Exhibit
      10.1

     

     

    


     

    As
      of
      September 15, 2008

    


    Mr.
      Timothy C. Reusing

    420
      E.
      23rd
      St.

    Apt.
      3H

    New
      York,
      NY 10010

    


    Dear
      Tim:


    


    The
      following constitutes the employment agreement (the "Agreement") between you
      (the "Executive") and On2 Technologies, Inc. (the "Company"), a Delaware
      corporation. This letter sets forth the terms of your employment as General
      Counsel and Executive Vice President, Corporate and Business Development.


    


    1.
      EMPLOYMENT; ACCEPTANCE OF EMPLOYMENT; FUTURE ADVANCEMENT 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 General Counsel and Executive Vice
      President, Corporate and Business Development of the Company and its
      subsidiaries. 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. 

    


    2.
      TERM
      OF AGREEMENT. The initial term of this Agreement shall commence on the date
      hereof and terminate three years hence. On or after the two hundred seventieth
      (270th)
      day
      before the end of the initial Term but prior to the sixtieth (60th)
      day
      before the end of the initial Term, Executive may provide notice to Company
      of
      his offer to renew the Agreement for an additional three (3) year term, and
      Company shall be deemed to have accepted the offer unless, within fifteen (15)
      days of notice, Company provides Executive with notice that Company determined
      not to renew the Agreement. The initial term, as extended by any renewal term,
      is referred to herein as the "Term". 

    


    3.
      EXECUTIVE'S DUTIES. 

    


    a.
      The
      Executive will serve as the chief legal officer and the chief corporate and
      business development officer of the Company and its subsidiaries. Executive's
      duties will include those services customarily rendered by a chief legal officer
      and chief corporate development and business development officer of a publicly
      traded company of the size of the Company in the Company's industry. The
      Executive will report directly to the Company’s Chief Operating Officer (“COO”).
      The Executive shall also perform such other duties and services as may
      reasonably be assigned to him from time to time by the COO, consistent with
      his
      position as General Counsel and Executive Vice President, Corporate and Business
      Development, in the conduct of the business of the Company. 

    


    b.
      The
      Executive's services shall be rendered primarily at Company's offices in
      Manhattan, New York and at such other locations as the Company may from time
      to
      time reasonably request consistent with its business needs. Travel to such
      other
      Company offices will be at the Company's expense. If you relocate from
      Manhattan, your office shall be in your new town of residence, it being
      understood that relocation outside of the Eastern Time Zone shall require prior
      approval, not to be unreasonably withheld. The Company shall provide office
      space for Executive in Manhattan or, in the event Executive relocates,
      Executive’s new town of residence


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    4.
      EXCLUSIVITY, RESTRICTIVE AGREEMENTS. 

    


    a.
      During
      his employment, the Executive shall devote all of his business time, skill
      and
      energies exclusively to the business of the Company. 

    


    b.
      The
      Executive acknowledges that the nature of the services, position and expertise
      of the Executive are such that he is capable of competing with the Company
      and
      seriously damaging its business and its prospects to the detriment of its
      stockholders and employees. In consideration of the Company's performance of
      its
      obligations under this Agreement, during the Term and thereafter during the
      Restricted Period (as defined below) the Executive shall not without the prior
      written consent of the Company (i) directly or indirectly enter into the employ
      of, or render any advice or services, whether or not for compensation, to,
      any
      Person (as defined below) engaged in any Competitive Business (as defined
      below); (ii) directly or indirectly engage in any Competitive Business; and
      (iii) directly or indirectly become interested, whether or not for compensation,
      in any Competitive Business as an individual, partner, shareholder, creditor,
      director, officer, principal, agent, employee, trustee, consultant, advisor
      or
      in any other relationship or capacity or, in the case of any such company whose
      securities are traded on a national securities exchange in the United States
      or
      otherwise or in the over-the-counter market, acquire, directly or indirectly,
      an
      interest in excess of one percent (1%) of the outstanding capital stock of
      such
      company. The Company's business is worldwide in scope; accordingly, the
      Executive agrees that this covenant not to compete shall not be subject to
      any
      geographical limit. 

    


    c.
      For
      purposes of this Section, any "Competitive Business" shall mean any business
      engaged in the design or development of digital compression, decompression
      or
      playback technologies in the computing, telecommunications or entertainment
      industries. For the avoidance of doubt, any division, unit, subsidiary or
      affiliate of any other business will be deemed a Competitive Business unless
      the
      Executive can demonstrate upon the Company's request that his employment by,
      engagement in, or 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 a Competitive Business during
      the Restricted Period. 

    


    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 period
      commencing on the date of this agreement, September 15, 2008, and extending
      through the expiration of the Term or through the 365th
      day
      immediately following termination of employment by resignation or termination
      by
      the Company, with or without Cause (as defined below).

    


    5.
      COMPENSATION. 

    


    a.
      During
      the Term the Executive shall receive base compensation (“Base Salary”) at the
      initial rate of $230,000 per year, payable semi-monthly and that rate may be
      increased from time to time. Executive’s Base Salary shall be reviewed by the
      Compensation Committee of the Board of Directors annually during the
      Term.

    


    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 Internet connectivity
      and business phone and cell phone bills, upon presentation of accountings,
      expense statements, vouchers or such other supporting information as may
      reasonably be required by the Company's policies. 

    


    c.
      The
      Company shall include Executive at the highest level in any incentive
      compensation or management or executive bonus plan(s) or pool currently in
      effect or adopted in the future. The terms of Executive’s participation in such
      plan(s) (including the potential amount of any bonus or incentive compensation
      when measured as a percentage of Base Salary) shall be no less favorable than
      any other On2 employee. 

    


    d. Executive
      shall receive a stock option grant convertible into 250,000 shares of the
      Company’s common stock, to be granted under the Company’s 2005 Incentive
      Compensation Plan. This grant will vest in three equal installments: one-third
      (1/3) on the date of the grant, one-third on September 15, 2009, and one-third
      on September 15, 2010. Executive shall also receive a restricted stock grant
      of
      50,000 shares of the Company’s common stock, which grant will vest in two equal
      installments; one-half (1/2) on September 15, 2009, and one-half on September
      15, 2010. 


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    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, restricted stock,
      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 DEATH, DISABILITY, OR BY THE COMPANY 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 material
      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.
      intentional 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 4 or 10). 

    


    b.
      If the
      Company terminates the employment of the Executive for Cause, or if the
      Executive resigns during the Term other than for Good Reason, the Company's
      obligations under this Agreement to pay further compensation shall cease
      forthwith, except that the Company will pay to the Executive, within 30 days
      after 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 earned to the date of termination and, subject to Executive’s
      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. In addition, during the
      six months after such termination, the Company will provide all benefits that
      would have been provided had Executive’s 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 spouse and children for the duration of such
      period. Nothing contained in this Section 7.b shall be construed to alter the
      Executive's rights under any stock option plan pursuant to which options have
      been or may be issued to Executive. 

    


    c.
      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
      after termination for Cause as defined in Section 7.a above. 

    


    d.
      If, as
      a result of the Executive's disability or incapacity during the Term due to
      any
      mental or physical illness or condition, the Executive is unable substantially
      to perform his duties hereunder for a consecutive 12-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) after which any reasonably requested accommodations are made,
      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 on which the Company's long-term disability
      plan pays benefits to the Executive. 


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    e.
      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 Executive after such termination without Cause to his successors
                or
                legal representatives or to his estate, during the 365 days immediately
                following such termination of employment (such period is hereinafter
                referred to as the "Severance Period"), his Base Salary on a monthly
                basis
                as would have been paid to the Executive had his employment with
                the
                Company continued; provided, however, that to the extent any payment
                under
                this Paragraph 8.i. fails to satisfy the requirements set forth in
                Treasury Regulation Section 1.409A-1(b)(9)(iii), the amount shall
                not be
                paid to the Executive before the date that is six (6) months after
                the
                date of the Executive’s separation from service, or if earlier, date of
                death.

            


    

    


    
      	 	 	
              ii.
                The Company shall pay to the Executive his proportionate share of
                any
                bonus compensation to which he would have been entitled 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
                but in any event no later than March 15th
                following the taxable year to which such bonus applies, except as
                permitted under Section 409A of the Internal Revenue Code (the
                “Code”);
                it
                being intended that the payment contemplated by this Paragraph 8.ii.
                comply with the short-term deferral exception to Section 409A of
                the
                Internal Revenue Code under Treasury Regulation Section 1.409A-1(b)(4)
                and, to the extent applicable, with Treasury Regulation Section
                1.409A-2(b)(7).

            


    

    


    
      	 	 	
              iii.
                The Company will continue to provide all benefits to the Executive
                during
                the Severance Period that would have been provided had Executive’s
                employment continued, including medical, disability and life insurance.
                In
                the case of the death of the Executive, medical insurance will be
                continued for Executive's spouse and children for the duration of
                the
                Severance Period; and 

            


    

    


    
      	 	 	
              iv.
                The Company will promptly, subject to the Executive’s submission of
                reasonably required documentation, reimburse the Executive for all
                reimbursable expenses accrued (but unpaid) to the date of termination;
                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 occurred shall immediately 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
      any
      such options under the terms of the applicable option plan or 90 days from
      the
      date of termination, whichever is later. Additionally, if a termination without
      Cause takes effect prior to the expiration of the Term, all of the Executive's
      restricted stock which would have vested had the Executive's employment
      continued to the end of the Term in which such termination without Cause has
      occurred shall immediately vest. 


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    9. EXECUTIVE’S
      TERMINATION OF EMPLOYMENT FOR GOOD REASON. 

    


    a.  If
      the
      Executive terminates his employment for Good Reason, the Company's obligations
      to pay further compensation to the Executive shall be the same as its
      obligations after a termination by the Company other than for Cause, as set
      forth in Section 8 above.

    


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

    


    i.
      a
      material diminution in the Executive’s base compensation, authority, duties, or
      responsibilities;

    


    
      	 	 	
              ii.
                a material diminution in the authority, duties, or responsibilities
                of the
                person or committee to whom the Executive is required to report;
                

            


    

    


    iii.
      a
      material diminution in the budget over which the Executive retains
      authority;

    


    iv.
      the
      Company fails to provide executive office space in Manhattan, New York, it
      being
      understood that in the event that Executive relocates outside of Manhattan,
      New
      York, failure to provide office space in proximity to the Executive’s principal
      place of residence shall not constitute grounds for resignation for Good
      Reason;

    


    v.
      a
      material change in the geographic location at which the Executive must perform
      the services; or

    


    vi.
      any
      other action or inaction that constitutes a material breach by the Company
      of
      this Agreement;

    


    For
      the
      condition claimed by the Executive to constitute Good Reason, the Executive
      must
      give written notice to the Company of the existence of the condition within
      90
      days of the initial existence of the condition, and the Company must fail to
      remedy the condition within 15 days after the receipt by the Company of the
      Executive’s notice.

    


    10.
      CHANGE IN CONTROL

    


    a.
      If the
      Company undertakes a business combination (including sale of assets, merger,
      consolidation or other transaction) that results in (1) the stockholders of
      the
      Company receiving liquid consideration for a majority of the holdings in the
      Company and (2) a change in actual control of the Company, then, regardless
      of
      whether the Executive’s employment hereunder is expected to continue after such
      transaction, all (i) stock options theretofore granted to the Executive shall
      vest and become exercisable 90 days before the transaction is scheduled to
      close, 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 any such
      options under the terms of the applicable option plan, or the day before such
      transaction closes, whichever is later and (ii) all restricted stock theretofore
      granted to the Executive shall vest. 

    


    11. 
      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. 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 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. 

    


    12.
      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. 

    


    13.
      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 11 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. 

    


    14.
      ASSIGNABILITY ETC. This Agreement shall be nondelegable and nonassignable by
      the
      Executive, and shall inure to the benefit of the heirs and assigns of 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.

    


    15.
      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 telefax, with notice
      confirmed, to the Executive at the address first stated above or his office
      at
      the Company, and to the Company at:


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    3
      Corporate Dr.

    Ste.
      100

    Clifton
      Park, NY 12065

    Attn:
      COO

    


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

    


    16.
      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.
      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 email or facsimile shall
      be
      deemed an original executed counterpart. 

    


    If
      the
      foregoing accurately reflects your understanding, please countersign and return
      one counterpart of this Agreement to the Company. 

    


    Sincerely
      yours, 

    


    
      	
              ON2
                TECHNOLOGIES, INC.

            
	 	 
	
              By:

            	
              /s/
                Matthew C. Frost

            
	
              Name:
                Matthew C. Frost

            
	
              Title:
                Interim Chief Executive Officer 

            
	
              Date:
                September 18, 2008

            


    

    


    
      	
              /s/
                Timothy C. Reusing

            
	
              Timothy
                C. Reusing

            
	
              Date:
                September 18, 2008