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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
December 4, 1997 (November 19, 1997)
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INFORMIX CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE
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(State or other jurisdiction of incorporation)
0-15325 94-3011736
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(Commission File Number) (IRS Employer Identification No.)
4100 Bohannon Drive, Menlo Park, California 94025
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (650) 926-6300
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Item 5. OTHER EVENTS
On November 19, 1997, Informix Corporation (the "Company") received a
$50 million equity investment from an investor group led by an affiliate of
Credit Suisse First Boston. A copy of the press release dated November 18, 1997
announcing the investment is attached to this Current Report as Exhibit 99.1 and
is incorporated herein.
In the investment, the Company sold 50,000 shares of newly issued Series B
Convertible Preferred Stock ("Series B Preferred") for an aggregate of
$50 million. The Company is also required to issue a warrant to acquire a
number of shares equal to 20% of the shares of Common Stock issued upon
conversion of the Series B Preferred but no less than 1,300,000 shares, together
with an additional increment of warrants to purchase 200,000 shares. The offer
and sale of these securities were completed pursuant to the exemption provided
by Regulation D under the Securities Act of 1933.
The Series B Preferred is convertible at the election of the holder into
shares of Common Stock beginning six months after issuance, and at any time
prior to six months upon the occurrence of certain events, including merger and
similar transactions which would result in a change of control of the Company.
The Series B Preferred will automatically convert into Common Stock three years
following the date of its issuance by the Company. Each share of Series B
Preferred, which has a face value of $1,000, is convertible into the number of
shares of Common Stock at a per share price equal to the lowest of (i) the
average of the closing bid prices for the Common Stock for the 22 trading days
immediately prior to the 180th day following the initial issuance date of the
Series B Preferred, (ii) 101% of the average of the closing bid prices for the
Common Stock for the 22 trading days ending five trading days prior to the date
of actual conversion, or (iii) 101% of the lowest closing bid price for the
Common Stock during the five trading days immediately prior to the date of
actual conversion. The conversion price of the Series B Preferred is subject to
modification and adjustment upon the occurrence of specified events.
The Series B Preferred accrues cumulative dividends at an annual rate of 5%
of the face value of each share of Series B Preferred. The dividend is
generally payable upon the conversion or redemption of the Series B Preferred,
and may be paid in cash or, at the holder's election, in shares of Common Stock.
The warrant may be exercised until 2002. The exercise price for the Common
Stock related to the warrant is 110% of the lesser of (i) the average of the
closing bid prices for the Common Stock on the five trading days occurring
immediately prior to November 19, 1997 and (ii) the average of the closing bid
prices for the Common Stock on the five trading days occurring immediately prior
to the six- month anniversary of November 19, 1997.
The Series B Preferred is junior to the Company's outstanding Series A-1
Convertible Preferred Stock in respect of the right to receive dividend payments
and liquidation preferences.
The Company is obligated to file with the Securities and Exchange
Commission a "shelf" registration statement covering the resale of all shares of
Common Stock issuable upon conversion of the Series B Preferred and upon
exercise of the warrants.
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The foregoing description is only a summary and is qualified in its
entirety by reference to the Securities Purchase Agreement dated as of November
17, 1997 between the Company and the purchasers listed therein, the Registration
Rights Agreement dated as of November 17, 1997 between the Company and the
purchasers listed therein and the Certificate of Designation of Series B
Convertible Preferred Stock attached to this Current Report as Exhibits 3.4,
10.13 and 10.14, respectively.
The proceeds from the equity investment will be used for working capital
purposes.
Item 7. EXHIBITS.
Exhibit No. Description
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3.3 Certificate of Designation of Series A-1 Preferred Stock
3.4 Certificate of Designation of Series B Convertible Preferred
Stock
10.13 Securities Purchase Agreement dated as of November 17,
1997 between the Company and the purchasers listed therein
10.14 Registration Rights Agreement dated as of November 17, 1997
between the Company and the purchasers listed therein
99.1 Press Release dated November 18, 1997
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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 December 3, 1997.
INFORMIX CORPORATION
By: /s/ JEAN-YVES DEXMIER
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Jean-Yves Dexmier,
Executive Vice President, Chief
Financial Officer and Secretary
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INDEX TO EXHIBITS
Exhibit
Number Description
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3.3 Certificate of Designation of Series A-1 Convertible
Preferred Stock
3.4 Certificate of Designation of Series B Convertible
Preferred Stock
10.13 Securities Purchase Agreement dated as of November 17,
1997 between the Company and the purchasers listed
therein
10.14 Registration Rights Agreement dated as of November 17,
1997 between the Company and the purchasers listed
therein
99.1 Press Release Dated November 18, 1997
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CERTIFICATE OF DESIGNATION
OF
SERIES A-1 CONVERTIBLE PREFERRED STOCK
OF
INFORMIX CORPORATION
The undersigned, Robert Finocchio, Jr. and Jean-Yves Dexmier, do hereby
certify:
1. That they are the duly elected and acting Chairman of the Board,
President and Chief Executive Officer and the Chief Financial Officer,
respectively, of Informix Corporation, a Delaware corporation (together with its
successors 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 the powers, designations,
preferences and other rights of a newly authorized series of 440,000 shares of
Preferred Stock designated as Series A-1 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 new
series of Series A-1 Convertible 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-1 Convertible Preferred Stock:
SECTION 1. DESIGNATION AND AMOUNT. The shares of such series shall be
designated as "Series A-1 Convertible Preferred Stock" ("Series A-1 Preferred
Stock") and the number of shares constituting Series A-1 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-1 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-1
Preferred Stock.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the provisions of paragraph (B) below, no dividends shall
accrue or be payable in respect of the Series A-1 Preferred Stock.
(B) Notwithstanding the limitation of paragraph (A) above, commencing
upon the date of occurrence (a "Default Event Date") of a Default Event (as
defined below), the holders of the Series
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A-1 Preferred Stock shall be entitled to receive, to the extent permitted by
applicable law, in preference to the payment of any dividend on any class or
series of stock of the Corporation ranking junior to the Series A-1 Preferred
Stock, cumulative dividends ("Dividends") on each share of Series A-1
Preferred Stock in an amount equal to, on an annualized basis, $250.00 times
fifteen percent (15%). Dividends shall accrue, whether or not earned or
declared, on each share of Series A-1 Preferred Stock from the Default Event
Date through the earlier to occur of (i) the date on which any Default Event
shall have been resolved, and (ii) the redemption or conversion thereof in
accordance with the terms hereof. Accrued Dividends on shares of Series A-1
Preferred Stock shall be payable on the last day of each calendar quarter
(the "Dividend Payment Date") following a Default Event Date during which a
Default Event shall have occurred, and shall be paid in cash to the holder of
such shares within five (5) business days following the applicable Dividend
Payment Date by delivering immediately available funds to such holder in
accordance with such holder's wiring instructions. If, on any date,
Dividends on any outstanding shares of Series A-1 Preferred Stock are payable
and have not been paid with respect to all Dividend Payment Dates preceding
such date, the aggregate amount of such Dividends shall be fully paid before
any distribution, whether by way of dividend or otherwise, shall be declared,
paid or set aside with respect to any shares of stock of the Corporation
ranking junior to the Series A-1 Preferred Stock.
(C) A Default Event as used in this Certificate of Designation shall
mean: (i) the failure of a Registration Statement to be declared effective
by the SEC before the 180th calendar day following and excluding the date of
a Registration Request (all such capitalized terms as defined in that certain
Subscription Agreement of the Corporation dated August 12, 1997, as amended
by Amendment No.1 thereto dated as of November 17, 1997 (the "Subscription
Agreement); or (ii) the failure to obtain the Required Consent (as defined
below) within 90 calendar days of the 19.9% Limit (as defined below)
becoming effective; or (iii) the failure of the Corporation to redeem in full
any shares of outstanding Series A-1 Preferred Stock which are Objecting
Shares (as defined below) on or before the date that is twenty (20) calendar
days following completion of a Non-Qualifying Transaction (as defined below).
A Default Event shall be deemed to have been resolved at such time as, in
the case of clause (i), the Registration Statement shall be declared
effective by the SEC, or, in the case of clause (ii), the Required Consent
shall have been obtained, or, in the case of clause (iii), the date on which
the Corporation (or any Surviving Entity, as defined below) shall redeem in
full all shares of Series A-1 Preferred Stock (or Similar Stock, as defined
below) which are Objecting Shares, and in all cases, all Dividends required
under Section 2(B) above have been paid in full.
SECTION 3. VOTING RIGHTS.
(A) Subject to the provisions of paragraph (B) below, except as required
by applicable law or Section 12, the holders of shares of Series A-1 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.
(B) Notwithstanding the limitation set forth in paragraph (A) above, if
the Corporation shall be required to pay Dividends in accordance with Section 2
above and fails to make timely payment in full of all Dividends so required to
be paid, then the holders of shares of Series A-1 Preferred Stock
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shall be entitled, voting as a separate class, to immediately elect and
appoint to the Board of Directors of the Corporation, and the Corporation
shall otherwise take appropriate action as necessary to permit the inclusion
on the Board of, a number of persons (not to be less than a minimum of one
designee) designated by the holders of the Series A-1 Preferred Stock such
that, following such election, such designees represent a percentage of the
total members of the Board of Directors (assuming no vacancies) that most
nearly approximates the percentage of the total number of then outstanding
shares of Series A-1 Preferred Stock (calculated on an as-if-converted to
Common Stock (as defined below) basis plus the total number of then
outstanding shares of Common Stock into which shares of Series A-1 Preferred
Stock have been converted, to the total outstanding shares of the voting
capital stock of the Corporation (also calculated on an as-if-converted to
Common Stock basis).
SECTION 4. CONVERSION.
(A) Subject to Section 4(C) and Section 4(D), a holder of shares of
Series A-1 Preferred Stock may, at any time after the date of issuance of such
shares and on or prior to the fifth calendar day prior to such date, if any, as
may have been fixed for the redemption thereof in any permitted call for
redemption pursuant to Section 11 below, by delivering to the Corporation
written notice ("Conversion Notice"), convert one or more shares of Series A-1
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-1 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-1 Preferred Stock, except if all
shares of Series A-1 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-1 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-1 Preferred Stock was converted;
provided, however, that in the event of a notice of redemption of any shares of
Series A-1 Preferred Stock pursuant to Section 11 hereof, the right of the
holder to convert the Series A-1 Preferred Stock shall terminate as to the
number of shares designated for redemption at the close of business on the fifth
calendar day preceding the redemption date, unless default is made in payment of
the redemption price, in which event such right of the holder to convert any
rights of the holder under Sections 2 and 3 hereof shall continue until such
payment. 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: Chief Financial
Officer, telecopy no. (650) 926-6564.
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On the Issue Date, the Corporation shall issue and cause to be delivered
(against delivery of the certificate representing the Series A-1 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-1 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-1 Preferred Stock.
(B) Subject to Section 4(C) and Section 4(D), each share of Series A-1
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"); provided, however,
that the Automatic Conversion Date shall be extended as provided in the
following circumstances: (I) if a Default Event identified in clauses (i) or
(ii) of Section 2(C) above shall have occurred and continues at the time that
such share of Series A-1 Preferred Stock would otherwise automatically convert
into Common Stock, then no such automatic conversion shall occur and the
Automatic Conversion Date shall be delayed for a period equal to 365 calendar
days following and excluding the date on which the Default Event shall have been
resolved pursuant to Section 2(C) hereof; (II) if a Default Event identifed in
clause (iii) of Section 2(C) above shall have occurred and continues at the
time that such share of Series A-1 Preferred Stock (or Similar Stock) would
otherwise automatically convert into Common Stock, then no such automatic
conversion shall occur and the Automatic Conversion Date shall be delayed for a
period equal to the number of days required for the resolution of such Default
Event; (III) if a Registration Request is made within 360 calendar days of the
Automatic Conversion Date for such share of Series A-1 Preferred Stock, then
such date shall be extended (even if no Default Event identified in clause (i)
of Section 2(C) shall have occurred) as necessary to ensure that the Automatic
Conversion Date is not less than 180 days from the effective date of the
requested Registration Statement; and (IV) if a Required Consent has not been
obtained within 180 calendar days of the Automatic Conversion Date for such
share of Series A-1 Preferred Stock, then such date shall be extended (even if
no Default Event identified in clause (ii) of Section 2(C) shall have occurred)
as necessary to ensure that the Automatic Conversion Date is not less than 90
days from the date that the Required Consent is obtained. From and after the
Automatic Conversion Date, such shares of Series A-1 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-1 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.
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(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-1 Preferred Stock and
(b) issuable upon conversion of all remaining outstanding shares of Series A-1
Preferred Stock (determining such number as if such Series A-1 Preferred Stock
were converted as of the Conversion Date relating to such Conversion Notice),
including Series A-1 Preferred Stock issuable (i) upon exercise by the
Corporation of its right to require Fletcher International Limited to purchase
additional shares of Series A-1 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-1 Preferred, in each case in accordance with the terms of 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 August 12, 1997 (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-1
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-1 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-1 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-1 Preferred Stock, additional shares of the Series A-1 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-1 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.
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(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-1 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-1 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.
SECTION 6. FRACTIONAL SHARES. Fractional shares of Common Stock shall not
be issued upon conversion of shares of Series A-1 Preferred Stock. In lieu of
issuance of a fractional share, the Corporation shall pay to the holder of the
share of Series A-1 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-1 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-1 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-1 Preferred Stock upon liquidation, dissolution
or winding up, the holders of the shares of Series A-1 Preferred Stock shall be
entitled to receive $250.00 per share plus the amount of any accrued and unpaid
Dividends (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-1 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-1 Preferred Stock, if
any, then such assets, or the proceeds thereof, shall be distributed among the
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holders of shares of Series A-1 Preferred Stock and any such other stock ratably
in accordance with the respective amounts which would be payable on such shares
of Series A-1 Preferred Stock and any such other stock if all amounts payable
thereon were paid in full.
SECTION 9. CONSOLIDATION, MERGER, ETC. 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"), each share of Series A-1 Preferred Stock which is not
converted by the holder into the right to receive Common Stock of the
Corporation prior to such Transaction shall thereafter be exchangeable at the
election of the holder of the Series A-1 Preferred Stock for an equal number of
shares of preferred stock of the Surviving Entity (the "Similar Stock"), which
preferred stock shall have terms substantially identical to the terms provided
in this Certificate of Designation, including without limitation, rights
specified in Sections 2 and 3 hereof 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-1 Preferred Stock which will
contain provisions ensuring the benefits contemplated by this Section 9 to the
holders of the Series A-1 Preferred Stock which remains outstanding after such
Transaction. The provisions of this Section 9 shall apply similarly to
successive Transactions.
SECTION 10. STOCK DIVIDENDS, STOCK SPLITS, ETC. In case the Corporation
shall after the date of first issuance of shares of Series A-1 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-1 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-1
Preferred Stock
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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.
(A) Following a Transaction as a result of which the Series A-1 Preferred
Stock would be convertible into (I) a class of common stock 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, or (II) consideration other than shares of publicly
traded common stock of the Surviving Entity (other than cash in lieu of
fractional amounts or in connection with the exercise of statutory appraisal
rights) (either (I) or (II), a "Non-Qualifying Transaction"), and provided that
the Corporation shall have legally available funds therefor, the Corporation
shall have the right, at the election of its Board of Directors upon
satisfaction of the terms and conditions stated herein, to redeem any or all
Objecting Shares (as defined below).
(B) Upon the occurrence of a public announcement with respect to a
Transaction, at least forty-five (45) calendar days prior to the completion
of the Transaction, the Company shall provide written notice thereof (a
"Transaction Notice") to the holders of the Series A-1 Preferred Stock,
stating the expected completion date of the Transaction and whether such
Transaction will be a Non-Qualifying Transaction. In the event such notice
provides that the Transaction is not a Non-Qualifying Transaction, then the
holders shall be bound by the provisions of this Certificate and the
Corporation shall have no right of redemption herein. In the event the
Transaction is a Non-Qualifying Transaction and if the redemption right is
exercised, then the Transaction Notice or other notice concerning redemption
shall be sent in accordance with and include the information set forth in
paragraph (C) below. Not later than ten (10) calendar days prior to the
announced completion date of the Non-Qualifying Transaction, each holder of
the Series A-1 Preferred Stock shall respond in writing to the Corporation
indicating whether the holder objects to the Non-Qualifying Transaction. Any
shares of Series A-1 Preferred Stock (and any shares of Similar Stock into
which such shares are converted in a Non-Qualifying Transaction) as to which
the holder thereof has provided a timely objection in accordance with the
preceding sentence shall be referred to as "Objecting Shares" for purposes of
this Section 11.
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(C) The redemption price for each share of Series A-1 Preferred Stock
shall be equal to the Liquidation Preference, and may be paid only out of funds
legally available therefor. Redemption of less than all of the then
outstanding shares of Series A-1 Preferred Stock shall be pro rata among the
holders of the Series A-1 Preferred Stock (as to the number of shares of Series
A-1 Preferred Stock held on the date of the notice of redemption). Less than
all of the Series A-1 Preferred Stock permitted to be redeemed hereunder may not
be redeemed until all Dividends, if any, accrued and unpaid on Series A-1
Preferred outstanding shall have been paid. At least twenty (20) calendar days'
previous notice by first class mail, postage prepaid, shall be given to the
holders of record of the Series A-1 Preferred Stock for any permitted
redemption, such notice to be addressed to each holder at the address shown in
the Corporation's records and which shall specify the date of redemption, the
number of shares of the holder to be redeemed and the date at which the
conversion rights provided hereunder terminate. On or after the date of
redemption as specified in such notice, each holder shall surrender such
holder's certificate for the number of shares of Series A-1 Preferred Stock to
be redeemed as stated in the notice (except that such number of shares shall be
reduced by the number of shares of Series A-1 Preferred Stock which have been
converted pursuant to the provisions of Section 4 above between the date of the
notice and the date on which conversion rights terminate) to the Corporation at
the place specified in the notice. If less than all of the shares represented
by such certificates are redeemed, a new certificate shall forthwith be issued
for the unredeemed shares. Provided such notice is duly given, and provided
that on the redemption date specified there shall be a source of funds legally
available for such redemption and funds necessary for the redemption shall have
been paid in immediately available funds in an account specified by the Holder,
then all rights with respect to such shares shall, after the specified
redemption date, terminate, whether or not said certificates have been
surrendered, excepting only in the latter instance the right of the holder to
receive the redemption price thereof, without interest, upon such surrender. At
least ten (10) days prior to the date of redemption, the Corporation shall
deposit the redemption price of all shares of Series A-1 Preferred Stock
designated for redemption in said notice and not yet redeemed with a bank or
trust company having aggregate capital and surplus in excess of $100,000,000 as
a trust fund for the benefit of the respective holders of the shares of Series
A-1 Preferred Stock designated for redemption and not yet redeemed.
SECTION 12. AMENDMENT. So long as any shares of Series A-1 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-1
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-1 Preferred Stock.
SECTION 13. REACQUIRED SHARES. Any shares of Series A-1 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
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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 and payment of dividends, the
Series A-1 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-1 Preferred Stock are
outstanding, no Common Stock nor any other such stock of the Corporation ranking
junior to the Series A-1 Preferred Stock 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-1 Preferred Stock 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 all outstanding shares of
the Series A-1 Preferred Stock on substantially the same terms (provided that
the redemption price per share shall not be less than the Liquidation
Preference).
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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 Chief Financial Officer this
17th day of November, 1997.
/S/ ROBERT FINOCCHIO, JR.
---------------------------------
Robert Finocchio, Jr.
Chairman of the Board, President and
Chief Executive Officer
Attest:
/S/ JEAN-YVES DEXMIER
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Jean-Yves Dexmier
Chief Financial Officer
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<PAGE>
CERTIFICATE OF DESIGNATION
OF
SERIES B CONVERTIBLE PREFERRED STOCK
OF
INFORMIX CORPORATION
PURSUANT TO SECTION 151 OF THE
DELAWARE GENERAL CORPORATION LAW
Informix Corporation, a corporation organized and existing under the laws
of the State of Delaware (the "Corporation"), hereby certifies that the
following resolution was adopted by the Board of Directors of the Corporation
pursuant to authority of the Board of Directors as required by Section 151 of
the Delaware General Corporation Law.
RESOLVED, that pursuant to the authority granted to the Board of
Directors in accordance with the provisions of the Corporation's Certificate
of Incorporation, the Board of Directors hereby authorizes a series of the
Corporation's previously authorized Preferred Stock, par value $.01 per share
(the "PREFERRED STOCK"), and hereby states the designation and number of
shares, and fixes the relative rights, preferences, privileges and
restrictions thereof as follows:
1. DESIGNATION AND AMOUNT.
The designation of this series, which consists of fifty thousand (50,000)
shares (the "PREFERRED SHARES") of Preferred Stock, is the Series B
Convertible Preferred Stock (the "SERIES B PREFERRED STOCK") and the face
amount shall be One Thousand Dollars ($1,000) per share (the "STATED VALUE").
2. DIVIDENDS.
(a) DIVIDEND RATE; PAYMENTS. The holders (each, a "HOLDER" and
collectively, the "HOLDERS") of Preferred Shares shall be entitled to
receive, to the extent permitted by applicable law, subject to the prior,
full payment of any accumulated and unpaid dividends on any class or series
of Senior Securities (as defined below) and in preference to the payment of
any dividend on any class or series of Junior
<PAGE>
Securities (as defined below), cumulative dividends ("DIVIDENDS") on each
Preferred Share in an amount equal to, on an annualized basis, the Stated
Value of such Preferred Share TIMES five percent (5%). Dividends shall accrue
and be payable, whether or not earned or declared, on each Preferred Share
from the date of the original issuance thereof (the "PURCHASE DATE") through
the earlier to occur of (A) the Maturity Date (as defined below) and (B) the
redemption or conversion thereof in accordance with the terms hereof.
Accrued Dividends on a Preferred Share shall be payable on each Conversion
Date (as defined below), on the Maturity Date (as defined below) and, in the
event that the Registration Statement (as defined below) has not become
effective within six (6) months of the Purchase Date, on the last day of such
six month period and on the first day of each calendar month following such
day until the Registration Statement has become effective (each, a "DIVIDEND
PAYMENT DATE"). If, on any date, Dividends on any outstanding Preferred
Shares have not been paid with respect to all Dividend Payment Dates
preceding such date, the aggregate amount of such Dividends shall be fully
paid before any distribution, whether by way of dividend or otherwise, shall
be declared, paid or set apart with respect to any Junior Securities on or
after such date. Dividends shall be paid either in cash or, at the option of
the Corporation (the "STOCK PAYMENT OPTION"), and subject to the satisfaction
of the conditions set forth in paragraph 2(e) below (the "STOCK PAYMENT
CONDITIONS"), in shares (the "DIVIDEND PAYMENT SHARES") of the Corporation's
common stock (the "COMMON STOCK"). Cash Dividends shall be paid to each
Holder within five (5) Business Days following the applicable Dividend
Payment Date by delivering immediately available funds to such Holder in
accordance with such Holder's wiring instructions. Any amount of Dividends
payable in cash which is not paid within five (5) Business Days of the
applicable Dividend Payment Date shall bear interest at an annual rate equal
to the lower of (x) the "prime" rate (as published in the Wall Street
Journal) on such fifth Business Day PLUS three percent (3%) and (y) the
highest rate permitted by applicable law, for the number of days elapsed from
such Dividend Payment Date until such amount is paid in full (the "DEFAULT
INTEREST RATE").
(b) EXERCISE OF STOCK PAYMENT OPTION. In order for the Corporation to
exercise the Stock Payment Option, it must deliver written notice thereof (a
"STOCK PAYMENT EXERCISE NOTICE") to each Holder on or before the tenth (10th)
Business Day prior to the Initial Conversion Date (as defined below) and
prior to the first day of each calendar quarter thereafter specifying whether
the Corporation intends to pay Dividends during such calendar quarter (or
shorter period in the case of the notice delivered prior to the Initial
Conversion Date) in Dividend Payment Shares or cash. Upon delivering a Stock
Payment Exercise Notice to a Holder, the Corporation thereafter shall be
irrevocably bound by its election made therein to deliver Dividend Payment
Shares or cash, as the case may be, during the period to which such notice
relates.
(c) DELIVERY OF DIVIDEND PAYMENT SHARES. Upon exercise of the Stock
Payment Option, the Corporation shall deliver to each Holder, on or before
the third (3rd) Business Day following the applicable Dividend Payment Date
(the "DIVIDEND PAYMENT SHARE DELIVERY DATE"), the aggregate number of whole
Dividend Payment Shares that is determined by dividing (x) the amount of the
Dividend to which such Holder is entitled as of such Dividend Payment Date
with respect to all of such Holder's Preferred Shares by (y) the applicable
Conversion Price (as defined below) on such Dividend Payment Date. The
Corporation shall effect delivery of Dividend Payment Shares to a Holder by,
as long as the
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Corporation's transfer agent is participating in the Depository Trust Company
("DTC") Fast Automated Securities Transfer program, crediting the account of
such Holder or its nominee at DTC with the number of Dividend Payment Shares
required to be delivered, no later than the close of business on such
Dividend Payment Share Delivery Date. In the event that the condition
specified in the immediately preceding sentence is not satisfied as of the
applicable Dividend Payment Share Delivery Date, or if a Holder specifies in
the applicable Conversion Notice (as defined below) or otherwise notifies the
Corporation in writing not less than three (3) Business Days prior to the
applicable Dividend Payment Date that such Holder wishes to receive physical
certificates, the Corporation shall effect delivery of Dividend Payment
Shares by delivering to the Holder or its nominee physical certificates
representing such Dividend Payment Shares, no later than the close of
business on such Dividend Payment Share Delivery Date. No fractional
Dividend Payment Shares shall be issued; the Corporation shall, in lieu
thereof, either issue a number of Dividend Payment Shares which reflects a
rounding up to the next whole number of shares or pay such amount in cash.
Dividend Payment Shares shall be fully paid and non-assessable, free and
clear of any liens, claims, preemptive rights or encumbrances imposed by or
through the Corporation.
(d) FAILURE TO DELIVER DIVIDEND PAYMENT SHARES. In the event that the
Corporation fails for any reason to deliver to a Holder certificates
representing the appropriate number of Dividend Payment Shares on or before
the third (3rd) Business Day following the applicable Dividend Payment Share
Delivery Date, the Corporation shall, upon written notice by such Holder,
immediately pay the amount of the Dividend in cash, together with interest at
an annual rate equal to the Default Interest Rate on such unpaid amount
accruing daily from the applicable Dividend Payment Date until the date on
which such amount is paid. Each Holder shall have the right to pursue actual
damages for the Corporation's failure to issue and deliver Dividend Payment
Shares on the Dividend Payment Share Delivery Date for a Dividend, including,
without limitation, damages relating to any purchase of shares of Common
Stock by such Holder to make delivery on a sale effected in anticipation of
receiving Dividend Payment Shares, such damages to be in an amount equal to
(A) the aggregate amount paid by such Holder for the shares of Common Stock
so purchased MINUS (B) (i) the aggregate amount of net proceeds, if any,
received by such Holder from the sale of the Dividend Payment Shares issued
by the Corporation with respect to such Dividend and (ii) the amount of any
cash received in lieu of such Dividend Payment Shares pursuant to the
immediately preceding sentence (excluding any interest accrued thereon), and
such Holder shall have the right to pursue all remedies available to it at
law or in equity (including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Corporation's
failure to deliver Dividend Payment Shares).
(e) CONDITIONS TO STOCK PAYMENT OPTION. The Corporation may exercise
the Stock Payment Option with respect to Dividends payable to a Holder only
if each of the following conditions has been satisfied as of the applicable
Dividend Payment Date:
(i) the number of shares of Common Stock authorized, unissued and
unreserved for all other purposes, or held in the Corporation's treasury, is
sufficient to effect the issuance and delivery of at least 125% of the
aggregate of (x) the number of shares of Common Stock into which all
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<PAGE>
outstanding Preferred Shares are then convertible (the "CONVERSION SHARES"),
(y) the number of shares of Common Stock into which the Warrants issuable
upon conversion of all outstanding Preferred Shares (substantially in the
form attached hereto as EXHIBIT A, the "WARRANTS") are then exercisable (the
"WARRANT SHARES"), and (z) the number of Dividend Payment Shares issuable
pursuant to such exercise;
(ii) the Common Stock is authorized for quotation on the Nasdaq
National Market, or is listed on the New York Stock Exchange or the American
Stock Exchange;
(iii) (A) a Registration Statement covering the resale of shares of
Common Stock (the "REGISTRATION STATEMENT") is effective and available for
the sale of no less than 125% of the aggregate of (x) the number of
Conversion Shares into which all outstanding Preferred Shares are then
convertible, (y) the number of Warrant Shares into which the Warrants
issuable upon conversion of all outstanding Preferred Shares are then
exercisable, and (z) the number of Conversion Shares that are then held by
all of the Holders and with respect to which a registration statement is
required to be maintained under the terms of the Registration Rights
Agreement pursuant to which the Conversion Shares and the Dividend Payment
Shares are required to be registered under the Registration Statement (the
"REGISTRATION RIGHTS AGREEMENT") and (zz) the number of Dividend Payment
Shares issuable pursuant to such exercise or (B) a Registration Statement is
no longer required to be maintained under the Registration Rights Agreement;
(iv) a Mandatory Redemption Event (as defined herein) has not
occurred;
(v) the Corporation shall have delivered a Stock Payment Exercise
Notice to such Holder in accordance with the terms hereof and elected therein
to pay such Dividends in Common Stock; and
(vi) such payment in Dividend Payment Shares, after giving effect
to the Conversion of all Preferred Shares, the exercise of all Warrants and
the prior issuance of all shares of Common Stock hereunder, in each case
effected on or before such Dividend Payment Date, will not violate the
limitations set forth in Section 5 below.
For purposes of subparagraphs (e)(i) and (e)(iii) above, the
determination of the number of Conversion Shares issuable at any time shall
be made without regard to the limitations set forth in Section 5 below.
3. PRIORITY.
(a) PAYMENT UPON DISSOLUTION.
(i) Upon the occurrence of (x) any insolvency or bankruptcy
proceedings, or any receivership, liquidation, reorganization or other
similar proceedings in connection therewith, commenced by the Corporation or
by its creditors, as such, or relating to its assets or (y) the dissolution
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<PAGE>
or other winding up of the Corporation whether total or partial, whether
voluntary or involuntary and whether or not involving insolvency or
bankruptcy proceedings, or (z) any assignment for the benefit of creditors or
any marshalling of the material assets or material liabilities of the
Corporation (each, a "LIQUIDATION EVENT"), no distribution shall be made to
the holders of any shares of Junior Securities (as defined below) unless,
following the payment of preferential amounts on all Senior Securities (as
defined below), each Holder shall have received the Liquidation Preference
(as defined below) with respect to each Preferred Share then held by such
Holder. In the event that upon the occurrence of a Liquidation Event, and
following the payment of preferential amounts on all Senior Securities (as
defined below), the assets available for distribution to the Holders and the
holders of Pari Passu Securities (as defined below) are insufficient to pay
the Liquidation Preference with respect to all of the outstanding Preferred
Shares and the preferential amounts payable to such holders, the entire
assets of the Corporation shall be distributed ratably among the Preferred
Shares and the shares of Pari Passu Securities in proportion to the ratio
that the preferential amount payable on each such share (which shall be the
Liquidation Preference in the case of a Preferred Share) bears to the
aggregate preferential amount payable on all such shares. If, after the
payment of all preferential amounts to the holders of Senior Securities, the
Holders and the holders of Pari Passu Securities, there are assets of the
Corporation remaining, the holders of Junior Securities shall share in such
assets ratably in accordance with the respective terms of such Junior
Securities.
(ii) The "LIQUIDATION PREFERENCE" with respect to a Preferred Share
shall mean an amount equal to the Stated Value of such Preferred Share plus
any accrued and unpaid Dividends thereon. "JUNIOR SECURITIES" shall mean the
Common Stock and all other capital stock of the Corporation that are not Pari
Passu Securities or do not have a preference over the Preferred Stock in
respect of dividends, redemption or distribution upon liquidation. "SENIOR
SECURITIES" shall mean any securities of the Corporation which by their terms
have a preference over the Preferred Stock in respect of dividends,
redemption or distribution upon liquidation and shall include the
Corporation's Series A-1 Convertible Preferred Stock outstanding at any time.
"PARI PASSU SECURITIES" shall mean any securities ranking PARI PASSU with the
Preferred Stock in respect of dividends, redemption or distribution upon
liquidation.
4. CONVERSION.
(a) RIGHT TO CONVERT. Subject to the limitations contained in Section 5
below and to the provisions of paragraph 4(b) below, each Holder shall have
the right to convert, at any time and from time to time, from and after the
date which is six (6) months following the Purchase Date (the "INITIAL
CONVERSION DATE"), all or any part of the Preferred Shares held by such
Holder into (i) such number of fully paid and non-assessable shares of Common
Stock ("CONVERSION SHARES") as is computed in accordance with the terms
hereof and (ii) a Warrant entitling such Holder to purchase two (2) shares of
Common Stock for every ten (10) Conversion Shares into which such Preferred
Shares are then being converted (a "CONVERSION"); PROVIDED, HOWEVER, that in
no event shall the number of Warrant Shares issuable upon exercise of all
Warrants that are issued pursuant to Conversion of all of the Preferred
Shares purchased under the Securities Purchase Agreement (as defined below)
be less than one million five hundred thousand (1,500,000) Warrant Shares
(the "MINIMUM WARRANT AMOUNT") and PROVIDED,
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FURTHER, that upon the initial Conversion of Preferred Shares effected by a
Holder hereunder, such Holder shall receive, in addition to the Conversion
Shares and Warrants otherwise issuable as provided herein, a Warrant
entitling such Holder to purchase such Holder's Allocable Share (as defined
below) of two hundred thousand (200,000) shares of Common Stock. In the
event that, upon Conversion by a Holder of not less than all of the Preferred
Shares held by such Holder, such Holder receives less than its Allocable
Share (as defined below) of the Minimum Warrant Amount, the Corporation
shall, immediately upon receiving written notice thereof from such Holder,
issue an additional Warrant or Warrants so that such Holder shall be entitled
to receive, upon exercise of all of the Warrants issued to it, its Allocable
Share of the Minimum Warrant Amount. A Holder's "ALLOCABLE SHARE" shall be
equal to (i) a fraction, the numerator of which shall be the number of
Preferred Shares purchased by such Holder pursuant to the Securities Purchase
Agreement (as defined below) and the denominator of which shall be the
aggregate number of Preferred Shares purchased by all of the Holders pursuant
to the Securities Purchase Agreement or (ii) if such Holder received
Preferred Shares pursuant to a transfer of such shares from a Holder, a pro
rata portion of the transferor Holder's Allocable Share.
(b) CONVERSION RIGHT UPON OCCURRENCE OF CERTAIN EVENTS; CHANGE OF
CONTROL TRANSACTION DEFINED. Notwithstanding anything contained herein to the
contrary, a Holder shall have the right to convert the Preferred Shares held
by such Holder at any time during the six-month period following the Purchase
Date if, during such six-month period, (A) the Corporation becomes obligated
to send a Change of Control Notice (as defined below) or an Exchange Notice
(as defined in paragraph 6(c) hereof), (B) a Major Announcement (as defined
in paragraph 6(e) hereof) is made, (C) Robert Finocchio, Jr., Jean-Yves
Dexmier or Myron Saranga no longer holds a senior management position with
the Corporation that is at least equivalent in responsibility to the position
held by such individual on the Purchase Date, and with respect to which such
individual is able to, and does, perform substantially all of the duties
customarily associated with such position, (D) the Corporation is obligated,
as a result of the issuance of securities by the Corporation, to deliver a
notice of such Holder's Right of First Offer (as defined in the Securities
Purchase Agreement) pursuant to the terms of the Securities Purchase
Agreement or (E) the Corporation fails to enter into a binding revolving
credit agreement with the Bank of Boston and/or Canadian Imperial Bank of
Commerce for no less than seventy five million dollars ($75,000,000) on or
before the forty fifth (45th) day following the Purchase Date or such credit
agreement is terminated or becomes unavailable to the Corporation during the
period of six (6) months following the Purchase Date (the date on which an
event described in clause (A), (B), (C), (D) or (E) first occurs is referred
to herein as an "EARLY CONVERSION DATE"); in the event of any of the
foregoing, the Initial Conversion Date for purposes of this Certificate of
Designation shall be deemed to occur on the EARLY CONVERSION DATE. Prior to
any sale, conveyance or disposition of all or substantially all of the assets
of the Corporation, or the effectuation of a transaction or series of related
transactions, in which more than 50% of the voting power of the Corporation
is disposed of, or the consolidation, merger or other business combination of
the Corporation with or into any other entity, immediately following which
the prior stockholders of the Corporation fail to own, directly or
indirectly, at least fifty percent (50%) of the surviving entity (a "CHANGE
OF CONTROL TRANSACTION"), the Corporation shall (i) deliver to each Holder a
written notice (a "CHANGE OF CONTROL NOTICE"), (ii) make a public
announcement of such event at the same time that it gives such notice (but
only if a public announcement of such event has not
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previously been made) and (iii) require the resulting successor or acquiring
entity (if not the Corporation) to assume by written instrument the
obligations of the Corporation hereunder and under the Securities Purchase
Agreement pursuant to which the Preferred Shares were issued and sold (the
"SECURITIES PURCHASE AGREEMENT"), the Warrants and the Registration Rights
Agreement.
(c) CONVERSION NOTICE. In order to convert Preferred Shares, a Holder
shall send by facsimile transmission, at any time prior to 11:59 p.m.,
eastern time, on the date on which such Holder wishes to effect such
Conversion (the "CONVERSION DATE"), a notice of conversion substantially in
the form of Exhibit B hereto (a "CONVERSION NOTICE") to the Corporation. The
Holder shall thereafter send the original of the Conversion Notice and of the
certificate or certificates representing the Preferred Shares being converted
to the Corporation. The Corporation shall issue a new certificate for
Preferred Shares in the event that less than all of the Preferred Shares
represented by a certificate delivered to the Corporation in connection with
a Conversion are converted. Except as otherwise provided herein, upon
delivery of a Conversion Notice by a Holder in accordance with the terms
hereof, such Holder shall, as of the applicable Conversion Date, be deemed
for all purposes to be record owner of the Common Stock to which such
Conversion Notice relates. In the case of a dispute between the Corporation
and a Holder as to the calculation of the Conversion Price or the number of
Conversion Shares issuable upon a Conversion, the Corporation shall promptly
issue to such Holder the number of Conversion Shares that are not disputed
and shall submit the disputed calculations to its independent accountant
within three (3) Business Days of receipt of such Holder's Conversion Notice.
The Corporation shall cause such accountant to calculate the Conversion
Price as provided herein and to notify the Corporation and such Holder of the
results in writing no later than three (3) Business Days following the day on
which it received the disputed calculations. Such accountant's calculation
shall be deemed conclusive absent manifest error. The fees of any such
accountant shall be borne by the party whose calculations were most at
variance with those of such accountant.
(d) NUMBER OF CONVERSION SHARES; CONVERSION PRICE. The number of
Conversion Shares to be delivered by the Corporation pursuant to a Conversion
shall be determined by dividing the aggregate Stated Value of the Preferred
Shares to be converted by the Conversion Price (as defined herein) in effect
on the Conversion Date. The number of Conversion Shares deliverable
hereunder to all Holders shall not exceed in the aggregate one hundred
million (100,000,000) shares (the "CONVERSION LIMIT"). "CONVERSION PRICE"
shall mean, subject to adjustment as provided in this Certificate of
Designation, the lesser of (A) the average of the Closing Bid Prices for the
Common Stock on the twenty-two (22) Trading Days (as defined herein)
occurring immediately prior to (but not including) the one hundred and
eightieth (180th) day following the Purchase Date (the "FIXED CONVERSION
PRICE"), (B) 101% of the average of the Closing Bid Prices for the Common
Stock during the twenty-two (22) Trading Days occurring immediately prior to
(but not including) the date that is the fifth (5th) Trading Day immediately
prior to the Conversion Date and (C) 101% of the lowest Closing Bid Price for
the Common Stock during the five (5) Trading Days occurring immediately prior
to (but not including) the Conversion Date.
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(e) CERTAIN DEFINITIONS. "TRADING DAY" shall mean any day on which the
Common Stock is traded on the Nasdaq Stock Market or on the principal
securities exchange or market on which the Common Stock is then traded.
"CLOSING BID PRICE" means, with respect to a security, the closing bid price
of such security on the principal securities exchange or trading market where
such security is listed or traded as reported by Bloomberg Financial Markets
or, if Bloomberg Financial Markets is not then reporting closing bid prices
of such security, a comparable reporting service of national reputation
selected by the Corporation and reasonably acceptable to holders of a
majority of the then outstanding Preferred Shares (collectively,
"BLOOMBERG"), or if the foregoing does not apply, the last reported bid price
of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no bid price is
reported for such security by Bloomberg, the average of the bid prices of all
market makers for such security as reported in the "pink sheets" by the
National Quotation Bureau, Inc. If the Closing Bid Price cannot be
calculated for such security on any of the foregoing bases, the Closing Bid
Price of such security shall be the fair market value as reasonably
determined by an investment banking firm selected by the Holders (which may
be a Holder) of a majority of the then outstanding Preferred Shares and
reasonably acceptable to the Corporation, with the costs of such appraisal to
be borne by the Corporation. "BUSINESS DAY" means any day on which the New
York Stock Exchange and commercial banks located in the City of New York are
open for business.
(f) DELIVERY OF COMMON STOCK AND WARRANT UPON CONVERSION. Upon receipt
of a Conversion Notice from a Holder pursuant to paragraph 4(c) above, the
Corporation shall, no later than the close of business on the later to occur
of (i) the third (3rd) Business Day following the Conversion Date set forth
in such Conversion Notice and (ii) the first Business Day following delivery
of the original certificates, duly endorsed, representing the Preferred
Shares being converted pursuant thereto (the "DELIVERY DATE"), issue and
deliver or cause to be delivered to such Holder (a) the number of Conversion
Shares as shall be determined as provided herein and (b) a Warrant entitling
the Holder to purchase two (2) shares of Common Stock for every ten (10) such
Conversion Shares. The Corporation shall effect delivery of Conversion
Shares to a Holder by, as long as the Corporation's transfer agent is
participating in the DTC Fast Automated Securities Transfer program,
crediting the account of such Holder or its nominee at DTC with the number of
Conversion Shares required to be delivered, no later than the close of
business on such Delivery Date. In the event that the condition specified in
the immediately preceding sentence is not satisfied as of the applicable
Delivery Date, or if a Holder so specifies in a Conversion Notice or
otherwise in writing, the Corporation shall effect delivery of Conversion
Shares by delivering to the Holder or its nominee physical certificates
representing such Conversion Shares, no later than the close of business on
such Delivery Date. Delivery of a Warrant shall be made by delivering a
physical certificate in the form of EXHIBIT A hereto, duly executed by an
authorized officer of the Corporation, to the Holder or such Holder's nominee
no later than the close of business on the related Delivery Date. If any
Conversion would create a fractional Conversion Share, such fractional
Conversion Share shall be disregarded and the number of Conversion Shares
issuable upon such Conversion, in the aggregate, shall be the next higher
number of Conversion Shares. Conversion Shares delivered to the Holder shall
not contain any restrictive legend as long as (A) the resale or transfer
(including without limitation a pledge) of such Conversion Shares is
registered pursuant to an effective registration statement and the Purchaser
holding or entitled to receive such Conversion Shares has represented to the
Corporation, in
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the related Conversion Notice or otherwise in writing, that such Purchaser
has resold or transferred such Conversion Shares in accordance with the terms
of the Prospectus relating to such Registration Statement, (B) such Purchaser
provides the Corporation with an opinion of counsel, in form, substance and
scope customary for opinions of counsel in comparable transactions (the cost
of which shall be borne by such Purchaser) to the effect that such Conversion
Shares can be sold publicly without registration under the Securities Act of
1933, as amended (the "SECURITIES ACT"), (C) such Conversion Shares can be
sold pursuant to Rule 144 under the Securities Act ("RULE 144") and a
registered broker dealer provides to the Corporation a customary broker's
Rule 144 letter and such Purchaser delivers to the Corporation a customary
seller's representation letter, or (D) such Conversion Shares are eligible
for resale under Rule 144(k) or any successor rule or provision.
(g) FAILURE TO DELIVER CONVERSION SHARES.
(i) In the event that the Corporation fails for any reason to
deliver to a Holder certificates representing the number of Conversion Shares
specified in the applicable Conversion Notice on or before the Delivery Date
therefor (a "CONVERSION DEFAULT"), such Holder shall notify the Corporation
by facsimile of such Conversion Default (a "DEFAULT NOTICE"). If, after the
Holder has sent a Default Notice to the Corporation, the Corporation has not
delivered such certificates, and such failure continues for seven (7)
Business Days following the Delivery Date, the Corporation shall pay to such
Holder payments ("CONVERSION DEFAULT PAYMENTS") in the amount of (i) (N/365)
MULTIPLIED BY (ii) the aggregate Liquidation Preference of the Preferred
Shares represented by the Conversion Shares which remain the subject of such
Conversion Default MULTIPLIED BY (iii) the lower of twenty-four percent (24%)
and the maximum rate permitted by applicable law, where "N" equals the number
of days elapsed between the original Delivery Date for such Conversion Shares
and the earlier to occur of (A) the date on which all of the certificates
representing such Conversion Shares are issued and delivered to such Holder,
(B) the date on which such Preferred Shares are redeemed pursuant to the
terms hereof and (C) the date on which a Withdrawal Notice (as defined below)
is delivered to the Corporation. Amounts payable under this subparagraph (g)
shall be paid to the Holder in immediately available funds on or before the
fifth (5th) Business Day of the calendar month immediately following the
calendar month in which such amounts have accrued.
(ii) In the event that a Holder has not received certificates
representing the Conversion Shares by the tenth (10th) Business Day following
a Conversion Default, such Holder may, upon written notice (a "WITHDRAWAL
NOTICE") delivered to the Corporation on such Business Day or on any Business
Day thereafter (unless, prior to the delivery of such notice, such Conversion
Shares are delivered to such Holder), withdraw its Conversion Notice with
respect to such Conversion Shares and regain its rights as a Holder of the
Preferred Shares that are the subject of such Conversion Default. In such
event, (x) the Fixed Conversion Price shall thereafter be equal to the lesser
of the Fixed Conversion Price then in effect and the lowest Closing Bid Price
for the Common Stock occurring between such tenth Business Day and the date,
if any, on which delivery of such certificates is made, and (y) such Holder
shall be entitled thereafter to convert the Preferred Shares that are the
subject of such Conversion Default at the lesser of (A) the Conversion Price
in effect on the original Conversion Date to which such
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Conversion Notice relates and (B) the Conversion Price that would otherwise
be in effect when such Preferred Shares are thereafter converted in
accordance with the terms hereof, in either such case, reduced by one percent
(1%) for each day occurring during the period immediately following such 10th
Business Day until the day on which the such Holder delivers a Withdrawal
Notice to the Corporation; PROVIDED, HOWEVER, that the maximum percentage by
which such Conversion Price may be reduced hereunder shall be fifty percent
(50%). (For example, if such Conversion Default were to continue for five
days following such 10th Business Day, such Conversion Price would be reduced
by 5%; if for ten days, by 10%; and for fifty days or more, 50%, so that the
number of Conversion Shares deliverable upon conversion of such Preferred
Shares would be increased proportionately). Upon delivery by a Holder of a
Withdrawal Notice, such Holder shall retain all of such Holder's rights and
remedies with respect to the Corporation's failure to deliver such Conversion
Shares (including without limitation the right to receive the cash payments
specified in subparagraph 4(g)(i) above).
(iii) Nothing herein shall limit a Holder's right to pursue actual
damages for the Corporation's failure to issue and deliver Conversion Shares
on the applicable Delivery Date (including, without limitation, damages
relating to any purchase of shares of Common Stock by such Holder to make
delivery on a sale effected in anticipation of receiving Conversion Shares
upon Conversion, such damages to be in an amount equal to (A) the aggregate
amount paid by such Holder for the shares of Common Stock so purchased MINUS
(B) the aggregate amount of net proceeds, if any, received by such Holder
from the sale of the Conversion Shares issued by the Corporation pursuant to
such Conversion), and such Holder shall have the right to pursue all remedies
available to it at law or in equity (including, without limitation, a decree
of specific performance and/or injunctive relief).
(h) CONVERSION AT MATURITY. On the date which is three (3) years
following the Purchase Date (the "MATURITY DATE"), all Preferred Shares then
outstanding shall be automatically converted into the number of shares of
Common Stock equal to the Stated Value of such shares DIVIDED BY the
Conversion Price then in effect (a "MANDATORY CONVERSION"); PROVIDED,
HOWEVER, that if, on the Maturity Date, (i) the number of shares of Common
Stock authorized, unissued and unreserved for all other purposes, or held in
the Corporation's treasury, is not sufficient to effect the issuance and
delivery of the aggregate of (x) the number of Conversion Shares into which
all outstanding Preferred Shares are then convertible, and (y) the number of
Warrant Shares into which the Warrants issuable upon conversion of all
outstanding Preferred Shares are then exercisable, (ii) the Common Stock is
not designated for quotation on the Nasdaq National Market or listed on the
New York Stock Exchange or American Stock Exchange, or (iii) a Mandatory
Redemption Event (as defined herein) has occurred and is continuing, each
Holder shall have the option, upon written notice to the Corporation, to
regain its rights as a holder of Preferred Shares, including without
limitation, the right to convert such Preferred Shares in accordance with the
terms of paragraphs 4(a) through 4(g) hereof and, upon delivery of such
notice, such Preferred Shares shall not be subject to a Mandatory Conversion
hereunder until the thirtieth (30th) day following the later of (a) the date
on which the event specified (i), (ii) or (iii) is no longer continuing and
(b) the date on which the Corporation delivers to each Holder written notice
to such effect, and in such event, such thirtieth day shall be deemed to be
the Maturity Date for purposes of this Certificate of Designation. If a
Mandatory Conversion occurs, the Corporation and each Holder shall follow the
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procedures for Conversion set forth in this Section 4, with the Maturity Date
deemed to be the Conversion Date, except that the Holder shall not be
required to send a Conversion Notice as contemplated by paragraph 4(c).
5. CONVERSION LIMITATION.
In no event shall a Holder be permitted to convert any Preferred Shares
in excess of the number of such shares, upon the Conversion of which (a) the
number of shares of Common Stock beneficially owned by such Holder PLUS (b)
the number of shares of Common Stock issuable upon the Conversion of such
Preferred Shares, would be equal to or exceed (c) 4.99% of the number of
shares of Common Stock then issued and outstanding. As used herein,
beneficial ownership shall be determined in accordance with Section 13(d) of
the Securities Exchange Act of 1934, as amended, and the rules thereunder.
To the extent that the limitation contained in this Section 5 applies, the
determination of whether Preferred Shares are convertible (in relation to
other securities owned by a Holder) and of which Preferred Shares or other
securities owned by a Holder are convertible shall be in the sole discretion
of such Holder, and the submission of Preferred Shares for Conversion shall
be deemed to be such Holder's determination that such Preferred Shares are
convertible pursuant to the terms hereof, and the Corporation shall have no
obligation whatsoever to verify or confirm the accuracy of such
determination. This Section 5 may be amended (i) in order to clarify an
ambiguity or otherwise to give effect to such limitation, by the Holders of
two-thirds (2/3) of the Preferred Shares then outstanding and (ii) for any
other reason, with the further consent of the holders of a majority of the
shares of Common Stock then outstanding. Nothing contained herein shall be
deemed to restrict the right of a Holder to convert Preferred Shares at such
time as the Conversion thereof will not violate the provisions of this
Section 5. The restriction contained in this Section 5 shall not apply in the
event of a Mandatory Conversion.
6. ADJUSTMENTS TO CONVERSION PRICE.
(a) ADJUSTMENT TO FIXED CONVERSION PRICE DUE TO STOCK SPLIT, STOCK
DIVIDEND, ETC. If, prior to the Conversion of all of the Preferred Shares,
(A) the number of outstanding shares of Common Stock is increased by a stock
split, a stock dividend on the Common Stock, a reclassification of the Common
Stock, the distribution to holders of Common Stock of rights or warrants
entitling them to subscribe for or purchase Common Stock at less than the
then current market price thereof (based upon the subscription or exercise
price of such rights or warrants at the time of the issuance thereof) or
other similar event, the Fixed Conversion Price shall be proportionately
reduced, or (B) the number of outstanding shares of Common Stock is decreased
by a reverse stock split, combination or reclassification of shares or other
similar event, the Fixed Conversion Price shall be proportionately increased.
In such event, the Corporation shall notify each Holder of such change on or
before the effective date thereof. For purposes of this subparagraph 6(a),
the market price per share of Common Stock on any date shall be the average
Closing Bid Price for the Common Stock on the five (5) consecutive Trading
Days occurring immediately prior to but not including the earlier of such
date and the Trading Day before the "ex" date, if any, with respect to the
issuance or distribution requiring such computation. The term "'ex' date",
when used with respect to any issuance or distribution, means the
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first Trading Day on which the Common Stock trades regular way in the market
from which such average Closing Bid Price is then to be determined without
the right to receive such issuance or distribution.
(b) ADJUSTMENT TO CONVERSION PRICE. If, prior to the Conversion of all
of the Preferred Shares, the number of outstanding shares of Common Stock is
increased or decreased by a stock split, a stock dividend on the Common
Stock, a combination, a reclassification of the Common Stock or other similar
event, and such event takes place during the reference period for the
determination of the Conversion Price for any Conversion thereof, the
Conversion Price shall be calculated giving appropriate effect to the stock
split, stock dividend, combination, reclassification or other similar event
for all Trading Days occurring during such reference period.
(c) ADJUSTMENT DUE TO MERGER, CONSOLIDATION, ETC. If, prior to the
Conversion of all of the Preferred Shares, there shall be any merger,
consolidation, business combination, tender offer, exchange of shares,
recapitalization, reorganization, redemption or other similar event, as a
result of which shares of Common Stock shall be changed into the same or a
different number of shares of the same or another class or classes of stock
or securities of the Corporation or another entity (an "EXCHANGE
TRANSACTION"), then such Holder shall (A) upon the consummation of such
Exchange Transaction, have the right to receive, with respect to any shares
of Common Stock then held by such Holder, or which such Holder is then
entitled to receive pursuant to a Conversion Notice previously delivered by
such Holder, (and without regard to whether such shares contain a restrictive
legend or are freely-tradeable) the same amount and type of consideration
(including without limitation, stock, securities and/or other assets) and on
the same terms as a holder of shares of Common Stock would be entitled to
receive in connection with the consummation of such Exchange Transaction (the
"EXCHANGE CONSIDERATION"), and (B) upon the Conversion of Preferred Shares
occurring subsequent to the consummation of such Exchange Transaction, the
Exchange Consideration which such Holder would have been entitled to receive
in connection with such Exchange Transaction had such shares been converted
immediately prior to such Exchange Transaction, and in any such case
appropriate provisions shall be made with respect to the rights and interests
of such Holder to the end that the provisions hereof (including, without
limitation, provisions for the adjustment of the Conversion Price and of the
number of shares issuable upon a Conversion) shall thereafter be applicable
as nearly as may be practicable in relation to any securities thereafter
deliverable upon the Conversion of such Preferred Shares. The Corporation
shall not effect any Exchange Transaction unless (i) it first gives to each
Holder twenty (20) days prior written notice of such Exchange Transaction (an
"EXCHANGE NOTICE"), and makes a public announcement of such event at the same
time that it gives such notice and (ii) the resulting successor or acquiring
entity (if not the Corporation) assumes by written instrument the obligations
of the Corporation hereunder, including the terms of this subparagraph 6(c),
and under the Securities Purchase Agreement and the Registration Rights
Agreement.
(d) DISTRIBUTION OF ASSETS. If the Corporation shall declare or make
any distribution of cash, evidences of indebtedness or other securities or
assets (other than cash dividends or distributions payable out of earned
surplus or net profits for the current or the immediately preceding year), or
any rights to
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acquire any of the foregoing, to holders of Common Stock as a partial
liquidating dividend, by way of return of capital or otherwise, including any
dividend or distribution in shares of capital stock of a subsidiary of the
Corporation (collectively, a "DISTRIBUTION"), then, upon a Conversion by a
Holder occurring after the record date for determining stockholders entitled
to such Distribution, the Fixed Conversion Price for Preferred Shares not
converted prior to the record date of a Distribution shall be reduced to a
price determined by decreasing the Fixed Conversion Price in effect
immediately prior to the record date of the Distribution by an amount equal
to the fair market value of the assets so distributed with respect to each
share of Common Stock, such fair market value to be determined by an
investment banking firm selected by the holders of at least two-thirds (2/3)
of the Preferred Shares then outstanding and reasonably acceptable to the
Corporation.
(e) ADJUSTMENT DUE TO MAJOR ANNOUNCEMENT. If the Corporation (i) makes
a public announcement that it intends to enter into a Change of Control
Transaction or (ii) any person, group or entity (including the Corporation)
publicly announces a tender offer, exchange offer or other transaction to
purchase 50% or more of the Common Stock (such announcement being referred to
herein as a "MAJOR ANNOUNCEMENT" and the date on which a Major Announcement
is made, the "ANNOUNCEMENT DATE"), then, in the event that a Holder seeks to
convert Preferred Shares on or following the Announcement Date, the
Conversion Price shall, effective upon the Announcement Date and continuing
through the earlier to occur of the consummation of the proposed transaction
or tender offer, exchange offer or other transaction and the Abandonment Date
(as defined below), be equal to the lower of (x) the average Closing Bid
Price for the Common Stock on the five (5) Trading Days immediately preceding
(but not including) the Announcement Date and (y) the Conversion Price in
effect on the Conversion Date for such Preferred Shares. "ABANDONMENT DATE"
means with respect to any proposed transaction or tender offer, exchange
offer or other transaction for which a public announcement as contemplated by
this paragraph 6(e) has been made, the date upon which the Corporation (in
the case of clause (i) above) or the person, group or entity (in the case of
clause (ii) above) publicly announces the termination or abandonment of the
proposed transaction or tender offer, exchange offer or another transaction
which caused this paragraph 6(e) to become operative.
(f) ADJUSTMENT PURSUANT TO REGISTRATION RIGHTS AGREEMENT. Upon the
occurrence of the events described in Section 2(d) of the Registration Rights
Agreement, the Conversion Price shall be adjusted as specified therein.
(g) NO FRACTIONAL SHARES. If any adjustment under this Section would
create a fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, such fractional share shall be disregarded and the
number of shares of Common Stock issuable upon Conversion shall be the next
higher number of shares or, at the option of the Corporation, shall be paid
in cash in an amount calculated by multiplying the amount of the fractional
share TIMES the Closing Bid Price used to calculate the Conversion Price for
such Conversion.
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7. MANDATORY REDEMPTION BY HOLDER.
(a) MANDATORY REDEMPTION. In the event that a Mandatory Redemption
Event (as defined below) occurs, each Holder shall have the right, to the
extent permitted by applicable law and subject to the rights and preferences
of the Senior Securities, to have all or any portion of the Preferred Shares
held by such Holder redeemed by the Corporation (a "MANDATORY REDEMPTION") at
the Mandatory Redemption Price (as defined herein) in same day funds. In
order to exercise its right to effect a Mandatory Redemption, a Holder must
deliver a written notice (a "MANDATORY REDEMPTION NOTICE") to the Corporation
at any time on or before the Business Day following the day on which such
event is no longer continuing. The Mandatory Redemption Notice shall specify
the effective date of such Mandatory Redemption (the "MANDATORY REDEMPTION
DATE") and the number of such shares to be redeemed.
(b) MANDATORY REDEMPTION EVENT. Each of the following events shall be
deemed a "MANDATORY REDEMPTION EVENT":
(i) the Corporation fails for any reason (including without
limitation (x) as a result of not having a sufficient number of shares of
Common Stock authorized and reserved for issuance, or (y) due to the listing
requirements of any quotation system or exchange on which the Common Stock is
quoted or listed with which the Corporation is unable to comply as a result
of voluntary action undertaken by the Corporation or a failure by the
Corporation to take appropriate action, but not because the Conversion Limit
has been reached) to issue shares of Common Stock to a Holder and deliver
certificates representing such shares to such Holder as and when required by
the provisions hereof upon Conversion of any Preferred Shares, and such
failure continues for ten (10) Business Days;
(ii) any material representation or warranty made by the Corporation
in the Securities Purchase Agreement, the Registration Rights Agreement, the
Warrants or any other agreement, document, certificate or other instrument
delivered in connection with the transactions contemplated hereby or thereby
is inaccurate or misleading in any material respect as of the date such
representation or warranty was made;
(iii) if following the declaration of effectiveness of the
Registration Statement and while the effectiveness of the Registration
Statement is required to be maintained pursuant to the terms of the
Registration Rights Agreement, the effectiveness of the Registration
Statement lapses for any reason (including without limitation, the issuance
of a stop order) or is unavailable to the Holder for the sale of Conversion
Shares in accordance with the terms of the Registration Rights Agreement, and
such lapse or unavailability continues for a period of five (5) Business
Days, PROVIDED that the cause of such lapse or unavailability results from
voluntary action undertaken by the Corporation or its failure to take
appropriate action; and PROVIDED FURTHER that the Registration Statement
shall not be deemed to be unavailable to the Holder, for purposes of this
subparagraph (iii) only, during any Blackout Period (as defined in the
Registration Rights Agreement); and
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(iv) the Corporation undertakes any voluntary action to terminate
the quotation or listing of the Common Stock on the Nasdaq National Market or
on a national securities exchange, unless such action is taken in connection
with the continued quotation or listing of the Common Stock on another
recognized national securities exchange or quotation system.
(c) MANDATORY REDEMPTION PRICE. The "MANDATORY REDEMPTION PRICE" shall
be equal to the greater of (i) Liquidation Preference of the Preferred Shares
being redeemed MULTIPLIED BY one hundred and fifteen percent (115%) and (ii)
an amount determined by dividing the Liquidation Preference of the Preferred
Shares being redeemed by the Conversion Price in effect on the Mandatory
Redemption Date and multiplying the resulting quotient by the average Closing
Bid Price for the Common Stock on the five (5) Trading Days immediately
preceding (but not including) the Mandatory Redemption Date.
(d) PAYMENT OF MANDATORY REDEMPTION PRICE.
(i) The Corporation shall pay the Mandatory Redemption Price to the
Holder exercising its right to redemption within five (5) Business Days
following the Mandatory Redemption Date. Upon the redemption of a Preferred
Share, and payment of the Mandatory Redemption Price to the Holder thereof,
such Holder will promptly return such share to the Corporation for
cancellation.
(ii) If Corporation fails to pay the Mandatory Redemption Price to
the Holder within five (5) Business Days of the Mandatory Redemption Date,
the Holder shall be entitled to interest thereon, from and after the
Mandatory Redemption Date until the Mandatory Redemption Price has been paid
in full, at an annual rate equal to the Default Interest Rate.
(iii) If the Corporation fails to pay the Mandatory Redemption Price
within ten (10) Business Days of the Mandatory Redemption Date, then the
Holder shall have the right at any time, so long as the Corporation remains
in default, to require the Corporation, upon written notice, to immediately
issue, in lieu of the Mandatory Redemption Price, the number of shares of
Common Stock of the Corporation equal to the Mandatory Redemption Price
DIVIDED BY the Conversion Price in effect on such Conversion Date as is
specified by the Holder in writing to the Corporation, such Conversion Price
to be reduced by one percent (1%) for each day beyond such 10th Business Day
in which the failure to pay the Mandatory Redemption Price continues;
PROVIDED, HOWEVER, that the maximum percentage by which such Conversion Price
may be reduced hereunder shall be fifty percent (50%).
8. MISCELLANEOUS.
(a) TRANSFER OF PREFERRED SHARES. A Holder may sell or transfer all or
any portion of the Preferred Shares to any person or entity as long as such
sale or transfer is the subject of an effective registration statement under
the Securities Act or is exempt from registration thereunder and otherwise is
made in accordance with the terms of the Securities Purchase Agreement. From
and after the date of such sale or transfer, the transferee hereof shall be
deemed to be a Holder. Upon any such sale or transfer, the Corporation
shall, promptly following the return of the certificate or certificates
representing
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the Preferred Shares that are the subject of such sale or transfer, issue and
deliver to such transferee a new certificate in the name of such transferee.
(b) NOTICES. Except as otherwise provided herein, any notice, demand or
request required or permitted to be given pursuant to the terms hereof, the
form or delivery of which notice, demand or request is not otherwise
specified herein, shall be in writing and shall be deemed given (i) when
delivered personally or by verifiable facsimile transmission on or before
5:00 p.m., eastern time, on a Business Day or, if such day is not a Business
Day, on the next succeeding Business Day, and (ii) on the next Business Day
after timely delivery to an overnight courier, addressed to the parties as
follows:
IF TO THE CORPORATION:
Informix Corporation
4100 Bohannon Drive
Menlo Park, CA 94205
Attn: Chief Financial Officer
Tel: (650) 926-6300
Fax: (650) 926-6564
WITH A COPY TO:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attn: Larry W. Sonsini, Esq.
Douglas H. Collom, Esq.
Tel: (650) 493-9300
Fax: (650) 496-4086
and if to any Holder, to such address for such Holder as shall be designated
by such Holder in writing to the Corporation.
(c) LOST OR STOLEN CERTIFICATE. Upon receipt by the Corporation of
evidence of the loss, theft, destruction or mutilation of a certificate
representing Preferred Shares, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the
Corporation, and upon surrender and cancellation of such certificate if
mutilated, the Corporation shall execute and deliver to the Holder a new
certificate identical in all respects to the original certificate.
(d) NO VOTING RIGHTS. Except as provided by applicable law and
paragraph 8(g) below, the Holders of the Preferred Shares shall have no
voting rights with respect to the business, management or affairs of the
Corporation; provided that the Corporation shall provide each Holder with
prior
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notification of each meeting of stockholders (and copies of proxy statements
and other information sent to such stockholders).
(e) REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided to a Holder in this Certificate of
Designation shall be cumulative and in addition to all other remedies
available to such Holder under this Certificate of Designation, at law or in
equity (including without limitation a decree of specific performance and/or
other injunctive relief), no remedy contained herein shall be deemed a waiver
of compliance with the provisions giving rise to such remedy and nothing
contained herein shall limit such Holder's right to pursue actual damages for
any failure by the Corporation to comply with the terms of this Certificate
of Designation. The Corporation agrees with each Holder that there shall be
no characterization concerning this instrument other than as specifically
provided herein. Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the Holder hereof and shall not, except as
expressly provided herein, be subject to any other obligation of the
Corporation (or the performance thereof). The Corporation acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to the
Holders and that the remedy at law for any such breach may be inadequate. The
Corporation agrees, in the event of any such breach or threatened breach,
each Holder shall be entitled, in addition to all other available remedies,
to an injunction restraining any breach, without the necessity of showing
economic loss and without any bond or other security being required.
(f) FAILURE OR DELAY NOT WAIVER. No failure or delay on the part of a
Holder in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege.
(g) PROTECTIVE PROVISIONS.
So long as shares of Series B Preferred Stock are outstanding, the
Corporation shall not, without first obtaining the approval of the Holders of
at least two-thirds (2/3) of the then outstanding shares of Series B
Preferred Stock:
(i) alter or change (x) the rights, preferences or privileges
of the Series B Preferred Stock or (y) any other capital stock of the
Corporation so as to affect adversely the Series B Preferred Stock;
(ii) create any new class or series of capital stock having a
preference over or ranking pari passu with the Series B Preferred Stock as to
redemption, the payment of dividends or distribution of assets upon a
Liquidation Event or any other liquidation, dissolution or winding up of the
Corporation (except for the Corporation's Series A-1 Preferred Stock);
(iii) increase the authorized number of shares of Series B
Preferred Stock;
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(iv) re-issue any shares of Series B Preferred Stock which
have been converted in accordance with the terms hereof;
(v) issue any Senior Securities (except for the Corporation's
Series A-1 Preferred Stock) or Pari Passu Securities; or
(vi) declare, pay or make any provision for any dividend or
distribution with respect to the Common Stock or any other capital stock of
the Corporation ranking junior to the Series B Preferred Stock as to
dividends or as to the distribution of assets upon liquidation, dissolution
or winding up of the Corporation.
In the event that Holders of at least two-thirds (2/3) of the then
outstanding shares of Series B Preferred Stock agree to allow the Corporation
to alter or change the rights, preferences or privileges of the Series B
Preferred Stock, pursuant to the terms hereof, then the Corporation will
deliver notice of such approved change, no later than the twentieth (20th)
day prior to the effective date of such approved change, to the holders of
the Series B Preferred Stock that did not agree to such alteration or change
(the "DISSENTING HOLDERS") and the Dissenting Holders shall have the right to
convert their Preferred Shares at any time and from time to time following
delivery of such notice. No such change shall be effective to the extent
that, by its terms, it applies to less than all of the Holders of Preferred
Shares then outstanding.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-18-
<PAGE>
IN WITNESS WHEREOF, the Corporation has executed this Certificate of
Designation as of the 18th day of November, 1997.
INFORMIX CORPORATION
By: /s/ ROBERT FINOCCHIO, JR.
-------------------------------
Name: Robert Finocchio, Jr.
Title: Chairman of the Board, President
and Chief Executive Officer
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<PAGE>
EXHIBIT A
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD
OR TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS IS AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
THIS WARRANT (THIS "WARRANT") AND THE WARRANTS OF EVEN DATE HEREWITH
(TOGETHER WITH THIS WARRANT, THE "WARRANTS") ARE ISSUED SUBJECT TO THE TERMS
OF (A) A SECURITIES PURCHASE AGREEMENT, DATED NOVEMBER 17, 1997 ("SECURITIES
PURCHASE AGREEMENT"), BY AND BETWEEN INFORMIX CORP. AND THE HOLDER OF THIS
WARRANT AND (B) A REGISTRATION RIGHTS AGREEMENT, DATED NOVEMBER [ ], 1997
("REGISTRATION RIGHTS AGREEMENT"), BY AND BETWEEN INFORMIX CORP. AND THE
HOLDER OF THIS WARRANT.
WARRANT TO PURCHASE
___________ SHARES
WARRANT TO PURCHASE COMMON STOCK
OF
INFORMIX CORP.
THIS CERTIFIES that ___________ or any subsequent holder hereof (the
"HOLDER"), has the right to purchase from INFORMIX CORP., a Delaware
corporation (the "COMPANY"), up to ___________ fully paid and nonassessable
shares of the Company's Common Stock (the "COMMON STOCK"), subject to
adjustment as provided herein, at a price equal to the Exercise Price (as
defined below), at any time beginning on the date on which this Warrant is
issued and ending at 5:00 p.m., eastern time, on November __, 2002 (the
"EXPIRATION DATE"). This Warrant is issued, and all rights hereunder shall
be, subject to all of the conditions, limitations and provisions set forth
herein and in the Securities Purchase Agreement.
<PAGE>
1. EXERCISE.
(a) RIGHT TO EXERCISE; EXERCISE PRICE. The Holder shall have the right
to exercise this Warrant at any time and from time to time up to and
including the Expiration Date as to all or any part of the shares of Common
Stock covered hereby (the "WARRANT SHARES"). The "EXERCISE PRICE" payable by
the Holder in connection with the exercise of this Warrant shall be equal to
one hundred and ten percent (110%) of the lesser of (A) the average of the
Closing Bid Prices (as defined below) for the Common Stock on the five (5)
Trading Days (as defined below) occurring immediately prior to (but not
including) the Closing Date (as defined in the Securities Purchase Agreement)
and (B) the average of the Closing Bid Prices (as defined below) for the
Common Stock on the five (5) Trading Days (as defined below) occurring
immediately prior to (but not including) the date which is the six (6) month
anniversary of the Closing Date (as defined in the Securities Purchase
Agreement). "TRADING DAY" shall mean any day on which the Common Stock is
traded for any period on the Nasdaq SmallCap Market or on the principal
securities exchange or market on which the Common Stock is then traded.
"CLOSING BID PRICE" means, with respect to a security, the closing bid price
of such security on the Nasdaq SmallCap Market or on the principal securities
exchange or market where such security is listed or traded as reported by
Bloomberg Financial Markets or, if Bloomberg Financial Markets is not then
reporting closing bid prices of such security, a comparable reporting service
of national reputation selected by the Company and reasonably acceptable to
the Holders (collectively, "BLOOMBERG"), or if the foregoing does not apply,
the last reported sale price of such security in the over-the-counter market
on the electronic bulletin board for such security as reported by Bloomberg,
or, if no sale price is reported for such security by Bloomberg, the average
of the bid prices of all market makers for such security as reported in the
"pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid
Price cannot be calculated for such security on such date on any of the
foregoing bases, the Closing Bid Price of such security on such date shall be
the fair market value as reasonably determined by an investment banking firm
selected by the Holder (which may be the Holder or an affiliate thereof), and
reasonably acceptable to the Company, with the costs of such appraisal to be
borne by the Company.
(b) EXERCISE NOTICE. In order to exercise this Warrant, the Holder
shall send by facsimile transmission, at any time prior to 11:59 p.m.,
eastern time, on the date on which the Holder wishes to effect such exercise
(the "EXERCISE DATE"), to the Company and to its designated transfer agent
for the Common Stock (the "TRANSFER AGENT") (i) a copy of the notice of
exercise in the form attached hereto as Exhibit A (the "EXERCISE NOTICE")
stating the number of Warrant Shares as to which such exercise applies and
the calculation therefor and (ii) a copy of this Warrant. The Holder shall
thereafter deliver to the Company the original Exercise Notice, the original
Warrant and the Exercise Price. In the case of a dispute as to the
calculation of the Exercise Price or the number of Warrant Shares issuable
hereunder, the Company shall promptly issue to the Holder the number of
Warrant Shares that are not disputed and shall submit the disputed
calculations to its independent accountant within one (1) business day
following the Exercise Date. The Company shall cause such accountant to
calculate the Exercise Price and/or the number of Warrant Shares issuable
hereunder and to notify the Company and the Holder of the results in writing
no later than two business days following the day on which it received the
disputed calculations. Such accountant's calculation shall be deemed
conclusive absent manifest error.
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<PAGE>
The fees of any such accountant shall be borne by the party whose
calculations were most at variance with those of such accountant.
(c) CANCELLATION OF WARRANT. This Warrant shall be canceled upon its
exercise and the Holder shall be entitled to receive, as soon as practicable
after the Exercise Date, a new Warrant or Warrants (containing terms
identical to this Warrant) representing any unexercised portion of this
Warrant.
2. DELIVERY OF WARRANT SHARES UPON EXERCISE. Upon receipt of a Exercise
Notice pursuant to paragraph 1 above, the Company shall, (A) in the case of a
Cashless Exercise (as defined below), no later than the close of business on
the third (3rd) business day following the Exercise Date set forth in such
Exercise Notice, and (B) in the case of a Cash Exercise (as defined below) no
later than the close of business on the earlier to occur of (i) the third
(3rd) business day following the Exercise Date set forth in such Exercise
Notice and (ii) such later date on which the Company shall have received
payment of the Exercise Price (the "DELIVERY DATE"), issue and deliver or
caused to be delivered to the Holder the number of Warrant Shares as shall be
determined as provided herein. Warrant Shares delivered to the Holder shall
not contain any restrictive legend as long as the sale of such Warrant Shares
is covered by an effective Registration Statement (as defined in the
Registration Rights Agreement) or may be made pursuant to Rule 144(k) under
the Securities Act of 1933, as amended, or any successor rule or provision.
3. FAILURE TO DELIVER WARRANT SHARES.
(a) EXERCISE DEFAULT. In the event that the Company fails for any
reason (other than by operation of paragraph 4 below) to deliver to a Holder
certificates representing the number of Warrant Shares specified in the
applicable Exercise Notice on or before the Delivery Date therefor (an
"EXERCISE DEFAULT"), the Company shall pay to such Holder payments ("EXERCISE
DEFAULT PAYMENTS") in the amount of (i) (N/365) MULTIPLIED BY (ii) the
aggregate Exercise Price for the Warrant Shares which are the subject of such
Exercise Default on the five (5) Trading Days occurring immediately prior to
(but not including) the applicable Exercise Date MULTIPLIED BY (iii) the
lower of twenty-four percent (24%) and the maximum rate permitted by
applicable law, where "N" equals the number of days elapsed between the
original Delivery Date for such Warrant Shares and the date on which all of
such Warrant Shares are issued and delivered to such Holder. Amounts payable
under this subparagraph 3(a) shall be paid to the Holder in immediately
available funds on or before the fifth (5th) business day of the calendar
month immediately following the calendar month in which such amount has
accrued.
(b) BUY-IN. Nothing herein shall limit a Holder's right to pursue
actual damages for the Company's failure to issue and deliver Warrant Shares
in connection with an exercise on the applicable Delivery Date (including,
without limitation, damages relating to any purchase of shares of Common
Stock by such Holder to make delivery on a sale effected in anticipation of
receiving Warrant Shares upon exercise, such damages to be in an amount equal
to (A) the aggregate amount paid by such Holder for the shares of Common
Stock so purchased MINUS (B) the aggregate amount of net proceeds, if any,
received by such Holder from the sale of the Warrant Shares issued by the
Company pursuant
-3-
<PAGE>
to such exercise), and such Holder shall have the right to pursue all
remedies available to it at law or in equity (including, without limitation,
a decree of specific performance and/or injunctive relief).
(c) REDUCTION OF EXERCISE PRICE. In the event that a Holder has not
received certificates representing the Warrant Shares by the tenth (10th)
business day following an Exercise Default, such Holder may, upon written
notice to the Company, regain on such business day the rights of a Holder of
this Warrant, or part thereof, with respect to the Warrant Shares that are
the subject of such Exercise Default, and the Exercise Price for such Warrant
Shares shall be reduced by one percent (1%) for each day beyond such 10th
business day in which the Exercise Default continues. In such event, such
Holder shall retain all of such Holder's rights and remedies with respect to
the Company's failure to deliver such Warrant Shares (including without
limitation the right to receive the cash payments specified in subparagraph
3(a) above).
(d) HOLDER OF RECORD. Each Holder, for all purposes, be deemed to
have become the holder of record of Warrant Shares on the Exercise Date of
this Warrant, irrespective of the date of delivery of such Warrant Shares.
Nothing in this Warrant shall be construed as conferring upon the Holder
hereof any rights as a shareholder of the Company.
4. EXERCISE LIMITATIONS.
In no event shall a Holder be permitted to exercise this Warrant, or part
thereof, with respect to Warrant Shares in excess of the number of such
shares, upon the issuance of which, (x) the number of shares of Common Stock
beneficially owned by such Holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned except for being subject
to a limitation on conversion or exercise analogous to the limitation
contained in this Section 4) PLUS (y) the number of shares of Common Stock
issuable upon such exercise, would be equal to or exceed (z) 4.99% of the
number of shares of Common Stock then issued and outstanding. Nothing
contained herein shall be deemed to restrict the right of a Holder to
exercise this Warrant, or part thereof, at such time as such exercise will
not violate the provisions of this Section 4.
5. PAYMENT OF THE EXERCISE PRICE. The Holder may pay the Exercise Price
in either of the following forms or, at the election of Holder, a combination
thereof:
(a) CASH EXERCISE: by delivery of immediately available funds.
(b) CASHLESS EXERCISE: by surrender of this Warrant to the Company
together with a notice of cashless exercise, in which event the Company shall
issue to the Holder the number of Warrant Shares determined as follows:
X = Y x (A-B)/A
where: X = the number of Warrant Shares to be issued to the Holder.
-4-
<PAGE>
Y = the number of Warrant Shares with respect to which this
Warrant is being exercised.
A = the average of the Closing Bid Prices of the Common Stock
for the five (5) Trading Days immediately prior to (but not
including) the Exercise Date.
B = the Exercise Price.
For purposes of Rule 144 under the Securities Act of 1933, as amended, it is
intended, understood and acknowledged that the Warrant Shares issued in a
cashless exercise transaction shall be deemed to have been acquired by the
Holder, and the holding period for the Warrant Shares shall be deemed to have
been commenced, on the Closing Date (as defined in the Securities Purchase
Agreement).
6. ANTI-DILUTION ADJUSTMENTS.
(a) STOCK DIVIDEND. If the Company shall at any time declare a dividend
payable in shares of Common Stock, then the Holder hereof, upon exercise of
this Warrant after the record date for the determination of Holders of Common
Stock entitled to receive such dividend, shall be entitled to receive, in
addition to the number of shares of Common Stock as to which this Warrant is
exercised, such additional shares of Common Stock as such Holder would have
received had this Warrant been exercised immediately prior to such record
date and the Exercise Price will be proportionately adjusted.
(b) RECAPITALIZATION OR RECLASSIFICATION. If the Company shall at any
time effect a recapitalization, reclassification or other similar transaction
of such character that the shares of Common Stock shall be changed into or
become exchangeable for a larger or smaller number of shares, then upon the
effective date thereof, the number of shares of Common Stock which the Holder
hereof shall be entitled to purchase upon exercise of this Warrant shall be
increased or decreased, as the case may be, in direct proportion to the
increase or decrease in the number of shares of Common Stock by reason of
such recapitalization, reclassification or similar transaction, and the
Exercise Price shall be, in the case of an increase in the number of shares,
proportionally decreased and, in the case of decrease in the number of
shares, proportionally increased. The Company shall give the Warrant Holder
the same notice at the same time it provides such notice to holders of Common
Stock of any transaction described in this Section 6(b).
(c) DISTRIBUTIONS. If the Company shall at any time distribute to
Holders of Common Stock cash, evidences of indebtedness or other securities
or assets (other than cash dividends or distributions payable out of earned
surplus or net profits for the current or a preceding year) then, in any such
case, the Holder of this Warrant shall be entitled to receive, upon exercise
of this Warrant, with respect to each share of Common Stock issuable upon
such exercise, the amount of cash or evidences of indebtedness or other
securities or assets which such Holder would have been entitled to receive
with respect to each such share of Common Stock as a result of the happening
of such event had this Warrant been exercised immediately prior to the record
date or other date fixing shareholders to be affected by such event (the
"DETERMINATION DATE") or, in lieu thereof, if the Board of Directors of the
Company should so determine
-5-
<PAGE>
at the time of such distribution, a reduced Exercise Price determined by
multiplying the Exercise Price on the Determination Date by a fraction, the
numerator of which is the difference between (x) such Exercise Price and (y)
the value of such distribution applicable to one share of Common Stock (such
value to be determined by the Board in its discretion), and the denominator
of which is such Exercise Price.
(d) NOTICE OF CONSOLIDATION OR MERGER. In the event of a merger,
consolidation, business combination, tender offer, exchange of shares,
recapitalization, reorganization, redemption or other similar event, as a
result of which shares of Common Stock of the Company shall be changed into
the same or a different number of shares of the same or another class or
classes of stock or securities or other assets of the Company or another
entity or there is a sale of all or substantially all the Company's assets (a
"CORPORATE CHANGE"), then this Warrant shall be exercisable into such class
and type of securities or other assets as the Holder would have received had
the Holder exercised this Warrant immediately prior to such Corporate Change;
provided, however, that Company may not affect any Corporate Change unless
(i) it first shall have given thirty (30) business days' notice to the Holder
hereof of any Corporate Change and makes a public announcement of such event
at the same time that it gives such notice and (ii) it requires the resulting
successor or acquiring entity (if not the Corporation) to assume by written
instrument the obligations of the Corporation hereunder and under the
Securities Purchase Agreement and the Registration Rights Agreement.
(e) EXERCISE PRICE AS ADJUSTED. As used in this Warrant, the term
"EXERCISE PRICE" shall mean the purchase price per share specified in
paragraph 1 of this Warrant, until the occurrence of an event stated in
subsection (a), (b) or (c) of this paragraph 6, and thereafter shall mean
said price as adjusted from time to time in accordance with the provisions of
each such subsection. No such adjustment under this paragraph 6 shall be
made unless such adjustment would change the Exercise Price at the time by
$.01 or more; provided, however, that all adjustments not so made shall be
deferred and made when the aggregate thereof would change the Exercise Price
at the time by $.01 or more. No adjustment made pursuant to any provision of
this paragraph 6 shall have the effect of increasing the total consideration
payable upon exercise of this Warrant in respect of all the Common Stock as
to which this Warrant may be exercised.
(f) ADJUSTMENTS: ADDITIONAL SHARES, SECURITIES OR ASSETS. In the event
that at any time, as a result of an adjustment made pursuant to this Section
6, the Holder of this Warrant shall, upon exercise of this Warrant, become
entitled to receive shares and/or other securities or assets (other than
Common Stock) then, wherever appropriate, all references herein to shares of
Common Stock shall be deemed to refer to and include such shares and/or other
securities or assets; and thereafter the number of such shares and/or other
securities or assets shall be subject to adjustment from time to time in a
manner and upon terms as nearly equivalent as practicable to the provisions
of this paragraph 6.
7. FRACTIONAL INTERESTS.
No fractional shares or scrip representing fractional shares shall be
issuable upon the exercise of this Warrant, but on exercise of this Warrant,
the Holder hereof may purchase only a whole
-6-
<PAGE>
number of shares of Common Stock. If, on exercise of this Warrant, the
Holder hereof would be entitled to a fractional share of Common Stock or a
right to acquire a fractional share of Common Stock, such fractional share
shall be disregarded and the number of shares of Common Stock issuable upon
exercise shall be the next higher number of shares.
8. TRANSFER OF THIS WARRANT. The Holder may sell, transfer, assign,
pledge or otherwise dispose of this Warrant, in whole or in part, as long as
such sale or other disposition is made pursuant to pursuant to an effective
registration statement or an exemption to the registration requirements of
the Securities Act of 1933, as amended, and applicable state laws. Upon such
transfer or other disposition, the Holder shall deliver a written notice to
Company, substantially in the form of the Transfer Notice attached hereto as
Exhibit B (the "TRANSFER NOTICE"), indicating the person or persons to whom
this Warrant shall be transferred and, if less than all of this Warrant is
transferred or this Warrant is transferred in parts, the number of Warrant
Shares to be covered by the part of this Warrant to be transferred to each
such person. Within three (3) business days of receiving a Transfer Notice
and the original of this Warrant, the Company shall deliver to the each
transferee designated by the Holder a Warrant or Warrants of like tenor and
terms for the appropriate number of Warrant Shares.
9. BENEFITS OF THIS WARRANT.
Nothing in this Warrant shall be construed to confer upon any person
other than the Holder of this Warrant any legal or equitable right, remedy or
claim under this Warrant and this Warrant shall be for the sole and exclusive
benefit of the Holder of this Warrant.
10. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT.
Upon receipt by the Company of evidence of the loss, theft,
destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity or security reasonably satisfactory to the Company,
and upon surrender of this Warrant, if mutilated, the Company shall execute
and deliver a new Warrant of like tenor and date.
11. NOTICE OR DEMANDS.
Except as otherwise provided herein, any notice, demand or request
required or permitted to be given pursuant to the terms of this Warrant shall
be in writing and shall be deemed given (i) when delivered personally or by
verifiable facsimile transmission (with an original to follow) on or before
5:00 p.m., eastern time, on a business day or, if such day is not a business
day, on the next succeeding business day, (ii) on the next business day after
timely delivery to a nationally-recognized overnight courier and (iii) on the
third business day after deposit in the U.S. mail (certified or registered
mail, return receipt requested, postage prepaid), addressed as follows:
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<PAGE>
IF TO THE COMPANY:
Informix Corp.
4100 Bohannon Drive
Menlo Park, CA 94205
Attn: Chief Financial Officer
Tel: (650) 926-6162
Fax: (650) 926-6564
and if to the Holder, to such address as shall be designated by the Holder in
writing to the Company.
12. APPLICABLE LAW.
This Warrant is issued under and shall for all purposes be governed
by and construed in accordance with the laws of the state of New York,
without giving effect to conflict of law provisions thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-8-
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the
___ day of November, 1997.
INFORMIX CORP.
By:_____________________________________
Name:
Title:
-9-
<PAGE>
EXHIBIT A to WARRANT
EXERCISE NOTICE
The undersigned Holder hereby irrevocably exercises the right to
purchase ____________ of the shares of Common Stock ("WARRANT SHARES") of
INFORMIX CORP., a [Delaware] corporation (the "COMPANY"), evidenced by the
attached Warrant (the "WARRANT"). Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.
1. Form of Exercise Price. The Holder intends that payment of the
Exercise Price shall be made as:
______ a CASH EXERCISE with respect to ________________ Warrant
Shares; and/or
______ a CASHLESS EXERCISE with respect to ______________ Warrant
Shares.
2. Payment of Exercise Price. In the event that the Holder has elected
a Cash Exercise with respect to some or all of the Warrant Shares to be
issued pursuant hereto, the Holder shall pay the sum of $________________ to
the Company in accordance with the terms of the Warrant.
3. Delivery of Warrant Shares. The Company shall deliver to the Holder
_____________ Warrant Shares in accordance with the terms of the Warrant.
Date: ______________________
___________________________________
Name of Registered Holder
By: _______________________________
Name:
Title:
-10-
<PAGE>
EXHIBIT B to WARRANT
TRANSFER NOTICE
FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby
sells, assigns and transfers unto the person or persons named below the right
to purchase ________ shares of the Common Stock of INFORMIX CORP. evidenced
by the attached Warrant.
Date: ______________________
___________________________________
Name of Registered Holder
By: _______________________________
Name:
Title:
Transferee Name and Address:
___________________________________
___________________________________
___________________________________
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<PAGE>
EXHIBIT B
NOTICE OF CONVERSION
The undersigned hereby elects to convert shares of Series B Convertible
Preferred Stock (the "Preferred Stock"), represented by stock certificate
No(s). ____________ (the "Preferred Stock Certificates"), into shares of
common stock ("Common Stock") and a Warrant of Informix Corporation (the
"Company") according to the terms and conditions of the Certificate of
Designation relating to the Preferred Stock (the "Certificate of
Designation"), as of the date written below. Capitalized terms used herein
and not otherwise defined shall have the respective meanings set forth in the
Certificate of Designation.
/ / (check box if shares of Common Stock have been resold) The undersigned
represents that the shares of Common Stock to be issued by the Company hereby
have been resold or transferred by the undersigned in accordance with the
provisions of the prospectus included in the Registration Statement.
Date of Conversion:___________________________________
Number of Shares of
Preferred Stock to be Converted:______________________
Applicable Conversion Price:__________________________
Number of Shares of
Common Stock to be Issued:____________________________
Number of Shares of Common
Stock into which the Warrant
is Exercisable:_______________________________________
Name of Holder:_______________________________________
Address:______________________________________________
______________________________________________
______________________________________________
Signature:____________________________________________
Name:
Title:
HOLDER REQUESTS DELIVERY TO BE MADE: (check one)
/ / By Delivery of Physical Certificates to the Above Address
/ / Through Depository Trust Corporation
(Account _________________________)
<PAGE>
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of November 17,
1997, by and among Informix Corporation, a Delaware corporation (the "COMPANY"),
and each of the entities whose names appear on the signature pages hereof. Such
entities are each referred to herein as a "PURCHASER" and, collectively, as the
"PURCHASERS".
The Company wishes to sell to each Purchaser, and each Purchaser wishes to
buy, on the terms and subject to the conditions set forth in this Agreement, the
number of shares (the "PREFERRED SHARES") of the Company's Series B Convertible
Preferred Stock (the "PREFERRED STOCK") set forth next to such Purchaser's name
on the signature pages hereof. The Preferred Shares are convertible pursuant to
the terms of a Certificate of Designation relating to the Preferred Stock, the
form of which is attached hereto as EXHIBIT A (the "CERTIFICATE OF DESIGNATION")
into (i) shares (the "CONVERSION SHARES") of the Company's Common Stock (the
"COMMON STOCK") and (ii) a Warrant in the form of EXHIBIT B hereto (a "WARRANT"
and, when taken together with all of the warrants issued or issuable pursuant to
the Certificate of Designation, the "WARRANTS") entitling the holder thereof to
purchase shares (the "WARRANT SHARES") of Common Stock. Dividends on the
Preferred Shares are payable, subject to the terms and conditions of the
Certificate of Designation, in shares of Common Stock (the "DIVIDEND PAYMENT
SHARES") or cash. The Preferred Shares, the Warrants, the Conversion Shares, the
Warrant Shares and the Dividend Payment Shares are collectively referred to
herein as the "SECURITIES".
The Company has agreed to effect the registration of the Conversion Shares,
the Warrant Shares and the Dividend Payment Shares under the Securities Act of
1933, as amended (the "SECURITIES ACT"), pursuant to a Registration Rights
Agreement of even date herewith by and among the Company and the Purchasers (the
"REGISTRATION RIGHTS AGREEMENT"). The sale of the Preferred Shares by the
Company to the Purchasers will be effected in reliance upon the exemption from
securities registration afforded by the provisions of Regulation D ("REGULATION
D"), as promulgated by the Securities and Exchange Commission (the "COMMISSION")
under the Securities Act.
The Company and the Purchasers hereby agree as follows:
1. PURCHASE AND SALE OF PREFERRED SHARES.
1.1 AGREEMENT TO PURCHASE AND SELL. Upon the terms and subject to the
satisfaction of the conditions set forth herein, the Company agrees to sell at
the Closing (as defined below), and each Purchaser agrees to purchase, the
number of Preferred Shares set forth below such Purchaser's name on the
signature pages hereof at a purchase price equal to one thousand dollars
($1,000) TIMES the number of Preferred Shares purchased by such Purchaser (the
"PURCHASE PRICE").
1.2 CLOSING. Subject to the satisfaction or waiver of the conditions set
forth herein, the closing of the purchase and sale of the Preferred Shares (the
"CLOSING") will be deemed to occur when full payment of the Purchase Price has
been made by each Purchaser by wire transfer of immediately
<PAGE>
available funds against physical delivery by the Company of duly executed
certificates representing the Preferred Shares purchased by such Purchaser
hereunder. The date on which the Closing is deemed to occur is referred to
herein as the "CLOSING DATE". It is anticipated that the Closing Date will be
November 18, 1997, or such later date as is mutually agreed upon by the
parties hereto.
1.3 CERTAIN DEFINITIONS. When used herein, (A) "BUSINESS DAY" shall mean
any day on which the New York Stock Exchange and commercial banks in the city of
New York are open for business, (B) an "AFFILIATE" of a party shall mean any
person or entity controlling, controlled by or under common control with that
party and (C) "CONTROL" shall mean, with respect to an entity, the ability to
direct the business, operations or management of such entity, whether through an
equity interest therein or otherwise.
2. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
Each Purchaser, solely with respect to it, hereby makes the following
representations and warranties to the Company and agrees with the Company that,
as of the date of this Agreement and as of the Closing Date:
2.1 AUTHORIZATION; ENFORCEABILITY. Such Purchaser is duly and validly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization with full power and authority
to purchase the Preferred Shares and to execute and deliver this Agreement.
This Agreement constitutes such Purchaser's valid and legally binding
obligation, enforceable in accordance with its terms, except as such enforcement
may be limited by (i) applicable bankruptcy, insolvency, reorganization or other
laws of general application relating to or affecting the enforcement of
creditors' rights generally and (ii) general principles of equity.
2.2 ACCREDITED INVESTOR; INVESTMENT INTENT. Such Purchaser is an
accredited investor as that term is defined in Rule 501 of Regulation D, and is
acquiring the Preferred Shares solely for its own account for investment
purposes as a principal and not with a present view to the public resale or
distribution of all or any part thereof, except pursuant to sales that are
exempt from the registration requirements of the Securities Act and/or sales
registered under the Securities Act; provided, however that in making such
representation, such Purchaser does not agree to hold the Securities for any
minimum or specific term and reserves the right to sell, transfer or otherwise
dispose of the Securities at any time in accordance with the provisions of this
Agreement and with Federal and state securities laws applicable to such sale,
transfer or disposition.
2.3 INFORMATION. The Company has provided such Purchaser with information
regarding the business, operations and financial condition of the Company, and
has granted to such Purchaser the opportunity to ask questions of and receive
answers from representatives of the Company, its officers, directors, employees
and agents concerning the Company and materials relating to the terms and
conditions of the purchase and sale of the Preferred Shares hereunder. Neither
such information nor any other investigation conducted by such Purchaser or any
of its representatives shall modify, amend or
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otherwise affect such Purchaser's right to rely on the Company's
representations and warranties contained in this Agreement.
2.4 LIMITATIONS ON DISPOSITION. Such Purchaser acknowledges that, except
as provided in the Registration Rights Agreement, the Securities have not been
and are not being registered under the Securities Act and may not be transferred
or resold without registration under the Securities Act or unless pursuant to an
exemption therefrom.
2.5 LEGEND. Such Purchaser understands that the certificates representing
the Securities may bear at issuance a restrictive legend in substantially the
following form:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, and may not be
offered or sold unless a registration statement under the Securities
Act and applicable state securities laws shall have become effective
with regard thereto, or an exemption from registration under the
Securities Act and applicable state securities laws is available in
connection with such offer or sale. Such securities are issued subject
to the provisions of (i) the Certificate of Designation of Informix
Corporation (the "Company"), (ii) a Securities Purchase Agreement,
dated November 17, 1997, by and among the Company and the purchasers
named therein, and (iii) a Registration Rights Agreement, dated
November 17, 1997, by and among the Company and such purchasers."
Notwithstanding the foregoing, it is agreed that, as long as (A) the
resale or transfer (including without limitation a pledge) of any of the
Securities is registered pursuant to an effective registration statement and the
Purchaser holding or entitled to receive such Securities has represented to the
Company, in the related Conversion Notice (as defined in the Certificate of
Designation) or otherwise in writing, that such Purchaser has resold or
transferred such Securities in accordance with the terms of the Prospectus
relating to such Registration Statement, (B) such holder provides the Company
with an opinion of counsel, in form, substance and scope customary for opinions
of counsel in comparable transactions (the cost of which shall be borne by such
holder) to the effect that such Security can be sold publicly without
registration under the Securities Act, (C) such Securities can be sold pursuant
to Rule 144 under the Securities Act ("RULE 144") and a registered broker dealer
provides to the Company a customary broker's Rule 144 letter and such Purchaser
delivers to the Company a customary seller's representation letter, or (D) such
Securities are eligible for resale under Rule 144(k), such Securities shall be
issued without any legend or other restrictive language and, with respect to
Securities upon which such legend is stamped, the Company shall issue new
certificates without such legend to the holder upon request.
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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby makes the following representations and warranties to
each Purchaser and agrees with such Purchaser that, as of the date of this
Agreement and as of the Closing Date:
3.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Each of the Company
and its subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and has
all requisite corporate power and authority to carry on its business as now
conducted. Each of the Company and its subsidiaries is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure so to qualify would have a material adverse effect on the consolidated
business or financial condition of the Company and its subsidiaries taken as a
whole. The term "subsidiaries" shall mean entities in which the Company has an
equity interest of 50% or greater.
3.2 AUTHORIZATION; CONSENTS. The Company has the requisite corporate
power and authority to enter into and perform its obligations under (i) this
Agreement, (ii) the Registration Rights Agreement and (iii) all other
agreements, documents, certificates or other instruments delivered by the
Company at the Closing (the instruments described in (i), (ii) and (iii) being
collectively referred to herein as the "TRANSACTION DOCUMENTS"), to execute and
perform its obligations under the Certificate of Designation, to execute and
perform its obligations under the Warrants, to issue and sell the Preferred
Shares to such Purchaser in accordance with the terms hereof, to issue the
Conversion Shares and the Warrants upon conversion of the Preferred Shares in
accordance with the Certificate of Designation, to issue the Warrant Shares upon
exercise of the Warrants and to issue the Dividend Payment Shares in accordance
with the Certificate of Designation. All corporate action on the part of the
Company by its officers, directors and stockholders necessary for (A) the
authorization, execution and delivery of, and the performance by the Company of
its obligations under, the Transaction Documents, (B) the authorization,
execution and filing of, and the performance by the Company of its obligations
under, the Certificate of Designation, and (C) the authorization and execution,
and the performance by the Company of its obligations under, the Warrants has
been taken, and no further consent or authorization of the Company, its Board of
Directors, its stockholders, any governmental agency or organization (other than
as may be required under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended), or any other person or entity is required (pursuant to any
rule of the National Association of Securities Dealers, Inc. or otherwise).
3.3 ENFORCEMENT. The Transaction Documents and the Certificate of
Designation constitute, and the Warrants upon issuance will constitute, valid
and legally binding obligations of the Company, enforceable in accordance with
their respective terms, except as such enforcement may be limited by (i)
applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors' rights
generally and (ii) general principles of equity.
3.4 DISCLOSURE DOCUMENTS; AGREEMENTS; FINANCIAL STATEMENTS; OTHER
INFORMATION. The Company has filed, or will file prior to the Closing, with the
Commission: (i) the Company's Annual Report on Form 10-K, as amended, for the
year ended December 31, 1996, (ii) Quarterly Reports on
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Form 10-Q, as amended, for the quarters ended March 30, 1997, June 29, 1997
and September 29, 1997, (iii) all Current Reports on Form 8-K required to be
filed with the Commission since December 31, 1996 and (iv) the Company's
definitive Proxy Statement for its 1997 Annual Meeting of Stockholders (the
"DISCLOSURE DOCUMENTS"). The Company is not aware of any event occurring on or
prior to the Closing (other than the transactions effected hereby) that would
require the filing of, or with respect to which the Company intends to file, a
Form 8-K after the Closing. Each Disclosure Document, as of the date of the
filing thereof with the Commission or, with respect to a Disclosure Document
that has been amended subsequent to the initial filing thereof, as of the date
of the filing of such amendment with the Commission, conformed in all material
respects to the requirements of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), and the rules and regulations thereunder and, as
of the date of such filing, such Disclosure Document did not contain an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. All material
agreements required to be filed as exhibits to the Disclosure Documents have
been filed (or will be filed prior to the Closing) as required. Neither the
Company nor any of its subsidiaries is in breach of any agreement to which it
is a party or by which it is bound where such breach is reasonably likely to
have a material adverse effect on the consolidated business or financial
condition of the Company and its subsidiaries taken as a whole. Except as set
forth in the Disclosure Documents or any schedule or exhibit attached hereto,
the Company has no liabilities, contingent or otherwise, other than
liabilities incurred in the ordinary course of business which, under generally
accepted accounting principles, are not required to be reflected in the
Company's financial statements and which, individually or in the aggregate,
are not material to the consolidated business or financial condition of the
Company and its subsidiaries taken as a whole. The financial statements of
the Company included in the Disclosure Documents, as of their respective dates
or, with respect to financial statements included in a Disclosure Document
that has been amended subsequent to the initial filing thereof, as of the date
of the filing of such amendment with the Commission, (A) complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the Commission with respect thereto and (B)
have been prepared in accordance with generally accepted accounting principles
consistently applied at the times and during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes
thereto, or (ii) in the case of unaudited interim statements, to the extent
they may exclude footnotes or may be condensed or summary statements) and
fairly present in all material respects the financial position of the Company
as of the dates thereof and the results of its operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to
normal year-end adjustments). The information described in paragraph 2.3 above
does not contain an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and does not include any material, non-public information.
3.5 CAPITALIZATION. The capitalization of the Company as of November 17,
1997, including its authorized capital stock, the number of shares issued and
outstanding, the number of shares issuable and reserved for issuance pursuant to
the Company's stock option plans, the number of shares issuable and reserved for
issuance pursuant to securities (other than the Preferred Stock) exercisable
for, or convertible into or exchangeable for any shares of Common Stock and the
number of shares initially to
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be reserved for issuance upon conversion of the Preferred Shares and exercise
of the Warrants is set forth on SCHEDULE 3.5 hereto. All of such outstanding
shares of capital stock have been, or upon issuance will be, validly issued,
fully paid and non-assessable. No shares of the capital stock of the Company
are subject to preemptive rights or any other similar rights of the
stockholders of the Company or any liens or encumbrances created by or through
the Company. Except as disclosed on SCHEDULE 3.5, or as contemplated herein,
as of the date of this Agreement and as of the Closing, there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exercisable or exchangeable for, any shares of capital
stock of the Company or any of its subsidiaries, or arrangements by which the
Company or any of its subsidiaries is or may become bound to issue additional
shares of capital stock of the Company or any of its subsidiaries. There have
been no material changes to the information set forth on Schedule 3.5 since
November 17, 1997.
3.6 VALID ISSUANCE.
3.6.1 The Preferred Shares are duly authorized and, when issued,
sold and delivered in accordance with the terms hereof, (i) will be duly and
validly issued, fully paid and nonassessable, free and clear of any taxes,
liens, claims, preemptive or similar rights or encumbrances imposed by or
through the Company, (ii) based in part upon the representations of such
Purchaser in this Agreement, will be issued, sold and delivered in compliance
with all applicable Federal and state securities laws and (iii) will be entitled
to all of the rights, preferences and privileges set forth in the Certificate of
Designation. The Conversion Shares are duly authorized and reserved for
issuance and, when issued upon conversion of the Preferred Shares in accordance
with the terms of the Certificate of Designation, will be duly and validly
issued, fully paid and nonassessable, free and clear of any taxes, liens,
claims, preemptive or similar rights or encumbrances imposed by or through the
Company. The Dividend Payment Shares are duly authorized and, upon the issuance
thereof in accordance with the terms of the Certificate of Designation, will be
duly and validly issued, fully paid and nonassessable, free and clear of any
taxes, liens, claims, preemptive or similar rights or encumbrances imposed by or
through the Company.
3.6.2 The Warrants are duly authorized and, when issued upon
conversion of the Preferred Shares in accordance with the terms of the
Certificate of Designation, will be duly and validly issued, fully paid and
nonassessable, free and clear of any taxes, liens, claims, preemptive or similar
rights or encumbrances imposed by or through the Company. The Warrant Shares are
duly authorized and reserved for issuance and, when issued upon exercise of the
Warrants in accordance with the terms thereof, will be duly and validly issued,
fully paid and nonassessable, free and clear of any taxes, liens, claims,
preemptive or similar rights or encumbrances imposed by or through the Company.
3.7 NO CONFLICT WITH OTHER INSTRUMENTS. Except as set forth on SCHEDULE
3.7, neither the Company nor any of its subsidiaries is in violation of any
provisions of its Certificate of Incorporation, Bylaws or any other governing
document as amended and in effect on and as of the date hereof or in default
(and no event has occurred which, with notice or lapse of time or both, would
constitute a default) under any provision of any instrument or contract to which
it is a party or by which it is bound, or of any provision of any Federal or
state judgment, writ, decree, order, statute, rule or governmental
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regulation applicable to the Company, which would have a material adverse
effect on the consolidated business or financial condition of the Company and
its subsidiaries taken as a whole. Subject to the satisfaction of conditions
set forth in Section 5 hereof, the (i) execution, delivery and performance of
this Agreement and the other Transaction Documents, (ii) execution and filing
of the Certificate of Designation, and (iii) consummation of the transactions
contemplated hereby and thereby (including without limitation, the issuance of
the Preferred Shares, the issuance of the Warrants and the reservation for
issuance and issuance of the Conversion Shares, the Warrant Shares and the
Dividend Payment Shares) will not (A) result in any such violation or be in
conflict with or constitute, with or without the passage of time and giving of
notice, either a default under any such provision, instrument or contract or
an event which results in the creation of any lien, charge or encumbrance upon
any assets of the Company or of any of its subsidiaries or the triggering of
any preemptive or anti-dilution rights or rights of first refusal or first
offer on the part of holders of the Company's securities or (B) cause any
Purchaser, or any affiliate of such Purchaser, (alone or together with any
other Purchasers) to be deemed an Acquiring Person as such term is defined in
the Company's Amended and Restated Rights Plan (the "RIGHTS PLAN") or trigger
any rights under the Rights Plan. Each Conversion Share, Warrant Share and
Dividend Payment Share shall be entitled to all of the rights afforded to
shares of Common Stock pursuant to the Rights Plan.
3.8 FINANCIAL CONDITION; TAXES; LITIGATION.
3.8.1 The Company's financial condition is, in all material respects,
as described in the Disclosure Documents, as amended, except for changes in the
ordinary course of business and normal year-end adjustments that are not, in the
aggregate, materially adverse to the consolidated business or financial
condition of the Company and its subsidiaries taken as a whole. Except as
otherwise described in the Disclosure Documents, as of the date hereof and as of
the Closing there has been no material adverse change to the Company's business,
operations, properties, financial condition, prospects or results of operations
since the date of the Company's most recent audited financial statements
contained in the Disclosure Documents.
3.8.2 The Company has filed all tax returns required to be filed by it
and paid all taxes which are due, except for taxes which it reasonably disputes
or which could not reasonably be expected to have a material adverse effect on
the consolidated business or financial condition of the Company and its
subsidiaries taken as a whole.
3.8.3 Except as set forth in SCHEDULE 3.8.3, each of the Company and
its subsidiaries is not the subject of any pending or, to the Company's
knowledge, threatened inquiry, investigation or administrative or legal
proceeding by the Internal Revenue Service, the taxing authorities of any state
or local jurisdiction, the Commission or any state securities commission or
other governmental or regulatory entity which could reasonably be expected to
have a material adverse effect on the consolidated business or financial
condition of the Company and its subsidiaries taken as a whole.
3.8.4 Except as set forth in SCHEDULE 3.8.4, there is no material
claim, litigation or administrative proceeding pending, or, to the Company's
knowledge, threatened or contemplated, against
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the Company or any of its subsidiaries, or against any officer, director or
employee of the Company or any such subsidiary in connection with such
person's employment therewith. Neither the Company nor any of its
subsidiaries is a party to or subject to the provisions of, any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality which could reasonably be expected to have a material adverse
effect on the consolidated business or financial condition of the Company and
its subsidiaries taken as a whole.
3.9 REPORTING COMPANY; FORM S-1. The Company is subject to the reporting
requirements of the Exchange Act, has a class of securities registered under
Section 12 of the Exchange Act, and has filed all reports required thereby. The
Company is eligible to register for resale shares of its Common Stock on a
registration statement on Form S-1 under the Securities Act.
3.10 ACKNOWLEDGEMENT OF DILUTION. The Company acknowledges that the
issuance of (i) the Conversion Shares upon conversion of the Preferred Shares in
accordance with the terms of the Certificate of Designation, (ii) the Warrant
Shares upon exercise of the Warrants, and (iii) the Dividend Payment Shares in
accordance with the terms of the Certificate of Designation may result in
dilution of the outstanding shares of Common Stock, which dilution may be
substantial under certain market conditions. The Company further acknowledges
that its obligation (x) to issue Conversion Shares and the Warrants upon
conversion of the Preferred Shares in accordance with the terms of the
Certificate of Designation, (y) to issue Warrant Shares upon exercise of the
Warrants and (z) to issue Dividend Payment Shares in accordance with the terms
of the Certificate of Designation is unconditional and absolute regardless of
the effect of any such dilution. The Board of Directors has reviewed the
Certificate of Designation and the Transaction Documents, and has determined
that the transactions contemplated thereby are in the best interests of the
Company and its stockholders.
3.11 INTELLECTUAL PROPERTY. The Company and its subsidiaries each owns or
possesses adequate trademarks, trade names and other rights to inventions, know-
how, patents, copyrights, confidential information and other intellectual
property rights necessary to conduct the business now operated by it, and is not
aware of any infringement by a third party with respect to such rights or of any
infringement by it or conflict with asserted rights of others that, in any such
case, if determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
consolidated business or financial condition of the Company and its subsidiaries
taken as a whole.
3.12 REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION. Except as described on
SCHEDULE 3.12 hereto, (A) the Company has not granted or agreed to grant to any
person or entity any rights (including "piggy-back" registration rights) to have
any securities of the Company registered with the Commission or any other
governmental authority which has not been satisfied and (B) no person or entity,
including, but not limited to, current or former stockholders of the Company,
underwriters, brokers, agents or other third parties, has any right of first
refusal, preemptive right, right of participation, or any similar right to
participate in the transactions contemplated by this Agreement, the other
Transaction Documents or the Certificate of Designation which has not been
waived.
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3.13 TRADING ON NASDAQ. The Common Stock is authorized for quotation on
the Nasdaq National Market, and trading in the Common Stock on Nasdaq has not
been suspended. The Company is (or will be at the Closing) in full compliance
with the designation criteria of the Nasdaq National Market, and does not
reasonably anticipate that the Common Stock will lose its designation as a
Nasdaq National Market Security, whether by reason of the transactions
contemplated by this Agreement, the other Transaction Documents or the
Certificate of Designation, or otherwise.
3.14 SOLICITATION. Neither the Company nor any of its subsidiaries or
affiliates, nor any person acting on its or their behalf, (i) has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Preferred Shares or
(ii) has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under any circumstances that would
require registration of the Preferred Shares under the Securities Act.
3.15 FEES. The Company is not obligated to pay any compensation or other
fee, cost or related expenditure to any underwriter, broker, agent or other
representative in connection with the transactions contemplated hereby.
3.16 FOREIGN CORRUPT PRACTICES. To the knowledge of the Company, neither
the Company, nor any of its subsidiaries nor any director, officer, agent,
employee or other person acting on behalf of the Company or any subsidiary, has
(i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity, (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or
employee, or (iii) violated any provision of the Foreign Corrupt Practices Act
of 1977, as amended, or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
3.17 OTHER ISSUANCES OF SECURITIES. The Company has not issued (and will
not issue) any shares of Common Stock or shares of any series of preferred stock
or other securities or instruments convertible into, exchangeable for or
otherwise entitling the holder thereof to acquire shares of Common Stock which
would be integrated with the sale of the Preferred Shares to such Purchaser, or
the issuance of the Conversion Shares upon conversion thereof, for purposes of
determining whether stockholder approval is required under the designation
criteria of the Nasdaq National Market.
3.18 TITLE. The Company has good and marketable title in fee simple to the
real property described in paragraph 5.1.15 hereof, subject to the contracts of
sale described therein, in each case free and clear of all liens, encumbrances
and defects, except for liens, claims or encumbrances as do not materially
affect the value of such property and do not interfere with the use made and
proposed to be made of such property (including the sale thereof as described in
paragraph 5.1.15) by the Company and its subsidiaries.
3.19 EXCHANGE OF SERIES A CONVERTIBLE PREFERRED STOCK. The holder or
holders of all of the previously outstanding shares of the Company's Series A
Convertible Preferred Stock have validly
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exchanged such shares for shares of the Series A-1 Preferred Stock (as defined
below). No shares of such Series A Convertible Preferred Stock remain
outstanding, and all such shares outstanding at any time prior to such
exchange have been retired by the Company and have regained the status of
authorized but unissued shares. No approval, consent or authorization by the
holder or holders of the Series A Convertible Preferred Stock or the Series
A-1 Preferred Stock is required in order to consummate the transactions
contemplated hereby or by the Certificate of Designation, other than as will
be delivered to the Purchasers by the Company on or before the Closing, and no
preemptive, anti-dilutive or other rights on the part of such holder or
holders are triggered thereby.
4. COVENANTS OF THE COMPANY.
4.1 CORPORATE EXISTENCE. The Company shall, so long as any Purchaser or
any affiliate of such Purchaser beneficially owns any Securities, maintain its
corporate existence in good standing and shall pay all taxes owed by it when due
except for taxes which the Company reasonably disputes or as to which the
failure to pay could not reasonably be expected to have a material adverse
effect on the consolidated business or financial condition of the Company.
4.2 PROVISION OF INFORMATION. The Company shall provide each Purchaser
with copies of its annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and proxy statements and other materials sent to
stockholders, in each such case promptly after the filing thereof with the
Commission, until the conversion or redemption of all of the Preferred Shares
and exercise in full of all of the Warrants held by such Purchaser.
4.3 FORM D; BLUE-SKY QUALIFICATION. The Company agrees to file a Form D
with respect to the Securities as required under Regulation D and to provide a
copy thereof to each Purchaser promptly after such filing. The Company shall,
on or before the Closing, take such action as is necessary to qualify the
Preferred Shares for sale under applicable state or "blue-sky" laws or obtain an
exemption therefrom, and shall provide evidence of any such action to each
Purchaser at or prior to the Closing.
4.4 REPORTING STATUS. As long as any Purchaser or any affiliate of such
Purchaser beneficially owns any Securities and until the date on which any of
the foregoing may be sold to the public pursuant to Rule 144(k) (or any
successor rule or regulation), (i) the Company shall timely file with the
Commission all reports required to be so filed pursuant to the Exchange Act and
(ii) the Company shall not terminate its status as an issuer required by the
Exchange Act to file reports thereunder even if the Exchange Act or the rules or
regulations thereunder would permit such termination. The Company agrees to file
with the Commission a Form 8-K describing the terms of the transactions
contemplated by this Agreement and the other Transaction Documents, with the
Transaction Documents attached to such Form 8-K as an exhibit thereto, on or
before the fifteenth (15th) day following the Closing Date in the form required
by the Exchange Act.
4.5 RESERVATION OF COMMON STOCK. The Company shall at all times have
authorized and reserved for issuance, free from any preemptive rights, solely
for the purpose of effecting conversions of the Preferred Shares hereunder and
the exercise of the Warrants, such number of its shares of
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Common Stock as shall from time to time be sufficient to effect the conversion
of all of the Preferred Shares and the exercise of the Warrants in full (the
"RESERVED AMOUNT"). As of the Closing Date, the Reserved Amount shall be
equal to no less than 150% of the number of shares of Common Stock issuable
upon conversion of all of the Preferred Shares to be issued at the Closing
(assuming for such purpose that the Conversion Date (as defined in the
Certificate of Designation) for such conversion were to occur as of the
Closing Date) and exercise of all of the Warrants issuable upon such
conversion. If on any date the Reserved Amount is less than 125% of the
number of shares of Common Stock issuable upon conversion of all of the
Preferred Shares then outstanding (assuming for such purpose that the
Conversion Date (as defined in the Certificate of Designation) for such
conversion were to occur as of such date) and exercise of all of the Warrants
issuable upon such conversion, the Company shall take action (including
without limitation seeking stockholder authorization for the reservation of
additional shares of Common Stock) as soon as practicable (but in no event
longer than thirty (30) days) to increase the Reserved Amount to no less than
150% of the number of shares of Common Stock into which such outstanding
Preferred Shares are then convertible and such Warrants are exercisable. In
addition, if on any date the number of shares of Common Stock authorized for
any purpose permitted under the Company's Certificate of Incorporation
(including the Reserved Amount) is less than 200% of the number of shares of
Common Stock issuable upon conversion of all of the Preferred Shares then
outstanding (assuming for such purpose that the Conversion Date (as defined in
the Certificate of Designation) for such conversion were to occur as of such
date) and exercise of all of the Warrants issuable upon such conversion, the
Company shall take action (including without limitation seeking stockholder
authorization for the reservation of additional shares of Common Stock) as
soon as practicable (but in no event longer than thirty (30) days) to (i)
reserve all authorized and unreserved shares of Common Stock solely for the
purpose of effecting conversions of the Preferred Shares hereunder and the
exercise of the Warrants in full and (ii) increase such authorized amount to
no less than 200% of the number of shares of Common Stock into which such
outstanding Preferred Shares are then convertible and such Warrants are
exercisable. The Company shall not reduce the number of shares reserved for
issuance hereunder without the written consent of the holders of two-thirds of
the Preferred Shares then outstanding. No Purchaser shall be issued, upon
conversion of Preferred Shares or exercise of the Warrants, shares of Common
Stock in an amount greater than the product of (A) the Reserved Amount in
effect on the date on which notice of such conversion or exercise is delivered
to the Company pursuant to the terms of the Certificate of Designation TIMES
(B) a fraction, the numerator of which is the number of Preferred Shares
purchased by such Purchaser hereunder and the denominator of which is the
aggregate amount of all of the Preferred Shares purchased by the Purchasers
hereunder.
4.6 USE OF PROCEEDS. The Company shall use the proceeds from the sale of
the Preferred Shares and the Warrants for general corporate purposes only, in
the ordinary course of its business and consistent with past practice and shall
not use such proceeds to make a loan to any employee, officer or director of the
Company or to repurchase or pay a dividend on shares of Common Stock except in
connection with a stock repurchase at the original purchase price therefor (as
long as such repurchase is effected at a purchase price for the shares of Common
Stock being repurchased which is less than the then current market value of the
Common Stock) from an employee under a customary form of stock repurchase
agreement resulting from the termination of such employee's employment.
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4.7 QUOTATION ON NASDAQ. The Company shall (i) as soon as practicable
following the Closing, secure the designation and quotation of the Conversion
Shares, the Warrant Shares and the Dividend Payment Shares on the Nasdaq
National Market, and (ii) use its best efforts to maintain the designation and
quotation, or listing, of the Common Stock on the Nasdaq National Market, the
New York Stock Exchange or the American Stock Exchange.
4.8 USE OF PURCHASER NAME. The Company shall not use, directly or
indirectly, any Purchaser's name in any advertisement, announcement, press
release or other similar communication unless it has received the prior written
consent of such Purchaser for the specific use contemplated or as otherwise
required by applicable law or regulation.
4.9 COMPANY'S INSTRUCTIONS TO TRANSFER AGENT. On or prior to the Closing,
the Company shall execute and deliver irrevocable instructions to its transfer
agent (the "TRANSFER AGENT") (i) to issue certificates representing Conversion
Shares upon conversion of the Preferred Shares in accordance with the terms of
the Certificate of Designation and receipt of a valid Conversion Notice (as
defined in the Certificate of Designation) from a Purchaser, in the amount
specified in such Conversion Notice, in the name of such Purchaser or its
nominee, (ii) to issue certificates representing the Warrants upon conversion of
the Preferred Shares in accordance with the terms of the Certificate of
Designation and receipt of a valid Conversion Notice (as defined in the
Certificate of Designation) from a Purchaser, covering the number of Warrant
Shares specified in such Conversion Notice, in the name of such Purchaser or its
nominee, (iii) to issue certificates representing Warrant Shares upon exercise
of the Warrants in accordance with their terms and receipt of a valid Exercise
Notice (as defined in the Warrants) from a Purchaser, in the amount specified in
such Exercise Notice in the name of such Purchaser or its nominee, (iv) to issue
certificates representing the Dividend Payment Shares upon the issuance thereof
in accordance with the Certificate of Designation and (v) to deliver such
certificates to such Purchaser no later than the close of business on the later
to occur of (A) the third (3rd) business day following the related Conversion
Date or the Dividend Payment Date (each as defined in the Certificate of
Designation) or Exercise Date (as defined in the Warrant), as the case may be
and (B) in the case of conversion of Preferred Shares or exercise of the
Warrant, the first business day following the date of delivery of the original
certificates, duly endorsed, representing the Series B Preferred Shares being
converted or the Warrant being exercised, as the case may be. The Company shall
instruct the transfer agent that, in lieu of delivering physical certificates
representing shares of Common Stock to a Purchaser upon conversion of the
Preferred Shares, exercise of the Warrant, or issuance of the Dividend Payment
Shares, and as long as the Transfer Agent is a participant in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer program, and such
Purchaser has not informed the Company that it wishes to receive physical
certificates therefor, the transfer agent may effect delivery of Conversion
Shares, Warrant Shares or Dividend Payment Shares, as the case may be, by
crediting the account of such Purchaser or its nominee at DTC for the number of
shares for which delivery is required hereunder within the time frame specified
above for delivery of certificates. The Company represents to and agrees with
each Purchaser that it will not give any instruction to the Transfer Agent that
will conflict with the foregoing instruction or otherwise restrict such
Purchaser's right to convert the Preferred Shares or exercise the Warrant or to
receive Conversion Shares, Warrants or Dividend Payment Shares in accordance
with the terms of the Certificate of Designation or to receive Warrant
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<PAGE>
Shares in accordance with the terms of the Warrants. In the event that the
Company's relationship with the Transfer Agent should be terminated for any
reason, the Transfer Agent shall continue acting as transfer agent pursuant to
the terms hereof until such time that a successor transfer agent is appointed
by the Company and agrees to be bound by the terms hereof.
4.10 RIGHT OF FIRST OFFER. Subject and subordinate to the rights set forth
in Section 5(h) of the Company's Subscription Agreement with Fletcher
International Limited dated as of August 12, 1997, as amended, and to the rights
of the holders of the Company's Series A-1 Preferred Stock, prior to any offer
or sale by the Company of Common Stock (or any securities convertible into or
exchangeable for Common Stock) during the one (1) year period following Closing
(the "FIRST OFFER PERIOD"), the Company must first deliver to each Purchaser
written notice describing the proposed issuance, including the terms and
conditions thereof, and provide such Purchaser with an option (the "RIGHT OF
FIRST OFFER") during the five (5) business day period following delivery of such
notice to purchase up to its proportionate share (based on the number of
Preferred Shares purchased by such Purchaser hereunder relative to the aggregate
number of Preferred Shares purchased by the Purchasers hereunder) of the
securities being offered on the same terms as contemplated by such issuance. In
the event that such Purchaser either does not give notice within such five
business day period that it intends to exercise the foregoing option or informs
the Company in writing that it does not intend to participate in such issuance,
the Company may offer to a third party the option to purchase up to, in the
aggregate, the amount of securities which were declined by such Purchaser, on
the same terms as were offered to such Purchaser; PROVIDED, HOWEVER, that any
Purchaser that declines to exercise its option pursuant to a Right of First
Offer shall have the right, upon delivery of notice thereof to the Company
during such five business day period, to exchange the Preferred Shares then held
by it for the securities being offered, on the same terms offered to such person
or entity (an "EXCHANGE OPTION"). In the event that a Purchaser exercises its
Exchange Option, the Company shall, at the same time that it issues the
securities being offered to such person or entity, deliver to such Purchaser, in
exchange for each Preferred Share (or securities received in exchange therefor
if such Purchaser has previously exercised a Participation Option ("EXCHANGE
SECURITIES")) then held by such Purchaser, the securities and any other
consideration to be delivered to, and at the same purchase price to be paid by,
such other person or entity; PROVIDED, HOWEVER, if such securities restrict in
any way the conversion or exercise thereof, or the sale or resale of the
underlying instruments issuable upon such conversion or exercise, and such
restriction is based on the passage of time, appropriate provision shall be made
so that such Purchaser shall be deemed to have held such securities for the same
time period as such Purchaser has theretofore held such Preferred Shares and/or
Exchange Securities, as the case may be. The value of each Preferred Share
being exchanged by such Purchaser for the securities being offered shall be
equal to the Liquidation Preference (as defined in the Certificate of
Designation) for such Preferred Share or, with respect to Exchange Securities,
the purchase price therefor plus accrued dividends or interest as the case may
be. The Right of First Offer shall not apply to any transaction involving
issuances of securities as consideration in a merger, consolidation, acquisition
or sale of assets (in each case, the primary purpose of which is not to raise
equity capital), or to a lender in connection with bank or equipment financing,
or pursuant to a strategic partnership or joint venture which is formed for a
bona fide commercial purpose, or as consideration for the acquisition of a
business, product or license by the Company or in connection with the exercise
of options by employees, directors or consultants. The Right of First Offer
also shall not
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<PAGE>
apply to (i) the issuance of Common Stock in a transaction pursuant to a
firm-commitment underwritten public offering (other than an offering conducted
pursuant to Rule 415 under the Securities Act), (ii) the issuance of
securities upon exercise or conversion of the Company's options, warrants or
other convertible securities outstanding as of the date hereof, (iii)
securities outstanding or issuable under the Company's Subscription Agreement
with Fletcher International Limited ("FLETCHER") dated as of August 12, 1997,
as amended, or under the Company's Exchange Agreement with Fletcher dated as
of November 17, 1997 or (iv) the grant of additional options or warrants, or
the issuance of additional securities, under any Company stock option or
restricted stock plan or similar equity incentive plan or arrangement for the
benefit of the Company's employees, directors or consultants.
5. CONDITIONS TO CLOSING.
5.1 CONDITIONS TO PURCHASER'S OBLIGATIONS AT CLOSING. Each Purchaser's
obligations at the Closing, including without limitation its obligation to
purchase the Preferred Shares, are conditioned upon the fulfillment of each of
the following events:
5.1.1 the representations and warranties of the Company set forth
in this Agreement shall be true and correct in all material
respects as of the Closing Date as if made on such date;
5.1.2 the Company shall have complied with or performed in all
material respects all of the agreements, obligations and
conditions set forth in this Agreement that are required to
be complied with or performed by the Company on or before
the Closing;
5.1.3 the Company shall have delivered to such Purchaser a
certificate, signed by an officer of the Company,
certifying that the conditions specified in paragraphs
5.1.1 and 5.1.2 above and paragraph 5.1.10 below have been
fulfilled as of the Closing;
5.1.4 the Company shall have filed the Certificate of Designation
with the Secretary of State of the State of Delaware and
shall have furnished such Purchaser with a file-stamped
copy thereof;
5.1.5 the Company shall have obtained from Fletcher its written
waiver of any and all rights under Section 5(h) of the
Subscription Agreement dated August 12, 1997, as amended,
between the Company and Fletcher, arising out of the
issuance of the Preferred Shares pursuant hereto or the
transactions contemplated hereby or by the Certificate of
Designation, and shall have delivered a copy of such waiver
to such Purchaser;
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<PAGE>
5.1.6 the Company shall have delivered to such Purchaser an
opinion of counsel for the Company, dated as of the Closing
Date, in form and substance reasonably acceptable to such
Purchaser;
5.1.7 the Company shall have delivered duly executed certificates
representing the Preferred Shares being so purchased;
5.1.8 the Company shall have executed and delivered the
Registration Rights Agreement;
5.1.9 the Common Stock shall be designated for quotation and
actively traded on the Nasdaq National Market;
5.1.10 there shall have been no material adverse changes in the
Company's consolidated business or financial condition
since the date of the Company's most recent financial
statements contained in the Disclosure Documents;
5.1.11 the Company shall have authorized and reserved for issuance
150% of the aggregate number of shares of Common Stock
issuable upon conversion of all of the Preferred Shares to
be issued at the Closing (assuming for such purpose that
the Conversion Date (as defined in the Certificate of
Designation) were to occur as of the Closing Date) and
exercise of the Warrants issuable upon such conversion;
5.1.12 the Company shall have (A) exchanged the outstanding shares
of the Company's Series A Preferred Stock for an additional
series of preferred stock as more specifically described in
the related certificate of designation filed with the
Secretary of State of the State of Delaware on November 17,
1997 (the "SERIES A-1 PREFERRED STOCK"), and (B) delivered
to such Purchaser a file-stamped copy of the Certificate of
Designation for the Series A-1 Preferred Stock;
5.1.13 the Company shall have amended the Rights Plan to permit the
issuance of the Preferred Stock and the consummation of the
transactions contemplated by this Agreement, the Certificate
of Designation, the Warrants and the Registration Rights
Agreement without the triggering of any rights thereunder;
5.1.14 the Company shall have filed with the Commission amended
Form 10-K/A for the year ended December 31, 1996, amended
Form 10-Q/A for the quarter ended March 31, 1997, Form 10-Q
for the quarter ended June 29, 1997, and Form 10-Q for the
quarter ended September 29, 1997 (the "AMENDED REPORTS"),
and the financial statements included in the
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<PAGE>
Amended Reports as so filed shall not differ materially
from the draft financial statements or other financial
information provided to the Purchasers on or before the
date hereof;
5.1.15 binding contracts of sale for approximately 27 acres of
property in Santa Clara, California, including a contract
for the sale of approximately 10 acres to affiliates of
Goldman Sachs & Co. and Tishman Speyer Properties and a
contract of sale of approximately 17 acres to Intel
Corporation, for an aggregate purchase price of not less
than $60 million, shall have been executed and delivered by
the Company and such purchasers; and
5.1.16 the Company shall have received from the NASD and shall have
delivered to such Purchaser written confirmation that all
delisting proceedings with respect to the designation of the
Common Stock as a Nasdaq National Market Security have been
terminated, and that the Company is in good standing as a
Nasdaq National Market issuer.
5.2 CONDITIONS TO COMPANY'S OBLIGATIONS AT CLOSING. The Company's
obligations at the Closing are conditioned upon the fulfillment of each of the
following events:
5.2.1 the representations and warranties of each Purchaser shall
be true and correct in all material respects as of the
Closing Date as if made on such date;
5.2.2 each Purchaser shall have complied with or performed all of
the agreements, obligations and conditions set forth in
this Agreement that are required to be complied with or
performed by such Purchaser on or before the Closing;
5.2.3 each Purchaser shall have executed and delivered the
Registration Rights Agreement; and
5.2.4 the conditions specified in subparagraphs 5.1.5 and 5.1.12
shall have been satisfied.
6. INDEMNIFICATION.
The Company agrees to indemnify and hold harmless each Purchaser and its
officers, directors, employees and agents, and each person who controls such
Purchaser within the meaning of the Securities Act or the Exchange Act (each, a
"PURCHASER INDEMNIFIED PARTY") against any losses, claims, damages, liabilities
or reasonable out-of-pocket expenses (including the reasonable fees and
disbursements of counsel) as incurred, joint or several, to which it, they or
any of them, may become subject and not
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<PAGE>
otherwise reimbursed, arising out of or in connection with the breach by the
Company of any of its representations, warranties or covenants made herein.
Each Purchaser agrees, severally and not jointly, to indemnify and hold
harmless the Company and its officers, directors, employees and agents, and each
person who controls the Company within the meaning of the Securities Act or the
Exchange Act (each, a "COMPANY INDEMNIFIED PARTY") (a Purchaser Indemnified
Party and a Company Indemnified Party are each hereinafter referred to as an
"INDEMNIFIED PARTY") against any losses, claims, damages, liabilities or
expenses (including the fees and disbursements of counsel) as incurred, joint or
several, to which it, they or any of them, may become subject and not otherwise
reimbursed, arising out of or in connection with the breach by such Purchaser of
any of its representations, warranties or covenants made herein.
Promptly after receipt by an Indemnified Party of notice of the
commencement of any action by a third party pursuant to which indemnification
may be sought hereunder, such Indemnified Party will, if a claim in respect
thereof is to be made against the other party (the "Indemnifying Party"),
deliver to the Indemnifying Party a written notice of the commencement thereof
and the Indemnifying Party shall have the right to participate in and to assume
the defense thereof with counsel reasonably selected by the Indemnifying Party,
provided, however, that an Indemnified Party shall have the right to retain its
own counsel, with the reasonably incurred fees and expenses of such counsel to
be paid by the Indemnifying Party, if representation of such Indemnified Party
by the counsel retained by the Indemnifying Party would be inappropriate due to
actual or potential conflicts of interest under applicable standards of
professional conduct between such Indemnified Party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the Indemnifying Party within a reasonable time of the commencement of
any such action will not relieve the Indemnifying Party of any of its
obligations hereunder with respect to such action except to the extent such
failure is prejudicial to the Indemnifying Party's ability to defend any such
action.
No Indemnifying Party shall, without the prior written consent of the
Indemnified Party, effect any settlement of pending or threatened action in
respect of which an Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on any claims that are the subject matter of such action. An
Indemnifying Party will not be liable for any settlement of any action or claim
effected without its written consent.
7. MISCELLANEOUS.
7.1 SURVIVAL; SEVERABILITY. The representations, warranties,
covenants and indemnities made by the parties herein shall survive the Closing
notwithstanding any due diligence investigation made by or on behalf of the
party seeking to rely thereon. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that in such case the parties shall
negotiate in good faith to replace such provision with a new provision which is
not illegal,
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<PAGE>
unenforceable or void, as long as such new provision does not materially
change the economic benefits of this Agreement to the parties.
7.2 SUCCESSORS AND ASSIGNS. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and permitted assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. The Purchaser may assign its
rights and obligations hereunder, in connection with any private sale or
transfer (including without limitation a bona fide pledge) of the Preferred
Shares or the Warrants in accordance with the terms hereof, as long as, as a
condition precedent to such transfer, the transferee executes an acknowledgment
agreeing to be bound by the applicable provisions of this Agreement, in which
case the term "Purchaser" shall be deemed to refer to such transferee as though
such transferee were an original signatory hereto. The Company may not assign it
rights or obligations under this Agreement.
7.3 INDEPENDENT NATURE OF PURCHASERS' OBLIGATIONS AND RIGHTS. The
obligations of each Purchaser hereunder are several and not joint with the
obligations of the other Purchasers hereunder, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. Nothing contained herein or in any other agreement or
document delivered at the Closing, and no action taken by any Purchaser pursuant
hereto or thereto, shall be deemed to constitute the Purchasers as a
partnership, an association, a joint venture or any other kind of entity, or
create a presumption that the Purchasers are in any way acting in concert with
respect to such obligations or the transactions contemplated by this Agreement.
Each Purchaser shall be entitled to protect and enforce its rights, including
without limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.
7.4 NO RELIANCE; REPRESENTATIONS BY PURCHASERS. Each party
acknowledges that (i) it has such knowledge in business and financial matters as
to be fully capable of evaluating this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby, (ii) it is not
relying on any advice or representation of the other party in connection with
entering into this Agreement, the other Transaction Documents or such
transactions (other than the representations made in this Agreement or the other
Transaction Documents), (iii) it has not received from such party any assurance
or guarantee as to the merits (whether legal, regulatory, tax, financial or
otherwise) of entering into this Agreement or the other Transaction Documents or
the performance of its obligations hereunder and thereunder, and (iv) it has
consulted with its own legal, regulatory, tax, business, investment, financial
and accounting advisors to the extent that it has deemed necessary, and has
entered into this Agreement and the other Transaction Documents based on its own
independent judgment and on the advice of its advisors as it has deemed
necessary, and not on any view (whether written or oral) expressed by such
party.
7.5 INJUNCTIVE RELIEF. The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to each Purchaser and
that the remedy or remedies at
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<PAGE>
law for any such breach will be inadequate and agrees, in the event of any
such breach, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate and specific performance of
such obligations without the necessity of showing economic loss.
7.6 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed under the laws of the State of New York without regard to the
conflict of laws provisions thereof. Each party hereby irrevocably submits to
the non-exclusive jurisdiction of the state and federal courts sitting in the
City of New York, borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law.
7.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
7.8 HEADINGS. The headings used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
7.9 NOTICES. Any notice, demand or request required or permitted to
be given by any party to any other party pursuant to the terms of this Agreement
shall be in writing and shall be deemed given (i) when delivered personally or
by verifiable facsimile transmission (with an original to follow) on or before
5:00 p.m., eastern time, on a business day or, if such day is not a business
day, on the next succeeding business day and (ii) on the next business day after
timely delivery to a nationally-recognized overnight courier, addressed to the
parties as follows:
IF TO THE COMPANY:
Informix Corporation
4100 Bohannon Drive
Menlo Park, CA 94205
Attn: Chief Financial Officer
Tel: (650) 926-6300
Fax: (650) 926-6564
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<PAGE>
WITH A COPY TO:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attn: Larry W. Sonsini, Esq.
Douglas H. Collom, Esq.
Tel: (650) 493-9300
Fax: (650) 496-4086
and if to any Purchaser, to such address for such Purchaser as shall appear on
the signature page hereof executed by such Purchaser, or as shall be designated
by such Purchaser in writing to the Company.
7.10 EXPENSES. Except as otherwise specified herein, the Company and
each Purchaser shall pay all costs and expenses that it incurs in connection
with the negotiation, execution, delivery and performance of this Agreement.
7.11 ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the other
Transaction Documents constitute the entire agreement between the parties with
regard to the subject matter hereof and thereof, superseding all prior
agreements or understandings, whether written or oral, between or among the
parties. Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended except pursuant to a written instrument executed by
the Company and the holders of at least two-thirds (2/3) of the Preferred Shares
then outstanding, and no provision hereof may be waived other than by a written
instrument signed by the party against whom enforcement of any such waiver is
sought.
7.12 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned prior to the Closing as
follows:
(i) by the mutual agreement of the parties hereto;
(ii) if the Closing shall not have occurred on or before December
15, 1997, either by delivery by the Company of a written notice
of termination (a "TERMINATION NOTICE") to each Purchaser or by
delivery by each Purchaser of a Termination Notice to the Company
(the date on which the Company or all of the Purchasers, as the
case may be, deliver such Termination Notice being referred to
herein as the "TERMINATION DATE").
In the event that this Agreement is terminated as provided herein, this
Agreement shall thereafter be void and of no further effect, without any
liability on the part of any party hereto, except for any liability that may
have accrued prior to the Termination Date.
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first-above written.
INFORMIX CORPORATION
By: /s/ Robert Finocchio, Jr.
-------------------------------
Name:
Title:
PURCHASER NAME: /s/ Capital Ventures International
----------------------------------
By: Heights Capital Management, its authorized agent
------------------------------------------------
By: /s/ Andrew Frost
-------------------------------
Name: Andrew Frost
Title: President, Heights Capital Management
ADDRESS:
Capital Ventures International Correspondence to:
------------------------------- Capital Ventures International
1 Capital Place c/o Heights Capital
P.O. BOX 1787 925 California Street
------------------------------- Suite 1100
Georgetown, Grand Cayman B.V.I San Francisco, CA 94104
------------------------------- Attn: Michael Spolan
Tel: Tel: 415-403-6500
--------------------------- Fax: 415-403-6525
Fax:
---------------------------
Number of Shares of Series B Preferred Stock to be Purchased: 17,500
-----------
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first-above written.
INFORMIX CORPORATION
By: /s/ Robert Finocchio, Jr.
-------------------------------
Name:
Title:
PURCHASER NAME: /s/ Proprietary Convertible Investment Group, Inc.
--------------------------------------------------
By: /s/ Allan Weine
-------------------------------
Name: Allan Weine
Title: Vice-President
ADDRESS:
c/o Credit Suisse First Boston
-------------------------------
11 Madison Avenue
3RD FLOOR
-------------------------------
NEW YORK, N.Y. 10010
-------------------------------
Tel: 212-355-2302
-------------------------------
Fax:212-325-6519
-------------------------------
Number of Shares of Series B Preferred Stock to be Purchased: 20,000
----------
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first-above written.
INFORMIX CORPORATION
By: /s/ Robert Finocchio, Jr.
-------------------------------
Name:
Title:
PURCHASER NAME: /s/ CC Investments, LDC
------------------------
By: /s/ John D. Zigelman
-------------------------------
Name: John D. Zigelman
Title: Director
ADDRESS:
c/o Citco Fund Services Correspondence to:
------------------------------- John D. Ziegelman
Corporate Centre, West Bay Road c/o Castle Creek Partners, LLC
------------------------------- 333 West Wacker Drive
P.O. BOX 31106, SMB Suite 1410
------------------------------- Chicago, IL 60606
GRAND CAYMAN, CAYMAN ISLANDS
-------------------------------
Tel: 345-949-3977
--------------------------
Fax: 345-949-3877
--------------------------
Number of Shares of Series B Preferred Stock to be Purchased: 12,500
----------
<PAGE>
Exhibit 1
Officers' Certificate
delivered by the Company
<PAGE>
INFORMIX CORPORATION
OFFICERS' CERTIFICATE
Informix Corporation, a Delaware corporation (the "Company"), hereby
certifies, in connection with the transactions contemplated by the Securities
Purchase Agreement dated November 17, 1997 between the Company and the
Purchasers listed therein (the "Agreement"), that:
(a) Robert Finocchio, Jr. and Jean-Yves Dexmier are the duly elected,
qualified, acting and incumbent Chairman of the Board, Chief Executive Officer
and President and the Executive Vice President and Chief Financial Officer of
the Company, respectively.
(b) All representations and warranties of the Company set forth in Section
3 of the Agreement are true and correct as of the date hereof.
(c) The Company has complied fully with all of its covenants and
agreements contained in Section 5 of the Agreement that are required to be
performed or complied with by it on or before the Closing (as defined in the
Agreement).
(d) This Certificate may be executed in counterparts and each such
executed counterpart shall be deemed an original, and such counterparts together
shall constitute one instrument.
INFORMIX CORPORATION INFORMIX CORPORATION
/S/ ROBERT FINOCCHIO, JR. /S/ JEAN-YVES DEXMIER
- ------------------------------------- ----------------------------------
Robert Finocchio, Jr. Jean-Yves Dexmier
Chairman of the Board, Chief Executive Chief Financial Officer and
Officer and President Executive Vice President
Dated: November 17, 1997 Dated: November 17, 1997
<PAGE>
Exhibit 2
Legal Opinion of
Wilson Sonsini Goodrich & Rosati P.C.
<PAGE>
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
Telephone 415-493-9300 Facsimile 415-496-6811
November 19, 1997
To Each of the Purchasers identified under the
Securities Purchase Agreement dated as of
November 17, 1997 among Informix Corporation
and the signatories thereto
Re: SERIES B PREFERRED STOCK OF INFORMIX CORPORATION
Ladies and Gentlemen:
Reference is made to the Securities Purchase Agreement (the "Securities
Purchase Agreement") dated as of November 17, 1997, complete with all listed
schedules and exhibits thereto (the "Securities Purchase Agreement"), by and
between Informix Corporation, a Delaware corporation (the "Company"), and the
Purchasers named therein (each, a "Purchaser" and collectively, the
"Purchasers"), which provides for, among other things, the issuance by the
Company to each Purchaser of the Preferred Shares. Unless the context otherwise
requires, all capitalized terms used herein have the respective meanings set
forth in the Securities Purchase Agreement.
We have acted as counsel for the Company in connection with the negotiation
of the Securities Purchase Agreement, the related Registration Rights Agreement
of even date therewith (the "Registration Rights Agreement") and the issuance of
the Preferred Shares. As such counsel, we have made such legal and factual
examinations and inquiries as we have deemed advisable or necessary for the
purpose of rendering this opinion. In addition, we have examined originals,
certified copies or copies otherwise identified to us as being true copies of
the following:
(a) the Restated Certificate of Incorporation of the Company, as amended
to date, including the Certificate of Designation of Series B Convertible
Preferred Stock (the "Certificate of Designation") filed with the Secretary of
State of the State of Delaware on November 18, 1997, as in effect on the date
hereof (the "Certificate of Incorporation");
(b) the Bylaws of the Company, as in effect on the date hereof (the
"Bylaws");
<PAGE>
Fletcher International Limited
November 19, 1997
Page 2
(c) Resolutions of the Board of Directors relating to the transactions
contemplated by the Agreements;
(d) the Securities Purchase Agreement, the Registration Rights Agreement
and the other documents delivered by the Company in connection with the Closing;
(e) a certificate as of recent date of the Secretary of State of the State
of Delaware addressing the corporate good standing of the Company;
(f) such other instruments, corporate records, certificates, and other
documents as we have deemed necessary as a basis for the opinions hereinafter
expressed.
In rendering this opinion, with your permission, we have assumed (i) the
authenticity of original documents and the genuineness of all signatures; (ii)
the conformity to the originals of all documents submitted to us as copies;
(iii) the truth, accuracy, and completeness of the factual matters,
representations, and warranties contained in the records, documents,
instruments, and certificates we have reviewed as of their stated dates and as
of the date hereof; (iv) the legal capacity of natural persons; (v) except as
specifically set forth in the opinions contained herein, the due authorization,
execution, and delivery on behalf of the respective parties thereto (other than
the Company) of documents referred to herein and the legal, valid, and binding
effect thereof on such parties (other than the Company); and (vi) the absence of
any evidence extrinsic to the provisions of the written agreements between the
parties that the parties intended a meaning contrary to that expressed by those
provisions. In addition, we have assumed, except with respect to any opinion
hereafter expressed as to the existence or absence of certain facts, that the
representations and warranties as to factual matters made by the Company in the
Securities Purchase Agreement and pursuant thereto are true, correct, and
complete.
As used in this opinion, the expression "to our knowledge," "known to us,"
or similar language with reference to matters of fact means that, after an
examination of documents, including, without limitation, the Agreements, made
available to us by the Company, including, without limitation, the Securities
Purchase Agreement and the Registration Rights Agreement, and after inquiries of
officers of the Company, but without any further independent factual
investigation, we find no reason to believe that the opinions expressed herein
are factually incorrect. Further, the expression "to our knowledge," "known to
us," or similar language with reference to matters of fact refers to the current
actual knowledge of attorneys of this firm who have worked on matters for the
Company in connection with the Securities Purchase Agreement. Except to the
extent expressly set forth herein or as we otherwise believe to be necessary to
our opinion, we have not undertaken any independent investigation to determine
the existence or absence of any fact, and no inference as to
<PAGE>
Fletcher International Limited
November 19, 1997
Page 3
our knowledge of the existence or absence of any fact should be drawn from
our representation of the Company or our rendering of the opinions set forth
below.
For purposes of this opinion, we have assumed that each Purchaser has all
requisite power and authority and has taken any and all necessary corporate or
partnership action to execute and deliver the Transaction Documents, and we have
assumed that the representations and warranties made by each Purchaser in the
Securities Purchase Agreements and pursuant thereto are true, correct, and
complete. We are also assuming that each Purchaser has purchased the Preferred
Shares for value, in good faith, and without notice of any adverse claims within
the meaning of the California Uniform Commercial Code.
The opinions hereinafter expressed are subject to the following
exceptions, qualifications, and assumptions:
(a) We are members of the Bar of the State of California, and we express
no opinion as to any matter relating to the laws of any jurisdiction other than
the federal law of the United States of America, the laws of the State of
California, and the General Corporation Law of the State of Delaware;
(b) We express no opinion as to the effect of (i) bankruptcy, insolvency,
reorganization, arrangement, fraudulent transfer, moratorium or similar laws
relating to or affecting the rights of creditors and (ii) general principles of
equity, including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing, the exercise of judicial discretion, and the
possible unavailability of specific performance or injunctive relief, regardless
of whether considered in a proceeding in equity or at law;
(c) We express no opinion as to the choice of law provision contained in
the Securities Purchase Agreement or the Registration Rights Agreement. Our
opinions set forth herein relating to the Securities Purchase Agreement or the
Registration Rights Agreement assume that the laws of the State of New York are
identical to the laws of the State of California;
(d) We express no opinion as to compliance with the anti-fraud provisions
of applicable securities laws;
(e) We express no opinion as to compliance with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended;
<PAGE>
Fletcher International Limited
November 19, 1997
Page 4
(f) We express no opinion as to the enforceability of the indemnification
provisions of Section 6 of the Registration Rights Agreement to the extent the
provisions thereof may be subject to limitations of public policy and the effect
of applicable statutes and judicial decisions; and
(g) Our opinion in paragraph 5 below is intended to express our opinion
that the execution, delivery, and performance by the Company of the Agreements
is neither prohibited by, nor does it subject the Company to, a fine, penalty,
or other sanction that would be materially adverse to the Company under any law,
rule, or regulation of the State of California or United States federal law that
a lawyer in the State of California exercising customary professional diligence
would reasonably recognize to be applicable to the Company.
Based upon the foregoing and having regard to legal considerations that we
deem relevant, and subject to the qualifications, exceptions, limitations, and
assumptions set forth herein, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing
under, and by virtue of, the laws of the State of Delaware and is in good
standing under such laws.
2. The Company has the requisite corporate power and authority to enter
into and perform its obligations under (i) the Securities Purchase Agreement,
(ii) the Registration Rights Agreement, and (iii) all other agreements,
documents, certificates or other instruments delivered by the Company at the
closing, to execute and perform its obligations under the Certificate of
Designation, to execute and perform its obligations under the Warrants, to issue
and sell the Preferred Shares to such Purchaser in accordance with the terms of
the Securities Purchase Agreement, to issue the Conversion Shares and the
Warrants upon conversion of the Preferred Shares in accordance with the
Certificate of Designation, to issue the Warrant Shares upon exercise of the
Warrants and to issue the Dividend Payment Shares in accordance with the
Certificate of Designation.
3. All corporate action on the part of the Company by its officers,
directors, and stockholders necessary for (A) the authorization, execution and
delivery of and the performance by the Company of its obligations under, the
Transaction Documents, (B) the authorization, execution, and filing of, and the
performance by the Company of its obligations under, the Certificate of
Designation, and (C) the authorization and execution and the performance by the
Company of its obligations under, the Warrants has been taken.
4. The Transaction Documents and the Certificate of Designation
constitute, and the Warrants upon issuance will constitute, valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms. The Certificate of Designation has been duly
<PAGE>
Fletcher International Limited
November 19, 1997
Page 5
filed with the Secretary of State of the State of Delaware, and the Preferred
Shares are entitled to all of the benefits and privileges set forth therein.
5. No consent, approval, authorization of, order, or designation,
declaration, or filing with any governmental authority on the part of the
Company is required in connection with the valid execution and delivery of the
Securities Purchase Agreement, the offer or issuance of the Preferred Shares, or
the performance of the Company's obligations under the Certificate of
Designation, Securities Purchase Agreement or Registration Rights Agreement,
except (i) qualification (or taking such action as may be necessary to secure an
exemption from qualification, if available) under the California Corporate
Securities Law of 1968, as amended, and other applicable blue sky laws (but
excluding jurisdictions outside of the United States) of the offer and sale of
the Preferred Shares and (ii) the filing of a Current Report on Form 8-K within
the time period prescribed by such report. Our opinion herein is otherwise
subject to the timely and proper completion of all filings and other actions
contemplated herein where such filings and actions are to be undertaken on or
after the date hereof.
6. The execution, delivery, and performance of and compliance with the
terms of the Transaction Documents do not violate, breach 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 (i) the
Certificate of Incorporation or the Bylaws of the Company or any of its
subsidiaries or any certificate of designation relating to any securities of the
Company or any of its subsidiaries, (ii) to our knowledge, any decree, judgment,
order, law, treaty, rule, regulation, or determination of any court,
governmental agency or body, or arbitrator having jurisdiction over the Company
or any of its subsidiaries or any of their respective properties or assets,
(iii) any rule of the National Association of Securities Dealers, Inc.
applicable to the Company or the transactions contemplated by the Agreement, or
(iv) any agreement, plan, arrangement or other instrument that has been as an
exhibit to the Company's periodic filings with the Securities and Exchange
Commission (the "Commission").
7. The Company has validly reserved 50,000 shares of Series B Preferred
Stock and, initially, 15,000,000 shares of Common Stock for issuance pursuant to
the terms of the Securities Purchase Agreement and the Certificate of
Designation. When issued to a Purchaser against payment therefor in accordance
with the terms of the Securities Purchase Agreement and the Certificate of
Designation, each share of Preferred Stock will be duly and validly authorized
and issued, fully paid, and nonassessable and will be free and clear of any
security interests, liens, claims, encumbrances, or preemptive or similar rights
contained in the Certificate of Incorporation or the Bylaws, except as
specifically provided in the Securities Purchase Agreement or the Certificate of
Designation; the Conversion Shares are duly authorized and reserved for issuance
and, when issued upon conversion of the Preferred Shares in accordance with the
terms of the Certificate of Designation, will be duly and validly issued, fully
paid and nonassessable, free and clear of any taxes, liens, claims, preemptive
or similar rights or encumbrance imposed by or through the Company; the Dividend
Payment Shares
<PAGE>
Fletcher International Limited
November 19, 1997
Page 6
are duly authorized and, upon the issuance thereof in accordance with the
terms of the Certificate of Designation, will be duly and validly issued,
fully paid, and nonassessable, free and clear of any taxes, liens, claims,
preemptive or similar rights or encumbrances imposed by or through the
Company; the Warrants are duly authorized and, when issued upon conversion of
the Preferred Shares in accordance with the terms of the Certificate of
Designation, will be duly and validly issued, fully paid, and nonassessable,
free and clear of any taxes, liens, claims, preemptive or similar rights or
encumbrances imposed by or through the Company; the Warrant Shares are duly
authorized and reserved for issuance and, when issued upon exercise of the
Warrants in accordance with the terms thereof, will be duly and validly
issued, fully paid and nonassessable, free and clear of any taxes, liens,
claims, preemptive or similar rights or encumbrances imposed by or through
the Company. The foregoing opinion is qualified by the fact that the
Preferred Shares, the shares of Common Stock and Warrants issuable upon
conversion of the Preferred Shares, the Dividend Payment shares, and the
Warrant Shares issuable upon exercise of the Warrants may be subject to
restrictions on transfer under state and/or federal securities laws.
8. The Company's Common Stock is currently designated for trading on the
Nasdaq National Market.
9. Except as set forth on Schedule 3.8.4 of the Securities Purchase
Agreement, to our knowledge, there are no actions, suits, proceedings or
investigations pending against the Company or its properties before any court or
governmental agency which could reasonably be expected to materially affect the
execution and delivery by the Company of the Securities Purchase Agreement or
the Registration Rights Agreement, the execution and filing of the Certificate
of Designation, or the performance of its obligations thereunder.
10. The offer, sale and issuance of the Preferred Shares in conformity
with the terms of the Securities Purchase Agreement constitute transactions
exempt from the registration requirements of Section 5 of the Securities Act of
1933, as amended, it being understood that we do not express any opinion as to
any subsequent resale of the Preferred Shares, as to the issuance of the
Warrants upon conversion of the Preferred Shares or as to the issuance of Common
Stock upon the conversion of the Preferred Shares or exercise of the Warrants,
as the case may be.
11. The Company has designated a series of preferred stock as the Series
A-1 Preferred Stock pursuant to a certificate of designation duly filed with the
Secretary of State of the State of Delaware and has issued the Series A-1
Preferred Stock pursuant to a valid exchange for all of the shares of Series A
Preferred Stock outstanding immediately prior to such exchange. No shares of
Series A Preferred Stock are outstanding as of the date hereof, and all of the
shares of Series A Preferred Stock outstanding immediately prior to such
exchange have been retired by the Company and have regained the status of
authorized but unissued shares.
<PAGE>
Fletcher International Limited
November 19, 1997
Page 7
This opinion is furnished to each Purchaser as of the date hereof solely
for its benefit in connection with the transactions contemplated by the
Securities Purchase Agreement and may not be relied upon by any other person or
for any other purpose without our prior written consent.
Sincerely,
WILSON, SONSINI, GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati P.C
-------------------------------------------
<PAGE>
Exhibit 3
Form of Series B Convertible Preferred Stock Certificate
<PAGE>
Number B - 1
INFORMIX CORPORATION _____________Shares
A Delaware Corporation
Series B Convertible Preferred Stock
THIS CERTIFIES THAT is the registered holder of
shares of the Series B Convertible Preferred Stock of INFORMIX
CORPORATION, transferable only on the books of the Corporation by the holder
hereof in person or by attorney upon surrender of this certificate properly
endorsed.
These shares are issued and shall be held subject to all of the provisions
of the Certificate of Incorporation and the Bylaws of the Corporation and any
amendments thereto, to which the holder of this certificate, by acceptance
hereof, assents.
Subject to certain conditions, the shares represented by this certificate
are convertible into shares of Common Stock and Warrants exercisable into shares
of Common Stock at any time and shall be automatically converted into shares of
Common Stock and Warrants upon the occurrence of certain events as set forth in
the Certificate of Designation of Series B Convertible Preferred Stock.
A statement of all of the rights, preferences, privileges and restrictions
granted to or imposed upon the respective classes and/or series of shares of
stock of the Corporation and upon the holders thereof may be obtained by any
stockholder upon request and without charge, at the principal office of the
Corporation, and the Corporation will furnish any stockholder, upon request and
without charge, a copy of such statement.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by its duly authorized officers this 19th day of November 1997.
_______________________________ _____________________________________
Jean-Yves Dexmier, Secretary Karen Blasing, Vice President,
<PAGE>
FOR VALUE RECEIVED __________________________ HEREBY SELL, ASSIGN AND TRANSFER
UNTO ______________________ SHARES REPRESENTED BY THE WITHIN CERTIFICATE AND
DO HEREBY IRREVOCABLY CONSTITUTE AND APPOINT ____________________, ATTORNEY
TO TRANSFER THE SAID SHARES ON THE SHARE REGISTER OF THE WITHIN NAMED
CORPORATION AND WITH FULL POWER OF SUBSTITUTION IN THE PREMISES.
DATED _________________, 19___
IN PRESENCE OF __________________________ _____________________________
(Witness) (Stockholder)
_____________________________
(Stockholder)
NOTICE: THE SIGNATURE ON THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FRONT OF THIS CERTIFICATE, IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE WHATSOEVER.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE, AND MAY NOT BE OFFERED OR SOLD UNLESS A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE IN
CONNECTION WITH SUCH OFFER AND SALE. SUCH SECURITIES ARE ISSUED SUBJECT TO THE
PROVISIONS OF (I) THE CERTIFICATE OF DESIGNATION OF SERIES B CONVERTIBLE
PREFERRED STOCK OF INFORMIX CORPORATION (THE "COMPANY"), (II) A SECURITIES
PURCHASE AGREEMENT, DATED NOVEMBER 17, 1997, BY AND AMONG THE COMPANY AND THE
PURCHASERS NAMED THEREIN, AND (III) A REGISTRATION RIGHTS AGREEMENT, DATED
NOVEMBER 19, 1997, BY AND AMONG THE COMPANY AND SUCH PURCHASERS.
<PAGE>
Exhibit 4
Disclosure Schedule
<PAGE>
INFORMIX CORPORATION
4100 Bohannon Drive
Menlo Park, California 94025
Telephone: (650) 926-6300
November 17, 1997
To the Purchasers Identified in
the Securities Purchase Agreement dated November 17, 1997
RE: INFORMIX CORPORATION DISCLOSURE SCHEDULE
Ladies and Gentlemen:
This letter (the "Disclosure Letter") sets forth certain exceptions to
the representations and warranties of Informix Corporation, a Delaware
corporation (the "Company" or "Informix"), set forth in the Securities
Purchase Agreement dated November 17, 1997 (the "Agreement") between the
Company and the Purchasers identified on the signature pages to the
Agreement. Any terms defined in the Agreement shall have the same meaning
when used in this Disclosure Letter as when used in the Agreement, unless the
context indicates otherwise.
The section numbers of this Disclosure Letter (and the referenced
incorporated exhibits and schedules hereto) correspond to the first or principal
section of the Agreement to which the disclosures contained therein relate;
however, a particular disclosure may apply to multiple sections, and all
information disclosed herein shall be deemed disclosed under and incorporated
into any other section of the Agreement where such disclosure would be
appropriate, regardless of whether a reference to this Disclosure Letter is made
in such section of the Agreement. Disclosures by schedules, annexes and
documents referenced herein are deemed made herein.
3.4 DISCLOSURE DOCUMENTS; AGREEMENTS; FINANCIAL STATEMENTS; OTHER
INFORMATION
As of the date of signing the Agreement, the Company has not filed its
Quarterly Reports on 10-Q for the quarters ended June 29, 1997 or September 30,
1997. The Company intends to file such Quarterly Reports with the Commission on
Tuesday, November 18, 1997.
On November 18, 1997, the Company also intends to file with the
Commission its amended Form 10-K for the year ended December 31, 1996 (the
"Form 10-K/A") and its amended Form 10-Q for the quarter ended March 29, 1997
(the "Form 10-Q/A"). Any representation or warranty relating to the
Company's Form 10-K for the year ended December 31, 1996 shall refer only the
Form 10-K/A, any representation or warranty relating to the Company's Form
10-Q for the quarter ended March 29, 1997 shall refer only to the Form
10-Q/A, and any reference to "Disclosure Documents" shall be deemed only to
include such amended filings (unless the context otherwise requires).
<PAGE>
Purchasers Identified in Securities Purchase Agreement dated November 17, 1997
November 17, 1997
Page 2
3.5 CAPITALIZATION
As of the date of the Agreement and as of the Closing Date, the
authorized capital stock of the Company consisted of 500,000,000 shares of
Common Stock, $0.01 par value, and 5,000,000 shares of preferred stock, $0.01
par value. Of the preferred stock, 440,000 shares have been designated Series A
Convertible Preferred Stock, none of which is issued and outstanding, 440,000
shares have been designated Series A-1 Convertible Preferred Stock, all of which
is issued and outstanding, and 50,000 shares have been designated Series B
Convertible Preferred Stock, all of which is expected to be issued pursuant to
the Agreement.
As of November 17, 1997, (i) 152,428,406 shares of Common Stock were issued
and outstanding (together with associated rights under the Rights Plan to
acquire an additional share of Common Stock for each share outstanding; (ii)
24,960,730 shares of Common Stock were reserved for issuance under stock option
plans or upon exercise of stock options granted outside such plans, of which
19,292,160 shares were subject to outstanding, unexercised options, and of which
5,668,570 shares remained 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 were reserved
for issuance upon exercise of a non-qualified stock option granted to the
Company's Chairman, President, and Chief Executive Officer.
In connection with the Agreement, the Company has reserved (i) 50,000
shares of Series B Preferred for issuance to the Purchasers and (ii) such number
of shares of the Company's Common Stock as may be issuable from time to time
upon conversion of the Series B Preferred (including shares issuable upon
exercise of the Warrants to be issued upon such conversion or in connection with
dividends that may be issuable to holders of Series B Preferred and payable in
the form of Common Stock in accordance with the terms set forth in the
Certificate), provided that the aggregate number of shares of Common Stock
reserved will not be less than 150% of the number of shares issuable upon
conversion of the Series B Preferred (including shares issuable upon exercise of
the Warrants).
Reference is made to the Exchange Agreement dated November 16, 1997 between
the Company and Fletcher International Limited ("Fletcher"), which grants
Fletcher certain rights of first negotiation with respect to certain issuances
of capital stock by the Company.
3.7 NO CONFLICT WITH OTHER INSTRUMENTS
At or prior to the Closing, the Company will have amended the Rights Plan
such that no Purchaser will be deemed an "Acquiring Person" thereunder.
Section 12 of the Company's Certificate of Designation of Series A
Convertible Preferred Stock requires the consent of the holders of a majority of
the total number of shares of Series A Preferred Stock outstanding, voting
separately as a series, to effect any amendment or addition to the
<PAGE>
Purchasers Identified in Securities Purchase Agreement dated November 17, 1997
November 17, 1997
Page 3
Company's Certificate of Incorporation that would adversely affect the
preferences of the Series A Preferred Stock.
3.8 FINANCIAL CONDITION; TAXES; LITIGATION
CLASS ACTIONS
Starting in April 1997, a number of class action complaints were filed in
the United States District Court for the Northern District of California. These
actions were consolidated in IN RE INFORMIX CORPORATION SECURITIES LITIGATION,
Master File No. C-97-1289 SBA (N.D. Cal.). The existing federal court
complaints allege that Informix and certain of its officers and/or directors,
and its independent auditors, issued false or misleading statements regarding
the Company's reported financial results and business prospects; during time
periods that vary among the complaints, the longest of which extends from
January 31, 1996 through September 22, 1997. The existing complaints, with one
exception, do not specify the amount of damages. One complaint, TEACHERS'
RETIREMENT SYSTEM OF LOUISIANA ET AL. V. INFORMIX CORPORATION ET AL., requests
$7.136 million in damages. Pursuant to court order, a superseding consolidated
complaint will be filed in the next two months, and Informix will respond to
that complaint thirty days thereafter.
Informix also has been named in two purported securities class action cases
filed in the Superior Court of the State of California, County of San Mateo.
The first state court class action complaint, RILEY V. INFORMIX CORPORATION ET
AL., No. 400739, contains allegations similar to the federal court complaints,
with respect to a time period of April 16, 1996 through August 7, 1997.
Informix has moved to dismiss that complaint. The second state court class
action complaint, DAYANI V. INFORMIX CORPORATION ET AL., No. 402262, is
identical to the most recently filed federal court complaint. Neither complaint
specifies the amount of damages. A third state court class action complaint,
GOLDSTEIN V. WHITE ET AL., No. 401829, asserts claims against certain of
Informix's officers and/or directors, and its independent auditors, but does not
name Informix as a defendant.
DERIVATIVE ACTIONS
Informix also has been named as a nominal defendant in eight derivative
actions filed in the Superior Court of the State of California, County of San
Mateo. The plaintiff in the first of these cases, SMURTHWAITE V. WHITE ET AL.,
No. 401818, has been appointed to lead the plaintiffs in all of these cases, and
the parties presently are drafting an order consolidating all of the cases under
the caption IN RE INFORMIX CORPORATION DERIVATIVE LITIGATION. The allegations
in the SMURTHWAITE complaint are similar to the allegations of the GOLDSTEIN
complaint. Plaintiff seeks unspecified damages on Informix's behalf, and
certain of Informix's officers and/or directors, and its independent auditors.
Informix will respond to the consolidated derivative complaint once it has been
filed.
<PAGE>
Purchasers Identified in Securities Purchase Agreement dated November 17, 1997
November 17, 1997
Page 4
ILLUSTRA ESCROW
In January, 1997, pursuant to the Agreement and Plan of Reorganization by
and among Informix Corporation ("Informix"), Informix Delaware, Inc. and
Illustra Information Technologies, Inc. ("Illustra"), Informix made a claim
against the Illustra shareholders for 258,002 shares contained in an escrow
fund. Informix made this claim based upon Illustra's failure to correctly
disclose information relating to the granting of stock options. In response,
the Illustra shareholders have claimed that Informix wrongfully caused these
shares to be retained in escrow, thereby harming the Illustra shareholders. At
present, no litigation or arbitration proceedings have been commenced by either
Informix or the Illustra shareholders.
SECURITIES AND EXCHANGE COMMISSION INVESTIGATION
On July 24, 1997, the Securities and Exchange Commission issued an Order
Directing Private Investigation and Designating Officers to Take Testimony,
initiating a proceeding captioned IN THE MATTER OF INFORMIX CORPORATION, File
No. HO-3308. The Order directs that a private investigation be made with
respect to Informix and certain unnamed persons associated with Informix
concerning non-specified accounting matters, financial reports and other public
disclosures by the Company as well as trading activity in the Company's
securities. The Order does not name any individual nor specify an applicable
time period. The Company is in the process of producing documents and a number
of current and former officers have been subpoenaed to testify before the SEC.
3.12 REGISTRATION RIGHTS; RIGHTS OF PARTICIPATION
Pursuant to the Subscription Agreement dated August 12, 1997 between
Fletcher International Limited ("Fletcher") and the Company, Fletcher holds
certain registration rights and a right of first negotiation with respect to
future issuances of capital stock by the Company in reliance on Section 4(2) or
Regulation D of the Securities Act.
3.13 TRADING ON NASDAQ
On November 6, 1997, The Nasdaq Stock Market held a hearing concerning the
status of the Company's listing as a Nasdaq National Market Security. The
Company has been advised by Nasdaq that the Company will be in compliance with
the designation criteria of The Nasdaq Stock Market, subject to (i) its filing
the Disclosure Documents with the Commission on or before November 19, 1997,
(ii) its compliance, as reported in the Disclosure Documents, with all criteria
necessary for continued listing on the Nasdaq National Market, other than the
net tangible assets requirements, and (iii) its satisfaction of the net tangible
assets requirement by February 23, 1998.
<PAGE>
Purchasers Identified in Securities Purchase Agreement dated November 17, 1997
November 17, 1997
Page 5
3.18 TITLE
On November 5, 1997, the Company sold a parcel of land consisting of
approximately 10.6 acres on Freedom Circle Drive in Santa Clara, California and
no longer holds a fee simple interest in such property. The consideration for
such sale consisted of $27.0 million in cash and a purchase money security
interest in the property in the amount of $8 million.
In October 1997, the Company entered into a contract of sale with Intel
Corporation with respect to an additional 16.8 acre parcel on Freedom Circle
Drive in Santa Clara, California. Subject to certain conditions set forth in
the contract of sale, the Company expects to sell such parcel to Intel
Corporation in December 1997 for $25.025 million.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Purchasers Identified in Securities Purchase Agreement dated November 17, 1997
November 17, 1997
Page 6
The undersigned has executed this Disclosure Letter as of the date first
set forth above.
INFORMIX CORPORATION
By: /S/ JEAN-YVES DEXMIER
---------------------------------------
Name: Jean-Yves Dexmier
Title: Chief Financial Officer
[DISCLOSURE LETTER SIGNATURE PAGE]
<PAGE>
SCHEDULE 3.5
CAPITALIZATION
See Section 3.5 of the Disclosure Letter.
<PAGE>
SCHEDULE 3.7
NO CONFLICT WITH OTHER INSTRUMENTS
See Section 3.7 of the Disclosure Letter.
<PAGE>
SCHEDULE 3.8.3 AND 3.8.4
FINANCIAL CONDITION; TAXES; LITIGATION
See Section 3.8 of the Disclosure Letter.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of November 17,
1997, by and among Informix Corporation, a Delaware corporation (the "COMPANY"),
and each of the entities whose names appear on the signature pages hereof. Such
entities are each referred to herein as a "PURCHASER" and, collectively, as the
"PURCHASERS".
The Company has agreed, on the terms and subject to the conditions set
forth in the Securities Purchase Agreement of even date herewith (the
"SECURITIES PURCHASE AGREEMENT"), to issue and sell to each Purchaser shares
(the "PREFERRED SHARES") of the Company's Series B Convertible Preferred Stock
(the "PREFERRED STOCK"). The Preferred Shares are convertible into (i) shares
(the "CONVERSION SHARES") of the Company's Common Stock (the "COMMON STOCK"),
and (ii) a Warrant (each, a "WARRANT" and, when taken together with all of the
warrants issued pursuant to the Company's Certificate of Designation (the
"CERTIFICATE OF DESIGNATION"), the "Warrants") entitling the holder thereof to
purchase shares (the "WARRANT SHARES") of Common Stock. In order to induce the
Purchasers to enter into the Securities Purchase Agreement, the Company has
agreed to provide certain registration rights under the Securities Act of 1933,
as amended (the "SECURITIES ACT"), and under applicable state securities laws.
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Securities Purchase Agreement.
In consideration of each Purchaser entering into the Securities Purchase
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DEFINITIONS.
For purposes of this Agreement, the following terms shall have the meanings
specified:
(a) "CLOSING" shall have the meaning specified in the Securities
Purchase Agreement;
(b) "REGISTRATION DEADLINE" means the one hundred and fiftieth
(150th) day following Closing;
(c) "HOLDER" means any person owning or having the right to acquire,
through conversion of Preferred Shares or exercise of the Warrant,
Registrable Securities, including initially each Purchaser and
thereafter any permitted assignee thereof;
(d) "REGISTER", "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration
statement or statements in compliance with the Securities Act and
pursuant to Rule 415 under the Securities Act ("RULE 415") or any
successor rule providing for the offering of securities on a
continuous or delayed basis
<PAGE>
("REGISTRATION STATEMENT"), and the declaration or ordering of
effectiveness of the Registration Statement by the Securities and
Exchange Commission (the "COMMISSION"); and
(e) "REGISTRABLE SECURITIES" means the Conversion Shares, the Warrant
Shares and the Dividend Payment Shares (as defined in the Certificate
of Designation), and any other shares of Common Stock issuable
pursuant to the terms of the Preferred Stock, whether as a dividend,
payment of a redemption price or otherwise, and any shares of capital
stock issued or issuable from time to time (with any adjustments) in
replacement of, in exchange for or otherwise in respect of the
Conversion Shares, the Warrant Shares or such Dividend Payment Shares,
including without limitation any securities received by a Holder in
connection with a Change of Control Transaction (as defined in the
Certificate of Designation), but excluding any securities that have
already been sold to the public by the Holder thereof and any
securities received by a Holder in connection with a Change of Control
Transaction and which may be publicly sold without any restriction
under applicable securities law as to the amount of such securities
that may be sold.
2. MANDATORY REGISTRATION.
(a) On or before the forty-fifth (45th) day following Closing, the
Company shall prepare and file with the Commission a Registration Statement on
Form S-1 as a "shelf" registration statement under Rule 415 covering the resale
of at least 150% of the number of shares of Registrable Securities then issuable
on conversion of the Preferred Shares (assuming that the Conversion Date (as
defined in the Certificate of Designation) for such conversion were to occur on
the date on which the Registration Statement is so filed) and exercise of the
Warrants. The Registration Statement shall state, to the extent permitted by
Rule 416 under the Securities Act, that it also covers such indeterminate number
of shares of Common Stock as may be required to effect (i) conversion of the
Preferred Shares to prevent dilution resulting from stock splits, stock
dividends or similar events, or by reason of changes in the Conversion Price in
accordance with the terms of the Certificate of Designation and (ii) exercise of
the Warrants in full to prevent dilution resulting from stock splits, stock
dividends or similar events. The Company agrees that, upon becoming eligible to
file with the Commission a Registration Statement on Form S-3, the Company will
replace the Registration Statement on Form S-1 referred to above with a
Registration Statement on Form S-3.
(b) The Company shall use its best efforts to cause the Registration
Statement to become effective as soon as practicable following the filing
thereof, but in no event later than the Registration Deadline, and shall submit
to the Commission, within five (5) business days after the Company learns that
no review of the Registration Statement will be made by the staff of the
Commission or that the staff of the Commission has no further comments on the
Registration Statement, as the case may be, a request for acceleration of the
effectiveness of the Registration Statement to a time and date not later than
forty-eight (48) hours after the submission of such request, and maintain the
effectiveness of the Registration Statement until the earlier to occur of (i)
the date on which all of the
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Registrable Securities have been sold pursuant to the Registration Statement
and (ii) the date on which all of the remaining Registrable Securities (in
the reasonable opinion of counsel to the Purchasers) may be immediately sold
to the public without registration and without regard to the amount of
Registrable Securities which may be sold by a Holder thereof at a given time
(the "REGISTRATION PERIOD").
(c) If the Registration Statement is not declared effective by the
Commission on or before the Registration Deadline as a result of the failure by
the Company to use its best efforts to cause the Registration Statement to
become effective, including without limitation a failure to respond completely
and as soon as practicable to comments made by the Commission on the
Registration Statement, the Company shall pay to each Holder an amount equal to
the lesser of (x) two percent (2%) per month and (y) the highest rate permitted
by applicable law, TIMES the aggregate purchase price of the Preferred Shares
held by such Holder, accruing daily and compounded monthly, from the
Registration Deadline until the date on which the Registration Statement is
declared effective. The amounts paid or payable by the Company hereunder shall
be in addition to any other remedies available to such Holder at law or in
equity or pursuant to the terms of any other Transaction Document. Payments of
cash pursuant hereto shall be made within five (5) days after the end of each
period that gives rise to such obligation, provided that, if any such period
extends for more than thirty (30) days, payments shall be made at the end of
each thirty-day period.
(d) In the event that (A) the Registration Statement is not declared
effective by the twentieth (20th) Business Day following the Registration
Deadline, (B) after the Registration Statement has been declared effective by
the Commission, sales of Registrable Securities cannot be made by a Holder under
the Registration Statement for any reason not within the exclusive control of
such Holder (other than such Registrable Securities as are then freely saleable
pursuant to Rule 144(k) under the Securities Act and except during a Blackout
Period (as defined below)), (C) the Common Stock is not included for quotation
on the Nasdaq Stock Market ("NASDAQ") or listed on the New York Stock Exchange
or the American Stock Exchange, or (D) the Company breaches, in any material
respect, any material covenant or other material term or condition of the
Securities Purchase Agreement, the Registration Rights Agreement, the Warrants
or any other agreement, document, certificate or other instrument delivered in
connection with the transactions contemplated hereby or thereby, and such breach
continues for a period of ten (10) Business Days after written notice thereof to
the Company from a Holder; (each event described in clause (A), (B), (C) or (D)
being hereinafter referred to as a "REPRICING EVENT"), in addition to the
amounts payable pursuant to paragraph 2(c) above, (I) the Fixed Conversion Price
(as defined in the Certificate of Designation) for any conversion of Preferred
Shares occurring during the three Trading Days following the Cure Date (as
defined below) with respect to such event shall be deemed to be equal to the
lesser of (i) the lowest Conversion Price (as defined in the Certificate of
Designation) that would have applied had such conversion occurred during the
period between the date on which a Repricing Event occurs and the date on which
such Repricing Event is no longer continuing (a "CURE DATE") and (ii) the Fixed
Conversion Price that would otherwise be in effect on the relevant Conversion
Date (as defined in the Certificate of Designation) and (II) the Company shall
pay to such Holder an amount equal to the lesser of (x) one and one quarter
percent (1.25%) per month and (y) the highest rate permitted by applicable law,
TIMES the aggregate purchase price of the Preferred Shares held by such Holder,
accruing daily and compounded monthly, from the date on which such
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Repricing Event occurs until the applicable Cure Date. For purposes hereof,
"BLACKOUT PERIOD" means such day or days, not to exceed an aggregate of
thirty (30) days during any period of twelve (12) consecutive months, with
respect to which the Board of Directors of the Company determines in good
faith (A) that an amendment or supplement to the Registration Statement (as
defined below) or prospectus contained therein is necessary, in light of
subsequent events, in order to correct a material misstatement made therein
or to include information the absence of which would render the Registration
Statement or such prospectus materially misleading and (B) that the filing of
such amendment or supplement would result in the disclosure of information
which the Company has a BONA FIDE business purpose for preserving as
confidential; provided that the Company shall be entitled to impose no more
than two (2) Blackout Periods during any period of twelve (12) consecutive
months. In the event that the Company imposes a Blackout Period hereunder,
each Holder shall be entitled, upon written notice to the Company, to use as
a Conversion Price (as defined in the Certificate of Designation) for any
conversion of Preferred Shares occurring after the termination of such
Blackout Period the lower of (a) the Conversion Price in effect pursuant to
the terms of the Certificate of Designation and (b) the lowest Conversion
Price that would have applied had such conversion occurred during such
Blackout Period. The Company agrees that it will not disclose any material,
non-public information to any Holder regarding the reasons for imposing a
Blackout Period, except to a Holder who specifically requests in writing such
information.
3. PIGGYBACK REGISTRATION.
If at any time prior to the expiration of the Registration Period, (i)
the Company proposes to register shares of Common Stock under the Securities Act
in connection with the public offering of such shares for cash (other than a
registration relating solely to the sale of securities to participants in a
Company stock plan or employee stock award or a registration on Form S-4 under
the Securities Act or any successor or similar form registering stock issuable
upon a reclassification, a business combination involving an exchange of
securities or an exchange offer for securities of the issuer or another entity)
(a "PROPOSED REGISTRATION") and (ii) a registration statement covering the sale
of all of the Registrable Securities is not then effective and available for
sales thereof by the Holders, the Company shall, at such time, promptly give
each Holder written notice of such Proposed Registration. Each Holder shall
have thirty (30) days from its receipt of such notice to deliver to the Company
a written request specifying the amount of Registrable Securities that such
Holder intends to sell and such Holder's intended method of distribution;
PROVIDED, HOWEVER, that in no event shall a Holder be entitled to sell
Registrable Securities pursuant to the Proposed Registration if such Registrable
Securities may then be sold pursuant to the Registration Statement filed by the
Company pursuant to Section 2 hereof. Upon receipt of such request, the Company
shall use its best efforts to cause all Registrable Securities which the Company
has been requested to register to be registered under the Securities Act to the
extent necessary to permit their sale or other disposition in accordance with
the intended methods of distribution specified in the request of such Holder;
PROVIDED, HOWEVER, that the Company shall have the right to postpone or withdraw
any registration effected pursuant to this Section 3 without obligation to the
Holder. If, in connection with any underwritten public offering for the account
of the Company, the managing underwriter(s) thereof shall impose a limitation on
the number of shares of Common Stock which may be included in the Registration
Statement because, in such underwriter(s)' judgment, marketing or other factors
dictate such
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<PAGE>
limitation is necessary to facilitate public distributions, then the Company
shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which each
Holder has requested inclusion hereunder as such underwriter(s) shall permit.
Any exclusion of Registrable Securities shall be made pro rata among the
Holders seeking to include Registrable Securities in the Registration
Statement, in proportion to the number of Registrable Securities sought to be
included by such Holders; provided, however, that the Company shall not
exclude any Registrable Securities unless the Company has first excluded all
outstanding securities, the holders of which are not entitled to inclusion of
such securities in such Registration Statement or are not entitled to pro
rata inclusion with the Registrable Securities; and provided, further,
however, that, after giving effect to the immediately preceding proviso, any
exclusion of Registrable Securities shall be made pro rata with holders of
other securities having the right to include such securities in the
Registration Statement.
4. OBLIGATIONS OF THE COMPANY.
In addition to performing its obligations hereunder, including those
pursuant to paragraphs 2(a) and 2(b) above, the Company shall:
(a) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
with the Registration Statement as may be necessary to comply with the
provisions of the Securities Act or to maintain the effectiveness of the
Registration Statement during the Registration Period, or as may be reasonably
requested by a Holder in order to incorporate information concerning such Holder
or such Holder's intended method of distribution;
(b) in the event that the number of shares available under the
Registration Statement filed by the Company hereunder is insufficient during any
period of three consecutive trading days to cover 125% of the Registrable
Securities then issued or issuable, the Company shall promptly amend the
Registration Statement, or file a new Registration Statement, or both, so as to
cover 150% of such Registrable Securities, in any event as soon as practicable,
but not later than the tenth business day following the last day of such three
day period. Any Registration Statement filed pursuant to this Section 4 shall
state that, to the extent permitted by Rule 416 under the Securities Act, such
Registration Statement also covers such indeterminate number of additional
shares of Common Stock as may become issuable upon conversion of the Preferred
Shares or exercise of the Warrants in full. Unless and until such amendment or
new Registration Statement becomes effective, each Holder shall have the rights
described in Section 2(c) above;
(c) secure the designation and quotation of the Registrable
Securities on the Nasdaq Stock Market or the listing thereof on the New York
Stock Exchange or the American Stock Exchange;
(d) furnish to each Holder such number of copies of the prospectus
included in such Registration Statement, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as such Holder may reasonably request in order to facilitate the disposition of
such Holder's Registrable Securities;
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<PAGE>
(e) use all commercially reasonable efforts to register or qualify
the Registrable Securities under the securities or "blue sky" laws of such
jurisdictions within the United States as shall be reasonably requested from
time to time by a Holder, and do any and all other acts or things which may be
necessary or advisable to enable such Holder to consummate the public sale or
other disposition of the Registrable Securities in such jurisdictions; provided
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such jurisdiction;
(f) in the event of an underwritten public offering of the
Registrable Securities, enter into and perform its obligations under an
underwriting agreement, in usual and customary form reasonably acceptable to the
Company, with the managing underwriter of such offering (who shall be reasonably
acceptable to the Company);
(g) notify each Holder immediately upon the occurrence of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, contains an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing,
and as promptly as practicable, prepare, file and furnish to each Holder a
reasonable number of copies of a supplement or an amendment to such prospectus
as may be necessary so that such prospectus does not contain an untrue statement
of material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing;
(h) use all commercially reasonable efforts to prevent the issuance
of any stop order or other order suspending the effectiveness of such
Registration Statement and, if such an order is issued, to obtain the withdrawal
thereof at the earliest possible time and to notify each Holder of the issuance
of such order and the resolution thereof;
(i) furnish to each Holder, on the date that such Registration
Statement becomes effective, (x) an opinion, dated such date, of outside counsel
representing the Company (and reasonably acceptable to such Holder) addressed to
such Holder, regarding the effectiveness of the Registration Statement and the
absence of any stop order, and (y) in the case of an underwriting, (A) an
opinion, dated such date, of such outside counsel, in form and substance as is
customarily given to underwriters in an underwritten public offering, and (B) a
letter, dated such date, from the Company's independent certified public
accountants, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to each Holder;
(j) provide each Holder and its representatives the opportunity to
conduct a reasonable inquiry of the Company's financial and other records during
normal business hours and make available its officers, directors and employees
for questions regarding information which such Holder may reasonably request in
order to fulfill any due diligence obligation on its part; and
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<PAGE>
(k) permit counsel for each Holder (at such Holder's expense) to
review such Registration Statement and all amendments and supplements thereto,
and all correspondence between the Commission and the Company relating thereto,
a reasonable period of time prior to the filing thereof with the Commission.
5. OBLIGATIONS OF EACH HOLDER.
In connection with the registration of the Registrable Securities pursuant
to the Registration Statement, each Holder shall:
(a) furnish to the Company such information regarding itself and the
intended method of disposition of Registrable Securities as the Company shall
reasonably request in order to effect the registration thereof;
(b) upon receipt of any notice from the Company of the happening of
any event of the kind described in paragraphs 4(g) or 4(h), immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement until the filing of an amendment or supplement as described in
paragraph 4(g) or withdrawal of the stop order referred to in paragraph 4(h), as
the case may be; and
(c) in the event of an underwritten offering of the Registrable
Securities, enter into a customary and reasonable underwriting agreement and
execute such other documents as the managing underwriter for such offering may
reasonably request.
6. INDEMNIFICATION.
In the event that any Registrable Securities are included in a Registration
Statement under this Agreement:
(a) To the extent permitted by law, the Company shall indemnify and
hold harmless each Holder, the officers, directors, employees, agents and
representatives of such Holder, and each person, if any, who controls such
Holder within the meaning of the Securities Act or the Securities Exchange Act
of 1934, as amended (the "1934 ACT"), against any losses, claims, damages,
liabilities or reasonable out-of-pocket expenses (whether joint or several)
(collectively, including legal or other expenses reasonably incurred in
connection with investigating or defending same, "LOSSES"), insofar as any such
Losses arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The Company will reimburse such Holder, and each such
officer, director, employee, agent, representative or controlling person for any
legal or other expenses as reasonably incurred by any such entity or person in
connection with investigating or defending any Loss; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any Loss if
such settlement is effected without the consent of the
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<PAGE>
Company (which consent will not be unreasonably withheld), nor shall the
Company be obligated to indemnify any person for any Loss to the extent that
such Loss arises out of or is based upon and in conformity with written
information furnished by such person expressly for use in such Registration
Statement; and provided, further, that the Company shall not be required to
indemnify any person to the extent that any Loss results from such person
selling Registrable Securities (i) to a person to whom there was not sent or
given, at or prior to the written confirmation of the sale of such shares, a
copy of the prospectus, as most recently amended or supplemented, if the
Company has previously furnished or made available copies thereof or (ii)
during any period following written notice by the Company to such Holder of
an event described in Section 4(g) or 4(h).
(b) To the extent permitted by law, each Holder, acting severally and
not jointly, shall indemnify and hold harmless the Company, the officers,
directors, employees, agents and representatives of the Company, and each
person, if any, who controls the Company within the meaning of the Securities
Act or the 1934 Act, against any Losses to the extent (and only to the extent)
that any such Losses arise out of or are based upon and in conformity with
written information furnished by such Holder expressly for use in such
Registration Statement; and such Holder will reimburse any legal or other
expenses as reasonably incurred by the Company and any such officer, director,
employee, agent, representative, or controlling person, in connection with
investigating or defending any such Loss; provided, however, that the foregoing
indemnity shall not apply to amounts paid in settlement of any such Loss if such
settlement is effected without the consent of such Holder (which consent will
not be unreasonably withheld); provided, that, in no event shall any indemnity
under this subsection 6(b) exceed the net purchase price of securities sold by
such Holder under the Registration Statement.
(c) Promptly after receipt by an indemnified party under this Section
6 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in and to assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the reasonably incurred fees and expenses of one such counsel to
be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate under
applicable standards of professional conduct due to actual or potential
conflicting interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, to the extent prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the indemnified party
under this Section 6 with respect to such action, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 6 or
with respect to any other action.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 6 is unavailable or insufficient to hold harmless an indemnified
party for any reason, the Company and each Holder agree, severally and not
jointly, to contribute to the aggregate Losses to which the Company or
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<PAGE>
such Holder may be subject in such proportion as is appropriate to reflect
the relative fault of the Company and such Holder in connection with the
statements or omissions which resulted in such Losses; provided, however,
that in no case shall such Holder be responsible for any amount in excess of
the net purchase price of securities sold by it under the Registration
Statement. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company or by such Holder. The Company and each Holder agree that it would
not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who is not guilty of such
fraudulent misrepresentation. For purposes of this Section 6, each person
who controls a Holder within the meaning of either the Securities Act or the
Exchange Act and each officer, director, employee, agent or representative of
such Holder shall have the same rights to contribution as such Holder, and
each person who controls the Company within the meaning of either the
Securities Act or the Exchange Act and each officer, director, employee,
agent or representative of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
(e) The obligations of the Company and each Holder under this
Section 6 shall survive the conversion or redemption, if any, of the Preferred
Shares, the exercise of the Warrants, the completion of any offering of
Registrable Securities pursuant to a Registration Statement under this
Agreement, or otherwise.
7. REPORTS.
With a view to making available to each Holder the benefits of Rule
144 under the Securities Act ("Rule 144") and any other similar rule or
regulation of the Commission that may at any time permit such Holder to sell
securities of the Company to the public without registration, the Company agrees
to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934 Act; and
(c) furnish to such Holder, so long as such Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company, if true, that it has complied with the reporting requirements of Rule
144, the Securities Act and the 1934 Act, (ii) a copy of the most recent annual
or quarterly report of the Company and such other reports and documents so filed
by the Company, and (iii) such other information as may be reasonably requested
in availing such Holder of any rule or regulation of the Commission which
permits the selling of any such securities without registration.
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8. MISCELLANEOUS.
(a) EXPENSES OF REGISTRATION. All expenses, other than underwriting
discounts and commissions and fees and expenses of counsel to each Holder,
incurred in connection with the registrations, filings or qualifications
described herein, including (without limitation) all registration, filing and
qualification fees, printers' and accounting fees, the fees and disbursements of
counsel for the Company, and the fees and disbursements incurred in connection
with the opinion and letter described in paragraph 4(i) hereof, shall be borne
by the Company.
(b) AMENDMENT; WAIVER. Any provision of this Agreement may be
amended only pursuant to a written instrument executed by the Company and
Holders of two-thirds (2/3) of the outstanding Registrable Securities. Any
waiver of the provisions of this Agreement may be made only pursuant to a
written instrument executed by the party against whom enforcement is sought.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each Holder, each future Holder, and the Company. The failure of
any party to exercise any right or remedy under this Agreement or otherwise, or
the delay by any party in exercising such right or remedy, shall not operate as
a waiver thereof.
(c) NOTICES. Any notice, demand or request required or permitted to
be given by any party to any other party pursuant to the terms of this Agreement
shall be in writing and shall be deemed given (i) when delivered personally or
by verifiable facsimile transmission (with an original to follow) on or before
5:00 p.m., eastern time, on a business day or, if such day is not a business
day, on the next succeeding business day and (ii) on the next business day after
timely delivery to a nationally-recognized overnight courier, addressed to the
parties as follows:
IF TO THE COMPANY:
Informix Corporation
4100 Bohannon Drive
Menlo Park, CA 94205
Attn: Chief Financial Officer
Tel: (650) 926-6300
Fax: (650) 926-6564
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WITH A COPY TO:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
Attn: Larry W. Sonsini, Esq.
Douglas H. Collom, Esq.
Tel: (650) 493-9300
Fax: (650) 496-4086
and if to any Holder, to such address as shall be designated by such Holder in
writing to the Company.
(d) TERMINATION. This Agreement shall terminate on the earlier to
occur of (a) the end of the Registration Period and (b) the date on which all of
the Registrable Securities have been publicly distributed; but any such
termination shall be without prejudice to (i) the parties' rights and
obligations arising from breaches of this Agreement occurring prior to such
termination and (ii) the indemnification and contribution obligations under this
Agreement.
(e) ASSIGNMENT. The rights of a Holder hereunder shall be assigned
automatically to any transferee of the Preferred Shares, the Warrants or
Registrable Securities from such Holder as long as: (i) the Company is, within a
reasonable period of time following such transfer, furnished with written notice
of the name and address of such transferee, (ii) the transferee agrees in
writing with the Company to be bound by all of the provisions hereof, (iii) such
transfer is made in accordance with the applicable requirements of the
Securities Purchase Agreement or the Warrants, as the case may be.
(f) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed one and the same instrument. This Agreement, once
executed by a party, may be delivered to any other party hereto by facsimile
transmission.
(g) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to the
conflict of laws provisions thereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.
INFORMIX CORPORATION
By: /s/ ROBERT FINOCCHIO, JR.
------------------------------------
Name: Robert Finocchio, Jr.
Title: Chairman of the Board, President
and Chief Executive Officer
PURCHASER NAME: Proprietary Convertible Investment Group, Inc.
----------------------------------------------
By: /s/ ALLAN WEINE
------------------------------------
Name: Allan Weine
Title: Vice-President
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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.
INFORMIX CORPORATION
By: /s/ ROBERT FINOCCHIO, JR.
------------------------------------
Name: Robert Finocchio, Jr.
Title: Chairman of the Board, President
and Chief Executive Officer
PURCHASER NAME: CC INVESTMENTS, LDC
-------------------
By: /s/ DAN ASHER
------------------------------------
Name: Dan Asher
Title: Director
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.
INFORMIX CORPORATION
By: /s/ ROBERT FINOCCHIO, JR.
------------------------------------
Name: Robert Finocchio, Jr.
Title: Chairman of the Board, President
and Chief Executive Officer
PURCHASER NAME: Capital Ventures International
--------------------------------
By: Heights Capital Management, Inc., its authorized agent
By: /s/ ANDREW FROST
------------------------------------
Name: Andrew Frost
Title: President, Heights Capital Management, Inc.
<PAGE>
INFORMIX COMPLETES EXTENDED AUDIT; RESTATES PRIOR PERIODS AND ANNOUNCES 3RD
QUARTER '97 RESULTS
ANNOUNCES $50 MILLION EQUITY INVESTMENT LED BY AN AFFILIATE OF CREDIT
SUISSE FIRST BOSTON, $75 MILLION REVOLVING LINE OF CREDIT AND
SALE OF REAL ESTATE FOR $60 MILLION
COMPANY IN COMPLIANCE WITH NASDAQ LISTING REQUIREMENTS
MENLO PARK, CA., November 18, 1997--Informix Corporation (NASDAQ: IFMXE)
announced today that it has completed its extended audit, and that it has
restated results for 1994, 1995, 1996 and the first quarter of 1997 as well
as adjusted results for the second quarter of 1997. The company--which also
reported third quarter 1997 results reflecting a conservative implementation
of its revenue recognition policies--outlined new business practices,
operational controls and key financial actions designed to put the company on
a secure footing going forward. The company said it believes it is now in
compliance with NASDAQ continued listing requirements.
The company also announced that it has strengthened its cash position,
improved liquidity and reduced operating expenses. Informix said it has
completed a $50 million convertible preferred private placement with three
investors led by an affiliate of Credit Suisse First Boston and including
affiliates of Castle Creek Partners and Heights Capital Management. This
investment follows the $40 million equity investment in Informix by Fletcher
International announced in August. Additionally, the company has received a
commitment letter for a $75 million revolving line of credit for two years
from Bank of Boston and Canadian Imperial Bank of Commerce. Informix has
also sold its land in Santa Clara, Calif., for a total consideration of $60
million. In the third quarter, Informix reduced operating expenses from
approximately $235 million in the first quarter of 1997 to approximately $195
million, with a current run rate below $185 million.
"We have made significant progress," said Bob Finocchio, Informix Chairman
and CEO. "Today's financial restatement is a thorough, comprehensive answer
to questions regarding Informix's past revenue recognition and related
matters. With these issues behind us, we are confident we have the people and
talent needed to build the new Informix, increase customer confidence and
regain our momentum in the enterprise database market."
The company also said that the Securities and Exchange Commission issued a
formal order of investigation of the company in July. "In light of the
restatement, we are not surprised there is an SEC investigation and we are
cooperating fully," said Finocchio.
RESTATEMENT OF PRIOR PERIODS
The company restated results for prior periods to reflect adjustments to net
revenue and net income that decrease revenue from January 1994 until June
1997 by a total of approximately $278 million from previously reported
amounts, and net income from previously reported amounts by a total of
approximately $236 million.
In September the company said it anticipated that its 1995 and 1996 financial
statements would be restated to reflect adjustments to revenue that would
decrease revenue and net income from previously reported amounts and could
exceed $250 million, consistent with today's restatement. It
<PAGE>
further said in September that it had identified errors and irregularities in
the recording of specific revenue transactions, as well as certain types of
revenue recognized from reseller channel transactions in both years. Today
the company said it had decided also to restate 1994 revenue and net income.
The company also said today that the errors and irregularities it found in
1994, 1995 and 1996 took numerous forms and were primarily the result of lack
of compliance with the company's procedures and controls, and a more
conservative application of its revenue recognition policy.
The following tables reflect the effect on reported revenue and net income
(loss) (in millions of dollars):
1997 1997
REVENUE Q1 REVENUE Q2 Six Months
Reported $133.7 Reported $164.7 $298.4
Restated $149.2 Adjusted $182.0 $331.2
NET INCOME Q1 NET INCOME Q2 Six Months
Reported ($140.1) Reported ($120.5) ($260.6)
Restated ($144.2) Adjusted ($111.4) ($255.6)
Revenue 1996 1995 1994
Reported $939.3 $714.2 $470.1
Restated $727.8 $632.8 $452.0
Net Income 1996 1995 1994
Reported $97.8 $97.6 $61.9
Restated ($73.6) $38.6 $48.3
<PAGE>
THIRD QUARTER 1997 RESULTS
Revenues for the third quarter were $149.9 million. Net loss for the third
quarter of 1997 was $110.7 million or $0.73 per share. These results reflect
a $49.7 million restructuring charge taken in the third quarter.
Summary Financial Results (in millions except per share amounts)
QUARTER ENDED
SEPTEMBER 28, 1997
Revenue $149.9
Operating income (loss) $(106.3)
Pretax income (loss) $(107.9)
Net income (loss) $(110.7)
Net income (loss) per share $(0.73)
North American revenues were $75.1 million, European revenues were $44.8
million, and Intercontinental revenues were $30.1 million.
Informix ended the third quarter with approximately $95 million in cash and
investments. Days sales outstanding in accounts receivable were 82.
About the company's third quarter performance, Finocchio said: "This was a
very weak third quarter, but this was expected--particularly in light of the
uncertainty caused by the announcements of our extended financial review
process and the financial restatement we made during the period. That said,
we've made significant operational progress in financial controls, planning
and expense reduction--and with our new financing actions we have reached an
important milestone in our efforts to create a solid foundation for Informix
moving forward."
NASDAQ COMPLIANCE
The company said it believes it is now in compliance with NASDAQ continued
listing requirements. It expects the NASD Listing Qualifications Panel to
issue a decision tomorrow that the company has complied with NASDAQ
requirements for continued listing, which would mean Informix would resume
trading under its normal symbol, IFMX, on Thursday.
THREE FINANCING ACTIONS
Informix announced three financing actions--a new equity investment, a
commitment for a new line of credit, and the sale of its Santa Clara, Calif.,
land.
<PAGE>
First, Informix has received a $50 million equity investment from an investor
group, led by an affiliate of Credit Suisse First Boston, that includes
Castle Creek Partners, a Chicago-based private investment partnership
specializing in technology investments, and Heights Capital Management, an
affiliate of the Susquehanna Investment Group. Under the terms of the
agreement, Informix sold 50,000 shares of newly issued Series B Convertible
Preferred Stock for an aggregate of $50 million. The Shemano Group of San
Francisco served as the company's placement agent on the transaction.
The Series B Convertible Preferred Stock is convertible into shares of Common
Stock six months after issuance and will automatically convert into Common
Stock three years following the date of its issuance by Informix. Each share
of Series B Convertible Preferred Stock is convertible into Common Stock at a
per share price equal to either a) a fixed conversion price set in six
months, or, b) a variable conversion price based upon market prices prior to
conversion. Informix will issue its warrant to purchase two shares of common
stock for every ten shares of common stock after conversion.
The investment led by an affiliate of Credit Suisse First Boston is the
second major equity investment in Informix in recent months, following
Fletcher International's $40 million equity investment in Informix announced
in August.
Second, Informix received a commitment letter for a $75 million revolving
line of credit for two years from Bank of Boston and Canadian Imperial Bank
of Commerce. The purpose of the facility is to finance working capital and
general corporate purposes. Terms of the facility will be adjusted to
reflect the improvement of Informix's overall performance in 1998.
Third, under agreements with Intel Corp. and a development venture led by
Tishman Speyer Properties, Informix will receive a total of $60 million for a
27-acre tract of land it purchased in early 1997. In November, Informix has
received a payment for $27 million and expects to receive the balance in
December. Informix paid $60 million for the land earlier in 1997.
"These three actions announced today improve the liquidity position of
Informix, and give us the financial foundation and flexibility we need to run
our business," said Finocchio.
OPERATIONAL PROGRESS
Finocchio said the company has made significant operational progress in
establishing firm financial controls throughout the organization including a
new revenue recognition process and organization, centralized finance and
legal functions and a strengthened and refocused internal audit function.
Finocchio said the third quarter '97 results reflect continued conservative
application of its revenue recognition policies, and that new internal
reporting structures and controls will ensure they are strictly enforced in
the future.
As a result of the company's focus on expense reduction, Informix reduced
operating expenses from approximately $235 million in the first quarter of
1997 to approximately $195 million in the third quarter, with a run rate
currently below $185 million.
<PAGE>
He said the company has also reduced the number of employees from roughly
4500 at the end of 1996 to approximately 3600 in November.
Finocchio also said the company is maintaining its current investments in
R&D, service and support.
Additionally, Finocchio also outlined how the company is recognizing revenue
from resellers. Revenue from resellers is earned when licenses are resold or
utilized by the reseller and after any related obligations have been
satisfied, i.e., when there are no longer any significant remaining
uncertainties related to the earnings process. This revised application of
accounting policy has been followed for all transactions with resellers,
other than those licenses sold and billed on a per-copy basis for 1997, 1996,
1995 and 1994.
NEW MANAGEMENT TEAM/ORGANIZATIONAL CHANGES
In addition to financial progress and substantial operational changes made,
the Informix management team has been strengthened.
JEAN-YVES DEXMIER was named executive vice president and chief financial
officer of Informix in October. Dexmier's responsibilities include all
financial management aspects of Informix's business, including treasury,
investor relations, controllership, audit, and operations, as well as MIS and
real estate. Before joining Informix, Dexmier was a consultant on business
development and strategy to Silicon Valley companies. Prior to that, he was
chief financial officer of Octel Communications, the leading provider of
voice messaging systems.
JIM ENGLE was named treasurer today. Engle was vice president and corporate
treasurer/chief tax officer at Octel Communications. Prior to 1991, he was
director of taxes at LSI Logic Corp., Ungermann-Bass, Inc. and Granger
Associates, Inc.
WES RAFFEL was named vice president of North American operations in
September. He is responsible for all sales activities in the U.S. and Canada,
including sales to end users, distributors, value-added resellers, systems
integrators and OEMs. In addition, Raffel has global responsibility for key
partner relationships and Informix's overall channel strategy. Before joining
Informix, Raffel was senior vice president of sales and marketing and acting
CEO of AssureNet Pathways, Inc., a leading network security company.
JEAN-PAUL MINARRO was named vice president of field operations for Europe,
Middle East and Africa in September. Minarro is responsible for all Informix
activities in these regions, including direct sales, indirect sales, customer
support and marketing. Minarro joined Informix in February 1995 as vice
president of Southern Europe.
DON HUNT was named vice president, North America end user sales, in
September. He was the vice president and general manager for Informix
responsible for the business in the Eastern United States and Canada, and on
a national basis responsible for business with the Federal Government.
<PAGE>
STEVE MAYSONAVE was named vice president of global partners in September. He
works closely with industry marketing and field operations on a global basis
to minimize channel conflict while maximizing and leveraging business
opportunities with partners in our target markets. He joined Informix in
February 1996 as part of the Illustra acquisition.
JOE NIEMANN was named vice president of distribution channels in October. He
has held a variety of senior management positions at Informix for eight years.
Remaining in their current roles are other key members of the senior
management team, including Mike Saranga, senior vice president of product
development, and Mike Stonebraker, chief technology officer.
FUTURE STRATEGY
Said Finocchio: "Informix has a strengthened management team, a refocused
market and product strategy, and industry-leading technology. Our highly
dedicated and knowledgeable people are focused on the competitive
opportunities ahead, and we are strategically focused on areas where we can
offer our customers true competitive advantage."
Informix says its continued emphasis on its four core enterprise solution
areas--high-performance OLTP, data warehousing, distributed enterprise and
Web/content management-- will drive its planned growth through six targeted
vertical markets--health care, media, manufacturing, retail,
telecommunications, and financial services. Informix will continue to pursue
profitable partnerships with leading solution providers.
Finocchio outlined Informix's strategic goals:
To continue Informix's focus as a database company targeting specific markets
To continue to penetrate and grow the company's installed base
To grow new license revenue with new customers
To maintain product and technology leadership
To build a strong NT channel
To leverage the right partnerships
To retain and attract the right talent
To change the company culture, re-emphasizing personal accountability and
long-term business relationships.
ABOUT INFORMIX
Informix Software, Inc., the world's database technology leader, provides
innovative database products that enable the world's major corporations to
attain competitive advantage. Informix, based in Menlo Park, California, is
widely recognized as the technology leader for corporate computing
environments ranging from small workgroups to very large parallel processing
applications. Informix's database servers, application development tools,
superior customer service, and strong partnerships
<PAGE>
enable the company to be at the forefront of major information technology
solution areas including data warehousing, OLTP, Web/content management and
distributed enterprise solutions. For more information, contact the sales
office nearest you or visit our Web site at http://www.informix.com.
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD-LOOKING
STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR ANTICIPATED
RESULTS, INCLUDING THOSE RISKS SET FORTH UNDER THE CAPTION "BUSINESS RISKS"
IN "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS" OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1996, AS AMENDED, AND IN THE COMPANY'S SUBSEQUENT QUARTERLY
REPORTS ON FORM 10-Q AND OTHER REPORTS FILED FROM TIME TO TIME WITH THE
SECURITIES AND EXCHANGE COMMISSION. SUCH RISKS INCLUDE UNCERTAINTIES
ASSOCIATED WITH THE RESTATEMENT OF THE COMPANY'S FINANCIAL STATEMENTS,
PENDING STOCKHOLDER CLASS ACTION LITIGATION, THE COMPANY'S POTENTIAL NEED FOR
ADDITIONAL FINANCING, THE COMPANY'S ABILITY TO ATTRACT AND RETAIN QUALIFIED
PERSONNEL, COMPETITION, AND TECHNOLOGICAL CHANGE. READERS SHOULD CAREFULLY
REVIEW THE RISK FACTORS DESCRIBED IN SUCH REPORTS AND OTHER FILINGS MADE BY
THE COMPANY FROM TIME TO TIME WITH THE SECURITIES AND EXCHANGE COMMISSION.
CONTACTS:
Financial Analysts:
Earl Aiken
650-926-6841
Editorial:
Robert Manetta
650-926-6978
Industry Analysts:
Jill Lindstedt
650-926-1940
