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Exhibit 10.2
 
EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”) is dated as of August 21, 2013 (the
“Effective Date”) by and between Eldad Eilam (“Executive”) and GraphOn
Corporation (the “Company”).

RECITALS

WHEREAS, Executive currently holds the position of President and Chief Executive
Officer of the Company;

WHEREAS, the Company and Executive seek to continue Executive’s employment in
accordance with the terms herein;

NOW THEREFORE, in consideration of the promises and mutual covenants contained
in this Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually agreed by and
between the parties as follows:

AGREEMENT

1.            Position and Duties.  The Company hereby continues to employ
Executive and Executive accepts continued employment by the Company as President
and Chief Executive Officer.  In Executive’s role as President and Chief
Executive Officer, Executive will report to the Board of Directors of the
Company (the “Board of Directors”) and will perform all of the duties that the
Board of Directors reasonably requires of him.

2.            Term.  Executive’s employment by the Company is not for any
specific period of time, but rather is an “employment at will” relationship.
 Executive’s employment under this Agreement shall continue until Executive’s
employment is terminated in accordance with Section 12 of this Agreement.

3.            Duty to the Company.  Except as permitted in this Section 3,
Executive agrees to devote Executive’s services and best energies and abilities
to the business and activities of the Company provided, however, that nothing
herein shall prevent Executive from participating in charitable organizations
and events, overseeing existing investments or investing in other businesses
provided that such other businesses are not competitive in any manner with any
business then being conducted by the Company, or investing in any business the
shares of stock of which are publicly traded even if such businesses are
competitive, provided that in the latter instance, Executive’s stock interest in
any such business is not a controlling or substantial interest and does not in
any event exceed 1% of the issued and outstanding shares of such business.

4.            Base Salary.  For the services rendered by Executive to the
Company hereunder, the Company agrees to pay Executive an annual base salary at
the rate of $275,000.00 (the “Base Salary”), payable in accordance with the
Company’s regular payroll practices and schedule.

5.            Bonus Opportunity.  Executive shall be eligible to earn a bonus
during each calendar year under such bonus program, if any, as may be
established for such calendar year by the Compensation Committee of the Board of
Directors in its sole and absolute discretion.  For 2013, Executive’s bonus
opportunity is $75,000.  Any such bonus will be based on the satisfaction of
certain performance criteria established at the beginning of the calendar year
to which the performance criteria relate.  Any bonus earned by Executive for a
calendar year shall be paid on or before March 15 of the subsequent calendar
year.

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6.            Restricted Stock and Stock Options.  Executive has been granted
1,600,000 restricted shares of Company Common Stock (the “Restricted Shares“)
under the GraphOn Corporation 2012 Equity Incentive Plan (the “2012 Equity
Plan”), pursuant to two Restricted Stock Agreements dated August 15, 2012 (the
“Restricted Stock Agreements”).  Executive has been granted stock options under
the GraphOn Corporation 2008 Equity Incentive Plan, as amended (the “2008 Equity
Plan”) to acquire 1,000,000 shares of Company Common Stock pursuant to an award
made February 22, 2012 (the “Time-Vesting Options“) and to acquire 1,000,000
shares of Company Common Stock pursuant to an award made September 8, 2011 (the
“Performance Options,“ and collectively with the Time-Vesting Options, the
“Stock Options”).  The Restricted Shares and Time-Vesting Options are scheduled
to vest over a period of 33 months commencing in the fourth month following the
grant effective date.  The Performance Options are scheduled to vest and become
exercisable upon the satisfaction of specified performance goals over a period
of three years.  Notwithstanding any contrary provision of the 2012 Equity Plan,
the 2008 Equity Plan, the Restricted Stock Agreements, or the Stock Option
awards, if Executive’s employment is terminated as a result of Executive’s death
or Disability (pursuant to Section 12(a)), by the Company without Cause
(pursuant to Section 12(c)), or by Executive for Good Reason (pursuant to
Section 12(d)), then, immediately upon such termination, all of Executive’s
unvested Restricted Shares shall vest and no longer be subject to the Company’s
“Return Right” (as defined in the 2012 Equity Plan) and all of the Stock Options
shall immediately vest and become exercisable for the applicable period
following termination specified in the 2008 Equity Plan.  The accelerated
vesting provisions of this Section 6 also shall apply to any restricted stock
and stock option awards made by the Company to Executive after the date of this
Agreement, whether or not so stated in the applicable grant agreements, and such
future awards shall be included in the definitions of “Restricted Shares” and
“Stock Options” under this Agreement.

7.            Executive Benefits.  Executive shall be entitled to participate in
any and all employee benefit plans, programs and practices sponsored by the
Company for the benefit of its executive employees and its employees generally
to the extent such participation is permitted under the terms of such plans,
programs and practices.  The Company reserves the right from time to time to
modify, amend and/or terminate its employee benefit plans, programs and
practices as it deems necessary or advisable.

8.            Paid Time Off.  Executive shall accrue up to four (4) weeks of
paid time off each year in accordance with the Company’s announced policy for
executive employees as in effect from time to time.  Executive may take vacation
at such time or times as shall not materially interfere with the performance of
the Executive’s duties under this Agreement.

9.            Expense Reimbursement.  Executive will be entitled to receive
reimbursement for all business expenses properly incurred and properly
documented by Executive in performing Executive’s duties under this Agreement.

10.         Confidential and Proprietary Information.  Executive and the Company
have entered into a Proprietary Information and Inventions Agreement dated July
20, 2011 (the “Proprietary Information Agreement”).  The terms and conditions of
the Proprietary Information Agreement shall continue in full force and effect
and are hereby incorporated by reference into this Agreement.

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11.          Company Property. Executive will return to the Company any Company
property that has come into Executive’s possession during Executive’s
association with and/or employment with the Company, when and as requested to do
so by the Company and in all events upon termination of Executive's employment.

12.          Termination.  Executive’s employment hereunder shall continue until
the occurrence of any of the following:

a.             Death or Disability.  Executive’s employment shall terminate upon
Executive’s death or, subject to applicable law, in the event of Executive’s
Disability (as defined herein), such termination to be effective upon thirty
(30) days’ written notice following delivery of the medical certification
described in the next sentence.  Executive shall be deemed to have a
“Disability” if a medical doctor (selected by the mutual consent of Executive
and the Company) certifies that Executive has for one hundred twenty (120)
consecutive days or one hundred eighty (180) non-consecutive days in any twelve
(12) month period been disabled in a manner which has rendered Executive unable
to perform the essential functions of Executive’s job duties with or without
reasonable accommodation.  Executive will cooperate in submitting to a medical
examination for the purpose of certifying Disability under this Section 12(a) if
requested by the Company.  Executive shall be entitled to have Executive’s
personal physician in attendance at any such medical examination.

b.             For Cause.  The Company may terminate Executive’s employment for
“Cause” immediately upon written notice by the Company to Executive.  For
purposes of this Agreement, “Cause” shall mean the occurrence of any one or more
of the following:

(i)            Executive’s conviction of any felony or of a misdemeanor
involving fraud, dishonesty or moral turpitude;

(ii)          Executive’s violation of any law or significant policy of the
Company committed in connection with the performance of Executive’s duties, or
violation of any other policy of the Company that would constitute grounds for
immediate dismissal in accordance with the terms of such policy, regardless of
whether within or outside the scope of Executive’s authority at the Company;

(iii)         Executive’s willful or intentional misconduct, recklessness or
gross negligence in the performance of Executive’s duties, regardless of whether
within or outside the scope of Executive’s authority at the Company, which
results in a material loss, damage or injury to the Company; or

(iv)         Executive’s failure or refusal to comply with a specific direction
of the Board of Directors provided that to the extent such failure or refusal is
susceptible to cure, it is not cured to the best of Executive’s ability within
ten (10) business days after the delivery of written notice of such failure or
refusal to Executive.

c.             Termination without Cause.  The Company may terminate Executive’s
employment without Cause at any time by giving Executive written notice of such
termination specifying the effective date of such termination, which may be any
date on or after the delivery date of the written notice.

d.             Termination by Executive for Good Reason.  Executive may
terminate Executive’s employment for Good Reason at any time upon thirty (30)
days’ prior written notice to the Company.  “Good Reason” shall mean that one of
the following events shall have occurred and shall not have been cured by the
Company within thirty (30) days after receipt of written notice from Executive
of the occurrence of such event delivered to the Company within ninety (90) days
of the occurrence of such event:

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(i)            the Company shall have materially reduced Executive’s Base
Salary, provided however if a reduction in Executive’s Base Salary is done in a
manner that is proportionate to a salary reduction imposed on similarly-situated
senior executives of the Company, then such reduction shall not constitute Good
Reason;

(ii)          the Company shall have materially diminished Executive’s duties,
responsibilities or authority or required Executive to report to anyone other
than the Board of Directors;

(iii)         the Company shall have relocated Executive’s principal office more
than fifty (50) miles from its current location in Campbell, California ; or

(iv)        the Company shall have materially breached this Agreement or any
other agreement between Executive and the Company.

e.              Termination by Executive Following Change in Control.  Executive
may terminate Executive’s employment at any time within one (1) year following a
“Change in Control” (as defined in the 2012 Equity Plan) upon thirty (30) days’
prior written notice to the Company.  Notwithstanding the foregoing, a
transaction shall be a “Change in Control” only if the transaction constitutes a
“change in ownership,” a “change in effective control” or a “change in the
ownership of a substantial portion of the assets” of the Company (as such terms
are defined for purposes of Section 409A (defined below)).

f.               Termination by Executive without Good Reason.  Executive may
terminate Executive’s employment without Good Reason at any time upon thirty
(30) days’ prior written notice to the Company.

13.          Rights and Remedies on Termination.

a.               Any Termination.  Upon any termination of this Agreement in
accordance with Section 12, above, Executive shall be entitled to receive, and
the Company shall be required to pay, (i) any unpaid Base Salary due for the
period prior and through the date of termination, (ii) any accrued and unused
vacation days through the date of termination, (iii) all other compensation and
all benefit amounts owing to Executive prior and through the date of
termination, and (iv) following submission of proper expense reports by
Executive, reimbursement for all expenses incurred in accordance with Section 9
of this Agreement, prior to the date of termination (the items set forth in the
foregoing clauses (i), (ii), (iii), and (iv) collectively, the “Accrued
Benefits”).

b.               Death.  If Executive’s employment hereunder is terminated as a
result of Executive’s death pursuant to Section 12(a) above, Executive’s estate
shall be entitled to receive the Accrued Benefits and full vesting of all
Restricted Shares and Stock Options.  Additionally, the Company shall, at the
Company’s expense, provide life insurance on Executive’s life with a death
benefit (net of any policy loans) in an amount not less than $1,000,000 at all
times Executive is an employee of the Company.  Executive shall have the right
to designate the beneficiary of such policy (or in the absence of such
designation the beneficiary shall be the Executive’s estate) during such time
periods as Executive is an employee of the Company.  The Company shall assist
the beneficiary of such policy in submitting a claim for the proceeds of such
insurance policy within thirty (30) days following the date of Executive’s
death.

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c.              Disability.  If Executive’s employment hereunder is terminated
as a result of Executive’s Disability pursuant to Section 12(a) above, Executive
shall be entitled to receive the Accrued Benefits and full vesting of all
Restricted Shares and Stock Options.  Additionally, the Company, at the
Company’s expense, shall maintain long-term disability insurance on Executive at
all times Executive is an employee of the Company, providing payments to
Executive in the event of Executive’s Disability in an amount not less than
66-2/3% of the sum of Executive’s Base Salary and target bonus amount per month,
and with a waiting period following Disability of not more than ninety (90)
days.

d.              For Cause/Without Good Reason.  If Executive’s employment
hereunder is terminated by the Company for Cause pursuant to Section 12(b) or by
Executive Without Good Reason pursuant to Section 12(f), then Executive shall
receive, and the Company shall be required to pay, only the Accrued Benefits.

e.              Termination Without Cause/for Good Reason/Following Change in
Control.  If Executive’s employment hereunder is terminated by the Company
without Cause pursuant to Section 12(c) or Executive terminates Executive’s
employment hereunder for Good Reason pursuant to Section 12(d) or following a
Change in Control pursuant to Section 12(e), then the Company shall pay to
Executive and Executive shall be entitled to receive (1) the Accrued Benefits,
(2) full vesting of all Restricted Shares and Stock Options, (3) continuation of
Executive’s Base Salary for a period of twelve (12) months following termination
at the rate of Base Salary in effect immediately prior to the date of
termination (or, if greater, in effect immediately prior to any reduction in
Base Salary constituting Good Reason), and (4) payment or reimbursement for a
period of twelve (12) months following termination of the full cost to Executive
of any Company provided health insurance coverage that Executive elects to
obtain for Executive and Executive’s eligible dependents under the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).
 Notwithstanding the foregoing, as a  condition to Executive receiving any
payments pursuant to clauses (3) and (4) above, Executive must execute and
deliver to the Company, and not revoke, a general release in a form provided by
the Company, releasing the Company, its employees, officers, directors, agents
and such other persons identified by the Company, and each person who controls
any of them within the meaning of Section 15 of the Securities Act of 1933, as
amended, from any and all claims of any kind or nature, whether known or unknown
(other than claims with respect to payments to be made pursuant to this
Agreement) from the beginning of time to the date of termination.  To receive
any such payments pursuant to clauses (3) and (4) above, such release must be
executed by Executive and delivered to the Company and such release must have
become irrevocable no later than 30 days after the date of Executive’s
employment termination.  Any payment pursuant to clauses (3) and (4) above that
otherwise would be due within 30 days following such termination shall be paid
on the Company's first normal payroll date after such 30th day.  If Executive’s
employment with the Company is terminated under circumstances that entitle
Executive to receive salary continuation and Company subsidized health care
continuation for a period of twelve (12) months or more following termination
under the GraphOn Corporation Key Employee Severance Plan (or a successor plan
to such Key Employee Severance Plan), then Executive shall not be paid or
provided duplicate benefits under clauses (3) and (4) above.

f.             409A Compliance.  It is the intention of the Company and
Executive that the payments and other benefits payable to Executive under this
Agreement either be exempt from, or otherwise comply with Section 409A (“Section
409A”) of the Internal Revenue Code of 1986, as amended (the “Code”).  The
provisions of this Agreement shall be interpreted in such manner as may be
required in order to be exempt from or to comply with Section 409A. In that
regard:

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(i)            If any payment to be made hereunder is “nonqualified deferred
compensation” subject to Section 409A and the timing of such payment is based on
termination of Executive’s employment with the Company, then for such purpose
“termination of employment” shall mean “separation from service” with the
Company as such term is defined for purposes of Section 409A.

(ii)            Whenever a payment under this Agreement specifies a payment
period with reference to a number of days following the termination of
employment or other event, the actual date of payment within the specified
period shall be within the sole discretion of the Company.

(iii)            Each payment (including each installment payment) that may be
made under this Agreement shall be considered a separate payment.

(iv)            In no event shall any payment of expense reimbursement
(including any COBRA reimbursement) under this Agreement be made later than the
end of the calendar year next following the calendar year in which such expense
was incurred, and Executive shall be required to have submitted substantiation
for such expenses at least ten (10) days before the last date for payment, the
amount of such expenses that the Company is obligated to pay in any given
calendar year shall not affect the expenses that the Company is obligated to pay
in any other calendar year, and Executive’s right to have the Company pay such
expenses may not be liquidated or exchanged for any other benefit.

(v)            Notwithstanding any other provision in this Agreement, solely to
the extent that a delay in payment is required in order to avoid the imposition
of any tax under Section 409A, if a payment obligation under this Agreement
arises on account of Executive’s “separation from service” (within the meaning
of Section 409A) while Executive is a “specified employee” (as determined for
purposes of Section 409A in good faith by the Board of Directors), then payment
of any amount or benefit provided under this Agreement that is considered to be
non-qualified deferred compensation for purposes of Section 409A and that is
scheduled to be paid within six (6) months after such separation from service
shall be paid without interest on the first business day after the date that is
six (6) months following Executive’s separation from service.

g.              Parachute Payments.  If any payment or benefit Executive would
receive under this Agreement when combined with any other payment or benefit
Executive may receive after the occurrence of the Designated Event that would
constitute a “parachute payment” within the meaning of Section 280G of the Code
(a “Payment”) that, but for this sentence, would be subject to the excise tax
imposed by Section 4999 of the Code (the “Excise Tax”), then such Payments shall
be reduced (with cash Payments being reduced to $0 before any Payment
attributable to the accelerated vesting of Restricted Shares or Stock Options or
other non-cash Payments) to such lesser amount as would result in no portion of
the Payments being subject to the Excise Tax.  Any cash Payments reduced
pursuant to the preceding sentence shall be applied ratably to each installment
payment due under clauses (3) and (4) of Section 13(e) before any other Payment
is reduced.  Accelerated vesting of Restricted Shares and Stock Options shall be
reduced to the maximum extent possible (in such order as Executive may specify)
before any other non-cash Payment is reduced (in reverse order of vesting
dates).

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14.           Arbitration.  Executive and the Company agree that, to the fullest
extent permitted by law, Executive and the Company will submit all disputes
arising under this Agreement or arising out of or related to Executive’s
employment with or separation from the Company, to final and binding arbitration
in Santa Clara County, California before an arbitrator associated with the
American Arbitration Association, JAMS or other mutually agreeable alternative
dispute resolution service.  Included within this provision are any claims based
on violation of local, state or federal law, such as claims for discrimination
or civil rights violations under Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act, the Americans with Disabilities Act, the
Family and Medical Leave Act, the California Family Rights Act, the California
Fair Employment and Housing Act, the California Labor Code, or similar statutes
and ordinances.  If there is a dispute as to whether an issue or claim is
arbitrable, the arbitrator will have the authority to resolve any such dispute,
including claims as to fraud in the inducement or execution, or claims as to
validity, construction, interpretation or enforceability.  The arbitrator
selected shall have the authority to grant Executive or the Company or both all
remedies otherwise available by law.  The arbitrator will be selected from a
neutral panel pursuant to the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association or similar rules of any
alternative dispute resolution service selected (the “Rules”).  The arbitration
will be conducted in accordance with the Rules (or the rules of any other
service selected).  Notwithstanding anything to the contrary in the Rules,
however, the arbitration shall provide (i) for written discovery and depositions
adequate to give the parties access to documents and witnesses that are
essential to the dispute and (ii) for a written decision by the arbitrator that
includes the essential findings and conclusions upon which the decision is
based. The arbitrator’s award shall be enforceable in any court having
jurisdiction thereof.  The parties shall each bear their own costs and
attorneys’ fees incurred in conducting the arbitration and, except in such
disputes where Executive asserts a claim otherwise under a state of federal
statute prohibiting discrimination in employment (a “Statutory Claim”), or
unless required otherwise by applicable law, shall split equally the fees and
administrative costs charged by the arbitrator and AAA (or such other
alternative dispute resolution service).  In disputes where Executive asserts a
Statutory Claim against the Company, or where otherwise required by law,
Executive shall be required to pay only the AAA filing (or filing of such other
arbitration service) fee to the extent such filing fee does not exceed the fee
to file a complaint in state or federal court.  The Company shall pay the
balance of the arbitrator’s fees and administrative costs. To the extent
permissible under the law, however, and following the arbitrator’s ruling on the
matter, the arbitrator may rule that the arbitrator’s fees and costs be
distributed in an alternative manner.  To the extent that applicable law
provides that a prevailing party is entitled to recover attorneys fees and
costs, the arbitrator shall apply the same standard with respect to the awarding
of fees and costs as would be awarded if such claim had been asserted in state
or federal court.  This mutual arbitration agreement does not prohibit or limit
either the Executive’s or the Company’s right to seek equitable relief from a
court, including, but not limited to, injunctive relief, a temporary restraining
order, or other interim or conservatory relief, pending the resolution of a
dispute by arbitration.  The arbitrator shall have no authority to add to or to
modify the terms described in this Section, shall apply all applicable law, and
shall have no lesser and no greater remedial authority than would a court of law
resolving the same claim or controversy.

15.           Entire Agreement;  Amendment;  Effect of Waiver.  This Agreement,
together with the Restricted Stock Agreements, the Stock Options and the
Proprietary Information Agreement, constitutes the entire agreement of the
parties concerning the subject matter hereof and supersedes any and all prior or
contemporaneous written or oral negotiations, correspondence, understandings and
agreements between the parties respecting the subject matter of this Agreement.
 This Agreement supersedes the GraphOn Corporation Key Employee Severance Plan
(and any successor plan to such Key Employee Severance Plan) unless Executive’s
employment with the Company is terminated under circumstances that entitle
Executive to receive salary continuation and Company subsidized health care
continuation for a period of twelve (12) months or more following termination
under the GraphOn Corporation Key Employee Severance Plan (or a successor plan
to such Key Employee Severance Plan).  No supplement, modification or amendment
to this Agreement shall be binding unless evidenced by a writing signed by the
party against whom it is sought to be enforced.  The waiver by either party of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any other provision or any subsequent breach of the same provision
thereof.  No waiver shall be binding unless executed in writing by the party
making the waiver.

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16.            Severability.  If any provision of this Agreement or the
application of any such provision shall be held by an arbitrator or court of
competent jurisdiction to be prohibited or unenforceable in any jurisdiction,
such provision shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability.  The remaining provisions of this
Agreement shall otherwise remain in full force and effect and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

17.            Assignability; Successors.  Executive may not delegate or assign
any of Executive’s duties or rights hereunder.  The rights of the Company under
this Agreement may be assigned by the Company to any successor to the Company in
the Company’s sole discretion.  This Agreement will be binding upon and inure to
the benefit of the parties hereto, their respective legal representatives and
successors.

18.           Miscellaneous.

(a)            Section headings are employed in this Agreement for reference
purposes only and shall not affect the interpretation or meaning of this
Agreement.

(b)            This Agreement shall be governed by and construed in accordance
with the laws of the State of California.

(c)            All notices and other communications required to be given
hereunder shall be sufficient if in writing and if delivered in person, by
facsimile transmission, electronic mail, overnight delivery service or U.S.
mail, in which event it may be mailed by first-class, certified or registered,
postage prepaid, to either party at the address of such party listed below the
signature block on the last page of this Agreement.

(d)            This Agreement may be executed in one or more counterparts
(including by facsimile), each of which shall be deemed to be an original, but
all of which shall constitute one and the same instrument.

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IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement
as of the day and year first above written.

GRAPHON CORPORATION

By: /s/ Steven Ledger
Name:  
Steven Ledger
Title:  
Chairman of the Board
Address:  
1901 S. Bascom Avenue Suite 660
 
Campbell, California 95008

 
EXECUTIVE
 
By: 
/s/ Eldad Eilam
Name:  
Eldad Eilam
Address: 
1901 S. Bascom Avenue Suite 660  
Campbell, California 95008

 
 
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