EXHIBIT
      10.1

     

     

    
      	 	 	 	
              On2
                Technologies, Inc.

              21
                Corporate Drive 

              Suite
                103

            
	 	 	 	 
	 	 	 	 


    

     

    


    


    


    July
      30,
      2007 

    


    Jim
      Bankoski

    23
      Kent
      Place

    Wynantskill
      NY 12198

    


    Dear
      Jim:


    


    The
      following constitutes the employment agreement (the "Agreement") between you
      (the "Executive") and On2 Technologies, Inc. (the "Company"), a Delaware
      corporation. This letter formalizes your promotion to and sets forth the terms
      of your employment as Chief Technology Officer and SVP - Core Technologies.
      Your
      title will be SVP/CTO -- On2 Technologies.

    


    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 Senior Vice President and Co-Chair of the Office
      of
      Technology. The Executive hereby accepts this employment and will render his
      services as required by the Company conscientiously, loyally, faithfully,
      competently and to the best of his talents and abilities throughout the Term
      in
      accordance with the direction and control of his designated supervisor and
      the
      Board of Directors of the Company (the "Board").

    


    2.
      TERM
      OF AGREEMENT. The initial term of this Agreement shall commence on the date
      hereof and terminate on July 30],
      2010.
      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 within 10 days of receipt
      of such written notice. 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, in addition duties as described in Appendix A and such
      other duties and services as may reasonably be assigned from time to time in
      the
      conduct of the business of the Company. The Executive shares equal, joint
      responsibility for managing and co-chairing the Office of Technology with Paul
      Wilkins, Senior Vice President and Chief Technology Officer, who shall also
      bear
      the title of SVP/CTO On2 Technologies.

    


    b.
      The
      Executive's services shall be rendered primarily at the Company's offices in
      Clifton Park, 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 reasonable expenses) to such other locations will be at the Company's
      expense, reimbursable to the Executive in accordance with Section 5(b).


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    c.
      The
      Executive shall abide by all policies of the Company and shall, at all times,
      comply with all laws, rules and regulations applicable to him, in his capacity
      as an employee of the Company, promulgated by any agency, commission or other
      body having regulatory or another authority over the Company or its business.
      

    


    4.
      EXCLUSIVITY, RESTRICTIVE AGREEMENTS. 

    


    a.
      During
      the Term, 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; (iii) solicit, call on or transact, or engage in
      any
      direct or indirect business activity, or provide assistance in such acts, for
      a
      purpose competitive with the business of the Company, with any (A) customer
      with
      whom the Company shall have dealt at any time preceding the termination of
      the
      Executive’s employment, or (B) independent contractor with whom the Company
      shall have dealt at any time preceding the termination of the Executive’s
      employment; (iv) influence or attempt to influence any then current or
      prospective customer or independent contractor of the Company to terminate
      or
      modify any written or oral agreement with the Company; (v) influence or attempt
      to influence any person, directly or indirectly, for a purpose competitive
      with
      the business of the Company, either (A) to terminate or modify an employment,
      consulting, agency, or other arrangement, whether oral or written, with the
      Company, or (B) to employ or retain, or arrange to have any other Person employ
      or retain, any person who has been employed or retained by the Company as an
      employee, consultant, or agent at any time during the five (5) year period
      immediately preceding the termination of the Executive’s employment; (vi)
      directly or indirectly have a relationship with or become interested, whether
      or
      not for compensation, in any Competitive Business as an individual, partner,
      member, joint venturer, shareholder, investor, creditor, director, manager,
      officer, principal, agent, employee, trustee, consultant, advisor or in any
      other relationship or capacity whatsoever 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 the covenant not to compete contained
      in
      this Section 4(b) 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) or activity which
      is
      principally engaged in the design or development of digital video compression,
      decompression or playback video technologies, video encoding software, or video
      pre-processing or post processing technologies.. 

    


    d.
      For
      purposes of this Section, "Person" shall mean any corporation, limited liability
      company, partnership, joint venture, trust, individual or any other entity.
      

    


    e.
      For
      all purposes of this Section 4, "Restricted Period" shall be the period of
      one
      year immediately following termination of employment for whatever reason,
      including, but not limited to, resignation, termination by the Executive for
      Good Reason, 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
      $152,500.00 per year, payable semi-monthly in accordance with the Company’s
      standard payroll policies. Such base compensation as may be increased from
      time
      to time and is hereinafter referred to as "Base Salary". 

    


    b.
      The
      Company will reimburse the Executive for reasonable expenses related to its
      business actually incurred or paid by the Executive in the performance of his
      duties under this Agreement, including, but not limited to, 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 and upon the Company’s approval.


    


    c.
      The
      Executive shall be eligible to participate in any incentive compensation or
      other bonus plan available to the most senior members of the Company’s
      management.

    


    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 Section 6(a) 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 or Compensation Committee
      of
      the Company 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 at any time 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 material
      fraud or dishonesty;

    


    ii.
      misconduct involving fraud, dishonesty or illegality that could reasonably
      be
      expected to damage the Company, its business, operations or reputation, as
      determined by the Board;

    


    iii.
      repeated failure to satisfactorily perform material services required under
      this
      Agreement in accordance with the requests of the Board;

    


    iv.
      willful misconduct or gross negligence in the performance of his duties;


    


    v.
      alcohol or illegal drug use or abuse which materially and adversely affects
      the
      Executive’s performance of his duties hereunder or the Company or its business,
      operations or reputation;

    


    vi.
      disregard or violation of the legal rights of any employee of the Company or
      of
      the Company's policies regarding harassment or discrimination;

    


    vii.
      material violation of any policies of the Company, the effect of which would
      be
      materially adverse to the Company or its business, operations or reputation;
      or

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    viii.
      a
      breach of any material provision of this Agreement (including, but not limited
      to, any breach of Sections 3 or 10). 

    


    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 and the Company’s approval, reimbursable expenses
      accrued (but unpaid) through the date of termination and (ii) any accrued but
      unused vacation days paid at the rate of the Executive's Base Salary. 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 the Term, 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 10 days 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 in the case
      where
      the alleged breach relates to a default in payment) 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 shall 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 semi-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 shall 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; and 

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    iv.
      The
      Company shall reimburse the Executive for all reasonable reimbursable expenses
      accrued (but unpaid) to the date of termination or expiration of the Term,
      subject to submission of all required documentation and the Company’s approval,
      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 in
      accordance with their terms. 

    


    c.
      Notwithstanding Section 8(b), if the Company terminates the Executive's
      employment without Cause following a business combination (including, but not
      limited to, sale or purchase 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 in accordance with their
      terms. 

    


    9. EXECUTIVE’S
      TERMINATION FOR GOOD REASON. 

    


    a. If
      the
      Executive terminates his employment for Good Reason (as defined below), the
      Company's obligations to pay further compensation under Section 5 shall cease
      forthwith, except that the Company shall pay the Executive: 

    


    b.
       all
      Base
      Salary for the Severance Period; 

    


    c. any
      amount of any bonus that has become payable with respect to a completed Calendar
      Year (as defined below) but has not been paid to the Executive; 

    


    d. the
      Board's good faith estimate of the amount of a bonus, if any, that would become
      payable for the Calendar Year in which such termination occurs, based upon
      the
      goals agreed to by the Company and the Executive or established by the
      Compensation Committee of the Company for such Calendar Year: and

    


    e. an
      amount
      equal to all reasonable reimbursable expenses accrued (but unpaid) to the date
      of termination, subject to submission of all required documentation and the
      Company’s approval, as the case may be.

    


    f. "Good
      Reason" means the occurrence of any of the following: 

    


    (i)
      the
      Executive is demoted or removed from, or does not continue to hold, the
      positions or offices described in Section 1(a) hereto or a position or office
      substantially similar in nature without his consent; or 

    


    (ii)
      the
      assignment to the Executive without his reasonable consent of any duties
      materially inconsistent in any material respect with his position or with his
      authority, duties or responsibilities as Senior Vice President and Chief
      Technology Officer, or any other action by the Company which results in a
      material diminution in position, authority, duties or responsibilities from
      the
      position, authority, duties or responsibilities of a co-chief technology officer
      of a company similar in size, capital structure and business to the Company,
      excluding for this purpose an isolated, insubstantial and inadvertent action
      not
      taken in bad faith or inherent in the nature of a jointly-held position;


    


    (iii)
      the
      Company fails to pay or provide when due (or reduces) the Base Salary or
      benefits to which the Executive is entitled hereunder, which failure is not
      cured (or which reduction is not corrected) within 15 days after the receipt
      by
      the Company from the Executive of his written notice referring to this provision
      and describing such failure (or reduction).

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    g. "Calendar
      Year" means the twelve months ending December 31 in which any part of the Term
      falls.

    


    10.
      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,
      for any reason, directly or indirectly, disclose or divulge to any Person or
      use
      for his own benefit or for any purpose other than the exclusive benefit of
      the
      Company any of the Company's Confidential Information or Trade Secrets at any
      time (both during the Term and thereafter) 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 Person (particularly to any
      employee of the Company) 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. "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; 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
      provisions of this subsection 10(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. 

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    11.
      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. 

    


    12.
      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 10 of this Agreement by the Executive. 

    


    13.
      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. 

    


    14.
      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 fax, with notice
      confirmed, to the Executive at the address first stated above or his office
      at
      the Company, and to the Company at: 

    


    21
      Corporate Dr.

    Ste.
      103

    Clifton
      Park, NY 12065

    Attn:
      CEO

    


    The
      addresses for notice may be changed by notice given to the other party pursuant
      to this Section. 

    


    15.
      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 14 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 14.


    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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, 12 and 15. 

    


    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.
      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. 

    


    i.
      All
      references to Sections shall be to sections and schedules of this Agreement.
      

    


    j.
      All
      references using male pronouns shall be deemed to include female pronouns.
      

    


    k.
      This
      Agreement may be 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:
      _________________________ 

    Name:
      

    Title:
       

    


    


    EXECUTIVE

    


    


    _________________________

    Jim
      Bankoski

    


    
      
         

      

      
         

        
          

        

      

      
         

      

    

    


    Appendix
      A

     

    Office
      of the Chief Technology Officers

     

    The
      office of the Chief Technology Officers ("Office") is an executive department
      reporting to the CEO focused on scientific and technical issues within a
      company. The Office will oversee a technical staff at the company with a focus
      on research related to video compression technologies. The principals must
      be
      responsible for creating, evangelizing - both internally and externally - and
      then implementing a technological strategy for the entire On2 business with
      the
      goal of strengthening On2's leading position in video compression technologies
      and establishing a strategic leadership in a fast-growing video
      space:

    


    Responsibilities/Skills

    


    This
      office provides a technical voice in the strategic planning for a company and
      helps determine what types of products or services the company should focus
      on.

    


    A
      list of
      responsibilities/ required skills are:

    


    	·  	
            Innovate.
              Participate in research and product creation directly. Be a significant
              part of innovative products. Anticipate and leverage technology
              opportunities to maintain competitive
              advantage

          


    


    	·  	
            Manage.
              Lead and manage the research that involves significant technologies
              to the
              company. Build internal expertise in new areas. Manage and grow the
              company's technical infrastructure to support domestic and international
              growth.

          


    


    	·  	
            Advise.
              Provide advice on company products, services, strategy, and structure.
              Similar to any other corporate executive, but with a uniquely technical
              competence. Evaluate all internal technologies (On2/Hantro) and work
              with
              the Development organizations to maximize the value of existing and
              future
              products based on the analysis of these
              technologies.

          


    


    	·  	
            Value.
              Aid in the valuation of internal businesses or of potential acquisitions.
              Provide analysis and opinion on the value of product portfolios, patents,
              facilities, and skilled staff.

          


    


    	·  	
            Vision.
              Build a vision for what technology will make possible, how it will
              impact
              a company's business area, and how to squeeze the most value from these
              changes.

          


    


    	·  	
            Communicate.
              Communicate the vision of the company to its own technical staff, to
              industry groups, and to the technical trade press. Engage these groups
              with terms from their own domain and with the personal credentials
              to be
              respected.

          


    


    	·  	
            Teamwork.
              Work with product architects, engineering and business managers to
              ensure
              that the technological strategy results in creating a thoroughly modern
              product line capable of satisfying fast changing market demands and
              thus
              maximize business objectives. Excellent consensus building and written
              and
              verbal communication skills a
              must.