EXHIBIT 99.2
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (this "Agreement") is made and entered
into as of this 27th day of February, 1998 by and between NEWPORT ACQUISITION
COMPANY NO. 2, LLC., a Delaware limited liability company ("Newport") and
CENTURA SOFTWARE CORPORATION, a California corporation (the "Company").
RECITALS:
A. THE HOLDER. Newport is a limited liability company duly organized
and in good standing under the laws of the State of Delaware with its principal
executive offices located in Newport Beach, California.
B. THE COMPANY. The Company is an existing corporation, formed under
the laws of the State of California, with its principal executive offices
located in Redwood Shores, California.
C. CORPORATE APPROVALS. Each of the parties to this Agreement has
obtained all necessary corporate and member approvals for the execution and
delivery of this Agreement.
D. ARM'S-LENGTH RELATIONSHIP. The parties to this Agreement intend to
conduct their relationships hereunder on an arm's-length basis.
E. PRIVATE PLACEMENT EXCHANGE. The Company intends to complete the
issuance to Newport of 11,415,094 shares of the Company's Common Stock, $.01 par
value per share (the "Common Shares"), in exchange for all of Newport's right,
title and interest in that certain Floating Rate Convertible Subordinated Note
Due 1998 of the Company, including all principal indebtedness and accrued
interest indebtedness thereunder (the "Note") pursuant to an exchange offering
exempt from the registration requirements of the Securities Act of 1933, as
amended (the "Private Placement"). Newport acquired the Note from Computer
Associates International, Inc. ("CA") pursuant to that certain Note Purchase and
Sale Agreement dated the date hereof by and among Newport, CA and the Company.
F. INVESTOR RIGHTS. In conjunction with the Private Placement, the
Holder and the Company desire to enter into this Agreement to provide certain
registration and other investor rights as provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and for other good and valuable consideration had
and received, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. DEFINITIONS. As used herein, the following terms shall have the
following respective meanings:
-1-
"Affiliate" shall mean any Person that directly or indirectly controls,
is controlled by, or is under common control with such Person. A Person shall be
deemed to control another Person if such Person owns five percent (5%) or more
of any equity interest in the "controlled" Person or possesses, directly or
indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of stock or
partnership or member interests, by contract, agreement or understanding
(whether oral or written), or otherwise.
"Common Shares" shall have the meaning set forth in Recital E of this
Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Holders" shall mean Newport, each of the Persons listed on Schedule 1
attached hereto and made a part hereof, any Affiliate of Newport or of any of
the Persons listed on Schedule 1 (other than the Company) and any transferee or
assignee under Section 10 hereof, and any combination of one or more such
Holders.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Other Holders" shall mean Persons (other than Holders) who are holders
of record of equity securities of the Company who subsequent to the date hereof
acquire more than five percent (5%) of the outstanding shares of Common Stock
pursuant to a transaction with the Company and to whom the Company grants
registration rights pursuant to a written agreement in connection with such
transaction.
"Person" shall mean any individual, corporation, association,
partnership, group (as defined in section 13(d)(3) of the Exchange Act), limited
liability company, joint venture, business trust or unincorporated organization,
or a government or any agency or political subdivision thereof.
"Registrable Shares" shall mean the Common Shares and any shares of
capital stock issued or issuable with respect to the Common Shares as a result
of any stock split, stock dividend, recapitalization, exchange or similar event
or otherwise. As to any particular Registrable Share, such Registrable Share
shall cease to be a Registrable Share when (w) it shall have been sold,
transferred or otherwise disposed of or exchanged pursuant to a registration
statement under the Securities Act; (x) it may be distributed to the public,
together with all other Registrable Shares held by the Holder of such share,
during any ninety (90) day period pursuant to and in compliance with all
applicable requirements of Rule 144 (or any successor provision) under the
Securities Act; (y) it shall have been sold or transferred in a private
transaction to a Person other than a Designated Transferee (as defined in
Section 10 below); or (z) it shall have been sold, transferred or otherwise
disposed of in violation of this Agreement.
"Registration Expenses" shall have the meaning set forth in Section
7.(a) hereof.
-2-
"SEC" shall mean the Securities and Exchange Commission or any
successor agency thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
2. INCIDENTAL REGISTRATIONS.
(a) RIGHT TO INCLUDE REGISTRABLE SHARES. On or after June 1, 1998 (the
"Rights Commencement Date"), each time the Company shall determine to file a
registration statement under the Securities Act in connection with a proposed
offer and sale for cash of any equity securities (other than an offering of debt
securities which are convertible into equity securities) by the Company, the
Company will give prompt written notice of its determination to each Holder and
of such Holder's rights under this Section 2, at least twenty (20) days prior to
the anticipated filing date of such registration statement. Upon the written
request of each Holder made within fifteen (15) days after the receipt of any
such notice from the Company (which request shall specify the Registrable Shares
intended to be disposed of by such Holder), the Company will use its best
efforts to effect the registration under the Securities Act of all Registrable
Shares which the Company has been so requested to register by the Holders
thereof, to the extent required to permit the disposition of the Registrable
Shares so to be registered; PROVIDED, HOWEVER, that (i) if, at any time after
giving written notice of its intention to register any securities and prior to
the effective date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to proceed with the
proposed registration of the securities to be sold by it, the Company may, at
its election, give written notice of such determination to each Holder of
Registrable Shares and thereupon shall be relieved of its obligation to register
any Registrable Shares in connection with such registration (but not from its
obligation to pay the Registration Expenses in connection therewith), and (ii)
if such registration involves an underwritten offering, all Holders of
Registrable Shares requesting to be included in the Company's registration must
sell their Registrable Shares to the underwriters on the same terms and
conditions as apply to the Company, with such differences, including any with
respect to indemnification and liability insurance, as may be customary or
appropriate in combined primary and secondary offerings. If a registration
requested pursuant to this Section 2(a) involves an underwritten public
offering, any Holder of Registrable Shares requesting to be included in such
registration may elect, in writing at least five (5) days prior to the effective
date of the registration statement filed in connection with such registration,
not to register such securities in connection with such registration. No
registration effected under this Section 2 shall relieve the Company of its
obligations to effect the registration under Section 4 hereof.
(b) PRIORITY IN INCIDENTAL REGISTRATION. If a registration pursuant to
this Section 2 involves an underwritten offering and the managing underwriter(s)
in good faith advise(s) the Company in writing that, in its opinion, the number
of securities which the Company, the Holders and any other Persons intend to
include in such registration exceeds the largest number of securities which can
be sold in such offering without having an adverse effect on such offering
(including the price at which such securities can be sold), then the Company
will include in such registration (i) first, the securities the Company proposes
to sell for its
-3-
own account; (ii) second, to the extent that the number of securities which the
Company proposes to sell is less than the number of securities which the Company
has been advised can be sold in such offering without having the adverse effect
referred to above, such number of Registrable Shares which the Holders have
requested to be included in such registration pursuant to Section 2(a) hereof;
PROVIDED, HOWEVER, that the aggregate value of the Registrable Securities to be
included in such registration by the Holders may not be so reduced to less than
twenty-five percent (25%) of the total value of all securities included in such
registration; and (iii) third, to the extent that the number of securities which
are to be included in such registration pursuant to clauses (i) and (ii) is, in
the aggregate, less than the number of securities which the Company has been
advised can be sold in such offering without having the adverse effect referred
to above, such number of other securities requested to be included in the
offering for the account of any Other Holders which, in the opinion of such
managing underwriter(s), can be sold without having the adverse effect referred
to above. The number of Registrable Shares included in such registration
statement shall be allocated pro rata among the Holders based on the number of
Registrable Shares held by each Holder.
3. HOLDBACK AGREEMENTS.
(a) If any registration of Registrable Shares shall be in connection
with a Qualified Public Offering (defined below), the Holders shall not effect
any public sale or distribution (except in connection with such public
offering), of any Registrable Securities (other than as part of such
underwritten public offering) during the one hundred twenty (120) day period (or
such lesser period as the managing underwriter(s) may permit) beginning on the
effective date of such registration, if, and to the extent, the managing
underwriter(s) of any such offering determine(s) such action is necessary or
desirable to effect such offering. A "Qualified Public Offering" is defined
herein as a firm commitment, underwritten public offering registered under the
Securities Act (other than a registration relating solely to a transaction under
Rule 145 under the Securities Act or to an employee benefit plan of the
Company), at a price per share of at least $2.00 and with aggregate proceeds to
the Company and/or any selling shareholders (before deduction for underwriters'
discounts and expenses) of at least $7,500,000.
(b) If any registration of Registrable Shares shall be in connection
with a Qualified Public Offering, the Company shall not effect any public sale
or distribution (except in connection with such public offering) of any of its
equity securities or of any security convertible into or exchangeable or
exercisable for any of its equity securities (in each case other than as part of
such underwritten public offering) during the one hundred twenty (120) day
period (or such lesser period as the managing underwriter(s) may permit)
beginning on the effective date of such registration, and the Company shall use
its best efforts to cause each member of the management of the Company who holds
any equity security and each other holder of five percent (5%) or more of the
outstanding shares of any equity security, or of any security convertible into
or exchangeable or exercisable for any equity security, of the Company purchased
from the Company (at any time other than in a public offering) to so agree.
-4-
(c) In the event of any discretionary waiver or termination of the
restrictions set forth in the agreements described in Section 3(b) above by the
Company or the representatives of the underwriters, the number of shares subject
to such waiver shall be allocated among all persons subject to such agreements
and to all Holders pro rata based on the number of securities held.
4. REGISTRATION.
(a) MANDATORY REGISTRATION. The Company shall prepare and, no later
than 305 days after the date of issuance of the Common Shares (the "Filing
Deadline"), file with the SEC a registration statement on Form S-3 covering the
resale of all of the Registrable Shares, or such lesser amount of Registrable
Shares as the Holders shall in their discretion notify the Company to register.
In the event that Form S-3 is unavailable for such a registration, the Company
shall use such other form as is available for such a registration, subject to
the further provisions of this Section 4(a). The Company shall use its best
efforts to have the registration statement declared effective no later than 365
days after the date of issuance of the Common Shares and in any event shall have
the registration declared effective no later than 380 days after the date of
issuance of the Common Shares. In the event that Form S-3 is not available for
the registration of Registrable Shares hereunder, the Company shall (i) register
the sale of the Registrable Shares on another appropriate form and (ii)
undertake to register the Registrable Shares on Form S-3 as soon as such form is
available, provided that the Company shall maintain the effectiveness of the
registration statement then in effect until such time as a registration
statement on Form S-3 covering the Registrable Shares has been declared
effective by the SEC. No securities other than Registrable Shares will be
included in any registration statement filed pursuant to this Section 4(a)
subject to Section 4(e) below. The Company shall keep a registration statement
described in this Section 4(a) hereof effective pursuant to Rule 415 promulgated
under the Securities Act at all times until the earlier of (i) the date as of
which each of the Holders may sell all of the Registrable Shares held by such
Holder without restriction pursuant to Rule 144(k) promulgated under the
Securities Act or (ii) the date on which the Holders shall have sold all the
Registrable Shares to the public (the"Registration Period"). The registration
statement (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a 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 in which they were
made, not misleading.
(b) BLACK-OUT PERIODS. If (i) in the good faith judgment of the Board
of Directors of the Company, the disclosure which would be required in
connection with the mandatory registration under Section 4(a) above would be
seriously detrimental to the Company and the Board of Directors of the Company
concludes by a duly adopted resolution that, as a result, it is essential at
such time to defer the filing of such registration statement or to suspend the
sale of securities thereunder, and (ii) the Company shall furnish to such
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company it would be
seriously detrimental to the Company for such registration statement to be filed
or for securities to be sold thereunder in the near future and that it is,
therefore, essential to defer the filing of such registration statement or
-5-
to suspend the sale of securities thereunder, then the Company shall have the
right to defer such filing or suspend the sale of securities thereunder for the
period during which such disclosure would be seriously detrimental (a "Black-out
Period"); PROVIDED, HOWEVER, that (A) the Company shall not have the right to
impose any Black-out Periods for ninety (90) days following the effectiveness of
the registration statement filed pursuant to Section 4(a) above, (B) no
Black-out Period shall extend longer than forty-five (45) consecutive calendar
days, (C) no Black-out Period may be imposed within forty-five (45) days
following the completion of a prior Black-out Period, and (D) the Company shall
not impose Black-out Periods which, in the aggregate, exceed ninety (90) days in
any twelve (12) month period. The Holders acknowledge and agree that the Company
may impose a legend setting forth the provisions of this Section 4(b) on the
Registrable Shares.
(c) SUBSEQUENT REGISTRATIONS. In the event fewer than all of the
Registrable Shares are covered by the registration effectuated pursuant to
Section 4(a) above, then, commencing six (6) months following the effective date
of such registration, upon the written request of the Holders of at least fifty
percent (50%) of the Registrable Shares not so covered that the Company effect
the registration of all or part of such Registrable Shares not so covered, and
specifying the amount and the intended method of disposition thereof, the
Company will promptly give notice of such requested registration to all other
Holders of Registrable Shares not so covered and, as expeditiously as possible,
use its best efforts to effect the registration under the Securities Act of: (i)
the Registrable Shares which the Company has been so requested to register by
such requesting Holders; and (ii) all other Registrable Shares which the Company
has been requested to register by any other Holder thereof by written request
received by the Company within thirty (30) days after the giving of such written
notice by the Company; PROVIDED, HOWEVER, that the Company shall not be required
to effect more than one (1) registration pursuant to this Section 4(c);
PROVIDED, FURTHER, that the Company shall not be obligated to file a
registration statement relating to a registration request under this Section
4(c), (x) if the registration request is delivered after delivery of a notice by
the Company of an intended registration and prior to the effective date of the
registration statement referred to in such notice, provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statements to become effective, or (y) within a period of ninety
(90) days after the effective date of any other registration statement of the
Company pursuant to which the Holders included Registrable Shares.
(d) REGISTRATION STATEMENT FORM. If any registration pursuant to this
Section 4 shall be in connection with an underwritten public offering, and if
the managing underwriter(s) shall advise the Company in writing that, in its
opinion, the use of a form of registration statement other than on Form S-3 is
of material importance to the success of such proposed offering, then such
registration shall be effected on such other form.
(e) PRIORITY IN REQUESTED REGISTRATIONS. If any registration pursuant
to this Section 4 involves an underwritten offering and the managing
underwriter(s) in good faith advise(s) the Company in writing that, in its
opinion, the number of securities requested to be included in such registration
(including securities of the Company which are not Registrable Shares) exceeds
the largest number of securities which can be sold in such offering without
having an adverse effect on such offering (including the price at which such
securities can
-6-
be sold), then the Company will include in such registration (i) first, one
hundred percent (100%) of the Registrable Shares requested to be registered
pursuant to Section 4(a) hereof (provided that if the number of Registrable
Shares requested to be registered pursuant to Section 4(a) hereof exceeds the
number which the Company has been advised can be sold in such offering without
having the adverse effect referred to above, the number of such Registrable
Shares to be included in such registration by the Holders shall be allocated pro
rata among such Holders on the basis of the relative number of Registrable
Shares each such Holder has requested to be included in such registration); (ii)
second, to the extent that the number of Registrable Shares requested to be
registered pursuant to Section 4(a) hereof is less than the number of securities
which the Company has been advised can be sold in such offering without having
the adverse effect referred to above, such number of shares of equity securities
the Company requests to be included in such registration, and (iii) third, to
the extent that the number of Registrable Shares requested to be included in
such registration pursuant to Section 4(a) hereof and the securities which the
Company proposes to sell for its own account are, in the aggregate, less than
the number of equity securities which the Company has been advised can be sold
in such offering without having the adverse effect referred to above, such
number of other securities proposed to be sold by any Other Holder which, in the
opinion of such managing underwriter(s), can be sold without having the adverse
effect referred to above (provided that if the number of such securities of such
Other Holder requested to be registered exceeds the number which the Company has
been advised can be sold in such offering without having the adverse effect
referred to above, the number of such securities to be included in such
registration pursuant to this Section 4(d) shall be allocated pro rata among all
such Other Holders on the basis of the relative number of securities each such
Other Holder has requested to be included in such registration).
(f) ADDITIONAL RIGHTS. If the Company at any time grants to any other
holders of equity securities of the Company any rights to request the Company to
effect the registration of any such shares of equity securities on terms more
favorable to such holders than the terms set forth in this Section 4 and in
Section 5 hereof, the terms of this Section 4 and of Section 5 hereof shall be
deemed amended or supplemented to the extent necessary to provide the Holders
such more favorable rights and benefits. In no event shall the Company grant to
any person any rights to request the Company to effect the registration of any
shares of equity securities of the Company on terms which would have the effect
of delaying the effectiveness of or reducing the number of shares covered by any
registration statements effectuated pursuant to Section 2 and this Section 4.
5. REGISTRATION PROCEDURES.
(a) Whenever a Holder has requested that any Registrable Shares be
registered pursuant to Section 2(a) or 4(c) or at such time as the Company is
obligated to file and maintain the effectiveness of a registration statement
with the SEC pursuant to Section 4(a), the Company shall use its best efforts to
effect the registration of the Registrable Shares in accordance with the
intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:
-7-
(i) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the Registration Period and to comply with the
provisions of the Securities Act, the Exchange Act, and the rules and
regulations promulgated thereunder with respect to the disposition of
all the securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the
Holders thereof set forth in such registration statement; PROVIDED,
HOWEVER, that (A) before filing a registration statement (including an
initial filing) or prospectus, or any amendments or supplements
thereto, the Company will furnish to one counsel (the "Holder Counsel")
selected by the Holders of a majority of the Registrable Shares covered
by such registration statement copies of all documents proposed to be
filed at least seven days prior to their filing with the SEC, which
documents will be subject to the review and comment of such counsel,
and (B) the Company will notify each Holder of Registrable Shares
covered by such registration statement of any stop order issued or
threatened by the SEC, any other order suspending the use of any
preliminary prospectus or of the suspension of the qualification of the
registration statement for offering or sale in any jurisdiction, and
take all reasonable actions required to prevent the entry of such stop
order, other order or suspension or to remove it if entered;
(ii) the Company shall furnish to the Holder Counsel, without
charge, any correspondence from the SEC or the staff of the SEC to the
Company or its representatives relating to any registration statement;
(iii) furnish without charge to each Holder and each
underwriter, if applicable, of Registrable Shares covered by such
registration statement such number of copies of the registration
statement and of each amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus
included in such registration statement (including each preliminary
prospectus and summary prospectus), in conformity with the requirements
of the Securities Act, and such other documents as each Holder of
Registrable Shares covered by such registration statement may
reasonably request in order to facilitate the disposition of the
Registrable Shares by such Holder;
(iv) use its best efforts to register or qualify such
Registrable Shares covered by such registration statement under the
state securities or blue sky laws of such jurisdictions as each Holder
of Registrable Shares covered by such registration statement and, if
applicable, each underwriter, may reasonably request, and do any and
all other acts and things which may be reasonably necessary to
consummate the disposition in such jurisdictions of the Registrable
Shares owned by such Holder, except that the Company shall not for any
purpose be required to qualify generally to do business as a foreign
corporation in any jurisdiction where, but for the requirements of this
-8-
clause (iv), it would not be obligated to be so qualified (the Company
shall promptly notify Holder Counsel and each Holder of the receipt by
the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Shares for sale
under the securities or "blue sky" laws of any jurisdiction in the
United States or its receipt of actual notice of the initiation or
threatening of any proceeding for such purpose);
(v) use its best efforts to cause such Registrable Shares
covered by such registration statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the Holders thereof to consummate the disposition
of such Registrable Shares;
(vi) if at any time an event shall have occurred as the result
of which any prospectus relating to any Registrable Shares as then in
effect would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, immediately give written
notice thereof to each Holder and the managing underwriter or
underwriters, if any, of such Registrable Shares and prepare and
furnish to each such Holder a reasonable number of copies of an amended
or supplemental prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such Registrable Shares, such prospectus
shall not include 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;
(vii) either (A) list any portion of such Registrable Shares
not already listed on any securities exchange on which similar
securities of the Company are then listed, and enter into customary
agreements including a listing application and indemnification
agreement in customary form, or (B) maintain the inclusion for
quotation on The Nasdaq SmallCap Market for the Registrable Shares and,
at such time as the Company is able to satisfy the listing requirements
on the Nasdaq National Market System and the Company's management
reasonably believes the Company will be able to continue to comply with
such requirements, use its best efforts to secure designation and
quotation of all the Registrable Shares on the Nasdaq National Market
System, and, without limiting the generality of the foregoing, use its
best efforts to arrange for at least two market makers to register with
the NASD as such with respect to the Registrable Shares, and provide a
transfer agent and registrar for such Registrable Shares covered by
such registration statement not later than the effective date of such
registration statement;
(viii) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other actions
as each Holder of Registrable Shares being sold or the underwriter or
-9-
underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Shares, including
customary indemnification and opinions;
(ix) use its best efforts to obtain a "cold comfort" letter or
letters from the Company's independent public accountants in customary
form and covering matters of the type customarily covered by "cold
comfort" letters as the Holders of the Registrable Shares being sold or
the underwriters retained by such Holders shall reasonably request,
provided that this provision shall only apply with respect to an
underwritten registration;
(x) make available for inspection by representatives of any
Holder, by any underwriter participating in any disposition to be
effected pursuant to such registration statement and by any attorney,
accountant or other agent retained by such Holders or any such
underwriter, all financial and other records pertinent corporate
documents and properties of the Company and its subsidiaries' officers,
directors and employees to supply all information and respond to all
inquiries reasonably requested by such Holders or any such
representative, underwriter, attorney, accountant or agent in
connection with such registration statement;
(xi) promptly prior to the filing of any document which is to
be incorporated by reference into the registration statement or the
prospectus (after initial filing of the registration statement), if
such document is not available to the public electronically via XXXXX,
provide copies of such document to counsel to the Holders and to the
managing underwriter(s), if any, and make the Company's representatives
available for discussion of such document;
(xii) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
security holders, as soon as reasonably practicable after the effective
date of the registration statement, an earning statement which shall
satisfy the provisions of section 11(a) of the Securities Act and the
rules and regulations promulgated thereunder;
(xiii) not later than the effective date of the applicable
registration statement, use its best efforts to provide a CUSIP number
for any portion of such Registrable Shares not already included in a
CUSIP number for similar securities of the Company, and provide the
applicable transfer agents with printed certificates for the
Registrable Shares which are in a form eligible for deposit with the
Depository Trust Company;
(xiv) notify counsel for the Holders of Registrable Shares
included in such registration statement and the managing underwriter or
underwriters, if any, immediately and confirm the notice in writing,
(A) when the registration
-10-
statement, or any post-effective amendment to the registration
statement, shall have become effective, or any supplement or amendment
to the prospectus shall have been filed, (B) of the receipt of any
comments from the SEC and (C) of any request of the SEC to amend the
registration statement or amend or supplement the prospectus or for
additional information;
(xv) in the event the Company and the Holders who hold at
least two-thirds of the Registrable Shares mutually agree to an
underwritten offering for one or more offerings of Registrable Shares
under Section 4(a) hereof, enter into and perform its obligations under
an underwriting agreement, in usual and customary form, including, but
not limited to, customary indemnification and contribution obligations,
with the underwriters (without limiting the generality of the
foregoing, if the underwriters for marketing or other reasons request
the inclusion in the registration statement of information which is not
required under the Securities Act to be included in a registration
statement on the applicable form for such registration, the Company
nonetheless will provide such information as may be reasonably
requested for inclusion by the underwriters in such registration
statement);
(xvi) use its best efforts to prevent the issuance of any stop
order or other suspension of effectiveness of a registration statement,
or the suspension of the qualification of any of the Registrable Shares
for sale in any jurisdiction and, if such an order or suspension is
used, use its best efforts to obtain the withdrawal of such order or
suspension at the earliest possible time;
(xvii) cooperate with each of the Holders and, to the extent
applicable, any managing underwriter or underwriters, to facilitate the
timely preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Shares offered and
sold pursuant to a registration statement and enable such certificates
to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or, if there is no
managing underwriter or underwriters, each of the Holders may
reasonably request and registered in such names as the managing
underwriter or underwriters, if any, or each of the Holders may
request;
(xviii) cooperate with each seller of Registrable Shares and
each underwriter, if any, participating in the disposition of such
Registrable Shares and their respective counsel in connection with any
filings required to be made with the NASD; and
(xix) take all other reasonable actions necessary or
reasonably requested by an Holder to expedite and facilitate
disposition by such Holder of Registrable Shares pursuant to a
registration statement.
-11-
(b) Each Holder of Registrable Shares hereby agrees that, upon receipt
of any notice from the Company of the happening of any event of the type
described in Section 5(a)(vi) hereof, such Holder shall forthwith discontinue
disposition of such Registrable Shares covered by such registration statement or
related prospectus until such Holder's receipt of the copies of the supplemental
or amended prospectus contemplated by Section 5(a)(vi) hereof, and, if so
directed by the Company, such Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Shares at the
time of receipt of such notice.
(c) Each Holder hereby agrees to provide the Company, upon receipt of
its request, with such information about such Holder to enable the Company to
comply with the requirements of the Securities Act and to execute such
certificates as the Company may reasonably request in connection with such
information and otherwise to satisfy any requirements of law.
6. UNDERWRITTEN REGISTRATIONS. Notwithstanding anything in this
Agreement to the contrary, the Company in its sole discretion shall determine
whether a registration on Form S-3 pursuant to Section 4 hereof shall be by
means of an underwritten offering. In the case of any underwritten offerings
pursuant to Section 2 and Section 4 hereof, the managing underwriter(s) that
will administer the offering shall be selected by the Company; PROVIDED,
HOWEVER, that such managing underwriter(s) shall be reasonably satisfactory to
the Holders of a majority of the Registrable Shares to be registered.
7. EXPENSES.
(a) Subject to Section 7(b), the Company shall pay all fees, costs and
expenses of all registrations pursuant to Section 2 and Section 4 hereof,
including all SEC and stock exchange or NASD registration and filing fees and
expenses, reasonable fees and expenses of any "qualified independent
underwriter" and its counsel as may be required by the rules of the NASD, fees
and expenses of compliance with securities or blue sky laws (including
reasonable fees and disbursements of counsel for the underwriters, if any, in
connection with blue sky qualifications of the Registrable Shares), rating
agency fees, printing expenses (including expenses of printing certificates for
Registrable Shares and prospectuses), messenger, telephone and delivery
expenses, the fees and expenses incurred in connection with the listing of the
securities to be registered on each securities exchange or national or other
market system on which similar securities issued by the Company are then listed,
fees and disbursements of counsel for the Company and all independent certified
public accountants (including the expenses of any annual audit, special audit
and "cold comfort" letters required by or incident to such performance and
compliance), the fees and disbursements of the underwriters customarily paid by
issuers or sellers of securities (including expenses relating to "road shows"
and other marketing activities), the reasonable fees and expenses of special
experts required to be retained by the Company in connection with such
registration, the reasonable fees and expenses of other Persons required to be
retained by the Company and the reasonable fees and expenses, not to exceed
$10,000 per registration statement, of one counsel for the Holders
(collectively, "Registration Expenses");
-12-
(b) The Holders shall pay the following: (i) any underwriting or
selling discounts or commissions or transfer taxes, if any, attributable to the
sale of Registrable Shares by the Holders pursuant to this Agreement, and (ii)
except as set forth in subsection 7(a) above, all fees, costs and expenses of
counsel to the Holders pursuant to this Agreement in connection with any
registration pursuant to this Agreement.
8. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any registration of
any securities of the Company under the Securities Act pursuant to Section 2 or
4 hereof, the Company will, and it hereby does, indemnify and hold harmless, to
the fullest extent permitted by law, each of the Holders of any Registrable
Shares covered by such registration statement, each Affiliate of such Holder
(other than the Company) and their respective partners, members, Affiliates,
directors and officers, each other Person who participates as an underwriter in
the offering or sale of such securities and each other Person, if any, who
controls such Holder or any such underwriter within the meaning of the
Securities Act (collectively, the "Indemnified Parties"), against any and all
losses, claims, damages or liabilities, joint or several, and expenses
(including any amounts paid in any settlement effected with the Company's
consent, which consent shall not be unreasonably withheld or delayed) to which
any Indemnified Party may become subject under the Securities Act, state
securities or blue sky laws, common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof,
whether or not such Indemnified Party is a party thereto) or expenses arise out
of or are based upon any of the following (each, a "Violation") (i) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary, final or summary prospectus contained therein,
or any amendment or supplement thereof, (ii) any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading or (iii) any violation by the Company of
any federal, state or common law rule or regulation applicable to the Company
and relating to action required of or inaction by the Company in connection with
any such registration, and the Company will promptly reimburse such Indemnified
Party for any legal or any other expenses reasonably incurred by it in
connection with investigating or defending any such loss, claim, liability,
action or proceeding; PROVIDED, HOWEVER, that the Company shall not be liable to
any Indemnified Party in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement or amendment or
supplement thereof or in any such preliminary, final or summary prospectus in
reliance upon and in conformity with written information with respect to such
Holder furnished to the Company by such Holder specifically for use in the
preparation thereof. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Holder or any
Indemnified Party and shall survive the transfer of such securities by such
Holder.
(b) INDEMNIFICATION BY THE HOLDERS AND THE UNDERWRITERS. In the event
of any registration of any securities of the Company under the Securities Act
pursuant to Section 2
-13-
or 4 hereof, each Holder of Registerable Shares included in the Securities as to
which such registration is being effected will, and it hereby does, indemnify
and hold harmless, to the fullest extent permitted by law, the Company, each
Affiliate of the Company, each of its directors, each of its officers who has
signed the registration statement, each Person, if any, who controls the Company
within the meaning of the Securities Act, any underwriter, any other Holder
selling securities under such registration statement and any controlling person
of any such underwriter or other Holder (collectively, the "Company Indemnified
Parties"), against any and all losses, claims, damages or liabilities, joint or
several, and expenses (including amounts paid in any settlement effected with
the Holder's prior written consent, which consent shall not be unreasonably
withheld or delayed) to which any Company Indemnified Party may become subject
under the Securities Act, state securities or blue sky laws, common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof, whether or not such Company Indemnified Party is
a party thereto) or expenses arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs due
to the Company's reliance upon and in conformity with written information
furnished by such Holder to the Company under an instrument duly executed by
such Holder and stated to be specifically for use in connection with such
registration statement, preliminary, final or summary prospectus or amendment or
supplement thereto; and each such Holder will promptly reimburse such Company
Indemnified Party for any legal or any other expenses reasonably incurred by it
in connection with investigation or defending any such loss, claim, liability,
action or proceeding if it is judicially determined that there was such a
Violation; PROVIDED, HOWEVER, that each such Holder shall be severally, and not
jointly, liable under any such indemnification; PROVIDED, FURTHER, that no such
Holder shall be liable in any event for any indemnity claims in excess of the
amount of the net proceeds received by such Holder from the sale of its
Registrable Shares. The Company may further require, in connection with any
underwritten registration effectuated in accordance with Section 2 or 4 hereof,
that the Company shall have received an undertaking reasonably satisfactory to
it from the underwriter to indemnify and hold harmless (in the same manner and
to the same extent as set forth in this Section 8(b)) the Company with respect
to any statement or alleged statement in or omission or alleged omission from
such registration statement, any preliminary, final or summary prospectus
contained therein, or any amendment or supplement, if such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information such underwriter furnished to the Company
specifically for use in the preparation of such registration statement,
preliminary, final or summary prospectus or amendment or supplement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any of the Holders, or any of their
respective Affiliates (other than the Company), directors, officers or
controlling Persons, and shall survive the transfer of such securities by such
Holder.
(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified
party hereunder of written notice of the commencement of any action or
proceeding with respect to which a claim for indemnification may be made
pursuant to this Section 8, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to the
latter of the commencement of such action; PROVIDED,
-14-
HOWEVER, that the failure of the indemnified party to give notice as provided
herein shall not relieve the indemnifying party of its obligations under this
Section 8, except to the extent that the indemnifying party is actually
materially prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, the indemnifying party will be entitled to
participate in and to assume the defense thereof, with counsel satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party for any legal or
other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation; PROVIDED, HOWEVER,
that the indemnified party shall have the right, at the sole cost and expense of
the indemnifying party, to employ counsel to represent the indemnified party and
its respective controlling persons, directors, officers, employees or agents who
may be subject to liability arising out of any claim in respect of which
indemnity may be sought by the indemnified party against such indemnifying party
under this Section 8 if (i) the employment of such counsel shall have been
authorized in writing by such indemnifying party in connection with the defense
of such action, (ii) the indemnifying party shall not have promptly employed
counsel reasonably satisfactory to the indemnified party to assume the defense
of such action or counsel, or (iii) any indemnified party shall have reasonably
concluded that there may be defenses available to such indemnified party or its
respective controlling persons, directors, officers, employees or agents which
are in conflict with or in addition to those available to an indemnifying party;
PROVIDED, FURTHER, that the indemnifying party shall not be obligated to pay for
more than the expenses of one firm of separate counsel for the indemnified
party. No indemnifying party will consent to entry of any judgment or enter into
any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such indemnified party of a release from
all liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to any indemnified party under Section 8(a) or 8(b) hereof
or is insufficient to hold it harmless in respect of any loss, claim, damage or
liability, or any action in respect of any loss, claim, damage or liability, or
any action in respect thereof referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the indemnified party and indemnifying party or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) but also the relative fault of the indemnified party
and indemnifying party with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. Notwithstanding any
other provision of this Section 8(d), no Holder of Registrable Shares shall be
required to contribute an amount greater than the dollar amount of the net
proceeds received by such Holder with respect to the sale of any such
Registrable Shares. 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 was not guilty of such fraudulent
misrepresentation.
-15-
(e) OTHER INDEMNIFICATION. Indemnification similar to that specified in
the preceding subdivisions of this Section 8 (with appropriate modifications but
subject to the same provisos set forth in Section 8(b) above) shall be given by
the Company and each Holder of Registrable Shares with respect to any required
registration or other qualification of securities under any federal or state law
or regulation other than the Securities Act.
(f) NON-EXCLUSIVITY. The obligations of the parties under this Section
8 shall be in addition to any liability which any party may otherwise have to
any other party.
9. RULE 144. With a view to making available to the Holders the
benefits of Rule 144 promulgated under the Securities Act or any other similar
rule or regulation of the SEC that may at any time permit the Holders to sell
securities of the Company to the public without registration ("Rule 144"), 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 SEC in a timely manner all reports and other
documents required of the Company under the Exchange Act, so long as
the Company remains subject to such requirements and the filing of such
reports and other documents is required for the applicable provisions
of Rule 144; and
(c) furnish to each Holder so long as such Holder owns
Registrable Shares, promptly upon request, (i) a written statement by
the company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange 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 to permit the Holders to
sell such securities pursuant to Rule 144 without registration.
10. ASSIGNABILITY. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and the Holders and their respective
successors and permitted assigns. Except as provided herein, no party may assign
any of its rights or delegate any of its duties under this Agreement without the
express consent of the other parties hereto. In addition, and whether or not any
express assignment shall have been made, the provisions of this Agreement which
are for the benefit of the Holders shall also be for the benefit of and
enforceable by any subsequent Holder, subject to the provisions contained
herein. Any Holder may assign any of its rights or delegate any of its duties
under this Agreement, in whole or in part, without any prior consent of the
Company only to a Person (a "Designated Transferee") who is (a) an Affiliate,
member or partner of a Holder, (b) a family member of or a trust for the benefit
of an individual Holder, or (c) a transferee of at least 250,000 Registrable
Shares (whether through purchase, share exchange, bequest or otherwise) and who
agrees to be bound by the terms of this Agreement. Any purported assignment in
violation of this Section 10 shall be void.
-16-
11. RIGHT OF FIRST REFUSAL. The Company hereby grants to each Holder
the right of first refusal to purchase a pro rata share of New Securities (as
defined in this Section 12) which the Company may, from time to time, propose to
sell and issue. A Holder's pro rata share, for purposes of this right of first
refusal, is the ratio of the number of shares of Common Stock owned by such
Holder immediately prior to the issuance of New Securities, to the total number
of shares of Common Stock outstanding immediately prior to the issuance of New
Securities. Each Holder shall have a right of over-allotment such that if any
Holder fails to exercise its right hereunder to purchase its pro rata share of
New Securities, the Company shall provide each Holder with prompt written notice
of this event and the other Holders may purchase the non-purchasing Holder's
portion on a pro rata basis within ten (10) days from the date of such notice.
This right of first refusal shall be subject to the following provisions:
(a) "New Securities" shall mean any capital stock (including Common
Stock and/or Preferred Stock) of the Company whether now authorized or not, and
rights, options or warrants to purchase such capital stock, and securities of
any type whatsoever that are, or may become, convertible into capital stock;
provided that the term "New Securities" does not include (i) securities issued
upon conversion of the warrants issued to CA on the date hereof; (ii) securities
issued to investors and securities issuable upon exercise of the warrants issued
to such investors in a private placement of the Company's Common Stock in an
aggregate offering amount of up to $2.5 million that will close as of the date
hereof, (iii) securities issued pursuant to the acquisition of another business
entity or business segment of any such entity by the Company by merger, purchase
of substantially all the assets or other reorganization whereby the Company will
own more than fifty percent (50%) of the voting power of such business entity or
business segment of any such entity; (iv) any borrowings, direct or indirect,
from financial institutions or other persons by the Company, whether or not
presently authorized, including any type of loan or payment evidenced by any
type of debt instrument, provided such borrowings do not have any equity
features including warrants, options or other rights to purchase capital stock
and are not convertible into capital stock of the Company; (v) securities issued
to employees, consultants, officers or directors of the Company pursuant to any
stock option, stock purchase or stock bonus plan, agreement or arrangement
existing on the date hereof or hereafter approved by the unanimous vote of the
Board of Directors or Compensation Committee; (vi) securities issued in
connection with obtaining bona fide lease financing, whether issued to a lessor
or guarantor; (vii) securities issued in a public offering of Common Stock of
the Company pursuant to a firm-commitment underwritten registration under the
Securities Act with an aggregate offering price to the public of at least
$10,000,000 and in which no single purchaser or group of affiliated purchasers
acquire in such offering greater than ten percent (10%) of the shares sold in
the offering or three (3%) of then outstanding equity securities of the Company;
and (viii) securities issued in connection with any stock split, stock dividend
or recapitalization of the Company.
(b) In the event the Company proposes to undertake an issuance of New
Securities, it shall give each Holder written notice of its intention,
describing the type of New Securities, and their price and the general terms
upon which the Company proposes to issue the same. Each Holder shall have
fifteen (15) days after any such notice is mailed or
-17-
delivered to agree to purchase up to such Holder's pro rata share of such New
Securities for the price and upon the terms specified in the notice by giving
written notice to the Company and stating therein the quantity of New Securities
to be purchased.
(c) In the event the Holders fail to exercise fully the right of first
refusal within such fifteen (15) day period and after the expiration of the
ten-day (10) period for the exercise of the over-allotment provisions of this
Section 12, the Company shall have sixty (60) days thereafter to sell or enter
into an agreement (pursuant to which the sale of New Securities covered thereby
shall be closed, if at all, within ninety (90) days to sell the New Securities
respecting which the Holders' right of first refusal option set forth in this
Section 12 was not exercised, at a price and upon terms no more favorable to the
purchasers thereof than specified in the Company's notice to Holders pursuant to
Section 12(b). In the event the Company has not sold within such 90-day period
or entered into an agreement to sell the New Securities in accordance with the
foregoing within sixty (60) days from the date of such agreement, the Company
shall not thereafter issue or sell any New Securities, without first again
offering such securities to the Holders in the manner provided in Section 12(b)
above.
(d) The right of first refusal granted under this Agreement shall
expire on the earlier to occur of (i) two (2) years from the date of this
Agreement or (ii) the date the Holders as a group hold less than 15% of the
issued and outstanding capital stock of the Company.
12. NOTICES. Any and all notices, designations, consents, offers,
acceptances or any other communications shall be given in writing by either (a)
personal delivery to and receipted for by the addressee or by (b) telecopy or
registered or certified mail which shall be addressed, in the case of the
Company, to: Centura Software Corporation, 000 Xxxxxx Xxxxx, Xxxxxxx Xxxxxx,
Xxxxxxxxxx 00000, attention: Chief Financial Officer; in the case of Holders, to
the address or addresses thereof appearing on the books of the Company or of the
transfer agent and registrar for its Common Stock. All such notices and
communications shall be deemed to have been duly given and effective: when
delivered by hand, if personally delivered; two (2) business days after being
deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.
13. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with the
rights granted to the Holders in this Agreement.
14. SPECIFIC PERFORMANCE. The Company acknowledges that the rights
granted to the Holders in this Agreement are of a special, unique and
extraordinary character, and that any breach of this Agreement by the Company
could not be compensated for by damages. Accordingly, if the Company breaches
its obligations under this Agreement, the Holders shall be entitled, in addition
to any other remedies that they may have, to enforcement of this Agreement by a
decree of specific performance requiring the Company to fulfill its obligations
under this Agreement.
-18-
15. SEVERABILITY. If any provision of this Agreement or any portion
thereof is finally determined by a court of competent jurisdiction to be
unlawful or unenforceable, such provision or portion thereof shall in no way
affect any other provision of this Agreement, the application of any such
provision and any other circumstances, and any portion of such invalidated
provision that is not invalidated by such a determination shall remain in full
force and effect.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which,
together, shall constitute one and the same instrument.
17. DEFAULTS. A default by any party to this Agreement in such party's
compliance with any of the conditions or covenants hereof or performance of any
of the obligations of such party hereunder shall not constitute a default by any
other party.
18. AMENDMENTS, WAIVERS. This Agreement may not be amended, modified or
supplemented and no waivers of or consents to or departures from the provisions
hereof may be given unless consented to in writing by the Company and the
holders of two-thirds of the Registrable Shares; PROVIDED, HOWEVER, that no such
amendment, supplement, modification or waiver shall deprive any Holder of any
rights under Section 2 or 4 hereof without the consent of such Holder.
19. CONSTRUCTION. The captions contained in this Agreement are for
reference purposes only and shall not constitute a part of this Agreement.
Unless the context requires otherwise, the use of the masculine shall include
the feminine, and the use of the singular shall include the plural. The word
"including" shall mean "including, but not limited to." The language used in
this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent and no rules of strict construction will be applied
against any party.
20. ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Agreement, or where any provision hereof is validly asserted
as a defense, the successful party shall be entitled to recover reasonable
attorneys' fees in addition to any other available remedy.
21. ADDITIONAL ACTIONS. Each party (including transferees and assigns
thereof) shall do and perform, or cause to be done and performed, all such
further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
22. ENTIRE AGREEMENT. This Agreement, together with the Note Purchase
Agreement and Exchange Agreement, contains the entire agreement among the
parties hereto with respect to the transaction contemplated herein and
understandings among the parties relating to the subject matter hereof. Any and
all previous agreements and understandings between
-19-
or among the parties hereto regarding the subject matter hereof are, whether
written or oral, superseded by this Agreement.
23. GOVERNING LAW. This Agreement is made pursuant to and shall be
construed in accordance with the laws of the State of California without regard
to that state's conflicts of laws principles.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective authorized officers as of the date first written
above.
NEWPORT ACQUISITION COMPANY NO. 2
LLC
By Crossroads Capital Partners, LLC, as managing
Member
By /S/XXXXX X. XXXXXXX
----------------------------------------------
Name XXXXX X. XXXXXXX
--------------------------------------------
Title PRINCIPAL
-------------------------------------------
CENTURA SOFTWARE CORPORATION
By /S/XXXX XXXXXX
---------------------------------------------
Name XXXX XXXXXX
-------------------------------------------
Title CHIEF FINANCIAL OFFICER
------------------------------------------
-20-
