Document:

exhibit10-4.htm

    
      	
            	
              EXECUTION COPY

            
	
            	 
	No. 1	718,860 Shares

    

    WARRANT TO PURCHASE COMMON STOCK

     

    OF 

     

    UNIFY CORPORATION 

     

    ISSUED ON JUNE 29,
2010 

     

    VOID AFTER 5:30 P.M.,
EASTERN TIME, ON JUNE 29, 2020 

     

              THIS WARRANT AND ANY SHARES ACQUIRED UPON THE
EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), AND MAY NOT
BE SOLD, PLEDGED, HYPOTHECATED,
DONATED OR OTHERWISE TRANSFERRED WITHOUT COMPLIANCE WITH THE REGISTRATION OR
QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR
APPLICABLE EXEMPTIONS THEREFROM. 

     

              FOR VALUE RECEIVED, UNIFY CORPORATION, a
Delaware corporation (the “Company”), hereby
agrees to sell upon the terms and conditions hereinafter set forth, but no later
than 5:30 p.m., Eastern Time, on the Expiration Date (as hereinafter defined) to
Hercules Technology II, L.P. or its registered assigns (the “Holder”), under the
terms as hereinafter set forth, 718,860 fully paid and
non-assessable shares of the Company’s Common Stock, par value $0.001 per share
(the “Warrant Shares”), at a per share purchase price equal to
$3.30 per share (the “Warrant Price”),
pursuant to this warrant (this “Warrant”). The
number of Warrant Shares to be so issued and the Warrant Price are subject to
adjustment in certain events as hereinafter set forth. The term “Common Stock” shall
mean, when used herein, unless the context otherwise requires, the stock and
other securities and property at the time receivable upon the exercise of this
Warrant. 

     

         1. Definitions

     

              a. “Act” has the meaning set forth in the legend
above. 

     

              b. “Certificate of Incorporation” means the Certificate of Incorporation of
the Company, as such Certificate of Incorporation may be amended, restated or
supplemented from time to time. 

     

              c. “Common Stock” has the meaning set forth in the preamble
hereto.

     

              d. “Company” has the meaning set forth in the preamble
hereto.

     

              e. “Dilutive Issuance” has the meaning set forth in Section 7(d)
hereof. 

     

    

    
    

              f. “Excluded Securities” means:

     

                   (i) shares of Common Stock, or options to acquire shares of Common Stock,
issued to directors, officers, employees and consultants of the Company or any
subsidiary pursuant to any qualified or non-qualified stock option plan or
agreement, stock purchase plan or agreement, stock restriction agreement,
employee stock ownership plan, consultant equity compensation plan or
arrangement approved by the Board of Directors of the Company or an authorized
committee thereof, including any repurchase or stock restriction agreement, or
such other options, issuances, arrangements, agreements or plans intended
principally as a means of providing compensation for employment or services and
approved by the Board of Directors of the Company; provided that the Company shall not issue options or other
rights (including restricted stock, “phantom stock” or securities convertible
into or exchangeable for shares of capital stock) under its 2001 Stock Option
Plan, 2002 Director Restricted Stock Plan or any other incentive equity plan
approved by the Borrower's stockholders after the date hereof for the purchase
or acquisition from the Company of more than 550,000 shares of Common Stock or
other equity interests (net of any forfeitures and cancellations and as such
number of shares may be increased or decreased to reflect stock splits, reverse
stock splits or stock dividends) in the aggregate in any twelve (12) month
period, with such first twelve (12) month period to commence on the date of this
Warrant; 

     

                   (ii) shares of Common Stock, or warrants or options to purchase Common Stock,
issued in connection with bona fide acquisitions, mergers or similar
transactions, the terms of which are approved by the Board of Directors of the
Company; and 

     

                   (iii) shares of Common Stock issued upon exercise or conversion of any options,
warrants or convertible notes of the Company set forth on the capitalization
table set forth on Schedule A hereto.

     

              g. “Expiration Date” means June 29, 2020. 

     

              h. “fair market value” has the meaning set forth in Section 2(a)
hereof. 

     

              i. “Fully-Diluted Basis” means, at any given time and without duplication, the aggregate number
of Common Stock and Preferred Stock (as such terms are defined in the
Certificate of Incorporation) and any other shares of the Company outstanding at
such time plus the aggregate number of Common Stock and Preferred Stock and any
other shares of the Company issuable (subject to readjustment upon the actual
issuance thereof) upon the exercise, conversion or exchange of any option,
right, warrant or convertible or exchangeable security outstanding at such time.

     

              j. “Holder” has the meaning set forth in the preamble
hereto. 

     

              k. “Loan Agreement” has the meaning
set forth in Section 12 hereof. 

     

              l. “Net Issuance” has the meaning set forth in Section 2(a)
hereof. 

     

              m. “New Issuance” means
(A) any issuance or sale by the Company of any class of shares of the Company
(including the issuance or sale of any shares owned or held by or for the
account of the Company) other than Excluded Securities, (B) any issuance or sale
by the Company of any options, rights or warrants to subscribe for any class of
shares of the Company other than Excluded Securities, or (C) the issuance or
sale of any securities convertible into or exchangeable for any class of shares
of the Company other than Excluded Securities. 

     

    2 

     

    

    
    

              n. “New Issuance Price” has the meaning set forth in Section 7(d)
hereof. 

     

              o. “Transfer Notice” has the meaning set forth in Section 3(b)
hereof. 

     

              p. “Warrant” means this
Warrant and any subsequent Warrant issued in accordance with the terms hereof.

     

              q. “Warrant Price has the meaning set forth in the preamble
hereto. 

     

              r. “Warrant Shares” means has the meaning set forth in the
preamble hereto. 

     

         2. Exercise of Warrant. 

     

              a. Notwithstanding anything
to the contrary in this Warrant, this Warrant shall not be exercisable unless
and until the Company shall have distributed to the Company's stockholders an
information statement, in accordance with Regulation 14C under the Securities
Exchange Act of 1934, as amended, with respect to the action taken by the
Company’s stockholders by written consent approving the issuance of the Warrant
Shares and twenty (20) days have elapsed from the date such information
statement is first given to the Company’s stockholders. At any time on or after
the twenty-first (21st) day following the Company’s distribution of such
information statement to its stockholders, the Holder or its assignee may
exercise this Warrant according to its terms by completing the subscription form
attached hereto and surrendering this Warrant to the Company at the address set
forth in Section 13, accompanied by payment in full of the purchase price for
the number of the Warrant Shares specified in the subscription form, or as
otherwise provided in this Warrant, prior to 5:30 p.m., Eastern Time on the
Expiration Date. Payment of the purchase price may be made (i) in cash or
certified check or by bank draft in lawful money of the United States of America
or (ii) in accordance with the net issuance formula below (“Net Issuance”).

     

              If the Holder elects the Net Issuance method
of payment, then the Company shall issue to Holder upon exercise such number of
shares of Common Stock determined in accordance with the following formula:

     

    
      	          	X =	 	Y(A-B)	 
	
            	 	
            	A	 
	
            	
            	
            	 	
            
	 	Where X
    =	
            	the number of shares of Common Stock to
      be issued to the Holder;
	
            	 	
            	
            
	 	Y = 	
            	the number of shares of Common Stock
      with respect to which the Holder is exercising its rights under this
      Warrant;
	
            	 	
            	 
	
            	A = 	
            	the fair market value of one (1) share
      of Common Stock on the date of exercise; and
	
            	
            	
            	 
	
            	B =	
            	
              the Warrant Price.
      

            

    

    3 

     

    

    
    

              For
purposes of the above calculation, “fair market value”
shall mean: 

     

    
      	               	(i)	 	
              if the Common Stock is listed
      or traded on the NASDAQ stock market or any United States securities
      exchange or quoted on any securities quotation service operated by NASDAQ
      (including the OTC Bulletin Board), the twenty day volume weighted average
      trading price for the twenty trading days ending on the second trading day
      prior to the date of exercise; or

            
	
            	 
	
            	(ii)	
            	
              if at any time the Common
      Stock is not listed or traded on any United States stock exchange or
      quoted on any securities quotation service operated by NASDAQ, the fair
      market value determined in good faith by the Board of Directors of the
      Company and approved in good faith by the Holder. In the event that the
      Holder does not accept the valuation determined by the Board, then the
      Company and the Holder shall, in good faith, select an independent
      valuation firm mutually acceptable to each of them to conduct a valuation
      of the price of a Warrant Share. The Holder may elect, in its sole
      discretion, to receive the number of shares of Common Stock issuable to it
      upon exercise of this Warrant calculated using the fair market value as
      determined in good faith by the Board of Directors of the Company. Upon
      the determination of the independent valuation firm, the Company and the
      Holder will make adjustments to the issuance of Common Stock based on the
      determination of such independent valuation firm. The determination of
      such independent valuation firm shall be conclusive, absent manifest
      error, as between the Company and the Holder for purposes herein. The
      Company shall pay all costs and expenses associated with the engagement of
      the independent valuation firm; provided that a valuation is not required more
      than once in any given twelve (12) consecutive month period. If at any
      time there will be more than one Holder, then any determination of the
      fair market value, made with respect to a Holder, shall apply to all the
      Holders, unless any party proves that a material change in the valuation
      of the Company has occurred since the valuation was
      determined.

            

    

     

              b. This Warrant may be
exercised in whole or in part so long as any exercise in part hereof would not
involve the issuance of fractional shares of Warrant Shares. If exercised in
part, the Company shall deliver to the Holder a new Warrant, identical in form,
in the name of the Holder, evidencing the right to purchase the number of
Warrant Shares as to which this Warrant has not been exercised, which new
Warrant shall be signed by the Chairman, Chief Executive Officer or President
and the Secretary or Assistant Secretary of the Company. 

     

              c. No fractional shares or
scrip representing fractional shares shall be issued upon the exercise of this
Warrant. The Company shall pay cash in lieu of fractional shares with respect to
the Warrants based upon the fair market value of such fractional shares of
Common Stock (which, for purposes of this Section 2(c), shall be the closing
price of such shares on the exchange or market on which the Common Stock is then
traded) at the time of exercise of this Warrant. 

     

    4 

     

    

    
    

         3. Disposition of Warrant Shares and
Warrant. 

     

              a. The Holder hereby
acknowledges that (i) this Warrant and any Warrant Shares purchased pursuant
hereto are, as of the date hereof, not registered: (A) under the Act on the
ground that the issuance of this Warrant is exempt from registration under
Section 4(2) of the Act as not involving any public offering or (B) under any
applicable state securities law because the issuance of this Warrant does not
involve any public offering and (ii) the Company’s reliance on the Section 4(2)
exemption of the Act and under applicable state securities laws is predicated in
part on the representations hereby made to the Company by the Holder. The Holder
represents and warrants that it is (i) an “accredited investor” within the
meaning of Rule 501(a) of Regulation D under the Securities Act, (ii) (A)
familiar with the business and affairs of the Company and (B) knowledgeable and
experienced in financial and business matters to the extent that such Holder is
capable of evaluating the merits and risks of an investment in the Warrant and
the Warrant Shares, and (iii) acquiring this Warrant and will acquire the
Warrant Shares for investment for its own account, with no present intention of
dividing his, her or its participation with others or reselling or otherwise
distributing the same. 

     

              b. Subject to compliance
with applicable federal and state securities laws and the immediately following
sentence, and if such intended transferee is not an affiliate of the Holder and
the intended transferee provides a duly executed written confirmation that the
representations and warranties in Section 3(a) of this Warrant are true and
correct as to such intended transferee, this Warrant and all rights hereunder
are transferable, in whole or in part, without charge to the holder hereof
(except for transfer taxes) upon surrender of this Warrant properly endorsed.
The Holder hereby agrees that it will not sell or transfer all or any part of
this Warrant and/or Warrant Shares unless and until it shall first have given
notice to the Company describing such sale or transfer and, if requested by the
Company in writing, furnished to the Company either (i) an opinion, reasonably
satisfactory to counsel for the Company, of counsel (skilled in securities
matters, selected by the Holder and reasonably satisfactory to the Company) to
the effect that the proposed sale or transfer may be made without registration
under the Act and without registration or qualification under any state law, or
(ii) an interpretative letter from the Securities and Exchange Commission to the
effect that no enforcement action will be recommended if the proposed sale or
transfer is made without registration under the Act. Each taker and holder of
this Warrant, by taking or holding the same, consents and agrees that this
Warrant, when endorsed in blank, shall be deemed negotiable subject to the
transfer restrictions provided for herein, and that the holder hereof, when this
Warrant shall have been so endorsed and its transfer recorded on the Company’s
books, shall be treated by the Company and all other persons dealing with this
Warrant as the absolute owner hereof for any purpose and as the person entitled
to exercise the rights represented by this Warrant and, notwithstanding any
other provision of this Warrant to the contrary, shall be the Holder as referred
to in this Warrant. 

     

              The proper transfer of this Warrant shall be
recorded in the registry referred to in Section 8(c) upon receipt by the Company
of a notice of transfer in the form attached hereto as Exhibit II (the “Transfer Notice”),
at its principal offices and the payment to the Company of all transfer taxes
and other governmental charges imposed on such transfer. Until the Company
receives such Transfer Notice, the Company may treat the registered owner hereof
as the owner for all purposes. 

     

    5 

     

    

    
    

              c. If, at the time of
issuance of the shares issuable upon exercise of this Warrant, no registration
statement is in effect with respect to such shares under applicable provisions
of the Act, the Company may at its election require that the Holder provide the
Company with written reconfirmation of the Holder’s investment intent and that
any stock certificate delivered to the Holder of a surrendered Warrant shall
bear legends reading substantially as follows: 

     

              “THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND MAY NOT BE SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OR AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER OF THIS CERTIFICATE THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT.” 

     

              In addition, so long as the foregoing legend
may remain on any stock certificate delivered to the Holder, the Company may
maintain appropriate “stop transfer” orders with respect to such certificates
and the shares represented thereby on its books and records and with those to
whom it may delegate registrar and transfer functions. 

     

         4. Reservation of Shares. The Company hereby agrees that at all times
there shall be reserved for issuance upon the exercise of this Warrant such
number of shares of its Common Stock as shall be required for issuance upon
exercise of this Warrant and shall at all times have a sufficient number of
authorized shares so as to permit the issuance of the shares of Common Stock
upon exercise of this Warrant. The Company further agrees that all Warrant
Shares represented by this Warrant will be duly authorized and will, upon
issuance and against payment of the exercise price, be validly issued, fully
paid and non-assessable. 

     

         5. Exchange, Transfer or Assignment of
Warrant. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other Warrants of different denominations, entitling the
Holder or Holders thereof to purchase in the aggregate the same number of shares
of Common Stock purchasable hereunder. Upon surrender of this Warrant to the
Company or at the office of its stock transfer agent, if any, with funds
sufficient to pay any transfer tax, the Company shall, without charge, execute
and deliver a new Warrant in the name of the assignee named in such instrument
of assignment and this Warrant shall promptly be canceled. 

     

         6. Delivery of Stock Certificate Upon
Exercise. Promptly after
the exercise of this Warrant and payment of the Warrant Price (which payment
shall be deemed to have occurred when the funds are immediately available to the
Company), the Company will cause to be issued in the name of and delivered to
the registered Holder hereof or its assigns, or such Holder’s nominee or
nominees, a certificate or certificates for the number of full shares of Common
Stock of the Company to which such Holder shall be entitled upon exercise (and
in the case of partial exercise, a Warrant of like tenor for the unexercised
portion remaining subject to exercise prior to the Expiration Date set forth
herein). For all corporate purposes, such certificate or certificates shall be
deemed to have been issued and such Holder or Holder’s designee to be named
therein shall be deemed to have become a holder of record of such shares of
Common Stock as of the date the duly executed exercise form pursuant to this
Warrant, together with the full payment of the Warrant Price, is received by the
Company as aforesaid. No fraction of a share or scrip certificate for such
fraction shall be issued upon exercise of this Warrant; in lieu thereof, the
Company will pay or cause to be paid to such Holder cash equal to a like
fraction at the prevailing fair market price for such share as determined in
good faith by the Company.

     

    6 

     

    

    
    

         7. Adjustment of Warrant Price and Number of
Warrant Shares. The number
of Warrant Shares purchasable
upon the exercise of this Warrant and the Warrant Price shall be subject to
adjustment as follows: 

     

              a. Recapitalization, Reclassification and
Succession. If any
recapitalization of the Company or reclassification of its Common Stock or any
merger or consolidation of the Company into or with a corporation or other
business entity, or the sale or transfer of all or substantially all of the
Company’s assets or of any successor corporation’s assets to any other
corporation or business entity (any such corporation or other business entity
being included within the meaning of the term “successor corporation”) shall be
effected, at any time while this Warrant remains outstanding and unexpired,
then, as a condition of such recapitalization, reclassification, merger,
consolidation, sale or transfer, lawful and adequate provision shall be made
whereby the Holder of this Warrant thereafter shall have the right to receive
upon the exercise hereof as provided in Section 1 and in lieu of the shares of
Common Stock immediately theretofore issuable upon the exercise of this Warrant,
such shares of capital stock, securities or other property as may be issued or
payable with respect to or in exchange for a number of outstanding shares of
Common Stock equal to the number of shares of Common Stock immediately
theretofore issuable upon the exercise of this Warrant had such
recapitalization, reclassification, merger, consolidation, sale or transfer not
taken place, and in each such case, the terms of this Warrant shall be
applicable to the shares of stock or other securities or property receivable
upon the exercise of this Warrant after such consummation. 

     

              b. Subdivision or Combination of
Shares. If the Company at
any time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the number of Warrant Shares purchasable upon exercise
of this Warrant shall be adjusted in accordance with Section 7(d)(i).

     

              c. Stock Dividends and
Distributions. If the
Company at any time while this Warrant is outstanding and unexpired shall issue
or pay the holders of its Common Stock, or take a record of the holders of its
Common Stock for the purpose of entitling them to receive, a dividend payable
in, or other distribution of, Common Stock, then the Warrant Price shall be
adjusted in accordance with Section 7(d)(ii). 

     

              d. Anti-Dilution. 

     

                   (i) If, at any time during the one-year period commencing on the date of
issuance of this Warrant, (A) the Company shall make a New Issuance for no
consideration or for a consideration per share less than the Warrant Price in
effect immediately prior to such New Issuance (a “Dilutive Issuance”)
or (B) the total consideration paid (including exercise price of any option,
right or warrant to subscribe for any class of shares of the Company or the
conversion price of any security convertible into or exchangeable for any class
of shares of the Company) (other than an option, right or warrant that is an
Excluded Security) is when issued or is later adjusted downward to a price that
is less than the exercise price in effect immediately prior to such downward
adjustment (such lower consideration price or adjusted exercise price or
conversion price, the “New
Issuance Price”), then immediately after such Dilutive Issuance or
downward adjustment of such exercise price or conversion price, the Warrant
Price then in effect shall be reduced to an amount equal to the New Issuance
Price. For purposes of this Warrant, if a part or all of the consideration
received by the Company in connection with a New Issuance consists of property
other than cash, such consideration shall be deemed to have a fair market value
as defined in Section 2(a) above.

     

    7 

     

    

    
    

                   (ii) If, at any time after the one-year period commencing on the date of
issuance of this Warrant, the Company makes a Dilutive Issuance, then, upon such
issuance, the Warrant Price shall be reduced to equal the amount computed using
the following formula: 

     

    
      	
            	A * [(C + D)/B]
	                        
          	
            
	                           
      where:
	 
	
            	A	=  	the Warrant Price in effect immediately prior to the Dilutive
      Issuance;
	
            	B	=	the number of shares of Common Stock outstanding immediately after
      the New Issuance (calculated on a Fully-Diluted Basis);
	
            	C	=	the number of shares of Common Stock outstanding immediately prior
      to the New Issuance (calculated on a Fully-Diluted Basis);
and
	
            	D  	=	the number of shares of Common Stock that would be issuable for the
      total consideration to be received for the New Issuance if the purchaser
      paid the Warrant Price in effect immediately prior to the New
      Issuance.

    

                   (iii) Upon each adjustment in the Warrant Price pursuant to this Section 7, the
number of Warrant Shares purchasable hereunder shall be adjusted, to the nearest
whole share, to the product obtained by multiplying the number of Warrant Shares
purchasable immediately prior to such adjustment by a fraction, (i) the
numerator of which shall be the Warrant Price immediately prior to such
adjustment, and (ii) the denominator of which shall be the Warrant Price
immediately thereafter. 

     

              e. Certain Shares Excluded. The number of shares of Common Stock
outstanding at any given time for purposes of the adjustments set forth in this
Section 7 shall exclude any shares then directly or indirectly held in the
treasury of the Company. 

     

              f. No Impairment. The Company will not, in any way whatsoever,
including by amendment of the Certificate of Incorporation, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder, or impair the economic interest of the Holder, but will at
all times in good faith assist in the carrying out of all of the provisions
hereof and in the taking of all such actions and making of all such adjustments
as may be necessary or appropriate in order to protect the rights and economic
interests of the Holder against impairment. 

     

    8 

     

    

    
    

         8. Notice To Holders. 

     

              a. Notice of Record Date. In case: 

     

                   (i) the Company shall take a record of the holders of its Common Stock (or
other stock or securities at the time receivable upon the exercise of this
Warrant) for the purpose of entitling them to receive any dividend (other than a
cash dividend payable out of earned surplus of the Company) or other
distribution, or any right to subscribe for or purchase any shares of stock of
any class or any other securities; 

     

                   (ii) of any capital reorganization of the Company, any reclassification of the
capital stock of the Company, any consolidation with or merger of the Company
into another corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation; or 

     

                   (iii) of any voluntary dissolution, liquidation or winding-up of the Company;

     

    then, and in each such
case, the Company will mail or cause to be mailed to the Holder hereof a notice
specifying, as the case may be, (A) the date on which a record is to be taken
for the purpose of such dividend, distribution or right, and stating the amount
and character of such dividend, distribution or right, or (B) the date on which
such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such stock or
securities at the time receivable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance, dissolution
or winding-up. Such notice shall be mailed at least 15 days prior to the record
date therein specified; provided, however, failure to provide any such notice
shall not affect the validity of such transaction. 

     

              b. Notice of Adjustment. Whenever any adjustment shall be made
pursuant to Section 7 hereof, the Company shall promptly notify the Holder of
this Warrant of the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the Warrant
Price and number of Warrant Shares purchasable upon exercise of this Warrant
after giving effect to such adjustment. 

     

              c. Warrant Register. The Company shall maintain a registry
showing the name and address of the registered holder of this Warrant. The
Holder may change such address by giving written notice of the change to the
Company. 

     

         9. Registration Rights. The Warrant Shares shall be deemed to be
Registerable Shares under that certain Registration Rights Agreement, dated as
of June 29, 2010, as such may be amended from time to time.

     

         10. Loss, Theft, Destruction or
Mutilation. Upon receipt
by the Company of evidence reasonably satisfactory to it of the ownership and
the loss, theft, destruction or mutilation of this Warrant and, in the case of
loss, theft or destruction, of indemnity reasonably satisfactory to the Company
and, in the case of mutilation, upon surrender and cancellation thereof, the
Company will execute and deliver a new Warrant of like tenor dated the date
hereof.

     

    9 

     

    

    
    

         11. Warrant Holder not a
Stockholder. The Holder of
this Warrant, in its capacity as a warrant holder, shall not be entitled by
reason of this Warrant to any rights whatsoever as a stockholder of the Company.

     

         12. Information Rights. During the term of this Warrant and to the
extent it remains the Holder of this Warrant, Hercules Technology II, L.P. shall
be entitled to the information rights contained in Section 8.1 of that certain
Loan and Security Agreement dated as of June 29, 2010 by and among the Company,
as Borrower, certain of its subsidiaries, as Guarantors, and Hercules Technology
II, L.P. as lender (the “Loan Agreement”),
and Section 8.1 of the Loan Agreement is hereby incorporated
into this Warrant by reference as though fully set forth herein, provided that
(A) the Company shall not be required to deliver a Compliance Certificate (as
defined in the Loan Agreement) once all Indebtedness (as defined in the Loan
Agreement) owed by the Company to Hercules Technology II, L.P. has been repaid,
and (B) for as long as the Holder is the lender under the Loan Agreement, the
Company shall not be required to make more than one delivery of each item of
information pursuant to Section 8.1 of the Loan
Agreement. 

     

         13. Notices. Any notice required or contemplated by this
Warrant shall be deemed to have been duly given if transmitted by registered or
certified mail, return receipt requested, or nationally recognized overnight
delivery service, to the Company at its principal executive offices 1420 Rocky
Ridge Drive, Suite 380, Roseville, California 95661, Attention: Chief Executive
Officer, or to the Holder at the name and address set forth in the Warrant
Register maintained by the Company. 

     

         14. Choice of Law. THIS WARRANT IS ISSUED UNDER AND SHALL FOR
ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF
LAW. 

     

         15. Jurisdiction and Venue. The Company and the Holder hereby agree that
any dispute which may arise between them arising out of or in connection with
this Warrant shall be adjudicated before a court located in New Castle County,
Delaware and they hereby submit to the exclusive jurisdiction of the federal and
state courts of the State of Delaware located in New Castle County with respect
to any action or legal proceeding commenced by any party, and irrevocably waive
any objection they now or hereafter may have respecting the venue of any such
action or proceeding brought in such a court or respecting the fact that such
court is an inconvenient forum, relating to or arising out of this Warrant or
any acts or omissions relating to the sale of the securities hereunder, and
consent to the service of process in the manner set forth in Section 13 of this
Warrant. 

     

    [Signature page
follows.] 

     

    10 

     

    

    
    

    IN WITNESS WHEREOF, the
undersigned has duly executed this Warrant as of this ____ day of June, 2010.

     

    
      	UNIFY CORPORATION
	 
	 
	By:	 
	 	Name:
	 	Title:

    

     

     

     

     

     

     

    Signature Page to
Warrant to Purchase Common Stock 

     

    

    
    

    Schedules and Exhibits
Omittedexhibit.htm

    THE INDEBTEDNESS
EVIDENCED BY THIS NOTE IS SUBORDINATE TO THE OBLIGATION OF THE COMPANY TO PAY
THE SENIOR DEBT (AS DEFINED IN SECTION 13 HEREIN BELOW) PURSUANT TO, AND TO THE
EXTENT PROVIDED IN, SECTION 13 BELOW. 

     

    This Note and the Buyer Common Stock issuable
upon conversion hereof (until such time, if any, as such Buyer Common Stock is
registered with the Securities and Exchange Commission pursuant to an effective
registration statement) have not been registered under the Securities Act of
1933, as amended (the “Act”), or any state securities laws, and may not be sold, offered for sale
of otherwise transferred unless registered or qualified under the Act and
applicable state securities laws or unless the Company receives an opinion, in
form and from counsel reasonably acceptable to the Company, that registration,
qualification or other such actions are not required under any such laws.

     

    SUBORDINATED INDEMNITY NOTE 

     

    
      	$1,200,000	
            	Maturity Date:
	 	
            	
            
	
              Issue Date:
      June [___], 2010

            	
            	September [__],
  2015

    

     

         FOR VALUE RECEIVED, Unify Corporation, a
Delaware corporation (the “Company”) hereby promises to pay to the order of
_______________ or its successors, assigns and legal representatives (the
“Holder”), at ___________________________, or at such
other location as the Holder may designate from time to time, the aggregate
principal sum of $1,200,000 (One Million Two Hundred Thousand Dollars), in
lawful money of the United States of America, together with interest thereon at
an annual interest rate of (x) three percent (3%) from the Effective Time
through the eighteen (18) month anniversary date of the Effective Time and (y)
thereafter, eight percent (8%); provided that upon the occurrence of and during the
continuance of an Event of Default the annual interest rate shall increase to
thirteen percent (13%). 

     

         1. Company Notes. This Subordinated Indemnity Note (the
“Note”) is one of a series of Notes of like tenor
in the aggregate principal amount of $1,200,000 issued by the Company pursuant
to the terms of that certain Agreement and Plan of Merger (the “Merger Agreement”), dated June ___, 2010 (the “Issue Date”), by and among the Company, Unify
Acquisition Corp., a wholly owned subsidiary of the Company and Strategic Office
Solutions, Inc., a California corporation. Capitalized terms used herein shall
have the respective meanings ascribed thereto in the Merger Agreement unless
otherwise defined herein. 

     

    

    
    

         2. Calculation of Interest. Interest hereunder shall be calculated on
the basis of a 365-day year for the actual number of days elapsed. Interest
shall be calculated on a simple interest basis and shall accrue
daily.

     

         3. Payments. Interest shall accrue but not be paid until
Section 13 terminates in accordance with Section 13(n). Accrued but unpaid
interest shall be paid on the first Business Day of the fiscal quarter of the
Company commencing after the termination of Section 13 and shall thereafter be
paid quarterly, in arrears. Subject to Section 13, the principal amount, and any
accrued but unpaid interest, shall be due and payable on the earlier of (x)
September __, 2015 and (y) the date ninety (90) days after the Senior Debt has
been fully and finally paid and all lending and other credit commitments under
the Loan Agreement and the other Loan Documents have terminated (the “Maturity
Date”). 

     

         4. Prepayment. Any prepayments hereunder shall be applied
first, to the payment of any expenses then owed to the Holder, second, to
accrued interest on this Note and third, to the payment of the principal amount
outstanding under this Note. The Company shall have no right to make any
prepayment of all or any portion of this Note unless the Company makes a
simultaneous prepayment of the other Notes pari passu. The Note may be prepaid at any time without
penalty, provided that the Company will give the Holder not less than fifteen
(15) days advance written notice of prepayment.

     

         5. Conversion.

     

              (a)
Optional Conversion. Subject to the provisions hereof, at any
time following the twenty-first (21st) day after the Company has sent to its
stockholders an information statement under Regulation 14C of the Securities
Exchange Act of 1934 with respect to the action by written consent of holders of
a majority of the outstanding Buyer Common Stock to authorize the issuance of
Buyer Common Stock issuable upon conversion of this Note, and so long as (i) the
Buyer Common Stock is authorized for listing or quotation on a national
securities exchange, Nasdaq or the Over-the-Counter Bulletin Board or the “pink
sheets,” and (ii) all or a portion of the principal amount of this Note remains
outstanding, either the Holder or the Company may at its election convert this
Note into the number of fully paid and non-assessable shares (the “Conversion Shares”) of Buyer Common Stock equal to the
aggregate outstanding principal amount due under this Note (plus accrued
interest) divided by the Conversion Price (as defined below), by notice of
conversion and surrender (or, in the case of a Company-elected conversion,
request for surrender) of this Note at the principal office of the Company, or
such other office or agency of the Company as it may reasonably designate by
written notice to the Holder, during normal business hours on any Business Day.
The “Conversion Price” shall, subject to adjustment as provided in
Section 6 below, mean (x) $3.50 (the “Initial Conversion Price”) if either the Company or the Holder elects
to convert this Note prior to the first anniversary of the date of issuance and
(y) if either the Company or the Holder elects to convert this Note after the
first anniversary of the date of issuance, the lesser of (A) the Initial
Conversion Price (as it may be adjusted in accordance with Section 6) and (B)
the volume weighted average trading price per share of Buyer Common Stock for
the twenty (20) trading days ending on the second trading date prior to the date
of the notice of conversion. 

     

    -2- 

     

    

    
    

              (b)
Stock Certificates. On the date on which the Holder shall have
satisfied in full the Holder’s obligations set forth herein regarding a
conversion of this Note, the Holder (or such other person or persons as directed
by the Holder, subject to compliance with applicable securities laws) shall be
treated for all purposes as the holder of record of such Conversion Shares as of
the close of business on such date. In the event of such conversion of this
Note, certificates for the whole number of shares of Buyer Common Stock
constituting the Conversion Shares shall be delivered to the Holder (or such
other person or persons as directed by the Holder, subject to compliance with
applicable securities laws) as promptly as is reasonably practicable (but not
later than five (5) days) after such conversion at the Company’s expense.

     

              (c)
Reservation of Shares; Stock Fully Paid;
Listing. The Company shall
keep reserved a sufficient number of shares of the authorized and unissued
shares of Buyer Common Stock to provide for the conversion of this Note in
compliance with its terms. All Conversion Shares issued upon conversion of this
Note shall be, at the time of delivery of the certificates for such Conversion
Shares upon conversion of this Note in accordance with the terms hereof, duly
authorized, validly issued, fully paid and non-assessable shares of Buyer Common
Stock. 

     

              (d)
Restricted Securities. The Conversion Shares hereunder may not, at
the time of issuance, have been registered under any federal or state securities
laws, and may constitute “restricted securities” within the meaning of federal
and state securities laws. By its receipt of Conversion Shares, if the shares
are not then the subject of an effective registration statement under the
Securities Act, the Holder will be deemed to acknowledge and confirm that it is
receiving such shares for its own account for investment, and not with a view to
the resale or distribution thereof in violation of any federal or state
securities laws. 

     

         6. Adjustments.

     

         6.1 Adjustment Upon Extraordinary Common Stock
Event. Upon the happening
of an Extraordinary Common Stock Event (as hereinafter defined) prior to the
issuance of the Conversion Shares, the Initial Conversion Price shall,
simultaneously with the happening of such Extraordinary Common Stock Event, be
adjusted by multiplying such Initial Conversion Price by a fraction, the
numerator of which shall be the number of shares of Buyer Common Stock
outstanding immediately prior to such Extraordinary Common Stock Event and the
denominator of which shall be the number of shares of Buyer Common Stock
outstanding immediately after such Extraordinary Common Stock Event, and the
product so obtained shall thereafter be the Initial Conversion Price which, as
so adjusted, shall be readjusted in the same manner upon the happening of any
successive Extraordinary Common Stock Event or Events.

     

    -3- 

     

    

    
    

         An “Extraordinary Common Stock
Event” shall mean (i) the
issue of additional shares of Buyer Common Stock as a dividend or other
distribution on outstanding shares of Buyer Common Stock, (ii) a subdivision of
outstanding shares of Buyer Common Stock into a greater number of shares of
Buyer Common Stock, or (iii) a combination or reverse stock split of outstanding
shares of Buyer Common Stock into a smaller number of shares of the Buyer Common
Stock. 

     

         6.2 Adjustment Upon Certain
Dividends. In the event
the Company shall make or issue, or shall fix a record date for the
determination of holders of Buyer Common Stock entitled to receive, a dividend
or other distribution with respect to the Buyer Common Stock payable in (i)
securities of the Company other than shares of Buyer Common Stock, or (ii) other
assets (excluding cash dividends or distributions), then the Company shall, not
less than thirty (30) days before the record date for such event, give the
Holder notice of such event. 

     

         6.3 Adjustment Upon Capital Reorganization or
Reclassification. If the
Buyer Common Stock shall be changed into the same or different number of shares
of any other class or classes of capital stock, whether by capital
reorganization, recapitalization, reclassification or otherwise (other than an
Extraordinary Common Stock Event provided for in Section 6.1, a dividend or
other distribution provided for in Section 6.2, or a merger or other transaction
provided for in Section 6.4), then and in each such event, the Holder shall have
the right thereafter to receive, upon conversion of this Note, in lieu of the
number of shares of Buyer Common Stock which the Holder would otherwise have
been entitled to receive, the kind and amount of shares of capital stock and
other securities and property receivable upon such reorganization,
recapitalization, reclassification or other change by the holders of the number
of shares of Buyer Common Stock for which this Note could have been converted
immediately prior to such reorganization, recapitalization, reclassification or
change, all subject to further adjustment as provided herein. 

     

         6.4 Adjustment for Merger or Reorganization,
etc.

     

              (a) In case of any consolidation or merger of
the Company with or into another Company or the sale of all or substantially all
of the assets of the Company to another Company, then this Note shall thereafter
be convertible for the kind and amount of shares of stock or other securities or
property to which a holder of the number of shares of Buyer Common Stock of the
Company deliverable upon conversion of this Note would have been entitled upon
such consolidation, merger or sale; and, in such case, appropriate adjustment
(as determined in good faith by the Board of Directors) shall be made in the
application of the provisions in this Section 6 with respect to the rights and
interest thereafter of the Holder of this Note, to the end that the provisions
set forth in this Section 6 shall thereafter be applicable, as nearly as
reasonably possible, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of this Note.

     

              (b)
The provision for such rights with respect to the Subordinated Purchase Notes
shall be a condition precedent to the consummation by the Company of any such
transaction.

     

    -4- 

     

    

    
    

         6.5 Certificate as to Adjustments; Notice by
Company. In each case of
an adjustment or readjustment of the Initial Conversion Price, the Company at
its expense will, within five (5) days of such adjustment or readjustment,
furnish the Holder with a certificate prepared by the Treasurer or Chief
Financial Officer of the Company, showing such adjustment or readjustment, and
stating in detail the facts upon which such adjustment or readjustment is based.

     

         6.6 Further Adjustments. In the event that, as a result of an
adjustment made pursuant to this Section 6, the Holder shall become entitled to
receive any shares of capital stock of the Company other than shares of Buyer
Common Stock, the number of such other shares so receivable upon conversion of
this Note shall be subject thereafter to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Conversion Shares contained in this Note. 

     

         7. Transfer Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Conversion Shares issuable upon
the conversion of this Note; provided, however, that the Company shall not be
required to pay any tax or taxes which may be payable in respect of any transfer
involved in the issuance or delivery of any certificates for Conversion Shares
in a name other than that of the registered holder of this Note in respect of
which such shares are issued, and in such case, the Company shall not be
required to issue or deliver any certificate for Conversion Shares until the
person requesting the same has paid to the Company the amount of such tax or has
established to the Company’s reasonable satisfaction that such tax has been
paid. 

     

         8. Events of Default. Each of the following shall constitute an
“Event of Default” hereunder: 

     

              (a)
The Company shall fail to pay the principal amount of this Note and accrued
interest thereon when due and payable (whether at the Maturity Date, upon
acceleration or otherwise); 

     

              (b)
The Company shall sell, transfer, lease or otherwise dispose of all or any
substantial portion of its assets in one transaction or a series of related
transactions, participate in any share exchange, consummate any
recapitalization, reclassification, reorganization or other business combination
transaction or adopt a plan of liquidation or dissolution or agree to do any of
the foregoing;

     

              (c) An
event of default has occurred and is continuing for sixty (60) days or more
without being cured with respect to any Senior Debt or the Senior Debt has been
accelerated and is due and owing to the Senior Creditor; or 

     

    -5- 

     

    

    
    

              (d)
The Company shall have applied for or consented to the appointment of a
custodian, receiver, trustee or liquidator, or other court-appointed fiduciary
of all or a substantial part of its properties; or a custodian, receiver,
trustee or liquidator or other court appointed fiduciary shall have been
appointed with or without the consent of the Company; or the Company is
generally not paying its debts as they become due by means of available assets,
or has made a general assignment for the benefit of creditors; or the Company
files a voluntary petition in bankruptcy, or a petition or an answer seeking
reorganization or an arrangement with creditors or seeking to take advantage of
any insolvency law, or an answer admitting the material allegations of a
petition in any bankruptcy, reorganization or insolvency proceeding or has taken
action for the purpose of effecting any of the foregoing; or if, within thirty
(30) days after the commencement of any proceeding against the Company seeking
any reorganization, rehabilitation, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under the Federal bankruptcy code or
similar order under future similar legislation, the appointment of any trustee,
receiver, custodian, liquidator, or other court-appointed fiduciary of the
Company or of all or any substantial part of its properties, such order or
appointment shall not have been vacated or stayed on appeal or otherwise or if,
within thirty (30) days after the expiration of any such stay, such order or
appointment shall not have been vacated (collectively, “Insolvency Events”).

     

              Upon
the occurrence of any Event of Default, the Holder may, at its option, declare
all amounts due hereunder to be due and payable immediately and, upon any such
declaration, the same shall, subject to Section 13 herein below, become and be
immediately due and payable. If an Insolvency Event occurs with respect to the
Company, then all amounts due hereunder shall become immediately due and payable
without any declaration or other act on the part of the Holder. If an Event of
Default occurs, the Company shall pay to the Holder the reasonable attorneys’
fees and disbursements and all other reasonable out-of-pocket costs incurred by
the Holder in order to collect amounts due and owing under this Note or
otherwise to enforce the Holder’s rights and remedies hereunder. 

     

         9. Right of Off-Set. Subject to the limitations set forth in
Article 8 of the Merger Agreement, the Company may set off Damage claims against
the Note. Any Damage claims will be set off pro rata against all other Notes of
like tenor. 

     

         10. Waiver of Presentment, Demand and
Dishonor. The Company
hereby waives presentment for payment, protest, demand, notice of protest,
notice of non-payment and diligence with respect to this Note, and waives and
renounces all rights to the benefit of any statute of limitations or any
moratorium, appraisement, exemption or homestead now provided or that hereafter
may be provided by any federal or applicable state statute, including but not
limited to exemptions provided by or allowed under the Federal Bankruptcy Code,
both as to itself and as to all of its property, whether real or personal,
against the enforcement and collection of the obligations evidenced by this Note
and any and all extensions, renewals and modifications hereof. 

     

    -6- 

     

    

    
    

         No failure on the part of the Holder
hereof to exercise any right or remedy hereunder with respect to the Company,
whether before or after the happening of an Event of Default, shall constitute a
waiver of any future Event of Default or of any other Event of Default. No
failure to accelerate the debt of the Company evidenced hereby by reason of an
Event of Default or indulgence granted from time to time shall be construed to
be a waiver of the right to insist upon prompt payment thereafter; or shall be
deemed to be a novation of this Note or a reinstatement of such debt evidenced
hereby or a waiver of such right of acceleration or any other right, or be
construed so as to preclude the exercise of any right the Holder may have,
whether by the laws of the state governing this Note, by agreement or otherwise;
and the Company hereby expressly waives the benefit of any statute or rule of
law or equity that would produce a result contrary to or in conflict with the
foregoing. 

     

         11. Amendment; Waiver. The terms of this Note may not be amended
unless all Subordinated Purchase Notes are identically amended. The Holder may
waive any of its rights under this Agreement, and no such waiver or consent on
any one instance shall be construed to be a continuing waiver or a waiver in any
other instance unless it expressly so provides.

     

         12. Transfers. The Holder shall have the right to transfer
this Note or any interest herein in any transaction meeting the requirements of
applicable securities laws. 

     

         13. Subordination. Notwithstanding anything contained in this
Note to the contrary, until the Payment In Full of the Senior Debt (as each term
is defined herein below), the terms of this Note shall at all times be subject
to the provisions set forth in this Section 13. 

     

         (a) Definitions. The following terms shall have the following
meanings in this Section 13: 

     

         (i) Loan Agreement. The Loan and Security Agreement, dated as of
June [__], 2010, by and among, Unify Corporation, as the borrower thereunder,
the guarantors party thereto from time to time, and the Senior Creditor, as
lender, as such agreement is amended, restated or otherwise modified and in
effect from time to time. 

     

         (ii) Loan Documents. The “Loan Documents” under and as defined in
the Loan Agreement. 

     

         (iii) Insolvency Proceeding. Has the meaning ascribed thereto in clause
(g) hereof. 

     

         (iv) Payment In Full. (A) The indefeasible payment in full in cash
of the principal of and interest (including interest accruing on or after the
commencement of any Insolvency Proceeding, whether or not such interest would be
allowed in such Insolvency Proceeding) and premium, if any, constituting Senior
Debt, (B) Indefeasible payment in full in cash of all other Senior Debt that is
outstanding and unpaid or otherwise accrued and owing at or prior to the time
the Senior Debt is paid, and (C) termination or expiration of all lending and
other credit commitments to lend under the Loan Agreement and the other Loan
Documents. 

     

    -7- 

     

    

    
    

         (v) Senior Creditor. Hercules Technology II, L.P.

     

         (vi) Senior Debt. All principal, interest, fees, costs,
enforcement expenses (including reasonable legal fees and disbursements),
collateral protection expenses and other reimbursement or indemnity obligations
created or evidenced by the Loan Agreement or any of the other Loan Documents or
any prior, concurrent, or subsequent notes, instruments or agreements of
indebtedness, liabilities or obligations of any type or form whatsoever relating
to the Loan Agreement or any of the other Loan Documents in favor of the Senior
Creditor. Senior Debt shall expressly include any and all interest accruing or
out of pocket costs or expenses (including reasonable legal fees and
disbursements) incurred after the date of any filing by or against the Company
of any petition under the federal Bankruptcy Code or in connection with any
other Insolvency Proceeding regardless of whether the Senior Creditor’s claim
therefor is allowed or allowable in the case or proceeding relating
thereto. 

     

         (vii) Subordinated Debt. All principal, interest, fees, costs,
enforcement expenses (including reasonable legal fees and disbursements),
reimbursement and indemnity obligations created or evidenced by this Note or any
prior, concurrent or subsequent notes, instruments or agreements of
indebtedness, liabilities or obligations of any type or form whatsoever relating
to this Note in favor of the Holder and which is unsecured. 

     

         (viii) Subordinated Documents. Collectively, the Note and any and all other
documents or instruments evidencing the Subordinated Debt, whether now existing
or hereafter created. 

     

         (b) The Subordinated Debt and any and all Subordinated Documents shall be and
hereby are subordinated and the payment thereof is deferred until the Payment In
Full of the Senior Debt, whether now or hereafter incurred or owed by the
Company. 

     

         (c) The Holder hereby acknowledges and agrees that the Subordinated Debt is
unsecured and until the Payment In Full of the Senior Debt, the Company shall
not, and shall not permit any of its subsidiaries to, grant to the Holder and
the Holder shall not take any lien on or security interest in any of the
Company’s or any of its subsidiaries’ property, now owned or hereafter acquired
or created to secure the Company’s obligations under the Subordinated Debt. In
addition, the Holder hereby agrees, upon request of the Senior Creditor at any
time and from time to time, to execute such other documents or instruments as
may be reasonably requested by the Senior Creditor further to evidence of public
record or otherwise the priority of the Senior Debt as contemplated hereby.

     

    -8- 

     

    

    
    

         (d) Until the Payment In Full of the Senior Debt, the Holder shall not take
or permit any action prejudicial to or inconsistent with the Senior Creditor’s
priority position over the Holder created by the provisions of this Section 13.
Without limiting the foregoing, until the Payment In Full of the Senior Debt,
the Holder will not assert, collect or enforce the Subordinated Debt or any part
thereof or take any action to foreclose or realize upon the Subordinated Debt or
any part thereof or enforce any of the Subordinated Documents except to the
extent (but only to such extent) that the commencement of a legal action may be
required to toll the running of any applicable statute of limitation. Until the
Payment In Full of the Senior Debt, the Holder shall not have any right of
subrogation, reimbursement, restitution, contribution or indemnity whatsoever
relating to the Subordinated Debt from any assets of the Company or any
guarantor of or provider of collateral security for the Senior Debt. The Holder
further waives any and all rights with respect to marshalling. 

     

         (e) Until the Payment In Full of the Senior Debt, the Holder will hold in
trust and immediately pay over to the Senior Creditor, in the same form of
payment received, with appropriate endorsements, for application to the Senior
Debt any cash amount that the Company pays to the Holder with respect to the
Subordinated Debt, or as collateral for the Senior Debt any other assets of the
Company that the Holder may receive with respect to the Subordinated Debt.

     

         (f) If the Holder, in contravention of the terms of this Section 13, shall
commence, prosecute or participate in any suit, action or proceeding against the
Company, then the Company may interpose as a defense or plea the provisions of
this Section 13, and the Senior Creditor may intervene and interpose such
defense or plea in its name or in the name of the Company. If the Holder, in
contravention of the terms of the provisions of this Section 13, shall attempt
to collect any of the Subordinated Debt or enforce any of the Subordinated
Documents, then the Senior Creditor or the Company may, by virtue of the
provisions of this Section 13, restrain the enforcement thereof in the name of
the Senior Creditor or in the name of the Company. If the Holder, in
contravention of the terms of this Section 13, obtains any cash or other assets
of the Company in respect of the Subordinated Debt as a result of any
administrative, legal or equitable actions, or otherwise, the Holder agrees
forthwith to pay, deliver and assign to the Senior Creditor, with appropriate
endorsements, any such cash for application to the Senior Debt and any such
other assets as collateral for the Senior Debt. 

     

         (g) Until the Payment In Full of the Senior Debt, the Holder will not, with
respect to any claim it may have in respect of its Subordinated Debt, commence
or join with any other creditor or creditors in commencing any Insolvency
Proceeding against the Company. At any meeting of creditors of the Company or in
the event of any case or proceeding, voluntary or involuntary, for the
distribution, division or application of all or part of the assets of the
Company or the proceeds thereof, whether such case or proceeding be for the
liquidation, dissolution or winding up of the Company or its business, a
receivership, insolvency or bankruptcy case or proceeding, an assignment for the
benefit of creditors or a proceeding by or against the Company for relief under
the federal Bankruptcy Code or any other bankruptcy, reorganization or
insolvency law or any other law relating to the relief of debtors, readjustment
of indebtedness, reorganization, arrangement, composition or extension or
marshalling of assets or otherwise (collectively, an “Insolvency
Proceeding”), the Senior Creditor is hereby irrevocably authorized at any
such meeting or in any such proceeding to receive or collect any cash or other
assets of the Company distributed, divided or applied by way of dividend or
payment, or any securities issued on account of any Subordinated Debt, and apply
such cash to or to hold such other assets or securities as collateral for the
Senior Debt, and to apply to the Senior Debt any cash proceeds of any
realization upon such other assets or securities that the Senior Creditor in its
discretion elects to effect, until the Payment In Full of all of the Senior
Debt, rendering to the Holder any surplus to which the Holder is then
entitled. 

     

    -9- 

     

    

    
    

         (h) Notwithstanding the foregoing provisions of Section 13(g) herein above,
the Holder shall be entitled to receive and retain any securities of the Company
or any other corporation or other entity provided for by a plan of
reorganization or readjustment (i) the payment of which securities is
subordinate, at least to the extent provided in this Section 13 with respect to
Subordinated Debt, to the payment of all Senior Debt under any such plan of
reorganization or readjustment and (ii) all other terms of which are reasonably
acceptable to the Senior Creditor. 

     

         (i) At any such meeting of creditors or in the event of any such Insolvency
Proceeding, the Holder shall retain the right to vote and otherwise act with
respect to the Subordinated Debt (including, without limitation, the right to
vote to accept or reject any plan of partial or complete liquidation,
reorganization, arrangement, composition or extension), provided that the Holder shall not vote with respect
to any such plan or take any other action in any way so as to contest (i) the
validity of any Senior Debt or any collateral therefor or guaranties thereof,
(ii) the relative rights and duties of any holders of any Senior Debt
established in any instruments or agreements creating or evidencing any of the
Senior Debt with respect to any of such collateral or guaranties, or (iii) the
Holder's obligations and agreements set forth in this Section 13. 

     

         (j) The Holder agrees, with respect to the Senior Debt and any and all
collateral therefor or guaranties thereof, that the Company and the Senior
Creditor may agree to increase the amount of the Senior Debt or otherwise modify
the terms of any of the Senior Debt, and the Senior Creditor may grant
extensions of the time of payment or performance to and make compromises,
including releases of collateral or guaranties, and settlements with the Company
and all other persons, in each case without the consent of the Holder or the
Company and without affecting the agreements of the Holder or the Company
contained in this Section 13; provided, however, that nothing contained in this Section
13(j) shall constitute a waiver of the right of the Company itself to agree or
consent to a settlement or compromise of a claim which the Senior Creditor may
have against the Company. 

     

         (k) The Holder will not, at any time while the provisions of this Section 13
are in effect, modify any of the terms of any of the Subordinated Debt or any of
the Subordinated Documents nor will the Holder sell, transfer, pledge, assign,
hypothecate or otherwise dispose of any or all of the Subordinated Debt to any
person. 

     

    -10- 

     

    

    
    

         (l) Nothing contained in this Section 13 shall impair, as between the Company
and the Holder, the obligation of the Company to pay to the Holder all amounts
payable in respect of the Subordinated Debt as and when the same shall become
due and payable in accordance with the terms thereof, or prevent the Holder
(except as expressly otherwise provided in Section 13(d) or Section 13(g)) from
exercising all rights, powers and remedies otherwise permitted by the
Subordinated Documents and by applicable law upon a default in the payment of
the Subordinated Debt or under any Subordinated Document, all, however, subject
to the rights of the Senior Creditor as set forth in this Section 13.

     

         (m) The provisions of this Section 13 shall continue in full force and
effect, and the obligations and agreements of the Holder and the Company
hereunder shall continue to be fully operative, until the Payment In Full of all
of the Senior Debt and such full payment and satisfaction shall be final and not
avoidable. To the extent that the Company or any guarantor of or provider of
collateral for the Senior Debt makes any payment on the Senior Debt that is
subsequently invalidated, declared to be fraudulent or preferential or set aside
or is required to be repaid to a trustee, receiver or any other party under any
bankruptcy, insolvency or reorganization act, state or federal law, common law
or equitable cause (such payment being hereinafter referred to as a
“Voided Payment”), then to the extent of such Voided Payment,
that portion of the Senior Debt that had been previously satisfied by such
Voided Payment shall be revived and continue in full force and effect as if such
Voided Payment had never been made. In the event that a Voided Payment is
recovered from the Senior Creditor, an Event of Default (under and as defined in
the Loan Agreement) shall be deemed to have existed and to be continuing under
the Loan Agreement from the date of the Senior Creditor’s initial receipt of
such Voided Payment until the full amount of such Voided Payment is restored to
the Senior Creditor. During any continuance of any such Event of Default, the
provisions of this Section 13 shall be in full force and effect with respect to
the Subordinated Debt. To the extent that the Holder has received any payments
with respect to the Subordinated Debt subsequent to the date of the Senior
Creditor’s initial receipt of such Voided Payment and such payments have not
been invalidated, declared to be fraudulent or preferential or set aside or are
required to be repaid to a trustee, receiver, or any other party under any
bankruptcy act, state or federal law, common law or equitable cause, the Holder
shall be obligated and hereby agrees that any such payment so made or received
shall be deemed to have been received in trust for the benefit of the Senior
Creditor, and the Holder hereby agrees to pay to the Senior Creditor, upon
demand, the full amount so received by the Holder during such period of time to
the extent necessary fully to restore to the Senior Creditor the amount of such
Voided Payment. Upon the Payment In Full of all of the Senior Debt, which
payment shall be final and not avoidable, the provisions of this Section 13 will
automatically terminate without any additional action by any party
hereto.

     

         14. Governing Law; Dispute
Resolution. This Note
shall be binding upon the Company and its successors, assigns and legal
representatives. The validity, construction and interpretation of this Note will
be governed, and construed in accordance with, the laws of the State of
California. Any Dispute arising out of this Note by and between the Holder and
the Company, shall be resolved in accordance with Section 9.6 (Arbitration) of
the Merger Agreement. 

     

    -11- 

     

    

    
    

    [Signature Page Follows] 

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    -12- 

     

    

    
    

    
      	HOLDER	      	COMPANY
	 	
            	
            
	ACKNOWLEDGED AND	
            	UNIFY CORPORATION
	AGREED:	
            	
            
	 	
            	
            
	 	
            	
            
	By:  	 	 	
            	By:  	 
	Name:	 	
            	Name: Todd E. Wille
	Title:	 	 	Title: Chief Executive
  Officer
	 	
            	
            
	Dated: June ___, 2010	
            	
            

    

    [Signature Page to Subordinated Indemnity
Note]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00175-of-00352.parquet"}]]