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:
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"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 0
hereof.
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"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 0, 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 0 shall
relieve the Company of its obligations to effect the registration under
Section 0 hereof.
(b) PRIORITY IN INCIDENTAL REGISTRATION. If a registration pursuant to
this Section 0 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 own
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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.
(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
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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 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
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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 0 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 0 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 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
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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:
(i) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as
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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 clause (iv), it would not be obligated to be so qualified (the
Company shall promptly notify Holder
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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
underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Shares, including
customary indemnification and opinions;
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(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 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;
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(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.
(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
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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 0 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");
(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.
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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 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
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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, 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,
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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.
(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.
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(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.
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
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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 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
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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.
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.
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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 or among the parties
hereto regarding the subject matter hereof are, whether written or oral,
superseded by this Agreement.
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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 CFO
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