On2 Technologies, Inc. 21 Corporate Drive Suite 103 Clifton Park, NY 12065 www.on2.com
EXHIBIT
10.1
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Xxxxxxx
Xxxx, XX 00000
xxx.xx0.xxx
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May
5,
2006
Xxx
Reusing
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Xxxxxxxxx Xxxx
Xxx
Xxxxx, XX 00000
Dear
Xxx:
This
amendment and restatement (this “Agreement”) of that certain employment
agreement (the "Original Agreement"), dated as of November 10, 2003,between
you
(the "Executive") and On2 Technologies, Inc. (the "Company"), a Delaware
corporation, is effective as of February 28, 2006 (the “Effective Date”). This
letter sets forth the terms of your employment as Executive Vice President,
Corporate Development.
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 and General Counsel. 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 December 31, 2006. 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 will include developing relationships with current and
prospective customers and assisting in the structuring, negotiation and closing
of pending license and other transactions. The Executive will report directly
to
the Company’s CEO.
b.
The
Executive's services shall be rendered primarily at the Company's offices in
New
York, New York and at such other locations as the Company may from time to
time
reasonably 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 while under the employ
of
the Company the Executive shall not (i) directly or indirectly 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 $192,500
per year, payable monthly. Such base salary as may be increased from time to
time and is hereinafter referred to as "Base Salary". The Executive is
guaranteed (i) payment of his Base Salary, (ii) all benefits to which he is
entitled pursuant to this Agreement, including, without limitation, those set
forth in Section 6 hereof during the Term, and (iii) retention of his title
and
use of his office space, in each case regardless of whether Executive is
terminated for Cause or not for Cause or resigns his position or is otherwise
unable to perform his duties on account of his death or disability; provided,
however, that Executive shall not be entitled to retain his title and use of
his
office space if he resigns his position. The foregoing sentence sets forth
all
of Executive’s rights to receive compensation upon his termination or departure
from his employment, irrespective of anything set forth in this Agreement
including, without limitation, in Sections 7 or 8 hereof. Upon the cessation
of
the Executive’s employment with the Company (regardless of whether such
cessation is due to Executive’s resignation, termination for Cause, termination
without Cause or due to Executive’s death or disability): (i) the Company shall
have the obligations set forth in Section 8.a. iv. and Section 8.c., (ii) all
of
the Executive's stock options which would have vested and become exercisable
had
the Executive's employment continued to the later of (x) October 15, 2006 or
(y)
the date upon which Executive employment ceases, shall vest and become
exercisable, and the Executive may exercise all stock 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 Executive’s employment ceases,
whichever is later.
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
satellite modem 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.
c.
Executive will receive a percentage set forth on a schedule to be mutually
agreed (the “Percentage”) of all monies actually received by the Company from or
in connection with or arising out of any licenses, deals or transactions entered
into with or through any of the entities set forth on a schedule to be mutually
agreed to; provided, however, that such amount shall not in the case of any
single entity exceed the amount set forth next to the entity’s name on such
schedule, if any. The license, deal or transaction must be entered into or
be
effective prior to the end of the Term in order for it to be eligible for the
Percentage fee. The Percentage fee shall be payable to Executive regardless
of
whether some or all eligible monies are received after the end of the Term
or
after the cessation of Executive’s employment with the Company; provided,
however, that Executive’s right to receive the Percentage fee shall not extend
to royalty fees, revenue shares, or other similar fees, to the extent such
fees
are received after the cessation of Executive’s employment with the
Company.
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 domestic partner and
children 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, 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 domestic partner
and children 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.
11A.
REPRESENTATIONS. Executive represents that he has provided to date truthful
and
complete information to the Company’s outside attorneys, and, aside from those
disclosures, knows of no other facts or circumstances arising out of his actions
or omissions on which a claim or action could be asserted against the Company
or
its subsidiaries. Based upon the foregoing representation, the Company does
hereby and forever release and discharge Executive, his heirs, assigns,
representatives and successors from any and all causes of action, actions,
judgments, liens, debts, contracts, indebtedness, damages, losses, claims,
liabilities, rights, interests and demands of whatsoever kind or character,
known or unknown, suspected to exist or not suspected to exist, anticipated
or
not anticipated, whether or not heretofore brought before any state or federal
court or before any state or federal agency or other governmental entity, which
the Company has or may have against Executive by reason of any and all acts,
omissions, events or facts occurring or existing prior to the date hereof
relating to or arising out of Executive’s employment, including, without
limitation, all claims attributable to the employment of Executive, and all
claims attributable to the termination of that employment, excepting only those
obligations expressly recited to be performed hereunder; provided, that, the
foregoing release shall not apply to claims which the Company has or may have
against Executive by reason of any willful misconduct, criminal acts or acts
of
fraud of Executive involving the Company or its subsidiaries.
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,
By:
/s/
Xxx
Xxxxx
Name:
Xxxxx Xxxxx
Title:
Interim CEO
/s/
Xxx
Reusing
Xxx
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