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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)
June 18, 1999 (May 26, 1999)
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 May 26, 1999, Informix Corporation entered into a memorandum of
understanding regarding the settlement of pending private securities and related
litigation against Informix. Copies of the Memorandum of Understanding and
Informix's May 26, 1999 press release regarding the settlement agreement are
attached as Exhibits to this Current Report on Form 8-K.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Exhibits
99.1 Memorandum of Understanding, dated May 26, 1999,
related to the settlement of pending private
securities and related litigation against Informix
99.2 Press Release dated May 26, 1999, related to the
Memorandum of Understanding related to the
settlement of pending private securities and related
litigation against Informix
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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 June 18, 1999.
INFORMIX CORPORATION
By: /s/ Howard A. Bain
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Howard A. Bain III,
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
EXHIBIT NO.
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99.1 Memorandum of Understanding, dated May 26, 1999,
related to the settlement of pending private securities
and related litigation against Informix
99.2 Press Release dated May 26, 1999, related to the
Memorandum of Understanding related to the settlement
of pending private securities and related litigation
against Informix
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Exhibit 99.1
MEMORANDUM OF UNDERSTANDING
IN THE INFORMIX SECURITIES LITIGATION
This memorandum of understanding ("MOU") dated as of May 26, 1999
contains all the essential terms of a settlement ("the Settlement") agreed to
in principle between defendants Informix Corporation ("Informix"), Phillip E.
White, Howard H. Graham, David Kenneth Coulter, Ronald Alvarez, Edwin C.
Winder, Karen Blasing, Albert F. Knorp, Jr., James L. Koch, Thomas A.
McDonnell, David H. Stanley, Cyril J. Yansouni, Ernst & Young LLP, Ernst &
Young United Kingdom and Ernst & Young International, Ltd., and all
defendants previously named in any complaint in any of the Actions
(collectively "Defendants"); and plaintiffs on behalf of themselves and
members of the Class in IN RE INFORMIX CORP. SECURITIES LITIGATION, Master
File No. C-97-1289-CRB, pending in the United States District Court, Northern
District of California; DAYANI V. INFORMIX, ET AL., Case No. 402262, pending
in the Superior Court of San Mateo County, and plaintiffs derivatively on
behalf of Informix Corporation in IN RE INFORMIX DERIVATIVE LITIGATION,
Master File No. 401818 pending in the Superior Court of San Mateo County and
all consolidated and related derivative cases pending in the Superior Court
of San Mateo County ("Derivative Actions") (collectively referred to as the
"Actions"). Plaintiffs in all Actions are collectively referred to as
"Plaintiffs". For the purposes of this agreement only, the undersigned
counsel represent that they have the power and authority to bind their
respective parties.
1. The Settlement Amount to be paid on behalf of all Defendants to
Plaintiffs in settlement of the Actions is $142 million consisting of (a) $51
million in cash and (b) Informix common stock and/or cash (at Informix's
election) with a guaranteed value of at least $91 million, as further
described below:
a. The cash amount of $51 million shall be paid into an
interest bearing escrow account maintained by Milberg Weiss Bershad Hynes &
Lerach LLP on or before June 26, 1999. Of
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the cash amount, Ernst & Young LLP shall pay $34 million and Informix shall
pay $17 million. If the $51 million is not paid into an interest bearing
escrow account by June 26, 1999, interest will accrue at 10 percent per annum
from June 26, 1999, to be paid by the delinquent defendants, until that
portion of the settlement amount is deposited into escrow.
b. The remainder of the Settlement Amount shall consist of at
least Nine (9) Million shares of freely tradeable Informix common stock
(which are registered or exempt from registration under the Securities Act of
1933) to be provided by Informix which shall have a guaranteed value of at
least $10.11 per share, as set forth in Exhibit A attached hereto.
c. It is contemplated that there will be at least two, and up
to four, dates of distribution for both cash and common stock: (i) the date
of the initial distribution of attorneys' fees and costs awarded by the Court
to Plaintiffs' counsel; (ii) the date of the second distribution, if any, of
any additional settlement contribution to Plaintiffs' counsel made in
accordance with Exhibit A; (iii) the date of the initial distribution to
class members in accordance with the claims administration process set forth
and agreed to in the Stipulation of Settlement; and (iv) the date of the
second distribution, if any, of any additional settlement contribution to
class members made in accordance with Exhibit A.
2. Plaintiffs agree to dismiss with prejudice all claims in the
Actions upon final approval of the Settlement in both state and federal court.
3. The parties agree that they will cooperate to expeditiously prepare
and execute a definitive Stipulation of Settlement and jointly seek
preliminary and final court approval of the Settlement as soon as possible.
This agreement is not subject to the execution of a formal Stipulation of
Settlement; however, this agreement shall be superseded by any court-approved
Stipulation of Settlement.
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4. The Stipulation of Settlement (including the judgment to be entered
pursuant to that Stipulation) will include a release of all claims in a form
acceptable to all parties and a release of all counsel in the Actions and
members of their respective firms. The release shall include mutual releases
of all claims as among all parties, including Ernst & Young affiliates and
Informix related individuals identified in Exhibit B hereto, the form of
which will be approved by Lead Counsel for Lead Plaintiffs, Ernst & Young and
Informix. Neither any Defendant named in any complaint (including any
previous complaints) in any of the Actions, nor any of the other persons or
entities listed in Exhibit B released pursuant to the Settlement shall be
entitled to make a claim on the Settlement Fund as a class member.
5. All costs of class notice and administration of the Settlement
shall be paid out of the escrow account.
6. This is not a claims-made settlement and, if all conditions under
the Stipulation of Settlement are satisfied and the settlement receives final
approval, no settlement consideration will be returned to Defendants.
7. Attorneys' fees and costs awarded to Plaintiffs' counsel shall,
with court approval, be paid to Plaintiffs' counsel immediately upon award,
notwithstanding the existence of any timely filed objections thereto, or
potential for appeal therefrom, or collateral attack on the Settlement,
subject to the obligation of Plaintiffs' counsel to make appropriate refunds
or repayments to the settlement fund plus accrued interest at the rate paid
on the escrow account by the financial institution holding it, if and when,
as a result of any appeal and/or further proceedings on remand, or successful
collateral attack, the fee or cost award is reduced or reversed.
8. If for any reason the settlement does not become final as defined
by the Stipulation of Settlement, or if the Stipulation of Settlement is
canceled or terminated, any and all contributions
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to the Settlement Fund, including accrued interest, less costs of notice and
administration, shall be returned to defendants.
9. The Settlement is conditioned upon final approval of the Settlement
in both state and federal court.
10. The Defendants have denied, and continue to deny, that they have
committed any violation of federal or state securities laws or other laws,
and are entering into this MOU solely because the proposed Settlement would
eliminate the burden and expense of further litigation. The provisions
contained in this MOU shall not be deemed or offered or received in evidence
as a presumption, a concession, or an admission of any fault, liability, or
wrongdoing, and, except as required to enforce this MOU or the Settlement,
they shall not be offered or received in evidence or otherwise used by any
person in these or any other actions or proceedings, whether civil, criminal,
or administrative. The Stipulation of Settlement shall contain identical
disclaimers of liability.
11. Defendants agree that the litigation was filed in good faith and
in accordance with Rule 11, Federal Rules of Civil Procedure ("FRCP"), and is
being settled voluntarily after consultation with competent legal counsel.
The final judgment will contain a statement that the parties agree that,
during the course of the litigation, the parties and their respective counsel
at all times complied with the requirements of FRCP Rule 11. Informix and
Ernst & Young each may issue a press release announcing that the parties have
executed this MOU but may not contradict the foregoing language.
12. Informix and Ernst & Young shall each have the option to terminate
the Settlement in the event that certain putative class members or putative
class members who purchased or otherwise acquired more than a certain number
of shares of Informix Corporation common stock during the Class Period choose
to exclude themselves from the class. Plaintiffs, Informix and Ernst & Young
agree to negotiate the terms of this option on or before June 26, 1999. In
the event that
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Plaintiffs, Informix and Ernst & Young are unable to reach agreement on the
terms of this option on or before June 26, 1999, then any of those parties
shall have the right to terminate the Settlement.
AGREED TO ON MAY 26, 1999:
MILBERG WEISS BERSHAD HYNES
& LERACH LLP
KAPLAN KILSHEIMER & FOX LLP
BARRACK RODOS & BACINE
By: /s/ authorized signatory
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Lead Counsel for Lead Plaintiffs and
the Class
COTCHETT, PITRE & SIMON
By: /s/ authorized signatory
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Lead Derivative Counsel
WILSON, SONSINI, GOODRICH, & ROSATI
By: /s/ authorized signatory
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Attorneys for Defendant Informix
Corporation and Authorized
Signatory for Defendants Phillip
E. White, Howard H. Graham, David
Kenneth Coulter, Ronald Alvarez,
Edwin C. Winder, Karen Blasing,
David H. Stanley, Albert Knorp,
James Koch, Thomas McDonnell, and
Cyril Yansouni
HELLER, EHRMAN, WHITE & McAULIFFE
By: /s/ authorized signatory
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Attorneys for Ernst & Young LLP
and Authorized Signatory for
Defendants Ernst & Young
International, Ltd. and Ernst &
Young United Kingdom
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EXHIBIT A
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A. DEFINITIONS.
1. "Settlement Fund" means:
a. The cash and interest (if any) set forth in paragraph 1
of the MOU, and
b. Nine Million (9,000,000) shares of Informix Common Stock
(the "Settlement Stock") with a guaranteed value of at least $91 million to be
distributed to class members and Plaintiffs' counsel as described in Section
B, below.
2. "Stock Price Guarantee Period" means:
a. With respect to the distribution of Settlement Stock to
Plaintiffs' counsel, the longer of (i) six months from the date of the initial
distribution of Settlement Stock to Plaintiffs' counsel as referred to in
paragraph 1(c)(i) of the MOU or (ii) one year from the date of the MOU.
b. With respect to the distribution of Settlement Stock to
class members, the longer of (i) six months from the date of the initial
distribution of Settlement Stock to class members as referred to in paragraph
1(c)(iii) of the MOU or (ii) one year from the date of final approval by the
Court of the Settlement.
B. STOCK PRICE GUARANTEE. For purposes of any initial distribution
referred to in paragraphs 1(c)(i) and 1(c)(iii) of the MOU:
1. If, for any ten (10) consecutive trading days subsequent to an
initial distribution of Settlement Stock during the applicable Stock Price
Guarantee Period, the closing price of Informix Common Stock (as reflected on
the NASDAQ National Market or, if Informix Common
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Stock ceases to be traded on the NASDAQ, on such other market as Informix
Common Stock is traded at that time) averages at least $10.11 per share,
Informix's Stock Price Guarantee will have been automatically satisfied for
that distribution.
2. If the closing price of Informix common stock fails to average
at least $10.11 per share for any ten (10) consecutive trading days subsequent
to an initial distribution of Settlement Stock during the applicable Stock
Price Guarantee Period, then Informix shall pay to the recipients of that
distribution (I.E., class members or Plaintiffs' counsel as appropriate),
within 30 days following the close of the applicable Stock Price Guarantee
Period, the difference between $10.11 per share and the larger of (a) the
average closing price of Informix common stock for the twenty (20) consecutive
trading days immediately following the distribution date or (b) the average
closing price for the final twenty (20) trading days of the applicable Stock
Price Guarantee Period (the "Stock Price Guarantee Differential").
3. Informix, in its sole discretion, may elect to pay the
applicable Stock Price Guarantee Differential to the recipients of that
distribution in additional cash, additional common stock, or a combination of
additional cash and additional common stock.
C. STOCK SPLITS, STOCK DIVIDENDS AND REVERSE STOCK SPLITS. The share
price and the total number of shares to be contributed to the Settlement Fund
will be adjusted to reflect any changes due to stock splits, stock dividends,
reverse stock splits, or any conversions of stock resulting from a merger or
acquisition that occur from the date of the MOU until the time of the
distribution(s).
D. COSTS. All costs, including those of Informix's transfer agent,
incurred in issuing and distributing any Settlement Stock to the recipients
shall be borne by Informix.
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E. RIGHTS WITH RESPECT TO THE SETTLEMENT STOCK. In order that the
Settlement may be distributed to and be fully and freely traded by the
recipients without any restrictions, ten (10) days before the hearing date for
final approval of the Settlement, Informix shall provide Plaintiffs' Co-Lead
Counsel with the written opinion of outside counsel substantially to the
effect: (a) that the Settlement Stock will be issued in compliance with the
registration requirements of Section 5 of the Securities Act of 1933 or will
be issued in reliance upon an exemption therefrom; (b) that the Settlement
Stock is fully tradable without any restriction after distribution; and (c)
that such shares are otherwise fully paid, non-assessable and free from all
liens and encumbrances.
F. DISTRIBUTION. On the appropriate date, the Claims Administrator shall
inform Informix's counsel that claims processing has been completed and that
all or a portion of the Settlement Stock shall be distributed to the Class.
The Claims Administrator also shall provide Informix's transfer agent with a
list (in the form required by the transfer agent) identifying each Class
Member who is entitled to receive stock and the number of shares of Settlement
Stock to be issued to each such person. Informix shall direct its stock
transfer agent to issue and distribute the Settlement Stock remaining in the
Settlement Fund within five (5) business days of receipt of the list of the
persons and in the amounts shown on said list.
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EXHIBIT B
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Other Persons and Entities To Be Released
Robert Finocchio
Gary Lloyd
Jean-Yves Dexmier
Matthew O'Rourke
Michael Stonebraker
Myron ("Mike") Saranga
Steven Sommer
Stephen Hill
Ira Dorf
All member firms of Ernst & Young International, Ltd.
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EXHIBIT 99.2
COMPANY PRESS RELEASE
INFORMIX ANNOUNCES SETTLEMENT OF
CLASS-ACTION LAWSUITS
MENLO PARK, Calif.--(BUSINESS WIRE)--May 26, 1999--Informix-Registered
Trademark- Corporation Nasdaq:IFMX - NEWS), today announced that A memorandum
of understanding has been signed with respect to the settlement of pending
private securities and related litigation against Informix, certain of its
current and former officers and directors, and Ernst & Young LLP, Informix'
former independent accountants, subject to court approval.
With the exception of two very small cases, the settlement will resolve all
litigation arising out of the restatement of certain of Informix' financial
statements that was publicly announced in November, 1997.
If the settlement is approved, Informix will pay approximately $3.2 million in
cash. An additional amount of approximately $13.8 million of insurance proceeds
will be contributed on behalf of certain of the Company's current and former
officers and directors. Finally, the Company will contribute a minimum of 9
million shares of Informix common stock worth $91 million. Ernst & Young will
pay $34 million in cash. The total amount of the settlement will be $142
million. Given that the settlement is funded largely through insurance and
stock, the Company believes that the settlement terms are very favorable.
The Company's decision to settle was driven solely by the Company's desire to
remove the uncertainty, expense and distraction of continuing litigation. "We
are pleased that we have reached this settlement. It is a well-structured
solution that allows Informix to move forward unhindered. We can now devote all
of our effort to building the new Informix," said Bob Finocchio, Informix
chairman and chief executive officer.
About Informix
Informix Corporation, based in Menlo Park, provides innovative database products
that assist the world's major corporations to attain competitive advantage.
Informix is widely recognized as the technology leader for corporate computing
environments ranging from small workgroups to very large parallel processing
applications. Informix' database server, application development tools, superior
customer service, and strong partnerships enable the company to be at the
forefront of major information technology solution areas including data
warehousing, high performance OLTP, and Web/e-commerce. For more information,
contact the sales office nearest you or visit the company's Web site at
www.informix.com.
