EXHIBIT 4.6
GRAPHON CORPORATION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made by and among
GRAPHON CORPORATION (the "Company") , XXXXXXX XXXXX INVESTORS (the
"Partnership"), Xxxxxx Xxxxxx ("Xxxxxx") and each INVESTOR executing a copy
hereof (together with the Partnership and Xxxxxx, collectively, the "Investors,"
and each an "Investor").
WHEREAS, the Investors (other than the Partnership and Xxxxxx) desire to
purchase from the Company, and the Company desires to issue and sell to the
Investors, up to an aggregate of 45 Units (plus an additional 6.75 Units solely
to cover over-subscriptions, if any), each Unit consisting of 100,000 shares of
common stock, no par value per share (the "Common Stock"), all upon the terms
set forth in the Company's Confidential Private Placement Memorandum dated
September 2, 1998 (the "Memorandum").
WHEREAS, to induce such Investors to purchase Units, the Company has
undertaken to register the Common stock, under the terms set forth herein;
WHEREAS, the Company has agreed to grant the same registration rights to
the Partnership with respect to an aggregate of 4,675,000 shares of Common Stock
(the "Partnership Stock"), with 3,500,000 of such shares having been purchased
from certain shareholders of the Company, 500,000 of such shares having been
purchased from the company, 475,000 of such shares issuable upon conversion of
the Convertible Promissory Note and 200,000 shares issuable upon conversion of
that certain Note held by the Partnership; and
WHEREAS, the Company has agreed to grant the same registration rights to
Xxxxxx in connection with 100,000 shares of Common Stock (the "Xxxxxx Stock")
issuable upon conversion of that certain Note held by Xxxxxx.
NOW, THEREFORE, the Company and the Investors hereby covenant and agree as
follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
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"Common Stock" shall mean the Common Stock, no par value, of the
Company, as constituted as of the date of this Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Final Closing Date" shall mean the closing date of the sale of the
last shares of Common Stock to Investors pursuant to the Memorandum.
"Lock-Up Period" shall mean the period commencing on the day on which
an initial public offering of the Company's securities shall be consummated and
ending on (i) the first anniversary thereof or (ii) such earlier or later date
as shall have been agreed between the underwriter and the Placement Agent,
acting on behalf of the holders of the Registrable Securities pursuant to
Section 4(c) hereof; provided, however, that in the event that any other holders
of the Company's securities shall have been permitted to participate in such
initial public offering, the Lock-Up Period shall end 180 days after the
consummation of such initial public offering.
"Register," "registered" and "registration" shall mean a registration
effected by preparing and filing a registration statement or statements or
similar documents in compliance with the Securities Act and the declaration or
ordering of effectiveness of such registration statement or document by the
Commission.
"Registrable Securities" shall mean (i) the Common Stock contained in
the Units purchased by the Investors, (ii) the Partnership Stock, (iii) the
Xxxxxx Stock and (iv) any Common Stock of the Company issued as a dividend or
other distribution with respect to, or in exchange for or in replacement of such
Common Stock otherwise acquired by an Investor other than Xxxxxx but excluding
any shares of Common Stock satisfying clause (i), (ii), (iii) or (iv) above but
which shares are sold by an Investor in a transaction in which such Investor's
registration rights under this Agreement are not assigned.
"Requisite Period" shall mean, with respect to a firm commitment
underwritten public offering the period commencing on the effective date of the
registration statement and ending on the date such underwriter has completed the
distribution of all securities purchased by it, and, with respect to any other
registration, the period commencing on the effective date of the registration
statement and ending on the earlier of the date on which the sale of all
Registrable Securities covered thereby is completed or 180 days after such
effective date.
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"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
Capitalized terms not defined herein shall have the meanings set forth in the
Memorandum.
2. AUTOMATIC AND DEMAND REGISTRATION.
(a) In the event that the Company shall complete an initial public
offering of its securities prior to the second anniversary of the Final Closing,
the Company shall effect the registration under the Securities Act of all
Registrable Securities not later than the expiration of the Lock-Up Period;
provided, that a holder of Registrable Securities may inform the Company in
writing that it wishes to exclude all or a portion of its Registrable Securities
from such registration; and provided further, that the Company shall have no
obligation to register Registrable Securities pursuant to this Section 2(a) if
such securities are freely tradeable without restriction by virtue of Rule 144
under the Securities Act or otherwise.
(b) In the event that on the third anniversary of the Final Closing
the Company has not yet completed such an initial public offering, the holders
of Registrable Securities constituting at least a majority of the total
Registrable Securities then outstanding may, by written notices (collectively, a
"Demand Notice"), request that the Company register under the Securities Act all
or any portion of the Registrable Securities held by such requesting holder or
holders for sale in the manner specified in the Demand Notice.
(c) Following receipt of any Demand Notice under Section 2(b) above,
the Company shall immediately notify all holders of Registrable Securities from
whom a Demand Notice has not been received and shall use its best efforts to
register under the Securities Act, for public sale in accordance with the method
of disposition specified in the Demand Notice, the number of shares of Common
Stock specified in the Demand Notice (and in all notices received by the Company
from other holders within 30 days after the giving of such notice by the
Company). If such method of disposition shall be an underwritten public
offering, the Company may designate the managing underwriter of such offering,
subject to the approval of the holders of a majority of the Registrable
Securities to be sold in such offering, which approval shall not be unreasonably
withheld or delayed. All holders proposing to distribute their securities
through such underwriting shall (together with the Company) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 2, if the
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underwriter advises the requesting holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then such
holders shall so advise all holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among all holders thereof, including the requesting holders, in
proportion (as nearly as practicable) to the amount of Registrable Securities of
the Company owned by each holder; provided, however, that the number of shares
of Registrable Securities to be included in such underwriting shall not be
reduced unless all other securities are first entirely excluded from the
underwriting. The Company shall be obligated to register Registrable Securities
pursuant to Section 2(b) on two occasions only, provided, that each such
obligation shall be deemed satisfied only when a registration statement covering
all Registrable Securities specified in notices received as aforesaid, for sale
in accordance with the method of disposition specified by the requesting
holders, shall have become effective and, if such method of disposition is a
firm commitment underwritten public offering, all such Registrable Securities
shall have been sold pursuant thereto.
(d) Notwithstanding the foregoing, if the Company shall furnish to
holders of the Registrable Securities requesting a registration statement
pursuant to this Section 2, a certificate signed by the Chief Executive Officer
of the Company stating that in the good faith judgment of the Board of Directors
of the Company, it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer taking action with respect to such filing for a period
of not more than 120 days after receipt of the request of the holders of the
Registrable Securities; provided, however, that the Company may not utilize this
right more than once in any twelve-month period.
3. Piggyback Registration. If the Company in its discretion at any time
(other than pursuant to Section 2) proposes to register any of its securities
under the Securities Act for sale to the public, whether for its own account or
for the account of other security holders or both (except with respect to
registration statements on Forms S-4 or S-8), each such time it will give
written notice to such effect to all holders of outstanding Registrable
Securities at least 30 days prior to such filing. Upon the written request of
any such holder, received by the Company within 30 days after the giving of any
such notice by the Company, to register any of its Registrable Securities, the
Company will cause the Registrable Securities as to which registration shall
have been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by the holder of such
Registrable Securities so registered. Notwithstanding the
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foregoing, in the event that any registration pursuant to this Section 3 shall
be, in whole or in part, an underwritten public offering of Common Stock, the
number of Registrable Securities to be included in such an underwriting may be
reduced (pro rate among the requesting holders and the Placement Agent (as
defined in the Memorandum) and its assigns based upon the number of Registrable
Securities requested to be registered by them) of and to the extent that the
managing underwriter shall be of the good faith opinion that such inclusion
would reduce the number of shares to be offered by the Company, provided that
such number of Registrable Securities shall not be reduced if any shares of
Common Stock are to be included in such underwriting for the account of any
person other than the Company, the Placement Agent and its assigns or requesting
holders of Registrable Securities. Notwithstanding the foregoing provisions, the
Company may withdraw any registration statement referred to in this Section 3
without thereby incurring any liability to the holders of Registrable
Securities.
4. LIMITATIONS ON REGISTRATION; LOCK-UP AGREEMENT; POWER OF ATTORNEY.
(a) Notwithstanding anything to the contrary contained in this
Agreement, the Company shall not be required to file a registration statement
pursuant to Section 2 hereof (i) which would become effective within (A) the
Lock-up Period, or (B) 120 days following the effective date of a registration
statement (other than a registration statement filed on Form S-4 or S-8) filed
by the Company with the Commission pertaining to any subsequent public offering
for the account of the Company or another holder of securities of the Company if
the holders of Registrable Securities were afforded the opportunity to include
all of its Registrable Securities in such subsequent registration pursuant to
Section 3, or (ii) if it would violate any restriction or prohibition requested
by any managing underwriter for the Company's initial public offering.
(b) In connection with the initial public offering or any registration
of Registrable Securities in connection with an underwritten public offering,
the holders of Registrable Securities agree if required by the underwriter or
underwriters not to effect any public sale or distribution, including any sale
pursuant to Rule 144 under the Securities Act, of any Registrable Securities,
and not to effect any such public sale or distribution of any other equity
security of the Company or of any security convertible into or exchangeable or
exercisable for any equity security of the Company (in each case, other than as
part of such underwritten public offering) during the 15 days prior to, and
during (i) the LockUp Period with respect to such initial public offering and
(ii) the 120 days following the effective date of the registration statement
(other than a registration statement on Form S-4 or S-8) with respect to such
other underwritten public offering if the holders of Registrable Securities were
afforded the opportunity to
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include all of their Registrable Securities therein pursuant to Section 3.
(c) In connection with any initial public offering by the Company,
each holder of Registrable Securities hereby irrevocably appoints the Placement
Agent (and all officers designated by Placement Agent) ("Attorney") to act as
his or its true and lawful Placement Agent and attorney-in-fact, with full power
of substitution, (i) to negotiate with the Company and the managing
underwriter(s) for the Company's initial public offering the terms and
conditions of the Lock-Up agreements of the holders of Registrable Securities
and any other restrictions on the right of such holder to sell his or its shares
of Common Stock which shall be imposed by the managing underwriter(s) for such
offering (including, without limitation, the length of the Lock-Up Period, and
the other rights of such holder of Registrable Securities to sell his or its
Registrable Securities), and (ii) to execute and deliver any and all documents,
agreements and instruments and to take any and all actions, in the name of and
on behalf of the holder of Registrable Securities, as may be necessary or
appropriate to effectuate the foregoing on such terms and conditions as the
Attorney approves in its sole judgment. No person to whom this Power of Attorney
is presented, as authority for Attorney to take any action or actions
contemplated hereby, shall be required to inquire into or seek confirmation from
the holder of Registrable Securities as to the authority of Attorney to take any
action or actions described above, or as to the existence of or fulfillment of
any condition to this Power of Attorney, which is intended to grant to Attorney
unconditionally the authority to take and perform the actions contemplated
herein, and the holder of the Registrable Securities irrevocably waives any
right to commence any suit or action, in law or equity, against any person or
entity which acts in reliance upon or acknowledges the authority granted under
this Power of Attorney. The Power of Attorney granted hereby is coupled with an
interest, and may not be revoked or cancelled by the holder of Registrable
Securities without Attorney's written consent. The holder of Registrable
Securities hereby ratifies, to the extent permitted by law, all that said
Attorney shall lawfully do or cause to be done by virtue hereof.
5. REGISTRATION PROCEDURES. If and whenever the Company is required by the
provisions of Section 2 or 3 to use its best efforts to effect the registration
of any Registrable Securities under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare and file with the Commission a registration statement with
respect to such securities within 60 days after the closing of the Company's
initial public offering under Section 2(a) hereof, and within 60 days after
delivery of a Demand Notice under Section 2(b) hereof, and use its best efforts
to cause such registration statement to become effective not later than 120 days
from the date of its filing and to remain effective for the Requisite
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Period;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the Requisite Period and comply with the provisions of the Securities Act with
respect to the disposition of all Registrable Securities covered by such
registration statement in accordance with the intended method of disposition set
forth in such registration statement for such period;
(c) furnish to each seller of Registrable Securities and to each
underwriter such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) a such
persons reasonably may request in order to facilitate the intended disposition
of the Registrable Securities covered by such registration statement;
(d) use its best efforts (i) to register or qualify the Registrable
Securities covered by such registration statement under the securities or "blue
sky" laws of such jurisdictions as the sellers of Registrable Securities or, in
the case of an underwritten public offering, the managing underwriter reasonably
shall request, (ii) to prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements, and take such other
actions, as may be necessary to maintain such registration and qualification in
effect at all times for the period of distribution contemplated thereby and
(iii) to take such further action as may be necessary or advisable to enable the
disposition of the Registrable Securities in such jurisdictions, provided that
the Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any jurisdiction;
(e) use its best efforts to list the Registrable Securities covered by
such registration statement with any securities exchange on which the Common
Stock is then listed, or, if the Common Stock is not then listed on a national
securities exchange, use its best efforts to facilitate the reporting of the
Common Stock on The Nasdaq Stock Market;
(f) immediately notify each seller of Registrable Securities and each
underwriter under such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes any untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements
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therein no misleading in light of the circumstances then existing and promptly
amend or supplement such registration statement to correct any such untrue
statement or omission;
(g) notify each seller of Registrable Securities of the issuance by
the Commission of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for that purpose and
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest possible
time;
(h) permit a single firm of counsel designated as selling
stockholders' counsel by the holders of a majority in interest of the
Registrable Securities being registered to review the registration statement and
all amendments and supplements thereto for a reasonable period of time prior to
their filing (provided, however, that in no event shall the Company be required
to reimburse legal fees in excess of $25,000 per registration statement pursuant
to this Section 5(h) and the Company shall not file any document in a form to
which such counsel reasonably objects;
(i) make generally available to its security holders as soon as
practicable, but not later than 90 days after the close of the period covered
thereby, an earnings statement (inform complying with the provisions of Rule 158
under the Securities Act) covering a 12-month period beginning not later than
the first day of the Company's next fiscal quarter following the effective date
of the registration statement;
(j) if the offering is an underwritten offering, the Company will
enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are usual
and customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature,
including, without limitation customary indemnification and contribution
provisions;
(k) if the offering is an underwritten offering, at the request of any
seller of Registrable Securities, use its best efforts to furnish on the date
that Registrable Securities are delivered to the underwriters for sale pursuant
to such registration; (i) an opinion dated such date of counsel representing the
Company for the purposes of such registration, addressed to the underwriters and
to such seller, in form and substance as is customarily given to underwriters in
an underwritten public offering, (ii) a letter dated such date from the
independent public accountants retained by the Company,. addressed to the
underwriters and to such seller, stating that they are independent public
accountants within the
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meaning of the Securities Act and that, in the opinion of such accountants, the
financial statements of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereof, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other financial matters
(including information as to the period ending no more than five business days
prior to the date of such letter) with respect to such registration as such
underwriters reasonably may request;
(l) make available for inspection by each seller of Registrable
Securities, any underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent retained by
such seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(m) provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(n) take all actions reasonably necessary to facilitate the timely
preparation and delivery of certificates (not bearing any legend restricting the
sale or transfer of such securities) representing the Registrable Securities to
be sold pursuant to the Registration Statement and to enable such certificates
to be in such denominations and registered in such names as the Investors or any
underwriters may reasonably request; and
(o) take all other reasonable actions necessary to expedite and
facilitate the registration of the Registrable Securities pursuant to the
Registration Statement.
In connection with each registration hereunder, the sellers of Registrable
Securities will furnish to the Company in writing such information with respect
to themselves and the proposed distribution by them as reasonably shall be
necessary in order to assure compliance with federal and applicable state
securities laws.
6. EXPENSES. All expenses incurred by the Company in complying with
Sections 2 and 3, including, without limitation, all registration and filing
fees, printing expenses, fees and disbursements of counsel and independent
public accountants for the Company, fees and expenses (including counsel fees)
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incurred in connection with complying with state securities or "blue sky" laws,
fees of the National Association of Securities Dealers, Inc., fees of transfer
agents and registrars, costs of insurance and, subject to Section 5(h) hereof,
fees and disbursements of one counsel for the sellers of Registrable Securities,
but excluding any Selling Expenses, are called "Registration Expenses." All
underwriting discounts and selling commissions applicable to the sale of
Registrable Securities are called "Selling Expenses."
The Company will pay all Registration Expenses in connection with the
registration statement under Section 2(a), the first registration statement
under Section 2(b) and each registration statement under Section 3. All Selling
Expenses in connection with reach registration statement under Sections 2 or 3,
and all Registration Expenses in connection with the second registration
statement under Section 2(b), shall be borne by the participating sellers in
proportion to the number of Registrable Securities sold by each or as they may
otherwise agree.
7. INDEMNIFICATION AND CONTRIBUTION. (a) In the event of a registration of
any of the Registrable Securities under the Securities Act pursuant to Sections
2 or 3, the Company will indemnify and hold harmless and pay and reimburse, each
seller of such Registrable Securities thereunder, each underwriter of such
Registrable Securities thereunder and each other person, if any, who controls
such seller or underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which such seller,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Registrable Securities were registered under the Securities Act
pursuant to Sections 2 or 3, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, 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, or any violation or alleged violation of the Securities Act or any
state securities or "blue sky" laws and will reimburse each such seller, each
such underwriter 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, 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 the Company's
reliance on an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by any such
seller, any such underwriter or any such controlling person in writing
specifically
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for use in such registration statement or prospectus.
(b) In the event of a registration of any of the Registrable
Securities under the Securities Act pursuant to Sections 2 or 3, each seller of
such Registrable Securities thereunder, severally and not jointly, will
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of the Securities Act, each officer of the Company
who signs the registration statement, each director of the Company, each
underwriter and each person who controls any under within the meaning of the
Securities Act, against all losses, claims, damages or liabilities, joint or
several, to which the Company or such officer, director, underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon reliance on any untrue statement or
alleged untrue statement of any material fact contained in the registration
statement under which such Registrable Securities was registered under the
Securities Act pursuant to Sections 2 or 3, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, 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, and will reimburse the Company and each such officer,
director, underwriter and 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, that such seller will
be liable hereunder in any such case if and only 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 made in
reliance upon and in conformity with information pertaining to such seller, as
such, furnished in writing to the Company such seller specifically for use in
such registration statement or prospectus, and provided, that the liability of
each seller hereunder shall be limited to the proportion of any such loss,
claim, damage, liability or expense which is equal to the proportion that the
public offering price of the Registrable Securities sold by such seller under
such registration statement bears to the total public offering price of all
securities sold thereunder, but not in any event to exceed the gross proceeds
received by such seller from the sale of Registrable Securities covered by such
registration statement.
(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
such indemnified party other than under this Section 7 and shall only relieve it
from
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any liability which it may have to such indemnified party under this Section 7
if and to the extent the indemnifying party is materially prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel to such
indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 7 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected, provided, that
if the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to its which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified party shall have the right to select
a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred. Notwithstanding anything to
the contrary contained herein, the indemnity provided in Section 7 shall not
apply to amounts paid in settlement of any loss, claim, damage, liability or
expense if such settlement is effected without the consent of the indemnified
party; provided that such indemnity shall apply to a settlement effected without
the consent of an indemnifying party in the event that such indemnifying party
has not assumed and undertaken the defense of the claim giving rise to such
indemnity.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
Registrable Securities exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 7, but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact this
Section 7 provides for indemnification in such case, or (ii) contribution under
the Securities Act may be required on the part of any such selling holder or any
such controlling person in circumstances for which indemnification is provided
under this Section 7; then, in each such case, the Company and such holder will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that such
holder is responsible for
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the portion represented by the percentage that the public offering price of its
Registrable Securities offered by the registration statement bears to the public
offering price of all securities offered by such registration statement, and the
Company is reasonable for the remaining portion; provided, that, in any such
case, (A) no such holder will be required to contribute any amount in excess of
the public offering price of all such Registrable Securities offered by it
pursuant to such registration statement and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
8. CHANGES IN CAPITAL STOCK. If, and as often as, there is any change in
the capital stock of the Company by way of a stock split, stock dividend,
combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the capital stock as so
changed.
9. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, at all
times after 90 days after any registration statement covering a public offering
of securities of the Company under the Securities Act shall have become
effective, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to each holder of Registrable Securities forthwith upon
request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing such holder to sell my Registrable Securities without
registration.
10. EVENT OF ELECTION. In the event that the Company fails to fulfill its
registration responsibilities pursuant to Sections 2 or 3 of this Agreement for
any
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reason, then the holders of the Common Stock contained in the Units purchased by
the Investors, in addition to all other rights and remedies available to such
holders at law or equity, shall have the rights provided in Section 9 of the
Subscription Agreement of even date herewith.
11. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Investors as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Articles of Incorporation or By-laws of the Company or any
provision of any indenture, agreement or other instrument to which it or nay or
its properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company or its subsidiaries.
(b) This Agreement has been duly executed and delivered by the Company
and constitute the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
12. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to have the Company
register Registrable Securities pursuant to this Agreement may be assigned by
the Investors to transferred or assignees of such securities; provided, that the
Company is, within reasonable time after such transfers, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned. The term
"Investors" as used in this Agreement shall include such permitted assignees.
13. MISCELLANEOUS.
(a) All covenants and agreements contained in this Agreement by or on
behalf of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto (including without
limitation transferees of any Registrable Securities), whether so expressed or
not.
(b) All notices, requests, consents and other communications hereunder
shall be in writing and shall be delivered in person, mailed by certified or
registered mail, return receipt requested, or sent by telecopier or telex,
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addressed (i) if to the Company or Xx. Xxxxxx, at 000 Xxxxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxx 00000, Facsimile No. (000) 000-0000, Attn: Xxxxxx Xxxxxx; (ii) if to
the Partnership, at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000;
Attn: Xxxxxxx Doguardi; (iii) if to any other party hereto, at the address of
such party set forth on the Combined Signature Page to Subscription Agreement
and Registration Rights Agreement; and (iv) if to any subsequent holder of
Registrable Securities, to it at such address as may have been furnished to the
Company in writing by such holder; or, in any case, at such other address or
addresses as shall have been furnished in writing to the Company (in the case of
a holder of Registrable Securities) or to the holders of Registrable Securities
(in the case of the Company) in accordance with the provisions of this
paragraph.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts entered into and
to be performed wholly within said State.
(d) Any judicial proceeding brought against any of the parties to this
Agreement on any dispute arising out of this Agreement of any matter related
hereto shall be brought in the courts of the State of New York or in the United
States District Court for the Southern District of New York, and, by execution
and delivery of this Agreement, each of the parties hereto accepts for itself
and himself the process in any such action or proceeding by the mailing of
copies of such process to it, at its or his address as set forth in paragraph
13(b) and irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement. Each party hereto irrevocably waives to the
fullest extent permitted by law any objection that it or he may now or hereafter
have to the laying of the venue of any judicial proceeding brought in such
courts and any claim that any such judicial proceeding has been brought in an
inconvenient forum. The foregoing consent to jurisdiction shall not constitute
general consent to service of process in the State of New York for any purpose
except as provided above and shall not be deemed to confer rights on any person
other than the respective parties to this Agreement.
(e) This Agreement may not be amended or modified without the written
consent of the Company and the holders of at least a majority of the Registrable
Securities.
(f) Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof. No waiver shall be effective unless and
until it is in writing and signed by the party granting the waiver.
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(g) 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.
(h) The Company shall not grant to any third party other than Xxxxxxx
Xxxxx Securities Incorporated any registration rights more favorable than or
inconsistent with any of those contained herein, or which would in any way,
adversely affect the rights of Investors hereunder, so long as any of the
registration rights under this Agreement remains in effect.
(i) If any provision of this Agreement shall be held to be illegal,
invalid or unenforceable, such illegality, invalidity or unenforceability shall
attach only to such provision and shall not in any manner affect or render
illegal, invalid or unenforceable any other provision of this Agreement, and
this Agreement shall be carried out as if any such illegal invalid or unenforced
provision were not contained herein.
Dated: , 1998 XXXXXXX XXXXX INVESTORS
---------------
By:
---------------------------
Title:
GRAPHON CORPORATION
By:
--------------------- ---------------------------
Title: Xxxxxx Xxxxxx
[COMBINED SIGNATURE PAGE TO SUBSCRIPTION AGREEMENT AND REGISTRATION RIGHTS
AGREEMENT TO BE EXECUTED BY COMPANY AND EACH INVESTOR, OTHER THAN THE
PARTNERSHIP AND XXXXXX WHO SIGN THE REGISTRATION RIGHTS AGREEMENT
HEREINABOVE]
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