Exhibit 10.12
On2 Technologies, Inc.
00 Xxxxxxxxx Xxxxx
Xxxxx 000
September 16, 2003 Xxxxxxx Xxxx, XX 00000
xxx.xx0.xxx
Xxxx Xxxxxx
00 Xxxxxxxxxxxx Xx.
Xxxxxx, XX 00000
Dear Xxxx:
The following constitutes the employment agreement (the "Agreement") between you
(the "Executive") and On2 Technologies, Inc. (the "Company"), a Delaware
corporation. This letter sets forth the terms of your employment as Executive
Vice President for Software Development and Chief Technology Officer.
1. EMPLOYMENT; ACCEPTANCE OF EMPLOYMENT The Company hereby employs the Executive
during the Term (as defined below) on a full-time basis to render exclusive
services to the Company as Executive Vice President for Software Development and
Chief Technology Officer. The Executive hereby accepts this employment and will
render his services as required by the Company conscientiously, loyally,
competently and to the best of his talents and abilities throughout the Term in
accordance with the direction and control of his designated supervisor.
2. TERM OF AGREEMENT. The initial term of this Agreement shall commence on the
date hereof and terminate on September 15, 2005. This Agreement may be renewed
by the Company upon 90 days' written notice to the Executive prior to the
expiration of the initial term or any renewal term and acceptance of such offer
of renewal by the Executive. The initial term, as extended by any renewal term,
is referred to herein as the "Term".
3. EXECUTIVE'S DUTIES.
a. The Executive's duties include those services customarily rendered by a chief
technology officer of a publicly traded company of the size of the Company in
the Company's industry, with such other duties and services as may reasonably be
assigned to him from time to time in the conduct of the business of the Company.
b. The Executive's services shall be rendered primarily at the Company's offices
in Xxxxxxx Park, New York and at such other locations as the Company may request
consistent with its business needs. Travel (and related expenses) to such other
locations will be at the Company's expense.
4. EXCLUSIVITY, RESTRICTIVE AGREEMENTS.
a. During his employment, the Executive shall devote all of his business time,
skill and energies exclusively to the business of the Company.
b. The Executive acknowledges that the nature of the services, position and
expertise of the Executive are such that he is capable of competing with the
Company and seriously damaging its business and its prospects to the detriment
of its stockholders and employees. In consideration of the Company's performance
of its obligations under this Agreement, during the Term and thereafter during
the Restricted Period (as defined below) the Executive shall not (i) directly or
indirectly enter into the employ of, or render any advice or services, whether
or not for compensation, to, any Person (as defined below) engaged in any
Competitive Business (as defined below); (ii) directly or indirectly engage in
any Competitive Business; and (iii) directly or indirectly become interested,
whether or not for compensation, in any Competitive Business as an individual,
partner, shareholder, creditor, director, officer, principal, agent, employee,
trustee, consultant, advisor or in any other relationship or capacity or, in the
case of any such company whose securities are traded on a national securities
exchange in the United States or otherwise or in the over-the-counter market,
acquire, directly or indirectly, an interest in excess of one percent (1%) of
the outstanding capital stock of such company. The Company's business is
worldwide in scope; accordingly, the Executive agrees that this covenant not to
compete shall not be subject to any geographical limit.
c. For purposes of this Section, any "Competitive Business" shall mean any
business (including, for the avoidance of doubt, any
division, unit, subsidiary or affiliate of any other business whether or not
such other business is a Competitive Business unless the Executive can
demonstrate upon the Company's request that his employment by, engagement in, or
his interest in, such unit, division, subsidiary or affiliate does not and will
not require him to provide services, information, advice or relevant knowledge,
skill, know-how or contacts to the Competitive Business during the Restricted
Period) which is principally engaged in the design or development of digital
compression, decompression or playback technologies in the computing,
telecommunications or entertainment industries.
d. For purposes of this Section, "Person" shall mean any corporation,
partnership, trust, individual or any other entity.
e. For all purposes of this Section 4, "Restricted Period" shall be the 180 days
immediately following termination of employment whether such termination is by
resignation or termination by the Company with or without Cause (as defined
below) or upon the expiration of the Term.
5. COMPENSATION.
a. During the Term the Executive shall receive base compensation at the rate of
$182,500 per year, payable monthly. Such base salary as may be increased from
time to time and is hereinafter referred to as "Base Salary".
b. The Company will reimburse the Executive for expenses related to its business
actually incurred or paid by the Executive in the performance of his duties
under this Agreement, including without limitation home cable modem and digital
cable bills and cell phone bills, upon presentation of accountings, expense
statements, vouchers or such other supporting information as may be required by
the Company's policies.
6. EXECUTIVE BENEFITS.
a. During the Term, the Executive shall be entitled to participate in such group
health, retirement, profit sharing, 401(k) and other benefits programs or plans,
qualified or unqualified, including any future stock option, bonus or other
incentive program, which are or become available to other senior executives of
the Company, subject to the policies of the Company with respect to all of such
programs or plans. Nothing in this clause 6a. shall be construed to create a
contractual obligation to provide the Executive with any particular form or type
of benefit or to limit the discretion of the Board of Directors or Compensation
Committee or any other duly authorized or appointed plan administrator is
permitted to exercise under any such benefit programs or plans.
b. During the Term the Executive shall be entitled to four weeks' paid vacation
per year of employment to be scheduled on reasonable notice to the Company and
to be taken, accrued and paid on the same basis as other employees of the
Company.
7. TERMINATION OF EMPLOYMENT FOR CAUSE.
a. The Company may terminate employment of Executive for any of the following
reasons, each of which is defined as "Cause:"
i. commission of a felony, any crime of moral turpitude or any act of fraud or
dishonesty;
ii. repeated failure to satisfactorily perform material services required under
this Agreement in accordance with the requests of the Board of Directors;
iii. willful misconduct or gross negligence in the performance of his duties;
iv. disregard or violation of the legal rights of any employees of the Company
or of the Company's written policies regarding harassment or discrimination; or
v. a breach of any material provisions of this Agreement (including, but not
limited to, any breach of Sections 3 or 9).
If the Company terminates the employment of the Executive for Cause, or if the
Executive resigns during the Term, the Company's obligations under this
Agreement to pay further compensation shall cease forthwith, except that the
Company will pay the Executive, within 30 days from the date of termination of
his employment, in full and complete satisfaction of all of the Company's
obligations under this Agreement, (i) the Base Salary and, subject to submission
of all required documentation, reimbursable expenses accrued (but unpaid) to the
date of termination and (ii) any accrued but unused vacation days paid at the
rate of the Executive's Base Salary and during the six months after such
termination will further provide all benefits as would have been provided had
employment continued including medical, disability and life insurance; PROVIDED,
that in the case of the death of the Executive during such six-month period,
medical insurance will be continued for the Executive's wife for the duration of
such period. Nothing contained in this Section 7.a shall be construed to alter
the Executive's right under any stock option plan pursuant to which options have
been issued to Executive.
b. If the Executive dies during the Term, such death shall be deemed termination
for Cause and the Company's obligation to Executive's estate shall be the same
as those for termination for cause as defined in Section 7.a above.
c. If, as a result of the Executive's disability or incapacity during the Term
due to physical illness or condition, or mental illness during his employment
with the Company, the Executive is unable to perform his duties hereunder for a
consecutive 6-calendar week period, or an aggregate period of 12 calendar weeks
during any 12 months (or such longer period as may be required to comply with
the Family Leave Act or other applicable law), the Company shall have the right,
upon written notice to the Executive, to terminate the Executive's employment
under this Agreement. Such a termination shall be deemed termination for Cause
as defined in Section 7.a but shall in no case become effective until the date
at which the Company's long-term disability plan pays benefits to him.
d. Any alleged breach of this Agreement by either party shall not be deemed a
breach until such time as the breaching party shall have received written notice
from the non-breaching party setting forth the alleged breach ("Alleged Breach
Notice") and the breaching party shall not have cured (if curable) the breach
set forth in the Alleged Breach Notice in the 15 days (10 days for defaults in
payments) after receipt of such Alleged Breach Notice. If the breach set forth
in the Alleged Breach Notice is not curable and has not resulted in a
substantive and material adverse effect on the party sending the Alleged Breach
Notice, the Company and the Executive shall, at the request of the other,
attempt to meet and discuss such alleged breach before resorting to remedies or
rights under this Agreement or otherwise. Notwithstanding the foregoing, this
Section shall not apply to, and the Executive shall have no right to cure, a
breach by him under clauses (i) and (iv) of the definition "Cause" contained in
Section 7.a, above.
8. TERMINATION OTHER THAN FOR CAUSE.
a. If the Company terminates the Executive's employment without Cause, the
Company's obligations under this Agreement shall be as follows:
i. The Company will continue to pay to the Executive, or in the case of death of
the employee to his successors or legal representatives or to his estate, during
the 180 days immediately following such termination of employment or expiration
of the Term, as the case may be (such period is hereinafter referred to as the
"Severance Period"), his Base Salary on a monthly basis as would have been paid
to the employee had his employment with the Company continued;
ii. The Company shall pay to the Executive his proportionate share of any bonus
compensation to which he would have received had he continued to be employed
until the end of the relevant bonus calculation period. Such bonus compensation
shall be payable in a lump sum within 30 days of determination of Executive's
bonus amount;
iii. The Company will continue to provide all benefits to the Executive during
the Severance Period as would have been provided had employment continued,
including medical, disability and life insurance. In the case of the death of
the employee, medical insurance will be continued for Executive's spouse for the
duration of the Severance Period; and
iv. The Company will reimburse the Executive for all reimbursable expenses
accrued (but unpaid) to the date of termination or expiration of the Term, as
the case may be; and within 10 business days after such termination, any accrued
but unused vacation days paid at Executive's Base Salary.
b. If a termination without Cause takes effect prior to the expiration of the
Term, all of the Executive's stock options which would have vested and become
exercisable had the Executive's employment continued to the end of the Term in
which such termination without Cause has occurred shall vest and become
exercisable, and the Executive may exercise all options held by him which have
thereby vested and become exercisable during the period ending on the last day
on which the Executive may exercise such options under the terms of the
applicable option plan or 90 days from the date of termination, whichever is
later.
c. Notwithstanding Section 8(b), if the Company terminates the Executive's
employment without Cause following a business combination (including sale of
assets, merger, consolidation or other transaction that results in the
stockholders of the Company receiving liquid consideration for a majority of the
holdings in the Company accompanied by a change in actual control of the
Company), all stock options theretofore granted to the Executive shall vest and
become exercisable, and the Executive may thereafter exercise all options held
by him during the period ending on the last day on which the Executive may
exercise such options under the terms of the applicable option plan or 90 days
from the date of termination, whichever is later.
9. NONDISCLOSURE.
a. Except as required in order to perform his obligations under this Agreement,
the Executive shall not, without the express prior written consent of the
Company, directly or indirectly, disclose or divulge to any other person or
entity any of the Company's
Confidential Information or Trade Secrets at any time (during or after the
Executive's employment) during which such data or information continues to
constitute Confidential Information or a Trade Secret. Except as required to be
disclosed to his attorney, accountant or financial advisor, the Executive shall
not disclose or divulge to any other person (particularly to any other employee)
any terms of the Executive's compensation under this Agreement. Upon any
termination or expiration of his employment, the Executive will promptly deliver
to the Company all data, lists, information, memoranda, documents and all other
property belonging to the Company or containing Confidential Information or
Trade Secrets of the Company.
b. As used in this Agreement:
i. "Confidential Information" of the Company shall mean any valuable,
competitively sensitive data and information related to the Company's business
other than Trade Secrets that are not generally known by or readily available to
the Company's competitors, including, among other things, that which relates to
services performed by the Executive for the Company, or was created or obtained
by the Executive while performing services for the Company or by virtue of the
Executive's relationship with the Company; and
ii. "Trade Secrets" shall mean information or data of the Company, including but
not limited to technical or non-technical data, compilations, programs, devices,
methods, techniques, processes, financial data and financial plans, that: (a)
derive economic value, actual or potential, from not being generally known to,
and not being readily ascertainable by proper means by, other persons who can
obtain economic value from their disclosure or use; and (b) are the subject of
efforts that are reasonable under the circumstances to maintain their secrecy.
To the extent that the foregoing definition is inconsistent with a definition of
"trade secret" mandated under applicable law, the latter definition shall govern
for purposes of interpreting the Executive's obligations under this Agreement.
iii. The obligations set forth in this Section shall not be applicable to any
information which: (i) the Company has authorized the Executive in writing to
publicly disclose, copy or use, but only to the extent of such authorization;
(ii) is generally known or becomes part of the public domain through no fault of
the Executive; (iii) is disclosed to the Company by third parties without
restrictions on disclosure; or (iv) is required to be disclosed in the context
of any administrative or judicial proceedings; PROVIDED that, if the Executive
is requested or becomes legally compelled to disclose any Confidential
Information or Trade Secrets, the Executive will provide the Company with prompt
written notice so that the Company may seek a protective order or other
appropriate remedy and/or waive compliance with the provisions of this Section
and the Executive will cooperate with the Company in any effort the Company
undertakes to obtain a protective order or other remedy. If such a protective
order or other remedy is not obtained or the Company waives compliance with this
Section, the Executive will furnish only that portion of the Confidential
Information and Trade Secrets that is legally required and will exercise all
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded the Confidential Information to be disclosed. The Company hereby
agrees to indemnify and hold harmless Executive from all costs and expenses,
including attorneys' fees, he incurs in carrying out his obligations under the
proviso provisions of this subsection 9.b.iii and further agrees upon the
written request of Executive to advance to Executive the anticipated cost of
complying with his obligations under such proviso provisions.
10. REPRESENTATIONS AND WARRANTIES. The Executive hereby represents and warrants
that (a) he has the right to enter into this Agreement with the Company and to
grant the rights contained in this Agreement, and (b) the provisions of this
Agreement do not violate any other contracts or agreements that the Executive
has entered into with any other individual or entity.
11. SERVICES OF THE EXECUTIVE. In the course of his employment under this
Agreement, the Executive will have access to Trade Secrets, the disclosure or
unauthorized use of which, the Company seeks to protect and the Executive has
agreed to protect. As a result of benefits accruing to the Executive from his
access to such Trade Secrets, and of the improvement in his knowledge, and
proficiency arising therefrom, the Executive acknowledges that (a) his services
are and will remain special and extraordinary, and have and will have a peculiar
value, the loss of which cannot be reasonably or adequately compensated in
damages in any action at law; (b) he is willing to comply with the restrictions
contained in Sections 4.b and 4.c; (c) the restrictions contained in those
Sections will not impair his ability to earn a living in any businesses other
than those businesses from which he is prohibited during the time of such
restriction; and (d) a material breach of his obligations under Sections 4.b,
4.c or 10 will cause the Company irreparable injury and damage. It is,
therefore, agreed that the Company, in addition to any other remedies, shall be
entitled to injunctive and other equitable relief to enforce its rights under,
and to prevent a breach of, Sections 4.b, 4.c and 9 of this Agreement by the
Executive.
12. ASSIGNABILITY ETC. This Agreement shall be nondelegable and nonassignable by
the Executive, and shall inure to the benefit of heir and assigns the Executive.
This Agreement shall be binding upon and inure to the benefit of the Company and
any entity succeeding to all or substantially all of the business assets of the
Company by merger, consolidation, purchase of assets or otherwise.
13. NOTICES. Any notice pertaining to this Agreement shall be in writing and
shall be served by delivering said notice (i) by
hand, (ii) by overnight mail by a internationally recognized carrier, (iii) by
sending it by certified mail, postage prepaid, return receipt requested, or (iv)
by confirmed telefax, with notice confirmed, to the Executive at the address
first stated above or his office at the Company, and to the Company at:
00 Xxxxxxxxx Xx.
Xxx. 000
Xxxxxxx Xxxx, XX 00000
Attn: CEO
The addresses for notice may be changed by notice given to the other party
pursuant to this Section.
14. MISCELLANEOUS.
a. This Agreement shall be governed by and construed under the laws and
decisions of the State of New York applicable without regard to the principles
of conflicts of laws. The parties to this Agreement agree that the state or
federal courts in the State of New York shall have personal jurisdiction over
them with respect to, and shall be the exclusive forum for the resolution of,
any matter or controversy arising from or with respect to this Agreement.
Service of a summons and complaint concerning any such matter or controversy
may, in addition to any other lawful means, be effected by sending a copy of
such summons and complaint by certified mail to the party to be served as
specified in Section 13 of this Agreement or at such other address as the party
to be served shall have provided in writing to the other from time to time in
accordance with Section 13.
b. To the extent permitted by law, the Executive and the Company irrevocably
waive trial by jury and any objection which he or it may now or hereafter have
to the venue of any suit, action or proceeding arising out of or relating to
this Agreement brought in the City of New York, and to the extent permitted by
law, the Executive and the Company hereby further irrevocably waive any claim
that any such suit, action or proceeding brought in the City of New York has
been brought in an inconvenient forum.
c. This Agreement contains the entire understanding of the parties to this
Agreement with respect to the subject matter of this Agreement and supersedes
all previous written and oral agreements between the parties with respect to the
subject matter set forth in this Agreement.
d. This Agreement may not be modified or amended except by a writing signed by
the parties to this Agreement.
e. Any provision of this Agreement that is deemed invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction and subject to
this Section, be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions of this
Agreement in such jurisdiction or rendering that or any other provision of this
Agreement invalid, illegal or unenforceable in any other jurisdiction. If the
covenant should be deemed invalid, illegal or unenforceable because its scope is
considered excessive, such covenant shall be modified so that the scope of the
covenant is reduced only to the minimum extent necessary to render the modified
covenant valid, legal and enforceable.
f. The following provisions of this Agreement shall survive in accordance with
their terms, the expiration or termination of this Agreement for any reason:
Sections 4, 7, 8, 9, 10, 11 and 14.
g. A waiver by either party of any Section, term or condition of this Agreement
in any instance shall not be deemed or construed to be a waiver of such Section,
term or condition for the future or of any subsequent breach thereof, and any
such waiver must be in writing, signed by the party to be charged. All rights
and remedies contained in this Agreement are cumulative, and none of them shall
be construed so as to limit any other right or remedy of either party.
h. This Agreement may be executed in counterparts, all of which shall constitute
one and the same agreement.
i. The headings and titles to the Sections of this Agreement are inserted for
convenience only and shall not be deemed a part of or affect the construction or
interpretation of any provisions of this Agreement.
j. All references to Sections shall be to sections and schedules of this
Agreement.
k. All references using male pronouns shall be deemed to include female
pronouns.
l. This Agreement maybe signed in multiple counterparts, each of which shall be
deemed an original. Any executed counterpart returned by facsimile shall be
deemed an original executed counterpart.
If the foregoing accurately reflects the Executive's understanding, please
countersign and return one counterpart of this Agreement to the Company.
Sincerely yours,
ON2 TECHNOLOGIES, INC.
By: /s/ Xxxx Xxxxxxx
------------------
Name: Xxxx Xxxxxxx
Title: CFO
/s/ Xxxx Xxxxxx
----------------------
Xxxx Xxxxxx
