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Exhibit
10.1
TRANSITION AGREEMENT
This
Transition Agreement (the “
Agreement ”)
is made and entered into this 10th day of June, 2008 (the
“
Effective Date ”)
between On2 Technologies, Inc., a Delaware corporation
(“
On2 ”),
and Balraj Joll (hereinafter “
Joll ”).
WHEREAS,
Joll and On2 are parties to an employment agreement, dated May
1, 2006 (the “
Employment Agreement ”);
and
WHEREAS,
in accordance with the Employment Agreement, Joll has served
as the President and Chief Executive Officer of On2, as a
member of the Board of Directors of On2 (the “
Board ”)
and as Chief Executive Officer of The Duck Corporation, a wholly
owned subsidiary of On2; and
WHEREAS,
Joll and On2 have agreed that Joll will resign as an officer
of On2 and as a member of the Board, and as an officer and
member of the boards of directors of all directly and
indirectly owned subsidiaries of On2, and will continue his
employment relationship with On2 in an advisory capacity until
September 30, 2008, all under the terms and conditions of this
Agreement.
NOW, THEREFORE, AND IN CONSIDERATION of
the mutual promises of the parties to this Agreement, the receipt
and sufficiency of which are hereby acknowledged, Joll and On2
hereby agree as follows:
1.
Resignation .
Effective as of the date of this Agreement (the “
Effective Date ”),
Joll resigns, and On2 accepts his resignation, from his employment
with On2 and from all the offices, directorships and other
positions that he holds with On2 and any of On2’s directly
and indirectly owned subsidiaries, including without limitation his
positions as President and Chief Executive Officer of On2 and as a
member of the Board. After the Effective Date, Joll shall not be
entitled to the receipt of any further payments or benefits from
On2 other than those expressly provided for in this Agreement. The
parties hereto agree that this Agreement constitutes written notice
to On2 of Joll’s resignation from the Board pursuant to
Article III, Section 10 of On2’s bylaws, and that,
except for those provisions of the Employment Agreement that
survive the termination of Joll’s employment with On2, the
Employment Agreement is terminated as of the Effective
Date.
2.
Continued Employment; Duties .
Joll’s employment with On2 shall end on September 30, 2008
(the “Termination Date”). From the Effective Date
through September 30, 2008 (the “Transition Period”),
Joll shall serve as an advisor to On2’s chief executive
officer. Joll’s responsibilities shall be to transition to
On2 personnel all existing customer account relationships and all
business development relationships and to perform such other
advisory duties as On2’s chief executive officer shall
reasonably assign to him. During the Transition Period, Joll will
not undertake any business activities as an advisor to On2 or
otherwise on behalf of On2 without the prior approval of
On2’s chief executive officer. Joll shall have no power or
authority to act for or to take any action on behalf of On2 or to
bind On2 to any obligation with any third party. During the
Transition Period, On2 will continue to pay Joll his Base Salary at
the rate provided in Section 5(a) of the Employment Agreement on
each regularly scheduled pay day, and Joll shall continue to be
eligible to participate in all retirement, savings, welfare, and
other benefit plans and arrangements offered by On2 (excluding any
incentive compensation program) under the terms of such benefit
plans and arrangements.
3.
Payments at the End of the Transition Period.
(a)
Vacation Days; Expenses.
On
the next regularly scheduled pay day after the Termination Date,
On2 will pay Joll for any accrued but unused vacation days as of
the Termination Date, in accordance with On2’s applicable
policies and procedures.
.
On2
shall reimburse Joll for appropriate and reasonable expenses
incurred by Joll on or before the Termination Date, if any, in
accordance with On2’s applicable policies and
procedures.
(b)
Severance .
Provided that Joll (i) signs this Agreement and does not revoke his
signature and (ii) complies with all of his obligations in this
Agreement, then following the Termination Date, On2 shall pay Joll
the Base Salary and Bonus (as each is defined in the Employment
Agreement) that Joll would have received, and Joll shall be
entitled to receive those employee benefits (excluding any
incentive compensation program) that he would have been entitled to
receive, if On2 had terminated his employment pursuant to Section
8(d) of the Employment Agreement on the Termination Date;
provided ,
that (
i )
Joll’s Base Salary for the one-year period commencing on
October 1, 2008 will be paid in accordance with On2’s
standard payroll practices through February 28, 2009 and the
balance for the one-year period will be paid after February 28,
2009 but before March 15, 2009; and (
ii )
Joll’s duty to mitigate his right to such payment shall
remain in effect as provided in Section 8(d) of the Employment
Agreement through March 15, 2009. It is the parties’
intention that no payment or entitlement pursuant to this Agreement
will give rise to any adverse tax consequences to any person
pursuant to Section
409A of the Internal Revenue Code (the “Code”), and
this Agreement shall be interpreted, applied and, to the minimum
extent necessary, amended to achieve that intention. Any
reimbursements due to Joll under any provision of this Agreement
shall be paid not later than March 15 of the year following the
year in which the expense is paid. In the case of any payment on
termination (other than in compliance with the requirements of
Treas. Reg. § 1.409A-1(b)(9)(iii) or (v) or of any successor
thereto or any other provision that exempts a payment from Section
409A of the Code; and except as provided in Section 3(b) above)
while Joll is a specified employee within the meaning of Section
409A of the Code, in no event will such payment be made earlier
than six (6) months after the date his employment terminates. In
the event that, due to Section 409A of the Code, Joll does not
receive one or more cash payments that would otherwise be due
during such six (6) month period, all such delayed payments will be
made on the first day after the six (6) month anniversary of his
employment termination, and thereafter any remaining payments shall
be made in accordance with the previously agreed-upon schedule.
A ny
reference in this Agreement to Section 409A of the Code shall also
include any proposed, temporary or final regulations, or any other
guidance, promulgated with respect to such Section by the U.S.
Department of the Treasury or the Internal Revenue
Service.
(c)
Stock Options and Restricted Stock Awards
. All of Joll’s stock options that are vested as of the
Effective Date shall remain exercisable through September 30, 2010
. If not fully exercised by that date, at Joll’s request, On2
will in good faith consider a request for further extension of the
exercisability of Joll’s vested options and may grant or deny
any such request at its discretion in light of the facts and
circumstances prevailing at the time. Notwithstanding the terms of
the grant of 107,629 restricted shares under On2’s 2005
Incentive Compensation Plan on November 13, 2007, those restricted
shares will vest with Joll on September 30, 2008.
(d)
Computer .
At the Termination Date, Joll will be entitled to retain his laptop
computer after providing it to On2 so that On2 can delete from the
memories of the computer information that On2 deems confidential or
proprietary to it.
4.
Continuing Effect of Restrictions .
Joll acknowledges that (a) Section 10 of the Employment
Agreement shall survive and remain in full force and effect in
accordance with its terms and limits his ability to disclose or
divulge certain information to the extent set forth therein; and
(b) his obligations under Section 11 of the Employment Agreement
survive and extend through September 30, 2009. In addition, Joll
will remain subject to On2’s blackout restrictions during the
Transition Period and, if Joll is in possess
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