INVESTOR RIGHTS AGREEMENT
This INVESTOR RIGHTS AGREEMENT (this "Agreement") is made as of January
29, 2004 by and among GraphOn Corporation, a Delaware corporation (the
"Company") and (ii) the investors listed on Exhibit A hereto (collectively the
"Investors")
WHEREAS, the Company desires to sell to the Investors, and the Investors
desire to purchase an aggregate of 5,000,000 shares of Common Stock of the
Company (the "Shares") and 5-year warrants, exercisable to purchase an aggregate
of 2,500,000 shares of Common Stock at $0.33 per share (the "Purchased
Warrants"), upon the terms and conditions set forth in that certain Unit
Subscription Agreement, dated of even date herewith, between the Company and the
Investors (the "Unit Subscription Agreement"); and
WHEREAS, the terms of the Unit Subscription Agreement provide that it
shall be a condition precedent to the closing of the transactions thereunder for
the Company and the Investors to execute and deliver this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
1. Definitions. The following terms shall have the meanings provided
below:
"Additional Shares" shall mean any additional shares of Common Stock
which may be issued or become issuable from time to time upon the exercise of a
Purchased Warrant or a Griffin Warrant, or a distribution with respect to, or in
exchange for, or in replacement of a Purchased Warrant or a Griffin Warrant, as
a result of anti-dilution provisions of a Purchased Warrant or a Griffin Warrant
or otherwise.
"Board of Directors" shall mean the board of directors of the
Company.
"Closing" shall have the meaning ascribed to such term in the Unit
Subscription Agreement.
"Common Stock" shall mean the common stock, $.0001 par value per
share, of the Company.
"Convertible Securities" means (i) options to purchase or rights to
subscribe for Common Stock, (ii) securities by their terms convertible into or
exchangeable for Common Stock or (iii) options to purchase or rights to
subscribe for such convertible or exchangeable securities.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and all of the rules and regulations promulgated thereunder.
"Excluded Stock" shall mean (i) all shares of Common Stock issued or
issuable to employees, directors or consultants pursuant to any equity
compensation plan that is in effect on the date of this Agreement, (ii) all
shares of Common Stock issued or issuable to employees or directors pursuant to
any equity compensation approved by the stockholders of the Company after the
date of this Agreement, (iii) all shares of Common Stock issued or issuable to
employees, directors or consultants in the form of a hiring bonus, (iv) the
Griffin Warrants, (iv) all shares of Common Stock issued or issuable to bona
fide leasing companies, strategic partners, or major lenders, (v) all shares of
Common Stock issued or issuable as the purchase price in a bona fide acquisition
or merger (including reasonable fees paid in connection therewith), or (vi) all
shares of Common Stock issued upon conversion or exercise of the Purchased
Warrants or other Convertible Securities outstanding on the date hereof.
"Griffin Warrants" shall mean warrants issued to Griffin Securities
Inc. ("Griffin") in substantially the same form as the Purchased Warrants (A) to
purchase an aggregate of 500,000 shares of Common Stock at $.23 per share and
(B) 250,000 shares of Common Stock at $.33 per share
"Holder" shall mean the Investors or any transferee of the
Purchased Warrants or Registrable Shares.
"Majority Holders" shall mean, at the relevant time of reference
thereto, those Holders holding more than fifty percent (50%) of the Registrable
Shares held by all of the Holders.
"Other Securities" refers to any stock (other than Common Stock) and
other securities of the Company or any other person (corporate or otherwise)
which the Holders of the Purchased Warrants or the Griffin Warrants at any time
shall be entitled to receive, or shall have received, upon the exercise of the
Purchased Warrants or the Griffin Warrants, in lieu of or in addition to Common
Stock, or which at any time shall be issuable or shall have been issued in
exchange for or in replacement of Common Stock or Other Securities pursuant to
the terms of the Purchased Warrants or the Griffin Warrants or otherwise.
"Registrable Shares" shall mean any Shares or any shares of Common
Stock or Other Securities issued or issuable from time to time upon the exercise
of a Purchased Warrant or a Griffin Warrant, or a distribution with respect to,
in exchange for, or in replacement of a Purchased Warrant or a Griffin Warrant,
including without limitation Additional Shares.
"Rule 144" shall mean Rule 144 promulgated under the Securities Act
and any successor or substitute rule, law or provision.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and all of the rules and regulations promulgated thereunder.
2. Effectiveness. This Agreement shall become effective upon the Closing.
3. Mandatory Registration. (a) No later than thirty (30) days after the
Closing, the Company will prepare and file with the SEC a registration statement
on Form S-3 (or, if Form S-3 is not then available to the Company, on such form
of registration statement that is then available to effect a registration of all
Registrable Shares) for the purpose of registering under the Securities Act all
of the Registrable Shares for resale by, and for the account of, the Investors
as selling stockholders thereunder (the "Registration Statement"). The
Registration Statement shall permit the Investors to offer and sell, on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, any
or all of the Registrable Shares. Such Registration Statement also shall cover,
to the extent allowable under the Securities 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 Shares.
(b) The Company agrees to use commercially reasonable efforts to
cause the Registration Statement to become effective as soon as practicable
after filing, but in no event later than one hundred twenty (120) days after
filing.
(c) The Company shall be required to keep the Registration
Statement, as amended, effective until such date that is the earlier of (i) two
years after the Closing, (ii) the date when all of the Registrable Shares
registered thereunder shall have been sold, or (iii) such time as all the
Registrable Shares held by the Investors can be sold pursuant to Rule 144(k) and
without compliance with the registration requirements of the Securities Act
(such date is referred to herein as the "Mandatory Registration Termination
Date"). Thereafter, the Company shall be entitled to withdraw the Registration
Statement and the Investors shall have no further right to offer or sell any of
the Registrable Shares pursuant to the Registration Statement (or any prospectus
relating thereto).
(d) The Company shall not grant any registration rights that are
pari passu with or senior to the registration rights of the Investors under this
Agreement if such registration rights would adversely affect the Investors'
ability to sell Registrable Shares pursuant to the Registration Statement. The
Company represents that no stockholders other than the Investors and Griffin
have the right to sell any Common Stock or other securities of the Company
pursuant to the Registration Statement.
4. Obligations of the Company. In connection with the Company's obligation
under Section 3 hereof to file a Registration Statement with the SEC and to use
its reasonable efforts to cause the Registration Statement to become effective
as soon as practicable after filing, the Company shall, as expeditiously and as
reasonably possible, subject to Section 9 hereof:
(a) Prepare and file with the SEC such amendments and supplements to
the Registration Statement and the prospectus used in connection therewith as
may be necessary to keep the Registration Statement effective until the
Mandatory Registration Termination Date;
(b) Furnish to the selling Investors such reasonable number of copies
of the Registration Statement, prospectus and preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
(including, without limitation, prospectus amendments and supplements as are
prepared by the Company in accordance with Section 4(a) above) as the selling
Investors may reasonably request, in order to facilitate the public or other
disposition of such selling Investors' Registrable Shares;
(c) Use reasonable efforts to register and qualify the Registrable
Shares covered by the Registration Statement under such other securities or Blue
Sky laws of all states requiring such securities or Blue Sky registration or
qualification, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions; and
(d) Use reasonable efforts to cause all such Registrable Shares
registered hereunder to be listed on each securities exchange (including without
limitation any Nasdaq market) on which securities of the same class issued by
the Company are then listed.
5. Furnish Information. (a) It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement that
the selling Investors shall furnish to the Company such information regarding
them and the securities held by them as the Company shall reasonably request and
as shall be required in order to effect any registration by the Company pursuant
to this Agreement.
(b) The Registration Statement will provide for a plan of distribution
with respect to the Registrable Shares substantially as follows: The Registrable
Shares may be sold from time to time by the Investors, or by pledgees, donees,
transferees or other successors in interest. Such sales may be made on one or
more exchanges or in the over-the-counter market, or otherwise at prices and at
terms then prevailing or at prices related to the then-current market price, or
in negotiated transactions. The Registrable Shares may be sold by one or more of
the following: (a) a block trade in which the broker or dealer so engaged will
attempt to sell the shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction; (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account pursuant
to the resale registration statement; (c) an exchange distribution in accordance
with the rules of such exchange; (d) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (e) transactions
between sellers and purchasers without a broker/dealer. In addition, any
securities covered by the Registration Statement which qualify for sale pursuant
to Rule 144 may be sold under Rule 144 rather than pursuant to the Registration
Statement. From time to time the selling Investors may engage in short sales,
short sales versus the box, puts and calls and other transactions in securities
of the issuer or derivatives thereof, and may sell and deliver the shares in
connection therewith. In effecting sales, brokers or dealers engaged by the
selling Investors may arrange for other brokers or dealers to participate.
Brokers or dealers will receive commissions or discounts from selling Investors
in amounts to be negotiated immediately prior to the sale.
6. Expenses of Registration. All expenses incurred in connection with the
registration of the Registrable Shares pursuant to this Agreement (excluding
underwriting, brokerage and other selling commissions and discounts), including
without limitation all registration and qualification and filing fees, printing
expenses, fees and disbursements of counsel for the Company, and the reasonable
fees and disbursements of one counsel for the selling Investors selected by the
selling Investors, shall be borne by the Company.
7. Indemnification.
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each selling Investor (including the partners or officers, directors
and stockholders of such Investor), and each person, if any, who controls such
selling Investor within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which they may become
subject under the Securities Act, the Exchange Act, and other federal or state
securities laws, or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) (i) arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained in the
Registration Statement, in any preliminary prospectus or final prospectus
relating thereto or in any amendments or supplements to the Registration
Statement or any such preliminary prospectus or final prospectus, (ii) arise out
of or are based upon 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 or (iii) arise out of any violation or alleged violation
by the Company of the Securities Act, the Exchange Act, any other federal or
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any other federal or state securities law; and will
reimburse such selling Investor, or such officer, director or 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 indemnity agreement contained in this Section 7(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld or delayed), nor shall
the Company be liable in any such case for any such loss, damage, liability or
action to the extent that it arises out of or is based upon an untrue statement
or alleged untrue statement or omission made in connection with the Registration
Statement, any preliminary prospectus or final prospectus relating thereto or
any amendments or supplements to the Registration Statement or any such
preliminary prospectus or final prospectus, in reliance upon and in conformity
with written information furnished expressly for use in connection with the
Registration Statement or any such preliminary prospectus or final prospectus by
the selling Investors, any broker/dealer acting on their behalf or controlling
person with respect to them.
(b) To the extent permitted by law, each selling Investor will
severally and not jointly indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the Registration Statement,
each person, if any, who controls the Company within the meaning of the
Securities Act, or any selling Investors, and all other selling Investors
against any losses, claims, damages or liabilities to which the Company or any
such director, officer, controlling person or such other selling Investor may
become subject to, under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any untrue or alleged untrue statement of any material fact
contained in the Registration Statement or any preliminary prospectus or final
prospectus, relating thereto or in any amendments or supplements to the
Registration Statement or any such preliminary prospectus or final prospectus,
or arise out of or are based upon 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, in each case to the extent and only to the
extent that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, in any preliminary
prospectus or final prospectus relating thereto or in any amendments or
supplements to the Registration Statement or any such preliminary prospectus or
final prospectus, in reliance upon and in conformity with written information
furnished by the selling Investor expressly for use in connection with the
Registration Statement, or any preliminary prospectus or final prospectus; and
such selling Investor will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person, or
other selling Investor in connection with investigating or defending any such
loss, claim, damage, liability or action, provided, however, that the liability
of each selling Investor hereunder (when aggregated with amounts contributed, if
any, pursuant to Section 7(d)) shall be limited to the difference (the
"Difference") between the amount received by such Investor from the sale of the
Registrable Securities pursuant to the Registration Statement and the amount
paid by such Investor to the Company for such Registrable Securities pursuant to
the Unit Subscription Agreement, and provided further, however, that the
indemnity agreement contained in this Section 7(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of those selling Investor(s) against
which the request for indemnity is being made (which consent shall not be
unreasonably withheld or delayed).
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying party
under this Section 7, notify the indemnifying party in writing of the
commencement thereof and the indemnifying party shall have the right to
participate in and, to the extent the indemnifying party desires, jointly with
any other indemnifying party similarly noticed, to assume at its expense the
defense thereof with counsel mutually satisfactory to the indemnifying parties
with the consent of the indemnified party which consent will not be unreasonably
withheld, conditioned or delayed. In the event that the indemnifying party
assumes any such defense, the indemnified party may participate in such defense
with its own counsel and at its own expense, provided, however, that the counsel
for the indemnifying party shall act as lead counsel in all matters pertaining
to such defense or settlement of such claim and the indemnifying party shall
only pay for such indemnified party's reasonable legal fees and expenses for the
period prior to the date of its participation in such defense, and provided
further, however, that the indemnified party (together with all indemnified
parties which may be represented without conflict by one counsel) shall have the
right to retain one separate counsel, with the fees and expenses to be paid by
the indemnifying party, if the representation of the indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between the indemnified party and any other
party represented by such counsel in such proceeding. Notwithstanding the
foregoing, the indemnifying party shall not be obligated to pay the fees of more
than one separate counsel. The failure to notify an indemnifying party of the
commencement of any such action will not relieve such indemnifying party of any
liability to the indemnified party under this Section 7 (except to the extent
that such failure materially and adversely affects the indemnifying party's
ability to defend such action), nor shall the omission so to notify an
indemnifying party relieve such indemnifying party of any liability which it may
have to any indemnified party otherwise other than under this Section 7. No
indemnifying party shall, without the consent of the indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation and otherwise in form and substance reasonably satisfactory to the
indemnified party.
(d) If the indemnification provided in this Section 7 is held by a
court of competent jurisdiction to be unavailable to an indemnified party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such loss, liability, claim, damage or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party on the one hand and of the indemnified party on the other in connection
with the statements or omissions that shall have resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations; provided that in no event shall any contribution by an Investor
under this Section 7(d), when aggregated with amounts paid, if any, pursuant to
Section 7(b), exceed the Difference. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) The obligations of the Company and Investors under this Section 7
shall survive the completion of any offering of Registrable Shares in a
Registration Statement under Section 3, and otherwise.
8. Reports Under the Exchange Act. With a view to making available to the
Investors the benefits of Rule 144 and any other rule or regulation of the SEC
that may at any time permit the Investors to sell the Registrable Shares to the
public without registration, the Company agrees to use reasonable efforts: (i)
to make and keep public information available, as those terms are understood and
defined in the General Instructions to Form S-3, or any successor or substitute
form, and in Rule 144, (ii) to file with the SEC in a timely manner all reports
and other documents required to be filed by an issuer of securities registered
under the Securities Act or the Exchange Act and (iii) undertake any additional
actions reasonably necessary to maintain the availability of the Registration
Statement or the use of Rule 144.
9. Selling Procedures. Any sale of Registrable Shares pursuant to the
registration statement filed in accordance with Section 3 hereof shall be
subject to the following conditions and procedures:
(a) Updating the Prospectus.
(i) If the Company informs the selling Investor that the
Registration Statement or final prospectus then on file with the SEC is not
current or otherwise does not comply with the Securities Act, the Company shall
use its best efforts to provide to the selling Investor a current prospectus
that complies with the Securities Act as soon as practicable, but in no event
later than three (3) business days after delivery of such notice.
(ii) If the Company requires more than three (3) business days to
update the prospectus under Section 9(a)(i) above, the Company shall have the
right to delay the preparation of a current prospectus that complies with the
Securities Act without explanation to such Investor, subject to the limitations
set forth in Section 9(b) below, for a period of not more than forty-five (45)
days (or two periods which total not more than ninety (90) days in the
aggregate) during any twelve-month period.
(b) General. Notwithstanding the foregoing, upon receipt of any
notice from the Company of (i) any request by the SEC or any other federal or
state governmental authority during the period of effectiveness of the
Registration Statement for amendments or supplements to the Registration
Statement or related prospectus or for additional information relating to the
Registration Statement, (ii) the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness
of the Registration Statement or the initiation of any proceedings for that
purpose, (iii) the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (iv) the happening of any
event which makes any statement made in the Registration Statement or related
prospectus or any document incorporated or deemed to be incorporated therein
by reference untrue in any material respect or which requires the making of
any changes in the Registration Statement or prospectus so that, in the case
of the Registration Statement, it will not contain 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, and that in the
case of the prospectus, it will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading or (v) that, in the judgment of the Company's Board of
Directors, it is advisable to suspend use of the prospectus for a discrete
period of time due to pending corporate developments, public filings with the
Commission or that there exists material nonpublic information about the
Company that the Board of Directors, acting in good faith, determines not to
disclose in a registration statement, then the Company may suspend use of the
prospectus (each a "Suspension"), in which case the Company shall promptly so
notify each Investor and each Investor shall not dispose of Registrable
Shares covered by the Registration Statement or prospectus until copies of a
supplemented or amended prospectus are distributed to the Investors or until
the Investors are advised in writing by the Company that the use of the
applicable prospectus may be resumed; provided, however, that,
notwithstanding the foregoing, the Company may suspend use of the prospectus
pursuant to Sections 9(a)(ii), 9(b)(iv) and 9(b)(v), and an Investor may be
prohibited from selling or otherwise disposing of the Registrable Shares
covered by the Registration Statement or prospectus, on not more than two
occasions in total during any twelve-month period and for no more than ninety
(90) days in the aggregate during any such twelve-month period. The Company
shall use its best efforts to ensure the use of the prospectus may be resumed
as soon as practicable. The Company shall use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of the Registration
Statement, or the lifting of any suspension of the qualification (or
exemption from qualification) of any of the securities for sale in any
jurisdiction, at the earliest practicable moment. The Company shall, upon the
occurrence of any event contemplated by clause (iv), prepare a supplement or
post-effective amendment to the Registration Statement or a supplement to the
related prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Shares being sold thereunder, such prospectus
will not contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
10. Pre-emptive Rights. In the event that at any time after the date
hereof the Company proposes to issue additional shares of Common Stock or
Convertible Securities, other than Excluded Stock, the Company shall send a
notice (an "Additional Share Notice") to the Holder setting forth the terms of
such proposed issuance. The Holder shall be entitled to purchase the proposed
number of shares of Common Stock or Convertible Securities, proposed to be
issued in proportion to the Holder's Proportionate Percentage (as hereafter
defined) on substantially the same terms set forth in the Additional Share
Notice by (a) notice to the Company (the "Purchase Notice") within 10 days of
the date of the Additional Share Notice and (b) payment of the price for such
shares of Common Stock or Convertible Securities, by wire transfer of
immediately available funds or such other method of payment as the Company may
approve, within 10 days after delivery to the Company of the Purchase Notice.
The "Proportionate Percentage" of the Holder means the percentage obtained by
dividing (a) the aggregate number shares of Common Stock held by the Holder by
(b) the aggregate number of shares of Common Stock of the Company then issued
and outstanding.
11. Issuance of Certain Securities. The Company shall not issue any (a)
Convertible Securities or similar securities that contain a provision that
provides for any change or determination of the applicable conversion price,
conversion rate, or exercise price (or a similar provision which might have a
similar effect) based on any determination of the Market Price or other value of
the Company's securities or any other market based or contingent standard, (b)
any preferred stock, debt instruments or similar securities or investment
instruments providing for (i) preferences or other payments substantially in
excess of the original investment by purchasers thereof or (ii) dividends,
interest or similar payments other than dividends, interest or similar payments
computed on an annual basis and not in excess, directly or indirectly, of the
lesser of a rate equal to (A) twice the interest rate on 10 year US Treasury
Notes and (B) 20%.
12. Assignment. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the parties hereto and their respective
successors and assigns. In addition, and whether or not any express assignment
shall have been made, the provisions of this Agreement which are for the benefit
of the Investors shall also be for the benefit of and enforceable by any
subsequent holder of any Registrable Securities who has executed a copy of this
Agreement or otherwise indicated its agreement to be bound hereby. Without
limitation on the Investors' rights to transfer Registrable Securities, the
Company acknowledges that any Investor may, at any time, transfer any of the
Registrable Securities which they may own, beneficially or of record, to (a)
their affiliates, or (b) their partner(s), investor(s), security holder(s) or
beneficial holder(s) pursuant to their organization documents or other
agreements, and that, upon the consummation of any such transfer, the provisions
of this Agreement shall be binding upon and inure to the benefit of each
transferee of such Registrable Securities.
13. Entire Agreement. This Agreement (including the exhibits hereto), the
Unit Subscription Agreement and the Purchased Warrants constitute and contain
the entire agreement and understanding of the parties with respect to the
subject matter hereof, and such agreements also supersede any and all prior
negotiations, correspondence, agreements or understandings with respect to the
subject matter hereof.
14. Miscellaneous.
(a) Amendments. This Agreement may not be amended, modified or
terminated, and no rights or provisions may be waived, except with the written
consent of the Majority Holders and the Company.
(b) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York. Each party
hereby irrevocably consents and submits to the jurisdiction of any New York
State or United States Federal Court sitting in the State of New York, County of
New York, over any action or proceeding arising out of or relating to this
Agreement and irrevocably consents to the service of any and all process in any
such action or proceeding by registered mail addressed to such party at its
address specified herein (or as otherwise noticed to the other party). Each
party further waives any objection to venue in New York and any objection to an
action or proceeding in such state and county on the basis of forum non
conveniens. Each party also waives any right to trial by jury.
(c) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors or assigns. This Agreement shall also be binding
upon and inure to the benefit of any transferee of any of the Registrable
Shares. Notwithstanding anything in this Agreement to the contrary, if at any
time any Investor shall cease to own any Registrable Shares, all of such
Investor's rights under this Agreement shall immediately terminate.
(d) Notices
(i) Any notices, reports or other correspondence (hereinafter
collectively referred to as "correspondence") required or permitted to be given
hereunder shall be sent by mail, courier (overnight or same day) or fax or
delivered by hand to the party to whom such correspondence is required or
permitted to be given hereunder (except that notices of Suspensions or stop
orders must be made by fax). The date of giving any notice shall be the date of
its actual receipt.
(ii) All correspondence to the Company shall be addressed as
follows:
GraphOn Corporation
105 Cochrane Circle, Suite L
Morgan Hill, California 95037
Attention: Chief Executive Officer
Fax number: (408) 776-8448
with a copy to:
Sonnenschein Nath & Rosenthal LLP
1221 Avenue of the Americas
New York, New York 10020-1089
Attention: Ira I. Roxland
Fax number: (212) 768-6800
(iii) All correspondence to any Investor shall be sent to the most
recent address furnished by the Investor to the Company. (iv) Any Investor may
change the address to which correspondence to it is to be addressed by
notification as provided for herein.
(e) Injunctive Relief. The parties acknowledge and agree that in the
event of any breach of this Agreement, remedies at law may be inadequate, and
each of the parties hereto shall be entitled to seek specific performance of the
obligations of the other parties hereto and such appropriate injunctive relief
as may be granted by a court of competent jurisdiction.
(f) Attorney's Fees. If any action at law or in equity is necessary
to enforce or interpret any of the terms of this Agreement, the prevailing party
shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
(g) Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be unenforceable under applicable law, such
provision shall be replaced with a provision that accomplishes, to the extent
possible, the original business purpose of such provision in a valid and
enforceable manner, and the balance of the Agreement shall be interpreted as if
such provision were so modified and shall be enforceable in accordance with its
terms.
(h) Aggregation of Shares. Registrable Shares held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
(i) Counterparts. This Agreement may be executed in a number of
counterparts, any of which together shall for all purposes constitute one
Agreement, binding on all the parties hereto notwithstanding that all such
parties have not signed the same counterpart.
[Remainder of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto have executed this Investor Rights
Agreement as of the date and year first above written.
GRAPHON CORPORATION
By: /s/ ROBERT P. DILWORTH
-----------------------------------
Name: Robert P. Dilworth
Title: Chief Executive Officer
INVESTOR
[ ]
By: /s/
----------------------------------
Name:
Title: