or
repeal such Bylaws and provided that the Board of Directors shall not make or
alter any Bylaws fixing the qualifications, classifications, or term of office
of directors.
<PAGE> 1
[LETTERHEAD OF MORRISON & FOERSTER LLP]
Exhibit 5.1
April 7, 1999
Informatica Corporation
3350 W. Bayshore Road
Palo Alto, CA 94303
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-1 initially filed by
Informatica Corporation, a California corporation (the "Company"), with the
Securities and Exchange Commission on February 19, 1999 (Registration No.
333-72677) and Amendment No. 1 thereto filed on April 7, 1999, respectively
(collectively the "Registration Statement"), relating to the registration under
the Securities Act of 1933, as amended, of up to 2,600,000 authorized but
unissued shares of the Company's Common Stock, $0.001 par value per share (the
"Shares"), being offered by the Company (including up to 340,000 shares that may
be issued upon exercise of the underwriters' over-allotment option). The Shares
are to be sold to the underwriters named in the Registration Statement for
resale to the public.
As counsel to the Company, we have examined the proceedings taken by the
Company in connection with the issuance and sale by the Company of up to
2,600,000 Shares.
We are of the opinion that the Shares to be offered and sold by the
Company have been duly authorized and, when issued and sold by the Company in
the manner described in the Registration Statement and in accordance with the
resolutions adopted by the Board of Directors of the Company, will be legally
issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us in the Registration
Statement, the prospectus constituting a part thereof and any amendments
thereto.
Very truly yours,
/s/ Morrison & Foerster LLP
<PAGE> 1
EXHIBIT 10.6
FORM OF
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is entered into, effective as of _______________,
1999, by and between Informatica Corporation, a Delaware corporation (the
"Company"), and _____________________ ("Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as
directors and officers the most capable persons available;
WHEREAS, Indemnitee is a director and/or officer of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims currently being asserted against directors
and officers of corporations;
WHEREAS, the Certificate of Incorporation and Bylaws of the
Company require the Company to indemnify and advance expenses to its directors
and officers to the fullest extent permitted under Delaware law, and the
Indemnitee has been serving and continues to serve as a director and/or officer
of the Company in part in reliance on the Company's Certificate of Incorporation
and Bylaws; and
WHEREAS, in recognition of Indemnitee's need for (i) substantial
protection against personal liability based on Indemnitee's reliance on the
aforesaid Certificate of Incorporation and Bylaws, (ii) specific contractual
assurance that the protection promised by the Certificate of Incorporation and
Bylaws will be available to Indemnitee (regardless of, among other things, any
amendment to or revocation of the Certificate of Incorporation and Bylaws or any
change in the composition of the Company's Board of Directors or acquisition
transaction relating to the Company), and (iii) an inducement to provide
effective services to the Company as a director and/or officer, the Company
wishes to provide in this Agreement for the indemnification of and the advancing
of expenses to Indemnitee to the fullest extent (whether partial or complete)
permitted under Delaware law and as set forth in this Agreement, and, to the
extent insurance is maintained, to provide for the continued coverage of
Indemnitee under the Company's directors' and officers' liability insurance
policies.
NOW, THEREFORE, in consideration of the above premises and of
Indemnitee continuing to serve the Company directly or, at its request, with
another enterprise, and intending to be legally bound hereby, the parties agree
as follows:
<PAGE> 2
1. Certain Definitions:
(a) Board: the Board of Directors of the Company.
(b) Affiliate: any corporation or other person or entity
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the person specified.
(c) Change in Control: shall be deemed to have occurred if
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))(other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of stock of
the Company, and other than any person holding shares of the Company on the date
that the Company first registers under the Act or any transferee of such
individual if such transferee is a spouse or lineal descendant of the transferee
or a trust for the benefit of the individual, his spouse or lineal descendants),
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
30% or more of the total voting power represented by the Company's then
outstanding Voting Securities, or (ii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board and
any new director whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority of the Board, or (iii)
the stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation that would
result in the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 80% of the
total voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation, or
(iv) the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company (in one
transaction or a series of transactions) of all or substantially all of the
Company's assets.
(d) Expenses: any expense, liability, or loss, including
attorneys' fees, judgments, fines, ERISA excise taxes and penalties, amounts
paid or to be paid in settlement, any interest, assessments, or other charges
imposed thereon, any federal, state, local, or foreign taxes imposed as a result
of the actual or deemed receipt of any payments under this Agreement, and all
other costs and obligations, paid or incurred in connection with investigating,
defending, being a witness in, participating in (including on appeal), or
preparing for any of the foregoing in, any Proceeding relating to any
Indemnifiable Event.
(e) Indemnifiable Event: any event or occurrence that
takes place either prior to or after the execution of this Agreement, related to
the fact that Indemnitee is or was a director or officer of the Company, or
while a director or officer is or was serving at the
2
<PAGE> 3
request of the Company as a director, officer, employee, trustee, agent, or
fiduciary of another foreign or domestic corporation, partnership, joint
venture, employee benefit plan, trust, or other enterprise, or was a director,
officer, employee, or agent of a foreign or domestic corporation that was a
predecessor corporation of the Company or of another enterprise at the request
of such predecessor corporation, or related to anything done or not done by
Indemnitee in any such capacity, whether or not the basis of the Proceeding is
alleged action in an official capacity as a director, officer, employee, or
agent or in any other capacity while serving as a director, officer, employee,
or agent of the Company, as described above.
(f) Independent Counsel: the person or body appointed in
connection with Section 3.
(g) Proceeding: any threatened, pending, or completed
action, suit, or proceeding (including an action by or in the right of the
Company), or any inquiry, hearing, or investigation, whether conducted by the
Company or any other party, that Indemnitee in good faith believes might lead to
the institution of any such action, suit, or proceeding, whether civil,
criminal, administrative, investigative, or other.
(h) Reviewing Party: the person or body appointed in
accordance with Section 3.
(i) Voting Securities: any securities of the Company that
vote generally in the election of directors.
2. Agreement to Indemnify.
(a) General Agreement. In the event Indemnitee was, is, or
becomes a party to or witness or other participant in, or is threatened to be
made a party to or witness or other participant in, a Proceeding by reason of
(or arising in part out of) an Indemnifiable Event, the Company shall indemnify
Indemnitee from and against any and all Expenses to the fullest extent permitted
by law, as the same exists or may hereafter be amended or interpreted (but in
the case of any such amendment or interpretation, only to the extent that such
amendment or interpretation permits the Company to provide broader
indemnification rights than were permitted prior thereto). The parties hereto
intend that this Agreement shall provide for indemnification in excess of that
expressly permitted by statute, including, without limitation, any
indemnification provided by the Company's Certificate of Incorporation, its
Bylaws, vote of its stockholders or disinterested directors, or applicable law.
(b) Initiation of Proceeding. Notwithstanding anything in
this Agreement to the contrary, Indemnitee shall not be entitled to
indemnification pursuant to this Agreement in connection with any Proceeding
initiated by Indemnitee against the Company or any director or officer of the
Company unless (i) the Company has joined in or the Board has consented to the
initiation of such Proceeding; (ii) the Proceeding is one to enforce
indemnification rights under Section 5; or (iii) the Proceeding is instituted
after a Change in Control (other than a Change in Control approved by a majority
of the directors on the Board
3
<PAGE> 4
who were directors immediately prior to such Change in Control) and Independent
Counsel has approved its initiation.
(c) Expense Advances. If so requested by Indemnitee, the
Company shall advance (within ten business days of such request) any and all
Expenses to Indemnitee (an "Expense Advance"); provided that (i) such an Expense
Advance shall be made only upon delivery to the Company of an undertaking by or
on behalf of the Indemnitee to repay the amount thereof if it is ultimately
determined that Indemnitee is not entitled to be indemnified by the Company, and
(ii) if and to the extent that the Reviewing Party determines that Indemnitee
would not be permitted to be so indemnified under applicable law, the Company
shall be entitled to be reimbursed by Indemnitee (who hereby agrees to reimburse
the Company) for all such amounts theretofore paid. If Indemnitee has commenced
or commences legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable law, as
provided in Section 4, any determination made by the Reviewing Party that
Indemnitee would not be permitted to be indemnified under applicable law shall
not be binding, and Indemnitee shall not be required to reimburse the Company
for any Expense Advance until a final judicial determination is made with
respect thereto (as to which all rights of appeal therefrom have been exhausted
or have lapsed). Indemnitee's obligation to reimburse the Company for Expense
Advances shall be unsecured and no interest shall be charged thereon.
(d) Mandatory Indemnification. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been successful
on the merits or otherwise in defense of any Proceeding relating in whole or in
part to an Indemnifiable Event or in defense of any issue or matter therein,
Indemnitee shall be indemnified against all Expenses incurred in connection
therewith.
(e) Partial Indemnification. If Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company for some
or a portion of Expenses, but not, however, for the total amount thereof, the
Company shall nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled.
(f) Prohibited Indemnification. No indemnification
pursuant to this Agreement shall be paid by the Company on account of any
Proceeding in which judgment is rendered against Indemnitee for an accounting of
profits made from the purchase or sale by Indemnitee of securities of the
Company pursuant to the provisions of Section 16(b) of the Securities Exchange
Act of 1934, as amended, or similar provisions of any federal, state, or local
laws.
3. Reviewing Party. Prior to any Change in Control, the Reviewing
Party shall be any appropriate person or body consisting of a member or members
of the Board or any other person or body appointed by the Board who is not a
party to the particular Proceeding with respect to which Indemnitee is seeking
indemnification; after a Change in Control, the Independent Counsel referred to
below shall become the Reviewing Party. With respect to all matters arising
after a Change in Control (other than a Change in Control approved by a majority
of the directors on the Board who were directors immediately prior to such
Change in Control)
4
<PAGE> 5
concerning the rights of Indemnitee to indemnity payments and Expense Advances
under this Agreement or any other agreement or under applicable law or the
Company's Certificate of Incorporation or Bylaws now or hereafter in effect
relating to indemnification for Indemnifiable Events, the Company shall seek
legal advice only from Independent Counsel selected by Indemnitee and approved
by the Company (which approval shall not be unreasonably withheld), and who has
not otherwise performed services for the Company or the Indemnitee (other than
in connection with indemnification matters) within the last five years. The
Independent Counsel shall not include any person who, under the applicable
standards of professional conduct then prevailing, would have a conflict of
interest in representing either the Company or Indemnitee in an action to
determine Indemnitee's rights under this Agreement. Such counsel, among other
things, shall render its written opinion to the Company and Indemnitee as to
whether and to what extent the Indemnitee should be permitted to be indemnified
under applicable law. The Company agrees to pay the reasonable fees of the
Independent Counsel and to indemnify fully such counsel against any and all
expenses (including attorneys' fees), claims, liabilities, loss, and damages
arising out of or relating to this Agreement or the engagement of Independent
Counsel pursuant hereto.
4. Indemnification Process and Appeal.
(a) Indemnification Payment. Indemnitee shall be entitled
to indemnification of Expenses, and shall receive payment thereof, from the
Company in accordance with this Agreement as soon as practicable after
Indemnitee has made written demand on the Company for indemnification, unless
the Reviewing Party has given a written opinion to the Company that Indemnitee
is not entitled to indemnification under applicable law.
(b) Suit to Enforce Rights. Regardless of any action by
the Reviewing Party, if Indemnitee has not received full indemnification within
thirty days after making a demand in accordance with Section 4(a), Indemnitee
shall have the right to enforce its indemnification rights under this Agreement
by commencing litigation in any court in the State of California or the State of
Delaware having subject matter jurisdiction thereof seeking an initial
determination by the court or challenging any determination by the Reviewing
Party or any aspect thereof. The Company hereby consents to service of process
and to appear in any such proceeding. Any determination by the Reviewing Party
not challenged by the Indemnitee shall be binding on the Company and Indemnitee.
The remedy provided for in this Section 4 shall be in addition to any other
remedies available to Indemnitee at law or in equity.
(c) Defense to Indemnification, Burden of Proof, and
Presumptions. It shall be a defense to any action brought by Indemnitee against
the Company to enforce this Agreement (other than an action brought to enforce a
claim for Expenses incurred in defending a Proceeding in advance of its final
disposition where the required undertaking has been tendered to the Company)
that it is not permissible under applicable law for the Company to indemnify
Indemnitee for the amount claimed. In connection with any such action or any
determination by the Reviewing Party or otherwise as to whether Indemnitee is
entitled to be indemnified hereunder, the burden of proving such a defense or
determination shall be on the Company. Neither the failure of the Reviewing
Party or the Company (including its Board, independent
5
<PAGE> 6
legal counsel, or its stockholders) to have made a determination prior to the
commencement of such action by Indemnitee that indemnification of the claimant
is proper under the circumstances because Indemnitee has met the standard of
conduct set forth in applicable law, nor an actual determination by the
Reviewing Party or Company (including its Board, independent legal counsel, or
its stockholders) that the Indemnitee had not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Indemnitee has not met the applicable standard of conduct. For purposes of this
Agreement, the termination of any claim, action, suit, or proceeding, by
judgment, order, settlement (whether with or without court approval),
conviction, or upon a plea of nolo contendere, or its equivalent, shall not
create a presumption that Indemnitee did not meet any particular standard of
conduct or have any particular belief or that a court has determined that
indemnification is not permitted by applicable law.
5. Indemnification for Expenses Incurred in Enforcing Rights. The
Company shall indemnify Indemnitee against any and all Expenses that are
incurred by Indemnitee in connection with any action brought by Indemnitee for
(i) indemnification or advance payment of Expenses by the Company
under this Agreement or any other agreement or under applicable
law or the Company's Certificate of Incorporation or Bylaws now
or hereafter in effect relating to indemnification for
Indemnifiable Events, and/or
(ii) recovery under directors' and officers' liability insurance
policies maintained by the Company, but only in the event that
Indemnitee ultimately is determined to be entitled to such
indemnification or insurance recovery, as the case may be. In
addition, the Company shall, if so requested by Indemnitee,
advance the foregoing Expenses to Indemnitee, subject to and in
accordance with Section 2(c).
6. Notification and Defense of Proceeding.
(a) Notice. Promptly after receipt by Indemnitee of notice
of the commencement of any Proceeding, Indemnitee shall, if a claim in respect
thereof is to be made against the Company under this Agreement, notify the
Company of the commencement thereof; but the omission so to notify the Company
will not relieve the Company from any liability that it may have to Indemnitee,
except as provided in Section 6(c).
(b) Defense. With respect to any Proceeding as to which
Indemnitee notifies the Company of the commencement thereof, the Company will be
entitled to participate in the Proceeding at its own expense and except as
otherwise provided below, to the extent the Company so wishes, it may assume the
defense thereof with counsel reasonably satisfactory to Indemnitee. After notice
from the Company to Indemnitee of its election to assume the defense of any
Proceeding, the Company shall not be liable to Indemnitee under this Agreement
or otherwise for any Expenses subsequently incurred by Indemnitee in connection
with the defense of such Proceeding other than reasonable costs of investigation
or as otherwise provided below. Indemnitee shall have the right to employ legal
counsel in such Proceeding, but all Expenses related thereto incurred after
notice from the Company of its assumption of the defense shall be
6
<PAGE> 7
at Indemnitee's expense unless: (i) the employment of legal counsel by
Indemnitee has been authorized by the Company, (ii) Indemnitee has reasonably
determined that there may be a conflict of interest between Indemnitee and the
Company in the defense of the Proceeding, (iii) after a Change in Control (other
than a Change in Control approved by a majority of the directors on the Board
who were directors immediately prior to such Change in Control), the employment
of counsel by Indemnitee has been approved by the Independent Counsel, or (iv)
the Company shall not in fact have employed counsel to assume the defense of
such Proceeding, in each of which cases all Expenses of the Proceeding shall be
borne by the Company. The Company shall not be entitled to assume the defense of
any Proceeding brought by or on behalf of the Company or as to which Indemnitee
shall have made the determination provided for in (ii), (iii) and (iv) above.
(c) Settlement of Claims. The Company shall not be liable
to indemnify Indemnitee under this Agreement or otherwise for any amounts paid
in settlement of any Proceeding effected without the Company's written consent,
such consent not to be unreasonably withheld; provided, however, that if a
Change in Control has occurred (other than a Change in Control approved by a
majority of the directors on the Board who were directors immediately prior to
such Change in Control), the Company shall be liable for indemnification of
Indemnitee for amounts paid in settlement if the Independent Counsel has
approved the settlement. The Company shall not settle any Proceeding in any
manner that would impose any penalty or limitation on Indemnitee without
Indemnitee's written consent. The Company shall not be liable to indemnify the
Indemnitee under this Agreement with regard to any judicial award if the Company
was not given a reasonable and timely opportunity, at its expense, to
participate in the defense of such action; the Company's liability hereunder
shall not be excused if participation in the Proceeding by the Company was
barred by this Agreement.
7. Establishment of Trust. In the event of a Change in Control
(other than a Change in Control approved by a majority of the directors on the
Board who were directors immediately prior to such Change in Control) the
Company shall, upon written request by Indemnitee, create a Trust for the
benefit of the Indemnitee and from time to time upon written request of
Indemnitee shall fund the Trust in an amount sufficient to satisfy any and all
Expenses reasonably anticipated at the time of each such request to be incurred
in connection with investigating, preparing for, participating in, and/or
defending any Proceeding relating to an Indemnifiable Event. The amount or
amounts to be deposited in the Trust pursuant to the foregoing funding
obligation shall be determined by the Independent Counsel. The terms of the
Trust shall provide that (i) the Trust shall not be revoked or the principal
thereof invaded without the written consent of the Indemnitee, (ii) the Trustee
shall advance, within ten business days of a request by the Indemnitee, any and
all Expenses to the Indemnitee (and the Indemnitee hereby agrees to reimburse
the Trust under the same circumstances for which the Indemnitee would be
required to reimburse the Company under Section 2(c) of this Agreement), (iii)
the Trust shall continue to be funded by the Company in accordance with the
funding obligation set forth above, (iv) the Trustee shall promptly pay to the
Indemnitee all amounts for which the Indemnitee shall be entitled to
indemnification pursuant to this Agreement or otherwise, and (v) all unexpended
funds in the Trust shall revert to the Company upon a final determination by the
Independent Counsel or a court of competent jurisdiction, as the case may be,
that the Indemnitee has been
7
<PAGE> 8
fully indemnified under the terms of this Agreement. The Trustee shall be chosen
by the Indemnitee. Nothing in this Section 7 shall relieve the Company of any of
its obligations under this Agreement. All income earned on the assets held in
the Trust shall be reported as income by the Company for federal, state, local,
and foreign tax purposes. The Company shall pay all costs of establishing and
maintaining the Trust and shall indemnify the Trustee against any and all
expenses (including attorneys' fees), claims, liabilities, loss, and damages
arising out of or relating to this Agreement or the establishment and
maintenance of the Trust.
8. Non-Exclusivity. The rights of Indemnitee hereunder shall be
in addition to any other rights Indemnitee may have under the Company's
Certificate of Incorporation, Bylaws, applicable law, or otherwise; provided,
however, that this Agreement shall supersede any prior indemnification agreement
between the Company and the Indemnitee. To the extent that a change in
applicable law (whether by statute or judicial decision) permits greater
indemnification than would be afforded currently under the Company's Certificate
of Incorporation, Bylaws, applicable law, or this Agreement, it is the intent of
the parties that Indemnitee enjoy by this Agreement the greater benefits so
afforded by such change.
9. Liability Insurance. To the extent the Company maintains an
insurance policy or policies providing general and/or directors' and officers'
liability insurance, Indemnitee shall be covered by such policy or policies, in
accordance with its or their terms, to the maximum extent of the coverage
available for any Company director or officer.
10. Period of Limitations. No legal action shall be brought and
no cause of action shall be asserted by or on behalf of the Company or any
Affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs,
executors, or personal or legal representatives after the expiration of two
years from the date of accrual of such cause of action, or such longer period as
may be required by state law under the circumstances. Any claim or cause of
action of the Company or its Affiliate shall be extinguished and deemed released
unless asserted by the timely filing and notice of a legal action within such
period; provided, however, that if any shorter period of limitations is
otherwise applicable to any such cause of action, the shorter period shall
govern.
11. Amendment of this Agreement. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be binding unless in the form of a writing signed by the party against
whom enforcement of the waiver is sought, and no such waiver shall operate as a
waiver of any other provisions hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver. Except as specifically provided herein,
no failure to exercise or any delay in exercising any right or remedy hereunder
shall constitute a waiver thereof.
12. Subrogation. In the event of payment under this Agreement,
the Company shall be subrogated to the extent of such payment to all of the
rights of recovery of Indemnitee, who shall execute all papers required and
shall do everything that may be necessary to secure
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such rights, including the execution of such documents necessary to enable the
Company effectively to bring suit to enforce such rights.
13. No Duplication of Payments. The Company shall not be liable
under this Agreement to make any payment in connection with any claim made
against Indemnitee to the extent Indemnitee has otherwise received payment
(under any insurance policy, Bylaw, or otherwise) of the amounts otherwise
indemnifiable hereunder.
14. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors (including any direct or indirect successor by purchase,
merger, consolidation, or otherwise to all or substantially all of the business
and/or assets of the Company), assigns, spouses, heirs, and personal and legal
representatives. The Company shall require and cause any successor (whether
direct or indirect by purchase, merger, consolidation, or otherwise) to all,
substantially all, or a substantial part, of the business and/or assets of the
Company, by written agreement in form and substance satisfactory to Indemnitee,
expressly to assume and agree to perform this Agreement in the same manner and
to the same extent that the Company would be required to perform if no such
succession had taken place. The indemnification provided under this Agreement
shall continue as to Indemnitee for any action taken or not taken while serving
in an indemnified capacity pertaining to an Indemnifiable Event even though he
may have ceased to serve in such capacity at the time of any Proceeding.
15. Severability. If any provision (or portion thereof) of this
Agreement shall be held by a court of competent jurisdiction to be invalid,
void, or otherwise unenforceable, the remaining provisions shall remain
enforceable to the fullest extent permitted by law. Furthermore, to the fullest
extent possible, the provisions of this Agreement (including, without
limitation, each portion of this Agreement containing any provision held to be
invalid, void, or otherwise unenforceable, that is not itself invalid, void, or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, void, or unenforceable.
16. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed in such State without giving
effect to its principles of conflicts of laws.
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Notices. All notices, demands, and other communications required
or permitted hereunder shall be made in writing and shall be deemed to have been
duly given if delivered by hand, against receipt, or mailed, postage prepaid,
certified or registered mail, return receipt requested, and addressed to the
Company at:
Informatica Corporation
3350 West Bayshore Road
Palo Alto, CA 94303
Attention: Diaz H. Nesamoney
and to Indemnitee at:
_____________________________
_____________________________
_____________________________
Notice of change of address shall be effective only when given in accordance
with this Section. All notices complying with this Section shall be deemed to
have been received on the date of hand delivery or on the third business day
after mailing.
18. 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.
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IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the day specified above.
INFORMATICA CORPORATION
By: _____________________________________
INDEMNITEE
By: _____________________________________
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EXHIBIT 10.7
FORM OF
SECURED PROMISSORY NOTE
$20,000 May 5, 1995
FOR VALUE RECEIVED, the undersigned ______________ ("Maker"), hereby
promises to pay to Informatica Corporation, a California corporation ("Payee"),
on the earlier of (i) May 5, 2000 or (ii) the date maker ceases to be an
employee of Payee, for any reason, the principal sum of Twenty Thousand Dollars
($20,000), in lawful money of the United States of America and in immediately
available funds, plus interest from the date hereof at the rate of seven and
12/100 percent (7.12%) per annum, payable in arrears on and May 5, 2000.
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 Note is secured by that certain Security Agreement of even date
herewith between Maker and Payee (the "Security Agreement"), 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.
(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
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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]
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EXHIBIT 10.11
INFORMATICA CORPORATION
1999 STOCK INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Stock Incentive Plan are
to attract and retain the best available personnel, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Company's business.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of the Committees
appointed to administer the Plan.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange
Act.
(c) "Applicable Laws" means the legal requirements relating to
the administration of stock incentive plans, if any, under applicable provisions
of federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any foreign jurisdiction applicable to Awards granted to residents therein.
(d) "Award" means the grant of an Option, SAR, Dividend
Equivalent Right, Restricted Stock, Performance Unit, Performance Share, or
other right or benefit under the Plan.
(e) "Award Agreement" means the written agreement evidencing the
grant of an Award executed by the Company and the Grantee, including any
amendments thereto.
(f) "Board" means the Board of Directors of the Company.
(g) "Change in Control" means a change in ownership or control of
the Company effected through either of the following transactions:
(i) the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which a
majority of the Continuing Directors who are not Affiliates or Associates of the
offeror do not recommend such stockholders accept, or
(ii) a change in the composition of the Board over a
period of thirty-six (36) months or less such that a majority of the Board
members (rounded up to the next whole
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number) ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who are Continuing Directors.
(h) "Code" means the Internal Revenue Code of 1986, as amended.
(i) "Committee" means any committee appointed by the Board to
administer the Plan.
(j) "Common Stock" means the common stock of the Company.
(k) "Company" means Informatica Corporation.
(l) "Consultant" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.
(m) "Continuing Directors" means members of the Board who either
(i) have been Board members continuously for a period of at least thirty-six
(36) months or (ii) have been Board members for less than thirty-six (36) months
and were elected or nominated for election as Board members by at least a
majority of the Board members described in clause (i) who were still in office
at the time such election or nomination was approved by the Board.
(n) "Continuous Service" means that the provision of services to
the Company or a Related Entity in any capacity of Employee, Director or
Consultant, is not interrupted or terminated. Continuous Service shall not be
considered interrupted in the case of (i) any approved leave of absence, (ii)
transfers between locations of the Company or among the Company, any Related
Entity, or any successor, in any capacity of Employee, Director or Consultant,
or (iii) any change in status as long as the individual remains in the service
of the Company or a Related Entity in any capacity of Employee, Director or
Consultant (except as otherwise provided in the Award Agreement). An approved
leave of absence shall include sick leave, military leave, or any other
authorized personal leave. For purposes of Incentive Stock Options, no such
leave may exceed ninety (90) days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract.
(o) "Corporate Transaction" means any of the following
transactions:
(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 in which the Company is incorporated;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with the complete
liquidation or dissolution of the Company;
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(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 a person or persons different from those who held such
securities immediately prior to such merger; or
(iv) an acquisition by any person or related group of
persons (other than the Company or by a Company-sponsored employee benefit plan)
of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act)
of securities possessing more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities (whether or not in a
transaction also constituting a Change in Control), but excluding any such
transaction that the Administrator determines shall not be a Corporate
Transaction.
(p) "Director" means a member of the Board or the board of
directors of any Related Entity.
(q) "Disability" means that a Grantee would qualify for benefit
payments under the long-term disability policy of the Company or the Related
Entity to which the Grantee provides services regardless of whether the Grantee
is covered by such policy.
(r) "Dividend Equivalent Right" means a right entitling the
Grantee to compensation measured by dividends paid with respect to Common Stock.
(s) "Employee" means any person, including an Officer or
Director, who is an employee of the Company or any Related Entity. The payment
of a director's fee by the Company or a Related Entity shall not be sufficient
to constitute "employment" by the Company.
(t) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(u) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) Where there exists a public market for the Common
Stock, the Fair Market Value shall be (A) the closing price for a Share for the
last market trading day prior to the time of the determination (or, if no
closing price was reported on that date, on the last trading date on which a
closing price was reported) on the stock exchange determined by the
Administrator to be the primary market for the Common Stock or the Nasdaq
National Market, whichever is applicable or (B) if the Common Stock is not
traded on any such exchange or national market system, the average of the
closing bid and asked prices of a Share on the Nasdaq Small Cap Market for the
day prior to the time of the determination (or, if no such prices were reported
on that date, on the last date on which such prices were reported), in each
case, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or
(ii) In the absence of an established market for the
Common Stock of the type described in (i), above, the Fair Market Value thereof
shall be determined by the Administrator in good faith.
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(v) "Grantee" means an Employee, Director or Consultant who
receives an Award pursuant to an Award Agreement under the Plan.
(w) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
(x) "Non-Qualified Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(y) "Officer" means a person who is an officer of the Company or
a Related Entity within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.
(z) "Option" means an option to purchase Shares pursuant to an
Award Agreement granted under the Plan.
(aa) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(bb) "Performance Shares" means Shares or an Award denominated in
Shares which may be earned in whole or in part upon attainment of performance
criteria established by the Administrator.
(cc) "Performance Units" means an Award which may be earned in
whole or in part upon attainment of performance criteria established by the
Administrator and which may be settled for cash, Shares or other securities or a
combination of cash, Shares or other securities as established by the
Administrator.
(dd) "Plan" means this 1999 Stock Incentive Plan.
(ee) "Registration Date" means the first to occur of (i) the
closing of the first sale to the general public of (A) the Common Stock or (B)
the same class of securities of a successor corporation (or its Parent) issued
pursuant to a Corporate Transaction in exchange for or in substitution of the
Common Stock, pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act of
1933, as amended; and (ii) in the event of a Corporate Transaction, the date of
the consummation of the Corporate Transaction if the same class of securities of
the successor corporation (or its Parent) issuable in such Corporate Transaction
shall have been sold to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended on or prior to the date of
consummation of such Corporate Transaction.
(ff) "Related Entity" means any Parent, Subsidiary and any
business, corporation, partnership, limited liability company or other entity in
which the Company, a Parent or a Subsidiary holds a substantial ownership
interest, directly or indirectly.
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(gg) "Related Entity Disposition" means the sale, distribution or
other disposition by the Company, a Parent or a Subsidiary of all or
substantially all of the interests of the Company, a Parent or a Subsidiary in
any Related Entity effected by a sale, merger or consolidation or other
transaction involving that Related Entity or the sale of all or substantially
all of the assets of that Related Entity.
(hh) "Restricted Stock" means Shares issued under the Plan to the
Grantee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.
(ii) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor thereto.
(jj) "SAR" means a stock appreciation right entitling the Grantee
to Shares or cash compensation, as established by the Administrator, measured by
appreciation in the value of Common Stock.
(kk) "Share" means a share of the Common Stock.
(ll) "Subsidiary" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 10, below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards (including
Incentive Stock Options) is 650,000 Shares, increased by (i) any Shares
available for future Awards under the the Company's 1996 Flexible Stock
Incentive Plan as of the Registration Date, (ii) any Shares that are represented
by Awards under the the Company's 1996 Flexible Stock Incentive Plan which are
forfeited, expire or are cancelled without delivery of Shares or which result in
the forfeiture of Shares back to the Company on or after the Registration Date,
and (iii) an annual increase to be added on the first day of the Company's
fiscal year beginning in 2000 equal to five percent (5%) of the number of Shares
outstanding as of such date or a lesser number of Shares determined by the
Administrator. Notwithstanding the foregoing, subject to the provisions of
Section 10, below, of the number of Shares specified above, the maximum
aggregate number of Shares available for grant of Incentive Stock Options shall
be 650,000 Shares, plus an annual increase to be added on the first day of the
Company's fiscal year beginning in 2000 equal to the lesser of (x) five percent
(5%) of the number of Shares outstanding as of such date, (y) 4,000,000 Shares,
or (z) a lesser number of Shares determined by the Administrator. For purposes
of determining the outstanding number of Shares under this Section 3(a), all
outstanding classes of securities of the Company, convertible notes, Awards and
warrants that are convertible or exercisable presently or in the future by the
holder into Shares, shall be deemed to have been fully converted or exercised
(notwithstanding any limits on such conversions or exercises) into the number of
Shares represented by such securities, notes, Awards and warrants calculated
using
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the treasury stock method. The Shares to be issued pursuant to Awards may be
authorized, but unissued, or reacquired Common Stock.
(b) Any Shares covered by an Award (or portion of an Award) which
is forfeited or canceled, expires or is settled in cash, shall be deemed not to
have been issued for purposes of determining the maximum aggregate number of
Shares which may be issued under the Plan. If any unissued Shares are retained
by the Company upon exercise of an Award in order to satisfy the exercise price
for such Award or any withholding taxes due with respect to such Award, such
retained Shares subject to such Award shall become available for future issuance
under the Plan (unless the Plan has terminated). Shares that actually have been
issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become available for future issuance under the Plan, except that if
unvested Shares are forfeited, or repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan.
4. Administration of the Plan.
(a) Plan Administrator.
(i) Administration with Respect to Directors and Officers.
With respect to grants of Awards to Directors or Employees who are also Officers
or Directors of the Company, the Plan shall be administered by (A) the Board or
(B) a Committee designated by the Board, which Committee shall be constituted in
such a manner as to satisfy the Applicable Laws and to permit such grants and
related transactions under the Plan to be exempt from Section 16(b) of the
Exchange Act in accordance with Rule 16b-3. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board.
(ii) Administration With Respect to Consultants and Other
Employees. With respect to grants of Awards to Employees or Consultants who are
neither Directors nor Officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the Applicable Laws. Once
appointed, such Committee shall continue to serve in its designated capacity
until otherwise directed by the Board. Subject to Applicable Laws, the Board may
authorize one or more Officers to grant such Awards and may limit such authority
as the Board determines from time to time.
(iii) Administration Errors. In the event an Award is
granted in a manner inconsistent with the provisions of this subsection (a),
such Award shall be presumptively valid as of its grant date to the extent
permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to Applicable Laws and
the provisions of the Plan (including any other powers given to the
Administrator hereunder), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:
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(i) to select the Employees, Directors and Consultants to
whom Awards may be granted from time to time hereunder;
(ii) to determine whether and to what extent Awards are
granted hereunder;
(iii) to determine the number of Shares or the amount of
other consideration to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under
the Plan;
(v) to determine the terms and conditions of any Award
granted hereunder;
(vi) to amend the terms of any outstanding Award granted
under the Plan, provided that any amendment that would adversely affect the
Grantee's rights under an outstanding Award shall not be made without the
Grantee's written consent;
(vii) to construe and interpret the terms of the Plan and
Awards granted pursuant to the Plan, including without limitation, any notice of
Award or Award Agreement, granted pursuant to the Plan;
(viii) to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of applicable foreign jurisdictions
and to afford Grantees favorable treatment under such laws; provided, however,
that no Award shall be granted under any such additional terms, conditions,
rules or procedures with terms or conditions which are inconsistent with the
provisions of the Plan; and
(ix) to take such other action, not inconsistent with the
terms of the Plan, as the Administrator deems appropriate.
(c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be conclusive and
binding on all persons.
5. Eligibility. Awards other than Incentive Stock Options may be granted
to Employees, Directors and Consultants. Incentive Stock Options may be granted
only to Employees of the Company, a Parent or a Subsidiary. An Employee,
Director or Consultant who has been granted an Award may, if otherwise eligible,
be granted additional Awards. Awards may be granted to such Employees, Directors
or Consultants who are residing in foreign jurisdictions as the Administrator
may determine from time to time.
6. Terms and Conditions of Awards.
(a) Type of Awards. The Administrator is authorized under the
Plan to award any type of arrangement to an Employee, Director or Consultant
that is not inconsistent with the provisions of the Plan and that by its terms
involves or might involve the issuance of (i) Shares, (ii) an Option, a SAR or
similar right with a fixed or variable price related to the Fair Market
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Value of the Shares and with an exercise or conversion privilege related to the
passage of time, the occurrence of one or more events, or the satisfaction of
performance criteria or other conditions, or (iii) any other security with the
value derived from the value of the Shares. Such awards include, without
limitation, Options, SARs, sales or bonuses of Restricted Stock, Dividend
Equivalent Rights, Performance Units or Performance Shares, and an Award may
consist of one such security or benefit, or two (2) or more of them in any
combination or alternative.
(b) Designation of Award. Each Award shall be designated in the
Award Agreement. In the case of an Option, the Option shall be designated as
either an Incentive Stock Option or a Non-Qualified Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of Shares subject to Options designated as Incentive Stock Options which
become exercisable for the first time by a Grantee during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options, to the extent of the Shares covered thereby in excess of
the foregoing limitation, shall be treated as Non-Qualified Stock Options. For
this purpose, Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of the Shares shall be
determined as of the date the Option with respect to such Shares is granted.
(c) Conditions of Award. Subject to the terms of the Plan, the
Administrator 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
(cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance
criteria established by the Administrator may be based on any one of, or
combination of, increase in share price, earnings per share, total stockholder
return, return on equity, return on assets, return on investment, net operating
income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator.
Partial achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement.
(d) Acquisitions and Other Transactions. The Administrator may
issue Awards under the Plan in settlement, assumption or substitution for,
outstanding awards or obligations to grant future awards in connection with the
Company or a Related Entity acquiring another entity, an interest in another
entity or an additional interest in a Related Entity whether by merger, stock
purchase, asset purchase or other form of transaction.
(e) Deferral of Award Payment. The Administrator may establish
one or more programs under the Plan to permit selected Grantees the opportunity
to elect to defer receipt of consideration upon exercise of an Award,
satisfaction of performance criteria, or other event that absent the election
would entitle the Grantee to payment or receipt of Shares or other consideration
under an Award. The Administrator may establish the election procedures, the
timing of such elections, the mechanisms for payments of, and accrual of
interest or other earnings, if any, on amounts, Shares or other consideration so
deferred, and such other terms,
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conditions, rules and procedures that the Administrator deems advisable for the
administration of any such deferral program.
(f) Award Exchange Programs. The Administrator may establish one
or more programs under the Plan to permit selected Grantees to exchange an Award
under the Plan for one or more other types of Awards under the Plan on such
terms and conditions as determined by the Administrator from time to time.
(g) Separate Programs. The Administrator may establish one or
more separate programs under the Plan for the purpose of issuing particular
forms of Awards to one or more classes of Grantees on such terms and conditions
as determined by the Administrator from time to time.
(h) Early Exercise. The Award Agreement may, but need not,
include a provision whereby the Grantee may elect at any time while an Employee,
Director or Consultant to exercise any part or all of the Award prior to full
vesting of the Award. Any unvested Shares received pursuant to such exercise may
be subject to a repurchase right in favor of the Company or a Related Entity or
to any other restriction the Administrator determines to be appropriate.
(i) Term of Award. The term of each Award shall be the term
stated in the Award Agreement, provided, however, that the term of an Incentive
Stock Option shall be no more than ten (10) years from the date of grant
thereof. However, in the case of an Incentive Stock Option granted to a Grantee
who, at the time the Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5)
years from the date of grant thereof or such shorter term as may be provided in
the Award Agreement.
(j) Transferability of Awards. Incentive Stock Options may not be
sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Grantee, only by the Grantee; provided,
however, that the Grantee may designate a beneficiary of the Grantee's Incentive
Stock Option in the event of the Grantee's death on a beneficiary designation
form provided by the Administrator. Other Awards shall be transferable to the
extent provided in the Award Agreement.
(k) Time of Granting Awards. The date of grant of an Award shall
for all purposes be the date on which the Administrator makes the determination
to grant such Award, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.
7. Award Exercise or Purchase Price, Consideration and Taxes.
(a) Exercise or Purchase Price. The exercise or purchase price,
if any, for an Award shall be as follows:
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(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, at the time of the
grant of such Incentive Stock Option owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be not less than one
hundred ten percent (110%) of the Fair Market Value per Share on the date of
grant; or
(B) granted to any Employee other than an Employee
described in the preceding paragraph, the per Share exercise price shall be not
less than one hundred percent (100%) of the Fair Market Value per Share on the
date of grant.
(ii) In the case of a Non-Qualified Stock Option, the per
Share exercise price shall be not less than eighty-five percent (85%) of the
Fair Market Value per Share on the date of grant unless otherwise determined by
the Administrator.
(iii) In the case of other Awards, such price as is
determined by the Administrator.
(iv) Notwithstanding the foregoing provisions of this
Section 7(a), in the case of an Award issued pursuant to Section 6(d), above,
the exercise or purchase price for the Award shall be determined in accordance
with the principles of Section 424(a) of the Code.
(b) Consideration. Subject to Applicable Laws, the consideration
to be paid for the Shares to be issued upon exercise or purchase of an Award
including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of
grant). In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for Shares
issued under the Plan the following, provided that the portion of the
consideration equal to the par value of the Shares must be paid in cash or other
legal consideration permitted by the Delaware General Corporation Law:
(i) cash;
(ii) check;
(iii) delivery of Grantee's promissory note with such
recourse, interest, security, and redemption provisions as the Administrator
determines as appropriate;
(iv) if the exercise or purchase occurs on or after the
Registration Date, surrender of Shares or delivery of a properly executed form
of attestation of ownership of Shares as the Administrator may require
(including withholding of Shares otherwise deliverable upon exercise of the
Award) which have a Fair Market Value on the date of surrender or attestation
equal to the aggregate exercise price of the Shares as to which said Award shall
be exercised (but only to the extent that such exercise of the Award would not
result in an accounting
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compensation charge with respect to the Shares used to pay the exercise price
unless otherwise determined by the Administrator);
(v) with respect to Options, if the exercise occurs on or
after the Registration Date, payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (A) shall provide written instructions
to a Company designated brokerage firm to effect the immediate sale of some or
all of the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (B) shall provide written
directives to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction; or
(vi) any combination of the foregoing methods of payment.
(c) Taxes. No Shares shall be delivered under the Plan to any
Grantee or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign, federal,
state, or local income and employment tax withholding obligations, including,
without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock
Option. Upon exercise of an Award, the Company shall withhold or collect from
Grantee an amount sufficient to satisfy such tax obligations.
8. Exercise of Award.
(a) Procedure for Exercise; Rights as a Stockholder.
(i) Any Award granted hereunder shall be exercisable at
such times and under such conditions as determined by the Administrator under
the terms of the Plan and specified in the Award Agreement.
(ii) An Award shall be deemed to be exercised when written
notice of such exercise has been given to the Company in accordance with the
terms of the Award by the person entitled to exercise the Award and full payment
for the Shares with respect to which the Award is exercised, including, to the
extent selected, use of the broker-dealer sale and remittance procedure to pay
the purchase price as provided in Section 7(b)(v). Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
such Shares, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Shares subject to an Award,
notwithstanding the exercise of an Option or other Award. The Company shall
issue (or cause to be issued) such stock certificate promptly upon exercise of
the Award. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in the Award Agreement or Section 10, below.
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(b) Exercise of Award Following Termination of Continuous
Service.
(i) An Award may not be exercised after the termination
date of such Award set forth in the Award Agreement and may be exercised
following the termination of a Grantee's Continuous Service only to the extent
provided in the Award Agreement.
(ii) Where the Award Agreement permits a Grantee to
exercise an Award following the termination of the Grantee's Continuous Service
for a specified period, the Award shall terminate to the extent not exercised on
the last day of the specified period or the last day of the original term of the
Award, whichever occurs first.
(iii) Any Award designated as an Incentive Stock Option to
the extent not exercised within the time permitted by law for the exercise of
Incentive Stock Options following the termination of a Grantee's Continuous
Service shall convert automatically to a Non-Qualified Stock Option and
thereafter shall be exercisable as such to the extent exercisable by its terms
for the period specified in the Award Agreement.
(c) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Award previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Grantee at the time that such offer is made.
9. Conditions Upon Issuance of Shares.
(a) Shares shall not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such
Shares pursuant thereto shall comply with all Applicable Laws, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
(b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws.
10. Adjustments Upon Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of Shares covered by each
outstanding Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or which
have been returned to the Plan, the exercise or purchase price of each such
outstanding Award, as well as any other terms that the Administrator determines
require adjustment shall be proportionately adjusted for (i) any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Shares, or
similar transaction affecting the Shares, (ii) any other increase or decrease in
the number of issued Shares effected without receipt of consideration by the
Company, or (iii) as the Administrator may determine in its discretion, any
other transaction with respect to Common Stock to which Section 424(a) of the
Code applies or a
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similar transaction; provided, however that conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration." Such adjustment shall be made by the Administrator
and its determination shall be final, binding and conclusive. Except as the
Administrator determines, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Award.
11. Corporate Transactions/Related Entity Dispositions/Buyout. Except as
may be provided in an Award Agreement:
(a) Effective upon the consummation of a Corporate Transaction,
all outstanding Awards under the Plan shall terminate. However, all such Awards
shall not terminate if they are, in connection with the Corporate Transaction,
assumed by the successor corporation or Parent thereof.
(b) Effective upon the consummation of a Related Entity
Disposition, for purposes of the Plan and all Awards, the Continuous Service of
each Grantee who is at the time engaged primarily in service to the Related
Entity involved in such Related Entity Disposition shall be deemed to terminate
and each Award of such Grantee which is at the time outstanding under the Plan
shall be exercisable in accordance with the terms of the Award Agreement
evidencing such Award. However, such Continuous Service shall be not to deemed
to terminate if such Award is, in connection with the Related Entity
Disposition, assumed by the successor entity or its parent.
12. Effective Date and Term of Plan. The Plan shall become effective
upon the earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated. Subject to Section 17, below, and Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.
13. Amendment, Suspension or Termination of the Plan.
(a) The Board may at any time amend, suspend or terminate the
Plan. To the extent necessary to comply with Applicable Laws, the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.
(b) No Award may be granted during any suspension of the Plan or
after termination of the Plan.
(c) Any amendment, suspension or termination of the Plan
(including termination of the Plan under Section 12, above) shall not affect
Awards already granted, and such Awards shall remain in full force and effect as
if the Plan had not been amended, suspended or terminated, unless mutually
agreed otherwise between the Grantee and the Administrator, which agreement must
be in writing and signed by the Grantee and the Company.
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14. Reservation of Shares.
(a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
(b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained. 15. No Effect on Terms of Employment/Consulting Relationship. The Plan
shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, nor shall it interfere in any way with his or her right or
the Company's right to terminate the Grantee's Continuous Service at any time,
with or without cause.
16. No Effect on Retirement and Other Benefit Plans. Except as
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The Plan
is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.
17. Stockholder Approval. The grant of Incentive Stock Options under the
Plan shall be subject to approval by the stockholders of the Company within
twelve (12) months before or after the date the Plan is adopted excluding
Incentive Stock Options issued in substitution for outstanding Incentive Stock
Options pursuant to Section 424(a) of the Code. Such stockholder approval shall
be obtained in the degree and manner required under Applicable Laws. The
Administrator may grant Incentive Stock Options under the Plan prior to approval
by the stockholders, but until such approval is obtained, no such Incentive
Stock Option shall be exercisable. In the event that stockholder approval is not
obtained within the twelve (12) month period provided above, all Incentive Stock
Options previously granted under the Plan shall be exercisable as Non-Qualified
Stock Options.
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EXHIBIT 10.12
INFORMATICA CORPORATION
1999 EMPLOYEE STOCK PURCHASE PLAN
The following constitute the provisions of the 1999 Employee
Stock Purchase Plan of Informatica Corporation.
1. Purpose. The purpose of the Plan is to provide employees of
the Company and its Designated Parents or Subsidiaries with an opportunity to
purchase Common Stock of the Company through accumulated payroll deductions. It
is the intention of the Company to have the Plan qualify as an "Employee Stock
Purchase Plan" under Section 423 of the Code. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Applicable Laws" means the legal requirements relating to
the administration of employee stock purchase plans, if any, under applicable
provisions of federal securities laws, state corporate and securities laws, the
Code, the rules of any applicable stock exchange or national market system, and
the rules of any foreign jurisdiction applicable to participation in the Plan by
residents therein.
(b) "Board" means the Board of Directors of the Company.
(c) "Change in Control" means a change in ownership or control of
the Company effected through the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Common Stock" means the common stock of the Company.
(f) "Company" means Informatica Corporation.
(g) "Compensation" means an Employee's base salary, commissions,
overtime, bonuses, annual awards, and other incentive payments from the Company
or one or more Designated Parents or Subsidiaries, including such amounts as are
deferred by the Employee (i) under a qualified cash or deferred arrangement
described in Section 401(k) of the Code, or (ii) to a plan qualified under
Section 125 of the Code. Compensation does not include reimbursements or other
expense allowances, fringe benefits (cash or noncash), moving expenses, deferred
compensation, contributions (other than contributions described in the first
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sentence) made on the Employee's behalf by the Company or one or more Designated
Parents or Subsidiaries under any employee benefit or welfare plan now or
hereafter established.
(h) "Corporate Transaction" means any of the following
transactions:
(1) 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 in which the Company is
incorporated;
(2) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the
capital stock of the Company's subsidiary corporations) in
connection with complete liquidation or dissolution of the
Company;
(3) 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 a person or
persons different from those who held such securities immediately
prior to such merger; or
(4) an acquisition by any person or related group of
persons (other than the Company or by a Company-sponsored
employee benefit plan) of beneficial ownership (within the
meaning of Rule 13d-3 of the Exchange Act) of securities
possessing more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities (whether or
not in a transaction also constituting a Change in Control), but
excluding any such transaction that the Plan Administrator
determines shall not be a Corporate Transaction
(i) "Designated Parents or Subsidiaries" means the Parents or
Subsidiaries which have been designated by the Plan Administrator from time to
time as eligible to participate in the Plan.
(j) "Effective Date" means the effective date of the Registration
Statement relating to the Company's initial public offering of its Common Stock.
However, should any Designated Parent or Subsidiary become a participating
company in the Plan after such date, then such entity shall designate a separate
Effective Date with respect to its employee-participants.
(k) "Employee" means any individual, including an officer or
director, who is an employee of the Company or a Designated Parent or Subsidiary
for purposes of Section 423 of the Code. For purposes of the Plan, the
employment relationship shall be treated as continuing intact while the
individual is on sick leave or other leave of absence approved by the
individual's employer. Where the period of leave exceeds ninety (90) days and
the individual's right to reemployment is not guaranteed either by statute or by
contract, the employment relationship will be deemed to have terminated on the
ninety-first (91st) day of such leave, for purposes of determining eligibility
to participate in the Plan.
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(l) "Enrollment Date" means the first day of each Offer Period.
(m) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(n) "Exercise Date" means the last day of each Purchase Period.
(o) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(1) Where there exists a public market for the Common
Stock, the Fair Market Value shall be (A) the closing price for a
share of Common Stock for the last market trading day prior to
the time of the determination (or, if no closing price was
reported on that date, on the last trading date on which a
closing price was reported) on the stock exchange determined by
the Plan Administrator to be the primary market for the Common
Stock or the Nasdaq National Market, whichever is applicable or
(B) if the Common Stock is not traded on any such exchange or
national market system, the average of the closing bid and asked
prices of a share of Common Stock on the Nasdaq Small Cap Market
for the day prior to the time of the determination (or, if no
such prices were reported on that date, on the last date on which
such prices were reported), in each case, as reported in The Wall
Street Journal or such other source as the Plan Administrator
deems reliable; or
(2) In the absence of an established market of the type
described in (1), above, for the Common Stock, the Fair Market
Value thereof shall be determined by the Plan Administrator in
good faith.
(p) "Offer Period" means an Offer Period established pursuant to
Section 4 hereof.
(q) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(r) "Participant" means an Employee of the Company or Designated
Parent or Subsidiary who is actively participating in the Plan.
(s) "Plan" means this Employee Stock Purchase Plan.
(t) "Plan Administrator" means either the Board or a committee of
the Board that is responsible for the administration of the Plan as is
designated from time to time by resolution of the Board.
(u) "Purchase Period" means a period of approximately six months,
commencing on February 1 and August 1 of each year and terminating on the next
following January 31 or July 31, respectively; provided, however, that the first
Purchase Period shall commence on the Effective Date and shall end on January
31, 2000.
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(v) "Purchase Price" shall mean an amount equal to 85% of the
Fair Market Value of a share of Common Stock on the Enrollment Date or on the
Exercise Date, whichever is lower.
(w) "Reserves" means the sum of the number of shares of Common
Stock covered by each option under the Plan which have not yet been exercised
and the number of shares of Common Stock which have been authorized for issuance
under the Plan but not yet placed under option.
(x) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
3. Eligibility.
(a) General. Any individual who is an Employee on a given
Enrollment Date shall be eligible to participate in the Plan for the Offer
Period commencing with such Enrollment Date.
(b) Limitations on Grant and Accrual. Any provisions of the Plan
to the contrary notwithstanding, no Employee shall be granted an option under
the Plan (i) if, immediately after the grant, such Employee (taking into account
stock owned by any other person whose stock would be attributed to such Employee
pursuant to Section 424(d) of the Code) would own stock and/or hold outstanding
options to purchase stock possessing five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or of any
Parent or Subsidiary, or (ii) which permits the Employee's rights to purchase
stock under all employee stock purchase plans of the Company and its Parents or
Subsidiaries to accrue at a rate which exceeds Twenty-Five Thousand Dollars
($25,000) worth of stock (determined at the Fair Market Value of the shares at
the time such option is granted) for each calendar year in which such option is
outstanding at any time. The determination of the accrual of the right to
purchase stock shall be made in accordance with Section 423(b)(8) of the Code
and the regulations thereunder.
(c) Other Limits on Eligibility. Notwithstanding Subsection (a),
above, the following Employees shall not be eligible to participate in the Plan
for any relevant Offer Period: (i) Employees whose customary employment is
twenty (20) hours or less per week; (ii) Employees whose customary employment is
for not more than five (5) months in any calendar year; and (iii) Employees who
are subject to rules or laws of a foreign jurisdiction that prohibit or make
impractical the participation of such Employees in the Plan.
4. Offer Periods.
(a) The Plan shall be implemented through overlapping or
consecutive Offer Periods until such time as (i) the maximum number of shares of
Common Stock available for issuance under the Plan shall have been purchased or
(ii) the Plan shall have been sooner terminated in accordance with Section 19
hereof. The maximum duration of an Offer Period shall be twenty-seven (27)
months. Initially, the Plan shall be implemented through overlapping
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<PAGE> 5
Offer Periods of twenty-four (24) months' duration commencing each February 1
and August 1 following the Effective Date (except that the initial Offer Period
shall commence on the Effective Date and shall end on July 15, 2001).
(b) A Participant shall be granted a separate option for each
Offer Period in which he or she participates. The option shall be granted on the
Enrollment Date and shall be automatically exercised in successive installments
on the Exercise Dates ending within the Offer Period.
(c) An Employee may participate in only one Offer Period at a
time. Accordingly, except as provided in Section 4(d), an Employee who wishes to
join a new Offer Period must withdraw from the current Offer Period in which the
Employee is participating and must also enroll in the new Offer Period prior to
the Enrollment Date for that Offer Period.
(d) If on the first day of any Purchase Period in an Offer Period
in which a Participant is participating, the Fair Market Value of the Common
Stock is less than the Fair Market Value of the Common Stock on the Enrollment
Date of the Offer Period (after taking into account any adjustment during the
Offer Period pursuant to Section 18(a)), the Offer Period shall be terminated
automatically and the Participant shall be enrolled automatically in the new
Offer Period which has its first Purchase Period commencing on that date,
provided the Participant is eligible to participate in the Plan on that date and
has not elected to terminate participation in the Plan.
(e) Except as specifically provided herein, the acquisition of
Common Stock through participation in the Plan for any Offer Period shall
neither limit nor require the acquisition of Common Stock by a Participant in
any subsequent Offer Period.
5. Participation.
(a) An eligible Employee may become a Participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the designated payroll office of
the Company at least ten (10) business days prior to the Enrollment Date for the
Offer Period in which such participation will commence, unless a later time for
filing the subscription agreement is set by the Plan Administrator for all
eligible Employees with respect to a given Offer Period.
(b) Payroll deductions for a Participant shall commence with the
first partial or full payroll period beginning on the Enrollment Date and shall
end on the last complete payroll period during the Offer Period, unless sooner
terminated by the Participant as provided in Section 10.
6. Payroll Deductions.
(a) At the time a Participant files a subscription agreement, the
Participant shall elect to have payroll deductions made during the Offer Period
in amounts between one
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percent (1%) and not exceeding ten percent (10%) of the Compensation which the
Participant receives during the Offer Period.
(b) All payroll deductions made for a Participant shall be
credited to the Participant's account under the Plan and will be withheld in
whole percentages only. A Participant may not make any additional payments into
such account.
(c) A Participant may discontinue participation in the Plan as
provided in Section 10, or may increase or decrease the rate of payroll
deductions during the Offer Period by completing and filing with the Company a
change of status notice in the form of Exhibit B to this Plan authorizing an
increase or decrease in the payroll deduction rate. Any decrease in the rate of
a Participant's payroll deductions shall be effective with the first full
payroll period commencing ten (10) business days after the Company's receipt of
the change of status notice unless the Company elects to process a given change
in participation more quickly. Any increase in the rate of a Participant's
payroll deductions shall be effective with the next Purchase Period following
the Purchase Period in which the Company receives the change of status notice if
such notice is filed within ten (10) business days before the commencement of
the next Purchase Period. A Participant's subscription agreement (as modified by
any change of status notice) shall remain in effect for successive Offer Periods
unless terminated as provided in Section 10. The Plan Administrator shall be
authorized to limit the number of payroll deduction rate changes during any
Offer Period.
(d) Notwithstanding the foregoing, to the extent necessary to
comply with Section 423(b)(8) of the Code and Section 3(b) herein, a
Participant's payroll deductions may be decreased to 0% at such time during any
Purchase Period which is scheduled to end during the current calendar year (the
"Current Purchase Period") that the aggregate of all payroll deductions which
were previously used to purchase stock under the Plan in a prior Purchase Period
which ended during that calendar year plus all payroll deductions accumulated
with respect to the Current Purchase Period equal $21,250. Payroll deductions
shall recommence at the rate provided in such Participant's subscription
agreement, as amended, at the beginning of the first Purchase Period which is
scheduled to end in the following calendar year, unless terminated by the
Participant as provided in Section 10.
7. Grant of Option. On the Enrollment Date, each Participant
shall be granted an option to purchase (at the applicable Purchase Price) up to
a number of shares of the Common Stock determined by dividing ten percent (10%)
of such Participant's Compensation receivable during the Offer Period by the
applicable Purchase Price; provided (i) that such option shall be subject to the
limitations set forth in Sections 3(b) and 12 hereof, and (ii) the maximum
number of shares of Common Stock a Participant shall be permitted to purchase in
any Purchase Period shall be 2,500 shares, subject to adjustment as provided in
Section 18 hereof. Exercise of the option shall occur as provided in Section 8,
unless the Participant has withdrawn pursuant to Section 10, and the option, to
the extent not exercised, shall expire on the last day of the Offer Period.
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8. Exercise of Option. Unless a Participant withdraws from the
Plan as provided in Section 10, below, the Participant's option for the purchase
of shares will be exercised automatically on each Exercise Date, by applying the
accumulated payroll deductions in the Participant's account to purchase the
maximum number of full shares subject to the option by dividing such
Participant's payroll deductions accumulated prior to such Exercise Date and
retained in the Participant's account as of the Exercise Date by the applicable
Purchase Price. No fractional shares will be purchased; any payroll deductions
accumulated in a Participant's account which are not sufficient to purchase a
full share shall be carried over to the next Purchase Period or Offer Period,
whichever applies, or returned to the Participant, if the Participant withdraws
from the Plan. Notwithstanding the foregoing, any amount remaining in a
Participant's account following the purchase of shares on the Exercise Date due
to the application of Section 423(b)(8) of the Code or Section 7, above, shall
be returned to the Participant and shall not be carried over to the next Offer
Period. During a Participant's lifetime, a Participant's option to purchase
shares hereunder is exercisable only by the Participant.
9. Delivery. Upon receipt of a request from a Participant after
each Exercise Date on which a purchase of shares occurs, the Company shall
arrange the delivery to such Participant, as promptly as practicable, of a
certificate representing the shares purchased upon exercise of the Participant's
option.
10. Withdrawal; Termination of Employment.
(a) A Participant may either (i) withdraw all but not less than
all the payroll deductions credited to the Participant's account and not yet
used to exercise the Participant's option under the Plan or (ii) terminate
future payroll deductions, but allow accumulated payroll deductions to be used
to exercise the Participant's option under the Plan at any time by giving
written notice to the Company in the form of Exhibit B to this Plan. If the
Participant elects withdrawal alternative (i) described above, all of the
Participant's payroll deductions credited to the Participant's account will be
paid to such Participant as promptly as practicable after receipt of notice of
withdrawal, such Participant's option for the Offer Period will be automatically
terminated, and no further payroll deductions for the purchase of shares will be
made during the Offer Period. If the Participant elects withdrawal alternative
(ii) described above, no further payroll deductions for the purchase of shares
will be made during the Offer Period, all of the Participant's payroll
deductions credited to the Participant's account will be applied to the exercise
of the Participant's option on the next Exercise Date, and after such Exercise
Date, such Participant's option for the Offer Period will be automatically
terminated. If a Participant withdraws from an Offer Period, payroll deductions
will not resume at the beginning of the succeeding Offer Period unless the
Participant delivers to the Company a new subscription agreement.
(b) Upon termination of a Participant's employment relationship
(as described in Section 2(k)) at a time more than three (3) months from the
next scheduled Exercise Date, the payroll deductions credited to such
Participant's account during the Offer Period but not yet used to exercise the
option will be returned to such Participant or, in the case of his/her death, to
the person or persons entitled thereto under Section 14, and such Participant's
option will be
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<PAGE> 8
automatically terminated. Upon termination of a Participant's employment
relationship (as described in Section 2(k)) within three (3) months of the next
scheduled Exercise Date, the payroll deductions credited to such Participant's
account during the Offer Period but not yet used to exercise the option will be
applied to the purchase of Common Stock on the next Exercise Date, unless the
Participant (or in the case of the Participant's death, the person or persons
entitled to the Participant's account balance under Section 14) withdraws from
the Plan by submitting a change of status notice in accordance with subsection
(a) of this Section 10. In such a case, no further payroll deductions will be
credited to the Participant's account following the Participant's termination of
employment and the Participant's option under the Plan will be automatically
terminated after the purchase of Common Stock on the next scheduled Exercise
Date.
11. Interest. No interest shall accrue on the payroll deductions
credited to a Participant's account under the Plan.
12. Stock.
(a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 18, the maximum number of shares of Common Stock
which shall be made available for sale under the Plan shall be 400,000 shares,
plus an annual increase to be added on the first day of the Company's fiscal
year beginning in 2000 equal to the lesser of (i) two percent (2%) of the
outstanding shares on such date, (ii) 1,600,000 shares, or (iii) a lesser number
of shares determined by the Plan Administrator. For purposes of determining the
outstanding number of shares of Common Stock under this Section 12(a), all
outstanding classes of securities of the Company, convertible notes, options and
warrants that are convertible or exercisable presently or in the future by the
holder into shares of Common Stock, shall be deemed to have been fully converted
or exercised (notwithstanding any limits on such conversions or exercises) into
the number of shares of Common Stock represented by such securities, notes,
options and warrants calculated using the treasury stock method. If on a given
Exercise Date the number of shares with respect to which options are to be
exercised exceeds the number of shares then available under the Plan, the Plan
Administrator shall make a pro rata allocation of the shares remaining available
for purchase in as uniform a manner as shall be practicable and as it shall
determine to be equitable.
(b) A Participant will have no interest or voting right in shares
covered by the Participant's option until such shares are actually purchased on
the Participant's behalf in accordance with the applicable provisions of the
Plan. No adjustment shall be made for dividends, distributions or other rights
for which the record date is prior to the date of such purchase.
(c) Shares to be delivered to a Participant under the Plan will
be registered in the name of the Participant or in the name of the Participant
and his or her spouse.
13. Administration. The Plan shall be administered by the Plan
Administrator which shall have full and exclusive discretionary authority to
construe, interpret and apply the terms of the Plan, to determine eligibility
and to adjudicate all disputed claims filed under the
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<PAGE> 9
Plan. Every finding, decision and determination made by the Plan Administrator
shall, to the full extent permitted by Applicable Law, be final and binding upon
all persons.
14. Designation of Beneficiary.
(a) Each Participant will file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
Participant's account under the Plan in the event of such Participant's death.
If a Participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the
Participant (and the Participant's spouse, if any) at any time by written
notice. In the event of the death of a Participant and in the absence of a
beneficiary validly designated under the Plan who is living (or in existence) at
the time of such Participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the Participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Plan Administrator), the Plan Administrator shall deliver such shares and/or
cash to the spouse (or domestic partner, as determined by the Administrator) of
the Participant, or if no spouse (or domestic partner) is known to the Plan
Administrator, then to the issue of the Participant, such distribution to be
made per stirpes (by right of representation).
15. Transferability. Neither payroll deductions credited to a
Participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 14 hereof) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Plan Administrator may treat such act as an election to
withdraw funds from an Offer Period in accordance with Section 10.
16. Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
17. Reports. Individual accounts will be maintained for each
Participant in the Plan. Statements of account will be given to Participants at
least annually, which statements will set forth the amounts of payroll
deductions, the Purchase Price, the number of shares purchased and the remaining
cash balance, if any.
18. Adjustments Upon Changes in Capitalization; Corporate
Transactions.
(a) Adjustments Upon Changes in Capitalization. Subject to any
required action by the stockholders of the Company, the Reserves, the Purchase
Price, as well as any other terms that the Plan Administrator determines require
adjustment shall be proportionately adjusted for (i) any increase or decrease in
the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, (ii) any other increase or decrease in the number of issued shares
of Common Stock
9
<PAGE> 10
effected without receipt of consideration by the Company, or (iii) as the Plan
Administrator may determine in its discretion, any other transaction with
respect to Common Stock to which Section 424(a) of the Code applies; provided,
however that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Plan Administrator and its determination shall
be final, binding and conclusive. Except as the Plan Administrator determines,
no issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason hereof shall be made with respect to, the Reserves and the Purchase
Price.
(b) Corporate Transactions. In the event of a proposed Corporate
Transaction, each option under the Plan shall be assumed by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
Plan Administrator determines, in the exercise of its sole discretion and in
lieu of such assumption, to shorten the Offer Period then in progress by setting
a new Exercise Date (the "New Exercise Date"). If the Plan Administrator
shortens the Offer Period then in progress in lieu of assumption in the event of
a Corporate Transaction, the Plan Administrator shall notify each Participant in
writing, at least ten (10) days prior to the New Exercise Date, that the
Exercise Date for the Participant's option has been changed to the New Exercise
Date and that the Participant's option will be exercised automatically on the
New Exercise Date, unless prior to such date the Participant has withdrawn from
the Offer Period as provided in Section 10. For purposes of this Subsection, an
option granted under the Plan shall be deemed to be assumed if, in connection
with the Corporate Transaction, the option is replaced with a comparable option
with respect to shares of capital stock of the successor corporation or Parent
thereof. The determination of option comparability shall be made by the Plan
Administrator prior to the Corporate Transaction and its determination shall be
final, binding and conclusive on all persons.
19. Amendment or Termination.
(a) The Plan Administrator may at any time and for any reason
terminate or amend the Plan. Except as provided in Section 18, no such
termination can affect options previously granted, provided that an Offer Period
may be terminated by the Plan Administrator on any Exercise Date if the Plan
Administrator determines that the termination of the Offer Period is in the best
interests of the Company and its stockholders. Except as provided in Section 18,
no amendment may make any change in any option theretofore granted which
adversely affects the rights of any Participant without the consent of affected
Participants. To the extent necessary to comply with Section 423 of the Code (or
any successor rule or provision or any other Applicable Law), the Company shall
obtain stockholder approval in such a manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether any
Participant rights may be considered to have been "adversely affected," the Plan
Administrator shall be entitled to limit the frequency and/or number of changes
in the amount withheld during Offer Periods, change the length of Purchase
Periods within any Offer Period, determine whether subsequent Offer Periods
shall be consecutive or overlapping, establish the exchange ratio
10
<PAGE> 11
applicable to amounts withheld in a currency other than U.S. dollars, establish
additional terms, conditions, rules or procedures to accommodate the rules or
laws of applicable foreign jurisdictions, permit payroll withholding in excess
of the amount designated by a Participant in order to adjust for delays or
mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or accounting
and crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each Participant properly correspond with amounts withheld from
the Participant's Compensation, and establish such other limitations or
procedures as the Plan Administrator determines in its sole discretion advisable
and which are consistent with the Plan.
20. Notices. All notices or other communications by a Participant
to the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Plan Administrator at the
location, or by the person, designated by the Plan Administrator for the receipt
thereof.
21. Conditions Upon Issuance of Shares. Shares shall not be
issued with respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto shall comply with all
Applicable Laws and shall be further subject to the approval of counsel for the
Company with respect to such compliance. As a condition to the exercise of an
option, the Company may require the Participant to represent and warrant at the
time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such a representation is required
by any of the aforementioned Applicable Laws. In addition, no options shall be
exercised or shares issued hereunder before the Plan shall have been approved by
stockholders of the Company as provided in Section 23.
22. Term of Plan. The Plan shall become effective upon the
earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 19.
23. Stockholder Approval. Continuance of the Plan shall be
subject to approval by the stockholders of the Company within twelve (12) months
before or after the date the Plan is adopted. Such stockholder approval shall be
obtained in the degree and manner required under Applicable Laws.
24. No Employment Rights. The Plan does not, directly or
indirectly, create any right for the benefit of any employee or class of
employees to purchase any shares under the Plan, or create in any employee or
class of employees any right with respect to continuation of employment by the
Company or a Designated Parent or Subsidiary, and it shall not be deemed to
interfere in any way with such employer's right to terminate, or otherwise
modify, an employee's employment at any time.
25. No Effect on Retirement and Other Benefit Plans. Except as
specifically provided in a retirement or other benefit plan of the Company or a
Designated Parent or Subsidiary, participation in the Plan shall not be deemed
compensation for purposes of computing benefits or contributions under any
retirement plan of the Company or a Designated
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<PAGE> 12
Parent or Subsidiary, and shall not affect any benefits under any other benefit
plan of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The Plan
is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.
26. Effect of Plan. The provisions of the Plan shall, in
accordance with its terms, be binding upon, and inure to the benefit of, all
successors of each Participant, including, without limitation, such
Participant's estate and the executors, administrators or trustees thereof,
heirs and legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Participant.
27. Governing Law. The Plan is to be construed in accordance with
and governed by the internal laws of the State of California (as permitted by
Section 1646.5 of the California Civil Code, or any similar successor provision)
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
California to the rights and duties of the parties, except to the extent the
internal laws of the State of California are superseded by the laws of the
United States. Should any provision of the Plan be determined by a court of law
to be illegal or unenforceable, the other provisions shall nevertheless remain
effective and shall remain enforceable.
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<PAGE> 13
EXHIBIT A
Informatica Corporation 1999 Employee Stock Purchase Plan
SUBSCRIPTION AGREEMENT
Effective with the Offer Period beginning on:
[ ] ESPP Effective Date [ ] August 1, 1999 or [ ] February 1, 2000
<TABLE>
<S> <C> <C>
1. PERSONAL INFORMATION <MODIFY DATA REQUESTED AS APPROPRIATE>
Legal Name (Please Print) __________________________________________ _______________ ___________
(Last) (First) (MI) Location Department
Street Address______________________________________________________ ___________________________
Daytime Telephone
City, State/Country, Zip____________________________________________ ___________________________
E-Mail Address
Social Security No. __ __ __ - __ __ - __ __ __ __Employee I.D. No. ___________________________
Manager Mgr. Location
</TABLE>
2. ELIGIBILITY Any Employee whose customary employment is more than 20 hours
per week and more than 5 months per calendar year, and who does not hold
(directly or indirectly) five percent (5%) or more of the combined voting
power of the Company, a parent or a subsidiary, whether in stock or options
to acquire stock is eligible to participate in the Informatica Corporation
1999 Employee Stock Purchase Plan (the "ESPP"); provided, however, that
Employees who are subject to the rules or laws of a foreign jurisdiction
that prohibit or make impractical the participation of such Employees in the
ESPP are not eligible to participate.
3. DEFINITIONS Each capitalized term in this Subscription Agreement shall have
the meaning set forth in the ESPP.
4. SUBSCRIPTION I hereby elect to participate in the ESPP and subscribe to
purchase shares of the Company's Common Stock in accordance with this
Subscription Agreement and the ESPP. I have received a complete copy of the
ESPP and a prospectus describing the ESPP and understand that my
participation in the ESPP is in all respects subject to the terms of the
ESPP. The effectiveness of this Subscription Agreement is dependent on my
eligibility to participate in the ESPP.
5. PAYROLL DEDUCTION AUTHORIZATION I hereby authorize payroll deductions from
my Compensation during the Offer Period in the percentage specified below
(payroll reductions may not exceed 10% of Compensation nor $21,250 per
calendar year):
Percentage to be Deducted (circle one) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
6. ESPP ACCOUNTS AND PURCHASE PRICE I understand that all payroll deductions
will be credited to my account under the ESPP. No additional payments may be
made to my account. No interest will be credited on funds held in the
account at any time including any refund of the account caused by withdrawal
from the ESPP. All payroll deductions shall be accumulated for the purchase
of Company Common Stock at the applicable Purchase Price determined in
accordance with the ESPP.
7. WITHDRAWAL AND CHANGES IN PAYROLL DEDUCTION I understand that I may
discontinue my participation in the ESPP at any time prior to an Exercise
Date as provided in Section 10 of the ESPP, but if I do not withdraw from
the ESPP, any accumulated payroll deductions will be applied automatically
to purchase Company Common Stock. I may increase or decrease the rate of my
payroll deductions in whole percentage increments to not less than one
percent (1%) on one occasion during any Purchase Period by completing and
timely filing a Change of Status Notice. Any decrease will be effective for
the full payroll period occurring after ten (10) business days from the
Company's receipt of the Change of Status Notice. Any increase will be
effective for the next Purchase Period occurring after the Purchase Period
in which the Change of Status Notice is filed with the Company if such
notice is filed more than ten (10) business days prior to the commencement
of the next Purchase Period.
8. PERPETUAL SUBSCRIPTION I understand that this Subscription Agreement shall
remain in effect for successive Offer Periods until I withdraw from
participation in the ESPP, or termination of the ESPP.
A-1
<PAGE> 14
9. TAXES I have reviewed the ESPP prospectus discussion of the federal tax
consequences of participation in the ESPP and consulted with tax consultants
as I deemed advisable prior to my participation in the ESPP. I hereby agree
to notify the Company in writing within thirty (30) days of any disposition
(transfer or sale) of any shares purchased under the ESPP if such
disposition occurs within two (2) years of the Enrollment Date (the first
day of the Offer Period during which the shares were purchased) or within
one (1) year of the Exercise Date (the date I purchased such shares), and I
will make adequate provision to the Company for foreign, federal, state or
other tax withholding obligations, if any, which arise upon the disposition
of the shares. In addition, the Company may withhold from my Compensation
any amount necessary to meet applicable tax withholding obligations incident
to my participation in the ESPP, including any withholding necessary to make
available to the Company any tax deductions or benefits contingent on such
withholding.
10. DESIGNATION OF BENEFICIARY In the event of my death, I hereby designate the
following person or trust as my beneficiary to receive all payments and
shares due to me under the ESPP: [ ] I am single [ ] I am married
Beneficiary (please print) _________________________________________________
(Last) (First) (MI)
Relationship to Beneficiary (if any) _______________________________________
Street Address _____________________________________________________________
City, State/Country, Zip ___________________________________________________
11. TERMINATION OF ESPP I understand that the Company has the right, exercisable
in its sole discretion, to amend or terminate the ESPP at any time, and a
termination may be effective as early as an Exercise Date (after purchase of
shares on such date) within each outstanding Offer Period.
Date: _______________ Employee Signature:__________________________________
__________________________________
spouse's signature (if
beneficiary is other than spouse)
A-2
<PAGE> 15
EXHIBIT B
Informatica Corporation 1999 Employee Stock Purchase Plan
CHANGE OF STATUS NOTICE
______________________________________________
Participant Name (Please Print)
______________________________________________
Social Security Number
WITHDRAWAL FROM ESPP
I hereby withdraw from the Informatica Corporation 1999 Employee Stock
Purchase Plan (the "ESPP") and agree that my option under the applicable
Offer Period will be automatically terminated and all accumulated
payroll deductions credited to my account will be refunded to me or
applied to the purchase of Common Stock depending on the alternative
indicated below. No further payroll deductions will be made for the
purchase of shares in the applicable Offer Period and I shall be
eligible to participate in a future Offer Period only by timely delivery
to the Company of a new Subscription Agreement.
================================================================================
[ ] WITHDRAWAL AND PURCHASE OF COMMON STOCK
Payroll deductions will terminate, but your account balance will be applied
to purchase Common Stock on the next Exercise Date. Any remaining balance
will be refunded.
[ ] WITHDRAWAL WITHOUT PURCHASE OF COMMON STOCK
Entire account balance will be refunded to me and no Common Stock will be
purchased on the next Exercise Date provided this notice is submitted to
the Company ten (10) business days prior to the next Exercise Date.
================================================================================
[ ] CHANGE IN PAYROLL DEDUCTION
I hereby elect to change my rate of payroll deduction under the ESPP as
follows (select one):
- --------------------------------------------------------------------------------
Percentage to be Deducted (circle one) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10%
- --------------------------------------------------------------------------------
The following rules under the ESPP apply to changing your payroll
deduction rate:
DECREASE -- Decrease in payroll deduction will be effective for the
first full payroll period commencing no fewer than ten (10)
business days following the Company's receipt of this notice,
unless this change is processed more quickly.
INCREASE -- An increase in payroll deduction will be effective for the
next Purchase Period following the Purchase Period in which
this notice is received by the Company provided that this
notice is submitted to the Company no fewer than ten (10)
business days before the first day of the upcoming Purchase
Period.
================================================================================
B-1
<PAGE> 16
================================================================================
[ ] CHANGE OF BENEFICIARY [ ] I am single [ ] I am married
This change of beneficiary shall terminate my previous beneficiary
designation under the ESPP. In the event of my death, I hereby designate
the following person or trust as my beneficiary to receive all payments
and shares due to me under the ESPP:
Beneficiary (please print) _________________________________________________
(Last) (First) (MI)
Relationship to Beneficiary (if any) _______________________________________
Street Address _____________________________________________________________
City, State/Country, Zip ___________________________________________________
================================================================================
Date: ___________________ Employee Signature:_________________________________
_________________________________
spouse's signature (if
beneficiary is other than spouse)
B-1
<PAGE> 1
EXHIBIT 10.13
INFORMATICA CORPORATION
1999 NON-EMPLOYEE DIRECTOR STOCK INCENTIVE PLAN
1. Purposes of the Plan. The purposes of this Stock Incentive Plan are
to attract and retain the best available Non-Employee Directors, to provide them
additional incentives, and to promote the success of the Company's business.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of the Committees
appointed to administer the Plan.
(b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange
Act.
(c) "Applicable Laws" means the legal requirements relating to
the administration of stock incentive plans, if any, under applicable provisions
of federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any foreign jurisdiction applicable to Awards granted to residents therein.
(d) "Award" means the grant of an Option or other right or
benefit under the Plan.
(e) "Award Agreement" means the written agreement evidencing the
grant of an Award executed by the Company and the Grantee, including any
amendments thereto.
(f) "Board" means the Board of Directors of the Company.
(g) "Change in Control" means a change in ownership or control of
the Company effected through either of the following transactions:
(i) the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which a
majority of the Continuing Directors who are not Affiliates or Associates of the
offeror do not recommend such stockholders accept, or
(ii) a change in the composition of the Board over a
period of thirty-six (36) months or less such that a majority of the Board
members (rounded up to the next whole number) ceases, by reason of one or more
contested elections for Board membership, to be comprised of individuals who are
Continuing Directors.
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<PAGE> 2
(h) "Code" means the Internal Revenue Code of 1986, as amended.
(i) "Committee" means any committee appointed by the Board to
administer the Plan.
(j) "Common Stock" means the common stock of the Company.
(k) "Company" means Informatica Corporation, a Delaware
corporation.
(l) "Consultant" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.
(m) "Continuing Directors" means members of the Board who either
(i) have been Board members continuously for a period of at least thirty-six
(36) months or (ii) have been Board members for less than thirty-six (36) months
and were elected or nominated for election as Board members by at least a
majority of the Board members described in clause (i) who were still in office
at the time such election or nomination was approved by the Board.
(n) "Continuous Service" means that the Grantee's service as a
Director is not interrupted or terminated. The Continuous Service of a Grantee
shall not be considered interrupted or terminated in the case of (i) any
approved leave of absence or (ii) terminating service as a Director followed
within thirty (30) days of such termination by commencing service to the Company
or a Related Entity as an Employee or a Consultant until the time such service
as an Employee or Consultant is terminated. An approved leave of absence shall
include sick leave, military leave, or any other authorized personal leave.
(o) "Corporate Transaction" means any of the following
transactions:
(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 in which the Company is incorporated;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations) in connection with the complete
liquidation or dissolution of the Company;
(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 a person or persons different from those who held such
securities immediately prior to such merger; or
(iv) an acquisition by any person or related group of
persons (other than the Company or by a Company-sponsored employee benefit plan)
of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act)
of securities possessing more than fifty
2
<PAGE> 3
percent (50%) of the total combined voting power of the Company's outstanding
securities (whether or not in a transaction also constituting a Change in
Control), but excluding any such transaction that the Administrator determines
shall not be a Corporate Transaction.
(p) "Director" means a member of the Board.
(q) "Disability" means that a Grantee would qualify for benefit
payments under the long-term disability policy of the Company or the Related
Entity to which the Grantee provides services regardless of whether the Grantee
is covered by such policy.
(r) "Employee" means any person, including a Director, who is an
employee of the Company or any Related Entity. The payment of a director's fee
by the Company or a Related Entity shall not be sufficient to constitute
"employment" by the Company.
(s) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(t) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) Where there exists a public market for the Common
Stock, the Fair Market Value shall be (A) the closing price for a Share for the
last market trading day prior to the time of the determination (or, if no
closing price was reported on that date, on the last trading date on which a
closing price was reported) on the stock exchange determined by the
Administrator to be the primary market for the Common Stock or the Nasdaq
National Market, whichever is applicable or (B) if the Common Stock is not
traded on any such exchange or national market system, the average of the
closing bid and asked prices of a Share on the Nasdaq Small Cap Market for the
day prior to the time of the determination (or, if no such prices were reported
on that date, on the last date on which such prices were reported), in each
case, as reported in The Wall Street Journal or such other source as the
Administrator deems reliable; or
(ii) In the absence of an established market for the
Common Stock of the type described in (i), above, the Fair Market Value thereof
shall be determined by the Administrator in good faith.
(u) "Grantee" means a Non-Employee Director who receives an Award
pursuant to an Award Agreement under the Plan.
(v) "Non-Employee Director" means a Director who is not an
Employee.
(w) "Non-Qualified Stock Option" means an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(x) "Option" means an option to purchase Shares pursuant to an
Award Agreement granted under the Plan.
(y) "Plan" means this 1999 Non-Employee Director Stock Incentive
Plan.
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<PAGE> 4
(z) "Registration Date" means the first to occur of (i) the
closing of the first sale to the general public of (A) the Common Stock or (B)
the same class of securities of a successor corporation (or its Parent) issued
pursuant to a Corporate Transaction in exchange for or in substitution of the
Common Stock, pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act of
1933, as amended; and (ii) in the event of a Corporate Transaction, the date of
the consummation of the Corporate Transaction if the same class of securities of
the successor corporation (or its Parent) issuable in such Corporate Transaction
shall have been sold to the general public pursuant to a registration statement
filed with and declared effective by the Securities and Exchange Commission
under the Securities Act of 1933, as amended on or prior to the date of
consummation of such Corporate Transaction.
(aa) "Related Entity" means any parent, subsidiary and any
business, corporation, partnership, limited liability company or other entity in
which the Company, a parent or a subsidiary holds a substantial ownership
interest, directly or indirectly.
(bb) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor thereto.
(cc) "Share" means a share of the Common Stock.
3. Stock Subject to the Plan.
(a) Subject to the provisions of Section 8, below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards is two
hundred fifty thousand (250,000) Shares. The Shares to be issued pursuant to
Awards may be authorized, but unissued, or reacquired Common Stock.
(b) Any Shares covered by an Award (or portion of an Award) which
is forfeited or canceled, expires or is settled in cash, shall be deemed not to
have been issued for purposes of determining the maximum aggregate number of
Shares which may be issued under the Plan. If any unissued Shares are retained
by the Company upon exercise of an Award in order to satisfy the exercise price
for such Award or any withholding taxes due with respect to such Award, such
retained Shares subject to such Award shall become available for future issuance
under the Plan (unless the Plan has terminated). Shares that actually have been
issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become available for future issuance under the Plan, except that if
unvested Shares are forfeited, or repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan.
4. Administration of the Plan.
(a) Plan Administrator.
(i) Administration. The Plan shall be administered by (A)
the Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws and to permit
such grants and related transactions
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under the Plan to be exempt from Section 16(b) of the Exchange Act in accordance
with Rule 16b-3. Once appointed, such Committee shall continue to serve in its
designated capacity until otherwise directed by the Board.
(ii) Administration Errors. In the event an Award is
granted in a manner inconsistent with the provisions of this subsection (a),
such Award shall be presumptively valid as of its grant date to the extent
permitted by the Applicable Laws.
(b) Powers of the Administrator. Subject to Applicable Laws and
the provisions of the Plan (including any other powers given to the
Administrator hereunder), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:
(i) to approve forms of Award Agreements for use under the
Plan;
(ii) to determine the terms and conditions consistent with
the terms of the Plan of any Award granted hereunder;
(iii) to amend the terms of any outstanding Award granted
under the Plan, provided that any amendment that would adversely affect the
Grantee's rights under an outstanding Award shall not be made without the
Grantee's written consent;
(iv) to construe and interpret the terms of the Plan and
Awards granted pursuant to the Plan, including without limitation, any notice of
Award or Award Agreement, granted pursuant to the Plan;
(v) to establish additional terms, conditions, rules or
procedures to accommodate the rules or laws of applicable foreign jurisdictions
and to afford Grantees favorable treatment under such laws; provided, however,
that no Award shall be granted under any such additional terms, conditions,
rules or procedures with terms or conditions which are inconsistent with the
provisions of the Plan; and
(vi) to take such other action, not inconsistent with the
terms of the Plan, as the Administrator deems appropriate.
(c) Effect of Administrator's Decision. Subject to Section 4(b),
all decisions, determinations and interpretations of the Administrator shall be
conclusive and binding on all persons.
5. Automatic Option Grant Program.
(a) Eligibility. Each Non-Employee Director shall be entitled to
receive Options upon the terms and conditions of this Automatic Option Grant
Program.
(b) Date of Grant and Number of Shares. A Non-Qualified Stock
Option to purchase 25,000 Shares shall be granted automatically ("Initial
Grant") to each Non-Employee Director elected or appointed to the Board after
the Registration Date upon the date each such Non-Employee Director first
becomes a Non-Employee Director. In addition, immediately
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following each annual meeting of the Company's stockholders, each Non-Employee
Director who continues as a Non-Employee Director following such annual meeting
shall be granted automatically a Non-Qualified Stock Option to purchase 5,000
Shares ("Subsequent Grant"); provided that no Subsequent Grant shall be made to
any Non-Employee Director who has not served as a Director, as of the time of
such annual meeting, for at least six (6) months. Each such Subsequent Grant
shall be made on the date of the annual stockholders' meeting in question.
(c) Vesting. Each Initial Grant shall vest and become exercisable
as to one-fourth (1/4) of the Shares subject to such Option twelve (12) months
after the grant date and an additional one-fourth (1/4) of the Shares subject to
such Option shall vest on each yearly anniversary of the grant date thereafter,
such that the Option will be fully exercisable four (4) years after its date of
grant. Each Subsequent Grant shall vest and become fully exercisable as to all
of the Shares subject to such Option twelve (12) months after the grant date.
(d) Corporate Transactions. Except as may be provided in an Award
Agreement, effective upon the consummation of a Corporate Transaction, all
outstanding Awards under the Plan shall terminate. However, all such Awards
shall not terminate if they are, in connection with the Corporate Transaction,
assumed by the successor corporation or parent thereof.
(e) Exercise of Option Following Termination of Service. In the
event of termination of a Grantee's Continuous Service for any reason other than
Disability or death, such Grantee may, but only within three (3) months from the
date of such termination, exercise the Grantee's Option to the extent that the
Grantee was entitled to exercise it at the date of such termination (but in no
event later than the expiration date of the term of such Option as set forth in
the Award Agreement). To the extent that the Grantee is not entitled to exercise
the Option at the date of termination, or if Grantee does not exercise such
Option to the extent so entitled within the time specified herein, the Option
shall terminate.
(f) Disability of Grantee. In the event of termination of a
Grantee's Continuous Service as a result of his or her Disability, such Grantee
may, but only within twelve (12) months from the date of such termination,
exercise the Grantee's Option to the extent that the Grantee was entitled to
exercise it at the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Award Agreement).
To the extent that the Grantee is not entitled to exercise the Option at the
date of termination, or if Grantee does not exercise such Option to the extent
so entitled within the time specified herein, the Option shall terminate.
(g) Death of Grantee. In the event of the death of a Grantee, the
Grantee's Option may be exercised at any time within twelve (12) months
following the date of death (but in no event later than the expiration of the
term of such Option as set forth in the Award Agreement), by the Grantee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent that the Grantee was entitled to exercise
the Option at the date of death. To the extent that the Grantee is not entitled
to exercise the Option at the time of death, the Option shall terminate. If,
after death, the Grantee's estate or a person who acquired the right
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to exercise the Option by bequest or inheritance does not exercise the Option
within the time specified herein, the Option shall terminate.
(h) Term of Option. The term of each Option awarded under this
Automatic Option Grant Program shall be five (5) years from the date of grant
thereof.
(i) Transferability of Option. Each Option awarded under this
Automatic Option Grant Program shall be transferable to the extent provided in
the Award Agreement.
(j) Exercise Price. The exercise price for each Option awarded
under this Automatic Option Grant Program shall be one hundred percent (100%) of
the Fair Market Value per Share on the date of grant.
(k) Consideration. Subject to Applicable Laws, the consideration
to be paid for the Shares to be issued upon exercise of an Option under this
Automatic Option Grant Program shall be the following, provided that the portion
of the consideration equal to the par value of the Shares must be paid in cash
or other legal consideration permitted by the Delaware General Corporation Law:
(i) cash;
(ii) check;
(iii) surrender of Shares or delivery of a properly
executed form of attestation of ownership of Shares as the Administrator may
require (including withholding of Shares otherwise deliverable upon exercise of
the Option) which have a Fair Market Value on the date of surrender or
attestation equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised (but only to the extent that such exercise of the
Option would not result in an accounting compensation charge with respect to the
Shares used to pay the exercise price unless otherwise determined by the
Administrator);
(iv) payment through a broker-dealer sale and remittance
procedure pursuant to which the Grantee (A) shall provide written instructions
to a Company designated brokerage firm to effect the immediate sale of some or
all of the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (B) shall provide written
directives to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction; or
(v) any combination of the foregoing methods of payment.
(l) Taxes. No Shares shall be delivered under the Plan to any
Grantee or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign, federal,
state, or local tax withholding obligations. Upon exercise of an Award, the
Company shall withhold or collect from Grantee an amount sufficient to satisfy
such tax obligations.
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(m) Other Terms. The Administrator shall determine the remaining
terms and conditions of the Options awarded under this Automatic Option Grant
Program.
6. Procedure for Exercise; Rights as a Stockholder.
(a) Any Award granted hereunder shall be exercisable at such
times and under such conditions as determined by the Administrator under the
terms of the Plan and specified in the Award Agreement.
(b) An Award shall be deemed to be exercised when written notice
of such exercise has been given to the Company in accordance with the terms of
the Award by the person entitled to exercise the Award and full payment for the
Shares with respect to which the Award is exercised, including, to the extent
selected, use of the broker-dealer sale and remittance procedure to pay the
purchase price as provided in Section 5(k)(iv). Until the issuance (as evidenced
by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to Shares subject to an Award, notwithstanding the exercise
of an Option or other Award. The Company shall issue (or cause to be issued)
such stock certificate promptly upon exercise of the Award. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in the Award Agreement
or Section 8, below.
7. Conditions Upon Issuance of Shares.
(a) Shares shall not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such
Shares pursuant thereto shall comply with all Applicable Laws, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.
(b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws.
8. Adjustments Upon Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of Shares covered by each
outstanding Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or which
have been returned to the Plan, the exercise or purchase price of each such
outstanding Award, as well as any other terms that the Administrator determines
require adjustment shall be proportionately adjusted for (i) any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Shares, or
similar transaction affecting the Shares, (ii) any other increase or decrease in
the number of issued Shares effected without receipt of consideration by the
Company, or (iii) as the Administrator may determine in its discretion, any
other transaction with respect to Common Stock to which Section 424(a) of the
Code applies or a
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similar transaction; provided, however that conversion of any convertible
securities of the Company shall not be deemed to have been "effected without
receipt of consideration." Such adjustment shall be made by the Administrator
and its determination shall be final, binding and conclusive. Except as the
Administrator determines, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason hereof shall be made with respect to, the
number or price of Shares subject to an Award.
9. Effective Date and Term of Plan. The Plan shall become effective upon
the earlier to occur of its adoption by the Board or its approval by the
stockholders of the Company. It shall continue in effect for a term of twenty
(20) years unless sooner terminated.
10. Amendment, Suspension or Termination of the Plan.
(a) The Board may at any time amend, suspend or terminate the
Plan. To the extent necessary to comply with Applicable Laws, the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.
(b) No Award may be granted during any suspension of the Plan or
after termination of the Plan.
(c) Any amendment, suspension or termination of the Plan
(including termination of the Plan under Section 9, above) shall not affect
Awards already granted, and such Awards shall remain in full force and effect as
if the Plan had not been amended, suspended or terminated, unless mutually
agreed otherwise between the Grantee and the Administrator, which agreement must
be in writing and signed by the Grantee and the Company.
11. Reservation of Shares.
(a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.
(b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
12. No Effect on Retirement and Other Benefit Plans. Except as
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The Plan
is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.
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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 Amendment No. 1 to the Registration Statement (Form S-1,
No. 333-72677) and related Prospectus of Informatica Corporation dated April 7,
1999.
Our audits also included the financial statement schedule of Informatica
Corporation listed in the Index at Item 16(b). This schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information set
forth therein.
/s/ ERNST & YOUNG LLP
Palo Alto, California
April 7, 1999
