Document:

EXHIBIT 10.14

 

GRAPHON CORPORATION 

 

STOCK OPTION AGREEMENT

RECITALS

A.           Optionee is to render valuable services to the Corporation (or a Parent
or Subsidiary), and this Agreement is executed in connection with the
Corporation's grant of an option to Optionee.

B.           All capitalized terms in this Agreement shall have the meaning assigned
to them in the attached Appendix.

NOW, THEREFORE, it is hereby agreed as
follows:

1.            Grant of Option. The Corporation hereby
grants to Optionee, as of the Grant Date, a Non-Statutory Option to purchase up
to the number of Option Shares specified in the Grant Notice. The Option Shares
shall be purchasable from time to time during the option term specified in
Paragraph 2 at the Exercise Price.

2.            Option Term. This option shall have a term of
ten (10) years measured from the Grant Date and shall accordingly expire at the
close of business on the Expiration Date, unless sooner terminated in accordance
with Paragraph 5 or 6.

	
       
	
      3.
	
      Limited Transferability.
  

(a)          This option shall be neither transferable nor assignable by Optionee
other than by will or the laws of inheritance following Optionee's death and may
be exercised, during Optionee's lifetime, only by Optionee. However, Optionee
may designate one or more persons as the beneficiary or beneficiaries of this
option, and this option shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the
Optionee's death while holding this option. Such beneficiary or beneficiaries
shall take the transferred option subject to all the terms and conditions of
this Agreement, including (without limitation) the limited time period during
which this option may, pursuant to Paragraph 5, be exercised following
Optionee's death.

(b)          This option may be assigned in whole or in part during Optionee's
lifetime to one or more members of Optionee's family or to a trust established
for the exclusive benefit of one or more such family members or to Optionee's
former spouse, to the extent such assignment is in connection with the
Optionee's estate plan or pursuant to a domestic relations order. The assigned
portion shall be exercisable only by the person or persons who acquire a

 

 

proprietary interest in the option pursuant to such assignment. The terms
applicable to the assigned portion shall be the same as those in effect for this
option immediately prior to such assignment. 

4.            Dates of Exercise. This option shall become
exercisable for the Option Shares in one or more installments as specified in
the Grant Notice. As the option becomes exercisable for such installments, those
installments shall accumulate, and the option shall remain exercisable for the
accumulated installments until the Expiration Date or sooner termination of the
option term under Paragraph 5 or 6.

5.            Cessation of Service. The option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date should any of the following provisions
become applicable:

(a)          Should Optionee cease to remain in Service for any reason (other than
death, Disability or Misconduct) while holding this option, then Optionee (or
any person or persons to whom this option is transferred pursuant to a permitted
transfer under Paragraph 3) shall have a period of three (3) months
(commencing with the date of such cessation of Service) during which to exercise
this option, but in no event shall this option be exercisable at any time after
the Expiration Date.

(b)          Should Optionee die while holding this option, then the personal
representative of Optionee's estate or the person or persons to whom the option
is transferred pursuant to Optionee's will or the laws of inheritance following
Optionee's death or to whom the option is transferred during Optionee's lifetime
pursuant to a permitted transfer under Paragraph 3 shall have the right to
exercise this option. However, if Optionee dies while holding this option and
has an effective beneficiary designation in effect for this option at the time
of his or her death, then the designated beneficiary or beneficiaries shall have
the exclusive right to exercise this option following Optionee's death. Any such
right to exercise this option shall lapse, and this option shall cease to be
outstanding, upon the earlier of
(i) the expiration of the twelve (12)-month period measured from the date of
Optionee's death or (ii) the Expiration Date.

(c)          Should Optionee cease Service by reason of Disability while holding this
option, then Optionee (or any person or persons to whom this option is
transferred pursuant to a permitted transfer under Paragraph 3) shall have
a period of twelve (12) months (commencing with the date of such cessation of
Service) during which to exercise this option. In no event shall this option be
exercisable at any time after the Expiration Date.

(d)          During the limited period of post-Service exercisability, this option may
not be exercised in the aggregate for more than the number of Option Shares for
which this option is, at the time of Optionee's cessation of Service,
exercisable in accordance with the Exercise Schedule specified in the Grant
Notice. Upon the expiration of such limited exercise period or (if earlier) upon
the Expiration Date, this option shall terminate and cease to be outstanding for
any Option Shares for which the option has not been exercised. To the extent
this option is not exercisable at the time of Optionee's cessation of Service,
this option shall 

 

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immediately terminate and cease to be outstanding for any exercisable
Option Shares for which the option has not been exercised.

(e)          Should Optionee's Service be terminated for Misconduct or should Optionee
otherwise engage in Misconduct while holding this option, then this option shall
terminate immediately and cease to remain outstanding.

	
       
	
      6.
	
      Change in Control.

(a)          In connection with a Change in Control, this option may be assumed by the
successor corporation (or parent thereof) or otherwise continued in full force
and effect pursuant to the terms of the Change in Control transaction.
Immediately following the Change in Control, this option shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof) or otherwise continued in full force and effect
pursuant to the terms of the Change in Control transaction.

(b)          If this option is assumed in connection with a Change in Control or
otherwise continued in effect, then this option shall be appropriately adjusted,
immediately after such Change in Control, to apply to the number and class of
securities which would have been issuable to Optionee in consummation of such
Change in Control had the option been exercised immediately prior to such Change
in Control, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate
Exercise Price shall remain the same. To the extent that the actual holders of
the Corporation's outstanding Common Stock receive cash consideration for their
Common Stock in consummation of the Change in Control, the successor corporation
may, in connection with the assumption of this option, substitute one or more
shares of its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Change in
Control.

(c)          This Agreement shall not in any way affect the right of the Corporation
to adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.

7.            Adjustment in Option Shares. Should any
change be made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, appropriate adjustments shall be made to (i) the total
number and/or class of securities subject to this option and (ii) the Exercise
Price in order to reflect such change and thereby preclude a dilution or
enlargement of benefits hereunder.

8.            Stockholder Rights. The holder of this option
shall not have any stockholder rights with respect to the Option Shares until
such person shall have exercised the option, paid the Exercise Price and become
the record holder of the purchased shares.

 

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      9.
	
      Manner of Exercising Option.

(a)          In order to exercise this option with respect to all or any part of the
Option Shares for which this option is at the time exercisable, Optionee (or any
other person or persons exercising the option) must take the following
actions:

(i)           Execute and deliver to the Corporation a Notice of Exercise for the
Option Shares for which the option is exercised.

(ii)          Pay the aggregate Exercise Price for the purchased shares by cash or
check made payable to the Corporation.

Should the Common Stock be registered under Section 12 of the 1934 Act at
the time the option is exercised, then the Exercise Price may also be paid as
follows:

(A)         in shares of Common Stock held by Optionee (or any other person or
persons exercising the option) for the requisite period necessary to avoid a
charge to the Corporation's earnings for financial reporting purposes and valued
at Fair Market Value on the Exercise Date; or 

(B)         to the extent the option is exercised for vested Option Shares, pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the receipt
of cash (or check) by the Corporation or the receipt of irrevocable instructions
to pay the aggregate exercise price to the Corporation from the sales proceeds,
provided that such program is not
in violation of the prohibition on the extension of credit to the Corporation's
executive officers and Board members under Section 402 of the Sarbanes-Oxley Act
of 2002, in the opinion of counsel acceptable to the Corporation.

Except to the extent a Regulation T program is utilized in connection
with the option exercise, payment of the Exercise Price must accompany the
Notice of Exercise delivered to the Corporation in connection with the option
exercise.

(iii)         Furnish to the Corporation appropriate documentation that the person or
persons exercising the option (if other than Optionee) have the right to
exercise this option.

(iv)         Execute and deliver to the Corporation such written representations as
may be requested by the Corporation in order for it to comply with the
applicable requirements of Federal and state securities laws.

 

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(v)          Make appropriate arrangements with the Corporation (or Parent or
Subsidiary employing or retaining Optionee) for the satisfaction of all Federal,
state and local income and employment tax withholding requirements applicable to
the option exercise.

(b)          As soon as practical after the Exercise Date, the Corporation shall issue
to or on behalf of Optionee (or any other person or persons exercising this
option) a certificate for the purchased Option Shares, with the appropriate
legends affixed thereto.

	
       
	
      (c)
	
      In no event may this option be exercised for any fractional
      shares.

	
       
	
      10.
	
      Compliance with Laws and Regulations.
	
       

					

(a)          The exercise of this option and the issuance of the Option Shares upon
such exercise shall be subject to compliance by the Corporation and Optionee
with all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange (or the Nasdaq Stock Market, if applicable) on
which the Common Stock may be listed for trading at the time of such exercise
and issuance.

(b)          The inability of the Corporation to obtain approval from any regulatory
body having authority deemed by the Corporation to be necessary to the lawful
issuance and sale of any Common Stock pursuant to this option shall relieve the
Corporation of any liability with respect to the non-issuance or sale of the
Common Stock as to which such approval shall not have been obtained. The
Corporation, however, shall use its best efforts to obtain all such
approvals.

(c)          Optionee acknowledges that the sale of the purchased shares upon exercise
of this option has not been qualified with the Commissioner of Corporations of
the State of California, and the issuance of such shares or the payment or
receipt of any part of the consideration therefor prior to such qualification is
unlawful unless the sale of such shares is exempt from qualification by Section
25100, 25102 or 25105 of the California Corporations Code. The rights of all
parties to this agreement are expressly conditioned unless the sale is so
exempt.

11.          Successors and Assigns. Except to the extent
otherwise provided in Paragraphs 3 and 6, the provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and Optionee, Optionee's assigns and the legal representatives,
heirs and legatees of Optionee's estate.

12.          Notices. Any notice required to be given or
delivered to the Corporation under the terms of this Agreement shall be in
writing and addressed to the Corporation at its principal corporate offices. Any
notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated below Optionee's signature line
on the Grant Notice. All notices shall be deemed effective upon personal
delivery or upon deposit in the U.S. mail, postage prepaid and properly
addressed to the party to be notified.

 

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13.          Governing Law. The interpretation,
performance and enforcement of this Agreement shall be governed by the laws of
the State of California without resort to that State's conflict-of-laws
rules.

 

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EXHIBIT I

 

NOTICE OF EXERCISE

I hereby notify GraphOn Corporation (the "Corporation") that I elect to purchase
______________ shares of the Corporation's Common Stock (the "Purchased Shares") at the option exercise
price of $                                   per share (the "Exercise
Price") pursuant to that certain option (the
"Option") granted to me on                                           
    , _______.

Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special third-party broker sale
program developed under Regulation T as specified in my agreement to effect
payment of the Exercise Price.

I hereby represent and warrant that:

1.            The Purchased Shares are being acquired for investment purposes only for
my own account, and not as a nominee or agent, and not with a view to the resale
or distribution of all or any part of the Purchased Shares. 

2.            I have a preexisting personal or business relationship with either the
Corporation or certain Board members or officers of the Corporation which is of
a nature and duration sufficient to make me aware of the character, business
acumen and general business and financial circumstances of the Corporation
and/or such Board members or officers. In addition, I have been furnished with,
and have had access to, such information concerning the Corporation's business,
management and financial condition as I consider necessary or appropriate for
deciding whether to invest in the Purchased Shares, and I have had an
opportunity to ask questions and receive answers from the Corporation regarding
the terms and conditions of the issuance of the Purchased Shares.

3.            I am able to fend for myself in the transactions contemplated by this
Agreement, can bear the economic risk of investment in the Purchased Shares and
have such knowledge and experience in financial or business matters to be
capable of evaluating the merits and risks of the investment in the Purchased
Shares. I am fully aware of: (i) the speculative nature of the investment in the
Purchased Shares, and (ii) the financial risk involved.

 

____________________, _______

Date

 

	
       
	
       
	
      

 

 

 

 

 

	
       
	
       
	
      Optionee

	
       
	
       
	
       

	
       
	
       
	
      Address:                                           
                              

	
       
	
       
	
       

	
       
	
       
	
      

	
       
	
       
	
       

	
      Print name in exact manner it is to appear on the stock
      certificate:
	
       
	
      

	
       
	
       
	
       

	
      Address to which certificate is to be sent, if different from
      address above:
	
       
	
      

	
       
	
       
	
       

	
       
	
       
	
      

	
       
	
       
	
       

	
      Social Security Number:
	
       
	
      

 

 

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APPENDIX

The following definitions shall be in effect under the
Agreement:

A.           Administrator shall mean either the Board or
a committee of the Board acting in its capacity as administrator of the
Non-Statutory Option.

	
       
	
      B.
	
      Agreement shall mean this Stock Option
      Agreement.
	
       

	
       
	
      C.
	
      Board shall mean the Corporation's
      Board of Directors.

D.           Change in Control shall mean a change in
ownership or control of the Corporation effected through any of the following
transactions: 

(i)           a merger, consolidation or other reorganization approved by the
Corporation's stockholders, unless securities representing more than fifty percent (50%) of the total
combined voting power of the voting securities of the successor corporation are
immediately thereafter beneficially owned, directly or indirectly and in
substantially the same proportion, by the persons who beneficially owned the
Corporation's outstanding voting securities immediately prior to such
transaction, or

(ii)          a stockholder-approved sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation, or

(iii)        the
acquisition, directly or indirectly by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation), of beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders.

In no event shall any public offering of the Corporation's securities be
deemed to constitute a Change in Control.

	
       
	
      E.
	
      Code shall mean the Internal Revenue
      Code of 1986, as amended.

	
       
	
      F.
	
      Common Stock shall mean the
      Corporation's common stock.
	
       

G.           Corporation shall mean GraphOn Corporation, a
Delaware corporation, and any successor corporation to all or substantially all
of the assets or voting stock of GraphOn Corporation which shall by appropriate
action assume this option.

 

A-1

 

 

H.           Disability shall mean the inability of
Optionee to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment and shall be determined by
the Administrator on the basis of such medical evidence as the Administrator
deems warranted under the circumstances. 

I.             Employee shall mean an individual who is in
the employ of the Corporation (or any Parent or Subsidiary), subject to the
control and direction of the employer entity as to both the work to be performed
and the manner and method of performance.

J.            Exercise Date shall mean the date on which
the option shall have been exercised in accordance with Paragraph 9 of the
Agreement.

K.           Exercise Price shall mean the exercise price
payable per Option Share as specified in the Grant Notice.

L.           Exercise Schedule shall mean the exercise
schedule specified in the Grant Notice pursuant to which this option is to
become exercisable in a series of installments over Optionee's period of
service.

M.          Expiration Date shall mean the date on which
the option expires as specified in the Grant Notice.

N.           Fair Market Value per share of Common Stock
on any relevant date shall be determined in accordance with the following
provisions:

(i)           If the Common Stock is at the time traded on the Nasdaq National Market,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question, as the price is reported by the National
Association of Securities Dealers on the Nasdaq National Market and published in
The Wall Street Journal. If there
is no closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.

(ii)          If the Common Stock is at the time listed on any Stock Exchange, then the
Fair Market Value shall be the closing selling price per share of Common Stock
on the date in question on the Stock Exchange determined by the Corporation to
be the primary market for the Common Stock, as such price is officially quoted
in the composite tape of transactions on such exchange and published in
The Wall Street Journal. If there
is no closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.

(iii)        If
the Common Stock is at the time neither listed on any Stock Exchange nor traded
on the Nasdaq National Market, then the Fair Market Value shall be determined by
the Corporation after taking into account such factors as the Corporation shall
deem appropriate.

 

A-2

 

 

O.           Grant Date shall mean the date of grant of
the option as specified in the Grant Notice.

P.            Grant Notice shall mean the Notice of Grant
of Stock Option accompanying the Agreement, pursuant to which Optionee has been
informed of the basic terms of the option evidenced hereby.

Q.           Misconduct shall
mean the commission of any act of fraud, embezzlement or dishonesty by Optionee,
any unauthorized use or disclosure by Optionee of confidential information or
trade secrets of the Corporation (or any Parent or Subsidiary), or any other
intentional misconduct by Optionee adversely affecting the business or affairs
of the Corporation (or any Parent or Subsidiary) in a material manner. The
foregoing definition shall not in any way preclude or restrict the right of the
Corporation (or any Parent or Subsidiary) to discharge or dismiss Optionee or
any other person in the Service of the Corporation (or any Parent or Subsidiary)
for any other acts or omissions, but such other acts or omissions shall not be
deemed, for purposes of this Agreement, to constitute grounds for termination
for Misconduct. 

	
       
	
      R.
	
      1934 Act shall mean the Securities
      Exchange Act of 1934, as amended.

S.            Non-Statutory Option shall mean an option not
intended to satisfy the requirements of Code Section 422.

T.            Notice of Exercise shall mean the notice of
exercise in the form attached hereto as Exhibit I.

U.           Option Shares shall mean the number of shares
of Common Stock subject to the option.

V.           Optionee shall
mean the person to whom the option is granted as specified in the Grant
Notice.

W.          Parent shall mean any corporation (other than
the Corporation) in an unbroken chain of corporations ending with the
Corporation, provided each corporation in the unbroken chain (other than the
Corporation) owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

X.           Service shall mean the Optionee's performance
of services for the Corporation (or any Parent or Subsidiary) in the capacity of
an Employee, a non-employee member of the board of directors or an independent
consultant.

Y.           Stock Exchange shall mean the American Stock
Exchange or the New York Stock Exchange.

 

A-3

 

 

Z.            Subsidiary shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

 

A-4

 

 

GRAPHON CORPORATION

 

NOTICE OF GRANT OF STOCK OPTION

Notice is hereby given of the following option grant (the
"Option") to purchase
shares of the Common Stock of GraphOn Corporation (the "Corporation"):

Optionee: Ralph Wesinger

Grant Date: February 1, 2005

Vesting Commencement Date: May 1, 2005

Exercise Price: $0.46 per share

Number of Option Shares: 1,000,000 shares of
Common Stock

Expiration Date: January 31, 2015

	
      Type of Option:
	
      Non-Statutory Stock
      Option

Date Exercisable: The Option shall become
exercisable with respect to, (i) eight and one-third percent
(81/3%) of the Option Shares upon Optionee's completion of
three (3) months of Service measured from the Vesting Commencement Date and
(ii) the balance of the Option Shares in a series of thirty-three (33)
successive equal monthly installments upon Optionee's completion of each
additional month of Service over the thirty-three (33)-month period measured
from three month anniversary of the Vesting Commencement Date. In no event shall
the Option become exercisable for any additional Option Shares after Optionee's
cessation of Service.

Optionee understands and agrees that the Option is subject to the terms
and conditions of the Stock Option Agreement attached hereto as Exhibit A
and agrees to be bound by those terms and conditions. Optionee further
understands and agrees that any Option Shares purchased under the Option will be
subject to the terms set forth in the Stock Purchase Agreement attached hereto
as Exhibit B.

At Will Employment. Nothing in this Notice or in
the attached Stock Option Agreement shall confer upon Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining Optionee) or of Optionee, which rights are
hereby expressly reserved by each, to terminate Optionee's Service at any time
for any reason, with or without cause.

 

A-5

 

 

Definitions. All capitalized terms in this Notice
shall have the meaning assigned to them in this Notice or in the attached Stock
Option Agreement.

Optionee represents and warrants that:

1.            Optionee has a preexisting personal or business relationship with either
the Corporation or certain Board members or officers of the Corporation which is
of a nature and duration sufficient to make Optionee aware of the character,
business acumen and general business and financial circumstances of the
Corporation and/or such Board members or officers. In addition, Optionee has
been furnished with, and has had access to, such information concerning the
Corporation's business, management and financial condition as Optionee considers
necessary or appropriate for deciding whether to invest in the Purchased Shares,
and Optionee has had an opportunity to ask questions and receive answers from
the Corporation regarding the terms and conditions of the issuance of the
Purchased Shares.

2.            Optionee is able to fend for itself in the transactions contemplated by
this Notice and the attached Stock Option Agreement, can bear the economic risk
of investment in the Purchased Shares and has such knowledge and experience in
financial or business matters to be capable of evaluating the merits and risks
of the investment in the Purchased Shares. Optionee is fully aware of: (i) the
speculative nature of the investment in the Purchased Shares, and (ii) the
financial risk involved.

DATED: February 1, 2005

	
      GRAPHON CORPORATION

	
      By:
	
       

	
       
	
       

	
      Title:
	
       

	
       
	
       

	
       
	
      RALPH WESINGER, OPTIONEE

	
       
	
       

	
      Address:
	
       

	
       
	
       

 

 

 

A-6EXHIBIT 10.15

 

GRAPHON CORPORATION 

 

STOCK OPTION AGREEMENT

RECITALS

A.           Optionee is to render valuable services to the Corporation (or a Parent
or Subsidiary), and this Agreement is executed in connection with the
Corporation's grant of an option to Optionee.

B.           All capitalized terms in this Agreement shall have the meaning assigned
to them in the attached Appendix.

NOW, THEREFORE, it is hereby agreed as
follows:

1.            Grant of Option. The Corporation hereby
grants to Optionee, as of the Grant Date, a Non-Statutory Option to purchase up
to the number of Option Shares specified in the Grant Notice. The Option Shares
shall be purchasable from time to time during the option term specified in
Paragraph 2 at the Exercise Price.

2.            Option Term. This option shall have a term of
ten (10) years measured from the Grant Date and shall accordingly expire at the
close of business on the Expiration Date, unless sooner terminated in accordance
with Paragraph 5 or 6.

	
       
	
      3.
	
      Limited Transferability.
  

(a)          This option shall be neither transferable nor assignable by Optionee
other than by will or the laws of inheritance following Optionee's death and may
be exercised, during Optionee's lifetime, only by Optionee. However, Optionee
may designate one or more persons as the beneficiary or beneficiaries of this
option, and this option shall, in accordance with such designation,
automatically be transferred to such beneficiary or beneficiaries upon the
Optionee's death while holding this option. Such beneficiary or beneficiaries
shall take the transferred option subject to all the terms and conditions of
this Agreement, including (without limitation) the limited time period during
which this option may, pursuant to Paragraph 5, be exercised following
Optionee's death.

(b)          This option may be assigned in whole or in part during Optionee's
lifetime to one or more members of Optionee's family or to a trust established
for the exclusive benefit of one or more such family members or to Optionee's
former spouse, to the extent such assignment is in connection with the
Optionee's estate plan or pursuant to a domestic relations order. The assigned
portion shall be exercisable only by the person or persons who acquire a

 

proprietary interest in the option pursuant to such assignment. The terms
applicable to the assigned portion shall be the same as those in effect for this
option immediately prior to such assignment. 

4.            Dates of Exercise. This option shall become
exercisable for the Option Shares in one or more installments as specified in
the Grant Notice. As the option becomes exercisable for such installments, those
installments shall accumulate, and the option shall remain exercisable for the
accumulated installments until the Expiration Date or sooner termination of the
option term under Paragraph 5 or 6.

5.            Cessation of Service. The option term
specified in Paragraph 2 shall terminate (and this option shall cease to be
outstanding) prior to the Expiration Date should any of the following provisions
become applicable:

(a)          Should Optionee cease to remain in Service for any reason (other than
death, Disability or Misconduct) while holding this option, then Optionee (or
any person or persons to whom this option is transferred pursuant to a permitted
transfer under Paragraph 3) shall have a period of three (3) months
(commencing with the date of such cessation of Service) during which to exercise
this option, but in no event shall this option be exercisable at any time after
the Expiration Date.

(b)          Should Optionee die while holding this option, then the personal
representative of Optionee's estate or the person or persons to whom the option
is transferred pursuant to Optionee's will or the laws of inheritance following
Optionee's death or to whom the option is transferred during Optionee's lifetime
pursuant to a permitted transfer under Paragraph 3 shall have the right to
exercise this option. However, if Optionee dies while holding this option and
has an effective beneficiary designation in effect for this option at the time
of his or her death, then the designated beneficiary or beneficiaries shall have
the exclusive right to exercise this option following Optionee's death. Any such
right to exercise this option shall lapse, and this option shall cease to be
outstanding, upon the earlier of
(i) the expiration of the twelve (12)-month period measured from the date of
Optionee's death or (ii) the Expiration Date.

(c)          Should Optionee cease Service by reason of Disability while holding this
option, then Optionee (or any person or persons to whom this option is
transferred pursuant to a permitted transfer under Paragraph 3) shall have
a period of twelve (12) months (commencing with the date of such cessation of
Service) during which to exercise this option. In no event shall this option be
exercisable at any time after the Expiration Date.

(d)          During the limited period of post-Service exercisability, this option may
not be exercised in the aggregate for more than the number of Option Shares for
which this option is, at the time of Optionee's cessation of Service,
exercisable in accordance with the Exercise Schedule specified in the Grant
Notice. Upon the expiration of such limited exercise period or (if earlier) upon
the Expiration Date, this option shall terminate and cease to be outstanding for
any Option Shares for which the option has not been exercised. To the extent
this option is not exercisable at the time of Optionee's cessation of Service,
this option shall 

 

2

 

 

immediately terminate and cease to be outstanding for any exercisable
Option Shares for which the option has not been exercised.

(e)          Should Optionee's Service be terminated for Misconduct or should Optionee
otherwise engage in Misconduct while holding this option, then this option shall
terminate immediately and cease to remain outstanding.

	
       
	
      6.
	
      Change in Control.

(a)          In connection with a Change in Control, this option may be assumed by the
successor corporation (or parent thereof) or otherwise continued in full force
and effect pursuant to the terms of the Change in Control transaction.
Immediately following the Change in Control, this option shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof) or otherwise continued in full force and effect
pursuant to the terms of the Change in Control transaction.

(b)          If this option is assumed in connection with a Change in Control or
otherwise continued in effect, then this option shall be appropriately adjusted,
immediately after such Change in Control, to apply to the number and class of
securities which would have been issuable to Optionee in consummation of such
Change in Control had the option been exercised immediately prior to such Change
in Control, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate
Exercise Price shall remain the same. To the extent that the actual holders of
the Corporation's outstanding Common Stock receive cash consideration for their
Common Stock in consummation of the Change in Control, the successor corporation
may, in connection with the assumption of this option, substitute one or more
shares of its own common stock with a fair market value equivalent to the cash
consideration paid per share of Common Stock in such Change in
Control.

(c)          This Agreement shall not in any way affect the right of the Corporation
to adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.

7.            Adjustment in Option Shares. Should any
change be made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, appropriate adjustments shall be made to (i) the total
number and/or class of securities subject to this option and (ii) the Exercise
Price in order to reflect such change and thereby preclude a dilution or
enlargement of benefits hereunder.

8.            Stockholder Rights. The holder of this option
shall not have any stockholder rights with respect to the Option Shares until
such person shall have exercised the option, paid the Exercise Price and become
the record holder of the purchased shares.

 

3

 

 

 

	
       
	
      9.
	
      Manner of Exercising Option.

(a)          In order to exercise this option with respect to all or any part of the
Option Shares for which this option is at the time exercisable, Optionee (or any
other person or persons exercising the option) must take the following
actions:

(i)           Execute and deliver to the Corporation a Notice of Exercise for the
Option Shares for which the option is exercised.

(ii)          Pay the aggregate Exercise Price for the purchased shares by cash or
check made payable to the Corporation.

Should the Common Stock be registered under Section 12 of the 1934 Act at
the time the option is exercised, then the Exercise Price may also be paid as
follows:

(A)         in shares of Common Stock held by Optionee (or any other person or
persons exercising the option) for the requisite period necessary to avoid a
charge to the Corporation's earnings for financial reporting purposes and valued
at Fair Market Value on the Exercise Date; or 

(B)         to the extent the option is exercised for vested Option Shares, pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the receipt
of cash (or check) by the Corporation or the receipt of irrevocable instructions
to pay the aggregate exercise price to the Corporation from the sales proceeds,
provided that such program is not
in violation of the prohibition on the extension of credit to the Corporation's
executive officers and Board members under Section 402 of the Sarbanes-Oxley Act
of 2002, in the opinion of counsel acceptable to the Corporation.

Except to the extent a Regulation T program is utilized in connection
with the option exercise, payment of the Exercise Price must accompany the
Notice of Exercise delivered to the Corporation in connection with the option
exercise.

(iii)         Furnish to the Corporation appropriate documentation that the person or
persons exercising the option (if other than Optionee) have the right to
exercise this option.

(iv)         Execute and deliver to the Corporation such written representations as
may be requested by the Corporation in order for it to comply with the
applicable requirements of Federal and state securities laws.

 

4

 

 

(v)          Make appropriate arrangements with the Corporation (or Parent or
Subsidiary employing or retaining Optionee) for the satisfaction of all Federal,
state and local income and employment tax withholding requirements applicable to
the option exercise.

(b)          As soon as practical after the Exercise Date, the Corporation shall issue
to or on behalf of Optionee (or any other person or persons exercising this
option) a certificate for the purchased Option Shares, with the appropriate
legends affixed thereto.

	
       
	
      (c)
	
      In no event may this option be exercised for any fractional
      shares.

	
       
	
      10.
	
      Compliance with Laws and Regulations.
	
       

					

(a)          The exercise of this option and the issuance of the Option Shares upon
such exercise shall be subject to compliance by the Corporation and Optionee
with all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange (or the Nasdaq Stock Market, if applicable) on
which the Common Stock may be listed for trading at the time of such exercise
and issuance.

(b)          The inability of the Corporation to obtain approval from any regulatory
body having authority deemed by the Corporation to be necessary to the lawful
issuance and sale of any Common Stock pursuant to this option shall relieve the
Corporation of any liability with respect to the non-issuance or sale of the
Common Stock as to which such approval shall not have been obtained. The
Corporation, however, shall use its best efforts to obtain all such
approvals.

(c)          Optionee acknowledges that the sale of the purchased shares upon exercise
of this option has not been qualified with the Commissioner of Corporations of
the State of California, and the issuance of such shares or the payment or
receipt of any part of the consideration therefor prior to such qualification is
unlawful unless the sale of such shares is exempt from qualification by Section
25100, 25102 or 25105 of the California Corporations Code. The rights of all
parties to this agreement are expressly conditioned unless the sale is so
exempt.

11.          Successors and Assigns. Except to the extent
otherwise provided in Paragraphs 3 and 6, the provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and Optionee, Optionee's assigns and the legal representatives,
heirs and legatees of Optionee's estate.

12.          Notices. Any notice required to be given or
delivered to the Corporation under the terms of this Agreement shall be in
writing and addressed to the Corporation at its principal corporate offices. Any
notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated below Optionee's signature line
on the Grant Notice. All notices shall be deemed effective upon personal
delivery or upon deposit in the U.S. mail, postage prepaid and properly
addressed to the party to be notified.

 

5

 

 

13.          Governing Law. The interpretation,
performance and enforcement of this Agreement shall be governed by the laws of
the State of California without resort to that State's conflict-of-laws
rules.

 

6

 

 

 

EXHIBIT I

 

NOTICE OF EXERCISE

I hereby notify GraphOn Corporation (the "Corporation") that I elect to purchase
______________ shares of the Corporation's Common Stock (the "Purchased Shares") at the option exercise
price of $                                   per share (the "Exercise
Price") pursuant to that certain option (the
"Option") granted to me on                                           
    , _______.

Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special third-party broker sale
program developed under Regulation T as specified in my agreement to effect
payment of the Exercise Price.

I hereby represent and warrant that:

1.            The Purchased Shares are being acquired for investment purposes only for
my own account, and not as a nominee or agent, and not with a view to the resale
or distribution of all or any part of the Purchased Shares. 

2.            I have a preexisting personal or business relationship with either the
Corporation or certain Board members or officers of the Corporation which is of
a nature and duration sufficient to make me aware of the character, business
acumen and general business and financial circumstances of the Corporation
and/or such Board members or officers. In addition, I have been furnished with,
and have had access to, such information concerning the Corporation's business,
management and financial condition as I consider necessary or appropriate for
deciding whether to invest in the Purchased Shares, and I have had an
opportunity to ask questions and receive answers from the Corporation regarding
the terms and conditions of the issuance of the Purchased Shares.

3.            I am able to fend for myself in the transactions contemplated by this
Agreement, can bear the economic risk of investment in the Purchased Shares and
have such knowledge and experience in financial or business matters to be
capable of evaluating the merits and risks of the investment in the Purchased
Shares. I am fully aware of: (i) the speculative nature of the investment in the
Purchased Shares, and (ii) the financial risk involved.

 

____________________, _______

Date

 

	
       
	
       
	
      

 

 

 

 

 

	
       
	
       
	
      Optionee

	
       
	
       
	
       

	
       
	
       
	
      Address:                                           
                              

	
       
	
       
	
       

	
       
	
       
	
      

	
       
	
       
	
       

	
      Print name in exact manner it is to appear on the stock
      certificate:
	
       
	
      

	
       
	
       
	
       

	
      Address to which certificate is to be sent, if different from
      address above:
	
       
	
      

	
       
	
       
	
       

	
       
	
       
	
      

	
       
	
       
	
       

	
      Social Security Number:
	
       
	
      

 

 

2

 

 

APPENDIX

The following definitions shall be in effect under the
Agreement:

A.           Administrator shall mean either the Board or
a committee of the Board acting in its capacity as administrator of the
Non-Statutory Option.

	
       
	
      B.
	
      Agreement shall mean this Stock Option
      Agreement.
	
       

	
       
	
      C.
	
      Board shall mean the Corporation's
      Board of Directors.

D.           Change in Control shall mean a change in
ownership or control of the Corporation effected through any of the following
transactions: 

(i)           a merger, consolidation or other reorganization approved by the
Corporation's stockholders, unless securities representing more than fifty percent (50%) of the total
combined voting power of the voting securities of the successor corporation are
immediately thereafter beneficially owned, directly or indirectly and in
substantially the same proportion, by the persons who beneficially owned the
Corporation's outstanding voting securities immediately prior to such
transaction, or

(ii)          a stockholder-approved sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation, or

(iii)        the
acquisition, directly or indirectly by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Corporation), of beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders.

In no event shall any public offering of the Corporation's securities be
deemed to constitute a Change in Control.

	
       
	
      E.
	
      Code shall mean the Internal Revenue
      Code of 1986, as amended.

	
       
	
      F.
	
      Common Stock shall mean the
      Corporation's common stock.
	
       

G.           Corporation shall mean GraphOn Corporation, a
Delaware corporation, and any successor corporation to all or substantially all
of the assets or voting stock of GraphOn Corporation which shall by appropriate
action assume this option.

 

A-1

 

 

H.           Disability shall mean the inability of
Optionee to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment and shall be determined by
the Administrator on the basis of such medical evidence as the Administrator
deems warranted under the circumstances. 

I.             Employee shall mean an individual who is in
the employ of the Corporation (or any Parent or Subsidiary), subject to the
control and direction of the employer entity as to both the work to be performed
and the manner and method of performance.

J.            Exercise Date shall mean the date on which
the option shall have been exercised in accordance with Paragraph 9 of the
Agreement.

K.           Exercise Price shall mean the exercise price
payable per Option Share as specified in the Grant Notice.

L.           Exercise Schedule shall mean the exercise
schedule specified in the Grant Notice pursuant to which this option is to
become exercisable in a series of installments over Optionee's period of
service.

M.          Expiration Date shall mean the date on which
the option expires as specified in the Grant Notice.

N.           Fair Market Value per share of Common Stock
on any relevant date shall be determined in accordance with the following
provisions:

(i)           If the Common Stock is at the time traded on the Nasdaq National Market,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question, as the price is reported by the National
Association of Securities Dealers on the Nasdaq National Market and published in
The Wall Street Journal. If there
is no closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.

(ii)          If the Common Stock is at the time listed on any Stock Exchange, then the
Fair Market Value shall be the closing selling price per share of Common Stock
on the date in question on the Stock Exchange determined by the Corporation to
be the primary market for the Common Stock, as such price is officially quoted
in the composite tape of transactions on such exchange and published in
The Wall Street Journal. If there
is no closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.

(iii)        If
the Common Stock is at the time neither listed on any Stock Exchange nor traded
on the Nasdaq National Market, then the Fair Market Value shall be determined by
the Corporation after taking into account such factors as the Corporation shall
deem appropriate.

 

A-2

 

 

O.           Grant Date shall mean the date of grant of
the option as specified in the Grant Notice.

P.            Grant Notice shall mean the Notice of Grant
of Stock Option accompanying the Agreement, pursuant to which Optionee has been
informed of the basic terms of the option evidenced hereby.

Q.           Misconduct shall
mean the commission of any act of fraud, embezzlement or dishonesty by Optionee,
any unauthorized use or disclosure by Optionee of confidential information or
trade secrets of the Corporation (or any Parent or Subsidiary), or any other
intentional misconduct by Optionee adversely affecting the business or affairs
of the Corporation (or any Parent or Subsidiary) in a material manner. The
foregoing definition shall not in any way preclude or restrict the right of the
Corporation (or any Parent or Subsidiary) to discharge or dismiss Optionee or
any other person in the Service of the Corporation (or any Parent or Subsidiary)
for any other acts or omissions, but such other acts or omissions shall not be
deemed, for purposes of this Agreement, to constitute grounds for termination
for Misconduct. 

	
       
	
      R.
	
      1934 Act shall mean the Securities
      Exchange Act of 1934, as amended.

S.            Non-Statutory Option shall mean an option not
intended to satisfy the requirements of Code Section 422.

T.            Notice of Exercise shall mean the notice of
exercise in the form attached hereto as Exhibit I.

U.           Option Shares shall mean the number of shares
of Common Stock subject to the option.

V.           Optionee shall
mean the person to whom the option is granted as specified in the Grant
Notice.

W.          Parent shall mean any corporation (other than
the Corporation) in an unbroken chain of corporations ending with the
Corporation, provided each corporation in the unbroken chain (other than the
Corporation) owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

X.           Service shall mean the Optionee's performance
of services for the Corporation (or any Parent or Subsidiary) in the capacity of
an Employee, a non-employee member of the board of directors or an independent
consultant.

Y.           Stock Exchange shall mean the American Stock
Exchange or the New York Stock Exchange.

 

A-3

 

 

Z.            Subsidiary shall mean any corporation (other
than the Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.

 

 

A-4

 

 

GRAPHON CORPORATION

 

NOTICE OF GRANT OF STOCK OPTION

Notice is hereby given of the following option grant (the
"Option") to purchase
shares of the Common Stock of GraphOn Corporation (the "Corporation"):

Optionee: Gary Green

Grant Date:                                           
                                          
                              

Vesting Commencement Date:                                           
                                        

Exercise Price: $                                          
                                          
       per
share

Number of Option Shares: 250,000 shares of Common
Stock

Expiration Date:                                           
                                          
                    

	
      Type of Option:
	
      Non-Statutory Stock
      Option

Date Exercisable: The Option shall become
exercisable with respect to, (i) eight and one-third percent
(81/3%) of the Option Shares upon Optionee's completion of
three (3) months of Service measured from the Vesting Commencement Date and
(ii) the balance of the Option Shares in a series of thirty-three (33)
successive equal monthly installments upon Optionee's completion of each
additional month of Service over the thirty-three (33)-month period measured
from three month anniversary of the Vesting Commencement Date. In no event shall
the Option become exercisable for any additional Option Shares after Optionee's
cessation of Service.

Optionee understands and agrees that the Option is subject to the terms
and conditions of the Stock Option Agreement attached hereto as Exhibit A
and agrees to be bound by those terms and conditions. 

At Will Employment. Nothing in this Notice or in
the attached Stock Option Agreement shall confer upon Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining Optionee) or of Optionee, which rights are
hereby expressly reserved by each, to terminate Optionee's Service at any time
for any reason, with or without cause.

Definitions. All capitalized terms in this Notice
shall have the meaning assigned to them in this Notice or in the attached Stock
Option Agreement.

Optionee represents and warrants that:

 

A-5

 

 

1.            Optionee has a preexisting personal or business relationship with either
the Corporation or certain Board members or officers of the Corporation which is
of a nature and duration sufficient to make Optionee aware of the character,
business acumen and general business and financial circumstances of the
Corporation and/or such Board members or officers. In addition, Optionee has
been furnished with, and has had access to, such information concerning the
Corporation's business, management and financial condition as Optionee considers
necessary or appropriate for deciding whether to invest in the Purchased Shares,
and Optionee has had an opportunity to ask questions and receive answers from
the Corporation regarding the terms and conditions of the issuance of the
Purchased Shares.

2.            Optionee is able to fend for itself in the transactions contemplated by
this Notice and the attached Stock Option Agreement, can bear the economic risk
of investment in the Purchased Shares and has such knowledge and experience in
financial or business matters to be capable of evaluating the merits and risks
of the investment in the Purchased Shares. Optionee is fully aware of: (i) the
speculative nature of the investment in the Purchased Shares, and (ii) the
financial risk involved.

DATED: __________________, 2005

	
      GRAPHON CORPORATION

	
      By:
	
       

	
       
	
       

	
      Title:
	
       

	
       
	
       

	
       
	
      GARY GREEN, OPTIONEE

	
       
	
       

	
      Address:
	
       

	
       
	
       

 

 

 

A-6

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