SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
August 25, 1997 (August 12, 1997)
Date of report (Date of earliest event reported)
INFORMIX CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
0-15325
(Commission File Number)
94-3011736
(I.R.S. Employer Identification No.)
4100 Bohannon Drive
Menlo Park, California 94025
(Address of Principal Executive Offices) (Zip Code)
650-926-6300
(Registrant's Telephone Number, Including Area Code)
Item 5. Other Events.
On August 13, 1997, Informix Corporation (the "Company") issued a press
release announcing that on August 12, 1997 the Company had received a
$40 million equity investment from Fletcher International Limited.
A copy of the press release is attached to this Current Report as
exhibit 99.1 and is incorporated herein.
The Company sold 160,000 shares of newly issued Series A Convertible
Preferred Stock for an aggregate of $40 million and issued a warrant to
acquire up to an additional 140,000 shares of Series A Convertible
Preferred Stock at an aggregate exercise price of up to $35 million. The
offer and sale of these securities were not registered under the
Securities Act of 1933 pursuant to the exemption provided by Regulation
S and these securities may not be offered or sold in the United States
absent registration or an applicable exemption from registration
requirements. Hambrecht & Quist LLC served as the Company's placement agent.
The Series A Convertible Preferred Stock is convertible into shares
of Common Stock at any time after issuance and will automatically
convert into Common Stock 18 months following the date of its issuance
by Informix. At the holder's option, each share of Series A Convertible
Preferred Stock, which has a face value of $250, is convertible into
Common Stock at a per share price equal to 101% of the Common Stock
average price for the thirty trading days ending five trading days prior
to the conversion, but not greater than the lesser of (i) 105% of the
Common Stock average price of the first five trading days of such thirty
day period, or (ii) $12. The number of shares of Common Stock to be
issued upon conversion will vary based on future stock price movements.
The warrant may generally be exercised from and after August 13, 1997 to
and including February 15, 1998, with a provision for extension of the
warrant exercise period under certain circumstances. The exercise price
for the Series A Convertible Preferred Stock related to the warrant is
$250 per share of Series A Convertible Preferred Stock.
The foregoing description is only a summary and is qualified in its
entirety by reference to the Subscription Agreement dated as of August
12, 1997 between the Company and Fletcher International Limited and the
Certificate of Designation of Series A Convertible Preferred Stock
attached to this Current Report as exhibits 99.2 and 99.3, respectively.
The proceeds from the equity investment will be used for working capital
purposes.
Item 7. Exhibits.
Copies of the press release, the Subscription Agreement and the
Certificate of Designation are filed as exhibits to this Current Report.
Item 9. Sales of Equity Securities Pursuant to Regulation S.
Reference is made to Item 5 of this Current Report.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this Current Report to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Menlo
Park, State of California, on August 25, 1997.
INFORMIX CORPORATION
(Registrant)
By /s/ David H. Stanley,
David H. Stanley,
Vice President,
Legal and Corporate Services,
General Counsel and Secretary
INDEX TO EXHIBITS
Exhibit
Number Description
- -------
99.1 Press Release dated August 13, 1997
99.2 Subscription Agreement dated as of August 12,
1997 between the Company and Fletcher
International Limited
99.3 Certificate of Designation of Series A Convertible
Preferred Stock
Editorial Contacts:
Margaret Brauns Robert Manetta Jill Lindstedt
Financial Analysts Public Relations Industry Analysts
650-926-6025 650-926-6978 650-926-1940
INFORMIX CORPORATION RECEIVES $40 MILLION EQUITY
INVESTMENT FROM FLETCHER INTERNATIONAL LIMITED
MENLO PARK, CA, Aug. 13, 1997 -- Informix Corporation
(NASDAQ: IFMX) today announced that it has received a $40 million equity
investment from Fletcher International Limited.
The Company sold 160,000 shares of newly issued Series A
Convertible Preferred Stock for an aggregate of $40 million and issued a
warrant to acquire up to an additional 140,000 shares of Series A
Convertible Preferred Stock at an aggregate exercise price of up to $35
million. The offer and sale of these securities were not registered
under the Securities Act of 1933 pursuant to an exemption and these
securities may not be offered or sold in the United States absent
registration or an applicable exemption from registration requirements.
Hambrecht & Quist LLC served as the Company's placement agent on this
transaction.
The Series A Convertible Preferred Stock is convertible into shares
of Common Stock at any time after issuance and will automatically
convert into Common Stock 18 months following the date of its issuance
by Informix. At the holder's option, each share of Series A Convertible
Preferred Stock, which has a face value of $250, is convertible into
Common Stock at a per share price equal to 101% of the Common Stock
average price for the thirty trading days ending five trading days prior
to the conversion, but not greater than the lesser of (i) 105% of the
Common Stock average price of the first five trading days of such thirty
day period, or (ii) $12. The number of shares of Common Stock to be
issued upon conversion will vary based on future stock price movements.
The warrant may generally be exercised from and after August 13,
1997 to and including February 15, 1998, with a provision for extension
of the warrant exercise period under certain circumstances. The exercise
price for the Series A Convertible Preferred Stock related to the
warrant is $250 per share of Series A Convertible Preferred Stock.
Bob Finocchio, Chairman and CEO of Informix said: "We are most
pleased to close the investment with Fletcher International Limited. We
intend to use the proceeds in our operations as we work to get Informix
back on track towards profitability."
About Informix
Informix Software, Inc., the Company's operating subsidiary based
in Menlo Park, Calif., provides innovative database technology that
enables the world's leading corporations to manage and grow their
businesses. Informix is widely recognized as the technology leader for
corporate computing environments ranging from workgroups to very large
OLTP and data warehouse applications. Informix's database servers,
application development tools, superior customer service, and strong
partnerships enable the Company to be at the forefront of many leading-
edge information technology solution areas. Informix information is
accessible via the World Wide Web at http://www.informix.com.
# # #
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement") dated August 12,
1997 is entered into by and between Informix Corporation, a Delaware
corporation (together with its successors, "Informix" or the "Company"),
and Fletcher International Limited, a company organized under the laws
of the Cayman Islands (together with its successors, "Fletcher").
Unless otherwise defined herein, capitalized terms used herein
and not defined herein shall have the meanings given to them in
Regulation S (as now in effect or as hereafter amended, "Regulation S")
under the Securities Act of 1933, as amended (the "Securities Act").
The parties hereto agree as follows:
1. Purchase and Sale. In consideration of and upon the basis
of the representations, warranties and agreements and subject to the
terms and conditions set forth in this Agreement:
a. Convertible Preferred Stock. Fletcher agrees to
purchase from Informix, and Informix agrees to sell to Fletcher, on the
Closing Date specified in Section 2 hereof, 160,000 shares (the "Initial
Preferred Shares") of Informix's Convertible Preferred Stock, Series A,
liquidation preference $250 per share (the "Preferred Stock"), having
the terms and conditions set forth in the Certificate of Designation
attached hereto as Annex A (the "Certificate of Designation"), at an
aggregate purchase price of $40,000,000 (the "Initial Purchase Price").
b. Joint Option. Fletcher and Informix may by mutual
further consent exercise an option (the "Joint Option") providing for
Informix to sell to Fletcher up to an additional number of shares (the
"Joint Preferred Shares") of Preferred Stock at a purchase price (the
"Joint Purchase Price") equal to the liquidation preference of such
Option Preferred Shares. To exercise the Joint Option, which exercise
shall be irrevocable, (i) Informix shall have delivered written notice
(the "Joint Notice") to Fletcher from the date six months after the
Closing Date to but not later than May 31, 1998 in the form attached
hereto as Annex B, and (ii) Fletcher, in its sole and absolute
discretion, shall have accepted such offer by duly executing and
delivering such Joint Notice to Informix within 10 trading days of
receipt of such Joint Notice. Unless Fletcher accepts such offer,
Fletcher shall have no obligation whatsoever to accept or deliver a
Joint Notice or to purchase any Joint Preferred Shares. The date
Informix delivers the Joint Notice is referred to herein as the "Joint
Option Notice Date". If the Joint Option is exercised and accepted,
such sale shall take place on the Joint Closing Date (as defined below)
upon satisfaction of the terms and conditions described herein. The
aggregate liquidation preference of the Joint Preferred Shares shall be
equal to an amount up to $35,000,000 as agreed by the parties. Upon
satisfaction or, if applicable, waiver of the relevant conditions set
forth in Sections 8 and 9 hereof, the closing of the sale of the Joint
Preferred Shares (the "Joint Closing") shall take place initially via
facsimile on the first trading day which is at least 30 calendar days
following acceptance and delivery of the Joint Notice by Fletcher or at
a time and date mutually agreed upon, provided that such Joint Closing
shall not occur prior to the sixth month anniversary of the Closing Date
(such date and time being referred to herein as the "Joint Closing
Date").
c. Warrant. Informix grants Fletcher a warrant (the
"Warrant", and together with the Joint Option, an "Option") to purchase
from Informix from time to time up to an additional number of shares
(the "Warrant Preferred Shares", and together with the Joint Option
Preferred Shares, the "Option Preferred Shares") of Preferred Stock as
determined below at a purchase price (the "Warrant Purchase Price", and
together with the Joint Option Purchase Price, the "Option Purchase
Price") equal to the liquidation preference of such Warrant Preferred
Shares. To exercise the Warrant, Fletcher shall have delivered one or
more written notice(s) in the form attached hereto as Annex G (a
"Warrant Notice") to Informix from time to time prior to the February
15, 1998 (the "Warrant Exercise Date"), provided that the Warrant
Exercise Date shall be extended by one trading day for each trading day
past September 21, 1997 on which Informix is not a Reporting Issuer (as
defined in Regulation S). If the Warrant is exercised, such sale shall
take place on a Warrant Closing Date (as defined below) upon
satisfaction of the terms and conditions described herein. The aggregate
liquidation preference of the Warrant Preferred Shares shall not exceed
$35,000,000. Upon satisfaction or, if applicable, waiver of the
relevant conditions set forth in Sections 8 and 9 hereof, the closing of
the sale of the Warrant Preferred Shares (the "Warrant Closing", and
together with the Joint Closing, an "Option Closing") shall take place
initially via facsimile at Fletcher's option on (i) the date that is
three trading days following delivery of the Warrant Notice or (ii) in
the event Fletcher has made a Registration Request under Section 7(a),
the date that is 10 trading days excluding and following the date on
which Informix notifies Fletcher that a registration statement relating
to all shares of Converted Stock has been declared effective, or at such
other date and time as Fletcher and Informix shall mutually agree (such
date and time being referred to herein as the "Warrant Closing Date",
and together with the Joint Closing Date, an "Option Closing Date"). In
the event Fletcher has made a Registration Request under Section 7(a),
and notwithstanding Informix's best efforts, such registration statement
has not been declared effective on or before July 15, 1998, the Warrant
shall expire and no longer be exercisable and any prior notice of
exercise of the Warrant shall be deemed to have been rescinded unless
prior to such date Fletcher exercises the Warrant by delivery of a
further Warrant Notice stating that Warrant Closing Date shall be the
date that is three trading days following delivery of such Warrant
Notice. Nothing in this section limits Informix's obligations under
Section 7.
The Warrant represented hereby shall be issued on the Closing
Date pursuant to the Subscription Agreement dated August 12, 1997
between Informix Corporation and Fletcher International Limited.
Neither the Warrant represented hereby nor the securities issued upon
exercise of the Warrant have been registered under the Securities Act of
1933, as amended (the "Securities Act"). The Warrant represented hereby
may not be exercised by or on behalf of any U.S. Person (as defined in
regulation S under the Securities Act ("Regulation S")) unless the
securities issuable upon exercise of the Warrant are registered under
the Securities Act or an exemption from registration is available. The
Warrant represented hereby shall be issued and sold in reliance on the
exemption from registration provided by Regulation S.
d. Converted Stock. The term "Converted Stock" shall
apply to any shares of Informix's common stock, par value $0.01 per
share (the "Common Stock") issued or to be issued to Fletcher upon
conversion of the Initial Preferred Shares or the Option Preferred
Shares pursuant to the terms of this Agreement and the Certificate of
Designation.
2. Closing. A. The closing of the sale of the
Initial Preferred Shares (the "Closing") shall take place initially via
facsimile on August 12, 1997 upon satisfaction or, if applicable,
waiver of the conditions set forth in Sections 8 and 9 hereof, or at
such other date and time as Fletcher and Informix shall mutually agree
(such date and time being referred to herein as the "Closing Date"),
provided that the original certificates representing the Initial
Preferred Shares shall be delivered via Federal Express to Fletcher at
the address set forth in Section 14.
At the Closing, the following deliveries shall be made:
a. Initial Preferred Shares. Informix shall deliver to
Fletcher ten stock certificates, each representing an equal number of
shares of Preferred Stock and collectively representing the Initial
Preferred Shares, duly registered on the books of Informix in the name
of Fletcher, against payment by Fletcher of the Initial Purchase Price
in immediately available funds to the following account: Informix
Software, Inc., Account Number: 12330-09815, Bank of America N.T. &
S.A., 1850 Gateway Boulevard, Concord, CA 94520, ABA Routing Number:
121 000 358.
b. Closing Documents. The closing documents required by
Sections 8 and 9 shall be delivered to Fletcher and Informix,
respectively.
c. Delivery Notice. An executed copy of the delivery
notice in the form attached hereto as Annex C shall be delivered to
Fletcher.
The foregoing deliveries shall be deemed to occur
simultaneously as part of a single transaction, and no delivery shall be
deemed to have been made until all such deliveries have been made.
B. At any Option Closing, the following deliveries shall
be made:
a. Option Preferred Shares. Informix shall deliver the
certificate representing the Option Preferred Shares, duly registered on
the books of Informix in the name of Fletcher, against payment by
Fletcher of the Option Purchase Price in immediately available funds to
the account identified in the Joint Notice, in the case of the Joint
Option, or by certified or official bank check to the order of
Informix, in the case of a Warrant.
b. Closing Documents. The closing documents required
by Sections 8 and 9 shall be delivered to Fletcher and Informix,
respectively.
c. Delivery Notice. An executed copy of the delivery
notice in the form attached hereto as Annex C shall be delivered to
Fletcher.
The foregoing deliveries shall be deemed to occur
simultaneously as part of a single transaction, and no delivery shall be
deemed to have been made until all such deliveries have been made. The
original certificates representing the Option Preferred Shares shall be
delivered via Federal Express to Fletcher at the address set forth in
Section 14 hereof, unless Fletcher shall have delivered to Informix a
written notice specifying a different address.
3. Representations and Warranties of Informix. Except as set
forth in the Disclosure Schedule attached hereto as Annex D, Informix
hereby represents and warrants to Fletcher on the date hereof, the
Closing Date, the Option Closing Date, and on the date any Preferred
Share or Option Preferred Share is converted into Common Stock (each a
"Conversion Date") (unless otherwise specified as provided in the
paragraphs below) as follows:
a. Informix has been duly incorporated and is validly
existing in good standing under the laws of Delaware, or, after the
Closing Date if another entity has succeeded Informix in accordance with
the terms hereof, under the laws of one of the United States.
b. The execution, delivery and performance of this
Agreement (including the issuance of the Initial Preferred Shares and
Option Preferred Shares) and of the Certificate of Designation by
Informix have been duly authorized by all requisite corporate action and
no further consent or authorization of Informix, its Board of Directors
or its stockholders is required in connection therewith (except to the
extent anticipated in the Certificate of Designation relating to Excess
Preferred Shares (as defined therein)). This Agreement has been duly
executed and delivered by Informix and, when duly authorized, executed
and delivered by Fletcher, will be a valid and binding agreement of
Informix, enforceable against Informix in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.
c. Informix has full corporate power and authority
necessary to execute and deliver this Agreement and to perform its
obligations hereunder (including the issuance of the Initial Preferred
Shares and the Option Preferred Shares) and under the Certificate of
Designation.
d. Except as may be required under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, no consent,
approval, authorization or order of any court, governmental agency or
other body is required for the execution and delivery by Informix of
this Agreement or the performance by Informix of any of its obligations
hereunder (including the issuance of the Initial Preferred Shares and
the Option Preferred Shares) and under the Certificate of Designation.
e. Except as may be required under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended, none of the
execution and delivery by Informix of this Agreement, the performance by
Informix of any of its obligations hereunder (including issuance of the
Initial Preferred Shares and the Option Preferred Shares) and under the
Certificate of Designation:
(1) violates, conflicts with, results in a breach
of, or constitutes a default (or an event which with the giving of
notice or the lapse of time or both would be reasonably likely to
constitute a default) under (A) the Certificate of Incorporation or by-
laws of Informix or any of its subsidiaries or any certificate of
designation relating to any securities of Informix or any of its
subsidiaries, (B) any decree, judgment, order, law, treaty, rule,
regulation or determination of any court, governmental agency or body,
or arbitrator having jurisdiction over Informix or any of its
subsidiaries or any of their respective properties or assets, (C) the
terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan,
indenture, lease, mortgage, deed of trust or other instrument to which
Informix or any of its subsidiaries is a party, by which Informix or any
of its subsidiaries is bound, or to which any of the properties or
assets of Informix or any of its subsidiaries is subject, (D) the terms
of any "lock-up" or similar provision of any underwriting or similar
agreement to which Informix or any of its subsidiaries is a party or (E)
any rules of the National Association of Securities Dealers, Inc.
applicable to Informix or the transactions contemplated hereby; or
(2) results in the creation or imposition of any
lien, charge or encumbrance (other than encumbrances that may be imposed
under federal securities laws) upon (A) any Initial Preferred Share,
Option Preferred Share or any Converted Stock or (B) any of the
properties or assets of Informix or any of its subsidiaries.
f. Informix has validly reserved 160,000 shares of
Preferred Stock for issuance pursuant to the terms hereof at the Closing
and 9 million shares of Common Stock for issuance upon conversion of the
Initial Preferred Shares, subject only to filing the Certificate of
Designation, which will be accomplished on or before the Closing Date.
On any Option Closing Date, Informix represents that it has validly
reserved all shares of Preferred Stock issued thereon and a number of
shares of Common Stock equal to twice the number of shares then issuable
upon conversion of the Initial Preferred Shares and the Option Preferred
Shares. When issued to Fletcher against payment therefor, each
Preferred Share, Option Preferred Share and share of Converted Stock:
(1) will be duly and validly authorized, duly and
validly issued, fully paid and non-assessable;
(2) will be free and clear of any security
interests, liens, claims or other encumbrances (other than encumbrances
that may be imposed under federal securities laws); and
(3) will not have been issued or sold in violation
of any preemptive or other similar rights of the holders of any
securities of Informix.
g. When issued, each share of Converted Stock will be
duly listed and admitted for trading on the on the NASDAQ National
Market ("NASDAQ") or, if applicable, listed and registered on a national
securities exchange (as defined in the United States Securities Exchange
Act of 1934, as amended (the "Exchange Act")). Informix satisfies all
quantitative maintenance criteria of the NASDAQ.
h. Informix is a reporting issuer within the meaning
of Regulation S ("Reporting Issuer"), provided, however, that the
representation and warranty contained in this Section 3(h) shall not be
required to be given in respect of an Option Closing Date or any
Conversion Date if the provisions of Section 7 are applicable and
Informix is in full compliance therewith and Fletcher is permitted to
resell the Converted Stock thereunder.
i. There is no pending or, to the best knowledge of
Informix, threatened action, suit, proceeding or investigation before
any court, governmental agency or body, or arbitrator having
jurisdiction over Informix or any of its affiliates that would
materially affect the execution by Informix of, or the performance by
Informix of its obligations under, this Agreement.
j. Informix has filed all filings with the United
States Securities and Exchange Commission (the "SEC") under the
Securities Act or under Section 13(a) or 15(d) of the Exchange Act (any
such filing, an "SEC Filing") required to be filed by Informix pursuant
to such acts and no SEC Filing, or press release (including without
limitation the press release issued on August 7, 1997 relating to the
restatement of Informix's financial statements) containing information
material to the business of Informix as a whole, contained any untrue
statement of a material fact or omitted to state any material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading. From and
after the Closing Date, the financial statements of Informix included in
SEC Filings (including any similar documents filed after the date of
this Agreement) comply as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto have been prepared in
accordance with generally accepted accounting principles (except, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may
be indicated in the notes thereto) and fairly present the consolidated
financial position of Informix and its consolidated subsidiaries as of
the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
k. Since the date of Informix's most recent quarterly
report on Form 10-Q or most recent periodic report on Form 8-K filed
with the SEC, there has not been, and Informix is not aware of any
development that is reasonably likely to result in, any material adverse
change in the condition, financial or otherwise, or in the business
affairs of Informix, whether or not arising in the ordinary course of
business. The representations and warranties contained in this Section
3.k. shall not be required to be given in respect of any Conversion Date
or any Warrant Closing Date.
l. The offer and sale of the Initial Preferred Shares
and the Option Preferred Shares, subject to compliance by Fletcher with
the applicable representations and warranties contained in Section 4
hereof and with the applicable covenants and agreements contained in
Section 6 hereof, shall be made in accordance with the provisions and
requirements of Regulation S and any applicable state law, provided,
however, that the representations and warranties contained in this
Section 3(l) shall not be required to be given in respect of the Option
Closing Date or any Conversion Date if the provisions of Section 7 are
applicable and Informix is in full compliance therewith and Fletcher is
permitted to resell the Common Stock thereunder.
m. Neither Informix nor any of its affiliates nor any
person acting on its or their behalf has engaged or will engage in any
directed selling efforts within the meaning of Regulation S ("Directed
Selling Efforts") with respect to the Initial Preferred Shares, the
Option Preferred Shares or the Converted Stock, and all such persons
understand and have complied and will otherwise comply with the
applicable requirements of Regulation S, provided, however, that the
representations and warranties contained in this Section 3(m) shall not
be required to be given in respect of the Option Closing Date or any
Conversion Date if the provisions of Section 7 are applicable and
Informix is in full compliance therewith and Fletcher is permitted to
resell the Common Stock thereunder.
n. The transactions contemplated by this Agreement
are not part of a plan or scheme on the part of Informix, any of its
affiliates or any person acting on its or their behalf to evade the
registration provisions of the Securities Act.
o. Informix has not issued, and after the date
hereof, will not issue, any stop transfer order or other order impeding
the sale and delivery of the Initial Preferred Shares, the Option
Preferred Shares or the Converted Stock except for a stop order
restricting the sale of any of the foregoing securities to any person in
the United States or to or for the account or benefit of any U.S. Person
during an applicable Restricted Period or otherwise not in compliance
with any applicable securities law or regulation.
p. Neither Informix nor any of its affiliates has
offered to sell or sold any Common Stock or any securities convertible
into or exchangeable or exercisable for Common Stock in reliance upon
Regulation S at any time during the 12 months prior to the date of this
Agreement; and as of the date hereof there are no outstanding
convertible or exchangeable securities that have been offered or sold in
reliance upon Regulation S, except, in each case, the Initial Preferred
Shares, the Option Preferred Shares and the Converted Stock, and as of
an Option Closing Date there are no outstanding convertible or
exchangeable equity securities that have been offered or sold in
reliance upon Regulation S, except, in each case, the Initial Preferred
Shares, the Option Preferred Shares and the Converted Stock. The
representations and warranties contained in this Section 3.p. shall not
be required to be given in respect of any Conversion Date.
q. As of the date of this Agreement, the authorized
capital stock of Informix consists of 500,000,000 shares of Common
Stock, and as of the Closing Date, the authorized capital stock of
Informix shall consist of 500,000,000 shares of Common Stock and
5,000,000 shares of preferred stock, par value $0.01 per share, of which
440,000 shares shall be designated Series A Convertible Preferred Stock.
As of August 6, 1997: (i) 152,328,562 shares of Common Stock
were issued and outstanding (together with associated rights to acquire
an additional share of Common Stock for each share outstanding under
Informix's Amended and Restated Rights Plan dated as of a date on or
prior to the Closing (together with any amendment or replacement
thereof, the "Rights Plan")); (ii) 25,292,181 shares of Common Stock
were reserved for issuance under stock option plans or upon exercise of
stock options granted outside such plans, of which 20,452,945 shares are
subject to outstanding, unexercised options and 4,839,236 shares remain
available for future grant under such plans; (iii) 4,000,000 shares of
Common Stock were reserved for issuance under employee stock purchase
plans; (iv) 30,913 shares of Common Stock were reserved for issuance
upon exercise of a warrant; and (v) 500,000 shares of Common Stock
reserved for issuance upon exercise of a non-qualified stock option
granted to the Chairman, President and Chief Executive Officer of
Informix.
All the outstanding shares of Common Stock are, and all shares
which may be issued pursuant to stock options, warrants or other
convertible rights will be, when issued and paid for in accordance with
the respective terms thereof, duly authorized, validly issued, fully
paid and nonassessable and free of any preemptive rights in respect
thereof. As of the date of this Agreement, except as set forth above,
and except for shares of Common Stock or other securities issued upon
conversion, exchange, exercise or purchase associated with the
securities, options, warrants, rights and other instruments referenced
above from August 6, 1997 to the date of this Agreement, and except for
shares of Common Stock related to option grants or purchases made after
August 6, 1997 to the date of this Agreement under stock option plans
for employees, directors or consultants and stock purchase plans for
employees (not exceeding 100,000 shares in the aggregate as of the date
hereof), and except for repurchase rights in favor of Informix with
respect to common stock held by employees or former employees of
Informix, and except for the Rights Plan, (i) no shares of capital stock
or other voting securities of Informix were outstanding, (ii) no equity
equivalents, interests in the ownership or earnings of Informix or other
similar rights were outstanding and (iii) there were no existing
options, warrants, calls, subscriptions or other rights or agreements or
commitments relating to the capital stock of Informix or any of its
subsidiaries or obligating Informix or any of its subsidiaries to issue,
transfer, sell or redeem any shares of capital stock, or other equity
interest in, Informix or any of its subsidiaries or obligating Informix
or any of its subsidiaries to grant, extend or enter into any such
option, warrant, call, subscription or other right, agreement or
commitment.
r. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereunder will not cause Fletcher to be deemed an Acquiring Person
within the meaning of, nor create (other than to Fletcher) or trigger
any rights under the Rights Plan. Each of the shares of Common Stock
issuable in connection herewith shall be entitled to the rights accorded
all other shares of Common Stock under the Rights Plan.
s. On the Joint Option Closing Date, Informix shall
not have suffered any material adverse change, or any development that
is reasonably likely to result in any material adverse change in the
condition, financial or otherwise, or in the business affairs of
Informix, whether or not in the ordinary course of business, which is
not disclosed in Informix's public filings under the Exchange Act filed
not less than five trading days prior to the Joint Option Notice Date.
4. Representations and Warranties of Fletcher. Fletcher
hereby represents and warrants to Informix on the date hereof, the
Closing Date and each Option Closing Date, and agrees with Informix
(unless otherwise specified as provided in the paragraphs below), as
follows:
a. Fletcher has been duly incorporated and is validly
existing in good standing under the laws of the Cayman Islands, or,
after the Closing Date if another entity has succeeded Fletcher in
accordance with the terms hereof, under the laws of the jurisdiction of
its incorporation.
b. The execution, delivery and performance of this
Agreement by Fletcher have been duly authorized by all requisite
corporate action and no further consent or authorization of Fletcher,
its Board of Directors or its stockholders is required. This Agreement
has been duly executed and delivered by Fletcher and, when duly
authorized, executed and delivered by Informix, will be a valid and
binding agreement enforceable against Fletcher in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity.
c. Fletcher understands that no United States federal
or state agency has passed on, reviewed or made any recommendation or
endorsement of the Initial Preferred Shares, the Option Preferred Shares
or the Converted Stock.
d. In making the decision to purchase the Initial
Preferred Shares or the Option Preferred Shares in accordance with this
Agreement, Fletcher has relied solely upon independent investigations
made by it and not upon any representations made by Informix other than
those made in this Agreement.
e. Subject to Section 7, Fletcher understands that
the Initial Preferred Shares, the Option Preferred Shares and the
Converted Stock have not been registered under the Securities Act and
may not be reoffered or resold other than pursuant to such registration
or an available exemption therefrom.
f. Fletcher is not a U.S. person within the meaning
of Regulation S ("U.S. Person") and is not acquiring the Initial
Preferred Shares, the Option Preferred Shares or any Converted Stock for
the account or benefit of any U.S. Person, or following the Closing
Date, subject to Section 7, the issuance of the Converted Stock or the
Option Preferred Shares is otherwise exempt from registration under the
Securities Act.
g. At the time the buy order for the Initial
Preferred Shares and, subject to Section 7, the Option Preferred Shares,
as applicable, is originated, Fletcher was located outside the United
States.
h. Neither Fletcher nor any of its affiliates nor
anyone acting on its or their behalf has engaged or will engage in any
Directed Selling Efforts with respect to the Initial Preferred Shares,
the Option Preferred Shares or any Converted Stock, and all such persons
understand and have complied and will otherwise comply with the
requirements of Regulation S, unless following the Closing Date, subject
to Section 7, the issuance of the Converted Stock or the Option
Preferred Shares is otherwise exempt from registration under the
Securities Act.
i. Subject to Section 7, Fletcher is purchasing the
Initial Preferred Shares, the Option Preferred Shares and the Converted
Stock for its own account, for the purpose of investment and not with a
view to a distribution thereof.
j. The transactions contemplated by this Agreement
are not part of a plan or scheme on the part of Fletcher, any of its
affiliates or any person acting on its or their behalf to evade the
registration requirements of the Securities Act.
k. Assuming the accuracy of the representations and
warranties of Informix herein made as of such date, no consent,
approval, authorization or order of any court, governmental agency or
other body is required for the execution by Fletcher of this Agreement
or the performance by Fletcher of any of its obligations hereunder,
other than such as have been obtained.
l. Neither the execution by Fletcher of this
Agreement nor the performance by Fletcher of any of its obligations
hereunder will violate, conflict with, result in a breach of, or
constitute a default (or an event which with the giving of notice or the
lapse of time or both would be reasonably likely to constitute a
default) under the Memorandum or Articles of Association of Fletcher.
m. Fletcher understands that no United States federal
or state agency has passed on, reviewed or made any recommendation or
endorsement of the Initial Preferred Shares, the Option Preferred Shares
or the Converted Stock.
n. Fletcher represents and warrants that it has not
relied upon any information or representations and warranties of
Hambrecht & Quist LLC (the "Placement Agent"), including, without
limitation, any information regarding Informix and its officers,
financial condition, business and prospects, or the terms of the
purchase of the Initial Preferred Shares and the Option Preferred
Shares. The foregoing, however, does not affect any rights of Fletcher
relative to Informix and does not limit or modify the representations
and warranties of Informix in Section 3 of this Agreement or the right
of Fletcher to rely thereon. Informix and Fletcher expressly
acknowledge and agree and intend that the Placement Agent is a third
party beneficiary of this Section 4(n).
5. Covenants of Informix. Except as set forth in the
Disclosure Schedule attached hereto, Informix covenants and agrees with
Fletcher as follows:
a. For so long as any of the Initial Preferred Shares
or Option Preferred Shares are outstanding, and in any case for a period
of 40 calendar days thereafter, and for so long as any Option is
exercisable, Informix will continue to be a Reporting Issuer within the
meaning of Regulation S and will maintain the eligibility of the Common
Stock for quotation on NASDAQ or listing on a national securities
exchange (as defined in the Exchange Act). Notwithstanding the
foregoing, Informix shall not be required to continue to be a Reporting
Issuer and Informix shall not be obligated to make the representation
set forth in Section 3(h) hereof from August 13, 1997 until Informix
files the quarterly report for the period ended June 29, 1997, provided
that Informix uses its best efforts to be a Reporting Issuer at all
times following the Closing Date.
b. For a period beginning on the date hereof and
ending on the day which is six months after the Joint Closing Date, or
in the event no Option is exercised, on March 2, 1998, Informix will not
offer or sell any Preferred Stock (other than the Option Preferred
Shares), Common Stock or other equity securities (or any securities
convertible into or exchangeable for such Preferred Stock, Common Stock,
or other equity securities) in reliance upon Regulation S and in any
event will not take any action which would extend the Restricted Period
of any securities issued or issuable hereunder, provided, however, that
the covenants and agreements contained in this Section 5(b) shall not be
required to be made in respect of the Option Closing Date or any
Conversion Date if the provisions of Section 7 are applicable and
Informix is in full compliance therewith and Fletcher is permitted to
resell the Common Stock thereunder.
c. For so long as any of the Initial Preferred
Shares or Option Preferred Shares are outstanding, and in any case for a
period of 40 calendar days thereafter, and for so long as the Option is
exercisable, neither Informix nor any of its affiliates nor any person
acting on its or their behalf will engage in any Directed Selling
Efforts with respect to the Initial Preferred Shares, the Option
Preferred Shares or any Converted Stock, provided, however, that the
covenants and agreements contained in this Section 5(c) shall not be
required to be made in respect of the Option Closing Date or any
Conversion Date if the provisions of Section 7 are applicable and
Informix is in full compliance therewith and Fletcher is permitted to
resell the Common Stock thereunder.
d. For so long as any of the Initial Preferred Shares
or Option Preferred Shares are outstanding, and in any case for a period
of 40 calendar days thereafter, and for so long as any Option is
exercisable, Informix will ensure that all applicable offering
restrictions within the meaning of Regulation S ("Offering
Restrictions") with respect to the Initial Preferred Shares, the Option
Preferred Shares and the Converted Stock are thoroughly complied with
and satisfied, provided, however, that the covenants and agreements
contained in this Section 5(d) shall not be required to be made in
respect of the Option Closing Date or any Conversion Date if the
provisions of Section 7 are applicable and Informix is in full
compliance therewith and Fletcher is permitted to resell the Common
Stock thereunder.
e. Beginning on the date hereof and for so long as
any of the Initial Preferred Shares or Option Preferred Shares are
outstanding and in any case for a period of 40 calendar days thereafter,
and so long as any Option is exercisable, Informix will (i) provide
Fletcher with an opportunity to review and comment on any public
disclosure by Informix of information regarding this Agreement and the
transactions contemplated hereby (including pursuant to paragraph 5. (i)
below), (ii) promptly notify Fletcher of any public disclosure by
Informix of material information regarding Informix or its financial
condition, prospects or results of operation and (iii) provide Fletcher
with copies of all SEC Filings.
f. Informix will (i) comply with the terms and
conditions of the Initial Preferred Shares and the Option Preferred
Shares as set forth in the Certificate of Designation, (ii) not amend
the Certificate of Designation without Fletcher's express written
consent and (iii) not issue any Preferred Stock other than as provided
hereunder without Fletcher's express written consent.
g. For so long as any of the Initial Preferred Shares
or Option Preferred Shares are outstanding, and for so long as any
Option is exercisable, Informix shall at all times reserve and keep
available, free from preemptive rights, out of its authorized but
unissued Common Stock, for issuance upon conversion of such Initial
Preferred Shares or Option Preferred Shares, not less than the maximum
number of shares of Converted Stock then so issuable in exchange for all
Initial Preferred Shares and Option Preferred Shares that have been
issued or are issuable pursuant to this Agreement.
h. For a period beginning on the date hereof and
ending on the day which is six months after the Joint Closing Date, or
in the event no Option is exercised, on June 30, 1998, Informix will not
offer or sell any of its or its subsidiaries' Preferred Stock, Common
Stock or other equity securities (or any securities convertible into or
exchangeable for such Preferred Stock, Common Stock or other equity
securities) in reliance upon Section 4(2) of the Securities Act or
Regulation D promulgated thereunder (an "Equity Placement"), unless
Informix shall have given Fletcher at least eight business days prior
written notice of its intention to engage in any such Equity Placement
or other capital raising transaction in advance of soliciting or
negotiating with any prospective investor and the parties hereto shall
have negotiated in good faith during such eight business days with
respect to any proposed Equity Placement, provided that during such
eight business day period, Informix shall not negotiate with any party
other than Fletcher with respect to any proposed Equity Placement.
Except during the five trading days excluding and immediately prior to
and excluding and immediately following each of the Closing Date and the
Option Closing Date, the above restrictions shall not apply to (i) the
sale of 50% or more of the outstanding common stock of a subsidiary of
Informix, (ii) any strategic partnership or arrangement or joint venture
entered into by Informix or any of its subsidiaries, (iii) the merger or
consolidation of Informix with or into any other corporation or entity
(other than a merger or consolidation that in substance results in the
issuance of Informix's securities for cash), (iv) any registered,
underwritten public offering of Informix's equity securities, (v) any
issuances of Common Stock (including warrants and options exercisable
for or convertible into Common Stock) in connection with bank or
equipment financing, (vi) any issuances of Common Stock (including
warrants and options exercisable for or convertible into Common Stock)
in connection with any employee, consultant or director compensation
plan or arrangement or (vii) any transaction intended to be made in
reliance upon Rule 144A of the Securities Act so long as such
transaction involves more than 10 purchasers.
i. As soon as such information is available (but in
no event later than 30 calendar days after the Closing Date), Informix
shall deliver to Fletcher a written notice stating the number of
outstanding shares of Common Stock as of the Closing Date.
j. In accordance with the terms of Regulation S,
Informix will file with the SEC, within 15 calendar days after the
Closing Date, a report on Form 8-K with respect to the transactions
contemplated hereby. In addition, Informix shall file copies of this
Agreement, including the Disclosure Schedule, and the Certificate of
Designation as exhibits to such Form 8-K.
k. Informix shall take all actions necessary to cause
the Converted Stock to be listed and admitted for trading upon issuance
on the NASDAQ or, if applicable, a national securities exchange (as
defined in the Exchange Act) and shall maintain the listing of such
shares after their issuance; provided, however, that, so long as
Informix is otherwise in compliance with the provisions of this
Agreement and the Certificate of Designation, Informix need not comply
with the covenant contained in this Section 5.k. following any
Transaction (as defined in the Certificate of Designation) as a result
of which the outstanding shares of Common Stock are no longer publicly
traded.
l. Prior to the Closing Date, Informix shall amend
the Rights Plan in a manner consistent with the provision contained in
Annex H and take any and all actions necessary, including further
amending the Rights Plan, to prevent the transactions contemplated
hereunder from causing any Fletcher Party (as defined in the Rights
Plan) to be deemed an Acquiring Person within the meaning of, or
otherwise creating (other than to a Fletcher Party) or triggering any
rights under, the Rights Plan, and shall not thereafter take any actions
inconsistent with the rights of Fletcher Parties as of the Closing Date.
6. Covenants of Fletcher. Fletcher hereby covenants and
agrees with Informix as follows:
a. During any Restricted Period applicable to the
Initial Preferred Shares, the Option Preferred Shares or the Converted
Stock issuable with respect thereto, neither Fletcher nor any of its
affiliates nor any person acting on its or their behalf will:
(1) offer or sell such Initial Preferred Shares,
Option Preferred Shares or Converted Stock other than in an Offshore
Transaction;
(2) engage in any Directed Selling Efforts with
respect to such Initial Preferred Shares, Option Preferred Shares or
Converted Stock;
(3) offer or sell such Initial Preferred Shares,
Option Preferred Shares or Converted Stock other than: (A) in
accordance with Rule 903 or Rule 904 of Regulation S; (B) pursuant to
registration under the Securities Act or (C) pursuant to an available
exemption therefrom; or
(4) offer or sell such Initial Preferred Shares,
Option Preferred Shares or Converted Stock, to any U.S. Person or for
the account or benefit of any U.S. Person.
The foregoing restriction shall not apply to the
Initial Preferred Shares, the Option Preferred Shares or the Converted
Stock issuable with respect thereto, if Section 7 is applicable or the
offer or sale is made pursuant to registration under the Securities Act
or an available exemption therefrom.
b. Neither Fletcher nor any of its affiliates nor any
person acting on its or their behalf will at any time offer or sell any
Initial Preferred Shares, any Option Preferred Shares or any Converted
Stock other than pursuant to registration under the Securities Act or
pursuant to an available exemption therefrom.
c. Solely with respect to Joint Preferred Shares, if
any, Fletcher hereby irrevocably waives for itself and its successors
the benefit of the provision in the term the "Conversion Price" as
defined in Section 4(E) of the Certificate of Designation that such
Conversion Price shall not exceed $12.00.
6A. Legend. The term "Restricted Period," with respect to
any security, shall mean the Restricted Period then applicable to such
security pursuant to Regulation S (or any applicable successor thereto),
provided that, the parties agree that absent an intervening change in
the applicable law, (i) the Restricted Period with respect to the
Initial Preferred Shares and the Converted Stock issuable with respect
thereto and the Warrant and the Warrant Preferred Shares issuable with
respect thereto will expire on the 40th calendar day after and including
the Closing Date, and (ii) the Restricted Period with respect to the
Joint Preferred Shares and the Converted Stock issuable with respect
thereto will expire on the 40th calendar day after and including the
Joint Closing Date. Informix may place the following legend on the
certificate representing the Initial Preferred Shares and the Joint
Preferred Shares (and any Warrant Preferred Shares issued during the
Restricted Period applicable to the Warrant):
The securities represented by this certificate were issued on
[___ __], 199[7] (the "Closing Date") pursuant to the Subscription
Agreement dated August 12, 1997 between Informix Corporation
("Informix") and Fletcher International Limited. The securities
represented by this certificate have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and have been
sold in reliance on the exemption from registration provided by
Regulation S under the Securities Act ("Regulation S"). Prior to the
expiration of a 40-day restricted period beginning on the Closing Date
(the "Restricted Period"), the securities represented by this
certificate may not be offered or sold, directly or indirectly, within
the United States (as defined in Regulation S under the Securities Act),
to a U.S. Person (as defined in Regulation S under the Securities Act)
or for the account or benefit of a U.S. Person. After the Restricted
Period, such securities may be resold in the United States or to a U.S.
Person only if they are registered under the Securities Act or an
exemption from registration is available.
At any time after the expiration of the Restricted Period with
respect to the Initial Preferred Shares, the Warrant or the Joint
Preferred Shares, certificates for any Warrant Preferred Shares issued
or for any Converted Stock issued or in respect of transferred shares of
Common Stock will not be legended unless required by Regulation S or
other applicable law.
7. Registration Provisions.
(a) If, at any time after the Closing Date, there is any
determination of application of, or change in, any law or regulation
relating to the issuance and resale of the Initial Preferred Shares, the
Option Preferred Shares or the Converted Stock, including any
interpretation or revision by the SEC or action by the United States
government relating to Regulation S or any successor or revision to
Regulation S, and such determination, change, interpretation, successor
provision or revision imposes a Restricted Period applicable to any
security issued or issuable hereunder that is greater than that in
effect on the date of this Agreement, or would materially impair the
ability of Fletcher or any of its affiliates to offer, sell or otherwise
dispose of any such security pursuant to Regulation S as contemplated
hereby, or requires any such offer, sale or other disposition to be
registered under the Securities Act, then upon the written request of
Fletcher (a "Registration Request") made in good faith after
consultation with counsel, Informix shall, as promptly as practicable
and in any event no later than (i) 30 calendar days thereafter if
Informix is eligible to use Form S-3 or (ii) 45 calendar days thereafter
if Informix is not eligible to use Form S-3 and at its own expense, file
a registration statement on an appropriate form of the SEC (the
"Registration Statement") (which Registration Statement shall be filed
on Form S-3, if available) under the Securities Act covering the sale or
resale of all shares of Converted Stock (each a "Covered Security") and
shall use its best efforts to cause such Registration Statement to be
declared effective as promptly as practicable following its filing;
provided that Fletcher shall have provided such information and
cooperation in connection therewith as Informix may reasonably request.
Informix shall amend the Registration Statement from time to time upon
the request of Fletcher if the maximum number of shares of Common Stock
issuable upon conversion of the Initial Preferred Shares and any Option
Preferred Shares that have been issued or may be issuable to Fletcher is
greater than the number of shares of Common Stock registered pursuant to
such Registration Statement; provided that Fletcher shall have provided
such information and cooperation in connection therewith as Informix may
reasonably request. Upon the effectiveness of such Registration
Statement (A) Informix shall issue such securities to Fletcher in
accordance with the terms hereof and (B) the provisions of Sections
3(1), (m) and (o) and (p), 4(e), (f), (g), (h), (i) and (j), 5(a), (b),
(c) and (d), 6(a) (collectively, the "Specified Provisions"), 8(a) and
(b) (to the extent applicable to the Specified Provisions), 9(b), (c)
and (d) (to the extent applicable to the Specified Provisions) shall
thereafter be of no force and effect with respect to the issuance of
such Covered Securities.
If a Registration Statement has not been declared
effective (a "Non-Registration") before the 180th calendar day following
and excluding the date of a Registration Request, Informix hereby agrees
to repurchase any Covered Securities as may not be resold in the United
States without restriction under the Securities Act upon request for
cash in an amount (the "Cash Amount") equal to (i) the liquidation
preference of the then-unconverted Initial Preferred Shares and Option
Preferred Shares, plus (ii) the Conversion Value multiplied by the
number of shares of the Converted Stock. The repurchase obligations set
forth in this Section 7 shall be subject to limitations of the Delaware
General Corporation Law. The "Conversion Value" is equal to the
weighted average of the respective conversion prices of Converted Stock
issued to Fletcher upon the conversion of Initial Preferred Shares and
Option Preferred Shares, with each such conversion price weighted
according to the number of shares of Common Stock received on the
respective date of conversion.
(b) In the case of the registration effected by
Informix pursuant to this Section 7, Informix will use its best efforts
to: (i) keep such registration effective until the earliest of (A) the
second anniversary of the issuance of each Covered Security, (B) such
date as all of the Covered Securities have been sold by Fletcher or (C)
such time as all of the Covered Securities held by Fletcher can be sold
by Fletcher or any of its affiliates within a three-month period without
compliance with the registration requirements of the Securities Act
pursuant to Rule 144 under the Securities Act ("Rule 144"); (ii) prepare
and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection with the
Registration Statement (as so amended and supplemented from time to
time, the "Prospectus") as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
Covered Securities by Fletcher or any of its affiliates; (iii) furnish
such number of Prospectuses and other documents incident thereto,
including any amendment of or supplement to the Prospectus, as Fletcher
from time to time may reasonably request; (iv) cause all Covered
Securities that are Common Stock to be listed on each securities
exchange and quoted on each quotation service on which similar
securities issued by Informix are then listed or quoted; (v) provide a
transfer agent and registrar for all Covered Securities and a CUSIP
number for all Covered Securities; (vi) otherwise use its best efforts
to comply with all applicable rules and regulations of the SEC; and
(vii) file the documents required of Informix and otherwise use its best
efforts to obtain and maintain requisite blue sky clearance in (A) all
jurisdictions in which any of the Covered Securities are originally sold
and (B) all other states specified in writing by Fletcher, provided
however, that as to this clause (B) Informix shall not be required to
qualify to do business or consent to service of process in any state in
which it is not now so qualified or has not so consented.
(c) Informix shall furnish to Fletcher upon request a
reasonable number of copies of a supplement to or an amendment of such
Prospectus as may be necessary in order to facilitate the public sale or
other disposition of all or any of the Covered Securities by Fletcher or
any of its affiliates pursuant to the Registration Statement.
(d) With a view to making available to Fletcher and
its affiliates the benefits of Rule 144 and Form S-3 under the
Securities Act, Informix covenants and agrees to: (i) make and keep
available adequate current public information (within the meaning of
Rule 144(c)) concerning Informix, until the earlier of (A) the second
anniversary of the issuance of each Covered Security or (B) such date as
all of the Covered Securities shall have been resold by Fletcher or any
of its affiliates; (ii) maintain its status as a Reporting Issuer and
file with the SEC in a timely manner all reports and other documents
required of Informix for use of Form S-3; and (iii) furnish to Fletcher
upon request, as long as Fletcher owns any Covered Securities, (A) a
written statement by Informix that it has complied with the reporting
requirements of the Securities Act and the Exchange Act, (B) a copy of
the most recent annual or quarterly report of Informix, and (C) such
other publicly disclosed information as may be reasonably requested in
order to avail Fletcher and its affiliates of Rule 144 or Form S-3 with
respect to such Covered Securities.
(e) Notwithstanding anything else in this Section 7,
if, at any time during which a Prospectus is required to be delivered in
connection with the sale of any Covered Securities, Informix determines
in good faith and in its reasonable judgment that such sale would
require public disclosure by the Company of material non-public
information that the Company deems it advisable not to disclose, or that
a development has occurred or a condition exists as a result of which
the Registration Statement or the Prospectus filed as a part thereof
contains a material misstatement or omission, Informix will immediately
notify Fletcher thereof by telephone and in writing. Upon receipt of
such notification, Fletcher and its affiliates will immediately suspend
all offers and sales of any Covered Securities pursuant to the
Registration Statement. In such event, Informix will amend or
supplement the Registration Statement as promptly as practicable and
will take such other steps as may be required to permit sales of the
Covered Securities thereunder by Fletcher and its affiliates in
accordance with applicable federal and state securities laws. Informix
will promptly notify Fletcher after it has determined in good faith that
such sales have become permissible in such manner and will promptly
deliver copies of the Registration Statement and the Prospectus (as so
amended or supplemented) to Fletcher in accordance with paragraph (b) of
this Section 7. Notwithstanding the foregoing, (A) under no
circumstances shall Informix be entitled to exercise its right to
suspend sales of any Covered Securities pursuant to the Registration
Statement more than two times in any twelve-month period, (B) the period
during which such sales may be suspended (each a "Blackout Period")
shall not exceed thirty calendar days and (C) no Blackout Period may
commence less than thirty calendar days after the end of the preceding
Blackout Period. Informix shall take any and all actions necessary,
including amending the Certificate of Designation, to ensure that the
automatic conversion date provided in the Certificate of Designation
does not occur during a Blackout period or within ten trading days of a
Blackout Period.
Upon the commencement of a Blackout Period pursuant to
this Section 7, Fletcher will immediately notify Informix of any
contracts to sell any Covered Securities (each a "Sales Contract") that
Fletcher or any of its affiliates has entered into prior to notification
of the commencement of such Blackout Period and that would require
delivery of such Covered Securities during such Blackout Period, which
notice will contain the aggregate sale price and volume of Covered
Securities pursuant to such Sales Contract. Upon receipt of such
notice, Informix will immediately notify Fletcher of its election either
(i) to terminate the Blackout Period and, as promptly as practicable,
amend or supplement the Registration Statement or the Prospectus filed
as a part thereof in order to correct the material misstatement or
omission and deliver to Fletcher copies of such amended or supplemented
Registration Statement and Prospectus in accordance with paragraph (b)
of this Section 7 or (ii) to continue the Blackout Period in accordance
with this paragraph. If Informix elects to continue the Blackout
Period, and Fletcher or any of its affiliates is therefore unable to
consummate the sale of Covered Securities pursuant to the Sales Contract
(such unsold Covered Securities being hereinafter referred to herein as
the "Unsold Securities"), Informix will promptly indemnify each Fletcher
Indemnified Party (as such term is defined in Section 12(a) below)
against any Proceeding (as such term is defined in Section 12(a) below)
that each Fletcher Indemnified Party may incur arising out of or in
connection with Fletcher's breach or alleged breach of any such Sales
Contract, and Informix shall reimburse each Fletcher Indemnified Party
for any reasonable costs or expenses (including reasonable legal fees)
incurred by such party in investigating or defending any such Proceeding
(collectively, the "Indemnification Amount"); provided, however, that
each Fletcher Indemnified Party shall take all actions reasonably
necessary or appropriate to mitigate such Indemnification Amount; and
provided further, however, that the Indemnification Amount shall be
reduced by an amount equal to the number of Unsold Securities multiplied
by the difference between (x) the actual per share price received by
Fletcher or any of its affiliates upon the sale of the Unsold Securities
(if such sale occurs within three Trading Days of the end of the
Blackout Period) or the closing sale price of the Common Stock on the
NASDAQ or other national securities exchange on which the Common Stock
is then listed on the third Trading Day after the end of the Blackout
Period (if the Unsold Securities are not sold by Fletcher or any of its
affiliates within three Trading Days of the end of the Blackout Period),
and (y) the per share sale price for the Unsold Securities provided in
the Sales Contract. As used herein, the term "Trading Day" means any
day on which Informix's Common Stock is quoted on NASDAQ or, if
applicable, other national securities exchange.
8. Conditions Precedent to Fletcher's Obligations. The
obligations of Fletcher hereunder are subject to the performance by
Informix of its obligations hereunder and to the satisfaction of the
following additional conditions precedent, unless expressly waived in
writing by Fletcher:
a. On the Closing Date and the Option Closing Date
and on each Conversion Date (i) to the extent provided in Section 3
hereof, the representations and warranties made by Informix in this
Agreement shall be true and correct, (ii) Informix shall have complied
fully with all the covenants and agreements in this Agreement, and (iii)
with respect to the Closing Date, the conditions set forth in 8(h) and
8(i) have been satisfied; and Fletcher shall have received on each such
date a certificate of the Chief Executive Officer and the Chief
Financial Officer (or Chief Accounting Officer) of Informix dated such
date and to such effect.
b. On the Closing Date and the Option Closing Date
and on each Conversion Date, Informix shall have delivered to Fletcher
an opinion of counsel, reasonably satisfactory to Fletcher, dated the
date of delivery, substantially in the form attached hereto as Annex E.
c. Prior to the Closing, Informix shall have caused
the Certificate of Designation to be filed with the Secretary of State
of the State of Delaware in accordance with the laws thereof.
d. On the Closing Date, Informix shall have delivered
to Fletcher an opinion of counsel reasonably satisfactory to Fletcher,
dated the Closing Date, to the effect that the offer and sale of the
Initial Preferred Shares hereunder do not require registration under the
Securities Act.
e. Prior to the Closing, Informix shall have amended
the Rights Plan such that the transactions contemplated hereunder will
not cause Fletcher to be deemed an Acquiring Person within the meaning
of, nor create (other than to Fletcher) or trigger any rights under, the
Rights Plan.
f. On the Option Closing Date, Informix shall have
delivered to Fletcher an opinion of counsel reasonably satisfactory to
Fletcher, dated the Option Closing Date, to the effect that the offer
and sale of the Option Preferred Shares hereunder do not require
registration under the Securities Act.
g. On the Joint Option Closing Date, Fletcher's
obligation to purchase Option Preferred Shares shall be subject to the
condition that Informix shall not have suffered any material adverse
change, or any development that is reasonably likely to result in any
material adverse change in the condition, financial or otherwise, or in
the business affairs of Informix, whether or not in the ordinary course
of business, which is not disclosed in Informix's public filings under
the Exchange Act filed not less than five trading days prior to the
Joint Option Notice Date.
As used herein the term "Business Day" means any day on which
banks in the City of New York are open for business.
9. Conditions Precedent to Informix's Obligations. The
obligations of Informix hereunder are subject to the performance by
Fletcher of its obligations hereunder and to the satisfaction of the
following additional conditions precedent, unless expressly waived in
writing by Informix:
a. On the Closing Date and the Option Closing Date
and on each Conversion Date, (i) the representations and warranties made
by Fletcher in this Agreement shall be true and correct, and (ii)
Fletcher shall have complied fully with all the covenants and agreements
in this Agreement; and Informix shall have received on each such date a
certificate of an appropriate officer of Fletcher dated such date and to
such effect.
b. On the Closing Date and on the Option Closing
Date, Fletcher shall have delivered to Informix a written certification
of an appropriate officer of Fletcher dated such date stating that
Fletcher is not a U.S. Person.
c. On each Conversion Date, Fletcher shall have
delivered to Informix either (i) a written certification of an
appropriate officer of Fletcher dated such date stating that Fletcher is
not a U.S. Person or (ii) an opinion of counsel to the effect that the
Initial Preferred Shares or the Option Preferred Shares, as applicable,
and the shares of Common Stock delivered upon conversion thereof have
been registered under the Securities Act or an exemption from such
registration is available.
d. On the date of any transfer by Fletcher of any
Initial Preferred Shares, Option Preferred Shares or Converted Stock
during the applicable Restricted Period, Fletcher shall have delivered
to Informix a written certification of an appropriate officer of
Fletcher dated such date stating that Fletcher is not a U.S. Person and
that the Initial Preferred Shares or the Option Preferred Shares are not
being converted or exercised on behalf of a U.S. Person, or in the case
of the Option Preferred Shares and the shares of Converted Stock
issuable upon conversion thereof, that such shares have been registered
under the Securities Act or an exemption from such registration is
available.
e. On the Closing Date, Fletcher shall have delivered
to Informix the opinion of counsel substantially in the form attached
hereto as Annex F, dated the Closing Date, to the effect that the offer
and sale of the Initial Preferred Shares hereunder do not require
registration under the Securities Act.
10. Fees and Expenses. Each of Fletcher and Informix agrees
to pay its own expenses incident to the performance of its obligations
hereunder, including, but not limited to the fees, expenses and
disbursements of such party's counsel, except as is otherwise expressly
provided in this Agreement.
11. Non-Performance.
If on the Closing Date, any Option Closing Date, any
Conversion Date, or the Termination Date, Informix shall fail to deliver
the Initial Preferred Shares, Option Preferred Shares or Converted Stock
to Fletcher required to be delivered pursuant to this Agreement for any
reason other than the failure of any condition precedent to Informix's
obligations hereunder, then Informix shall:
(1) hold Fletcher harmless against any loss, claim or
damage (including without limitation, incidental and consequential
damages) arising from or as a result of such failure by Informix; and
(2) reimburse Fletcher for all of its reasonable out-of-
pocket expenses, including fees and disbursements of its counsel,
incurred by Fletcher in connection with this Agreement and the
transactions contemplated hereby;
provided, however, that Informix shall then be under no further
liability to Fletcher except as provided in this Section 11 and Section
12 hereof.
12. Indemnification.
a. Indemnification of Fletcher. Informix hereby
agrees to indemnify Fletcher and each of its officers, directors,
employees, agents and affiliates and each person that controls (within
the meaning of Section 20 of the Exchange Act) any of the foregoing
persons (each a "Fletcher Indemnified Party") against any claim, demand,
action, liability, damages, loss, cost or expense (including, without
limitation, reasonable legal fees) (a "Proceeding"), that it may incur
in connection with any of the transactions contemplated hereby arising
out of or based upon:
(1) any untrue or alleged untrue statement of a
material fact by Informix or any of its affiliates or any person acting
on its or their behalf or omission or alleged omission to state any
material fact necessary in order to make the statements, in the light of
the circumstances under which they were made, not misleading by Informix
or any of its affiliates or any person acting on its or their behalf ;
(2) any of the representations or warranties made
by Informix herein being untrue or incorrect; or
(3) any breach or non-performance by Informix of
any of its covenants, agreements or obligations under this Agreement;
and Informix hereby agrees to reimburse each Fletcher Indemnified
Party for any reasonable legal or other expenses incurred by such
Fletcher Indemnified Party in investigating or defending any such
Proceeding; provided, however, that the foregoing indemnity shall not
apply to any Proceeding to the extent that it arises out of or is based
upon the gross negligence or wilful misconduct of Fletcher in connection
therewith.
b. Indemnification of Informix. Fletcher hereby
agrees to indemnify Informix and each of its officers, directors,
employees, agents and affiliates and each person that controls (within
the meaning of Section 20 of the Exchange Act) any of the foregoing
persons (each an "Informix Indemnified Party") against any Proceeding,
that it may incur in connection with any of the transactions
contemplated hereby arising out of or based upon:
(1) any untrue or alleged untrue statement of a
material fact by Fletcher or any of its affiliates or any person acting
on its or their behalf or omission or alleged omission to state any
material fact necessary in order to make the statements, in the light of
the circumstances under which they were made, not misleading by Fletcher
or any of its affiliates or any person acting on its or their behalf:
(2) any of the representations or warranties made
by Fletcher herein being untrue or incorrect; or
(3) any breach or non-performance by Fletcher of
any of its covenants, agreements or obligations under this Agreement;
and Fletcher hereby agrees to reimburse each Informix Indemnified
Party for any reasonable legal or other expenses incurred by such
Informix Indemnified Party in investigating or defending any such
Proceeding; provided, however, that the foregoing indemnity shall not
apply to any Proceeding to the extent that it arises out of or is based
upon the gross negligence or wilful misconduct of Informix in connection
therewith.
c. Conduct of Claims.
(1) Whenever a claim for indemnification shall
arise under this Section, the party seeking indemnification (the
"Indemnified Party"), shall notify the party from whom such
indemnification is sought (the "Indemnifying Party") in writing of the
Proceeding and the facts constituting the basis for such claim in
reasonable detail;
(2) Upon delivery of such notice, such Indemnified
Party shall have a duty to take all reasonable steps to mitigate any
losses, liabilities, costs, charges and expenses relating to any such
Proceeding;
(3) Such Indemnifying Party shall have the right to
retain the counsel of its choice in connection with such Proceeding and
to participate at its own expense in the defense of any such Proceeding;
provided, however, that counsel to the Indemnifying Party shall not
(except with the consent of the relevant Indemnified Party) also be
counsel to such Indemnified Party. In no event shall the Indemnifying
Party be liable for fees and expenses of more than one counsel (in
addition to any local counsel) separate from its own counsel for all
Indemnified Parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances; and
(4) No Indemnifying Party shall, without the prior
written consent of the Indemnified Parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of
any judgment with respect to any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened,
or any claim whatsoever in respect of which indemnification could be
sought under this Section unless such settlement, compromise or consent
(A) includes an unconditional release of each Indemnified Party from all
liability arising out of such litigation, investigation, proceeding or
claim and (B) does not include a statement as to or an admission of
fault, culpability or a failure to act by or on behalf of any
Indemnified Party.
13. Survival of the Representations, Warranties, etc. The
respective representations, warranties, and agreements made herein by or
on behalf of the parties hereto shall remain in full force and effect,
regardless of any investigation made by or on behalf of the other party
to this Agreement or any officer, director or employee of, or person
controlling or under common control with, such party and will survive
delivery of and payment for the Initial Preferred Shares, the Option
Preferred Shares and any Converted Stock issuable hereunder.
13.A Termination.
a. This Agreement may be terminated and the transactions
contemplated by this Agreement may be abandoned at any time prior to the
Closing as follows:
(i) by mutual written consent of Informix and
Fletcher; or
(ii) by either Informix or Fletcher if the Closing
shall not have occurred on or before September 2, 1997 (the "Termination
Date"), provided, however, that the right to terminate this Agreement
under this Section 13.A shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or
before the Termination Date.
b. In the event of termination of this Agreement by either
Informix or Fletcher as provided in Section 13.A, this Agreement shall
forthwith become void and have no effect, without any liability or
obligation on the part of Informix or Fletcher, other than the
provisions of Section 11, this Section 13.A and Section 15, and except
to the extent that such termination results from the wilful and material
breach by a party of any of its representations, warranties, covenants
or agreements set forth in this Agreement.
14. Notices. all communications hereunder shall be in
writing, and
a. if sent to Fletcher, shall be delivered by hand,
sent by registered mail or transmitted and confirmed by facsimile to
Fletcher at:
Fletcher International Limited
c/o Midland Bank Trust Corporation (Cayman) Limited
P.O. Box 1109, Mary Street
Grand Cayman, Cayman Islands
British West Indies
Telephone: (809) 949-7755
Facsimile: (809) 949-7634
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
Attention: Stephen W. Hamilton
Telephone: (202) 371-7010
Facsimile: (202) 393-5760
b. if sent to Informix, shall be delivered by hand,
sent by registered mail or transmitted and confirmed by facsimile to
Informix at:
Informix Corporation
4100 Bohannon Drive
Menlo Park, CA 94025
Attention: Margaret R. Brauns
and
General Counsel
Telephone: (650) 926-6300
Facsimile: (650) 926-6564
with a copy to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attention: Douglas H. Collom
Telephone: (650) 493-9300
Facsimile: (650) 496-4086
15. Miscellaneous
a. This Agreement may be executed in one or more
counterparts and it is not necessary that signatures of all parties
appear on the same counterpart, but such counterparts together shall
constitute but one and the same agreement.
b. This Agreement shall inure to the benefit of and
be binding upon the parties hereto, their respective successors and
assigns and, with respect to Section 12 hereof, their respective
officers, directors, employees, agents, affiliates and controlling
persons, and no other person shall have any right or obligation
hereunder. Informix may not assign this Agreement.
c. This Agreement shall be governed by, and construed
in accordance with, the internal laws of the State of New York, and each
of the parties hereto hereby submits to the non-exclusive jurisdiction
of any State or Federal court in the Borough of Manhattan in the City
and State of New York and any court hearing any appeal therefrom, over
any suit, action or proceeding against it arising out of or based upon
this Agreement (a "Related Proceeding"). Each of the parties hereto
hereby waives any objection to any Related Proceeding in such courts
whether on the grounds of venue, residence or domicile or on the ground
that the Related Proceeding has been brought in an inconvenient forum.
d. The provisions of this Agreement are severable,
and if any clause or provision hereof shall be held invalid, illegal or
unenforceable in whole or in part, such invalidity or unenforceability
shall not in any manner affect any other clause or provision of this
Agreement.
e. The headings of the sections of this document have
been inserted for convenience of reference only and shall not be deemed
to be a part of this Agreement.
f. This Agreement (including the terms and conditions
of the Certificate of Designation relating to the Initial Preferred
Shares and the Option Preferred Shares) constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and
oral, between the parties hereto with respect to the subject matter of
this Agreement and is not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder or under the terms
of the term sheets between such parties.
g. The term "affiliate" is used herein as defined in
Rule 144(a)(1) under the Securities Act.
16. Time of Essence. Time shall be of the essence in this
Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year first above
written.
INFORMIX CORPORATION
By: /S/ Robert Finocchio, Jr.
Name: Robert Finocchio, Jr.
Title: Chairman, President and Chief Executive Officer
FLETCHER INTERNATIONAL LIMITED
By: /S/ Todd J. Fletcher
Name: Todd J. Fletcher
Title: Chairman
ANNEX D
Disclosure Schedule
No exceptions.
CERTIFICATE OF DESIGNATION
of
SERIES A CONVERTIBLE PREFERRED STOCK
of
INFORMIX CORPORATION
The undersigned, Robert Finocchio, Jr. and Margaret R. Brauns, do
hereby certify:
1. That they are the duly elected and acting Chairman of the
Board, President and Chief Executive Officer and the Vice President and
Treasurer, respectively, of Informix Corporation, a Delaware corporation
(the "Corporation").
2. That pursuant to the authority conferred upon the Board of
Directors by the Restated Certificate of Incorporation of the
Corporation, the Board of Directors adopted the following resolution
creating a series of 440,000 shares of Preferred Stock designated as
Series A Convertible Preferred Stock as required by Section 151 of the
Delaware General Corporation Law:
RESOLVED, that pursuant to the authority granted to and vested in
the Board of Directors of the Corporation (the "Board of Directors") in
accordance with the provisions of the Corporation's Restated Certificate
of Incorporation (the "Certificate of Incorporation"), the Board of
Directors hereby creates a series of Preferred Stock, par value $.01 per
share, of the Corporation and hereby states the designation and number
of shares, and fixes the relative rights, preferences, and limitations
thereof as follows:
Series A Convertible Preferred Stock:
Section 1. Designation and Amount. The shares of such series
shall be designated as "Series A Convertible Preferred Stock" ("Series A
Preferred Stock") and the number of shares constituting Series A
Preferred Stock shall be 440,000. Such number of shares may be
increased or decreased by resolution of the Board of Directors, provided
that no decrease shall reduce the number of shares of Series A Preferred
Stock to a number less than the number of shares then outstanding plus
the number of shares reserved for issuance upon the exercise of
outstanding options, rights or warrants or upon the conversion of any
outstanding securities issued by the Corporation convertible into Series
A Preferred Stock.
Section 2. Dividends and Distributions. No dividends shall accrue
or be payable in respect of the Series A Preferred Stock.
Section 3. Voting Rights. Except as required by applicable law or
Section 12, the holders of shares of Series A Preferred Stock shall not
be entitled to vote on any matter submitted to a vote of stockholders of
the Corporation and their consent shall not be required for taking any
corporate action.
Section 4. Conversion.
(A) Subject to Section 4(C) and Section 4(D), a holder of
Series A Preferred Stock may, by delivering to the Corporation written
notice ("Conversion Notice"), convert one or more shares of Series A
Preferred Stock into the number of shares of the Corporation's common
stock (the "Common Stock") equal to (i) $250.00 divided by (ii) the
Conversion Price (as defined in Section 4(E)). The Conversion Notice
shall specify the number of shares of Series A Preferred Stock to be
converted, the applicable Conversion Price, the number of shares of
Common Stock issuable on conversion (which shall not be less than 8,000
shares of Series A Preferred Stock, except if all shares of Series A
Preferred Stock then outstanding are being converted to Common Stock).
From and after the date on which the Corporation received a Conversion
Notice from a holder of a share of Series A Preferred Stock (or if such
date is not a business day in the State of California, the next
succeeding business day) (the "Conversion Date"), such share shall cease
to be outstanding and the converting holder shall be deemed the owner of
the number of shares of Common Stock into which such share of Series A
Preferred Stock was converted. The Corporation shall deliver to such
holder an uncertificated security evidencing such shares of Common Stock
through book-entry transfer within three business days following the
Conversion Date or, at the written request of the holder as specified in
the Conversion Notice, a physical stock certificate evidencing such
shares within ten business days following the Conversion Date (such date
of delivery referred to as the "Issue Date"). For purposes of the
preceding sentence, the first business day following the Conversion Date
shall count as the first business day for delivery of evidence of such
shares of Common Stock. The Conversion Notice may be delivered via
facsimile transmission to Informix Corporation, attention: Margaret R.
Brauns, telecopy no. (650) 926-6564.
On the Issue Date, the Corporation shall issue and cause to be
delivered (against delivery of the certificate representing the Series A
Preferred Stock (the "Preferred Certificate")) to the registered holder
thereof at such address as such holder shall specify in the Conversion
Notice a certificate or certificates (including uncertificated
securities) for the number of full shares of Common Stock issuable upon
the conversion, registered in such holder's name, together with cash (if
any) as provided in Section 6. Such certificate or certificates shall
be deemed to have been issued and any person so designated to be named
therein shall be deemed to have become a holder of record of such shares
as of such Conversion Date. If on such Issue Date the number of shares
of Series A Preferred Stock to be delivered shall be less than the total
number of shares represented by the Preferred Certificate, there shall
be issued to the holder thereof or his assignee on such Issue Date a new
Preferred Certificate evidencing the remaining Series A Preferred Stock.
(B) Subject to Section 4(C) and Section 4(D), each share of
Series A Preferred Stock shall automatically convert into Common Stock
in accordance with the terms hereof but without the delivery of a
Conversion Notice on the date that is 547 days excluding and following
the date of issuance of such share (or if such date is not a business
day in the State of California, the next succeeding business day) (the
"Automatic Conversion Date"). From and after the Automatic Conversion
Date, such shares of Series A Preferred Stock shall cease to be
outstanding and the converting holder shall be deemed the owner of the
number of shares of Common Stock into which such shares of Series A
Preferred Stock were converted. The Corporation shall deliver to such
holder a stock certificate evidencing such shares of Common Stock within
ten business days following the Automatic Conversion Date. For the
purpose of determining the applicable Conversion Price under Section
4(E), the Automatic Conversion Date shall be deemed the Conversion Date.
(C) If, either at the time that the Corporation received a
Conversion Notice or on the Automatic Conversion Date, the aggregate
number of shares of Common Stock issuable pursuant to such Conversion
Notice and all other Conversion Notices received at that time (the
"Subject Conversion Notices"), when added to the aggregate number of
shares of Common Stock (a) previously issued pursuant to the conversion
of shares of Series A Preferred Stock and (b) issuable upon conversion
of all remaining outstanding shares of Series A Preferred Stock
(determining such number as if such Series A Preferred Stock were
converted as of the Conversion Date relating to such Conversion Notice),
including Series A Preferred Stock issuable (i) upon exercise by the
Corporation of its right to require Fletcher International Limited to
purchase additional shares of Series A Preferred and (ii) upon exercise
by Fletcher of its right to require the Company to issue and sell to
Fletcher additional shares of Series A Preferred, in each case in
accordance with the terms of that certain Subscription Agreement dated
August 12, 1997 (the "Subscription Agreement"), would exceed the number
of shares equal to 19.9% of the total number of shares of Common Stock
outstanding (adjusted to reflect any split, subdivision, combination, or
consolidation of the Common Stock, whether by reclassification,
distribution of a dividend with respect to the outstanding Common Stock
payable in shares of Common Stock, or otherwise, or any recapitalization
of the Common Stock) on the date of the first issuance of shares of
Series A Preferred Stock (the "19.9% Limit") and such circumstance would
require the approval of the holders of the Common Stock pursuant to the
listing requirements or rules of the Nasdaq National Market (or such
stock exchange or other interdealer quotation system on which the Common
Stock is then listed or quoted), then the number of shares of Series A
Preferred Stock identified in the Subject Conversion Notices that, if
converted into shares of Common Stock, would equal or exceed the 19.9%
Limit (the "Excess Preferred Shares"), shall not be converted unless and
until the stockholder approval referred to in Section 5 (the "Required
Consent") is obtained or is no longer required. The Excess Preferred
Shares will be allocated among the holders delivering Subject Conversion
Notices on a pro rata basis based on the relative number of shares of
Series A Preferred Stock identified in each such Subject Conversion
Notice. Any Excess Preferred Shares shall not be converted into shares
of Common Stock until the later of the date on which the Required
Consent is obtained and the Corporation received a subsequent Conversion
Notice with respect thereto.
(D) Shares of Series A Preferred Stock shall be convertible
only into the Maximum Number of shares of Common Stock. The "Maximum
Number" is equal to the sum of 13,674,500 plus the Convertible Number.
The "Convertible Number" is initially zero and thereafter may be
increased upon expiration of a 65 day period (the "Notice Period") after
the holder delivers a notice (a"65 Day Notice") to the Issuer
designating an aggregate number of shares of Common Stock in excess of
13,674,500 which will become convertible. A 65 Day Notice may be given
at any time. If the initial 65 Day Notice does not designate all of the
shares of Common Stock then issuable upon conversion to such holder
under the Series A Preferred Stock, additional shares of the Series A
Preferred Stock will become convertible for some or all of the remaining
shares of Common Stock upon delivery of one or more 65 Day Notices
increasing the Convertible Number after a further Notice Period. From
time to time following the Notice Period, shares of the Series A
Preferred Stock may be converted on any Business Day for any quantity of
shares of Common Stock, such that the aggregate number of shares of
Common Stock issued hereunder is less than or equal to the Maximum
Number.
(E) "Conversion Price" means 101% of the average of the daily
volume-weighted per share average prices as reported by Bloomberg, L.P.
(or otherwise as agreed mutually between the Corporation and the holder
of record of Series A Preferred Stock delivering a Conversion Notice) of
the Common Stock on the Nasdaq National Market (or such other national
securities exchange which the Common Stock is then listed) during the 30
Trading Days (as defined below) ending and excluding five Trading Days
before and excluding the Conversion Date (the "Pricing Period");
provided, however, that in no event shall the Conversion Price be
greater than 105% of the average of the daily volume-weighted per share
average prices as reported by Bloomberg, L.P. (or otherwise as agreed
mutually between the Corporation and the holder of record of Series A
Preferred Stock delivering a Conversion Notice) of the Common Stock on
the Nasdaq National Market (or such other national securities exchange
on which the Common Stock is then listed) during the first five Trading
Days of the Pricing Period; and provided further, that in no event shall
the Conversion Price be greater than $12.00 per share (the "Conversion
Ceiling Price"). The term "Trading Day" shall mean any trading day on
the Nasdaq National Market (or such other national securities exchange
on which the Common Stock is then principally listed).
Section 5. Stockholder Approval. In the event there are Excess
Preferred Shares as described in Section 4(C), the Corporation shall
promptly take all actions reasonably necessary to obtain the required
consent, including causing its Board of Directors to call a special
meeting of stockholders and recommend such approval.
In the event the Required Consent is not obtained within 90 days of
the 19.9% Limit becoming effective, each holder shall have the right at
any time and from time to time to require the Corporation to repurchase,
and the Corporation hereby agrees to repurchase, any or all Excess
Preferred Shares at a price of $250 per share upon 90 days notice by
delivery of a notice requesting such repurchase. The repurchase
obligation of the Corporation shall be subject to limitations of the
Delaware General Corporation Law.
Section 6. Fractional Shares. Fractional shares of Common Stock
shall not be issued upon conversion of shares of Series A Preferred
Stock. In lieu of issuance of a fractional share, the Corporation shall
pay to the holder of the share of Series A Preferred Stock being
converted a cash amount equal to such fraction multiplied by the
Conversion Price.
Section 7. 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 the Series A Preferred
Stock, such number of its shares of Common Stock as shall from time to
time be sufficient to effect the conversion of all outstanding shares of
the Series A Preferred Stock.
Section 8. Liquidation, Dissolution or Winding Up. In the event
of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, before any payment or distribution of
the assets of the Corporation (whether capital or surplus) shall be made
to or set apart for the holders of Common Stock or any other series or
class or classes of stock of the Corporation ranking junior to the
Series A Preferred Stock upon liquidation, dissolution or winding up,
the holders of the shares of Series A Preferred Stock shall be entitled
to receive $250.00 per share (the "Liquidation Preference"). If, upon
any liquidation, dissolution or winding up of the Corporation, the
assets of the Corporation, or proceeds thereof, distributable among the
holders of the shares of Series A Preferred Stock shall be insufficient
to pay in full the preferential amount aforesaid and liquidating
payments on any other shares of stock ranking, as to liquidation,
dissolution or winding up, on a parity with the Series A Preferred
Stock, if any, then such assets, or the proceeds thereof, shall be
distributed among the holders of shares of Series A Preferred Stock and
any such other stock ratably in accordance with the respective amounts
which would be payable on such shares of Series A Preferred Stock and
any such other stock if all amounts payable thereon were paid in full.
Section 9. Consolidation, Merger, Etc.
(A) In case the Corporation shall be a party to any transaction
providing for (i) any acquisition of the Corporation by means of merger
or other form of corporate reorganization in which outstanding shares of
the Corporation are exchanged for securities or other consideration
issued, or caused to be issued, by the acquiring corporation or its
subsidiary or (ii) a sale of all or substantially all of the assets of
the Corporation or (iii) any other transaction or series of related
transactions by the Corporation in which in excess of 50% of the
Corporation's voting power is transferred to a single entity or group
acting in concert (each of the foregoing being referred to as a
"Transaction"), and as a result of such Transaction shares of Common
Stock shall be converted into the right to receive only shares of
publicly traded common stock (other than cash in lieu of fractional
amounts or in connection with the exercise of statutory appraisal
rights) of the Surviving Entity (as defined below), each share of Series
A Preferred Stock which is not converted by the holder into the right to
receive such common stock in connection with such Transaction shall
thereafter be exchangeable for an equal number of shares of preferred
stock of the Surviving Entity, which preferred stock shall have terms
substantially identical to the terms provided in this Certificate of
Designation and be convertible, at the holder's option, into shares of
any class of publicly traded common stock of the Surviving Entity. For
purposes hereof, "Surviving Entity" shall mean an acquiror, purchaser or
transferee contemplated by clauses (i), (ii) and (iii), respectively, of
the immediately preceding sentence. The Corporation shall not be a
party to any Transaction unless the terms of such Transaction are
consistent with the provisions of this Section 9 and it shall not
consent or agree to the occurrence of any Transaction until the
Corporation has entered into an agreement with the successor or
purchasing entity, as the case may be, for the benefit of the holders of
the Series A Preferred Stock which will contain provisions ensuring the
benefits contemplated by this Section 9 to the holders of the Series A
Preferred Stock which remains outstanding after such Transaction. The
provisions of this Section 9 shall apply similarly to successive
Transactions.
(B) If as a result of a Transaction, either (i) Section 9(A) is
inapplicable or (ii) the Series A Preferred Stock would become
convertible pursuant to Section 9(A) into securities of a class with (x)
an aggregate market capitalization of less than $1.3 billion or (y) an
average weekly traded value as reported by Bloomberg, L.P. over the
preceding six months of less than $285 million, then, at the sole option
of the holder, the holder may cause the Corporation to redeem some or
all of the shares of Series A Preferred Stock for cash in immediately
available funds payable upon the consummation of such Transaction at a
price equal to the aggregate Liquidation Preference thereof. In
addition, if either (i) there are any Excess Preferred Shares and
Section 9(A) is applicable, or (ii) as a result of a Transaction any
Excess Preferred Shares would be created in the Corporation or in a
Surviving Entity, then at the sole option of the holder, the holder may
cause the Corporation to redeem some or all of such Excess Preferred
Shares for cash in immediately available funds payable upon the
consummation of such Transaction at a price equal to the aggregate
Liquidation Preference thereof.
Section 10. Stock Dividends, Stock Splits, Etc. In case the
Corporation shall after the date of first issuance of shares of Series A
Preferred Stock (A) pay a dividend or make a distribution on its Common
Stock in shares of its Common Stock, (B) subdivide its outstanding
Common Stock into a greater number of shares, or (C) combine its
outstanding Common Stock into a smaller number of shares, which becomes
effective on a Trading Day which is included in the calculation of the
Conversion Price, then the average of the daily volume-weighted per
share average prices of the Common Stock for the period from the first
Trading Day included in the calculation of the Conversion Price to (but
not including) the effective date of such event (the "Adjustable Average
Price") and the Conversion Ceiling Price will be proportionately
adjusted to reflect such event in calculating the Conversion Price. If
the event in question causes an increase in the total number of
outstanding Common Stock, then the Adjustable Average Price and the
Conversion Ceiling Price will be proportionately decreased. If the
event in question causes a decrease in the total number of outstanding
Common Stock, then the Adjustable Average Price and the Conversion
Ceiling Price will be proportionately increased. In case the
Corporation shall after the date of the first issuance of the Series A
Preferred Stock issue any shares of capital stock by reclassification of
its Common Stock (excluding any transaction as to which Section 9
applies), each share of Series A Preferred Stock shall thereafter be
convertible into the kind and in the proportion of shares of stock and
other securities and property ("Reclassification Consideration")
receivable by a holder of one share of Common Stock immediately prior to
the record date or effective date of such reclassification, as
appropriate, and the Conversion Price in such circumstances shall be
determined based upon weighted prices of the Reclassification
Consideration. In the event the market price of any portion of the
Reclassification Consideration cannot be determined in a manner
reasonably consistent with Section 4(E), the market value of such
portion of the Reclassification Consideration shall be determined in
good faith by the Corporation's Board of Directors. In addition, the
Conversion Price and the Conversion Ceiling Price following such a
reclassification shall be adjusted as appropriate in a manner consistent
with the first three sentences of this Section 10. Adjustments made
pursuant to this Section 10 shall become effective immediately after the
close of business on the record date in the case of a dividend or
distribution and shall become effective immediately after the close of
business on the record date in the case of subdivision, combination or
reclassification.
Section 11. Redemption. The shares of Series A Preferred Stock
shall not be redeemable.
Section 12. Amendment. So long as any shares of Series A
Preferred Stock are outstanding, the Corporation shall not, without
first obtaining the approval by vote or written consent, in the manner
provided by law, of the holders of at least a majority of the total
number of shares of Series A Preferred Stock outstanding, voting
separately as a series, amend or repeal any provision of, or add any
provision to, the Corporation's Certificate of Incorporation if such
action would adversely affect the preferences, rights, privileges or
powers of, or the restrictions provided for the benefit of, the Series A
Preferred Stock.
Section 13. Reacquired Shares. Any shares of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition
thereof. All such shares shall upon their cancellation become
authorized but unissued shares of preferred stock of the Corporation and
may be reissued as part of a new series of preferred stock subject to
the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designation
creating a series of preferred stock of the Corporation or any similar
stock or as otherwise required by applicable law.
Section 14. Rank.
(A) With respect to liquidation preferences, the Series A
Preferred Stock shall rank senior to all other existing capital stock of
the Corporation and shall rank senior to all series of any class of the
Corporation's capital stock issued after the date of the filing of this
Certificate of Designation.
(B) So long as any shares of the Series A Preferred Stock are
outstanding, no Common Stock nor any other such stock of the Corporation
ranking junior to the Series A Preferred Stock, upon liquidation, will
be redeemed, purchased or otherwise acquired for any consideration by
the Corporation (except by conversion into or exchange for stock of the
Corporation ranking junior to the Series A Preferred Stock, upon
liquidation and except pursuant to restricted stock purchase or similar
agreements providing for the Company's repurchase of shares of Common
Stock at their original cost in connection with termination of
employment) unless, in each case the Corporation offers to redeem shares
of the Series A Preferred Stock on substantially the same terms
(provided that the redemption price shall not be less than $250 per
share).
IN WITNESS WHEREOF, this Certificate of Designation is executed on
behalf of the Corporation by the Chairman of the Board, President and
Chief Executive Officer of the Corporation and attested by its Vice
President and Treasurer this 12th day of August, 1997.
/S/ Robert Finocchio, Jr.
Robert Finocchio, Jr.
Chairman of the Board, President and
Chief Executive Officer
Attest:
/S/ Margaret R. Brauns
Margaret R. Brauns
Vice President and Treasurer
