-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VVZL8VJd4RwuuKUeZjisrKJaSAlizECdIe0J03cn4NtzZxTnlYYUg+MHDQ96OeUU RW3AA45jDNTjQmDMn0JJ6A== 0000895021-99-000004.txt : 19990505 0000895021-99-000004.hdr.sgml : 19990505 ACCESSION NUMBER: 0000895021-99-000004 CONFORMED SUBMISSION TYPE: S-4 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19990504 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURA SOFTWARE CORP CENTRAL INDEX KEY: 0000895021 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 942874178 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-4 SEC ACT: SEC FILE NUMBER: 333-77643 FILM NUMBER: 99609413 BUSINESS ADDRESS: STREET 1: 975 ISLAND DR CITY: REDWOOD SHORES STATE: CA ZIP: 94065 BUSINESS PHONE: 6505963400 MAIL ADDRESS: STREET 1: 1060 MARSH ROAD CITY: MENLO PARK STATE: CA ZIP: 94025 S-4 1 S-4 DATED MAY 3, 1999 As filed with the Securities and Exchange Commission on May 3, 1999 SECURITIES ACT FILE NO. 333- ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- FORM S-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------- CENTURA SOFTWARE CORPORATION (Exact name of registrant as specified in its charter) --------------- Delaware 7372 94-2874178 (State or other jurisdiction of (Primary standard (I.R.S. employer incorporation or organization) industrial identification classification number) code number) 975 Island Drive, Redwood Shores, California 94065 (650) 596-3400 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) _____________ SCOTT R. BROOMFIELD Centura Software Corporation 975 Island Drive Redwood Shores, California 94065 (650) 596-3400 (Name, address, including zip code, and telephone number, including area code, of agent for service) _____________ Copies to: RICHARD S. GREY, ESQ. Orrick, Herrington & Sutcliffe LLP Old Federal Reserve Bank Building 400 Sansome Street San Francisco, California 94111 _____________ Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and certain other conditions under the applicable merger agreement are met or waived. If the only securities registered on this Form are being offered in connection with the formation of a holding company and there is compliance with general Instruction G, check the following box. [ ] CALCULATION OF REGISTRATION FEE
============================================================================== Proposed Proposed maximum maximum Title of each class offering aggregate Amount of of securities to be Amount to be price per offering registration registered registered(1) share(2) price(3) fee - -------------------- -------------- ------------- ------------ ------------ Common Stock 5,800,000 $564,000 $157 ==============================================================================
(1) Based upon the maximum number of shares of Common Stock of Centura Software Corporation that may be issued pursuant to the applicable merger agreement. (2) Not applicable. (3) There is no established trading market for the securities of Raima Corporation which are to be converted into shares of Common Stock of the Registrant pursuant to the applicable merger agreement. In accordance with Rule 457(f)(2) under the Securities Act of 1933, as amended, the proposed Maximum Offering Price has been calculated on the basis of the book value of the Raima securities as of March 31, 1999. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. [RAIMA LOGO] MERGER PROPOSED - YOUR VOTE IS IMPORTANT Dear Stockholder: The boards of directors of Raima Corporation and Centura Software Corporation have agreed to a merger of their companies because they believe the resulting combination will create an opportunity to achieve significant operating synergies and better exploit the individual companies' complementary products in the embedded database market. The merger agreement provides that Raima will become a wholly owned subsidiary of Centura. The combined company will be headquartered in Redwood Shores, California. If the merger is completed, the shares of Raima common stock issued and outstanding at the time of the merger will be converted into (1) a base number of Centura common shares, minus professional fees over a certain dollar amount and a possible negative adjustment based on Raima's balance sheet and (2) a possible cash payment from a positive adjustment based also on Raima's balance sheet. See the section in this prospectus entitled "The Merger - Structure of the Merger and Conversion of Raima Common Stock" for a discussion of how the conversion of the Raima shares will be calculated. The shares of Centura stock to be issued to Raima stockholders will represent approximately 16.4% of the outstanding stock of Centura after the merger, with the remainder being held by Centura's existing stockholders. The affirmative vote of the holders of shares representing at least two-thirds of all outstanding shares of Raima stock is required to approve the merger. Raima has scheduled a special meeting of its stockholders to vote on the merger. We encourage you to exercise your voting rights. However, several significant stockholders of Raima, representing approximately 82% of the outstanding common stock, have agreed to vote their shares in favor of the merger. Therefore, regardless of other votes, the approval of the merger agreement is assured. THE BOARD OF DIRECTORS OF RAIMA HAS UNANIMOUSLY DETERMINED THAT THE MERGER IS IN THE BEST INTERESTS OF ITS STOCKHOLDERS AND RECOMMENDS THAT ITS STOCKHOLDERS VOTE IN FAVOR OF APPROVING THE MERGER AGREEMENT. All shares represented by each properly executed, unrevoked proxy in the form accompanying this prospectus which is received by Raima in time for its special meeting will be voted in the manner specified therein. If the manner of voting is not specified in an executed proxy received by Raima, the proxy will be voted for approval of the merger. An abstention from voting will have the effect of a vote against the merger because it is one less vote in favor. The date, time and place of the meeting is as follows: ___________, 1999 5:30 p.m. Raima Corporation 4800 Columbia Center 701 Fifth Avenue Seattle, WA 98104 This prospectus provides you with detailed information about the proposed merger. We encourage you to read this entire document carefully. /s/ Stephen P. Smith Chief Executive Officer THE MERGER INVOLVES RISKS TO RAIMA STOCKHOLDERS. SEE "RISK FACTORS," BEGINNING ON PAGE 13. Neither the Securities and Exchange Commission nor any state securities regulators have approved the Centura common stock to be issued under this prospectus or determined whether this prospectus is accurate or adequate. Any representation to the contrary is a criminal offense. This prospectus is dated _____________, 1999 and is first being mailed to stockholders on or about ______________, 1999 RAIMA CORPORATION 4800 COLUMBIA CENTER 701 FIFTH AVENUE SEATTLE, WA 98104 ________________________ NOTICE OF SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON _______________, 1999 ________________________ To Our Stockholders: A special meeting of stockholders of Raima Corporation will be held at the offices of Raima located at 4800 Columbia Center, 701 Fifth Avenue, Seattle WA 98104, on _______________, 1999, commencing at 5:30 p.m., local time, for the following purposes: 1. To consider and vote on a proposal to adopt the Agreement and Plan of Reorganization dated as of March 15, 1999 among Centura Software Corporation, a Delaware corporation, Centura Subsidiary Corporation, a Delaware corporation, and Raima. Adoption of the merger agreement and its implementation would effect the following actions, among other matters: (a) a wholly owned subsidiary of Centura will be merged into Raima, resulting in Raima becoming a wholly owned subsidiary of Centura, (b) the shares of Raima common stock issued and outstanding at the time of the merger will be converted into (1) a base number of Centura common shares, minus professional fees over a certain dollar amount and a possible negative adjustment based on Raima's balance sheet and (2) a possible cash payment from a positive adjustment based also on Raima's balance sheet. See the section entitled "The Merger-Structure of the Merger and Conversion of Raima Common Stock" on page 33 for a discussion of how the conversion of the Raima shares will be calculated. 2. To transact such other business as may properly come before the meeting. All Raima stockholders are cordially invited to attend the meeting in person. However, to assure your representation at the meeting, you are urged to mark, sign, date and return the enclosed proxy card as promptly as possible in the postage prepaid envelope enclosed for that purpose. Any Raima stockholder attending the meeting may vote in person even if he or she returned a proxy. Holders of outstanding shares of Raima common stock have the right to dissent from the merger and, subject to certain conditions, receive payment for their shares. These rights are described in greater detail in the accompanying prospectus under the caption "The Merger-Rights of Dissenting Stockholders," and are set forth in Sections 23B.13.010 through 23B.13.310 of the Washington Business Corporation Act, a copy of which is attached as Annex B to this prospectus. Stockholders of record as of the close of business on April 21, 1999 will be entitled to vote at the meeting and any adjournment or postponement of it. The merger and other important matters are explained in this prospectus, which you are urged to read carefully. A copy of the merger agreement is attached as Annex A. By order of the board of directors, Stephen P. Smith Chief Executive Officer Seattle, Washington ____________, 1999 WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE FILL IN, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. TABLE OF CONTENTS QUESTIONS AND ANSWERS ABOUT THE CENTURA/RAIMA MERGER iv WHO CAN HELP ANSWER YOUR QUESTIONS vii SUMMARY 1 THE COMPANIES 1 RAIMA STOCKHOLDERS' MEETING 2 THE MERGER AND RELATED TRANSACTIONS 2 SUMMARY HISTORICAL FINANCIAL DATA 7 Selected Historical Financial Data of Centura 7 Selected Historical Financial Data of Raima 8 Summary Unaudited Pro Forma Condensed Combined Consolidated Financial Data 9 UNAUDITED COMPARATIVE PER SHARE INFORMATION 10 MARKET PRICE AND DIVIDEND INFORMATION 11 Recent Closing Prices 11 Dividend Information 12 RISK FACTORS 13 The value of the consideration that Raima stockholders receive will depend in part on the price of Centura's common stock. 13 The price of Centura's common stock has been volatile. 13 Centura may have difficulty restructuring its operations and integrating Raima into its business. 14 The impact of Centura's recent strategic changes is uncertain. 14 Centura's new management team might not be successful in executing its objectives. 14 Centura's future performance is substantially dependent on the performance of its executive officers and key product development, technical, sales, marketing and management personnel. 15 Centura has experienced recent fluctuations in quarterly and annual results. 15 Centura and Raima may not succeed in effectively developing new products and keeping pace with rapid technological changes. 17 Year 2000 problems may have an adverse effect on Centura's and Raima's operations and ability to offer products and services without interruption. 19 After the merger the combined company will face intense competition. 19 Any termination or significant disruption of Centura's or Raima's relationships with any of their resellers or distributors, or the failure by such parties to renew agreements with Centura or Raima, could materially and adversely affect the combined company's business, operating results and financial condition. 21 The combined company's continued success in international markets is uncertain. 22 The success and ability of the combined company to compete is dependent in part upon its proprietary technology. 22 SPECIAL MEETING OF RAIMA'S STOCKHOLDERS 24 Record Date 24 Voting at the Raima Special Meeting 24 Proxies 24 THE MERGER 26 Background Of The Merger 26 Joint Reasons For The Merger 28 Raima's Reasons for the Merger; Board Recommendation 29 Conflicts of Interests of Certain Persons in the Merger 32 Completion and Effectiveness of the Merger 33 Structure of the Merger and Conversion of Raima Common Stock 33 Escrow Arrangement 34 Exchange of Raima Stock Certificates for Centura Stock Certificates and Cash 35 Material United States Federal Income Tax Consequences of the Merger 36 Accounting Treatment of the Merger 38 Regulatory Filings and Approvals Required to Complete the Merger 38 NASDAQ SmallCap Market Listing 39 Rights of Dissenting Stockholders 39 The Merger Agreement 40 Employment Agreements 47 Raima Employee Stock Options 48 Operations after the Merger 48 UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL INFORMATION 50 INFORMATION REGARDING RAIMA 55 Overview 55 Management's Discussion and Analysis 59 Ownership of Raima Capital Stock 65 CERTAIN RELATIONSHIPS AND RELATED TRANSCTIONS 66 PRO FORMA OWNERSHIP OF CENTURA COMMON STOCK 67 COMPARISON OF RIGHTS OF HOLDERS OF RAIMA COMMON STOCK AND CENTURA COMMON STOCK 68 Classes of Common Stock of Raima and Centura 68 Preferred Stock 68 Cumulative Voting 68 Number of Directors 68 Removal of Directors 69 Filling of Vacancies on the Board of Directors 69 Limits on Stockholder Action by Written Consent 69 Ability to Call Special Meetings 70 Advance Notice Provisions for Stockholder Nominations and Proposals 70 Amendment of Certificate or Articles of Incorporation 71 Amendment of Bylaws 72 State Anti-Takeover Statutes 72 Transactions With Officers or Directors. 72 Limitation of Liability of Directors 73 Indemnification of Directors and Officers 74 Certain Anti-Takeover Provisions 75 LEGAL OPINION 77 EXPERTS 77 WHERE YOU CAN FIND MORE INFORMATION 77 STATEMENTS REGARDING FORWARD-LOOKING INFORMATION 78 CONSOLIDATED FINANCIAL STATEMENTS OF RAIMA F-1 ANNEX A: AGREEMENT AND PLAN OF REORGANIZATION DATED MARCH 15, 1999 A-1 ANNEX B: WASHINGTON DISSENTERS' RIGHTS STATUTE B-1 QUESTIONS AND ANSWERS ABOUT THE CENTURA/RAIMA MERGER Q. Why are the two companies proposing to merge? A. Our companies are proposing to merge because we believe the resulting combination will create an opportunity to achieve significant operating synergies and better utilize the individual companies' complementary products in the embedded database market. Q. What will I receive in the merger? A. Raima stockholders will receive (1) a total of approximately 5,800,000 shares of Centura common stock in exchange for all the shares of Raima common stock outstanding, minus a number of shares based on the amount of professional fees incurred by Raima in the transaction over a certain dollar and a possible negative adjustment based on Raima's balance sheet, and (2) a possible cash payment from a positive adjustment based also on Raima's balance sheet. The merger agreement contains a condition that the average trading price of Centura's common stock for 10 trading days prior to the merger be at least $1.00. However, this condition may be waived by both parties. The merger agreement also provides a cap of $17,400,000 on the value of the Centura shares the Raima stockholders may receive in the merger. Centura will not issue fractional shares. Raima stockholders who would otherwise be entitled to receive a fractional share will instead receive cash based on the market value of the fractional share of Centura stock. In order to calculate the ratio of Centura shares to which you are entitled for your Raima shares, divide the base number of Centura shares the Raima stockholders would receive (minus adjustments) by the number of outstanding shares of Raima stock at the time of merger. Example A: If the number of Centura shares the Raima stockholders would receive equals 4,761,600 (after adjustments) and the outstanding shares of Raima stock equals 6,200,000, then the exchange ratio would be 4,761,600 ------------- = 0.768 6,200,000 Therefore you will receive 0.768 of a share of Centura common stock for each share of Raima stock you own. If you currently own 100 shares of Raima common stock, then after the merger you will be entitled to receive 76 shares of Centura common stock and a check for the market value of the 0.8 fractional share. The ratio of Centura shares to which you are entitled for your Raima shares will vary depending on the adjustment to the base number of Centura shares that Raima stockholders will receive in the aggregate (based on the amount of professional fees and Raima's balance sheet) and the number of outstanding shares of Raima at the time of the merger. The dollar value of the shares you receive in the exchange will also vary depending on the price of Centura shares at the completion of the merger. As stated in Example A, if you own 100 shares of Raima common stock, you would be entitled to receive 76 shares of Centura common stock and a check for the residual fractional amount. If the trading price of Centura common stock at the time of the merger is $2 per share, your 76 Centura shares would be worth $152. If the trading price of Centura's common stock at the time of the merger instead is $1 per share, you would still be entitled to receive 76 Centura shares, but they would then be worth $76. However, as stated above, the average trading price of Centura's common stock for 10 trading days prior to the merger must be at least $1.00, unless the parties waive this condition. In addition, if the average trading price of Centura for 10 trading days prior to the merger is greater than $3.00 per share, then the maximum total value of the Centura shares the Raima stockholders would receive would be $17,400,000, and the base number of Centura shares Raima stockholders would receive would be calculated as follows: $17,400,000 ------------- the average Centura trading price Example B: If the average Centura trading price is $3.01 per share, then Raima stockholders would receive the following base number of Centura shares (before adjustments) in the aggregate: $17,400,000 ------------- = 5,780,730.897 $3.01 The number of Centura shares to which you are entitled for each share of Raima stock you own would be calculated in the same manner as in Example A above. Q. What do I need to do now? A. Just mail your signed proxy card in the enclosed return envelope as soon as possible so that your shares will be counted at the special meeting of Raima's stockholders. Q. Does Raima's board recommend voting in favor of the merger? A. Yes. The board of directors of Raima unanimously recommends voting in favor of the adoption of the merger agreement. Q. Can I change my vote after I have mailed my signed proxy card? A. Yes. You can change your vote at any time before your proxy is voted at the special meeting. You can do this three different ways. First, you can send a written notice stating that you would like to revoke your proxy. Second, you can complete and submit a new proxy card. Raima stockholders choosing either of these options should send their revocation letter or new proxy card to the Raima corporate secretary at the address provided on page vii. The third way you may change your vote is to attend the special meeting and vote in person. Simply attending the meeting, however, will not revoke your proxy. If you have instructed a broker to vote your shares, you must follow the directions provided by your broker to change those instructions. Q. Should I send in my stock certificates now? A. No. After the merger is completed, Centura will send Raima stockholders written instructions for exchanging their share certificates. Q. When will I receive my Centura shares? A. If the stockholders of Raima vote to adopt the merger agreement at its special meeting, we expect the merger will be completed by June 7, 1999. Q: What will happen to stock options held by Raima employees? A. Under the Raima Stock Option Plan, the vesting of each outstanding option is accelerated so that it will become exercisable in full immediately prior to the merger. If any options are not exercised on the effective date of the merger, they will automatically terminate. WHO CAN HELP ANSWER YOUR QUESTIONS If you have more questions about the merger or would like additional copies of this prospectus, you should contact: Raima Corporation 4800 Columbia Center 701 Fifth Avenue Seattle, WA 98104 Attention: Stephen P. Smith (206) 515-9477 SUMMARY This summary only highlights selected information from this document and may not contain all of the information that is important to you. To understand the merger fully and for a more complete description of the legal terms of the merger, you should carefully read this entire document and the documents to which we have referred you. See "Where You Can Find More Information" on page 77. THE COMPANIES CENTURA SOFTWARE CORPORATION 975 Island Drive Redwood Shores, California 94065 (650) 596-3400 Centura believes that it is a leading provider of enterprise-scale client/server and internet application development and deployment software. Centura offers four major product lines: SQLBase, Centura Team Developer, SQLWindows and SQLHost. SQLBase consists of small-footprint database products that help businesses deploy decentralized applications easily and cost-effectively. Centura Team Developer helps customers develop and deploy 32-bit client/server applications in traditional two and multi-tiered client/server environments as well as the internet and corporate intranet environments. Created specifically to meet the needs of organizations seeking the power to move from workgroup and enterprise pilot projects into large enterprise applications, Centura Team Developer delivers client/server application scalability, internet integration, and drag and drop data replication facilities. SQLWindows is an open 16 bit client/server development environment for creating multi-database applications on desktop platforms. SQLHost allows organizations to integrate DB2 or legacy data into a client/server environment without compromising performance, control, or security. Centura's products enable customers to obtain the benefits of PC client/server computing, while preserving their investments in corporate data sources. Centura has established stratified distribution channels that provide broad market coverage for its products and address the specific needs of its varied customer segments worldwide. Centura's products are used in at least 75 countries by organizations including Automatic Data Processing (ADP), Baan, BMW, CAMData, Citibank N.A., Clarus, Computer Associates, Daimler-Benz, Deutsche Bank, Ford Motor Company, IFS, Infra Corporation (Help Desk Systems), Norfolk Southern, Ontario Hydro, Lilly Software, Siemens-Nixdorf Information System AG (Siemens-Nixdorf), Station, Telia, The Southern Company, United Airlines, United Parcel Service (UPS), Xerox and the governments of Australia, France, Mexico, the United Kingdom and the United States. RAIMA CORPORATION 4800 Columbia Center 701 Fifth Avenue Seattle, Washington 98104 (206) 515-9477 Raima Corporation is a privately held company which develops and markets database management systems. Raima's principal products are Raima Database Manager, a fast, small footprint database management system, and Velocis Database Server, a client/server SQL database with support for multiple database models and application programming interfaces. Raima also has developed a report writer product, Raima Report Writer, which enables users to access information stored in Raima Database Manager. In addition, Raima provides consulting and training through its subsidiary, Vista Development Corporation. RAIMA STOCKHOLDERS' MEETING The Raima Special Meeting The Raima special meeting will be held at Raima's offices at 4800 Columbia Center, 701 Fifth Avenue, Seattle Washington, 98104, at 5:30 p.m., local time, on ___________, 1999. At the Raima special meeting, Raima stockholders will be asked to adopt the merger agreement. Raima's Recommendation to Stockholders The Raima board believes that the merger is fair to you and in your best interest and unanimously recommends that you vote FOR the proposal to approve the merger agreement. For more information on why the Raima board recommends the merger and possible conflicts of interest of the Raima directors, see pages 29 and 32, respectively. Record Date; Voting Power You are entitled to vote at the special meeting if you owned shares of Raima as of the close of business on April 21, 1999, which is the record date. On the record date, there were 6,199,953 shares of Raima common stock entitled to vote at the Raima special meeting. Raima stockholders will have one vote for each share of Raima common stock they owned on the record date. Raima Vote Required In order to approve the merger, two-thirds of the outstanding shares of Raima common stock must vote in favor of adopting the merger agreement. Several Raima stockholders, who together hold a total of 5,079,910 shares of Raima common stock as of March 15, 1999, representing approximately 82% of the outstanding shares of Raima common stock, have agreed to vote their shares in favor of the merger. Accordingly, approval of the merger agreement by Raima stockholders is assured. For more information on the Raima special meeting, see page 24. THE MERGER AND RELATED TRANSACTIONS THE MERGER AGREEMENT IS ATTACHED TO THIS PROSPECTUS AS ANNEX A. WE ENCOURAGE YOU TO READ THE MERGER AGREEMENT CAREFULLY, AS IT IS THE LEGAL DOCUMENT WHICH GOVERNS THE MERGER OF CENTURA AND RAIMA. Ownership of Centura Following The Merger Immediately following the merger, former Raima stockholders will own approximately 16% of the combined company. Management and Board Of Directors of Centura Following the Merger If the merger is completed, the current directors and executive officers of Centura will continue to be the directors and executive officers of Centura; however, Centura will cause Thomas R. Clark, a current director of Raima, to be appointed to its board and, in connection with its next two annual meetings thereafter, will nominate and recommend for election to its board Mr. Clark or another designee agreed upon by certain significant Raima stockholders. Please refer to the section entitled "The Merger-Operations after the Merger" on page 48. Interests of Executive Officers and Directors of Raima in the Merger (Page 32) In considering the Raima board's recommendation that you vote in favor of the merger, you should be aware that some officers and directors of Raima have benefits that provide them with interests in the merger that are different from the interests of Raima stockholders. Please refer to pages 32 and 47 for more information. Merger Consideration The shares of Raima common stock issued and outstanding at the time of the merger will be converted into (1) a base number of Centura common shares, minus professional fees incurred by Raima over a certain dollar amount and a possible negative adjustment based on Raima's balance sheet and (2) a possible cash payment from a positive adjustment based also on Raima's balance sheet. See the section entitled "The Merger-Structure of the Merger and Conversion of Raima Common Stock" on page 33 for a discussion of how the conversion of the Raima shares will be calculated. Escrow Arrangement (Page 34) On the day of the merger, Centura will pay to each holder of Raima stock 80% of the shares of Centura common stock and 80% of the cash to which such stockholder is entitled to receive. The 20% balance of stock and cash will be deposited in an escrow account to cover any indemnification claims. Approximately 50% of the escrowed stock will be released after 6 months, and the remainder of the escrowed stock and all of the escrowed cash will be released after 12 months, in each case subject to amounts needed to satisfy pending claims. Conditions to the Merger (Page 44) The completion of the merger depends upon meeting a number of conditions, including the following: o the requisite number of Raima's stockholders shall have voted in favor of the merger; o Raima stockholders holding no more than 6% of the outstanding Raima stock will have exercised their dissenters' rights, as further described in the section entitled "The Merger-Rights of Dissenting Stockholders" on page 39; o at the closing, the representations and warranties of each of Centura and Raima shall be true in all material respects and each of the companies shall have performed their covenants in the merger agreement; o certain Raima key employees will have entered into employment agreements with Centura; o the arithmetic mean of the closing sale price of Centura common stock on the Nasdaq SmallCap Market for each of the ten (10) trading days before the merger, shall not be less than $1.00 per share; o Centura shall be in compliance with all of the requirements for continued listing of its common stock on the Nasdaq SmallCap Market; o five days have passed since Centura has issued a press release containing news adverse to Centura; and o PricewaterhouseCoopers LLP will have delivered an unqualified opinion regarding Raima's audited financial statements for fiscal years ended December 31, 1998 and 1997. Each of the conditions to the merger may be waived by the company entitled to assert the condition. Employment Agreements (Page 47) As a condition to the merger, Centura will enter into employment agreements with Stephen P. Smith, Randall L. Merilatt, Wayne L. Warren, all of whom are directors and principal stockholders of Raima, and Steven T. Graves, who is President and Chief Operating Officer of Raima. Mr. Smith will be employed as Vice President, Business Development of Centura; Mr. Graves will be employed as Vice President, Worldwide Consulting of Centura; and Messrs. Warren and Merilatt will be employed as Senior Database Architects of Centura. Termination of the Merger Agreement (Page 46) Centura and Raima can mutually agree to terminate the merger agreement without completing the merger, and either of them can terminate the merger agreement by written notice if the merger is not completed by June 7, 1999. Payment of Expenses upon Termination (Page 46) Each party shall pay the other's legal, accounting and advisory expenses incurred in connection with the merger if the agreement is terminated because of a breach by that party. The merger agreement requires Centura to pay up to $100,000 of Raima's legal, accounting and advisory fees and expenses incurred in connection with the merger if the merger agreement is terminated for any reason other than a breach by the parties to the agreement. When the Merger Takes Effect (Page 33) The merger will become effective when all necessary documentation has been filed in Delaware and Washington. Such documentation will be filed promptly upon satisfaction or waiver of each of the conditions provided in the merger agreement. Exchange of Stock Certificates (Page 35) After completion of the merger, Raima stockholders will no longer have any rights as Raima stockholders. Once the merger is effective, Centura will mail instructions for the exchange of certificates to all Raima stockholders. Raima stockholders who turn in their Raima stock certificates will receive Centura stock certificates and cash, if applicable, from the transfer agent as quickly as is feasible. Comparison of Rights Under Applicable Laws (Page 68) Centura is incorporated in the State of Delaware, and Raima is incorporated in the State of Washington. After the merger, the rights of Raima stockholders will be governed by Centura's certificate of incorporation and bylaws. There are important differences between Centura's and Raima's governing documents of which you should be aware. Accounting Treatment (Page 38) The merger will be accounted for by Centura as a purchase in accordance with generally accepted accounting principles. Application of the purchase method of accounting for the merger will reduce Centura's pre-tax earnings for approximately 5 years. The reported results of operations of Centura will include the results of Raima from and after the closing date of the merger. The assets, including intangible assets, and liabilities of Raima will be recorded at their fair values as of the closing date of the merger. Any excess of the purchase consideration over the fair values of the assets and liabilities of Raima will be recorded as goodwill and amortized over a 5-year period. Federal Income Tax Consequences (Page 36) We have structured the merger so that it is not expected that Centura, Raima and their stockholders should recognize any gain or loss for federal income tax purposes as a result of the merger, except for taxes on cash received by Raima stockholders in the merger. However, there may be a possibility that the merger as structured will not be tax free to you. In that event, you would be treated as selling your Raima common stock to Centura in a fully taxable transaction, resulting in capital gain or loss measured by the difference between the value of the Centura common stock and cash you received in the merger and your tax basis in the Raima common stock. TAX MATTERS ARE VERY COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER TO YOU WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR TAX ADVISORS FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE MERGER TO YOU. Dissenter and Appraisal Rights (Page 39) Under Washington law, Raima stockholders have dissenters' rights and a right to an appraisal of the value of their shares in connection with the merger. Listing of Centura Common Stock Prior to the merger, Centura will obtain approval to have the shares of Centura stock to be issued in the merger listed on the Nasdaq SmallCap Market. Trademarks Centura, the Centura logo, Centura Ranger, Gupta, the Gupta logo, Gupta Powered, the Gupta Powered logo, Fast Facts, Quest, QuickObjects, SQL/API, SQLBase,SQLBase SafeGuarde, SQLBase Safeguarde Max, SQLBase Ranger, SQLConsole, SQLGateway, SQLHost, SQLNetwork, SQLRouter and SQLTalk are trademarks of Centura and are registered in certain jurisdictions. SQLWindows, TeamWindows, ReportWindows, and EditWindows are trademarks exclusively used and licensed by Centura. Raima, Raima Database Manager, Raima Object Manager, Raima Report Writer and Velocis Database Server are trademarks of Raima. SUMMARY HISTORICAL FINANCIAL DATA Centura is providing the following information to aid you in your analysis of the financial aspects of the merger. Centura derived this information from its historical audited financial statements for the fiscal years ended December 31, 1994 through December 31, 1998. This information is only a summary and you should read it in conjunction with Centura's consolidated financial statements (and related notes) contained in the most recent annual report for Centura which has been incorporated in this prospectus by reference.
Consolidated Statement of Operations Data: Year Ended December 31, ------------------------------------------------- 1998 1997 1996 1995 1994 --------- --------- --------- --------- --------- Net revenues.............................. $53,497 $57,946 $63,233 $65,714 $56,532 Operating income (loss)................... 3,895 1,230 2,484 (42,993) (32,981) Net income (loss) from continuing operations(1)........................... 2,115 (649) 2,027 (44,079) (31,841) Basic net income (loss) per share(1)...... $0.08 ($0.04) $0.15 ($3.62) ($2.66) Basic weighted average common shares(1)... 27,390 15,439 13,231 12,175 11,957 Diluted net income (loss) per share(1).... $0.08 ($0.04) $0.15 ($3.62) ($2.66) Diluted weighted average common shares(1). $27,776 $15,439 $13,380 $12,175 $11,957 Consolidated Balance Sheet Data: At December 31, ------------------------------------------------- 1998 1997 1996 1995 1994 --------- --------- --------- --------- --------- Working capital (deficit)(2).............. $983 ($18,232) ($15,616) ($25,604) $599 Total assets.............................. 29,372 28,200 36,705 48,104 58,161 Long-term obligations..................... 53 856 12,188 11,744 1,939 Stockholders' equity (deficit)............ $7,273 ($9,954) ($16,923) ($24,057) $18,670
___________ (1) See Note 2 of Notes to Consolidated Financial Statements in Centura's most recent annual report incorporated in this prospectus by reference for an explanation of shares used in computing net income (loss) per basic and diluted common shares and equivalents. (2) Working Capital (Deficit) includes deferred revenue of $13,274,000, $14,618,000, $21,891,000, $28,800,000 and $21,879,000 at December 31, 1998, 1997, 1996, 1995, and 1994, respectively. Raima is providing the following information to aid you in your analysis of the financial aspects of the merger. Raima derived this information from its historical unaudited financial statements for the fiscal years ended December 31, 1994 through December 31, 1996 and the audited financial statements for the fiscal years ended December 31, 1997 and 1998. This information is only a summary and you should read it in conjunction with Raima's consolidated financial statements (and related notes) beginning on page F-1 and "Raima's Management's Discussion and Analysis of Financial Condition and Results of Operations" beginning on page 59. Selected Historical Financial Data of Raima (in thousands)
Consolidated Statement of Operations Data: Year Ended December 31, --------------------------------------------------- 1998 1997 1996 1995 1994 --------- --------- --------- --------- --------- Net revenues............................... $8,584 $8,613 $6,771 $6,148 $5,422 Operating income (loss).................... (220) 343 183 516 (1,926) Net income (loss) from continuing operations............................... (127)(1) 323 123 389 (1,977) Consolidated Balance Sheet Data: December 31, --------------------------------------------------- 1998 1997 1996 1995 1994 --------- --------- --------- --------- --------- Working capital (deficit).................. $86 ($712) $272 $294 ($247) Total assets............................... 3,023 3,719 3,072 2,876 1,688 Long-term obligations...................... 36 31 1,740 1,876 1,770 Shareholders' equity (deficit)............. 564 (166) (881) (1,004) (1,360)
(1) Excludes extraordinary gain on the forgiveness of debt of $451,000, net of taxes. See note 1 to Raima's consolidated financial statements (and related notes). Summary Unaudited Pro Forma Condensed Combined Consolidated Financial Data (in thousands, except per share data) The following table sets forth unaudited pro forma condensed combined consolidated financial data for Centura and Raima which gives effect to the acquisition, accounted for as a purchase, as if it had been consummated as of January 1, 1998 for the statement of operations data and December 31, 1998 for the balance sheet data. The pro forma data is not necessarily indicative of the results that would have been achieved had the transaction been consummated on such dates and should not be construed as representative of future operations. This presentation is subject to the assumptions set forth in the notes to the Unaudited Pro Forma Condensed Combined Consolidated Financial Information appearing elsewhere in this prospectus. The information presented should be read in conjunction with the pro forma financial information and the notes thereto and the historical consolidated financial statements (and related notes) of Centura and of Raima incorporated by reference or appearing elsewhere in this prospectus. Pro Forma Combined Consolidated Statement of Operations Data: Year Ended December 31, 1998 --------------- Pro Forma Combined Consolidated Statement of Operations Data: Net revenues.................................................. $62,081 Operating income.............................................. 2,502 Net income.................................................... 708 Basic net income per share.................................... $0.02 Basic weighted average common shares.......................... 33,190 Diluted net income per share.................................. $0.02 Diluted weighted average common shares........................ 33,576 December 31, 1998 --------------- Pro Forma Combined Consolidated Balance Sheet Data: Working capital............................................... $234 Total assets.................................................. 38,709 Long-term obligations......................................... 53 Shareholders' equity.......................................... 13,437 (1) Excludes extraordinary gain on the forgiveness of debt of $451,000, net of taxes. See note 1 to Raima's consolidated financial statements (and related notes). UNAUDITED COMPARATIVE PER SHARE INFORMATION The following table sets forth certain earnings, dividend and book value per share data for Centura and Raima on a historical basis and pro forma combined basis. The information is only a summary and you should read it in conjunction with the "Unaudited Pro Forma Condensed Combined Consolidated Financial Information" beginning on page 50 and the respective audited consolidated financial statements (and related notes) of Centura and Raima incorporated by reference or appearing elsewhere in this prospectus. The Raima pro forma equivalent per share amounts are calculated by multiplying the Centura pro forma per share amounts by the assumed exchange ratio of approximately 0.768. This ratio is calculated by dividing the total number of shares of Centura common stock to be issued in the merger (5,800,000) (assuming no adjustments in respect of professional fees or Raima's balance sheet) by the number of shares of Raima common stock outstanding on a fully diluted basis (7,550,519). This information is not necessarily indicative of the results of future operations of the combined company or the actual results that would have occurred had the merger been consummated prior to the periods indicated. At or for the Year Ended December 31, 1998 ------------ Per share of Centura common stock: Book value: Historical............................ $0.25 Pro forma............................. $0.38 Net income from continuing operations: Historical............................ $0.08 Pro forma(1).......................... $0.02 Per share of Raima common stock: Book value: Historical............................ $0.09 Pro forma............................. $0.29 Net income (loss) from continuing operations: Historical(1)......................... ($0.02) Pro forma(1).......................... $0.02 (1) Excludes extraordinary gain on the forgiveness of debt of $451,000, net of taxes. See note 1 to Raima's consolidated financial statements (and related notes). MARKET PRICE AND DIVIDEND INFORMATION The shares of Centura common stock are listed and principally traded on the Nasdaq SmallCap Market and quoted under the symbol "CNTR." The following table sets forth, for the quarters indicated, the high and low closing prices of Centura common stock as reported on the Nasdaq SmallCap Market. For current price information, Raima stockholders are urged to consult publicly available sources. High Low ------------ ------------ 1998 First Quarter........................... $2.125 $0.906 Second Quarter.......................... 2.875 1.563 Third Quarter........................... 1.813 1.000 Fourth Quarter.......................... 1.438 1.000 1997 First Quarter........................... $5.125 $2.875 Second Quarter.......................... 3.625 1.313 Third Quarter........................... 3.125 1.438 Fourth Quarter.......................... 2.719 1.063 Recent Closing Prices The following table sets forth the closing prices per share of Centura common stock on the Nasdaq SmallCap Market on March 12, 1999, the last trading day before announcement of the proposed merger, and on __________, 1999, the latest practicable trading day before the printing of this prospectus. The table also includes a Raima equivalent value which is calculated by multiplying the closing price per share of Centura common stock on the applicable date by an assumed exchange ratio of 0.768 shares of Centura stock per share of Raima stock. The Raima equivalent per share price can be used by the Raima stockholders to determine the approximate value of one share of Raima capital stock based on the Centura common stock trading price, without giving effect to the average Centura trading price, Raima's professional fees and other adjustments or the escrow and resale restrictions. Centura stock Raima Equivalent March 12, 1999 $1.063 $0.817 _________, 1999 The market price of Centura common stock is subject to fluctuation. Therefore, the market value of the shares of Centura common stock which Raima stockholders will receive in the merger may increase or decrease prior to the merger. Raima stockholders are urged to obtain current market quotations. In addition, if the average trading price of Centura common stock, as defined in the section entitled "The Merger-Structure of the Merger and Conversion of Raima Common Stock" on page 33, is $3.00 per share or greater, the base number of shares Raima's stockholders would receive in the merger (prior to any adjustments based on professional fees incurred by Raima or Raima's balance sheet) would be determined by dividing o $17,400,000 by o the average trading price so that the value of the shares issuable (using the 10-day average calculation) is $17,400,000. Dividend Information Centura has not paid any cash dividends on its common stock during the last five fiscal years. Centura currently intends to retain any earnings for use in its business and does not anticipate paying any cash dividends in the foreseeable future. In addition, Centura's short-term borrowing facility restricts Centura's ability to pay cash dividends. Raima has never paid any cash dividends on its common stock, and if the merger is not consummated, it anticipates that it will continue to retain any earnings for the foreseeable future for use in the operation of its business. RISK FACTORS In addition to general investment risks and those factors set forth elsewhere herein, the following risks should be considered by Raima stockholders in deciding whether to adopt the merger agreement and thereby become stockholders of Centura. The value of the consideration that Raima stockholders receive will depend in part on the price of Centura's common stock. Under the terms of the merger agreement, the shares of Raima common stock issued and outstanding at the time of the merger will be converted into (1) a base number of Centura common shares, minus professional fees incurred by Raima over a certain dollar amount and a possible negative adjustment based on Raima's balance sheet and (2) a possible cash payment from a positive adjustment based also on Raima's balance sheet. See the section entitled "The Merger-Structure of the Merger and Conversion of Raima Common Stock" on page 33 for a discussion of how the conversion of the Raima shares will be calculated. The value of the consideration will therefore depend largely on the price of Centura's common stock at the time of the merger. On March 15, the day the merger agreement was signed, the closing price of Centura's common stock was $1.031. The market price of Centura's common stock on and after the merger may be higher or lower than such price. The merger agreement contains a condition that the average trading price of Centura's common stock for 10 trading days prior to the merger must be at least $1.00. However, this condition may be waived by both parties. The merger agreement also provides a cap of $17,400,000 on the value of the Centura shares the Raima stockholders receive in the merger. Raima stockholders should consider recent trading prices of Centura's common stock in determining whether or not to vote in favor of the merger. The price of Centura's common stock has been volatile. The market for Centura's common stock is highly volatile. The trading price of Centura's common stock fluctuated significantly in 1998, 1997, and 1996, and may continue to be subject to wide fluctuations in response to quarterly variations in operating and financial results, announcements of new products or customer contracts by Centura or its competitors, litigation and other factors including sales of substantial blocks of Centura's common stock. Any shortfall in revenue or earnings from levels expected by securities analysts or others could have an immediate and significant adverse effect on the trading price of Centura's common stock in any given period. Additionally, Centura may not learn of, or be able to confirm, revenue or earnings shortfalls until late in the fiscal quarter or following the end of the quarter, which could result in an even more immediate and adverse effect on the trading of Centura's common stock. Finally, Centura participates in a highly dynamic industry, which often results in significant volatility of its common stock price, without necessarily any regard to whether Centura has experienced changes in its business, operating results, or financial condition. Centura may have difficulty restructuring its operations and integrating Raima into its business. The realization of the benefits sought from the merger depends on the ability of the combined company to better utilize product development capabilities, sales and marketing channels, administrative organization and facilities than either company could do separately. These benefits may not be achieved if the activities of Centura and Raima are not integrated in a coordinated, timely and efficient manner. The combination of the two organizations will also require the dedication of management resources, which will temporarily detract attention from the day-to-day business of the combined company. The impact of Centura's recent strategic changes is uncertain. Centura's recent restructuring efforts may not be successful. Centura has restructured its operations and announced changes in strategic direction several times during the past three years. o The first of these changes, which began in December 1995, encompassed a change in Centura's name from Gupta Corporation to Centura Software Corporation and the identification of a flagship product bearing the name Centura. o In early 1997, Centura refocused its marketing and sales efforts away from databases and development tools products to a middleware connectivity product, and entered into an agreement to merge with InfoSpinner, Inc., the developer of the underlying product. That merger was not consummated, and Centura entered into a distribution agreement with InfoSpinner. o In the second half of 1997, however, Centura restructured and refocused operations on its core competencies, products and technologies and terminated its distribution arrangement with InfoSpinner. Centura continued to pursue this strategic direction throughout 1998. It is uncertain whether these efforts will result in improved operational performance. Centura may or may not undertake other major restructuring efforts or changes in strategic direction in the future. Centura's new management team might not be successful in executing its objectives. Recent changes in Centura's management make it difficult to predict Centura's likelihood of success in achieving its business goals. In the fourth quarter of 1997, Centura announced significant changes in senior management. Such changes included the appointment of Scott R. Broomfield as Chief Executive Officer, John W. Bowman as Chief Financial Officer, and Kathy Lane as Senior Vice President of Alliances, and the election of Messrs. Jack King, Phillip Koen, Jr., and Earl Stahl to Centura's board of directors, and the departure of Samuel M. Inman, III, Earl Stahl and Richard Gelhaus from their positions as officers of Centura. In February 1998 Centura announced the election of Messrs. William D. Nicholas and Peter Micciche to the board of directors and the appointment of Scott R. Broomfield to the position of Chairman. Mr. Nicholas subsequently resigned from the board of directors in December 1998. In April 1999, Mr. Inman resigned from the board of directors. The key recent additions to the senior management team are Joe Falcone, who joined Centura as Senior Vice President and Chief Technology Officer in November, 1998, and Len Strickler, who joined Centura as Vice President, Americas and Asia Pacific Sales and Marketing in January 1999. In connection with the merger, Thomas D. Clark, presently on the Raima board of directors, will be appointed to Centura's board of directors. In addition, Stephen P. Smith, presently a director and principal stockholder and the Chief Executive Officer of Raima, will be employed as Vice President, Business Development of Centura, and Steven T. Graves, who is presently President and Chief Operating Officer of Raima, will be employed as Vice President, Worldwide Consulting of Centura. Centura's future performance is substantially dependent on the performance of its executive officers and key product development, technical, sales, marketing and management personnel. The loss of the services of any executive officer or other key technical or management personnel of Centura for any reason could have a material adverse effect on the business, operating results and financial condition of Centura. Centura presently does not have employment or non- competition agreements with any of its employees. However, Centura will have employment agreements with key Raima personnel after the merger. See the section entitled "The Merger-Employment Agreements" on page 47. The future success of Centura also depends on its continuing ability to identify, hire, train, motivate and retain other highly qualified technical and managerial personnel. Centura has experienced difficulty in identifying and hiring qualified engineering and software development personnel. Centura might not be able to attract, assimilate or retain other highly qualified technical and managerial personnel in the future. Centura has experienced recent fluctuations in quarterly and annual results. Centura has experienced in the past and might continue to experience in the future significant fluctuations in quarterly or annual operating results. On an annual basis, Centura reported a profit of $2.1 million in 1998, a loss of $0.6 million for 1997, and a profit of $2.0 million for 1996. Centura might not be able to sustain profitability on a quarterly or annual basis. Many of Centura's product licensing arrangements are subject to revenue recognition on a per-unit deployed basis as Centura's deferred obligation to such customers is gradually extinguished. Revenue recognition in such cases is therefore dependent upon the business activities of Centura's customers and the timely and accurate reporting of such activities to Centura, which makes predictability of the related revenue extremely uncertain. In addition, quarterly operating results of Centura will depend on a number of other factors that are difficult to forecast, including: o general market demand for Centura's products; o the size and timing of individual orders during a quarter; o introduction, localization or enhancement of products by Centura; o delays in the introduction and/or enhancement of products by Centura and its competitors; o market acceptance of new products; o reviews in the industry press concerning the products of Centura or its competitors; o software "bugs" or other product quality problems; o competition and pricing in the software industry; o sales mix among distribution channels; o customer order deferrals in anticipation of new products; o reduction in demand for existing products and shortening of product life cycles as a result of new product introductions; o changes in operating expenses; o changes in Centura's strategy; o personnel changes; o foreign currency exchange rates; o mix of products sold; o inventory obsolescence; o product returns and rotations; and o general economic conditions. Sales of Centura's products also may be negatively affected by delays in the introduction or availability of new hardware and software products from third parties. Centura's financial results also may vary as a result of seasonal factors including year and quarter end purchasing and the timing of marketing activities, such as industry conventions and tradeshows. Although Centura has operated historically with little or no backlog of traditional boxed product shipments, it has experienced a seasonal pattern of product revenue, contributing to variation in quarterly worldwide product revenues and operating results. It has generally realized lower European product revenues in the third quarter as compared to the rest of the year. Centura has also experienced a pattern of recording a substantial portion of its revenues in the third month of a quarter. As a result, product revenues in any quarter are dependent on orders booked in the last month. Centura's staffing and other operating expenses are based in part on anticipated net revenues, a substantial portion of which may not be generated until the end of each quarter. Delays in the receipt or shipment of orders, including delays that may be occasioned by failures of third party product fulfillment firms to produce and ship products, or the actual loss of product orders can cause significant variations in operating results from quarter to quarter. Centura may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Accordingly, any significant shortfall in sales of Centura's products in relation to Centura's expectations could have an immediate adverse impact on Centura's business, operating results and financial condition. Due to the foregoing factors, Centura's operating results may, during any fiscal period, fall below the expectations of securities analysts and investors. In such event, the trading price of Centura's common stock could be materially adversely affected. Centura and Raima may not succeed in effectively developing new products and keeping pace with rapid technological changes. The markets for Centura's and Raima's software products and services are characterized by rapid technological developments, evolving industry standards, swift changes in customer requirements and computer operating environments, and frequent new product introductions and enhancements. As a result, the success of the combined company depends substantially upon its ability to continue to enhance existing products, to develop and introduce new products incorporating technological advances and to meet increasing customer expectations, all on a timely and cost-effective basis. To the extent one or more competitors introduce products that better address customer needs, Centura's businesses could be adversely affected. Centura or Raima may fail to timely deliver or achieve market acceptance with its products. The combined company's success will depend on the ability of its primary products, SQLBase, SQLBase SafeGarde, Raima Database Manager, Velocis Database Server, Centura Team Developer, SQLWindows, Centura net.db, and SQLHost, to perform well with existing and future leading, industry-standard application software products intended to be used in connection with RDBMS. Any failure to deliver these products as scheduled or their failure to achieve market acceptance as a result of competition, technological change, failure to timely release new versions or upgrades, failure of such upgrades to achieve market acceptance or otherwise, could have a material adverse effect on the business, operating results and financial condition of the combined company. In addition, commercial acceptance of Centura's and Raima's products and services could be adversely affected by critical or negative statements or reports by industry and financial analysts concerning Centura and Raima and their products, or other factors such as the combined company's financial performance. If Centura or Raima are unable to develop and introduce new products or enhancements to existing products in a timely manner in response to changing market conditions or customer requirements, the combined company's business, operating results and financial condition could be materially and adversely affected. Centura may experience delays in the development of new products. Centura depends substantially upon internal efforts for the development of new products and product enhancements. Like many software companies, Centura has in the past experienced delays in the development of new products and product versions, which resulted in loss or delays of product revenues, and there can be no assurance that Centura will not experience further delays in connection with its current product development or future development activities. Some of Centura's and Raima's products may contain software errors. Software products as complex as those offered by Centura and Raima may contain undetected errors when first introduced or as new versions are released. Centura has in the past discovered software errors in some of its new products and enhancements after their introduction. Although Centura has not experienced material adverse effects resulting from any such errors to date, errors could be found in new products or releases after commencement of commercial shipments, resulting in adverse product reviews and a loss of or delay in market acceptance. New products may result in increased returns of previously sold products. From time to time, Centura and Raima or their competitors may announce new products, product versions, capabilities or technologies that have the potential to replace or shorten the life cycles of Centura's and Raima's existing products. Centura has historically experienced increased returns of a particular product version following the announcement of a planned release of a new version of that product. Centura provides allowances for anticipated returns and believes its existing policies result in the establishment of allowances that are adequate, and have been adequate in the past, but there can be no assurance that product returns will not exceed such allowances in the future. The announcement of currently planned or other new products may cause customers to delay their purchasing decisions in anticipation of such products. The computer industry may shift away from Centura's PC client/server-based products. To date, substantially all of Centura's revenues have been derived from the licensing of software products for PC client/server systems and licensing of such products is expected to continue to account for substantially all of Centura's revenues for the foreseeable future. With the increasing focus on enterprise-wide systems that embrace the World Wide Web, some customers may opt for solutions that favor mainframe or mini-computer solutions with associated World Wide Web connectivity. Accordingly, some companies may substantially reduce or abandon the use of PC client/server systems, which could have a material adverse effect on Centura's future success. The market for internet software in general, and the segments of such market addressed by Centura's products in particular, are relatively new. The future financial performance of Centura will depend in part on the continued expansion of this market and these market segments and the growth in the demand for other products developed by Centura and Raima, as well as increased acceptance of Centura's and Raima's products by MIS professionals. We cannot assure you that the internet software market and the relevant segments of the market will continue to grow, that Centura and Raima will be able to respond effectively to the evolving requirements of the market and market segments, or that MIS professionals will accept Centura's and Raima's products. If Centura and Raima are not successful in developing, marketing, localizing and selling applications that gain commercial acceptance in these markets and market segments on a timely basis, the combined company's business, operating results and financial condition could be materially and adversely affected. Year 2000 problems may have an adverse effect on Centura's and Raima's operations and ability to offer products and services without interruption. Both Centura and Raima utilize a significant number of computer software programs and operating systems across their entire organizations. To the extent Centura's and Raima's software applications use source codes that are unable to appropriately recognize the upcoming calendar year 2000, some level of modification, or even replacement of such applications may be necessary. Accordingly, Centura and Raima are reviewing their internal computer programs and systems to prepare for problems associated with the year 2000. Centura presently believes that its and Raima's computer systems will be compliant with the year 2000 in a timely manner and that the incremental costs to achieve such compliance will not exceed $100,000 during the last three quarters of 1999. However, Centura cannot assure you that its or Raima's computer systems will function properly in the year 2000. Centura has initiated communications with its customers and third party suppliers, and Raima has initiated communications with third parties with whom it has material relationships, to identify and, to the extent possible, to resolve issues involving the year 2000. However, Centura and Raima have limited or no control over the actions of its customers and other third parties. These third parties might not resolve any or all problems with their systems before the occurrence of a material disruption to the business of Centura. In particular, customers that may not be compliant with the year 2000 may experience cash flow difficulties and could negatively affect Centura's and Raima's accounts receivables or bad debt reserves. Centura has requested compliance letters from all of its large customers. Moreover, Centura has created Centura Team2000, which is a service that determines whether any application built in CTD or SQLWindows is year 2000 compliant. Centura charges for this service and does not mandate that this service be purchased. It is also possible that undetected year 2000 issues, or year 2000 issues of third parties with whom Centura or Raima has material relationships, could have a material adverse effect on Centura's operations or results of operations. After the merger the combined company will face intense competition. The market for embeddable databases and application development tools system software is intensely competitive and rapidly changing. Centura's products are specifically targeted at the emerging portion of this market relating to embeddable PC and World Wide Web client/server software, and Centura's current and prospective competitors offer a variety of solutions to address this market segment. Competitor providers of application development software include Oracle, Sybase's Powersoft Division, Microsoft, and borland.com (Inprise), and connectivity software competitors include IBM. Centura also faces potential competition from vendors of applications development tools based on 4GLs or CASE (Computer Aided Software Engineers) technologies. With the emergence of the World Wide Web as an important platform for application development and deployment and a variety of newly created Java based development tools, additional competitors or potential competitors have emerged with: o longer operating histories; o significantly greater financial, technical, sales, marketing and other resources; o greater name recognition; o larger installed base; and o established relationships with customers of Centura. Centura's competitors could in the future introduce products with more features and lower prices than Centura's offerings. These companies could also bundle existing or new products with more established products to compete with Centura. Furthermore, as the PC and World Wide Web client/server market expands, a number of companies, with significantly greater resources than Centura, could attempt to increase their presence in this market by acquiring or forming strategic alliances with competitors of Centura, or by introducing products specifically designed for the PC and Web client/server market. Since database capacity is often indicative of differences in customer application, segments within the PC client/server market in which Centura competes can generally be distinguished and segregated by the target capacity of the database utilized. Centura generally markets its database products in environments utilizing capacity ranging from very small environments of less than five hundred kilobytes to those in excess of five gigabytes. Competitors of Centura, including Microsoft, Oracle, CA, IBM, Sybase, borland.com (Inprise), Pervasive, Progress, and Informix, generally have product offerings which compete with Centura's products in some or all of these capacity ranges. In addition, some of these competitors are providers of sophisticated database software, originally designed and marketed primarily for use with mainframes and minicomputers, which, if successfully reconfigured to provide similar functionality in Windows or Browser clients, or smaller capacity environments, could materially and adversely impact Centura's revenues, results of operations and financial condition. Raima's products also compete in the embedded segment of the database management system market. Within this segment, Raima's competitors include vendors of embedded database management systems, such as Pervasive, Faircom, Solid, Sybase, MDBS, and Inprise. To a lesser extent, Raima's products also compete with providers of enterprise database management systems, including Microsoft and Oracle. Raima also competes with internally developed, custom database management software. Many of these competitors have significantly greater financial, technical, marketing and other resources than Raima. Such competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements or devote greater resources to the development, promotion and sales of products than Raima. Raima might not be able to compete successfully against current and future competitors. Any termination or significant disruption of Centura's or Raima's relationships with any of their resellers or distributors, or the failure by such parties to renew agreements with Centura or Raima, could materially and adversely affect the combined company's business, operating results and financial condition. Centura relies on relationships with value-added resellers and independent third party distributors for a substantial portion of its sales and revenues. Some of Centura's resellers and distributors also offer competing products. Most of Centura's resellers and distributors are not subject to any minimum purchase requirements, they can cease marketing Centura's products at any time, and they may from time to time be granted stock exchange or rotation rights. Moreover, the introduction of new and enhanced products may result in higher product returns and exchanges from distributors and resellers. Any product returns or exchanges in excess of recorded allowances could have a material adverse effect on Centura's business, operating results and financial condition. Centura also maintains strategic relationships with a number of vertical software vendors and other technology companies for marketing or resale of Centura's products. The distribution channels through which client/server software products are sold have been characterized by rapid change, including consolidations and financial difficulties of distributors, resellers and other marketing partners including certain of Centura's current distributors. The bankruptcy, deterioration in financial condition or other business difficulties of a distributor or retailer could render Centura's accounts receivable from such entity uncollectible, and this could result in a material adverse effect on Centura's business, operating results and financial condition. We cannot assure you that distributors will continue to purchase Centura's products or provide Centura's products with adequate promotional support. Failure of distributors to do so could have a material and adverse effect on Centura's business, operating results and financial condition. In a number of international markets Centura has entered into multi-year agreements with independent companies that have also licensed the use of Centura's name. These agreements are in place to increase Centura's opportunities and penetration in such markets where the rapid adoption of client/server technologies is anticipated. While Centura believes that to date these agreements have increased Centura's penetration in such markets, there can be no certainty that this performance will continue nor that these relationships will remain in place. Centura's future cost of maintaining its business in these markets could increase substantially if these agreements are not renewed. Approximately 16% of Raima's sales revenues come from international distributors and resellers. Raima typically engages these firms to sell in a country or group of countries and provides products at a discount of 30% or more. Distributors and resellers provide local marketing and sales organizations, which are assisted by Raima. In addition, approximately 17% of Raima's revenues are generated as royalties by original equipment manufacturers or OEMs in the U.S. and internationally. These OEMs are technology companies that embed Raima databases into their own products. Raima is paid a royalty, which can be structured on a license fee per-unit-sold, an annual license fee, or as a royalty "buyout" covering a specified time period and platforms. The list price for royalties on Velocis Database Server is 60% of the price of Raima's development products, but discounts are often negotiated in larger transactions. The combined company's continued success in international markets is uncertain. International sales represented 54%, 58%, and 60% of Centura's net revenues for the years ended December 31, 1998, 1997 and 1996, respectively. A key component of Centura's strategy is continued expansion into international markets, and Centura currently anticipates that international sales, particularly in new and emerging markets, will continue to account for a significant percentage of total revenues. As stated above, approximately 16% of Raima's sales revenues come from international distributors and resellers. The combined company will need to retain effective distributors, and hire, retain and motivate qualified personnel internationally to maintain and/or expand its international presence. However, Centura cannot assure that it will be able to successfully market, sell, localize and deliver its products in international markets. In addition to the uncertainty as to the combined company's ability to sustain or expand its international presence, there are certain risks inherent in doing business on an international level, such as unexpected changes in regulatory requirements and government controls, problems and delays in collecting accounts receivable, tariffs, export license requirements and other trade barriers, difficulties in staffing and managing foreign operations, longer payment cycles, political and economic instability, fluctuations in currency exchange rates, seasonal reductions in business activity during summer months in Europe and certain other parts of the world, restrictions on the export of critical technology, and potentially adverse tax consequences, which could adversely impact the success of international operations. In addition, effective copyright and trade secret protection may be limited or unavailable under the laws of certain foreign jurisdictions. Also, sales of the combined company's products will be denominated either in the local currency of the respective geographic region or in US dollars, depending upon the economic stability of that region and locally accepted business practices. Accordingly, any increase in the value of the US dollar relative to local currencies in those markets may negatively impact the combined company's competitive position and subsequently its revenues, results of operations and financial condition. In addition, the US dollar value of a sale denominated in a region's local currency decreases in proportion to relative increases in the value of the US dollar. The success and ability of the combined company to compete is dependent in part upon its proprietary technology. Centura has one patent with respect to its SQLWindows and Centura Team Developer products. Raima has no patents. The source code for Centura's proprietary software is protected both as a trade secret and as a copyrighted work. Despite these precautions, it may be possible for a third party to copy or otherwise obtain and use their products or technology without authorization, or to develop similar technology independently. In addition, effective copyright and trade secret protection may be unavailable or limited in certain foreign countries. Centura and Raima generally enter into confidentiality or license agreements with their employees, consultants and vendors, and generally controls access to and distribution of its software, documentation and other proprietary information. Despite efforts to protect proprietary rights, unauthorized parties may attempt to copy aspects of Centura's or Raima's products or to obtain and use information that is regarded as proprietary. Policing such unauthorized use is difficult. There can be no assurance that the steps taken by Centura or Raima will prevent misappropriation of Centura's or Raima's technology or that such agreements will be enforceable. In addition, litigation may be necessary in the future to enforce intellectual property rights, to protect trade secrets or to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of Centura's or Raima's resources. Third parties may also claim infringement by Centura or Raima with respect to current or future products. Centura expects that it will increasingly be subject to such claims as the number of products and competitors in the client/server and internet connectivity software market grows and the functionality of such products overlaps with other industry segments. In the past, Centura has received notices alleging that its products infringe trademarks of third parties. Centura has historically dealt with and will in the future continue to deal with such claims in the ordinary course of business, evaluating the merits of each claim on an individual basis. There are currently no material pending legal proceedings against Centura regarding trademark infringement. Any third party infringement claims, whether or not they are meritorious, could result in costly litigation or require Centura or Raima to enter into royalty or licensing agreements. Such royalty or license agreements, if required, may not be available on terms acceptable to Centura, or at all. If Centura was found to have infringed upon the proprietary rights of third parties, it could be required to pay damages, cease sales of the infringing products and redesign or discontinue such products. This prospectus and the documents incorporated by reference into this prospectus contain forward-looking statements within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business and on the expected impact of the merger on Centura's performance. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates" and similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. In evaluating the merger, you should carefully consider the above discussion of risks and uncertainties. SPECIAL MEETING OF RAIMA'S STOCKHOLDERS The holders of two-thirds of the issued and outstanding shares of Raima common stock must vote in favor of the merger for its approval. Raima's board of directors has called a special meeting of the Raima stockholders, to be held on _______, 1999 at 5:30 p.m. local time, at the Raima's offices located at 701 Fifth Avenue, Suite 4800, Seattle, Washington, 98104. At the special meeting, the Raima stockholders of record as of the close of business on April 21, 1999 will be asked to consider and vote upon the merger and such other business as may properly come before the meeting. Record Date The Raima board has fixed April 21, 1999 as the record date for determination of Raima stockholders entitled to notice of, and to vote at, its special meeting. Accordingly, only stockholders of record at the close of business on April 21, 1999 are entitled to notice of, and to vote at, Raima's special meeting. Each holder of record of shares of Raima common stock on the record date is entitled to cast one vote per share, exercisable in person or by a properly executed proxy at Raima's special meeting. As of the record date, there were 6,199,953 shares of Raima common stock outstanding and entitled to vote which were held by 68 holders of record. Voting at the Raima Special Meeting Raima stockholders representing a majority of the outstanding shares of Raima common stock outstanding on the record date must be present either in person or by proxy at Raima's special meeting in order for a quorum to be present for purposes of voting on the merger. Pursuant to applicable law, the affirmative vote of the holders of two-thirds of the outstanding shares of Raima common stock is required to approve and adopt the merger. An abstention from voting on the merger will have the effect of a vote "against" the merger since it is one less vote in favor. Stephen P. Smith, Wayne L. Warren and Randall R. Merilatt, who collectively hold a total of 5,079,910 shares of Raima common stock, representing approximately 81% of the currently outstanding shares of Raima common stock, have agreed in the merger agreement to vote in favor of the merger. Thus, the approval of the merger by the Raima stockholders is assured. Proxies All shares represented by each properly executed, unrevoked proxy, in the form accompanying this prospectus, which is received in time for the special meeting will be voted in the manner specified therein. If the manner of voting is not specified in an executed proxy received by Raima the proxy will be voted for approval of the merger. Any stockholder giving a proxy in the form accompanying this proxy statement has the power to revoke the proxy prior to its exercise. A proxy can be revoked by (1) delivering to the secretary of Raima an instrument of revocation prior to the special meeting, (2) presenting a duly executed proxy bearing a later date or time than the date or time of the proxy being revoked at the special meeting, or (3) attending the special meeting and electing to vote in person. Mere attendance at the special meeting will not serve to revoke a proxy. The expense of soliciting proxies will be borne by Raima. The solicitation will be by mail. Further solicitation of proxies may be made by telephone or oral communication with stockholders by directors, officers and other employees of Raima who will not receive additional compensation for the solicitation. THE MERGER This section of the prospectus describes material aspects of the proposed merger, including the merger agreement. While we believe that the description covers the material terms of the merger and the related transactions, this summary may not contain all of the information that is important to you. You should read this entire document and the other documents we refer to carefully for a more complete understanding of the merger. In addition, we incorporate important business and financial information about Centura into this prospectus by reference. You may obtain the information incorporated by reference into this prospectus without charge by following the instructions in the section entitled "Where You Can Find More Information" on page 77 of this prospectus. Background Of The Merger Centura, until late 1997, had been primarily focused on Fourth Generation Language software development tools and databases embedded in software applications for business. In late 1997, Centura expanded its use of the term "embedded" software to include software embedded in electronic devices, appliances and other computer hardware and embraced this expanded definition within the framework of a formal strategic direction. Raima has been selling its line of embeddable database products for several years in computer hardware, electronic device and appliances markets. On or about December 15, 1998, Richard Lucien, Vice President, Finance and Operations of Centura, contacted Stephen P. Smith, Chief Executive Officer of Raima by telephone to discuss cross-licensing, cross-selling and other potential joint strategic opportunities the two companies might pursue. In the course of this discussion it was determined that both Raima and Centura may have an interest in combining their operations and the strategic merits of what such a combination might be were also discussed. From December 15, 1998 through December 31, 1998 discussions concerning the potential merits of combined operations continued. Such discussions included Scott Broomfield, Chairman and Chief Executive Officer of Centura, John Bowman, Executive Vice President and Chief Financial Officer of Centura, Mr. Smith and Mr. Lucien. On January 4 and 5, 1999, representatives from both companies, including Mr. Smith, Steven Graves, President and Chief Operating Officer of Raima, Chris Schember, Raima's financial advisor, Larry Stefonic, Managing Director of Raima's Australian subsidiary, and Mr. Broomfield, Mr. Bowman, Joe Falcone, Chief Technical Officer of Centura, Kathy Lane, Sr. Vice President of Alliances of Centura, Mr. Lucien, David Tollen, Director of World Wide Transactions of Centura and Jay Botelho, Director of Product Management of Centura, met to discuss in more depth the benefits and issues related a merger and what the terms of such a merger might be. During the course of these meetings it was decided to continue to pursue discussions related to a merger of the companies, predicated upon the ability to agree on terms and conditions and the results of further due diligence to be performed by both parties. Beginning January 11, 1999, Mr. Broomfield, Mr. Bowman, Mr. Lucien, Mr. Tollen, Mr. Smith and Mr. Schember had numerous discussions relating to the structure of a transaction and the terms and conditions thereto. On January 20, 1999, at a regularly scheduled meeting of Centura's board of directors, management of Centura discussed the recent communications with Raima and the advantages of a business combination. Centura's board of directors authorized the appropriate officers to continue with formal merger negotiations. On January 29, 1999 the companies completed a non-binding agreement setting forth the terms and conditions for the proposed transaction which included: o approximate exchange ratio of Centura shares for Raima shares and conditions thereto o anticipated professional fees to be incurred o the basic terms of employment agreements for certain Raima employees. Beginning February 1, 1999 and continuing through March 15, 1999 the companies completed bi-directional due diligence reviews which included investigation of technical fit, a financial and legal review, exploration and comparison of the respective company cultures and discussions with customers. Upon completion of a majority of their due diligence work, the companies began detailed discussions concerning a definitive agreement to merge and began drafting the underlying agreement. Extensive discussions between the parties, including Orrick Herrington & Sutcliffe LLP, counsel for Centura, and Heller, Ehrman, White and McAuliffe, counsel to Raima, concerning the terms of a definitive agreement, began February 15, 1999 and continued through execution of the definitive agreement. On March 9, 1999, Centura's board of directors held a special meeting to discuss the proposed transaction. Mr. Broomfield and other members of management reviewed the status of the transaction, including the following: o the details related to the proposed merger that still required resolution o a financial review of the proposed transaction o a review of Raima's business operations o the results of Centura's due diligence review On March 10, 1999 Centura engaged First Security, Van Kasper to perform financial advisory services concerning a review of the financial aspects of the proposed transaction, including an analysis of the fairness of the transaction to the stockholders of Centura. On the evening of March 11, 1999 Raima's board of directors met and the senior management and legal and financial advisors of Raima reviewed the following: o the status of the negotiations of the proposed transaction o the results of the due diligence evaluation of Centura o the benefits and potential risks of the transaction with Centura o the principal terms of the merger agreement and related documents Raima's legal advisors discussed the board's fiduciary duties in considering a strategic business combination and strategic alternatives and further discussed the terms of the merger agreement and related documents. Raima's financial advisor reviewed the strategic rationale for, and financial analyses relating to, the proposed merger. On the morning of March 15, 1999, Centura's board of directors held a special meeting to discuss the proposed transaction. Representatives of First Security, Van Kasper presented to Centura's board of directors a summary of its analyses of the fairness of the transaction to the stockholders of Centura from a financial point of view. Mr. Broomfield and representatives of Orrick Herrington & Sutcliffe LLP, Centura's legal advisors, outlined the terms of the proposed merger and the directors' legal duties and responsibilities. At the conclusion of the meeting, Centura's board of directors unanimously approved the principal terms of the proposed business combination, approved the merger agreement in the form presented and authorized management to finalize the details of the merger agreement. On the morning of March 15, 1999, Raima's board of directors met again to discuss the merger. Scott Broomfield and John Bowman attended part of this meeting to address Raima's board of directors regarding the perceived benefits of the merger and to answer questions. Following discussion and further consideration of the merger by all of the directors, including a discussion of the interests of certain directors in the merger which are different than the interests of the stockholders, Raima's board of directors determined that the proposed merger was advisable and unanimously approved the merger agreement and resolved to recommend that Raima stockholders approve the merger agreement. Centura and Raima entered into the definitive merger and reorganization agreement as of March 15, 1999. On the afternoon of March 15, 1999, subsequent to execution of the agreements Raima and Centura each issued a press release announcing that they had entered into definitive agreements to merge. Joint Reasons For The Merger Centura's and Raima's boards of directors have determined that the combined company following the merger would have the potential to realize long-term improved operating and financial results. Centura's and Raima's boards of directors have identified additional potential mutual benefits of the merger that they believe will contribute to the success of the combined company. These potential benefits include the following: o The merger allows the combined entity to clearly define the market for embedded and secure databases as a market which encompasses database products embedded in software applications, computer hardware, information appliances and other appliances, and places it in a position of leadership in this market. o The combined entity will be one of the largest participants in the world-wide market for embedded micro and e-business databases and data management tools, supporting a wide variety of cross-platform solutions for secure embedded and e-business solutions. Platforms the combined entity will support include Unix, Linux, NT, Netware, Windows CE and a variety of real-time operating systems, or RTOS, utilizing the three database options of SQLBase 7.5/SafeGarde, RDM and Velocis. This will place the combined entity a position of strategic advantage when compared with competitors with less product depth. o International Data Corporation, or IDC, has estimated the Windows CE based information appliance market to be growing at a rate of 70% a year. The combination provides products already developed for this market by Raima to a broad distribution channel and experienced sales force at Centura. The combination also provides Centura the ability to reallocate scarce development resources to other projects, resulting in a more efficient use of resources by the combined entity. o Centura believes an important direction of information management is in connecting micro and e-business databases to core business systems, allowing connectivity and browser based access to information, to and from appliances, mobile users, desktops and back-end servers in a secure fashion. The combination allows the companies to leverage their combined strength in business software application development tools, embedded and secure databases, connectivity, and browser based access to information. o Many of the applications built using the combined companies' product line tend to be found in relatively insecure environments, outside of a firewall and possibly embedded in portable devices. For such systems, security is becoming an increasingly important "must-have" feature. Over time the companies intend to add end-to-end security to the entire combined product line, providing products which are both secure and scalable. o The combined entity will immediately be enabled with a combined consulting services organization of approximately 20 individuals capable of providing enhanced applications design and development, which will further enable the combined entity to more effectively offer "whole product" and complete solutions for its customers. Raima's Reasons for the Merger; Board Recommendation In 1994, shortly after a resource intensive introduction of Raima's new flagship product, Velocis Database Server, Raima's board of directors and its new management team made the decision to focus Raima's limited resources on enhancing product technology, while positioning the company for sale. Through 1998, Raima completed new releases of three major products, paid off all its debts, and considered obtaining equity financing. In early 1998, Mr. Smith was specifically charged by the board with the priority to finance or sell the company. In April 1998, Raima negotiated a $2 million credit line to pay off debts and to finance growth, then proceeded to contact brokers to sell the company. Over a period of several months, Raima's management consulted with Raima's board of directors regarding a potential business combination. Beginning in January 1999, Raima's board of directors, along with Raima's management, engaged in several meetings and negotiations discussing the desirability and terms of such a business combination. At a special meeting of Raima's board of directors held on March 11, 1999, Raima's board of directors received presentations concerning, and reviewed the terms of, the merger agreement with members of Raima's management and its legal counsel and also received a presentation from its financial advisor. On March 15, 1999, Raima's board of directors held another meeting to discuss the merger, at which they received a presentation from Scott Broomfield, Chairman and Chief Executive Office of Centura. Following the meeting, Raima's board of directors determined that the proposed merger was fair to, and in the best interests of, the stockholders of Raima. Accordingly, Raima's board of directors has unanimously adopted the merger agreement and resolved to proceed with the merger transaction and unanimously recommends that Raima's stockholders approve the merger. In reaching its conclusion to approve the merger, Raima's board of directors considered the following factors: o historical information concerning Centura's and Raima's respective businesses, financial performance and condition, operations, technology, management and competitive position, including public reports concerning results of operations during the most recent fiscal year and fiscal quarter for Centura filed with the SEC; o the financial condition, cash flows and results of operations of Raima, both on a historical and prospective basis, including its financial prospects as an independent company; o the engineering, marketing and sales benefits of combining the products of Centura and Raima; o Centura's ability to sell Raima products into its existing customer base and thereby achieve greater presence and distribution of Raima's core products; o the general business and competitive conditions in its industry and the risks and uncertainties in remaining an independent company, as well as Raima's management's view as to the potential for other third parties to merge with or to acquire Raima; o comments made by Raima's financial advisor concerning a range of values for Raima as well as a comparison of the percentage of Centura common stock being issued in the merger to Raima's relative contribution to the financial condition and operations of the combined entity after the merger; o the opportunity the merger provides for Raima stockholders to trade shares of the combined entity in the public equity markets after the merger; o the terms and conditions of the merger agreement, including the parties' representations, warranties and covenants and the conditions to their respective obligations; o the due diligence investigations of Centura conducted by Raima's management and financial advisor; and o current financial market conditions and historical market prices, volatility and trading information with respect to Centura common stock. Raima's board of directors also identified and considered the following potential negative factors in its deliberations concerning the merger: o possible disruption of Raima's business pending completion of the merger; o the possibility that the merger might not be consummated and the negative effect of the public announcement of the merger on Raima's sales and operating results and on Raima's ability to retain key management, marketing and technical personnel; o the possibility of management disruption associated with the merger and the risk that, despite the efforts of Centura and Raima, key technical and management personnel might not remain employed by Raima; o the substantial expense to be incurred in connection with the merger, including the costs of integrating the businesses and transaction expenses arising from the merger; o the volatility and recent trading values of Centura's common stock; and o the risk factors of Centura identified in documents filed by Centura with the SEC and available to the general public. Raima's board of directors believed that these potential negative factors were outweighed by the potential benefits of the merger. The list of factors above represents many factors considered by the board but is not exhaustive. Raima's board of directors did not quantify or assign relative weights to the specific factors considered in reaching its determination. In addition, individual members of Raima board of directors may have given different weights to different factors. Based on the factors outlined above, Raima's board of directors determined that the merger is in the best interests of Raima and all of its stockholders. Conflicts of Interests of Certain Persons in the Merger In considering Raima's board of director's recommendation that Raima's stockholders vote in favor of the merger, Raima's stockholders should be aware that several major stockholders, executive officers and directors of Raima have certain interests in the merger that are different from, or in addition to, the interests of Raima's stockholders generally. Ownership of Raima Common stock. As of March 15, 1999, directors and executive officers of Raima beneficially owned, directly or indirectly, an aggregate of 5,830,775 shares of Raima common stock, including shares issuable upon the exercise of outstanding stock options, which would represent approximately 77% of the outstanding shares of Raima common stock, if all outstanding options were actually exercised. Acceleration of Options. As of March 15, 1999 directors and executive officers of Raima hold options to purchase approximately 495,275 shares of Raima common stock, which would represent about 7% of the Raima common stock outstanding if all options were exercised. In connection with the merger, under the terms of the Raima Stock Option Plan, these directors and officers and other holders of outstanding options will have the right to exercise their options in full immediately prior to the merger, and to thereby participate in the merger, regardless of whether or not the vesting requirements of such options have been satisfied. Directorship. After the merger, one of Raima's directors, Thomas R. Clark, will be appointed to the board of directors of Centura. In addition, Centura agrees in the merger agreement to nominate either Mr. Clark or another individual designated by Stephen P. Smith, Randall L. Merilatt and Wayne L. Warren, directors and principal stockholders of Raima, for election to its board of directors for the next two annual meetings or until Messrs. Smith, Merilatt and Warren cease to own 50% of the total shares of Centura common stock they were issued in the merger. Centura provides each of its directors stock options to purchase 100,000 shares of common stock at an exercise price equal to the closing fair market value on the date of the grant. Mr. Clark will be granted these options shortly after his appointment to Centura's board. Employment Agreements. As a condition to the merger, Centura will enter into employment agreements with Stephen P. Smith, Randall L. Merilatt and Wayne L. Warren, each of whom is a director and principal stockholder of Raima, and Steven T. Graves, who is President and Chief Operating Officer of Raima. Mr. Smith will be employed as Vice President, Business Development of Centura; Mr. Graves will be employed as Vice President, Worldwide Consulting of Centura; and Messrs. Warren and Merilatt will be employed as Senior Database Architects of Centura. Centura will pay these employees annual salaries as follows: Mr. Smith, $175,000, Mr. Graves, $150,000, and Messrs. Warren and Merilatt, $135,000. Their compensation package will also include quarterly bonuses or commissions and options to purchase shares of Centura common stock. See the section entitled "The Merger-Employment Agreements" on page 47. Raima's board of directors recognized the interests of these stockholders, directors and officers and determined that such interests neither supported nor detracted from the merger transaction being in the best interests of all the stockholders of Raima. Completion and Effectiveness of the Merger The merger will be completed when all of the conditions to completion of the merger are satisfied or waived, including adoption of the merger agreement by the stockholders of Raima. The merger will become effective upon the filing of a certificate of merger with the State of Delaware and articles of merger with the State of Washington. Centura and Raima are working towards completing the merger as quickly as possible. They have agreed in the merger agreement to complete the merger by June 7, 1999, unless they waive this requirement. Structure of the Merger and Conversion of Raima Common Stock In accordance with the merger agreement and Delaware and Washington law, Centura Subsidiary Corporation, a newly formed and wholly owned subsidiary of Centura, will be merged with and into Raima. As a result of the merger, the separate corporate existence of Centura Subsidiary will cease and Raima will survive the merger as a wholly owned subsidiary of Centura. Upon completion of the merger, each outstanding share of Raima common stock will be converted into (1) fully paid and nonassessable shares of Centura common stock and (2) cash, if there is a positive adjustment to the purchase price based on Raima's balance sheet. The total number of shares of Centura common stock issuable in the merger will be equal to: o the "Base Share Number" of o 5,800,000 shares, if the "average Centura trading price," or the arithmetic mean of the closing sale price of Centura common stock on the Nasdaq SmallCap Market for each of the 10 trading days before the merger, is equal to or greater than $1.00 per share and less than or equal to $3.00 per share, or o the number of shares obtained by dividing $17,400,000 by the average Centura trading price, if the average Centura trading price is greater than $3.00 per share o minus any professional fee adjustment, which shall be made if Raima incurs professional fees in connection with the completed merger in excess of a total of $400,000, and which shall equal the amount of fees in excess of $400,000 divided by the average Centura trading price o and minus any negative balance sheet adjustment, which shall be made if o Raima's "current net equity," or total assets divided by total liabilities (subject to certain exclusions, such as amounts attributable to Raima's sale of its internet consulting business prior to the merger), at the end of the month preceding the merger and ending at least 15 days prior to the merger, is less than o Raima's "minimum net equity," which is equal to (a) Raima's net equity as of December 31, 1998 minus (b) $700,000. o A negative balance sheet adjustment will equal the excess of Raima's current net equity over Raima's minimum net equity divided by the average Centura trading price. Each outstanding share of Raima common stock will be converted into the number of shares of Centura common stock and the amount of cash determined by dividing the total number of shares issuable and the total amount of cash payable by the number of shares of Raima common stock outstanding. No fractional shares of Centura common stock will be issued in connection with the merger. Instead you will receive cash, without interest, in lieu of a fraction of a share of Centura common stock. Raima stockholders may also receive cash equal to any positive balance sheet adjustment, which will be equal to the excess, if any, of Raima's current net equity over Raima's "maximum net equity," which is equal to Raima's (a) net equity as of December 31, 1998 plus (b) $700,000. Escrow Arrangement According to the terms of the merger agreement and an escrow agreement, Centura will pay to each holder of Raima stock at the time of the merger 80% of the shares of Centura common stock and 80% of the cash to which such stockholder is entitled to receive. The 20% balance of stock and cash will be put in escrow to cover any indemnification claims under the merger agreement. See the section entitled "The Merger-The Merger Agreement-Indemnification Claims against the Raima Stockholders" on page 46. U.S. Bank Trust, National Association, is the designated escrow agent. The escrow agent will deliver an irrevocable proxy to the former Raima stockholders' representatives under which the former Raima stockholders will be entitled to vote based on their proportionate ownership of the Centura shares held in escrow. The escrow agent will invest the cash held in escrow as directed in writing by the former Raima stockholders' representatives. See the section entitled "The Merger-The Merger Agreement-The Stockholders' Representatives on page 47. The escrow agent may only invest in certain types of obligations, as specified in the escrow agreement. All interest and income from the investments will be added to the escrow account. The escrow agent will not be liable for any losses from the investments. Six months after the effective date of the merger, the escrow agent will release to the former Raima stockholders the number of Centura shares equal to half of: o the Centura shares held in escrow minus o the number of shares which, when added to the cash held in escrow, are needed to cover any indemnification claims then pending (including reasonable legal fees and expenses). One year after the effective date of the merger, the escrow agent will release the balance of first the Centura shares held in escrow and then the cash held in escrow, to the extent such shares and cash are not needed to reasonably cover any indemnification claims then pending. Centura will pay the fees and expenses of the escrow agent. Exchange of Raima Stock Certificates for Centura Stock Certificates and Cash When the merger is completed, Centura will (1) deposit 20% of the number of shares of Centura common stock and 20% of the total amount of cash payable to Raima stockholders in the merger into the escrow account and (2) mail to each Raima stockholder a letter of transmittal and instructions for use in surrendering their Raima stock certificates in exchange for Centura stock certificates and cash, if applicable. When you deliver your Raima stock certificates to the transfer agent along with a properly executed letter of transmittal and any other required documents, your Raima stock certificates will be canceled and you will receive Centura stock certificates and cash representing 80% of the number of full shares of Centura common stock and total amount of cash to which you are entitled under the merger agreement. You will also receive payment in cash, without interest, in lieu of any fractional shares of Centura common stock which would have been otherwise issuable to you as a result of the merger. YOU SHOULD NOT SUBMIT YOUR RAIMA STOCK CERTIFICATES FOR EXCHANGE UNLESS AND UNTIL YOU RECEIVE THE TRANSMITTAL INSTRUCTIONS AND A FORM OF LETTER OF TRANSMITTAL FROM THE TRANSFER AGENT. You are not entitled to receive any dividends or other distributions on Centura common stock until the merger is completed and you have surrendered your Raima stock certificates in exchange for Centura stock certificates. If there is any dividend or other distribution on Centura common stock with a record date after the merger and a payment date prior to the date you surrender your Raima stock certificates in exchange for Centura stock certificates, you will receive it with respect to the whole shares of Centura common stock issued to you promptly after they are issued. If there is any dividend or other distribution on Centura common stock with a record date after the merger and a payment date after the date you surrender your Raima stock certificates in exchange for Centura stock certificates, you will receive it with respect to the whole shares of Centura common stock issued to you promptly after the payment date. Centura will only issue a Centura stock certificate or a check in lieu of a fractional share in a name other than the name in which a surrendered Raima stock certificate is registered if you present the transfer agent with all documents required to show and effect the unrecorded transfer of ownership and show that you paid any applicable stock transfer taxes. Material United States Federal Income Tax Consequences of the Merger The following general discussion summarizes certain material United States federal income tax consequences of the merger, assuming that you hold your shares of Raima common stock as a capital asset. This discussion is based on the Internal Revenue Code of 1986, or the Code, its legislative history, applicable Treasury regulations, administrative rulings and court decisions currently in effect, all of which are subject to change at any time, possibly with retroactive effect. Neither a ruling from the Internal Revenue Service, or the IRS, nor an opinion of tax counsel will be received with regard to the United States federal income tax treatment relating to merger and, therefore, there can be no assurance that the IRS will agree with the conclusions set forth below. This discussion does not address all aspects of United States federal income taxation that may be important to you in light of your individual circumstances, particularly if you are subject to special rules, such as rules relating to (1) stockholders who are not citizens or residents of the United States, (2) financial institutions, (3) tax-exempt organizations, (4) insurance companies, (5) dealers in securities, (6) stockholders who acquired their shares of Raima common stock by exercising employee stock options or rights or otherwise as compensation or (7) stockholders who hold their shares of Raima common stock as part of a hedge, straddle or conversion transaction. It is expected that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Code. In that case: o No gain or loss will be recognized by Centura, Raima, or Centura Subsidiary Corporation as a result of the merger. o No gain or loss will be recognized by holders of Centura stock as a result of the merger. o No gain or loss will be recognized by you when you exchange all of your Raima common stock solely for Centura common stock in the merger (except with respect to cash you receive in the merger). o The aggregate tax basis of the Centura common stock you receive in the merger will be the same as your aggregate tax basis in the Raima common stock you surrender in the merger (reduced by the tax basis allocable to any fractional share interest in Centura common stock for which you receive cash and the amount of any additional cash you receive in the merger, and increased by the amount of any gain or dividend you recognize as a result of receiving such additional cash). o The tax holding period of the Centura common stock that you receive in the merger (including any fractional share interest for which you receive cash as described above) will include the period during which you held the Raima common stock surrendered in the merger. Any cash you receive in the merger in addition to the cash you receive in lieu of a fractional share of Centura common stock will result in you recognizing gain to the extent of the additional cash received, but not in excess of any gain you would have recognized on your Raima common stock if the merger were fully taxable. Your gain recognized on the receipt of the additional cash would be capital gain if the receipt of the additional cash is considered "not essentially equivalent to a dividend," determined as if you received additional shares of Centura common stock in the merger instead of the additional cash, which additional shares were then redeemed by Centura for the additional cash payment. The receipt of such cash by you will not be considered essentially equivalent to a dividend if based upon your individual facts and circumstances such deemed redemption of Centura common stock results in a "meaningful reduction" in your interest in Centura. The IRS has indicated in published rulings that even a small reduction in the proportionate interest of a small minority stockholder in a publicly held corporation who exercises no control over corporate affairs may constitute a "meaningful reduction." The IRS held in Revenue Ruling 76- 385, 1976-2 C.B. 92, that a reduction in the percentage ownership interest of a stockholder in a publicly held corporation from .0001118% to .0001081% (a reduction to 96.7% of the stockholder's prior percentage ownership interest) would constitute a "meaningful reduction." Under this ruling, it is likely that you would satisfy the "not essentially equivalent to a dividend" test if you are a small minority stockholder who exercises no control over Centura. In making this determination, you must take into account not only shares you actually own, but also shares you are deemed to own under Section 318 of the Code. In addition, contemporaneous or related transactions in stock or stock options may be taken into account. Any capital gain would be a long term capital gain if the holding period for your shares of Raima common stock is more than one year at the time the merger is consummated. You will recognize gain or loss with respect to the cash you receive in lieu of a fractional share interest in Centura common stock. Your gain or loss will be measured by the difference between the amount of cash that you receive in lieu of the fractional share and the portion of the tax basis of your shares of Raima common stock allocable to such fractional share interest (after adjustment to the basis to account for the receipt of any additional cash received by you and the gain or dividend resulting from the receipt of such cash). This gain or loss will be capital gain or loss and will be long term capital gain or loss if your shares of Raima common stock have been held for more than one year at the time the merger is consummated. In the event that the receipt of the additional cash by you does not satisfy the "not essentially equivalent to a dividend" test then your gain recognized on the receipt of the additional cash will be treated as a dividend instead of a capital gain to the extent of your ratable share of the accumulated earnings and profits of Raima. Accordingly, you should consult with your own tax advisors if you are expecting to rely on the "not essentially equivalent to a dividend" test. Pursuant to the merger agreement an escrow will be established to hold a portion of the Centura common stock you receive in the merger. The escrow agent will not elect to treat the escrow as an association taxable as a corporation for United States federal income tax purposes. Accordingly, you should be required to report on your federal income tax return your allocable share of any income or loss of the escrow and should be entitled to deduct your share of the fees and expenses of the escrow subject to applicable limitations. It is not expected that the escrow will have any material income. The foregoing discussion assumes that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Code. However, there may be a possibility that the merger as structured will not be considered such a reorganization because, for example, the amount of additional cash you may receive in the merger could exceed the amount permitted under the Code for a reorganization. In that event, you would be treated as selling your Raima common stock to Centura in a fully taxable transaction, resulting in capital gain or loss measured by the difference between the value of the Centura common stock and cash received by you in the merger and your tax basis in the Raima common stock. Gain or loss would be computed separately for each block of shares sold (shares acquired separately at different times and prices). The gain or loss on such sale would be long term capital gain or loss if your Raima common stock had been held for more than one year. The deductibility of capital losses is restricted and generally may only be used to reduce capital gains to the extent thereof. However, individual taxpayers generally may deduct annually $3,000 of capital losses in excess of their capital gains. This foregoing discussion is a general summary and is not intended to be a complete analysis or description of all potential United States federal income tax consequences of the merger. In addition, this discussion does not address (1) tax consequences which may vary with, or are contingent on, your particular circumstances and tax situation and (2) any non-income tax or any foreign, state or local tax consequences of the merger. You are strongly urged to consult with your tax advisor regarding the tax consequences of the merger to you, including the effects of United States federal, state, local, foreign and other tax laws. Accounting Treatment of the Merger The merger will be accounted for by Centura as a purchase in accordance with generally accepted accounting principles. Application of the purchase method of accounting for the merger will reduce Centura's pre-tax earnings for approximately 5 years. The reported results of operations of Centura will include the results of Raima from and after the closing date of the merger. The assets, including intangible assets, and liabilities of Raima will be recorded at their fair values as of the closing date of the merger. Any excess of the purchase consideration over the fair values of the assets and liabilities of Raima will be recorded as goodwill and amortized over a 5-year period. Regulatory Filings and Approvals Required to Complete the Merger Centura is not aware of any material governmental or regulatory filings or approvals required for completion of the merger, other than compliance with the applicable corporate laws of Delaware and Washington. NASDAQ SmallCap Market Listing One of Raima's conditions to the merger is that Centura be in compliance with all of the requirements for continued listing on the NASDAQ SmallCap Market as of the date of the merger. However, this condition may be waived by Raima in its discretion. Rights of Dissenting Stockholders The following is a brief summary of your right to dissent from the merger. The summary is not exhaustive and you are encouraged to read the applicable provisions of Chapter 23B.13 of the Washington Business Corporation Act, or the Dissenters' Rights Statute, a copy of which is attached hereto as Annex B. Under the Dissenters' Rights Statute, you will be entitled to dissenters' rights as a result of the merger. You will have the right to dissent with respect to the merger and, subject to certain conditions, will be entitled to receive a cash payment equal to the fair value of your shares of Raima common stock under the Dissenters' Rights Statute. If you choose to assert dissenters' rights you must assert them with respect to all shares of Raima common stock which you beneficially own or have the power to direct the vote. You may assert dissenters' rights as to fewer than all the shares registered in your name only if you dissent with respect to all shares beneficially owned by any one person and notify Raima in writing of the name and address of each person on whose behalf you are asserting dissenters' rights. To exercise dissenters' rights, (a) before the vote on the merger is taken, you must deliver to Raima written notice of your intent to demand payment for your shares if the merger is effectuated, and (b) you must not vote in favor of the merger. A vote against the merger will not in itself satisfy the notice requirement, and failure to vote against the merger will not in itself constitute a waiver of dissenters' rights with respect to such shares. You should deliver notice of your intent to exercise dissenters' rights to Raima at its principal executive offices at 701 Fifth Avenue, Suite 4800, Seattle, WA. If you do not satisfy both of these requirements you will not be entitled to dissenters' rights. If the merger is approved, Raima will send written notice not later than 10 days after the effective time of the merger to each of its dissenting stockholders (a) stating where such stockholder must send his or her written payment demand, (b) stating where and when certificates representing shares of Raima common stock must be deposited, (c) containing a form for demanding payment which requires that the dissenter certify whether or not he or she acquired beneficial ownership before the first public announcement of the merger which occurred on March 15, 1999, and (d) setting a date by which such written payment demand must be received. A dissenting stockholder who does not demand payment must certify that he or she acquired the shares on or before March 15, 1999 and deposit his or her shares within the time provided by such notice or will not be entitled to dissenters' rights. Raima will pay to each dissenting stockholder who (a) complies with the procedures described above within 30 days after the later of the effective time of the Merger and the date the payment demand is received and (b) was a stockholder on March 15, 1999, the amount that Raima estimates to be the fair value of his or her shares, plus accrued interest. In addition, Raima will provide to these dissenting stockholders, financial information of Raima, including Raima's balance sheet, income statement and statement of changes in stockholders' equity for its last fiscal year and Raima's latest available interim financial statements, an explanation of how Raima estimated the fair value of the shares, and, an explanation of how the accrued interest was calculated. For dissenting stockholders who were not the beneficial owner of the shares of Raima common stock before March 15, 1999, Raima may withhold payment and instead send a statement setting forth its estimate of the fair value of their shares and offering to pay such amount, with interest, as a final settlement of such dissenting stockholder's demand for payment. Any dissenting stockholder who is dissatisfied with his or her payment or offer may, within 30 days of such payment or offer for payment, notify Raima in writing of their estimate of fair value of his or her shares and the amount of interest due and demand payment thereof. If any dissenting stockholder's demand for payment is not settled within 60 days after receipt by Raima of his or her payment demand, the Dissenters' Rights Statute requires that Raima commence a proceeding in King County Superior Court and petition the court to determine the fair value of the shares and accrued interest, naming all the dissenting stockholders whose demands remain unsettled as parties to the proceeding. The court may appoint one or more persons as appraisers to receive evidence and recommend the fair value of the shares. The dissenting stockholders will be entitled to the same discovery rights as parties in other civil actions. Each dissenting stockholder made a party to the proceeding will be entitled to judgment for the amount, if any, by which the court finds the fair value of his or her shares, plus interest, exceeds the amount paid by Raima. Stockholders should recognize that a court determination of fair value could result in a price higher than, lower than or equal to the price available to Raima's stockholders pursuant to the merger. Under the Dissenters' Rights Statute, a court may consider a variety of factors in determining fair value. The Dissenters' Rights Statute requires that the court consider all relevant facts and circumstances in determining the fair value and that it not give undue emphasis to any one factor. Court costs and appraisal fees would be assessed against Raima, except that the court may assess such costs against some or all of the dissenting stockholders to the extent that the court finds that the dissenting stockholders acted arbitrarily, vexatiously or not in good faith in demanding payment. The court may also assess the fees and expenses of counsel and experts of the respective parties in amounts that the court finds equitable: (a) against Raima, if the court finds that it did not substantially comply with the Dissenters' Rights Statute, and (b) against the dissenting stockholder or against Raima, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously or not in good faith. If the court finds that services of counsel for any dissenting stockholder were of substantial benefit to other dissenting stockholders similarly situated, and that the fees should not be assessed against Raima, the court may award to such counsel reasonable fees to be paid out of the amounts awarded to dissenting stockholders who benefited from the proceedings. The Merger Agreement Representations and Warranties. Centura and Raima each made a number of representations and warranties in the merger agreement regarding aspects of their respective businesses, financial condition, structure and other facts pertinent to the merger. In addition, certain principal stockholders of Raima made representations concerning title and ownership of their Raima shares and certain other matters. The representations given by Raima cover the following topics, among others, as they relate to Raima and its subsidiaries: o Raima's corporate organization and its qualification to do business o Raima's capitalization o identification of Raima's subsidiaries o Year 2000 compliance of Raima's products o Raima's financial statements o Raima's accounts receivable o Raima's taxes o changes in Raima's business, properties or financial position since December 31, 1998 o Raima's largest customers and Raima's notice that any intend to cease doing business with Raima o Raima's material contracts o identification of Raima's key employees o labor matters o Raima's employee benefit plans o Raima's authority to enter into the merger agreement o governmental consents and approvals needed in connection with the merger o property leased by Raima o Raima's personal property o litigation involving Raima o the possession and compliance with governmental licenses and permits required to conduct Raima's business o employee-related claims against Raima o employees and proprietary information o intellectual property used by Raima o brokers engaged by Raima in connection with the merger o the condition of Raima's equipment o environmental matters concerning real property used by Raima o Raima's corporate records o information supplied by Raima in the merger agreement, this prospectus and the related registration statement filed by Centura The representations given by Centura cover the following topics, among others, as they relate to Centura and its subsidiaries: o Centura's corporate organization and its qualification to do business and the organization of Centura Subsidiary o Centura's capitalization o authorization of the merger agreement by Centura and Centura Subsidiary o governmental approvals required to complete the merger o the validity of the shares to be issued in the merger o Centura's filings and reports with the SEC o Centura's financial statements o Developments having an adverse effect on Centura's business since December 31, 1998 o information supplied by Centura in the merger agreement, this prospectus and the related registration statement filed by Centura o the effect of the merger on obligations of Centura and under applicable laws o litigation involving Centura The representations, warranties and covenants in the merger agreement are complicated and not easily summarized. You are urged to carefully read the article II of the merger agreement entitled "Representations and Warranties of the Company" and article IV of the merger agreement entitled "Representations, Warranties and Covenants of Centura." Raima's Conduct Of Business Before Completion Of The Merger. Raima agreed that until the completion of the merger, Raima and its subsidiaries will operate its businesses in the ordinary course and use commercially reasonable efforts to: o preserve intact its current business organization; o conserve the goodwill and relationships of its o customers o suppliers o others having business relations with it; and o keep available the services of its officers, employees, agents and representatives. Raima also agreed that until the completion of the merger, Raima would conduct its business in compliance with specific restrictions relating to the following: o the maintenance of Raima's corporate existence and good standing in the appropriate jurisdictions o the amendment of Raima's articles of incorporation and bylaws o the issuance of dividends or other distributions o the increase in compensation of its employees or officers other than normal increases or certain permitted bonuses o the merger with or acquisition of assets of other entities o the taking of any action which would be a breach or default under its contracts o allowing Centura access to Raima's corporate offices, properties and records o the taking of any action which would result in any representation or warranty in the merger agreement being materially inaccurate or incorrect o the provision of financial statements to Centura The agreements related to the conduct of Raima's business in the merger agreement are complicated and not easily summarized. You are urged to carefully read article V of the merger agreement entitled "Covenants of the Company." No Other Negotiations Involving Raima. Until the merger is completed or the merger agreement is terminated, Raima has agreed not to submit, solicit, initiate, encourage or discuss any proposal or enter into any agreement or accept an offer relating to: o a major restructuring of Raima, or any of its subsidiaries, other than the sale of the internet consulting division of Raima's subsidiary, Vista Development Corporation as described more fully in the section entitled "Information Regarding Raima-Results of Operations" on page 59 o additional borrowings or increased indebtedness outside of the ordinary course of business o a merger or consolidation of Raima or any subsidiary o a purchase or sale of material assets or capital stock o any similar transaction or business combination involving Raima or its subsidiaries, or their assets In addition, Raima has agreed not to furnish any information to any third person relating to the matters mentioned above and to notify Centura about any proposal, offer, inquiry or contact relating to the matters mentioned above which it receives. Centura's Covenants. The covenants given by Centura cover the following topics, among others, as they relate to Centura and its subsidiaries: o the appointment of Thomas R. Clark or another designated individual to Centura's board of directors, as discussed in the sections entitled "The Merger-Operations after the Merger" on page 48 and "Conflicts of Interest of Certain Persons in the Merger" on page 32 and o access to information. Treatment Of Raima Stock Options. Under the terms of Raima's Stock Option Plan, each of Raima's outstanding stock options will become fully vested and exercisable immediately prior to the merger. The shares of Raima common stock issued upon exercise will then be converted into Centura stock and cash on the same terms as all other outstanding shares of Raima common stock are converted upon completion of the merger. Any stock options not exercised prior to completion of the merger will expire and be terminated. Conditions To Completion Of The Merger. Centura's and Raima's obligations to complete the merger and the other transactions contemplated by the merger agreement are subject to the satisfaction of each of the following conditions before completion of the merger, each of which may be waived by both parties: o Centura's registration statement on Form S-4, of which this prospectus forms a part, must be effective and all necessary state securities authorizations must have been obtained o the merger agreement must be adopted by the holders of two- thirds of the outstanding shares of Raima common stock o no suit, action or other proceeding shall be pending or threatened before any court or governmental agency seeking to restrain, to prohibit or to obtain material damages in connection with the merger o all applicable approvals and consents required to complete the merger must be received o the ancillary agreements, including employment agreements with key employees of Raima and an escrow agreement, must be executed and delivered o the "average trading price" of Centura's shares must not be less than $1.00 per share Centura's obligations to complete the merger and the other transactions contemplated by the merger agreement are subject to the satisfaction of each of the following additional conditions before completion of the merger, each of which may be waived by Centura: o Raima's and its principal stockholders' representations and warranties must be true and correct in all material respects on the date of closing of the merger o Centura must receive a legal opinion of Heller Ehrman White and McAuliffe, counsel to Raima o Raima and its principal stockholders must perform or comply in all material respects with all of their agreements and covenants required by the merger agreement o holders of no more than 6% of Raima's common stock will have dissented from the merger under Washington law o Centura must receive an officers' certificate from Raima and certificates from Raima's principal stockholders o Raima must have received Raima's audited financial statements for fiscal years ended December 31, 1998 and 1997, together with an unqualified opinion from PricewaterhouseCoopers LLP Raima's obligations to complete the merger and the other transactions contemplated by the merger agreement are subject to the satisfaction of each of the following additional conditions before completion of the merger, each of which may be waived by Raima: o Centura must be in compliance with all the requirements for continued listing on the Nasdaq SmallCap Market o Centura's representations and warranties must be true and correct in all material respects on the date of closing of the merger o Raima and its stockholders must receive a legal opinion of Orrick, Herrington & Sutcliffe LLP, counsel to Centura o Centura must perform or comply in all material respects with all of its agreements and covenants required by the merger agreement o Raima and its stockholders must receive an officer's certificate from Centura o within 5 days of the merger, Centura must not have issued a press release containing news adverse to Centura Termination Of The Merger Agreement. The merger agreement may be terminated at any time prior to completion of the merger, whether before or after adoption of the merger agreement by Raima stockholders: o by mutual consent of Centura and Raima o by Centura or Raima, if the merger is not completed before June 7, 1999 except that the right to terminate the merger agreement is not available to any party whose failure to fulfill any obligation under the merger agreement has been a cause of the failure to complete the merger on or before June 7, 1999 Payment Of Merger Expenses upon Termination. If the merger agreement is terminated because of: o a breach by Centura, Centura will pay all of Raima's merger- related fees and expenses; o a breach by Raima, Raima will pay all of Centura's merger- related fees and expenses; o any reason other than a breach by Centura or Raima, Centura will pay up to $100,000 of Raima's merger-related fees and expenses. Indemnification Claims against the Raima Stockholders. Centura and Raima and their successors, assigns, officers, directors, stockholders, employees and agents will be indemnified and held harmless by the Raima stockholders from and against all damages, claims, losses, liabilities and expenses, including legal and accounting, which arise out of o any breach of the merger agreement by Raima or its principal stockholders who are parties to the merger agreement o any breach of any of the representations, warranties or covenants made in the merger agreement by Raima or its principal stockholders who are parties to the merger agreement o any inaccuracy or misrepresentation in the schedules or exhibits or certificate or document delivered according to the merger agreement by Raima or its principal stockholders who are parties to the merger agreement o any claim based on events occurring or circumstances existing prior to the effective date of the merger. Parties will only be entitled to indemnification if the aggregate indemnification claims exceed $100,000. All rights to assert indemnification claims expire one year after the effective date of the merger, except for claims notified to the stockholders' representatives prior to the one-year expiration date. Indemnification claims will be satisfied solely by first the cash and then the shares held in escrow. See the section entitled "The Merger-Escrow Arrangement" on page 34. No former Raima stockholder will have any personal liability for the indemnification claims. Stockholders' Representatives. Under the merger agreement, Stephen P. Smith, Wayne L. Warren and Randall L. Merilatt, principal stockholders and directors of Raima, are appointed and authorized to act as the representatives, exclusive agent and attorney-in-fact of the Raima stockholders for all matters of the merger agreement and the escrow agreement. The stockholders' representatives will act by vote or consent by any one or more of them owning a majority of the Centura shares held in escrow. Any action taken by the stockholders' representatives will be binding on the Raima stockholders. The stockholders' representatives will act at all times in the best interests of the Raima stockholders and will provide written notice to them within 3 business days of any action taken on their behalf. Employment Agreements As a condition to the merger, Centura will enter into employment agreements with Stephen P. Smith, Randall L. Merilatt, Wayne L. Warren and Steven T. Graves. Mr. Smith will be employed as Vice President, Business Development of Centura; Mr. Graves will be employed as Vice President, Worldwide Consulting of Centura; and Messrs. Warren and Merilatt will be employed as Senior Database Architects of Centura. Centura will pay these employees annual salaries as follows: Mr. Smith, $175,000, Mr. Graves, $150,000, and Messrs. Warren and Merilatt, $135,000. Their compensation package will also include bonuses and commissions and options to purchase an aggregate of 1,200,000 shares of Centura common stock. The initial term of employment in each agreement is 3 years following the merger, unless sooner terminated, as described below. These employees agree not to compete with Centura or solicit any of Centura's customers for a period ending on the earlier of o 3 years after the effective date of the merger, or o the date which is 1 year after termination of the employment agreement. However, the employees may own, manage or be employed by entities which do not compete directly with Centura's database business. If any of these employees is terminated by Centura other than for "cause" or voluntarily resigns for "good reason," as defined in their employment agreements, they will continue to be paid their annual salary for a period after termination equal to the lesser of (a) 18 months or (b) the end of the regular term of employment under their employment agreement, but in no event less than 3 months. In addition, following Centura's termination of any of these employees other than for "cause," or an employee's resignation for "good reason," that employee's options will continue to vest and remain exercisable as they would have if the employee remained an employee of Centura. Raima Employee Stock Options Provided the merger occurs, Centura has agreed to issue options, effective the date of the merger, to purchase up to 800,000 shares of Centura common stock to the former employees of Raima (excluding Messrs. Smith, Graves, Warren and Merilatt). The exercise price, vesting schedule and other terms and conditions of these options will be consistent with options issued under Centura's existing stock option plan for its employees. Operations after the Merger Stockholders. Following the merger, Raima will become a wholly owned subsidiary of Centura, and be fully integrated with Centura's operations. The membership of Centura's board of directors will remain unchanged as a result of the merger, except Centura has agreed to appoint Thomas R. Clark to its board of directors, and in connection with its next 2 annual meetings thereafter, to nominate and recommend for election Mr. Clark, or another designee of Raima's principal stockholders, to its board of directors for a period of 2 years after the merger or until the principal stockholders fail to collectively own 50% of the Centura shares issued to them in the merger. Some of the conditions of the merger include that: o Stephen P. Smith, Raima's Chairman and Chief Executive Officer, join Centura as Vice President of Business Development; o Steven Graves, Raima's President and Chief Operating Officer, join Centura as Vice President of Consulting; and o Wayne Warren and Randall Merilatt, current employees and significant stockholders of Raima, join Centura as Senior Database Architects. Messrs. Smith, Graves, Warren and Merilatt have separate employment contracts. The stockholders of Raima will become stockholders of Centura, and their rights as Stockholders will be governed by the Centura bylaws and the laws of the State of Delaware. Management. Following the merger, the Seattle office of Raima will continue to function indefinitely, but as an office of Centura. The office will focus on developing and maintaining existing Raima products, as well as other products Centura may decide to develop and offer to the market. Centura's management team will remain in place following the merger, supplemented by Mr. Smith as Vice President of Business Development, and Mr. Graves as Vice President of Consulting. Administration. To the extent possible, the administrative functions currently performed at Raima will be consolidated with those at Centura. Administration consists primarily of Finance, Accounting, Operations, and Human Resources. Finance and Accounting will be consolidated generally within one quarter following the completion of the merger, whereas Human Resources will be consolidated immediately following the merger. Engineering and Consulting. There will be two database code lines; one each for Centura and Raima. The development of Centura products will remain at Redwood Shores, whereas the development of Raima products combined with certain Centura product development will remain in Seattle. The consulting business will be managed out of the Seattle office. However, Raima has entered into an agreement to sell the internet consulting business conducted by Raima's wholly owned subsidiary, Vista Development Corporation, which is expected to occur prior to the merger. Sales and Marketing. The combined sales force will be structured similar to the Centura sales organization; a North American, European and Asia Pacific organizations with regional divisions, supplemented with Raima staff. There will also remain an "inside" sales staff which will remain in Seattle. Following the merger, all products will be cross-sold - there will not be separate Centura or Raima sales forces. Products. Following the merger, Centura will continue to offer all of its current products, along with Raima Database Manager and Velocis products. Centura will brand all products as Centura, and product pricing is expected to remain unchanged. UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL INFORMATION The following unaudited pro forma condensed combined consolidated financial information gives effect to the acquisition by Centura of Raima in a transaction accounted for as a purchase. The unaudited pro forma condensed combined consolidated financial information is based on the individual historical consolidated financial statements (and related notes) of Centura and Raima for the year ended December 31, 1998, incorporated by reference or included elsewhere in this prospectus. The following unaudited pro forma condensed combined consolidated statement of operations is not necessarily indicative of the results of operations of the combined company or the results of operations which would have resulted had Centura and Raima been combined during the period presented. In addition, the pro forma results are not intended to be a projection of future operating results. The unaudited pro forma condensed combined consolidated financial information should be read in conjunction with the historical consolidated financial statements (and related notes) of Centura and Raima incorporated by reference or appearing elsewhere in this prospectus. The unaudited pro forma condensed combined consolidated balance sheet assumes that the acquisition took place on December 31, 1998. The unaudited pro forma condensed combined consolidated statement of operations assumes that the acquisition took place as of January 1, 1998. The unaudited pro forma condensed combined consolidated financial statements are based on the estimates and assumptions set forth in the notes to such statements. The pro forma adjustments are based on a preliminary valuation of Raima made in connection with the development of the pro forma information for illustrative purposes to comply with the disclosure requirements of the SEC. Centura Software Corporation Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet (in thousands)
Centura Raima Pro Forma December 31, December 31, -------------------------- 1998 1998 Adjustments Combined ------------ ------------ ------------ ----------- Current Assets: Cash and cash equivalents.................. $6,414 $406 $6,820 Accounts receivable, net................... 12,988 1,800 14,788 Other current assets....................... 3,627 303 ($85)(b) 3,845 ------------ ------------ ------------ ----------- Total current assets.................... 23,029 2,509 (85) 25,453 Property and equipment, net.................. 2,888 437 3,325 Goodwill..................................... -- -- 6,399 (c) 6,399 Intangibles and other assets................. 3,455 77 3,532 ------------ ------------ ------------ ----------- Total assets............................ $29,372 $3,023 $6,314 $38,709 ============ ============ ============ =========== Current Liabilities: Accounts payable........................... $2,798 $462 $3,260 Accrued compensation and related expenses.. 1,567 408 1,975 Short-term borrowings...................... 2,663 364 3,027 Other accrued liabilities.................. 1,744 316 $750 (d) 2,810 Deferred revenue........................... 13,274 873 14,147 ------------ ------------ ------------ ----------- Total current liabilities............... 22,046 2,423 750 25,219 Other long-term liabilities.................. 53 36 (36)(b) 53 Commitments and contingencies Stockholders' equity: Preferred stock............................ -- -- -- Common stock............................... 85,690 2,257 3,907 (a) 91,854 Accumulated other comprehensive loss....... (426) -- (426) Deferred compensation...................... -- (640) 640 (a) -- Accumulated deficit........................ (77,991) (1,053) 1,053 (a) (77,991) ------------ ------------ ------------ ----------- Total stockholders' equity.............. 7,273 564 5,600 13,437 ------------ ------------ ------------ ----------- Total liabilities and stockholders' equity................................ $29,372 $3,023 $6,314 $38,709 ============ ============ ============ ===========
See accompanying notes to unaudited pro forma condensed combined consolidated financial information. Centura Software Corporation Unaudited Pro Forma Condensed Combined Consolidated Statement of Operations (in thousands, except per share data)
For the Year Ended December 31, Pro Forma ------------------------- -------------------------- Centura Raima Adjustments Combined ------------ ------------ ------------ ----------- Net revenues: Product.................................... $33,453 $6,314 $39,767 Service.................................... 20,044 2,270 22,314 ------------ ------------ ------------ ----------- Net revenues 53,497 8,584 62,081 ------------ ------------ ------------ ----------- Cost of revenues: Product.................................... 4,652 96 4,748 Service.................................... 4,382 1,170 5,552 ------------ ------------ ------------ ----------- Cost of revenues........................ 9,034 1,266 10,300 ------------ ------------ ------------ ----------- Gross profit............................ 44,463 7,318 51,781 ------------ ------------ ------------ ----------- Operating expenses: Sales and marketing........................ 25,776 3,054 28,830 Engineering and product development........ 7,938 1,648 9,586 General and administrative................. 6,854 2,729 9,583 Goodwill amortization...................... -- -- $1,280 (a) 1,280 ------------ ------------ ------------ ----------- Total operating expenses................ 40,568 7,431 1,280 49,279 ------------ ------------ ------------ ----------- Operating income (loss)................. 3,895 (113) (1,280) 2,502 Other income (expense), net.................. (1,507) (107) (1,614) ------------ ------------ ------------ ----------- Income (loss) before taxes................... 2,388 (220) (1,280) 888 Provision for income taxes................... (273) 93 (180) ------------ ------------ ------------ ----------- Net income (loss) from continuing operations..................... $2,115 ($127) ($1,280) $708 ============ ============ ============ =========== Basic net income per share................... $0.08 $0.02 ============ =========== Basic weighted average common shares(b)...... 27,390 33,190 ============ =========== Diluted net income per share................. $0.08 $0.02 ============ =========== Diluted weighted average common shares(b).... 27,776 33,576 ============ ===========
See accompanying notes to unaudited pro forma condensed combined consolidated financial information. Notes to Unaudited Pro Forma Condensed Combined Consolidated Financial Information Note 1-Basis of Presentation The unaudited pro forma condensed combined consolidated balance sheet has been prepared to reflect the acquisition of Raima by Centura as if the acquisition had occurred on December 31, 1998. The unaudited pro forma condensed combined consolidated statement of operations for the year ended December 31, 1998 has been prepared to reflect the acquisition of Raima by Centura as if the acquisition had occurred on January 1, 1998. The unaudited pro forma condensed combined consolidated statement of operations presents information only through income (loss) from continuing operations. Therefore, the extraordinary gain on the forgiveness of debt of $451,000, net of taxes, for Raima occurring in fiscal 1998 is excluded from this statement. There were no material differences in the accounting policies of Centura and Raima for the periods presented. Note 2-Purchase Accounting and Pro Forma Adjustments Purchase Price In connection with the merger, Centura issued or will be obligated to issue a total of 5,800,000 shares of Centura common stock. The market value of a share of common stock used to value the purchase price was $1.063. In addition, Centura anticipates incurring acquisition costs of $750,000, resulting in a total purchase price of $6,914,000. The Raima option grants contained provisions for accelerated vesting of all the options in the event of a transaction resulting in a change in control of Raima and are included in the total amount of shares issued by Centura. Allocation of Purchase Price The total purchase price of $6,914,000 was allocated to the fair value of the assets acquired and liabilities assumed as follows: Amortization Life --------------- Tangible assets........ $ 2,938,000 -- Goodwill .............. 6,399,000 5 Liabilities assumed.... (2,423,000) -- --------------- Total .......... $ 6,914,000 =============== Pro Forma Adjustments The following adjustments were applied to the historical consolidated statements of operations to arrive at the pro forma condensed combined consolidated statement of operations: (a) Reflects the amortization of anticipated goodwill for the year ended December 31, 1998 on a straight-line basis over 5 years. (b) Shares used in the pro forma per share calculations reflect the 5,800,000 Centura common shares issued to Raima stockholders as if they were outstanding from the beginning of the period presented. The following adjustments were applied to the historical consolidated balance sheets to arrive at the pro forma condensed combined consolidated balance sheet: (a) The elimination of the common stockholders' equity accounts of Raima. (b) The anticipated net assets of Raima established at fair value at the acquisition date. (c) The anticipated excess of acquisition cost over the fair value of the net assets acquired (goodwill). (d) The anticipated acquisition costs to be incurred. INFORMATION REGARDING RAIMA Overview Raima develops and markets database management systems that are used for developing commercial, industrial and corporate in-house software applications, as well as "embedded systems" applications that are built into hardware products, such as office equipment and consumer devices. Raima's products include two database management systems or database "engines" that provide the professional software developer with a number of options for customization. These database engines are provided on multiple operating systems, including Microsoft Windows (95/98, CE, NT), many types of UNIX, including Linux and Solaris, and real-time operating systems such as Wind River Systems' VxWorks and QNX Software's QNX. Raima has also developed technology used in generating reports from its database engines. In addition, Raima provides consulting, training and product support services. Raima has four wholly owned subsidiaries: o Vista Development Corporation, a Washington corporation which provides application development, database integration, performance optimization, design review and training to clients o Raima Deutschland GmbH, organized under the laws of Germany, which is responsible for sales and marketing in Germany o Raima ANZ, organized under the laws of Australia, which is responsible for sales and marketing in Australia and New Zealand o Raima International Sales Corporation, a foreign sales corporation organized under the laws of the Virgin Islands Raima has entered into an agreement to sell the internet consulting services business unit of Vista Development Corporation. Revenues from this business unit represented approximately 11% of Raima's consolidated net revenues in 1998. Raima anticipates this sale will occur prior to the merger becoming effective. Raima is based in Seattle, Washington and has sales offices in 14 countries. As of April 13, 1999, Raima and its subsidiaries had approximately 91 employees. Products and Technology Raima's principal products are embedded database management systems, Velocis Database Server and Raima Database Manager. Velocis is a client/server architecture database engine that supports the ODBC and SQL standards. Velocis also has interfaces for the C, C++, Java, Delphi, Perl and Visual Basic programming languages. Raima Database Manager is a file server architecture database engine, delivered in the form of a shared library of C language functions called by the application and offers a relatively small "footprint" in terms of RAM, CPU and disk storage demands. Raima has also developed Raima Report Writer, which allows users to generate reports from information stored in Raima Database Manager. Software products as complex as those offered by Raima may contain undetected errors. We cannot assure you that, despite testing by Raima and by customers, errors will not be found in the products, or, if discovered, successfully corrected in a timely manner. Services In addition to its product offerings, Raima provides consulting and implementation services as well as technical support. Raima provides consulting and implementation services through its wholly owned subsidiary, Vista Development Corporation. Vista provides a range of implementation and post-implementation services, including application development, database integration, design review, performance optimization, migration from Raima Database Manager to Velocis, and product training. Raima provides technical support through a team of engineers, who provide remote technical assistance for Raima's products, including answers to technical questions, functionality issues, and documentation clarification. Engineering Raima's product development efforts are currently directed toward refining and enhancing Velocis Database Server, Raima Database Manager, and Raima Report Writer. A key milestone for Raima will be the launch of Velocis Database Server version 3.0. This product's beta release is expected in the Second Quarter of 1999. Raima's current development goals for Velocis Database Server include developing and improving interfaces for development environments, such as Java and OLE DB, and implementing architectural changes to enhance performance. Raima is currently focusing its development efforts for Raima Database Manager on architectural changes that deliver "re- entrancy" or the ability to support multiple threads of execution simultaneously. Sales and Marketing Raima's target customers are professional software developers, development managers and executives. These include major hardware and software companies, consultants and firms developing systems for specific vertical markets, such as retail and manufacturing; and corporations developing applications for internal use. With the exception of the Raima Report Writer, Raima's products do not target application end-users. Raima concentrates its marketing efforts on the horizontal market of professional application development. By focusing on this group, Raima believes it can clearly identify its prospective accounts and the developers, managers and executives in these organizations, who are primary sales targets. Within the market of professional application development, Raima has identified several segments to focus its marketing efforts. These include network and systems management, telephony/telecommunications, and real-time and embedded systems. Raima employs a direct selling model, in which direct sales executives work with leads provided by the marketing department and with Raima's base of existing customers. Raima's sales process incorporates a "strategic/conceptual selling" methodology that addresses the issues involved in a complex sale, in which the purchasing decision usually involves multiple executives within the purchasing company. Raima sales executives meet with the customers and prospects and provide them with information, product descriptions and overviews, as well as a sales presentation. Distributors and OEM Relationships Approximately 16% of Raima's sales revenues come from international distributors and resellers. Raima typically engages these firms to sell in a country or group of countries and provides products at a discount of 30% or more. Distributors and resellers provide local marketing and sales organizations, which are assisted by Raima. In addition, approximately 17% of Raima's revenues are generated as royalties by original equipment manufacturers, or OEMs in the U.S. and internationally. These OEMs are technology companies that embed Raima databases into their own products. Raima is paid a royalty, which can be structured on a license fee per-unit-sold, an annual license fee, or as a royalty "buyout" covering a specified time period and platforms. The list price for royalties on Velocis Database Server is 60% of the price of Raima's development products, but discounts are often negotiated in larger transactions. Competition Raima's products compete in the embedded segment of the database management system market. Within this segment, competitors include vendors of embedded database management systems, such as Pervasive, Faircom, Solid, Sybase, MDBS, and Inprise. To a lesser extent, Raima's products also compete with providers of enterprise database management systems, including Microsoft and Oracle. Raima also competes with internally developed, custom database management software. Many of these competitors have significantly greater financial, technical, marketing and other resources than Raima. Such competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements or devote greater resources to the development, promotion and sales of products than Raima. We cannot be certain that Raima will be able to compete successfully against current and future competitors. Proprietary Rights Raima relies upon a combination of statutory and common law copyright, trademark and trade secret laws, customer licensing agreements, employee and third party non-disclosure agreements, and other methods to establish and maintain its proprietary rights to its products. Raima does not hold any patents. Raima generally enters into confidentiality agreements with its employees, consultants and customers, and limits access to, and distribution of, its proprietary information. Use of Raima's software products is subject to terms and conditions prohibiting unauthorized reproduction or transfer of such products. The laws of some foreign countries do not protect Raima's proprietary rights to as great an extent as do the laws of the United States. In addition, we cannot assure you that the steps taken by Raima to protect its proprietary rights will be adequate to prevent misappropriation of its technology or that Raima's competitors will not independently develop technologies or similar products that are substantially equivalent or superior to Raima's technology and products. Raima is not aware that any of its products infringes the proprietary rights of third parties. However, we cannot assure you that third parties will not claim infringement by Raima with respect to current or future products. Certain development tools and technology used in Raima's products are licensed from third parties, including the Velocis JDBC driver. Raima also licenses certain software products from third parties, including the Raima Report Writer. These licenses may require Raima to pay royalties and to fulfill confidentiality obligations. Raima believes that there are alternative sources for each of the material components of technology licensed by Raima from third parties. However, the termination of any of such licenses, or the failure of the third party licensers to adequately maintain or update their products, could result in delay in Raima's ability to ship certain of its products while it seeks to implement technology offered by alternative sources. Any required replacement licenses could prove costly. Management's Discussion and Analysis Management's discussion and analysis should be read in conjunction with the consolidated financial statements of Raima and related notes and the information contained in "Selected Consolidated Financial Data of Raima." The following discussion may contain predictions, estimates, and other forward-looking statements that involve a number of risks and uncertainties. See "Risk Factors" beginning on page 13 for a discussion of certain factors that could cause actual results to differ from those described in the following discussion. Overview Raima was founded in 1982 to provide consulting services and to develop embedded database management systems. Raima sells its database products primarily to professional application developers for use in commercial and line-of-business database applications. Raima's products are hardware independent and operate on a number of computing environments, including Microsoft Windows 3.11, Windows 95, Windows NT, QNX, VxWorks, Linux and many UNIX variants, including Solaris, HP-UX, AIX, SCO, BSDI. Raima's products include Velocis Database Server, Raima Database Manager and Raima Report Writer. Raima sells its products through a direct sales force, international distributors, and Value Added Resellers (VARs). Raima generates revenue from product sales, license fees paid by VARs and distributors, and service fees paid by its customers for technical support and database and internet consulting. Prior to 1998, Raima recognized revenue in accordance with Statement of Position 91-1, "Software Revenue Recognition" (SOP 91-1). For the fiscal year beginning January 1, 1998, Raima has recognized revenue in accordance with Statement of Position No. 97-2, "Software Revenue Recognition" (SOP 97-2). In December, 1998, the American Institute of Certified Public Accountants also issued Statement of Position 98-9, "Modification of SOP 97-2, Software Recognition, with Respect to Certain Transactions", which Raima will adopt for transactions entered into during the fiscal year beginning January 1, 1999. Results of Operations The following table sets forth, for the periods indicated, selected consolidated financial data of Raima and such data as a percentage of Raima's total net revenue:
Year Ended December 31, --------------------------------------- 1998 1997 ------------------- ------------------- Per- Per- centage centage of total of total net net Amount Revenue Amount Revenue --------- --------- --------- --------- Net revenue: Product........................... $6,314 74% $7,552 88% Service........................... 2,270 26% 1,061 12% --------- --------- --------- --------- Net revenue.................... 8,584 100% 8,613 100% --------- --------- --------- --------- Cost of revenue: Cost of product revenue........... 96 1% 167 2% Cost of service revenue........... 1,170 14% 769 9% --------- --------- --------- --------- Gross profit................... 7,318 85% 7,677 89% --------- --------- --------- --------- Operating expenses: Sales and marketing............... 3,054 36% 3,619 42% Engineering and product development..................... 1,648 19% 1,548 18% General and administrative........ 2,729 31% 2,116 24% --------- --------- --------- --------- Total operating expenses....... 7,431 86% 7,283 84% --------- --------- --------- --------- Operating income............... (113) -1% 394 5% Other income (expense), net......... (107) -1% (51) -1% --------- --------- --------- --------- Income (loss) before taxes and extraordinary item................ (220) -2% 343 4% Provision (benefit) for income taxes............................. (93) -1% 20 -- --------- --------- --------- --------- Net income (loss) before extraordinary item................ (127) -1% 323 4% Extraordinary item, net of applicable income taxes........... 451 5% -- -- --------- --------- --------- --------- Net income.......................... $324 4% $323 4% ========= ========= ========= =========
Net Revenue. Raima's net revenue for 1998 was $8.6 million which was consistent with net revenue in 1997. Net revenue remained static in 1998 primarily due to management's decision in 1998 to limit marketing and sales expenditures, in order to pay approximately $1.2 million of pre-bankruptcy petition obligations and to reduce borrowings under Raima's line of credit. Management has increased its spending on sales and marketing beginning in January 1999. Raima has entered into an agreement to sell the internet consulting division of its wholly owned subsidiary, Vista Development Corporation in fiscal year 1999. This division generated $1.0 million of Raima's net revenue in 1998 and $262,000 of Raima's net revenue in 1997. As of March 31, 1999, revenue from this division had exceeded $490,000 for the three months then ended. This sale may cause 1999 revenue to decrease. However, management believes that the cash provided by the sale will enable Raima to invest more in its core competencies, database development and services. Net Product Revenue. Net product revenue consists of license fees from certain resellers under product licensing arrangements. Net product revenue for 1998 was $6.3 million, which represents a 17% decrease from net product revenue of $7.6 million in 1997. This decrease was primarily due to the loss of a customer. In addition, reduced investment in sales and marketing in the second and third quarters of 1998 resulted in a decrease in product sales in the fourth quarter of 1998. Net Service Revenue. Net services revenue consists of consulting, training and maintenance. Net service revenue for 1998 was $2.3 million, which represents an increase of 109% over 1997 service revenue of $1.1 million. This increase was primarily due to Raima's dedication of a full- time salesperson to database services sales in 1998 and the resulting service fees paid under several significant long-term contracts awarded in 1998. Cost of Product Revenue. Cost of product revenue includes the cost of media (CDs, tapes, etc.) freight, training and product manuals, and the amortization of capitalized software. Cost of product revenue as a percentage of product revenue was 2% in 1998, compared with 3% in 1997. Cost of Service Revenue. Cost of service revenue consists primarily of personnel costs related to database consulting and internet services consulting. Cost of service revenue as a percentage of service revenue was 52% in 1998, compared with 73% in 1997. The decrease in cost of service revenue as a percentage of service revenue in 1998 was primarily due to a higher utilization of direct personnel resources, and an increase in average billing rates. Sales and Marketing Expenses. Sales and marketing expenses consist principally of salaries, sales commissions and costs of advertising and marketing campaigns. Sales and marketing expenses decreased 14% to $3.1 million in 1998 from $3.6 million in 1997. Sales and marketing expenses represented 36% of net revenue in 1998, compared with 42% of net revenue in 1997. The decrease in sales and marketing expenses, both as percentage of revenue and in total dollars spent in 1998, was primarily due to management's decision to reduce spending on sales and marketing in the second and third quarters of 1998 by consolidating the senior marketing and senior sales positions, attending fewer trade shows than in previous years, and using internet in place of print advertisements. Engineering and Product Development. Engineering and product development consists principally of salaries, quality assurance, documentation and technical support personnel. Engineering and product development expenses increased 6% to $1.6 million in 1998 from $1.5 million in 1997. As a percentage of total net revenue, engineering and product development expenses also increased slightly to 19% of net revenue in 1998 from 18% of net revenue in 1997. This increase is primarily due to normal pay increases and merit raises. General and Administrative Expenses. General and administrative expenses consist primarily of staffing and related expenses in the following functional areas: executive offices, finance, legal, information systems, shipping and administration. They also include expenses for rent and facilities, depreciation, and outside services. General and administrative expenses increased 29% to $2.7 million in 1998 from $2.1 million in 1997. This increase was primarily due to the addition of a senior executive, a senior consultant, a full-time contracts administrator, and an assistant in accounts receivable, combined with employee raises of 4% to 5% and employee merit increases. Other Income (Expense). Other income (expense) primarily consists of interest expense. Extraordinary Item, Net of Applicable Income Taxes. Extraordinary item, net of applicable income taxes was due to the forgiveness in May 1998, of approximately $451,000, net of tax, of debt and interest related to obligations incurred prior to the filing of Raima's bankruptcy petition in June 1994. Provision (Benefit) for Income Taxes. Raima reported an income tax benefit of $93,000 in 1998, compared with an income tax provision of $20,000 in 1997. The income tax benefit in 1998 was primarily due to the tax losses in 1998, which Raima believes will be available to offset taxable income related to the extraordinary gain. Liquidity and Capital Resources. At December 31, 1998, Raima had working capital of approximately $86,000 and net stockholders equity of approximately $564,000. Excluding the impact of deferred product and support revenue of $873,000, Raima had working capital of approximately $959,000 at December 31, 1998. The deferred product and support revenue of $873,000 at December 31, 1998, reflects a delay in recognition of revenue in accordance with contractual agreements and requires minimal resources of Raima. Net cash provided by operating activities was $1,007,000 in 1998, compared to net cash provided by operating activities of $523,000 in 1997. Net cash used in investment activities was $153,000 in 1998, and cash used for investment activities was $187,000 in 1997. In each year cash was used by investment activities to purchase property and equipment. Net cash used by financing activities was $913,000 in 1998, compared to net cash used by financing activities of $39,000 in 1997. The increase in net cash used by financing activities in 1998 was principally due to the repayment of long-term obligations to creditors in the amount of $1.2 million offset by proceeds from the line of credit in the amount of $114,000. Also, in 1998, cash in the amount of $227,000 was received upon payment of a note from Raima UK, a distributor. In 1997, repayments of notes payable of $272,000 offset by net proceeds from the line of credit of $250,000 and the issuance of common stock, accounted for the cash used by financing activities. As of December 31, 1998, Raima's principal sources of liquidity were cash of $406,000 and its line of credit. Raima management believes that expected cash flow from operations and existing cash balances, as well as borrowings under its line of credit will be sufficient to meet Raima's currently anticipated working capital and capital expenditure requirements for at least the next 12 months. In April 1998, Raima entered into a loan and security agreement with Silicon Valley Bank, which provided Raima with $2.0 million line of credit, secured by substantially all of Raima's assets. As of December 31, 1998, approximately $364,000 was outstanding under the loan and security agreement. In April of 1999, Raima entered into a new $1.0 million loan revolving agreement with Silicon Valley Bank to replace the $2.0 million loan agreement. This facility bears interest at 1.5% above the prime rate and expires in one year. The loan is secured substantially by all of Raima's assets. The loan agreement is subject to a number of financial and non-financial covenants, including a covenant not to merge with any other entity, which will need to be waived in connection with the merger. Year 2000 Issues Raima utilizes a significant number of computer software programs and operating systems across its entire organization. To the extent that Raima's software applications use source codes that are unable to appropriately recognize the upcoming calendar year 2000, some level of modification, or even replacement of such applications, may be necessary. Accordingly, Raima is reviewing its internal computer programs and systems to prepare for problems associated with the year 2000. Raima is also currently assessing the extent to which its non-information technology systems are not Year 2000 compliant and the remediation required to bring those systems into compliance. Raima has taken steps to identify the extent to which the software applications and computer equipment used in its internal operations will need to be modified or replaced to accurately function after January 1, 2000, and has begun the required modification and replacement. Raima believes it will complete the process of making its internal operations Year 2000 compliant in a timely manner. Raima is also currently assessing the extent to which its non-information technology systems are not Year 2000 compliant and the remediation required to bring these systems into compliance. Raima has also initiated discussions with third parties with whom it has material relationships to identify and assess the risk posed to Raima by their Year 2000 issues. At this time Raima is unable to estimate the extent of the risk it faces from third parties' failure to effectively address Year 2000 issues. Raima presently believes that Year 2000 issues will not pose significant operational problems. However, it is possible that undetected Year 2000 issues, or Year 2000 issues of third parties with whom Raima has material relationships, could have a material adverse effect on Raima's operations or result of operations. The discussion of the Raima's efforts, and management's expectations, relating to Year 2000 compliance are forward-looking statements. Raima's ability to achieve Year 2000 compliance and the costs associated therewith, could be adversely impacted by, among other things, the availability and cost of programming and testing resources, vendors' ability to modify proprietary software, and unanticipated problems identified in the ongoing compliance review. Recent Accounting Pronouncements. In April 1998, the American Institute of Certified Public Accountants issued Statement of Position 98-1, "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 provides guidance on capitalization of the costs incurred for computer software developed or obtained for internal use. It also provides guidance for determining whether computer software is internal-use software, and on accounting for the proceeds of computer software originally developed or obtained for internal use and then subsequently sold to the public. Raima has not yet determined the impact, if any, of adopting this statement. The disclosures prescribed by SOP 98-1 will be effective for Raima's consolidated financial statements for the fiscal year ending December 31, 1999. In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. It requires that entities recognize all derivatives as either assets or liabilities in the statement of financial position and measures those instruments at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. Raima will adopt SFAS 133 in the first quarter of the fiscal year ending December 31, 2000 and has not yet evaluated the impact of adoption and its effects on the Raima's results of operations, financial position, capital resources or liquidity. Ownership of Raima Capital Stock The following table sets forth certain information regarding the beneficial ownership of Raima common stock as of March 15, 1999, by (1) each person who is known by Raima to own beneficially more than 5% of the Raima Common stock, (2) each director of Raima, (3) each of the executive officers of Raima and (4) by all of Raima's directors and executive officers as a group. Shares Beneficially Owned(1) ----------------------- Percent of Outstanding Number Capital of Shares Stock(2) ----------- ----------- Stephen P. Smith(3)................... 2,788,000 44.7% Randall L. Merilatt(4)................ 1,522,500 24.4% Wayne L. Warren(5).................... 769,410 12.3% Steven T. Graves(6)................... 131,400 2.0% Wayne Dalgardno(7).................... 26,250 * Thomas R. Clark(8).................... 23,000 * Laird Foshay(9)....................... 75,000 1.1% William C. Dunn(10)................... 35,000 * All directors and executive officers as a group (8 persons)(11).. 5,380,560 82.3% ---------------- * Less than 1% of the outstanding shares of Raima common stock. (1) Beneficial ownership is determined in accordance with the rules of the Commission. In computing the number of shares beneficially owned by a person and the percentage of ownership of that person, shares subject to options held by that person that are currently exercisable or exercisable within 60 days of March 15, 1999 are deemed outstanding. Such shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of each other person. Except pursuant to applicable community property laws or as indicated in the footnotes of this table, to Raima's knowledge, each stockholder identified in the table possesses sole voting and investment power with respect to all shares of Raima common stock shown as beneficially owned by such stockholder. (2) Applicable percentage of ownership for each stockholder is based on 6,199,953 shares of Raima common stock outstanding as of March 4, 1999. (3) Includes 28,000 shares of Raima common stock issuable upon exercise of options under the Raima Stock Option Plan. (4) Includes 17,000 shares of Raima Common stock issuable upon exercise of options under the Raima Stock Option Plan. (5) Includes 16,660 shares of Raima common stock issuable upon exercise of options under the Raima Stock Option Plan. (6) Includes 117,950 shares of Raima common stock issuable upon exercise of options under the Raima Stock Option Plan. (7) Represents 26,250 shares issuable upon exercise of options under the Raima Stock Option Plan. (8) Includes 7,500 shares of Raima common stock issuable upon exercise of options under the Raima Stock Option Plan. (9) Represents 75,000 shares issuable upon exercise of options under the Raima Stock Option Plan. (10) Represents 35,000 shares issuable upon exercise of options under the Raima Stock Option Plan. (11) Includes 333,360 shares issuable upon exercise of options under the Raima Stock Option Plan. CERTAIN RELATIONSHIPS AND RELATED TRANSCTIONS Thomas R. Clark, who will be appointed to the board of directors of Centura after the merger, is presently on the board of directors of Raima and has provided consulting services to Raima through Clark Ventures, Inc., an S corporation wholly owned by him and his wife. Services commenced April 5, 1999 and will conclude by the time of the merger, unless extended by Centura. PRO FORMA OWNERSHIP OF CENTURA COMMON STOCK An aggregate of approximately 5,800,000 shares of Centura common stock (subject to certain adjustments) will be issued to Raima stockholders in the merger. It is a condition to the obligation of all parties to close the transaction that the "average Centura trading price," defined as the arithmetic mean of the closing sale price of Centura's common stock on the NASDAQ SmallCap Market for each of the 10 trading days ending on the day immediately preceding the closing, be at least $1.00 per share. In addition, if the average trading price is $3.00 per share or greater, Raima's stockholders will receive the number of shares (assuming no adjustments) determined by dividing o $17,400,000 by o the average trading price so that the value of the shares they are issued (using the 10-day average calculation) is no more than $17,400,000. Approximately 20% of the consideration payable to the former Raima stockholders will be subject to an escrow which will be available to Centura to satisfy certain indemnification rights under the merger agreement. Approximately one-half of the consideration held in escrow not needed to satisfy pending claims will be released to the former Raima stockholders six months after closing, and the balance not needed to satisfy pending claims will be released one year after closing. Based upon the number of shares of Centura common stock issued and outstanding as of March 15, 1999, the Raima common stock outstanding immediately prior to the merger would be converted into, and have voting power with respect to, approximately 16.4% of the combined company's total issue and outstanding shares. The foregoing numbers of shares and percentages are subject to change in the event that the capitalization of Centura changes subsequent to March 15, 1999 and prior to the effective time of the merger. There can be no assurance as to the actual capitalization of Centura at the time of the merger or of Centura at any time following the merger. COMPARISON OF RIGHTS OF HOLDERS OF RAIMA COMMON STOCK AND CENTURA COMMON STOCK This section of the prospectus describes certain differences between the rights of holders of Raima common stock and Centura common stock. While Centura and Raima believe that the description covers the material differences between the two, this summary may not contain all of the information that is important to you. You should carefully read this entire document and the other documents we refer to for a more complete understanding of the differences between being a stockholder of Raima and being a stockholder of Centura. As a stockholder of Raima, your rights are governed by the laws of the State of Washington, Raima's restated articles of incorporation and Raima's bylaws. After completion of the merger, you will become a stockholder of Centura. As a Centura stockholder, your rights will be governed by the Delaware General Corporate Law, Centura's certificate of incorporation and Centura's bylaws. Classes of Common Stock of Raima and Centura Both Raima and Centura have only one class of common stock issued and outstanding. Holders of Raima and Centura stock are entitled to one vote for each share held. Preferred Stock Centura is authorized to issue preferred stock, while Raima is not. Centura may issue its preferred stock periodically in one or more series. Centura's board of directors may fix or alter the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption, redemption prices, and liquidation preferences of any unissued series, and the number of shares constituting that series. Centura's board of directors may also increase or decrease the number of shares of any series subsequent to the issuance of such series; however, the board may not decrease the number of shares below the number of shares then outstanding within that series. Cumulative Voting At elections for directors, Raima stockholders may cumulate their votes by giving one candidate as many votes as the number of such directors multiplied by the number of their shares, or by distributing such votes on the same principle among any number of candidates. Centura does not allow its stockholders to cumulate votes at any election of directors. Number of Directors Raima's restated articles of incorporation and bylaws provide that the number of directors on the board shall be seven. This number may only be changed by amendment of the restated articles of incorporation. Centura's bylaws allow the stockholders or the board to set the number of directors within a range from five to nine. The present number of Centura directors is seven. The numbers of the range may be changed, or a definite number may be fixed without allowing for a range, by an amendment to the bylaws adopted by a majority of the stockholders, or by an amendment to the certificate of incorporation. Removal of Directors Centura's stockholders may remove any director or the entire board of directors only for cause by a majority of the stockholders then entitled to vote at an election of directors. Raima's stockholders may remove one or more directors, with or without cause, by a majority vote at a stockholder meeting called expressly for that purpose. However, no Raima director may be removed from office (unless the entire board is removed) if the votes cast against his or her removal would be sufficient to elect him or her under cumulative voting. Filling of Vacancies on the Board of Directors Any vacancy created on Raima's board may be filled by a majority vote of the remaining directors, even though less than a quorum. A director of Raima elected to fill a vacancy is elected for the unexpired term of his or predecessor. A vacancy may also be filled by a vote of Raima's stockholders at either an annual meeting or a special meeting called for that purpose. A vacancy created on Centura's board may also be filled by a majority vote of the remaining directors, even if less than a quorum, or by a sole remaining director. However, a vacancy created by the removal of a director by the vote of the stockholders or by court order may be filled only by the affirmative vote of a majority of the shares represented and voting at a duly held meeting where a quorum is present. A director of Centura so elected holds office until the next annual meeting of stockholders and until a successor is elected and qualified. If Centura has no directors in office, then any officer or stockholder or fiduciary of a stockholder may call a special meeting of the stockholders or apply to the Delaware Court of Chancery for a decree ordering an election. If the number of directors on the board at the time of filling any vacancy is less than a majority of the whole board, then any stockholder holding at least ten percent of the total outstanding shares entitled to vote may also apply to the Delaware court of Chancery for a decree ordering an election. Limits on Stockholder Action by Written Consent Raima's stockholders may take any action which could be taken at a meeting if all the stockholders entitled to vote sign one or more written consents and deliver them to Raima. Centura's stockholders may not take action by written consent in lieu of a meeting. Any actions contemplated by the stockholders must be taken at a duly called annual or special meeting. Ability to Call Special Meetings Raima's chairman of the board, president or board of directors may call special meetings of the stockholders for any purpose. A special meeting must be held if holders of at least 10% of all the votes eligible to be cast on any issue proposed to be considered at the special meeting have signed and delivered to Raima's secretary a written demand for a meeting describing the meeting's purpose. Centura's chairman of the board, president or board of directors may call special meetings of the stockholders at any time. Advance Notice Provisions for Stockholder Nominations and Proposals Raima's bylaws provide that the board, chairman of the board, the president, the secretary, or someone under their direction, must give written notice of a meeting to each stockholder entitled to vote no less than 10 nor more than 60 days prior to the meeting for most meetings. However, notice must be given to stockholders no less than 20 days prior to a meeting to act on: o amendment to the articles of incorporation; o a plan of merger or share exchange; o the sale, lease, exchange or other disposition of all or substantially all of Raima's assets other than in the regular course of business; or o the dissolution of Raima. Any stockholder owning 30% or more of Raima's common stock must be given notice at least 30 days before the meeting. The notice must state the place, day and hour of the meeting, and in the case of a special meeting, the purpose of the meeting. For Centura, nominations for the election of a director or other business brought before an annual meeting must be: o specified in the notice of a meeting given by or at the direction of the board of directors; o otherwise properly brought before the meeting by or at the direction of the board of directors, or o otherwise properly brought before the meeting by a stockholder. "Properly brought before the meeting by a stockholder" means giving timely notice and using proper form. To be timely, the notice must be delivered to or mailed and received by the secretary of the corporation at least 90 days prior to the meeting. If less than 100 days notice or prior public disclosure of the meeting is given or made to stockholders, then the stockholder's notice must be received by the secretary no later than 10 days after the notice or disclosure of the meeting. To be in proper form, the notice must include: o relevant names and addresses; o representation that the stockholder is a holder of record and will appear in person or by proxy; o if applicable, a description of all arrangements or understandings between the stockholder and any nominee; o other information required to be in a proxy statement by the SEC had the nominee been nominated or the matter proposed by the board of directors; o if applicable, the consent of each nominee to serve as director if elected. Amendment of Certificate or Articles of Incorporation Under Delaware law, a certificate of incorporation of a Delaware corporation may be amended by approval of the board of directors of the corporation and the affirmative vote of the holders of a majority of the outstanding shares entitled to vote for the amendment, unless a higher vote is required by the corporation's certificate of incorporation. Centura's certificate of incorporation provides that the affirmative vote of the holders of at least two-thirds (2/3) of the combined voting power of all the then-outstanding shares of Centura entitled to vote is required to alter, amend or repeal: o Article 13 of the certificate of incorporation, which does not allow Centura stockholders to take any action by written consent in lieu of a meeting; or o Article 14 of the certificate of incorporation, which creates this two-thirds requirement for amending part of the certificate of incorporation. The Washington Business Corporation Act authorizes a corporation's board of directors to make various changes of an administrative nature to the corporation's articles of incorporation, including changes of corporate name, changes to the number of outstanding shares in order to effectuate a stock split or stock dividend in the corporation's own shares, and changes to or elimination of provisions with respect to the corporation's stock's par value. Other amendments to a corporation's articles of incorporation must be recommended to the stockholders by the board of directors, unless the board determines that because of a conflict of interest or other special circumstances, it should make no recommendation, and must be approved by two-thirds (if the corporation is not a public company), or a majority (if the corporation is a public company), of all votes entitled to be cast by each voting group that has a right to vote on the amendment. The articles of incorporation of a corporation other than a public company may provide for a lower percentage of stockholder approval (but not less than a majority of the votes entitled to be cast. Raima's restated articles of incorporation provide that any provision in the restated articles may only be repealed or amended by the affirmative vote of at least two-thirds (2/3) of the outstanding common stock of Raima. The board of directors of Raima may not amend the restated articles of incorporation. Amendment of Bylaws Under Delaware law, stockholders entitled to vote have the power to adopt, amend or repeal bylaws. In addition, a corporation may, in its certificate of incorporation, confer such powers upon the board of directors. The stockholders always have the power to adopt, amend or repeal bylaws, even though the board may also be delegated such power. Accordingly, Centura's certificate of incorporation expressly authorizes the board of directors to make, alter, amend or repeal the bylaws of Centura. Under Washington law, stockholders entitled to vote have the power to amend or repeal bylaws or adopt new bylaws. In addition, a corporation's board of directors may also have such power unless (a) the articles of incorporation or Washington law expressly reserve this power to the stockholders or (b) in amending or repealing a particular bylaw, the stockholders expressly provide the board of directors may not amend or repeal that bylaw. Raima's board of directors has the power to adopt, amend or repeal the bylaws of Raima, subject to the power of the stockholders to amend or repeal the bylaws. The stockholders of Raima also have the power to adopt, amend or repeal the bylaws. State Anti-Takeover Statutes Centura is subject to Section 203 of the Delaware General Corporation Law, which under certain circumstances may make it more difficult for a person who would be an "Interested Stockholder," as defined in Section 203, of Centura, to effect various business combinations with Centura for a three-year period. Under Delaware law, a corporation's certificate of incorporation or bylaws may exclude a corporation from the restrictions imposed by Section 203. Centura's certificate of incorporation and bylaws do not exclude it from the restrictions imposed under Section 203. Transactions With Officers or Directors. The Washington Business Corporation Act sets forth a safe harbor for transactions by a corporation, one of its subsidiaries or any other entity in which it has a controlling interest, respecting which a director has a conflicting interest. Under this provision, a director's conflicting interest transaction may not be enjoined, set aside or give rise to damages because a director has an interest in the transaction if: (1) it is approved by a majority of qualified directors or a duly empowered committee of qualified directors of the board after required disclosure; (2) it is approved by the affirmative vote of a majority of all qualified shares after required notice and disclosures; or (3) the transaction, judged according to circumstances at the time of commitment, is established to have been fair to the corporation. For purposes of this provision, a "qualified director" is one who does not have (1) a conflicting interest respecting the transaction or (2) a familial, financial, professional or employment relationship with a second director, which relationship would reasonably be expected to exert an influence on the first director's judgment when voting on the transactions. "Qualified shares" are defined generally as shares other than those beneficially owned, or the voting of which is controlled, by a director who has a conflicting interest respecting the transaction. The Delaware General Corporation Law provides that contracts or transactions between a corporation and one or more of its officers or directors or an entity in which they have an interest is not void or voidable solely because of such interest or the participation of the director or officer in a meeting of the board or a committee that authorizes the contract or transaction if : (1) the material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the board or the committee, and the board or the committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of disinterested directors; (2) the material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by a vote of the stockholders; or (3) the contract or transaction is fair to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee thereof or the stockholders. Limitation of Liability of Directors The Delaware General Corporation Law permits a corporation to include a provision in its certificate of incorporation eliminating or limiting the personal liability of a director or officer to the corporation or its stockholders for damages for a breach of the director's fiduciary duty, subject to certain limitations. Centura's certificate of incorporation includes such a provision to the maximum extent permitted by law. While this provision provides directors with protection from awards for monetary damages for breaches of their duty of care, it does not eliminate that duty. Accordingly, this provision will have no effect on the availability of equitable remedies such as an injunction or rescission based on a director's breach of his or her duty of care. The Washington Business Corporation Act permits a corporation to include a provision in its articles of incorporation not inconsistent with law that eliminates or limits the personal liability of a director to the corporation or its stockholders for monetary damages for conduct as a director. However such provisions may not eliminate or limit the liability of a director for (1) acts or omissions that involve intentional misconduct or a knowing violation of law by a director, (2) certain conduct involving a transaction in which the director has a conflicting interest, or (3) any transaction from which the director will personally receive a benefit in money, property, or services to which the director is not legally entitled. Raima's restated articles of incorporation also state that its directors will not be liable to Raima or its stockholders for monetary damages for conduct as a director, to the full extent that the Washington Business Corporation Act, as amended, permits the limitation or elimination of the liability of directors. Indemnification of Directors and Officers The Delaware General Corporation Law permits a corporation to indemnify officers and directors for o actions taken in good faith and o in a manner they reasonably believed to be in, or not opposed to, the best interests of the corporation and o with respect to any criminal action which they had no reasonable cause to believe was unlawful. Centura's bylaws provide for the indemnification of its officers and directors to the maximum extent and in the manner permitted by the General Corporation Law of Delaware. Centura will indemnify each of its directors and officers against: o expenses (including attorneys' fees); o judgments; o fines; o settlements; and o other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact that such person is or was an agent of Centura. Raima's bylaws also provide indemnification for Raima's officers and directors to the full extent permitted by the Washington Business Corporation Act. The Washington Business Corporation Act provides that a corporation may (if authorized in each specific instance) indemnify an individual made a party to a proceeding (for reasonable expenses incurred) because they are or were a director, officer, employee or agent if o they acted in good faith, o reasonably believed their conduct was in the best interest of the corporation (if made in their official capacity) or not opposed to the corporation's best interest (in all other cases), and o in criminal cases, had no reasonable cause to believe their conduct was unlawful, and provided they are not adjudged liable to the corporation or on the basis that they received any personal benefit improperly. However, if authorized by the articles of incorporation, a bylaw adopted or ratified by stockholders, or a resolution adopted or ratified, before or after the event, by the stockholders, a corporation has the power to indemnify a director or officer made a party to a proceeding, or advance or reimburse expenses incurred in a proceeding, without regard to the foregoing limitations, expect that no such indemnification shall be allowed on account of o acts or omissions of a director or officer finally adjudged to be intentional misconduct or a knowing violation of the law, o conduct of a director or officer finally adjudged to be an unlawful distribution, or o any transaction with respect to which it was finally adjudged that such director or officer personally received a benefit in money, property or services to which the director or officer was not legally entitled. Unless limited by the corporation's articles of incorporation, Washington law requires indemnification if the director or officer is wholly successful on the merits of the action or otherwise. Any indemnification of a director in a derivative action must be reported to the stockholders in writing. Raima will indemnify any person who was or is a party or is threatened to be made a party to any civil, criminal, administrative or investigative action, suit or proceeding because he or she is a director or officer of Raima. Raima will indemnify against expenses and fees similar to those against which Centura will indemnify. Raima's indemnification is not exclusive of any other rights to which a person might be entitled as a matter of law or contract. Certain Anti-Takeover Provisions Under Delaware law, every corporation may create and issue rights entitling the holders of such rights to purchase from the corporation shares of its capital stock of any class or classes, subject to any provisions in its certificate of incorporation. The price and terms of such shares must be in the certificate of incorporation or in a resolution adopted by the board of directors for the creation or issuance of such rights. Centura has created a stockholder rights plan, which provides that each share of common stock outstanding will have the right to purchase a fraction of a share of preferred stock at an exercise price of $60.00. This right will become exercisable if a person o acquires 15% or more of Centura's common stock or o announces a tender offer that would result in the person owning 15% or more of Centura's common stock. If the right to purchase the preferred stock becomes exercisable, the holder of each right (other than the person whose acquisition triggered the exercisability of the rights) will be entitled to purchase, at the right's then current exercise price, a number of shares of Centura's common stock having a market value of twice the exercise price. In addition, if Centura were to be acquired in a merger, or Centura sells more than 50% of its assets or earning power, each right will entitle its holder to purchase, at the right's then current price, common stock of the acquiring company having a market value of twice the exercise price. The rights are redeemable by Centura at a price of $.01 per share at any time within 10 days after a person has acquired 15% or more of Centura's common stock. The rights expire on August 3, 2004, unless earlier redeemed by Centura. LEGAL OPINION The validity of the shares of Centura common stock offered by this prospectus will be passed upon for Centura by Orrick, Herrington & Sutcliffe LLP. EXPERTS The consolidated financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-K of Centura Software Corporation for the year ended December 31, 1998 have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. The consolidated financial statements of Raima Corporation as of December 31, 1998 and 1997 and for each of the two years in the period ended December 31, 1998 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting. WHERE YOU CAN FIND MORE INFORMATION Centura files reports, proxy statements and other information with the Securities and Exchange Commission. Copies of Centura's reports, proxy statements and other information may be inspected and copied at the public reference facilities maintained by the SEC at: Judiciary Plaza Room 1024 450 Fifth Street, N.W. Washington, D.C. 20549 Citicorp Center 500 West Madison Street Suite 1400 Chicago, Illinois 60661 Seven World Trade Center 13th Floor New York, New York 10048 Reports, proxy statements and other information concerning Centura may be inspected at: The National Association of Securities Dealers 1735 K Street, N.W. Washington, D.C. 20006 Copies of these materials can also be obtained by mail at prescribed rates from the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549 or by calling the SEC at l-800-SEC- 0330. The SEC maintains a Website that contains reports, proxy statements and other information regarding each of us. The address of the SEC Website is http://www.sec.gov. Centura has filed a registration statement on Form S-4 under the Securities Act with the SEC with respect to Centura's common stock to be issued to Raima stockholders in the merger. This prospectus constitutes the prospectus of Centura filed as part of the registration statement. This prospectus does not contain all of the information set forth in the registration statement because certain parts of the registration statement are omitted in accordance with the rules and regulations of the SEC. The registration statement and its exhibits are available for inspection and copying as set forth above. If you have any questions about the merger, please call Centura at (650) 596-3400. You may also call Raima at (206) 515-9477. This prospectus does not constitute an offer to sell, or a solicitation of an offer to purchase, the securities offered by this prospectus, or the solicitation of a proxy, in any jurisdiction to or from any person to whom or from whom it is unlawful to make such offer, solicitation of an offer or proxy solicitation in such jurisdiction. Neither the delivery of this prospectus nor any distribution of securities pursuant to this prospectus shall, under any circumstances, create any implication that there has been no change in the information set forth or incorporated into this prospectus by reference or in our affairs since the date of this prospectus. The information contained in this prospectus with respect to Centura and its subsidiaries was provided by Centura and the information contained in this prospectus with respect to Raima was provided by Raima. STATEMENTS REGARDING FORWARD-LOOKING INFORMATION This prospectus contains forward-looking statements within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business, and on the expected impact of the merger on Centura's financial performance. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates" and similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. In evaluating the merger, you should carefully consider the discussion of risks and uncertainties in the section entitled "Risk Factors" on page 13 of this prospectus. RAIMA CORPORATION INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page ------- Report of Independent Accountants................................. F-2 Consolidated Balance Sheets....................................... F-3 Consolidated Statements of Operations............................. F-4 Consolidated Statements of Stockholders' Equity (Deficit)......... F-5 Consolidated Statements of Cash Flows............................. F-6 Notes to Consolidated Financial Statements........................ F-7 Report of Independent Accountants To the Board of Directors and Stockholders of Raima Corporation In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of stockholders' equity (deficit) and of cash flows present fairly, in all material respects, the financial position of Raima Corporation and its subsidiaries (the "Company") at December 31, 1998 and 1997 and the results of their operations and their cash flows for each of the two years in the period ended December 31, 1998 in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP San Jose, California April 7, 1999, except for Note 10 which is dated as of April 22, 1999 RAIMA CORPORATION CONSOLIDATED BALANCE SHEETS
December 31, ----------------------- 1998 1997 ----------- ----------- ASSETS Current assets: Cash and cash equivalents........................ $406,000 $465,000 Accounts receivable, net......................... 1,800,000 1,969,000 Notes receivable................................. 3,000 230,000 0ther current assets............................. 300,000 478,000 ----------- ----------- Total current assets........................... 2,509,000 3,142,000 Property and equipment, net........................ 437,000 450,000 0ther assets ...................................... 77,000 127,000 ----------- ----------- Total assets................................... $3,023,000 $3,719,000 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Line of credit................................... $364,000 $250,000 Debt under reorganization plan................... -- 2,038,000 Accounts payable................................. 462,000 298,000 Accrued liabilities.............................. 536,000 433,000 Deferred revenue................................. 873,000 830,000 Income taxes payable............................. 188,000 5,000 ----------- ----------- Total current liabilities...................... 2,423,000 3,854,000 Deferred income taxes.............................. 36,000 31,000 Commitments (Note 5) Stockholders' equity (deficit): Preferred Stock, $.01 par value; 2,000,000 shares authorized; none issued and outstanding..................................... -- -- Common Stock, no par value; 10,000,000 shares authorized; 6,157,838 and 6,106,713 issued and outstanding.......................... 2,257,000 2,036,000 Unearned compensation............................ (640,000) (825,000) Accumulated deficit.............................. (1,053,000) (1,377,000) ----------- ----------- Total stockholders' equity (deficit)........... 564,000 (166,000) ----------- ----------- Total liabilities and stockholders' equity (deficit).............................. $3,023,000 $3,719,000 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. RAIMA CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31, ----------------------------------- 1998 1997 1996 ----------- ----------- ----------- (unaudited) Net revenues: License fees.......................... $6,314,000 $7,552,000 $5,892,000 Service and other..................... 2,270,000 1,061,000 879,000 ----------- ----------- ----------- Net revenues........................ 8,584,000 8,613,000 6,771,000 ----------- ----------- ----------- Cost of revenues: License fees.......................... 96,000 167,000 128,000 Service and other..................... 1,170,000 769,000 611,000 ----------- ----------- ----------- Cost of revenues.................... 1,266,000 936,000 739,000 ----------- ----------- ----------- Gross profit............................ 7,318,000 7,677,000 6,032,000 ----------- ----------- ----------- Operating expenses: Research and development.............. 1,648,000 1,548,000 1,346,000 Sales and marketing................... 3,054,000 3,619,000 2,637,000 General and administrative............ 2,729,000 2,116,000 2,112,000 ----------- ----------- ----------- Total operating expenses............ 7,431,000 7,283,000 6,095,000 ----------- ----------- ----------- Operating income (loss)................. (113,000) 394,000 (63,000) Interest income......................... 7,000 34,000 37,000 Interest expense ....................... (123,000) (65,000) (97,000) Other income (expense), net............. 9,000 (20,000) (28,000) ----------- ----------- ----------- Income (loss) before income taxes and extraordinary item................ (220,000) 343,000 (151,000) Provision (benefit) for income taxes.... (93,000) 20,000 7,000 ----------- ----------- ----------- Income (loss) before extraordinary item. (127,000) 323,000 (158,000) Extraordinary item, net of applicable income taxes........................... 451,000 -- -- ----------- ----------- ----------- Net income (loss)....................... $324,000 $323,000 ($158,000) =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. RAIMA CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Total Common Stock Accumu- Stockholders' ----------------------- Unearned lated Equity Shares Amount Compensation Deficit (Deficit) ---------- ------------ ------------- ------------ -------------- Balance at December 31, 1995 (unaudited)......................... 5,893,831 $1,326,000 ($788,000) ($1,542,000) ($1,004,000) Exercise of Common Stock options (unaudited)......................... 14,869 -- -- -- -- Unearned compensation (unaudited)..... -- 185,000 (185,000) -- -- Amortization of unearned compensation (unaudited)......................... -- -- 281,000 -- 281,000 Net loss (unaudited).................. -- -- -- (158,000) (158,000) ---------- ------------ ------------- ------------ -------------- Balance at December 31, 1996.......... 5,908,700 1,511,000 (692,000) (1,700,000) (881,000) Exercise of Common Stock options...... 198,013 2,000 -- -- 2,000 Unearned compensation................. -- 523,000 (523,000) -- -- Amortization of unearned compensation. -- -- 390,000 -- 390,000 Net income............................ -- -- -- 323,000 323,000 ---------- ------------ ------------- ------------ -------------- Balance at December 31, 1997.......... 6,106,713 2,036,000 (825,000) (1,377,000) (166,000) Exercise of Common Stock options...... 51,125 1,000 -- -- 1,000 Unearned compensation................. -- 220,000 (220,000) -- -- Amortization of unearned compensation. -- -- 405,000 -- 405,000 Net income............................ -- -- -- 324,000 324,000 ---------- ------------ ------------- ------------ -------------- Balance at December 31, 1998.......... 6,157,838 $2,257,000 ($640,000) ($1,053,000) $564,000 ========== ============ ============= ============ ==============
The accompanying notes are an integral part of these consolidated financial statements. RAIMA CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31, --------------------------------- 1998 1997 1996 ----------- ---------- ---------- (unaudited) Cash flows from operating activities: Income (loss) before extraordinary item..... ($127,000) $323,000 ($158,000) Adjustments to reconcile net income (loss) before extraordinary item to net cash provided by (used in) operating activities: Depreciation and amortization............. 166,000 226,000 183,000 Provision for doubtful accounts........... 267,000 73,000 67,000 Amortization of unearned compensation..... 405,000 390,000 281,000 Deferred federal income taxes............. 31,000 (115,000) (38,000) Litigation settlement and other........... -- -- 96,000 Changes in current assets and liabilities: Accounts receivable..................... (98,000) (231,000) (570,000) Other current assets.................... 152,000 (99,000) (39,000) Other assets............................ 50,000 (30,000) 17,000 Accounts payable and accrued liabilities............................ 267,000 (198,000) (102,000) Income tax payable...................... (149,000) (25,000) 18,000 Deferred revenue........................ 43,000 209,000 149,000 ----------- ---------- ---------- Net cash provided by (used in) operating activities................ 1,007,000 523,000 (96,000) ----------- ---------- ---------- Cash flows from investing activities: Purchase of property and equipment.......... (153,000) (187,000) (307,000) ----------- ---------- ---------- Net cash used in investing activities. (153,000) (187,000) (307,000) ----------- ---------- ---------- Cash flows from financing activities: Notes receivable, net....................... 227,000 -- (30,000) Net proceeds from (repayment of) line of credit.................................. 114,000 250,000 -- Proceeds from issuance of common stock...... 1,000 2,000 -- Net borrowing (repayment) of notes payable.. -- (272,000) (50,000) Repayment of pre-petition debt.............. (1,255,000) (19,000) (82,000) ----------- ---------- ---------- Net cash used in financing activities. (913,000) (39,000) (162,000) ----------- ---------- ---------- Net increase (decrease) in cash and cash equivalents.................................. (59,000) 297,000 (565,000) Cash and cash equivalents at beginning of year...................................... 465,000 168,000 733,000 ----------- ---------- ---------- Cash and cash equivalents at end of year...... $406,000 $465,000 $168,000 =========== ========== ========== Supplemental cash flow information: Cash paid for income taxes.................. $18,000 $10,000 $27,000 =========== ========== ========== Cash paid for interest...................... $72,000 $3,000 $8,000 =========== ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. RAIMA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The Company Raima Corporation and subsidiaries (the "Company") was incorporated on November 12, 1982 in the State of Washington. The Company designs, markets, and supports database management software products. The Company also provides customers with training, telephone support and consulting services. The Company's customers are involved in information management technology in a wide variety of industries and are located in the United States and abroad. Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Vista Development Corporation, Raima Deutschland GmbH, Raima ANZ and Raima International Sales Corporation. All significant intercompany balances and transactions have been eliminated in consolidation. Reorganization presentation The accompanying consolidated financial statements are presented in accordance with Statement of Position No. 90-7, Financial Reporting by Entities in Reorganization under the Bankruptcy Code, which provides guidance for financial reporting for companies in reorganization. On November 12, 1996, the Bankruptcy Court confirmed the Company's Chapter 11 Plan of Reorganization and the Company emerged as a reorganized debtor. Pre-petition liabilities subject to compromise have been classified according to the repayment schedule as stated in the Company's reorganization plan. In 1998, the settlement of the pre- petition liabilities resulted in an extraordinary gain of $451,000, net of applicable income taxes of $332,000. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue recognition The Company receives licensing fees from certain resellers (including original equipment manufactures) under product licensing arrangements. Revenues from these resellers are recognized upon shipment of product, if collection of the resulting receivable is probable and no ongoing vendor obligation exists. If an ongoing vendor obligation exists, revenue is deferred based on vendor-specific objective evidence of the undelivered element. If vendor-specific objective evidences does not exist for all undelivered elements, all revenue is deferred until sufficient evidence exists or all elements have been delivered. Provisions for sales returns are provided at the time of revenue recognition based upon estimated returns. Service revenues from customer maintenance fees for ongoing customer support and product updates, including maintenance bundled with software licenses, is recognized ratably over the period of the contract. Revenue from other services, including consulting and training, are recognized as performed. During 1998, the Company has recognized revenues in accordance with Statement of Position No. 97-2 ("SOP 97-2"), "Software Revenue Recognition." Prior to 1998, the Company recognized revenues in accordance with Statement of Position No. 91-1, "Software Revenue Recognition." In December 1998, the American Institute of Certified Public Accountants ("AICPA") issued Statement of Position No. 98-9 ("SOP 98-9"), "Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain Transactions." The provisions of SOP 98-9 will be adopted for transactions entered into during the fiscal year beginning January 1, 1999. Cash equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Management believes the Company deposits cash and cash equivalents with high credit quality financial institutions. At December 31, 1997, restricted cash of $250,000 is invested in a certificate of deposit, classified as a current asset, and represents collateral for the line of credit. Concentration of credit risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, short-term investments and accounts receivable. The Company's accounts receivable are derived from revenue earned from customers located in the United States and abroad. The Company generally requires no collateral from its customers. The Company maintains an allowance for doubtful accounts receivable based upon the expected collectibility of accounts receivable. At December 31, 1998, one customer accounted for 15% of total accounts receivable. Capitalized software development costs All costs incurred to establish the technological feasibility of software to be sold, leased or otherwise marketed are expensed as research and development costs. Costs incurred subsequent to the establishment of technological feasibility, and prior to the general availability of the product to the public are capitalized. The Company defines technological feasibility as the establishment of a working model which typically occurs when the beta testing commences. The Company's policy is to amortize the capitalized software costs on a product by product basis using the greater of (a) the ratio that current period gross revenues for the product bear to the total of current period and estimated future gross revenues for that product or (b) the straight-line method over the remaining estimated economic life of the product at the beginning of the period, which is generally four years. Amortization of capitalized computer software development costs is provided over an estimated useful life of 48 months. At December 31, 1998 and 1997, all capitalized software was fully amortized. Property and equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally three to five years, or the lease term of the respective assets. Long-lived assets The Company evaluates the recoverability of its long-lived assets in accordance with Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of ("SFAS 121"). SFAS 121 requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds the future undiscounted cash flows attributable to such assets. Fair value of financial instruments The Company's financial instruments, including cash, cash equivalents, accounts receivable and accounts payable are carried at cost, which approximates their fair value because of the short-term maturity of these instruments. Comprehensive income Effective January 1, 1998, the Company adopted the provisions of SFAS No. 130, "Reporting Comprehensive Income." SFAS No. 130 established standards for reporting comprehensive income and its components in financial statements. Comprehensive income, as defined, includes all changes in equity (net assets) during a period from non- owner sources. To date, the Company has not had any significant transactions that are required to be reported in comprehensive income. Foreign currency The functional currency of the Company's subsidiaries is the local currency. The balance sheet accounts are translated into United States dollars at the exchange rates prevailing at the balance sheet dates. Revenues, costs and expenses are translated into United States dollars at average rates for the periods. Gains and losses resulting from translation are accumulated as a component of stockholder's equity (deficit) and were not significant during any of the periods presented. Net gains and losses resulting from foreign exchange transactions are included in the consolidated statements of operations and were not significant during any of the period presented. Stock-based compensation The Company accounts for stock-based employee compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations. The Company provides footnote disclosure of the pro forma net income and related disclosures based on the fair value method of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," ("SFAS 123"). Had compensation cost for the Company's option plans been determined based on the fair value at the grant date as prescribed in SFAS 123, the Company's pro forma net losses would not be materially different from that reported in 1998, 1997 and 1996 (unaudited). Recent accounting pronouncements In March 1998, the American Institute of Certified Public Accountants issued SOP No. 98-1, "Software for Internal Use," which provides guidance on accounting for the cost of computer software developed or obtained for internal use. SOP No. 98-1 is effective for financial statements for fiscal years beginning after December 15, 1998. The Company does not expect that the adoption of SOP No. 98-1 will have a material impact on its consolidated financial statements. In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments, embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. The company must adopt this standard no later than the first quarter of fiscal year 2000. To date, the company has not engaged in hedging activities. NOTE 2 - BALANCE SHEET COMPONENTS:
December 31, ----------------------- 1998 1997 ----------- ----------- Allowance for doubtful accounts: Balance at beginning of period........ $146,000 $100,000 Charged to costs and expenses......... 267,000 73,000 Deductions............................ (272,000) (27,000) ----------- ----------- $141,000 $146,000 =========== =========== Property and equipment, net: Computer equipment, furniture and fixtures............................ $912,000 $759,000 Leasehold improvements................ 37,000 37,000 ----------- ----------- 949,000 796,000 Less: Accumulated depreciation and amortization........................ (512,000) (346,000) ----------- ----------- $437,000 $450,000 =========== =========== Accrued liabilities: Payroll and related................... $408,000 $400,000 Other................................. 128,000 33,000 ----------- ----------- $536,000 $433,000 =========== ===========
NOTE 3 - INCOME TAXES: The Company uses the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and to operating loss and tax credit carryforwards. Deferred tax assets or liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in results of operations in the period that includes the enactment date. Operating income before income taxes are attributable to the following jurisdictions:
Year Ended December 31, ----------------------------------- 1998 1997 1996 ----------- ----------- ----------- (unaudited) United States........................... ($123,000) $394,000 ($63,000) Foreign................................. 10,000 -- -- ----------- ----------- ----------- ($113,000) $394,000 ($63,000) =========== =========== =========== The provision (benefit) for income taxes consists of the following: Year Ended December 31, ----------------------------------- 1998 1997 1996 ----------- ----------- ----------- (unaudited) Current................................. ($124,000) $135,000 $36,000 Deferred................................ 31,000 (115,000) (29,000) ----------- ----------- ----------- ($93,000) $20,000 $7,000 =========== =========== ===========
Deferred tax assets and liabilities consist of the following:
December 31, ----------------------- 1998 1997 ----------- ----------- Deferred tax assets: Operating lease claim................ $ -- $111,000 Accruals and reserves................ 85,000 112,000 ----------- ----------- 85,000 223,000 Deferred tax liabilities: Depreciation......................... $36,000 $31,000 ----------- ----------- Net deferred tax assets................ 49,000 192,000 Valuation allowance.................... -- (112,000) ----------- ----------- $49,000 $80,000 =========== ===========
The Company provides a valuation allowance for deferred tax assets when it is more likely then not, based on available evidence, that some portion or all of the deferred assets will not be realized. In 1997, the deferred income tax benefit reflects a reduction of the valuation allowance applied against the operating lease claim based upon a proposed settlement and resulting deductibility of a significant portion of this liability. 1997 reflects a valuation allowance against the accruals and reserves due to uncertainty as to the future realization. Statutory rate reconciliation:
Year Ended December 31, ----------------------------------- 1998 1997 1996 ----------- ----------- ----------- (unaudited) Pretax book income (loss) including extraordinary gain.................... $563,000 $343,000 ($151,000) =========== =========== =========== Statutory rate at 34%................... 191,000 114,000 (51,000) Change in valuation allowance........... (112,000) (247,000) (61,000) Permanent differences................... 19,000 18,000 24,000 Stock compensation...................... 138,000 135,000 95,000 Other................................... 3,000 -- -- ----------- ----------- ----------- $239,000 $20,000 $7,000 =========== =========== ===========
NOTE 4 - BORROWINGS: Line of credit At December 31, 1998, the Company had a $2,000,000 revolving line of credit with Silicon Valley Bank. The line of credit is supported by a loan agreement, including certain financial covenants. Compliance shall be determined on a monthly basis. The company was in compliance with these debt covenants at December 31, 1998. Borrowings under the terms of the line of credit are secured by substantially all of the Company's assets. Interest is computed based on the bank's prime rate (7.75% at December 31, 1998) plus 2.5% per annum. The line of credit expires in April 2000. Total borrowings at December 31, 1998 were $364,000. At December 31, 1997, the Company had a $300,000 revolving line of credit with Silicon Valley Bank. The line of credit is supported by a loan agreement which provides, among other matters, certain restrictive covenants, including limitations on additional borrowings, restrictions as to dividend payments, and the maintenance of certain ratios. Borrowings under the terms of the line of credit are secured by substantially all of the Company's assets, including a certificate of deposit equal to the amount advanced. Interest is computed based upon the bank's prime rate (8.5% at December 31, 1997) and is payable monthly. The line of credit expired on August 27, 1998. The Company's compliance with the loan agreement's financial covenant structure determines the applicable interest rate and maximum borrowing under the terms of the agreement. At December 31, 1997, the Company was not in compliance with the financial covenants provided in the loan agreement. Debt under reorganization plan
December 31, ----------------------- 1998 1997 ----------- ----------- Notes payable - shareholders, including accrued interest at 9% per annum. These notes are payable according to the Company's reorganization plan..... $ -- $29,000 Pre-petition liabilities, including accrued interest at 7% per annum. Unpaid liabilities and accrued interest are payable according to the Company's reorganization plan.................. -- 2,009,000 ----------- ----------- $ -- $2,038,000 =========== ===========
NOTE 5 - COMMITMENTS: Leases The Company leases office space under a 36 month noncancelable operating lease. Rent expense for the year ended December 31, 1998, 1997, and 1996 (unaudited) was $365,000, $356,000 and $339,000, respectively. The terms of the facility lease provided for free rent periods during the lease term. The Company recognizes rent expense on a straight-line basis over the lease period, and has accrued for rent expense incurred but not paid. Future minimum lease payments under the facility lease are as follows: Year Ending December 31, 1999............................................... $383,000 2000............................................... 64,000 ----------- $447,000 ===========
NOTE 6 - SEGMENT INFORMATION: Effective January 1, 1998, the Company adopted the provisions of SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information." The Company identifies its operating segments based on business activities, management responsibility and geographical location. Through December 31, 1998, foreign operations have not been significant. The Company has determined that its reportable segments are licensed software and related maintenance distributed under Raima Corporation and consulting services performed under its wholly owned subsidiary, Vista Development Corporation. The following summarizes information about each reporting segment.
Raima Vista Elimination Total ----------- ----------- ----------- ----------- 1998: Revenues................ $6,272,000 $2,408,000 ($96,000) $8,584,000 Operating income (loss). (17,000) -- (96,000) (113,000) Assets................... 2,589,000 434,000 -- 3,023,000 1997: Revenues................ $7,551,000 $1,431,000 ($369,000) $8,613,000 Operating income (loss). 815,000 (52,000) (369,000) 394,000 Assets................... 3,408,000 311,000 -- 3,719,000 1998: Revenues................ $5,891,000 $1,317,000 ($437,000) $6,771,000 Operating income (loss). 112,000 262,000 (437,000) (63,000) Assets................... 2,761,000 311,000 -- 3,072,000
Total export sales were 20%, 20% and 15% (unaudited) of total revenues during the years ended December 31, 1998, 1997 and 1996, respectively. NOTE 7 - STOCK OPTION PLANS: In November 1991, the Company adopted the 1991 Stock Option Plan (the "Plan"). The Plan provides for the granting of stock options to employees and consultants of the Company. Options granted under the Plan may be either incentive stock options or nonqualified stock options. Incentive stock options ("ISO") may be granted only to Company employees (including officers and directors who are also employees). Nonqualified stock options ("NSO") may be granted to Company employees and consultants. The Company has reserved 3,500,000 shares of Common Stock for issuance under the Plan. Options under the Plan may be granted for periods of up to ten years and at prices no less than 85% of the estimated fair value of the shares on the date of grant as determined by the Board of Directors, provided, however, that (i) the exercise price of an ISO and NSO shall not be less than 100% and 85% of the estimated fair value of the shares on the date of grant, respectively, and (ii) the exercise price of an ISO and NSO granted to a 10% shareholder shall not be less than 110% of the estimated fair value of the shares on the date of grant, respectively. Options are exercisable immediately subject to repurchase options held by the Company which lapse over a maximum period of ten years at such times and under such conditions as determined by the Board of Directors. Options granted under the Plan accelerate upon a change in control of the Company, as defined. To date, options granted generally vest over four years.
1998 1997 1996 --------------------- -------------------- -------------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price ----------- --------- ---------- --------- ---------- --------- (unaudited) Options outstanding at January 1.... 1,644,756 $0.02 1,618,644 $0.03 1,637,322 $0.03 Options granted below fair value.. 220,875 0.01 377,000 0.01 268,500 0.01 Options exercised................. (51,125) 0.01 (198,013) 0.01 (14,869) 0.01 Options canceled.................. (421,825) 0.05 (152,875) 0.02 (272,309) 0.03 ----------- ---------- ---------- Outstanding at December 31.......... 1,392,681 0.01 1,644,756 0.02 1,618,644 0.03 =========== ========== ==========
Options Outstanding at Options Exercisable at December 31, 1998 December 31, 1998 ---------------------------------- ---------------------- Weighted Average Weighted Weighted Range of Remaining Average Average Exercise Number Contractual Exercise Number Exercise Price Outstanding Life Price Exercisable Price - --------- ----------- ----------- ---------- ----------- ---------- $0.01 1,356,806 7.20 $0.01 727,526 $0.01 0.20 35,875 3.98 0.20 35,875 0.20 ----------- ----------- 1,392,681 7.12 0.01 763,401 0.02 =========== ===========
The Company calculated the fair value of each option grant on the date of grant using the method with the following assumptions: dividend yield at 0%; weighted average expected option term of four years; risk free interest rate of 4.98% to 5.62% and 5.70% to 6.66% for the year ended December 31, 1998 and 1997, respectively. The weighted average fair value of options granted during 1998 and 1997 was less than $0.01, respectively. NOTE 8 - UNEARNED COMPENSATION: In connection with certain stock option grants during the years ended December 31, 1998, 1997 and 1996 (unaudited) the Company recorded $220,000, $523,000 and $185,000, respectively, of unearned compensation representing the difference between the deemed fair value by the Company of the common stock on the date of grant and the option exercise price on the date of grant. Unearned compensation will be amortized over the four year vesting period of the options. During the years ended December 31, 1998, 1997 and 1996 (unaudited), $405,000, $390,000 and $281,000, respectively, of unearned compensation was recognized as expense. The fair market value of the options is determined by the Company on the date of grant. In determining the fair market value on each grant date, the Company considered, among other things, the Company's absolute and relative level of revenues and other operating results, the absence of a public trading market for the Company's securities, the intensely competitive nature of the Company's market and the appreciation of stock values of a number of generally comparable companies. NOTE 9 - EMPLOYEE BENEFIT PLANS: The Company sponsors a 401(k) defined contribution plan covering all employees. Contributions made by the Company are determined annually by the Board of Directors. Employer contributions under this plan amounted to $36,000, $27,000 and $0 for the years ended December 31, 1998, 1997, and 1996 (unaudited), respectively. NOTE 10 - SUBSEQUENT EVENTS: On March 15, 1999, the Company entered into an agreement, subject to shareholder approval, with Centura Software Corporation ("Centura") to be acquired for 5.8 million shares of Centura's common stock. The transaction is expected to close on or before June 7, 1999 and will be accounted for under the purchase method of accounting. On April 22, 1999, the Company entered into an agreement with Meridian Partners, Ltd. to sell certain assets of Vista Development Corporation for approximately $1.4 million. The assets sold primarily consist of existing consulting contracts with a historical value of zero at December 31, 1998. Revenue from the contracts included in services and other in the statement of operations were $1,000,000, $262,000 and $100,000 for the years ended December 31, 1998, 1997 and 1996 (unaudited), respectively. Annex A AGREEMENT AND PLAN OF REORGANIZATION This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") dated as of March 15, 1999, among Centura Software Corporation, a Delaware corporation ("Centura"); Centura Subsidiary Corporation, a Delaware corporation and a wholly-owned subsidiary of Centura ("Subsidiary"); Raima Corporation, a Washington corporation (the "Company"); and Stephen P. Smith, Wayne L. Warren and Randall L. Merilatt (collectively, the "Shareholders" and each individually, a "Shareholder"). WHEREAS, the parties desire that the Company be reorganized pursuant to a Plan of Reorganization under the provisions of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code"), through the merger (the "Merger") of Subsidiary with and into the Company, as a result of which the Company will become a wholly-owned subsidiary of Centura. NOW, THEREFORE, in consideration of the agreements hereinafter set forth the parties hereto agree as follows: I. THE MERGER; CLOSING 1.00 Shareholder Approval. As soon as possible following the effectiveness of the Registration Statement (as hereinafter defined), the Company shall duly convene a meeting of the Company's shareholders for the purpose of approving this Agreement and the Agreement of Merger substantially in the form attached as Exhibit I hereto (the "Agreement of Merger"), pursuant to which Subsidiary shall merge into the Company in accordance with the laws of the States of Delaware and Washington. The Shareholders hereby agree to vote their shares in favor of this Agreement and the Agreement of Merger or give their irrevocable written consent to this Agreement and the Agreement of Merger. 1.01 Agreement of Merger. Subject to the terms and conditions of this Agreement, each party agrees to cause the Merger to occur and to use its or his reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable laws and regulations to cause the Merger to occur upon the terms and conditions set forth in this Agreement. Promptly upon satisfaction or waiver of each of the conditions provided herein, but in no event later than June 7, 1999, (i) a duly executed Agreement of Merger shall be duly filed with the Secretary of State of Delaware in accordance with the Delaware General Corporations Law (the "DGCL") and (ii) Articles of Merger (the "Articles of Merger") substantially in the form of Exhibit II hereto shall be filed with the Secretary of State of Washington in accordance with the Washington Business Corporation Act ("WBCA"). The date of filing such Agreement of Merger and Articles of Merger shall be herein referred to as the "Effective Date." Each party agrees to use its or his reasonable best efforts to cause the Effective Date to occur as soon as reasonably possible. 1.02 Consideration. As provided in the Agreement of Merger, at the Effective Date each outstanding share of Raima Stock (the term "Raima Stock" includes all outstanding shares of capital stock of the Company as of the date of this Agreement and all shares of capital stock which may be issued after the date of this Agreement upon the exercise or conversion of all options, warrants, rights, calls, commitments or agreements of any character to which the Company is a party or by which it is bound calling for the issuance of shares of capital stock of the Company or any securities convertible into or exercisable or exchangeable for, or representing the right to purchase or otherwise receive, directly or indirectly, any such capital stock or other arrangement to acquire, at any time or under any circumstance, capital stock of the Company or any such other securities) will be converted into (I) the number of shares of Centura common stock equal to the quotient (rounded down to the nearest whole number) obtained by dividing (A)(i) the Base Share Number (as defined below) (ii) minus any Professional Fee Share Adjustment (as defined in Section 10.07), (iii) if Net Current Equity (as defined in Section 5.10) is less than Minimum Net Equity (as defined in Section 5.10), minus any Negative Balance Sheet Adjustment (as defined in Section 5.10), by (B) the number of outstanding shares of Raima Stock (such shares of Centura common stock into which the Raima Stock will be converted by virtue of the Merger are referred to herein as the "Centura Stock") plus (II) a right to receive cash equal to the quotient obtained by dividing (A) the Positive Balance Sheet Adjustment (if any, as defined in Section 5.10) by (B) the number of outstanding shares of Raima Stock. The "Base Share Number" shall equal: (i) 5,800,000 shares, if the Average Centura Trading Price is equal to or greater than $1.0000 per share and less than or equal to $3.0000 per share or (ii) if the Average Centura Trading Price is greater than $3.0000 per share, then the Base Share Number shall equal $17,400,000 divided by the Average Centura Trading Price. No fractional shares of Centura common stock shall be issued in the Merger and cash will be paid in lieu of the issuance of fractional shares. On the Effective Date, each option to purchase shares of Company stock shall expire and be terminated if not exercised. (b) On the Effective Date, Centura shall be obligated to issue to each holder of Raima Stock (including prior holders of options to purchase shares of the Company's common stock who have validly exercised such options prior to the Merger) eighty percent (80%) of the shares of Centura Stock to which such shareholder is entitled. On the Effective Date, Centura shall instruct its transfer agent with respect to the exchange of shares of outstanding common stock of the Company, and Centura shall mail to all shareholders of the Company a letter of transmittal and instructions to exchange certificates representing the Company's common stock for certificates representing Centura Stock, including procedures applicable in the case of lost certificates. The balance of Centura's common stock issuable on the Effective Date (the "Escrow Shares") shall be issued by Centura to U.S. Bank National Association, as Escrow Agent pursuant to, and shall be held and disbursed in accordance with, the provisions of Article IX hereof and the Escrow Agreement (as hereinafter defined). (c) On the Effective Date, Centura shall also be obligated to pay to each holder of Raima Stock (including prior holders of options to purchase shares of the Company's common stock who have validly exercised such options prior to the Merger) such holder's pro rata portion of the Positive Balance Sheet Adjustment (if any) to which such shareholder is entitled pursuant to Section 5.10 hereof. An amount equal to 20% of the Positive Balance Sheet Adjustment (if any) shall be deposited, on the Effective Date, by Centura with U.S. Bank National Association, as Escrow Agent pursuant to, and shall be held and disbursed in accordance with, the provisions of Article IX hereof and the Escrow Agreement (as hereinafter defined). Such amount, together with interest thereon, shall be herein referred to as the "Escrow Cash," and, together with the Escrow Shares, the "Escrow Property." The balance of the Positive Balance Sheet Adjustment (if any) shall be paid by Centura to the former holders of Raima Stock in their respective pro rata portions in accordance with Sections 1.02 and 5.10 hereof. (d) The Escrow Agreement shall provide that on the six- month anniversary of the Effective Date, the Escrow Agent shall release to the former holders of Raima Stock the number of shares of Centura Stock equal to the quotient (rounded to the nearest whole share) obtained by dividing (A)(i) the Escrow Shares minus (ii) the number of shares which, when added to the Escrow Cash, are needed to cover any Indemnification Claims then pending (including a reasonable estimate of legal fees and other expenses in connection therewith) by (B) two (2). The Escrow Agreement shall also provide that, upon the occurrence of the Expiration Date (as defined in Article IX), to the extent not needed to reasonably cover any Indemnification Claims then pending (including a reasonable estimate of legal fees and other expenses in connection therewith), the Escrow Agent shall release to the former holders of Raima Stock, first, the balance of the Escrow Shares, and then the balance of the Escrow Cash. 1.03 Dissenters' Rights. Notwithstanding anything in this Agreement to the contrary, any shares of Raima Stock that are outstanding immediately prior to the Effective Time and that are held by shareholders who have demanded properly in writing appraisal for such shares in accordance with Section 23B.13.210 of the WBCA (collectively, the "Dissenting Shares") shall not be converted into or represent the right to receive the merger consideration set forth in Section 1.02. Such shareholders shall be entitled to receive payment of the appraised value of such shares of Raima Stock held by them in accordance with the provisions of Section 23B.13.250 of the WBCA, except that all Dissenting Shares held by shareholders who shall have failed to perfect or who effectively shall have withdrawn or lost their rights to appraisal of such shares of Raima Stock under such Section 23B.13.210 shall thereupon be deemed to be exchangeable, as of the Effective Time, for the right to receive, without any interest thereon, the applicable merger consideration set forth in Section 1.02. The Company shall give Centura (i) prompt notice of any notices or demands for appraisal or payment for shares of Raima Stock received by the Company and (ii) the opportunity to participate in all negotiations and proceedings with respect to any such demands or notices. The Company shall not, without the prior written consent of Centura, make any payment with respect to, or settle, offer to settle or otherwise negotiate, any such demands. II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Centura as follows: 2.00 Organization. The Company is a corporation duly organized, existing and in good standing under the laws of the State of Washington, has full power and authority to own its properties and to carry on its business as now conducted, and is in good standing and duly qualified to conduct business as a foreign corporation in each of the jurisdictions in which the ownership or leasing of its properties or the conduct of its business requires such qualification. 2.01 Capitalization. The Company's authorized capital stock consists of 10,000,000 shares of Common Stock, of which 6,199,953 shares (the "Shares") are issued, outstanding and owned of record by the stockholders of the Company as set opposite their names on Schedule 2.01 hereto. No other shares of capital stock of the Company are issued or outstanding. Except as provided in Schedule 2.01, all of the Shares are validly issued, fully paid and nonassessable, and there are no options, calls, warrants or other securities or rights outstanding which are convertible into, exercisable for or relate to any shares of capital stock of the Company to which the Company is a party. 2.02 Subsidiaries. Except as set forth in Schedule 2.02, the Company does not own, directly or indirectly, any interest or have any investment or financial interest in any corporation or other business. 2.03 Year 2000. Except as set forth on Schedule 2.03, all of the products sold by the Company (i) consistently process date information before, during and after January 1, 2000, including, but not limited to, accepting date input, providing date output, performing calculations on dates or portions of dates, calculating leap years; (ii) function accurately in all material respects with their documentation and without interruption before, during and after January 1, 2000 without any adverse change in operation, function or performance associated with the advent of the new century; (iii) respond to two-digit year date input in a way that resolves any ambiguity as to century; and (iv) store and provide output of date information in ways that are unambiguous as to century. With respect to products which are not Year 2000 compliant, in accordance with the previous sentence, Schedule 2.03 sets forth the efforts the Company has made to communicate the risks associated with such products. 2.04 Financial Statements. Schedule 2.04 consists of copies of the Company's unaudited balance sheets as of the end of, and the related unaudited statements of income and cash flows for, each of the three fiscal years in the periods December 31, 1996, 1997 and 1998, including the notes thereto. Schedule 2.04 (hereinafter referred to as the "Raima Financial Statements"): (a) presents fairly, in all material respects, the financial position of the Company and its subsidiaries and results of operations and cash flows for the Company and its subsidiaries as of the respective dates and for the respective periods stated above, and (b) to the knowledge of the Company, has, in all material respects, been prepared pursuant to and in accordance with generally accepted accounting principles applied on a consistent basis. Any items of income or expense which are unusual or of a nonrecurring nature have been separately disclosed in the Raima Financial Statements in accordance, to the Company's knowledge, with generally accepted accounting principles or will be shown on Schedule 2.04. 2.05 Accounts Receivable. All accounts and notes receivable of the Company represent or will represent valid obligations arising from sales actually made in the ordinary course of business. Adequate provision has been made in a timely manner in the Raima Financial Statements for doubtful accounts and other receivables, in accordance, to the Company's knowledge, with generally accepted accounting principles and consistent with past practice; and the Company did not and does not have any liability or obligation, whether accrued, absolute or contingent, arising out of transactions entered into or any fact existing on or prior to the dates of the Raima Financial Statements, not reflected therein that should be reflected therein in accordance, to the Company's knowledge, with generally accepted accounting principles. 2.06 Taxes. Except as set forth in Schedule 2.06, all federal, state and local tax returns and reports of the Company required by law to be filed have been duly and timely filed, and all taxes, fees or other governmental charges of any nature shown on such returns and reports have been paid or are currently provided for on the books of the Company. There is no asserted deficiency or additional tax or governmental charge, and there is no tax proceeding pending before any agency or court to which the Company is a party, nor, to the best of the Company's knowledge, is there any basis for any such proceeding. There are no unpaid taxes of the Company which are a lien on its properties and assets, except liens for taxes not yet due and payable; all taxes assessable against the Company and due and payable which, to the Company's knowledge, require accrual under generally accepted accounting principles have been properly accrued on the books of account of the Company and reflected in the Raima Financial Statements and all taxes assessable against the Company and not yet due and payable which, to the Company's knowledge, require accrual under generally accepted accounting principles have been properly accrued on the books of account of the Company and reflected in the Raima Financial Statements. The charges, accruals and reserves shown in the Raima Financial Statements in respect of all taxes for all fiscal periods to date, whether or not yet ended, are adequate to provide for such tax together with interest thereon and any penalties with respect thereto in accordance, to the Company's knowledge, with generally accepted accounting principles. The federal income tax returns of the Company have been audited or are otherwise closed through December 31, 1995. There are no open returns for any period ending on or before such date. No consents extending the statute of limitations have been filed by the Company with respect to the Company's tax liability for any fiscal year. The Company has not made or become obligated to make any payments that will not be deductible under Section 280G of the Code. The Company has not been a United States real property holding corporation within the meaning of Section 897(c) of the Code. All monies required to be withheld by the Company from employees for income taxes, social security and unemployment insurance taxes, or required to be withheld with respect to backup withholding or U.S. tax withholding, have been collected or withheld, and either paid to the respective governmental agencies or set aside in accounts for such purpose, or accrued, reserved against, and entered upon the books of the Company. The Company has never filed any consent under Section 341(f) of the Code. The Company is not a party to any election or consent with respect to taxes not disclosed in Schedule 2.06. The Company neither owns any interest in a "passive foreign investment company" as that term is defined in Section 1296 of the Code nor is a beneficiary of a foreign trust the distributions of which may be subject to the interest charge determined under Section 668 of the Code. 2.07 No Material Adverse Change. Except as set forth in Schedule 2.07, since December 31, 1998, there has been no material adverse change in the business, properties, financial position, results of operations, net worth or prospects of the Company; the business affairs of the Company have since such date been conducted in the usual and ordinary course, and no transaction has taken place with the Company other than in the usual and ordinary course of business, except as specifically contemplated by this Agreement. 2.08 Absence of Certain Changes or Events. Without limiting the generality of Section 2.07 hereto, except as set forth in Schedule 2.08 or as specifically contemplated by this Agreement, since December 31, 1998, the Company has not: (a) issued capital stock or declared or paid a dividend or made any other payment from capital or surplus or other distribution of any nature, or, directly or indirectly, redeemed, purchased or otherwise acquired or recapitalized or reclassified any of its capital stock or liquidated in whole or in part; (b) merged or consolidated with another corporation; (c) created, incurred or assumed or committed to create, incur or assume indebtedness or other liability, except for indebtedness or other liabilities less than $50,000 in the aggregate and for accounts payable or other current liabilities which (1) are not for borrowed money, (2) were incurred in the usual and ordinary course of business, and (3) are not materially adverse to the business, properties, financial position or results of operations of the Company; (d) mortgaged, pledged or otherwise encumbered any of its assets other than in the ordinary course of business; (e) raised salaries, hourly rates or the rate of bonuses or commissions or other compensation, except for normal increases therein consistent with past practice; (f) altered or amended its Articles of Incorporation or Bylaws; or (g) entered into, materially amended or terminated any material contract, agreement, franchise, permit or license which involves consideration in excess of $25,000 annually, except in the ordinary course of business. 2.09 Customers. To the Company's knowledge, except as set forth in Schedule 2.09, the Company has not received any notice, written or oral, that any of the Company's 10 largest customers (based on Company invoices for the twelve-month period ended December 31, 1998 and excluding all revenues in connection with the Vista Internet Services Division of the Company) intends to cease dealing with the Company or materially reduce its business with the Company. 2.10 Contracts. Included in Schedule 2.10 is a list of all executory contracts, agreements and commitments, written and oral, and other instruments to which the Company is a party of the following nature (the "Contracts"): (i) written contract for employment of any employee; (ii) profit sharing, bonus, deferred compensation, stock option, severance pay, pension or retirement plan or material agreement or other employee benefit plan or material agreement related to employees; (iii) agreement or arrangement for the sale (otherwise than in the ordinary course of business) of any assets for consideration in excess of $25,000; (iv) agreement, contract or indenture relating to the borrowing of money in excess of $25,000; (v) agreement with unions; (vi) material governmental permit or registration; (vii) lease of any real or personal property involving an annual rental of $50,000 or more; (viii) agreement purporting to restrict the Company from competing with any person or in any geographic area; and (ix) any other material contract, agreement or commitment to which the Company is a party which requires payment of $25,000 or more and is not cancelable by the Company, without payment of any penalty, within thirty (30) days. Except as indicated in Schedule 2.10 hereto, none of the Contracts involves as a party any shareholder, officer or director of the Company or, to the knowledge of the Company and the Shareholders, any corporation, firm or individual in which any such person has any direct or indirect interest, or with whom such person has any direct or indirect relation by blood or marriage or adoption. The Company has performed all the obligations required to be performed by it to date under the Contracts, is not in default in any respect under any such Contract except where the failure to perform any obligation or any such default would not reasonably be expected to have a material adverse effect on the Company and the Company has not received any notice, written or oral, of any claim, charge or threat that it has materially breached any such Contract. To the Company's knowledge, all other parties to such Contracts are in compliance therewith and none are in default thereunder except as will not have a material adverse effect on the Company. 2.11 Key Employees. Schedule 2.11 lists any officer or other employee of the Company with a title of manager or above ("Key Employee") who has terminated employment with the Company since January 1, 1998. The Company has no knowledge that any Key Employee intends to terminate employment with the Company. 2.12 Labor Matters. No employees of the Company are, or have been, represented by a union or other labor organization. Since January 1, 1995, there have been no labor disputes to which the Company has been a party and it has not received notice from any union or employee setting forth demands for representation, elections or for present or future changes in wages, terms of employment or working conditions. 2.13 Employee Benefits. Except as set forth in Schedule 2.13, the Company neither maintains nor has any obligation to make contributions to, any employee benefit plan (an "ERISA Plan") within the meaning of Section 3(3) of the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA", nor any other retirement, profit sharing, stock option, stock bonus or employee benefit plan (a "Non-ERISA Plan"). All such ERISA Plans and Non-ERISA Plans have been maintained and operated in all material respects in accordance with all federal, state and local laws applicable to such plans and the terms and conditions of the respective plan documents. The Internal Revenue Service has issued a favorable determination letter with respect to each ERISA Plan that is intended to be a "qualified plan" within the meaning of Section 401(a) of the Code. Except as set forth in Schedule 2.13 hereto, no ERISA Plan is subject to Title IV or Section 302 of ERISA or Section 412 of the Code. No ERISA Plan is a "multiemployer plan" within the meaning of Section 4001(A)(3) of ERISA (a "Multiemployer Plan") or a plan that has two or more contributing sponsors at least two of whom are not under common control, within the meaning of Section 4063 of ERISA (a "Multiple Employer Plan"), nor has the Company at any time contributed to, or been obligated to contribute to, any Multiemployer Plan or any Multiple Employer Plan. The Company has never been a member of a group described in Sections 414(b), (c), (m) or (o) of the Code. Except for continuation coverage as required by Section 4980(B) of the Code or by applicable state insurance laws, no ERISA Plan or Non-ERISA Plan provides life, health, medical or other welfare benefits to former employees or beneficiaries or dependents thereof. 2.14 Authority Relative to this Agreement. The Company has full corporate power and authority to enter into this Agreement and, subject to the approval by the Company's shareholders in accordance with law, to consummate the transactions contemplated herein. This Agreement has been duly authorized, executed and delivered by the Company and, except for the approval of this Agreement, the Agreement of Merger and the Articles of Merger by the Company's shareholders in accordance with law, is a valid and legally binding obligation of the Company except to the extent enforceability may be limited by applicable bankruptcy insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors rights generally or by general principles of equity. Except as set forth on Schedule 2.14, neither the execution of this Agreement nor the consummation of the transactions contemplated herein will constitute or cause a breach or violation of the Articles of Incorporation, Bylaws or other covenants or obligations binding upon the Company or affecting any of its properties, or cause a lien or other encumbrance to attach to any of its properties that will materially adversely affect the Company or its ability to consummate the transactions contemplated by this Agreement, or result in the acceleration of or the right to accelerate any obligation under or the termination of or the right to terminate any license, franchise, lease, permit, approval or agreement to which the Company is a party and under which the Company has either invoiced or received invoices in 1998 for amounts in excess of $25,000, or require a consent of any person to prevent such breach, default, violation, lien, encumbrance, acceleration, right or termination. 2.15 Governmental Consents/Approvals. Except as set forth on Schedule 2.15, no approval of or filing with a federal, state or local court, authority or administrative agency is necessary to authorize the execution and delivery of this Agreement or the Ancillary Agreements (as defined in Section 6.06 hereof) by the Company or any Shareholder (or any individual who also acts as a fiduciary for a Shareholder) or the consummation by the Company or any Shareholder (or individual) of the transactions contemplated herein or therein, except for the filing of the Agreement of Merger with the Secretary of State of Delaware and the filing of the Articles of Merger with the Secretary of State of Washington. 2.16 Real Property. The Company owns no real property and Schedule 2.16 includes a complete list of all real property leased by the Company ("Leased Real Property"). The Company has, or will have at Closing, valid leasehold interests in all its Leased Real Property. 2.17 Personal Property. Schedule 2.17 hereto includes a complete list of all items of personal property owned by the Company which have a depreciated value in excess of $10,000, including any motor vehicles. The Company has good and marketable title to all of its personal property, in each case free and clear of all mortgages, liens, security interests, pledges, charges or encumbrances of any nature whatsoever, other than purchase money security interests disclosed on Schedule 2.17. 2.18 Litigation. Except as set forth in Schedule 2.18, there are no lawsuits, claims, customs penalties or fines, proceedings or investigations pending or, to the best knowledge of the Company and the Shareholders, threatened by or against the Company which could materially impair the transactions contemplated by this Agreement or the value of the business being acquired by Centura. 2.19 [Intentionally Omitted]. 2.20 Licenses. The Company holds each governmental license, permit or other governmental authorization (collectively hereinafter referred to as "Licenses") which is required for the operation of its business and, except as set forth on Schedule 2.20, all such Licenses are in full force and effect and will remain in full force and effect notwithstanding the closing of the transactions contemplated hereby. Attached hereto as Schedule 2.20 is a complete list of each such License. 2.21 Employee and Related Matters. Except as disclosed in Schedule 2.21, there are no employment-related claims, actions, proceedings or investigations pending or, to the best knowledge of the Company and the Shareholders, threatened against the Company before any court, governmental, regulatory or administrative authority or body, or arbitrator or arbitration panel. The Company is not subject to any outstanding order, writ, judgment, injunction, decision, award, compliance order, consent decree, conciliation agreement, settlement agreement, affirmative action plan, determination letter or advisory of any court, governmental, regulatory or administrative authority or body, or arbitrator or arbitration panel pertaining to an employment-related claim. The Company is not, nor has it ever been, a party to any collective bargaining agreements, and is in substantial compliance with all contracts, and all laws and regulatory requirements, pertaining to employment and employee benefits. Except as described in Schedule 2.21, after the Closing, the Company shall not have any obligation to pay or contribute any sums to any pension, ESOP, retirement or similar plan. 2.22 Proprietary Information; Inventions; Employees and Consultants. Except as set forth on Schedule 2.22, since 1990, each of the Company's officers, directors, employees, consultants and contractors, who, either alone or in concert with others, developed, invented, discovered, derived, programmed or designed Intellectual Property (as defined below) or Inventions (as defined below), or who has knowledge of or access to information about Intellectual Property or Inventions, has entered into a written agreement ("Proprietary Information Agreement") with the Company in the form attached hereto as Schedule 2.22. As used herein, "Inventions" means all inventions, developments and discoveries which during the period of an employee's, consultant's or contractor's service to the Company he, she or it makes or conceives of, either solely or jointly with others, that relate to any subject matter with which his, her or its work for the Company may be concerned, or relate to or are connected with the business, products, services or projects of the Company, or relate to the actual or demonstrably anticipated research or development of the Company or involve the use of the Company's funds, time, material, facilities or trade secret information. (b) The Company and the Shareholders are not aware that any of the Company's employees or consultants is in violation of his, her or its Proprietary Information Agreement. The Company and the Shareholders do not believe it is or will be necessary, for the Company's business as presently conducted or as the Company presently proposes to conduct it, for the Company to utilize any inventions, copyrights or other intellectual property of any of the Company's officers, directors, employees, consultants or contractors made or owned prior to their employment with or engagement by the Company or that it is or will be necessary, for the Company's business as presently conducted or as the Company presently proposes to conduct it, to utilize any other assets or rights of any of its officers, directors, employees, consultants or contractors made or owned prior to their employment with or engagement by the Company, in violation of any limitations or restrictions to which any such officer, director, employee, consultant or contractor is a party or to which any of such assets or rights may be subject. 2.23 Patents and Other Intangible Assets. Schedule 2.23(a) lists all patents, patent applications, trademarks, service marks, trade names, copyrights, licenses or rights with respect to the foregoing, used in or necessary for the conduct of the Company's business, as presently conducted or as the Company presently proposes to conduct it, with a description of their scope, including identification of any and all websites maintained by the Company. (b) Except as set forth in Schedule 2.23(b), the Company (i) owns or has the right to use, free and clear of all liens, claims and restrictions, all patents, patent applications, trademarks, service marks, trade names, copyrights, inventions, developments or discoveries used in or necessary for the conduct of the Company's business, as presently conducted and as the Company presently proposes to conduct it (collectively, the "Intellectual Property"), (ii) is not infringing upon or otherwise acting adversely to the right or claimed right of any person or entity under or with respect to any patent, trademark, service mark, trade name, invention, trade secret, copyright, license or other Intellectual Property or right with respect thereto, and (iii) is not subject to any agreement which obligates it to make any payments by way of royalties, fees or otherwise to any owner or licensee of, or other claimant to, any patent, trademark, service mark, trade name, invention, trade secret, or copyright with respect to the use thereof or in connection with the conduct of its business or otherwise. Furthermore, the Company and the Shareholders have no knowledge, and neither the Company nor the Shareholders have received any communication alleging or stating, that the Company or any employee, consultant or contractor has violated or infringed, or by conducting business as presently proposed by the Company, would violate or infringe, any patent, trademark, service mark, trade name, copyright, trade secret, proprietary right, process or other Intellectual Property of any other person or entity. (c) Except as set forth in Schedule 2.23(c), (i) the Company has not sold, transferred, assigned, licensed or subjected to any lien, security interest or other encumbrance, any Intellectual Property and (ii) the Company has not granted to any other person or entity rights to license, market or sell its proposed products or services and the Company is not bound by any agreement that affects the Company's exclusive right to develop, license, market or sell its products or services. (d) Except as set forth in Schedule 2.23(d), no director, officer, employee, agent or shareholder of the Company owns or has any right in the Intellectual Property of the Company. (e) Except as set forth on Schedule 2.23(e), to the Company's knowledge, neither the carrying on of the Company's business by its current employees, consultants and contractors, nor the conduct of its business as presently proposed, will conflict with or result in a breach of the terms, conditions or provisions of, or constitute a default under, any contract, covenant or instrument under which any of such employees, consultants or contractors is now obligated. 2.24 No Brokers. Except as set forth on Schedule 2.24 or as specified in Section 10.07 hereof, no agent, broker, investment banker, person or firm acting on behalf of the Shareholders, the Company or any related entity is or will be entitled to any broker's or finder's fee or any other commission or similar fee in connection with any of the transactions contemplated herein. 2.25 Equipment. The equipment of the Company is in good operating condition, normal wear and tear excepted. 2.26 Environmental Matters. The Company has not received any written notice or written threat of any private or governmental claims, citations, complaints, notices of violation or letters made, issued to or threatened against the Company by any governmental entity or private or other party for the impairment or diminution of, or damage, injury or other adverse effects to, the environment or public health resulting, in whole or in part, from the ownership, use or operation of any of the Company's facilities which will be occupied or operated by Centura as a result of the transactions contemplated hereby (the "Property"). The Property has not been used by the Company for the disposal of "hazardous waste" or "hazardous materials" as those terms are defined below. As used in this Agreement, the term "hazardous materials" or "hazardous waste" means any hazardous or toxic substances, materials, and wastes listed in the United States Department of Transportation Hazardous Materials Table (49 CFR 172.101) or by the Environmental Protection Agency as a hazardous substance (40 CFR Part 302) and amendments thereto, or such substances, materials and wastes which are or may become regulated under any applicable local, state or federal law, including, without limitation, any material, waste or substance which is (i) petroleum, (ii) asbestos, (iii) polychlorinated biphenyls, (iv) defined as a "hazardous waste," "extremely hazardous waste" or "restricted hazardous waste" or "hazardous material" under applicable state laws and regulations, (v) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. 1251, et seq. (33 U.S.C. 1321) or U.S.C. 1317, (vi) defined as "hazardous waste" pursuant to Section 1004 of the Resource Conversation and Recovery Act, 42 U.S.C. 6901, et seq. (42 U.S.C. 6903) or (vii) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 9601, et seq. (42 U.S.C. 9601). To the Company's knowledge, there are no hazardous materials or hazardous waste on, under, in or about the Property, including but not limited to the air above the Property, the soil and groundwater at and below the Property, and surface water on and running through the Property. The Company has duly complied with the provisions of all material federal, state and local environmental, health and safety laws, codes and ordinances and all rules and regulations promulgated thereunder. The Company has been issued, and will maintain until the date of Closing, all material federal, state and local permits, licenses, certificates and approvals with respect to the Property required to be maintained by the Company as a tenant of the Property or as the operator thereof, relating to (i) air emissions, (ii) discharges to surface water or groundwater, (iii) noise emissions, (iv) solid or liquid waste disposal, (v) the use, generation, storage, transportation or disposal of hazardous materials or hazardous wastes, or (vi) other environmental, health or safety matters. The Company has received no notice of, any fact(s) which might constitute violation(s) of any federal, state or local environmental, health or safety laws, codes or ordinances, and any rules or regulations promulgated thereunder, which relate to the use, ownership or occupancy of the Property by the Company, and is not in violation of any material covenants, conditions, easements, rights of way or restrictions affecting the Property or any rights appurtenant thereto. The Company has no information in its possession which pertains to the environmental history of the Property which has not been furnished to Centura. 2.27 Corporate Records. There have been delivered to Centura, or representatives of Centura have been permitted free access to, true and complete copies of Articles of Incorporation of the Company and the Bylaws of the Company in effect on the date hereof. The corporate books of the Company, which the Company has made and will make available to Centura prior to the Closing, are true and complete in all material respects. 2.28 Disclosure. No representation or warranty made by the Company in this Agreement and no statement contained in a certificate, schedule, list or other instrument or document attached to this Agreement and delivered by the Company, whether heretofore furnished to Centura or hereafter required to be furnished to Centura (all such documents being taken as a whole), contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements contained herein or therein not misleading. 2.29 Rule 10b-5. On the effective date of the Registration Statement on Form S-4 (the "Registration Statement") filed in connection with the Merger, the Registration Statement insofar as it relates to information pertaining to the Company furnished in writing by or on behalf of the Company for use in the Registration Statement, will not contain any untrue statement of a material fact and will not omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; and, on such date the Prospectus prepared in connection therewith (the "Prospectus") will not and, on the Closing Date, will not, insofar as it relates to information pertaining to the Company furnished in writing by or on behalf of the Company for use in the Prospectus, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. For the purposes of the foregoing representations and warranties, any reference to "the Company's knowledge," "knowledge of the Company", or any variation thereof, shall mean the knowledge of Stephen P. Smith, Wayne Warren, Randall Merilatt, Steven T. Graves, Wayne Dalgardno, Wally Santella, Mike Marrah or William Houglum. III. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SHAREHOLDERS Each of the Shareholders, severally and not jointly, represents, warrants and covenants to Centura as follows: 3.00 Ownership of Shares. The Shareholder owns the number of shares of Common Stock set forth next to his, her or its name on Schedule 3.00 hereto. 3.01 Title to Property. Conditional upon the effectiveness of the Merger, on and as of the Effective Date, such Shareholder hereby assigns and transfers to Centura all of the right, title claim and interest in and to any property of any kind owned by such Shareholder which is used by or in connection with, or reasonably anticipated to be used by or in connection with, the business of the Company, including, without limitation, all patents, patent applications, trademarks, service marks, trade names, inventions, trade secrets, copyrights, licenses and rights with respect to the foregoing, used in or necessary for the conduct of the Company's business or reasonably anticipated to be so used, but excluding therefrom the tangible personal property set forth in Schedule 3.01. 3.02 Competitors. Except for the ownership of non- controlling interests in securities of corporations, the shares of which are publicly traded, such Shareholder does not own directly or indirectly, any interest or has any investment or profit participation in a corporation or other entity which is a competitor or potential competitor or which directly or indirectly, does business with the Company. 3.03 Disclosure. No representation or warranty made by any such Shareholder in this Agreement and no statement contained in a certificate, schedule, list or other instrument or document attached to this Agreement and delivered by such Shareholder, whether heretofore furnished to Centura or hereafter required to be furnished to Centura (all such documents being taken as a whole), contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements contained herein or therein not misleading. 3.04 Rule 10b-5. On the effective date of the Registration Statement filed in connection with the Merger, the Registration Statement insofar as it relates to information pertaining to such Shareholder furnished in writing by or on behalf of such Shareholder for use in the Registration Statement, will not contain any untrue statement of a material fact and will not omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; and, on such date the Prospectus will not, insofar as it relates to information pertaining to such Shareholder furnished in writing by or on behalf of such Shareholder for use in the Prospectus, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 3.05 No Conflicts. This Agreement and the Ancillary Agreements to which each such Shareholder is a party have been duly executed and delivered by such Shareholder and are valid and legally binding obligations of such Shareholder in accordance with their terms. Neither the execution of this Agreement, or the Ancillary Agreements to which such Shareholder is a party, by the Shareholder nor the consummation of the transactions contemplated herein or therein will constitute or cause a breach or violation of the charter of Bylaws of the Company or a covenant or obligation binding upon the Company or the Shareholder or affecting his properties that will materially adversely effect the Company's or the Shareholder's ability to consummate the transactions contemplated herein or therein. 3.06 Employment Agreements. Each of the Shareholders shall execute and deliver his Employment Agreement (as hereinafter defined). IV. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CENTURA Centura represents, warrants and covenants to the Company and the Shareholders as follows: 4.00 Organization. Centura and Subsidiary are corporations duly organized, validly existing and in good standing under the laws of the State of Delaware and the State of Delaware, respectively. Each of Centura and Subsidiary has full power and authority to own its properties and to carry on its business as now conducted, and is in good standing and duly qualified to conduct business as a foreign corporation in each of the jurisdictions in which the ownership or leasing of its properties or the conduct of its business requires such qualification, except where the failure to be so qualified would not have a material adverse effect on Centura and Subsidiary, taken as a whole. 4.01 Capitalization. Centura's authorized capital stock consists of 60,000,000 shares of Common Stock, of which, as of January 22, 1999, 29,596,361 shares were issued and outstanding. Except as set forth in filings with the Securities and Exchange Commission (the "SEC") or on Schedule 4.01, all of the Shares are validly issued, fully paid and nonassessable, and there are no options, calls, warrants or other securities or rights outstanding which are convertible into, exercisable for or relate to any shares of capital stock of the Company to which the Company is a party. 4.02 Authority Relative to this Agreement. Centura and Subsidiary have full corporate power to enter into this Agreement and the Ancillary Agreements (as defined in Section 6.06 hereof) and to consummate the transactions contemplated herein and therein, neither the execution of this Agreement or the Ancillary Agreements nor the consummation of the transactions contemplated herein or therein will constitute or cause a breach or violation of the charter or Bylaws of Centura or Subsidiary or of a covenant or obligation binding upon either of them or affecting any of their respective properties or cause a lien or other encumbrance to attach to any of their properties, or result in the acceleration of or the right to accelerate any obligation under or the termination of or the right to terminate any license, franchise, lease, permit, approval or agreement to which Centura or the Subsidiary is a party, or require a consent of any person to prevent such breach, default, violation, lien, encumbrance, acceleration, right or termination. 4.03 Governmental Consents/Approvals. Except as set forth in Schedule 4.03, no approval of or filing with a federal, state or local court, authority or administrative agency is necessary to authorize the execution and delivery of this Agreement or the Ancillary Agreements by Centura or Subsidiary or the consummation by Centura or Subsidiary of the transactions contemplated herein or therein, other than such filings as may be required under the Securities Act and state blue sky laws, the filing of the Agreement of Merger with the Secretary of State of Delaware and the Articles of Merger with the Secretary of State of Washington. 4.04 Centura Stock. The shares of Centura Stock to be issued pursuant to this Agreement will be validly issued, fully paid and nonassessable. 4.05 SEC Reports and Financial Statements. To the extent not otherwise available to the Company, Centura has made available to the Company prior to the execution of this Agreement copies of its annual report on Form 10-K for the fiscal year ended December 31, 1997 filed with the SEC under the Securities Exchange Act of 1934 (the "Exchange Act") and the other reports required to be filed by Centura under Sections 13(a), 14(a), 14(c) and 15(d) of the Exchange Act subsequent to December 31, 1997 (the "SEC Reports"). As of their respective dates, the SEC Reports (i) complied as to form in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The audited consolidated financial statements and unaudited interim consolidated financial statements (including, in each case, the notes, if any, thereto) included in the SEC Reports (the "Centura Financial Statements") complied as to form in all material respects with the published rules and regulations of the SEC with respect thereto, were prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (except as may be permitted by rules applicable with respect to Form 10-Q of the SEC) and fairly present (subject, in the case of the unaudited interim financial statements, to normal, recurring year- end audit adjustments which are not expected to be, individually or in the aggregate, materially adverse to Centura) the consolidated financial position of Centura and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of their operations and cash flows for the respective periods then ended. 4.06 No Material Adverse Change. Except as may have been otherwise disclosed in the SEC Reports, since December 31, 1998, there has not been any change, event or development having, individually or in the aggregate, a material adverse effect on Centura and its subsidiaries taken as a whole. 4.07 No Conflicts. This Agreement and the Ancillary Agreements to which the Centura or Subsidiary is or will be a party have been duly executed and delivered by Centura or Subsidiary and are valid and legally binding obligations of Centura or Subsidiary in accordance with their terms except to the extent enforceability may be limited by applicable bankruptcy insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors rights generally or by general principles of equity. Neither the execution of this Agreement, or the Ancillary Agreements to which the Centura or Subsidiary is a party nor the consummation of the transactions contemplated herein or therein will constitute or cause a breach or violation of the charter or Bylaws of Centura or Subsidiary or a covenant or obligation binding upon Centura or Subsidiary that will materially adversely affect the Centura's ability to consummate the transactions contemplated herein or therein; provided, however, that the consent of Coast Business Credit to the transactions contemplated by this Agreement is required pursuant to the Loan and Security Agreement dated as of January 19, 1998 by and between Centura and Coast Business Credit. 4.08 Litigation. There are no lawsuits, claims, customs, penalties or fines, proceedings or investigations pending or, to the knowledge of Centura, threatened against Centura which could materially impair the transactions contemplated by this Agreement or would not reasonably be expected to have a material adverse effect on Centura and its subsidiaries, taken as a whole. 4.09 Compliance with Laws. Centura and its subsidiaries are in compliance with all applicable laws, except where the failure to be in compliance, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on Centura and its subsidiaries, taken as a whole. 4.10 Absence of Certain Changes or Events. Except as specifically contemplated by this Agreement, since December 31, 1998, Centura has not: (a) issued capital stock or declared or paid a dividend or made any other payment from capital or surplus or other distribution of any nature, or, directly or indirectly, redeemed, purchased or otherwise acquired or recapitalized or reclassified any of its capital stock or liquidated in whole or in part; (b) merged or consolidated with another corporation; (c) created, incurred or assumed or committed to create, incur or assume indebtedness or other liability which is materially adverse to the business, properties, financial position or results of operations of Centura; (d) mortgaged, pledged or otherwise encumbered any of its assets other than in the ordinary course of business; (e) raised salaries, hourly rates or the rate of bonuses or commissions or other compensation, except for normal increases therein consistent with past practice; (f) altered or amended its Articles of Incorporation or Bylaws; or (g) entered into, materially amended or terminated any contract that is materially adverse to the business, properties, financial position or results of operations of Centura and its subsidiaries, taken as a whole. 4.11 Rule 10b-5. On the effective date of the Registration Statement, the Registration Statement insofar as it relates to information pertaining to Centura (and excluding information pertaining to the Company), will not contain any untrue statement of a material fact and will not omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; and, on such date the Prospectus will not and, on the Closing Date, will not, insofar as it relates to information pertaining to Centura (and excluding information pertaining to the Company), contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. 4.12 Disclosure. No representation or warranty made by Centura in this Agreement or the Ancillary Agreements and no statement contained in any exhibit, certificate, schedule, list or other instrument or document attached to this Agreement or the Ancillary Agreements delivered by Centura, whether heretofore furnished to the Company or hereafter required to be furnished to the Company (all such documents being taken as a whole), contains any untrue statement of a material fact or omits to state any material fact necessary to make the statements not misleading. 4.13 Board Representation. If the Effective Date occurs, effective as of the Effective Date, Centura agrees that it will cause Thomas R. Clark to be appointed to its Board of Directors and, in connection with its next two annual meetings thereafter, it will nominate and recommend for election to its Board of Directors Mr. Clark or the "Alternate Designee" (as defined below). If Mr. Clark or an Alternate Designee is not elected to Centura's Board of Directors at such meetings, Centura agrees to use its best efforts to cause another Alternate Designee (other than Mr. Clark or any Alternate Designee nominated but not elected to the Centura Board of Directors) to be so elected. As used herein, an "Alternate Designee" shall mean an individual (other than one of the three Shareholders) designated by any two of the three Shareholders, provided that such individual is acceptable to the Chairman of Centura's Board of Directors. If the Chairman of Centura's Board of Directors deems any individual so designated as unacceptable, then Stephen P. Smith shall be the Alternate Designee. If Stephen P. Smith is not elected to Centura's Board of Directors, or for any other reason fails to serve, any two of the three Shareholders may designate another individual, provided that such other individual is acceptable to the Chairman of Centura's Board of Directors. Notwithstanding the foregoing, Centura's obligations in connection with this Section 4.09 shall immediately cease at such time as the Shareholders, in the aggregate, beneficially own less than 50% of the shares of Centura Stock that they hold on the Effective Date. 4.14 Access to Information. Centura shall, on reasonable notice, afford Stephen Smith and Steve Graves full access during normal business hours throughout the period prior to the Effective Date to all of the Company's offices, properties and records subject to compliance with reasonable restrictions imposed by the Company with respect to maintaining confidentiality; provided, however, that neither Mr. Smith nor Mr. Graves shall be entitled such access unless each of them has entered into an agreement, satisfactory to Centura, to keep such information confidential and not to trade in any securities of Centura prior to the Effective Date. In addition, prior to the Effective Date, Centura shall provide to the Company copies of Centura's unaudited balance sheet as of the end of each month and the related statement of income and cash flows for each of the respective monthly periods, beginning with the month of January 1999. No investigation or inquiry made by the Company shall in any way affect the representations and warranties of Centura contained in this Agreement or their survival after Closing. V. COVENANTS OF THE COMPANY The Company covenants and agrees pending the Closing as follows: 5.00 Ordinary Course. The Company shall carry on its business in the ordinary course, consistent with prior practice, and shall use commercially reasonable efforts to preserve its business organization intact and conserve the goodwill and relationships of its customers, suppliers and others having business relations with it and the services of its officers, employees, agents and representatives. 5.01 Corporate Matters. The Company shall maintain its corporate existence and good standing in Washington and in each jurisdiction in which it is qualified to do business, and will not amend its Articles of Incorporation or Bylaws except as contemplated hereby. 5.02 Distributions. Except with Centura's written consent, no payment, dividend or other distribution of any nature will be declared, made, set aside or paid on or in respect of any capital stock or surplus of the Company nor will the Company directly or indirectly, issue, redeem, retire, purchase or otherwise acquire shares of its stock. 5.03 Compensation. Except as set forth on Schedule 5.03 or with Centura's written consent or with respect to normal increases consistent with past practice, no increase will be made in the compensation or rate of compensation payable or to become payable to the officers or employees of the Company, and no bonus, profit sharing, retirement, insurance, death, fringe benefit or other extraordinary or indirect compensation shall accrue, be set aside or be paid for or on behalf of any such officer or employee, and no agreement or plan with respect to the same shall be adopted or committed to. 5.04 Additional Agreements. Except as set forth on Schedule 5.04, the Company shall: (a) not merge or consolidate with or acquire any assets of another corporation, business or other person except as contemplated hereby; (b) not do any act or omit any act the doing or omission of which would be a breach or default under any of the Contracts; (c) from the date hereof, on reasonable notice, afford Centura and its representatives full access during normal business hours throughout the period prior to the Closing to all of the Company's offices, properties and records subject to compliance with reasonable restrictions imposed by the Company with respect to maintaining confidentiality; provided, however, that any investigation or inquiry made by Centura shall not in any way affect the representations and warranties contained in this Agreement or their survival after the Closing; (d) until the consummation of the transactions contemplated hereby or the termination of this Agreement pursuant to VIII hereof, neither the Company, the Shareholders nor any of their affiliates or representatives or, as applicable, their respective officers, employees, directors or agents will, directly or indirectly (i) submit, solicit, initiate, encourage or discuss with any unrelated third party any proposal from any such person or enter into any agreement or accept any offer relating to any (1) reorganization, liquidation, dissolution or recapitalization of the Company or any of its subsidiaries, (2) additional borrowings or increased indebtedness of the Company or any subsidiaries, other than to generate working capital in the ordinary course of business, under currently existing credit facilities, (3) merger or consolidation involving the Company or any of its subsidiaries, (4) purchase or sale of any material assets or capital stock , or (5) similar transaction or business combination involving the Company or any of its subsidiaries, or their assets or (ii) furnish any information with respect to, assist or participate in or facilitate in any other manner any effort or attempt by any person to do or seek any of the foregoing. The Company shall immediately notify Centura if any person makes any proposal, offer, inquiry or contact with respect to any of the foregoing. 5.05 Representations and Warranties. The Company shall not take any action or omit to take any action within its reasonable control to the extent such action or omission would result in any representation or warranty of the Company contained in this Agreement being inaccurate or incorrect in any material respect on and as of the date of Closing. 5.06 Related Party Debts. At or prior to the Closing, each Shareholder, officer and director of the Company and each entity (other than corporations the shares of which are publicly traded and other than any Subsidiary listed on Schedule 2.02) in which the Company or any Shareholder has a direct or indirect interest shall pay to the Company all outstanding indebtedness owed by such shareholder, officer, director or entity to the Company. 5.07 [Intentionally Omitted]. 5.08 Information. The Company will provide to Centura such financial statements and other information as it may reasonably request in connection with reports required to be filed by Centura with the SEC on Form 8-K or otherwise. 5.09 [Intentionally Omitted]. 5.10 Financial Statements. The Company will deliver to Centura: (a) as promptly as practicable but in any event prior to Closing, copies of the Company's audited balance sheets as of December 31, 1996, 1997 and 1998 and audited statements of income and cash flows for the years then ended, including the notes thereto and an unqualified report supplied therewith by PricewaterhouseCoopers LLP and (b) not later than the latter of (i) within fifteen (15) days after completion of the audit report described in clause (a) above for the year ended December 31, 1998, or (ii) the fifteenth (15th) day of each month with respect to the immediately preceding month, copies of the Company's unaudited balance sheet as of the end of each month commencing with January 1999, together with the related unaudited statements of income and cash flows for the respective monthly period. The financial statements referred to in subsection (a) above are herein referred to as the "Raima Audited Financial Statements." By reason of the Company's delivering such financial information, the Company shall be deemed to represent and warrant to Centura that such financial information has been prepared pursuant to and in accordance with generally accepted accounting principles applied on a consistent basis, subject to normal year-end adjustments and that (A) the Raima Audited Financial Statements (i) present fairly, in all material respects, the financial position of the Company and its subsidiaries and the results of operations and cash flows for the Company and its subsidiaries as of the respective dates and for the respective periods stated above and (ii) have been prepared pursuant to and in accordance with generally accepted accounting principles applied on a consistent basis, and, (B) in the case of the financial statements referred to in Section 5.10(b), have, in all material respects, been prepared pursuant to and in accordance with generally accepted accounting principles applied on a consistent basis, subject to normal year-end adjustments and reflect any and all adjustments made pursuant to the completion of the Raima Audited Financial Statements and incorporate and reflect balances carried forward from the Raima Audited Financial Statements, and Centura shall have the right to review and approve such financial statements for compliance therewith. There shall be an adjustment in consideration payable to the former holders of Raima Stock under Section 1.02 hereof if either the Company's "Current Net Equity" (as defined below) is less than the "Minimum Net Equity" (as defined below), in which case there shall be a "Negative Balance Sheet Adjustment" (as defined below), or the Company's Current Net Equity is greater than the "Maximum Net Worth" (as defined below), in which event there shall be a "Positive Balance Sheet Adjustment" (as defined below). There shall be no adjustment in consideration payable to the former holders of Raima Stock if the Company's Current Net Equity is greater than the Minimum Net Equity but less than or equal to the Maximum Net Equity. As used herein, "Current Net Equity" shall mean the excess ("Net Equity") of the Company's total assets over the Company's total liabilities (excluding any amounts attributable to the sale of the Vista Internet Services division of the Company) as shown on the Company's unaudited balance sheet dated as of the end of the month immediately preceding the month in which the Closing occurs and ending at least fifteen (15) days prior to the date of the Closing (the "Prior Month End'). As used herein, "Minimum Net Equity" shall mean the Company's Net Equity as of December 31, 1998 minus seven hundred thousand dollars ($700,000), and "Maximum Net Equity" shall mean the Company's Net Equity as of December 31, 1998 plus seven hundred thousand dollars ($700,000). If the Company's Current Net Equity is less than Minimum Net Equity, the "Negative Balance Sheet Adjustment" shall be denominated in shares of Centura common stock and shall be equal to the amount of such shortfall divided by the Average Centura Trading Price and shall reduce the number of shares of Centura Stock issuable pursuant to Section 1.02 hereof. If the Company's Current Net Equity exceeds the Maximum Net Equity, the "Positive Balance Sheet Adjustment" shall be denominated in dollars and shall be equal to the amount of such excess. Any Positive Balance Sheet Adjustment shall be paid to the former Raima shareholders (a) 20% of the Positive Balance Sheet Adjustment by cash deposit on the Effective Date with the Escrow Agent under the Escrow Agreement, (b) up to 80% of the Positive Balance Sheet Adjustment in cash on the Effective Date, but only to the extent that the Company's cash balance (excluding any amounts attributable to the sale of the Vista Internet Services division of the Company) exceeds $250,000 plus the sum of (A) short term borrowings (as shown on the Company's balance sheet as of the Prior Month End), plus (B) the aggregate amount of accounts payable aged more than 45 days (as shown on the Company's balance sheet as of the Prior Month End), plus (C) 20% of the Positive Balance Sheet Adjustment and (c) the balance of the Positive Balance Sheet Adjustment in cash ninety (90) days after the Effective Date. VI. THE COMPANY'S AND THE SHAREHOLDERS' CONDITIONS PRECEDENT All of the following shall be conditions precedent to the obligations of the Company and the Shareholders to consummate the transactions contemplated by this Agreement: 6.00 Representations and Warranties. The representations and warranties made by Centura contained in this Agreement or in any written document (including exhibits and schedules delivered by Centura) shall be true and correct in all material respects on the date of Closing. 6.01 Legal Opinion. The Company and the Shareholders shall have been furnished with an opinion of Orrick, Herrington &Sutcliffe LLP, dated as of the Closing, as to the matters set forth below and as to such other matters as counsel for the Company shall reasonably request: (a) Centura and Subsidiary are incorporated, duly existing and in good standing under the laws of the States of Delaware. (b) Centura and Subsidiary each has full corporate power to enter into this Agreement and to consummate the transactions contemplated herein. This Agreement has been duly authorized, executed and delivered by Centura and Subsidiary and is a valid and binding agreement of Centura and Subsidiary, respectively, in accordance with its terms except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors' rights or the relief of debtors generally and to the application of general equitable principles by a court of competent jurisdiction. (c) The Centura Stock has been duly authorized for issuance pursuant to the terms of this Agreement and, when issued in accordance therewith will be duly issued, fully paid and nonassessable. 6.02 Performance of Obligations. Centura and Subsidiary shall have complied in all material respects with all of their respective obligations under this Agreement. 6.03 Statutes. There shall not be in effect any statute, rule or regulation which makes it illegal to consummate the transactions contemplated herein or any order, decree or judgment which enjoins the consummation of the transactions contemplated herein. 6.04 Litigation. No suit, action or other proceeding shall be pending or threatened before any court or governmental agency seeking to restrain, to prohibit or to obtain material damages or other relief in connection with this Agreement or the consummation of the transactions contemplated herein, and there shall have been no investigation or inquiry threatened or commenced in connection with this Agreement or with the transactions contemplated herein and this Agreement. 6.05 Shareholder Approval. The Agreement of Merger shall have been approved by the Shareholders of the Company in accordance with the WBCA. 6.06 Ancillary Agreements. The following agreements shall have been duly executed and delivered: an Agreement of Merger in substantially the form of Exhibit I attached hereto; Articles of Merger in substantially the form of Exhibit II attached hereto; an Employment Agreement with each of Stephen P. Smith, Steven T. Graves, Wayne L. Warren and Randall L. Merilatt, in the forms of Exhibits III-A, III-B, III-C and III-IV attached hereto, respectively; and an Escrow Agreement in substantially the form of Exhibit IV attached hereto(collectively the "Ancillary Agreements"). 6.07 Officer's Certificate. The Company and the Shareholders shall have received a certificate dated the date of Closing, signed by the President or a Vice President of Centura to the effect that the representations and warranties of Centura set forth herein are true and correct in all material respects on the date of Closing. 6.08 Effectiveness of the Registration Statement. The Registration Statement shall have been declared effective; no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC and no proceedings for that purpose shall have been initiated or, to the knowledge of the Company or Centura, threatened by the SEC, and all state securities or blue sky authorizations necessary to carry out the transactions contemplated hereby shall have been obtained and be in full force and effect. 6.09 Minimum Price. The Average Centura Trading Price (as hereinafter defined) shall not be less than $1.00 per share. The "Average Centura Trading Price" means the arithmetic mean of the closing sale price of Centura common stock on the NASDAQ SmallCap Market for each of the ten (10) trading days ending on the day immediately preceding the Effective Date. 6.10 NASDAQ SmallCap Market Listing. Centura shall be in compliance with all of the requirements for continued listing on the NASDAQ SmallCap Market as of the Closing Date. 6.11 No Recent Adverse Announcement. Five (5) days shall have expired from any date on which Centura has issued a press release containing news adverse to Centura. VII. CENTURA'S AND SUBSIDIARY'S CONDITIONS PRECEDENT All of the following shall be conditions precedent to the obligations of Centura and Subsidiary to consummate the transactions contemplated by this Agreement. 7.00 Representations and Warranties. The representations and warranties made by the Company and the Shareholders contained in this Agreement or in any written document (including the Exhibits and Schedules referred to herein) delivered to Centura pursuant hereto shall be true and correct in all material respects on the date of Closing. 7.01 Legal Opinion. Centura shall have been furnished with the opinion of Heller Ehrman White and McAuliffe, counsel to the Company and the Shareholders, dated as of the Closing, as to the matters set forth in Exhibit VI hereto and as to such other matters as counsel for Centura may reasonably request. 7.02 Performance of Obligations. The Company and the Shareholders shall have complied in all material respects with all of their respective obligations under this Agreement. 7.03 Statutes. There shall not be in effect any statute, rule or regulation which makes it illegal to consummate the transactions contemplated herein or any order, decree or judgment which enjoins the consummation of the transactions contemplated herein. 7.04 Litigation. No suit, action or other proceeding shall be pending or threatened before any court or governmental agency seeking to restrain, to prohibit or to obtain material damages or other relief in connection with this Agreement or the consummation of the transactions contemplated herein, and there shall have been no investigation or inquiry threatened or commenced in connection with this Agreement or the transactions contemplated herein and this Agreement. 7.05 Shareholder Approval. The Agreement of Merger shall have been approved by the shareholders of the Company in accordance with WBCA. 7.06 Dissenting Shareholders. Holders of no more than 6% of the Raima Stock shall have dissented from the Merger in the manner required by 23B.13 of the WBCA. 7.07 Ancillary Agreements. The Anciallary Agreements shall have been duly executed and delivered. 7.08 Officer's and Shareholders' Certificate. Centura shall have received a certificate of the Company dated the date of the Closing, signed by the President of the Company and the Shareholders, respectively, to the effect that the representations and warranties of the Company and the Shareholders, respectively, set forth herein are true and correct in all material respects on the date of Closing. 7.09 Effectiveness of the Registration Statement. The Registration Statement shall have been declared effective; no stop order suspending the effectiveness of the Registration Statement shall have been issued by the SEC and no proceedings for that purpose shall have been initiated or, to the knowledge of the Company or Centura, threatened by the SEC. 7.10 Minimum Price. The Average Centura Trading Price shall not be less than $1.00 per share. 7.11 Audit Opinion. Raima shall have received the Raima Audited Financial Statements and an unqualified opinion from PricewaterhouseCoopers LLP in connection with the Raima Audited Financial Statements and shall have delivered the Raima Audited Financial Statements along with the unqualified opinion from PricewaterhouseCoopers LLP to Centura. VIII. TERMINATION 8.00 Mutual Agreement. This Agreement may be abandoned or terminated on or before the Closing by mutual agreement of Centura and the Company. 8.01 Delay. If the Closing shall not have taken place on or prior to June 7, 1999, this Agreement may be terminated by written notice from Centura to the Company or from the Company to Centura; provided, however, that the right to terminate this Agreement under this Section 8.01 shall not be available to any party whose failure to fulfill any obligation under this Agreement shall have been the cause of or shall have resulted in the delay. 8.02 Effect of Termination. If this Agreement is abandoned or terminated as provided in Sections 8.00 or 8.01, it shall forthwith become wholly void and of no effect, other than the provisions of Section 8.04 hereof relating to Confidential Information, without liability of any party to the other parties, and no party shall have the right to bring or maintain any action hereunder; provided, however, that such abandonment or termination shall not relieve any party of its liability for breach of its obligation to consummate the transactions contemplated by this Agreement upon satisfaction or waiver of the conditions precedent to such obligation. 8.03 Expenses. If this Agreement is terminated for any reason other than a breach by Centura, the Company or the Shareholders, Centura shall pay the legal, accounting and advisory fees and expenses incurred by the Company in connection with this transaction, up to a maximum amount of $100,000 for all such fees and expenses in the aggregate. If this Agreement is terminated by reason of a breach by Centura, Centura shall pay the legal, accounting and advisory fees and expenses incurred by the Company in connection with this transaction. If this Agreement is terminated by reason of a breach by the Company or the Shareholders, the Company shall pay the legal, accounting and advisory fees and expenses incurred by Centura in connection with this transaction. 8.04 Confidential Information. (a) The parties hereto acknowledge that certain information communicated in the course of discussions and negotiations with respect to the transactions contemplated herein is confidential. Such information (the "Confidential Information") includes trade secrets concerning or relating to the property, business and affairs of the Company or Centura, information concerning or relating to sales methods, prices, customers, plans for the development of new services and information contained in the books and records of the Company or Centura. (b) Each of the parties hereto agrees that no Confidential Information furnished by or on behalf of the Company on the one hand, or by or on behalf of Centura on the other hand, will be used to affect adversely or compete with the businesses of the Company or Centura, respectively and all such Confidential Information shall be kept confidential by the Shareholders and the Company or by Centura, as the case may be, and their respective agents and representatives. Notwithstanding the foregoing, neither Centura, the Company nor any Shareholder shall have the confidentiality obligation hereunder to the extent that information contained in the Confidential Information (i) has been made public (other than through breach of the provisions hereof), (ii) was in such party's possession or available to it on a non- confidential basis from a third person prior to its receipt in connection herewith, (iii) is hereafter obtained from third parties without obligation of confidentiality, or (iv) in the opinion of such party's counsel such information is legally required to be disclosed. The provisions contained in this Section 8.04 shall continue as to the obligations of the Company and the Shareholders in full force and effect after the consummation of the transactions contemplated herein and shall continue as to the obligations of Centura if this Agreement is terminated but, as to the obligations of Centura, shall otherwise terminate upon Closing. IX. INDEMNIFICATION 9.00 Indemnification Claims. (a) Subject to the provisions of Sections 9.00(b) and 9.00(c) below, Centura and the Company and their respective successors and assigns and their respective officers, directors, shareholders, employees and agents shall be indemnified and held harmless from and against, and in respect of, any and all damages, claims, losses, liabilities and expenses, including, without limitation, reasonable legal, accounting and other expenses which arise out of: any breach of this Agreement by the Shareholders or, prior to the Effective Date, the Company; any breach of any of the representations, warranties or covenants made in this Agreement by the Company or the Shareholders; any inaccuracy or misrepresentation in the Schedules or Exhibits hereto or in any certificate or document delivered in accordance with the terms of this Agreement by the Company or the Shareholders or any claim based on events occurring or circumstances existing prior to the Effective Date (collectively, "Indemnification Claims"); provided, however, that any party so indemnified shall be entitled to indemnification pursuant to this Section 9.00 if, and only if, the aggregate of all Indemnification Claims asserted by all parties exceeds the sum of $100,000, in which event an indemnified party shall be so entitled with respect to all Indemnification Claims, without regard to the $100,000 threshold. All rights to assert Indemnification Claims shall expire on the date (the "Expiration Date") one year after the Effective Date, except as to any Indemnification Claims of which the Shareholders' Representatives have received written notice on or before the Expiration Date. (b) Indemnification Claims shall be satisfied solely by, first, return to Centura of Escrow Cash, and, next, return to Centura and cancellation of Escrow Shares. The number of Escrow Shares to be so returned to the Company for cancellation shall be equal to the liquidated amount of the Indemnification Claim being satisfied divided by the "Current Average Centura Trading Price" (as hereinafter defined). As used herein, the "Current Average Centura Trading Price" shall mean the arithmetic mean of the closing sale price of Centura common stock on the NASDAQ SmallCap Market for each of the ten (10) trading days ending on the day immediately preceding the date Escrow Shares are returned to Centura. (c) Notwithstanding anything to the contrary contained in this Agreement, if the Effective Date occurs, the recourse of Centura and the Company shall be limited to the Escrow Property, and no former shareholder of the Company shall have any personal liability in respect thereof. X. GENERAL 10.00 Registration Statement. As promptly as practicable after the execution of this Agreement, Centura shall prepare and file with the SEC the Registration Statement. In connection with the Registration Statement, the Company and the Shareholders agree to furnish any information reasonably requested by Centura and to otherwise cooperate in any manner reasonably requested by Centura. 10.01 Governing Law. This Agreement shall be construed, interpreted and the rights of the parties determined in accordance with the laws of the State of Delaware. Venue in any action to enforce or interpret this Agreement shall lie either in the State of California or the State of Washington, and all parties hereto submit themselves to the jurisdiction of courts in either state for such purpose. 10.02 Survival Period. Notwithstanding any investigation by a party hereto, the representations and warranties and agreements herein contained shall survive the Closing and shall continue in full force and effect after the consummation of this transaction, subject to the terms of Article IX hereof. 10.03 Miscellaneous. This Agreement (including the Exhibits and Schedules referred to herein) constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written, of the parties, including, without limitation, the Non-Disclosure Agreement, dated as of December 22, 1998, by and between Centura and the Company, and there are no warranties, representations or other agreements between the parties in connection with the subject matter hereof except as set forth specifically herein. No amendment, supplement, modification, waiver or termination of this Agreement shall be implied or be binding (including, without limitation, any alleged waiver based on a party's knowledge of a breach or inaccuracy in a representation or warranty contained herein) unless in writing and signed by the party against which such amendment, supplement, modification, waiver or termination is asserted. 10.04 No Assignment. All of the terms and provisions of this Agreement by or for the benefit of the parties shall be binding upon and inure to the benefit of their successors, assigns, heirs and personal representatives. The rights and obligations provided by this Agreement shall not be assignable, except, following the Closing, by Centura (without discharge of its obligations hereunder) to a subsidiary or an affiliate or to a successor to its business, and, except as expressly provided herein, nothing herein is intended to confer upon any person other than the parties and their successors, any right or remedy under or by reason of this Agreement. 10.05 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. 10.06 Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (except as may otherwise be specifically provided herein to the contrary) if delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed or mailed by certified or registered mail with postage prepaid: (a) If to Centura or Centura Software Corporation Subsidiary to 975 Island Drive Redwood Shores, CA 94065 Attention: Mr. Scott Broomfield Chief Executive Officer Telephone: Facsimile: with a copy to Orrick, Herrington & Sutcliffe LLP Old Federal Reserve Bank Building 400 Sansome Street San Francisco, CA 94111-3143 Richard S. Grey, Esq. Telephone: (415) 773-5450 Facsimile: (415) 773-5759 (b) If to the Stephen P. Smith Shareholders 2420 8th Ave. N. Representatives: Seattle, WA with a copy to Heller Ehrman White & McAuliffe 701 Fifth Avenue, Suite 6100 Seattle, Washington 98104-7098 Attention: Louisa Barash, Esq. Telephone: (206) 447-0900 Facsimile: (206) 447-0849 (c) If to the Raima Corporation Company to 4800 Columbia Center 701 Fifth Avenue Seattle, WA 98104 Attention: Stephen P. Smith Chief Executive Officer with a copy to Heller Ehrman White & McAuliffe 701 Fifth Avenue, Suite 6100 Seattle, Washington 98104-7098 Attention: Louisa Barash, Esq. Telephone: (206) 447-0900 Facsimile: (206) 447-0849 10.07 Professional Fees. Subject to Section 8,03 hereof, Centura and the Company (for itself and on behalf of the Shareholders) shall each bear their own expenses and legal fees in connection with the consummation of this transaction; provided, however, that in the event of the successful consummation of the transactions contemplated hereby, Centura will pay, on the Effective Date, (i) the out-of-pocket transaction-related advisory fees up to an aggregate of the greater of 2.25% of the value of the transaction on the Effective Date and $150,000 plus (ii) all legal and accounting fees incurred by the Company in connection with the preparation, execution and delivery of this Agreement and the consummation of the Merger, upon receipt of reasonably detailed invoices therefor; provided, however, that the excess of the aggregate amount of all such fees and disbursements described in the foregoing clauses (i) and (ii) above the total amount of $400,000 shall be divided by the Average Centura Trading Price determined in connection with the occurrence of the Merger shall be herein referred to as the "Professional Expense Share Adjustment" and shall reduce the number of shares of Centura Stock issuable in connection with the Merger as provided in Section 1.02 hereof. Centura and the Company agree to consult with each other regarding the definition and scope of professional work to be performed. 10.08 Public Announcement. Unless required by law (in which case each of Centura and the Company hereby agree to use reasonable efforts to consult with the other party prior to any such disclosure as to the content of such disclosure), after the date hereof, through and including the Effective Date, no press releases, announcements to employees, customers or suppliers of the Company or other releases of information related to this Agreement or the transactions contemplated hereby will be issued or released without the consent of each of Centura and the Company. After the Effective Date, Centura may issue any such releases of information without the consent of any other party hereto. 10.09 Shareholders' Representative. The Shareholders are hereby authorized and appointed (so long as they are willing and able to serve) to act as the representatives of the holders of Raima Stock (the "Shareholders' Representatives"), to act as their exclusive agent and attorney-in-fact on behalf of them with respect to all matters which are the subject of this Agreement or the Escrow Agreement, including, without limitation, (a) receiving or giving all notices, instructions, other communications, consents or agreements that may be necessary, required or given hereunder and (b) asserting, settling, compromising, defending, or determining not to assert, settle, compromise or defend, any Indemnification Claims. The Shareholders hereby accept such authorization and appointment. The Shareholders' Representatives shall act by vote or consent of any one or more of them owning a majority of the Escrow Shares then held by all of them in the aggregate ("Majority Representative"), and any action so taken or consent given shall be binding on the shareholders of Raima. None of the Company's shareholders shall act with respect to any of the matters which are the subject of this Agreement except through the Shareholders' Representatives; provided, however, that nothing contained herein shall be deemed to be a waiver by the shareholders of the Company to any rights they would otherwise have under applicable Federal or state securities laws, which rights are expressly retained by the shareholders. By virtue of approving this Agreement, each of the Company's shareholders acknowledges and agrees that he shall be bound by all notices received and agreements and determinations made by and documents executed and delivered by the Majority Representative under this Agreement and the Escrow Agreement. The Shareholders' Representatives shall promptly and in any event within three (3) business days, provide written notice to each of the Company's shareholders of any action taken on their behalf. Each of the Shareholders' Representatives shall at all times act in such capacity in a manner that he believes to be in the best interest of the shareholders of the Company. By virtue of approving this Agreement, each of the Company's shareholders further acknowledges and agrees that Centura may deal exclusively with the Shareholders' Representatives with respect to such matters. In the event that any of the Shareholders' Representatives declines or is unable to so act, those shareholders holding more than fifty percent (50%) of the Company's common stock immediately prior to the Effective Date may designate a new Shareholders' Representative, and each such shareholder agrees that in such event he or she will be bound by the determination of such majority of the shareholders. Upon the receipt of written evidence satisfactory to Centura to the effect that a new Shareholders' Representative has been substituted, all parties shall be entitled to rely upon such substituted representative to the same extent as each such party was theretofore entitled to rely upon the Shareholders' Representatives with respect to the matters covered by this Section 10.09. 10.10 Directors' and Officers' Insurance. Centura agrees that, for six (6) years after the Effective Date, Centura or the Company shall maintain officers' and directors' liability insurance policies covering the current officers and directors of the Company either by continuation of existing policies or on terms no less advantageous to such officers and directors than the terms of the policies in effect with respect to Centura's officers and directors. 10.11 Interpretation. When a reference is made in this Agreement to Sections, Schedules or Exhibits, such reference shall be to a Section, Schedule or Exhibit to this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. For purposes of contract interpretation, the parties agree that they are joint authors of this document. * * * * * * * IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and year first above written. RAIMA CORPORATION By: /s/ STEVEN P. SMITH Stephen P. Smith, Chief Executive Officer CENTURA SOFTWARE CORPORATION By: /s/ SCOTT BROOMFIELD Scott Broomfield, President CENTURA SUBSIDIARY CORPORATION By: /s/ SCOTT BROOMFIELD Scott Broomfield, President THE SHAREHOLDERS /s/ RANDALL L. MERILATT Randall L. Merilatt /s/ STEPHEN P. SMITH Stephen P. Smith /s/ WAYNE L. WARREN Wayne L. Warren SHAREHOLDERS' REPRESENTATIVES: /s/ RANDALL L. MERILATT Randall L. Merilatt /s/ STEPHEN P. SMITH Stephen P. Smith /s/ WAYNE L. WARREN Wayne L. Warren Exhibit III-A EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made and entered into as of the effective date (the "Effective Date") of the merger between Centura Subsidiary Corporation, a Delaware corporation and wholly-owned subsidiary of Centura Software Corporation, a Delaware corporation (the "Company"), and Raima Corporation, a Washington corporation ("Raima"), by and between the Company and Stephen P. Smith (the "Employee"). BACKGROUND The Company desires to retain the services of the Employee as Vice President, Business Development of the Company, and the Employee is willing to be employed by the Company in such capacity, on the terms and subject to the conditions set forth in this Agreement. AGREEMENT Accordingly, in consideration of the mutual covenants contained herein, the parties agree as follows: 1. Positions and Duties. 1.1 Title. The Company hereby agrees to employ the Employee, and the Employee agrees to serve the Company, as its Vice President, Business Development, subject to the terms and conditions set forth in this Agreement. 1.2 Duties. The Employee shall report directly to the President and Chief Executive Officer of the Company, and perform those duties which are customary with such position and which are more fully described on Exhibit A attached hereto. The Employee shall devote substantially all of his business time, energy, and skill to the affairs of the Company. 2. Term of Agreement. The initial term of this Agreement (the "Initial Term") shall begin on the Effective Date. The Initial Term shall continue for a period of three (3) years following the Effective Date, unless sooner terminated in accordance with Section 4 hereof. After the end of the Initial Term, this Agreement shall continue in effect until termination by either party upon not less than thirty (30) days' prior written notice. The "Term" of this Agreement shall refer to the period of time during which this Agreement is in effect. 3. Compensation. 3.1 Base Salary. As payment for the services rendered by the Employee hereunder during the Term of this Agreement, the Company shall pay to the Employee an annualized base salary (the "Base Salary") of (a) $175,000 for the period beginning on the Effective Date of this Agreement and continuing through December 31, 1999, and (b) for each annual period thereafter, such increased annualized amount as shall be determined in a manner similar to that of other employees of the Company, but not less than 108% of the Employee's Base Salary for the immediately preceding calendar year. The Base Salary shall be payable on the Company's normal payroll schedule. 3.2 Commissions. Commencing on the Effective Date, the Employee shall be entitled to receive quarterly commissions which shall be determined, awarded and paid in accordance with the Commission Plan attached as Exhibit B (the "Plan"). The amount of quarterly commissions shall be based upon the quarterly and annual invoicing quota as set forth in the Plan; provided that the Employee's target annual commission ("Target Commission") shall be equal to (a) a prorated amount for the period beginning on the Effective Date and continuing through December 31, 1999, based on $100,000 per year, and (b) such increased amount as shall be determined by the Chief Executive Officer for each annual period thereafter, which shall not be less than $108,000 for 2000 and, in subsequent years, 108% of the Employee's Target Commission for the immediately preceding calendar year. Upon the Effective Date, all other compensation (including bonus and incentive compensation) of the Employee under any agreements or plans (whether oral or written) between the Employee and Raima ("Raima Compensation") shall cease to accrue and the Employee shall only be entitled to receive such Raima Compensation which accrued prior to, or is payable with respect to the period ending on, the Effective Date. 3.3 Employee Benefits. The Employee shall be entitled to all employee benefits which the Company may make generally available from time to time for its executive employees, including, without limitation, those available, if any, under any group health, dental, life or disability insurance, profit sharing, pension or retirement plans. The Employee's participation in such plans shall be subject to Employee's making such contributions as may be required of other employees. 3.4 Stock Options. Upon the Effective Date, the Company shall issue to the Employee stock options to purchase 400,000 shares of Common Stock (the "Options"). The Options shall vest and become exercisable in accordance with the following vesting schedule: 25% of the Options shall vest and become exercisable on the date which is six months after the Effective Date, an additional 25% of the Options shall vest and become exercisable on the one year anniversary of the Effective Date, an additional 25% of the Options shall vest and become exercisable on the date which is eighteen months after the Effective Date, and the remaining 25% of the Options shall vest and become exercisable on the second anniversary of the Effective Date; provided that in the event of a "Change of Control" (as defined in Section 4.3), the vesting of the Options shall accelerate so that they are exercisable in full immediately prior to the closing of the Change of Control transaction. The strike price of the Options shall be equal to the closing price of the Company's common stock, as reported on the Nasdaq National Market System on the Effective Date. The term and other terms and conditions of the Options shall otherwise be in accordance with options issued under the Company's existing stock option plan. 3.5 Sick Leave, Vacation and Holidays. If the Employee is absent from work on account of personal injuries, or physical or mental illness, he shall continue to receive his Base Salary pursuant to Section 3.1 in accordance with the Company's standard policy for its employees in effect from time to time. The Employee shall be entitled, without loss of compensation, to four (4) weeks of vacation per year. Unused vacation may be accrued by the Employee for up to the maximum period allowable under the Company's standard policy for its employees in effect from time to time. In addition, on the Effective Date, the Company shall credit the Employee with _________ days of accrued and unused vacation and sick leave, which Employee represents and warrants is equal to that held by the Employee as an employee of Raima immediately prior to the Effective Date, which shall not be lost under the Company's standard policy. The Employee shall also be entitled to such holidays with full pay as the Company generally affords its employees. 3.6 Travel and Other Expenses. The Company shall, upon submission of verification in accordance with applicable Company policy, pay, or promptly reimburse the Employee for those travel, promotional and similar expenditures incurred by Employee which the Company determines are reasonably necessary for the proper discharge of the Employee's duties under this Agreement. 4. Termination. 4.1 Termination For Cause. The Company may terminate this Agreement at any time without prior notice for "cause" (as defined below) with no severance or other obligation to the Employee, other than payment of the amounts of unpaid Base Salary accrued pursuant to Section 3.1 and Commissions accrued pursuant to Section 3.2 to the date of such termination. For purposes of this Agreement, "cause" shall consist of: (a) Employee being convicted of a felony; (b) Employee knowingly and intentionally breaching, in a material respect, the terms of the Proprietary Information Agreement or the terms of this Agreement, which breach continues uncured for 30 days following written notice thereof; (c) Employee's commencement of full-time employment with another employer while employed by the Company; or (d) Employee engaging in demonstrated conduct constituting sexual harassment under applicable law for which termination is reasonably deemed an appropriate response. 4.2 Termination Without Cause. Subject to the conditions stated in Section 4.4, the Company may terminate this Agreement, without cause, at any time for any reason, or no reason by giving the Employee 30 days' written notice. If requested by the Company to do so, the Employee shall continue to perform his duties under this Agreement during such 30 day period. 4.3 Voluntary Termination By Employee Upon Good Reason. This Agreement may be terminated by the Employee, upon thirty (30) days' prior written notice to the Company, in the event that: (a) there shall be a material diminution in the Employee's office, title and duties from the Effective Date of this Agreement; (b) Employee is notified he will be directed to relocate to an office that is more than thirty (30) miles away from the office at which Employee is based immediately prior to the execution hereof; or (c) there is a "Change in Control" of the Company (hereinafter referred to as "Good Reason"). As used in this Agreement, a "Change of Control" shall mean any of the following events: (i) All or substantially all of the assets of the Company are sold, exchanged or otherwise transferred in one or more transactions; (ii) The Company is merged or consolidated with or into another corporation with the effect that the Company's common stockholders immediately prior to such merger or consolidation hold less than 50% of the ordinary voting power of the outstanding securities of the surviving corporation of such merger or the corporation resulting from such consolidation; or (iii) A person or group (such as term is used in rule 13d-5 under the Securities and Exchange Act of 1934 (the "Exchange Act")) shall, as a result of a tender or exchange offer, open market purchases, merger, private placement or otherwise, have become, directly or indirectly, the beneficial owner (within the meaning of the rule 13d-3 under the Exchange Act) of securities having more than 50% of the voting power of then outstanding securities of the Company. 4.4 Severance. In the event this Agreement is terminated (a) by the Company without cause or (b) by the Employee for Good Reason, the Company shall (in lieu of all other separation benefits that may be available to the Employee under otherwise applicable Company policy and in full satisfaction of all of the Company's obligations to Employee in connection with his employment other than the Company's obligations with respect to the Options) continue to pay the Employee his then current Base Salary set forth in Section 3.1 as of the date of termination (without any increase therein) for a period equal to the lesser of (a) eighteen (18) months or (b) the remainder of the Term of this Agreement, but in no event for less than three (3) months, in such installments as the Employee's Base Salary has been paid during the Term of this Agreement. In the event this Agreement is terminated (x) by the Company for any reason other than for cause pursuant to Section 4.1 or (y) by the Employee for Good Reason pursuant to Section 4.3, the Options shall continue to vest and become exercisable in accordance with Section 3.4 (including the provision therein for accelerated vesting in the event of a Change of Control). 4.5 Return of Company Property. Prior to termination of this Agreement, Employee shall return to the Company all products, books, records, forms, specifications, formulae, data processes, designs, papers and writings relating to the business of the Company, including without limitation proprietary or licensed computer programs, customer lists and customer data, and/or copies or duplicates thereof in the Employee's possession or under the Employee's control. The Employee shall not retain any copies or duplicates of such property and all licenses granted to him by the Company to use computer programs or software shall be revoked as of the date of such termination. 5. Non-Competition. The Employee covenants that he shall not, during the "Noncompetition Period" (as defined below), directly or indirectly, whether or not through others acting as such party's employee or agent, own, manage, operate, join, control, be employed by or participate in the ownership, management, control, or operation of, or be connected with, a division or business unit of any of the entities listed on Exhibit C to this Agreement (or any of their subsidiaries) or a division or business unit of any other entity (or subsidiary), which division or business unit competes directly with the Company's data-base business; nor shall the Employee directly or indirectly solicit any of the Company's customers or any of the Company's employees or consultants. In addition, concurrently with the execution of this Agreement, the Employee shall execute and deliver to the Company, the Proprietary Information Agreement attached hereto as Exhibit D (the "Proprietary Information Agreement"). For purposes of this Agreement, the "Noncompetition Period" shall begin on the Effective Date and shall terminate on the earlier of (a) the third anniversary of the Effective Date, or (b) the date which is one (1) year after termination of this Agreement; provided, however that if the Company fails to comply with its obligations under Section 4.4 following termination of this Agreement, the Noncompetition Period shall immediately terminate if the Company does not remedy such failure within five (5) days after the written notice is given to the Company by the Employee. Notwithstanding the foregoing, the Employee shall not be restricted from owning, managing, operating, joining, controlling, being employed by or participating in the ownership, management, control, or operation of or being connected with such divisions or business units of any of the entities listed on Exhibit C to this Agreement or of any other entities which do not compete directly with the Company's data-base business. 6. Other Provisions. 6.1 Compliance With Other Agreements. The Employee represents and warrants to the Company that the execution, delivery and performance of this Agreement and the Proprietary Information Agreement will not conflict with or result in the violation or breach of any term or provision of any order, judgment, injunction, contract, agreement, commitment or other arrangement to which the Employee is a party or by which he is bound. The Employee acknowledges that the Company is relying on his representation and warranty in entering into this Agreement, and agrees to indemnify the Company from and against all claims, demands, causes of action, damages, costs or expenses (including attorneys' fees) arising from any breach thereof. 6.2 Nondelegable Duties. This is a contract for the Employee's personal services. The duties of the Employee under this Agreement are personal and may not be delegated or transferred in any manner whatsoever, and shall not be subject to involuntary alienation, assignment or transfer by the Employee during his life. 6.3 Entire Agreement. This Agreement, the Proprietary Information Agreement and the option agreement for the Employee's Options are the only agreements and understandings between the parties pertaining to the subject matter of Employee's employment by the Company, and supersede all prior agreements, summaries of agreements, descriptions of compensation packages, discussions, negotiations, understandings, representations or warranties, whether verbal or written, between the parties pertaining to such subject matter. 6.4 Governing Law. The validity, construction and performance of this Agreement shall be governed by the laws, without regard to the laws as to choice or conflict of laws, of the State of Washington. 6.5 Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions, and this Agreement shall be construed in all respects as if any invalid or unenforceable provision were omitted. 6.6 Amendment and Waiver. This Agreement may be amended, modified or supplemented only by a writing executed by each of the parties. Either party may in writing waive any provision of this Agreement to the extent such provision is for the benefit of the waiving party. No waiver by either party of a breach of any provision of this Agreement shall be construed as a waiver of any subsequent or different breach, and no forbearance by a party to seek a remedy for noncompliance or breach by the other party shall be construed as a waiver of any right or remedy with respect to such noncompliance or breach. 6.7 Binding Effect. The provisions of this Agreement shall bind and inure to the benefit of the parties and their respective successors and permitted assigns. 6.8 Notice. All notices and other communications under this Agreement shall be in writing and shall be given by personal or courier delivery, facsimile or first class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given upon receipt if personally delivered or delivered by courier, on the date of transmission if transmitted by facsimile, or three days after mailing if mailed, to the addresses of the Company and the Employee contained in the records of the Company at the time of such notice. Any party may change such party's address for notices by notice duly given pursuant to this Section 6.8. 6.9 Arbitration. Any controversy or claim arising out of, or relating to, this Agreement or the breach of this Agreement (other than Section 5 hereof or the Proprietary Information Agreement) shall be settled by arbitration by, and in accordance with the applicable National Rules for the Resolution of Employment Disputes of, the American Arbitration Association. The arbitrator shall hear the case within sixty days of being appointed, and shall render a written award within thirty days thereafter. The award shall be final and binding and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The arbitrator will have the right to assess, against a party or among the parties, as the arbitrator deems reasonable, (a) administrative fees of the American Arbitration Association, (b) compensation, if any, to the arbitrator and (c) attorneys' fees incurred by a prevailing party. Arbitration hearings will be held in Seattle, Washington. 6.10 Headings. The Section and other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. COMPANY: CENTURA SOFTWARE CORPORATION By: Scott Broomfield Chief Executive Officer EMPLOYEE: ____________________________ Stephen P. Smith EXHIBIT A Position description: Vice President, Business Development The VP Business Development will be responsible for the successful development of new accounts and customers, without restriction to geographical region (i.e. worldwide). The focus of Business Development will be to guide the company to new business opportunities, including those within the existing agreements and customer base, that will directly contribute in a meaningful way to the growth and prosperity of Centura Software. The VP Business Development will be the primary executive responsible for leading Centura's efforts at seeking, qualifying, negotiating, and closing sales to new customers and closing new sales to existing customers. This will be a quota carrying position, with incentive compensation based on successful conversion of new business opportunities into revenue generation, as defined by the attached commission plan, Exhibit B. The area of emphasis for the first three months will be to find new business opportunities for existing Raima products in either existing or new accounts. EXHIBIT B INCENTIVE COMPENSATION PLAN Your current 1999 sales incentive compensation plan is attached. It consists of this overview document (pages 1 & 2) and the details of your quota and incentive compensation plan. A copy of this plan is in your personnel file and it governs your compensation at Centura Software Corporation until changed. Changes approved by the Chief Executive Officer, and subject to your employment agreement, may take the form of (a) addenda; (b) electronic mail messages, and/or (c) a fully revised plan. GENERAL PRINCIPLES o Total compensation is comprised of base salary and incentive compensation. o This plan primarily addresses the details of the Incentive Compensation portion of the Total Compensation that is paid to the employee. Base Salary is paid and adjusted per the standard company policy, subject to your employment agreement. o Any change to the compensation plan will take effect, after the change is announced. o Annual income and sales targets are represented in quarterly amounts throughout the plan. COMPENSATION COMPONENTS o Base Salary is to compensate employees for customer service, administrative responsibilities and other duties that are not directly tied to generating immediate sales results, but are required for the company's long term health and success. o Base Salary is determined by experience and performance of the individual. o Incentive Compensation is paid for sales results relative to established quotas. o Bonuses may be paid at management discretion to provide incentives for specific performance and/or sales mix. QUOTAS o Quotas are established for each sales person to clearly define the expected level of sales results for ongoing employment with the company. o Quotas may change when the resources in a district change, or when the opportunity in the territory justifies an adjustment. COMMISSION RATES o Commission rates for individuals are established by dividing the individual's annual target commission income by the related quota. This overall rate is then adjusted to provide a lower rate for the first 50% achievement of Quota in each quarter and a higher rate for the second 50%. o A larger quota produces a smaller commission rate, but is intended to be applied to a larger stream of commissionable sales. o Achievements of sales results in excess of quota are rewarded by a higher commission rate, as calculated using established "rate multipliers." o In order to earn the "Over 100%" accelerated commission rates in a quarter, the cumulative annual quota must be met or exceeded at that quarter's end. o Commission rates are in effect per the tables in the compensation plan spreadsheet attached. o Sales to "New Accounts" are paid an additional rate per the attached spreadsheet. (See below for definition of New Accounts.) o Sales of Consulting are paid an additional rate per the attached spreadsheet. COMMISSIONABLE SALES o Timing: Sales are counted as commissionable in the quarter in which the company invoices an accepted order from the customer. o All applicable sales, which create incremental accounts receivable, are commissionable. o All sales through resellers or other alternate channels will be paid net. o At the discretion of the Chief Executive Officer, consulting engagements that require non-Centura resources may be paid net. o Sales are determined, for each district, by the ship address (ship- to), more specifically the ship zip code. o Prudent reserves and write-offs may offset commissionable sales, at the discretion of the VP, Finance. o Interpretation of whether a given sale is commissionable is reserved for the CEO, CFO, or VP Finance. NEW ACCOUNTS o In order for a sale to qualify for the "New Account" additional rate, it must be identified by the salesperson as a new account sale. o A "New Account" is one that has provided no invoicing for Centura since January 1, 1997. At the discretion of the CEO, sales to "new" divisions of large organizations can also qualify as "New Accounts". o A "New Account" sale must be for at least $25,000. o Once a "New Account" is validated, all sales to that account in 1999 qualify for the "New Accounts" additional rate. COMPENSATION BREAKDOWN o This plan is in effect for VP Business Development. o The Company acknowledges the potential for shared effort in the closing of certain sales and encourages this effort. A shared sale between the VP Business Development and other Centura employees will not reduce the commissions otherwise payable to the VP Business Development and the sales people involved in the sale. o The allocation of any credit for shared sales to other Centura employees shall be determined by the VP Sales & Marketing, Americas & Asia Pacific and the VP Europe at their sole discretion, respectively. TIMING OF PAYMENTS o Commissions are calculated once per quarter, after the results are final for that quarter. Quarterly commissions are paid within 45 days after the end of the quarter. o A draw for each of the first two months of the quarter will be paid in the second pay period after the end of each respective month. o The monthly draw is a pre-determined, fixed amount throughout the year. o The draw for the first two months will be subtracted from the quarterly commission earned. GENERAL TERMS AND CONDITIONS General: The following general provisions apply: (a) The interpretation of this Plan as it applies to specific circumstances will be made by the CEO. (b) Centura reserves the right to change, modify or terminate this Plan at any time on written notice. Any commissions earned up to the point of notification will be paid under the original conditions of the Plan. Modifications may only be made in writing, as provided in this Plan. (c) Nothing in this Plan shall limit or restrict the standard terms and conditions governing the employment relationship between Centura and the sales representative, which terms and conditions are contained in the employment offer letter, Employee Handbook and other documentation previously provided to the employee. (d) This Plan constitutes the entire understanding of the parties on any subjects covered by this Plan and supersedes any and all other agreements, representations and/or understandings, written or oral. (e) Upon termination of employment, payments of commissions and/or incentive compensation will be paid if invoiced before the time of termination, subject to offset for amounts due the company and the requirements of applicable law. This Plan is Approved: Name_____________________________ Chief Executive Officer Date Name VP Business Development Date _____________________________ Name____________________________ Chief Financial Officer or Vice President, Finance Date EXHIBIT C Oracle Corporation Progress Software Corporation Inprise Corporation Cloudscape, Inc. Pervasive Software, Inc. Sybase, Inc. Informix Corporation Microsoft Corporation Allaire Corporation EXHIBIT D Proprietary Information Agreement As an employee of Centura Corporation, its subsidiary or its affiliate (together the " Company"), and in consideration of the compensation now and hereafter paid to me, I agree to the following: 1. Maintaining Confidential Information a. Company Information. I agree at all times during the term of my employment and thereafter to hold in strictest confidence, and not to use, except for the benefit of the Company, or to disclose to any person, firm or corporation without written authorization of the Board of Directors of the Company, or except as necessary to carry out my work for the Company, any trade secrets, confidential knowledge, data or other proprietary information relating to products, processes, know-how, design, formulas, developmental or experimental work, computer programs, data bases, other original works of authorship, customer lists business plans, financial information or other subject matter pertaining to any business of the Company or any of its clients, consultants, or licensees. b. Former Employer Information. I agree that I will not during my employment with the Company, improperly use or disclose any proprietary information or trade secrets of my former or concurrent employers or companies, if any, and that I will not bring onto the premises of the Company any unpublished document or any property belonging to my former of concurrent employers or companies (other than Raima Corporation) , if any, unless consented to in writing by said employers or companies. c. Third Party Information. I recognize that the Company has received and in the future will receive from third parties their confidential or proprietary information subject to a duty on the Company's part to maintain the confidentiality of such information and to use it only for certain limited purposes, I agree that I owe the Company and such third parties, during the term of my employment and thereafter, a duty to hold all such confidential or proprietary information in the strictest confidence and not to disclose it to any person, firm or corporation (except as necessary in carrying out my work for the Company consistent with the Company's agreement with such third party) or to use it for the benefit of anyone other than for the Company or such third party (consistent with the Company's agreement with such third party) without the express written authorization of the Board of Directors of the Company. d. Insider Trading Policy. I acknowledge receipt of a copy of the Company's Insider Trading Policy and that I have read and understood this document. I further acknowledge that I understand that compliance with this policy is critical to the Company's Insider Trading Policy as a condition of my ongoing employment with the Company. I further understand that the Company reserves the right to terminate my employment with the Company without notice should I violate the company's Insider Trading Policy. 2. Retaining and Assigning Inventions and Original Works a. Inventions and Original Works Retained by me. I have attached hereto, as Exhibit A, a list describing all inventions, original works authorship, developments, improvements, and trade secrets which were made by me prior to my employment with the Company, which belong to me, which relate to the Company's proposed business and products and which are not assigned to the Company; or, if no such list is attached, I represent that there are no such inventions . b. Inventions and Original Works Assigned to the Company. I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right and benefit of the Company, and will assign to the Company all my right, title, and interest in and to any and all inventions, original works of authorship, developments, improvements of trade secrets which I may solely of jointly conceive or develop or reduce to practice, during the period of time I am in the employ of the Company. I recognize, However, that Section 2870 of the California Labor Code (as set forth in Exhibit B hereto), or a like provision in the State of Washington, may exempt from this provision any invention as to which I can prove the following: i) It was developed entirely on my own time; and ii) No equipment, supplies, facility or trade secret of the Company was used in its development; and iii) It either (a) does not relate to the business of the Company or to the Company's actual or demonstrably anticipated research and development, or b) does not result from any work performed by me for the Company. I acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope of my employment and which are protected by copyright are "works made for hire," as that is defined in the United States Copyright Act (17 USCA, Section 101). c. Maintenance of Records. I agree to keep and maintain adequate and current written records of all inventions and original works of authorship made by me (solely or jointly with others) during the term of my employment with the Company. The records will be in the form of notes, sketches, drawings, and any other format that may be specified by the Company. The records will be available to, and remain the sole property of, the Company at all times. d. Inventions Assigned to the United States. I agree to assign to the United States government all my right, title, and interest in and to any and all inventions, original works of authorship, developments, improvements or trade secrets whenever such full title is required to be in the United States or any of its agencies. e. Obtaining Letters Patent and Copyright Registrations. I agree that my obligation to assist the Company to obtain United States or foreign letters patent and copyright registrations covering inventions, and original works of authorship assigned hereunder by me to the Company shall continue beyond the termination of my employment but the Company shall compensate me at a reasonable rate for time actually spent by me at the Company's request on such assistance. If the Company is unable because of my mental or physical incapacity or for any other reason to secure my signature to apply for or to pursue any application for any United States or foreign letters patent of copyright registrations covering inventions of original works of authorship assigned to the Company as above, then I hereby irrevocably designate and appoint the Company and its duly authorized officers and agents as my agent and attorney in fact, to act for and on my behalf and stead to execute and file any such application and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations thereon with the same legal force and effect as if executed by me. I hereby waive and quitclaim to the Company any and all claims, of any nature whatsoever, which I now or may hereafter have for infringement of any patents or copyright resulting from any such applications for letters patent or copyright registrations assigned hereunder by me to the Company. f. Exception to assignments. I understand that the provisions of this Agreement requiring assignment to the Company do not apply to any invention which qualifies fully under the provision of Section 2870 of the California Labor Code, a copy of which is attached hereto as Exhibit B, if applicable, or under any comparable provision in effect in the State of Washington. I will advise the Company promptly in writing of any inventions, original works of authorship, developments, improvements or trade secrets that I believe meet the criteria in Subparagraphs 2b (I), (ii), and (iii) above; and I will at that time provide to the Company in writing all evidence necessary to substantiate that belief. I understand that the Company will keep in confidence and will not disclose to third parties without my consent any confidential information disclosed in writing to the Company relating to inventions that qualify fully under the provisions of Section 2870 of the California Labor Code. 3. Conflicting Employment I agree that, during the term of my employment with the Company, I will not engage in any other employment, occupation, consulting or other business activity directly related to the business in which the Company is now involved or becomes involved during the term of my employment, nor will I engage in any other activities that conflict with my obligations to the Company. 4. Returning Company Documents I agree that at the time of leaving the employ of the Company, I will deliver to the Company (and will not keep in my possession or deliver to anyone else) all devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items belonging to the Company, its successors or assigns. In the event of the termination of my employment, I agree to sign and deliver the "Termination Certification" attached hereto as Exhibit C. 5. Representations I agree to execute any proper oath or verify any proper document required to carry out the terms of this Agreement, I represent that my performance of all the terms of this Agreement will not breach any agreement to keep in confidence proprietary information acquired by me in confidence or in trust prior to my employment by the Company; provided, however, that disclosure by me to the Company and otherwise in accordance with this Agreement of information acquired by reason of my employment with Raima Corporation shall not be considered a breach hereof. I have not entered into, and I agree I will not enter into, any oral or written agreement in conflict herewith. 6. General Provisions a. Governing Law. This agreement will be governed by the laws of the state of California. b. Entire Agreement. This Agreement sets forth the entire agreement and understanding between the Company and me relating to the subject matter herein and merges all prior discussion between us, No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, will be effective unless in writing signed by the party to be charged. Any subsequent change or changes in my duties, salary or compensation will not affect the validity or scope of this Agreement. c. Severability. If one or more of the provisions in this Agreement are deemed void by law, then the remaining provisions will continue in full force and effect. d. Successors and Assigns. This Agreement will be binding upon my heirs, executors, administrators and other legal representatives and will be set for the benefit of the Company, its successors and its assigns. Date: ___________________________ _____________________________ _______________________________ Signature of Employee Signature of Witness _____________________________ _______________________________ Name of Employee Name of Witness EXHIBIT A List of Prior Inventions and Original Works of Authorship Title Date Identifying Number or Brief Description Date: ___________________________ ________________________________ Signature of Employee ________________________________ __________________________ Name Of Employee Approved By EXHIBIT B California Labor Code 2870 Employee Agreements; Assignment of Rights "Any Provisions in an employment agreement which provides that an employee shall assign or offer to assign any of his or her rights in an invention to his or her employee shall not apply to an invention for which no equipment, supplies, facility, or trade secret information of the employer was used and which was developed entirely on the employee's own time, and a) which does not relate (1) to the business of employer or (2) to the employer's actual or demonstrably anticipated research or development, or b) which does not result from any work performed by the employee for the employer. Any Provisions which purports to apply to such an invention is to that extent against the public policy of this state and is to that extent void and unenforceable." EXHIBIT C Termination Certification This is to certify that I do not have in my possession, nor have I failed to return, any devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings, blueprints, sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items belonging to Centura Software Corporation, its subsidiaries, affiliates, successors or assigns (together, the "Company") I further certify that I have complied with all the terms of the Company's Employee Proprietary Information Agreement signed by me, including the reporting of any inventions and original works of authorship (as defined therein), conceived or made by me (solely or jointly with others) covered by that agreement. I further agree that, in compliance with the Employee Proprietary Information Agreement, I will preserve as confidential all trade secrets, confidential knowledge, data or other proprietary information relating to products, employees, (including, without limitation, salary levels and responsibilities) processes, know-how, designs, formulas, developmental or experimental work, computer programs, data bases, other original works of authorship, customer lists, business plans, financial information or other subject matter pertaining to any business of the Company or any of its clients, consultants of licensees. Date: _________________________ ________________________________ Employee Signature ________________________________ Employee's Name (typed or printed) Exhibit III-B EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made and entered into as of the effective date (the "Effective Date") of the merger between Centura Subsidiary Corporation, a Delaware corporation and wholly-owned subsidiary of Centura Software Corporation, a Delaware corporation (the "Company"), and Raima Corporation, a Washington corporation ("Raima"), by and between the Company and Steve Graves (the "Employee"). BACKGROUND The Company desires to retain the services of the Employee as Vice President, Worldwide Consulting of the Company and the Employee is willing to be employed by the Company in such capacity, on the terms and subject to the conditions set forth in this Agreement. AGREEMENT Accordingly, in consideration of the mutual covenants contained herein, the parties agree as follows: 1. Positions and Duties. 1.1 Title. The Company hereby agrees to employ the Employee, and the Employee agrees to serve the Company, as its Vice President, Worldwide Consulting subject to the terms and conditions set forth in this Agreement. 1.2 Duties. The Employee shall report directly to the President and Chief Executive Officer of the Company, and perform those duties which are customary with such position and which are more fully described on Exhibit A attached hereto. The Employee shall devote substantially all of his business time, energy, and skill to the affairs of the Company. 2. Term of Agreement. The initial term of this Agreement (the "Initial Term") shall begin on the Effective Date. The Initial Term shall continue for a period of three (3) years following the Effective Date, unless sooner terminated in accordance with Section 4 hereof. After the end of the Initial Term, this Agreement shall continue in effect until termination by either party upon not less than thirty (30) days' prior written notice. The "Term" of this Agreement shall refer to the period of time during which this Agreement is in effect. 3. Compensation. 3.1 Base Salary. As payment for the services rendered by the Employee hereunder during the Term of this Agreement, the Company shall pay to the Employee an annualized base salary (the "Base Salary") of (a) $150,000 for the period beginning on the Effective Date of this Agreement and continuing through December 31, 1999, and (b) for each annual period thereafter, such increased annualized amount as shall be determined in a manner similar to that of other employees of the Company, but not less than 108% of the Employee's Base Salary for the immediately preceding calendar year. The Base Salary shall be payable on the Company's normal payroll schedule. 3.2 Bonus. An Employee bonus in the amount of Seventy-Five Thousand Dollars ($75,000) on an annual basis, pro-rated for the period from the Effective Date through the end of the calendar year, shall be paid on the basis of specific management objectives as determined by the Company. Upon the Effective Date, all other compensation (including bonus and incentive compensation) of the Employee under any agreements or plans (whether oral or written) between the Employee and Raima, ("Raima Compensation") except for compensation related to the sale of the Vista Internet Services Division by Raima shall cease to accrue and except as otherwise provided, the Employee shall only be entitled to receive such Raima Compensation which accrued prior to, or is payable with respect to the period ending on, the Effective Date. 3.3 Employee Benefits. The Employee shall be entitled to all employee benefits which the Company may make generally available from time to time for its executive employees, including, without limitation, those available, if any, under any group health, dental, life or disability insurance, profit sharing, pension or retirement plans. The Employee's participation in such plans shall be subject to Employee's making such contributions as may be required of other employees. 3.4 Stock Options. Upon the Effective Date, the Company shall issue to the Employee stock options to purchase 200,000 shares of Common Stock (the "Options"). The Options shall vest and become exercisable in accordance with the following vesting schedule: 25% of the Options shall vest and become exercisable on the date which is six months after the Effective Date, an additional 25% of the Options shall vest and become exercisable on the one year anniversary of the Effective Date, an additional 25% of the Options shall vest and become exercisable on the date which is eighteen months after the Effective Date, and the remaining 25% of the Options shall vest and become exercisable on the second anniversary of the Effective Date; provided that in the event of a "Change of Control" (as defined in Section 4.3), the vesting of the Options shall accelerate so that they are exercisable in full immediately prior to the closing of the Change of Control transaction. The strike price of the Options shall be equal to the closing price of the Company's common stock, as reported on the Nasdaq National Market System on the Effective Date. The term and other terms and conditions of the Options shall otherwise be in accordance with options issued under the Company's existing stock option plan. 3.5 Sick Leave, Vacation and Holidays. If the Employee is absent from work on account of personal injuries, or physical or mental illness, he shall continue to receive his Base Salary pursuant to Section 3.1 in accordance with the Company's standard policy for its employees in effect from time to time. The Employee shall be entitled, without loss of compensation, to four (4) weeks of vacation per year. Unused vacation may be accrued by the Employee for up to the maximum period allowable under the Company's standard policy for its employees in effect from time to time. In addition, on the Effective Date, the Company shall credit the Employee with _______ days of accrued and unused vacation and sick leave, which Employee represents and warrants is equal to that held by the Employee as an employee of Raima immediately prior to the Effective Date, which shall not be lost under the Company's standard policy. The Employee shall also be entitled to such holidays with full pay as the Company generally affords its employees. 3.6 Travel and Other Expenses. The Company shall, upon submission of verification in accordance with applicable Company policy, pay, or promptly reimburse the Employee for those travel, promotional and similar expenditures incurred by Employee which the Company determines are reasonably necessary for the proper discharge of the Employee's duties under this Agreement. 4. Termination. 4.1 Termination For Cause. The Company may terminate this Agreement at any time without prior notice for "cause" (as defined below) with no severance or other obligation to the Employee, other than payment of the amounts of unpaid Base Salary accrued pursuant to Section 3.1 and Commissions accrued pursuant to Section 3.2 to the date of such termination. For purposes of this Agreement, "cause" shall consist of: (a) Employee being convicted of a felony; (b) Employee knowingly and intentionally breaching, in a material respect, the terms of the Proprietary Information Agreement or the terms of this Agreement, which breach continues uncured for 30 days following written notice thereof; (c) Employee's commencement of full-time employment with another employer while employed by the Company; or (d) Employee engaging in demonstrated conduct constituting sexual harassment under applicable law for which termination is reasonably deemed an appropriate response. 4.2 Termination Without Cause. Subject to the conditions stated in Section 4.4, the Company may terminate this Agreement, without cause, at any time for any reason, or no reason by giving the Employee 30 days' written notice. If requested by the Company to do so, the Employee shall continue to perform his duties under this Agreement during such 30 day period. 4.3 Voluntary Termination By Employee Upon Good Reason. This Agreement may be terminated by the Employee, upon thirty (30) days' prior written notice to the Company, in the event that: (a) there shall be a material diminution in the Employee's office, title and duties from the Effective Date of this Agreement; (b) Employee is notified he will be directed to relocate to an office that is more than thirty (30) miles away from the office at which Employee is based immediately prior to the execution hereof; or (c) there is a "Change in Control" of the Company (hereinafter referred to as "Good Reason"). As used in this Agreement, a "Change of Control" shall mean any of the following events: (i) All or substantially all of the assets of the Company are sold, exchanged or otherwise transferred in one or more transactions; (ii) The Company is merged or consolidated with or into another corporation with the effect that the Company's common stockholders immediately prior to such merger or consolidation hold less than 50% of the ordinary voting power of the outstanding securities of the surviving corporation of such merger or the corporation resulting from such consolidation; or (iii) A person or group (such as term is used in rule 13d-5 under the Securities and Exchange Act of 1934 (the "Exchange Act")) shall, as a result of a tender or exchange offer, open market purchases, merger, private placement or otherwise, have become, directly or indirectly, the beneficial owner (within the meaning of the rule 13d-3 under the Exchange Act) of securities having more than 50% of the voting power of then outstanding securities of the Company. 4.4 Severance. In the event this Agreement is terminated (a) by the Company without cause or (b) by the Employee for Good Reason, the Company shall (in lieu of all other separation benefits that may be available to the Employee under otherwise applicable Company policy and in full satisfaction of all of the Company's obligations to Employee in connection with his employment other than the Company's obligations with respect to the Options) continue to pay the Employee his then current Base Salary set forth in Section 3.1 as of the date of termination (without any increase therein) for a period equal to the lesser of (a) eighteen (18) months or (b) the remainder of the Term of this Agreement, but in no event for less than three (3) months, in such installments as the Employee's Base Salary has been paid during the Term of this Agreement. In the event this Agreement is terminated (x) by the Company for any reason other than for cause pursuant to Section 4.1 or (y) by the Employee for Good Reason pursuant to Section 4.3, the Options shall continue to vest and become exercisable in accordance with Section 3.4 (including the provision therein for accelerated vesting in the event of a Change of Control). 4.5 Return of Company Property. Prior to termination of this Agreement, Employee shall return to the Company all products, books, records, forms, specifications, formulae, data processes, designs, papers and writings relating to the business of the Company, including without limitation proprietary or licensed computer programs, customer lists and customer data, and/or copies or duplicates thereof in the Employee's possession or under the Employee's control. The Employee shall not retain any copies or duplicates of such property and all licenses granted to him by the Company to use computer programs or software shall be revoked as of the date of such termination. 5. Non-Competition. The Employee covenants that he shall not during the "Noncompetition Period" (as defined below), directly or indirectly, whether or not through others acting as such party's employee or agent, own, manage, operate, join, control, be employed by or participate in the ownership, management, control, or operation of or be connected with, a division or business unit of any of the entities listed on Exhibit B to this Agreement (or any of their subsidiaries) or a division or business unit of any other entity (or subsidiary), which division or business unit competes directly with the Company's data- base business; nor shall the Employee directly or indirectly solicit any of the Company's customers or any of the Company's employees or consultants. In addition, concurrently with the execution of this Agreement, the Employee shall execute and deliver to the Company, the Proprietary Information Agreement attached hereto as Exhibit C (the "Proprietary Information Agreement"). For purposes of this Agreement, the "Noncompetition Period" shall begin on the Effective Date and shall terminate on the earlier of (a) the third anniversary of the Effective Date, or (b) the date which is one (1) year after termination of this Agreement; provided, however, that if the Company fails to comply with its obligations under Section 4.4 following termination of this Agreement, the Noncompetition Period shall immediately terminate if the Company does not remedy such failure within five (5) days after the written notice is given to the Company by the Employee. Notwithstanding the foregoing, the Employee shall not be restricted from owning, managing, operating, joining, controlling, being employed by or participating in the ownership, management, control, or operation of or being connected with such divisions or business units of any of the entities listed on Exhibit C to this Agreement, or of any other entities, that do not compete directly with the Company's data-base business. 6. Other Provisions. 6.1 Compliance With Other Agreements. The Employee represents and warrants to the Company that the execution, delivery and performance of this Agreement and the Proprietary Information Agreement will not conflict with or result in the violation or breach of any term or provision of any order, judgment, injunction, contract, agreement, commitment or other arrangement to which the Employee is a party or by which he is bound. The Employee acknowledges that the Company is relying on his representation and warranty in entering into this Agreement, and agrees to indemnify the Company from and against all claims, demands, causes of action, damages, costs or expenses (including attorneys' fees) arising from any breach thereof. 6.2 Nondelegable Duties. This is a contract for the Employee's personal services. The duties of the Employee under this Agreement are personal and may not be delegated or transferred in any manner whatsoever, and shall not be subject to involuntary alienation, assignment or transfer by the Employee during his life. 6.3 Entire Agreement. This Agreement, the Proprietary Information Agreement and the option agreement for the Employee's Options are the only agreements and understandings between the parties pertaining to the subject matter of Employee's employment by the Company, and supersede all prior agreements, summaries of agreements, descriptions of compensation packages, discussions, negotiations, understandings, representations or warranties, whether verbal or written, between the parties pertaining to such subject matter. 6.4 Governing Law. The validity, construction and performance of this Agreement shall be governed by the laws, without regard to the laws as to choice or conflict of laws, of the State of Washington. 6.5 Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions, and this Agreement shall be construed in all respects as if any invalid or unenforceable provision were omitted. 6.6 Amendment and Waiver. This Agreement may be amended, modified or supplemented only by a writing executed by each of the parties. Either party may in writing waive any provision of this Agreement to the extent such provision is for the benefit of the waiving party. No waiver by either party of a breach of any provision of this Agreement shall be construed as a waiver of any subsequent or different breach, and no forbearance by a party to seek a remedy for noncompliance or breach by the other party shall be construed as a waiver of any right or remedy with respect to such noncompliance or breach. 6.7 Binding Effect. The provisions of this Agreement shall bind and inure to the benefit of the parties and their respective successors and permitted assigns. 6.8 Notice. All notices and other communications under this Agreement shall be in writing and shall be given by personal or courier delivery, facsimile or first class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given upon receipt if personally delivered or delivered by courier, on the date of transmission if transmitted by facsimile, or three days after mailing if mailed, to the addresses of the Company and the Employee contained in the records of the Company at the time of such notice. Any party may change such party's address for notices by notice duly given pursuant to this Section 6.8. 6.9 Arbitration. Any controversy or claim arising out of, or relating to, this Agreement or the breach of this Agreement (other than Section 5 hereof or the Proprietary Information Agreement) shall be settled by arbitration by, and in accordance with the applicable National Rules for the Resolution of Employment Disputes of, the American Arbitration Association. The arbitrator shall hear the case within sixty days of being appointed, and shall render a written award within thirty days thereafter. The award shall be final and binding and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The arbitrator will have the right to assess, against a party or among the parties, as the arbitrator deems reasonable, (a) administrative fees of the American Arbitration Association, (b) compensation, if any, to the arbitrator and (c) attorneys' fees incurred by a prevailing party. Arbitration hearings will be held in Seattle, Washington. 6.10 Headings. The Section and other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. COMPANY: CENTURA SOFTWARE CORPORATION By: Scott Broomfield Chief Executive Officer EMPLOYEE: ____________________________ Steve Graves EXHIBIT A Position description: Vice President, Worldwide Consulting 1. Responsible for the integration, management and effectiveness of the combined Centura Software (and former Raima) consulting organizations. 2. Leverage sales to ensure that consulting projects are included in sales deals where appropriate and that all consulting revenue opportunities are maximized. 3. Leverage Technical Support leads to generate consulting revenues. 4. Support field sales and marketing events when required. 5. Co-ordinate hand-off of consulting projects into mainline product development when appropriate. 6. Tie deliverables (objectives), to be defined and agreed to by Centura's CEO and the Vice President, Worldwide Consulting, to the bonus plan based on successful completion of objectives. 7. Responsible for the building up and profitable growth of the combined consulting organization. EXHIBIT B Non-Competition Oracle Corporation Progress Software Corporation Inprise Corporation Cloudscape, Inc. Pervasive Software, Inc. Sybase, Inc. Informix Corporation Microsoft Corporation Allaire Corporation EXHIBIT C See Exhibit D to Exhibit III-A. Exhibit III-C EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made and entered into as of the effective date (the "Effective Date") of the merger between Centura Subsidiary Corporation, a Delaware corporation and wholly-owned subsidiary of Centura Software Corporation, a Delaware corporation (the "Company"), and Raima Corporation, a Washington corporation ("Raima"), by and between the Company and Wayne Warren (the "Employee"). BACKGROUND The Company desires to retain the services of the Employee as a Senior Database Architect of the Company and the Employee is willing to be employed by the Company in such capacity, on the terms and subject to the conditions set forth in this Agreement. AGREEMENT Accordingly, in consideration of the mutual covenants contained herein, the parties agree as follows: 1. Positions and Duties. 1.1 Title. The Company hereby agrees to employ the Employee, and the Employee agrees to serve the Company, as a Senior Database Architect subject to the terms and conditions set forth in this Agreement. 1.2 Duties. The Employee shall report directly to Bill Houglum, Director of Engineering, and perform those duties which are customary with such position and which are more fully described on Exhibit A attached hereto. The Employee shall devote substantially all of his business time, energy, and skill to the affairs of the Company. 2. Term of Agreement. The initial term of this Agreement (the "Initial Term") shall begin on the Effective Date. The Initial Term shall continue for a period of three (3) years following the Effective Date, unless sooner terminated in accordance with Section 4 hereof. After the end of the Initial Term, this Agreement shall continue in effect until termination by either party upon not less than thirty (30) days' prior written notice. The "Term" of this Agreement shall refer to the period of time during which this Agreement is in effect. 3. Compensation. 3.1 Base Salary. As payment for the services rendered by the Employee hereunder during the Term of this Agreement, the Company shall pay to the Employee an annualized base salary (the "Base Salary") of (a) $135,000 for the period beginning on the Effective Date of this Agreement and continuing through December 31, 1999, and (b) for each annual period thereafter, such increased annualized amount as shall be determined in a manner similar to that of other employees of the Company, but not less than 108% of the Employee's Base Salary for the immediately preceding calendar year. The Base Salary shall be payable on the Company's normal payroll schedule. 3.2 Bonus. The Company shall set quarterly performance goals for the Employee to achieve. The goals shall be measurable and shall be consistent with the duties described in Section 1.2 and the position description in Exhibit A. Each quarter's goals, the criteria for satisfaction of the goals, and a bonus amount to be paid to the Employee for achieving the goals shall be determined by agreement between the Employee and senior management of the Company before the first day of each quarter. Initial goals are listed in Exhibit B. 3.3 Employee Benefits. The Employee shall be entitled to all employee benefits which the Company may make generally available from time to time for its executive employees, including, without limitation, those available, if any, under any group health, dental, life or disability insurance, profit sharing, pension or retirement plans. The Employee's participation in such plans shall be subject to Employee's making such contributions as may be required of other employees. 3.4 Stock Options. Upon the Effective Date, the Company shall issue to the Employee stock options to purchase 300,000 shares of Common Stock (the "Options"). The Options shall vest and become exercisable in accordance with the following vesting schedule: 25% of the Options shall vest and become exercisable on the date which is six months after the Effective Date, an additional 25% of the Options shall vest and become exercisable on the one year anniversary of the Effective Date, an additional 25% of the Options shall vest and become exercisable on the date which is eighteen months after the Effective Date, and the remaining 25% of the Options shall vest and become exercisable on the second anniversary of the Effective Date; provided that in the event of a "Change of Control" (as defined in Section 4.3), the vesting of the Options shall accelerate so that they are exercisable in full immediately prior to the closing of the Change of Control transaction. The strike price of the Options shall be equal to the closing price of the Company's common stock, as reported on the Nasdaq National Market System on the Effective Date. The term and other terms and conditions of the Options shall otherwise be in accordance with options issued under the Company's existing stock option plan. 3.5 Sick Leave, Vacation and Holidays. If the Employee is absent from work on account of personal injuries, or physical or mental illness, he shall continue to receive his Base Salary pursuant to Section 3.1 in accordance with the Company's standard policy for its employees in effect from time to time. The Employee shall be entitled, without loss of compensation, to four (4) weeks of vacation per year. Unused vacation may be accrued by the Employee for up to the maximum period allowable under the Company's standard policy for its employees in effect from time to time. In addition, on the Effective Date, the Company shall credit the Employee with _________ days of accrued and unused vacation and sick leave, which Employee represents and warrants is equal to that held by the Employee as an employee of Raima immediately prior to the Effective Date, which shall not be lost under the Company's standard policy. The Employee shall also be entitled to such holidays with full pay as the Company generally affords its employees. 3.6 Travel and Other Expenses. The Company shall, upon submission of verification in accordance with applicable Company policy, pay, or promptly reimburse the Employee for those travel, promotional and similar expenditures incurred by Employee which the Company determines are reasonably necessary for the proper discharge of the Employee's duties under this Agreement. 4. Termination. 4.1 Termination For Cause. The Company may terminate this Agreement at any time without prior notice for "cause" (as defined below) with no severance or other obligation to the Employee, other than payment of the amounts of unpaid Base Salary accrued pursuant to Section 3.1 and Commissions accrued pursuant to Section 3.2 to the date of such termination. For purposes of this Agreement, "cause" shall consist of: (a) Employee being convicted of a felony; (b) Employee knowingly and intentionally breaching, in a material respect, the terms of the Proprietary Information Agreement or the terms of this Agreement, which breach continues uncured for 30 days following written notice thereof; (c) Employee's commencement of full-time employment with another employer while employed by the Company; or (d) Employee engaging in demonstrated conduct constituting sexual harassment under applicable law for which termination is reasonably deemed an appropriate response. 4.2 Termination Without Cause. Subject to the conditions stated in Section 4.4, the Company may terminate this Agreement, without cause, at any time for any reason, or no reason by giving the Employee 30 days' written notice. If requested by the Company to do so, the Employee shall continue to perform his duties under this Agreement during such 30 day period. 4.3 Voluntary Termination By Employee Upon Good Reason. This Agreement may be terminated by the Employee, upon thirty (30) days' prior written notice to the Company, in the event that: (a) there shall be a material diminution in the Employee's office, title and duties from the Effective Date of this Agreement; (b) Employee is notified he will be directed to relocate to an office that is more than thirty (30) miles away from the office at which Employee is based immediately prior to the execution hereof; or (c) there is a "Change in Control" of the Company (hereinafter referred to as "Good Reason"). As used in this Agreement, a "Change of Control" shall mean any of the following events: (i) All or substantially all of the assets of the Company are sold, exchanged or otherwise transferred in one or more transactions; (ii) The Company is merged or consolidated with or into another corporation with the effect that the Company's common stockholders immediately prior to such merger or consolidation hold less than 50% of the ordinary voting power of the outstanding securities of the surviving corporation of such merger or the corporation resulting from such consolidation; or (iii) A person or group (such as term is used in rule 13d-5 under the Securities and Exchange Act of 1934 (the "Exchange Act")) shall, as a result of a tender or exchange offer, open market purchases, merger, private placement or otherwise, have become, directly or indirectly, the beneficial owner (within the meaning of the rule 13d-3 under the Exchange Act) of securities having more than 50% of the voting power of then outstanding securities of the Company. 4.4 Severance. In the event this Agreement is terminated (a) by the Company without cause or (b) by the Employee for Good Reason, the Company shall (in lieu of all other separation benefits that may be available to the Employee under otherwise applicable Company policy and in full satisfaction of all of the Company's obligations to Employee in connection with his employment other than the Company's obligations with respect to the Options) continue to pay the Employee his then current Base Salary set forth in Section 3.1 as of the date of termination (without any increase therein) for a period equal to the lesser of (a) eighteen (18) months or (b) the remainder of the Term of this Agreement, but in no event for less than three (3) months, in such installments as the Employee's Base Salary has been paid during the Term of this Agreement. In the event this Agreement is terminated (x) by the Company for any reason other than for cause pursuant to Section 4.1 or (y) by the Employee for Good Reason pursuant to Section 4.3, the Options shall continue to vest and become exercisable in accordance with Section 3.4 (including the provision therein for accelerated vesting in the event of a Change of Control). 4.5 Return of Company Property. Prior to termination of this Agreement, Employee shall return to the Company all products, books, records, forms, specifications, formulae, data processes, designs, papers and writings relating to the business of the Company, including without limitation proprietary or licensed computer programs, customer lists and customer data, and/or copies or duplicates thereof in the Employee's possession or under the Employee's control. The Employee shall not retain any copies or duplicates of such property and all licenses granted to him by the Company to use computer programs or software shall be revoked as of the date of such termination. 5. Non-Competition. The Employee covenants that he shall not during the "Noncompetition Period" (as defined below), directly or indirectly, whether or not through others acting as such party's employee or agent, own, manage, operate, join, control, be employed by or participate in the ownership, management, control, or operation of or be connected with, a division or business unit of any of the entities listed on Exhibit C to this Agreement (or any of their subsidiaries) or a division or business unit of any other entity (or subsidiary), which division or business unit competes directly with the Company's data base business; nor shall the Employee directly or indirectly solicit any of the Company's customers or any of the Company's employees or consultants. In addition, concurrently with the execution of this Agreement, the Employee shall execute and deliver to the Company, the Proprietary Information Agreement attached hereto as Exhibit D (the "Proprietary Information Agreement"). For purposes of this Agreement, the "Noncompetition Period" shall begin on the Effective Date and shall terminate on the earlier of (a) the third anniversary of the Effective Date or (b) the date which is one (1) year after termination of this Agreement; provided, however, that if the Company fails to comply with its obligations under Section 4.4 following termination of this Agreement, the Noncompetition Period shall immediately terminate if the Company does not remedy such failure within five (5) days after the written notice is given to the Company by the Employee. Notwithstanding the foregoing, the Employee shall not be restricted from owning, managing, operating, joining, controlling, being employed by or participating in the ownership, management, control, or operation of or being connected with such divisions or business units of any of the entities listed on Exhibit C to this Agreement, or of any other entities, that do not compete directly with the Company's data-base business. 6. Other Provisions. 6.1 Compliance With Other Agreements. The Employee represents and warrants to the Company that the execution, delivery and performance of this Agreement and the Proprietary Information Agreement will not conflict with or result in the violation or breach of any term or provision of any order, judgment, injunction, contract, agreement, commitment or other arrangement to which the Employee is a party or by which he is bound. The Employee acknowledges that the Company is relying on his representation and warranty in entering into this Agreement, and agrees to indemnify the Company from and against all claims, demands, causes of action, damages, costs or expenses (including attorneys' fees) arising from any breach thereof. 6.2 Nondelegable Duties. This is a contract for the Employee's personal services. The duties of the Employee under this Agreement are personal and may not be delegated or transferred in any manner whatsoever, and shall not be subject to involuntary alienation, assignment or transfer by the Employee during his life. 6.3 Entire Agreement. This Agreement, the Proprietary Information Agreement and the option agreement for the Employee's Options are the only agreements and understandings between the parties pertaining to the subject matter of Employee's employment by the Company, and supersede all prior agreements, summaries of agreements, descriptions of compensation packages, discussions, negotiations, understandings, representations or warranties, whether verbal or written, between the parties pertaining to such subject matter. 6.4 Governing Law. The validity, construction and performance of this Agreement shall be governed by the laws, without regard to the laws as to choice or conflict of laws, of the State of Washington. 6.5 Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions, and this Agreement shall be construed in all respects as if any invalid or unenforceable provision were omitted. 6.6 Amendment and Waiver. This Agreement may be amended, modified or supplemented only by a writing executed by each of the parties. Either party may in writing waive any provision of this Agreement to the extent such provision is for the benefit of the waiving party. No waiver by either party of a breach of any provision of this Agreement shall be construed as a waiver of any subsequent or different breach, and no forbearance by a party to seek a remedy for noncompliance or breach by the other party shall be construed as a waiver of any right or remedy with respect to such noncompliance or breach. 6.7 Binding Effect. The provisions of this Agreement shall bind and inure to the benefit of the parties and their respective successors and permitted assigns. 6.8 Notice. All notices and other communications under this Agreement shall be in writing and shall be given by personal or courier delivery, facsimile or first class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given upon receipt if personally delivered or delivered by courier, on the date of transmission if transmitted by facsimile, or three days after mailing if mailed, to the addresses of the Company and the Employee contained in the records of the Company at the time of such notice. Any party may change such party's address for notices by notice duly given pursuant to this Section 6.8. 6.9 Arbitration. Any controversy or claim arising out of, or relating to, this Agreement or the breach of this Agreement (other than Section 5 hereof or the Proprietary Information Agreement) shall be settled by arbitration by, and in accordance with the applicable National Rules for the Resolution of Employment Disputes of, the American Arbitration Association. The arbitrator shall hear the case within sixty days of being appointed, and shall render a written award within thirty days thereafter. The award shall be final and binding and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The arbitrator will have the right to assess, against a party or among the parties, as the arbitrator deems reasonable, (a) administrative fees of the American Arbitration Association, (b) compensation, if any, to the arbitrator and (c) attorneys' fees incurred by a prevailing party. Arbitration hearings will be held in Seattle, Washington. 6.10 Headings. The Section and other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. COMPANY: CENTURA SOFTWARE CORPORATION By: Scott Broomfield Chief Executive Officer EMPLOYEE: ____________________________ Wayne Warren EXHIBIT A Position description: Senior Database Architect 1. Responsible for architecture and continued development of all database products for combined Centura as defined by the Phase Review process and by the senior management of Centura. 2. Ensure that products comply with the functional specifications, and the initial and ongoing quality goals. 3. Work with the product management to incorporate customer requirements into the product development plans. EXHIBIT B Goal Bonus Beta release for Velocis implementation of OLE DB $5,000 Release of Velocis implementation of OLE DB $5,000 Release of RDM implementation of OLE DB $5,400 EXHIBIT C Oracle Corporation Progress Software Corporation Inprise Corporation Cloudscape, Inc. Pervasive Software, Inc. Sybase, Inc. Informix Corporation Microsoft Corporation Allaire Corporation EXHIBIT D See Exhibit D to Exhibit III-A. Exhibit III-D EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT is made and entered into as of the effective date (the "Effective Date") of the merger between Centura Subsidiary Corporation, a Delaware corporation and wholly-owned subsidiary of Centura Software Corporation, a Delaware corporation (the "Company"), and Raima Corporation, a Washington corporation ("Raima"), by and between the Company and Randall Merilatt (the "Employee"). BACKGROUND The Company desires to retain the services of the Employee as a Senior Database Architect, of the Company and the Employee is willing to be employed by the Company in such capacity, on the terms and subject to the conditions set forth in this Agreement. AGREEMENT Accordingly, in consideration of the mutual covenants contained herein, the parties agree as follows: 1. Positions and Duties. 1.1 Title. The Company hereby agrees to employ the Employee, and the Employee agrees to serve the Company, as a Senior Database Architect subject to the terms and conditions set forth in this Agreement. 1.2 Duties. The Employee shall report directly to Bill Houglum, Director of Engineering, and perform those duties which are customary with such position and which are more fully described on Exhibit A attached hereto. The Employee shall devote substantially all of his business time, energy, and skill to the affairs of the Company. 2. Term of Agreement. The initial term of this Agreement (the "Initial Term") shall begin on the Effective Date. The Initial Term shall continue for a period of three (3) years following the Effective Date, unless sooner terminated in accordance with Section 4 hereof. After the end of the Initial Term, this Agreement shall continue in effect until termination by either party upon not less than thirty (30) days' prior written notice. The "Term" of this Agreement shall refer to the period of time during which this Agreement is in effect. 3. Compensation. 3.1 Base Salary. As payment for the services rendered by the Employee hereunder during the Term of this Agreement, the Company shall pay to the Employee an annualized base salary (the "Base Salary") of (a) $135,000 for the period beginning on the Effective Date of this Agreement and continuing through December 31, 1999, and (b) for each annual period thereafter, such increased annualized amount as shall be determined in a manner similar to that of other employees of the Company, but not less than 108% of the Employee's Base Salary for the immediately preceding calendar year. The Base Salary shall be payable on the Company's normal payroll schedule. 3.2 Bonus. The Company shall set quarterly performance goals for the Employee to achieve. The goals shall be measurable and shall be consistent with the duties described in Section 1.2 and the position description in Exhibit A. Each quarter's goals, the criteria for satisfaction of the goals, and a bonus amount to be paid to the Employee for achieving the goals shall be determined by agreement between the Employee and senior management of the Company before the first day of each quarter. Initial goals are listed in Exhibit B. 3.3 Employee Benefits. The Employee shall be entitled to all employee benefits which the Company may make generally available from time to time for its executive employees, including, without limitation, those available, if any, under any group health, dental, life or disability insurance, profit sharing, pension or retirement plans. The Employee's participation in such plans shall be subject to Employee's making such contributions as may be required of other employees. 3.4 Stock Options. Upon the Effective Date, the Company shall issue to the Employee stock options to purchase 300,000 shares of Common Stock (the "Options"). The Options shall vest and become exercisable in accordance with the following vesting schedule: 25% of the Options shall vest and become exercisable on the date which is six months after the Effective Date, an additional 25% of the Options shall vest and become exercisable on the one year anniversary of the Effective Date, an additional 25% of the Options shall vest and become exercisable on the date which is eighteen months after the Effective Date, and the remaining 25% of the Options shall vest and become exercisable on the second anniversary of the Effective Date; provided that in the event of a "Change of Control" (as defined in Section 4.3), the vesting of the Options shall accelerate so that they are exercisable in full immediately prior to the closing of the Change of Control transaction. The strike price of the Options shall be equal to the closing price of the Company's common stock, as reported on the Nasdaq National Market System on the Effective Date. The term and other terms and conditions of the Options shall otherwise be in accordance with options issued under the Company's existing stock option plan. 3.5 Sick Leave, Vacation and Holidays. If the Employee is absent from work on account of personal injuries, or physical or mental illness, he shall continue to receive his Base Salary pursuant to Section 3.1 in accordance with the Company's standard policy for its employees in effect from time to time. The Employee shall be entitled, without loss of compensation, to four (4) weeks of vacation per year. Unused vacation may be accrued by the Employee for up to the maximum period allowable under the Company's standard policy for its employees in effect from time to time. In addition, on the Effective Date, the Company shall credit the Employee with ______ days of accrued and unused vacation and sick leave, which Employee represents and warrants is equal to that held by the Employee as an employee of Raima immediately prior to the Effective Date, which shall not be lost under the Company's standard policy. The Employee shall also be entitled to such holidays with full pay as the Company generally affords its employees. 3.6 Travel and Other Expenses. The Company shall, upon submission of verification in accordance with applicable Company policy, pay, or promptly reimburse the Employee for those travel, promotional and similar expenditures incurred by Employee which the Company determines are reasonably necessary for the proper discharge of the Employee's duties under this Agreement. 4. Termination. 4.1 Termination For Cause. The Company may terminate this Agreement at any time without prior notice for "cause" (as defined below) with no severance or other obligation to the Employee, other than payment of the amounts of unpaid Base Salary accrued pursuant to Section 3.1 and Commissions accrued pursuant to Section 3.2 to the date of such termination. For purposes of this Agreement, "cause" shall consist of: (a) Employee being convicted of a felony; (b) Employee knowingly and intentionally breaching, in a material respect, the terms of the Proprietary Information Agreement or the terms of this Agreement, which breach continues uncured for 30 days following written notice thereof; (c) Employee's commencement of full-time employment with another employer while employed by the Company; or (d) Employee engaging in demonstrated conduct constituting sexual harassment under applicable law for which termination is reasonably deemed an appropriate response. 4.2 Termination Without Cause. Subject to the conditions stated in Section 4.4, the Company may terminate this Agreement, without cause, at any time for any reason, or no reason by giving the Employee 30 days' written notice. If requested by the Company to do so, the Employee shall continue to perform his duties under this Agreement during such 30 day period. 4.3 Voluntary Termination By Employee Upon Good Reason. This Agreement may be terminated by the Employee, upon thirty (30) days' prior written notice to the Company, in the event that: (a) there shall be a material diminution in the Employee's office, title and duties from the Effective Date of this Agreement; (b) Employee is notified he will be directed to relocate to an office that is more than thirty (30) miles away from the office at which Employee is based immediately prior to the execution hereof; or (c) there is a "Change in Control" of the Company (hereinafter referred to as "Good Reason"). As used in this Agreement, a "Change of Control" shall mean any of the following events: (i) All or substantially all of the assets of the Company are sold, exchanged or otherwise transferred in one or more transactions; (ii) The Company is merged or consolidated with or into another corporation with the effect that the Company's common stockholders immediately prior to such merger or consolidation hold less than 50% of the ordinary voting power of the outstanding securities of the surviving corporation of such merger or the corporation resulting from such consolidation; or (iii) A person or group (such as term is used in rule 13d-5 under the Securities and Exchange Act of 1934 (the "Exchange Act")) shall, as a result of a tender or exchange offer, open market purchases, merger, private placement or otherwise, have become, directly or indirectly, the beneficial owner (within the meaning of the rule 13d-3 under the Exchange Act) of securities having more than 50% of the voting power of then outstanding securities of the Company. 4.4 Severance. In the event this Agreement is terminated (a) by the Company without cause or (b) by the Employee for Good Reason, the Company shall (in lieu of all other separation benefits that may be available to the Employee under otherwise applicable Company policy and in full satisfaction of all of the Company's obligations to Employee in connection with his employment other than the Company's obligations with respect to the Options) continue to pay the Employee his then current Base Salary set forth in Section 3.1 as of the date of termination (without any increase therein) for a period equal to the lesser of (a) eighteen (18) months or (b) the remainder of the Term of this Agreement, but in no event for less than three (3) months, in such installments as the Employee's Base Salary has been paid during the Term of this Agreement. In the event this Agreement is terminated (x) by the Company for any reason other than for cause pursuant to Section 4.1 or (y) by the Employee for Good Reason pursuant to Section 4.3, the Options shall continue to vest and become exercisable in accordance with Section 3.4 (including the provision therein for accelerated vesting in the event of a Change of Control). 4.5 Return of Company Property. Prior to termination of this Agreement, Employee shall return to the Company all products, books, records, forms, specifications, formulae, data processes, designs, papers and writings relating to the business of the Company, including without limitation proprietary or licensed computer programs, customer lists and customer data, and/or copies or duplicates thereof in the Employee's possession or under the Employee's control. The Employee shall not retain any copies or duplicates of such property and all licenses granted to him by the Company to use computer programs or software shall be revoked as of the date of such termination. 5. Non-Competition. The Employee covenants that he shall not during the "Noncompetition Period" (as defined below), directly or indirectly, whether or not through others acting as such party's employee or agent, own, manage, operate, join, control, be employed by or participate in the ownership, management, control, or operation of or be connected with, a division or business unit of any of the entities listed on Exhibit C to this Agreement (or any of their subsidiaries) or a division or business unit of any other entity (or subsidiary), which division or business unit competes directly with the Company's data-base business; nor shall the Employee directly or indirectly solicit any of the Company's customers or any of the Company's employees or consultants. In addition, concurrently with the execution of this Agreement, the Employee shall execute and deliver to the Company, the Proprietary Information Agreement attached hereto as Exhibit D (the "Proprietary Information Agreement"). For purposes of this Agreement, the "Noncompetition Period" shall begin on the Effective Date and shall terminate on the earlier of (a) the third anniversary of the Effective Date, or (b) the date which is one (1) year after termination of this Agreement; provided, however, that if the Company fails to comply with its obligations under Section 4.4 following termination of this Agreement, the Noncompetition Period shall immediately terminate if the Company does not remedy such failure within five (5) days after the written notice is given to the Company by the Employee. Notwithstanding the foregoing, the Employee shall not be restricted from owning, managing, operating, joining, controlling, being employed by or participating in the ownership, management, control, or operation of or being connected with such divisions or business units of any of the entities listed on Exhibit C to this Agreement, or of any other entities, that do not compete directly with the Company's data-base business. 6. Other Provisions. 6.1 Compliance With Other Agreements. The Employee represents and warrants to the Company that the execution, delivery and performance of this Agreement and the Proprietary Information Agreement will not conflict with or result in the violation or breach of any term or provision of any order, judgment, injunction, contract, agreement, commitment or other arrangement to which the Employee is a party or by which he is bound. The Employee acknowledges that the Company is relying on his representation and warranty in entering into this Agreement, and agrees to indemnify the Company from and against all claims, demands, causes of action, damages, costs or expenses (including attorneys' fees) arising from any breach thereof. 6.2 Nondelegable Duties. This is a contract for the Employee's personal services. The duties of the Employee under this Agreement are personal and may not be delegated or transferred in any manner whatsoever, and shall not be subject to involuntary alienation, assignment or transfer by the Employee during his life. 6.3 Entire Agreement. This Agreement, the Proprietary Information Agreement and the option agreement for the Employee's Options are the only agreements and understandings between the parties pertaining to the subject matter of Employee's employment by the Company, and supersede all prior agreements, summaries of agreements, descriptions of compensation packages, discussions, negotiations, understandings, representations or warranties, whether verbal or written, between the parties pertaining to such subject matter. 6.4 Governing Law. The validity, construction and performance of this Agreement shall be governed by the laws, without regard to the laws as to choice or conflict of laws, of the State of Washington. 6.5 Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions, and this Agreement shall be construed in all respects as if any invalid or unenforceable provision were omitted. 6.6 Amendment and Waiver. This Agreement may be amended, modified or supplemented only by a writing executed by each of the parties. Either party may in writing waive any provision of this Agreement to the extent such provision is for the benefit of the waiving party. No waiver by either party of a breach of any provision of this Agreement shall be construed as a waiver of any subsequent or different breach, and no forbearance by a party to seek a remedy for noncompliance or breach by the other party shall be construed as a waiver of any right or remedy with respect to such noncompliance or breach. 6.7 Binding Effect. The provisions of this Agreement shall bind and inure to the benefit of the parties and their respective successors and permitted assigns. 6.8 Notice. All notices and other communications under this Agreement shall be in writing and shall be given by personal or courier delivery, facsimile or first class mail, certified or registered with return receipt requested, and shall be deemed to have been duly given upon receipt if personally delivered or delivered by courier, on the date of transmission if transmitted by facsimile, or three days after mailing if mailed, to the addresses of the Company and the Employee contained in the records of the Company at the time of such notice. Any party may change such party's address for notices by notice duly given pursuant to this Section 6.8. 6.9 Arbitration. Any controversy or claim arising out of, or relating to, this Agreement or the breach of this Agreement (other than Section 5 hereof or the Proprietary Information Agreement) shall be settled by arbitration by, and in accordance with the applicable National Rules for the Resolution of Employment Disputes of, the American Arbitration Association. The arbitrator shall hear the case within sixty days of being appointed, and shall render a written award within thirty days thereafter. The award shall be final and binding and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction. The arbitrator will have the right to assess, against a party or among the parties, as the arbitrator deems reasonable, (a) administrative fees of the American Arbitration Association, (b) compensation, if any, to the arbitrator and (c) attorneys' fees incurred by a prevailing party. Arbitration hearings will be held in Seattle, Washington. 6.10 Headings. The Section and other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. COMPANY: CENTURA SOFTWARE CORPORATION By: Scott Broomfield Chief Executive Officer EMPLOYEE: ____________________________ Randall Merilat EXHIBIT A Position description: Senior Database Architect 1. Responsible for architecture and continued development of all database products for combined Centura as defined by the Phase Review process and by the senior management of Centura. 2. Ensure that products comply with the functional specifications, and the initial and ongoing quality goals. 3. Work with the product management to incorporate customer requirements into the product development plans. EXHIBIT B Goal Bonus Velocis 3.0 Final Release $5,000 Velocis Dynamic DDL Detailed Design Specification $5,000 EXHIBIT C Oracle Corporation Progress Software Corporation Inprise Corporation Cloudscape, Inc. Pervasive Software, Inc. Sybase, Inc. Informix Corporation Microsoft Corporation Allaire Corporation EXHIBIT D See Exhibit D to Exhibit III-A. Exhibit IV ESCROW AGREEMENT THIS ESCROW AGREEMENT (this "Agreement") is made and entered into as of ________, 1999 by and among CENTURA SOFTWARE CORPORATION, a Delaware corporation ("Centura"); Stephen P. Smith, Wayne L. Warren and Randall L. Merilatt, as Shareholders' Representatives (as described below) of the former shareholders of RAIMA CORPORATION, a Washington corporation (the "Shareholders' Representatives"); and U.S. BANK TRUST, NATIONAL ASSOCIATION (together with any successors hereunder, the "Escrow Agent"). R E C I T A L S: WHEREAS, pursuant to the provisions of that certain Agreement and Plan of Reorganization dated as of ____________, 1999 (the "Merger Agreement"), by and among Centura, Centura Subsidiary Corporation, a Delaware corporation ("Centura Subsidiary"), Raima Corporation, a Washington corporation ("Raima"), and Stephen P. Smith, Wayne L. Warren and Randall L. Merilatt, Centura Subsidiary is to be merged with and into Raima, as a result of which Raima will become a wholly owned subsidiary of Centura; and WHEREAS, pursuant to Section 6.06 of the Merger Agreement, it is a condition precedent to the Merger that Centura, the Shareholders' Representatives and the Escrow Agent enter into this Escrow Agreement for the purpose of setting forth the terms and conditions under which certain assets will be held, invested and disbursed by the Escrow Agent in order to carry out the provisions of Article IX of the Merger Agreement; and WHEREAS, pursuant to Section 10.09 of the Merger Agreement, Stephen P. Smith, Wayne L. Warren and Randall L. Merilatt are designated to act as Shareholders' Representatives under the Merger Agreement and hereunder for the former shareholders of the Company and have full authority to act on behalf of said former shareholders with respect thereto. A G R E E M E N T NOW, THEREFORE, in consideration of the premises and the covenants and agreement hereinafter set forth and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Appointment of the Escrow Agent. Centura and the Shareholders' Representatives hereby designate U.S. Bank Trust, National Association, to act as the Escrow Agent hereunder, and U.S. Bank Trust, National Association hereby accepts such appointment and agrees to act as the Escrow Agent hereunder, upon the terms and subject to the conditions hereinafter set forth. 2. Delivery of Property. Contemporaneously with execution and delivery hereof, Centura shall deliver to the Escrow Agent __________________ shares of Centura's common stock (the "Escrowed Shares"), registered in the name of "U.S. Bank Trust, National Association, as Escrow Agent." The Escrow Agent agrees to hold the Escrowed Shares, together with any stock dividends or stock distributions issued in respect thereof (including, without limitation, any shares issued pursuant to any stock dividend, stock split, reverse stock split, combination or reclassification thereof), and to disburse them in accordance with the terms and conditions hereof. The Escrow Agent agrees to execute and deliver to the Shareholders' Representatives an irrevocable proxy under which each former shareholder of Raima, or any person holding a valid proxy from any such former shareholder, shall be entitled to vote the Escrowed Shares in accordance with the proportionate ownership of the Escrowed Shares by such former shareholder. After the date hereof, Centura may deliver to the Escrow Agent cash in the amount of _______ (together with all income earned in respect thereof, the "Escrowed Cash"). The Escrowed Shares and the Escrowed Cash are herein referred to collectively as the "Escrowed Property." In consideration of the covenants herein contained, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and in order to provide security for any obligation to Centura arising under or by virtue of Article IX of the Merger Agreement, the Shareholders' Representatives, on behalf of each former shareholder of the Company, hereby grant to Centura a security interest in the Escrowed Property and hereby transfer, assign and deliver to the Escrow Agent, as agent for Centura with respect to such security interest, all of the right, title and interest of such former shareholder in the Escrowed Property. All dividends or distributions or proceeds in stock or other property issued in respect of the Escrowed Shares shall be deposited into the Escrow Account and become part of the Escrowed Property. 3. Duties of the Escrow Agent. The Escrow Agent is hereby authorized and directed by Centura and the Shareholders' Representatives to hold the Escrowed Property and to disburse the same in accordance with the provisions of this Agreement. The Escrow Agent agrees to establish and maintain a separate account for the Escrowed Property (the "Escrow Account"). The Escrowed Cash shall be invested by the Escrow Agent as directed in writing by the Shareholders' Representatives; provided, however, that the Escrowed Cash shall be invested only in one or more of the following (the "Obligations"): (a) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America, (b) "money market funds" authorized to invest solely in direct obligations of the United States of America and having net assets in excess of $100,000,000, (c) certificates of deposit issued by commercial banks having membership in the Federal Deposit Insurance Corporation ("FDIC") or any successor thereto and in amounts not exceeding the maximum amount of insurance thereunder, or (d) repurchase agreements entered into with any bank or trust company organized under the laws of the United States or any state thereof having capital and surplus in excess of $100,000,000. The Obligations shall have a maturity of ninety (90) days or less and shall be in the name of "U.S. Bank Trust, National Association, as Escrow Agent." Interest and other income on the Obligations shall be added to the Escrow Account. Any loss incurred on any Obligation will be borne by the Escrow Account. In the absence of instructions from the Shareholders' Representatives, the Escrow Agent shall invest the Escrowed Cash, to the extent reasonably practicable, in ____________________________, [which is insured by the FDIC]. The Escrow Agent may make any investments through its own investment department or that of its affiliates. The Escrow Agent shall not be liable for any loss from the Obligations, including, without limitation, upon the sale or disposition of any Obligation. The Escrowed Shares and the Escrowed Cash shall be held by the Escrow Agent in separate accounts. 4. Investment Instructions. For the purpose of investing the Escrowed Cash, the Escrow Agent may accept written instructions from the Shareholders' Representatives (including instructions sent to the Escrow Agent by facsimile transmission, with the original sent promptly to the Escrow Agent). The Escrow Agent will act upon investment instructions the day that such instructions are received, provided that the requests are communicated within a sufficient amount of time to allow the Escrow Agent to make the specified investment; otherwise the Escrow Agent will act upon such instructions the next business day. The Escrow Agent shall not be liable for any loss arising directly or indirectly, in whole or in part, from the inability to invest funds on the day the instructions were received. The Escrow Agent shall not be liable for any loss incurred by the actions of third parties or by any loss arising by error, failure, or delay in making an investment which is caused by circumstances beyond the Escrow Agent's reasonable control. 5. Disbursements of the Escrowed Property. (a) Promptly upon receipt from time to time of proper instructions (the "Instructions") from Centura, as hereinafter provided, the Escrow Agent shall notify the Shareholders' Representatives by certified mail with a copy of the Instructions from Centura. If the Escrow Agent receives Contrary Instructions (as defined below) from the Shareholders' Representatives within ten (10) business days after such notice from the Escrow Agent is deemed received by the Shareholders' Representatives, the Escrow Agent shall take no action, but shall continue to hold the Escrowed Property until jointly directed by Centura and the Shareholders' Representatives or ordered by a court having jurisdiction. If the Escrow Agent does not receive Contrary Instructions from the Shareholders' Representatives within such ten (10) day period, the Escrow Agent shall deliver the Escrowed Property, or any portion thereof, as such Instructions shall direct, first, in Escrowed Cash, and then the balance, if any, in Escrowed Shares. (b) Instructions shall be in writing, addressed to the Escrow Agent, dated currently, and signed on behalf of Centura; shall refer to this Agreement; and shall direct the Escrow Agent to deliver the Escrowed Property, or any portion thereof, as stated in such Instructions. In addition, Instructions shall set forth a reasonably complete description of Centura's claim under Article IX of the Merger Agreement and may contain such other matters as Centura may determine, but nothing contained therein shall enlarge the duties or obligations of the Escrow Agent hereunder without its prior consent. (c) "Contrary Instructions" shall mean written instructions to the Escrow Agent, dated currently and signed by the Shareholders' Representatives, stating that the Instructions delivered by Centura are inaccurate or incorrect and that the Escrowed Property, or such portion thereof specified in the Instructions, should not be disbursed to Centura. (d) On the six-month anniversary of the Effective Date, the Escrow Agent shall release to the former holders of Raima Stock the number of shares of Centura Stock equal to the quotient (rounded to the nearest whole share) obtained by dividing (A)(i) the Escrowed Shares minus (ii) the number of shares which, when added to the Escrowed Cash, are needed to cover any Indemnification Claims then pending (including a reasonable estimate of legal fees and other expenses in connection therewith) by (B) two (2). 6. Termination of this Agreement. On the first anniversary of the date hereof, to the extent not needed to reasonably cover any Indemnification Claims then pending (including a reasonable estimate of legal fees and other expenses in connection therewith), the Escrow Agent shall release to the former holders of Raima Stock, first, the balance of the Escrowed Shares (together with any stock dividends or stock distributions issued in respect thereof), and then the balance of the Escrowed Cash. 7. Procedures for Disbursements of Escrowed Property. All disbursements to the former shareholders of Raima shall be made to the parties listed, and in the percentages shown, on Exhibit 2 attached hereto. For distributions of Escrowed Shares, the Escrow Agent shall so instruct Centura's transfer agent, and the transfer agent shall mail out certificates to its address of record for each such former shareholder. Centura shall not be required to issue fractional shares but may instead pay cash in lieu thereof. One or more certificates representing any Escrowed Shares to be disbursed to Centura hereunder shall be delivered to Centura by the Escrow Agent for cancellation. The Escrow Agent agrees to execute any and all other documents reasonably requested by Centura or by the Shareholders' Representatives in order to effectively transfer to the appropriate party Escrowed Shares to be disbursed hereunder. 8. Provisions Regarding the Escrow Agent. (a) Liability of the Escrow Agent. In performing any duties under this Agreement, the Escrow Agent shall not be liable to any party for consequential, special or exemplary damages (including, without limitation, lost profits), losses, or expenses, except for gross negligence or willful misconduct on the part of the Escrow Agent. The Escrow Agent shall not incur any such liability for (i) any act or failure to act made or omitted in good faith, or (ii) any action taken or omitted in reliance upon any instrument, including any written statement, instructions or affidavit provided for in this Agreement, that the Escrow Agent shall in good faith believe to be genuine, nor will the Escrow Agent be liable or responsible for forgeries, fraud, impersonations, or determining the scope of any representative authority. In addition, the Escrow Agent may consult with legal counsel in connection with the Escrow Agent's duties under this Agreement and shall be fully protected in any act taken, suffered, or permitted by it in good faith in accordance with the advice of counsel. The Escrow Agent is not responsible for determining and verifying the authority of any person acting or purporting to act on behalf of any party to this Agreement. (b) Fees and Expenses. The fees and expenses of the Escrow Agent for ordinary services as contemplated by this Agreement shall be as set forth in Exhibit 1 attached hereto. If the parties request that the Escrow Agent render any services not provided for in this Agreement, or if the parties request a substantial modification of its terms, or if any controversy arises, or if the Escrow Agent is made a party to, or intervenes in, any litigation pertaining to this escrow or its subject matter, the Escrow Agent shall be reasonably compensated for such extraordinary services and reimbursed for all costs, attorneys' fees, including allocated costs of in-house counsel, and expenses occasioned by such default, delay, controversy or litigation. The fees and expenses of the Escrow Agent, including any fees and expenses for extraordinary services authorized by Centura, shall be paid by Centura. (c) Controversies. If any controversy arises between the parties to this Agreement, or with any other party, concerning the subject matter of this Agreement, its terms or conditions, the Escrow Agent will not be required to determine the controversy or to take any action regarding it. The Escrow Agent may hold all documents and funds and may wait for resolution conclusion of any such controversy. In such event, the Escrow Agent will not be liable for interest or damage. Furthermore, the Escrow Agent may, at its option, file an action requiring that any claims between the parties be resolved. The Escrow Agent is authorized to deposit with the court all documents and property held in escrow, except all costs, expenses, charges and reasonable attorneys' fees incurred by the Escrow Agent due to the action and which the parties severally agree to pay. Upon initiating such action, the Escrow Agent shall be fully released and discharged of and from all obligations and liability imposed by the terms of this Agreement. (d) Indemnification of the Escrow Agent. Centura and its successors and assigns agree severally to indemnify and hold the Escrow Agent harmless against any and all losses, claims, damages, liabilities, and expenses, including reasonable costs of investigation, attorneys' fees, including allocated costs of in-house counsel, and disbursements that may be imposed on the Escrow Agent or incurred by the Escrow Agent in connection with the performance of its duties under this Agreement, including, but not limited to, any litigation arising from this Agreement or involving its subject matter. The Escrow Agent shall have a first lien on the property and papers held under this Agreement for such compensation and expenses. (e) Resignation of the Escrow Agent. The Escrow Agent may resign at any time upon giving at least thirty (30) days' written notice to the parties; provided, however, that no such resignation shall become effective until the appointment of a successor escrow agent which shall be accomplished as provided in this subsection 7(e). The Shareholders' Representatives and Centura shall use their best efforts to mutually agree on a successor escrow agent within thirty (30) days after receiving such notice. If the Shareholders' Representatives and Centura fail to agree on a successor escrow agent within such time, the Escrow Agent shall have the right to appoint a successor escrow agent; provided, however, that such successor escrow agent is a trust company or bank authorized to do business in the State of California that has a combined capital and surplus of at least ten million dollars ($10,000,000) and is subject to supervision or examination by federal or state authority. The successor escrow agent shall execute and deliver an instrument accepting such appointment and it shall, without further acts, be vested with all the estates, properties, rights, powers, and duties of the predecessor escrow agent as if originally named as escrow agent. At such time, the predecessor escrow agent shall be discharged from any further duties and liability under this Agreement. (f) Automatic Succession. Notwithstanding anything to the contrary contained herein, any company into which the Escrow Agent may be merged or with which it may be consolidated, or any company to whom the Escrow Agent may transfer a substantial amount of its Global Escrow business, shall be the successor to the Escrow Agent without the execution or filing of any paper or any further act on the part of the parties, provided that such successor to the Escrow Agent is a trust company or bank authorized to do business in the State of California that has a combined capital and surplus of at least ten million dollars ($10,000,000) and is subject to supervision or examination by federal or state authority. (g) Tax Election. The Escrow Agent shall not elect under Treasury Regulation Section 301.7701-3 or corresponding provisions of state or local law to treat the Escrow Account created pursuant to this Agreement as an association taxable as a corporation. 9. Notices. All notices hereunder shall be in writing and shall be deemed received upon delivery if delivered in person or upon the earlier of actual receipt or the third business day after mailing if mailed by first class mail or by certified or registered mail, with postage prepaid, to Centura, to the Shareholders' Representatives or to the Escrow Agent at their respective address set forth below or such other address that may be provided to the parties in accordance with this Section 8: (a) if to Centura to: CENTURA SOFTWARE CORPORATION 975 Island Drive Redwood Shores, CA 94065 Attention: Mr. Scott Broomfield Chief Executive Officer with a copy to: Richard S. Grey, Esq. ORRICK, HERRINGTON & SUTCLIFFE LLP The Old Federal Reserve Bank Building 400 Sansome Street San Francisco, California 94111 (b) if to the Shareholders' Representatives, to [The address set forth in the Agreement and Plan of Reorganization] with a copy to: Heller Ehrman White & McAuliffe 701 Fifth Avenue, Suite 6100 Seattle, Washington 98104-7098 Attention: Louisa Barash, Esq. (c) if to the Escrow Agent: [U.S. Bank Trust, National Association] ___________________ ___________________ ___________________ 10. Amendments. This Agreement may be amended or modified only by a written instrument executed by Centura, the Shareholders' Representatives and the Escrow Agent. No such amendment shall be effective to alter or enlarge the Escrow Agent's duties, discretions and obligations hereunder without its prior consent. 11. Governing Law. This Agreement shall be construed and enforced in accordance with the substantive laws, and not the law of conflicts, of the State of California, as applied to agreements entered into and to be performed entirely within California. 12. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Escrow Agent, Centura, and the Shareholders' Representatives and each of their respective heirs, personal representatives, successors and assigns. Nothing contained in this Agreement, express or implied, is intended to confer upon any person other than the parties hereto and the respective heirs, personal representatives, successors and assigns as aforesaid, any rights or remedies under or by reason of this Agreement. 13. Taxes. The former shareholders of Raima shall be responsible for the payment of all taxes imposed on interest and other income in respect the Escrowed Cash. The taxpayer identification number associated with the Escrowed Cash shall be designated for the Escrow Agent by the Shareholders' Representatives. 14. Severability. If any provision of this Agreement, or the application thereof to any person, place, or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable or void, the remainder of this Agreement and such provisions as applied to other persons, places and circumstances shall remain in full force and effect. 15. Actions by Shareholders' Representatives. For all purposes hereunder, the act of any one or more of the Shareholders' Representatives holding a majority of the Escrowed Shares (as shown on Exhibit 2) then held by all of the Shareholders' Representatives ("Majority Representative") in the aggregate shall be the act of all three of the Shareholders' Representatives, and the Escrow Agent agrees to recognize and give effect to any consent, vote, direction, waiver, instruction, notice or other act hereunder if signed by the Majority Representative. Shareholders holding more than 50% of the shares shown on Exhibit 2 may, by delivery of written notice to the Escrow Agent, remove or replace any one of the three Shareholders' Representatives. 16. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed or have caused this Agreement to be executed as of the day and year first above written. CENTURA SOFTWARE CORPORATION By Name: Title: SHAREHOLDERS' REPRESENTATIVES: Name________________________________ Name________________________________ Name________________________________ ESCROW AGENT: [U.S. BANK TRUST NATIONAL ASSOCIATION] By Name: Title: Exhibit 1 U.S. BANK CORPORATE TRUST SERVICES SCHEDULE OF FEES FOR ESCROW SERVICES CENTURA SOFTWARE CORPORATION AND RAIMA CORPORATION SHAREHOLDERS ESCROW AGREEMENT ACCEPTANCE FEE 010 The acceptance fee includes the review of all documents, initial set-up of the account, and other reasonably required services up to and including the closing. This is a one-time fee, payable at inception. $ 1,500.00 ADMINISTRATION/AGENT FEES Annual account administration fee covers the normal duties of the escrow agent associated with the management of the account. Administration fees are payable in advance and will not be prorated. 470 Depository Escrow Agent $1,000.00 TRANSACTION FEES 880 Disbursement/Draw Charge per item disbursed. Includes the wire or check fee. $ 20.00 100 Trades-Open Market/Directed Charge per trade to buy or sell permitted investments. This excludes U.S. Bank investment transactions. $100.00 101 Receipts Charge per item received. $ 20.00 INDIRECT OUT OF POCKET Charge for miscellaneous expenses such as fax, messenger service, overnight mail, stationery, and postage (excluding large mailings). 166 This charge is applied against your total Administration/Agent Fees, and will not be prorated. 3% EXTRAORDINARY SERVICES Charge for duties or responsibilities of an unusual nature not provided for in the indenture or otherwise set forth in this schedule. A reasonable charge will be made based on the nature of the service and the responsibility involved. These charges will be billed as a flat fee or our hourly rate then in effect, at our option. Final account acceptance is subject to review of documents. Fees are based on our understanding of the transaction and are subject to revision if the structure is changed. In the event this transaction does not close, any related out-of-pocket expenses will be billed to you at cost. Fees for any services not specifically covered will be based on appraisal of services rendered. With general reference to all of our charges, it should be understood that they are subject to adjustment from time to time, upon written notification. The fees in this schedule are the terms under which you agree to do business. Closing the transaction constitutes agreement to this fee schedule, as does payment of the invoice received after subsequent fee adjustment notification. Absent your instructions to sweep or otherwise invest balances, no interest, earnings, or other compensation for uninvested balances will be paid to you. Annex B TITLE 23B. WASHINGTON BUSINESS CORPORATION ACT CHAPTER 23B.13. DISSENTERS' RIGHTS 23B.13.010. Definitions As used in this chapter: (1) "Corporation" means the issuer of the shares held by a dissenter before the corporate action, or the surviving or acquiring corporation by merger or share exchange of that issuer. (2) "Dissenter" means a shareholder who is entitled to dissent from corporate action under the Revised Code of Washington, or RCW, 23B.13.020 and who exercises that right when and in the manner required by RCW 23B.13.200 through 23B.13.280. (3) "Fair value," with respect to a dissenter's shares, means the value of the shares immediately before the effective date of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable. (4) "Interest" means interest from the effective date of the corporate action until the date of payment, at the average rate currently paid by the corporation on its principal bank loans or, if none, at a rate that is fair and equitable under all the circumstances. (5) "Record shareholder" means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. (6) "Beneficial shareholder" means the person who is a beneficial owner of shares held in a voting trust or by a nominee as the record shareholder. (7) "Shareholder" means the record shareholder or the beneficial shareholder. 23B.13.020. Right to dissent (1) A shareholder is entitled to dissent from, and obtain payment of the fair value of the shareholder's shares in the event of, any of the following corporate actions: (a) Consummation of a plan of merger to which the corporation is a party (i) if shareholder approval is required for the merger by RCW 23B.11.030, 23B.11.080, or the articles of incorporation and the shareholder is entitled to vote on the merger, or (ii) if the corporation is a subsidiary that is merged with its parent under RCW 23B.11.040; (b) Consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired, if the shareholder is entitled to vote on the plan; (c) Consummation of a sale or exchange of all, or substantially all, of the property of the corporation other than in the usual and regular course of business, if the shareholder is entitled to vote on the sale or exchange, including a sale in dissolution, but not including a sale pursuant to court order or a sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale will be distributed to the shareholders within one year after the date of sale; (d) An amendment of the articles of incorporation that materially reduces the number of shares owned by the shareholder to a fraction of a share if the fractional share so created is to be acquired for cash under RCW 23B.06.040; or (e) Any corporate action taken pursuant to a shareholder vote to the extent the articles of incorporation, bylaws, or a resolution of the board of directors provides that voting or nonvoting shareholders are entitled to dissent and obtain payment for their shares. (2) A shareholder entitled to dissent and obtain payment for the shareholder's shares under this chapter may not challenge the corporate action creating the shareholder's entitlement unless the action fails to comply with the procedural requirements imposed by this title, RCW 25.10.900 through 25.10.955, the articles of incorporation, or the bylaws, or is fraudulent with respect to the shareholder or the corporation. (3) The right of a dissenting shareholder to obtain payment of the fair value of the shareholder's shares shall terminate upon the occurrence of any one of the following events: (a) The proposed corporate action is abandoned or rescinded; (b) A court having jurisdiction permanently enjoins or sets aside the corporate action; or (c) The shareholder's demand for payment is withdrawn with the written consent of the corporation. 23B.13.030. Dissent by nominees and beneficial owners (1) A record shareholder may assert dissenters' rights as to fewer than all the shares registered in the shareholder's name only if the shareholder dissents with respect to all shares beneficially owned by any one person and notifies the corporation in writing of the name and address of each person on whose behalf the shareholder asserts dissenters' rights. The rights of a partial dissenter under this subsection are determined as if the shares as to which the dissenter dissents and the dissenter's other shares were registered in the names of different shareholders. (2) A beneficial shareholder may assert dissenters' rights as to shares held on the beneficial shareholder's behalf only if: (a) The beneficial shareholder submits to the corporation the record shareholder's written consent to the dissent not later than the time the beneficial shareholder asserts dissenters' rights; and (b) The beneficial shareholder does so with respect to all shares of which such shareholder is the beneficial shareholder or over which such shareholder has power to direct the vote. 23B.13.200. Notice of dissenters' rights (1) If proposed corporate action creating dissenters' rights under RCW 23B.13.020 is submitted to a vote at a shareholders' meeting, the meeting notice must state that shareholders are or may be entitled to assert dissenters' rights under this chapter and be accompanied by a copy of this chapter. (2) If corporate action creating dissenters' rights under RCW 23B.13.020 is taken without a vote of shareholders, the corporation, within ten days after [the] effective date of such corporate action, shall notify in writing all shareholders entitled to assert dissenters' rights that the action was taken and send them the dissenters' notice described in RCW 23B.13.220. 23B.13.210. Notice of intent to demand payment (1) If proposed corporate action creating dissenters' rights under RCW 23B.13.020 is submitted to a vote at a shareholders' meeting, a shareholder who wishes to assert dissenters' rights must (a) deliver to the corporation before the vote is taken written notice of the shareholder's intent to demand payment for the shareholder's shares if the proposed action is effected, and (b) not vote such shares in favor of the proposed action. (2) A shareholder who does not satisfy the requirements of subsection (1) of this section is not entitled to payment for the shareholder's shares under this chapter. 23B.13.220. Dissenters' notice (1) If proposed corporate action creating dissenters' rights under RCW 23B.13.020 is authorized at a shareholders' meeting, the corporation shall deliver a written dissenters' notice to all shareholders who satisfied the requirements of RCW 23B.13.210. (2) The dissenters' notice must be sent within ten days after the effective date of the corporate action, and must: (a) State where the payment demand must be sent and where and when certificates for certificated shares must be deposited; (b) Inform holders of uncertificated shares to what extent transfer of the shares will be restricted after the payment demand is received; (c) Supply a form for demanding payment that includes the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action and requires that the person asserting dissenters' rights certify whether or not the person acquired beneficial ownership of the shares before that date; (d) Set a date by which the corporation must receive the payment demand, which date may not be fewer than thirty nor more than sixty days after the date the notice in subsection (1) of this section is delivered; and (e) Be accompanied by a copy of this chapter. 23B.13.230. Duty to demand payment (1) A shareholder sent a dissenters' notice described in RCW 23B.13.220 must demand payment, certify whether the shareholder acquired beneficial ownership of the shares before the date required to be set forth in the dissenters' notice pursuant to RCW 23B.13.220(2)(c), and deposit the shareholder's certificates in accordance with the terms of the notice. (2) The shareholder who demands payment and deposits the shareholder's share certificates under subsection (1) of this section retains all other rights of a shareholder until the proposed corporate action is effected. (3) A shareholder who does not demand payment or deposit the shareholder's share certificates where required, each by the date set in the dissenters' notice, is not entitled to payment for the shareholder's shares under this chapter. 23B.13.240. Share restrictions (1) The corporation may restrict the transfer of uncertificated shares from the date the demand for their payment is received until the proposed corporate action is effected or the restriction is released under RCW 23B.13.260. (2) The person for whom dissenters' rights are asserted as to uncertificated shares retains all other rights of a shareholder until the effective date of the proposed corporate action. 23B.13.250. Payment (1) Except as provided in RCW 23B.13.270, within thirty days of the later of the effective date of the proposed corporate action, or the date the payment demand is received, the corporation shall pay each dissenter who complied with RCW 23B.13.230 the amount the corporation estimates to be the fair value of the shareholder's shares, plus accrued interest. (2) The payment must be accompanied by: (a) The corporation's balance sheet as of the end of a fiscal year ending not more than sixteen months before the date of payment, an income statement for that year, a statement of changes in shareholders' equity for that year, and the latest available interim financial statements, if any; (b) An explanation of how the corporation estimated the fair value of the shares; (c) An explanation of how the interest was calculated; (d) A statement of the dissenter's right to demand payment under RCW 23B.13.280; and (e) A copy of this chapter. 23B.13.260. Failure to take action (1) If the corporation does not effect the proposed action within sixty days after the date set for demanding payment and depositing share certificates, the corporation shall return the deposited certificates and release any transfer restrictions imposed on uncertificated shares. (2) If after returning deposited certificates and releasing transfer restrictions, the corporation wishes to undertake the proposed action, it must send a new dissenters' notice under RCW 23B.13.220 and repeat the payment demand procedure. 23B.13.270. After-acquired shares (1) A corporation may elect to withhold payment required by RCW 23B.13.250 from a dissenter unless the dissenter was the beneficial owner of the shares before the date set forth in the dissenters' notice as the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action. (2) To the extent the corporation elects to withhold payment under subsection (1) of this section, after taking the proposed corporate action, it shall estimate the fair value of the shares, plus accrued interest, and shall pay this amount to each dissenter who agrees to accept it in full satisfaction of the dissenter's demand. The corporation shall send with its offer an explanation of how it estimated the fair value of the shares, an explanation of how the interest was calculated, and a statement of the dissenter's right to demand payment under RCW 23B.13.280. 23B.13.280. Procedure if shareholder dissatisfied with payment or offer (1) A dissenter may notify the corporation in writing of the dissenter's own estimate of the fair value of the dissenter's shares and amount of interest due, and demand payment of the dissenter's estimate, less any payment under RCW 23B.13.250, or reject the corporation's offer under RCW 23B.13.270 and demand payment of the dissenter's estimate of the fair value of the dissenter's shares and interest due, if: (a) The dissenter believes that the amount paid under RCW 23B.13.250 or offered under RCW 23B.13.270 is less than the fair value of the dissenter's shares or that the interest due is incorrectly calculated; (b) The corporation fails to make payment under RCW 23B.13.250 within sixty days after the date set for demanding payment; or (c) The corporation does not effect the proposed action and does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares within sixty days after the date set for demanding payment. (2) A dissenter waives the right to demand payment under this section unless the dissenter notifies the corporation of the dissenter's demand in writing under subsection (1) of this section within thirty days after the corporation made or offered payment for the dissenter's shares. 23B.13.300. Court action (1) If a demand for payment under RCW 23B.13.280 remains unsettled, the corporation shall commence a proceeding within sixty days after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the sixty-day period, it shall pay each dissenter whose demand remains unsettled the amount demanded. (2) The corporation shall commence the proceeding in the superior court of the county where a corporation's principal office, or, if none in this state, its registered office, is located. If the corporation is a foreign corporation without a registered office in this state, it shall commence the proceeding in the county in this state where the registered office of the domestic corporation merged with or whose shares were acquired by the foreign corporation was located. (3) The corporation shall make all dissenters, whether or not residents of this state, whose demands remain unsettled, parties to the proceeding as in an action against their shares and all parties must be served with a copy of the petition. Nonresidents may be served by registered or certified mail or by publication as provided by law. (4) The corporation may join as a party to the proceeding any shareholder who claims to be a dissenter but who has not, in the opinion of the corporation, complied with the provisions of this chapter. If the court determines that such shareholder has not complied with the provisions of this chapter, the shareholder shall be dismissed as a party. (5) The jurisdiction of the court in which the proceeding is commenced under subsection (2) of this section is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend decision on the question of fair value. The appraisers have the powers described in the order appointing them, or in any amendment to it. The dissenters are entitled to the same discovery rights as parties in other civil proceedings. (6) Each dissenter made a party to the proceeding is entitled to judgment (a) for the amount, if any, by which the court finds the fair value of the dissenter's shares, plus interest, exceeds the amount paid by the corporation, or (b) for the fair value, plus accrued interest, of the dissenter's after-acquired shares for which the corporation elected to withhold payment under RCW 23B.13.270. 23B.13.310. Court costs and counsel fees (1) The court in a proceeding commenced under RCW 23B.13.300 shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation, except that the court may assess the costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding payment under RCW 23B.13.280. (2) The court may also assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable: (a) Against the corporation and in favor of any or all dissenters if the court finds the corporation did not substantially comply with the requirements of RCW 23B.13.200 through 23B.13.280; or (b) Against either the corporation or a dissenter, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by chapter 23B.13 RCW. (3) If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to these counsel reasonable fees to be paid out of the amounts awarded the dissenters who were benefited. B-7 PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 20. Indemnification of Directors and Officers. Section 145(a) of the General Corporation Law of the State of Delaware ("Delaware Corporation Law") provides, in general, that a corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), because the person is or was a director or officer of the corporation. Such indemnity may be against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action, suit or proceeding, if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation and if, with respect to any criminal action or proceeding, the person did not have reasonable cause to believe the person's conduct was unlawful. Section 145(b) of the Delaware Corporation Law provides, in general, that a corporation shall have the power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor because the person is or was a director or officer of the corporation, against any expenses (including attorneys' fees) actually and reasonably incurred by the person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of the corporation. Section 145(g) of the Delaware Corporation Law provides, in general, that a corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation against any liability asserted against the person in any such capacity, or arising out of the person's status as such, whether or not the corporation would have the power to indemnify the person against such liability under the provisions of the law. Article Tenth of the Registrant's Certificate of Incorporation (incorporated by reference herein) provides for indemnification of directors, officers and other persons as follows: "To the fullest extent permitted by the Delaware General Corporation Law as the same exists or as may hereafter be amended, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Neither any amendment nor repeal of this Article, nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article, shall eliminate or reduce the effect of this Article in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision." Article VI of the Registrant's Bylaws (incorporated by reference herein) provides that: "Indemnification of Directors and Officers. The corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, indemnify each of its directors and officers against expenses (including attorneys' fees), judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.1, a "director" or "officer" of the corporation includes any person (i) who is or was a director or officer of the corporation, (ii) who is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation." "Indemnification of Others. The corporation shall have the power, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, to indemnify each of its employees and agents (other than directors and officers) against expenses (including attorneys' Fees), judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.9, an "employee" or "agent" of the corporation (other than a director or officer) includes any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation." "Insurance. The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of the General Corporation Law of Delaware." Centura has obtained directors' and officers' liability insurance covering, subject to certain exceptions, actions taken by Centura's directors and officers in their capacities as such. Item 21. Exhibits and Financial Statement Schedules. (a) The following exhibits are filled herewith or incorporated herein by reference:
Exhibit No. Description - ----------- ----------------------------------------------------------- 2.1 Agreement and Plan of Reorganization, dated as of March 15, 1999, by and among the Registrant, Centura Subsidiary Corporation and Raima Corporation (included as Annex A to the Prospectus included as part of this Registration Statement). 3.1 Certificate of Incorporation of the Registrant. 3.2 Bylaws of the Registrant 4.1(13) Preferred Shares Rights Agreement, dated as of August 3, 1994, between the Registrant and Chemical Trust Company of California, including the Certificate of Determination of Rights, Preferences and Privileges of Series A Participating Preferred Stock, the form of Rights Certificate and the Summary of Rights, attached thereto as Exhibit A, B and C, respectively. 4.2(17) Amendment to Preferred Shares Rights Agreement effective February 27, 1998. 5.1(1) Opinion of Orrick, Herrington & Sutcliffe LLP regarding legality of securities being registered. 10.1(3) Form of Directors' and Officers' Indemnification Agreement. 10.2(4)(5) 1986 Incentive Stock Option Plan, as amended, and forms of agreements thereunder. 10.3(3) 1991 United Kingdom Sub Plan and forms of agreements thereunder. 10.4(3) 1992 Employee Stock Purchase Plan and forms of agreements thereunder, as amended on September 24, 1996. 10.5(3)* 1992 Directors' Stock Option Plan and forms of agreements thereunder. 10.8(3) Lease Agreement dated February 4, 1992 between Registrant and Bohannon Associates. 10.9(6) 1996 Executive Officers' Compensation Plan. 10.12(3) Forms of License Agreements. 10.14(2) 1995 Stock Option Plan and forms of agreements thereunder, as amended on September 24, 1996. 10.16(7) Note Purchase Agreement dated March 31, 1996 between the Company and Computer Associates International, Inc. 10.17(8)* Executive Employment Agreement dated April 10, 1996 between the Company and Sam M. Inman III. 10.18(9)* Loan Agreement Secured by Property and Securities dated August 31, 1996 between the Company and Earl and Ann Stahl. 10.19(2)* 1996 Directors' Stock Option Plan and forms of agreements thereunder. 10.20(2) Stipulation of Settlement dated July 19, 1996, in regards to the Registrant's securities litigation between plaintiff's settlement counsel and the Registrant's counsel, including exhibits thereto, and related Final Judgment and Order of Dismissal dated September 30, 1996. 10.21(14) Distributorship Agreement dated January 6, 1997, between the Registrant and InfoSpinner, Inc. 10.22* Intentionally omitted. 10.23(15) Factoring Agreement dated June 26, 1997, between Centura Software Corporation and Pacific Business Funding Corporation. 10.24(15) Warrant to Purchase Common Stock issued June 30, 1997 by Centura Software Corporation to Sand Hill Capital. 10.25(15)* 1997 Executive Retention Program. 10.26(16) Lease Agreement, dated October 14, 1996, between Westport Investment and the Registrant. 10.27(17)* Letter Agreement dated November 5, 1997 between the Registrant and Hickey & Hill Incorporated, and form of Nonstatutory Stock Options issued to new Executives. 10.28(17)* Settlement Agreements and Mutual Releases between the Registrant and Sam M. Inman, III and between the Registrant and Earl Stahl. 10.29(17) Loan and Security Agreement dated January 19, 1998 between the Registrant and Coast Business Credit, a division of Southern Pacific Bank. 10.30(17) Common Stock and Warrant Purchase Agreement dated February 27, 1998 between the Registrant and certain Purchasers of the Registrant's Common Stock. 10.31(17) Note Conversion Agreement dated February 27, 1998 between the Registrant and Newport Acquisition Company No. 2, LLC. 10.32(17) Warrant Purchase Agreement dated February 27, 1998 between the Registrant and Computer Associates International, Inc. 10.33(17) Investor Rights Agreement dated February 27, 1998 between the Registrant and Newport Acquisition Company No. 2, LLC. 10.34(17) Common Stock Purchase Warrants issued to Rochon Capital Group, Ltd. On February 27, 1998. 10.35(17)* 1998 Employee Stock Option Plan and form of Nonstatutory Option Agreements thereunder. 10.36(18) Amendment to Investor Rights Agreement dated February 27, 1998 between the Registrant and Newport Acquisition Company No. 2, LLC. 11.1(14) Statement regarding computation of per share earnings. 23.1(1) Consent of Orrick, Herrington & Sutcliffe LLP (included in Exhibit 5.1). 23.2 Consent of PricewaterhouseCoopers LLP, with respect to financial statements of the Registrant. 23.3 Consent of PricewaterhouseCoopers LLP, with respect to financial statements of Raima Corporation. 24.1 Power of Attorney (included on the signature page of this Form S-4).
_______________________________ * Management Compensatory Plan or Arrangement. (1) To be filed by amendment. (2) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996. (3) Incorporated by reference from the Company's Registration Statement on Form S-1 (No. 33-55566), declared effective by the Commission on February 4, 1993. (4) Incorporated by reference from the Company's Registration Statement on Form S-8 (No. 33-62194) filed with the Commission on May 5, 1993. (5) Incorporated by reference from the Company's Registration Statement on Form S-8 (No. 33-83850) filed with the Commission on September 9, 1994. (6) Incorporated by reference from the Company's Annual Report on Form 10-Q for the year ended December 31, 1995. (7) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995. (8) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995. (9) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995. (10) Incorporated by reference from the Company's Current Report on Form 8-K dated July 2, 1993. (11) Incorporated by reference from the Company's Current Report on Form 8-K dated October 11, 1995, as amended by Amendment No. 1 dated October 25, 1995 (Form 8-K/A). (12) Incorporated by reference from the Company's Current Report on Form 8-K dated January 8, 1996. (13) Incorporated by reference from the Company's Registration Statement on Form 8-A filed with the Commission on August 10, 1994. (14) Incorporated by reference from Amendment No. 1 to the Company's Registration Statement on Form S-4 filed with the Commission on March 10, 1997. (15) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. (16) Incorporated by reference from the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997. (17) Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1997. (18) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998. Item 22. Undertakings The undersigned Registrant hereby undertakes: (1) that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; (2) that prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form; (3) that every prospectus (i) that is filed pursuant to paragraph (2) immediately preceding, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; (4) to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of any such request, and to send the incorporated documents by first class mail or other equally prompt means, including information contained in documents filed after the effective date of this registration statement through the date of responding to such request; and (5) to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in this registration statement when it became effective. Insofar as indemnification for liabilities under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described in Item 20 above, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. If a claim of indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in a successful defense of any action, suit or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. SIGNATURES Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Redwood Shores, State of California, on April 30, 1999. CENTURA SOFTWARE CORPORATION By: /s/ Scott R. Broomfield -------------------------- Scott R. Broomfield President, Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Scott R. Broomfield, John W. Bowman and Richard Lucien, and each of them, his true and lawful attorneys-in-fact and agents with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement and to file the same with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. This power of attorney may be executed in counterparts. Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated. Signature Title Date - ------------------------ ---------------------------------- ----------------- /s/ Scott R. Broomfield President, Chief Executive Officer April 30, 1999 - ------------------------ and Chairman of the Board of Scott R. Broomfield Directors (Principal Executive Officer) /s/ John W. Bowman Executive Vice President, Finance April 30, 1999 - ------------------------ and Operations and Chief Financial John W. Bowman Officer (Principal Financial Officer) /s/ Richard Lucien Vice President, Finance and April 30, 1999 - ------------------------ Operations (Principal Accounting Richard Lucien Officer) /s/ Peter Micchiche Director April 29, 1999 - ------------------------ Peter Micchiche /s/ Earl M. Stahl Director April 29, 1999 - ------------------------ Earl M. Stahl /s/ Philip Koen, Jr. Director April 30, 1999 - ------------------------ Philip Koen, Jr. /s/ Jack King - ------------------------ Director April 29, 1999 Jack King EXHIBIT INDEX
Exhibit No. Description - ---------- ----------------------------------------------------------------- 2.1 Agreement and Plan of Reorganization, dated as of March 15, 1999, by and among the Registrant, Centura Subsidiary Corporation and Raima Corporation (included as Annex A to the Prospectus included as part of this Registration Statement). 3.1 Certificate of Incorporation of the Registrant. 3.2 Bylaws of the Registrant 4.1(13) Preferred Shares Rights Agreement, dated as of August 3, 1994, between the Registrant and Chemical Trust Company of California, including the Certificate of Determination of Rights, Preferences and Privileges of Series A Participating Preferred Stock, the form of Rights Certificate and the Summary of Rights, attached thereto as Exhibit A, B and C, respectively. 4.2(17) Amendment to Preferred Shares Rights Agreement effective February 27, 1998. 5.1(1) Opinion of Orrick, Herrington & Sutcliffe LLP regarding legality of securities being registered. 10.1(3) Form of Directors' and Officers' Indemnification Agreement. 10.2(4)(5) 1986 Incentive Stock Option Plan, as amended, and forms of agreements thereunder. 10.3(3) 1991 United Kingdom Sub Plan and forms of agreements thereunder. 10.4(3) 1992 Employee Stock Purchase Plan and forms of agreements thereunder, as amended on September 24, 1996. 10.5(3)* 1992 Directors' Stock Option Plan and forms of agreements thereunder. 10.8(3) Lease Agreement dated February 4, 1992 between Registrant and Bohannon Associates. 10.9(6) 1996 Executive Officers' Compensation Plan. 10.12(3) Forms of License Agreements. 10.14(2) 1995 Stock Option Plan and forms of agreements thereunder, as amended on September 24, 1996. 10.16(7) Note Purchase Agreement dated March 31, 1996 between the Company and Computer Associates International, Inc. 10.17(8)* Executive Employment Agreement dated April 10, 1996 between the Company and Sam M. Inman III. 10.18(9)* Loan Agreement Secured by Property and Securities dated August 31, 1996 between the Company and Earl and Ann Stahl. 10.19(2)* 1996 Directors' Stock Option Plan and forms of agreements thereunder. 10.20(2) Stipulation of Settlement dated July 19, 1996, in regards to the Registrant's securities litigation between plaintiff's settlement counsel and the Registrant's counsel, including exhibits thereto, and related Final Judgment and Order of Dismissal dated September 30, 1996. 10.21(14) Distributorship Agreement dated January 6, 1997, between the Registrant and InfoSpinner, Inc. 10.22* Intentionally omitted. 10.23(15) Factoring Agreement dated June 26, 1997, between Centura Software Corporation and Pacific Business Funding Corporation. 10.24(15) Warrant to Purchase Common Stock issued June 30, 1997 by Centura Software Corporation to Sand Hill Capital. 10.25(15)* 1997 Executive Retention Program. 10.26(16) Lease Agreement, dated October 14, 1996, between Westport Investment and the Registrant. 10.27(17)* Letter Agreement dated November 5, 1997 between the Registrant and Hickey & Hill Incorporated, and form of Nonstatutory Stock Options issued to new Executives. 10.28(17)* Settlement Agreements and Mutual Releases between the Registrant and Sam M. Inman, III and between the Registrant and Earl Stahl. 10.29(17) Loan and Security Agreement dated January 19, 1998 between the Registrant and Coast Business Credit, a division of Southern Pacific Bank. 10.30(17) Common Stock and Warrant Purchase Agreement dated February 27, 1998 between the Registrant and certain Purchasers of the Registrant's Common Stock. 10.31(17) Note Conversion Agreement dated February 27, 1998 between the Registrant and Newport Acquisition Company No. 2, LLC. 10.32(17) Warrant Purchase Agreement dated February 27, 1998 between the Registrant and Computer Associates International, Inc. 10.33(17) Investor Rights Agreement dated February 27, 1998 between the Registrant and Newport Acquisition Company No. 2, LLC. 10.34(17) Common Stock Purchase Warrants issued to Rochon Capital Group, Ltd. On February 27, 1998. 10.35(17)* 1998 Employee Stock Option Plan and form of Nonstatutory Option Agreements thereunder. 10.36(18) Amendment to Investor Rights Agreement dated February 27, 1998 between the Registrant and Newport Acquisition Company No. 2, LLC. 11.1(14) Statement regarding computation of per share earnings. 23.1(1) Consent of Orrick, Herrington & Sutcliffe LLP (included in Exhibit 5.1). 23.2 Consent of PricewaterhouseCoopers LLP, with respect to financial statements of the Registrant. 23.3 Consent of PricewaterhouseCoopers LLP, with respect to financial statements of Raima Corporation. 24.1 Power of Attorney (included on the signature page of this Form S-4).
______________________________ * Management Compensatory Plan or Arrangement. (1) To be filed by amendment. (2) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1996. (3) Incorporated by reference from the Company's Registration Statement on Form S-1 (No. 33-55566), declared effective by the Commission on February 4, 1993. (4) Incorporated by reference from the Company's Registration Statement on Form S-8 (No. 33-62194) filed with the Commission on May 5, 1993. (5) Incorporated by reference from the Company's Registration Statement on Form S-8 (No. 33-83850) filed with the Commission on September 9, 1994. (6) Incorporated by reference from the Company's Annual Report on Form 10-Q for the year ended December 31, 1995. (7) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995. (8) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1995. (9) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995. (10) Incorporated by reference from the Company's Current Report on Form 8-K dated July 2, 1993. (11) Incorporated by reference from the Company's Current Report on Form 8-K dated October 11, 1995, as amended by Amendment No. 1 dated October 25, 1995 (Form 8-K/A). (12) Incorporated by reference from the Company's Current Report on Form 8-K dated January 8, 1996. (13) Incorporated by reference from the Company's Registration Statement on Form 8-A filed with the Commission on August 10, 1994. (14) Incorporated by reference from Amendment No. 1 to the Company's Registration Statement on Form S-4 filed with the Commission on March 10, 1997. (15) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997. (16) Incorporated by reference from the Company's Quarterly Report on Form 10-Q/A for the quarter ended June 30, 1997. (17) Incorporated by reference from the Company's Annual Report on Form 10-K for the year ended December 31, 1997. (18) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998. EX-3.1 2 CERTIFICATE OF INCORPORATION Exhibit 3.1 CERTIFICATE OF INCORPORATION OF CENTURA SOFTWARE CORPORATION FIRST: The name of the corporation is Centura Software Corporation, (the "Corporation"). SECOND: The address of the Corporation's registered office in the State of Delaware is 15 E. North Street, in the City of Dover, County of Kent. The name of its registered agent at such address is Incorporating Services, Ltd. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware. FOURTH: The Corporation is authorized to issue two classes of shares to be designated respectively Common Stock and Preferred Stock. The total number of shares of all classes of stock which the Corporation has authority to issue is Sixty-Two Million (62,000,000) shares, consisting of Sixty Million (60,000,000) shares of Common Stock, $0.01 par value, (the "Common Stock") and Two Million (2,000,000) shares of Preferred Stock, $0.01 par value (the "Preferred Stock"). The Preferred Stock may be issued from time to time in one or more series. The Board of Directors is hereby authorized to fix or alter the dividend rights, dividend rate, conversion rights, voting rights, rights and terms of redemption (including sinking fund provisions), redemption prices, and liquidation preferences of any wholly unissued series of Preferred Stock, and the number of shares constituting any such series and the designation thereof, or any of them. The Board of Directors is further authorized to increase or decrease (but not below the number of shares of any such series then outstanding) the number of shares of any series, the number of which was fixed by it, subsequent to the issue of shares of such series then outstanding, subject to the limitations and restrictions stated in the resolution of the Board of Directors originally fixing the number of shares of such series. If the number of shares of any series is so decreased, then the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution originally fixing the number of shares of such series. FIFTH: The name and mailing address of the incorporator are as follows: Deborah Moore Orrick, Herrington & Sutcliffe LLP 400 Capitol Mall, Suite 3000 Sacramento, CA 95814-4407 SIXTH: The corporation is to have perpetual existence. SEVENTH: The election of directors need not be by written ballot unless a stockholder demands election by written ballot at a meeting of stockholders and before voting begins or unless the Bylaws of the Corporation shall so provide. EIGHTH: The number of directors which constitute the whole Board of Directors of the Corporation shall be designated in the Bylaws of the Corporation. Any director may be removed from office by the stockholders of the corporation only for cause. NINTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to make, alter, amend or repeal the Bylaws of the Corporation. TENTH: To the fullest extent permitted by the Delaware General Corporation Law as the same exists or as may hereafter be amended, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Neither any amendment nor repeal of this Article, nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article, shall eliminate or reduce the effect of this Article in respect of any matter occurring, or any cause of action, suit or claim that, but for this Article, would accrue or arise, prior to such amendment, repeal or adoption of an inconsistent provision. ELEVENTH: At the election of directors of the corporation, each holder of stock or of any class or classes or of a series or series thereof shall be entitled to one vote for each share held. No stockholder will be permitted to cumulate votes at any election of directors. TWELFTH: Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Corporation may be kept (subject to any provision contained in the statutes) outside of the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation. THIRTEENTH: Stockholders of the Corporation may not take action by written consent in lieu of a meeting. Any actions contemplated by the stockholders must be taken at a duly called annual or special meeting. FOURTEENTH: Notwithstanding any other provisions of this Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of the capital stock required by law or this Certificate of Incorporation, the affirmative vote of the holders of at least two-thirds (2/3) of the combined voting power of all of the then-outstanding shares of the Corporation entitled to vote shall be required to alter, amend or repeal Articles THIRTEENTH or FOURTEENTH or any provision thereof, unless such amendment shall be approved by a majority of the directors of the Corporation not affiliated or associated with any person or entity holding (or which has announced an intention to obtain) 10% or more of the voting power of the Corporation's outstanding capital stock. FIFTEENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights conferred upon stockholders herein are granted subject to this reservation. The undersigned incorporator hereby acknowledges that the foregoing Certificate of Incorporation is her act and deed and that the facts stated herein are true. /s/ Deborah Abernathy Moore ------------------------------------------- Deborah Abernathy Moore, Incorporator Dated: January 5, 1999 EX-3.2 3 BYLAWS Exhibit 3.2 BYLAWS OF CENTURA SOFTWARE CORPORATION (a Delaware corporation) ARTICLE I CORPORATE OFFICES 1.1 Registered Office. The registered office of the corporation shall be fixed in the certificate of incorporation of the corporation. 1.2 Other Offices. The board of directors may at any time establish branch or subordinate offices at any place or places where the corporation is qualified to do business. ARTICLE II MEETINGS OF STOCKHOLDERS 2.1 Place of Meetings. Meetings of stockholders shall be held at any place within or outside the State of Delaware designated by the board of directors. In the absence of any such designation, stockholders' meetings shall be held at the principal executive office of the corporation. 2.2 Annual Meeting. The annual meeting of stockholders shall be held each year on a date and at a time designated by the board of directors. In the absence of such designation, the annual meeting of stockholders shall be held on the fifteenth day of December in each year at 10:00 a.m. However, if such day falls on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding full business day. At the meeting, directors shall be elected, and any other proper business may be transacted. 2.3 Special Meeting. A special meeting of the stockholders may be called at any time by the board of directors or by the chairman of the board or by the president. 2.4 Notice of Stockholders' Meetings. All notices of meetings of stockholders shall be sent or otherwise given in accordance with Section 2.7 of these bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting. The notice shall specify the place, date, and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted (no business other than that specified in the notice may be transacted) or (ii) in the case of the annual meeting, those matters which the board of directors, at the time of giving the notice, intends to present for action by the stockholders (but any proper matter may be presented at the meeting for such action). The notice of any meeting at which directors are to be elected shall include the name of any nominee or nominees who, at the time of the notice, the board intends to present for election. 2.5 Advance Notice of Stockholder Nominees and Stockholder Business. To be properly brought before an annual meeting, nominations for the election of director or other business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors, (b) otherwise properly brought before the meeting by or at the direction of the board of directors, or (c) otherwise properly brought before the meeting by a stockholder. For such nominations or other business to be considered properly brought before the meeting by a stockholder such stockholder must have given timely notice and in proper form of his intent to bring such business before such meeting. To be timely, such stockholder's notice must be delivered to or mailed and received by the secretary of the corporation not less than ninety (90) days prior to the meeting; provided, however, that in the event that less than one-hundred (100) days notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. To be in proper form, a stockholder's notice to the secretary shall set forth: (i) the name and address of the stockholder who intends to make the nominations or propose the business and, as the case may be, of the person or persons to be nominated or of the business to be proposed; (ii) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote at such meeting and, if applicable, intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (iii) if applicable, a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons pursuant to which the nomination or nominations are to be made by the stockholder; (iv) such other information regarding each nominee or each matter of business to be proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission had the nominee been nominated, or intended to be nominated, or the matter been proposed, or intended to be proposed by the board of directors; and (v) if applicable, the consent of each nominee to serve as director of the corporation if so elected. The chairman of the meeting may refuse to acknowledge the nomination of any person or the proposal of any business not made in compliance with the foregoing procedure. 2.6 Manner of Giving Notice; Affidavit of Notice. Written notice of any meeting of stockholders shall be given either personally or by first-class mail or by telegraphic or other written communication. Notices not personally delivered shall be sent charges prepaid and shall be addressed to the stockholder at the address of that stockholder appearing on the books of the corporation or given by the stockholder to the corporation for the purpose of notice. If no such address appears on the corporation's books or is given, notice shall be deemed to have been given if sent to that stockholder by mail or telegraphic or other written communication to the corporation's principal executive office, or if published at least once in a newspaper of general circulation in the county where that office is located. Notice shall be deemed to have been given at the time when delivered personally or deposited in the mail or sent by telegram or other means of written communication. If any notice addressed to a stockholder at the address of that stockholder appearing on the books of the corporation is returned to the corporation by the United States Postal Service marked to indicate that the United States Postal Service is unable to deliver the notice to the stockholder at that address, then all future notices or reports shall be deemed to have been duly given without further mailing if the same shall be available to the stockholder on written demand of the stockholder at the principal executive office of the corporation for a period of one (1) year from the date of the giving of the notice. An affidavit of the mailing or other means of giving any notice of any stockholders' meeting, executed by the secretary, assistant secretary or any transfer agent of the corporation giving the notice, shall be prima facie evidence of the giving of such notice. 2.7 Quorum. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (i) the chairman of the meeting or (ii) the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting in accordance with Section 2.8 of these bylaws. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which, by express provision of the statutes or of the certificate of incorporation, a different vote is required, in which case such express provision shall govern and control the decision of the question. If a quorum be initially present, the stockholders may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, if any action taken is approved by a majority of the stockholders required to initially constitute a quorum. 2.8 Adjourned Meeting; Notice. When a meeting is adjourned to another time and place, unless these bylaws otherwise require, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting the corporation may transact any business that might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2.9 Voting. The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.12 of these bylaws, subject to the provisions of Sections 217 and 218 of the General Corporation Law of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners, and to voting trusts and other voting agreements). Except as may otherwise be provided in the certificate of incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder. No stockholder will be permitted to cumulate votes at any election of directors. 2.10 Validation of Meetings; Waiver of Notice; Consent. The transactions of any meeting of stockholders, either annual or special, however called and noticed, and wherever held, shall be as valid as though they had been taken at a meeting duly held after regular call and notice, if a quorum be present either in person or by proxy, and if, either before or after the meeting, each person entitled to vote, who was not present in person or by proxy, signs a written waiver of notice or a consent to the holding of the meeting or an approval of the minutes thereof. The waiver of notice or consent or approval need not specify either the business to be transacted or the purpose of any annual or special meeting of stockholders. All such waivers, consents, and approvals shall be filed with the corporate records or made a part of the minutes of the meeting. Attendance by a person at a meeting shall also constitute a waiver of notice of and presence at that meeting, except when the person objects at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Attendance at a meeting is not a waiver of any right to object to the consideration of matters required by law to be included in the notice of the meeting but not so included, if that objection is expressly made at the meeting. 2.11 Stockholder Action by Written Consent Without a Meeting. The stockholders of the corporation may not take action by written consent without a meeting. Any such actions must be taken at a duly called annual or special meeting. 2.12 Record Date for Stockholder Notice; Voting; Giving Consents. For purposes of determining the stockholders entitled to notice of any meeting or to vote thereat, the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of any such meeting, and in such event only stockholders of record on the date so fixed are entitled to notice and to vote, notwithstanding any transfer of any shares on the books of the corporation after the record date. If the board of directors does not so fix a record date, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the business day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting unless the board of directors fixes a new record date for the adjourned meeting, but the board of directors shall fix a new record date if the meeting is adjourned for more than thirty (30) days from the date set for the original meeting. The record date for any other purpose shall be as provided in Section 8.1 of these bylaws. 2.13 Proxies. Every person entitled to vote for directors, or on any other matter, shall have the right to do so either in person or by one or more agents authorized by a written proxy signed by the person and filed with the secretary of the corporation, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. A proxy shall be deemed signed if the stockholder's name is placed on the proxy (whether by manual signature, typewriting, telegraphic transmission or otherwise) by the stockholder or the stockholder's attorney-in-fact. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212(c) of the General Corporation Law of Delaware. 2.14 Inspectors of Election. Before any meeting of stockholders, the board of directors may appoint an inspector or inspectors of election to act at the meeting or its adjournment. If no inspector of election is so appointed, then the chairman of the meeting may, and on the request of any stockholder or a stockholder's proxy shall, appoint an inspector or inspectors of election to act at the meeting. The number of inspectors shall be either one (1) or three (3). If inspectors are appointed at a meeting pursuant to the request of one (1) or more stockholders or proxies, then the holders of a majority of shares or their proxies present at the meeting shall determine whether one (1) or three (3) inspectors are to be appointed. If any person appointed as inspector fails to appear or fails or refuses to act, then the chairman of the meeting may, and upon the request of any stockholder or a stockholder's proxy shall, appoint a person to fill that vacancy. Such inspectors shall: (a) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies; (b) receive votes, ballots or consents; (c) hear and determine all challenges and questions in any way arising in connection with the right to vote; (d) count and tabulate all votes or consents; (e) determine when the polls shall close; (f) determine the result; and (g) do any other acts that may be proper to conduct the election or vote with fairness to all stockholders. 2.15 Organization. The president, or in the absence of the president, the chairman of the board, shall call the meeting of the stockholders to order, and shall act as chairman of the meeting. In the absence of the president, the chairman of the board, and all of the vice presidents, the stockholders shall appoint a chairman for such meeting. The chairman of any meeting of stockholders shall determine the order of business and the procedures at the meeting, including such matters as the regulation of the manner of voting and the conduct of business. The secretary of the corporation shall act as secretary of all meetings of the stockholders, but in the absence of the secretary at any meeting of the stockholders, the presiding officer may appoint any person to act as secretary of the meeting. 2.16 List of Stockholders Entitled to Vote. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them. ARTICLE III DIRECTORS 3.1 Powers. Subject to the provisions of the General Corporation Law of Delaware and to any limitations in the certificate of incorporation or these bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the board of directors. Each director shall exercise such powers and otherwise perform such duties in good faith, in the manner such director believes to be in the best interests of the corporation, and with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances. 3.2 Number of Directors. The authorized number of directors shall be not less than five (5) nor more than nine (9). The exact number of directors shall be seven (7) until changed, within the limits specified above, by a bylaw amending this Section 3.2, duly adopted by the board of directors or by the stockholders. The indefinite number of directors may be changed, or a definite number may be fixed without provision for an indefinite number, by an amendment to this bylaw duly adopted by the vote or written consent of the holders of a majority of the stock issued and outstanding and entitled to vote, or by a duly adopted amendment to the certificate of incorporation. No reduction of the authorized number of directors shall have the effect of removing any director before that director's term of office expires. 3.3 Election and Term of Office of Directors. Except as provided in Section 3.4 of these bylaws, directors shall be elected at each annual meeting of stockholders to hold office until the next annual meeting. Each director, including a director elected or appointed to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified. 3.4 Resignation and Vacancies. Any director may resign effective on giving written notice to the chairman of the board, the president, the secretary or the board of directors, unless the notice specifies a later time for that resignation to become effective. If the resignation of a director is effective at a future time, the board of directors may elect a successor to take office when the resignation becomes effective. Vacancies in the board of directors may be filled by a majority of the remaining directors, even if less than a quorum, or by a sole remaining director; however, a vacancy created by the removal of a director by the vote of the stockholders or by court order may be filled only by the affirmative vote of a majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute a majority of the required quorum). Each director so elected shall hold office until the next annual meeting of the stockholders and until a successor has been elected and qualified. Unless otherwise provided in the certificate of incorporation or these bylaws: (i) Vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all of the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director: (ii) Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected. If at any time, by reason of death or resignation or other cause, the corporation should have no directors in office, then any officer or any stockholder or an executor, administrator, trustee or guardian of a stockholder, or other fiduciary entrusted with like responsibility for the person or estate of a stockholder, may call a special meeting of stockholders in accordance with the provisions of the certificate of incorporation or these bylaws, or may apply to the Court of Chancery for a decree summarily ordering an election as provided in Section 211 of the General Corporation Law of Delaware. If, at the time of filling any vacancy or any newly created directorship, the directors then in office constitute less than a majority of the whole board (as constituted immediately prior to any such increase), then the Court of Chancery may, upon application of any stockholder or stockholders holding at least ten percent (10%) of the total number of the shares at the time outstanding having the right to vote for such directors, summarily order an election to be held to fill any such vacancies or newly created directorships, or to replace the directors chosen by the directors then in office as aforesaid, which election shall be governed by the provisions of Section 211 of the General Corporation Law of Delaware as far as applicable. 3.5 Removal of Directors. Unless otherwise restricted by statute, by the certificate of incorporation or by these bylaws, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors. 3.6 Place of Meetings; Meetings by Telephone. Regular meetings of the board of directors may be held at any place within or outside the State of Delaware that has been designated from time to time by resolution of the board. In the absence of such a designation, regular meetings shall be held at the principal executive office of the corporation. Special meetings of the board may be held at any place within or outside the State of Delaware that has been designated in the notice of the meeting or, if not stated in the notice or if there is no notice, at the principal executive office of the corporation. Any meeting, regular or special, may be held by conference telephone or similar communication equipment, so long as all directors participating in the meeting can hear one another; and all such directors shall be deemed to be present in person at the meeting. 3.7 First Meetings. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. 3.8 Regular Meetings. Regular meetings of the board of directors may be held without notice at such time as shall from time to time be determined by the board of directors. If any regular meeting day shall fall on a legal holiday, then the meeting shall be held at the same time and place on the next succeeding full business day. 3.9 Special Meetings; Notice. Special meetings of the board of directors for any purpose or purposes may be called at any time by the chairman of the board, the president, any vice president, the secretary or any two directors. Notice of the time and place of special meetings shall be delivered personally or by telephone to each director or sent by first-class mail, reputable courier service, or telegram, charges prepaid, addressed to each director at that director's address as it is shown on the records of the corporation. If the notice is mailed, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. If the notice is delivered personally, by reputable courier service, or by telephone or telegram, it shall be delivered personally, by courier, or by telephone or to the telegraph company at least forty-eight (48) hours before the time of the holding of the meeting. Any oral notice given personally or by telephone may be communicated either to the director or to a person at the office of the director who the person giving the notice has reason to believe will promptly communicate it to the director. The notice need not specify the purpose or the place of the meeting, if the meeting is to be held at the principal executive office of the corporation. 3.10 Quorum. A majority of the authorized number of directors shall constitute a quorum for the transaction of business, except to adjourn as provided in Section 3.19 of these bylaws. Every act or decision done or made by a majority of the directors present at a duly held meeting at which a quorum is present shall be regarded as the act of the board of directors, subject to the provisions of the certificate of incorporation and applicable law. A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting. 3.11 Waiver of Notice. Notice of a meeting need not be given to any director (i) who signs a waiver of notice or a consent to holding the meeting or an approval of the minutes thereof, whether before or after the meeting, or (ii) who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such directors. All such waivers, consents, and approvals shall be filed with the corporate records or made part of the minutes of the meeting. A waiver of notice need not specify the purpose of any regular or special meeting of the board of directors. 3.12 Adjournment. A majority of the directors present, whether or not constituting a quorum, may adjourn any meeting to another time and place. 3.13 Notice of Adjournment. Notice of the time and place of holding an adjourned meeting need not be given unless the meeting is adjourned for more than twenty-four (24) hours. If the meeting is adjourned for more than twenty-four (24) hours, then notice of the time and place of the adjourned meeting shall be given before the adjourned meeting takes place, in the manner specified in Section 3.9 of these bylaws, to the directors who were not present at the time of the adjournment. 3.14 Board Action by Written Consent Without a Meeting. Any action required or permitted to be taken by the board of directors may be taken without a meeting, provided that all members of the board individually or collectively consent in writing to that action. Such action by written consent shall have the same force and effect as a unanimous vote of the board of directors. Such written consent and any counterparts thereof shall be filed with the minutes of the proceedings of the board of directors. 3.15 Fees and Compensation of Directors. Directors and members of committees may receive such compensation, if any, for their services and such reimbursement of expenses as may be fixed or determined by resolution of the board of directors. This Section 3.15 shall not be construed to preclude any director from serving the corporation in any other capacity as an officer, agent, employee or otherwise and receiving compensation for those services. 3.16 Approval of Loans to Officers. The corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the corporation or of its subsidiary, including any officer or employee who is a director of the corporation or its subsidiary, whenever, in the judgment of the directors, such loan, guaranty or assistance may reasonably be expected to benefit the corporation. The loan, guaranty or other assistance may be with or without interest and may be unsecured, or secured in such manner as the board of directors shall approve, including, without limitation, a pledge of shares of stock of the corporation. Nothing contained in this section shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the corporation at common law or under any statute. 3.17 Sole Director Provided by Certificate of Incorporation. In the event only one (1) director is required by these bylaws or the certificate of incorporation, then any reference herein to notices, waivers, consents, meetings or other actions by a majority or quorum of the directors shall be deemed to refer to such notice, waiver, etc., by such sole director, who shall have all the rights and duties and shall be entitled to exercise all of the powers and shall assume all the responsibilities otherwise herein described as given to the board of directors. 3.18 Advisory Directors. The board of directors from time to time may elect one or more persons to be advisory directors who shall not by such appointment be members of the board of directors. Advisory directors shall be available from time to time to perform special assignments specified by the president, to attend meetings of the board of directors upon invitation and to furnish consultation to the board of directors. The period during which the title shall be held may be prescribed by the board of directors. If no period is prescribed, the title shall be held at the pleasure of the board of directors. 3.19 Super Majority Vote of Directors. A two-thirds super majority vote of directors shall be required to approve any of the following actions: (a) consolidation or merger of the corporation with or into any other corporation in which securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities are transferred to a person or persons different from the persons holding those securities immediately prior to such transaction (other than a consolidation or merger in which the surviving entity is the corporation or one of its wholly-owned subsidiaries) or transfer or sale of all or substantially all of the assets of the corporation; or (b) an increase in the corporation's secured indebtedness to an aggregate amount in excess of $15 million. ARTICLE IV COMMITTEES 4.1 Committees of Directors. The board of directors may, by resolution adopted by a majority of the authorized number of directors, designate one (1) or more committees, each consisting of one or more directors, to serve at the pleasure of the board. The board may designate one (1) or more directors as alternate members of any committee, who may replace any absent member at any meeting of the committee. The appointment of members or alternate members of a committee requires the vote of a majority of the authorized number of directors. Any committee, to the extent provided in the resolution of the board, shall have all the authority of the board, but no such committee shall have the power or authority to (i) amend the certificate of incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the board of directors as provided in Section 151(a) of the General Corporation Law of Delaware, fix any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the corporation), (ii) adopt an agreement of merger or consolidation under Sections 251 or 252 of the General Corporation Law of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, (iv) recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution, or (v) amend the bylaws of the corporation; and, unless the board resolution establishing the committee, the bylaws or the certificate of incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the General Corporation Law of Delaware. 4.2 Meetings and Actions of Committees. Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of Article III of these bylaws, Section 3.6 (place of meetings; meetings by telephone), Section 3.8 (regular meetings), Section 3.9 (special meetings; notice), Section 3.10 (quorum), Section 3.11 (waiver of notice), Section 3.12 (adjournment), Section 3.13 (notice of adjournment), and Section 3.14 (board action by written consent without meeting), with such changes in the context of those bylaws as are necessary to substitute the committee and its members for the board of directors and its members; provided, however, that the time of regular meetings of committees may be determined either by resolution of the board of directors or by resolution of the committee, that special meetings of committees may also be called by resolution of the board of directors, and that notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The board of directors may adopt rules for the government of any committee not inconsistent with the provisions of these bylaws. 4.3 Committee Minutes. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. ARTICLE V OFFICERS 5.1 Officers. The Corporate Officers of the corporation shall be a president, a secretary and a chief financial officer. The corporation may also have, at the discretion of the board of directors, a chairman of the board, one or more vice presidents, one or more assistant secretaries, one or more assistant treasurers, and such other officers as may be appointed in accordance with the provisions of Section 5.3 of these bylaws. Any number of offices may be held by the same person. In addition to the Corporate Officers of the corporation described above, there may also be such Administrative Officers of the corporation as may be designated and appointed from time to time by the president of the corporation in accordance with the provisions of Section 5.12 of these bylaws. 5.2 Election of Officers. The Corporate Officers of the corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 or Section 5.5 of these bylaws, shall be chosen by the board of directors, subject to the rights, if any, of an officer under any contract of employment. 5.3 Subordinate Officers; Etc. The board of directors may appoint, or may empower the president to appoint, such other Corporate Officers as the business of the corporation may require, each of whom shall hold office for such period, have such authority, and perform such duties as are provided in these bylaws or as the board of directors may from time to time determine. The president may from time to time designate and appoint Administrative Officers of the corporation in accordance with the provisions of Section 5.12 of these bylaws. 5.4 Removal and Resignation of Officers. Subject to the rights, if any, of a Corporate Officer under any contract of employment, any Corporate Officer may be removed, either with or without cause, by the board of directors at any regular or special meeting of the board or, except in case of a Corporate Officer chosen by the board of directors, by any Corporate Officer upon whom such power of removal may be conferred by the board of directors. Any Corporate Officer may resign at any time by giving written notice to the corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice; and, unless otherwise specified in that notice, the acceptance of the resignation shall not be necessary to make it effective. Any resignation is without prejudice to the rights, if any, of the corporation under any contract to which the Corporate Officer is a party. Any Administrative Officer designated and appointed by the president may be removed, either with or without cause, at any time by the president. Any Administrative Officer may resign at any time by giving written notice to the president or to the secretary of the corporation. 5.5 Vacancies in Offices. A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled in the manner prescribed in these bylaws for regular appointments to that office. 5.6 Chairman of the Board. The chairman of the board, if such an officer be elected, shall, if present, preside at meetings of the board of directors and exercise and perform such other powers and duties as may from time to time be assigned to him by the board of directors or as may be prescribed by these bylaws. The chairman of the board shall also be the chief executive officer of the corporation and shall have the powers and duties prescribed in Section 5.7 of these bylaws. 5.7 President. Subject to such supervisory powers, if any, as may be given by the board of directors to the chairman of the board, if there be such an officer, the president shall be the chief executive officer of the corporation and shall, subject to the control of the board of directors, have general supervision, direction, and control of the business and the officers of the corporation. He or she shall preside at all meetings of the stockholders and, in the absence or nonexistence of a chairman of the board, at all meetings of the board of directors. He or she shall have the general powers and duties of management usually vested in the office of president of a corporation, and shall have such other powers and duties as may be prescribed by the board of directors or these bylaws. 5.8 Vice Presidents. In the absence or disability of the president, the vice presidents, if any, in order of their rank as fixed by the board of directors or, if not ranked, a vice president designated by the board of directors, shall perform all the duties of the president and when so acting shall have all the powers of, and be subject to all the restrictions upon, the president. The vice presidents shall have such other powers and perform such other duties as from time to time may be prescribed for them respectively by the board of directors, these bylaws, the president or the chairman of the board. 5.9 Secretary. The secretary shall keep or cause to be kept, at the principal executive office of the corporation or such other place as the board of directors may direct, a book of minutes of all meetings and actions of the board of directors, committees of directors and stockholders. The minutes shall show the time and place of each meeting, whether regular or special (and, if special, how authorized and the notice given), the names of those present at directors' meetings or committee meetings, the number of shares present or represented at stockholders' meetings, and the proceedings thereof. The secretary shall keep, or cause to be kept, at the principal executive office of the corporation or at the office of the corporation's transfer agent or registrar, as determined by resolution of the board of directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates evidencing such shares, and the number and date of cancellation of every certificate surrendered for cancellation. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and of the board of directors required to be given by law or by these bylaws. He or she shall keep the seal of the corporation, if one is adopted, in safe custody and shall have such other powers and perform such other duties as may be prescribed by the board of directors or by these bylaws. 5.10 Chief Financial Officer. The chief financial officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares. The books of account shall at all reasonable times be open to inspection by any director. The chief financial officer shall deposit all money and other valuables in the name and to the credit of the corporation with such depositories as may be designated by the board of directors. He or she shall disburse the funds of the corporation as may be ordered by the board of directors, shall render to the president and directors, whenever they request it, an account of all of his or her transactions as chief financial officer and of the financial condition of the corporation, and shall have such other powers and perform such other duties as may be prescribed by the board of directors or these bylaws. 5.11 Assistant Secretary. The assistant secretary, or, if there is more than one, the assistant secretaries in the order determined by the stockholders or board of directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors or the stockholders may from time to time prescribe. 5.12 Administrative Officers. In addition to the Corporate Officers of the corporation as provided in Section 5.1 of these bylaws and such subordinate Corporate Officers as may be appointed in accordance with Section 53 of these bylaws, there may also be such Administrative Officers of the corporation as may be designated and appointed from time to time by the president of the corporation. Administrative Officers shall perform such duties as from time to time may be determined by the president or the board of directors in order to assist the Corporate Officers in the furtherance of their duties. In the performance of such duties, however, such Administrative Officers shall have limited authority to act on behalf of the corporation as the board of directors shall establish, including but not limited to limitations on the dollar amount and on the scope of agreements or commitments that may be made by such Administrative Officers on behalf of the corporation, which limitations may not be exceeded by such individuals or altered by the president without further approval by the board of directors. 5.13 Authority and Duties of Officers. In addition to the foregoing authority and duties, all officers of the corporation shall respectively have such authority and perform such duties in the management of the business of the corporation as may be designated from time to time by the board of directors or the stockholders. ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES, AND OTHER AGENTS 6.1 Indemnification of Directors and Officers. The corporation shall, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, indemnify each of its directors and officers against expenses (including attorneys' fees), judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.1, a "director" or "officer" of the corporation includes any person (i) who is or was a director or officer of the corporation, (ii) who is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was a director or officer of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation. 6.2 Indemnification of Others. The corporation shall have the power, to the maximum extent and in the manner permitted by the General Corporation Law of Delaware, to indemnify each of its employees and agents (other than directors and officers) against expenses (including attorneys' Fees), judgments, fines, settlements and other amounts actually and reasonably incurred in connection with any proceeding arising by reason of the fact that such person is or was an agent of the corporation. For purposes of this Section 6.9, an "employee" or "agent" of the corporation (other than a director or officer) includes any person (i) who is or was an employee or agent of the corporation, (ii) who is or was serving at the request of the corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise, or (iii) who was an employee or agent of a corporation which was a predecessor corporation of the corporation or of another enterprise at the request of such predecessor corporation. 6.3 Insurance. The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the corporation would have the power to indemnify him or her against such liability under the provisions of the General Corporation Law of Delaware. ARTICLE VII RECORDS AND REPORTS 7.1 Maintenance and Inspection of Records. The corporation shall, either at its principal executive office or at such place or places as designated by the board of directors, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these bylaws as amended to date, accounting books and other records of its business and properties. Any stockholder of record, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the corporation's stock ledger, a list of its stockholders, and its other books and records and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person's interest as a stockholder. In every instance where an attorney or other agent is the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing that authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the corporation at its registered office in Delaware or at its principal place of business. 7.2 Inspection by Directors. Any director shall have the right to examine the corporation's stock ledger, a list of its stockholders and its other books and records for a purpose reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper. 7.3 Annual Statement to Stockholders. The board of directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation. 7.4 Representation of Shares of Other Corporations. The chairman of the board, the president, any vice president, the chief financial officer, the secretary or assistant secretary of this corporation, or any other person authorized by the board of directors or the president or a vice president, is authorized to vote, represent, and exercise on behalf of this corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this corporation. The authority herein granted may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority. 7.5 Certification and Inspection of Bylaws. The original or a copy of these bylaws, as amended or otherwise altered to date, certified by the secretary, shall be kept at the corporation's principal executive office and shall be open to inspection by the stockholders of the corporation, at all reasonable times during office hours. ARTICLE VIII GENERAL MATTERS 8.1 Record Date for Purposes Other than Notice and Voting. For purposes of determining the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any other lawful action, the board of directors may fix, in advance, a record date, which shall not be more than sixty (60) days before any such action. In that case, only stockholders of record at the close of business on the date so fixed are entitled to receive the dividend, distribution or allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date so fixed, except as otherwise provided by law. If the board of directors does not so fix a record date, then the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the board of directors adopts the applicable resolution or the sixtieth (60th) day before the date of that action, whichever is later. 8.2 Checks; Drafts; Evidences of Indebtedness. From time to time, the board of directors shall determine by resolution which person or persons may sign or endorse all checks, drafts, other orders for payment of money, notes or other evidences of indebtedness that are issued in the name of or payable to the corporation, and only the persons so authorized shall sign or endorse those instruments. 8.3 Corporate Contracts and Instruments; How Executed. The board of directors, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the board of directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. 8.4 Stock Certificates; Transfer; Partly Paid Shares. The shares of the corporation shall be represented by certificates, provided that the board of directors of the corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Notwithstanding the adoption of such a resolution by the board of directors, every holder of stock represented by certificates and upon request every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the corporation by, the chairman of the board of directors or the president or a vice-president, and by the chief financial officer, the secretary or an assistant secretary of such corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue. Certificates for shares shall be of such form and device as the board of directors may designate and shall state the name of the record holder of the shares represented thereby; its number; date of issuance; the number of shares for which it is issued; a statement summary or reference to the rights, privileges, preferences and restrictions, if any; a statement or summary as to the redemption or conversion, if any; a statement or summary of liens or restrictions upon transfer or voting, if any; if the shares by assessable or, if assessments are collectible by personal action, a plain statement of such facts. Upon surrender to the secretary or transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. The corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon. 8.5 Special Designation on Certificates. If the corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the corporation shall issue to represent such class or series of stock; provided, however, that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements there may be set forth on the face or back of the certificate that the corporation shall issue to represent such class or series of stock a statement that the corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences, and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. 8.6 Lost Certificates. Except as provided in this Section 8.6, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the corporation or its duly authorized transfer agent and canceled at the same time. The board of directors may, in case any share certificate or certificate for any other security is lost, stolen or destroyed, authorize the issuance of replacement certificates on such terms and conditions as the board may require; the board may require indemnification of the corporation secured by a bond or other adequate security sufficient to protect the corporation against any claim that may be made against it, including any expense or liability, on account of the alleged loss, theft or destruction of the certificate or the issuance of the replacement certificate. 8.7 Transfer Agents and Registrars. The board of directors may appoint one or more transfer agents or transfer clerks, and one or more registrars, which shall be an incorporated bank or trust company- either domestic or foreign, who shall be appointed at such times and places as the requirements of the corporation may necessitate and the board of directors may designate. 8.8 Legend Condition. In the event any shares of this corporation are issued pursuant to a permit or exemption therefrom requiring the imposition of a legend condition the person or persons issuing or transferring said shares shall make sure said legend appears on the certificate and on the stub relating thereto in the stock record book and shall not be required to transfer any shares free of such legend unless an amendment to such permit or a new permit be first issued so authorizing such a deletion. 8.9 Subsidiary Corporations. Shares of this corporation owned by a subsidiary shall not be entitled to vote on any matter. A subsidiary for these purposes is defined as a corporation, the shares of which possessing more than twenty-five percent (25%) of the total combined voting power of all classes of shares entitled to vote, are owned directly or indirectly through one or more subsidiaries. 8.10 Construction; Definitions. Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the General Corporation Law of Delaware shall govern the construction of these bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term "person" includes both a corporation and a natural person. ARTICLE IX AMENDMENTS The original or other bylaws of the corporation may be adopted, amended or repealed by the stockholders entitled to vote; provided, however, that the corporation may, in its certificate of incorporation, confer the power to adopt, amend or repeal bylaws upon the directors. The fact that such power has been so conferred upon the directors shall not divest the stockholders of the power, nor limit their power to adopt, amend or repeal bylaws. Notwithstanding any other provision of these bylaws or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of the capital stock required by law or by these bylaws, the affirmative vote of two- thirds (2/3) of the then-outstanding shares of the corporation entitled to vote shall be required to alter, amend or repeal Article II, Section 2.11 or this Article IX hereof or any provision thereof, or to add or amend any other bylaw in order to change or nullify the effect of such provisions, unless such amendment shall be approved by a majority of the directors of the corporation not affiliated or associated with any person or entity holding (or which has announced an intent to obtain) 10% or more of the voting power of the corporation's outstanding capital stock. Whenever an amendment or new bylaw is adopted, it shall be copied in the book of bylaws with the original bylaws, in the appropriate place. If any bylaw is repealed, the fact of repeal with the date of the meeting at which the repeal was enacted or written consent was filed shall be stated in said book. ARTICLE X DISSOLUTION If it should be deemed advisable in the judgment of the board of directors of the corporation that the corporation should be dissolved, the board, after the adoption of a resolution to that effect by a majority of the whole board at any meeting called for that purpose, shall cause notice to be mailed to each stockholder entitled to vote thereon of the adoption of the resolution and of a meeting of stockholders to take action upon the resolution. At the meeting a vote shall be taken for and against the proposed dissolution. If a majority of the outstanding stock of the corporation entitled to vote thereon votes for the proposed dissolution, then a certificate stating that the dissolution has been authorized in accordance with the provisions of Section 275 of the General Corporation Law of Delaware and setting forth the names and residences of the directors and officers shall be executed, acknowledged, and filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such certificate's becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the corporation shall be dissolved. Whenever all the stockholders entitled to vote on a dissolution consent in writing, either in person or by duly authorized attorney, to a dissolution, no meeting of directors or stockholders shall be necessary. The consent shall be filed and shall become effective in accordance with Section 103 of the General Corporation Law of Delaware. Upon such consent becoming effective in accordance with Section 103 of the General Corporation Law of Delaware, the corporation shall be dissolved. If the consent is signed by an attorney, then the original power of attorney or s photocopy thereof shall be attached to and filed with the consent. The consent filed with the Secretary of State shall have attached to it the affidavit of the secretary or some other officer of the corporation stating that the consent has been signed by or on behalf of all the stockholders entitled to vote on a dissolution; in addition, there shall be attached to the consent a certification by the secretary or some other officer of the corporation setting forth the names and residences of the directors and officers of the corporation. ARTICLE XI CUSTODIAN 11.1 Appointment of a Custodian in Certain Cases. The Court of Chancery, upon application of any stockholder, may appoint one or more persons to be custodians and, if the corporation is insolvent, to be receivers, of and for the corporation when: (i) at any meeting held for the election of directors the stockholders are so divided that they have failed to elect successors to directors whose terms have expired or would have expired upon qualification of their successors; (ii) the business of the corporation is suffering or is threatened with irreparable injury because the directors are so divided respecting the management of the affairs of the corporation that the required vote for action by the board of directors cannot be obtained and the stockholders are unable to terminate this division; or (iii) the corporation has abandoned its business and has failed within a reasonable time to take steps to dissolve, liquidate or distribute its assets. 11.2 Duties of Custodian. The custodian shall have all the powers and title of a receiver appointed under Section 291 of the General Corporation Law of Delaware, but the authority of the custodian shall be to continue the business of the corporation and not to liquidate its affairs and distribute its assets, except when the Court of Chancery otherwise orders and except in cases arising under Sections 226(a)(3) or 352(a)(2) of the General Corporation Law of Delaware. EX-23.2 4 CONSENT OF INDEPENDENT ACCOUNTANTS Exhibit 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectus constituting part of this Registration Statement on Form S-4 of Centura Software Corporation of our report dated February 16, 1999 appearing on page 37 of Centura Software Corporation's Annual Report on Form 10-K for the year ended December 31, 1998. We also consent to the reference to us under the heading "Experts" in such Prospectus. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP San Jose, California April 29, 1999 EX-23.3 5 CONSENT OF INDEPENDENT ACCOUNTANTS Exhibit 23.3 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the use in the Prospectus constituting part of this Registration Statement on Form S-4 of Centura Software Corporation of our report dated April 7, 1999, except for Note 10, which is dated as of April 22, 1999, relating to the financial statements of Raima Corporation, which appears in such Prospectus. We also consent to the reference to us under the heading "Experts" in such Prospectus. /s/ PricewaterhouseCoopers LLP PricewaterhouseCoopers LLP San Jose, California April 29, 1999 -----END PRIVACY-ENHANCED MESSAGE-----