-----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, ErG2+flJRgGbfbBQuaOBxswiWfM82dc5M6THR/yO7qR9Eg6P3FqfVzxteUr7fy4G Y2ljsRcYb+s6Ai5hszkfAg== 0000950008-98-000114.txt : 19980310 0000950008-98-000114.hdr.sgml : 19980310 ACCESSION NUMBER: 0000950008-98-000114 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19980309 SROS: NASD SUBJECT COMPANY: 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: SC 13D SEC ACT: SEC FILE NUMBER: 005-43263 FILM NUMBER: 98560598 BUSINESS ADDRESS: STREET 1: 975 ISLAND DR CITY: REDWOOD SHORES STATE: CA ZIP: 94025 BUSINESS PHONE: 6505963400 MAIL ADDRESS: STREET 1: 1060 MARSH ROAD CITY: MENLO PARK STATE: CA ZIP: 94025 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NEWPORT ACQUISITION CO NO 2 LLC CENTRAL INDEX KEY: 0001057251 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: C/O CROSSROADS CAPITAL PARTNERS LLC STREET 2: 1600 DOVE ST STE 300 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 BUSINESS PHONE: 6502334665 MAIL ADDRESS: STREET 1: CROSSROADS CAPITAL PARTNERS LLC STREET 2: 1600 DOVE ST STE 300 CITY: NEWPORT BEACH STATE: CA ZIP: 92660 SC 13D 1 SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. )* CENTURA SOFTWARE CORPORATION (Name of Issuer) COMMON STOCK (Title of Class of Securities) 15640W 10 3 (CUSIP Number) Dennis I. Simon Newport Acquisition Company No. 2 LLC c/o Crossroads Capital Partners, LLC 1600 Dove Street, Suite 300 Newport Beach, CA 92660 (714) 261-1600 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) WITH A COPY TO: L. William Caraccio Pillsbury Madison & Sutro LLP 2550 Hanover Street Palo Alto, CA 94304-1115 (650) 233-4500 FEBRUARY 27, 1998 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|. Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Page 1 of 11 Pages - -------------------------------------------------------------------------------------------------------------------------------
CUSIP No. 15640W 10 3 - ------------------------------------------------------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS, I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Newport Acquisition Company No. 2 LLC 52-2085075 - ------------------------------------------------------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) 2 (a) |_| (b) |_| - ------------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) WC - ------------------------------------------------------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_| - ------------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware, U.S.A. - ------------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER 11,415,094 NUMBER OF -------------------------------------------------------------------------------------- SHARES 8 SHARED VOTING POWER Not Applicable BENEFICIALLY OWNED BY EACH -------------------------------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER 11,415,094 PERSON WITH -------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER Not Applicable - ------------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11,415,094 - ------------------------------------------------------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) |_| - ------------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 38.7% - ------------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) OO - -------------------------------------------------------------------------------------------------------------------------------
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CUSIP No. 15640W 10 3 - ------------------------------------------------------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS, I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Crossroads Capital Partners, LLC 33-0749571 - ------------------------------------------------------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) 2 (a) |_| (b) |_| - ------------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) WC - ------------------------------------------------------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_| - ------------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION California, U.S.A. - ------------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER Not Applicable NUMBER OF -------------------------------------------------------------------------------------- SHARES 8 SHARED VOTING POWER 11,415,094 BENEFICIALLY OWNED BY EACH -------------------------------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER Not Applicable PERSON WITH -------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 11,415,094 - ------------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11,415,094 - ------------------------------------------------------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) |_| - ------------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 38.7% - ------------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) OO - -------------------------------------------------------------------------------------------------------------------------------
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CUSIP No. 15640W 10 3 - ------------------------------------------------------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS, I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Rubin Pachulski Dew Properties, LLC 95-4649433 - ------------------------------------------------------------------------------------------------------------------------------- CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS) 2 (a) |_| (b) |_| - ------------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS (SEE INSTRUCTIONS) WC - ------------------------------------------------------------------------------------------------------------------------------- 5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_| - ------------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION California, U.S.A. - ------------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER Not Applicable NUMBER OF -------------------------------------------------------------------------------------- SHARES 8 SHARED VOTING POWER Not Applicable BENEFICIALLY OWNED BY EACH -------------------------------------------------------------------------------------- REPORTING 9 SOLE DISPOSITIVE POWER Not Applicable PERSON WITH -------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,073,742 - ------------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,073,742 - ------------------------------------------------------------------------------------------------------------------------------- 12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS) |_| - ------------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.0% - ------------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON (SEE INSTRUCTIONS) OO - -------------------------------------------------------------------------------------------------------------------------------
Page 4 of 11 Pages ITEM 1. SECURITY AND ISSUER. The class of equity securities to which this statement relates is the common stock, par value $0.01 per share (the "Common Stock"), of Centura Software Corporation, a California corporation (the "Issuer"). The Issuer's principal executive offices are located at 975 Island Drive, Redwood Shores, California 94065. ITEM 2. IDENTITY AND BACKGROUND. (a)-(c) This statement is filed by the following parties: (i) Newport Acquisition Company No. 2 LLC, a Delaware limited liability company ("Newport"). The principal business of Newport is to serve as an investment holding company. Newport's address is c/o Crossroads Capital Partners, LLC, 1600 Dove Street, Suite 300, Newport Beach, CA 92660. (ii) Crossroads Capital Partners, LLC, a California limited liability company and the sole Managing Member of Newport ("Crossroads"). The principal business of Crossroads is to provide merchant banking services for undervalued companies. Crossroads' address is 1600 Dove Street, Suite 300, Newport Beach, California 92660. The Managing Member of Crossroads is Dennis I. Simon, an individual whose business address is 1600 Dove Street, Suite 300, Newport Beach, California 92660. The principal occupation of Mr. Simon is to serve as the Managing Member of Crossroads. (iii) Rubin Pachulski Dew Properties, LLC, a California limited liability company and a non-managing Member of Newport ("RPD"). The principal business of RPD is real estate investments. RPD's address is 10351 Santa Monica Boulevard, Suite 410, Los Angeles, California 90025. The Managing Members of RPD are Stewart Rubin, Richard Pachulski and Scott Dew. The business address of Messrs. Rubin, Pachulski and Dew is 10351 Santa Monica Boulevard, Suite 410, Los Angeles, California 90025. The principal occupation of Mr. Rubin is real estate investor. The principal occupation of Mr. Pachulski is attorney-at-law. The principal occupation of Mr. Dew is real estate investor. (d) During the last five years, neither Newport, Crossroads or RPD, nor, to such parties' knowledge, any of the other persons with respect to whom information is given in response to this Item 2, has been convicted in a criminal proceeding. (e) During the last five years, neither Newport, Crossroads or RPD, nor, to such parties' knowledge, any of the other persons with respect to whom information is given in response to this Item 2, has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction resulting in a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violations with respect to such laws. (f) To the knowledge of Newport, Crossroads and RPD, all of the persons with respect to whom information is given in response to this Item 2 are citizens of the United States. Page 5 of 11 Pages ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. Pursuant to that certain Note Conversion Agreement dated as of February 27, 1998 by and between Centura Software Corporation, a California corporation (the "Issuer"), and Newport (the "Conversion Agreement"), Newport converted the aggregate amount of principal and accrued interest under that certain Floating Rate Convertible Subordinated Note Due 1998 (the "Note") into an aggregate of 11,415,094 shares of Common Stock of the Issuer (the "Common Stock"). As of February 27, 1998, the aggregate amount of principal and accrued interest under the Note was $12,251.771.19. Newport acquired the Note at a discount from Computer Associates International, Inc., a Delaware corporation ("Computer Associates"), pursuant to that certain Note Purchase and Sale Agreement dated as of February 27, 1998 by and among the Issuer, Newport and Computer Associates. The consideration paid by Newport to Computer Associates to acquire the Note was originally obtained by Newport in the form of capital contributions from each member of Newport at the time the limited liability company was formed. The foregoing summary of the Conversion Agreement is qualified in its entirety by reference to the form of Conversion Agreement included as Exhibit 99.1 to this Schedule 13D and incorporated herein in its entirety by reference. ITEM 4. PURPOSE OF TRANSACTION. As disclosed in Item 3 above, on February 27, 1998 (the "Closing Date"), Newport purchased the Note and converted it into 11,415,094 shares of Common Stock of Issuer, pursuant to the terms and conditions of the Conversion Agreement. The Common Stock was acquired by Newport solely for investment purposes. In connection with the closing of the Conversion Agreement, the Issuer and Newport entered into an Investor Rights Agreement dated as of February 27, 1998, pursuant to which the Issuer has agreed to file, not later than December 30, 1998, with the Securities and Exchange Commission a registration statement on Form S-3 covering the resale of the Common Stock. In addition, the Issuer agreed that, on or after June 1, 1998, the Issuer will use its best efforts to include in any registration statement it files in connection with proposed public offerings of its equity securities all shares of Common Stock requested to be so included by the holders thereof. Pursuant to the Investor Rights Agreement, Newport and its members were granted a right of first refusal to purchase a pro rata share of any New Securities (as defined in the Investor Rights Agreement) which the Issuer may, from time to time, propose to sell and issue. The foregoing description of the Investor Rights Agreement is qualified in its entirety by reference to the form of Investor Rights Agreement included as Exhibit 99.2 to the Schedule 13D and incorporated herein in its entirety by reference. Pursuant to the Conversion Agreement, effective upon the Closing Date, the Issuer adopted an amendment to its Bylaws setting the number of directors on its Board of Directors at seven (7) and appointed two (2) new directors to its Board of Directors, each of whom were nominated by Newport. Provided that Newport and/or its members and successors thereto continue to hold greater than 25% of the issued and outstanding stock of Issuer, the Issuer shall recommend in all proxy materials relating to its annual meetings of shareholders that the shareholders at each such meeting Page 6 of 11 Pages elect two individuals to the Board of Directors who are nominated by Newport (or the holders of a majority of the Common Stock if Newport has been dissolved) and the Issuer shall at each such meeting cause its designated proxyholder to vote all proxies received from shareholders in favor of such nominees, provided that such nominees are reasonably acceptable to the Issuer. Provided that Newport and/or its members or successors thereto continue to hold greater than 15% but less than or equal to 25% of the issued and outstanding stock of the Issuer, the Issuer shall recommend in such proxy materials that its shareholders at each such meeting elect one (1) individual to its Board of Directors who is nominated by Newport (or the holders of a majority of the Common Stock if Newport has been dissolved) and the Issuer shall at each such meeting cause its designated proxyholder to vote all proxies received from shareholders in favor of such nominee, provided that such nominee is reasonably acceptable to the Issuer. In the event the Issuer increases its board size above seven (7) directors prior to the next annual meeting of shareholders, the Issuer shall not be required to nominate or recommend election of additional Newport candidates to the Board of Directors other than as set forth above, provided that the number of directors who are officers, employees or paid full-time consultants of the Issuer is not greater than two (2). In addition, the Issuer has agreed that the Compensation Committee of the Board of Directors shall be comprised of three (3) directors and shall include one (1) director who is nominated to the Board by Newport. Pursuant to the Conversion Agreement, effective upon the Closing Date, the Issuer adopted an amendment to its Bylaws providing that a two-thirds supermajority vote of directors be required to approve any of the following actions: (i) consolidation or merger of the Issuer with or into any other corporation in which securities possessing more than 50% of the total combined voting power of the Issuer'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 Issuer or one of its wholly-owned subsidiaries) or transfer or sale of all or substantially all of the assets of the Issuer; and (ii) an increase in the Issuer's secured indebtedness to an aggregate amount in excess of $15 million. The Issuer agreed to not amend the foregoing supermajority Bylaws amendment without Newport's consent so long as Newport and/or its members or successors thereto continue to hold at least 7.5% of the issued and outstanding capital stock of the Issuer. Pursuant to the Conversion Agreement, effective upon the Closing Date, the Issuer amended that certain Preferred Shares Rights Agreement dated August 3, 1994 between the Issuer and Chemical Trust Company of California (the "Rights Plan"), to provide that (i) the sale of the Common Stock to Newport under the Conversion Agreement is not deemed to be a Triggering Event (as defined in the Rights Plan), (ii) neither Newport nor any of its members, affiliates, associates, representatives or control persons shall be deemed an "Acquiring Person" under the Rights Plan and (iii) Newport's nominees to the Board of Directors shall be deemed "continuing directors" under the Rights Plan. Pursuant to the Conversion Agreement, on the Closing Date, the Issuer consummated a private placement of approximately 2,300,000 shares of its common stock at a purchase price of $1.06 per share, and issued to the purchasers thereof warrants to acquire approximately 583,000 shares of common stock at an exercise price of $1.25 per share. None of the reporting persons under this Schedule 13D acquired shares of the Issuer in such private placement. Pursuant to the Conversion Agreement, Newport agreed that, in the event that a shareholder vote is solicited by the Issuer to amend and restate its Articles of Incorporation, Newport will vote in favor of proposed amendments to effect any of the following measures: (i) a reverse stock split of Page 7 of 11 Pages the Issuer's capital stock in a ratio reasonably recommended by the Issuer's executive management, (ii) reincorporation of the Issuer into Delaware, and (iii) an increase in the total number of authorized shares of the Issuer's Common Stock (subject to certain conditions). Also pursuant to the Conversion Agreement, Newport agreed that during the period commencing two weeks prior to the Closing Date and continuing through the date on which Newport holds 5% or less of the common stock acquired thereunder, Newport will not directly or indirectly engage in short sales, derivative transactions or any similar hedging techniques of strategies involving any Common Stock of Issuer. The foregoing summary of the Conversion Agreement is qualified in its entirety by reference to the form of Conversion Agreement included as Exhibit 99.1 to this Schedule 13D and incorporated herein in its entirety by reference. Except as disclosed above, Newport has no present plans or proposals with respect to the Issuer that relate to or could result in the occurrence of any of the following events: (a) The acquisition by any person of additional securities of the Issuer, or the disposition of securities of the Issuer; (b) An extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (c) A sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (d) Any change in the present board of directors or management of the Issuer, including any plans or proposals to change the number of term of directors or to fill any existing vacancies on the board; (e) Any material change in the present capitalization or dividend policy of the Issuer; (f) Any other material change in the Issuer's business or corporate structure; (g) Changes in the Issuer's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Issuer by any person; (h) Causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (i) A class of equity securities of the Issuer becoming eligible for termination of registration pursuant to section 12(g)(4) of the Exchange Act; or (j) Any action similar to any of those enumerated above. Notwithstanding the foregoing, Newport reserves the right to develop such plans or proposals and may hereafter develop such plans or proposals with respect to the Issuer. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a)-(b) As a result of Newport's conversion of the Note, Newport beneficially owns 11,415,094 shares of Common Stock on the date hereof, or approximately 38.7% of the 29,526,171 shares of Issuer's common stock that would be issued and outstanding as of February 27, 1998. Newport may be deemed to have the sole power to vote (and to direct the vote of) and to dispose of (and direct the disposition of) the 11,415,094 shares of Common Stock owned of record by it. As a result of Crossroads' ownership of a 15% equity interest in Newport, Crossroads may be deemed to have indirect beneficial ownership of 1,712,263 shares of Common Stock on the date Page 8 of 11 Pages hereof, or approximately 5.8% of the shares of Issuer's common stock that would be issued and outstanding as of February 27, 1998. In addition, as a result of Crossroads' role as the Managing Member of Newport, pursuant to which Crossroads has the authority to vote (and to direct the vote of) and to dispose of (and direct the disposition of) the 11,415,094 shares of Common Stock owned of record by Newport, Crossroads may be deemed to have indirect beneficial ownership of the 11,415,094 shares of Common Stock owned of record by Newport. As a result of RPD's ownership of an 18.2% equity interest in Newport, RPD may be deemed to have indirect beneficial ownership of 2,073,742 shares of Common Stock of the Issuer, or approximately 7.0% of the shares of Issuer's common stock that would be issued and outstanding as of February 27, 1998. To the knowledge of Newport, Crossroads and RPD, no shares of Common Stock are beneficially owned by any other persons, except for such indirect beneficial ownership by Newport's members arising solely from the purchase of the Common Stock by Newport. (c) Except as disclosed herein, neither Newport, Crossroads nor RPD, nor, to the knowledge of Newport, Crossroads and RPD, any person with respect to whom information is given in the Schedule 13D, has effected any transaction in the Common Stock during the past sixty (60) days. (d) Except for Newport and its members (including without limitation Crossroads and RFD), no other person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Common Stock. Newport anticipates that, following the Closing Date under the Conversion Agreement, Sterling Centura Software LLC, a nonmanaging member of Newport which owns a 30.0% equity interest in Newport, will withdraw from Newport and receive in redemption of its membership interest 3,424,528 shares of the Common Stock, constituting approximately 11.6% of the shares of Issuer's common stock that would be issued and outstanding as of February 27, 1998. At such time as the sale of the Common Stock has been registered under and in accordance with the Investor Rights Agreement, any other member of Newport (including without limitation Crossroads and RPD) may redeem all or any portion of such member's interest in Newport in return for a distribution to such member of the percentage of the shares of Common Stock of the Issuer allocated to such member. In no event will Crossroads be allowed to redeem more than 80% of its membership interest in Newport. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Except as described in Item 4 and Item 5, Newport, Crossroads and RPD have no contract, arrangement, understanding or relationship (legal or otherwise) with any person with respect to any security of the Issuer, including, but not limited to, transfer or voting of any securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. Page 9 of 11 Pages ITEM 7. MATERIALS TO BE FILED AS EXHIBITS. EXHIBIT NO. 99.1 Note Conversion Agreement dated February 27, 1998 between Issuer and Newport (excluding exhibits thereto). 99.2 Investor Rights Agreement dated February 27, 1998 between Issuer and Newport (excluding exhibits thereto). 99.3 Agreement to Jointly File Schedule 13D dated March 6, 1998 among Newport, Crossroads and RPD. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, each of the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: March 6, 1998. NEWPORT ACQUISITION COMPANY NO. 2 LLC By: Crossroads Capital Partners, LLC, as Managing Member By /S/ DENNIS SIMON ------------------------------------------------ Dennis I. Simon Managing Member (Principal Executive Officer) CROSSROADS CAPITAL PARTNERS, LLC By /S/ DENNIS SIMON ------------------------------------------------ Dennis I. Simon Managing Member /S/ DENNIS SIMON --------------------------------------------------- Dennis I. Simon Page 10 of 11 Pages RUBIN PACHULSKI DEW PROPERTIES, LLC By /S/ SCOTT DEW --------------------------------------------------- Scott Dew Managing Member /S/ STEWART RUBIN --------------------------------------------------- Stewart Rubin /S/ RICHARD PACHULSKI --------------------------------------------------- Richard Pachulski /S/ SCOTT DEW --------------------------------------------------- Scott Dew Page 11 of 11 Pages EX-99.1 2 NOTE CONVERSION AGREEMENT EXHIBIT 99.1 ------------ CENTURA SOFTWARE CORPORATION NOTE CONVERSION AGREEMENT FEBRUARY 27, 1998 TABLE OF CONTENTS Page 1. Conversion of Principal and Interest Indebtedness..........................1 1.1 Issuance of Common Stock..............................................1 1.2 Delivery into Escrow..................................................2 1.3 Purchase and Sale Irrevocable.........................................2 1.4 Closing; Delivery.....................................................2 2. Representations and Warranties of the Company..............................3 2.1 Organization, Good Standing and Qualification.........................3 2.2 Capital Stock.........................................................3 2.3 Authorization.........................................................4 2.4 Intentionally Omitted.................................................4 2.5 Compliance with Other Instruments.....................................4 2.6 SEC Reports...........................................................5 2.7 Compliance with SmallCap Continued Listing Requirements...............5 2.8 Absence of Certain Changes............................................5 2.9 Absence of Litigation.................................................6 2.10 No Undisclosed Events, Liabilities, Developments or Circumstances........................................................6 2.11 No General Solicitation..............................................6 2.12 Employee Relations...................................................6 2.13 Intellectual Property Rights.........................................6 2.14 Title................................................................7 2.15 Insurance............................................................7 2.16 Regulatory Permits...................................................7 2.17 Internal Accounting Controls.........................................7 2.18 No Materially Adverse Contracts, Etc.................................7 2.19 Tax Status...........................................................8 2.20 Transactions With Affiliates.........................................8 2.21 Consent..............................................................8 3. Representations and Warranties of Purchaser................................8 3.1 Authorization.........................................................8 3.2 Purchase Entirely for Own Account.....................................9 3.3 Accredited Investor...................................................9 3.4 Restricted Securities.................................................9 3.5 Further Limitations on Disposition....................................9 3.6 Legends..............................................................10 3.7 Disclosure of Information............................................10 3.8 Membership of the Purchaser..........................................11 4. Registration of Securities................................................11 4.1 Rights Agreement.....................................................11 TABLE OF CONTENTS (continued) Page 4.2 Prohibition on Hedging...............................................11 5. Covenants of the Company..................................................11 5.1 Nomination of Directors..............................................11 5.2 Bylaws Amendments....................................................12 5.3 Amendment to Preferred Shares Rights Agreement.......................12 5.4 Form D and Blue Sky..................................................12 5.5 Reporting Status.....................................................13 5.6 Financial Information................................................13 5.7 Listing..............................................................13 5.8 Filing of Form 8-K...................................................13 5.9 Private Placement....................................................14 5.10 Coast Consent.......................................................14 6. Covenants of the Purchaser................................................14 7. Conditions of the Purchaser's Obligations at the Closing..................14 7.1 Representations and Warranties.......................................14 7.2 Performance..........................................................14 7.3 Compliance Certificate...............................................14 7.4 Qualifications.......................................................15 7.5 Opinion of Company Counsel...........................................15 7.6 NASD Confirmation....................................................15 7.7 Release..............................................................15 7.8 Schedule of Exceptions...............................................15 8. Conditions of the Company's Obligations at Closing........................15 8.1 Representations and Warranties.......................................15 8.2 Performance..........................................................15 8.3 Qualifications.......................................................15 8.4 Note and Other Evidence of Principal Indebtedness....................16 8.5 NASD Confirmation....................................................16 9. Miscellaneous.............................................................16 9.1 Survival of Warranties...............................................16 9.2 Transfer; Successors and Assigns.....................................16 9.3 Governing Law........................................................16 9.4 Counterparts.........................................................16 9.5 Titles and Subtitles.................................................16 9.6 Notices..............................................................16 8.7 Company Advisor / Payment of Fees....................................17 9.8 Fees and Expenses....................................................17 -ii- TABLE OF CONTENTS (continued) Page 9.9 Attorney's Fees......................................................17 9.10 Amendments and Waivers..............................................17 9.11 Severability........................................................18 9.12 Delays or Omissions.................................................18 9.13 Entire Agreement....................................................18 9.14 Corporate Securities Law............................................18 9.15 Confidentiality.....................................................18 -iii- CENTURA SOFTWARE CORPORATION NOTE CONVERSION AGREEMENT This Note Conversion Agreement (the "AGREEMENT") is made as of the 27th day of February 1998 by and between Centura Software Corporation, a California corporation (the "COMPANY"), and Newport Acquisition Company No. 2 LLC, a Delaware limited liability company (the "PURCHASER"). Recitals Whereas, the Company and Computer Associates International, Inc. a Delaware corporation (the "SELLER" or "CA"), entered into that certain Note Purchase Agreement dated March 31, 1995 (the "PRIOR AGREEMENT") and that certain Floating Rate Convertible Subordinated Note Due 1998 in the principal amount of $10,000,000 (the "PRINCIPAL INDEBTEDNESS") dated as of April 3, 1995 in the form attached hereto as EXHIBIT A (the "NOTE"); Whereas, the Company, the Purchaser and the Seller have entered into a Note Purchase and Sale Agreement (the "PURCHASE AGREEMENT") of even date herewith pursuant to which the Purchaser has agreed to purchase the Note and all accrued interest thereunder (the "INTEREST INDEBTEDNESS") and all of Seller's rights and obligations pursuant to the Prior Agreement; and the Seller has agreed to sell the Note and the Interest Indebtedness to the Purchaser and to assign to Purchaser all of its rights and obligations under the Note and the Prior Agreement in consideration for the Purchaser's payment to the Seller of $6 million and the Company has agreed, in consideration of CA's release of the Company with respect to the Note as set forth in a Warrant Purchase Agreement of even date herewith between Seller and the Company in the form attached hereto as EXHIBIT B ("WARRANT PURCHASE AGREEMENT"), to deliver and sell to the Seller concurrently at a price of $0.001 per share a warrant in the form attached hereto as EXHIBIT B (the "WARRANT") to purchase up to 500,000 shares of the Company's Common Stock at an exercise price of $1.906 per share; and Whereas, the Company and the Purchaser desire to convert the Principal Indebtedness and Interest Indebtedness under the Note to equity securities of the Company simultaneously with the Closing of the Purchase Agreement. Now, therefore, for good and valuable consideration, the parties hereby agree as follows: 1. Conversion of Principal and Interest Indebtedness. 1.1 Issuance of Common Stock. Subject to the terms and conditions of this Agreement, at the Closing, in consideration for the cancellation of all Principal Indebtedness and Interest Indebtedness under the Note and any other instrument evidencing such indebtedness, the Company shall issue and sell to the Purchaser and the Purchaser shall purchase a total of 11,415,094 shares of the Company's Common Stock. The shares of Common Stock issuable upon the conversion hereunder (the "CONVERSION STOCK") shall also be hereinafter referred to as the "STOCK" or the "SECURITIES." 1.2 Delivery into Escrow. On the basis of the representations, warranties, terms and conditions contained herein, on the date hereof each party shall deliver to the financial entity or other entity mutually agreed to by the Parties (the "ESCROW AGENT"), pursuant to an agreement in the form attached hereto as EXHIBIT C (the "ESCROW AGREEMENT"), the following: (a) Seller shall deliver the original signature Note; (b) Purchaser shall deliver $6 million in cash or by wire transfer; (c) The Company shall deliver an affidavit executed by an officer of the Company setting forth the Interest Indebtedness on the Note calculated through February 27, 1998 and certified as correct by an officer of the Seller (the "INTEREST AFFIDAVIT"); and (d) Seller, Purchaser and the Company shall deliver each of the other items required to be delivered by each of them pursuant to the terms of the Escrow Agreement. 1.3 Purchase and Sale Irrevocable. The Company and Purchaser each acknowledge and agree that by its delivery of the respective consideration set forth above in Section 1.1 to the Escrow Agent, it shall have made an irrevocable commitment to close the purchase, sale and assignment transactions contemplated hereunder subject to the fulfillment of the terms and conditions of this Agreement, the Purchase Agreement, and the Escrow Agreement. 1.4 Closing; Delivery. (a) The issuance and sale of the Conversion Stock hereunder shall take place at the offices of Venture Law Group, 2800 Sand Hill Road, Menlo Park, California, at 2:00 p.m., on February __, 1998, or at such other time and place as the Company and the Purchaser mutually agree upon, orally or in writing (which time and place are designated as the "CLOSING"), provided that such Closing occurs simultaneously with the closing of the Purchase Agreement pursuant to the terms and conditions thereof (without waiver of any term or condition thereof). (b) At the Closing, in consideration for the conversion of the Principal and Interest Indebtedness by the Purchaser, the Company shall instruct the Escrow Agent to deliver to the Purchaser a stock certificate representing the Conversion Stock being issued. (c) At the Closing, in consideration for the issuance of the Conversion Stock by the Company, the Purchaser shall instruct the Escrow Agent to deliver to the Company for cancellation the Note and the Interest Affidavit as defined in Section 1.2.(a) of the Purchase Agreement, setting forth the Interest Indebtedness under the Note. 2. Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchaser that, except as set forth on a Schedule of Exceptions attached hereto as EXHIBIT D, which exceptions shall be deemed to be representations and warranties as if made hereunder: -2- 2.1 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California and has all requisite corporate power and authority to carry on its business. 2.2 Capital Stock. The authorized capital of the Company consists, or will consist, immediately prior to the Closing, of 60,000,000 shares of Common Stock, $0.01 par value per share, of which 15,780,886 shares were issued and outstanding as of February 9, 1998, and 2,000,000 shares of Preferred Stock, $0.01 par value per share, none of which are issued or outstanding. All such shares have been duly authorized, and all such issued and outstanding shares have been validly issued, are fully paid and nonassessable, are not subject to any preemptive rights or rights of first refusal (other than rights of first refusal held by the Company and specifically described in the Schedule of Exceptions) under applicable law, the Articles of Incorporation or Bylaws of the Company, or any agreement to which the Company is a party or by which it is bound and are free of any liens or encumbrances other than any liens or encumbrances created by or imposed upon the holders thereof. The Company has also reserved (i) an aggregate of 2,000,000 shares of Common Stock issuable to employees and consultants pursuant to the Company's 1995 Stock Option Plan, of which 1,164,947 shares are issuable upon exercise of outstanding options under such plan, (ii) an aggregate of 2,657,399 shares of Common Stock issuable to employees and consultants pursuant to the Company's 1986 Stock Option Plan, of which 2,657,399 shares are issuable upon exercise of outstanding options under such plan, (iii) an aggregate of 400,000 shares of Common Stock issuable to employees pursuant to the Company's 1992 Employee Stock Purchase Plan, of which no shares are available for future issuance under such plan, (iv) 500,000 shares of Common Stock issuable to non-employee directors pursuant to Company's 1996 Directors' Stock Option Plan, of which 300,000 shares are issuable upon exercise of outstanding options under such plan, (v) non-plan options issued to the Company's Chief Executive Officer, Chief Financial Officer and Vice President of Marketing to purchase up to an aggregate of 1,500,000 shares of Common Stock, (vi) up to 450,000 shares of Common Stock issuable upon exercise of warrants granted or to be granted to certain third parties, including vendors, suppliers and financial and investment advisors of the Company, prior to inclusion of the Warrant for 500,000 shares of Common Stock to be issued to the Seller. The shares of Conversion Stock have been duly authorized and, when issued and paid for in accordance with this Agreement, will be validly issued, fully paid, and nonassessable, and not subject to any preemptive rights or rights of first refusal under applicable law, the Articles of Incorporation or Bylaws of the Company, or any agreement to which the Company is a party or by which the Company is bound, and are free of any taxes, claims, liens, charges or encumbrances other than taxes, claims, liens, charges or encumbrances created by or imposed upon the holders thereof; provided, however, that the Conversion Stock may be subject to restrictions on transfer as set forth in this Agreement. There are no agreements or arrangements under which the Company is obligated to register the sale of any of its securities under the Securities Act of 1933, as amended (the "1933 ACT"). There are no outstanding securities of the Company which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company is or may become bound to redeem a security of the Company. There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Conversion Stock. There are no outstanding securities or instruments of the Company which contain any -3- redemption or similar provisions, and there are on contracts, commitments, understandings or arrangements by which the Company is or may become bound to redeem a security of the Company. The Company does not have any stock appreciation rights or "phantom stock" plans or agreements or any similar plan or agreement. Other than as set forth in the Reports, the Company has no subsidiaries or equity interest in any other entity. The Company has furnished to the Purchaser true and correct copies of the Company's Articles of Incorporation, as amended and as in effect on the date hereof (the "ARTICLES OF INCORPORATION"), and the Company's Bylaws, as amended and as in effect on the date hereof (the "Bylaws"), and the terms of all securities convertible into or exercisable for Common Stock and the material rights of the holders thereof in respect thereto. The execution, delivery and performance by the Company of the Transaction Agreements will not cause the conversion rights or exercise rights of any securities convertible into or exercisable for Common Stock to be accelerated. 2.3 Authorization. The execution, delivery and performance by the Company of this Agreement and the Investor Rights Agreement attached hereto as EXHIBIT E (the "RIGHTS AGREEMENT" and together with the Agreement and the Purchase Agreement, the "TRANSACTION AGREEMENTS") are within the Company's corporate power and have been duly authorized by all requisite action by the Company. The Transaction Agreements have been duly executed and delivered by the Company and this Agreement constitutes, and the Rights Agreement when executed and delivered in accordance with this Agreement will constitute, the valid and binding obligation of the Company, enforceable in accordance with their respective terms, except as such enforceability may be limited by principles of public policy and subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies. 2.4 Intentionally Omitted. 2.5 Compliance with Other Instruments. The execution, delivery and performance of the Transaction Agreements and the consummation of the transactions contemplated thereby will not result in any violation or default of any provisions of the Articles of Incorporation or Bylaws of the Company or of any instrument, judgment, order, writ, decree or contract to which the Company is a party or by which the Company is bound or, to the Company's knowledge, of any provision of federal or state statute, rule or regulation applicable to the Company, or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision, instrument, judgment, order, writ, decree or contract or an event which results in the creation of any lien, charge or encumbrance upon any assets of the Company. 2.6 SEC Reports. The Company has filed with the Securities and Exchange Commission (the "COMMISSION") via Edgar its Annual Report on Form 10-K for the year ended December 31, 1996 and its Quarterly Reports on Form 10-Q for the first three quarters of the year ended December 31, 1997 (the "REPORTS"), and such Reports are available to Purchaser through Edgar in electronic format. As of their respective filing dates, the Reports complied in all material respects with the requirements of the Securities Exchange Act of 1934, as amended, and none of the Reports contained any untrue statement of a material fact or omitted to state a -4- material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances in which they were made, not misleading, except to the extent corrected by a document subsequently filed with the Commission and provided to Purchaser prior to the date hereof. No other information provided by or on behalf of the Company to the Purchaser which is not included in the Reports, including, but not limited to, information referred to in Section 2.2 of this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in light of the circumstance under which they are or were made, not misleading. Neither the Company nor any of its officers, directors, employees or agents have provided the Purchaser with any material, nonpublic information. 2.7 COMPLIANCE WITH SMALLCAP CONTINUED LISTING REQUIREMENTS. After giving effect to the transactions contemplated hereunder and a private placement of the Company's equity securities scheduled to close concurrently with the Closing, on the Closing Date the Company will have (a) net tangible assets in excess of $2,000,000, (b) a public float of in excess of 500,000 shares, (c) a market value for the public float in excess of $1,000,000, (d) in excess of 300 shareholders, (e) at least two market makers for its registered securities and (f) corporate governance standards duly adopted by its Board of Directors which the Company reasonably believes satisfy published requirements for The Nasdaq SmallCap Market. After giving effect to the transactions contemplated hereunder and the private placement referenced above, the Company reasonably believes that (A) on the Closing Date the Company will be in compliance with all other requirements, other than the $1.00 per share bid price maintenance requirement, imposed by Nasdaq upon the Company with respect to the continued listing of the Common Stock for quotation on The Nasdaq SmallCap Market, and (B) the Common Stock of the Company will continue to be listed for quotation on The Nasdaq SmallCap Market. 2.8 Absence of Certain Changes. Since September 30, 1997, there has been no material adverse change and no material adverse development in the business, properties, operations, financial condition, results of operations or prospects of the Company. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings. Since September 30, 1997 the Company has not declared or paid any dividends, sold any assets outside of the ordinary course of business or had material capital expenditures. 2.9 ABSENCE OF LITIGATION. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against or affecting the Company, its Common Stock or any of the Company's officers or directors in their capacities as such or that questions the validity of the Transaction Agreements or the right of the Company to enter into them, or to consummate the transactions contemplated thereby. 2.10 NO UNDISCLOSED EVENTS, LIABILITIES, DEVELOPMENTS OR CIRCUMSTANCES. No event, liability, development or circumstance has occurred or exists, or to the Company's knowledge is contemplated to occur, with respect to the Company or its business, properties, -5- prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a registration statement filed with the SEC relating to an issuance and sale by the Company of its Common Stock and which has not been publicly announced. 2.11 No General Solicitation. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the 1933 Act) in connection with the offer or sale of the Conversion Stock. 2.12 Employee Relations. The Company is not involved in any union labor dispute nor, to the knowledge of the Company, is any such dispute threatened. None of the Company's employees is a member of a union, the Company is not a party to a collective bargaining agreement, and the Company believes that its relations with is employees are good. No executive officer (as defined in Rule 501(f) of the 1933 Act) has notified the Company that such officer intends to leave the Company or otherwise terminate such officer's employment with the Company. 2.13 Intellectual Property Rights. The Company owns or possesses adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct its business as now conducted. None of the Company's trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets or other intellectual property rights have expired or terminated. The Company does not have any knowledge of any infringement by the Company of trademarks, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secret or other similar rights of others, or of any such development of similar or identical trade secrets or technical information by others, other than technology underlying competitive products in the market, and there is no claim, action or proceeding being made or brought against, or to the Company's knowledge, being threatened against the Company regarding trademarks, trade names, patents, patent rights, invention, copyright, license, service names, service marks, service mark registrations, trade secrets or other infringements; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company has taken reasonable security measures to protect the secrecy, confidentiality and value of all of its intellectual properties. 2.14 Title. The Company has good and marketable title to all real property and good and marketable title to all personal property owned by it which is material to the business of the Company free and clear of all liens, claims, charges, encumbrances and defects such as do not materially affect the value of such property and do not interfere with the use made and proposed to made of such property by the Company. Any real property and facilities held under lease by the Company is held by it under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings by the Company. -6- 2.15 Insurance. The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company is engaged. The Company has not been refused any insurance coverage sought or applied for and the Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not materially and adversely affect the condition, financial or otherwise, or the earnings, business or operations of the Company. 2.16 Regulatory Permits. The Company possesses, to its knowledge, all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct its business, and the Company has not received any notice of proceedings relating to the revocation or modification of any such certificate, authorization or permit. 2.17 Internal Accounting Controls. The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 2.18 No Materially Adverse Contracts, Etc. The Company is not subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the reasonable business judgment of the Company's officers, who were appointed as officers of the Company on December 5, 1997, has or could reasonably be expected in the future to have a material adverse effect on the Company. The Company is not a party to any contract, agreement or arrangement which in the reasonable business judgment of the Company's officers, who were appointed as officers of the Company on December 5, 1997, has or could reasonably be expected to have a material adverse effect on the Company. 2.19 Tax Status. The Company has made or filed all tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. 2.20 TRANSACTIONS WITH AFFILIATES. None of the officers, directors, or employees of the Company is presently a party to any transaction with the Company (other than -7- for services as employees, officers and directors), including any contract, agreement or arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. 2.21 Consent. Coast Business Credit is the sole holder of Senior Indebtedness under the Note. The Company has obtained the oral consent of such holders of Senior Indebtedness under the Note to the transactions contemplated hereunder and under the Transaction Agreements and will use best efforts to obtain the written consent of such holder prior to the Closing. 2.22 ENVIRONMENT LAWS.To its knowledge, the Company (i) is in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) has received all permits, licenses and other approvals required of it under applicable Environmental Laws to conduct its respective businesses and (iii) is in compliance with all terms and conditions of any such permit, license or approval where, in each of the three foregoing cases, the failure to so comply would have individually or in the aggregate, a material adverse effect on the Company. 3. Representations and Warranties of Purchaser. The Purchaser hereby represents and warrants to the Company that: 3.1 Authorization. The execution, delivery and performance by the Purchaser of the Transaction Agreements are within the Purchaser's limited liability company power and have been duly authorized by all requisite action by the Purchaser. The Transaction Agreements have been duly executed and delivered by the Purchaser and this Agreement constitutes, and the Rights Agreement when executed and delivered in accordance with this Agreement will constitute, the valid and binding obligation of the Purchaser, enforceable in accordance with their respective terms, except as such enforceability may be limited by principles of public policy and subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies. 3.2 Purchase Entirely for Own Account. The Purchaser is acquiring the shares of Conversion Stock hereunder for investment for the Purchaser's own account, and not as a nominee or agent, and not with a view to the resale or distribution of any part thereof. Purchaser has no present intention of selling, granting any participation in, or otherwise distributing the Securities other than to members of the Purchaser as of the date hereof. 3.3 Accredited Investor. The Purchaser is an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the 1933 Act. -8- 3.4 Restricted Securities. Purchaser understands that the Securities are characterized as "restricted securities" under the federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such Securities may be resold without registration under the 1933 Act, only in certain limited circumstances. In this connection, Purchaser represents that it is familiar with SEC Rule 144, as presently in effect, and understands the resale limitations imposed thereby and by the Act. 3.5 Further Limitations on Disposition. Notwithstanding anything to the contrary contained in Section 3.5 of the Purchase Agreement, without in any way limiting the representations set forth in this Agreement, Purchaser further agrees not to make any disposition of all or any portion of the Securities unless and until: (a) There is then in effect a Registration Statement under the 1933 Act covering such proposed disposition and such disposition is made in accordance with such Registration Statement; or (b) (i) Purchaser shall have notified the Company of the proposed disposition and shall have furnished the Company with such information as is necessary to effect the proposed disposition, (ii) the transferee has agreed in writing for the benefit of the Company to be bound by this Section 3, and (iii) if reasonably requested by the Company, Purchaser shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, that such disposition will not require registration under the 1933 Act. 3.6 Legends. Purchaser understands that the Securities, and any securities issued in respect thereof or exchange therefor, may bear one or all of the following legends, if applicable: (a) "THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT." (b) Any legend required by the laws of the State of California, including any legend required by the California Department of Corporations. (c) Any legend required by the Blue Sky laws of any other state to the extent such laws are applicable to the shares represented by the certificate so legended. (d) Any legend required by the Company's Shareholder Rights Plan. The legends set forth in subparagraphs (a), (b) and (c) above shall be removed upon application to the Company after the one year anniversary date of this Agreement and the Company shall -9- promptly issue a certificate without such legends to the holder of Securities upon which it is stamped and shall remove all stop transfer orders and other transfer restrictions communicated to the Company's transfer agent, if (i) such Securities are registered for sale under the 1933 Act, (ii) in connection with a sale transaction, such holder provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that a public sale, assignment or transfer of the Securities may be made without registration under the 1933 Act or (iii) such holder provides the Company with reasonable assurances that the Securities can be sold pursuant to Rule 144 and the Company's counsel has reasonably determined that the legends set forth in subparagraphs (a), (b) and (c) above may be removed under Rule 144; provided however, that in the event Purchaser is granted piggy-back registration rights in connection with an equity offering by the Company prior to the one year anniversary date of this Agreement, the legends set forth in subparagraphs (a), (b) and (c) above shall be removed upon application to the Company and the Company shall issue a certificate without such legends to the holder of Securities upon which it is stamped. 3.7 Disclosure of Information. Purchaser has had an opportunity to discuss the Company's business, management, financial affairs and the terms and conditions of the offering of the Securities with the Company's management and has had an opportunity to review the Company's Reports. Purchaser understands that such discussions, as well as the written information issued by the Company, were intended to describe the aspects of the Company's business which it believes to be material. 3.8 Membership of the Purchaser. EXHIBIT F attached hereto contains a true and complete list of all of the members of the Purchaser. 4. Registration of Securities. 4.1 Rights Agreement. The Company and the Purchaser will enter into an Investor Rights Agreement in the form attached hereto as EXHIBIT E, setting forth the obligations and the rights of the parties, respectively, with respect to registration of the Securities. 4.2 Prohibition on Hedging. During the period commencing with the date that is two (2) weeks prior to the Closing and continuing through the date on which the Purchaser holds 5% or less of the Conversion Stock acquired hereunder, the Purchaser hereby agrees that it shall not directly or indirectly engage in short sales, derivative transactions or any similar hedging techniques or strategies involving any Common Stock of the Company. 5. Covenants of the Company. The Company agrees that: 5.1 Nomination of Directors. On or before the Closing date, effective upon the consummation of the transaction contemplated hereunder, the Company shall have (i) adopted an amendment to its Bylaws setting the number of directors on its Board of Directors at seven (7) and (ii) appointed two (2) new directors to its Board of Directors, each of whom shall have been nominated by the Purchaser at least three (3) business days prior to the Closing Date, provided that such individuals are reasonably acceptable to the Company. Provided that the Purchaser and/or one or more of the persons listed on EXHIBIT F continues to hold greater than 25% of the issued and outstanding stock of the Company as of the record date for the mailing of -10- proxy materials to shareholders in connection with the Company's annual meeting of shareholders, the Company shall recommend in such proxy materials that shareholders at each such meeting elect two (2) individuals to its Board of Directors who were nominated by the Purchaser (or the holders of a majority of the Conversion Stock if the Purchaser has been dissolved) and the Company shall at each such meeting cause its designated proxyholder to vote proxies received from shareholders in favor of such nominees, provided that such nominees are reasonably acceptable to the Company. Provided that the Purchaser and/or one or more of the persons listed on EXHIBIT F continues to hold greater than 15% but less than or equal to 25% of the issued and outstanding stock of the Company as of the record date for the mailing of proxy materials to shareholders in connection with the Company's annual meeting of shareholders, the Company shall recommend in such proxy materials that shareholders at each such meeting elect one (1) individual to its Board of Directors who was nominated by the Purchaser (or the holders of a majority of the Conversion Stock if the Purchaser has been dissolved) and the Company shall at each such meeting cause its designated proxyholder to vote proxies received from shareholders in favor of such nominee, provided that such nominee is reasonably acceptable to the Company. In the event the Company increases its Board size above seven (7) directors prior to the next annual meeting of shareholders, the Company shall not be required to nominate or recommend election of additional Purchaser candidates to the Company's Board of Directors other than as set forth above in this Section 5.1, provided that the number of directors who are officers, employees, or paid full-time consultants of the Company is not greater than two (2). The Compensation Committee of the Board of Directors shall be comprised of three (3) directors and shall include one (1) director who was nominated to the Board by the Purchaser. 5.2 Bylaws Amendments. On or before the Closing date, effective upon the consummation of the transaction contemplated hereunder, the Company shall have adopted an amendment to its Bylaws providing that a two-thirds super majority vote of directors be required to approve any of the following actions: (i) consolidation or merger of the Company 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 Company or one of its wholly-owned subsidiaries) or transfer or sale of all or substantially all of the assets of the Company; or (ii) an increase in the Company's secured indebtedness to an aggregate amount in excess of $15 million. The Company agrees that it will not amend the foregoing super majority bylaws amendment without obtaining the prior written consent of the Purchaser (or the holders of a majority of the Conversion Stock if the Purchaser has been dissolved) so long as the Purchaser and/or one or more of the persons listed on EXHIBIT F continues to hold at least 7.5% of the issued and outstanding capital stock of the Company. -11- 5.3 AMENDMENT TO PREFERRED SHARES RIGHTS AGREEMENT. On or before the Closing Date, the Company shall have taken all appropriate action to ensure that (a) the sale of the Conversion Stock to Purchaser hereunder is not deemed to be a Triggering Event as that term is defined in Section 1(y) of the Preferred Shares Rights Agreement dated August 3, 1994 between the Company and Chemical Trust Company of California (the "RIGHTS PLAN"), (b) neither the Purchaser nor any of its members, Affiliates, Associates, representatives or control persons shall be deemed an "Acquiring Person" under the Rights Plan and (c) the Purchaser nominees to the Board of Directors shall be deemed "Continuing Directors" under the Rights Plan. 5.4 Form D and Blue Sky. The Company agrees to file a Form D with respect to the Conversion Stock as required under Regulation D and to provide a copy thereof to the Purchaser promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Conversion Stock for, or obtain exemption for the Conversion Stock for, sale to the Purchaser at the Closing pursuant to this Agreement under applicable securities or "Blue Sky" laws of the states of the United States, and shall provide evidence of any such action so taken to the Purchaser on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and sale of the Conversion Stock required under applicable securities or "Blue Sky" laws of applicable states of the United States following the Closing Date. 5.5 Reporting Status. Until the date as of which the Holders (as that term is defined in the Rights Agreement) may sell all of the Conversion Shares without restriction pursuant to Rule 144(k) promulgated under 1933 Act (or successor thereto), the Company shall file all reports required to be filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the "1934 ACT"), and until that date, the Company shall not terminate its status as an issuer required to file reports under the 1934 Act even if the 1934 Act, or the rules and regulations thereunder would otherwise permit such termination, unless the reporting requirements of Rule 144(k) have also been amended to permit the Holders to sell the Conversion Shares without restriction. 5.6 Financial Information. The Company shall file with the SEC via Edgar all registration statements and all reports required pursuant to the 1933 Act and the 1934 Act, including without limitation, its Annual Reports on Form 10-K, its Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any registration statements (including those on Form S-8) or amendments and such reports will be available to the Purchaser via Edgar. The Company shall deliver to the Purchaser copies of any notices and other information made available or given to the shareholders of the Company generally, contemporaneously with the making available or giving thereof to the shareholders. 5.7 Listing. The Company shall use its best efforts to maintain the inclusion for quotation on The Nasdaq SmallCap Market of its Common Stock, and without limiting the generality of the foregoing, the Company shall use its best efforts to arrange for at least two market makers to register with the NASD or any other comparable exchange as such with respect to the Common Stock. The Company shall not knowingly take any action which would be -12- reasonably expected to result in the removal of the Common Stock from quotation on The Nasdaq SmallCap Market. At such time as the Company is able to satisfy the listing requirements on the Nasdaq National Market System ("NNM") and the Company's management reasonably believes that the Company will be able to continue to comply with the continued listing requirements of the NNM thereafter, the Company shall use its reasonable efforts to secure designation and quotation of its outstanding Common Stock on the NNM. The Company shall promptly report to its Board of Directors information or notices it receives regarding the continued eligibility of its Common Stock for quotation on any automated quotation system or securities exchange. 5.8 Filing of Form 8-K. Within five (5) business days following the Closing Date, the Company shall file a Form 8-K with the SEC describing the terms of the transactions contemplated by the Transaction Agreements and the Note Purchase Agreement in the form specified by the 1934 Act. 5.9 Private Placement. Concurrently with the Closing of the transactions contemplated hereunder, the Company will consummate a private placement of Common Stock of the Company, at not less than $1.06 per share (with up to 25% warrant coverage at an exercise price of at least $1.25 per share), resulting in gross proceeds to the Company of at least $1,000,000. 5.10 COAST CONSENT. The Company shall have obtained from Coast, as a condition to the Closing, a written consent by Coast to the Company's execution, delivery and performance of the Transaction Agreements and a waiver, effective upon the Closing, of any defaults by the Company under its debt facility with Coast occurring prior to the Closing Date. 6. Covenants of the Purchaser. In the event that a shareholder vote is solicited by the Company to amend and restate its Articles of Incorporation, the Purchaser agrees to vote in favor of proposed amendments to effect any of the following measures: (a) a reverse stock split of the Company's capital stock in a ratio reasonably recommended by the Company's executive management; (b) reincorporation of the Company into Delaware; and (c) an increase in the total number of authorized shares of the Company's Common Stock, provided however that the Purchaser shall not be obligated to vote in favor of such an amendment unless the authorized number of the Company's Common Stock has been reduced to a number that is less than 60 million as the result of a reverse stock split pursuant to subsection 6(a) above. 7. Conditions of the Purchaser's Obligations at the Closing. The obligations of the Purchaser under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived: -13- 7.1 Representations and Warranties. The representations and warranties of the Company contained in Section 2 shall be true and correct on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the date of the Closing. 7.2 Performance. The Company shall have performed and complied with all covenants, agreements, obligations and conditions contained in this Agreement that are required to be performed or complied with by it on or before the Closing. 7.3 Compliance Certificate. The President of the Company shall deliver to the Purchaser at the Closing a certificate ("OFFICER'S COMPLIANCE CERTIFICATE") certifying that (a) the conditions specified in Sections 5.1, 5.2, 5.3, 7.1 and 7.2 have been fulfilled and (b) all conditions of the Company's obligations under the Purchase Agreement and the Warrant Purchase Agreement have been fulfilled or waived. 7.4 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Securities pursuant to this Agreement shall be obtained and effective as of the Closing. 7.5 Opinion of Company Counsel. The Purchaser shall have received from Venture Law Group, counsel for the Company, an opinion, dated as of the Closing, in substantially the form of EXHIBIT G. 7.6 NASD Confirmation. The Company shall have received confirmation from the National Association of Securities Dealers, Inc. (the "NASD") that approval by the Company's shareholders is not required prior to the consummation of the actions (including without limitation, the issuance of the Securities to Purchaser) contemplated hereunder. 7.7 Release. CA shall have executed and delivered the Warrant Purchase Agreement. 7.8 Schedule of Exceptions. The Company shall have delivered the final Schedule of Exceptions, reasonably approved by Purchaser, in the form attached as EXHIBIT D. 8. Conditions of the Company's Obligations at Closing. The obligations of the Company under this Agreement are subject to the fulfillment, on or before the Closing, of each of the following conditions, unless otherwise waived: 8.1 Representations and Warranties. The representations and warranties of the Purchaser contained in Section 3 shall be true and correct in all material respects on and as of the Closing with the same effect as though such representations and warranties had been made on and as of the Closing. -14- 8.2 Performance. All covenants, agreements and conditions contained in this Agreement to be performed by the Purchaser on or prior to the Closing shall have been performed or complied with in all material respects. 8.3 Qualifications. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or of any state that are required in connection with the lawful issuance and sale of the Securities pursuant to this Agreement shall be obtained and effective as of the Closing. 8.4 Note and Other Evidence of Principal Indebtedness. The Purchaser shall have delivered to the Company for cancellation the originally executed Note and any other related documents or instruments, including the Interest Affidavit, evidencing indebtedness under the Note. 8.5 NASD Confirmation. The Company shall have received confirmation from the NASD that approval by the Company's shareholder is not required prior to the consummation of the actions (including without limitation, the issuance of the Securities to Purchaser) contemplated hereunder. 9.Miscellaneous. 9.1 Survival of Warranties. Unless otherwise set forth in this Agreement, the warranties, representations and covenants of the Company and the Purchaser contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing for a period of two (2) years following the Closing. 9.2 Transfer; Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties and successive holders of all or any portion of the Conversion Stock and their respective successors and assigns. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto, holders of Conversion Stock, or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 9.3 Governing Law. This Agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of California, without giving effect to principles of conflicts of law. 9.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. 9.5 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience of reference only and are not to be considered in construing or interpreting this Agreement. -15- 9.6 Notices. Any notice required or permitted by this Agreement shall be in writing and shall be deemed sufficient upon delivery, when delivered personally or by overnight courier or sent by telegram or fax (provided that electronic confirmation of transmission has been received), or forty-eight (48) hours after being deposited in the US mail, as certified or registered mail, with postage prepaid, addressed to the party to be notified at such party's address as set forth on the signature page hereto, or as subsequently modified by written notice, and (a) if to the Company, with a copy to Craig W. Johnson, Venture Law Group, 2800 Sand Hill Road, Menlo Park, CA 94025 or (b) if to the Purchaser, with a copy to William Caraccio, Pillsbury Madison & Sutro LLP, 2550 Hanover Street, Palo Alto, CA 94304. 9.7 Company Advisor/Payment of Fees. Purchaser represents that it neither is nor will be obligated for any finder's fee or commissions to any third party in connection with this transaction. The Company represents that it has retained Rochon Capital Group, Ltd. ("ROCHON") as its advisor in connection with the transactions contemplated by this Agreement and the Note Purchase and Sale Agreement. Purchaser acknowledges that Rochon has acted solely as an advisor to the Company, and has in no way acted for or on behalf of Purchaser in connection herewith. The information provided to Purchaser by the Company (or by Purchaser) has not been subjected to independent verification by Rochon, and no representation or warranty is made by Rochon as to the accuracy or completeness of such information or the advisability of Purchaser entering into this Agreement and consummating the transactions contemplated hereby. Purchaser acknowledges that it has not relied on any statements made by Rochon in connection with its decision to enter into and perform this Agreement and the transactions contemplated hereby. The Company agrees to indemnify and to hold harmless Purchaser from any liability for any compensation payable to Rochon (and the costs and expenses of defending against such liability or asserted liability) in connection with the transactions contemplated hereby. Each Party agrees to hold Rochon harmless and the Company agrees to indemnify Rochon and its officers, directors, principals, employees and agents (and their respective heirs, successors and assigns) from and against any liability arising from this Agreement, including the consummation of or the failure to consummate any or all of the transactions contemplated hereby, except to the extent such liability results from the gross negligence or willful misconduct of Rochon. 9.8 Fees and Expenses. The Company shall pay the reasonable fees and expenses of legal, accounting and financial advisors for the Purchaser incurred with respect to this Agreement and the transactions contemplated hereby, provided such fees and expenses do not exceed $45,000 in the aggregate, of which reimbursement for legal fees shall not exceed $30,000, reimbursement for fees incurred as a result of due diligence conducted by individuals or entitles not affiliated with prospective purchasers of the Company's capital stock shall not exceed $10,000 and reimbursement of travel expenses shall not exceed $5,000. 9.9 Attorney's Fees. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of any of the Agreements, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. -16- 9.10 Amendments and Waivers. Any term of this Agreement may be amended or waived only with the written consent of the Company and the holders of at least two thirds (2/3) of the Conversion Stock. Any amendment or waiver effected in accordance with this Section 9.10 shall be binding upon the Purchaser and each transferee of the Conversion Stock and the Company. 9.11 Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (a) such provision shall be excluded from this Agreement, (b) the balance of the Agreement shall be interpreted as if such provision were so excluded and (c) the balance of the Agreement shall be enforceable in accordance with its terms. 9.12 Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any party under this Agreement, upon any breach or default of any other party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative. 9.13 Entire Agreement. This Agreement, and any transaction documents referred to herein constitute the entire agreement between the parties hereto pertaining to the subject matter hereof, and any and all other written or oral agreements or commitments relating to the subject matter hereof existing between the parties hereto (except for any confidentiality provisions or terms contained therein) are expressly superseded hereby and canceled. 9.14 Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT. 9.15 Confidentiality. Each party hereto agrees that, except with the prior written permission of the other parties, it shall at all times keep confidential and not divulge, furnish or make accessible to anyone, including without limitation CA, any confidential -17- information, knowledge or data concerning or relating to the business or financial affairs of the other parties to which such party has been or shall become privy by reason of the Transaction Agreements, discussions or negotiations relating to the terms of the Transaction Agreements, the performance of its obligations hereunder or the ownership of Securities purchased hereunder, except for such disclosure as is required by law. The parties acknowledge and agree that the Company will file reports with the Securities and Exchange Commission from time to time following the consummation of the transactions hereunder and that press releases may also be required or desirable, provided that such press releases will contain only such information as may be required for proper disclosure in the opinion of legal counsel to the Company. This Section 9.15 shall not prohibit the disclosure by Purchaser to its members and permitted assignees of the Conversion Stock of such information, knowledge or data, provided each recipient thereof agrees to be bound by the confidentiality covenants hereunder. [Signature Pages Follow] -18- The parties have executed this Note Conversion Agreement as of the date first written above. COMPANY: CENTURA SOFTWARE CORPORATION By: /s/Scott R. Broomfield ---------------------------------------- Name: Scott R. Broomfield ------------------------------------- (print) Title: CEO ------------------------------------ Address: 975 Island Drive Redwood Shores, CA 94065 Telephone: (650) 596-3400 Fax: (650) 596-4986 PURCHASER: NEWPORT ACQUISITION COMPANY NO. 2 LLC By: Crossroads Capital Partners LLC, as Managing Member By: /s/James Skelton --------------------------------------- Name: James Skelton -------------------------------------- (print) Title: Principal ------------------------------------ Address: 1600 Dove Street Suite 300 Newport Beach, CA 92660 Telephone: (714) 261-1600 Fax: (714) 261-1655 SIGNATURE PAGE TO CONVERSION AGREEMENT EX-99.2 3 INVESTOR RIGHTS AGREEMENT EXHIBIT 99.2 INVESTOR RIGHTS AGREEMENT THIS INVESTOR RIGHTS AGREEMENT (this "Agreement") is made and entered into as of this 27th day of February, 1998 by and between NEWPORT ACQUISITION COMPANY NO. 2, LLC., a Delaware limited liability company ("Newport") and CENTURA SOFTWARE CORPORATION, a California corporation (the "Company"). RECITALS: A. THE HOLDER. Newport is a limited liability company duly organized and in good standing under the laws of the State of Delaware with its principal executive offices located in Newport Beach, California. B. THE COMPANY. The Company is an existing corporation, formed under the laws of the State of California, with its principal executive offices located in Redwood Shores, California. C. CORPORATE APPROVALS. Each of the parties to this Agreement has obtained all necessary corporate and member approvals for the execution and delivery of this Agreement. D. ARM'S-LENGTH RELATIONSHIP. The parties to this Agreement intend to conduct their relationships hereunder on an arm's-length basis. E. PRIVATE PLACEMENT EXCHANGE. The Company intends to complete the issuance to Newport of 11,415,094 shares of the Company's Common Stock, $.01 par value per share (the "Common Shares"), in exchange for all of Newport's right, title and interest in that certain Floating Rate Convertible Subordinated Note Due 1998 of the Company, including all principal indebtedness and accrued interest indebtedness thereunder (the "Note") pursuant to an exchange offering exempt from the registration requirements of the Securities Act of 1933, as amended (the "Private Placement"). Newport acquired the Note from Computer Associates International, Inc. ("CA") pursuant to that certain Note Purchase and Sale Agreement dated the date hereof by and among Newport, CA and the Company. F. INVESTOR RIGHTS. In conjunction with the Private Placement, the Holder and the Company desire to enter into this Agreement to provide certain registration and other investor rights as provided herein. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, and for other good and valuable consideration had and received, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. DEFINITIONS. As used herein, the following terms shall have the following respective meanings: -1- "Affiliate" shall mean any Person that directly or indirectly controls, is controlled by, or is under common control with such Person. A Person shall be deemed to control another Person if such Person owns five percent (5%) or more of any equity interest in the "controlled" Person or possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether through ownership of stock or partnership or member interests, by contract, agreement or understanding (whether oral or written), or otherwise. "Common Shares" shall have the meaning set forth in Recital E of this Agreement. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Holders" shall mean Newport, each of the Persons listed on Schedule 1 attached hereto and made a part hereof, any Affiliate of Newport or of any of the Persons listed on Schedule 1 (other than the Company) and any transferee or assignee under Section 10 hereof, and any combination of one or more such Holders. "NASD" shall mean the National Association of Securities Dealers, Inc. "Other Holders" shall mean Persons (other than Holders) who are holders of record of equity securities of the Company who subsequent to the date hereof acquire more than five percent (5%) of the outstanding shares of Common Stock pursuant to a transaction with the Company and to whom the Company grants registration rights pursuant to a written agreement in connection with such transaction. "Person" shall mean any individual, corporation, association, partnership, group (as defined in section 13(d)(3) of the Exchange Act), limited liability company, joint venture, business trust or unincorporated organization, or a government or any agency or political subdivision thereof. "Registrable Shares" shall mean the Common Shares and any shares of capital stock issued or issuable with respect to the Common Shares as a result of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise. As to any particular Registrable Share, such Registrable Share shall cease to be a Registrable Share when (w) it shall have been sold, transferred or otherwise disposed of or exchanged pursuant to a registration statement under the Securities Act; (x) it may be distributed to the public, together with all other Registrable Shares held by the Holder of such share, during any ninety (90) day period pursuant to and in compliance with all applicable requirements of Rule 144 (or any successor provision) under the Securities Act; (y) it shall have been sold or transferred in a private transaction to a Person other than a Designated Transferee (as defined in Section 10 below); or (z) it shall have been sold, transferred or otherwise disposed of in violation of this Agreement. "Registration Expenses" shall have the meaning set forth in Section 7.(a) hereof. -2- "SEC" shall mean the Securities and Exchange Commission or any successor agency thereto. "Securities Act" shall mean the Securities Act of 1933, as amended. 2. INCIDENTAL REGISTRATIONS. (a) RIGHT TO INCLUDE REGISTRABLE SHARES. On or after June 1, 1998 (the "Rights Commencement Date"), each time the Company shall determine to file a registration statement under the Securities Act in connection with a proposed offer and sale for cash of any equity securities (other than an offering of debt securities which are convertible into equity securities) by the Company, the Company will give prompt written notice of its determination to each Holder and of such Holder's rights under this Section 2, at least twenty (20) days prior to the anticipated filing date of such registration statement. Upon the written request of each Holder made within fifteen (15) days after the receipt of any such notice from the Company (which request shall specify the Registrable Shares intended to be disposed of by such Holder), the Company will use its best efforts to effect the registration under the Securities Act of all Registrable Shares which the Company has been so requested to register by the Holders thereof, to the extent required to permit the disposition of the Registrable Shares so to be registered; PROVIDED, HOWEVER, that (i) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company shall determine for any reason not to proceed with the proposed registration of the securities to be sold by it, the Company may, at its election, give written notice of such determination to each Holder of Registrable Shares and thereupon shall be relieved of its obligation to register any Registrable Shares in connection with such registration (but not from its obligation to pay the Registration Expenses in connection therewith), and (ii) if such registration involves an underwritten offering, all Holders of Registrable Shares requesting to be included in the Company's registration must sell their Registrable Shares to the underwriters on the same terms and conditions as apply to the Company, with such differences, including any with respect to indemnification and liability insurance, as may be customary or appropriate in combined primary and secondary offerings. If a registration requested pursuant to this Section 2(a) involves an underwritten public offering, any Holder of Registrable Shares requesting to be included in such registration may elect, in writing at least five (5) days prior to the effective date of the registration statement filed in connection with such registration, not to register such securities in connection with such registration. No registration effected under this Section 2 shall relieve the Company of its obligations to effect the registration under Section 4 hereof. (b) PRIORITY IN INCIDENTAL REGISTRATION. If a registration pursuant to this Section 2 involves an underwritten offering and the managing underwriter(s) in good faith advise(s) the Company in writing that, in its opinion, the number of securities which the Company, the Holders and any other Persons intend to include in such registration exceeds the largest number of securities which can be sold in such offering without having an adverse effect on such offering (including the price at which such securities can be sold), then the Company will include in such registration (i) first, the securities the Company proposes to sell for its -3- own account; (ii) second, to the extent that the number of securities which the Company proposes to sell is less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of Registrable Shares which the Holders have requested to be included in such registration pursuant to Section 2(a) hereof; PROVIDED, HOWEVER, that the aggregate value of the Registrable Securities to be included in such registration by the Holders may not be so reduced to less than twenty-five percent (25%) of the total value of all securities included in such registration; and (iii) third, to the extent that the number of securities which are to be included in such registration pursuant to clauses (i) and (ii) is, in the aggregate, less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of other securities requested to be included in the offering for the account of any Other Holders which, in the opinion of such managing underwriter(s), can be sold without having the adverse effect referred to above. The number of Registrable Shares included in such registration statement shall be allocated pro rata among the Holders based on the number of Registrable Shares held by each Holder. 3. HOLDBACK AGREEMENTS. (a) If any registration of Registrable Shares shall be in connection with a Qualified Public Offering (defined below), the Holders shall not effect any public sale or distribution (except in connection with such public offering), of any Registrable Securities (other than as part of such underwritten public offering) during the one hundred twenty (120) day period (or such lesser period as the managing underwriter(s) may permit) beginning on the effective date of such registration, if, and to the extent, the managing underwriter(s) of any such offering determine(s) such action is necessary or desirable to effect such offering. A "Qualified Public Offering" is defined herein as a firm commitment, underwritten public offering registered under the Securities Act (other than a registration relating solely to a transaction under Rule 145 under the Securities Act or to an employee benefit plan of the Company), at a price per share of at least $2.00 and with aggregate proceeds to the Company and/or any selling shareholders (before deduction for underwriters' discounts and expenses) of at least $7,500,000. (b) If any registration of Registrable Shares shall be in connection with a Qualified Public Offering, the Company shall not effect any public sale or distribution (except in connection with such public offering) of any of its equity securities or of any security convertible into or exchangeable or exercisable for any of its equity securities (in each case other than as part of such underwritten public offering) during the one hundred twenty (120) day period (or such lesser period as the managing underwriter(s) may permit) beginning on the effective date of such registration, and the Company shall use its best efforts to cause each member of the management of the Company who holds any equity security and each other holder of five percent (5%) or more of the outstanding shares of any equity security, or of any security convertible into or exchangeable or exercisable for any equity security, of the Company purchased from the Company (at any time other than in a public offering) to so agree. -4- (c) In the event of any discretionary waiver or termination of the restrictions set forth in the agreements described in Section 3(b) above by the Company or the representatives of the underwriters, the number of shares subject to such waiver shall be allocated among all persons subject to such agreements and to all Holders pro rata based on the number of securities held. 4. REGISTRATION. (a) MANDATORY REGISTRATION. The Company shall prepare and, no later than 305 days after the date of issuance of the Common Shares (the "Filing Deadline"), file with the SEC a registration statement on Form S-3 covering the resale of all of the Registrable Shares, or such lesser amount of Registrable Shares as the Holders shall in their discretion notify the Company to register. In the event that Form S-3 is unavailable for such a registration, the Company shall use such other form as is available for such a registration, subject to the further provisions of this Section 4(a). The Company shall use its best efforts to have the registration statement declared effective no later than 365 days after the date of issuance of the Common Shares and in any event shall have the registration declared effective no later than 380 days after the date of issuance of the Common Shares. In the event that Form S-3 is not available for the registration of Registrable Shares hereunder, the Company shall (i) register the sale of the Registrable Shares on another appropriate form and (ii) undertake to register the Registrable Shares on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the registration statement then in effect until such time as a registration statement on Form S-3 covering the Registrable Shares has been declared effective by the SEC. No securities other than Registrable Shares will be included in any registration statement filed pursuant to this Section 4(a) subject to Section 4(e) below. The Company shall keep a registration statement described in this Section 4(a) hereof effective pursuant to Rule 415 promulgated under the Securities Act at all times until the earlier of (i) the date as of which each of the Holders may sell all of the Registrable Shares held by such Holder without restriction pursuant to Rule 144(k) promulgated under the Securities Act or (ii) the date on which the Holders shall have sold all the Registrable Shares to the public (the"Registration Period"). The registration statement (including any amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. (b) BLACK-OUT PERIODS. If (i) in the good faith judgment of the Board of Directors of the Company, the disclosure which would be required in connection with the mandatory registration under Section 4(a) above would be seriously detrimental to the Company and the Board of Directors of the Company concludes by a duly adopted resolution that, as a result, it is essential at such time to defer the filing of such registration statement or to suspend the sale of securities thereunder, and (ii) the Company shall furnish to such Holders a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company it would be seriously detrimental to the Company for such registration statement to be filed or for securities to be sold thereunder in the near future and that it is, therefore, essential to defer the filing of such registration statement or -5- to suspend the sale of securities thereunder, then the Company shall have the right to defer such filing or suspend the sale of securities thereunder for the period during which such disclosure would be seriously detrimental (a "Black-out Period"); PROVIDED, HOWEVER, that (A) the Company shall not have the right to impose any Black-out Periods for ninety (90) days following the effectiveness of the registration statement filed pursuant to Section 4(a) above, (B) no Black-out Period shall extend longer than forty-five (45) consecutive calendar days, (C) no Black-out Period may be imposed within forty-five (45) days following the completion of a prior Black-out Period, and (D) the Company shall not impose Black-out Periods which, in the aggregate, exceed ninety (90) days in any twelve (12) month period. The Holders acknowledge and agree that the Company may impose a legend setting forth the provisions of this Section 4(b) on the Registrable Shares. (c) SUBSEQUENT REGISTRATIONS. In the event fewer than all of the Registrable Shares are covered by the registration effectuated pursuant to Section 4(a) above, then, commencing six (6) months following the effective date of such registration, upon the written request of the Holders of at least fifty percent (50%) of the Registrable Shares not so covered that the Company effect the registration of all or part of such Registrable Shares not so covered, and specifying the amount and the intended method of disposition thereof, the Company will promptly give notice of such requested registration to all other Holders of Registrable Shares not so covered and, as expeditiously as possible, use its best efforts to effect the registration under the Securities Act of: (i) the Registrable Shares which the Company has been so requested to register by such requesting Holders; and (ii) all other Registrable Shares which the Company has been requested to register by any other Holder thereof by written request received by the Company within thirty (30) days after the giving of such written notice by the Company; PROVIDED, HOWEVER, that the Company shall not be required to effect more than one (1) registration pursuant to this Section 4(c); PROVIDED, FURTHER, that the Company shall not be obligated to file a registration statement relating to a registration request under this Section 4(c), (x) if the registration request is delivered after delivery of a notice by the Company of an intended registration and prior to the effective date of the registration statement referred to in such notice, provided that the Company is actively employing in good faith all reasonable efforts to cause such registration statements to become effective, or (y) within a period of ninety (90) days after the effective date of any other registration statement of the Company pursuant to which the Holders included Registrable Shares. (d) REGISTRATION STATEMENT FORM. If any registration pursuant to this Section 4 shall be in connection with an underwritten public offering, and if the managing underwriter(s) shall advise the Company in writing that, in its opinion, the use of a form of registration statement other than on Form S-3 is of material importance to the success of such proposed offering, then such registration shall be effected on such other form. (e) PRIORITY IN REQUESTED REGISTRATIONS. If any registration pursuant to this Section 4 involves an underwritten offering and the managing underwriter(s) in good faith advise(s) the Company in writing that, in its opinion, the number of securities requested to be included in such registration (including securities of the Company which are not Registrable Shares) exceeds the largest number of securities which can be sold in such offering without having an adverse effect on such offering (including the price at which such securities can -6- be sold), then the Company will include in such registration (i) first, one hundred percent (100%) of the Registrable Shares requested to be registered pursuant to Section 4(a) hereof (provided that if the number of Registrable Shares requested to be registered pursuant to Section 4(a) hereof exceeds the number which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of such Registrable Shares to be included in such registration by the Holders shall be allocated pro rata among such Holders on the basis of the relative number of Registrable Shares each such Holder has requested to be included in such registration); (ii) second, to the extent that the number of Registrable Shares requested to be registered pursuant to Section 4(a) hereof is less than the number of securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of shares of equity securities the Company requests to be included in such registration, and (iii) third, to the extent that the number of Registrable Shares requested to be included in such registration pursuant to Section 4(a) hereof and the securities which the Company proposes to sell for its own account are, in the aggregate, less than the number of equity securities which the Company has been advised can be sold in such offering without having the adverse effect referred to above, such number of other securities proposed to be sold by any Other Holder which, in the opinion of such managing underwriter(s), can be sold without having the adverse effect referred to above (provided that if the number of such securities of such Other Holder requested to be registered exceeds the number which the Company has been advised can be sold in such offering without having the adverse effect referred to above, the number of such securities to be included in such registration pursuant to this Section 4(d) shall be allocated pro rata among all such Other Holders on the basis of the relative number of securities each such Other Holder has requested to be included in such registration). (f) ADDITIONAL RIGHTS. If the Company at any time grants to any other holders of equity securities of the Company any rights to request the Company to effect the registration of any such shares of equity securities on terms more favorable to such holders than the terms set forth in this Section 4 and in Section 5 hereof, the terms of this Section 4 and of Section 5 hereof shall be deemed amended or supplemented to the extent necessary to provide the Holders such more favorable rights and benefits. In no event shall the Company grant to any person any rights to request the Company to effect the registration of any shares of equity securities of the Company on terms which would have the effect of delaying the effectiveness of or reducing the number of shares covered by any registration statements effectuated pursuant to Section 2 and this Section 4. 5. REGISTRATION PROCEDURES. (a) Whenever a Holder has requested that any Registrable Shares be registered pursuant to Section 2(a) or 4(c) or at such time as the Company is obligated to file and maintain the effectiveness of a registration statement with the SEC pursuant to Section 4(a), the Company shall use its best efforts to effect the registration of the Registrable Shares in accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall have the following obligations: -7- (i) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the Registration Period and to comply with the provisions of the Securities Act, the Exchange Act, and the rules and regulations promulgated thereunder with respect to the disposition of all the securities covered by such registration statement during such period in accordance with the intended methods of disposition by the Holders thereof set forth in such registration statement; PROVIDED, HOWEVER, that (A) before filing a registration statement (including an initial filing) or prospectus, or any amendments or supplements thereto, the Company will furnish to one counsel (the "Holder Counsel") selected by the Holders of a majority of the Registrable Shares covered by such registration statement copies of all documents proposed to be filed at least seven days prior to their filing with the SEC, which documents will be subject to the review and comment of such counsel, and (B) the Company will notify each Holder of Registrable Shares covered by such registration statement of any stop order issued or threatened by the SEC, any other order suspending the use of any preliminary prospectus or of the suspension of the qualification of the registration statement for offering or sale in any jurisdiction, and take all reasonable actions required to prevent the entry of such stop order, other order or suspension or to remove it if entered; (ii) the Company shall furnish to the Holder Counsel, without charge, any correspondence from the SEC or the staff of the SEC to the Company or its representatives relating to any registration statement; (iii) furnish without charge to each Holder and each underwriter, if applicable, of Registrable Shares covered by such registration statement such number of copies of the registration statement and of each amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and summary prospectus), in conformity with the requirements of the Securities Act, and such other documents as each Holder of Registrable Shares covered by such registration statement may reasonably request in order to facilitate the disposition of the Registrable Shares by such Holder; (iv) use its best efforts to register or qualify such Registrable Shares covered by such registration statement under the state securities or blue sky laws of such jurisdictions as each Holder of Registrable Shares covered by such registration statement and, if applicable, each underwriter, may reasonably request, and do any and all other acts and things which may be reasonably necessary to consummate the disposition in such jurisdictions of the Registrable Shares owned by such Holder, except that the Company shall not for any purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction where, but for the requirements of this -8- clause (iv), it would not be obligated to be so qualified (the Company shall promptly notify Holder Counsel and each Holder of the receipt by the Company of any notification with respect to the suspension of the registration or qualification of any of the Registrable Shares for sale under the securities or "blue sky" laws of any jurisdiction in the United States or its receipt of actual notice of the initiation or threatening of any proceeding for such purpose); (v) use its best efforts to cause such Registrable Shares covered by such registration statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the Holders thereof to consummate the disposition of such Registrable Shares; (vi) if at any time an event shall have occurred as the result of which any prospectus relating to any Registrable Shares as then in effect would include an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, immediately give written notice thereof to each Holder and the managing underwriter or underwriters, if any, of such Registrable Shares and prepare and furnish to each such Holder a reasonable number of copies of an amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Shares, such prospectus shall not include an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; (vii) either (A) list any portion of such Registrable Shares not already listed on any securities exchange on which similar securities of the Company are then listed, and enter into customary agreements including a listing application and indemnification agreement in customary form, or (B) maintain the inclusion for quotation on The Nasdaq SmallCap Market for the Registrable Shares and, at such time as the Company is able to satisfy the listing requirements on the Nasdaq National Market System and the Company's management reasonably believes the Company will be able to continue to comply with such requirements, use its best efforts to secure designation and quotation of all the Registrable Shares on the Nasdaq National Market System, and, without limiting the generality of the foregoing, use its best efforts to arrange for at least two market makers to register with the NASD as such with respect to the Registrable Shares, and provide a transfer agent and registrar for such Registrable Shares covered by such registration statement not later than the effective date of such registration statement; (viii) enter into such customary agreements (including an underwriting agreement in customary form) and take such other actions as each Holder of Registrable Shares being sold or the underwriter or -9- underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Shares, including customary indemnification and opinions; (ix) use its best efforts to obtain a "cold comfort" letter or letters from the Company's independent public accountants in customary form and covering matters of the type customarily covered by "cold comfort" letters as the Holders of the Registrable Shares being sold or the underwriters retained by such Holders shall reasonably request, provided that this provision shall only apply with respect to an underwritten registration; (x) make available for inspection by representatives of any Holder, by any underwriter participating in any disposition to be effected pursuant to such registration statement and by any attorney, accountant or other agent retained by such Holders or any such underwriter, all financial and other records pertinent corporate documents and properties of the Company and its subsidiaries' officers, directors and employees to supply all information and respond to all inquiries reasonably requested by such Holders or any such representative, underwriter, attorney, accountant or agent in connection with such registration statement; (xi) promptly prior to the filing of any document which is to be incorporated by reference into the registration statement or the prospectus (after initial filing of the registration statement), if such document is not available to the public electronically via EDGAR, provide copies of such document to counsel to the Holders and to the managing underwriter(s), if any, and make the Company's representatives available for discussion of such document; (xii) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC, and make available to its security holders, as soon as reasonably practicable after the effective date of the registration statement, an earning statement which shall satisfy the provisions of section 11(a) of the Securities Act and the rules and regulations promulgated thereunder; (xiii) not later than the effective date of the applicable registration statement, use its best efforts to provide a CUSIP number for any portion of such Registrable Shares not already included in a CUSIP number for similar securities of the Company, and provide the applicable transfer agents with printed certificates for the Registrable Shares which are in a form eligible for deposit with the Depository Trust Company; (xiv) notify counsel for the Holders of Registrable Shares included in such registration statement and the managing underwriter or underwriters, if any, immediately and confirm the notice in writing, (A) when the registration -10- statement, or any post-effective amendment to the registration statement, shall have become effective, or any supplement or amendment to the prospectus shall have been filed, (B) of the receipt of any comments from the SEC and (C) of any request of the SEC to amend the registration statement or amend or supplement the prospectus or for additional information; (xv) in the event the Company and the Holders who hold at least two-thirds of the Registrable Shares mutually agree to an underwritten offering for one or more offerings of Registrable Shares under Section 4(a) hereof, enter into and perform its obligations under an underwriting agreement, in usual and customary form, including, but not limited to, customary indemnification and contribution obligations, with the underwriters (without limiting the generality of the foregoing, if the underwriters for marketing or other reasons request the inclusion in the registration statement of information which is not required under the Securities Act to be included in a registration statement on the applicable form for such registration, the Company nonetheless will provide such information as may be reasonably requested for inclusion by the underwriters in such registration statement); (xvi) use its best efforts to prevent the issuance of any stop order or other suspension of effectiveness of a registration statement, or the suspension of the qualification of any of the Registrable Shares for sale in any jurisdiction and, if such an order or suspension is used, use its best efforts to obtain the withdrawal of such order or suspension at the earliest possible time; (xvii) cooperate with each of the Holders and, to the extent applicable, any managing underwriter or underwriters, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legend) representing the Registrable Shares offered and sold pursuant to a registration statement and enable such certificates to be in such denominations or amounts, as the case may be, as the managing underwriter or underwriters, if any, or, if there is no managing underwriter or underwriters, each of the Holders may reasonably request and registered in such names as the managing underwriter or underwriters, if any, or each of the Holders may request; (xviii) cooperate with each seller of Registrable Shares and each underwriter, if any, participating in the disposition of such Registrable Shares and their respective counsel in connection with any filings required to be made with the NASD; and (xix) take all other reasonable actions necessary or reasonably requested by an Holder to expedite and facilitate disposition by such Holder of Registrable Shares pursuant to a registration statement. -11- (b) Each Holder of Registrable Shares hereby agrees that, upon receipt of any notice from the Company of the happening of any event of the type described in Section 5(a)(vi) hereof, such Holder shall forthwith discontinue disposition of such Registrable Shares covered by such registration statement or related prospectus until such Holder's receipt of the copies of the supplemental or amended prospectus contemplated by Section 5(a)(vi) hereof, and, if so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the prospectus covering such Registrable Shares at the time of receipt of such notice. (c) Each Holder hereby agrees to provide the Company, upon receipt of its request, with such information about such Holder to enable the Company to comply with the requirements of the Securities Act and to execute such certificates as the Company may reasonably request in connection with such information and otherwise to satisfy any requirements of law. 6. UNDERWRITTEN REGISTRATIONS. Notwithstanding anything in this Agreement to the contrary, the Company in its sole discretion shall determine whether a registration on Form S-3 pursuant to Section 4 hereof shall be by means of an underwritten offering. In the case of any underwritten offerings pursuant to Section 2 and Section 4 hereof, the managing underwriter(s) that will administer the offering shall be selected by the Company; PROVIDED, HOWEVER, that such managing underwriter(s) shall be reasonably satisfactory to the Holders of a majority of the Registrable Shares to be registered. 7. EXPENSES. (a) Subject to Section 7(b), the Company shall pay all fees, costs and expenses of all registrations pursuant to Section 2 and Section 4 hereof, including all SEC and stock exchange or NASD registration and filing fees and expenses, reasonable fees and expenses of any "qualified independent underwriter" and its counsel as may be required by the rules of the NASD, fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the underwriters, if any, in connection with blue sky qualifications of the Registrable Shares), rating agency fees, printing expenses (including expenses of printing certificates for Registrable Shares and prospectuses), messenger, telephone and delivery expenses, the fees and expenses incurred in connection with the listing of the securities to be registered on each securities exchange or national or other market system on which similar securities issued by the Company are then listed, fees and disbursements of counsel for the Company and all independent certified public accountants (including the expenses of any annual audit, special audit and "cold comfort" letters required by or incident to such performance and compliance), the fees and disbursements of the underwriters customarily paid by issuers or sellers of securities (including expenses relating to "road shows" and other marketing activities), the reasonable fees and expenses of special experts required to be retained by the Company in connection with such registration, the reasonable fees and expenses of other Persons required to be retained by the Company and the reasonable fees and expenses, not to exceed $10,000 per registration statement, of one counsel for the Holders (collectively, "Registration Expenses"); -12- (b) The Holders shall pay the following: (i) any underwriting or selling discounts or commissions or transfer taxes, if any, attributable to the sale of Registrable Shares by the Holders pursuant to this Agreement, and (ii) except as set forth in subsection 7(a) above, all fees, costs and expenses of counsel to the Holders pursuant to this Agreement in connection with any registration pursuant to this Agreement. 8. INDEMNIFICATION. (a) INDEMNIFICATION BY THE COMPANY. In the event of any registration of any securities of the Company under the Securities Act pursuant to Section 2 or 4 hereof, the Company will, and it hereby does, indemnify and hold harmless, to the fullest extent permitted by law, each of the Holders of any Registrable Shares covered by such registration statement, each Affiliate of such Holder (other than the Company) and their respective partners, members, Affiliates, directors and officers, each other Person who participates as an underwriter in the offering or sale of such securities and each other Person, if any, who controls such Holder or any such underwriter within the meaning of the Securities Act (collectively, the "Indemnified Parties"), against any and all losses, claims, damages or liabilities, joint or several, and expenses (including any amounts paid in any settlement effected with the Company's consent, which consent shall not be unreasonably withheld or delayed) to which any Indemnified Party may become subject under the Securities Act, state securities or blue sky laws, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Party is a party thereto) or expenses arise out of or are based upon any of the following (each, a "Violation") (i) any untrue statement or alleged untrue statement of any material fact contained in any registration statement under which such securities were registered under the Securities Act, any preliminary, final or summary prospectus contained therein, or any amendment or supplement thereof, (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any violation by the Company of any federal, state or common law rule or regulation applicable to the Company and relating to action required of or inaction by the Company in connection with any such registration, and the Company will promptly reimburse such Indemnified Party for any legal or any other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, liability, action or proceeding; PROVIDED, HOWEVER, that the Company shall not be liable to any Indemnified Party in any such case to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement or amendment or supplement thereof or in any such preliminary, final or summary prospectus in reliance upon and in conformity with written information with respect to such Holder furnished to the Company by such Holder specifically for use in the preparation thereof. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Party and shall survive the transfer of such securities by such Holder. (b) INDEMNIFICATION BY THE HOLDERS AND THE UNDERWRITERS. In the event of any registration of any securities of the Company under the Securities Act pursuant to Section 2 -13- or 4 hereof, each Holder of Registerable Shares included in the Securities as to which such registration is being effected will, and it hereby does, indemnify and hold harmless, to the fullest extent permitted by law, the Company, each Affiliate of the Company, each of its directors, each of its officers who has signed the registration statement, each Person, if any, who controls the Company within the meaning of the Securities Act, any underwriter, any other Holder selling securities under such registration statement and any controlling person of any such underwriter or other Holder (collectively, the "Company Indemnified Parties"), against any and all losses, claims, damages or liabilities, joint or several, and expenses (including amounts paid in any settlement effected with the Holder's prior written consent, which consent shall not be unreasonably withheld or delayed) to which any Company Indemnified Party may become subject under the Securities Act, state securities or blue sky laws, common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof, whether or not such Company Indemnified Party is a party thereto) or expenses arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs due to the Company's reliance upon and in conformity with written information furnished by such Holder to the Company under an instrument duly executed by such Holder and stated to be specifically for use in connection with such registration statement, preliminary, final or summary prospectus or amendment or supplement thereto; and each such Holder will promptly reimburse such Company Indemnified Party for any legal or any other expenses reasonably incurred by it in connection with investigation or defending any such loss, claim, liability, action or proceeding if it is judicially determined that there was such a Violation; PROVIDED, HOWEVER, that each such Holder shall be severally, and not jointly, liable under any such indemnification; PROVIDED, FURTHER, that no such Holder shall be liable in any event for any indemnity claims in excess of the amount of the net proceeds received by such Holder from the sale of its Registrable Shares. The Company may further require, in connection with any underwritten registration effectuated in accordance with Section 2 or 4 hereof, that the Company shall have received an undertaking reasonably satisfactory to it from the underwriter to indemnify and hold harmless (in the same manner and to the same extent as set forth in this Section 8(b)) the Company with respect to any statement or alleged statement in or omission or alleged omission from such registration statement, any preliminary, final or summary prospectus contained therein, or any amendment or supplement, if such statement or alleged statement or omission or alleged omission was made in reliance upon and in conformity with written information such underwriter furnished to the Company specifically for use in the preparation of such registration statement, preliminary, final or summary prospectus or amendment or supplement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any of the Holders, or any of their respective Affiliates (other than the Company), directors, officers or controlling Persons, and shall survive the transfer of such securities by such Holder. (c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an indemnified party hereunder of written notice of the commencement of any action or proceeding with respect to which a claim for indemnification may be made pursuant to this Section 8, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; PROVIDED, -14- HOWEVER, that the failure of the indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under this Section 8, except to the extent that the indemnifying party is actually materially prejudiced by such failure to give notice. In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, with counsel satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof other than reasonable costs of investigation; PROVIDED, HOWEVER, that the indemnified party shall have the right, at the sole cost and expense of the indemnifying party, to employ counsel to represent the indemnified party and its respective controlling persons, directors, officers, employees or agents who may be subject to liability arising out of any claim in respect of which indemnity may be sought by the indemnified party against such indemnifying party under this Section 8 if (i) the employment of such counsel shall have been authorized in writing by such indemnifying party in connection with the defense of such action, (ii) the indemnifying party shall not have promptly employed counsel reasonably satisfactory to the indemnified party to assume the defense of such action or counsel, or (iii) any indemnified party shall have reasonably concluded that there may be defenses available to such indemnified party or its respective controlling persons, directors, officers, employees or agents which are in conflict with or in addition to those available to an indemnifying party; PROVIDED, FURTHER, that the indemnifying party shall not be obligated to pay for more than the expenses of one firm of separate counsel for the indemnified party. No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation. (d) If the indemnification provided for in this Section 8 shall for any reason be unavailable to any indemnified party under Section 8(a) or 8(b) hereof or is insufficient to hold it harmless in respect of any loss, claim, damage or liability, or any action in respect of any loss, claim, damage or liability, or any action in respect thereof referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the indemnified party and indemnifying party or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the indemnified party and indemnifying party with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. Notwithstanding any other provision of this Section 8(d), no Holder of Registrable Shares shall be required to contribute an amount greater than the dollar amount of the net proceeds received by such Holder with respect to the sale of any such Registrable Shares. No person guilty of fraudulent misrepresentation (within the meaning of section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. -15- (e) OTHER INDEMNIFICATION. Indemnification similar to that specified in the preceding subdivisions of this Section 8 (with appropriate modifications but subject to the same provisos set forth in Section 8(b) above) shall be given by the Company and each Holder of Registrable Shares with respect to any required registration or other qualification of securities under any federal or state law or regulation other than the Securities Act. (f) NON-EXCLUSIVITY. The obligations of the parties under this Section 8 shall be in addition to any liability which any party may otherwise have to any other party. 9. RULE 144. With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act or any other similar rule or regulation of the SEC that may at any time permit the Holders to sell securities of the Company to the public without registration ("Rule 144"), the Company agrees to: (a) make and keep public information available, as those terms are understood and defined in Rule 144; (b) file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act, so long as the Company remains subject to such requirements and the filing of such reports and other documents is required for the applicable provisions of Rule 144; and (c) furnish to each Holder so long as such Holder owns Registrable Shares, promptly upon request, (i) a written statement by the company that it has complied with the reporting requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the company, and (iii) such other information as may be reasonably requested to permit the Holders to sell such securities pursuant to Rule 144 without registration. 10. ASSIGNABILITY. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and the Holders and their respective successors and permitted assigns. Except as provided herein, no party may assign any of its rights or delegate any of its duties under this Agreement without the express consent of the other parties hereto. In addition, and whether or not any express assignment shall have been made, the provisions of this Agreement which are for the benefit of the Holders shall also be for the benefit of and enforceable by any subsequent Holder, subject to the provisions contained herein. Any Holder may assign any of its rights or delegate any of its duties under this Agreement, in whole or in part, without any prior consent of the Company only to a Person (a "Designated Transferee") who is (a) an Affiliate, member or partner of a Holder, (b) a family member of or a trust for the benefit of an individual Holder, or (c) a transferee of at least 250,000 Registrable Shares (whether through purchase, share exchange, bequest or otherwise) and who agrees to be bound by the terms of this Agreement. Any purported assignment in violation of this Section 10 shall be void. -16- 11. RIGHT OF FIRST REFUSAL. The Company hereby grants to each Holder the right of first refusal to purchase a pro rata share of New Securities (as defined in this Section 12) which the Company may, from time to time, propose to sell and issue. A Holder's pro rata share, for purposes of this right of first refusal, is the ratio of the number of shares of Common Stock owned by such Holder immediately prior to the issuance of New Securities, to the total number of shares of Common Stock outstanding immediately prior to the issuance of New Securities. Each Holder shall have a right of over-allotment such that if any Holder fails to exercise its right hereunder to purchase its pro rata share of New Securities, the Company shall provide each Holder with prompt written notice of this event and the other Holders may purchase the non-purchasing Holder's portion on a pro rata basis within ten (10) days from the date of such notice. This right of first refusal shall be subject to the following provisions: (a) "New Securities" shall mean any capital stock (including Common Stock and/or Preferred Stock) of the Company whether now authorized or not, and rights, options or warrants to purchase such capital stock, and securities of any type whatsoever that are, or may become, convertible into capital stock; provided that the term "New Securities" does not include (i) securities issued upon conversion of the warrants issued to CA on the date hereof; (ii) securities issued to investors and securities issuable upon exercise of the warrants issued to such investors in a private placement of the Company's Common Stock in an aggregate offering amount of up to $2.5 million that will close as of the date hereof, (iii) securities issued pursuant to the acquisition of another business entity or business segment of any such entity by the Company by merger, purchase of substantially all the assets or other reorganization whereby the Company will own more than fifty percent (50%) of the voting power of such business entity or business segment of any such entity; (iv) any borrowings, direct or indirect, from financial institutions or other persons by the Company, whether or not presently authorized, including any type of loan or payment evidenced by any type of debt instrument, provided such borrowings do not have any equity features including warrants, options or other rights to purchase capital stock and are not convertible into capital stock of the Company; (v) securities issued to employees, consultants, officers or directors of the Company pursuant to any stock option, stock purchase or stock bonus plan, agreement or arrangement existing on the date hereof or hereafter approved by the unanimous vote of the Board of Directors or Compensation Committee; (vi) securities issued in connection with obtaining bona fide lease financing, whether issued to a lessor or guarantor; (vii) securities issued in a public offering of Common Stock of the Company pursuant to a firm-commitment underwritten registration under the Securities Act with an aggregate offering price to the public of at least $10,000,000 and in which no single purchaser or group of affiliated purchasers acquire in such offering greater than ten percent (10%) of the shares sold in the offering or three (3%) of then outstanding equity securities of the Company; and (viii) securities issued in connection with any stock split, stock dividend or recapitalization of the Company. (b) In the event the Company proposes to undertake an issuance of New Securities, it shall give each Holder written notice of its intention, describing the type of New Securities, and their price and the general terms upon which the Company proposes to issue the same. Each Holder shall have fifteen (15) days after any such notice is mailed or -17- delivered to agree to purchase up to such Holder's pro rata share of such New Securities for the price and upon the terms specified in the notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased. (c) In the event the Holders fail to exercise fully the right of first refusal within such fifteen (15) day period and after the expiration of the ten-day (10) period for the exercise of the over-allotment provisions of this Section 12, the Company shall have sixty (60) days thereafter to sell or enter into an agreement (pursuant to which the sale of New Securities covered thereby shall be closed, if at all, within ninety (90) days to sell the New Securities respecting which the Holders' right of first refusal option set forth in this Section 12 was not exercised, at a price and upon terms no more favorable to the purchasers thereof than specified in the Company's notice to Holders pursuant to Section 12(b). In the event the Company has not sold within such 90-day period or entered into an agreement to sell the New Securities in accordance with the foregoing within sixty (60) days from the date of such agreement, the Company shall not thereafter issue or sell any New Securities, without first again offering such securities to the Holders in the manner provided in Section 12(b) above. (d) The right of first refusal granted under this Agreement shall expire on the earlier to occur of (i) two (2) years from the date of this Agreement or (ii) the date the Holders as a group hold less than 15% of the issued and outstanding capital stock of the Company. 12. NOTICES. Any and all notices, designations, consents, offers, acceptances or any other communications shall be given in writing by either (a) personal delivery to and receipted for by the addressee or by (b) telecopy or registered or certified mail which shall be addressed, in the case of the Company, to: Centura Software Corporation, 975 Island Drive, Redwood Shores, California 94065, attention: Chief Financial Officer; in the case of Holders, to the address or addresses thereof appearing on the books of the Company or of the transfer agent and registrar for its Common Stock. All such notices and communications shall be deemed to have been duly given and effective: when delivered by hand, if personally delivered; two (2) business days after being deposited in the mail, postage prepaid, if mailed; and when receipt is acknowledged, if telecopied. 13. NO INCONSISTENT AGREEMENTS. The Company will not hereafter enter into any agreement with respect to its securities which is inconsistent with the rights granted to the Holders in this Agreement. 14. SPECIFIC PERFORMANCE. The Company acknowledges that the rights granted to the Holders in this Agreement are of a special, unique and extraordinary character, and that any breach of this Agreement by the Company could not be compensated for by damages. Accordingly, if the Company breaches its obligations under this Agreement, the Holders shall be entitled, in addition to any other remedies that they may have, to enforcement of this Agreement by a decree of specific performance requiring the Company to fulfill its obligations under this Agreement. -18- 15. SEVERABILITY. If any provision of this Agreement or any portion thereof is finally determined by a court of competent jurisdiction to be unlawful or unenforceable, such provision or portion thereof shall in no way affect any other provision of this Agreement, the application of any such provision and any other circumstances, and any portion of such invalidated provision that is not invalidated by such a determination shall remain in full force and effect. 16. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which, together, shall constitute one and the same instrument. 17. DEFAULTS. A default by any party to this Agreement in such party's compliance with any of the conditions or covenants hereof or performance of any of the obligations of such party hereunder shall not constitute a default by any other party. 18. AMENDMENTS, WAIVERS. This Agreement may not be amended, modified or supplemented and no waivers of or consents to or departures from the provisions hereof may be given unless consented to in writing by the Company and the holders of two-thirds of the Registrable Shares; PROVIDED, HOWEVER, that no such amendment, supplement, modification or waiver shall deprive any Holder of any rights under Section 2 or 4 hereof without the consent of such Holder. 19. CONSTRUCTION. The captions contained in this Agreement are for reference purposes only and shall not constitute a part of this Agreement. Unless the context requires otherwise, the use of the masculine shall include the feminine, and the use of the singular shall include the plural. The word "including" shall mean "including, but not limited to." The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent and no rules of strict construction will be applied against any party. 20. ATTORNEYS' FEES. In any action or proceeding brought to enforce any provision of this Agreement, or where any provision hereof is validly asserted as a defense, the successful party shall be entitled to recover reasonable attorneys' fees in addition to any other available remedy. 21. ADDITIONAL ACTIONS. Each party (including transferees and assigns thereof) shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby. 22. ENTIRE AGREEMENT. This Agreement, together with the Note Purchase Agreement and Exchange Agreement, contains the entire agreement among the parties hereto with respect to the transaction contemplated herein and understandings among the parties relating to the subject matter hereof. Any and all previous agreements and understandings between -19- or among the parties hereto regarding the subject matter hereof are, whether written or oral, superseded by this Agreement. 23. GOVERNING LAW. This Agreement is made pursuant to and shall be construed in accordance with the laws of the State of California without regard to that state's conflicts of laws principles. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective authorized officers as of the date first written above. NEWPORT ACQUISITION COMPANY NO. 2 LLC By Crossroads Capital Partners, LLC, as managing Member By /S/JAMES A. SKELTON ---------------------------------------------- Name JAMES A. SKELTON -------------------------------------------- Title PRINCIPAL ------------------------------------------- CENTURA SOFTWARE CORPORATION By /S/JOHN BOWMAN --------------------------------------------- Name JOHN BOWMAN ------------------------------------------- Title CHIEF FINANCIAL OFFICER ------------------------------------------ -20- EX-99.3 4 AGREEMENT TO JOINTLY FILE SCHEDULE 13D EXHIBIT 99.3 AGREEMENT TO JOINTLY FILE SCHEDULE 13D Each of the undersigned parties hereby agree, effective March 6, 1998, to cause to be jointly filed on their behalf a Schedule 13D with the Securities and Exchange Commission, the Nasdaq Small Cap Market, and Centura Software Corporation ("Centura") in connection with the acquisition by Newport Acquisition Company No. 2 LLC of 11,415,094 shares of Centura common stock on February 27, 1998. IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be executed as of the date first referenced above. NEWPORT ACQUISITION COMPANY NO. 2 LLC By: Crossroads Capital Partners, LLC, as Managing Member By /s/Dennis I. Simon -------------------------------------------- Dennis I. Simon Managing Member CROSSROADS CAPITAL PARTNERS, LLC By /s/Dennis I. Simon -------------------------------------------- Dennis I. Simon Managing Member RUBIN PACHULSKI DEW PROPERTIES, LLC By /s/Scott Dew -------------------------------------------- Scott Dew Managing Member -----END PRIVACY-ENHANCED MESSAGE-----