<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Commission File Number
SEPTEMBER 30, 1996 0-21010
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
CENTURA SOFTWARE CORPORATION
(FORMERLY GUPTA CORPORATION)
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-2874178
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
1060 Marsh Road
Menlo Park, California 94025
(Address of principal executive offices)
Registrant's telephone number, including area code:
(415) 321-9500
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for at least the past 90 days.
Yes X No
------ ------
As of September 30, 1996, there were 12,632,875 shares of the Registrant's
common stock outstanding.
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CENTURA SOFTWARE CORPORATION
FORM 10-Q For the Quarter Ended September 30, 1996
INDEX
Page
Facing sheet 1
Index 2
Part I. Financial Statements and Supplementary Data
Item 1. a) Condensed consolidated balance sheets at September 30, 3
1996 and December 31, 1995
b) Condensed consolidated statements of operations for the 4
three months and nine months ended September 30, 1996
and September 30, 1995
c) Condensed consolidated statements of cash flows for the 5
nine months ended September 30, 1996 and September 30,
1995
d) Notes to condensed consolidated financial statements 6
Item 2. Management's Discussion and Analysis of Financial Condition 7
and Results of Operations
Part II Other Information 13
Signature 15
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ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CENTURA SOFTWARE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(IN THOUSANDS,
EXCEPT PER SHARE DATA) SEPTEMBER 30, DECEMBER 31
1996 1995
------------- ------------
ASSETS (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 8,104 $ 9,865
Short-term investments 3,366 9,557
Accounts receivable, less allowances
of $3,054 in 1996 and $3,475 in 1995 9,269 12,174
Inventories 53 218
Other current assets 3,196 2,999
------- -------
Total current assets 23,988 34,813
Property and equipment, at cost, less accumulated depreciation 4,288 5,881
Capitalized software, at cost, net of accumulated amortization 3,244 2,980
Long-term investments 1,337 2,354
Other assets 2,201 2,076
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Total assets $35,058 $48,104
------- -------
------- -------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current Liabilites:
Current portion of capital lease obligations $ 369 $ 397
Accounts payable 5,660 6,152
Accrued compensation and related expenses 2,117 3,168
Other accrued liabilities 3,194 7,572
Accrued litigation expenses 12,306 14,328
Deferred revenue 22,201 28,800
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Total current liabilities 45,847 60,417
Long-term debt, less current portion 10,085 10,330
Other long-term liabilities 1,966 1,414
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Total liabilities $57,898 $72,161
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SHAREHOLDERS EQUITY (DEFICIT)
Common stock, $.01 par value:
Authorized: 60,000 shares
Issued and outstanding: 12,632 shares in 1996 and 12,382 shares in
1995 58,025 57,577
Cumulative translation adjustment (222) (150)
Accumulated deficit (80,643) (81,484)
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Total shareholders' equity (deficit) (22,840) (24,057)
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Total liabilities and shareholders' equity (deficit) $35,058 $48,104
------- -------
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</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
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<PAGE>
CENTURA SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
(IN THOUSANDS, Three Months Ended Sept 30, Nine Months Ended Sept 30,
EXCEPT PER SHARE DATA) -------------------------- --------------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net revenues:
Product $10,414 $13,053 $33,002 $39,784
Service 4,196 3,875 12,647 12,100
------- ------- ------- -------
Net revenues 14,610 16,928 45,649 51,884
------- ------- ------- -------
Cost of revenues:
Product 1,047 1,822 3,546 5,700
Service 2,323 2,621 6,780 8,014
------- ------- ------- -------
Cost of revenues 3,370 4,443 10,326 13,714
------- ------- ------- -------
Gross profit 11,240 12,485 35,323 38,170
------- ------- ------- -------
Operating expenses:
Sales and marketing 6,697 10,998 20,984 32,934
Research and development 2,813 2,819 8,370 8,828
General and administrative 1,480 1,764 4,608 6,137
------- ------- ------- -------
Total operating expenses 10,990 15,581 33,962 47,899
------- ------- ------- -------
Operating Income (Loss) 250 (3,096) 1,361 (9,729)
Other income (expense):
Interest income 141 -- 335 695
Interest expense (210) -- (397) --
Foreign currency gain (loss) (1) 71 (182) --
------- ------- ------- -------
Income (Loss) before income taxes 180 (3,025) 1,117 (9,034)
Provision for income taxes 83 402 276 1,029
Net Income (Loss) $97 (3,427) $841 (10,063)
------- ------- ------- -------
------- ------- ------- -------
Net Income (Loss) per share $0.01 $(0.28) $0.07 $(0.83)
------- ------- ------- -------
------- ------- ------- -------
Weighted average common shares and equivalents 12,760 12,260 12,720 12,184
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
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CENTURA SOFTWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Nine Months Ended September 30,
(IN THOUSANDS) 1996 1995
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net Income (Loss) $ 841 $(10,063)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 2,255 2,852
Amortization of and adjustments to capitalized software
development costs 1,162 1,612
Provision for doubtful accounts (220) 19
Provision for sales returns and allowances (200) (1,099)
Changes in assets and liabilities:
Accounts receivable 3,326 1,984
Inventories 165 89
Prepaid expenses and other current assets (197) (1,738)
Accounts payable and accrued liabilities (7,944) (2,386)
Deferred revenue (6,600) 3,729
Other liabilities 552 808
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Net cash used in operating activities (6,860) (4,193)
------- -------
Cash flows from investing activities:
Maturities of investments 7,207 7,369
Capitalization of software costs (1,426) (2,300)
Other assets (125) (1,130)
Additions to property and equipment (662) (2,286)
-------- --------
Net cash provided by investing activities 4,994 1,653
-------- --------
Cash flows from financing activities:
Repayment of note payable (243) -
Proceeds from notes payable - 9,396
Repayment of capital lease obligations (28) (938)
Proceeds from issuance of common stock, net 448 1,004
-------- --------
Net cash provided by financing activities 177 9,462
-------- --------
Effect of exchange rate changes on cash and cash equivalents (72) 11
-------- --------
Net increase (decrease) in cash and cash equivalents (1,761) 6,932
Cash and cash equivalents at beginning of period 9,865 7,031
--------
Cash and cash equivalents at end of period $ 8,104 $ 13,963
-------- --------
-------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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CENTURA SOFTWARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
METHOD OF PREPARATION. The condensed consolidated balance sheets as of
September 30, 1996 and the condensed consolidated statements of operations and
cash flows for the periods ended September 30, 1996 and 1995 have been prepared
by the Company, without audit. The financial statements for the period ended
September 30, 1995 have been restated (see Notes to the Company's Annual Report
on Form 10-K for the year ended December 31, 1995). In the opinion of
management, all adjustments necessary for a fair statement of the financial
position, results of operations, and cash flows have been made for all periods
presented. The financial data should be reviewed in conjunction with the
audited financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995. The results of
operations for the interim period ended September 30, 1996 are not necessarily
indicative of the operating results for the full year.
The December 31, 1995 balance sheet was derived from audited financial
statements, but does not include all disclosures required by generally accepted
accounting principles.
COMPUTATION OF NET INCOME (LOSS) PER SHARE. Net income (loss) per share is
computed using the weighted average number of common and common equivalent
shares outstanding. Common equivalent shares (using the modified treasury stock
method) have been included in the computation when dilutive. Convertible
debentures which are not common stock equivalents are also not included in a
fully diluted calculation of earnings (loss) per share because their effect is
antidilutive.
2. LITIGATION
On May 2, 1994, a lawsuit was filed against the Company and certain of its
officers and directors, by a holder of the Company's common stock, on his own
behalf and purportedly on behalf of a class of others similarly situated. The
lawsuit was subsequently amended, and alleged that the Company made false and
misleading statements and failed to disclose material information relating to
existing business conditions and the Company's prospects and that officers and
directors violated the insider trading laws. The plaintiff was seeking damages
of an unstated amount.
The Company has reached a binding settlement agreement with plaintiffs'
counsel in this lawsuit, and gained court approval on September 30, 1996. Under
the terms of the agreement, the Company will provide $3 million and 1,875,000
shares to a fund to be distributed among the members of the plaintiff class. The
Company also agreed to supplement this payment with up to 625,000 additional
shares in the event the value of its common stock is less than $6.00 per share
at certain dates in the future. The Company's directors and officers' liability
insurer will pay approximately $2 million of the cash contribution to the
settlement fund. The 1995 financial statements include $15.3 million in
litigation expense for the agreement and associated legal expenses.
As of September 30, 1996, to the best of the Company's knowledge there were
no other pending actions, potential actions, claims or proceedings against the
Company that were likely to result in potential damages that would have a
material adverse impact on the Company's financial statements. As noted in the
"Risk Factors" in Item 2 below, the Company exists in a volatile legal and
regulatory environment and it is not possible to anticipate or estimate the
potential adverse impact of unknown claims or liabilities against the Company,
its officers and directors, and as such no estimate is made in the Company's
financial statements for such unknown claims or liabilities.
<PAGE>
ITEM 2.
CENTURA SOFTWARE CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. With the exception of
historical information contained herein, the matters discussed in this Form 10-Q
involve risk and uncertainties, including quarterly fluctuations in operating
results, timely availability and market acceptance of new products and upgrades,
the impact of competitive products and pricing, and other risk factors as
detailed below. Results for future quarters could differ materially from those
expressed in any forward looking statements made by or on behalf of the company.
The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements and notes thereto included in Part
I--Item 1 of this Quarterly Report, and the audited consolidated financial
statements, and notes thereto, and Management's Discussion and Analysis of
Financial Condition and Results of Operations included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995.
RESULTS OF OPERATIONS:
NET REVENUES. During 1995, the Company restated revenues on certain product
licensing arrangements for fiscal years 1995, 1994, and 1993, excluding the
fourth quarter of 1995. For these contracts the Company has deferred
recognition of revenues until the customer indicates that it has sublicensed or
distributed the product. The restatement resulted in an increase of operating
revenues of $1.2 million in the third quarter of 1995.
Net revenues decreased 13% to $14.6 million for the third quarter of 1996
from $16.9 million for the third quarter of 1995. For the first nine months of
1996 net revenue decreased 12% to $45.6 million from $51.8 million for the first
nine months of 1995. International revenues accounted for approximately 64% of
net revenues in the third quarter of 1996 compared to 61% in the third quarter
of 1995. International revenues were approximately 61% of net revenues for the
first nine months of 1996 and also 1995. Revenue from expired contracts
amounted to $0.6 million and $0 in the third quarter of 1996 and 1995,
respectively. For the first nine months of 1996 revenue from expired contracts
was $1.3 million compared to $0.5 million for the same period in 1995.
Product revenues decreased by $2.6 million or 20% to $10.4 million for the
third quarter of 1996 compared to the third quarter of 1995. For the first nine
months of 1996 product revenues decreased 17% to $33.0 million from $39.7
million for the same period of 1995. Sales of the new Centura product line,
introduced in May, accounted for approximately 15% of product revenues in the
third quarter of 1996. The remaining third quarter 1996 product revenues were
split between database and tools/connectivity software at 64% and 36%,
respectively. In the third quarter of 1995, database products and
tools/connectivity software accounted for 46% and 54% of product revenues,
respectively. For the first nine months of 1996, product revenues from the new
Centura line were 15% of the total with the reamining revenues split 59%
database and 41% tools/connectivity software, compared to 50% and 50% for the
same period of 1995. Channel sales accounted for 55% of net revenues for the
third quarter of 1996, compared to 56% for the third quarter of 1995. For the
first nine months of 1996 channel sales were 51% compared to 55% for the same
period in 1995.
Service revenues increased 8% to $4.2 million for the third quarter of 1996
from $3.8 million for the third quarter of 1995. For the first nine months of
1996 service revenues increased to $12.6 million from $12.1 million in the same
period of 1995, an increase of 4%.
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COST OF PRODUCT. Cost of product as a percentage of product revenues
was 10% for the third quarter of 1996, and 11% for the first nine months of
1996 compared to 14% and 14% for the same periods of 1995.
COST OF SERVICES. Cost of services as a percentage of service revenues was
55% for the third quarter of 1996 and 53% for the first nine months of 1996
compared to 67% and 66% for same periods of 1995. This reduction in percentage
reflects the impact of restructuring and other costs reduction efforts completed
in the fourth quarter of Fiscal 1995.
SALES AND MARKETING EXPENSES. For the third quarter of 1996, the Company
spent $6.7 million, or 45% of net revenues, in sales and marketing activities,
compared to $11.0 million, or 65% of net revenues, for the third quarter of
1995. In the first nine months of 1996, sales and marketing expenses were $20.9
million or 46% of net revenues compared to $32.9 million or 63% for the same
period in 1995. The reduction in sales and marketing expense for the first nine
months of 1996 compared to the same period in 1995 reflects the Company's
commitment to control spending, while continuing its worldwide marketing
efforts.
RESEARCH AND DEVELOPMENT EXPENSES. The table below sets forth gross
research and development expenses, capitalized software development costs, and
net research and development expenses in dollar amounts and as a percentage of
net revenues for the periods indicated:
<TABLE>
<CAPTION>
(IN THOUSANDS) Three months ended Nine months ended
September 30, September 30,
------------------ -----------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Dollar Amounts:
Gross research and development expenses $2,888 $3,239 $9,796 $10,006
Capitalized software development costs (75) (420) (1,426) (1,178)
------ ------ ------ -------
Net research and development expenses $2,813 $2,819 $8,370 $8,828
As a Percentage of Net Revenues:
Gross research and development expenses 20% 19% 21% 19%
Net research and development expenses 19% 17% 18% 17%
</TABLE>
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
decreased 16% to $1.48 million for the third quarter of 1996 from $1.76 million
for the third quarter of 1995. For the first nine months of 1996 these expenses
decreased 25% to $4.6 million compared to $6.1 million in the same period of
1995. In 1995, the Company began a program of reducing administrative expenses
by staff reductions, deferring MIS projects, and reductions in discretionary
spending. The Company is now experiencing the benefits of this program, in
reduced general and administrative expenses. Additionally, the Company
completed a restructuring announced on January 2, 1996, the costs of which were
accrued in the fourth quarter of 1995, which further reduced general and
administrative staff.
OTHER INCOME (EXPENSE). Other income (expense) is comprised of interest
income, interest expense, and gains or losses on foreign currency transactions.
For the third quarter of 1996 other income (expense) was $(0.1) million,
compared to $0.1 million for the third quarter of 1995. For the first nine
months of 1996 other income (expense) was $(0.2) million compared to $0.7
million in the same period of 1995.
PROVISION FOR INCOME TAXES. The provision for income taxes was $83,000 in
the third quarter of 1996 and $402,000 in the third quarter of 1995. For the
first nine months of 1996, income tax provision was $276,000 versus $1,029,000
in the same period of 1995. The provision primarily relates to foreign
withholding taxes. Due to the Company's existing NOL position with regard to
prior years, no tax provision was made for income in this quarter.
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LIQUIDITY AND CAPITAL RESOURCES:
At September 30, 1996, the Company had a deficit working capital position
of $21.8 million. Net cash used in operating activities in the first nine
months of 1996 was $6.8 million. Approximately $5.9 million of the $6.8 million
was associated with the shareholder lawsuit, restructuring and one time charges
expensed during fiscal 1995. For the first nine months of 1996, cash provided
by investing activities totaled $5.0 million, which related primarily to the
maturities of short-term investments of $7.2 million, which was offset by the
capitalization of software development costs of $1.4 million and additions to
property and equipment of $0.8 million.
RISK FACTORS:
This Quarterly Report on Form 10-Q contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Actual results could differ
materially from those projected in the forward-looking statements as a result of
certain of the risk factors set forth below and elsewhere in this Quarterly
Report on Form 10-Q. In evaluating the Company's business, prospective
investors should carefully consider the following factors in addition to the
other information presented in this report.
CENTURA PRODUCTS. The Company's strategy, including the change in the
Company's name, is centered on the successful delivery and market acceptance of
its Centura product line. The initial release of the Centura products occurred
in May 1996, with additional products scheduled for delivery throughout 1996 and
1997. The failure to deliver these products as scheduled or their failure to
achieve early market acceptance could have a material adverse affect on the
Company's business, operating results and financial condition.
NEED FOR ADDITIONAL EQUITY FINANCING. Additional equity financing may be
necessary to meet NASDAQ minimum net worth requirements. Furthermore, the
Company is dependent upon achieving a reasonable operating performance to
satisfy its current and future financing needs. During 1995, the Company
completed a private debt placement with Computer Associates International of
approximately $10 million dollars. If the Company needs further financing,
there can be no assurance that it will be available on reasonable terms or at
all. Any additional equity financing will result in dilution to the Company's
stockholders.
DEPENDENCE ON THIRD PARTY ORGANIZATIONS. The Company is increasingly
dependent on the efforts of third party "partners" (e.g., consultants, system
houses, software developers, etc.) to implement, service and support the
Company's products. These third parties increasingly have opportunities to
select from a very broad range of products from the Company's competitors, many
of whom have greater resources and market acceptance than the Company. In order
to succeed, the Company must actively recruit and sustain relationships with
these third parties. There can be no assurance that the Company will be
successful in recruiting new partners or in sustaining its relationships with
its existing partners.
DEPENDENCE ON KEY PERSONNEL. The Company's future success depends in large
part on the continued service of its key product development, technical, sales,
marketing and management personnel and on its ability to continue to attract,
motivate and retain highly qualified employees. The Company depends on teams of
programmers, and competition for these skilled employees is intense. The loss
of services of key technical or management personnel could have a material
adverse effect upon the Company's current business, new product development
efforts and prospects. Competition for qualified software development, sales
and other personnel is intense and there can be no assurance that the Company
will be successful in attracting and retaining such personnel. The Company does
not have
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employment or non-competition agreements with any employees, except for
Sam Inman, the Company's CEO and President.
COMPETITION. The market for client/server system software is intensely
competitive and characterized by rapidly changing technology, evolving industry
standards, and changing customer requirements. The Company's competitors
include providers of sophisticated database software including IBM, Informix
Corporation, Ingres, Oracle Corporation and Sybase, Inc. The Company also faces
competition from the providers of PC-based software products, including
Microsoft Corporation and Borland International. In addition, the Company faces
competition from providers of software specifically developed for the PC
client/server market, including front-end tools offered by Sybase's Powersoft
Division, Microsoft, and Forte, and potentially from vendors of applications
development tools based on fourth-generation languages or computer-aided
software engineering technologies. Many of the Company's competitors have
longer operating histories and greater financial, technical, sales, marketing
and other resources, as well as greater name recognition and a larger installed
base, than the Company. Furthermore, these competitors could attempt to
increase their presence in this market by acquiring or forming strategic
alliances with competitors or bundling existing or new products with other, more
established products. The Company's products experienced increased competition
in 1995 and the first nine months of 1996, resulting in price reductions and
loss of market share. There can be no assurance that the Company will be able
to compete successfully or that competition will not have a material adverse
effect in the future.
NEW PRODUCT RISKS; RAPID TECHNOLOGICAL CHANGE. The market for the
Company's software products and services is characterized by dynamic customer
demands, rapid technological and marketplace changes, and frequent new product
introductions. The Company believes that its future success will depend on its
ability to enhance its existing products and introduce new products , through
acquiring or internal development , on a timely and cost-effective basis that
meet dynamic customer requirements. The Company has experienced delays in
introducing new products and enhancements which resulted in loss or delays of
product revenues. In addition, programs as complex as the software products
offered by the Company may contain undetected errors or bugs when they are first
introduced which could adversely affect commercial acceptance of such products.
Centura Software's success will also depend on the ability of its products to
perform well with existing and future leading, industry-standard application
software products intended to be used in connection with RDBMSs. There can be no
assurance that the Company will be able to respond effectively to technological
changes or product announcements by competitors. Furthermore, the Company may
announce new products, capabilities or technologies that have an immediate
adverse impact on the Company's existing product offerings. Commercial
acceptance of the Company's products and services could be adversely affected by
critical or negative statements or reports by industry and financial analysts
concerning the Company and its products, or other factors such as the Company's
financial performance.
DEPENDENCE UPON DISTRIBUTION CHANNELS. The Company increasingly relies on
strategic relationships with value-added resellers and distributors for a
substantial portion of its sales and revenues. Some of the Company's resellers
and distributors also offer competing products. Most of the Company's resellers
and distributors are not subject to any minimum purchase requirements, can cease
marketing the Company's products at any time, and may from time to time be
granted stock exchange or rotation rights. The introduction of new and enhanced
products may result in higher product returns and exchanges. Any product
returns or exchanges in excess of recorded allowances could have a material
adverse effect on the Company's business, operating results and financial
condition. The Company also maintains relationships with a number of vertical
software "partners" and strategic marketing "partners" for marketing or resale
of the Company's products. The loss of one or more resellers, distributors,
vertical software partners or other marketing partners, or failure of such
parties to renew agreements with the Company on expiration, could have a
material adverse effect on the Company.
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<PAGE>
The Company has reduced its resources devoted to North American corporate
sales and also decreased its expenditures on corporate and product marketing.
The Company expects to rely increasingly on third-party channels for sales of
packaged product while focusing its corporate sales efforts on larger
opportunities. Failure of the Company to successfully implement, support and
manage these sales strategies could have a material adverse effect on the
Company.
In a number of markets, including rapidly growing client/server markets
such as Japan, Korea, China/Hong Kong and Brazil, the Company has entered into
quasi-exclusive multi-year agreements with independent companies that have also
licensed the use of the Company's name. These organizations are in place to
increase the Company's opportunities and penetration in such markets where the
rapid adoption of client/server technologies is anticipated. While the Company
believes that to date these agreements have increased the Company's penetration
in these markets, there can be no certainty that this performance will continue
nor that these relationships will remain in place. The Company's future cost of
maintaining its business in these markets could increase substantially if these
agreements are not renewed.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS. The Company's revenues and
operating results have fluctuated and may vary substantially from period to
period. Whilst the Company has reported profits in the first three quarters of
1996, it had net losses of $44.1 million and $31.8 million for fiscal years 1995
and 1994, respectively. There can be no assurance that the restructuring of the
Company's business strategies and tactics completed in early 1996 will be
successful or that the Company will be able to sustain any such profitability on
a quarterly basis. The product licensing arrangements which are subject to sell
through revenue recognition will make estimation of revenues dependent on
customer reporting. Thus, estimation of operating results prior to the end of a
quarter becomes extremely uncertain. The Company has operated historically with
little or no backlog of traditional boxed product shipments. Centura has
experienced a seasonal pattern of product revenue decline between the fourth
quarter and the succeeding first quarter, contributing to lower worldwide
product revenues and operating results. The Company has generally realized
lower European product revenues in the third quarter as compared to the rest of
the year. The Company has experienced a pattern of recording a substantial
portion of its revenues in the third month of a quarter. As a result, product
revenues in any quarter are substantially dependent on orders booked in the last
month. Because the Company's operating expenses are based on projected annual
and quarterly revenue levels, operating results for a particular period may be
adversely affected by delays in or loss of orders. Additional factors have
caused and may in the future cause, the Company's revenues and operating results
to vary significantly from period to period. These factors include: delays in
introduction of products or product enhancements; size and timing of individual
orders; software "bugs" or other product quality problems; competition and
pricing in the software industry; sales mix among distribution channels;
customer order deferrals in anticipation of new products; market acceptance of
new products; reduction in demand for existing products and shortening of
product life cycles as a result of new product introductions; changes in
operating expenses; changes in Company strategy; personnel changes; foreign
currency exchange rates; mix of products sold; inventory obsolescence; product
returns and rotations; and general economic conditions
COMPONENTIZED MARKETS: The advent of so-called componentized software may
alter the way in which customers buy software. As specific software
functionality can be bundled into smaller units or objects rather than in broad,
highly functional products such as the Company's development tools, customers
may be less willing to buy such broad, highly functional products. If such a
trend continues, there can be no assurance that the Company will be able to
repackage and efficiently distribute its products in such componentized
packages. The costs and efforts necessary to package and distribute such
components are largely unknown. Failure of the Company to introduce
componentized products successfully and cost-effectively could have a material
adverse affect on the Company's business, operating results and financial
condition.
MARKET ACCEPTANCE OF PC CLIENT/SERVER SYSTEMS. Substantially all of the
Company's revenues have been derived from the licensing of software products for
PC client/server systems, and licenses of
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such products are expected to continue to account for substantially all of
the Company's revenues for the foreseeable future. With the increasing focus
on enterprise-wide systems, some customers may opt for solutions that favor
mainframe or mini-computer solutions. Accordingly, companies may abandon use
of PC client/server systems and such decisions could be critical to the
Company's future success.
INTERNATIONAL SALES AND OPERATIONS. The Company expects that international
revenues, particularly in new and emerging markets, will continue to account for
a significant percentage of its total revenues. Certain risks are inherent in
international operations, including foreign currency fluctuations and losses,
governmental controls, export license requirements, restrictions on the export
of critical technology, political and economic instability, trade restrictions,
changes in tariffs and taxes, difficulties in staffing and managing
international operations, and possibility of difficulty in accounts receivable
collection. There can be no assurance that these or other factors will not have
a material adverse effect on the Company's future international sales and
operations.
LEGAL PROCEEDINGS: The Company operates in a complicated and volatile
industry in which disputes, litigation, regulatory proceedings and other actions
are a necessary risk of doing business. There can be no assurance that the
Company will not participate in such legal proceedings and that the costs and
charges will not have a material adverse impact on the Company's future success.
POSSIBLE VOLATILITY OF STOCK PRICE. The market for the Company's stock is
highly volatile. The trading price of the Company's common stock fluctuated
widely in 1995 and the first nine months of 1996 and may continue to be subject
to wide fluctuations in response to quarterly variation in operating and
financial results and announcements of new products or customer contracts by the
Company or its competitors. Any shortfall in revenue or earnings from levels
expected by securities analysts or others could have an immediate and
significant adverse effect on the trading price of the Company's common stock in
any given period. Additionally, the Company may not learn of, or be able to
confirm, revenue or earnings shortfalls until late in the fiscal quarter or
following the end of the quarter, which could result in an even more immediate
and adverse effect on the trading of the Company's common stock. Finally, the
Company participates in a highly dynamic industry, which often results in
significant volatility of the Company's common stock price.
-12-
<PAGE>
PART II: OTHER INFORMATION
CENTURA SOFTWARE CORPORATION
ITEM 1. LEGAL PROCEEDINGS
On May 2, 1994, a lawsuit was filed against the Company and certain of its
officers and directors, by a holder of the Company's common stock, on his own
behalf and purportedly on behalf of a class of others similarly situated. The
lawsuit was subsequently amended, and alleged that the Company made false and
misleading statements and failed to disclose material information relating to
existing business conditions and the Company's prospects and that officers and
directors violated the insider trading laws. The plaintiff was seeking damages
of an unstated amount.
The Company has reached a binding settlement agreement with plaintiff
counsel in this lawsuit, and obtained court approval on September 30, 1996.
Under the terms of the agreement, the Company will provide $3 million and
1,875,000 shares to a fund to be distributed among the members of the plaintiff
class. The Company also agreed to supplement this payment with up to 625,000
additional shares in the event the value of its common stock is less than $6.00
per share at certain dates in the future. $2 million of the cash contribution
to the settlement fund will be paid by the Company's directors and officers'
liability insurer. As a result of the settlement, shares outstanding will
increase by approximately 15% based on the settlement price. The 1995 financial
statements include $15.3 million in litigation expense for the agreement and
associated legal expenses.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS IN SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held it's Annual Meeting of shareholders on September 24, 1996.
There were present at the meeting , in person or represented by proxy, the
holders of 11,437,046 shares of Common Stock, which represented approximately
90.5% of the outstanding shares of Common Stock. The matters voted on at the
meeting and the votes cast were as follows :
1. All Management's nominees for directors were elected as listed below :
Name of Nominee Votes Cast
--------------- ----------
Umang P. Gupta. . . . . . . . . . . . . . . For 10,765,867
Withheld 671,179
Samuel M. Inman . . . . . . . . . . . . . . For 11,211,511
Withheld 225,495
-13-
<PAGE>
D. Bruce Scott. . . . . . . . . . . . . . . For 10,797,677
Withheld 639,369
William O. Grabe. . . . . . . . . . . . . . For 11,214,521
Withheld 222,525
Max D. Hopper . . . . . . . . . . . . . . . For 11,217,579
Withheld 219,467
Anthony Sun . . . . . . . . . . . . . . . . For 11,211,901
Withheld 225,145
2. The approval of an amendment to the Company's 1995 Stock Option Plan
to increase the number of shares of Common Stock reserved for issuance
thereunder by 1,000,000 shares to an aggregate of 2,000,000 shares.
There were 5,269,505 shares of Common Stock voting in favor, 970,093
shares of Common Stock voting against, 1,109,097 shares of Common
Stock abstaining and 4,088,351 non-votes.
3. The approval of an amendment to the Company's 1992 Employee Stock
Option Plan to increase the number of shares of Common Stock reserved
for issuance thereunder by 100,000 shares to an aggregate of 400,000
shares. There were 6,967,770 shares of Common Stock voting in favor,
480,193 shares of Common Stock voting against , 18,804 shares of
Common Stock abstaining and 3,970,279 non-votes.
4. The approval of the adoption of the 1996 Directors' Stock Option
Plan and the reservation of 500,000 shares of Common Stock for
issuance thereunder. There were 6,379,669 shares of Common Stock
voting in favor, 923,538 shares of Common Stock voting against ,
45,518 shares of Common Stock abstaining and 4,088,321 non-votes.
5. The approval of an amendment to the Company's Amended and Restated
Articles of Incorporation to change the name of the company to Centura
Software Corporation. There were 11,358,401 shares of Common Stock
voting in favor, 50,902 shares of Common Stock voting against, 18,018
shares of Common Stock abstaining and 9,725 non-votes.
6. The ratification of the appointment of Price Waterhouse LLP as the
Company's independent public accountants for the fiscal year ending
December 31, 1996. There were 11,383,871 shares of Common Stock voting
in favor, 40,157 shares of Common Stock voting against, 13,018 shares
of Common Stock abstaining and 0 non-votes.
ITEM 5. OTHER INFORMATION
None
-14-
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (numbered in accordance with Item 601 of Regulation S-K)
Exhibit
Number Description
-------- ---------------------------------------------------------
3(i) Articles of Incorporation of Registrant , as amended on
September 24, 1996.
3(ii) Bylaws of Registrant, as amended on September 24, 1996.
10.4 1992 Employee Stock Purchase Plan , as amended on
September 24, 1996.
10.14 1995 Stock Option Plan , as amended on September 24, 1996.
10.19 1996 Directors' Stock Option Plan and forms of agreement
thereunder.
10.20 Stipulation of Settlement dated July 19, 1996 in re the
Registrant's Securities Litigation between Plaintiff's
Settlement Counsel and the Registrant's Counsel , including
exhibits thereto , and related Final Judgment and Order of
Dismissal dated September 30,1996.
(b) Reports on Form 8-K
The Company filed a Form 8-K, reporting the engagement of the accounting
firm of Price Waterhouse, LLP, as independent accountants to audit the Company's
financial statements for years ended December 31, 1993, 1994 and 1995, dated
January 8, 1996 ("Form 8-K"). The Company also reported that Arthur Andersen
LLP had withdrawn its reports dated January 14, 1994, and January 23, 1995,
issued with respect to the Company's December 31, 1993, and December 31, 1994,
financial statements.
The Company filed a Form 8-K on April 17, 1996, announcing that its annual
report on Form 10-K would be delayed due to the fact that the Company's audit
for the periods ended December 31, 1993, 1994 and 1995, by Price Waterhouse LLP
was not yet complete.
The Company filed a Form 8-K on June 18, 1996, announcing that its annual
report on Form 10-K would be further delayed due to the fact that the Company's
audit for the periods ended December 31, 1993, 1994 and 1995 by Price Waterhouse
LLP was not yet complete.
-15-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURA SOFTWARE CORPORATION
/s/ Richard A. Gelhaus
---------------------------------------------
Senior Vice President and Chief Financial Officer
(Duly Authorized and Principal Financial and
Accounting Officer)
Date: November 13, 1996
-16-
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION OF
GUPTA CORPORATION
UMANG P. GUPTA and CRAIG W. JOHNSON certify that:
1. They are the President and Secretary, respectively, of GUPTA
CORPORATION, a California corporation.
2. The Articles of Incorporation of this corporation are amended and
restated to read in their entirety as follows:
"I.
The name of this corporation is GUPTA CORPORATION.
II.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust
company business or the practice of a profession permitted to be incorporated
by the California Corporations Code.
III.
(a) This corporation is authorized to issue two classes of shares
designated "Preferred Stock" and "Common Stock", respectively. The total number
of shares which this corporation shall have authority to issue is Sixty-Two
Million (62,000,000), with par value of $0.01 per share. The number of shares
of Preferred Stock authorized to be issued is Two Million (2,000,000), and the
number of shares of Common Stock authorized to be issued is Sixty Million
(60,000,000). Upon the filing of these Amended and Restated Articles of
Incorporation, each outstanding share of Common Stock, no part value, shall be
reconstituted as one share of Common Stock, $.01 par value.
(b) The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized, within the limitations and
restrictions stated in these Articles of Incorporation to determine or alter the
rights, preferences, privileges or restrictions stated in these Articles of
Incorporation; to determine or alter the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued series of Preferred
Stock and the number of shares constituting any such series and the
<PAGE>
designation thereof, or any of them; and to increase or decrease the number
of shares of any series subsequent to the issue of shares of that series, but
not below the number of shares of such series then outstanding. In case the
number of shares of any series shall be so decreased, the shares constituting
such decrease shall resume the status which they had prior to the adoption of
the resolution originally fixing the number of shares of such series.
IV.
Section 1. LIMITATION OF DIRECTORS' LIABILITY. The liability of the
directors of the corporation for monetary damages shall be eliminated to the
fullest extent permissible under California law.
Section 2. INDEMNIFICATION OF CORPORATE AGENTS. This corporation is
authorized to provide indemnification of agents (as defined in Section 317 of
the California Corporations Code) through bylaw provisions, agreements with
agents, vote of shareholders or disinterested directors or otherwise, in excess
of the indemnification otherwise, in excess of the indemnification otherwise
permitted by such Section 317 of the California Corporations Code, subject only
to the applicable limits set forth in Section 204 of the California Corporations
Code with respect to actions for breach of duty to the corporation and its
shareholders.
Section 3. REPEAL OR MODIFICATION. Any repeal or modification of the
foregoing provisions of this Article IV by the shareholders of the corporation
shall not adversely affect any right or protection of a director of the
corporation existing at the time of such repeal or modification."
3. The foregoing amendment of Articles of Incorporation has been duly
approved by the Board of Directors.
4. The foregoing amendment of Articles of Incorporation has been duly
approved by the required vote of shareholders in accordance with Section 902 of
the California Corporations Code. At the time of shareholder approval, the
total number of outstanding shares of Common Stock of the corporation was
4,649,355, the total number of outstanding shares of Series A Preferred Stock of
the corporation was 1,220,908, the total number of outstanding shares of
Series B Preferred Stock of the corporation was 1,208,000, and the total number
of outstanding shares of Series C Preferred Stock of the corporation was
1,657,500. All outstanding shares of Series A, Series B and Series C Preferred
Stock have converted into shares of Common Stock in accordance with their terms.
The corporation has no other class of securities outstanding. The number of
shares voting in favor of the amendment equaled or exceeded the vote required.
The
<PAGE>
percentage vote required was more that 50% of the Common Stock and more than
50% of the Preferred Stock.
We further declare under penalty of perjury under the laws of the State of
California that the matters set forth in this Certificate of Amendment and
Restatement of Articles of Incorporation are true of our own knowledge.
Executed at Palo Alto, California on February 9, 1993.
/s/ Umang P. Gupta
----------------------
UMANG P. GUPTA, President
/s/ Craig W. Johnson
----------------------
CRAIG W. JOHNSON, Secretary
<PAGE>
CERTIFICATE OF AMENDMENT OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF GUPTA CORPORATION
A CALIFORNIA CORPORATION
The undersigned, Samuel Inman and Richard Heaps, hereby certify that:
1. They are the duly elected and acting President and Chief Executive
Officer and Assistant Secretary, respectively, of said corporation.
2. Article I of the Amended and Restated Articles of Incorporation of
said corporation shall be amended in its entirety to read in full as follows:
"ARTICLE I
The name of this corporation is Centura Software Corporation."
3. The foregoing amendment of Amended and Restated Articles of
Incorporation has been duly approved by the Board of Directors.
4. The foregoing amendment was approved by the holders of the requisite
number of shares of said corporation in accordance with Sections 902 and 903 of
the California General Corporation Law; the total number of outstanding shares
of each class entitled to vote with respect to the foregoing amendment was
12,622,467 shares of Common Stock. There are no shares of any series of
Preferred Stock outstanding as of the date hereof. The number of shares voting
in favor of the foregoing amendment equaled or exceeded the vote required, such
required vote being a majority of the outstanding shares of Common Stock.
The undersigned declare under penalty or perjury that the matters set forth
in the foregoing certificate are true of their own knowledge. Executed at Palo
Alto, California on September 24, 1994.
/s/ Samuel Inman
-----------------------------------
Samuel Inman, President and
Chief Executive Officer
/s/ Richard Heaps
-----------------------------------
Richard Heaps, Assistant Secretary
<PAGE>
BYLAWS
OF
CENTURA SOFTWARE CORPORATION
(formerly Gupta Corporation)
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I CORPORATE OFFICES. . . . . . . . . . . . . . . . . . . . . . . .3
1.1 PRINCIPAL OFFICE . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.2 OTHER OFFICES. . . . . . . . . . . . . . . . . . . . . . . . . . . .3
ARTICLE II MEETINGS OF SHAREHOLDERS. . . . . . . . . . . . . . . . . . . .3
2.1 PLACE OF MEETINGS. . . . . . . . . . . . . . . . . . . . . . . . . .3
2.2 ANNUAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.3 SPECIAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . .3
2.4 NOTICE OF SHAREHOLDERS' MEETINGS . . . . . . . . . . . . . . . . . .4
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE . . . . . . . . . . . .4
2.6 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.7 ADJOURNED MEETING; NOTICE. . . . . . . . . . . . . . . . . . . . . .5
2.8 VOTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT. . . . . . . . . .7
2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING . . . . . .7
2.11 RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING CONSENTS . . . .8
2.12 PROXIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
2.13 INSPECTORS OF ELECTION. . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE III DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 POWERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 NUMBER OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . . . 10
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS . . . . . . . . . . . . . 11
3.4 RESIGNATION AND VACANCIES. . . . . . . . . . . . . . . . . . . . . 11
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE . . . . . . . . . . . . . 11
3.6 REGULAR MEETINGS . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.7 SPECIAL MEETINGS; NOTICE . . . . . . . . . . . . . . . . . . . . . 12
3.8 QUORUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.9 WAIVER OF NOTICE . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.10 ADJOURNMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.11 NOTICE OF ADJOURNMENT . . . . . . . . . . . . . . . . . . . . . . 13
3.12 ACTION WITHOUT MEETING. . . . . . . . . . . . . . . . . . . . . . 13
3.13 FEES AND COMPENSATION OF DIRECTORS. . . . . . . . . . . . . . . . 13
3.14 APPROVAL OF LOANS TO OFFICERS . . . . . . . . . . . . . . . . . . 14
ARTICLE IV COMMITTEES. . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.1 COMMITTEES OF DIRECTORS. . . . . . . . . . . . . . . . . . . . . . 14
4.2 MEETINGS AND ACTION OF COMMITTEES. . . . . . . . . . . . . . . . . 15
ARTICLE V OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.1 OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5.2 ELECTION OF OFFICERS . . . . . . . . . . . . . . . . . . . . . . . 15
5.3 SUBORDINATE OFFICERS . . . . . . . . . . . . . . . . . . . . . . . 16
<PAGE>
5.4 REMOVAL AND RESIGNATION OF OFFICERS. . . . . . . . . . . . . . . . 16
5.5 VACANCIES IN OFFICERS. . . . . . . . . . . . . . . . . . . . . . . 16
5.6 CHAIRMAN OF THE BOARD. . . . . . . . . . . . . . . . . . . . . . . 16
5.7 PRESIDENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.8 VICE PRESIDENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.9 SECRETARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.10 CHIEF FINANCIAL OFFICER . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. . . . . . . . . . . . . 18
6.2 INDEMNIFICATION OF OTHERS. . . . . . . . . . . . . . . . . . . . . 18
6.3 PAYMENT OF EXPENSES IN ADVANCE . . . . . . . . . . . . . . . . . . 19
6.4 INDEMNITY NOT EXCLUSIVE. . . . . . . . . . . . . . . . . . . . . . 19
6.5 INSURANCE INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . 19
6.6 CONFLICTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII RECORDS AND REPORTS. . . . . . . . . . . . . . . . . . . . . 20
7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER . . . . . . . . . . . 20
7.2 MAINTENANCE AND INSPECTION OR BYLAWS . . . . . . . . . . . . . . . 20
7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS. . . . . . . 21
7.4 INSPECTION BY DIRECTORS. . . . . . . . . . . . . . . . . . . . . . 21
7.5 ANNUAL REPORT TO SHAREHOLDERS; WAIVER. . . . . . . . . . . . . . . 21
7.6 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VIII GENERAL MATTERS . . . . . . . . . . . . . . . . . . . . . . 22
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. . . . . . . 22
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS. . . . . . . . . . . . . 23
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED. . . . . . . . . 23
8.4 CERTIFICATES FOR SHARES. . . . . . . . . . . . . . . . . . . . . . 23
8.5 LOST CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . 24
8.6 CONSTRUCTION; DEFINITION . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE iX AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1 AMENDMENT BY SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . 24
9.2 AMENDMENT BY DIRECTORS . . . . . . . . . . . . . . . . . . . . . . 24
-ii-
<PAGE>
CENTURA SOFTWARE CORPORATION
ARTICLE I
CORPORATE OFFICES
1.1 PRINCIPAL OFFICE
The board of directors shall fix the location of the principal executive
office of the corporation at any place within or outside the State of
California. If the principal executive office is located outside such state and
the corporation has one or more business offices in such state, then the board
of directors shall fix and designate a principal business office in the State of
California.
1.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 PLACE OF MEETINGS
Meetings of shareholders shall be held at any place within or outside the
State of California designated by the board of directors. In the absence of any
such designation, shareholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of shareholders shall be held each year on a date and at
a time designated by the board of directors. In the absence of such
designation, the annual meeting of shareholders shall be held on the 18th of
April in each year at 10:00 a.m. However, if such day falls on a legal holiday,
then the meeting shall be held at the same time and place on the next succeeding
full business day. At the meeting, directors shall be elected, and any other
proper business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the shareholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president, or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
<PAGE>
If a special meeting is called by any person or persons other than the
board of directors or the president or the chairman of the board, then the
request shall be in writing, specifying the time of such meeting and the general
nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other (facsimile
transmission to the chairman of the board, the president, any vice president or
the secretary of the corporation. The officer receiving the request shall cause
notice to be promptly given to the shareholders entitled to vote, in accordance
with the provisions of Sections 2.4 and 2.5 of these bylaws, that a meeting will
be held at the time requested by the person or persons calling the meeting, so
long as that time is not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, then the person or persons requesting
the meeting may give the notice. Nothing contained in this paragraph of this
Section 2.3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the board of directors may be held.
2.4 NOTICE OF SHAREHOLDERS' MEETINGS
All notices of meetings of shareholders shall be sent or otherwise given in
accordance with Section 2.5 of these bylaws not less than ten (10) (or, if sent
by third-class mail pursuant to Section 2.5 of these bylaws, thirty (30)) nor
more than sixty (60) days before the date of the meeting. The notice shall
specify the place, date, and hour of the meeting and (i) in the case of a
special meeting, the general nature of the business to be transacted (no
business other than that specified in the notice may be transacted) or (ii) in
the case of the annual meeting, those matters which the board of directors, at
the time of giving the notice, intends to present for action by the shareholders
(but subject to the provisions of the next paragraph of this Section 2.4 any
proper matter may be presented at the meeting for such action). The notice of
any meeting at which directors are to be elected shall include the name of any
nominee or nominees whom, at the time of the notice, the board intends to
present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Corporations Code of California (the
"Code"), (ii) an amendment of the articles of incorporation, pursuant to Section
902 of the Code, (iii) a reorganization of the corporation, pursuant to Section
1201 of the Code, (iv) a voluntary dissolution of the corporation, pursuant to
Section 1900 of the Code, or (v) a distribution in dissolution other than in
accordance with the rights of outstanding preferred shares, pursuant to Section
2007 of the Code, then the notice shall also state the general nature of that
proposal.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of shareholders shall be given either (i)
personally or (ii) by first-class mail or (iii) by third class mail but only if
the corporation has outstanding shares held of record by five hundred (500) or
more persons (determined as provided in Section 605 of the Code) on the record
date for the shareholders' meeting, or (iv) by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such
-2-
<PAGE>
address appears on the corporation's books or is given, notice shall be deemed
to have been given if sent to that shareholder by mail or telegraphic or other
written communication to the corporation's principal executive office, or if
published at least once in a newspaper of general circulation in the county
where that office is located. Notice shall be deemed to have been given at
the time when delivered personally or deposited in the mail or sent by telegram
or other means of written communication.
If any notice addressed to a shareholder at the address of that shareholder
appearing on the books of the corporation is returned to the corporation by the
United States Postal Service marked to indicate that the United States Postal
Service is unable to deliver the notice to the shareholder at that address, then
all future notices or reports shall be deemed to have been duly given without
further mailing if the same shall be available to the shareholder on written
demand of the shareholder at the principal executive office of the corporation
for a period of one (1) year from the date of the giving of the notice.
An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.6 QUORUM
The presence in person or by proxy of the holders of a majority of the
shares entitled to vote thereat constitutes a quorum for the transaction of
business at all meetings of shareholders. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
2.7 ADJOURNED MEETING; NOTICE
Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of the majority of the
shares represented at that meeting, either in person or by proxy. In the
absence of a quorum, no other business may be transacted at that meeting except
as provided in Section 2.6 of these bylaws.
When any meeting of shareholders, either annual or special, is adjourned to
another time or place, notice need not be given of the adjourned meeting if the
time and place are announced at the meeting at which the adjournment is taken.
However, if a new record date for the adjourned meeting is fixed or if the
adjournment is for more than forty-five (45) days from the date set for the
original meeting, then notice of the adjourned meeting shall be given. Notice
of any such adjourned meeting shall be given to each shareholder of record
entitled to vote at the adjourned meeting in accordance with the provisions of
Sections 2.4 and 2.5 of these bylaws. At any adjourned meeting the corporation
may transact any business which might have been transacted at the original
meeting.
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2.8 VOTING
The shareholders entitled to vote at any meeting of shareholders shall be
determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 702 through 704 of the Code (relating to
voting shares held by a fiduciary, in the name of a corporation or in joint
ownership).
The shareholders' vote may be by voice vote or by ballot; provided,
however, that any election for directors must be by ballot if demanded by any
shareholder at the meeting and before the voting has begun.
Except as provided in the last paragraph of this Section 2.8, or as may be
otherwise provided in the articles of incorporation, each outstanding share,
regardless of class, shall be entitled to one vote on, each matter submitted to
a vote of the shareholders. Any shareholder entitled to vote on any matter may
vote part of the shares in favor of the proposal and refrain from voting the
remaining shares or, except when the matter is the election of directors, may
vote them against the proposal; but, if the shareholder fails to specify the
number of shares which the shareholder is voting affirmatively, it will be
conclusively presumed that the shareholder's approving vote is with respect to
all shares which the shareholder is entitled to vote.
If a quorum is present, the affirmative vote of the majority of the shares
represented and voting at a duly held meeting (which shares voting affirmatively
also constitute at least a majority of the required quorum) shall be the act of
the shareholders, unless the vote of a greater number or a vote by classes is
required by the Code or by the articles of incorporation.
At a shareholders' meeting at, which directors are to be elected, a
shareholder shall be entitled to cumulate votes (i.e. cast for any candidate a
number of votes greater than the number of votes which such shareholder normally
is entitled to cast) if the candidates' names have been placed in nomination
prior to commencement of the voting and the shareholder has given notice prior
to commencement of the voting of the shareholder's intention to cumulate votes.
If any shareholder has given such a notice, then every shareholder entitled to
vote may cumulate votes for candidates in nomination either (i) by giving one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which that shareholder's shares are
normally entitled or (ii) by distributing the shareholder's votes on the same
principle among any or all of the candidates, as the shareholder thinks fit.
The candidates receiving the highest number of affirmative votes, up to the
number of directors to be elected, shall be elected; votes against any candidate
and votes withheld shall have no legal effect.
2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT
The transactions of any meeting of shareholders, either annual or special,
however called and noticed, and wherever held, shall be as valid as though had
at a meeting duly held after regular call and notice, if a quorum be present
either in person or by proxy, and if, either before or after the meeting, each
person entitled to vote, who was not present in person or by proxy, signs a
written waiver of notice or a consent to the holding of the meeting or an
approval of the minutes thereof. The waiver of notice or consent or approval
need not specify either the business to be
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transacted or the purpose of any annual or special meeting of shareholders,
except that if action is taken or proposed to be taken for approval of any of
those matters specified in the second paragraph of Section 2.4 of these
bylaws, the waiver of notice or consent or approval shall state the general
nature of the proposal. All such waivers, consents, and approvals shall be
filed with the corporate records or made a part of the minutes of the meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened. Attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by the Code to be
included in the notice of the meeting but not so included, if that objection is
expressly made at the meeting.
2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take that action at a meeting at which all
shares entitled to vote on that action were present and voted.
In the case of election of directors, such a consent shall be effective
only if signed by the holders of all outstanding shares entitled to vote for the
election of directors. However, a director may be elected at any time to fill
any vacancy on the board of directors, provided that it was not created by
removal of a director and that it has not been filled by the directors, by the
written consent of the holders of a majority of the outstanding shares entitled
to vote for the election of directors.
All such consents shall be maintained in the corporate records. Any
shareholder giving a written consent, or the shareholder's proxy holders, or a
transferee of the shares, or a personal representative of the shareholder, or
their respective proxy holders, may revoke the consent by a writing received by
the secretary of the corporation before written consents of the number of shares
required to authorize the proposed action have been filed with the secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
shareholders has not been received, then the secretary shall give prompt notice
of the corporate action approved by the shareholders without a meeting. Such
notice shall be given to those shareholders entitled to vote who have not
consented in writing and shall be given in the manner specified in Section 2.5
of these bylaws. In the case of approval of (i) a contract or transaction in
which a director has a direct or indirect financial interest, pursuant to
Section 310 of the Code, (ii) indemnification of a corporate "agent," pursuant
to Section 317 of the Code, (iii) a reorganization of the corporation, pursuant
to Section 1201 of the Code, and (iv) a distribution in dissolution other than
in accordance with the rights of outstanding preferred shares, pursuant to
Section 2007 of the Code, the notice shall be given at least ten (10) days
before the consummation of any action authorized by that approval.
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2.11 RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING CONSENTS
For purposes of determining the shareholders entitled to notice of any
meeting or to vote thereat or entitled to give consent to corporate action
without a meeting, the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) days nor less than ten (10) days before
the date of any such meeting nor more than sixty (60) days before any such
action without a meeting, and in such event only shareholders of record on the
date so fixed are entitled to notice and to vote or to give consents, as the
case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date, except as otherwise provided in the Code.
If the board of directors does not so fix a record date:
(a) the record date for determining shareholders entitled to notice
of or to vote at a meeting of shareholders shall be at the close of business on
the business day next preceding the day on which notice is given or, if notice
is waived, at the close of business on the business day next preceding the day
on which the meeting is held; and
(b) the record date for determining shareholders entitled to give
consent to corporate action in writing without a meeting, (i) when no prior
action by the board has been taken, shall be the day on which the first written
consent is given, or (ii) when prior action by the board has been taken, shall
be at the close of business on the day on which the board adopts the resolution
relating to that action, or the sixtieth (60th) day before the date of such
other action, whichever is later.
The record date for any other purpose shall be as provided in Article VIII
of these bylaws.
2.12 PROXIES
Every person entitled to vote for directors, or on any other matter, shall
have the right to do so either in person or by one or more agents authorized by
a written proxy signed by the person and filed with the secretary of the
corporation. A proxy shall be deemed signed if the shareholder's name is placed
on the proxy (whether by manual signature, typewriting, telegraphic transmission
or otherwise) by the shareholder or the shareholder's attorney-in-fact. A
validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (i) the person who executed the proxy
revokes it prior to the time of voting by delivering a writing to the
corporation stating that the proxy is revoked or by executing a subsequent proxy
and presenting it to the meeting or by voting in person at the meeting, or (ii)
written notice of the death or incapacity of the maker of that proxy is received
by the corporation before the vote pursuant to that proxy is counted; provided,
however, that no proxy shall be valid after the expiration of eleven (11) months
from the date of the proxy, unless otherwise provided in the proxy. The dates
contained on the forms of proxy presumptively determine the order of execution,
regardless of the postmark dates on the envelopes in which they are mailed. The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Sections 705(e) and 705(f) of the Code.
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2.13 INSPECTORS OF ELECTION
Before any meeting of shareholders, the board of directors may appoint an
inspector or inspectors of election to act at the meeting or its adjournment.
If no inspector of election is so appointed, then the chairman of the meeting
may, and on the request of any shareholder or a shareholder's proxy shall,
appoint an inspector or inspectors of election to act at the meeting. The
number of inspectors shall be either one (1) or three (3). If inspectors are
appointed at a meeting. pursuant to the request of one (1) or more shareholders
or proxies, then the holders of a majority of shares or their proxies present at
the meeting shall determine whether one (1) or three (3) inspectors are to be
appointed. If any person appointed as inspector fails to appear or fails or
refuses to act, then the chairman of the meeting may, and upon the request of
any shareholder or a shareholder's proxy shall, appoint a person to fill that
vacancy.
Such inspectors shall:
(a) determine the number of shares outstanding and the voting power
of each, the number of shares represented at the meeting, the existence of a
quorum, and the authenticity, validity, and effect of proxies;
(b) receive votes, ballots or consents;
(c) hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(d) count and tabulate all votes or consents;
(e) determine when the polls shall close;
(f) determine the result; and
(g) do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the Code and any limitations in the articles
of incorporation and these bylaws relating to action required to be approved by
the shareholders or by the outstanding shares, the business and affairs of the
corporation shall be managed and all corporate powers shall be exercised by or
under the direction of the board of directors.
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3.2 NUMBER OF DIRECTORS
The number of directors of the corporation shall be not less than five
(5) nor more than nine (9).* The exact number of directors shall be seven
until changed, within the limits specified above, by a bylaw amending this
Section 3.2, duly adopted by the board of directors or by the shareholders.
This indefinite number may be changed, or a definite number may be fixed
without provision for an indefinite number, by a duly adopted amendment to
the articles of incorporation or by an amendment to this bylaw adopted by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that an amendment reducing the fixed
number or the minimum number of directors to a number less than five (5)
cannot be adopted if the votes cast against its adoption at a meeting, or the
shares not consenting in the case of an action by written consent, are equal
to more than sixteen and two-thirds percent (16-2/3%) of the outstanding
shares entitled to vote thereon.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
Directors shall be elected at each annual meeting of shareholders to hold
office until the next annual meeting. Each director, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
3.4 RESIGNATION AND VACANCIES
Any director may resign effective on giving written notice to the chairman
of the board, the president, the secretary or the board of directors, unless the
notice specifies a later time for that resignation to become effective. If the
resignation of a director is effective at a future time, the board of directors
may elect a successor to take office when the resignation becomes effective.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
affirmative vote of a majority of the shares represented and voting at a duly
held meeting at which a quorum is present (which shares voting affirmatively
also constitute a majority of the required quorum) or by the unanimous written
consent of all shares entitled to vote thereon. Each director so elected shall
hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
A vacancy or vacancies in the board of directors shall be deemed to exist
(i) in the event of the death, resignation or removal of any director, (ii) if
the board of directors by resolution declares vacant the office of a director
who has been declared of unsound mind by an order of court or convicted of a
felony, (iii) if the authorized number of directors is increased, or (iv) if the
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* The number of directors of the corporation shall be not less
than five (5) nor more than nine (9)-April 20, 1990.
* The number of directors was fixed at seven on March 14, 1995.
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shareholders fail, at any meeting of shareholders at which any director or
directors are elected, to elect the number of directors to be elected at that
meeting.
The shareholders may elect a director or directors at any time to fill any
vacancy or vacancies not filled by the directors, but any such election other
than to fill a vacancy created by removal, if by written consent, shall require
the consent of the holders of a majority of the outstanding shares entitled to
vote thereon.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
Regular meetings of the board of directors may be held at any place within
or outside the State of California that has been designated from time to time by
resolution of the board. In the absence of such a designation, regular meetings
shall be held at the principal executive office of the corporation. Special
meetings of the board may be held at any place within or outside the State of
California that has been designated in the notice of the meeting or, if not
stated in the notice or if there is no notice, at the principal executive office
of the corporation.
Any meeting, regular or special, may be held by conference telephone or
similar communication equipment, so long as all directors participating in the
meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice if
the times of such meetings are fixed by the board of directors.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes may
be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
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3.8 QUORUM
A majority of the authorized number of directors shall constitute a quorum
for the transaction of business, except to adjourn as provided in Section 3.10
of these bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the board of directors, subject to the provisions of
Section 310 of the Code (as to approval of contracts or transactions in which a
director has a direct or indirect material financial interest), Section 311 of
the Code (as to appointment of committees), Section 317(e) of the Code (as to
indemnification of directors), the articles of incorporation, and other
applicable law.
A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for that meeting.
3.9 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or (ii) who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such directors. All such waivers, consents, and approvals shall be
filed with the corporate records or made part of the minutes of the meeting. A
waiver of notice need not specify the purpose of any regular or special meeting
of the board of directors.
3.10 ADJOURNMENT
A majority of the directors present, whether or not constituting a quorum,
may adjourn any meeting to another time and place.
3.11 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting need not be
given unless the meeting is adjourned for more than twenty-four (24) hours. If
the meeting is adjourned for more than twenty-four (24) hours, then notice of
the time and place of the adjourned meeting shall be given before the adjourned
meeting takes place, in the manner specified in Section 3.7 of these bylaws, to
the directors who were not present at the time of the adjournment.
3.12 ACTION WITHOUT MEETING
Any action required or permitted to be taken by the board of directors may
be taken without a meeting, provided that all members of the board individually
or collectively consent in writing to that action. Such action by written
consent shall have the same force and effect as a unanimous vote of the board of
directors. Such written consent and any counterparts thereof shall be filed
with the minutes of the proceedings of the board.
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3.13 FEES AND COMPENSATION OF DIRECTORS
Directors and members of committees may receive such compensation, if any,
for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.13 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
3.14 APPROVAL OF LOANS TO OFFICERS*
The corporation may, upon the approval of the board of directors alone,
make loans of money or property to, or guarantee the obligations of, any officer
of the corporation or its parent or subsidiary, whether or not a director, or
adopt an employee benefit plan or plans authorizing such loans or guaranties
provided that (i) the board of directors determines that such a loan or guaranty
or plan may reasonably be expected to benefit the corporation, (ii) the
corporation has outstanding shares held of record by 100 or more persons
(determined as provided in Section 605 of the Code) on the date of approval by
the board of directors, and (iii) the approval of the board of directors is by a
vote sufficient without counting the vote of any interested director or
directors.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent member at any meeting of the committee.
The appointment of members or alternate members of a committee requires the vote
of a majority of the authorized number of directors. Any committee, to the
extent provided in the resolution of the board, shall have all the authority of
the board, except with respect to:
(a) the approval of any action which, under the Code, also requires
shareholders' approval or approval of the outstanding shares;
(b) the filling of vacancies on the board of directors or in any
committee;
(c) the fixing of compensation of the directors for serving on the
board or any committee;
(d) the amendment or repeal of these bylaws or the adoption of new
bylaws;
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*This section is effective only if it has been approved by the shareholders
in accordance with Sections 315(b) and 153 of the Code.
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(e) the amendment or repeal of any resolution of the board of
directors which by its express terms is not so amendable or repealable;
(f) a distribution to the shareholders of the corporation, except at
a rate or in a periodic amount or within a price range determined by the board
of directors; or
(g) the appointment of any other committees of the board of directors
or the members of such committees.
4.2 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the provisions of Article III of these bylaws, Section 3.5
(place of meetings), Section 3.6 (regular meetings), Section 3.7 (special
meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice),
Section 3.10 (adjournment), Section 3.11 (notice of adjournment), and Section
3.12 (action without meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the board of
directors and its members; provided, however, that the time of regular meetings
of committees may be determined either by resolution of the board of directors
or by resolution of the committee, that special meetings of committees may also
be called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, a secretary, and a
chief financial officer. The corporation may also have, at the discretion of
the board of directors, a chairman of the board, one or more vice presidents,
one or more assistant secretaries, one or more assistant treasurers, and such
other officers as may be appointed in accordance with the provisions of Section
5.3 of these bylaws. Any number of offices may be held by the same person.
5.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be appointed
in accordance with the provisions of Section 5.3 or Section 5.5 of these bylaws,
shall be chosen by the board, subject to the rights, if any, of an officer under
any contract of employment.
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5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the president to
appoint, such other officers as the business of the corporation may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the board of directors may
from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by the
board of directors at any regular or special meeting of the board or, except in
case of an officer chosen by the board of directors, by any officer upon whom
such power of removal may be conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the board of
directors to the chairman of the board, if there be such an officer, the
president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction, and control of the business and tee officers of the corporation. He
shall preside at all meetings of the shareholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He shall have the general powers and duties of management usually
vested in the office of president of a corporation, and shall have such other
powers and duties as may be prescribed by the board of directors or these
bylaws.
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5.8 VICE PRESIDENTS
In the absence or disability of the president, the vice presidents, if any,
in order of their rank as fixed by the board of directors or, if not ranked, a
vice president designated by the board of directors, shall perform all the
duties of the president and when so acting shall have all the powers of, and be
subject to all the restrictions upon, the president. The vice presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors, these bylaws, the
president or the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors and shareholders. The minutes shall show the time and place of
each meeting, whether regular or special (and, if special, how authorized and
the notice given), the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at shareholders'
meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all shareholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings of
the shareholders and of the board of directors required to be given by law or by
these bylaws. He shall keep the seal of the corporation, if one be adopted, in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables in
the name and to the credit of the corporation with such depositaries as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as chief financial officer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or these bylaws.
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ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner permitted by
the Code, indemnify each of its directors and officers against expenses (as
defined in Section 317(a) of the Code), judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with any proceeding (as
defined in Section 317(a) of the Code), arising by reason of the fact that such
person is or was an agent of the corporation. For purposes of this Section 6.1,
a "director" or "officer" of the corporation includes any person (i) who is or
was a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or iii) who was a
director, officer or employee of a corporation which was a predecessor
corporation of the corporation or of another enterprise at the request of such
predecessor corporation.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the extent and in the manner
permitted by the Code, to indemnify each of its employees and agents (other than
directors and officers) against expenses (as defined in Section 317(a) of the
Code), judgments, fines, settlements, and other amounts actually and reasonably
incurred in connection with any proceeding (as defined in Section 317 (a) of the
Code), arising by reason of the fact that such person is or was an agent of the
corporation. For purposes of this Section 6.2, an "agent" of the corporation
(other than a director or officer) includes any person (i) who is or was an
agent of the corporation, (ii) who is or was serving at the request of the
corporation as an agent of another corporation, partnership, joint venture,
trust or other enterprise, or (iii) who was an agent of a corporation which was
a predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
6.3 PAYMENT OF EXPENSES IN ADVANCE
Expenses incurred in defending any civil or criminal action or proceeding
for which indemnification is required pursuant to Section 6.1 or for which
indemnification is permitted pursuant to Section 6.2 following authorization
thereof by the Board of Directors shall be paid by the corporation in advance of
the final disposition of such action or proceeding upon receipt of any
undertaking by or on behalf of the indemnified party to repay such amount if it
shall ultimately be determined that the indemnified party is not entitled to be
indemnified as authorized in this Article VI.
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6.4 INDEMNITY NOT EXCLUSIVE
The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those seeking indemnification may be
entitled under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, to the extent that such
additional rights to indemnification are authorized in the Articles of
Incorporation.
6.5 INSURANCE INDEMNIFICATION
The corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation against any liability asserted against or incurred by such person in
such capacity or arising out of such person's status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of this Article VI.
6.6. CONFLICTS
No indemnification or advance shall be made under this Article VI, except
where such indemnification or advance is mandated by law or the order, judgment
or decree of any court of competent jurisdiction, in any circumstance where it
appears:
(1) That it would be inconsistent with a provision of the Articles of
Incorporation, these bylaws, a resolution of the shareholders or an agreement in
effect at the time of the accrual of the alleged cause of the action asserted in
the proceeding in which the expenses were incurred or other amounts were paid,
which prohibits or otherwise limits indemnification; or
(2) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER
The corporation shall keep either at its principal executive office or at
the office of its transfer agent or registrar (if either be appointed), as
determined by resolution of the board of directors, a record of its shareholders
listing the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation who holds at least five
percent (5%) in the aggregate of the outstanding voting shares of the
corporation or who holds at least one percent (1%) of such voting shares and has
filed a Schedule 14B with the Securities and Exchange
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Commission relating to the election of directors, may (i) inspect and copy
the records of shareholders' names, addresses, and shareholdings during usual
business hours on five (5) days prior written demand on the corporation, (ii)
obtain from the transfer agent of the corporation, on written demand and on
the tender of such transfer agent's usual charges for such list, a list of
the names and addresses of the shareholders who are entitled to vote for the
election of directors, and their shareholdings, as of the most recent record
date for which that list has been compiled or as of a date specified by the
shareholder after the date of demand. Such list shall be made available to
any such shareholder by the transfer agent on or before the later of five (5)
days after the demand is received or five (5) days after the date specified
in the demand as the date as of which the list is to be compiled.
record of shareholders shall also be open to inspection on the written
demand of any shareholder or holder of a voting trust certificate, at any time
during usual business hours, for a purpose reasonably related to the holder's
interests as a shareholder or as the holder of a voting trust certificate.
Any inspection and copying under this Section 7.1 may be made in person or
by an agent or attorney of the shareholder or holder of a voting trust
certificate making the demand.
7.2 MAINTENANCE AND INSPECTION OF BYLAWS
The corporation shall keep at its principal executive office or, if its
principal executive office is not in the State of California, at its principal
business office in California the original or a copy of these bylaws as amended
to date, which bylaws shall be open to inspection by the shareholders at all
reasonable times during office hours. If the principal executive office of the
corporation is outside the State of California and the corporation has no
principal business office in such state, then the secretary shall, upon the
written request of any shareholder, furnish to that shareholder a copy of these
bylaws as amended to date.
7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS
The accounting books and records and the minutes of proceedings of the
shareholders, of the board of directors, and of any committee or committees of
the board of directors shall be kept at such place or places as are designated
by the board of directors or, in absence of such designation, at the principal
executive office of the corporation. The minutes shall be kept in written form,
and the accounting books and records shall be kept either in written form or in
any other form capable of being converted into written form.
The minutes and accounting books and records shall be open to inspection
upon the written demand of any shareholder or holder of a voting trust
certificate, at any reasonable time during usual business hours, for a purpose
reasonably related to the holder's interests as a shareholder or as the holder
of a voting trust certificate. The inspection may be made in person or by an
agent or attorney and shall include the right to copy and make extracts. Such
rights of inspection shall extend to the records of each subsidiary corporation
of the corporation.
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7.4 INSPECTION BY DIRECTORS
Every director shall have the absolute right at any reasonable time to
inspect all books, records, and documents of every kind as well as the physical
properties of the corporation and each of its subsidiary corporations. Such
inspection by a director may be made in person or by an agent or attorney. The
right of inspection includes the right to copy and make extracts of documents.
7.5 ANNUAL REPORT TO SHAREHOLDERS, WAIVER
The board of directors shall cause an annual report to be sent to the
shareholders not later than one hundred twenty (120) days after the close of the
fiscal year adopted by the corporation. Such report shall be sent at least
fifteen (15) days (or, if sent by third-class mail, thirty-five (35) days before
the annual meeting of shareholders to be held during the next fiscal year and in
the manner specified in Section 2.5 of these bylaws for giving notice to
shareholders of the corporation.
The annual report shall contain (i) a balance sheet as of the end of the
fiscal year, (ii) an income statement, (iii) a statement of changes in financial
position for the fiscal year, and (iv) any report of independent accountants or,
if there is no such report, the certificate of an authorized officer of the
corporation that the statements were prepared without audit from the books and
records of the corporation.
The foregoing requirement of an annual report shall be waived so long as
the shares of the corporation are held by fewer than one hundred (100) holders
of record.
7.6 FINANCIAL STATEMENTS
If no annual report for the fiscal year has been sent to shareholders, then
the corporation shall, upon the written request of any shareholder made more
than one hundred twenty (120) days after the close of such fiscal year, deliver
or mail to the person making the request, within thirty (30) days thereafter, a
copy of a balance sheet as of the end of such fiscal year and an income
statement and statement of changes in financial position for such fiscal year.
If a shareholder or shareholders holding at least five percent (5%) of the
outstanding shares of any class of stock of the corporation makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than thirty (30) days before the date of the request, and for a
balance sheet of the corporation as of the end of that period, then the chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corporation has not sent to the shareholders its annual report
for the last fiscal year, the statements referred to in the first paragraph of
this Section 7.6 shall likewise be delivered or mailed to the shareholder or
shareholders within thirty (30) days after the request.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or
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by the certificate of an authorized officer of the corporation that the
financial statements were prepared without audit from the books and records
of the corporation.
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the shareholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
shareholders entitled to exercise any rights in respect of any other lawful
action (other than action by shareholders by written consent without a meeting),
the board of directors may fix, in advance, a record date, which shall not be
more than sixty (60) days before any such action. In that case, only
shareholders of record at the close of business on the date so fixed are
entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided in the Code.
If the board of directors does not so fix a record date, then the record
date for determining shareholders for any such purpose shall be at the close of
business on the day on which the board adopts the applicable resolution or the
sixtieth (60th) day before the date of that action, whichever is later.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
The board of directors, except as otherwise provided in these bylaws, may
authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.4 CERTIFICATES FOR SHARES
A certificate or certificates for shares of the corporation shall be issued
to each shareholder when any of such shares are fully paid. The board of
directors may authorize the
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issuance of certificates for shares partly paid provided that these
certificates shall state the total amount of the consideration to be paid for
them and the amount actually paid. All certificates shall be signed in the
name of the corporation by the chairman of the board or the vice chairman of
the board or the president or a vice president and by the chief financial
officer or an assistant treasurer or the secretary or an assistant secretary,
certifying the number of shares and the class or series of shares owned by
the shareholder. Any or all of the signatures on the certificate may be
facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed on a certificate ceases to be that officer,
transfer agent or registrar before that certificate is issued, it may be issued
by the corporation with the same effect as if that person were an officer,
transfer agent or registrar at the date of issue.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Code shall govern the construction of these
bylaws. Without limiting the generality of this provision, the singular number
includes the plural, the plural number includes the singular, and the term
"person" includes both a corporation and a natural person.
ARTICLE IX
AMENDMENTS
9.1 AMENDMENT BY SHAREHOLDERS
New bylaws may be adopted or these bylaws may be amended or repealed by the
vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the articles of incorporation of
the corporation set forth the number of authorized directors of the corporation,
then the authorized number of directors may be changed only by an amendment of
the articles of incorporation.
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9.2 AMENDMENT BY DIRECTORS
Subject to the rights of the shareholders as provided in Section 9.1 of these
bylaws, bylaws, other than a bylaw or an amendment of a bylaw changing the
authorized number of directors (except to fix the authorized number of directors
pursuant to a bylaw providing for a variable number of directors), may be
adopted, amended or repealed by the board of directors.
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CERTIFICATE OF SECRETARY
I, the undersigned do hereby certify:
1. That I am the duly elected and acting Secretary of Centura Software
Corporation, a California corporation; and
2. That the attached Bylaws, comprising twenty-four (24) pages,
constitute the Bylaws of said corporation as amended to date, as duly adopted by
the Board of Directors at a meeting of the Board of Directors of said
corporation held on July 23, 1996, effective as of September 24, 1996.
IN WITNESS WHEREOF, I have hereunto subscribed my name this 24th day of
September, 1996.
/s/ Craig W. Johnson
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Craig W. Johnson, Secretary
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CENTURA SOFTWARE CORPORATION
1992 EMPLOYEE STOCK PURCHASE PLAN
AMENDED DECEMBER 16, 1994
The following constitute the provisions of the 1992 Employee Stock Purchase
Plan of Centura Software Corporation.
1. PURPOSE. The purpose of the Plan is to provide employees of the
Company and its Designated Subsidiaries with an opportunity to purchase Common
Stock of the Company. It is the intention of the Company to have the Plan
qualify as an "Employee Stock Purchase Plan" under Section 423 of the Internal
Revenue Code of 1986, as amended. The provisions of the Plan shall,
accordingly, be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.
2. DEFINITIONS.
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean Centura Software Corporation, a California
corporation.
(e) "COMPENSATION" shall mean all regular straight time gross
earnings, excluding payments for overtime, shift premium, incentive
compensation, incentive payments, bonuses, commissions and other compensation.
(f) "CONTINUOUS STATUS AS AN EMPLOYEE" shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of a leave of absence
agreed to in writing by the Company, provided that such leave is for a period of
not more than 90 days or reemployment upon the expiration of such leave is
guaranteed by contract or statute.
(g) "CONTRIBUTIONS" shall mean all amounts credited to the account of
a participant pursuant to the Plan.
(h) "DESIGNATED SUBSIDIARIES" shall mean the Subsidiaries which have
been designated by the Board from time to time in its sole discretion as
eligible to participate in the Plan.
<PAGE>
(i) "EMPLOYEE" shall mean any person, including an officer, who is
customarily employed for at least twenty (20) hours per week and more than five
(5) months in a calendar year by the Company or one of its Designated
Subsidiaries.
(j) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "EXERCISE DATE" shall mean the last day of each Offering Period
of the Plan.
(l) "OFFERING DATE" shall mean the first business day of each
Offering Period of the Plan, except that in the case of an individual who
becomes an eligible Employee after the first business day of an Offering Period
but prior to the first business day of the last calendar quarter of such
Offering Period, the term "Offering Date" shall mean the first business day of
the calendar quarter coinciding with or next succeeding the day on which that
individual becomes an eligible Employee.
Options granted after the first business day of an Offering
Period will be subject to the same terms as the options granted on the first
business day of such Offering Period except that they will have a different
grant date (thus, potentially, a different exercise price) and, because they
expire at the same time as the options granted on the first business day of such
Offering Period, a shorter term.
(m) "OFFERING PERIOD" shall mean a period of three (3) months.
(n) "PLAN" shall mean this Employee Stock Purchase Plan.
(o) "REPORTING PERSON" shall mean an officer, director or other
employee who is subject to Section 16 of the Exchange Act.
(p) "SUBSIDIARY" shall mean a corporation, domestic or foreign, of
which not less than 50% of the voting shares are held by the Company or a
Subsidiary, whether or not such corporation now exists or is hereafter organized
or acquired by the Company or a Subsidiary.
3. ELIGIBILITY.
(a) Any person who is an Employee as of the Offering Date of a given
Offering Period shall be eligible to participate in such Offering Period under
the Plan, provided that such person was not eligible to participate in such
Offering Period as of any prior Offering Date, and further, subject to the
requirements of Section 5(a) and the limitations imposed by Section 423(b) of
the Code.
(b) Any provisions of the Plan to the contrary notwithstanding, no
Employee shall be granted an option under the Plan (i) if, immediately after the
grant, such Employee (or any other person whose stock would be attributed to
such Employee pursuant to Section 424(d) of the Code) would own stock and/or
hold outstanding options to purchase stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Company or of any subsidiary of the Company, or (ii) if such option would permit
his or her rights to purchase stock
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under all employee stock purchase plans (described in Section 423 of the
Code) of the Company and its Subsidiaries to accrue at a rate which exceeds
Twenty-Five Thousand Dollars ($25,000) of fair market value of such stock
(determined at the time such option is granted) for each calendar year in
which such option is outstanding at any time.
4. OFFERING PERIODS. The Plan shall be implemented by a series of
Offering Periods, with new Offering Periods commencing on or about January 1,
April 1, July 1, and October 1 of each year (or at such other time or times as
may be determined by the Board of Directors). The first Offering Period shall
commence on the effective date of the Registration Statement on Form S-1 for the
initial public offering of the Company's Common Stock and continue until June
30, 1993. The Plan shall continue until terminated in accordance with
Section 19 hereof. The Board of Directors of the Company shall have the power
to change the duration and/or the frequency of Offering Periods with respect to
future offerings without shareholder approval if such change is announced at
least fifteen (15) days prior to the scheduled beginning of the first Offering
Period to be affected.
5. PARTICIPATION.
(a) An eligible Employee may become a participant in the Plan by
completing a subscription agreement on the form provided by the Company and
filing it with the Company's payroll office prior to the applicable Offering
Date, unless a later time for filing the subscription agreement is set by the
Board for all eligible Employees with respect to a given offering. The
subscription agreement shall set forth the percentage of the participant's
Compensation (which shall be not less than 1% and not more than 10%) to be paid
as Contributions pursuant to the Plan.
(b) Payroll deductions shall commence on the first payroll following
the Offering Date and shall end on the last payroll paid on or prior to the
Exercise Date of the offering to which the subscription agreement is applicable,
unless sooner terminated by the participant as provided in Section 10.
6. METHOD OF PAYMENT OF CONTRIBUTIONS.
(a) The participant shall elect to have payroll deductions made on
each payday during the Offering Period in an amount not less than one
percent (1%) and not more than ten percent (10%) of such participant's
Compensation on each such payday; provided that the aggregate of such payroll
deductions during the Offering Period shall not exceed ten percent (10%) of the
participant's aggregate Compensation during said Offering Period. All payroll
deductions made by a participant shall be credited to his or her account under
the Plan. A participant may not make any additional payments into such account.
(b) A participant may discontinue his or her participation in the
Plan as provided in Section 10. If a participant desires to change the rate of
his or her contributions, he or she may do so effective as of the beginning of
the next Offering Period following the date of filing of a new subscription
agreement.
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(c) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b) herein, a participant's
payroll deductions may be decreased to 0% at such time during any Offering
Period which is scheduled to end during the current calendar year that the
aggregate of all payroll deductions accumulated with respect to such Offering
Period and any other Offering Period ending within the same calendar year equal
$25,000. Payroll deductions shall re-commence at the rate provided in such
participant's subscription Agreement at the beginning of the first Offering
Period which is scheduled to end in the following calendar year, unless
terminated by the participant as provided in Section 10.
7. GRANT OF OPTION.
(a) On the Offering Date of each Offering Period, each eligible
Employee participating in such Offering Period shall be granted an option to
purchase on the Exercise Date a number of shares of the Company's Common Stock
determined by dividing such Employee's Contributions accumulated prior to such
Exercise Date and retained in the participant's account as of the Exercise Date
by the lower of (i) eighty-five percent (85%) of the fair market value of a
share of the Company's Common Stock on the Offering Date, or (ii) eighty-five
percent (85%) of the fair market value of a share of the Company's Common Stock
on the Exercise Date; provided however, that the maximum number of shares an
Employee may purchase during each Offering Period shall be determined at the
Offering Date by dividing $6,250 by the fair market value of a share of the
Company's Common Stock on the Offering Date, and provided further that such
purchase shall be subject to the limitations set forth in Sections 3(b) and 12.
The fair market value of a share of the Company's Common Stock shall be
determined as provided in Section 7(b).
(b) The option price per share of the shares offered in a given
Offering Period shall be the lower of: (i) 85% of the fair market value of a
share of the Common Stock of the Company on the Offering Date; or (ii) 85% of
the fair market value of a share of the Common Stock of the Company on the
Exercise Date. The fair market value of the Company's Common Stock on a given
date shall be determined by the Board in its discretion based on the closing
price of the Common Stock for such date (or, in the event that the Common Stock
is not traded on such date, on the immediately preceding trading date), as
reported by the National Association of Securities Dealers Automated Quotation
(NASDAQ) National Market System or, if such price is not reported, the mean of
the bid and asked prices per share of the Common Stock as reported by NASDAQ or,
in the event the Common Stock is listed on a stock exchange, the fair market
value per share shall be the closing price on such exchange on such date (or, in
the event that the Common Stock is not traded on such date, on the immediately
preceding trading date), as reported in THE WALL STREET JOURNAL. For purposes
of the Offering Date under the first Offering Period under the Plan, the fair
market value of a share of the Common Stock of the Company shall be the Price to
Public as set forth in the final prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424 under the Securities Act of 1933, as
amended.
8. EXERCISE OF OPTION. Unless a participant withdraws from the Plan as
provided in paragraph 10, his or her option for the purchase of shares will be
exercised automatically on the Exercise Date of the Offering Period, and the
maximum number of full shares subject to option will be purchased at the
applicable option price with the accumulated Contributions in his or her
account.
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The shares purchased upon exercise of an option hereunder shall be
deemed to be transferred to the participant on the Exercise Date. If the
participant is a Reporting Person, the shares purchased upon exercise of an
option shall not be sold or otherwise transferred by the participant within six
(6) months after the Exercise Date. During his or her lifetime, a participant's
option to purchase shares hereunder is exercisable only by him or her.
9. DELIVERY. As promptly as practicable after the Exercise Date of each
Offering Period, the Company shall arrange the delivery to each participant, as
appropriate, of a certificate representing the shares purchased upon exercise of
his or her option. Any cash remaining to the credit of a participant's account
under the Plan after a purchase by him or her of shares at the termination of
each Offering Period, or which is insufficient to purchase a full share of
Common Stock of the Company, shall be returned to said participant.
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.
(a) A participant may withdraw all but not less than all the
Contributions credited to his or her account under the Plan at any time prior to
the Exercise Date of the Offering Period by giving written notice to the
Company. All of the participant's Contributions credited to his or her account
will be paid to him or her promptly after receipt of his or her notice of
withdrawal and his or her option for the current period will be automatically
terminated, and no further Contributions for the purchase of shares will be made
during the Offering Period.
(b) Upon termination of the participant's Continuous Status as an
Employee prior to the Exercise Date of the Offering Period for any reason,
including retirement or death, the Contributions credited to his or her account
will be returned to him or her or, in the case of his or her death, to the
person or persons entitled thereto under Section 14, and his or her option will
be automatically terminated.
(c) In the event an Employee fails to remain in Continuous Status as
an Employee of the Company for at least twenty (20) hours per week during the
Offering Period in which the employee is a participant, he or she will be deemed
to have elected to withdraw from the Plan and the Contributions credited to his
or her account will be returned to him or her and his or her option terminated.
(d) A participant's withdrawal from an offering will not have any
effect upon his or her eligibility to participate in a succeeding offering or in
any similar plan which may hereafter be adopted by the Company.
11. INTEREST. No interest shall accrue on the Contributions of a
participant in the Plan.
12. STOCK.
(a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be 400,000 shares, subject
to adjustment upon changes in capitalization of the Company as provided in
Section 18. If the total number of shares which
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would otherwise be subject to options granted pursuant to Section 7(a)
on the Offering Date of an Offering Period exceeds the number of shares then
available under the Plan (after deduction of all shares for which options
have been exercised or are then outstanding), the Company shall make a pro
rata allocation of the shares remaining available for option grant in as
uniform a manner as shall be practicable and as it shall determine to be
equitable. In such event, the Company shall give written notice of such
reduction of the number of shares subject to the option to each Employee
affected thereby and shall similarly reduce the rate of Contributions, if
necessary.
(b) The participant will have no interest or voting right in shares
covered by his or her option until such option has been exercised.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant and
his or her spouse.
13. ADMINISTRATION. The Board, or a committee named by the Board, shall
supervise and administer the Plan and shall have full power to adopt, amend and
rescind any rules deemed desirable and appropriate for the administration of the
Plan and not inconsistent with the Plan, to construe and interpret the Plan, and
to make all other determinations necessary or advisable for the administration
of the Plan. The composition of the committee shall be in accordance with the
requirements to obtain or retain any available exemption from the operation of
Section 16(b) of the Exchange Act pursuant to Rule 16b-3 promulgated thereunder.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account under
the Plan in the event of such participant's death subsequent to the end of the
Offering Period but prior to delivery to him or her of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death prior to the Exercise Date of the Offering Period.
If a participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.
(b) Such designation of beneficiary may be changed by the participant
(and his or her spouse, if any) at any time by written notice. In the event of
the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant's death,
the Company shall deliver such shares and/or cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the Company,
in its discretion, may deliver such shares and/or cash to the spouse or to any
one or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.
15. TRANSFERABILITY. Neither Contributions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
shares under the Plan may be assigned, transferred, pledged or otherwise
disposed of in any way (other than by will, the laws of descent and
distribution, or as provided in Section 14) by the participant. Any such
attempt at assignment,
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<PAGE>
transfer, pledge or other disposition shall be without effect, except that
the Company may treat such act as an election to withdraw funds in accordance
with Section 10.
16. USE OF FUNDS. All Contributions received or held by the Company under
the Plan may be used by the Company for any corporate purpose, and the Company
shall not be obligated to segregate such Contributions.
17. REPORTS. Individual accounts will be maintained for each participant
in the Plan. Statements of account will be given to participating Employees
promptly following the Exercise Date, which statements will set forth the
amounts of Contributions, the per share purchase price, the number of shares
purchased and the remaining cash balance, if any.
18. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any required
action by the shareholders of the Company, the number of shares of Common Stock
covered by each option under the Plan which has not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but have not yet been placed under option (collectively, the
"Reserves"), as well as the price per share of Common Stock covered by each
option under the Plan which has not yet been exercised, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration". Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue by the Company of shares of stock
of any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an option.
In the event of the proposed dissolution or liquidation of the Company, the
Offering Period will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each option under the
Plan shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the Board determines, in the exercise of its sole discretion and in lieu
of such assumption or substitution, to shorten the Offering Period then in
progress by setting a new Exercise Date (the "New Exercise Date"). If the Board
shortens the Offering Period then in progress in lieu of assumption or
substitution in the event of a merger or sale of assets, the Board shall notify
each participant in writing, at least ten (10) days prior to the New Exercise
Date, that the Exercise Date for his or her option has been changed to the New
Exercise Date and that his or her option will be exercised automatically on the
New Exercise Date, unless prior to such date he or she has withdrawn from the
Offering Period as provided in Section 10. For purposes of this paragraph, an
option granted under the Plan shall be deemed to be assumed if, following the
sale of assets or merger, the option confers the right to purchase, for each
share of option stock subject to the option immediately prior to the sale of
assets or merger, the consideration (whether stock, cash or other securities or
property) received in the sale of assets or merger by
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<PAGE>
holders of Common Stock for each share of Common Stock held on the effective
date of the transaction (and if such holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority
of the outstanding shares of Common Stock); provided, however, that if such
consideration received in the sale of assets or merger was not solely common
stock of the successor corporation or its parent (as defined in Section
424(e) of the Code), the Board may, with the consent of the successor
corporation and the participant, provide for the consideration to be received
upon exercise of the option to be solely common stock of the successor
corporation or its parent equal in fair market value to the per share
consideration received by holders of Common Stock and the sale of assets or
merger.
The Board may, if it so determines in the exercise of its sole discretion,
also make provision for adjusting the Reserves, as well as the price per share
of Common Stock covered by each outstanding option, in the event that the
Company effects one or more reorganizations, recapitalizations, rights offerings
or other increases or reductions of shares of its outstanding Common Stock, and
in the event of the Company being consolidated with or merged into any other
corporation.
19. AMENDMENT OR TERMINATION.
(a) The Board of Directors of the Company may at any time terminate
or amend the Plan. Except as provided in Section 18, no such termination may
affect options previously granted, nor may an amendment make any change in any
option theretofore granted which adversely affects the rights of any
participant. In addition, to the extent necessary to comply with Rule 16b-3
under the Exchange Act, or under Section 423 of the Code (or any successor rule
or provision or any applicable law or regulation), the Company shall obtain
shareholder approval in such a manner and to such a degree as so required.
(b) Without shareholder consent and without regard to whether any
participant rights may be considered to have been adversely affected, the Board
(or its committee) shall be entitled to change the Offering Periods, limit the
frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the
amount designated by a participant in order to adjust for delays or mistakes in
the Company's processing of properly completed withholding elections, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Board (or its committee) determines in its sole discretion advisable
which are consistent with the Plan.
20. NOTICES. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been duly
given when received in the form specified by the Company at the location, or by
the person, designated by the Company for the receipt thereof.
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<PAGE>
21. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment and
without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned applicable provisions of law.
22. TERM OF PLAN; EFFECTIVE DATE. The Plan shall become effective upon
the earlier to occur of its adoption by the Board of Directors or its approval
by the shareholders of the Company. It shall continue in effect for a term of
twenty (20) years unless sooner terminated under Section 19.
23. ADDITIONAL RESTRICTIONS OF RULE 16b-3. The terms and conditions of
options granted hereunder to, and the purchase of shares by, persons subject to
Section 16 of the Exchange Act shall comply with the applicable provisions of
Rule 16b-3. This Plan shall be deemed to contain, and such options shall
contain, and the shares issued upon exercise thereof shall be subject to, such
additional conditions and restrictions as may be required by Rule 16b-3 to
qualify for the maximum exemption from Section 16 of the Exchange Act with
respect to Plan transactions.
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<PAGE>
New Election ______
Change of Election ______
Centura Software Corporation
EMPLOYEE STOCK PURCHASE PLAN
SUBSCRIPTION AGREEMENT
1. I, ________________________, hereby elect to participate in the
Centura Software Corporation Employee Stock Purchase Plan (the "Plan") for the
Offering Period ______________, 19__ to _______________, 19__, and subscribe to
purchase shares of the Company's Common Stock in accordance with this
Subscription Agreement and the Plan.
2. I elect to have Contributions in the amount of ____% of my
Compensation, as those terms are defined in the Plan, applied to this purchase.
I understand that this amount must not be less than 1% and not more than 10% of
my Compensation during the Offering Period. (Please note that no fractional
percentages are permitted).
3. I hereby authorize payroll deductions from each paycheck during the
Offering Period at the rate stated in Item 2 of this Subscription Agreement. I
understand that all payroll deductions made by me shall be credited to my
account under the Plan and that I may not make any additional payments into such
account. I understand that all payments made by me shall be accumulated for the
purchase of shares of Common Stock at the applicable purchase price determined
in accordance with the Plan. I further understand that, except as otherwise set
forth in the Plan, shares will be purchased for me automatically on the Exercise
Date of the Offering Period unless I otherwise withdraw from the Plan by giving
written notice to the Company for such purpose.
4. I understand that I may discontinue at any time prior to the Exercise
Date my participation in the Plan as provided in Section 10 of the Plan. I also
understand that if I desire to change the rate of my contributions, I can do so
EFFECTIVE FOR THE NEXT OFFERING PERIOD by completing and filing with the Company
a new Subscription Agreement.
5. I have received a copy of the Company's most recent description of the
Plan and a copy of the complete "Centura Software Corporation 1992 Employee
Stock Purchase Plan." I understand that my participation in the Plan is in all
respects subject to the terms of the Plan.
<PAGE>
6. Shares purchased for me under the Plan should be issued in the name(s)
of (name of employee or employee and spouse only):
- -------------------------
- -------------------------
7. In the event of my death, I hereby designate the following as my
beneficiary(ies) to receive all payments and shares due to me under the Plan:
NAME: (Please print) _____________________________________
(First) (Middle) (Last)
____________________ _____________________________________
(Relationship) (Address)
_____________________________________
8. FOR EMPLOYEES WHO ARE NOT SEC REPORTING PERSONS. I understand that I
may dispose of any shares received by me pursuant to the Plan at any time.
Furthermore, I understand that if I dispose of any shares received by me
pursuant to the Plan within 2 years after the Offering Date (the first day of
the Offering Period during which I purchased such shares) or within 1 year after
the date of the end of the Offering Period, I will be treated for federal income
tax purposes as having received ordinary compensation income at the time of such
disposition in an amount equal to the excess of the fair market value of the
shares at the time such shares were transferred to me over the price which I
paid for the shares, regardless of whether I disposed of the shares at a price
less than their fair market value at transfer. The remainder of the gain or
loss, if any, recognized on such disposition will be treated as capital gain or
loss.
I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER
THE DATE OF ANY SUCH DISPOSITION, AND I WILL MAKE ADEQUATE PROVISION FOR
FEDERAL, STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON
THE DISPOSITION OF THE COMMON STOCK. I understand that if applicable tax laws
change, the Company may be obligated to withhold from my compensation the amount
necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax deductions or
benefits attributable to the sale or early disposition of Common Stock by me.
9. FOR EMPLOYEES WHO ARE SEC REPORTING PERSONS. I understand that I may
not dispose of any shares received by me pursuant to the Plan within 6 months
after the date of the end of the Offering Period. Furthermore, I understand
that if I dispose of any shares received by me pursuant to the Plan within 2
years after the Offering Date (the first day of the Offering Period during which
I purchased such shares) or within 1 year after the date of the end of the
Offering Period, I will be treated for federal income tax purposes as having
received ordinary compensation income at the time
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<PAGE>
of such disposition in an amount equal to the excess of the fair market value
of the shares at the time such shares were transferred to me over the price
which I paid for the shares, regardless of whether I disposed of the shares
at a price less than their fair market value at transfer. The remainder of
the gain or loss, if any, recognized on such disposition will be treated as
capital gain or loss.
I HEREBY AGREE TO NOTIFY THE COMPANY IN WRITING WITHIN 30 DAYS AFTER
THE DATE OF ANY SUCH DISPOSITION, AND I WILL MAKE ADEQUATE PROVISION FOR
FEDERAL, STATE OR OTHER TAX WITHHOLDING OBLIGATIONS, IF ANY, WHICH ARISE UPON
THE DISPOSITION OF THE COMMON STOCK. I understand that if applicable tax laws
change, the Company may be obligated to withhold from my compensation the amount
necessary to meet any applicable withholding obligation including any
withholding necessary to make available to the Company any tax deductions or
benefits attributable to the sale or early disposition of Common Stock by me.
10. If I dispose of such shares at any time after expiration of the 2-
year and 1-year holding periods, I understand that I will be treated for federal
income tax purposes as having received compensation income only to the extent of
an amount equal to the LESSER of (1) the excess of the fair market value of the
shares at the time of such disposition over the purchase price which I paid for
the shares under the option, or (2) 15% of the fair market value of the shares
on the Offering Date. The remainder of the gain or loss, if any, recognized on
such disposition will be treated as capital gain or loss.
I UNDERSTAND THAT THIS TAX SUMMARY IS ONLY A SUMMARY AND IS SUBJECT TO
CHANGE.
11. I hereby agree to be bound by the terms of the Plan. The
effectiveness of this Subscription Agreement is dependent upon my eligibility to
participate in the Plan.
SIGNATURE: ----------------------------------
SOCIAL SECURITY #: --------------------------
DATE: ---------------------------------------
SPOUSE'S SIGNATURE (necessary
if beneficiary is not spouse):
- ----------------------------------
(Signature)
- ----------------------------------
(Print name)
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<PAGE>
Centura Software Corporation
EMPLOYEE STOCK PURCHASE PLAN
NOTICE OF WITHDRAWAL
I, __________________________, hereby elect to withdraw my participation in
the Centura Software Corporation Employee Stock Purchase Plan (the "Stock
Purchase Plan") for the Offering Period _________. This withdrawal covers all
Contributions credited to my account and is effective on the date designated
below.
I understand that all Contributions credited to my account will be paid to
me within ten (10) business days of receipt by the Company of this Notice of
Withdrawal and that my option for the current period will automatically
terminate, and that no further Contributions for the purchase of shares can be
made by me during the Offering Period.
The undersigned further understands and agrees that he or she shall be
eligible to participate in succeeding offering periods only by delivering to the
Company a new Subscription Agreement.
If the undersigned is an officer, director of Centura Software Corporation
or other person subject to Section 16 of the Securities Exchange Act of 1934,
the undersigned further understands that under rules promulgated by the U.S.
Securities and Exchange Commission he or she may not re-enroll in the Stock
Purchase Plan for a period of six (6) months after withdrawal.
Dated:------------------- --------------------------------
Signature of Employee
--------------------------------
Social Security Number
<PAGE>
CENTURA SOFTWARE CORPORATION
1995 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Employees and Consultants
of the Company and to promote the success of the Company's business.
Options granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options, at the discretion of the Board and as reflected in
the terms of the written option agreement.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ADMINISTRATOR" shall mean the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "APPLICABLE LAWS" shall have the meaning set forth in Section
4(a) below.
(c) "BOARD" shall mean the Board of Directors of the Company.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(e) "COMMITTEE" shall mean the Committee appointed by the Board of
Directors in accordance with Section 4(a) of the Plan, if one is appointed.
(f) "COMMON STOCK" shall mean the Common Stock of the Company.
(g) "COMPANY" shall mean Centura Software Corporation, a California
corporation.
(h) "CONSULTANT" shall mean any person who is engaged by the Company
or any Parent or Subsidiary to render consulting services and is compensated for
such consulting services.
(i) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Administrator; provided that such leave is for
a period of not more than 90 days or reemployment upon the expiration of such
leave is guaranteed by contract or statute. For purposes of this Plan, a change
in status from an Employee
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to a Consultant or from a Consultant to an Employee will not constitute a
termination of employment.
(j) "DIRECTOR" shall mean a member of the Board.
(k) "EMPLOYEE" shall mean any person, including Officers, Named
Executives and those Directors who are also employees of the Company, who are
employed by the Company or any Parent or Subsidiary of the Company. The payment
by the Company of a director's fee to the Director shall not be sufficient to
constitute "employment" of such Director by the Company.
(l) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sales
price for such stock as quoted on such system on the date of determination (if
for a given day no sales were reported, the closing bid on that day shall be
used), as such price is reported in THE WALL STREET JOURNAL or such other source
as the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but
not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the bid and asked prices for the Common Stock or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(n) "INCENTIVE STOCK OPTION" shall mean an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable option agreement.
(o) "NAMED EXECUTIVE" shall mean any individual who, on the last day
of the Company's fiscal year, is the chief executive officer of the Company (or
is acting in such capacity) or among the four highest compensated officers of
the Company (other than the chief executive officer). Such officer status shall
be determined pursuant to the executive compensation disclosure rules under the
Exchange Act.
(p) "NONSTATUTORY STOCK OPTION" shall mean an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable option
agreement.
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<PAGE>
(q) "OFFICER" shall mean a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(r) "OPTION" shall mean a stock option granted pursuant to the Plan.
(s) "OPTIONED STOCK" shall mean the Common Stock subject to an
Option.
(t) "OPTIONEE" shall mean an Employee or Consultant who receives an
Option.
(u) "PARENT" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(v) "PLAN" shall mean this 1995 Stock Option Plan.
(w) "RULE 16b-3" shall mean Rule 16b-3 promulgated under the Exchange
Act as the same may be amended from time to time, or any successor provision.
(x) "SHARE" shall mean a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.
(y) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 14 of
the Plan, the maximum aggregate number of shares that may be optioned and sold
under the Plan is 2,000,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares that were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan. Notwithstanding any other provision of the Plan, shares
issued under the Plan and later repurchased by the Company shall not become
available for future grant or sale under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) COMPOSITION OF ADMINISTRATOR.
(i) MULTIPLE ADMINISTRATIVE BODIES. If permitted by Rule 16b-
3, and by the legal requirements relating to the administration of incentive
stock option plans, if any, of applicable securities laws and the Code
(collectively, the "Applicable Laws"), the Plan may (but need not) be
administered by different administrative bodies with respect to Directors,
Officers and Employees who are neither Directors nor Officers.
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<PAGE>
(ii) ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS.
With respect to grants of Options to Employees or Consultants who are also
Officers or Directors of the Company, the Plan shall be administered by (A) the
Board, if the Board may administer the Plan in compliance with Rule 16b-3 as it
applies to a plan intended to qualify thereunder as a discretionary plan and
Section 162(m) of the Code as it applies so as to qualify grants of Options to
Named Executives as performance-based compensation, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted in such a manner as to permit the Plan to comply with Rule 16b-3 as
it applies to a plan intended to qualify thereunder as a discretionary plan, to
qualify grants of Options to Named Executives as performance-based compensation
under Section 162(m) of the Code and to satisfy the Applicable Laws.
(iii) ADMINISTRATION WITH RESPECT TO OTHER PERSONS. With
respect to grants of Options to Employees or Consultants who are neither
Directors nor Officers of the Company, the Plan shall be administered by (A)
the Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the Applicable Laws.
(iv) GENERAL. Once a Committee has been appointed pursuant to
subsection (ii) or (iii) of this Section 4(a), such Committee shall continue
to serve in its designated capacity until otherwise directed by the Board. From
time to time the Board may increase the size of any Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies (however caused) and remove
all members of a Committee and thereafter directly administer the Plan, all to
the extent permitted by the Applicable Laws and, in the case of a Committee
appointed under subsection (ii), to the extent permitted by Rule 16b-3 as it
applies to a plan intended to qualify thereunder as a discretionary plan, and to
the extent required under Section 162(m) of the Code to qualify grants of
Options to Named Executives as performance-based compensation.
(b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(m) of the Plan;
(ii) to select the Employees and Consultants to whom Options
may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options are
granted hereunder;
(iv) to determine the number of shares of Common Stock to be
covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
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(vi) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder (including, but not
limited to, the share price and any restriction or limitation, or any vesting
acceleration or waiver of forfeiture restrictions regarding any Option and/or
the shares of Common Stock relating thereto, based in each case on such factors
as the Administrator shall determine, in its sole discretion);
(vii) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election of the
participant (including providing for and determining the amount, if any, of
any deemed earnings on any deferred amount during any deferral period); and
(viii) to reduce the exercise price of any Option to the then
current Fair Market Value if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;
(c) EFFECT OF ADMINISTRATOR'S DECISION. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options.
5. ELIGIBILITY.
(a) RECIPIENTS OF GRANTS. Nonstatutory Stock Options may be granted
only to Employees and Consultants. Incentive Stock Options may be granted only
to Employees. An Employee or Consultant who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options.
(b) TYPE OF OPTIONS. Each Option shall be designated in the written
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designations, to the extent that the
aggregate Fair Market Value of shares with respect to which Incentive Stock
Options are exercisable for the first time by an Optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
For purposes of this Section 5(b), Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the time the Option with respect to such
Shares is granted.
(c) NO EMPLOYMENT RIGHTS. The Plan shall not confer upon any
Optionee any right with respect to continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's right to terminate his or her employment or consulting
relationship at any time, with or without cause.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the
Company as described in Section
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20 of the Plan. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 16 of the Plan.
7. TERM OF OPTION. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that in the case of an Incentive Stock
Option, the term shall be no more than ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Option Agreement.
However, in the case of an Option granted to an Optionee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Option shall be five (5) years from the date of grant thereof or
such shorter term as may be provided in the Option Agreement.
8. LIMITATION ON GRANTS TO EMPLOYEES. Subject to adjustment as provided
in this Plan, the maximum number of Shares which may be subject to Options
granted to any one Employee under this Plan for any fiscal year of the Company
shall be 250,000.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be such price as is determined
by the Administrator, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of the grant of
such Incentive Stock Option, owns stock representing more than ten percent (10%)
of the voting power of all classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of grant;
(B) granted to any Employee, the per Share exercise price
shall be no less than 100% of the Fair Market Value per Share on the date of
grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of the grant of
such Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of the grant;
(B) granted to a person who, at the time of the grant of
such Option, is a Named Executive of the Company, the per share Exercise Price
shall be no less than 100% of the Fair Market Value on the date of grant;
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(C) granted to any person other than a Named Executive,
the per Share exercise price shall be no less than 85% of the Fair Market Value
per Share on the date of grant.
(b) PERMISSIBLE CONSIDERATION. The consideration to be paid for the
Shares to be issued upon exercise of an Option, including the method of payment,
shall be determined by the Administrator (and, in the case of an Incentive Stock
Option, shall be determined at the time of grant) and may consist entirely of
(1) cash, (2) check, (3) promissory note, (4) other Shares that (x) in the
case of Shares acquired upon exercise of an Option either have been owned by the
Optionee for more than six months on the date of surrender or were not acquired,
directly or indirectly, from the Company, and (y) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised, (5) authorization from the Company to
retain from the total number of Shares as to which the Option is exercised that
number of Shares having a Fair Market Value on the date of exercise equal to the
exercise price for the total number of Shares as to which the Option is
exercised, (6) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to deliver promptly to the Company the
amount of sale or loan proceeds required to pay the exercise price, (7)
delivery of an irrevocable subscription agreement for the Shares that
irrevocably obligates the option holder to take and pay for the Shares not more
than twelve months after the date of delivery of the subscription agreement,
(8) any combination of the foregoing methods of payment, or (9) such other
consideration and method of payment for the issuance of Shares to the extent
permitted under Applicable Laws. In making its determination as to the type of
consideration to accept, the Administrator shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.
10. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 9(b) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such stock certificate promptly upon exercise of the Option. No
adjustment
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will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 14 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF STATUS AS AN EMPLOYEE OR CONSULTANT. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant, such Optionee may, but only within thirty (30) days (or such other
period of time, not exceeding three (3) months in the case of an Incentive Stock
Option or six (6) months in the case of a Nonstatutory Stock Option, as is
determined by the Administrator, with such determination in the case of an
Incentive Stock Option being made at the time of grant of the Option) after the
date of such termination (but in no event later than the date of expiration of
the term of such Option as set forth in the Option Agreement), exercise his or
her Option to the extent that he or she was entitled to exercise it at the date
of such termination. To the extent that the Optionee was not entitled to
exercise the Option at the date of such termination, or if the optionee does not
exercise such Option (which he or she was entitled to exercise) within the time
specified herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 10(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of his or her total and
permanent disability (as defined in Section 22(e)(3) of the Code), he or she
may, but only within six (6) months (or such other period of time not exceeding
twelve (12) months as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) from the date of such termination (but in no event later
than the date of expiration of the term of such Option as set forth in the
Option Agreement), exercise his or her Option to the extent he or she was
entitled to exercise it at the date of such termination. To the extent that he
or she was not entitled to exercise the Option at the date of termination, or if
he does not exercise such Option (which he was entitled to exercise) within the
time specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee:
(i) during the term of the Option who is at the time of his
death an Employee or Consultant of the Company and who shall have been in
Continuous Status as an Employee or Consultant since the date of grant of the
Option, the Option may be exercised, at any time within six (6) months (or such
other period of time, not exceeding six (6) months, as is determined by the
Administrator, with such determination in the case of an Incentive Stock Option
being made at the time of grant of the Option) following the date of death (but
in no event later than the date of expiration of the term of such Option as set
forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance but only to
the extent of the right to exercise that would have accrued had the Optionee
continued living and remained in Continuous Status as an Employee or Consultant
three (3) months (or such other period of time as is determined by the
Administrator as provided above) after the date of death, subject to the
limitation set forth in Section 5(b); or
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(ii) within thirty (30) days (or such other period of time not
exceeding three (3) months as is determined by the Administrator, with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option) after the termination of Continuous Status as an Employee
or Consultant, the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of termination.
(e) RULE 16b-3. Options granted to persons subject to Section 16(b)
of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
11. WITHHOLDING TAXES. As a condition to the exercise of Options granted
hereunder, the Optionee shall make such arrangements as the Administrator may
require for the satisfaction of any federal, state, local or foreign withholding
tax obligations that may arise in connection with the exercise, receipt or
vesting of such Option. The Company shall not be required to issue any Shares
under the Plan until such obligations are satisfied.
12. STOCK WITHHOLDING TO SATISFY WITHHOLDING TAX OBLIGATIONS. At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option which tax liability is subject to tax withholding
under applicable tax laws, and the Optionee is obligated to pay the Company an
amount required to be withheld under applicable tax laws, the Optionee may
satisfy the withholding tax obligation by one or some combination of the
following methods: (a) by cash payment, or (b) out of Optionee's current
compensation, (c) if permitted by the Administrator, in its discretion, by
surrendering to the Company Shares that (i) in the case of Shares previously
acquired from the Company, have been owned by the Optionee for more than six
months on the date of surrender, and (ii) have a fair market value on the date
of surrender equal to or less than Optionee's marginal tax rate times the
ordinary income recognized, or (d) by electing to have the Company withhold from
the Shares to be issued upon exercise of the Option that number of Shares having
a fair market value equal to the amount required to be withheld. For this
purpose, the fair market value of the Shares to be withheld shall be determined
on the date that the amount of tax to be withheld is to be determined (the "Tax
Date").
Any surrender by an Officer or Director of previously owned
Shares to satisfy tax withholding obligations arising upon exercise of this
Option must comply with the applicable provisions of Rule 16b-3 and shall be
subject to such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
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All elections by an Optionee to have Shares withheld to satisfy
tax withholding obligations shall be made in writing in a form acceptable to the
Administrator and shall be subject to the following restrictions:
(a) the election must be made on or prior to the applicable Tax Date;
(b) once made, the election shall be irrevocable as to the particular
Shares of the Option as to which the election is made;
(c) all elections shall be subject to the consent or disapproval of
the Administrator;
(d) if the Optionee is an Officer or Director, the election must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option is exercised but such
Optionee shall be unconditionally obligated to tender back to the Company the
proper number of Shares on the Tax Date.
13. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution. The designation of a
beneficiary by an Optionee will not constitute a transfer. An Option may be
exercised, during the lifetime of the Optionee, only by the Optionee or a
transferee permitted by this Section 13.
14. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS.
(a) ADJUSTMENTS. Subject to any required action by the shareholders
of the Company, the number of shares of Common Stock covered by each outstanding
Option, the number of shares of Common Stock that have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, the maximum number of shares of Common Stock for which Options may be
granted to any employee under Section 8 of the Plan, and the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly
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provided herein, no issuance by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, shall affect,
and no adjustment by reason thereof shall be made with respect to, the number
or price of shares of Common Stock subject to an Option.
(b) CORPORATE TRANSACTIONS. In the event of the proposed dissolution
or liquidation of the Company, the Option will terminate immediately prior to
the consummation of such proposed action, unless otherwise provided by the
Administrator. The Administrator may, in the exercise of its sole discretion in
such instances, declare that any Option shall terminate as of a date fixed by
the Administrator and give each Optionee the right to exercise his or her Option
as to all or any part of the Optioned Stock, including Shares as to which the
Option would not otherwise be exercisable. In the event of a proposed sale of
all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, the Option shall be assumed or an
equivalent option shall be substituted by such successor corporation or a parent
or subsidiary of such successor corporation, unless the Administrator
determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, that the Optionee shall have the right to exercise
the Option as to some or all of the Optioned Stock, including Shares as to which
the Option would not otherwise be exercisable. If the Administrator makes an
Option exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Administrator shall notify the Optionee that the
Option shall be exercisable for a period of thirty (30) days from the date of
such notice, and the Option will terminate upon the expiration of such period.
15. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option is so granted within a reasonable time after the date of such
grant.
16. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
provided that, the following revisions or amendments shall require approval of
the shareholders of the Company in the manner described in Section 20 of the
Plan:
(i) any increase in the number of Shares subject to the Plan,
other than in connection with an adjustment under Section 14 of the
Plan;
(ii) any change in the designation of the class of persons
eligible to be granted Options;
(iii) any change in the limitation on grants to employees as
described in Section 8 of the Plan or other changes which would
require shareholder approval to qualify options granted hereunder as
performance-based compensation under Section 162(m) of the Code; or
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(iv) if the Company has a class of equity securities registered
under Section 12 of the Exchange Act at the time of such revision or
amendment, any material increase in the benefits accruing to
participants under the Plan.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
17. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned relevant provisions of law.
18. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. The inability of the
Company to obtain authority from any regulatory body having jurisdiction, which
authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which
such requisite authority shall not have been obtained.
19. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such forms as the Board shall approve.
20. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law
and the rules of any stock exchange and, in particular, shall be solicited
substantially in accordance with Section 14(a) of the Exchange Act and the rules
and regulations promulgated thereunder.
21. INFORMATION TO OPTIONEES. The Company shall provide to each
Optionee, during the period for which such Optionee has one or more Options
outstanding, copies of all annual reports and other information which are
provided to all shareholders of the Company.
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EXHIBIT 10.19
CENTURA SOFTWARE CORPORATION
1996 DIRECTORS' STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Directors' Stock Option
Plan are to attract and retain the best available personnel for service as
Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their continued
service on the Board.
All options granted hereunder shall be nonstatutory stock options.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "BOARD" shall mean the Board of Directors of the Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(c) "COMMON STOCK" shall mean the Common Stock of the Company.
(d) "COMPANY" shall mean Centura Software Corporation, a California
corporation.
(e) "CONTINUOUS STATUS AS A DIRECTOR" shall mean the absence of any
interruption or termination of service as a Director.
(f) "DIRECTOR" shall mean a member of the Board.
(g) "EMPLOYEE" shall mean any person, including any officer or
director, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient in and of
itself to constitute "employment" by the Company.
(h) "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "OPTION" shall mean a stock option granted pursuant to the Plan.
All options shall be nonstatutory stock options (i.e., options that are not
intended to qualify as incentive stock options under Section 422 of the Code).
(j) "OPTIONED STOCK" shall mean the Common Stock subject to an
Option.
(k) "OPTIONEE" shall mean an Outside Director who receives an Option.
(l) "OUTSIDE DIRECTOR" shall mean a Director who is not an Employee.
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(m) "PARENT" shall mean a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(n) "PLAN" shall mean this 1996 Directors' Stock Option Plan.
(o) "SHARE" shall mean a share of the Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(p) "SUBSIDIARY" shall mean a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 500,000 Shares (the "POOL") of Common Stock. The Shares may
be authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan. If Shares which were acquired upon exercise of an
Option are subsequently repurchased by the Company, such Shares shall not in any
event be returned to the Plan and shall not become available for future grant
under the Plan.
4. ADMINISTRATION OF AND GRANTS OF OPTIONS UNDER THE PLAN.
(a) ADMINISTRATOR. Except as otherwise required herein, the Plan
shall be administered by the Board.
(b) PROCEDURE FOR GRANTS. All grants of Options hereunder shall be
automatic and nondiscretionary and shall be made strictly in accordance with the
following provisions:
(i) No person shall have any discretion to select which Outside Directors
shall be granted Options or to determine the number of Shares to be covered by
Options granted to Outside Directors.
(ii) Each Outside Director shall be automatically granted an Option to
purchase Shares (the "OPTION") as follows: (A) with respect to persons who are
Outside Directors on the effective date of this Plan, as determined in
accordance with Section 6 hereof, 50,000 shares on such effective date, and
(B) with respect to any other person, 50,000 shares on the date on which such
person first becomes an Outside Director, whether through election by the
shareholders of the Company or appointment by the Board of Directors to fill a
vacancy.
(iii) Notwithstanding the provisions of subsection (ii) hereof, in the
event that a grant would cause the number of Shares subject to outstanding
Options plus the number of Shares previously purchased upon exercise of Options
to exceed the Pool, then each such automatic grant shall be for that number of
Shares determined by dividing the total number of Shares remaining available for
grant by the number of Outside Directors receiving an Option on
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such date on the automatic grant date. Any further grants shall then be
deferred until such time, if any, as additional Shares become available for
grant under the Plan through action of the shareholders to increase the
number of Shares which may be issued under the Plan or through cancellation
or expiration of Options previously granted hereunder.
(iv) Notwithstanding the provisions of subsection (ii) hereof, any grant of
an Option made before the Company has obtained shareholder approval of the Plan
in accordance with Section 17 hereof shall be conditioned upon obtaining such
shareholder approval of the Plan in accordance with Section 17 hereof.
(v) The terms of each Option granted hereunder shall be as follows:
(1) the Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in Section 9
hereof;
(2) the exercise price per Share shall be 100% of the fair
market value per Share on the date of grant of the Option, determined in
accordance with Section 8 hereof; and
(3) the Option shall become exercisable in installments
cumulatively as to 1/48th of the Shares subject to the Option on each of the
first forty-eight monthly anniversaries of the date of grant of the Option.
(c) POWERS OF THE BOARD. Subject to the provisions and restrictions
of the Plan, the Board shall have the authority, in its discretion: (i) to
determine, upon review of relevant information and in accordance with
Section 8(b) of the Plan, the fair market value of the Common Stock; (ii) to
determine the exercise price per share of Options to be granted, which exercise
price shall be determined in accordance with Section 8(a) of the Plan; (iii) to
interpret the Plan; (iv) to prescribe, amend and rescind rules and regulations
relating to the Plan; (v) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option previously
granted hereunder; and (vi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.
(d) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
(e) SUSPENSION OR TERMINATION OF OPTION. If the President or his or
her designee reasonably believes that an Optionee has committed an act of
misconduct, the President may suspend the Optionee's right to exercise any
option pending a determination by the Board of Directors (excluding the Outside
Director accused of such misconduct). If the Board of Directors (excluding the
Outside Director accused of such misconduct) determines an Optionee has
committed an act of embezzlement, fraud, dishonesty, nonpayment of an obligation
owed to the Company, breach of fiduciary duty or deliberate disregard of the
Company rules resulting in loss, damage or injury to the Company, or if an
Optionee makes an unauthorized disclosure of any Company trade secret or
confidential information, engages in any conduct constituting unfair
competition, induces any Company customer to breach a contract with the Company
or induces any
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principal for whom the Company acts as agent to terminate such agency
relationship, neither the Optionee nor his or her estate shall be entitled to
exercise any option whatsoever. In making such determination, the Board of
Directors (excluding the Outside Director accused of such misconduct) shall
act fairly and shall give the Optionee an opportunity to appear and present
evidence on Optionee's behalf at a hearing before the Board or a committee of
the Board.
5. ELIGIBILITY. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) hereof. An Outside Director who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.
6. TERM OF PLAN; EFFECTIVE DATE. The Plan shall become effective on the
date on which it is adopted by resolution of the Company's Board of Directors.
It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 13 of the Plan.
7. TERM OF OPTIONS. The term of each Option shall be ten (10) years from
the date of grant thereof.
8. EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per Share exercise price for the Shares to
be issued pursuant to exercise of an Option shall be 100% of the fair market
value per Share on the date of grant of the Option.
(b) FAIR MARKET VALUE. The fair market value shall be determined by
the Board; PROVIDED, HOWEVER, that where there is a public market for the Common
Stock, the fair market value per Share shall be the mean of the bid and asked
prices of the Common Stock in the over-the-counter market on the day immediately
preceding the date of grant, as reported in THE WALL STREET JOURNAL (or, if not
so reported, as otherwise reported by the National Association of Securities
Dealers Automated Quotation ("Nasdaq") System) or, in the event the Common Stock
is traded on the Nasdaq National Market or listed on a stock exchange, the fair
market value per Share shall be the closing price on such system or exchange on
the day immediately preceding the date of grant of the Option (or, in the event
that the Common Stock is not traded on such date, on the immediately preceding
trading date), as reported in THE WALL STREET JOURNAL.
(c) FORM OF CONSIDERATION. The consideration to be paid for the
Shares to be issued upon exercise of an Option shall consist entirely of cash,
check, other Shares of Common Stock having a fair market value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised (which, if acquired from the Company, shall have been
held for at least six months), or any combination of such methods of payment
and/or any other consideration or method of payment as shall be permitted under
applicable corporate law.
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9. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable at such times as are set forth in
Section 4(b) hereof; provided, however, that no Options shall be exercisable
prior to shareholder approval of the Plan in accordance with Section 17 hereof
has been obtained.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of
such exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 8(c) of the Plan. Until the issuance (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company) of the stock certificate evidencing such Shares,
no right to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. A share certificate for the number of Shares so acquired shall be
issued to the Optionee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 of the Plan.
Exercise of an Option in any manner shall result in a decrease in
the number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) TERMINATION OF STATUS AS A DIRECTOR. If an Outside Director
ceases to serve as a Director, he or she may, but only within ninety (90) days
after the date he or she ceases to be a Director of the Company, exercise his or
her Option to the extent that he or she was entitled to exercise it at the date
of such termination. Notwithstanding the foregoing, in no event may the Option
be exercised after its term set forth in Section 7 has expired. To the extent
that such Outside Director was not entitled to exercise an Option at the date of
such termination, or does not exercise such Option (which he or she was entitled
to exercise) within the time specified herein, the Option shall terminate.
(c) DISABILITY OF OPTIONEE. Notwithstanding Section 9(b) above, in
the event a Director is unable to continue his or her service as a Director with
the Company as a result of his or her total and permanent disability (as defined
in Section 22(e)(3) of the Code), he or she may, but only within six (6) months
(or such other period of time not exceeding twelve (12) months as is determined
by the Board) from the date of such termination, exercise his or her Option to
the extent he or she was entitled to exercise it at the date of such
termination. Notwithstanding the foregoing, in no event may the Option be
exercised after its term set forth in Section 7 has expired. To the extent that
he or she was not entitled to exercise the Option at the date of termination, or
if he or she does not exercise such Option (which he or she was entitled to
exercise) within the time specified herein, the Option shall terminate.
(d) DEATH OF OPTIONEE. In the event of the death of an Optionee:
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<PAGE>
(i) During the term of the Option who is, at the time of his or her death,
a Director of the Company and who shall have been in Continuous Status as a
Director since the date of grant of the Option, the Option may be exercised, at
any time within six (6) months following the date of death, by the Optionee's
estate or by a person who acquired the right to exercise the Option by bequest
or inheritance, but only to the extent of the right to exercise that would have
accrued had the Optionee continued living and remained in Continuous Status as
Director for six (6) months (or such lesser period of time as is determined by
the Board) after the date of death. Notwithstanding the foregoing, in no event
may the Option be exercised after its term set forth in Section 7 has expired.
(ii) Three (3) months after the termination of Continuous Status as a
Director, the Option may be exercised, at any time within six (6) months
following the date of death, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only
to the extent of the right to exercise that had accrued at the date of
termination. Notwithstanding the foregoing, in no event may the option be
exercised after its term set forth in Section 7 has expired.
10. NONTRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution or pursuant to a qualified
domestic relations order (as defined by the Code or the rules thereunder). The
designation of a beneficiary by an Optionee does not constitute a transfer. An
Option may be exercised during the lifetime of an Optionee only by the Optionee
or a transferee permitted by this Section.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; CORPORATE TRANSACTIONS.
(a) ADJUSTMENT. Subject to any required action by the shareholders
of the Company, the number of shares of Common Stock covered by each outstanding
Option, and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company;
PROVIDED, HOWEVER, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option.
(b) CORPORATE TRANSACTIONS. In the event of (i) a dissolution or
liquidation of the Company, (ii) a sale of all or substantially all of the
Company's assets, (iii) a merger or consolidation in which the Company is not
the surviving corporation, or (iv) any other capital
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<PAGE>
reorganization in which more than fifty percent (50%) of the shares of the
Company entitled to vote are exchanged, the Company shall give to the
Eligible Director, at the time of adoption of the plan for liquidation,
dissolution, sale, merger, consolidation or reorganization, either a
reasonable time thereafter within which to exercise the Option, including
Shares as to which the Option would not be otherwise exercisable, prior to
the effectiveness of such liquidation, dissolution, sale, merger,
consolidation or reorganization, at the end of which time the Option shall
terminate, or the right to exercise the Option, including Shares as to which
the Option would not be otherwise exercisable (or receive a substitute option
with comparable terms), as to an equivalent number of shares of stock of the
corporation succeeding the Company or acquiring its business by reason of
such liquidation, dissolution, sale, merger, consolidation or reorganization.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4(b) hereof.
Notice of the determination shall be given to each Outside Director to whom an
Option is so granted within a reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable;
PROVIDED that, to the extent necessary and desirable to comply with Rule 16b-3
under the Exchange Act (or any other applicable law or regulation), the Company
shall obtain approval of the shareholders of the Company to Plan amendments to
the extent and in the manner required by such law or regulation.
Notwithstanding the foregoing, the provisions set forth in Section 4 of this
Plan (and any other Sections of this Plan that affect the formula award terms
required to be specified in this Plan by Rule 16b-3) shall not be amended more
than once every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan that would impair the rights of any Optionee shall not
affect Options already granted to such Optionee and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance. As a
condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares, if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.
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<PAGE>
15. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan. Inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
16. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
17. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company at or prior to the first annual
meeting of shareholders held subsequent to the granting of an Option hereunder.
If such shareholder approval is obtained at a duly held shareholders' meeting,
it may be obtained by the affirmative vote of the holders of a majority of the
outstanding shares of the Company present or represented and entitled to vote
thereon. If such shareholder approval is obtained by written consent, it may be
obtained by the written consent of the holders of a majority of the outstanding
shares of the Company. Options may be granted, but not exercised, before such
shareholder approval.
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<PAGE>
CENTURA SOFTWARE CORPORATION
1996 DIRECTORS' STOCK OPTION PLAN
NOTICE OF STOCK OPTION GRANT
----------------------------
[Optionee]
[OptioneeAddress1]
[OptioneeAddress2]
You have been granted an option to purchase Common Stock of Centura
Software Corporation (the "COMPANY") as follows:
Date of Grant ________________
Vesting Commencement Date ________________
Exercise Price per Share ________________
Total Number of Shares Granted ________________
Total Exercise Price ________________
Expiration Date ________________
Vesting Schedule This Option may be exercised, in whole
or in part, in accordance with the
following schedule: 1/48th of the Shares
subject to the Option shall vest on each
of the first forty-eight monthly
anniversaries of the Date of Grant.
Termination Period This Option may be exercised for 90 days
after termination of Optionee's Continuous
Status as a Director, or such longer period
as may be applicable upon death or
Disability of Optionee as provided in the
Plan, but in no event later than the
Expiration Date as provided above.
<PAGE>
By your signature and the signature of the Company's representative below,
you and the Company agree that this option is granted under and governed by the
terms and conditions of the 1996 Directors' Stock Option Plan and the
Nonstatutory Stock Option Agreement, all of which are attached and made a part
of this document.
OPTIONEE: CENTURA SOFTWARE CORPORATION
__________________________ By: _____________________________
Signature
Title: __________________________
___________________________
Print Name
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<PAGE>
CENTURA SOFTWARE CORPORATION
NONSTATUTORY STOCK OPTION AGREEMENT
-----------------------------------
1. GRANT OF OPTION. The Board of Directors of the Company hereby grants
to the Optionee named in the Notice of Stock Option Grant attached as Part I of
this Agreement (the "OPTIONEE"), an option (the "OPTION") to purchase a number
of Shares, as set forth in the Notice of Stock Option Grant, at the exercise
price per share set forth in the Notice of Stock Option Grant (the "EXERCISE
PRICE"'), subject to the terms and conditions of the 1996 Directors' Stock
Option Plan (the "PLAN"), which is incorporated herein by reference.
(Capitalized terms not defined herein shall have the meanings ascribed to such
terms in the Plan.) In the event of a conflict between the terms and conditions
of the Plan and the terms and conditions of this Nonstatutory Stock Option
Agreement, the terms and conditions of the Plan shall prevail.
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Stock Option Grant
and the applicable provisions of the Plan and this Nonstatutory Stock Option
Agreement. In the event of Optionee's death, disability or other termination of
Optionee's employment or consulting relationship, the exercisability of the
Option is governed by the applicable provisions of the Plan and this
Nonstatutory Stock Option Agreement.
(b) METHOD OF EXERCISE. This Option is exercisable by delivery of an
exercise notice, in the form attached as EXHIBIT A (the "EXERCISE NOTICE"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "EXERCISED SHARES"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares. This Option shall
be deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange or quotation service upon which the
Shares are then listed. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash;
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<PAGE>
(b) check;
(c) delivery of a properly executed exercise notice together with
such other documentation as the Administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the exercise price; or
(d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares.
4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution or
pursuant to a domestic relations order (as defined by the Code or the rules
thereunder) and may be exercised during the lifetime of Optionee only by the
Optionee or a transferee permitted by Section 10 of the Plan. The terms of the
Plan and this Nonstatutory Stock Option Agreement shall be binding upon the
executors, administrators, heirs, successors and assigns of the Optionee.
5. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Stock Option Grant, and may be exercised during such term
only in accordance with the Plan and the terms of this Nonstatutory Stock Option
Agreement.
6. TAX CONSEQUENCES. Set forth below is a brief summary of certain
federal and California tax consequences relating to this Option under the law in
effect as of the date of grant. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE SHOULD CONSULT HIS OR
HER OWN TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) EXERCISING THE OPTION. Since this Option does not qualify as an
incentive stock option under Section 422 of the Code, the Optionee may incur
regular federal and California income tax liability upon exercise. The Optionee
will be treated as having received compensation income (taxable at ordinary
income tax rates) equal to the excess, if any, of the fair market value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price.
(b) DISPOSITION OF SHARES. If the Optionee holds the Option Shares
for more than one year, gain realized on disposition of the Shares will be
treated as long-term capital gain for federal and California income tax
purposes.
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<PAGE>
By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of the Plan and this Nonstatutory Stock Option Agreement.
Optionee has reviewed the Plan and this Nonstatutory Stock Option Agreement in
their entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Nonstatutory Stock Option Agreement and fully understands all
provisions of the Plan and Nonstatutory Stock Option Agreement. Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions relating to the Plan and
Nonstatutory Stock Option Agreement.
CENTURA SOFTWARE CORPORATION
_______________________________
[Optionee] By: _____________________________
Title: __________________________
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<PAGE>
CONSENT OF SPOUSE
-----------------
The undersigned spouse of Optionee has read and hereby approves the terms
and conditions of the Plan and this Nonstatutory Stock Option Agreement. In
consideration of the Company's granting his or her spouse the right to purchase
Shares as set forth in the Plan and this Nonstatutory Stock Option Agreement,
the undersigned hereby agrees to be irrevocably bound by the terms and
conditions of the Plan and this Nonstatutory Stock Option Agreement and further
agrees that any community property interest shall be similarly bound. The
undersigned hereby appoints the undersigned's spouse as attorney-in-fact for the
undersigned with respect to any amendment or exercise of rights under the Plan
or this Nonstatutory Stock Option Agreement.
______________________________
Spouse of Optionee
<PAGE>
EXHIBIT A
NOTICE OF EXERCISE
------------------
To: Centura Software Corporation
Attn: Stock Option Administrator
Subject: NOTICE OF INTENTION TO EXERCISE STOCK OPTION
This is official notice that the undersigned ("OPTIONEE") intends to
exercise Optionee's option to purchase __________ shares of Centura Software
Corporation Common Stock, under and pursuant to the Company's 1996 Directors'
Stock Option Plan and the Nonstatutory Stock Option Agreement dated
_______________, as follows:
Grant Number: _________________________
Date of Purchase: _________________________
Number of Shares: _________________________
Purchase Price: _________________________
Method of Payment of
Purchase Price: _________________________
Social Security No.: _________________________
The shares should be issued as follows:
Name: _________________________
Address: _________________________
_________________________
_________________________
Signed: _________________________
Date: _________________________
<PAGE>
WILLIAM S. LERACH (68581)
KEITH F. PARK (54275)
MARK SOLOMON (151949)
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: (619) 231-1058
ROBERT N. KAPLAN
JONATHAN K. LEVINE
CHRISTINE M. COMAS
KAPLAN, KILSHEIMER & FOX LLP
685 Third Avenue, 26th Floor
New York, NY 10017
Telephone: (212) 687-1980
Plaintiffs' Settlement Counsel
[Additional Counsel on Signature Page]
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
IN re GUPTA CORPORATION SECURITIES ) CLASS ACTION
LITIGATION )
) Master File No.
- ---------------------------------- ) 94-1517-FMS (EAI)
This Document Relates to All )
Actions )
- ---------------------------------- )
STIPULATION OF SETTLEMENT
-------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
-----
<S> <C>
I. THE LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II. PRETRIAL PROCEEDINGS AND DISCOVERY IN THE LITIGATION . . . . . . . . . . . . . . . . . . 2
III. DEFENDANTS' STATEMENT AND DENIALS OF WRONGDOING AND LIABILITY. . . . . . . . . . . . . . 2
IV. CLAIMS OF THE REPRESENTATIVE PLAINTIFFS AND BENEFITS OF SETTLEMENT . . . . . . . . . . . 3
V. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT . . . . . . . . . . . . . . . . . . . . 3
1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
2. Administration of The Settlement Fund . . . . . . . . . . . . . . . . . . . . . . .12
A. The Escrow Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
B. Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
C. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
3. Rights With Respect To The Settlement Stock . . . . . . . . . . . . . . . . . . . .15
4. Consent To Jurisdiction Of Magistrate Judge . . . . . . . . . . . . . . . . . . . .16
5. Notice Order and Settlement Hearing . . . . . . . . . . . . . . . . . . . . . . . .16
6. Releases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
7. Administration And Calculation Of Claims, Final Awards and Supervision
And Distribution Of Settlement Fund . . . . . . . . . . . . . . . . . . . . . . . .18
8. Representative Plaintiffs' Counsel's Attorneys' Fees And
Reimbursement Of Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
9. Conditions Of Settlement, Effect Of Disapproval, Cancellation Or Termination. . . .22
10. Miscellaneous Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
</TABLE>
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<PAGE>
This Stipulation of Settlement (the "Stipulation"), dated as of July 19,
1996, is made and entered by and among the following parties (as defined further
in Section V herein) to the above entitled Litigation: (i) the Representative
Plaintiffs (on behalf of themselves and each of the Class Members), by and
through their counsel of record in the Litigation; and (ii) the Defendants, by
and through their counsel of record in the Litigation. The Stipulation is
intended by the parties to fully, finally and forever resolve, discharge and
settle the Released Claims (as defined herein), upon and subject to the terms
and conditions hereof.
I. THE LITIGATION
This action was commenced in the United States District Court for the
Northern District of California on or about May 2, 1994. On August 4, 1994,
plaintiffs filed a First Amended Complaint, which was dismissed with leave to
replead on December 6, 1994. On January 12, 1995, plaintiffs filed a Second
Amended Complaint, which has been sustained in part and dismissed in part.
This is a securities class action on behalf of all persons, other than
defendants, who purchased the common stock of Gupta Corporation ("Gupta")
between October 19, 1993 and July 6, 1994, inclusive (the "Class Period"). The
action is brought under Sections 10(b) and 20(a) of the Securities and Exchange
Act of 1934, and Rule l0b-5 promulgated thereunder. Defendants include Gupta
and certain of its present and former officers and directors. This action was
certified to proceed as a class action pursuant to this Court's order of May 17,
1995. This action is referred to herein as the "Class Action" or the
"Litigation."
<PAGE>
II. PRETRIAL PROCEEDINGS AND DISCOVERY IN THE LITIGATION
The parties have engaged in substantial motion practice in the Litigation,
including motions to dismiss the various complaints and motions to compel the
production of documents and oppositions to such motions.
Counsel for the Representative Plaintiffs have also conducted extensive
formal and informal discovery and investigation during the prosecution of the
Litigation. This discovery and investigation has included, INTER ALIA, (i)
extensive depositions in the United States and England of Gupta executives and
employees, present and former, and its former auditors, (ii) inspection of
hundreds of thousands of pages of documents produced by defendants, Gupta's
auditors, securities analysts, Gupta's customers and other non-parties; (iii)
consultation with experts in damages and accounting; (iv) review of Gupta's
public filings, annual reports and other public statements; and (v) research of
the applicable law with respect to the claims asserted and the potential
defenses thereto.
III. DEFENDANTS' STATEMENT AND DENIALS
OF WRONGDOING AND LIABILITY
The Defendants have denied and continue to deny each and all of the claims
and contentions alleged by the Representative Plaintiffs on behalf of the Class.
The Defendants also have denied and continue to deny, INTER ALIA, the
allegations that the Representative Plaintiffs or the Class have suffered
damage.
Nonetheless, the Defendants have concluded that further conduct of the
Litigation would be protracted and expensive, and that it is desirable that the
Litigation be fully and finally settled in the manner and upon the terms and
conditions set forth in this Stipulation. The Defendants also have taken into
account the uncertainty and risks inherent in any litigation, especially in
complex
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<PAGE>
cases like the Litigation. The Defendant have, therefore, determined
that it is desirable and beneficial to them that the Litigation be settled in
the manner and upon the terms and conditions set forth in this Stipulation.
IV. CLAIMS OF THE REPRESENTATIVE PLAINTIFFS
AND BENEFITS OF SETTLEMENT
The Representative Plaintiffs believe that the claims asserted in the
Litigation have merit and that the evidence developed to date in the Litigation
supports the claims asserted. However, counsel for the Representative
Plaintiffs recognize and acknowledge the expense and length of continued
proceedings necessary to prosecute the Litigation against the Defendants through
trial and through appeals. Counsel for the Representative Plaintiffs believe
that the settlement set forth in the Stipulation confers substantial benefits
upon the Class and each of the Class Members. Based on their evaluation,
counsel for the Representative Plaintiffs have determined that the settlement
set forth in the Stipulation is in the best interests of the Representative
Plaintiffs and the Class and each of the Class Members.
V. TERMS OF STIPULATION AND AGREEMENT OF SETTLEMENT
NOW, THEREFORE, IT IS HEREBY STIPULATED AND AGREED by and among the
Representative Plaintiffs (for themselves and the Class Members), and the
Defendants, by and through their respective counsel or attorneys of record,
that, subject to the approval of the Court, the Litigation and the Released
Claims shall be finally and fully compromised, settled and released, and the
Litigation shall be dismissed on the merits and with prejudice, as to all
settling parties, upon and subject to the terms and conditions of the
Stipulation, as follows:
1. DEFINITIONS
As used in the Stipulation the following terms have the meanings
specified below:
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<PAGE>
1.1 "Authorized Claimant" means any Class Member whose claim for
recovery has been allowed pursuant to the terms of the Stipulation.
1.2 "Authorized Stock Recipients" means Class Members and the
attorneys to the Class to whom the Court orders that Settlement Stock shall be
distributed.
1.3 "Claimant" means any Class Member who files a Proof of Claim in
such form and manner, and within such time, as the Court shall prescribe.
1.4 "Claims Administrator" means Gilardi & Co., P.O. Box 5100,
Larkspur, California, 94977-5100.
1.5 "Defendants" means Umang P. Gupta, D. Bruce Scott, Richard M.
Noling, Nicholas Birtles, Richard J. Heaps, Reed D. Taussig, Douglas C.
Carlisle, Anthony Sun and Gupta Corporation (including Gupta Corporation's
successors and assigns).
1.6 "Effective Date" means the first date by which all of the events
and conditions specified in PARA9.1 of the Stipulation have been met and have
occurred.
1.7 "Escrow Agent" means Milberg, Weiss Betshad, Hynes & Lerach LLP.
1.8 "Final" means: (i) The date of final affirmance on an appeal
from the Judgment, the expiration of the time for a petition for a writ of
certiorari to review the Judgment and, if certiorari be granted, the date of
final affirmance of the Judgment following review pursuant to that grant; or
(ii) the date of final dismissal of any appeal from the Judgment or the final
dismissal of any proceeding on certiorari to review the Judgment; or (iii) if no
appeal is filed, the expiration date of the time for the filing or noticing of
any appeal from the Court's judgment approving the Stipulation substantially in
the form of Exhibit "B" hereto, I.E., thirty (30) days after entry of the
Judgment or such longer time as may be allowed by Court order extending the time
for appeal. Any proceeding or order, or any appeal or petition for a writ of
certiorari pertaining
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<PAGE>
solely to any plan of allocation and/or application for attorneys' fees,
costs or expenses, shall not in any way delay or preclude the Judgment
from becoming Final.
1.9 "Judgment" means the judgment to be rendered by the Court,
substantially in the form attached hereto as Exhibit "B."
1.10 "Notification Date" means the date on which the Claims
Administrator shall inform Defendants' Counsel that claims processing has been
completed and that all or a portion of the Settlement Stock shall be distributed
to all or some of the Authorized Stock Recipients.
1.11 "Parties" means, collectively, each of the Defendants and the
Representative Plaintiffs on behalf of themselves and the members of the Class.
1.12 "Person" means an individual, corporation, partnership, limited
partnership, association, joint stock company, estate, legal representative,
trust, unincorporated association, government or any political subdivision or
agency thereof, and any business or legal entity and their spouses, heirs,
predecessors, successors, representatives, or assignees.
1.13 "Plaintiffs' Settlement Counsel" means the following counsel for
Representative Plaintiffs in the Litigation:
Milberg Weiss Bershad Hynes & Lerach LLP, William S. Lerach,
Keith F. Park, Joy Ann Bull, Mark Solomon, 600 W. Broadway, Suite 1800, San
Diego, California, 92101, Telephone: 619/231-1058; and Kaplan, Kilsheimer & Fox
LLP, Robert N. Kaplan, Jonathan K. Levine, Christine M. Comas, 685 Third Avenue,
New York, New York, 10017, Telephone: 212/687-1980.
1.14 "Plan of Allocation" means a plan or formula of allocation of the
Settlement Fund which shall be described in the "Notice of Settlement of Class
Action" to be sent
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<PAGE>
to Class Members in connection with the Settlement whereby the Settlement
Fund shall be distributed to Authorized Claimants after payment of expenses
of notice and administration of the Settlement, any taxes, penalties or
interest or tax preparation fees owed by the Settlement Fund, and such
attorneys' fees, costs, expenses and interest as may be awarded by the Court.
Any Plan of Allocation is not part of the Stipulation.
1.15 "Related Parties" means each of a Defendant's past or present
directors, officers, employees, partners, principals, agents, underwriters,
controlling shareholders, any entity in which the Defendant and/or any member(s)
of the Defendant's immediate family has or have a controlling interest,
attorneys, accountants, auditors, banks, investment banks or investment bankers,
advisors, personal or legal representatives, predecessors, successors, parents,
subsidiaries, divisions, joint ventures, assigns, spouses, heirs, associates,
related or affiliated entities, any members of their immediate families, or any
trust of which any Defendant is the settlor or which is for the benefit of any
Defendant and/or member(s) of his family. Without limiting the foregoing, the
Related Parties of defendant Gupta Corporation shall be deemed to include
Novell, Inc.
1.16 "Released Claims" means and includes any and all claims or causes
of action, including "Unknown Claims" as defined in PARA 1.25 hereof, demands,
rights, liabilities, and causes of action of every nature and description
whatsoever, known or unknown, asserted or that could have been asserted by the
Representative Plaintiffs or the Class Members, or any of them, against the
Released Persons based upon or related to both the purchase of Gupta stock by
the Representative Plaintiffs or the Class Members during the Class Period and
the facts, transactions, events, occurrences, disclosures, statements, acts or
omissions or failures to act which were or
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could have been alleged in the Litigation, including the purchase, sale or
distribution by any of the defendants of the common stock of Gupta
Corporation during the Class Period.
1.17 "Released Persons" means each and all of the Defendants and their
respective Related Parties.
1.18 "Representative Plaintiffs" means Jafar Hooman, David Rosenfield,
Brian Murray, Ram Narace Maharaj and Rodney Conover.
1.19 "Gupta" or the "Company" means Gupta Corporation.
1.20 "Class" means all persons (except Defendants, members of the
immediate family of Defendants, any entity in which any Defendant has a
controlling interest, and the legal representatives, heirs, successors or
assigns of any such excluded party) who purchased Gupta common stock during the
period from October 19, 1993 through July 6, 1994 inclusive, excluding those
persons who timely and validly requested exclusion from the Class pursuant to
the "Notice of Pendency of Class Action" which was sent to the Class on
September 27, 1995.
1.21 "Class Member" or "Member of the Class" means a Person who falls
within the definition of the Class as set forth in PARA 1.20 of the Stipulation.
1.22 "Class Period" means the period from October 19, 1993 through
July 6, 1994, inclusive.
1.23 "Settlement Fund" means:
(a) the principal amount of Three Million Dollars ($3,000,000)
in cash, which sum shall be paid by wire transfer to the Escrow Agent on or
before July 19, 1996, plus interest earned thereon. Any amount not paid by that
date shall bear interest at the rate of ten (10%) per annum until paid; and
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(b) One Million Eight Hundred and Seventy-Five Thousand
(1,875,000) shares of Gupta common stock with a guaranteed value as described
below to be distributed as set forth in this subsection (b).
i. DISTRIBUTIONS OF STOCK, IF ANY, TO COUNSEL FOR THE
REPRESENTATIVE PLAINTIFFS. To the extent that the Court authorizes the
distribution of a portion of the Settlement Stock (as defined in paragraph
V.1.24 herein) as payment of any portion of the attorneys' fees to counsel for
the Representative Plaintiffs, Gupta shall direct its stock transfer agent to
issue and distribute the amount of stock determined below on or before the fifth
business day following the execution of an order by the Court awarding the fees
and expenses (the "Fee and Expense Order"). The number of shares so distributed
shall be determined as follows. The price-per-share of the shares of the
Settlement Stock shall be determined by calculating the average closing price of
Gupta common stock, (as reflected on the NASDAQ National Market or, if Gupta
common stock ceases to be traded on the NASDAQ, on such other market as Gupta
common stock is traded at that time) for the twenty (20) trading days prior to
the execution of the Fee and Expense Order (the "First Valuation Period"). If
the price-per-share for the First Valuation Period is equal to or greater than
$6, then the number of shares to be distributed to counsel for Representative
Plaintiffs shall be the amount of stock awarded by the Court as attorneys' fees
(the "Shares Awarded"). In such event, the number of shares remaining in the
Settlement Fund after the distribution will be 1,875,000 minus the number of
shares distributed. If the price-per-share for the First Valuation Period is
less than $6 per share, but $4.50 per share or higher, then the number of shares
to be distributed to counsel for the Representative Plaintiffs shall be equal to
the amount of stock that would have been distributed based on a Settlement Fund
that contained only 1,875,000 shares of Gupta Common stock, multiplied by the
following
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fraction: $6 divided by the price-per-share for the First Valuation Period;
if the price-per-share for the First Valuation Period is less than $4.50 per
share, then the number of shares to be distributed to counsel for the
Representative Plaintiffs shall be equal to the amount of stock that would
have been distributed based on the Settlement Fund, including 1,875,000
shares of Gupta Common stock, multiplied by the following fraction: $6
divided by $4.50; in either event, the number of shares remaining in the
Settlement Fund after the distribution will be 1,875,000 minus the number of
shares that would have been distributed to plaintiffs' counsel based on a
Settlement Fund that contained only 1,875,000 shares of Gupta common stock.
ii. The remaining portion of the Settlement Stock shall be
distributed pursuant to paragraphs 3.1-3.2 below in an aggregate number of
shares calculated as follows. The price-per-share of the shares of the
Settlement Stock shall be determined by calculating the average closing price of
Gupta common stock, (as reflected on the NASDAQ National Market or, if Gupta
common stock ceases to be traded on the NASDAQ, on such other market as Gupta
common stock is traded at that time) for the twenty (20) trading days prior to
the Notification Date (the "Second Valuation Period"). If the price-per-share
for the Second Valuation Period is equal to or greater than $6, then the number
of shares to be distributed to the Class shall be the balance of the shares of
Settlement Stock remaining in the Settlement Fund ("Remaining Shares"). If the
price-per-share for the Second Valuation Period is less than $6 per share, but
$4.50 per share or greater, then the number of shares to be distributed to the
Class shall be equal to the number of Remaining Shares multiplied by the
following fraction: $6 divided by the price-per-share for the Second Valuation
Period. If the price-per-share for the Second Valuation Period is less than
$4.50 per share, then the number of shares to be distributed to the
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Settlement Class shall be equal to the number of Remaining Shares multiplied
by the following fraction: $6 divided by $4.50.
iii. In each of the foregoing cases, the share price and the
total number of shares to be contributed to the Settlement Fund will be adjusted
to reflect any changes due to stock splits, stock dividends, reverse stock
splits that occur from the date of this Stipulation until the time of the
distribution(s).
iv. All costs, including those of Gupta's transfer agent,
incurred in issuing and distributing any Settlement Stock to Authorized Stock
Recipients shall be borne by Gupta.
1.24 "Settlement Stock" means shares of Gupta common stock to be
issued by Gupta which shall comprise a part of the Settlement Fund as set forth
in paragraph 1.23.
1.25 "Unknown Claims" means any Released Claims which any
Representative Plaintiff or Class Member does not know or suspect to exist in
his, her or its favor at the time of the release of the Released Persons which,
if known by him, her or it, might have affected his, her or its settlement with
and release of the Released Persons, or might have affected his, her or its
decision not to object to this settlement. With respect to any and all Released
Claims, the Parties stipulate and agree that, upon the Effective Date, each of
the Representative Plaintiffs shall expressly and the Class Members shall be
deemed to have, and by operation of the Judgment shall have, expressly waived
and relinquished, to the fullest extent permitted by law, the provisions,
rights, and benefits of Section 1542 of the California Civil Code, which
provides:
A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor.
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Each of the Representative Plaintiffs shall expressly and the Class Members
shall be deemed to, and upon the Effective Date and by operation of the Judgment
shall have waived any and all provisions, rights and benefits conferred by any
law of any state or territory of the United States, or principle of common law,
which is similar, comparable or equivalent to Section 1542 of the California
Civil Code. Each of the Representative Plaintiffs and the Class Members may
hereafter discover facts in addition to or different from those which he, she or
it now knows or believes to be true with respect to the subject matter of the
Released Claims, but hereby stipulate and agree that each Representative
Plaintiff does and each Class Member shall be deemed to, upon the Effective Date
and by operation of the Judgment shall have, fully, finally, and forever settled
and released any and all Released Claims, known or unknown, suspected or
unsuspected, contingent or non-contingent, whether or not concealed or hidden,
which now exist, or heretofore have existed upon any theory of law or equity now
existing or coming into existence in the future, including, but not limited to,
conduct which is negligent, intentional, with or without malice, or a breach of
any duty, law or rule, without regard to the subsequent discovery or existence
of such different or additional facts. Releasers acknowledge that the foregoing
waiver was bargained for and a key element of the Settlement of which this
release is a part.
2. ADMINISTRATION OF THE SETTLEMENT FUND
A. THE ESCROW AGENT
2.1 The Escrow Agent shall invest the cash portion of the
Settlement Fund in instruments backed by the full faith and credit of the United
States Government or fully insured by the United States Government or an agency
thereof and shall reinvest the proceeds of these instruments as they mature in
similar instruments at the current market rates.
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2.2 The Escrow Agent shall not disburse the Settlement Fund
except as provided in the Stipulation, or by an Order of the Court, or with the
written agreement of counsel for Defendants and Plaintiffs' Settlement Counsel.
2.3 Subject to such further order and direction by the Court as
may be necessary, the Escrow Agent is authorized to execute such transactions on
behalf of the Class Members as are consistent with the terms of the Stipulation.
2.4 All funds held by the Escrow Agent shall be deemed and
considered to be in CUSTODIA LEGIS of the Court, and shall remain subject to the
jurisdiction of the Court, until such time as such funds shall be distributed
pursuant to the Stipulation and/or further order(s) of the Court.
2.5 Within ten (10) days after the payment of the Settlement
Fund or a portion thereof to the Escrow Agent, the Escrow Agent may establish a
"Notice and Administration Fund," and $100,000 may be transferred from the
Settlement Fund to it. The Notice and Administration Fund may be used by
Plaintiffs' Settlement Counsel to pay costs and expenses reasonably and actually
incurred in connection with providing notice to the Class, locating Class
members, soliciting Class claims, assisting with the filing of claims,
administering and distributing the Settlement Fund to the Members of the Class,
processing Proofs of Claim and Release and paying escrow fees and costs, if any.
The Notice and Administration Fund may also be invested and earn interest as
provided for in PARA 2.1 of this Stipulation.
2.6 On the Effective Date, any balance (including interest) then
remaining in the Notice and Administration Fund, less expenses incurred but not
yet paid, may be transferred by the Escrow Agent to, and deposited and credited
as part of, the Settlement Fund to be applied as set forth in PARA 7.2 below.
Thereafter, Plaintiffs' Settlement Counsel shall have the
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right to use such portions of the Settlement Fund as are, in their exercise
of reasonable judgment, necessary to carry out the purposes set forth in
PARA 2.5.
B. TAXES
2.7 (a) The Parties and the Escrow Agent agree to treat the
Settlement Fund as being at all times a "qualified settlement fund" within the
meaning of Treas. Reg. Section 1.468B-1. In addition, the Escrow Agent and, as
required, the Defendants and/or the Insurance Carrier contributing any
settlement consideration shall jointly and timely make the "relation-back
election" (as defined in Treas. Reg. Section 1.468B-1) back to the earliest
permitted date. Such election Shall be made in compliance with the procedures
and requirements contained in such regulations. It shall be the responsibility
of the Escrow Agent to timely and properly prepare, and deliver the necessary
documentation for signature by all necessary parties, and thereafter to cause
the appropriate filing to occur.
(b) For the purposes of Section 468B of the Internal
Revenue Code of 1986, and Treas. Reg. Section 1.468B, the "administrator" shall
be the Escrow Agent. The Escrow Agent shall timely and properly file all
informational and other tax returns necessary or advisable with respect to the
Settlement Fund (including without limitation the returns described in Treas.
Reg. Section 1.468B-2(1)). Such returns (as well as the election described in
PARA 2.7(a)) shall be consistent with this PARA 2.7 and in all events shall
reflect that all taxes (including any estimated taxes, interest or penalties) on
the income earned by the Settlement Fund shall be paid out of the Settlement
Fund as provided in PARA 2.7(c) hereof.
(c) All (i) taxes (including any estimated taxes, interest
or penalties) arising with respect to the income earned by the Settlement Fund,
("Taxes") and (ii) expenses and costs incurred in connection with the operation
and implementation of this PARA 2.7
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(including, without limitation, expenses of tax attorneys and/or accountants
and mailing and distribution costs and expenses relating to filing (or
failing to file) the returns described in this PARA 2.7) ("Tax Expenses"),
shall be paid out of the Settlement Fund; in all events the Defendants shall
not have any liability or responsibility for the taxes, the Tax Expenses, or
the filing of any tax returns or other documents with the Internal Revenue
Service or any other state or local taxing authority. The Escrow Agent shall
indemnify and hold Defendants harmless for Taxes and Tax Expenses (including,
without limitation, Taxes payable by reason of any such indemnification).
Further, Taxes and the Tax Expenses shall be treated as, and considered to
be, a cost of administration of the Settlement and shall be timely paid by
the Escrow Agent out of the Settlement Fund without prior order from the
Court, and the Escrow Agent shall be obligated (notwithstanding anything
herein to the contrary) to withhold from distribution to Authorized Claimants
any funds necessary to pay such amounts (as well as any amounts that may be
required to be withheld under Treas. Reg. Section 1.468B-2(1) (2)); the
Defendants are not responsible and shall have no liability therefor, or for
any reporting requirements that may relate thereto. The parties hereto agree
to cooperate with the Escrow Agent, each other, and their tax attorneys and
accountants to the extent reasonably necessary to carry out the provisions of
this PARA 2.7.
C. TERMINATION
2.8 In the event that the Stipulation is not approved, or is
terminated, canceled, or fails to become effective for any reason, the
Settlement Fund (including accrued interest) and the funds in the Notice and
Administration Fund (described in PARA 2.5 above), less expenses actually
incurred or due and owing in connection with the settlement provided for herein,
shall be refunded.
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3. RIGHTS WITH RESPECT TO THE SETTLEMENT STOCK
3.1 In order that the Settlement Stock may be distributed to and be
fully and freely traded by the Authorized Stock Recipients without any
restrictions, ten (10) days before the Settlement hearing date, Gupta shall
provide Plaintiffs' Settlement Counsel with the written opinion of outside
counsel substantially to the effect: (a) that the Settlement Stock will be
issued in compliance with the registration requirements of Section 5 of the
Securities Act of 1933 or will be issued in reliance upon an exemption
therefrom; (b) that the Settlement Stock is fully tradeable without any
restriction after distribution; and (c) that such shares are otherwise fully
paid, non-assessable and free from all liens and encumbrances.
3.2 Within three (3) business days of the completion of the Second
Valuation Period, the Claims Administrator shall provide Gupta's transfer agent
with a list (in the form required by the transfer agent) identifying each Class
Member who is entitled to receive stock and the number of shares of Settlement
Stock to be issued to each such person. Gupta shall direct its stock transfer
agent to issue and distribute the Settlement Stock within five (5) business days
of receipt of the list of the persons and in the amounts shown on said list.
4. CONSENT TO JURISDICTION OF MAGISTRATE JUDGE
4.1 The Settling Parties hereto consent, pursuant to 28 U.S.C.
Section 636 and Rule 73 of the Federal Rules of Civil Procedure, to the conduct
by United States Magistrate Judge Edward A. Infante (the "Court") of all
proceedings and to enter such orders and judgments as are necessary or required
to approve, implement and act upon the Stipulation, the Plan of Allocation, the
Fee and Expense Applications and all related matters.
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5. NOTICE ORDER AND SETTLEMENT HEARING
5.1 Promptly after execution of the Stipulation, but in no event
later than ten (10) days after the Stipulation is signed (unless such time is
extended by the written agreement of Plaintiffs' Settlement Counsel and counsel
for the Defendants), the Parties shall submit the Stipulation together with its
Exhibits to the Court and shall jointly apply for entry of an order (the "Notice
Order"), substantially in the form of Exhibit "A," hereto, requesting the
preliminary approval of the settlement set forth in the Stipulation, and
approval for the mailing and publication of a Notice of Settlement of Class
Action which shall include the general terms of the settlement set forth in the
Stipulation, the proposed Plan of Allocation, the general terms of the Fee and
Expense Application (as defined in PARA 8.1) and the date of the Settlement
Hearing (as defined below in PARA 5.2).
5.2 The parties shall request that, after notice is given, the Court
hold a Hearing (the "Settlement Hearing") and finally approve this settlement as
set forth herein. At or after the Settlement Hearing, Representative
Plaintiffs' counsel also will request that the Court approve the proposed Plan
of Allocation and the Fee and Expense Application.
6. RELEASES
6.1 Upon the Effective Date, the Representative Plaintiffs shall and
each of the Class Members shall be deemed to have, and by operation of the
Judgment shall have, fully, finally, and forever released, relinquished and
discharged all Released Claims against each and all of the Released Persons,
whether or not such Class Member executes and delivers the Proof of Claim and
Release.
6.2 Upon the Effective Date, each of the Released Persons shall be
deemed to have, and by operation of the Judgment shall have, fully, finally, and
forever released, relinquished
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and discharged each and all of the Representative Plaintiffs, the Class
Members, and counsel to the Representative Plaintiffs from all claims
(including "Unknown Claims"), arising out of, relating to, or in connection
with the institution, prosecution, assertion or resolution of the Litigation
or the Released Claims.
6.3 Only those Class Members filing valid and timely Proofs of Claim
and Release shall be entitled to participate in the settlement and receive any
distributions from the Settlement Fund. The Proofs of Claim and Release to be
executed by the Class Members shall release all Released Claims against the
Released Persons, and shall be substantially in the form contained in Exhibit
"A-3" hereto. All members of the Class shall be bound by the releases set forth
therein whether or not they submit a valid and timely Proof of Claim and
Release.
7. ADMINISTRATION AND CALCULATION OF CLAIMS,
FINAL AWARDS AND SUPERVISION AND DISTRIBUTION
OF SETTLEMENT FUND
7.1 Plaintiffs' Settlement Counsel, or their authorized agents,
acting on behalf of the Class, and subject to the supervision, direction and
approval of the Court, shall administer and calculate the claims submitted by
Class Members and shall oversee distribution of that portion of the Settlement
Fund that is finally awarded by the Court to the Class Members.
7.2 The Settlement Fund shall be applied as follows:
(a) To pay all unpaid costs and expenses reasonably and actually
incurred in connection with providing Class Notice including, locating Class
members, soliciting Class claims, assisting with the filing of claims,
administering and distributing the Settlement Fund to the Class, processing
Proofs of Claim and Release and paying escrow fees and costs, if any;
(b) To pay Taxes and Tax Expenses;
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(c) To pay counsel to Representative Plaintiffs' attorneys'
fees, expenses and costs, with interest thereon (the "Fee and Expense Award"),
if and to the extent allowed by the Court; and
(d) To distribute the balance of the Settlement Fund (the "Net
Settlement Fund") to Authorized Claimants as allowed by the Stipulation, the
Plan of Allocation or the Court.
7.3 After the Effective Date and subject to such further approval and
further order(s) of the Court as may be required, the Net Settlement Fund shall
be distributed to Class Members who submit valid, timely filed Proofs of Claim
and Release ("Authorized Claimants"), subject to and in accordance with the
following:
(a) Within ninety (90) days after the mailing of the Notice or
such other time as may be set by the Court, each Person claiming to be an
Authorized Claimant shall be required to submit to the Claims Administrator a
separate completed Proof of Claim and Release as attached to the Notice and
substantially in the form of Exhibit "A-3" hereto, signed under penalty of
perjury and supported by such documents as specified in the Proof of Claim and
Release and as are reasonably available to the Authorized Claimant.
(b) Except as otherwise ordered by the Court, all Class Members
who fail to timely submit a valid Proof of Claim and Release within such period,
or such other period as may be ordered by the Court, or who have not already
done so, shall be forever barred from receiving any payments of money or stock
pursuant to the Stipulation and the settlement set forth herein, but will in all
other respects be subject to and bound by the provisions of the Stipulation, the
settlement and releases contained herein, and the Judgment.
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(c) The Net Settlement Fund shall be distributed to the
Authorized Claimants in accordance with and subject to the Plan of Allocation to
be described in the Notice mailed to Class Members. The proposed Plan of
Allocation shall not be a part of the Stipulation.
7.4 The Defendants shall not have any responsibility for, interest
in, or liability whatsoever with respect to the investment or distribution of
the Settlement Fund, the Plan of Allocation, the determination, administration
of taxes, or any losses incurred in connection therewith. No Person shall have
any claim of any kind against Defendants, or their respective counsel with
respect to the matters set forth in this paragraph; and the Class Members and
Plaintiffs' Settlement Counsel release Defendants from any and all liability and
claims arising from or with respect to the investment or distribution of the
Settlement Fund.
7.5 No Person shall have any claim against Plaintiffs'
Settlement Counsel or any claims administrator, or other agent designated by
Plaintiffs' Settlement Counsel, or Defendants or their counsel, based on the
distributions made substantially in accordance with the Stipulation and the
settlement contained herein, the Plan of Allocation or further orders of the
Court.
7.6 It is understood and agreed by the Parties that any proposed
Plan of Allocation of the Net Settlement Fund, including, without limitation,
any adjustments to an Authorized Claimant's claim set forth therein is not a
part of the Stipulation and is to be considered by the Court separately from the
Court's consideration of the fairness, reasonableness and adequacy of the
settlement set forth in the Stipulation, and any order or proceedings relating
to the Plan of Allocation shall not operate to terminate or cancel the
Stipulation or affect the finality of the Court's Judgment approving the
Stipulation and the settlement set forth herein, or any other orders entered
pursuant to the Stipulation.
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8. REPRESENTATIVE PLAINTIFFS' COUNSEL'S
ATTORNEYS' FEES AND REIMBURSEMENT OF EXPENSES
8.1 The Representative Plaintiffs or their counsel may submit an
application or applications (the "Fee and Expense Application") for
distributions to them from the Settlement Fund for: (i) an award of attorneys'
fees in an amount up to 33-1/3 percent of the Settlement Fund; plus (ii)
reimbursement of all expenses and costs, including the fees of any experts or
consultants incurred in connection with prosecuting the Litigation, plus
interest on such attorneys' fees, costs and expenses at the same rate and for
the same periods as earned by the Settlement Fund (until paid), as may be
awarded by the Court.
8.2 The attorneys' fees, expenses and costs, including the fees of
experts and consultants, as awarded by the Court (the "Fee and Expense Award"),
shall be transferred to Plaintiffs' Settlement Counsel from the Settlement Fund,
within five (5) business days after the Court executes an order awarding such
fees and expenses. Plaintiffs' Settlement Counsel shall thereafter allocate the
Fee and Expense Award amongst Representative Plaintiffs' Counsel in a manner in
which Plaintiffs' Settlement Counsel in good faith believe reflects the
contributions of such counsel to the prosecution and settlement of the
Litigation; provided, however, that in the event that the Stipulation and the
settlement set forth herein does not become Effective for any reason, or the
Judgment or the Order making the Fee and Expense Award is reversed or modified
on appeal, and in the event that the Fee and Expense Award have been paid to any
extent, then Representative Plaintiffs' Counsel shall within five (5) business
days from the event which precludes the Effective Date from occurring or such
reversal or modification, refund to the Settlement Fund the fees, expenses,
costs and interest previously paid to them from the Settlement Fund, including
accrued interest on any such amount at the average rate earned on the
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Settlement Fund from the time of withdrawal until the date of refund. Each
such Representative Plaintiffs' Counsel's law firm, as a condition of
receiving such fees and expenses, on behalf of itself and each partner and/or
shareholder of it, agrees that the law firm and its partners and/or
shareholders are subject to the jurisdiction of the Court for the purpose of
enforcing this PARA 8.2 of the Stipulation. Without limitation, each such law
firm and its partners and/or shareholders agree that the Court may, upon
application of Defendants, on notice to counsel to the Representative
Plaintiffs, summarily issue orders, including but not limited to, judgments
and attachment orders, and may make appropriate findings of or sanctions for
contempt, against them or any of them should such law firm fail timely to
repay fees and expenses pursuant to this PARA 8.2 of the Stipulation.
8.3 Defendants and their Related Parties shall have no responsibility
for, and no liability whatsoever with respect to, any payment to Plaintiffs'
Settlement Counsel from the Settlement Fund that may occur before the Effective
Date.
8.4 Defendants and their Related Parties shall have no responsibility
for, and no liability whatsoever with respect to, the allocation among
Plaintiffs' Settlement Counsel, and any other Person who may assert some claim
thereto, or any Fee and Expense Awards that the Court may make in this
Litigation.
8.5 The procedure for and the allowance or disallowance by the Court
of any applications by any of the counsel to the Representative Plaintiffs for
attorneys' fees, costs and expenses, including the fees of experts and
consultants, to be paid out of the Settlement Fund, are not part of the
settlement set forth in the Stipulation, and are to be considered by the Court
separately from the Court's consideration of the fairness, reasonableness and
adequacy of the settlement set forth in the Stipulation, and any order or
proceedings relating to the Fee and Expense Application, or any appeal from any
order relating thereto, shall not operate to terminate
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or cancel the Stipulation, or affect or delay the finality of the Judgment
approving the Stipulation and the settlement of the Litigation set forth
herein.
9. CONDITIONS OF SETTLEMENT, EFFECT OF
DISAPPROVAL, CANCELLATION OR TERMINATION
9.1 The Effective Date of the Stipulation shall be conditioned on the
occurrence of all of the following events:
(a) Defendants shall have timely transferred or caused to be
timely transferred the cash portion of the Settlement Fund to the Escrow Agent
as required in PARA 1.23(a) above;
(b) The Court has entered the Notice Order, as required by
PARA 5, above;
(c) The Court has entered the Judgment, or a judgment
substantially in the form of Exhibit "B;"
(d) The Judgment has become Final, as defined in PARA 1.8,
above.
9.2 Upon the occurrence of all of the events referenced in PARA 9.1
above, any and all remaining interest or right of the Defendants to the
Settlement Fund shall be absolutely and forever extinguished.
9.3 Neither a modification nor reversal on appeal of any Plan of
Allocation or of any amount of attorneys' fees, costs, expenses and interest
awarded by the Court to any of the Representative Plaintiffs' counsel shall
constitute grounds for cancellation and termination of the Stipulation.
9.4 If all of the conditions specified in PARA 9.1 are not met, then
the Stipulation shall be canceled and terminated unless Plaintiffs' Settlement
Counsel, and counsel for Defendants mutually agree in writing to proceed with
the Stipulation.
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9.5 Unless otherwise ordered by the Court, in the event the
Stipulation shall terminate, or be canceled, or shall not become effective for
any reason, within five (5) business days after written notification of such
event is sent by counsel for Defendants or Plaintiffs' Settlement Counsel to the
Escrow Agent, the Settlement Fund (including accrued interest), plus any amount
then remaining in the Notice and Administration Fund (including accrued
interest), less expenses and any costs which have either been disbursed pursuant
to PARAS 2.5 or 2.6 hereto, or are determined to be chargeable to the Notice
and Administration Fund, shall be refunded by the Escrow Agent pursuant to
written instructions from Defendants or their counsel. In such event Defendants
shall be entitled to any tax refund owing to the Settlement Fund. At the
request of Defendants or Defendants' counsel, the Escrow Agent or its designee
shall apply for any such refund and pay the proceeds, less the cost of obtaining
the tax refund.
9.6 In the event that the Stipulation is not approved by the Court or
the settlement set forth in the Stipulation is terminated or fails to become
effective in accordance with its terms, the Parties shall be restored to their
respective positions in the Litigation as of July 19, 1996. In such event, the
terms and provisions of the Stipulation, with the exception of PARAS 2.5, 2.7,
2.8, 7.5, 8.2-8.5, 9.1-9.7 herein, shall have no further force and effect with
respect to the parties and shall not be used in this Litigation or in any other
proceeding for any purpose, except as provided for in PARAS 2.5, 2.7, 2.8,
7.5, 8.2-8.5, 9.1-9.7; and any Judgment or Order entered by the Court in
accordance with the terms of the Stipulation shall be treated as vacated, NUNC
pro TUNC. No order of the Court or modification or reversal on appeal of any
order of the Court concerning the Plan of Allocation or the amount of any
attorneys' fees, costs, expenses and interest awarded by the Court to the
Representative Plaintiffs or any of their counsel shall constitute grounds for
cancellation or termination of the Stipulation.
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<PAGE>
9.7 If the Effective Date does not occur, or if the Stipulation is
terminated pursuant to its terms, neither the Representative Plaintiffs nor any
of their counsel shall have any obligation to repay any amounts actually and
properly disbursed from the Notice and Administration Fund. In addition, any
expenses already incurred and properly chargeable to the Notice and
Administration Fund pursuant to PARA 2.5 hereof at the time of such termination
or cancellation but which have not been paid, shall be paid by the Escrow Agent
in accordance with the terms of the Stipulation prior to the balance being
refunded in accordance with PARA 9.5 above.
9.8 If a case is commenced in respect to any Defendant under Title 11
of the United States Code (Bankruptcy), or a trustee, receiver or conservator is
appointed under any similar law, and in the event of the entry of a final order
of a court of competent jurisdiction determining the transfer of the Settlement
Fund, or any portion thereof, by or on behalf of such Defendant to be a
preference, voidable transfer, fraudulent conveyance or similar transaction,
then, as to such Defendant only, the releases given and Judgment entered in
favor of such Defendant pursuant to this Stipulation shall be null and void.
10. MISCELLANEOUS PROVISIONS
10.1 The Parties (a) acknowledge that it is their intent to consummate
this agreement; and (b) agree to cooperate to the extent necessary to effectuate
and implement all terms and conditions of the Stipulation and to exercise their
best efforts to accomplish the foregoing terms and conditions of the
Stipulation.
10.2 Each Defendant warrants as to himself or itself that, at the time
any of the payments provided for herein are made on behalf of himself or itself,
he is not insolvent and the payment will not render him or it insolvent.
-24-
<PAGE>
10.3 Defendants agree that the amount of the Settlement Fund, as well
as the other terms of the Settlement reflect a good faith settlement of
Representative Plaintiffs' and the Class' claims, reached voluntarily after
consultation with experienced legal counsel. Neither the Stipulation nor the
settlement contained therein, nor any act performed or document executed
pursuant to or in furtherance of the Stipulation or the Settlement: (i) is or
may be deemed to be or may be used as an admission of, or evidence of, the
validity of any Released Claim, or of any wrongdoing or liability of the
Released Persons, or (ii) is or may be deemed to be or may be used as an
admission of, or evidence of, any fault or omission of any of the Released
Persons in any civil, criminal or administrative proceeding in any court,
administrative agency or other tribunal. Released Persons may file the
Stipulation and/or the judgment from this action in any other action that may be
brought against them in order to support a defense or counterclaim based on
principles of RES JUDICATA, collateral estoppel, release, good faith settlement,
judgment bar or reduction or any theory of claim preclusion or issue preclusion
or similar defense or counterclaim.
10.4 All of the Exhibits to the Stipulation are material and integral
parts hereof and are fully incorporated herein by this reference.
10.5 The Stipulation may be amended or modified only by a written
instrument signed by or on behalf of all parties or their successors-in-
interest.
10.6 The Stipulation and the Exhibits attached hereto constitute the
entire agreement among the parties hereto and no representations, warranties or
inducements have been made to any party concerning the Stipulation or its
Exhibits other than the representations, warranties and covenants contained and
memorialized in such documents. Except as otherwise provided herein, each party
shall bear its own costs.
-25-
<PAGE>
10.7 Plaintiffs' Settlement Counsel, on behalf of the Class, are
expressly authorized by the Representative Plaintiffs to take all appropriate
action required or permitted to be taken by the Class pursuant to the
Stipulation to effectuate its terms and also are expressly authorized to enter
into any modifications or amendments to the Stipulation on behalf of the Class
which they deem appropriate.
10.8 Each counsel or other Person executing the Stipulation or any of
its Exhibits on behalf of any party hereto hereby warrants that such person has
the full authority to do so.
10.9 The Stipulation may be executed in one or more counterparts. All
executed counterparts and each of them shall be deemed to be one and the same
instrument. Counsel for the parties to the Stipulation shall exchange among
themselves original signed counterparts and a complete set of original executed
counterparts shall be filed with the Court.
10.10 The Stipulation shall be binding upon, and inure to the
benefit of, the successors and assigns of the parties hereto.
10.11 The Court shall retain jurisdiction with respect to
implementation and enforcement of the terms of the Stipulation, and all parties
hereto submit to the jurisdiction of the Court for purposes of implementing and
enforcing the settlement embodied in the Stipulation.
10.12 The Stipulation and the Exhibits hereto shall be considered
to have been negotiated, executed and delivered, and to be wholly performed, in
the State of California, and the rights and obligations of the parties to the
Stipulation shall be construed and enforced in accordance with the laws of the
State of California without giving effect to that State's choice of law
principles.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused the Stipulation to be
executed, by their duly authorized attorneys, as of July 19, 1996.
MILBERG WEISS BERSHAD HYNES
& LERACH LLP
By: /s/ Keith F. Park
----------------------------
Keith F. Park
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: (619) 231-1058
KAPLAN, KILSHEIMER & FOX LLP
By: /s/ Robert N. Kaplan
---------------------------
Robert N. Kaplan
685 Third Avenue, 26th Floor
New York, NY 10017
Telephone: (212) 687-1980
Plaintiffs' Settlement Counsel
PRONGAY & MIKOLAJCZYK
KEVIN PRONGAY
881 Alma Real Drive, Suite 211
Pacific Palisades, CA 90272
Telephone: (310) 573-3600
KAUFMAN MALCHMAN KIRBY & SQUIRE
JEFFREY H. SQUIRE
919 Third Avenue
New York, NY 10022
Telephone: (212) 371-6600
Plaintiffs' Counsel
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<PAGE>
HALE AND DORR
By: /s/ Geoffrey S. Stewart
--------------------------
Geoffrey S. Stewart
1455 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
Telephone: (202) 942-8400
Counsel for Umang P. Gupta, D. Bruce Scott,
Richard M. Noling, Nicholas Burtles,
Richard J. Heaps, Reed D. Taussig,
Douglass C. Carlisle, Anthony Sun and
Gupta Corporation
-28-
<PAGE>
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
In re GUPTA CORPORATION SECURITIES ) CLASS ACTION
LITIGATION ) -----------
___________________________________)
) Master File No.
This Document Relates to All ) 94-1517-FMS (EAI)
Actions )
)
___________________________________)
[PROPOSED]
ORDER PRELIMINARILY APPROVING SETTLEMENT,
APPROVING NOTICE OF PROPOSED SETTLEMENT
AND SETTING SETTLEMENT HEARING
<PAGE>
The Court has received the Stipulation of Settlement (the
"Stipulation"), dated as of July 19, 1996, that has been entered into by the
Representative Plaintiffs and Defendants. The Court has reviewed the
Stipulation and its attached exhibits, and, good cause appearing,
IT IS HEREBY ORDERED as follows:
1. The Court, for purposes of this preliminary order, adopts all
defined terms as set forth in the Stipulation.
2. The Court has previously certified the Class Actions as class
actions pursuant to Rule 23(a) and (b)(3) of the Federal Rules of Civil
Procedure ("the Class"). The Class is as defined in paragraph 1.20 of the
Stipulation and the Class Period is as defined in paragraph 1.22 of the
Stipulation.
3. The Court preliminarily approves the settlement of the Class Actions
set forth in the Stipulation, as being fair, just, reasonable and adequate as to
the Class and its members, subject to further consideration at the Settlement
Hearing described below.
4. The Court approves as to form and content, and for distribution to
Class Members a Notice of Settlement of Class Action and Settlement Hearing
("Notice") substantially in the form of Exhibit 1 hereto, and a Proof of Claim
and Release ("Proof of Claim") substantially in the form of Exhibit 3 hereto.
5. Plaintiffs' Settlement Counsel shall make reasonable efforts to
identify all persons who are Class Members, including beneficial owners whose
Gupta securities are held by banks, brokerage firms, or other nominees.
Plaintiffs' Settlement Counsel shall send the Notice and the Proof of Claim by
first class mail to all persons to whom a Notice of Pendency was previously sent
and to any other persons whose names and addresses have been received in
response to that notice. The mailing of the Notice and Proofs of Claim shall be
by _______________, 1996 ("the
-2-
<PAGE>
Notice Date"). Pursuant to the Notice, nominees shall either: (1) send the
Notice and Proof of Claim to all Class Members by first class mail within ten
(10) days after the nominees receive the Notice; or (2) send a list of the
names and addresses of such beneficial owners to Plaintiffs' Settlement
Counsel within seven (7) days after the nominees receive the Notice and, in
the event of the latter, Plaintiffs' Settlement Counsel shall send by first
class mail the Notice and Proof of Claim to all Class Members who are on the
lists received from the nominees. Plaintiffs' Settlement Counsel shall file
with the Court and serve upon Defendants' Counsel no later than seven (7)
days prior to the Settlement Hearing an affidavit or declaration describing
the efforts taken to comply with this order to identify all Class Members,
and stating that the mailings have been completed in accordance with the
terms of this order.
6. Within ten (10) days of the Notice Date, Plaintiffs' Settlement
Counsel shall publish a Summary Notice substantially in the form of Exhibit 2
hereto once in the national edition of THE INVESTORS BUSINESS DAILY.
Plaintiffs' Settlement Counsel shall file with the Court and serve upon
Defendants' Counsel no later than seven (7) days prior to the Settlement Hearing
an affidavit or declaration stating that the Summary Notice has been published
in accordance with the terms of this order.
7. The Court finds that dissemination of the Notice and Proof of Claim in
the manner required by paragraph 5, and publication of the Summary Notice in the
manner required by paragraph 6, constitute the best notice practicable under the
circumstances to Class Members and meet the requirements of Rule 23 of the
Federal Rules of Civil Procedure, due process under the United States
Constitution, and any other applicable law and shall constitute due and
sufficient notice to all persons entitled thereto.
-3-
<PAGE>
8. Any Class Member who objects to the settlement of any of the Class
Actions, the proposed plan of allocation, or the applications of counsel for
attorneys' fees, costs, and expenses, shall have a right to appear and be heard
at the Settlement Hearing. No later than fifteen (15) days before the
Settlement Hearing, any such person must file with the Court and deliver to
Plaintiffs' Settlement Counsel and Defendants' Counsel a written notice of
objection, and any brief opposing the settlement, plan of allocation, or
application for attorneys' fees, costs, and expenses. The manner by which a
notice of objection should be prepared, filed, and delivered shall be stated in
the Notice. Only Class Members who have filed and delivered valid and timely
written notices of objection will be entitled to be heard at the Settlement
Hearing unless the Court orders otherwise.
9. Plaintiffs' Settlement Counsel are hereby authorized to retain the
firm of Gilardi & Co. as Claims Administrator to supervise and administer the
Notice procedure as well as the proving of claims.
10. The Court authorizes the payment out of the Notice and Administration
Fund the expenses described in paragraph 2.5 of the Stipulation.
11. The Settlement Hearing will be held before Honorable Edward A.
Infante, United States Magistrate Judge on _______________, 1996, at ______
__.M. in the United States Courthouse, 280 South First Street, San Jose,
California, to determine whether the proposed settlement of the Class Actions,
as set forth in the Stipulation, should be approved as fair, just, reasonable
and adequate to the Class and its members, and whether the Final Judgment
approving the settlement should be entered. The Court may adjourn or continue
the Settlement Hearing without further notice to Class Members.
-4-
<PAGE>
12. At or after the Settlement Hearing, the Court will determine whether
Plaintiffs' Settlement Counsels' proposed Plan of Allocation should be approved.
13. The passage of title and ownership of the Settlement Fund to the
Escrow Agent in accordance with the terms and obligations of the Stipulation is
approved. No person that is not a Class Member or counsel for a representative
plaintiff shall have any right to any portion of, or in the distribution of, the
Settlement Fund unless otherwise ordered by the Court or otherwise provided in
the Stipulation.
14. All funds held by the Escrow Agent shall be deemed and considered to
be IN CUSTODIA LEGIS of the Court, and shall remain subject to the jurisdiction
of the Court, until such time as such funds shall be distributed pursuant to the
Stipulation and/or further order(s) of the Court.
15. At or after the Settlement Hearing, the court will determine whether
the application of counsel for Representative Plaintiffs for an award of
attorneys' fees, costs, and expenses should be approved.
16. In the event the settlement of the Class Actions is approved by the
Court, the issuance by Gupta of Settlement Stock in accordance with the
Stipulation shall be without registration under the Securities Act of 1933, as
amended, in reliance upon the exemption under Section 3(a)(10) thereof.
17. No later than ninety (90) days after the Notice Date, any Class Member
who wishes to participate in the Settlement Fund must submit a valid Proof of
Claim to the Claims Administrator. To be valid, a Proof of Claim must be: (1)
completed in a manner that permits the Claims Administrator to determine the
eligibility of the claim; (2) signed with an affirmation that the information is
true and correct; and (3) postmarked for delivery to the Claims Administrator
-5-
<PAGE>
within ninety (90) days after the Notice Date. All Class Members who submit
valid and timely Proofs of Claim shall share in the distribution of the
Settlement Fund. All Class Members who do not submit valid and timely Proofs of
Claim shall be forever barred from receiving any payments from the Settlement
Fund, but will in all other respects be subject to and bound by the provisions
of the Stipulation and the Final Judgment.
18. Plaintiffs' Settlement Counsel shall file with the Court and serve on
Defendants' Counsel a proposed Plan of Allocation for the Settlement Fund.
Neither Defendants nor Defendants' Counsel shall have any responsibility for the
Plan of Allocation and it will be considered separately from the fairness,
reasonableness and adequacy of the settlement.
19. No later than seven (7) days before the Settlement Hearing,
Plaintiffs' Settlement Counsel shall submit any applications they may wish to
make for attorneys' fees, costs, and expenses, to the court. Neither Defendants
nor Defendants' Counsel shall have any responsibility for the applications for
attorneys' fees and expenses and such applications will be considered separately
from the fairness, reasonableness and adequacy of the settlement.
20. No later than seven (7) days before the Settlement Hearing, all briefs
supporting the settlement, the Plan of Allocation, and the request for
attorneys' fees and costs, shall be served and filed.
21. Neither the Stipulation, nor any of its terms or provisions, nor any
of the negotiations or proceedings connected with it, shall be construed as an
admission or concession by Defendants of the truth of any of the allegations in
the Class Actions, or of any liability, fault, or wrongdoing of any kind.
22. All discovery and other proceedings in the Class Actions are stayed
until further order of the Court, except as may be necessary to implement the
settlement or comply with the
-6-
<PAGE>
terms of the Stipulation. The Representative Plaintiffs and Class Members
are barred from commencing or prosecuting any direct or representative
action, or any action in any other capacity, asserting any of the Released
Claims, unless and until the Stipulation is terminated according to its terms.
23. The Final Judgment will permanently bar and enjoin the Representative
Plaintiffs and all members of the Class from instituting or prosecuting, in any
capacity, any action or proceeding that involves or asserts any of the Released
Claims.
-7-
<PAGE>
24. The Court may, for good cause, extend any of the deadlines set forth
in this order without further notice to the Class Members.
Dated: ______________________, 1996
____________________________________
Hon. Edward A. Infante
United States Magistrate Judge
Submitted by:
MILBERG WEISS BERSHAD
HYNES a LERACH LLP
WILLIAM S. LERACH
KEITH F. PARK
_______________________________
KEITH F. PARK
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: (619) 231-1058
KAPLAN KILSHEIMER & FOX LLP
ROBERT N. KAPLAN
JONATHAN K. LEVINE
_______________________________
ROBERT N. KAPLAN
685 Third Avenue, 26th Fl.
New York, New York 10017
Telephone: (212) 687-1980
Plaintiffs' Settlement Counsel
-8-
<PAGE>
WILLIAM S. LERACH (68581)
KEITH F. PARK (54275)
MARK SOLOMON (151949)
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: (619) 231-1058
ROBERT N. KAPLAN
JONATHAN K. LEVINE
CHRISTINE M. COMAS
KAPLAN, KILSHEIMER & FOX LLP
685 Third Avenue, 26th Floor
New York, NY 10017
Telephone: (212) 687-1980
Plaintiffs' Settlement Counsel
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
In re GUPTA CORPORATION SECURITIES ) CLASS ACTION
LITIGATION ) ------------
___________________________________)
) Master File No.
This Document Relates to All ) 94-1517-FMS (EAI)
Actions )
___________________________________)
NOTICE OF PROPOSED SETTLEMENT
AND SETTLEMENT HEARING
-----------------------------
<PAGE>
TO: ALL PERSONS WHO PURCHASED ANY SHARES OF THE COMMON STOCK OF GUPTA
CORPORATION ("GUPTA") DURING THE PERIOD FROM OCTOBER 19, 1993 THROUGH AND
INCLUDING JULY 6, 1994 AND WHO HAVE NOT PREVIOUSLY REQUESTED EXCLUSION ("CLASS")
IMPORTANT
---------
PLEASE READ THIS NOTICE CAREFULLY. THIS NOTICE RELATES TO A PROPOSED
SETTLEMENT OF LITIGATION AND CONTAINS IMPORTANT INFORMATION REGARDING YOUR
RIGHTS.
NOTICE OF SETTLEMENT HEARING
A settlement hearing will be held on _______________, 1996, at _____ a.m.,
before the Honorable Edward A. Infante, United States Magistrate Judge, at the
United States Courthouse, Courtroom No. 7, 280 South First Street, San Jose,
California (the "Settlement Hearing"). The purpose of the Settlement Hearing
will be to determine: (1) whether the settlement of the Class Action in the
amount of $14,250,000 consisting of (i) $3,000,000 in cash, plus accrued
interest and (ii) 1,875,000 shares of Gupta common stock with a guaranteed value
of at least $11,250,000 (if the market price of Gupta stock is at least $4.50
per share)(1)should be approved as fair,
just, reasonable and adequate to the Class and its members; (2) whether the
releases should be approved as fair, just, reasonable and adequate to the
Class and its members; (3) whether the proposed Plan of Allocation is fair,
just, reasonable, and adequate; (4) whether applications of plaintiffs'
Counsel for an award of attorneys' fees, costs, and expenses should be
approved; (5) whether this Litigation should be dismissed with prejudice as
set forth in the Stipulation of Settlement dated as of July 19, 1996, filed
with the Court; and (6) whether the terms and conditions of the proposed
issuance of the shares of Gupta common stock (the "Settlement
- -----------------------
(1) If, during a valuation period prior to the distribution of the stock to
the class, the average price of Gupta stock is less than $6 per share, Gupta
shall issue additional shares above the 1,875,000 shares such that the value
of the stock in the aggregate is $11,250,000. However, Gupta is not required
to issue more than a total of 2,500,000 shares.
<PAGE>
Stock") are fair, reasonable and adequate. The Court may adjourn or continue
the Settlement Hearing without further notice to the Class.
PURPOSE OF NOTICE AND DESCRIPTION OF LITIGATION
This notice is given pursuant to Rule 23 of the Federal Rules of Civil
Procedure and an order of the United States District Court for the Northern
District of California entered on _______________, 1996. The purpose of this
notice is to inform you of a proposed settlement of the Class Action as
described below. This notice describes rights you may have under the proposed
settlement and what steps you may take in relation to this litigation. This
notice is not an expression of any opinion by the Court as to the merits of any
of the claims or defenses asserted by any party in this litigation, or the
fairness or adequacy of the proposed settlement.
A. THE CLASS ACTION
This action was commenced in the United States District Court for the
Northern District of California on or about May 2, 1994. On August 4, 1994,
plaintiffs filed an Amended Complaint, which was dismissed on December 6, 1994
with leave to replied. On January 12, 1995, plaintiffs filed a Second Amended
Complaint which has been sustained in part and dismissed in part. The Second
Amended Complaint alleges, INTER ALIA, that Gupta's financial statements issued
during the Class Period were false and misleading in violation of generally
accepted accounting principles. Defendants deny plaintiffs' allegations.
This is a securities class action on behalf of all persons, other than
defendants, who purchased the common stock of Gupta between October 19, 1993
and July 6, 1994, inclusive (the "Class Period"). The action is brought
under Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934,
and Rule l0b-5 promulgated thereunder. Defendants include Gupta and certain
of its present and former officers and directors. This action was certified
to proceed as a
-2-
<PAGE>
class action pursuant to this Court's order of May 17, 1995. This action
shall be referred to herein as "the Class Action."
Plaintiffs' Counsel have conducted extensive discovery, including INTER
ALIA, numerous inspections of documents, extensive depositions in the United
States and Europe and informal investigations and consultations with expert
consultants.
BENEFITS OF THE SETTLEMENT
Plaintiffs' and Defendants' Counsel have conduced extensive settlement
negotiations with a settlement judge. Plaintiffs' Counsel have concluded that
it is in the best interests of the Representative Plaintiffs and Class Members
that the Class Actions be settled on the terms and conditions set forth in the
Stipulation described below. Plaintiffs' Counsel reached this conclusion after
considering the factual and legal issues in the Class Actions, the substantial
benefits that Class Members will receive under the Settlement, the risks and
uncertainties of continued litigation, the expense that would be necessary to
prosecute the Class Actions through trial and through any appeals that might be
taken, and the likelihood of success at trial.
SETTLEMENT OF THE CLASS ACTIONS
A written settlement agreement dated as of July 19, 1996 (the
"Stipulation"), has been entered into by the Representative Plaintiffs on behalf
of the Class, and by the Defendants (referred to hereinafter as the "Settling
Parties"). The following summarizes the terms of the Stipulation. For the full
details of the proposed settlement, you may desire to refer to the Stipulation,
which is on file with the Court.
-3-
<PAGE>
IF YOU ARE A MEMBER OF THE CLASS. THE FOLLOWING APPLIES TO
YOU:
ORDER CERTIFYING A CLASS
AND PRIOR NOTICE OF PENDENCY
On May 17, 1995, the Court certified a Class consisting of all persons who
purchased the common stock of Gupta between October 19, 1993 and July 6, 1994,
except the defendants, officers and directors of Gupta, members of the immediate
family of each of the individual defendants, any entity in which any defendant
has a controlling interest and the legal representatives, heirs, successors and
assigns of any such excluded party. The period from October 19, 1993 through
and including July 6, 1994 is hereinafter referred to as the "Class Period."
On September 27, 1995, a Notice of Pendency of Class Action was mailed and
on October 13, 1995 a Summary Notice of Pendency appeared in the National
Edition of the WALL STREET JOURNAL. If you submitted a request for exclusion
pursuant to that notice, you are not a member of the Class and cannot
participate in this settlement.
The Court has appointed the Representative Plaintiffs as representatives of
the Class, and has designated the law firms of Milberg Weiss Bershad Hynes &
Lerach LLP and Kaplan, Kilsheimer & Fox LLP as Settlement Counsel.
PARTICIPATION IN THE SETTLEMENT
TO BE ELIGIBLE TO PARTICIPATE IN THE DISTRIBUTION OF THE NET SETTLEMENT
FUND, YOU MUST TIMELY COMPLETE AND RETURN THE PROOF OF CLAIM AND RELEASE FORM
THAT ACCOMPANIES THIS NOTICE. The Proof of Claim and Release ("Proof of Claim")
must be postmarked and delivered to the Claims Administrator at
-4-
<PAGE>
the address below on or before _______________, 1996. Unless the Court
orders otherwise, if you do not timely submit a valid Proof of Claim, you
will be forever barred from receiving any payments from the Net Settlement
Fund, but will in all other respects be bound by the provisions of the
Stipulation and the Final Judgment. If you do file a valid and timely Proof
of Claim, and you are a Class Member, you will be eligible to share in the
Net Settlement Fund.
THE SETTLEMENT FUND
Under the terms of the Stipulation, the Defendants will create a Settlement
Fund. The Settlement Fund will include: (1) $3,000,000 in cash which has been
paid and is earning interest for the benefit of the Settlement Fund; and (2)
1,875,000 shares of newly issued Gupta common stock. If the value of the
1,875,000 shares of Gupta common stock during the valuation periods preceding
the date(s) of distribution of the stock is below $11,250,000, the amount of
newly issued stock to be distributed will be increased proportionately, so that
the total value of all of the stock distributed will be a minimum of
$11,250,000. This could require the issuance of more than 1,875,000 shares of
Gupta common stock. However, Gupta is not required to issue more than a total
of 2,500,000 shares of stock. Therefore, if the price of the stock is less than
$4.50 per share during a valuation period, the total value of the stock to be
issued by Gupta would be less than $11,250,000. The stock issued will be exempt
from registration under Section 3(a)(10) of the Securities Act of 1933.
Interest earned on the amounts of cash in the Settlement Fund shall become part
of the Settlement Fund.
A portion of the Settlement Fund will be used for certain administrative
expenses, including costs of publishing, printing, and mailing this notice,
costs of publishing a newspaper notice of the settlement, costs associated with
the establishment and administration of the Settlement Fund, and payment of any
taxes assessed against the Settlement Fund. In addition, a
-5-
<PAGE>
portion of the Settlement Fund may be awarded by the Court to counsel for
Representative Plaintiffs as attorneys' fees and reimbursement for costs and
expenses including expert consultants' fees. The portion of the Settlement
Fund remaining after payment of such costs, fees, expenses and awards (the
"Net Settlement Fund") will be distributed to Class Members who submit valid
and timely Proofs of Claim. Class members who submit valid and timely Proofs
of Claim will receive either cash, Gupta common stock or cash plus Gupta
common stock.
PLAN OF ALLOCATION
The Net Settlement Fund shall be distributed to Class Members who submit a
valid, timely Proof of Claim ("Authorized Claimants") pursuant to the following
Plan of Allocation.
To the extent there are sufficient funds in the Net Settlement Fund, each
Authorized Claimant will receive an amount equal to the Authorized Claimant's
Claim, as defined below. If, however, the amount in the Net Settlement Fund is
not sufficient to permit payment of the total Claim of each Authorized Claimant,
then each Authorized Claimant shall be paid the percentage that each Authorized
Claimant's Claim bears to the total of the Claims of all Authorized Claimants.
Payment in this manner shall be deemed conclusive against all Authorized
Claimants.
The Claims will be paid to Authorized Claimants in both cash and stock.
However, if an Authorized Claimant's Claim would entitle the Claimant to receive
fewer than 25 shares of Gupta stock, instead of receiving the stock, the
Authorized Claimant shall receive additional cash from the cash portion of the
Settlement Fund equal to the value of the Gupta stock which the Authorized
Claimant would have received based upon the calculated value of the stock during
the Valuation Period set forth in the Stipulation of Settlement. The Gupta
stock which would have been distributed to said Authorized Claimant will be
distributed pro rata among the other Authorized Claimants who will receive 25
shares or more, and those Claimants will receive
-6-
<PAGE>
correspondingly less cash. This allocation of cash and stock shall neither
increase nor decrease the total value of the distribution (both stock and
cash) of the Settlement Fund to any Authorized Claimant.
No fractional shares of Gupta common stock shall be issued. Any calculation
which would yield a fractional share will be rounded down or up to the next
closest share.
The Claims shall be computed as follows:
1. Any person who purchased Gupta common stock from October 19, 1993
through January 16, 1994, and who retained it as of the close of trading on July
6, 1994, shall have a per share claim calculated as 25% of the difference
between the purchase price and $9.95 per share.
2. Any person who purchased Gupta common stock, from January 17, 1994
through April 25, 1994, and who retained it as of the close of trading on July
6, 1994, shall have a per share claim calculated as 50% of the difference
between the purchase price and $9.95 per share.
3. Any person who purchased Gupta common stock, from April 26, 1994
through July 6, 1994, and who retained it as of the close of trading on July 6,
1994, shall have a per share claim calculated as the difference between the
purchase price and $9.95 per share.
4. Any person who purchased Gupta common stock, from October 19, 1993
through January 16, 1994, and who sold it from April 26, 1994 through July 6,
1994 shall have a per share claim which is 25% of the purchase price per share
less the sales price per share.
5. Any person who purchased Gupta common stock, from January 17, 1994
through April 25, 1994, and who sold it from April 26, 1994 through July 6, 1994
shall have a per share claim which is 50% of the purchase price per share less
the sales price per share.
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<PAGE>
6. Any person who purchased Gupta common stock, from April 26, 1994
through June 2, 1994, and who sold it from June 3, 1994 through July 6, 1994
shall have a per share claim which is the lesser of:
(a) the purchase price per share less the sales price per share; or
(b) $3.75 per share.
DISMISSAL AND RELEASES
If the proposed settlement is approved, the Court will enter a Final
Judgment and Order of Dismissal of the Action ("Final Judgment"). The Final
Judgment will dismiss the Class Actions, and all claims alleged therein, with
prejudice as to all Defendants. The Final Judgment will provide that the
settlement may not be used against Released Persons in any action or proceeding,
except to enforce the Final Judgment.
The Final Judgment will provide that all Class Members shall be deemed to
have released and forever discharged all Released Claims, including Unknown
Claims, against all Released Persons, as defined in the Proof of Claim and
Release which accompanies this Notice.
APPLICATIONS FOR FEES, EXPENSES AND AWARDS
At the Settlement Hearing, counsel for Representative Plaintiffs will
request the Court to award attorneys' fees not to exceed thirty-three percent
(33%) of the Settlement Fund. In addition, Plaintiffs' Settlement Counsel will
seek reimbursement of the expenses advanced in connection with the litigation,
including expenses incurred for experts.
Class Members are not personally liable for any fees and expenses.
CONDITIONS FOR SETTLEMENT
The settlement is conditioned upon the occurrence of a number of events,
which are subject to waiver. Those events include, among other things: (1)
entry of the Final Judgment by
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<PAGE>
the Court as provided for in the Stipulation; (2) expiration of the time to
appeal from the Final Judgment; (3) Gupta has provided Plaintiffs' Settlement
Counsel with the written opinion of outside counsel substantially to the
effect: (a) that the Settlement Stock will be issued in compliance with the
registration requirements of Section 5 of the Securities Act of 1933 or will
be issued in reliance upon an exemption therefrom; (b) that the Settlement
Stock is fully tradeable without any restriction after distribution; and (c)
that such shares are otherwise fully paid, non-assessable and free from all
liens and encumbrances. If, for any reason, any one of the conditions
described in the Stipulation is not met, the Stipulation might be terminated
and, if terminated, will become null and void, and the parties to the
Stipulation will be restored to their respective positions as of the date of
the Stipulation.
THE RIGHT TO BE HEARD AT THE HEARING
Any Class Member (who did not validly and timely request to be excluded
from the Class) and who objects to any aspect of the settlement of the Class
Actions, the Plan of Allocation, or the applications for attorneys' fees,
costs, and expenses, may appear and be heard at the Settlement Hearing. Any
such person must submit a written notice of objection, postmarked on or
before _______________, 1996, to each of the following addresses:
Clerk of the Court
United States District Court
Northern District of California
280 South First Street
San Jose, CA 95113-4612
Re: IN RE GUPTA CORPORATION SECURITIES LITIGATION
Geoffrey S. Stewart
Hale and Dorr
1455 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
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<PAGE>
Robert N. Kaplan
Jonathan K. Levine
Kaplan, Kilsheimer & Fox LLP
685 Third Avenue
New York, NY 10017
Keith F. Park
Milberg Weiss Bershad Hynes
& Lerach LLP
600 West Broadway, Suite 1800
San Diego, CA 92101
The notice of objection should demonstrate the objecting person's
membership in the Class, and contain a statement of the reasons for objection.
Only members of the Class who have submitted written notices of objection in
this manner will be entitled to be heard at the Settlement Hearing, unless the
Court orders otherwise.
SPECIAL NOTICE TO NOMINEES:
If you purchased any shares of Gupta common stock during the Class Period
as nominee for a beneficial owner, then, within ten (10) days after you receive
this Notice, you must either: (1) send a copy of this Notice and the Proof of
Claim by first class mail to all such persons; or (2) provide a list of the
names and addresses of such persons to the Claims Administrator:
IN RE GUPTA CORPORATION SECURITIES LITIGATION
c/o Gilardi & Co.
P.O. Box 5100
Larkspur, CA 94977-5100
If you choose to mail the Notice and Proof of Claim yourself, you may
obtain (without cost to you) as many additional copies of these documents as you
will need to complete the mailing from the Claims Administrator.
Regardless of whether you choose to complete the mailing yourself or elect
to have the mailing performed for you, you may obtain reimbursement for or
advancement of reasonable
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<PAGE>
administrative costs actually incurred in connection with forwarding the
Notice and Proof of Claim, and which would not have been incurred but for the
obligation to forward the Notice and Proof of Claim.
EXAMINATION OF PAPERS
This Notice is a summary notice and does not describe all of the details of
the Stipulation. For full details of the matters discussed in this Notice, you
may desire to review the Stipulation filed with the Court, which may be
inspected at the office of the Clerk of the Court, at the United States
Courthouse, 280 South First Street, San Jose, California, during business hours.
If you have any questions about settlement of the Class Actions, you may
contact Plaintiffs' Settlement Counsel or your own personal attorney.
Settlement Counsel may be contacted by writing:
Robert N. Kaplan Keith F. Park
Jonathan K. Levine Milberg Weiss Bershad
Kaplan, Kilsheimer & Fox LLP Hynes & Lerach LLP
685 Third Avenue 600 West Broadway
New York, NY 10017 Suite 1800
San Diego, CA 92101
DO NOT TELEPHONE THE COURT.
Dated: _______________, 1996
By Order of the United States
District Court for the
Northern District of
California
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<PAGE>
WILLIAM S. LERACH (68581)
KEITH F. PARK (54275)
MARK SOLOMON (151949)
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: (619) 231-1058
ROBERT N. KAPLAN
JONATHAN K. LEVINE
CHRISTINE M. COMAS
KAPLAN, KILSHEIMER & FOX LLP
685 Third Avenue, 26th Floor
New York, NY 10017
Telephone: (212) 687-1980
Plaintiffs' Settlement Counsel
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
IN re GUPTA CORPORATION SECURITIES ) CLASS ACTION
LITIGATION ) ------------
)
__________________________________ ) Master File No.
) 94-1517-FMS (EAI)
This Document Relates to All )
Actions )
__________________________________ )
SUMMARY NOTICE OF PROPOSED SETTLEMENT
<PAGE>
SUMMARY NOTICE OF PROPOSED
SETTLEMENT AND SETTLEMENT
HEARING ON _____________, 1996
TO: ALL PERSONS WHO PURCHASED ANY SHARES OF THE COMMON STOCK OF GUPTA
CORPORATION DURING THE PERIOD FROM OCTOBER 19, 1993, THROUGH AND INCLUDING
JULY 6, 1994 AND WHO HAVE NOT PREVIOUSLY REQUESTED EXCLUSION ("THE CLASS")
Since May 1994, this class action litigation the ("Litigation") has been
pending in the United States District Court for the Northern District of
California (the "Court") against Gupta Corporation and certain of its present
and former officers and directors ("Defendants"). The parties to the actions
have reached a proposed settlement.
You are hereby notified, pursuant to court order, that a settlement
hearing will be held on _______________, 1996, _____ at a.m., before the
Honorable Edward A. Infante, United States Magistrate Judge, at the United
Courthouse, Courtroom _____, 280 South First Street, San Jose, California
(the "Settlement Hearing") to determine: (1) whether the settlement of the
Class Actions in the amount of $14,250,000 (which may be worth less than that
amount if Gupta common stock during a valuation period is less than $4.50 per
share) consisting of (i) $3,000,000 in cash, plus accrued interest, and (ii)
at least 1,875,000 shares of Gupta common stock (the "Settlement Fund")
should be approved as fair, just, reasonable and adequate to all the settling
parties; (2) whether the respective contributions and each of the releases
should be approved as fair, just, reasonable and adequate; (3) whether the
proposed Plan of Allocation for the Class Actions is fair, just, reasonable,
and adequate; (4) whether the applications of counsel for the class for an
award of attorneys' fees and expenses, should be approved; (5) whether this
Litigation should be dismissed with prejudice as set forth in the Stipulation
of Settlement dated as of July __, 1996, filed with the Court; and (6)
whether the terms and conditions of the proposed issuance of the shares of
Gupta common stock (the "Settlement Stock") are fair, reasonable and adequate.
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<PAGE>
If you purchased Gupta common stock during the period from October 19,
1993 through and including July 6, 1994, your rights may be affected by the
settlement of this Litigation. To share in the distribution of the
Settlement Fund, members of the class must establish their rights and file a
Proof of Claim and Release form on or before _______________, 1996.
Your rights against the Defendants may be affected by the settlement of
the Litigation. This is only a summary of the proposed settlement. Further
details are contained in the Notice of Proposed Settlement of Class Action
and Settlement Hearing. To receive a Notice and Proof of Claim form or
further information, please write to the Claims Administrator:
IN RE GUPTA CORPORATION SECURITIES LITIGATION
c/o Gilardi & Co.
P.O. Box 5100
Larkspur, CA 94977-5100
Counsel for the class is:
Robert N. Kaplan Keith F. Park
Jonathan K. Levine Milberg Weiss Bershad Hynes
Kaplan Kilsheimer & Fox LLP & Lerach LLP
685 Third Avenue 600 West Broadway, Suite 1800
New York, New York 10017 San Diego, California 92101
DO NOT TELEPHONE THE COURT.
By Order of the
United States District Court
Northern District of California
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<PAGE>
WILLIAM S. LERACH (68581)
KEITH F. PARK (54275)
MARK SOLOMON (151949)
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: (619) 231-1058
ROBERT N. KAPLAN
JONATHAN K. LEVINE
CHRISTINE M. COMAS
KAPLAN, KILSHEIMER & FOX LLP
685 Third Avenue, 26th Floor
New York, NY 10017
Telephone: (212) 687-1980
Plaintiffs' Settlement Counsel
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
In re GUPTA CORPORATION SECURITIES ) CLASS ACTION
LITIGATION ) ------------
___________________________________)
) Master File No.
This Document Relates to All ) 94-1517-FMS (EAI)
Actions )
___________________________________)
PROOF OF CLAIM AND RELEASE
--------------------------
<PAGE>
GENERAL INSTRUCTIONS
1. To recover as a member of the Class based on your claims in the
above entitled action (the "Class Action"), you must complete and, on page
_____ hereof, sign this Proof of Claim and Release. If you fail to file a
properly addressed (as set forth in paragraph 3 below) Proof of Claim and
Release, your claim may be rejected and you may be precluded from any
recovery from the Settlement Fund created in connection with the proposed
settlement of the Class Action.
2. Submission of this Proof of Claim and Release, however, does not
assure that you will share in the proceeds of settlement in the Litigation.
3. YOU MUST MAIL YOUR COMPLETED AND SIGNED PROOF OF CLAIM AND RELEASE
POSTMARKED ON OR BEFORE _______________1996 ADDRESSED AS FOLLOWS:
IN RE GUPTA CORPORATION SECURITIES LITIGATION
c/o Gilardi & Co.
P.O. Box 5100
Larkspur, California 94977-5100
4. If you are a member of the Class and previously did not validly and
timely request exclusion from the Class, you are bound by the terms of any
judgment entered in the Class Action, WHETHER OR NOT YOU SUBMIT A PROOF OF
CLAIM AND RELEASE.
5. If you are NOT a member of the Class as defined in the Notice of
Proposed Settlement of Class Action and Settlement Hearing (the "Notice"), DO
NOT submit a Proof of Claim and Release Form.
<PAGE>
CLAIMANT IDENTIFICATION
1. If you purchased Gupta Corporation common stock, and held the
certificate(s) in your name, you are the beneficial purchaser as well as the
record purchaser. If, however, you purchased these securities, and the
certificate(s) were registered in the name of a third party, such as a
nominee or brokerage firm, you are the beneficial purchaser and the third
party is the record purchaser.
2. Use Part I of this form entitled "Claimant Identification" to
identify each purchaser of record, if different from the beneficial purchaser
("nominee"), of Gupta stock, which forms the basis of this claim. THIS CLAIM
MUST BE FILED BY THE ACTUAL BENEFICIAL PURCHASER OR PURCHASERS, OR THE LEGAL
REPRESENTATIVE OF SUCH PURCHASER OR PURCHASERS, OF THE STOCK, UPON WHICH THIS
CLAIM IS BASED.
3. All joint purchasers must sign this claim. Executors,
administrators, guardians, conservators and trustees must complete and sign
this claim on behalf of persons represented by them and their authority must
accompany this claim and their titles or capacities must be stated. The
Social Security (or taxpayer identification) number and telephone number of
the beneficial owner may be used in verifying the claim. Failure to provide
the foregoing information could delay verification of your claim or result in
rejection of the claim.
CLAIM FORM
1. Use Part II of this form entitled "Schedule of Transactions in
Gupta Common Stock", to supply all required details of your transaction(s) in
these securities. If you need more space or additional schedules, attach
separate sheets giving all of the required information in substantially the
same form. Sign and print or type your name on each additional sheet.
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<PAGE>
2. On the schedules, provide all of the requested information with
respect to all of your purchases and all of your sales of Gupta stock which
took place at any time between October 19, 1993 through and including July 6,
1994 (the "Class Period"), whether such transactions resulted in a profit or
a loss. Failure to report all such transactions may result in the rejection
of your claim.
3. List each transaction in the Class Period separately and in
chronological order, by trade date, beginning with the earliest. You must
accurately provide the month, day and year of each transaction you list.
4. The term "Purchase Price" means the amount paid for the securities
(including commissions and transfer taxes) and the term "Sales Price" means
the amount realized on the sale of the securities (net of commissions and
transfer taxes). The date of purchase or sale is the "contract" or "trade"
date as distinguished from the "settlement" date. The date of covering a
"short sale" is deemed to be the date of purchase of the security. The date
of a "short sale" is deemed to be the date of sale of the security.
5. Broker's confirmations or other documentation of your transactions
in Gupta stock should be attached to your claim. Failure to provide this
documentation could delay verification of your claim or result in rejection
of your claim.
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<PAGE>
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
IN RE GUPTA CORPORATION SECURITIES LITIGATION
Master File No. 94-1517-FMS EAI)
PROOF OF CLAIM
Must be Postmarked No Later Than:
____________________1996
PLEASE TYPE OR PRINT
PART I: CLAIMANT IDENTIFICATION
Beneficial Owner's Name (First, Middle, Last)
Street Address
City State Zip Code
Foreign Province Foreign Country
______________________________ _____ Individual
Social Security Number or
Taxpayer Identification Number _____ Corporation/Other
__________ _______________________(work)
Area Code Telephone Number
__________ _______________________(home)
Area Code Telephone Number
Record Owner's Name (if different from beneficial owner listed above)
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<PAGE>
PART II: SCHEDULE OF TRANSACTIONS IN GUPTA COMMON STOCK
A) THE NUMBER OF SHARES OF GUPTA COMMON STOCK HELD AT THE
COMMENCEMENT OF TRADING ON OCTOBER 19, 1993
________________________
B) PURCHASES (OCTOBER 19, 1993 - JULY 6, 1994, INCLUSIVE) OF GUPTA
COMMON STOCK
TRADE DATE NUMBER OF TOTAL
MO DAY YEAR SHARES PURCHASED PURCHASE PRICE
1.__________________ ___________________ $_______________
2.__________________ ___________________ $_______________
3.__________________ ___________________ $_______________
C) SALES (OCTOBER 19, 1993 - JULY 6, 1994, INCLUSIVE) OF GUPTA
COMMON STOCK
TRADE DATE NUMBER OF TOTAL
MO DAY YEAR SHARES SOLD PURCHASE PRICE
1.__________________ ___________________ $_______________
2.__________________ ___________________ $_______________
3.__________________ ___________________ $_______________
(D) THE NUMBER OF SHARES OF GUPTA COMMON STOCK HELD AS OF THE CLOSE
OF TRADING ON JULY 6, 1994
________________________
YOU MUST READ AND SIGN RELEASE ON PAGE _____.
If you require additional space, attach extra schedules in the same
format as above. Sign and print your name on each additional page. Copies
of broker's confirmations or other documentation evidencing your transactions
in Gupta stock should be attached.
PART III: SUBMISSION TO JURISDICTION OF COURT
I submit this Proof of Claim and Release under the terms of the
Stipulation of Settlement described in the Notice.
I also submit to the jurisdiction of the United States District Court
for the Northern District of California with respect to my claim as a Class
Member and for purposes of enforcing
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<PAGE>
the release set forth herein and any Judgment which may be entered in the
Class Action. I further acknowledge that I am bound by and subject to the
terms of any judgment that may be entered in the Class Action.
I agree to furnish additional information to the Claims Administrator to
support this claim if required to do so.
PART IV. RELEASE
A. I hereby acknowledge full and complete satisfaction of, and do
hereby fully, finally and forever settle, discharge and release all Released
Claims against all Released Persons.
B. "Released Claims" means and includes any and all claims or causes
of action, including "Unknown Claims" as defined below, demands, rights,
liabilities, and causes of action of every nature and description whatsoever,
known or unknown, asserted or that could have been asserted by the
Representative Plaintiffs or the Class Members, or any of them, against the
Released Persons based upon or related to both the purchase of Gupta stock by
the Representative Plaintiffs or the Class Members during the Class Period
and the facts, transactions, events, occurrences, disclosures, statements,
acts or omissions or failures to act which were or could have been alleged in
the Litigation, including the purchase, sale or distribution by any of the
defendants of Gupta stock during the Class Period.
C. "Unknown Claims" means any Released Claims which any Representative
Plaintiff or Class Member does not know or suspect to exist in his, her or
its favor at the time of the release of the Released Persons which, if known
by him, her or it, might have affected his, her or its settlement with and
release of the Released Persons, or might have affected his, her or its
decision not to object to this settlement. With respect to any and all
Released Claims, the Parties stipulate and agree that, upon the Effective
Date, each of the Representative Plaintiffs and the
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<PAGE>
Class Members shall be deemed to have, and by operation of the Judgment shall
have, expressly waived and relinquished, to the fullest extent permitted by
law, the provisions, rights, and benefits of Section 1542 of the California
Civil Code, which provides:
A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at
the time of executing the release, which if known by him
must have materially affected his settlement with the
debtor.
Each of the Representative Plaintiffs shall expressly and the Class
Members shall be deemed to, and upon the Effective Date and by operation of
the Judgment shall have waived any and all provisions, rights and benefits
conferred by any law of any state or territory of the United States, or
principle of common law, which is similar, comparable or equivalent to
Section 1542 of the California Civil Code. Each of the Representative
Plaintiffs and the Class Members may hereafter discover facts in addition to
or different from those which he, she or it now knows or believes to be true
with respect to the subject matter of the Released Claims, but shall be
deemed to, upon the Effective Date, and by operation of the Judgment shall
have fully, finally, and forever settled and released any and all Released
Claims, known or unknown, suspected or unsuspected, contingent or
non-contingent, whether or not concealed or hidden, which now exist, or
heretofore have existed upon any theory of law or equity now existing or
coming into existence in the future, including, but not limited to, conduct
which is negligent, intentional, with or without malice, or a breach of any
duty, law or rule, without regard to the subsequent discovery or existence of
such different or additional facts.
D. "Released Persons" means each and all of the Defendants and their
respective Related Parties.
-7-
<PAGE>
E. "Defendants" means Umang P. Gupta, D. Bruce Scott, Richard M.
Noling, Nicholas Birtles, Richard J. Heaps, Reed D. Taussig, Douglas C.
Carlisle, Anthony Sun and Gupta Corporation (including Gupta Corporation's
successors and assigns).
G. "Related Parties" means each of a Defendant's past or present
directors, officers, employees, partners, principals, agents, underwriters,
controlling shareholders, any entity in which the Defendant and/or any
member(s) of the Defendant's immediate family has or have a controlling
interest, attorneys, accountants, auditors, banks, investment banks or
investment bankers, advisors, personal or legal representatives,
predecessors, successors, parents, subsidiaries, divisions, joint ventures,
assigns, spouses, heirs, associates, related or affiliated entities, any
members of their immediate families, or any trust of which any Defendant is
the settlor or which is for the benefit of any Defendant and/or member(s) of
his family. Without limiting the foregoing, the Related Parties of defendant
Gupta Corporation shall be deemed to include Novell, Inc.
I. This release shall be of no force or effect unless and until the
Court approves the Stipulation of Settlement and the Stipulation becomes
Effective.
J. I (we) hereby warrant and represent that I (we) have not assigned
or transferred or purported to assign or transfer, voluntarily or
involuntarily, any matter released pursuant to this release or any other part
or portion thereof.
K. I (we) certify that I am (we are) not subject to backup withholding
under the provisions of Section 3406(a) (1) (c) of the Internal Revenue Code.
NOTE: If you have been notified by the Internal Revenue Service that
you are subject to backup withholding, please strike out the language that
you are not subject to backup withholding in the certification above.
-8-
<PAGE>
I declare under penalty of perjury under the laws of the United States
of America that the foregoing information supplied by the undersigned is true
and correct and that this Proof of Claim and Release form was executed this
_____ day of
_____________________ in ______________________________________________
(month) (year) (City, State, Country)
______________________________________________
(Sign your name here)
______________________________________________
(Type or print you name here)
______________________________________________
(Capacity of persons signing, e.g., Beneficial
Purchaser, Executor or Administrator)
Reminder Checklist:
1. Please sign the above release and declaration.
2. Remember to attach supporting documentation, if available.
3. Do not send original or copies of stock certificates.
4. Keep a copy of your claim form for your records.
5. If you desire an acknowledgment of receipt of your claim form,
please send it Certified Mail, Return Receipt Requested.
6. If you move, please send us your new address.
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<PAGE>
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
In re GUPTA CORPORATION SECURITIES ) Master File No.
LITIGATION ) C-94-1517-EAI
__________________________________ )
) CLASS ACTION
) ------------
This Document Relates To: )
) DATE: September 30, 1996
ALL ACTIONS. ) TIME: 9:30 a.m.
__________________________________ ) COURTROOM: The Honorable
Edward A. Infante
FINAL JUDGMENT AND ORDER OF DISMISSAL
<PAGE>
This matter came on for hearing on September 30, 1996, upon the
application of the parties for approval of the settlement set forth in the
Stipulation of Settlement (the "Stipulation") dated July 19, 1996. Due and
adequate notice having been given to the Class defined below, and the Court
having considered the Stipulation, all papers filed and proceedings had
herein and all oral and written objections and comments received regarding
the proposed settlement, and having reviewed the entire record in the
Litigation, and good cause appearing.
IT IS HEREBY ORDERED, ADJUDGED AND DECREED AS FOLLOWS:
1. The Court, for purposes of the Final Judgment and Order of
Dismissal of Action (the "Final Judgment"), adopts all defined terms as set
forth in the Stipulation.
2. The Court has jurisdiction over the subject matter of the Class
Action, the Representative Plaintiffs, the Class, and the Defendants.
3. The Court finds that the distribution of the Notice of Proposed
Settlement and Settlement Hearing, Proof of Claim and Release, and
publication of the Summary Notice as provided for in the Order Preliminary
Approving Settlement, Approving Notice of Proposed Settlement and Setting
Settlement Hearing constituted the best notice practicable under the
circumstances to all persons within the definition of the Class, and fully
met the requirements of Rule 23 of the Federal Rules of Civil Procedure, due
process, the United States Constitution, and any other applicable law.
4. Pursuant to and in accordance with the requirements of Rule 23 of
the Federal Rules of Civil Procedure and Section 3(a)(10) of the Securities
Act of 1933, the Court approves the settlement of the Class Action set forth
in the Stipulation, each of the releases and other terms, as fair, just,
reasonable, and adequate to the Class and the Defendants. The parties to the
Stipulation shall complete and finalize the settlement in accordance with the
terms set forth in the Stipulation.
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<PAGE>
5. Except as to any individual claim of those persons (identified in
Exhibit 1 hereto) who have validly and timely requested exclusion from the
Class, the Litigation and all claims contained therein, including all of the
Released Claims are dismissed with prejudice as to the Representative
Plaintiffs and the Class, and the parties are to bear their own costs.
6. All Class Members whether or not such Class Member has filed a
Proof of Claim, shall, as of the Effective Date, conclusively be deemed to
have released and forever discharged all Released Persons from all Released
Claims.
7. All Released Persons shall, as of the Effective Date, conclusively
be deemed to have released and forever discharged each of the Representative
Plaintiffs, the Class Members, and counsel to the Representative Plaintiffs,
as set forth in paragraph 6.2 of the Stipulation.
8. The Released Persons and the Class Members shall, as of the
Effective Date, conclusively be deemed to have acknowledged that the Released
Claims may include Unknown Claims. These persons nonetheless release all
such Unknown Claims. All Released Persons and Class members shall further,
as of the Effective Date, conclusively be deemed to have waived the rights
afforded by California Civil Code Section 1542 and any similar statute or
law, or principle of common law, of California or any other jurisdiction.
9. All Class Members as of the Effective Date are permanently barred
and enjoined from instituting or prosecuting, in any capacity, any action or
proceeding that involves or asserts any of the Released Claims.
10. All Released Persons as of the Effective Date are permanently
barred and enjoined from instituting or prosecuting, in any capacity, any
action or proceeding that invokes or asserts any of the claims released in
paragraph 6.2 of the Stipulation.
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<PAGE>
11. All Persons who have filed valid and timely requests for exclusion
from the Class shall not be bound by this Final Judgment and Order of
Dismissal. A list of the names of those persons who are not bound by this
Final Judgment and Order of Dismissal is attached hereto.
12. By virtue of the Court's consideration and approval of the
settlement described herein the Court finds that the terms and conditions of
the issuance by Gupta of Settlement Stock are fair, reasonable and adequate,
the Court orders that the issuance of Settlement Stock shall be without
registration under the Securities Act of 1933, as amended, and the Court
finds that said issuance fails within the exemption set forth in Section
3(a)(10) of said Act.
13. The Court reserves exclusive and continuing jurisdiction over the
Class Action, the Representative Plaintiffs, the Class and the Released
Persons for the purposes of; (1) supervising the implementation, enforcement,
construction, and interpretation of the Stipulation, the Preliminary Order,
the proposed Plan of Allocation, and the Final Judgment; (2) hearing and
determining any application by Settlement Counsel for an award of attorney's
fees, costs, and expenses; and (3) supervising the distribution of the
Settlement Fund.
14. Any Plan of Allocation to be submitted by Settlement Counsel or any
order to be entered regarding the attorneys' fees application shall in no way
disturb or affect this Final Judgment and shall be considered separate from
this Final Judgment.
15. Neither the Stipulation nor the settlement contained therein, nor
any act performed or document executed pursuant to or in furtherance of the
Stipulation or the settlement: (i) is or may be deemed to be or may be used
as an admission of, or evidence of, the validity of any Released Claim, or of
any wrongdoing or liability of the Released Persons, or (ii) is or may be
deemed to be or may be used as an admission of, or evidence of, any fault or
omission of any of the Released Persons in any civil, criminal or
administrative proceeding in any court,
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<PAGE>
administrative agency or other tribunal. Released Persons may file the
Stipulation and/or the judgment from this action in any other action that may
be brought against them in order to support a defense or counterclaim based
on principles of RES JUDICATA, collateral estoppel, release, good faith
settlement, judgment bar or reduction or any theory of claim preclusion or
issue preclusion or similar defense or counterclaim. Defendants have denied
and continue to deny each and all of the claims alleged in the Litigation.
Dated: September 30, 1996 /s/ Edward A. Infante
----------------------------------------
HONORABLE EDWARD A. INFANTE
UNITED STATES MAGISTRATE JUDGE
Submitted by:
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
WILLIAM S. LERACH
KEITH F. PARK
BLAKE M. HARPER
MARK SOLOMON
/s/ Keith F. Park
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KEITH F. PARK
600 West Broadway, Suite 1800
San Diego, CA 92101
Telephone: 619/231-1058
KAPLAN, KILSHEIMER & FOX, LLP
ROBERT N. KAPLAN
JONATHAN K. LEVINE
CHRISTINE M. COMAS
685 Third Avenue, 26th Floor
New York, N.Y. 10017
Telephone: 212/687-1980
Plaintiffs' Settlement Counsel
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PRONGAY & MIKOLAJCZYK
KEVIN M. PRONGAY
EUGENE MIKOLAJCZYK
JOHN BORDERUD
881 Alma Real Drive
Suite 211
Pacific Palisades, CA 90272
Telephone: 310/573-3600
KAUFMAN, MALCHMAN, KIRBY
& SQUIRE
JEFFREY H. SQUIRE
919 Third Avenue, 11th Floor
New York, N.Y. 10022
Telephone: 212/371-6600
ZARIAN & DUNCAN
JOHN N. ZARIAN
2030 Main Street
Suite 660
Irvine, CA 92714
Telephone: 714/475-1700
Attorneys for Plaintiffs
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