Document:

Purchase Agreement by and between Tarantella, Inc. and certain investors

 Exhibit 4.2 
  
 PURCHASE AGREEMENT 
  
 THIS PURCHASE AGREEMENT (“Agreement”) is made as of the 29th day of September, 2003 by and among Tarantella, Inc., a California corporation (the “Company”), and the Investors set forth on the signature pages affixed hereto (each an
“Investor” and collectively the “Investors”). 
  
 Recitals 
  
 A. The Company and the Investors are
executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the provisions of Regulation D (“Regulation D”), as promulgated by the U.S. Securities and Exchange Commission (the
“SEC”) under the Securities Act of 1933, as amended; and 
  
 B. The Investors wish to purchase from the Company, and the Company wishes to sell and issue to the Investors, upon the terms and conditions stated in this Agreement, (i) an aggregate of 1,950,000 shares of the Company’s Common Stock,
no par value (the “Common Stock”), and (ii) warrants to purchase an aggregate of 1,950,000 shares of Common Stock of the Company in the form attached hereto as Exhibit A (the “Warrants”); and 
  
 C. Contemporaneous with the sale of the Common Stock and Warrants, the
parties hereto will execute and deliver a Registration Rights Agreement, in the form attached hereto as Exhibit B (the “Registration Rights Agreement”), pursuant to which the Company will agree to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, and applicable state securities laws. 
  
 In consideration of the mutual promises made herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows: 
  
 1.
Definitions. In addition to those terms defined above and elsewhere in this Agreement, for the purposes of this Agreement, the following terms shall have the meanings here set forth: 
  
 “Affiliate” means, with respect to any
Person, any other Person which directly or indirectly Controls, is controlled by, or is under common control with, such Person. 
  
 “Business Day” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general
transaction of business. 
  
 “Common
Stock” means the common stock, no par value, of the Company, and any securities into which the Common Stock may be reclassified. 
  
 “Company’s Knowledge” means the actual knowledge of the officers of the Company, after due inquiry. 
  
 “Confidential Information” means trade
secrets, confidential information and know-how (including but not limited to ideas, formulae, compositions, processes, procedures and techniques, research and development information, computer program code, performance specifications, support
documentation, drawings, specifications, designs, business and marketing plans, and customer and supplier lists and related information). 
  
 “Control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by contract or otherwise. 
  

 “Intellectual Property” means all of the following: (i) patents, patent
applications, patent disclosures and inventions (whether or not patentable and whether or not reduced to practice); (ii) trademarks, service marks, trade dress, trade names, corporate names, logos, slogans and Internet domain names, together with
all goodwill associated with each of the foregoing; (iii) copyrights and copyrightable works; (iv) registrations, applications and renewals for any of the foregoing; and (v) proprietary computer software (including but not limited to data, data
bases and documentation). 
  
 “Material
Adverse Effect” means a material adverse effect on (i) the assets, liabilities, results of operations, condition (financial or otherwise), business, or prospects of the Company and its Subsidiaries taken as a whole, or (ii) the ability of
the Company to perform its obligations under the Transaction Documents. 
  
 “Nasdaq” means The Nasdaq Stock Market, Inc., its successors and assigns. 
  
 “Person” means an individual, corporation, partnership, limited liability company, trust, business trust, association,
joint stock company, joint venture, sole proprietorship, unincorporated organization, governmental authority or any other form of entity not specifically listed herein. 
  
 “Purchase Price” means Two Million Two Hundred Fifty-Four Thousand Two Hundred Dollars
($2,254,200). 
  
 “SEC Filings”
has the meaning set forth in Section 4.6. 
  
 “Securities” means the Shares, the Warrants and the Warrant Shares. 
  
 “Shares” means the shares of Common Stock being purchased by the Investors hereunder. 
  
 “Subsidiary” has the meaning set forth in
Section 4.1. 
  
 “Transaction
Documents” means this Agreement, the Warrants and the Registration Rights Agreement. 
  
 “Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants. 
  
 “1933 Act” means the Securities Act of
1933, as amended, and the rules and regulations promulgated thereunder. 
  
 “1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 
  
 2. Purchase and Sale of the Shares and Warrants. Subject to the terms and conditions of this Agreement, on the
Closing Date, each of the Investors shall severally, and not jointly, purchase, and the Company shall sell and issue to the Investors, the Shares and Warrants in the respective amounts set forth opposite the Investors’ names on the signature
pages attached hereto in exchange for the Purchase Price as specified in Section 3 below. 
  
 3. Closing. Upon confirmation that the other conditions to closing specified herein have been satisfied, the Company shall deliver to Lowenstein Sandler PC, in trust, a certificate or certificates, registered
in such name or names as the Investors may designate, representing the Shares and Warrants, with instructions that such certificates are to be held for release to the Investors only upon payment of the Purchase Price to the Company. Upon receipt by
Lowenstein Sandler PC of the certificates, each Investor shall promptly cause a wire transfer in same day funds to be sent to the account of the Company as instructed in writing by the Company, in an amount representing such Investor’s pro rata
portion of the Purchase Price as set forth on the signature pages to this Agreement. On the date (the “Closing Date”) the Company receives such funds, the certificates evidencing the Shares and Warrants shall be released to the Investors
(the “Closing”). The purchase and sale of the Shares and Warrants shall take place at the offices of Lowenstein Sandler PC, 1330 Avenue of the Americas, 21st Floor, New York, New York, or at such other location and on such other date as
the Company and the Investors shall mutually agree. 
  

 4. Representations and Warranties of the Company. The Company hereby represents and warrants to
the Investors that, except as set forth in the schedules delivered herewith (collectively, the “Disclosure Schedules”), which disclosure shall provide an exception to or otherwise qualify the representations or warranties of the Company
specifically referred to in such disclosure and such other representation and warranties to the extent such disclosure shall reasonably appear to be applicable to such other representations or warranties: 
  
 4. 1 Organization, Good Standing and Qualification.
Each of the Company and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority to carry on its business as
now conducted and to own its properties. Each of the Company and its Subsidiaries is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing
of property makes such qualification or leasing necessary unless the failure to so qualify has not and could not reasonably be expected to have a Material Adverse Effect. The Company’s subsidiaries are reflected on Schedule 4.1 hereto
(the “Subsidiaries”). 
  
 4.2
Authorization. The Company has full power and authority and has taken all requisite action on the part of the Company, its officers, directors and shareholders necessary for (i) the authorization, execution and delivery of the Transaction
Documents, (ii) authorization of the performance of all obligations of the Company hereunder or thereunder, and (iii) the authorization, issuance (or reservation for issuance) and delivery of the Securities. The Transaction Documents constitute the
legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally. 
  
 4.3 Capitalization. Schedule 4.3 sets forth the authorized capital stock of the Company on the date hereof; (b) the number of shares of capital stock issued and outstanding; (c) the number of shares of
capital stock issuable pursuant to the Company’s stock plans; and (d) the number of shares of capital stock issuable and reserved for issuance pursuant to securities (other than the Shares and the Warrants) exercisable for, or convertible into
or exchangeable for any shares of capital stock of the Company. All of the issued and outstanding shares of the Company’s capital stock have been duly authorized and validly issued and are fully paid, nonassessable and free of pre-emptive
rights and were issued in compliance in all material respects with applicable law and any rights of third parties. All of the issued and outstanding shares of capital stock of each Subsidiary have been duly authorized and validly issued and are
fully paid, nonassessable and free of pre-emptive rights, were issued in compliance in all material respects with applicable law and any rights of third parties and are owned by the Company, beneficially and of record, subject to no lien,
encumbrance or other adverse claim. No Person is entitled to pre-emptive or similar statutory or contractual rights with respect to any securities of the Company. Except as described on Schedule 4.3, there are no outstanding warrants,
options, convertible securities or other rights, agreements or arrangements of any character under which the Company or any of its Subsidiaries is or may be obligated to issue any equity securities of any kind and except as contemplated by this
Agreement, neither the Company nor any of its Subsidiaries is currently in negotiations for the issuance of any equity securities of any kind. Except as described on Schedule 4.3 and except for the Registration Rights Agreement, there are no
voting agreements, buy-sell agreements, option or right of first purchase agreements or other agreements of any kind among the Company and any of the securityholders of the Company relating to the securities of the Company held by them. The Company
has not granted any Person the right to require the Company to register any securities of the Company under the 1933 Act, whether on a demand basis or in connection with the registration of securities of the Company for its own account or for the
account of any other Person. Except as described on Schedule 4.3, the issuance and sale of the Securities hereunder will not obligate the Company to issue shares of Common Stock or other securities to any other Person (other than the
Investors) and will not result in the adjustment of the exercise, conversion, exchange or reset price of any outstanding security. 
  
 The Company does not have outstanding shareholder purchase rights or any similar arrangement in effect giving any Person the right to
purchase any equity interest in the Company upon the occurrence of certain events. 
  

 4.4 Valid Issuance. The Shares have been duly and validly authorized and, when
issued and paid for pursuant to this Agreement, will be validly issued, fully paid and nonassessable, and shall be free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or
imposed by applicable securities laws. The Warrants have been duly and validly authorized. Upon the due exercise of the Warrants, the Warrant Shares will be validly issued, fully paid and non-assessable free and clear of all encumbrances and
restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws. The Company has reserved a sufficient number of shares of Common Stock for issuance upon the exercise of the Warrants,
free and clear of all encumbrances and restrictions, except for restrictions on transfer set forth in the Transaction Documents or imposed by applicable securities laws. 
  
 4.5 Consents. The execution, delivery and performance by the Company of the Transaction Documents and
the offer, issuance and sale of the Securities require no consent of, action by or in respect of, or filing with, any Person, governmental body, agency, or official other than filings that have been made pursuant to applicable state securities laws
and post-sale filings pursuant to applicable state and federal securities laws which the Company undertakes to file within the applicable time periods. The Company has taken all action necessary to exempt (i) the issuance and sale of the Securities,
(ii) the issuance of the Warrant Shares upon due exercise of the Warrants, and (iii) the other transactions contemplated by the Transaction Documents from the provisions of any shareholder rights plan or other “poison pill” arrangement,
anti-takeover, business combination or control share law or statute binding on the Company or to which the Company or any of its assets and properties may be subject or any provision of the Company’s Articles of Incorporation, By-laws or any
shareholder rights agreement that is or could become applicable to the Investors as a result of the transactions contemplated hereby, including without limitation, the issuance of the Securities and the ownership, disposition or voting of the
Securities by the Investors or the exercise of any right granted to the Investors pursuant to this Agreement or the other Transaction Documents. 
  
 4.6 Delivery of SEC Filings; Business. The Company has provided the Investors with copies of the Company’s most recent Annual
Report on Form 10-K for the fiscal year ended September 30, 2002 (the “10-K”), and all other reports filed by the Company pursuant to the 1934 Act since the filing of the 10-K and prior to the date hereof (collectively, the “SEC
Filings”). Except as described on Schedule 4.6, the SEC Filings are the only filings required of the Company pursuant to the 1934 Act for such period. The Company and its Subsidiaries are engaged only in the business described in the SEC
Filings and, except as described on Schedule 4.6, the SEC Filings contain a complete and accurate description in all material respects of the business of the Company and its Subsidiaries, taken as a whole. 
  
 4.7 Use of Proceeds. The proceeds of the sale of the
Shares and the Warrants hereunder shall be used by the Company for working capital and general corporate purposes. 
  
 4.8 No Material Adverse Change. Since September 30, 2002, except as identified and described in the SEC Filings or as described on
Schedule 4.8, there has not been: 
  
 (i)
any change in the consolidated assets, liabilities, financial condition or operating results of the Company from that reflected in the financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,
2003, except for changes in the ordinary course of business which have not and could not reasonably be expected to have a Material Adverse Effect, individually or in the aggregate; 
  
 (ii) any declaration or payment of any dividend, or any authorization or payment of any distribution, on any
of the capital stock of the Company, or any redemption or repurchase of any securities of the Company; 
  
 (iii) any material damage, destruction or loss, whether or not covered by insurance to any assets or properties of the Company or its
Subsidiaries; 
  
 (iv) any waiver, not in the
ordinary course of business, by the Company or any Subsidiary of a material right or of a material debt owed to it; 
  

 (v) any satisfaction or discharge of any lien, claim or encumbrance or payment of any
obligation by the Company or a Subsidiary, except in the ordinary course of business and which is not material to the assets, properties, financial condition, operating results or business of the Company and its Subsidiaries taken as a whole (as
such business is presently conducted and as it is proposed to be conducted); 
  
 (vi) any change or amendment to the Company’s Articles of Incorporation or by-laws, or material change to any material contract or arrangement by which the Company or any Subsidiary is bound or to which any of
their respective assets or properties is subject; 
  
 (vii) any material labor difficulties or labor union organizing activities with respect to employees of the Company or any Subsidiary; 
  
 (viii) any transaction entered into by the Company or a Subsidiary other than in the ordinary course of business; 
  
 (ix) the loss of the services of any key employee, or
material change in the composition or duties of the senior management of the Company or any Subsidiary; 
  
 (x) the loss or threatened loss of any customer which has had or could reasonably be expected to have a Material Adverse Effect; or

  
 (xi) any other event or condition of any
character that has had or could reasonably be expected to have a Material Adverse Effect. 
  
 4.9 SEC Filings. 
  
 (a) Except as described on Schedule 4.9, at the time of filing thereof, the SEC Filings complied as to form in all material
respects with the requirements of the 1934 Act and did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they
were made, not misleading. 
  
 (b) Except as
described on Schedule 4.9, each registration statement and any amendment thereto filed by the Company since January 1, 2002 pursuant to the 1933 Act and the rules and regulations thereunder, as of the date such statement or amendment became
effective, complied as to form in all material respects with the 1933 Act and did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they were made, not misleading; and each prospectus filed pursuant to Rule 424(b) under the 1933 Act, as of its issue date and as of the closing of any sale of securities pursuant thereto did not
contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

  
 (c) For only the reasons described on
Schedule 4.9, the Company is ineligible to use Form S-3 to register the Registrable Securities (as such term is defined in the Registration Rights Agreement) for sale by the Investors as contemplated by the Registration Rights Agreement.

  
 4.10 No Conflict, Breach, Violation or
Default. The execution, delivery and performance of the Transaction Documents by the Company and the issuance and sale of the Securities will not conflict with or result in a breach or violation of any of the terms and provisions of, or
constitute a default under (i) the Company’s Articles of Incorporation or the Company’s Bylaws, both as in effect on the date hereof (copies of which have been provided to the Investors before the date hereof), or (ii)(a) any statute,
rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company, any Subsidiary or any of their respective assets or properties, or (b) any agreement or instrument to which the
Company or any Subsidiary is a party or by which the Company or a Subsidiary is bound or to which any of their respective assets or properties is subject, except in the case of clause (ii), for breaches, violations or defaults that that would not
have a Material Adverse Effect, individually or in the aggregate. 
  

 4.11 Tax Matters. The Company and each Subsidiary has timely prepared and filed
all material tax returns required to have been filed by the Company or such Subsidiary with all appropriate governmental agencies and timely paid all taxes shown thereon or otherwise owed by it. The charges, accruals and reserves on the books of the
Company in respect of taxes for all fiscal periods are adequate in all material respects, and there are no material unpaid assessments against the Company or any Subsidiary nor, to the Company’s Knowledge, any basis for the assessment of any
additional taxes, penalties or interest for any fiscal period or audits by any federal, state or local taxing authority except for any assessment which is not material to the Company and its Subsidiaries, taken as a whole. All taxes and other
assessments and levies that the Company or any Subsidiary is required to withhold or to collect for payment have been duly withheld and collected and paid to the proper governmental entity or third party when due, except where the failure to so
withhold, collect or pay has not and would not reasonably be expected to result in a Material Adverse Effect. There are no tax liens or claims pending or, to the Company’s Knowledge, threatened against the Company or any Subsidiary or any of
their respective assets or property. Except as described on Schedule 4.11, there are no outstanding tax sharing agreements or other such arrangements between the Company and any Subsidiary or other corporation or entity. 
  
 4.12 Title to Properties. Except as disclosed in the
SEC Filings, the Company and each Subsidiary has good and marketable title to all real properties and all other properties and assets owned by it, in each case free from liens, encumbrances and defects that would materially affect the value thereof
or materially interfere with the use made or currently planned to be made thereof by them; and except as disclosed in the SEC Filings, the Company and each Subsidiary holds any leased real or personal property under valid and enforceable leases with
no exceptions that would materially interfere with the use made or currently planned to be made thereof by them. 
  
 4.13 Certificates, Authorities and Permits. The Company and each Subsidiary possess adequate certificates, authorities or permits
issued by appropriate governmental agencies or bodies necessary to conduct the business now operated by it, and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the Company or such Subsidiary, could reasonably be expected to have a Material Adverse Effect, individually or in the aggregate. 
  
 4.14 No Labor Disputes. No material labor dispute
with the employees of the Company or any Subsidiary exists or, to the Company’s Knowledge, is imminent. 
  
 4.15 Intellectual Property. 
  
 (a) The Company and/or its Subsidiaries has complied in all material respects with its obligations (including timely filings, proofs and
payments of fees) with respect to all Intellectual Property owned by the Company and/or its Subsidiaries, and to the Company’s Knowledge, the Company’s rights with respect to such owned Intellectual Property is currently valid and
enforceable. No Intellectual Property of the Company or its Subsidiaries which is necessary for the conduct of Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted
has been or is now involved in any cancellation, dispute or litigation, and, to the Company’s Knowledge, no such action is threatened. No patent of the Company or its Subsidiaries has been or is now involved in any interference, reissue,
re-examination or opposition proceeding. 
  
 (b)
All of the licenses and sublicenses and consent, royalty or other agreements concerning Intellectual Property which are necessary for the conduct of the Company’s and each of its Subsidiaries’ respective businesses as currently conducted
or as currently proposed to be conducted to which the Company or any Subsidiary is a party or by which any of their assets are bound (other than generally commercially available, non-custom, off-the-shelf software application programs having a
retail acquisition price of less than $10,000 per license) (collectively, “License Agreements”) are valid and binding obligations of the Company or its Subsidiaries that are parties thereto and, to the Company’s Knowledge, the other
parties thereto, enforceable in accordance with their terms, except to the extent that enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of
creditors’ rights generally, and there exists no event or condition which will result in a material violation or breach of or constitute (with or without due notice or lapse of time or both) a default by the Company or any of its Subsidiaries
under any such License Agreement. 
  

 (c) The Company and its Subsidiaries own or have the valid right to use all of the
Intellectual Property that is necessary for the conduct of the Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted and for the ownership, maintenance and operation
of the Company’s and its Subsidiaries’ properties and assets, free and clear of all liens, encumbrances, adverse claims or obligations to license all such owned Intellectual Property and Confidential Information, other than licenses
entered into in the ordinary course of the Company’s and its Subsidiaries’ businesses. The Company and its Subsidiaries have a valid and enforceable right to use all third party Intellectual Property and Confidential Information used or
held for use in the respective businesses of the Company and its Subsidiaries. 
  
 (d) The conduct of the Company’s and its Subsidiaries’ businesses as currently conducted does not infringe or otherwise impair
or conflict with (collectively, “Infringe”) any Intellectual Property rights of any third party or any confidentiality obligation owed to a third party, and, to the Company’s Knowledge, the Intellectual Property and Confidential
Information of the Company and its Subsidiaries which are necessary for the conduct of Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted are not being Infringed by
any third party. There is no litigation or order pending or outstanding or, to the Company’s Knowledge, threatened or imminent, that seeks to limit or challenge or that concerns the ownership, use, validity or enforceability of any Intellectual
Property or Confidential Information of the Company and its Subsidiaries and the Company’s and its Subsidiaries’ use of any Intellectual Property or Confidential Information owned by a third party, and, to the Company’s Knowledge,
there is no valid basis for the same. 
  
 (e) The
consummation of the transactions contemplated hereby will not result in the alteration, loss, impairment of or restriction on the Company’s or any of its Subsidiaries’ ownership or right to use any of the Intellectual Property or
Confidential Information which is necessary for the conduct of Company’s and each of its Subsidiaries’ respective businesses as currently conducted or as currently proposed to be conducted. 
  
 (f) All software owned by the Company or any of its
Subsidiaries, and, to the Company’s Knowledge, all software licensed from third parties by the Company or any of its Subsidiaries, (i) is free from any material defect, bug, virus, or programming, design or documentation error; (ii) operates
and runs in a reasonable and efficient business manner; and (iii) conforms in all material respects to the specifications and purposes thereof. 
  
 (g) The Company and its Subsidiaries have taken reasonable steps to protect the Company’s and its Subsidiaries’ rights in their
Intellectual Property and Confidential Information. Each employee, consultant and contractor who has had access to Confidential Information which is necessary for the conduct of Company’s and each of its Subsidiaries’ respective businesses
as currently conducted or as currently proposed to be conducted has executed an agreement to maintain the confidentiality of such Confidential Information and has executed appropriate agreements that are substantially consistent with the
Company’s standard forms thereof. Except under confidentiality obligations, there has been no material disclosure of any of the Company’s or its Subsidiaries’ Confidential Information to any third party. 
  
 4.16 Environmental Matters. Neither the Company nor
any Subsidiary is in violation of any statute, rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, “Environmental Laws”), owns or operates any real property contaminated with any substance that is subject to any Environmental
Laws, is liable for any off-site disposal or contamination pursuant to any Environmental Laws, and is subject to any claim relating to any Environmental Laws, which violation, contamination, liability or claim has had or could reasonably be expected
to have a Material Adverse Effect, individually or in the aggregate; and there is no pending or, to the Company’s Knowledge, threatened investigation that might lead to such a claim. 
  

 4.17 Litigation. Except as described on Schedule 4.17, there are no pending
actions, suits or proceedings against or affecting the Company, its Subsidiaries or any of its or their properties; and to the Company’s Knowledge, no such actions, suits or proceedings are threatened or contemplated. 
  
 4.18 Financial Statements. Except as described on
Schedule 4.18, the financial statements included in each SEC Filing present fairly, in all material respects, the consolidated financial position of the Company as of the dates shown and its consolidated results of operations and cash flows
for the periods shown, and such financial statements have been prepared in conformity with United States generally accepted accounting principles applied on a consistent basis (except as may be disclosed therein or in the notes thereto, and, in the
case of quarterly financial statements, as permitted by Form 10-Q under the 1934 Act). Except as set forth in the financial statements of the Company included in the SEC Filings filed prior to the date hereof or as described on Schedule 4.18,
neither the Company nor any of its Subsidiaries has incurred any liabilities, contingent or otherwise, except those incurred in the ordinary course of business, consistent (as to amount and nature) with past practices since the date of such
financial statements, none of which, individually or in the aggregate, have had or could reasonably be expected to have a Material Adverse Effect. 
  
 4.19 Insurance Coverage. The Company and each Subsidiary maintains in full force and effect insurance coverage that is customary
for comparably situated companies for the business being conducted and properties owned or leased by the Company and each Subsidiary, and the Company reasonably believes such insurance coverage to be adequate against all liabilities, claims and
risks against which it is customary for comparably situated companies to insure. 
  
 4.20 Compliance with Nasdaq Continued Listing Requirements. Except as described on Schedule 4.20, the Company is in
compliance with applicable Nasdaq continued listing requirements. There are no proceedings pending or, to the Company’s Knowledge, threatened against the Company relating to the continued listing of the Company’s Common Stock on Nasdaq and
the Company has not received any notice of, nor, except as described on Schedule 4.20, to the Company’s Knowledge is there any basis for, the delisting of the Common Stock from Nasdaq. 
  
 4.21 Brokers and Finders. No Person will have, as a
result of the transactions contemplated by this Agreement, any valid right, interest or claim against or upon the Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to any agreement, arrangement or
understanding entered into by or on behalf of the Company, other than Olympus Securities, LLC which will receive a fee equal to 7% of the investment made by the Special Situations entities listed on the signature pages hereto. 
  
 4.22 No Directed Selling Efforts or General
Solicitation. Neither the Company nor any Person acting on its behalf has conducted any general solicitation or general advertising (as those terms are used in Regulation D) in connection with the offer or sale of any of the Securities.

  
 4.23 No Integrated Offering. Neither
the Company nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any Company security or solicited any offers to buy any security, under circumstances that would adversely
affect reliance by the Company on Section 4(2) for the exemption from registration for the transactions contemplated hereby or would require registration of the Securities under the 1933 Act. 
  
 4.24 Private Placement. The offer and sale of the
Securities to the Investors as contemplated hereby is exempt from the registration requirements of the 1933 Act. 
  
 4.25 Questionable Payments. Neither the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any of their
respective current or former shareholders, directors, officers, employees, agents or other Persons acting on behalf of the Company or any Subsidiary, has on behalf of the Company or any Subsidiary or in connection with their respective businesses:
(a) used any corporate funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (b) made any direct or indirect unlawful payments to any governmental officials or employees from corporate
funds; (c) established or maintained any unlawful or unrecorded fund of corporate monies or other assets; (d) made any false or fictitious entries on the books 

  

 
and records of the Company or any Subsidiary; or (e) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment of any
nature. 
  
 4.26 Transactions with
Affiliates. Except as disclosed in SEC Filings made on or prior to the date hereof or as disclosed on Schedule 4.26, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any Subsidiary (other than as holders of stock options and/or warrants, and for services as employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. 
  
 4.27 Internal Controls. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 
  
 4.28 Disclosures. Neither the Company nor any Person acting on its behalf has provided the Investors or their agents or counsel
with any information that constitutes or might constitute material, non-public information. The Company has provided the Investors with all the information that the Investors have requested for deciding whether to acquire the Shares and Warrants,
including information that the Company is deferring the release of its third quarter 2003 financial results pending the review of certain transactions from earlier quarters in fiscal year 2003, and that the Company may be required to restate
revenues from the first and second quarters of fiscal year 2003, and possibly earlier periods. The written materials delivered to the Investors in connection with the transactions contemplated by the Transaction Documents do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, not misleading. 
  
 5. Representations and Warranties of the Investors. Each of the
Investors hereby severally, and not jointly, represents and warrants to the Company that: 
  
 5.1 Organization and Existence. The Investor is a validly existing corporation, limited partnership or limited liability company
and has all requisite corporate, partnership or limited liability company power and authority to invest in the Securities pursuant to this Agreement. 
  
 5.2 Authorization. The execution, delivery and performance by the Investor of the Transaction Documents to which such Investor is a
party have been duly authorized and will each constitute the valid and legally binding obligation of the Investor, enforceable against the Investor in accordance with their respective terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability, relating to or affecting creditors’ rights generally. 
  
 5.3 Purchase Entirely for Own Account. The Securities to be received by the Investor hereunder will be acquired for the
Investor’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof in violation of the 1933 Act, and the Investor has no present intention of selling, granting any participation in, or
otherwise distributing the same in violation of the 1933 Act. The Investor is not a registered broker dealer or an entity engaged in the business of being a broker dealer. 
  
 5.4 Investment Experience. The Investor acknowledges that it can bear the economic risk and complete
loss of its investment in the Securities and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment contemplated hereby. 
  

 5.5 Disclosure of Information. The Investor has had an opportunity to receive all
additional information related to the Company requested by it and to ask questions of and receive answers from the Company regarding the Company, its business and the terms and conditions of the offering of the Securities. The Investor acknowledges
receipt of copies of the SEC Filings. The Company has provided the Investor with all the information that the Investor has requested in order to decide whether to acquire the Shares and Warrants. Neither such inquiries nor any other due diligence
investigation conducted by the Investor shall modify, amend or affect the Investor’s right to rely on the Company’s representations and warranties contained in this Agreement. The Investor acknowledges that the Company has disclosed to
such Investor that the Company is deferring the release of its third quarter 2003 financial results pending the review of certain transactions from earlier quarters in fiscal year 2003, and that the Company may be required to restate revenues from
the first and second quarters of fiscal year 2003, and possibly earlier periods as well, and that the Investor acknowledges the risks associated with such possible restatements, including but not limited to (i) the risk that the Company’s
common stock may be delisted from the Nasdaq SmallCap Market, (ii) the risk that the Company may never regain compliance with the SEC’s reporting requirements, and (iii) the risk that the Company may be subject to certain penalties, which may
be substantial. 
  
 5.6 Restricted
Securities. The Investor understands that the Securities are characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public
offering and that under such laws and applicable regulations such securities may be resold without registration under the 1933 Act only in certain limited circumstances. 
  
 5.7 Legends. It is understood that, except as provided below, certificates evidencing such Securities
may bear the following or any similar legend: 
  
 (a) “The securities represented hereby may not be transferred unless (i) such securities have been registered for sale pursuant to the Securities Act of 1933, as amended, (ii) such securities may be sold pursuant to Rule 144(k), or
(iii) the Company has received an opinion of counsel reasonably satisfactory to it that such transfer may lawfully be made without registration under the Securities Act of 1933 or qualification under applicable state securities laws.”

  
 (b) If required by the authorities of any
state in connection with the issuance of sale of the Securities, the legend required by such state authority. 
  
 Upon the earlier of (i) registration for resale pursuant to the Registration Rights Agreement and receipt by the Company of the
Investor’s written confirmation that such Securities will not be disposed of except in compliance with the prospectus delivery requirements of the 1933 Act or (ii) Rule 144(k) becoming available the Company shall, upon an Investor’s
written request, promptly cause certificates evidencing the Securities to be replaced with certificates which do not bear such restrictive legends, and Warrant Shares subsequently issued upon due exercise of the Warrants shall not bear such
restrictive legends provided the provisions of either clause (i) or clause (ii) above, as applicable, are satisfied with respect to such Warrant Shares. When the Company is required to cause unlegended certificates to replace previously issued
legended certificates, if unlegended certificates are not delivered to an Investor within three (3) Business Days of submission by that Investor of legended certificate(s) to the Company’s transfer agent together with a representation letter in
customary form, the Company shall be liable to the Investor for liquidated damages (but only if such failure results in the Investor being subject to a buy-in in connection with a trade of the Securities) in an amount equal to 1.5% of the aggregate
purchase price of the Securities evidenced by such certificate(s) for each thirty (30) day period (or portion thereof) beyond such three (3) Business Day that the unlegended certificates have not been so delivered. 
  
 5.8 Accredited Investor. The Investor is an
accredited investor as defined in Rule 501(a) of Regulation D, as amended, under the 1933 Act. 
  
 5.9 No General Solicitation. The Investor did not learn of the investment in the Securities as a result of any public advertising
or general solicitation. 
  
 5.10 Brokers and
Finders. No Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest or claim against or upon the Company, any Subsidiary or an Investor for any commission, fee or other compensation pursuant to
any agreement, arrangement or understanding entered into by or on behalf of the Investors. 
  

 6. Conditions to Closing. 
  
 6.1 Conditions to the Investors’ Obligations. The obligation of the Investors to purchase the
Securities at the Closing is subject to the fulfillment to the Investors’ satisfaction, on or prior to the Closing Date, of the following conditions, any of which may be waived by the Investors agreeing hereunder to purchase a majority of the
Shares and Warrants (the “Required Investors”): 
  
 (a) The representations and warranties made by the Company in Section 4 hereof qualified as to materiality shall be true and correct at all times prior to and on the Closing Date, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case such representation or warranty shall be true and correct as of such earlier date, and, the representations and warranties made by the Company in Section 4 hereof not
qualified as to materiality shall be true and correct in all material respects at all times prior to and on the Closing Date, except to the extent any such representation or warranty expressly speaks as of an earlier date, in which case such
representation or warranty shall be true and correct in all material respects as of such earlier date. The Company shall have performed in all material respects all obligations and conditions herein required to be performed or observed by it on or
prior to the Closing Date. 
  
 (b) The Company
shall have obtained in a timely fashion any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the purchase and sale of the Securities all of which shall be in full force and effect.

  
 (c) The Company shall have executed and
delivered the Registration Rights Agreement. 
  
 (d) The Company shall have received oral confirmation from Nasdaq (A) to the effect that the issuance and sale of the Securities as contemplated hereby will not require shareholder approval pursuant to the requirements of Nasdaq Marketplace
Rule 4350(i), and (B) that the Warrant Shares shall have been approved for inclusion in The Nasdaq SmallCap Market upon official notice of issuance. 
  
 (e) No judgment, writ, order, injunction, award or decree of or by any court, or judge, justice or magistrate, including any bankruptcy
court or judge, or any order of or by any governmental authority, shall have been issued, and no action or proceeding shall have been instituted by any governmental authority, enjoining or preventing the consummation of the transactions contemplated
hereby or in the other Transaction Documents. 
  
 (f) The Company shall have delivered a Certificate, executed on behalf of the Company by its Chief Executive Officer or its Chief Financial Officer, dated as of the Closing Date, certifying to the fulfillment of the conditions specified in
subsections (a), (b), (d) and (e) of this Section 6.1. 
  
 (g) The Company shall have delivered a Certificate, executed on behalf of the Company by its Secretary, dated as of the Closing Date, certifying the resolutions adopted by the Board of Directors of the Company approving the transactions
contemplated by this Agreement and the other Transaction Documents and the issuance of the Securities, certifying the current versions of the Articles of Incorporation and Bylaws of the Company and certifying as to the signatures and authority of
persons signing the Transaction Documents and related documents on behalf of the Company. 
  
 (h) The Investors shall have received an opinion from the Company’s counsel, dated as of the Closing Date, in form and substance
reasonably acceptable to the Investors and addressing such legal matters as the Investors may reasonably request. 
  
 (i) No stop order or suspension of trading shall have been imposed by Nasdaq, the SEC or any other governmental regulatory body with
respect to public trading in the Common Stock. 
  

 6.2 Conditions to Obligations of the Company. The Company’s obligation to
sell and issue the Securities at the Closing is subject to the fulfillment to the satisfaction of the Company on or prior to the Closing Date of the following conditions, any of which may be waived by the Company: 
  
 (a) The representations and warranties made by the Investors
in Section 5 hereof, other than the representations and warranties contained in Sections 5.3, 5.4, 5.5, 5.6, 5.7, 5.8 and 5.9 (the “Investment Representations”), shall be true and correct in all material respects when made, and shall be
true and correct in all material respects on the Closing Date with the same force and effect as if they had been made on and as of said date. The Investment Representations shall be true and correct in all respects when made, and shall be true and
correct in all respects on the Closing Date with the same force and effect as if they had been made on and as of said date. The Investors shall have performed in all material respects all obligations and conditions herein required to be performed or
observed by them on or prior to the Closing Date. 
  
 (b) The Investors shall have executed and delivered the Registration Rights Agreement. 
  
 (c) The Investors shall have delivered the Purchase Price to the Company. 
  
 6.3 Termination of Obligations to Effect Closing; Effects. 
  
 (a) The obligations of the Company, on the one hand, and the
Investors, on the other hand, to effect the Closing shall terminate as follows: 
  
 (i) Upon the mutual written consent of the Company and the Required Investors; 
  
 (ii) By the Company if any of the conditions set forth in
Section 6.2 shall have become incapable of fulfillment, and shall not have been waived by the Company; 
  
 (iii) By the Required Investors if any of the conditions set forth in Section 6.1 shall have become incapable of fulfillment, and shall
not have been waived by the Required Investors; or 
  
 (iv) By either the Company or the Required Investors if the Closing has not occurred on or prior to October 15, 2003; 
  
 provided, however, that, except in the case of clause (i) above, the party seeking to terminate its obligation to effect the Closing shall not then be in breach of any of
its representations, warranties, covenants or agreements contained in this Agreement or the other Transaction Documents if such breach has resulted in the circumstances giving rise to such party’s seeking to terminate its obligation to effect
the Closing. 
  
 (b) In the event of termination
by the Company or the Required Investors of their obligations to effect the Closing pursuant to this Section 6.3, written notice thereof shall forthwith be given to the other parties hereto and the obligation of all parties to effect the Closing
shall be terminated, without further action by any party. Nothing in this Section 6.3 shall be deemed to release any party from any liability for any breach by such party of the terms and provisions of this Agreement or the other Transaction
Documents or to impair the right of any party to compel specific performance by any other party of its obligations under this Agreement or the other Transaction Documents. 
  
 7. Covenants and Agreements of the Company. 
  
 7.1 Reservation of Common Stock. The Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of providing for the exercise of the Warrants, such number of shares of Common Stock as shall from time to time equal the number of shares sufficient to permit the exercise of
the Warrants issued pursuant to this Agreement in accordance with their respective terms. 
  

 7.2 Reports. So long as the Investors own at least 5% of the Company’s
outstanding Common Stock, the Company will furnish to such Investors and/or their assignees such information relating to the Company and its Subsidiaries as from time to time may reasonably be requested by such Investors and/or their assignees;
provided, however, that the Company shall not disclose material nonpublic information to the Investors, or to advisors to or representatives of the Investors, unless prior to disclosure of such information the Company identifies such information as
being material nonpublic information and provides the Investors, such advisors and representatives with the opportunity to accept or refuse to accept such material nonpublic information for review and any Investor wishing to obtain such information
enters into an appropriate confidentiality agreement with the Company with respect thereto. 
  
 7.3 No Conflicting Agreements. The Company will not take any action, enter into any agreement or make any commitment that would
conflict or interfere in any material respect with the obligations to the Investors under the Transaction Documents. 
  
 7.4 Insurance. The Company shall not materially reduce the insurance coverages described in Section 4.19. 
  
 7.5 Compliance with Laws. The Company will comply in
all material respects with all applicable laws, rules, regulations, orders and decrees of all governmental authorities. 
  
 7.6 Listing of Underlying Shares and Related Matters. Promptly following the date hereof, the Company shall take all necessary
action to cause the Shares and the Warrant Shares to be listed on the Nasdaq SmallCap Market no later than the Closing Date. Further, if the Company applies to have its Common Stock or other securities traded on any other principal stock exchange or
market, it shall include in such application the Shares and the Warrant Shares and will take such other action as is necessary to cause such Common Stock to be so listed. The Company will use commercially reasonable efforts to continue the listing
and trading of its Common Stock on the Nasdaq SmallCap Market and, in accordance, therewith, will use commercially reasonable efforts to comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules
of such market or exchange, as applicable. 
  
 7.7 Termination of Covenants. The provisions of Sections 7.2 through 7.5 shall terminate and be of no further force and effect upon the earlier of (i) the mutual consent of the Company and the Required Investors or (ii) the date on
which the Company’s obligations under the Registration Rights Agreement to register or maintain the effectiveness of any registration covering the Registrable Securities (as such term is defined in the Registration Rights Agreement) shall
terminate. 
  
 8. Survival and Indemnification. 

 
 8.1 Survival. All representations, warranties,
covenants and agreements contained in this Agreement shall be deemed to be representations, warranties, covenants and agreements as of the date hereof and shall survive the execution and delivery of this Agreement for a period of three (3) years
from the date of this Agreement; provided, however, that the provisions contained in Section 7 hereof shall survive in accordance therewith. 
  
 8.2 Indemnification. The Company agrees to indemnify and hold harmless, on an after-tax and after insurance recovery basis, each
Investor and its Affiliates and their respective directors, officers, employees and agents from and against any and all losses, claims, damages, liabilities and expenses (including without limitation reasonable attorney fees and disbursements and
other expenses incurred in connection with investigating, preparing or defending any action, claim or proceeding, pending or threatened and the costs of enforcement hereof) (collectively, “Losses”) to which such Person may become subject
as a result of any breach of representation, warranty, covenant or agreement made by or to be performed on the part of the Company under the Transaction Documents, and will reimburse any such Person for all such amounts as they are incurred by such
Person. 
  

 8.3 Conduct of Indemnification Proceedings. Promptly after
receipt by any Person (the “Indemnified Person”) of notice of any demand, claim or circumstances which would or might give rise to a claim or the commencement of any action, proceeding or investigation in respect of which indemnity
may be sought pursuant to Section 8.2, such Indemnified Person shall promptly notify the Company in writing and the Company shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Person, and
shall assume the payment of all fees and expenses; provided, however, that the failure of any Indemnified Person so to notify the Company shall not relieve the Company of its obligations hereunder except to the extent that the Company
is materially prejudiced by such failure to notify. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless:
(i) the Company and the Indemnified Person shall have mutually agreed to the retention of such counsel; or (ii) in the reasonable judgment of counsel to such Indemnified Person representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. The Company shall not be liable for any settlement of any proceeding effected without its written consent, which consent shall not be unreasonably withheld, but if settled
with such consent, or if there be a final judgment for the plaintiff, the Company shall indemnify and hold harmless such Indemnified Person from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment.
Without the prior written consent of the Indemnified Person, which consent shall not be unreasonably withheld, the Company shall not effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Person from all liability arising out of such proceeding. 
  
 9. Miscellaneous. 
  
 9.1 Successors and Assigns. This Agreement may not be
assigned by a party hereto without the prior written consent of the Company or the Required Investors, as applicable, provided, however, that an Investor may assign its rights and delegate its duties hereunder in whole or in part to an Affiliate or
to a third party acquiring some or all of its Securities in a private transaction without the prior written consent of the Company or the other Investors, after notice duly given by such Investor to the Company and the other Investors, provided,
that no such assignment or obligation shall affect the obligations of such Investor hereunder. Each Investor acknowledges that a transfer of its Securities may be subject to the terms of the Rights Agreement. The provisions of this Agreement shall
inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 
  

9.2 Counterparts; Faxes. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument. This Agreement may also be executed via facsimile, which shall be deemed an original. 
  

9.3 Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. 
  
 9.4 Notices. Unless otherwise provided, any notice required or permitted under this Agreement shall be given in writing and shall be deemed effectively given as hereinafter described (i) if given by personal
delivery, then such notice shall be deemed given upon such delivery, (ii) if given by telex or telecopier, then such notice shall be deemed given upon receipt of confirmation of complete transmittal, (iii) if given by mail, then such notice shall be
deemed given upon the earlier of (A) receipt of such notice by the recipient or (B) three days after such notice is deposited in first class mail, postage prepaid, and (iv) if given by an internationally recognized overnight air courier, then such
notice shall be deemed given one day after delivery to such carrier. All notices shall be addressed to the party to be notified at the address as follows, or at such other address as such party may designate by ten days’ advance written notice
to the other party: 
  
 If to the Company:

  
 Tarantella, Inc. 
 425 Encinal Street 
 Santa Cruz, California 95060 
 Attention: Legal Department 
 Fax: (831) 427-5474 
  

 With a copy to: 
  
 Wilson Sonsini Goodrich & Rosati LLP 
 650 Page Mill Road 
 Palo Alto, California 94304 
 Attention: Michael Danaher, Esq. 
  
 If to the Investors: 
  
 to the addresses set forth on the signature pages hereto. 
  
 9.5 Expenses. The parties hereto shall pay their own
costs and expenses in connection herewith, except that the Company shall pay the reasonable fees and expenses of counsel to the Investors. Such expenses shall be paid not later than the Closing. The Company shall reimburse the Investors upon demand
for all reasonable out-of-pocket expenses incurred by the Investors, including without limitation reimbursement of attorneys’ fees and disbursements, in connection with the review of any registration statement, any amendment, modification or
waiver of this Agreement or the other Transaction Documents; provided, however that the amount of all expenses payable by the Company shall not exceed $25,000. In the event that legal proceedings are commenced by any party to this Agreement against
another party to this Agreement in connection with this Agreement or the other Transaction Documents, the party or parties which do not prevail in such proceedings shall severally, but not jointly, pay their pro rata share of the reasonable
attorneys’ fees and other reasonable out-of-pocket costs and expenses incurred by the prevailing party in such proceedings. 
  
 9.6 Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Required Investors. Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Securities purchased under this Agreement at the time outstanding, each future holder of all such securities, and the Company. 
  

9.7 Publicity. No public release or announcement concerning the transactions contemplated hereby shall be issued by the Company
or the Investors without the prior consent of the Company (in the case of a release or announcement by the Investors) or Special Situations Technology Fund, L.P. (“SSF”) (in the case of a release or announcement by the Company) (which
consents shall not be unreasonably withheld), except as such release or announcement may be required by law or the applicable rules or regulations of any securities exchange or securities market, in which case the Company or the Investors, as the
case may be, shall allow SSF or the Company, as applicable, to the extent reasonably practicable in the circumstances, reasonable time to comment on such release or announcement in advance of such issuance; provided, however, that the Company shall
have the right to make such disclosures as the Company reasonably believes are required to be made under applicable law, rule or regulations of any stock exchange or market on which the Company’s securities are then traded. 
  
 9.8 Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were
written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereby waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect. 
  

 9.9 Entire Agreement. This Agreement, including the Exhibits and the Disclosure
Schedules, and the other Transaction Documents constitute the entire agreement among the parties hereof with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both oral and written, between the
parties with respect to the subject matter hereof and thereof. 
  
 9.10 Further Assurances. The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated
hereby and to evidence the fulfillment of the agreements herein contained. 
  
 9.11 Governing Law; Consent to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles
thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any
suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the
world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in
such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court
has been brought in an inconvenient forum. 
  
 [signature page
follows] 
  

 IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to
execute this Agreement as of the date first above written. 
  

									
	 The Company:
	 	 	 	 TARANTELLA, INC.

					
	 	 	 	 	 	 	By:	 	 /s/    ALOK MOHAN

	 	 	 	 	 	 	 Name:
	 	 Alok Mohan

	 	 	 	 	 	 	 Title:
	 	 Chairman

  

									
	 The Investors:
	 	 	 	 SPECIAL SITUATIONS TECHNOLOGY FUND, L.P.

					
	 	 	 	 	 	 	By:	 	 /s/    AUSTIN MARXE

	 	 	 	 	 	 	 Name:
	 	 Austin Marxe

	 	 	 	 	 	 	 Title:
	 	 General Partner

  
 Aggregate Purchase Price: $276,862

 Number of Shares: 239,500 
 Number of Warrants: 239,500

  
 Address for Notice: 
  

									
	 	 	 	 	 	 	 	 	 153 E. 53rd Street
 55th Floor
 New York, NY 10022
  
 with a copy to:
  
 Lowenstein Sandler PC
 65 Livingston
Avenue
 Roseland, NJ 07068
 Attn: John D. Hogoboom, Esq.
 Telephone: 973.597.2500
 Facsimile:  973.597.2400

  

									
	 	 	 	 	 SPECIAL SITUATIONS TECHNOLOGY FUND II, L.P.

					
	 	 	 	 	 	 	By:	 	 /s/    AUSTIN MARXE

	 	 	 	 	 	 	 Name:
	 	 Austin Marxe

	 	 	 	 	 	 	 Title:
	 	 General Partner

  
 Aggregate Purchase Price: $1,413,788

 Number of Shares: 1,223,000 
 Number of Warrants: 1,223,000

  
 Address for Notice: 
  

									
	 	 	 	 	 	 	 	 	 153 E. 53rd Street
 55th Floor
 New York, NY 10022

  

									
					
	 	 	 	 	 	 	 	 	 with a copy to:
  
 Lowenstein Sandler PC
 65 Livingston
Avenue
 Roseland, NJ 07068
 Attn: John D. Hogoboom, Esq.
 Telephone: 973.597.2500
 Facsimile:  973.597.2400

  

									
	 	 	 	 	 VERTICAL VENTURES LLC

					
	 	 	 	 	 	 	By:	 	 /s/    SCOT COHEN

	 	 	 	 	 	 	 Name:
	 	 Scot Cohen

	 	 	 	 	 	 	 Title:
	 	 

  
 Aggregate Purchase Price: $450,840

 Number of Shares: 390,000 
 Number of Warrants: 390,000

  
 Address for Notice: 
  

									
	 	 	 	 	 	 	 641 Lexington Avenue, 26th Floor
 New York, NY 10022

					
	 	 	 	 	 	 	 	 	 /s/    SCOT COHEN

	 	 	 	 	 	 	 	 	 Scot Cohen

  
 Aggregate Purchase Price: $112,710

 Number of Shares: 97,500 
 Number of Warrants: 97,500

  
 Address for Notice: 
  

									
	 	 	 	 	 	 	 641 Lexington Avenue, 26th Floor
 New York, NY 10022Registration Rights Agreement by and between Tarantella and certain investors

  
 Exhibit 4.3 
  
 REGISTRATION RIGHTS AGREEMENT 
  
 This Registration Rights Agreement (the “Agreement”) is made and
entered into as of this 30th day of September, 2003 by and among Tarantella, Inc., a California corporation (the “Company”), and the “Investors” named in that certain Purchase Agreement by and among the Company and the Investors
(the “Purchase Agreement”). 
  
 The parties hereby agree
as follows: 
  
 1. Certain Definitions. 
  
 As used in this Agreement, the following terms shall have the following
meanings: 
  
 “Affiliate” means, with respect to
any person, any other person which directly or indirectly controls, is controlled by, or is under common control with, such person. 
  
 “Business Day” means a day, other than a Saturday or Sunday, on which banks in New York City are open for the general transaction of
business. 
  
 “Common Stock” shall mean the
Company’s common stock, no par value, and any securities into which such shares may hereinafter be reclassified. 
  
 “Investors” shall mean the Investors identified in the Purchase Agreement and any Affiliate or permitted transferee of any Investor who
is a subsequent holder of any Warrants or Registrable Securities. 
  
 “Prospectus” shall mean the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus. 
  
 “Register,” “registered” and
“registration” refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the 1933 Act (as defined below), and the declaration or ordering of effectiveness of such
Registration Statement or document. 
  
 “Registrable
Securities” shall mean the Shares and the shares of Common Stock issuable (i) upon the exercise of the Warrants, if any, and (ii) any other securities issued or issuable with respect to or in exchange for Registrable Securities; provided,
that, a security shall cease to be a Registrable Security upon (A) sale pursuant to a Registration Statement or Rule 144 under the 1933 Act, or (B) such security becoming eligible for sale by the Investors pursuant to Rule 144(k). 
  
 “Registration Statement” shall mean any registration
statement of the Company filed under the 1933 Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective
amendments, all exhibits and all material incorporated by reference in such Registration Statement. 
  
 “Required Investors” means the Investors holding a majority of the Registrable Securities. 
  
 “SEC” means the U.S. Securities and Exchange Commission.

  
 “Shares” means the shares of Common Stock
issued pursuant to the Purchase Agreement. 
  
 “1933
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 
  
 “1934 Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. 
  
 “Warrants” means, the warrants to purchase shares of Common
Stock issued to the Investors pursuant to the Purchase Agreement, the form of which is attached to the Purchase Agreement as Exhibit A. 
  
 “Warrant Shares” means the shares of Common Stock issuable upon the exercise of the Warrants. 
  

 2. Registration. 
  

(a) Registration Statement. (i) The Company shall use commercially reasonable efforts to comply with the reporting requirements of Section 13 or 15(d) of the Exchange
Act promptly following the closing of the purchase and sale of the securities contemplated by the Purchase Agreement. Promptly following the date (the “Reporting Date”) upon which the Company is again in compliance with such reporting
requirements but in any event not later than forty-five (45) days following the Reporting Date (the “Filing Deadline”), the Company shall use commercially reasonable efforts to file with the SEC a registration statement on Form S-1
covering all Registrable Securities in an amount at least equal to the number of Shares plus the number of shares of Common Stock necessary to permit the exercise in full of the Warrants. Such Registration Statement also shall cover, to the extent
allowable under the 1933 Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the
Registrable Securities. The Registration Statement (and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided in accordance with Section 3(c) to the Investors and their counsel prior to
its filing or other submission. If a Registration Statement covering the Registrable Securities is not filed with the SEC on or prior to the Filing Deadline, the Company will make pro rata payments to each Investor, as liquidated damages and not as
a penalty, in an amount equal to 1.0% of the aggregate amount invested by such Investor for each 30-day period or pro rata for any portion thereof following the date by which such Registration Statement should have been filed for which no
Registration Statement is filed with respect to the Registrable Securities; provided, however, that such liquidated damages shall be irrevocably waived in the event that the Registration Statement is declared effective by the SEC on or prior to the
Initial Effectiveness Date. Such payments shall be in compensation to the Investors, and shall constitute the Investors’ exclusive remedy for such events; provided, however, that the Investors shall retain their rights to seek specific
performance of the provisions hereof. Such payments shall be made to each Investor in cash. 
  
 (ii) Promptly following the date (the “Qualification Date”) upon which the Company becomes eligible to use a registration statement on Form S-3 to register the Registrable Securities for resale, but in no
event more than ten (10) days after the Qualification Date (the “Qualification Deadline”), the Company shall file a registration statement on Form S-3 covering the Registrable Securities (or a post-effective amendment on Form S-3 to the
registration statement on Form S-1) (a “Shelf Registration Statement”) and shall use commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective as promptly as practicable thereafter. If a Shelf
Registration Statement covering the Registrable Securities is not filed with the SEC on or prior to the Qualification Deadline, the Company will make pro rata payments to each Investor, as liquidated damages and not as a penalty, in an amount equal
to 1.0% of the aggregate amount invested by such Investor for each 30-day period or pro rata for any portion thereof following the date by which such Shelf Registration Statement should have been filed for which no such Shelf Registration Statement
is filed with respect to the Registrable Securities. Such payments shall be in compensation to the Investors, and shall constitute the Investors’ exclusive remedy for such events; provided, however, that the Investors shall retain their rights
to seek specific performance of the provisions hereof. Such payments shall be made to each Investor in cash. 
  
 (b) Expenses. The Company will pay all expenses associated with each registration, including filing and printing fees, counsel and accounting fees and expenses, costs associated with clearing the Registrable
Securities for sale under applicable state securities laws and listing fees, but excluding fees and expenses of counsel to the Investors, discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry
professionals with respect to the Registrable Securities being sold. 
  
 (c) Effectiveness. 
  
 (i) The Company
shall use commercially reasonable efforts to have the Registration Statement, any post effective amendment thereto and any Shelf Registration Statement declared effective as soon as practicable. The Company shall notify the Investors by facsimile or
e-mail as promptly as practicable, and in any event, within twenty-four (24) hours, after any Registration Statement or post-effective amendment is declared effective and shall simultaneously provide the Investors with copies of any related
Prospectus to be used in connection with the sale or other disposition of the securities covered thereby. If (A)(x) a Registration Statement covering the Registrable Securities is not declared effective by the SEC within 120 days after the Filing
Deadline (the “Initial Effectiveness Deadline”) or (y) a Shelf Registration Statement is 

  

 
not declared effective by the SEC within 90 days after the Qualification Deadline, or (B) after a Registration Statement has been declared effective by the
SEC, sales cannot be made pursuant to such Registration Statement for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement), but excluding the inability of any
Investor to sell the Registrable Securities covered thereby due to market conditions and except as excused pursuant to subparagraph (ii) below, then the Company will make pro rata payments to each Investor, as liquidated damages and not as a
penalty, in an amount equal to 1.0% of the aggregate amount invested by such Investor for each 30-day period or pro rata for any portion thereof following the date by which such Registration Statement should have been effective (the “Blackout
Period”). Such payments shall be in compensation to the Investors, and shall constitute the Investors’ exclusive remedy for such events; provided, however, that the Investors shall retain their rights to seek specific performance of the
provisions hereof. The amounts payable as liquidated damages pursuant to this paragraph shall be paid monthly within three (3) Business Days of the last day of each month following the commencement of the Blackout Period until the termination of the
Blackout Period. Such payments shall be made to each Investor in cash. Notwithstanding the foregoing, in the event that the effectiveness of the registration statement on Form S-1 is delayed due to events beyond the Company’s control, the
parties shall negotiate in good faith regarding the amount of the liquidated damages payable as a result of such delay. 
  
 (ii) For not more than twenty (20) consecutive days or for a total of not more than forty-five (45) days in any twelve (12) month period, the Company may
suspend the use of any Prospectus included in any registration contemplated by this Section by the Investors if the Company believes in good faith that it would be seriously detrimental to the Company for resales to be made pursuant to a prospectus
in the registration statement due to the existence of a material development or potential material development, which is required to be disclosed in such prospectus and which disclosure at the time is not, in the good faith opinion of the Company,
in the best interests of the Company (an “Allowed Delay”); provided, however, that so long as the Registration Statement is on Form S-1 or on any other form that does not allow for incorporation by reference of reports and other materials
filed by the Company pursuant .to Section 13(a) or 15(d) of the 1934 Act, the Company may suspend sales under the Registration Statement (and such suspension shall be deemed to be an Allowed Delay without regard to the time periods mentioned above)
(i) for the period commencing at the time that the Company disseminates a press release announcing its preliminary financial results for any fiscal period and ending on the fifth Business Day after the earlier of (A) the date that the related report
on Form 10-K or 10-Q, as applicable, Act is filed with the SEC and (B) the date on which such report is required to be filed under the 1934 Act (without regard to Rule 12b-25 promulgated thereunder) and (ii) for the period commencing at the time
that the Company disseminates a press release announcing a material development and ending on the fifth Business Day after the earlier of (A) the date that the related report on Form 8-K is filed with the SEC and (B) the date on which such report is
required to be filed under the 1934 Act (without regard to Rule 12b-25 promulgated thereunder) to the extent, but in any such case only to the extent necessary to allow any post-effective amendment to the Registration Statement or supplement to the
Prospectus to be prepared and, if necessary, filed with the SEC and declared effective. 
  
 (iii) The Company shall promptly (a) notify the Investors in writing of the existence of (but in no event, without the prior written consent of an Investor, shall the Company disclose to such Investor any of the facts
or circumstances regarding) material non-public information giving rise to an Allowed Delay, (b) advise the Investors in writing to cease all sales under the Registration Statement until the end of the Allowed Delay, and (c) use commercially
reasonable efforts to terminate an Allowed Delay as promptly as practicable. 
  
 (d) Underwritten Offering. If any offering pursuant to a Registration Statement pursuant to Section 2(a) hereof involves an underwritten offering, the Company shall have the right to select an investment banker and manager to
administer the offering, which investment banker or manager shall be reasonably satisfactory to the Required Investors. 
  
 3. Company Obligations. The Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the
terms hereof, and pursuant thereto the Company will, as expeditiously as possible: 
  
 (a) use commercially reasonable efforts to cause such Registration Statement to become effective and to remain continuously effective (subject to the terms hereof) for a period that will terminate upon the earlier of (i) the date on
which all Registrable Securities covered by such Registration Statement as amended from time to time, 
  

 
have been sold, and (ii) the date on which all Registrable Securities covered by such Registration Statement may be sold pursuant to Rule 144(k);

  
 (b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective for the period specified in Section 3(a) and to comply with the provisions of the 1933 Act and the 1934 Act with respect to
the distribution of all of the Registrable Securities covered thereby; 
  
 (c) provide copies to and permit counsel designated by the Investors to review each Registration Statement and all amendments and supplements thereto no fewer than five (5) Business Days prior to their filing with the SEC and not file
any document to which such counsel reasonably objects; 
  
 (d) furnish to
the Investors and their legal counsel (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date, as
the case may be) one (1) copy of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the
staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion of any thereof which contains information for which the Company has sought
confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as each Investor may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Investor that are covered by the related Registration Statement; 
  
 (e) in the event the Company selects an underwriter for the offering, the Company shall enter into and perform its reasonable obligations under an underwriting
agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the underwriter of such offering; 
  
 (f) if required by the underwriter, or if any Investor is described in the Registration Statement as an underwriter, the Company shall
furnish, on the effective date of the Registration Statement (except with respect to clause (i) below) and on the date that Registrable Securities are delivered to an underwriter, if any, for sale in connection with the Registration Statement
(including any Investor deemed to be an underwriter), (i) (A) in the case of an underwritten offering, an opinion, dated as of the closing date of the sale of Registrable Securities to the underwriters, from independent legal counsel representing
the Company for purposes of such Registration Statement, in form, scope and substance as is customarily given in an underwritten public offering, addressed to the underwriters and the Investors participating in such underwritten offering or (B) in
the case of an “at the market” offering, an opinion, dated as of or promptly after the effective date of the Registration Statement to the Investors, from independent legal counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in a public offering, addressed to the Investors, and (ii) a letter, dated as of the effective date of such Registration Statement and confirmed as of the applicable dates described
above, from the Company’s independent certified public accountants in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters
(including any Investor deemed to be an underwriter); 
  
 (g) use
commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if such order is issued, obtain the withdrawal of any such order at the earliest possible moment; 
  
 (h) prior to any public offering of Registrable Securities, use commercially reasonable
efforts to register or qualify or cooperate with the Investors and their counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions
requested by the Investors and do any and all other commercially reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided,
however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(h), (ii) subject itself to
general taxation in any jurisdiction where it would not otherwise be so subject but for this Section 3(h), or (iii) file a general consent to service of process in any such jurisdiction; 
  
 (i) use commercially reasonable efforts to cause all Registrable Securities covered by a
Registration Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed; 
  
 (j) immediately notify the Investors, at any time when a Prospectus relating to Registrable Securities is required to be delivered under
the 1933 Act, upon discovery that, or upon the happening of any event as a result 

  

 
of which, the Prospectus included in a Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and at the request of any such holder, promptly prepare and furnish to such holder a reasonable
number of copies of a supplement to or an amendment of such Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; and 
  
 (k) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the 1933 Act and
the 1934 Act, take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and make available to its security holders, as soon as reasonably practicable, but not later than the
Availability Date (as defined below), an earnings statement covering a period of at least twelve (12) months, beginning after the effective date of each Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a)
of the 1933 Act, including Rule 158 promulgated thereunder (for the purpose of this subsection 3(k), “Availability Date” means the 45th day following the end of the fourth fiscal quarter that includes the effective date of such
Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the Company’s fiscal year, “Availability Date” means the 90th day after the end of such fourth fiscal quarter). 
  
 (l) With a view to making available to the Investors the benefits of Rule 144 (or its
successor rule) and any other rule or regulation of the SEC that may at any time permit the Investors to sell shares of Common Stock to the public without registration, from and after the Reporting Date the Company covenants and agrees to: (i) make
and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of (A) six months after such date as all of the Registrable Securities may be resold pursuant to Rule 144(k) or any other rule of similar
effect or (B) such date as all of the Registrable Securities shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the 1934 Act; and (iii) furnish to each Investor upon
request, as long as such Investor owns any Registrable Securities, (A) a written statement by the Company that it has complied with the reporting requirements of the 1934 Act, (B) a copy of the Company’s most recent Annual Report on Form 10-K
or Quarterly Report on Form 10-Q, and (C) such other information as may be reasonably requested in order to avail such Investor of any rule or regulation of the SEC that permits the selling of any such Registrable Securities without registration.

  
 4. Due Diligence Review; Information. The Company shall make
available, during normal business hours, for inspection and review by the Investors, advisors to and representatives of the Investors (who may or may not be affiliated with the Investors and who are reasonably acceptable to the Company), any
underwriter participating in any disposition of shares of Common Stock on behalf of the Investors pursuant to a Registration Statement or amendments or supplements thereto or any blue sky, NASD or other filing, all financial and other records, all
SEC Filings (as defined in the Purchase Agreement) and other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably necessary for the purpose of such review, and cause the Company’s officers,
directors and employees, within a reasonable time period, to supply all such information reasonably requested by the Investors or any such representative, advisor or underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of the Registration Statement for the sole purpose of enabling the Investors
and such representatives, advisors and underwriters and their respective accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of such Registration Statement. 
  
 The Company shall not disclose material nonpublic information to the
Investors, or to advisors to or representatives of the Investors, unless prior to disclosure of such information the Company identifies such information as being material nonpublic information and provides the Investors, such advisors and
representatives with the opportunity to accept or refuse to accept such material nonpublic information for review and any Investor wishing to obtain such information enters into an appropriate confidentiality agreement with the Company with respect
thereto. 
  

 5. Obligations of the Investors. 
  
 (a) Each Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and
the intended method of disposition of the Registrable Securities held by it, as shall be reasonably required to effect the registration of such Registrable Securities and shall execute such documents in connection with such registration as the
Company may reasonably request. At least five (5) Business Days prior to the first anticipated filing date of any Registration Statement, the Company shall notify each Investor of the information the Company requires from such Investor if such
Investor elects to have any of the Registrable Securities included in the Registration Statement. An Investor shall provide such information to the Company at least two (2) Business Days prior to the first anticipated filing date of such
Registration Statement if such Investor elects to have any of the Registrable Securities included in the Registration Statement. 
  
 (b) Each Investor, by its acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the
preparation and filing of a Registration Statement hereunder, unless such Investor has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement. 
  
 (c) In the event the Company, at the request of the Investors, determines to engage the
services of an underwriter, such Investor agrees to enter into and perform its obligations under an underwriting agreement, in usual and customary form, including, without limitation, customary indemnification and contribution obligations, with the
managing underwriter of such offering and take such other actions as are reasonably required in order to expedite or facilitate the dispositions of the Registrable Securities. 
  
 (d) Each Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to
Section 2(c)(ii) or (ii) the happening of an event pursuant to Section 3(j) hereof, such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until
the Investor’s receipt of the copies of the supplemented or amended prospectus filed with the SEC and declared effective and, if so directed by the Company, the Investor shall deliver to the Company (at the expense of the Company) or destroy
(and deliver to the Company a certificate of destruction) all copies in the Investor’s possession of the Prospectus covering the Registrable Securities current at the time of receipt of such notice. 
  
 (e) No Investor may participate in any third party underwritten registration hereunder
unless it (i) agrees to sell the Registrable Securities on the basis provided in any underwriting arrangements in usual and customary form entered into by the Company, (ii) completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements, and (iii) agrees to pay its pro rata share of all underwriting discounts and commissions. Notwithstanding the foregoing, no Investor
shall be required to make any representations to such underwriter, other than those with respect to itself and the Registrable Securities owned by it, including its right to sell the Registrable Securities, and any indemnification in favor of the
underwriter by the Investors shall be several and not joint and limited in the case of any Investor, to the proceeds received by such Investor from the sale of its Registrable Securities. The scope of any such indemnification in favor of an
underwriter shall be limited to the same extent as the indemnity provided in Section 6(b) hereof. 
  
 6. Indemnification. 
  
 (a)
Indemnification by the Company. The Company will indemnify and hold harmless each Investor and its officers, directors, members, employees and agents, successors and assigns, and each other person, if any, who controls such Investor within
the meaning of the 1933 Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the 1933 Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement, any preliminary prospectus or final prospectus contained therein, or any amendment or
supplement thereof; (ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or
all of the Registrable Securities under the securities laws thereof (any such application, document or information herein called a “Blue Sky Application”); (iii) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated under the 1933 Act applicable to the Company or its
agents and relating to action or inaction required of the Company in connection with such registration (except to the extent arising from a breach by such Investor of the terms hereof); or (v) any failure to register or qualify the Registrable
Securities included in any such Registration in any state where the Company or its agents has affirmatively undertaken or agreed in writing 

  

 
that the Company will undertake such registration or qualification on an Investor’s behalf (the undertaking of any underwriter chosen by the Company
being attributed to the Company) and will reimburse such Investor, and each such officer, director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Investor or any such controlling person in writing specifically for use in such Registration Statement or Prospectus. 

 
 (b) Indemnification by the Investors. In connection with any registration
pursuant to the terms of this Agreement, each Investor will furnish to the Company in writing such information as the Company reasonably requests concerning the holders of Registrable Securities or the proposed manner of distribution for use in
connection with any Registration Statement or Prospectus and agrees, severally but not jointly, to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, stockholders and each person who
controls the Company (within the meaning of the 1933 Act) against any losses, claims, damages, liabilities and expense (including reasonable attorney fees) resulting from (i) any untrue statement of a material fact or any omission of a material fact
required to be stated in the Registration Statement or Prospectus or preliminary prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading, to the extent, but only to the extent that such untrue
statement or omission is contained in any information furnished in writing by such Investor to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto or (ii) a breach by such Investor
of the terms hereof. In no event shall the liability of an Investor be greater in amount than the dollar amount of the proceeds (net of all expense paid by such Investor in connection with any claim relating to this Section 6 and the amount of any
damages such holder has otherwise been required to pay by reason of such untrue statement or omission) received by such Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification
obligation. 
  
 (c) Conduct of Indemnification Proceedings. Any
person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory
to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person
notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person);
and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially
adversely affect the indemnifying party in the defense of any such claim or litigation. It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than
one separate firm of attorneys at any time for all such indemnified parties. No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation. 
  
 (d) Contribution. If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an
indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. No person guilty of fraudulent misrepresentation within the
meaning of Section 11(f) of the 1933 Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation. In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than
the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or 

  

 
omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation. 
  
 7. Miscellaneous. 
  
 (a) Amendments and Waivers. This Agreement may be amended only by a writing signed
by the Company and the Required Investors. The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to such amendment, action or
omission to act, of the Required Investors. 
  
 (b) Notices. All
notices and other communications provided for or permitted hereunder shall be made as set forth in Section 9.4 of the Purchase Agreement. 
  
 (c) Assignments and Transfers by Investors. The provisions of this Agreement shall be binding upon and inure to the benefit of the Investors and their
respective successors and assigns. An Investor may transfer or assign, in whole or from time to time in part, to one or more persons its rights hereunder in connection with the transfer of Registrable Securities by such Investor to such person,
provided that such Investor complies with all laws applicable thereto and provides written notice of assignment to the Company promptly after such assignment is effected. 
  
 (d) Assignments and Transfers by the Company. This Agreement may not be assigned by the Company (whether by operation of law or
otherwise) without the prior written consent of the Required Investors, provided, however, that the Company may assign its rights and delegate its duties hereunder to any surviving or successor corporation in connection with a merger or
consolidation of the Company with another corporation, or a sale, transfer or other disposition of all or substantially all of the Company’s assets to another corporation, without the prior written consent of the Required Investors, after
notice duly given by the Company to each Investor. 
  
 (e) Benefits of
the Agreement. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon
any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 
  
 (f) Counterparts; Faxes. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Agreement may also be executed via facsimile, which shall be deemed an original. 
  
 (g) Titles and Subtitles. The titles and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or interpreting this Agreement. 
  
 (h) Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable in any respect.

  
 (i) Further Assurances. The parties shall execute and deliver
all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained. 
  
 (j) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter. 
  
 (k) Governing Law; Consent to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof. Each of the
parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action,
proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each
party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum. 
  

 IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this
Agreement as of the date first above written. 
  

									
	The Company:	 	 	 	 TARANTELLA, INC.

					
	 	 	 	 	 	 	By:	 	 /s/    ALOK MOHAN

	 	 	 	 	 	 	Name:	 	 Alok Mohan

	 	 	 	 	 	 	Title:	 	 Chairman

  

									
	 The Investors:
	 	 	 	 SPECIAL SITUATIONS TECHNOLOGY FUND, L.P.

					
	 	 	 	 	 	 	By:	 	 /s/    AUSTIN MARXE

	 	 	 	 	 	 	 Name:
	 	 Austin Marxe

	 	 	 	 	 	 	 Title:
	 	 General Partner

  

									
	 	 	 	 	 SPECIAL SITUATIONS TECHNOLOGY FUND II, L.P

					
	 	 	 	 	 	 	By:	 	 /s/    AUSTIN MARXE

	 	 	 	 	 	 	 Name:
	 	 Austin Marxe

	 	 	 	 	 	 	 Title:
	 	 General Partner

  

									
	 	 	 	 	 VERTICAL VENTURES LLC

					
	 	 	 	 	 	 	By:	 	 /s/    SCOT COHEN

	 	 	 	 	 	 	 Name:
	 	 Scot Cohen

	 	 	 	 	 	 	 Title:
	 	 
				
	 	 	 	 	 	 	 /s/    SCOT COHEN

	 	 	 	 	 	 	 	 	 Scot Cohen

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00061-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00061-of-00352.parquet"}]]