ON2 TECHNOLOGIES,
INC.
RETENTION AND SEVERANCE
PLAN
The
Company hereby adopts the ON2 Technologies, Inc. Retention and
Severance Plan, effective as of, and conditioned upon, the signing
of the Merger Agreement (as defined herein), for the benefit of
certain employees of the Company on the terms and conditions
hereinafter stated. The Plan, as set forth herein, is intended to
assist in the retention and continued dedication of qualified
employees in the event of the Change of Control (as defined herein)
of the Company and provides for certain payments to eligible
employees in connection therewith.
SECTION
1.
DEFINITIONS . As hereinafter used:
1.1 “
Base Salary ” means the annual salary paid to a
Participant by the Company immediately prior to the Closing Date as
compensation for his or her services, and which has been disclosed
to Parent. Base Salary shall not include any incentive
compensation, overtime, bonuses or other income paid to the
Participant.
1.2 “
Board ” means the Board of Directors of the
Company.
1.3 “
Cause ” means (i) Participant’s willful and
continued failure to perform the duties and responsibilities of his
position (other than as a result of the Participant’s illness
or injury) after there has been delivered to Participant a written
demand for performance from the Participant’s supervisor
which describes the basis for the supervisor’s belief that
Participant has not substantially performed his duties and provides
Participant with a reasonable period of not less than ten (10) days
to take corrective action; (ii) any material act of personal
dishonesty taken by Participant in connection with his
responsibilities as an employee of the Company with the intention
that such action may result in the substantial personal enrichment
of the Participant; or (iii) Participant’s conviction of, or
plea of nolo contendere to, a felony that the Company reasonably
believes has had or will have a material detrimental effect on the
Company’s reputation or business.
1.4 “
Change in Control ” means the occurrence of any of the
following events: (a) any “person” (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended) becomes the “beneficial owner” (as
defined in Rule 13d-3 under said Act), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more
of the total voting power represented by the Company’s then
outstanding voting securities; (b) a change in the composition of
the Board occurring within a two-year period, as a result of which
fewer than a majority of the directors are Incumbent Directors, (c)
the consummation of a merger or consolidation of the Company with
any other corporation, other than a merger or consolidation that
would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity or such surviving entity’s parent) at
least fifty percent (50%) of the total voting power represented by
the voting securities of the Company or such surviving entity or
such surviving entity’s parent outstanding immediately after
such merger or consolidation; (d) the consummation of the sale or
disposition by the Company of all or seventy-five percent (75%) or
more of the Company’s assets or (e) any other event that the
Board determines to be a Change of Control. For the avoidance of
doubt, the consummation of the Merger shall constitute a Change of
Control and unless the Merger Agreement has been terminated, none
of the foregoing shall constitute a Change in Control other than
the Closing.
1.5 “
Closing ” shall have the meaning set forth in the
Merger Agreement.
1.6 “
Closing Date ” shall have the meaning set forth in the
Merger Agreement.
1.7 “
Code ” means the Internal Revenue Code of 1986, as
amended.
1.8 “
Company ” means ON2 Technologies, Inc., a Delaware
corporation.
1.9 “
Confidential Information ” means any valuable,
competitively sensitive data and information related to the
Company’s business 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 a
Participant for the Company, or was created or obtained by a
Participant while performing services for the Company or by virtue
of a Participant’s relationship with the Company.
Confidential Information includes but is not limited to, all
tangible or intangible business or financial plans, processes,
strategies, market research and analyses, projections, methods and
techniques, forecasts and forecast assumptions, business practices,
operations and procedures, marketing information, customer
information and other business information, including records,
technologies, designs, patents, business plans, financial
statements, manuals, memoranda, lists and other documentation
respecting the Company.
1.10 “
Effective Date ” means the date upon which this Plan
is adopted, effective as of, and conditioned upon the signing of
the Merger Agreement.
1.11 “
Eligible Termination Date ” means the effective date
of a Participant’s termination of employment as indicated in
the Release.
1.12 “
ERISA ” means the Employee Retirement Income Security
Act of 1974, as amended.
1.13 “
Merger ” shall have the meaning set forth in the
Merger Agreement.
1.14 “
Merger Agreement ” means the Agreement and Plan of
Merger, dated as of August 4, 2009, by and among Google Inc., a
Delaware corporation (“ Parent ”), Oxide Inc., a
Delaware corporation and a wholly-owned subsidiary of Parent, and
the Company.
1.15 “
Notice of Participation ” means the individual notice
that informs the Participant of his or her designation as a
participant in the Plan and which sets forth the amount and timing
of payments that such Participant may be eligible to receive under
the Plan. A form of the Notice of Participation for Participants
eligible for payments under Section 2.1(a) of the Plan is attached
hereto as Schedule B . A form of the Notice of Participation
for Participants eligible for payments under Section 2.1(b) of the
Plan is attached hereto as Schedule C .
1.16 “
Offer of Employment ” means a bona fide offer of
employment from Parent or the Surviving Corporation (as defined in
the Merger Agreement).
1.17 “
Participant ” means (a) with respect to Section 2.1(a)
of this Plan, any employee of the Company or any subsidiary thereof
(other than employees of On2 Technologies Finland Oy), and (b) with
respect to Section 2.1(b) of this Plan, any employee who is
designated by the Board or Plan Administrator as eligible for
benefits under Section 2.1(b) of this Plan on or before the
Effective Date. Notwithstanding the foregoing, no employee of the
Company may receive a Severance Payment under both Section 2.1(a)
of this Plan and pursuant to an alternative arrangement with the
Company, Parent or the Surviving Corporation. In such a case, an
employee will only be entitled to the Severance Payment that
provides him with the greatest amount of severance pay. Severance
Payments under this Plan will be reduced by any other severance,
pay in lieu of notice, or other similar benefits payable to such
employee from or on behalf of the Company or any prior employer of
such employee, which becomes payable on account of such
employee’s involuntary termination pursuant to (1) the WARN
Act, (2) a written employment or severance agreement, or any other
severance plan or program sponsored or participated in by the
Company, unless otherwise specifically provided under such other
plan, program, arrangement or agreement or (3) any other obligation
by any other individual or entity other than the Company to provide
a payment to such Covered Employee in the event of an termination
of such employee’s employment with the Company. For the
avoidance of doubt, Closing Retention Bonus payments made pursuant
to Section 2.1(b) of this Plan will not be reduced or changed as a
result of a Participant being eligible for payments under
alternative arrangements with the Company, Parent or the Surviving
Corporation.
1.18 “
Plan ” means the ON2 Technologies, Inc. Retention and
Severance Plan.
1.19 “
Plan Administrator ” means the Compensation Committee
of the Board.
1.20 “
Release ” means the Separation Agreement and Release
in the form attached hereto as Schedule A .
SECTION
2.
CHANGE IN CONTROL RETENTION BENEFITS
2.1
General .
(a) Subject
to the terms and conditions of the Plan, each Participant shall be
entitled to a severance payment under this Section 2.1(a) equal to
three months of the Participant’s Base Salary (“
Severance Payment ”) if (i) after not receiving an
Offer of Employment on or before the 60 th day after the Closing Date, the Participant
terminates employment; (ii) the Participant’s employment is
terminated either (a) by Parent or the Surviving Corporation for
any reason other than Cause on or before the 60th date after the
Closing Date; or (b) by Parent or the Surviving Corporation
indicating in writing to such Participant that he or she will not
be receiving an Offer of Employment for any reason other than Cause
on or before the 60 th day after the Closing Date; or (iii) the
Participant is given an Offer of Employment on or before the
60 th
day after the Closing Date and the
employee declines such Offer of Employment within a time period (of
no less than five (5) business days) specified in the Offer of
Employment and within forty-five (45) days after receipt of such
Offer of Employment his or her employment is terminated (by Parent,
the Surviving Corporation, or the Participant). Upon the occurrence
of any of the foregoing, within five (5 ) business days of such
occurrence, Company shall provide Participant with a Release
specifying Participant’s Eligible Termination Date and
eligibility for the Severance Payment.
(b) Subject
to the terms and conditions of the Plan, each Participant
designated by the Board or the Plan Administrator as eligible for
benefits under this Section 2.1(b) shall be entitled as of the
Closing Date to a retention bonus payment (“ Closing
Retention Bonus ”) under this Section 2.1(b), in such
amounts determined by the Board or the Plan Administrator, if such
Participant is employed by the Company on the Closing
Date.
2.2
Payments .
(a) Each
Severance Payment under Section 2.1(a) shall be paid in a lump sum
within thirty (30) days after the Release Effective Date (as
defined in the Release). In addition, if a Participant’s
employment is terminated by Parent or the Surviving Corporation for
any reason, other than Cause, before the 60
th day after the Closing Date, such Participant
will receive, in addition to the Severance Payment specified in
Section 2.1(a) above, Base Salary and continuation of standard
Company benefits as if the Participant was employed for such full
60-day period. For the avoidance of doubt, any Participant that
voluntarily terminates his or her employment prior to the 60
th day after the Closing Date and prior to the
receipt of an Offer of Employment or is terminated at any time for
Cause, shall not be entitled to a Severance Payment under Section
2.1(a) of this Plan.
(b) Each
Closing Retention Bonus under Section 2.1(b) shall be paid in a
lump sum within thirty (30) days after the Closing Date. In each
case, the payments will be equal to a certain percentage of each
Participant’s Base Salary. The retention bonus payments are
in such amounts as have been designated by the Board or Plan
Administrator on or before the Effective Date.
2.3
409A . The provisions of this Plan are intended to satisfy
the requirements of the “short-term deferral” rule set
forth in Section 1.409A-1(b)(4) of the Treasury Regulations and be
exempt from Section 409A of the Code and the final regulations and
any guidance promulgated thereunder (“ Section 409A
”). Further, it is the intent of the Plan to comply with the
requirements of Section 409A so that none of the benefits to be
provided hereunder will be subject to the additional tax imposed
under Section 409A, and any ambiguities herein will be interpreted
to so comply. The Company reserves the right to amend the Plan and
to take such reasonable actions which are necessary, appropriate,
or desirable to avoid imposition of any additional tax or income
recognition prior to actual payment to a Participant under Section
409A, provided that such amendment or action may not materially
reduce the benefits provided or to be provided to the Participant
under the Plan.
SECTION
3.
RESTRICTIVE COVENANTS .
3.1
General . A Participant’s entitlement to the Severance
Payment or Closing Retention Bonus not previously paid to or on
behalf of the Participant under Section 2 of the Plan shall be
conditioned on compliance with restrictive covenants, as set forth
in this Section 3.
3.2
Confidentiality . During each Participant’s employment
with the Company and thereafter, the Participant shall not disclose
to any Person (except as required by applicable law or for the
proper performance of his duties and responsibilities to the
Company and its affiliates), or use for his own benefit or gain,
any Confidential Information obtained by the Participant incident
to his employment or other association with the Company or any of
its affiliates. Notwithstanding anything herein to the contrary,
the term “Confidential Information” shall not include
information that: (i) becomes subsequently available to the
Participant on a non-confidential basis from a source not known or
reasonably suspected by Participant to be bound by a
confidentiality agreement or secrecy obligation owed to the
Company; (ii) is or becomes generally available to the public other
than as a result of a breach of this Section 3.2 by the
Participant; or (iii) is independently developed by the Participant
without use, directly or indirectly, of Confidential Information.
If only a portion of the Confidential Information falls under one
of the foregoing exceptions, then only that portion shall not be
deemed Confidential Information. In the event that the Participant
is requested or required, pursuant to any applicable court order,
administrative order, statute, regulation or other official order
by any government or any agency or department thereof, to disclose
any Confidential Information, the Participant shall (a) provide the
Company with prompt written notice of any such request or
requirement so that the Company may seek a protective order or
other appropriate remedy and/or waive compliance with the
provisions of this Plan; and (b) reasonably cooperate with the
Company to obtain such protective order or other remedy. In the
event such protective order or other remedy is not obtained and the
Company fails to waive compliance with the relevant provisions of
this Plan, the Participant agrees to (1) furnish only that portion
of the Confidential Information that the Participant is advised by
his or her legal counsel in writing that he or she is legally
required to disclose, (2) upon the Company’s request and
expense, use his or her reasonable efforts to obtain assurances
that confidential treatment will be accorded to such information,
and (3) give the Company prior written notice of the Confidential
Information to be disclosed as far in advance of his or her
disclosure as is reasonably practicable.
3.3
Enforcement of Covenants; Breach .
(1)
The Company, in addition to any other remedies available to it,
shall be entitled to preliminary and permanent injunctive relief
against any breach or threatened breach by any Participant of any
of the covenants contained in this Section 3, without having to
post bond, and shall be entitled to an award of its
attorneys’ fees and costs if the Participant is adjudged by a
court of competent jurisdiction to have breached any of the
restrictive covenants in this Section 3.
(2)
In the event that any provision of this Section 3 shall be
determined by any court of competent jurisdiction to be
unenforceable by reason of its being extended over too great a
time, too large a geographic area or too great a range of
activities, such provision shall be deemed to be modified to permit
its enforcement to the maximum extent permitted by law.
SECTION
4.
PLAN ADMINISTRATION .
4.1 The
Plan Administrator shall administer the Plan and may interpret the
Plan, prescribe, amend and rescind rules and regulations under the
Plan and make all other determinations necessary or advisable for
the administration of the Plan, subject to all of the provisions of
the Plan. Any determinations made by the Plan Administrator shall
be binding on the Company and all Participants and any other Person
with rights under the Plan.
4.2 The
Plan Administrator is empowered, on behalf of the Plan, to engage
accountants, legal counsel and such other personnel as it deems
necessary or advisable to assist it in the performance of its
duties under the Plan. The functions of any such persons
en
