Void after February XX, 2010 Warrant No.
This Warrant and any shares acquired upon the exercise of this
Warrant have not been registered under the Securities Act of 1933.
This Warrant and such shares may not be sold or transferred in the
absence of such registration or an exemption therefrom under said
Act. This Warrant and such shares may not be transferred except upon
the conditions specified in this Warrant, and no transfer of this
Warrant or such shares shall be valid or effective unless and until
such conditions shall have been complied with.
GRAPHON CORPORATION
COMMON STOCK PURCHASE WARRANT
GraphOn Corporation (the "Company"), having its principal office at
3130 Winkle Avenue, Santa Cruz, California 95065, hereby certifies that, for
value received, _____________, or assigns, is entitled, subject to the terms set
forth below, to purchase from the Company at any time on or from time to time
after _________ __, 2005 and before 5:00 P.M., New York City time, on _______ ,
2010, or as extended in accordance with the terms hereof (the "Expiration
Date"), ______________ fully paid and non-assessable shares of Common Stock of
the Company, at the initial Purchase Price per share (as defined below) of
$0.40. The number and character of such shares of Common Stock and the Purchase
Price per share are subject to adjustment as provided herein.
Background. The Company agreed to issue warrants to purchase an aggregate
of 8,148,100 shares of Common Stock (subject to adjustment as provided herein)
(the "Warrants"), each Warrant entitling the Holder thereof to purchase one
share of Common Stock in exchange for the Series B Participating Convertible
Preferred Stock Purchase Warrants issued __________, 2010 in connection with a
private placement of the Company's Units (the "February Offering").
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
The term "Company" includes the Company and any corporation which
shall succeed to or assume the obligations of the Company hereunder. The term
"corporation" shall include an association, joint stock company, business trust,
limited liability company or other similar organization.
The term "Common Stock" includes all stock of any class or classes
(however designated) of the Company, authorized upon the Original Issue Date or
thereafter, the Holders of which shall have the right, without limitation as to
amount, either to all or to a share of the balance of current dividends and
liquidating dividends after the payment of dividends and distributions on any
shares entitled to preference, and the Holders of which shall ordinarily, in the
absence of contingencies, be entitled to vote for the election of a majority of
directors of the Company (even though the right so to vote has been suspended by
the happening of such a contingency).
The term "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.
The term "Exchange Act" means the Securities Exchange Act of 1934 as
the same shall be in effect at the time.
"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
warrants issued to Griffin Securities Inc. ("Griffin") on the date hereof, (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.
"Fair Market Value" of assets or securities (other than Common Stock)
shall mean the fair market value as reasonably determined by the Board of
Directors of the Company in good faith in accordance with generally accepted
accounting principles.
The term "Holder" means any record owner of Warrants or Underlying
Securities.
The "Original Issue Date" means __________ __, 2005.
The term "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 Warrants at any time shall be entitled to
receive, or shall have received, upon the exercise of the 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 Section 6 or otherwise.
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The term "Purchase Price per share" means $0.40 per share, as
adjusted from time to time in accordance with the terms hereof.
The terms "registered" and "registration" refer to a registration
effected by filing a registration statement in compliance with the Securities
Act, to permit the disposition of Common Stock (or Other Securities) issued or
issuable upon the exercise of Warrants, and any post-effective amendments and
supplements filed or required to be filed to permit any such disposition.
The term "Securities Act" means the Securities Act of 1933 as the
same shall be in effect at the time.
The term "Underlying Securities" means any Common Stock or Other
Securities issued or issuable upon exercise of Warrants.
The term "Warrant" means, as applicable, this Warrant or each right
as set forth in this Warrant to purchase one share of Common Stock, as adjusted.
1. Registration, etc. The Holder shall have the rights to
registration of Underlying Securities issuable upon exercise of the Warrants
that are set forth in the Investor Rights Agreement, dated February 2, 2005,
between the Company and the Holder (the "Investor Rights Agreement").
2. Sale or Exercise Without Registration. If, at the time of any
exercise, transfer or surrender for exchange of a Warrant or of Underlying
Securities previously issued upon the exercise of Warrants, such Warrant or
Underlying Securities shall not be registered under the Securities Act, the
Company may require, as a condition of allowing such exercise, transfer or
exchange, that the Holder or transferee of such Warrant or Underlying
Securities, as the case may be, furnish to the Company an opinion of counsel,
reasonably satisfactory to the Company, to the effect that such exercise,
transfer or exchange may be made without registration under the Securities Act,
provided that the disposition thereof shall at all times be within the control
of such Holder or transferee, as the case may be, and provided further that
nothing contained in this Section 2 shall relieve the Company from complying
with any request for registration pursuant to the Investor Rights Agreement.
3. Exercise of Warrant.
3.1. Exercise in Full. Subject to the provisions hereof, this
Warrant may be exercised in full by the Holder hereof by surrender of this
Warrant, with the form of subscription at the end hereof duly executed by
such Holder, to the Company at its principal office accompanied by
payment, in cash or by certified or official bank check payable to the
order of the Company, in the amount obtained by multiplying the number of
shares of Common Stock issuable upon exercise of this Warrant by the
Purchase Price per share, after giving effect to all adjustments through
the date of exercise.
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3.2. Partial Exercise. Subject to the provisions hereof, this
Warrant may be exercised in part by surrender of this Warrant in the
manner and at the place provided in Section 3.1 except that the amount
payable by the Holder upon any partial exercise shall be the amount
obtained by multiplying (a) the number of shares of Common Stock (without
giving effect to any adjustment therein) designated by the Holder in the
subscription at the end hereof by (b) the Purchase Price per share. Upon
any such partial exercise, the Company at its expense will forthwith issue
and deliver to or upon the order of the Holder hereof a new Warrant or
Warrants of like tenor, in the name of the Holder hereof or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may
request, calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock equal (without giving effect to any
adjustment therein) to the number of such shares called for on the face of
this Warrant minus the number of such shares designated by the Holder in
the subscription at the end hereof.
3.3. Exercise by Surrender of Warrant or Shares of Common
Stock. In addition to the method of payment set forth in Sections 3.1 and
3.2 and in lieu of any cash payment required thereunder, the Holder(s) of
the Warrants shall have the right at any time and from time to time to
exercise the Warrants in full or in part by surrendering shares of Common
Stock, this Warrant or other securities issued by the Company in the
manner and at the place specified in Section 3.1 as payment of the
aggregate Purchase Price per share for the Warrants to be exercised. The
number of Warrants or shares of Common Stock to be surrendered in payment
of the aggregate Purchase Price for the Warrants to be exercised shall be
determined by multiplying the number of Warrants to be exercised by the
Purchase Price per share, and then dividing the product thereof by an
amount equal to the Market Price (as defined below) . The number of shares
of Common Stock or such other securities to be surrendered in payment of
the aggregate Purchase Price for the Warrants to be exercised shall be
determined in accordance with the preceding sentence as if the other
securities had been converted into Common Stock immediately prior to
exercise or, in the case the Company has issued other securities which are
not convertible into Common Stock, at the Market Price thereof.
3.4. Definition of Market Price. As used herein, the phrase
"Market Price" at any date shall be deemed to be (i) if the principal
trading market for such securities is an exchange, the average of the high
reported sale prices per share of Common Stock for the last five previous
trading days in which a sale was reported, as officially reported on any
consolidated tape, (ii) if the principal market for the Common Stock is
the over-the-counter market, the average of the high reported sale prices
per share on such trading days as set forth by such market or, (iii) if
the Common Stock is not quoted by such over-the-counter market, the
average of the average of the mean of the bid and asking prices per share
on such trading days as set forth in the National Quotation Bureau sheet
listing such securities for such days. Notwithstanding the foregoing, if
there is no reported high sale price, as the case may be, reported on any
of the ten trading days preceding the event requiring a determination of
Market Price hereunder, then the Market Price shall be the average of the
high bid and asked prices for such days; and if there is no reported high
bid and asked prices, as the case may be, reported on any of the ten
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trading days preceding the event requiring a determination of Market Price
hereunder, then the Market Price shall be determined in good faith by
resolution of the Board of Directors of the Company, based on the best
information available to it or in the event of a dispute of the
determination of the Board of Directors of the Company provided in clause
(b) above, by arbitration in accordance with the rules then standing of
the American Arbitration Association, before a single arbitrator to be
chosen by the Company and reasonably acceptable to a majority in interest
of the holders of Warrants from a panel of persons qualified by education
and training to pass on the matter to be decided.
3.5. Company to Reaffirm Obligations. The Company will, at the
time of any exercise of this Warrant, upon the request of the Holder
hereof, acknowledge in writing its continuing obligation to afford to such
Holder any rights (including, without limitation, any right to
registration of the Underlying Securities) to which such Holder shall
continue to be entitled after such exercise in accordance with the
provisions of this Warrant, provided that if the Holder of this Warrant
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Company to afford such Holder any such
rights.
3.6. Certain Exercises. If an exercise of a Warrant or
Warrants is to be made in connection with a registered public offering or
sale of the Company, such exercise may, at the election of the Holder, be
conditioned on the consummation of the public offering or sale of the
Company, in which case such exercise shall not be deemed effective until
the consummation of such transaction.
4. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within three business days thereafter, the Company at its own expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder hereof, or as such Holder
(upon payment by such Holder of any applicable transfer taxes) may direct, a
certificate or certificates for the number of fully paid and non-assessable
shares of Common Stock or Other Securities to which such Holder shall be
entitled upon such exercise, plus, in lieu of any fractional share to which such
Holder would otherwise be entitled, cash equal to such fraction multiplied by
the then current Market Price of one full share, together with any other stock
or other securities and property (including cash, where applicable) to which
such Holder is entitled upon such exercise pursuant to Section 5 or otherwise.
5. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time after the
Original Issue Date the holders of Common Stock (or, if applicable, Other
Securities) shall have received, or (on or after the record date fixed for the
determination of stockholders eligible to receive) shall have become entitled to
receive, without payment therefor
(a) other or additional stock or other securities or property
(other than cash) by way of dividend, or
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(b) any cash paid or payable (including, without limitation,
by way of dividend), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate
rearrangement,
then, and in each such case the Holder of this Warrant, upon the exercise hereof
as provided in Section 3, shall be entitled to receive the amount of stock and
other securities and property (including cash in the cases referred to in
subdivisions (b) and (c) of this Section 5 which such Holder would hold on the
date of such exercise if on the Original Issue Date such Holder had been the
Holder of record of the number of shares of Common Stock called for on the face
of this Warrant and had thereafter, during the period from the Original Issue
Date to and including the date of such exercise, retained such shares and all
such other or additional stock and other securities and property (including cash
in the cases referred to in subdivisions (b) and (c) of this Section 5
receivable by such Holder as aforesaid during such period, giving effect to all
adjustments called for during such period by Sections 6 and 7 hereof. If the
number of shares of Common Stock outstanding at any time after the date hereof
is decreased by a combination or reverse stock split of the outstanding shares
of Common Stock, the Purchase Price per share shall be increased, and the number
of shares of Common Stock purchasable under this Warrant shall be decreased in
proportion to such decrease in outstanding shares of Common Stock.
6. Reorganization, Consolidation, Merger, etc. In case the Company
after the Original Issue Date shall (a) effect a reorganization, (b) consolidate
with or merge into any other person or (c) transfer all or substantially all of
its properties or assets to any other person under any plan or arrangement
contemplating the dissolution of the Company, then, in each such case, the
Holder of this Warrant, upon the exercise hereof as provided in Section 3 at any
time after the consummation of such reorganization, consolidation or merger or
the effective date of such dissolution, as the case may be, shall be entitled to
receive (and the Company shall be entitled to deliver), in lieu of the
Underlying Securities issuable upon such exercise prior to such consummation or
such effective date, the stock and other securities and property (including
cash) to which such Holder would have been entitled upon such consummation or in
connection with such dissolution, as the case may be, if such Holder had so
exercised this Warrant immediately prior thereto, all subject to further
adjustment thereafter as provided in Sections 5 and 7 hereof. The Company shall
not effect any such reorganization, consolidation, merger or sale, unless prior
to or simultaneously with the consummation thereof, the successor corporation
resulting from such consolidation or merger or the corporation purchasing such
assets or the appropriate corporation or entity shall assume, by written
instrument, the obligation to deliver to each Holder the shares of stock, cash,
other securities or assets to which, in accordance with the foregoing
provisions, each Holder may be entitled to and all other obligations of the
Company under this Warrant. In any such case, if necessary, the provisions set
forth in this Section 6 with respect to the rights thereafter of the Holders
shall be appropriately adjusted so as to be applicable, as nearly as may
reasonably be, to any Other Securities or assets thereafter deliverable on the
exercise of the Warrants.
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7. Other Adjustments.
7.1. General. Other than as set forth in Sections 5 and 6, if
the Company shall issue any Common Stock other than Excluded Stock for a
consideration per share (determined as set forth below) less than the
Purchase Price per share in effect immediately prior to the issuance of
such Common Stock (the "New Issuance"), the Purchase Price per share in
effect immediately prior to each issuance shall forthwith be reduced to a
new Purchase Price per share determined by dividing (x) the sum of (I) the
consideration received by the Company in such issue less (II) the Fair
Market Value of any securities or other assets transferred by the Company
in units or otherwise together with such Common Stock ("Additional
Assets"), by (y) the number of shares of Common Stock (not including
shares issuable upon conversion or exercise of Additional Assets) issued
in the New Issuance (the "New Purchase Price"). The number of shares of
Common Stock for which this Warrant is exercisable shall be increased to a
new number of shares determined by multiplying the number of shares of
Common Stock for which this Warrant is exercisable prior to the New
Issuance by a fraction, the numerator of which is the Purchase Price per
share in effect prior to the New Issuance and the denominator is the New
Purchase Price per share.
7.2. Convertible Securities. (a) In case the Company shall
issue or sell any Convertible Securities (including without limitation
Additional Assets), other than Excluded Stock, after the date hereof,
there shall be determined the price per share for which Common Stock is
issuable upon the conversion or exchange thereof, such determination to be
made by dividing (i) the total amount received or receivable by the
Company as consideration for the issue or sale of such Convertible
Securities, plus the then current aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or
exchange thereof, by (ii) the maximum number of shares of Common Stock of
the Company issuable upon the conversion or exchange of all of such
Convertible Securities.
(b) If the price per share so determined shall be less than the
applicable Purchase Price per share, then such issue or sale shall be
deemed to be an issue or sale for cash (as of the date of issue or sale of
such Convertible Securities) of such maximum number of shares of Common
Stock at the price per share so determined, provided that, if such
Convertible Securities shall by their terms provide for an increase or
increases or decrease or decreases, with the passage of time, in the
amount of additional consideration, if any, to the Company, or in the rate
of exchange, upon the conversion or exchange thereof, the adjusted
Purchase Price per share shall, forthwith upon any such increase or
decrease becoming effective, be readjusted to reflect the same, and
provided further, that upon the expiration of such rights of conversion or
exchange of such Convertible Securities, if any thereof shall not have
been exercised, the adjusted Purchase Price per share shall forthwith be
readjusted and thereafter be the price which it would have been had an
adjustment been made on the basis that the only shares of Common Stock so
issued or sold were issued or sold upon the conversion or exchange of such
Convertible Securities, and that they were issued or sold for the
consideration actually received by the Company upon such conversion or
exchange, plus the consideration, if any, actually received by the Company
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for the issue or sale of all of such Convertible Securities which shall
have been converted or exchanged.
7.3. Rights and Options. (a) In case the Company shall grant
any rights or options to subscribe for, purchase or otherwise acquire
Common Stock, other than Excluded Stock, there shall be determined the
price per share for which Common Stock is issuable upon the exercise of
such rights or options, such determination to be made by dividing (i) the
total amount, if any, received or receivable by the Company as
consideration for the granting of such rights or options, plus the then
current amount of additional consideration payable to the Company upon the
exercise of such rights or options, by (ii) the maximum number of shares
of Common Stock of the Company issuable upon the exercise of such rights
or options.
(b) If the price per share so determined shall be less than the
applicable Purchase Price per share, then the granting of such rights or
options shall be deemed to be an issue or sale for cash (as of the date of
the granting of such rights or options) of such maximum number of shares
of Common Stock at the price per share so determined, provided that, if
such rights or options shall by their terms provide for an increase or
increases or decrease or decreases, with the passage of time, in the
amount of additional consideration payable to the Company upon the
exercise thereof, the adjusted Purchase Price per share shall, forthwith
upon any such increase or decrease becoming effective, be readjusted to
reflect the same, and provided, further, that upon the expiration of such
rights or options, if any thereof shall not have been exercised, the
adjusted Purchase Price per share shall forthwith be readjusted and
thereafter be the price which it would have been had an adjustment been
made on the basis that the only shares of Common Stock so issued or sold
were those issued or sold upon the exercise of such rights or options and
that they were issued or sold for the consideration actually received by
the Company upon such exercise, plus the consideration, if any, actually
received by the Company for the granting of all such rights or options,
whether or not exercised.
7.4. Other Securities. If any event occurs as to which the
provisions of this Warrant are strictly applicable and the application
thereof would not fairly protect the rights of the Holders in accordance
with the essential intent and principles of such provisions, then the
Company shall make such adjustments in the application of such provisions,
in accordance with such essential intent and principles, as the Board of
Directors, in good faith, determines to be reasonably necessary to protect
such rights as aforesaid. In case at any time or from time to time the
Company shall take any action in respect of its Common Stock, other than
any action described in Sections 5, 6 and 7, then, unless such action will
not have a materially adverse effect upon the rights of the Holders, the
number of shares of Common Stock or other stock for which this Warrant is
exercisable and the Purchase Price per share shall be adjusted in such
manner as the Board of Directors, in good faith, determines to be
equitable in the circumstances. In furtherance and not in limitation of
the foregoing, if any event occurs of the type contemplated by Section 7
but not expressly provided for by such Section (including, without
limitation, the granting of stock appreciation rights, phantom stock
rights or other rights or arrangements with equity features), then the
Company's Board of Directors shall make an appropriate adjustment in the
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Purchase Price per share and the number of shares of Common Stock or Other
Securities issuable upon the exercise of a Warrant so as to protect the
rights of the Holders of such Warrants. No adjustment made pursuant to
this Section 7 shall increase the Purchase Price per share or decrease the
number of shares of Common Stock or Other Securities issuable upon
exercise of the Warrants.
8. Further Assurances. The Company will take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and non-assessable shares of stock upon the exercise of all
Warrants from time to time outstanding.
9. Officer's Certificate as to Adjustments. In each case of any
adjustment or readjustment in the shares of Common Stock (or Other Securities)
issuable upon the exercise of the Warrants, the Company at its expense will
promptly cause its Chief Financial Officer to compute such adjustment or
readjustment in accordance with the terms of the Warrants and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, and the number of
shares of Common Stock outstanding or deemed to be outstanding, including a
statement of: (a) the consideration received or receivable by the Company for
any additional shares of Common Stock (or Other Securities) issued or sold or
deemed to have been issued or sold; (b) the number of shares of Common Stock (or
Other Securities) outstanding or deemed to be outstanding; and (c) the Purchase
Price and the number of shares of Common Stock to be received upon exercise of
this Warrant, in effect immediately prior to such adjustment or readjustment and
as adjusted or readjusted as provided in this Warrant. The Company will
forthwith mail a copy of each such certificate to each Holder.
10. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of its stockholders
for the purpose of determining the stockholders thereof who are entitled
to receive any dividend or other distribution, or any right to subscribe
for, purchase or otherwise acquire any shares of stock of any class or any
other securities or property, or to receive any other right, or for the
purpose of determining stockholders who are entitled to vote in connection
with any proposed capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the Company
or any transfer of all or substantially all the assets of the Company to
or consolidation or merger of the Company with or into any other person,
or
(b) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company, or
(c) any proposed issue or grant by the Company of any Common
Stock, Convertible Securities or any other securities, or any right or
option to subscribe for, purchase or otherwise acquire any shares of stock
of any class or any other securities (other than the issue of Common Stock
on the exercise of the Warrants),
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then and in each such event the Company will mail or cause to be mailed to each
Holder of a Warrant a notice specifying (i) the date on which any such record is
to be taken for the purpose of such dividend, distribution or right, and stating
the amount and character of such dividend, distribution or right, (ii) the date
on which any such reorganization, reclassification, recapitalization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take place,
and the time, if any, as of which the Holders of record of Underlying Securities
shall be entitled to exchange their shares of Underlying Securities for
securities or other property deliverable upon such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up and (iii) the amount and character of any
stock or other securities, or rights or options with respect thereto, proposed
to be issued or granted, the date of such proposed issue or grant and the
persons or class of persons to whom such proposed issue or grant and the persons
or class of persons to whom such proposed issue or grant is to be offered or
made. Such notice shall be mailed at least 20 days prior to the date therein
specified.
11. Reservation of Stock, etc., Issuable on Exercise of Warrants.
The Company will at all times reserve and keep available, solely for issuance
and delivery upon the exercise of the Warrants, all shares of Common Stock (or
Other Securities) from time to time issuable upon the exercise of the Warrants.
12. Listing on Securities Exchanges; Registration; Issuance of
Certain Securities.
12.1. In furtherance and not in limitation of any other provision of
this Warrant, if the Company at any time shall list any Common Stock on any
national securities exchange or Nasdaq, the Company will, at its expense,
simultaneously list on such exchange or Nasdaq, upon official notice of issuance
upon the exercise of the Warrants, and maintain such listing of all shares of
Common Stock from time to time issuable upon the exercise of the Warrants; and
the Company will so list on any national securities exchange or Nasdaq, will so
register and will maintain such listing of, any Other Securities if and at the
time that any securities of like class or similar type shall be listed on such
national securities exchange or Nasdaq by the Company.
12.2. 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 the
Market Price or any other determination of the market price or value of the
Company's securities or any other market based or contingent standard, such as
so-called "toxic" or "death spiral" convertible securities; provided, however,
that this prohibition shall not include Convertible Securities or similar
securities the conversion or exercise price or conversion rate of which is fixed
on the date of issuance or subject to adjustment based upon the issuance by the
Company of additional securities, including without limitation, standard
anti-dilution adjustment provisions which are not based on calculations of the
Market Price or other variable valuations; and provided, further, that in no
event shall this provision be deemed to prohibit the transactions contemplated
in the February Offering; or (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,
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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%.
13. Exchange of Warrants. Subject to the provisions of Section 2
hereof, upon surrender for exchange of any Warrant, properly endorsed, to the
Company, as soon as practicable (and in any event within three business days)
the Company at its own expense will issue and deliver to or upon the order of
the Holder thereof a new Warrant or Warrants of like tenor, in the name of such
Holder or as such Holder (upon payment by such Holder of any applicable transfer
taxes) may direct, calling in the aggregate on the face or faces thereof for the
number of shares of Common Stock called for on the face or faces of the Warrant
or Warrants so surrendered.
14. Replacement of Warrants. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of any
Warrant and, in the case of any such loss, theft or destruction, upon delivery
of an indemnity agreement reasonably satisfactory in form and amount to the
Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company at its expense will execute and deliver, in lieu
thereof, a new Warrant of like tenor.
15. Warrant Agent. The Company may, by written notice to each Holder
of a Warrant, appoint an agent having an office in New York, New York, for the
purpose of issuing Common Stock (or Other Securities) upon the exercise of the
Warrants pursuant to Section 3, exchanging Warrants pursuant to Section 13, and
replacing Warrants pursuant to Section 14, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
16. Remedies. The Company stipulates that the remedies at law of the
Holder of this Warrant in the event of any default or threatened default by the
Company in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate, and that such terms may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
17. Negotiability, etc. Subject to Section 2 above, this Warrant is
issued upon the following terms, to all of which each Holder or owner hereof by
the taking hereof consents and agrees:
(a) subject to the provisions hereof, title to this Warrant
may be transferred by endorsement (by the Holder hereof executing the form
of assignment at the end hereof) and delivery in the same manner as in the
case of a negotiable instrument transferable by endorsement and delivery;
(b) subject to the foregoing, any person in possession of this
Warrant properly endorsed is authorized to represent himself as absolute
owner hereof and is empowered to transfer absolute title hereto by
endorsement and delivery hereof to a bona fide purchaser hereof for value;
each prior taker or owner waives and renounces all of his equities or
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rights in this Warrant in favor of each such bona fide purchaser and each
such bona fide purchaser shall acquire absolute title hereto and to all
rights represented hereby; and
(c) until this Warrant is transferred on the books of the
Company, the Company may treat the registered Holder hereof as the
absolute owner hereof for all purposes, notwithstanding any notice to the
contrary.
18. Notices, etc. All notices and other communications from the
Company to the Holder of this Warrant shall be mailed by first class registered
or certified mail, postage prepaid, at such address as may have been furnished
to the Company in writing by such Holder, or, until an address is so furnished,
to and at the address of the last Holder of this Warrant who has so furnished an
address to the Company.
19. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
Company and the Holders of outstanding Warrants to purchase a majority of the
shares of common Stock underlying all the outstanding Warrants. This Warrant is
being delivered in the State of New York and shall be construed and enforced in
accordance with and governed by the laws of such State. The headings in this
Warrant are for purposes of reference only, and shall not limit or otherwise
affect any of the terms hereof.
20. Assignability. Subject to Section 2 hereof, this Warrant is
fully assignable at any time.
Dated: __________ __, 2005
GRAPHON CORPORATION
By:________________________________
Name:
Title:
Attest:___________________________
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FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: GRAPHON CORPORATION
The undersigned, the Holder of the within Warrant, hereby irrevocably
elects to exercise the purchase right represented by such Warrant for, and to
purchase thereunder, shares of Common Stock of GraphOn Corporation, and herewith
makes payment therefor:
(i) of $ * or
(ii) by surrender of the number of Warrants included in the within
Warrant required for full exercise pursuant to Section 3.3 of the Warrant, and
requests that the certificates for such shares be issued in the name of, and
delivered to, ___________________, whose address is
- -----------------------.
Dated:
----------------------------------------
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
________________________________________
-
(Address)
* Insert here the number of shares called for on the face of the Warrant (or,
in the case of a partial exercise, the portion thereof as to which the
Warrant is being exercised), in either case without making any adjustment
for additional Common Stock or any other stock or other securities or
property or cash which, pursuant to the adjustment provisions of the
Warrant, may be deliverable upon exercise.
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FORM OF ASSIGNMENT
(To be signed only upon transfer of Warrant)
For value received, the undersigned hereby sells, assigns and
transfers unto _________________________ the right represented by the within
Warrant to purchase _________ of Common Stock of GraphOn Corporation to which
the within Warrant relates, and appoints ______________________________ Attorney
to transfer such right on the books of GraphOn Corporation with full power of
substitution in the premises. The Warrant being transferred hereby is one of the
Warrants issued by GraphOn Corporation as of __________ __, 2005 to purchase an
aggregate of 600,000 shares of Common Stock.
Dated:_______________
(Signature must conform in all respects to
name of Holder as specified on the face of
the Warrant)
(Address)
Signature guaranteed by a Bank or Trust Company having its principal office in
New York City or by a Member Firm of the New York or American Stock Exchange