UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

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GRAPHON CORPORATIONGraphOn Corporation
(Name of Registrant as Specified In Itsin its Charter)

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GRAPHON CORPORATION
GraphOn Corporation
5400 Soquel Avenue, Suite A-2
Santa Cruz, California 95062
 
                  
 
NOTICE OF 20092010 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 18, 200917, 2010
 
                  
 
To the Stockholders of
GraphOn Corporation:
 
NOTICE IS GIVEN that the 20092010 annual meeting of stockholders of GraphOn Corporation will be held at the Hilton Santa Cruz/Scotts Valley, 6001 La Madrona Drive, Santa Cruz, California 95060, on Wednesday, November 18, 200917, 2010 at 10:00 a.m., local time, for the following purposes:
 
I.To elect one directortwo directors to Class III of the boardBoard of directorsDirectors to serve for a three-year term.
 
II.To ratify the selection of Macias Gini & O’Connell LLP as our independent auditorsregistered public accounting firm for the fiscal year ending December 31, 2009.2010.
 
 III.To transact such other business as may properly come before the meeting.meeting or any adjournment thereof.
 
OnlyThe record date for determining stockholders of recordentitled to vote at the Annual Meeting is the close of business on October 15, 2009 are entitled4, 2010. The accompanying proxy statement contains additional information regarding the matters to notice of, and to votebe acted on at the meeting or any adjournment thereof.Annual Meeting.
 

/s/ William Swain
William Swain
Secretary
 
Santa Cruz, California
October 15, 20097, 2010
 
Whether or not you planAll stockholders are urged to attend the meeting,Annual Meeting in person. However, to ensure that your vote is counted at the Annual Meeting, please sign and datevote as promptly as possible by submitting your vote before the Annual Meeting. You may submit your vote by mailing the enclosed proxy which is solicited by our board of directors, and promptly return itcard or voting instruction card, or if your shares are held in “street name,” you may also have the pre-addressed envelope provided for that purpose. Any stockholder may revoke his or her proxy at any time beforeoption to vote on the meeting by giving written notice to such effect, by submitting a subsequently dated proxy,Internet or by attending the meeting and voting in person.telephone.
 

 
 
 

GRAPHON CORPORATIONGraphOn Corporation
5400 Soquel Avenue, Suite A-2
Santa Cruz, California
_____________________
 
PROXY STATEMENT
 
FOR THE 20092010 ANNUAL MEETING OF STOCKHOLDERS
_____________________
 
GENERAL INFORMATION ABOUT THIS PROXY STATEMENT AND THE ANNUAL MEETING
 
This proxy statement is being sent to you in connection with the solicitation of proxies by the Board of Directors of GraphOn Corporation for the 20092010 Annual Meeting of Stockholders to be held at the Hilton Santa Cruz/Scotts Valley, 6001 La Madrona Drive, Santa Cruz, California 95060 on Wednesday, November 18, 200917, 2010 at 10:00 a.m., local time. We invite you to attend in person.
 
Availability of Proxy Materials on the Internet
 
We are providing you access to this proxy statement, the accompanying form of proxy card and our annual report on Form 10-K for the fiscal year ended December 31, 20082009 both by sending you these proxy materials and by notifying you of the availability of these proxy materials on the Internet. These proxy materials are available on the Internet at http://proxymaterials.graphon.com. These proxy materials were first mailed to our stockholders on or about October 19, 2009. These proxy materials are available on the Internet at http://proxymaterials.graphon.com.7, 2010.
 
Voting Information
 
Record date
 
The record date for the Annual Meeting is October 15, 2009.4, 2010. You may vote all shares of our common stock that you owned as of the close of business on that date. On October 15, 2009,4, 2010, there were 46,834,29245,981,625 shares of our common stock outstanding. Each share of common stock is entitled to one vote on each matter to be voted on at the Annual Meeting.
 
How to vote
 
You may vote by marking, signing, dating and mailing each proxy card or vote instruction card and returning it in the envelope provided. If your shares are held in “street name” (that is, they are held in the name of a broker, bank or other nominee), you also maywill receive instructions with your proxy materials that you must follow in order to have your shares voted. Please review your proxy or vote instruction card to determine whether you will be able to vote by telephone or the Internet by following the instructions on the vote instruction card or as otherwise indicated by your broker, bank, or other nominee.Internet.
 
 All stockholders as of the close of business on October 15, 20094, 2010 can attend the Annual Meeting. You may also vote at the Annual Meeting if you are a stockholder of record (that is, your shares are directly registered in your name on our books and not held through a broker, bank or other nominee). In order to vote at the Annual Meeting shares held in “street name,” you must obtain a valid proxy from your broker, bank, or other nominee.nominee, and bring it to the meeting. Follow the instructions from your broker, bank, or other nominee included with these proxy materials, or contact your broker, bank, or other nominee to request a proxy form.
 
Revoking your proxy
 
You can revoke your proxy at any time before your shares are voted at the meeting by (i) sending a written notice of revocation to William Swain, Secretary, GraphOn Corporation, 5400 Soquel Avenue, Suite A-2, Santa Cruz, California, 95062, (ii) submitting by mail, telephone or the Internet another proxy dated as of a later date, or (iii) voting in person


at the Annual Meeting. Merely attending the Annual Meeting will not revoke your proxy. Voting in person at the Annual Meeting will replace any previous votes submitted by proxy.
 


Voting Instructions
 
If you complete and submit your proxy voting instructions, the persons named as proxies will follow your instructions.
If you are a stockholder of record and submit your proxy voting instructions but do not direct how to vote on each item, the persons named as proxies will vote your shares FOR each of the nominees and FOR the ratification of Macias Gini & O’Connell LLP as our independent auditorsregistered public accounting firm for the fiscal year ending December 31, 2009.2010. The persons named as proxies will vote on any other matters properly presented at the Annual Meeting in accordance with their best judgment. We have not received notice of other matters that may be properly presented for voting at the Annual Meeting.
If your shares are held in “street name” and you do not provide the broker, bank or other nominee that holds your shares with specific voting instructions, the organization that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the organization that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the organization that holds your shares will inform us that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a “broker non-vote.” Both Proposal 1 (election of directors) and Proposal 2 (approval of auditors) involve matters that we believe will be considered routine. We have no proposals this year which we believe will be considered non-routine.
 
Withholding your vote, voting to “abstain” and “broker non-votes”
 
In the election of directors, you can withhold your vote for any of the nominees. Withheld votes will be excluded entirely from the vote and will have no effect on the outcome. With regard to the other proposals,proposal, you can vote to “abstain.” If you vote to “abstain,” your shares will be counted as present at the meeting for purposes of that proposal and your votedetermining whether a quorum exists, but such abstention will have the effect of a vote against the proposal. Broker non-votes will be counted as part
A bank, brokerage firm or other nominee is not permitted by applicable regulatory requirements to vote on non-routine matters without instructions from the owner of the quorumshares. An election of directors is deemed a non-routine matter; consequently, absent instructions from you, your broker may vote your shares on the ratification of the appointment of our independent registered public accounting firm, but willmay not be countedvote your shares on the election of directors. A “broker non-vote” occurs when a broker submits a proxy without voting on one of more of the non-routine matters. A broker non-vote is considered present at the meeting for purposes of determining whether a proposal has been approved.quorum exists but is not counted as a vote cast on any matter presented at the Annual Meeting.
 
Votes required to hold the Annual Meeting
 
We needThe holders of a majority of the total voting power of our common stock, outstanding on October 15, 20094, 2010, present, in person or by proxy, to holdshall constitute a quorum for the transaction of any business at the Annual Meeting (that is, have a quorum).Meeting.
 
Votes required to elect directors and to adopt other proposals
 
Directors will be elected by a plurality of votes cast at the Annual Meeting. The affirmative vote of a majority of the voting power of our common stock that is present, in person or by proxy, at the Annual Meeting is required to ratify the appointment of Macias Gini & O’Connell LLP as our independent auditorsregistered public accounting firm for the fiscal year ending December 31, 2009.2010.
 
Postponement or adjournment of the Annual Meeting
 
If the Annual Meeting were to be postponed or adjourned, your proxy would still be valid and mightwill be voted at the postponed or adjourned meeting. You would still be able to revoke your proxy until it was voted.
 

 
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Cost of Proxy Solicitation
 
We will pay the expenses of the preparation of our proxy materials and theour solicitation by the Board of Directors of your proxy. Our directors, officers and employees, who will receive no additional compensation for soliciting, may solicit your proxy by telephone or other means.
 
Voting Results of the Annual Meeting
 
The preliminary voting results will be announced at the Annual Meeting. The final voting results will be tallied by the Inspectors of Election and published in ouron a Form 8-K within four business days after the Annual Report on Form 10-K for the annual period ending December 31, 2009.
Meeting.
 
PROPOSAL I
 
ELECTION OF DIRECTORDIRECTORS
 
The members of our boardBoard of directorsDirectors are divided into three classes. The members of one class are elected at each annual meeting of stockholders to hold office for a three-year term and until successors of such class members have been elected and qualified. The respective members of each class are set forth below:
 
 •Class I:Michael VolkerCurrently vacant (one person; current nominee, term expires 2009)2012)
 •Class II:Robert Dilworth and August Klein (two persons; current nominees, terms expire 2010)
 •Class III:Gordon M. Watson (one person; term expires 2011)
 
One director isTwo directors are to be elected at this meeting to serve for a term of three years or until his successoreach of their successors is elected and qualified.
 
NomineeNominees for Election at the 20092010 Annual Meeting (to a three-year termterms expiring in 20122013 – Class I)II)
 
The following sets forth information concerning the nominee:
Michael Volker, age 61, has served as one of our directors since July 2001. Since 1996, Mr. Volker has been Director of Simon Fraser University’s Industry Liaison Office. He is also Chief Executive Officer of WUTIF Capital, an “angel” fund that invests in technology startup companies.  Since 1998, Mr. Volker has been Chairman of VANTEC – Vancouver’s Angel Technology Network. From 1996 to 2001, Mr. Volker was Chairman of the Vancouver Enterprise Forum, a non-profit organization dedicated to the development of British Columbia’s technology enterprises. From 1987 to 1996, Mr. Volker was Chief Executive Officer and Chairman of the Board of Directors of RDM Corporation, a developer of specialized hardware and software products for both Internet electronic commerce and paper payment processing. From 1988 to 1992, Mr. Volker was Executive Director of BC Advanced Systems Institute, a hi-tech research institute. Since 1982, Mr. Volker has been active in various early stage businesses as a founder, investor, director and officer. Mr. Volker, a registered professional engineer in the Province of British Columbia, holds a Bachelor’s and Master’s degree from the University of Waterloo. Mr. Volker is also a director of Plutonic Power Corporation, and Greenangel Energy Corporation, both of which are listed on the Toronto Stock Exchange.
Current Directors Whose Terms Expire in 2010 (Class II)nominees:
 
Robert Dilworth, age 68,69, has served as one of our directors since July 1998 and was appointed Chairman in December 1999. In January 2002, Mr. Dilworth was appointed Interim Chief Executive Officer and in September 2006, Mr. Dilworth was appointed our full-time Chief Executive Officer. From 1987 to 1998, Mr. Dilworth served as the Chief Executive Officer and Chairman of the Board of Metricom, Inc., a leading provider of wireless data communication and network solutions. Prior to joining Metricom, from 1985 to 1988, Mr. Dilworth served as President of Zenith Data Systems Corporation, a microcomputer manufacturer. Earlier positions included: Chief Executive Officer and President of Morr ow Designs; Chief Executive Officer of Ultramagnetics; Group Marketing and Sales Director of Varian Associates Instruments Group; Director of Minicomputer Systems at Sperry Univac; and Vice President of Finance and Administration at Varian Data Machines. Mr. Dilworth has developed an intimate knowledge of our business, employees, culture, and competitors during his tenure with our company and we believe that these traits, and his in-depth knowledge of high-tech companies, demonstrate that he is well-qualified to serve on our Board. Mr. Dilworth is currently a director of eOn Communications Corporation, which is listed on NASDAQ, and Public Wireless, Inc., a privately-held company. During the five-year period ended December 31, 2009, Mr. Dilworth served as a director of the following privately-held entities: Amber Technologies; Get2Chip.com, Inc.; Mobility Electronics; Sky Pipeline; and Yummy Interactive.
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August P. Klein, age 73,74, has served as one of our directors since August 1998.1998, and Vice Chairman of the Board since February 2010. In 1995 Mr. Klein founded JSK Corporation, a general contracting firm. Mr. Klein was an initial member of JSK Corporation’s board of directors and served as its initial Chief Executive Officer until his retirement in 1999. Mr. Klein remains a member of JSK Corporation’s board of directors. From 1989 to 1993, Mr. Klein was founder and Chief Executive Officer of Uniquest, Inc., an object-oriented

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application software company. From 1984 to 1988, Mr. Klein served as Chief Executive Officer of Masscomp, Inc., a developer of high performance real time mission critical systems and UNIX-based applications. Mr. Klein is a director of QuickSite Corporation, a privately-held corporation, has served as Group Vice President, Serial Printers at Data Products Corporation and President and Chief Executive Officer at Integral Data Systems, a manufacturer of personal computer printers. Mr. Klein spent 25 years with IBM Corporation, rising to a senior executive position as General Manager of the Retail/Distribution Business unit. We believe that Mr. Klein’s more than 30 years’ experience as chief executive and board member of many different companies, including multiple high-tech companies, supports our belief that he is well-qualified to serve as a member of our Board. Mr. Klein currently serves as a tr ustee of the United States Supreme Court Historical Society and as a trustee of the Computer Museum in Boston, Massachusetts since 1988, and duringMassachusetts. During the five-year period ended December 31, 2009, was selected to serveMr. Klein served as a trusteedirector of the United States Supreme Court Historical Society.privately-held QuickSite Corporation. Mr. Klein holds a B.S. in Mathematics from St. Vincent College.
 
Current Director Whose Term Expires in 20122011 (Class III)
 
Gordon M. Watson, age 73,74, has served as one of our directors since April 2002. Mr. Watson brings over 30 years’ executive, board and management experience to our Board. In 1997, Mr. Watson founded Watson Consulting, LLC, a consulting company for early stage technology companies, and has served as its President since its inception. From 1996 to 1997, Mr. Watson served as Western Regional Director, Lotus Consulting of Lotus Development Corporation. From 1988 to 1996, Mr. Watson held various positions with Platinum Technology, Incorporated, most recently serving as Vice President Business Development.Development, Distributed Solutions. Earlier positions included: Senior Vice President of Sale s for Local Data, Incorporated; President, Troy Division, Data Card Corporation; and Vice President and General Manager, Minicomputer Division, Computer Automation, Incorporated. Mr, Watson also held various executive and director level positions with TRW, Incorporated, Varian Data Machines, and Computer Usage Company. We believe that Mr. Watson’s qualifications to serve on our Board include his over 25 years’ executive-level experience (full income statement responsibility) at the Chief Operating Officer, Vice President, General Manager, and Division President levels, his extensive knowledge and understanding of the high tech industry, and his over 10 years’ experience serving on the boards of other public and privately-held companies. Mr. Watson holds a Bachelors of Science degree in electrical engineering from the University of California at Los Angeles, and has taught at the University of California at Irvine. Mr. Watson is Chairman and Chief Executive Officera board member of PerSage Inc., a privately-held company and he is also a director of PATH Reliability,Relia bility, Inc., a privately-held company. Mr. Watson also serves on advisory boards for Mobophiles, Inc.,AKiiRA Media Systems, Incorporated, and Sterling Pear, Incorporated, eachIncorporated. Each of whichthese four entities is a privately-held company..company.
 
Executive Officer that is not a Director
 
William Swain, age 68,69, has served as our Chief Financial Officer and Secretary since March 2000. Mr. Swain was a consultant from August 1998 until February 2000, working with entrepreneurs in the technology industry in connection with the start-up and financing of new business opportunities. Mr. Swain was Chief Financial Officer and Secretary of Metricom Inc., from January 1988 until June 1997, during which time he was instrumental in private financings as well as Metricom’s initial public offering and subsequent public financing activities. Mr. Swain continued as Senior Vice President of Administration with Metricom from June 1997 until July 1998. Prior to joining Metricom, Mr.Mr . Swain held top financial positions with various companies in the computer industry. Mr. Swain holds a Bachelors degree in Business Administration from California State University of Los Angeles and is a Certified Public Accountant in the State of California.
 
Executive officers are elected annually by our board to hold office until the first meetingCommittees of the board following the next annual meetingBoard of stockholders and until their successors are chosen and qualified.Directors
 
Our boardBoard of Directors has an Audit Committee and a Compensation Committee. Our Board has determined not to establish a nominating committee. Nominees for election as directors are selected by our Board.

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Our Audit Committee consists of two directors, August P. Klein (Chairman) and Gordon Watson. Our Board of Directors has determined that each member of our Audit Committee meets the Nasdaq Marketplace definition of “independent” for audit committee purposes. Our Board of Directors has also determined that August P. Klein meets the SEC definition of an “audit committee financial expert.” Information regarding our Audit Committee and its functions and responsibilities is included in this proxy statement under the caption “Report of the Audit Committee” below.
Our Compensation Committee consists of two directors, August P. Klein and Gordon Watson. Our Board of Directors has determined that each member of our Compensation Committee meets the Nasdaq Marketplace definition of “independent director” for compensation committee purposes. In addition, each member of our Compensation Committee is an “outside director” under section 162(m) of the Internal Revenue Code and a “non-employee director” as defined in Rule 16b-3 under the Securities Exchange Act of 1934. The Compensation Committee annually reviews and determines both the cash and non-cash components of compensation paid to our directors and executive officers. In years past, the Compensation Committee has utilized information published by independent organizations, such as the American Electronics Associati on and Culpepper and Associates, for background information as to general compensation levels currently being offered in our industry. During 2009, the Compensation Committee retained the services of Human Resources Professional Group, an independent human resources consulting firm, to prepare a report benchmarking the compensation paid to our executive officers and key employees against our peer group for the committee’s consideration while setting compensation for these individuals for 2010. Our executive officers do not perform any role in determining or recommending the amount or form of executive or director compensation. Our Compensation Committee administers our employee benefit plans. Our Compensation Committee does not have a charter.
Each committee has the power to engage independent legal, financial or other advisors, as it may deem necessary, without consulting or obtaining the approval of our Board of Directors or any of our officers.
Board Leadership Structure
The roles of Chairman and Chief Executive Officer are held by one individual, Robert Dilworth. We believe that this structure is appropriate for a company of our small size because Mr. Dilworth: (i) is most familiar with our business and industry; (ii) possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing our company, and is thus best positioned to develop agendas that ensure the Board’s time and attention are focused on matters which are critical to us; and (iii) conveys a clear, cohesive message to our employees and industry partners. In addition, as Mr. Dilworth is the individual who manages our day-to-day operations, his direct involvement in the business makes him best positioned to lead productive Board sessions. The Board believes that this structure provides an efficient and effective leadership model for our company and facilitates efficient communication between our directors and management team who frequently and directly work together and share information and ideas. Our Board does not have an independent lead director.
Role of Board of Directors in Risk Oversight
One of the responsibilities of our Board is to review and evaluate the process used to assess major risks facing our company and to periodically review assessments prepared by our senior management of such risks, as well as options for their mitigation. Frequent interaction between our directors and members of senior management assist in this effort. Communications between our Board and senior management regarding long-term strategic planning and short-term operational practices include matters of material risk inherent in our business.
Our Board also plays an active role, as a whole and at the committee level, in overseeing management of our risks. Our entire Board of Directors is formally apprised at least annually of our enterprise risk management efforts. Our Board regularly reviews information regarding our credit, liquidity and operations, as well as the risks associated with each. Our Audit Committee is responsible for overseeing the management of financial and accounting risks. Our Compensation Committee is responsible for overseeing the management of risk

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taking relating to executive compensation plans and arrangements. While each committee is responsible for the evaluation and management of such risks, our entire Board is regularly informed through committee reports.
Meetings of the Board of Directors and Committees
During 2009, there were nine meetings of our Board of Directors, five meetings of our Audit Committee and two meetings of our Compensation Committee. With the exception of one director, who was absent from one Audit Committee meeting, each director attended, either in person or by electronic means, all of the meetings of our Board of Directors and Board committees on which they served during 2009.
Director Independence
Our Board of Directors has determined that each of our non-employee directors (August P. Klein Michael Volker and Gordon Watson), who collectively constitute a majority of our board,Board, meets the general independence criteria set forth in the Nasdaq Marketplace rules. In addition, as further required by Nasdaq rules, our boardBoard has made a subjective determination as to each of the foregoing individuals that no relationships exist that, in the opinion of our board,Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
 

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BoardDirector Nominations and Committee MeetingsQualifications for Director Nominee
 
As noted above, our Board of Directors has no nominating committee. Our board of directors has established two committees: an audit committee and a compensation committee. During 2008, our board met seven times, our audit committee met four times and our compensation committee met twice. Each director attended, either in person or by electronic means, at least 90% of the aggregate number of meetings of the board of directors and the number of meetings held by all committees on which he served during 2008.
The duties and responsibilities of the audit committee are described below under “Report of Audit Committee.” The audit committee is composed of August P. Klein (committee chairman), Michael Volker and Gordon Watson. The boardBoard has determined that each member of the audit committee meets the Nasdaq Marketplace Rules’ definition of “independent” for audit committee purposes.  The board of directors has also determined that Mr. Klein meets the SEC definition of an “audit committee financial expert.”
The compensation committee reviews and approves the compensation and benefits for our executive officers, administers our stock plans and performs other duties as may from time to time be determined by our board. The compensation committee does not have a written charter. The compensation committee is composed of Gordon Watson and August Klein, each of whom is an independent director. The compensation committee annually reviews and determines both the cash and non-cash components of compensation paid to our directors and executive officers. The compensation committee does not rely on the use of outside consultants while carrying out its duties; however, they have utilized information published by independent organizations such as the American Electronics Association and Culpepper and Associates for insight as to general compensation levels currently being offered in our industry. Due to the small size of our company, it is not practical for the compensation committee to delegate its functions to other parties and historically no such delegation has occurred. Our executive officers have historically not performed any role in determining or recommending the amount or form of executive or director compensation.
We do not have a nominating committee as the board has determined, given its relatively small size, to perform thisthe function of a nominating committee could be performed by our Board as a whole. We do not currently have a charter or written policy with regard towhole without unduly burdening the nomination process. At this time, we doduties and responsibilities of our Board members. The nominations of the directors standing for election at the 2010 Annual Meeting were unanimously approved by our Board of Directors.
Our Board does not have a formal policy with regard towritten guidelines regarding the considerationqualifications or diversity of any director candidates recommended by our stockholders because historically we have not received recommendations from our stockholders.
Stockholders may propose director nominees for consideration by our board of directors. Stockholders can propose qualifiedproperly submitted stockholder candidates for director nomineesmembership on our Board as well as candidates submitted by submitting, in writing, the names, appropriate biographical informationcurrent Board members and qualifications of such nominees to: William Swain, Chief Financial Officer and Secretary, GraphOn Corporation, 5400 Soquel Avenue, Suite A2, Santa Cruz, California 95062. Properly completed submissions that are received will be forwarded to the board of directors for further review and consideration. In considering any nominee proposed by a stockholder, the directors will reach a conclusion based on the factors described below. The board does not intend to evaluate candidates proposed by stockholders any differently than other candidates. After full consideration, the stockholder proponent will be notified of the decision of the board of directors.
others. Qualifications for consideration as a boardnew director nominee may vary according to the particular areas of expertise being sought as a complement to the existing boardBoard composition. The boardIn reviewing nominations, our Board of directors wouldDirectors will consider, among other things, an individual’s business experience, industry experience, financial background, breadth of knowledge about issues affecting our company,us, time available for meetings and consultation regarding company matters and other particular skills and experience possessed by the individual.
Stockholder Nominations and Bylaw Procedures
Our bylaws establish procedures pursuant to which a stockholder may nominate a person for election to the Board. Our Bylaws are made available at our website at: www.GraphOn.com. Follow the link to “About GraphOn” to the link for “Corp. Governance” and then “Corporate Bylaws.”
To nominate a person for election to our Board, a stockholder must set forth all information relating to the nominee that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934. Such notice must also contain information specified in the bylaws as to the director nominee, information about the stockholder making the nomination and the beneficial owner, if any, on behalf of whom the nomination is made, including name and address, class and number of shares owned, and representations regarding the intention to make such a nomination and to solicit proxies in support of it. We may require any proposed nominee to furnish information concerning his or her eligibility to serve as an independent director or that could be material to a reasonable stockholder’s understanding of the independence of the nominee.

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Deadlines to Submit Nominations
To nominate a person for election to our Board at our annual meeting of stockholders, written notice of a stockholder nomination must be delivered to our Secretary not less than 90 nor more than 120 days prior to the one year anniversary of the date on which we first mailed the proxy materials for the prior year’s annual meeting. However, if our annual meeting is advanced or delayed by more than 30 days from the anniversary of the previous year’s meeting, a stockholder’s written notice will be timely if it is delivered by the later of the 90th day prior to such annual meeting or the 10th day following the announcement of the date of the meeting. This year, our prox y statement is dated October 7, 2010; therefore, we must receive any notice of recommendation for next year’s annual meeting between June 9, 2011 and July 9, 2011.
Stockholder nominations must be addressed to William Swain, Chief Financial Officer and Secretary, and must be mailed to him at GraphOn Corporation, 5400 Soquel Avenue, Suite A-2, Santa Cruz, California 95062, or faxed to him at 1-831-475-3017, with a confirmation copy sent by mail.
Executive Sessions of Independent Directors
The independent members of our Board of Directors meet in executive session, without any employee directors or other members of management in attendance, as circumstances warrant; however, such a meeting is held at least annually. Additionally, if our Board convenes a special meeting, the independent directors may meet in executive session, if the circumstances warrant.
 
Code of Ethics
 
We have a code of ethics that applies to all of our employees, including our chief executive officer, chief financial officer and controller. Our code of ethics is made available at our website at: www.graphon.com.www.GraphOn.com. Follow the link to “About GraphOn” to the link for “Corp. Governance” and then “Code of Ethics.”
 

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Stockholder Communication with Board Members
 
We maintain contact information for stockholders, both telephone and email, on our website (www.graphon.com) under the heading “About GraphOn.” By first clicking on the “About GraphOn” link and then following the “Contact Us” link, a stockholder will be given access to our telephone number and mailing address as well as a link for providing email correspondence to Investor/Public Relations. Communications sent to Investor/Public Relations and specifically marked as a communication for our boardBoard will be forwarded to the boardour Board or specific members of the boardour Board as directed in the stockholder communication. In addition, communications for our Board received via telephone or mail for the board are forwarded to the boardour Board by one of our employees.
 
Board Member Attendance at Annual Meetings
 
Our boardBoard of directorsDirectors does not have a formal policy regarding attendance of directors at our annual stockholder meetings. All of our directors attended our 20082009 annual meeting of stockholders.
 
Board Recommendation
 
The boardBoard unanimously recommends a vote FOR the election of the nomineenominees to serve as A Class I director.class II directors.


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EXECUTIVE COMPENSATION
 
Summary Compensation Table
 
The following table sets forth information for the fiscal years ended December 31, 20082009 and 2007,2008, respectively, concerning compensation we paid to our Chief Executive Officer and to our Chief Financial Officer. We do not have any other executive officers whose total compensation exceeded $100,000 for the year ended December 31, 2008.officers.
 
Summary Compensation Table
Name and Principal PositionYearSalaryOption Awards (1)All Other CompensationTotal
Robert Dilworth2008$   311,131$     35,743                    — $      346,874
Chief Executive Officer2007
 
 $   296,852
 
 $     36,734
 
—
 
 $      333,586
William Swain2008 $   157,511 $     22,045 $      2,000 (2) $      181,556
Chief Financial Officer2007
 
 $   149,569
 
 $     28,085
 
 $      2,000 (2)
 
 $      179,654
Summary Compensation Table
Name and Principal PositionYearSalaryOption Awards (1)All Other CompensationTotal
Robert Dilworth     
Chief Executive Officer
2009
2008
$   311,131
$   311,131
$       6,250
 $     47,500
—
—
 $      317,381
 $      358,631
William Swain
Chief Financial Officer
2009
2008
 $   157,511
 $   157,511
 $       3,750
 $     28,500
 $      2,000 (2)
 $      2,000 (2)
 $      163,261
 $      188,011


(1)The amounts listed in the Option Awards column reflect the dollar amount recognized for financial statement reporting purposes for the respective fiscal year in accordance with Statement of Financial Accounting Standards No. 123R, “Share-Based Payment,” (“FAS No. 123R”), and include amounts from awards granted in and prior to 2008 and 2007, respectively.  Prior to our adoption of FAS No. 123R, on January 1, 2006, we used the intrinsic-value method, as prescribed by Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” and interpretations thereof (collectively “APB 25”).  We estimated theaggregate grant date fair value of the underlying options granted to the respective named executive officer during the respective year. For Mr. Dilworth such amounts are based on options to purchase 125,000 and 125,000 shares of common stock optionsgranted on January 2, 2009 and 2008, respectively, at theirexercise prices, which were equal to the grant date by usingfair values, of $0.05 and $0.38, respectively. For Mr. Swain such amounts are based on options to purchase 75,000 and 75,000 shares of common stock granted on January 2, 2009 and 2008, respectively, at exercise prices, which were equal to the Black-Scholes option pricing model with the following weighted average assumptions for grants made prior to 2006 that are included in the Summary Compensation Table:  dividend yield, 0; risk free interestgrant date fair values, of 1.5% to 2.5%; expected volatility of 60%;$0.05 and an expected life of 5 years.  The assumptions used in the valuations of the stock options awarded in 2008 and 2007, subsequent to our adoption of FAS No. 123R, are set forth in Note 1 to our consolidated financial statements, appearing in our Form 10-K as filed with the SEC on March 31, 2009.$0.38, respectively.
 
(2)Company contribution to the individual’s 401(k) Plan.
 

6

Mr. Dilworth began as Chief Executive Officer (Interim) during January 2002 and became full-time Chief Executive Officer during September 2006. Mr. Dilworth has been a director since July 1998, and Chairman of our Board since December 1999. Mr. Dilworth elected, during his term as interim Chief Executive Officer, to forgo the cash compensation we pay all directors for their attendance at board and committee meetings as well as the quarterly retainer.
The recognized stock-based compensation expense listed as Option Awards for Mr. Dilworth in the above Summary Compensation Table for the year ended December 31, 2008 was derived from option awards made on January 27, 2005, January 26, 2006, January 15, 2007, and January 2, 2008 in the amount of 200,000, 125,000, 125,000, and 125,000 options, respectively, at exercise prices of $0.43, $0.21, $0.17, and $0.38 per share, respectively.
The recognized stock-based compensation expense listed as Option Awards for Mr. Dilworth in the above Summary Compensation Table for the year ended December 31, 2007 was derived from option awards made on November 11, 2004, January 27, 2005, January 26, 2006, and January 15, 2007 in the amount of 40,000, 200,000, 125,000, and 125,000 options, respectively, at exercise prices of $0.34, $0.43, $0.21, and $0.17 per share, respectively.
The recognized stock-based compensation expense listed as Options Awards for Mr. Swain in the above Summary Compensation Table for the year ended December 31, 2008 was derived from option awards made on January 27, 2005, January 26, 2006, January 15, 2007, and January 2, 2008 in the amount of 160,000, 75,000, 75,000, and 75,000 options, respectively, at exercise prices of $0.43, $0.21, $0.17, and $0.38 per share, respectively.
The recognized stock-based compensation expense listed as Options Awards for Mr. Swain in the above Summary Compensation Table for the year ended December 31, 2007 was derived from option awards made on January 27, 2005, January 26, 2006, and January 15, 2007 in the amount of 160,000, 75,000, and 75,000 options, respectively, at exercise prices of $0.43, $0.21, and $0.17 per share, respectively.
 
All such options granted to Mr. Dilworth and Mr. Swain were immediately exercisable upon their respective grant date and vest in thirty-three equal monthly installments, beginning in the fourth month after their respective grant date.  Should either Mr. Dilworth’s or Mr. Swain’s service cease prior to full vesting of the options, we have the right to repurchase any shares issued upon exercise of options not vested.
 
Pursuant to his employment letter agreement, Mr. Swain would be entitled to three-months’ severance of his then base salary in the event of a merger or acquisition which lead to a change in the nature, reduction or elimination of his duties, a reduction in his level of compensation, relocation of the corporate office by more than 50 miles from its then current location or his termination.

 
78
 


Outstanding Equity Awards at Fiscal Year-End

Outstanding Equity Awards At Fiscal Year-End
 Option Awards  (1)
NameNumber of Securities Underlying Unexercised Options  ExercisableOption Exercise PriceOption Expiration Date
Robert Dilworth
Chief Executive Officer
100,000 (2) $          0.2503/04/12
Chief Executive Officer40,000 (2) $          0.1805/04/13
300,000 (3) $          0.3411/14/14
200,000 (2) $          0.4301/26/15
125,000 (2) $          0.2101/25/16
125,000 (2) $          0.1701/15/17
125,000 (2) $          0.3801/01/18
125,000 (2) $          0.0501/01/19
William Swain
Chief Financial Officer
40,000 (2) $          0.1805/04/13
Chief Financial Officer380,000 (3) $          0.3411/14/14
160,000 (2) $          0.4301/26/15
  75,000 (2) $          0.2101/25/16
  75,000 (2) $          0.1701/15/17
  75,000 (2) $          0.3801/01/18
  75,000 (2) $          0.0501/01/19


 (1) As of December 31, 2008. On January 2, 2009, Mr. Dilworth and Mr. Swain were granted 125,000 and 75,000 options, respectively, at an exercise price of $0.05 per share with such exercise price being equal to the fair market value on the grant date. All such options were immediately exercisable upon grant and vest in thirty-three equal monthly installments, beginning in the fourth month after their respective grant date. Each of these options will be fully vested on January 2, 2012 and will expire on January 1, 2019. If Mr. Dilworth’s or Mr. Swain’s employment ceases prior to full vesting of the options, we have the right to repurchase, at the exercise price, any shares issued upon exercise of options not vested.2009.

(2) All such options were immediately exercisable upon grant and vest in thirty-three equal monthly installments, beginning in the fourth month after their respective grant date. For Mr. Dilworth, the options identified in this footnote were, or will be, fully vested on the following dates: March 5, 2005, May 4, 2006, January 25, 2008, January 25, 2009, January 15, 2010, and January 1, 2011, and January 2, 2012, respectively.  For Mr. Swain, the options identified in this footnote were, or will be, fully vested on the following dates: May 4, 2006, January 25, 2008, January 25, 2009, January 15, 2010, and January 1, 2011, and January 2, 2012, respectively.  If Mr. Dilworth’s or Mr. Swain’s employment ceases prior to full vesting of the options, we have the right to repurchase any shares issued upon exercise of optionsopti ons not vested.

(3) Mr. Dilworth and Mr. Swain voluntarily surrendered, on May 14, 2004, 260,000 and 380,000 out-of-the-money options, respectively, in conjunction with participation in a voluntary stock option exchange program. New option grants equal to the number cancelled were made on November 15, 2004.  All such options were fully vested as of November 14, 2005.  On November 15, 2004, Mr. Dilworth was granted 40,000 options in his capacity as a director.  These options became fully vested on November 14, 2007.


8

Compensation of Directors

During the years ended December 31, 20082009 and 2007,2008, our non-employee directors were eligible to be compensated at the rate of $1,000 for attendance at each meeting of our board,Board, $500 if their attendance was via telephone, $500 for attendance at each meeting of a boardBoard committee, and a $1,500 quarterly retainer. Additionally, non-employee directors are granted stock options periodically, typically on a yearly basis.

9


Director CompensationDirector CompensationDirector Compensation 
Name Year Fees Earned or Paid in CashOption Awards (1)All Other CompensationTotal Year Fees Earned or Paid in CashOption Awards (1)All Other CompensationTotal
August Klein 2008  $       18,000  $   22,045  $              —  $       40,045 2009 $  16,500  $   3,750  $       —  $     20,250
 2007           16,500       31,306                  —           47,806 2008     18,000     28,500           —         46,500
                    
Michael Volker(2) 2008           16,000       22,045                  —           38,045 2009     18,000      3,750           —(3)        21,750
 2007           15,500       30,662                  —           46,162 2008     16,000    28,500           —         44,500
                    
Gordon Watson 2008           17,000       22,045                  —           39,045 2009     17,500      3,750           —         21,250
 2007           15,500       30,146                  —           45,646 2008     17,000    28,500           —         44,500

(1) The amounts listed in the Option Awards column reflect the dollar amount recognized for financial statement reporting purposes for the fiscal years ended December 31, 2008 and 2007, in accordance with FAS No. 123R, and include amounts from awards granted in and prior to 2008 and 2007, respectively.  We estimated the fair value of stock options at their grant date by using the Black-Scholes option pricing model with the following weighted average assumptions for grants made prior to 2006 that are included in the Summary Compensation Table:  dividend yield, 0; risk free interest of 1.5% to 2.5%; expected volatility of 60%; and an expected life of 5 years.  The assumptions used in the valuations of the stock options awarded in 2008 and 2007, subsequent to our adoption of FAS No. 123R, appear in Note 1 to our consolidated financial statements, which appear in our Form 10-K as filed with the SEC on March 31,
(1)  The amounts listed in the Option Awards column reflect the aggregate grant date fair value of the common stock underlying the options granted to the respective named director during the respective year. For Messrs. Klein, Volker, and Watson, such amounts are based on options to purchase 75,000 and 75,000 shares of common stock granted on January 2, 2009 and 2008, respectively, at exercise prices, which were equal to the grant date fair values, of $0.05 and $0.38, respectively.
(2)  Mr. Volker withdrew his candidacy as a director prior to our Annual Meeting of Shareholders held November 18, 2009.
(3)  Upon the cessation of his service as director, we entered into an agreement with Mr. Volker that will pay him $1,500 per quarter, during the year ending December 31, 2010, in return for which he will provide us with advisory services in our search for a replacement director, and prospective potential business combinations. Additionally, we modified certain of Mr. Volker’s previously granted stock option awards by accelerating their vesting to November 18, 2009 and/or changing their expiration date to December 31, 2010.
 
 
The recognized stock-based compensation expense listed as Option Awards for all three non-employee directors in the above table for the year ended December 31, 2008 was derived from option awards made on January 27, 2005, January 26, 2006, January 15, 2007, and January 2, 2008 at exercise prices of $0.43, $0.21, $0.17, and $0.38 per share, respectively.  On such dates, Messrs. Klein, Volker, and Watson were each granted 160,000, 75,000, 75,000, and 75,000 options, respectively.  All such options granted to our non-employee directors were immediately exercisable upon their respective grant date and vest in thirty-three equal monthly installments, beginning in the fourth month after their respective grant date.
The recognized stock-based compensation expense listed as Option Awards for all three non-employee directors in the above table for the year ended December 31, 2007 was derived from option awards made on May 14, 2004, January 27, 2005, January 26, 2006, and January 15, 2007 at exercise prices of $0.56, $0.43, $0.21, and $0.17 per share, respectively.  On such dates, Mr. Klein was granted 62,500, 160,000, 75,000, and 75,000 options, respectively, Mr. Volker was granted 50,000, 160,000, 75,000, and 75,000 options, respectively, and Mr. Watson was granted 40,000, 160,000, 75,000, and 75,000 options, respectively.  All such options granted to our non-employee directors were immediately exercisable upon their respective grant date and vest in thirty-three equal monthly installments, beginning in the fourth month after their respective grant date.
Should any non-employee director’s service cease prior to full vesting of the options, we have the right to repurchase any shares issued upon exercise of options not vested.
 
Compensation Committee Interlocks and Insider Participation
 
During the year ended December 31, 2008,2009, the compensation committee was comprised of Gordon Watson and August Klein, each of whom is a non-employee director. August Klein is the committee chairman.
 

 
9

REPORT OF AUDIT COMMITTEE
 
The audit committee operates under a written charter adopted by the board of directors. GraphOn’s audit committee charter is made available at its web-site at: www.graphon.com. Follow the link to “About GraphOn” to the link for “Corp. Governance” and then “Audit Committee Charter.” The functions of the audit committee include the following:our Audit Committee are focused on three areas:
 
·  ·appointmentthe adequacy of independent auditors, determinationthe internal controls and financial reporting process of their compensationGraphOn Corporation (the “Company”) and oversightthe reliability of their work;its consolidated financial statements;
 
·  ·review the arrangements forappointment, compensation, retention and scopeoversight of the audit byCompany’s independent auditors;
·review the independence of the independent auditors;
·consider the adequacy and effectiveness of theregistered public accounting and financial controls;
·pre-approve audit and non-audit services;
·establish procedures regarding complaints relating to accounting, internal accounting controls, or auditing matters;
·review and approve any related party transactions;firm; and
 
·  ·discussthe Company’s compliance with managementlegal and the independent auditors our draft quarterly interim and annual financial statements and key accounting and reporting matters.regulatory requirements.
 
           ManagementWe operate under a written charter which has the primary responsibility for the financial statements and the reporting process, including the systems of internal controls, and the independent auditors are responsible for auditing those financial statements in accordance with the standards set forthbeen approved by the PublicBoard of Directors. The Company Accounting Oversight Board and to issue a report thereon. The committee’s responsibility is to overseehas made the financial reporting processAudit Committee charter available on behalf ofits website at www.GraphOn.com under the board of directors and to report the result of their activities to the board of directors.
In fulfilling its oversight responsibilities, the audit committee reviewed the audited consolidated financial statements in the Annual Report on Form 10-K with management, including a discussion of both the quality and acceptability of the accounting principles applied, the reasonableness of significant estimates and judgments, critical accounting policies and accounting estimates resulting from the application of these policies and the clarity of disclosures in the financial statements. In addition, the audit committee discussed the rulesheading “Audit Committee Charter” found under The Sarbanes-Oxley Act of 2002 that pertain to the audit committee and the roles and responsibilities of the audit committee members.
During the year ended December 31, 2008, GraphOn’s independent certified public accountants were Macias Gini & O’Connell LLP. In addition to audit-related services, Macias Gini & O’Connell LLP also performed non-audit related services that consisted primarily of tax services for“About GraphOn during 2008. The audit committee reviewed Macias Gini & O’Connell LLP’s judgments of both the quality and acceptability of the accounting principles applied by management and such other matters that are required to be discussed with the audit committee under auditing standards generally accepted in the United States.
In overseeing the preparation of GraphOn’s financial statements, the audit committee met with both GraphOn’s management and Macias Gini & O’Connell LLP, with and without management being present, to review and discuss all financial statements prior to their issuance and to discuss significant accounting issues. GraphOn’s management advised the audit committee that all financial statements were prepared in accordance with accounting principles generally accepted in the United States and that they complied with the rules of Sarbanes-Oxley. The audit committee’s review included discussions with Macias Gini & O’Connell LLP of matters required to be discussed pursuant to Statement on Auditing Standards No. 114 (The Auditor’s Communication with Those Charged with Governance), which has superseded Statement on Auditing Standards No. 61 (Communication with Audit Committees). The audit committee has received the written disclosures and the letter from the independent accountant required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence.- Corp. Governance.”
 

 
10
 

We meet with management periodically to consider the adequacy of the Company’s internal controls and the objectivity of the Company’s financial reporting. We discuss these matters with the Company’s independent registered public accounting firm and with appropriate financial personnel. We periodically (at least annually) meet privately with both the independent registered public accounting firm and the Company’s financial personnel, each of whom has unrestricted access to us. We also appoint the independent registered public accounting firm and review their performance and independence from management. In addition, we review the Company’s financing plans.
 
OnManagement is responsible for the basisfinancial reporting process, including the system of these reviewsinternal control, and discussions, the audit committee recommended to the boardpreparation of directors that it approve the inclusion of the auditedconsolidated financial statements in GraphOn’s Annual Reportaccordance with generally accepted accounting principles. The Company’s independent registered public accounting firm is responsible for auditing those financial statements. Our responsibility is to monitor and review these processes. However, we are not professionally engaged in the practice of accounting or auditing and are not experts in the fields of accounting or auditing, including with respect to auditor independence. We rely on, Form 10-Kwithout independent verification, the information provided to us and on the representations made by management and the independent registered public accounting firm.
In this context, we held five meetings during 2009. The meetings were designed, among other things, to facilitate and encourage communication among us, management, the internal accountants and the Company’s independent registered public accounting firm for fiscal year 2009, Macias Gini & O’Connell LLP (MGO). We discussed with the MGO the overall scope and plans for their audit. We also met with the MGO, with and without management present, to discuss the results of their examinations and their evaluations of the Company’s internal controls. We reviewed and discussed with the MGO the Company’s compliance in establishing and maintaining an adequate internal control structure and procedures for financial reporting.
We reviewed and discussed the audited consolidated financial statements for the fiscal year ended December 31, 2008 for filing2009 with management and MGO.
We also discussed with the SEC.MGO matters required to be discussed with audit committees under generally accepted auditing standards, including, among other things, matters related to the conduct of the audit of the Company’s consolidated financial statements and the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
 
TheWe have received the written disclosures and the letter from MGO required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountants’ communications with us concerning independence, and we discussed with MGO their independence from the Company. When considering MGO’s independence, we considered whether their provision of services to us beyond those rendered in connection with their audit committee hasand review of the Company’s consolidated financial statements was compatible with maintaining their independence. We also evaluated the performance of Macias Gini & O’Connell LLP, including,reviewed, among other things, the amount of fees paid to themMGO for audit and non-audit related services in 2008. Information related(primarily tax services).
Based on our review and these meetings, discussions and reports, and subject to Macias Gini & O’Connell LLP’s fees for 2008the limitations on our role and 2007 are discussed belowresponsibilities referred to above and in the proxy statement under “Proposal II – RatificationAudit Committee charter, we recommended to the Board of Selection of Independent Auditors.” Based on its evaluation,Directors that the audit committee has selected Macias Gini & O’Connell LLP to serve as GraphOn’s auditorsCompany’s audited consolidated financial statements for the fiscal year endingended December 31, 2009.2009 be included in the Company’s annual report on Form 10-K for filing with the Securities and Exchange Commission.
 
October 15, 20097, 2010                                                                THE AUDIT COMMITTEEMembers of the Audit Committee

August P. Klein Chairman
Michael Volker
(Chairman)
Gordon M. Watson

 
11
 


PRINCIPAL STOCKHOLDERS
 
The following table sets forth certain information, as of October 15, 2009,4, 2010, with respect to the beneficial ownership of shares of our common stock held by:  (i) each director; (ii) each person known by us to beneficially own 5% or more of our common stock; (iii) each executive officer named in the summary compensation table; and (iv) all directors and executive officers as a group. Unless otherwise indicated, the address for each of the following stockholders is c/o GraphOn Corporation, 5400 Soquel Avenue, Suite A-2, Santa Cruz, California 95062.
Name and Address of Beneficial OwnerNumber of Shares of Common Stock Beneficially Owned (1)(2)Percent of Class (%)
Robert Dilworth (3)1,193,8202.5
William Swain (4)917,0001.9
August P. Klein (5)745,7601.6
Michael Volker (6)638,2001.3
Gordon Watson (7)580,000      1.2
AIGH Investment Partners, LLC (8)
6006 Berkeley Avenue
Baltimore, MD  21209
9,120,41718.3
Kennedy Capital Management, Inc. (9)
10829 Olive Boulevard
St. Louis, MO 63141
3,199,4986.8
Paul Packer (10)
60 Broad Street, 38th Floor
New York, NY 10004
4,111,2108.4
All current executive officers and directors as a group (5 persons)(11)4,074,7808.1
Name and Address of Beneficial OwnerNumber of Shares of Common Stock Beneficially Owned (1)(2)Percent of Class (%)
Robert Dilworth (3)1,293,820  2.7
William Swain (4)1,024,800  2.2
August P. Klein (5)   845,760  1.8
Gordon Watson (6)   686,600  1.5
AIGH Investment Partners, LLC (7)
6006 Berkeley Avenue
Baltimore, MD  21209
6,080,27813.2
Paul Packer (8)
60 Broad Street, 38th Floor
New York, NY 10004
2,296,925  5.0
All current executive officers and directors as a group (4 persons)(9)3,850,980  7.8


(1)
As used in this table, beneficial ownership means the sole or shared power to vote, or direct the voting of, a security, or the sole or shared power to invest or dispose, or direct the investment or disposition, of a security.  Except as otherwise indicated, based on information provided by the named individuals, all persons named herein have sole voting power and investment power with respect to their respective shares of our common stock, except to the extent that authority is shared by spouses under applicable law, and record and beneficial ownership with respect to their respective shares of our common stock.  With respect to each stockholder, any shares issuable upon exercise of options and warrants held by such stockholder that are currently exercisable or will become exercisable within 60 days of October 15, 20094, 2010 are deemed outstanding for computing the percentage of the person holding such options, but are not deemed outstanding for computing the percentage of any other person.
(2)
Percentage ownership of our common stock is based on 46,834,29245,981,625 shares of common stock outstanding as of October 15, 2009.4, 2010.
(3)
Includes 1,140,000 shares of common stock issuable upon the exercise of outstanding options.
(4)
Includes 880,000 shares of common stock issuable upon the exercise of outstanding options.
(5)
Includes 595,000 shares of common stock issuable upon the exercise of outstanding options.
(6)
Includes 560,000 shares of common stock issuable upon the exercise of outstanding options.
(7)Includes 580,000 shares of common stock issuable upon the exercise of outstanding options.
(8)
    (7)
Based on information contained in a Schedule 13G/A filed by AIGH Investment Partners, LLC on March 3, 2008.  Includes 3,040,139 shares of common stock issuable upon the exercise of outstanding warrants.2008, and information known to us. Orin Hirschman is the managing member of AIGH Investment Partners, LLC.
(9)    (8)
Based on information contained in a Schedule 13G/A filed by Kennedy Capital Management, Inc., an investment advisor, on March 13, 2009.  Kennedy Capital Management has the sole power to vote or direct the vote of 2,891,898 shares and the sole power to dispose or direct the disposition of 3,199,498 shares.
(10)Based on information contained in a Schedule 13G/A filed by Paul Packer and related parties on February 13, 2009.11, 2010 and information known to us, Mr. Packer has sole voting and dispositive power with respect to 1,215,017701,317 shares held or issuable upon exercise of outstanding warrants held by Mr. Packercommon stock and Mr. Packer sharesshared voting and dispositive power with respect to an aggregate 2,896,1931,595,608 shares held or issuable upon exercise of outstanding warrants held by Globis Overseas Fund Ltd. and Globis Capital Partners, LP.common stock.
(11)
    (9)
Includes 3,755,0003,195,000 shares of common stock issuable upon the exercise of outstanding options.

12
 
COMPLIANCE WITH SECTION 16(a) OF SECURITIES EXCHANGE ACT
 
Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors, as well as those persons who own more than 10% of our common stock, to file reports of ownership and changes in ownership with the SEC. These persons are required by SEC rule to furnish us with copies of all Section 16(a) forms they file.
 
Based solely on our review of the copies of such forms, or written representations from certain reporting persons that no such forms were required, we believe that during the year ended December 31, 2008,2009, all filing requirements applicable to our officers, directors and greater than 10% owners of our common stock were complied with.
 

12

PROPOSAL II
 
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORSREGISTERED PUBLIC ACCOUNTING FIRM
 
Our audit committee has selectedappointed Macias Gini & O’Connell LLP to audit our accounts for the fiscal year ending December 31, 2009.2010. Such firm, which has served as our independent auditorsregistered public accounting firm since February 9, 2005, has reported to us that none of its members has any direct financial interest or material indirect financial interest in our company.
 
A proposal will be presented at the annual meeting to ratify the audit committee’s appointment of Macias Gini & O’Connell LLP as our independent auditors.registered public accounting firm. Although stockholder ratification of the audit committee’s action in this respect is not required, our boardBoard of directorsDirectors considers it desirable for stockholders to pass upon such appointment.
 
A representative of Macias Gini & O’Connell LLP is expected to attend the annual meetingAnnual Meeting and will be afforded the opportunity to make a statement and/or respond to appropriate questions from stockholders.
 
Fees for professional services provided by Macias Gini & O’Connell LLP for the years ended December 31, 20082009 and 20072008 were as follows:
 

Category2008200720092008
Audit fees$       144,300$        154,900$    143,200$     144,300
Audit – related fees                 —1,300             —              —
Tax fees15,00014,000       14,000        15,000
Other fees                 —                 —             —              —
Totals$       159,300$        170,200$    157,200$     159,300

 
Audit fees include fees associated with our annual audit, the reviews of our quarterly reports on Form 10-Q, and assistance with and review of documents filed with the Securities and Exchange Commission.  Audit-related fees include consultations regarding revenue recognition and new accounting pronouncements particularly; FIN 48 (2007) and interpretations thereof, as they related to the financial reporting of certain transactions.  Tax fees included tax compliance and tax consultations.
 
The audit committee has adopted a policy that requires advance approval of all audit, audit-related, tax services and other services performed by our independent auditor.registered public accounting firm. The policy provides for pre-approval by the audit committee of specifically defined audit and non-audit services. Unless the specific service has been previously pre-approved with respect to that year, the audit committee must approve the permitted service before the independent auditorregistered public accounting firm is engaged to perform it.
 

13


Board Recommendation
 
The boardBoard unanimously recommends a vote FOR ratification of the selection of Macias Gini & O’Connell LLP as our independent auditorsregistered public accounting firm for the fiscal year ending December 31, 2009.2010.
OTHER MATTERS
Our Board of Directors knows of no other matters to be brought before the Annual Meeting. However, if other matters should come before the meeting, it is the intention of each person named in the proxy to vote in accordance with his judgment on such matters.
 
HOUSEHOLDING OF PROXY MATERIALS
 
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders.  This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
 
This year, a number of brokers with account holders who are GraphOnGraphOn stockholders will be “householding” our proxy materials. A single proxy statement and annual report will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement and annual report, please notify your broker, direct your written request to William Swain, our Secretary, at our address or contact William Swain at (800) 472-7466.472 - -7466.  Stockholders who currently receive multiple copies of the proxy statement and annual report at their address and would like to request “householding” of their communications should contact their broker.
 
20102011 STOCKHOLDER PROPOSALS
 
Stockholders are entitled to submit proposals on matters appropriate for stockholder action consistent with regulations of the SEC. In order for stockholder proposals for the 20102011 Annual Meeting of Stockholders to be eligible for inclusion in our proxy statement, our Secretary must receive them at our principal offices not later than June 21, 2010.9, 2011. Such proposals should be submitted, in writing, to GraphOn Corporation, Attn: William Swain, Secretary, 5400 Soquel Avenue, Suite A2,A-2, Santa Cruz, CA 95062.
 
ACCOMPANYING INFORMATION
 
Accompanying this proxy statement is a copy of our annual report to stockholders on Form 10-K, for our fiscal year ended December 31, 2008.2009. Such annual report includes our audited consolidated financial statements for the two fiscal years ended December 31, 2008.2009. No part of such annual report shall be regarded as proxy-soliciting material or as a communication by means of which any solicitation is being or is to be made.
 


 
1314
 



GRAPHON CORPORATIONGraphOn Corporation
5400 Soquel Avenue, Suite A2A-2
Santa Cruz, California 95062

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned stockholder hereby appoints Robert Dilworth and William Swain, or either of them, as Proxies,proxies, each with the power to appoint his substitute, and hereby authorizes each of them to represent and vote, as designated on the reverse side hereof, all the shares of Common Stock of GraphOn Corporation (the “Company”) held of record by the undersigned on October 15, 2009,4, 2010, at the Annual Meeting of the Stockholders to be held on November 18, 200917, 2010 or any adjournment thereof.

This Proxy, when properly executed, will be voted in the manner directed by the undersigned stockholder. If no direction is made, the Proxy will be voted FOR Proposals I the election of each of the director nominees listed on the reverse side and FOR Proposal II.

(Continued and to be signed on the reverse side)



 
 
 

ANNUAL MEETING OF STOCKHOLDERS OF

GRAPHON CORPORATIONGraphOn Corporation

November 18, 200917, 2010

NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, Proxy Statement and Proxy Card are available at:at
http://proxymaterials.graphon.com

Please sign, date and mail your proxy card
in the envelope provided as soon as possible

Please detach along the perforated line and mail in the envelope provided
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSALS I AND II.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE [X]

I.Election of Director:Directors: The nomineenominees for Class III of the Board of Directors isare listed below:

[   ] For nominee                                                                             Michael VolkerFOR ALL NOMINEES
[   ] WithholdWITHHOLD AUTHORITY FOR ALL NOMINEES
[   ] FOR ALL EXCEPT (See instructions below)                                      [   ] Robert Dilworth
[   ] August Klein

INSTRUCTIONS: To withhold authority for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the square next to each nominee you wish to withhold, as shown here: [X]

II.To ratify the selection of Macias Gini & O’Connell LLP[   ] For
as the Company’s independent auditorsregistered public accounting firm for the fiscal                                                     [   ] Against
year ending December 31, 20092010                                                                                                                                         0;    [   ] Abstain

III.To transact such other business as may properly come before the meeting.





To change the address on your account, please check the box at right [   ] and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.


Signature of Stockholder:                                                                                                Date:


Signature of Stockholder:                                                                                                Date:


Note: Please sign exactly as your name or names appear on this Proxy.  When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.