Document:

SECURITY
      AGREEMENT

    

    BY
      AND BETWEEN PATIENT SAFETY TECHNOLOGIES, INC.

    AND
      HERBERT LANGSAM REVOCABLE TRUST 

    

    Herbert
      Langsam Revocable Trust (“Secured Party”) and Patient Safety Technologies, Inc.,
      a Delaware corporation (“Debtor”) agree as follows as of May 1, 2006:

    

    1.           
      GRANT
      OF SECURITY INTEREST.

    

    1.1  The
      Debtor hereby grants to the Secured Party a security interest in all of the
      assets, inventory, accounts, equipment, chattel paper, patents, trademarks,
      copyrights, contract rights, documents, instruments, deposit accounts,
      investment property (including equity interest of subsidiaries), general
      intangibles and other personal property and fixtures of Debtor and its
      subsidiaries, including first mortgage liens on all real property of Debtor
      and
      its subsidiaries, and all products or proceeds of any or all of the foregoing
      (collectively, the “Collateral”). Such Collateral of Debtor constitutes the
      security for: 

     

    1.1.1
      The
      satisfaction and the prompt and full performance of all of Debtor’s obligations
      under that certain Secured Promissory Note dated May 1, 2006 (the “Note”) in the
      principal amount of Five Hundred Thousand and zero/100 Dollars ($500,000.00)
      plus interest at the rate of twelve percent (12%) per annum, as the Note may
      be
      amended, modified, or extended from time to time (including, without limitation,
      the obligation to make payments of principal and interest thereon);
      and

    

    1.1.2
      The
      full, faithful, true and exact performance and observance of all of the
      obligations, covenants and duties of Debtor under this Security Agreement,
      as
      the same may be amended, modified, or extended from time to time.

    

    2.            
      DEFAULT.
      Any of
      the following events shall constitute an event of default
      hereunder:

    

    2.1 The
      failure by Debtor to make full and timely payment when due of any sum as
      required to be paid to Secured Party under the Note. A true and correct copy
      of
      the Note is incorporated herein by this reference.

    

    2.2 The
      failure by Debtor to fully and timely perform any covenant, agreement,
      obligation or duty imposed on Debtor by the Note, this Security Agreement or
      any
      other agreement by and between Debtor and Secured Party now existing or
      hereinafter made.

    

    2.3 The
      filing by Debtor of any petition, or commencement by Debtor of any proceeding,
      under the Bankruptcy Act or any state insolvency law.

    

    2.4 The
      making by Debtor of any general assignment for the benefit of
      creditors.

    

    2.5 The
      filing of any petition, or commencement of any proceeding, under the Bankruptcy
      Act or any state insolvency law, against Debtor, or the appointment of any
      receiver or trustee, which petition, proceeding or appointment is not fully
      and
      completely discharged, dismissed or vacated within sixty (60) days.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.6
       Any
      warranties made by Debtor are untrue in any material respect, or any schedule,
      statement, report, notice, or writing furnished by Debtor to the Secured Party
      are untrue in any material respect on the date as of which the facts set forth
      are stated or certified.

    

    3.           
      INSPECTION
      OF RECORDS.
      Secured
      Party shall have the right without notice to inspect all financial books,
      records and reports of Debtor at Debtor’s premises or wherever the same may be
      maintained during normal business hours.

    

    4.         
      REMEDIES
      UPON DEFAULT.

    

    4.1
      Upon
      the occurrence of an event of default, in addition to any and all other remedies
      at law or in equity available to Secured Party, Debtor hereby authorizes and
      empowers Secured Party, at Secured Party’s option and without notice to Debtor,
      except as specifically provided herein (and, to the extent necessary, hereby
      irrevocably appoint Secured Party as Debtor’s attorney-in-fact for such
      purposes) and subject to applicable laws:

    

    4.1.1
      To
      require Debtor to assemble any and all of the Collateral and make the same
      available to Secured Party at the premises wherein the same is located, or
      any
      other place designated by Secured Party; Secured Party may enter upon any
      premises where any of the Collateral is located and may take possession of
      the
      same without judicial process and without the need to post any bond or security
      as an incident thereto; and

    

    4.1.2
      To
      sell, assign, transfer and deliver the whole or any part of the Collateral
      at
      public or private sale, for cash, upon credit, or for future delivery, in bulk
      or item by item, at such prices and upon such terms as are commercially
      reasonable, given the nature of the Collateral and the market therefor, with
      or
      without warranties, without the necessity of the Collateral being present at
      any
      such sale or in view of the prospective purchasers thereof, and without any
      presentment, demand for performance, protest, notice of protest, or notice
      of
      dishonor except as set forth herein, any other such advertisement, presentment,
      demand or notice being expressly waived by Debtor to the extent permitted by
      law. At any public sale or sales of the Collateral, Secured Party or Secured
      Party’s assigns may bid for and purchase all or any part of the Collateral
      offered for sale and upon compliance with the terms of such sale, may hold,
      exploit and dispose of such Collateral discharged from all claims of Debtor,
      except to the extent that Debtor has rights in the proceeds of such sale or
      sales, and free from any right or redemption, all of which are hereby expressly
      waived and released, and may in paying the purchase price thereof, in lieu
      of
      cash assignment at the face amount thereof, together with any interest accrued
      thereon, all or any part of unpaid principal or interest or both, payable under
      the Note. Secured Party may also purchase all or any part of the Collateral
      at
      any private sale thereof to the extent that such Collateral is customarily
      sold
      in a recognized market or is the subject of a widely or regularly distributed
      standard price quotation. Upon conclusion of any such public or private sale,
      Secured Party may execute and deliver a bill of sale to the assets so sold,
      in
      the name of Debtor. Secured Party may use Debtor’s premises for the purpose of
      conducting of any such sale. Secured Party shall give Debtor seven (7) days’
notice, in writing, of the time and place thereof, and in the case of a public
      sale, the date thereof and the name of the purchaser. Notice shall be deemed
      given when deposited in the United States mail, postage prepaid, certified
      or
      registered, and addressed to Debtor at 1800 Century Park East, Suite 200, Los
      Angeles, California 90067. Secured Party shall only be required to publish
      an
      advertisement of a public sale, which advertisement may be published in a
      newspaper of general circulation no later than seven (7) days prior to the
      date
      of sale, and an advertisement so published shall be deemed commercially
      reasonable if it merely gives the place, time, and date of sale, merely
      identifies the Collateral by classification without describing quantity or
      quality; provided, however that such advertisement may, at Secured Party’s
      option, contain additional information. Debtor acknowledges that Secured Party
      may accept any offer received, provided it is commercially reasonable, that
      Secured Party, at Secured Party’s option, need not approach more than one
      possible purchaser, and that Secured Party shall, to the fullest extent
      permitted by law, be relieved from all liability or claim for inadequacy of
      price if the manner and terms of sale comply with the terms of this Security
      Agreement.

    

    
      
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    4.2
      In
      the event of any such sale by Secured Party of all or any of said Collateral
      on
      credit, or for future delivery, such property so sold may be retained by Secured
      Party until the selling price is paid by the purchaser. Secured Party shall
      incur no liability in case of the failure of the purchaser to take up and pay
      for the property so sold. In case of any such failure, said Collateral may
      be
      again, and from time to time, sold.

    

    4.3
      In
      the event of any such sale or disposition, the proceeds thereof shall be applied
      first to the payment of the expenses of the sale, commissions, actual attorneys’
fees, and all other charges paid or incurred by Secured Party in taking,
      holding, selling, advertising, or otherwise preparing such Collateral for sale
      or otherwise in connection with maintaining the security of such Collateral,
      including any taxes or other charges imposed by law upon the Collateral and/or
      the ownership, holding or transfer thereof; secondly, to pay, satisfy and
      discharge all indebtedness of Debtor to Secured Party secured hereby then due
      and payable pursuant to the Note; thirdly, to the extent that Debtor may still
      have monetary obligations to Secured Party not yet due and payable, Secured
      Party may retain any surplus as collateral for the payment of such sums when
      due; and fourthly, if all of the secured obligations are then discharged and
      satisfied, to pay the surplus, if any, to Debtor. Secured Party shall not look
      to any other assets of Debtor other than the Collateral to satisfy any claims,
      defaults or breaches regarding the Note.

    

    4.4
      Secured Party shall not be liable or responsible for safeguarding the
      Collateral, or any portion thereof, or maintaining the condition thereof, or
      for
      any loss or damage thereto and diminution in value of the Collateral either
      through loss or non-collection. Secured Party shall not be liable or responsible
      for any act or default of any carrier or warehouseman or of any other person,
      other than that occasioned by the gross negligence and willful misconduct of
      Secured Party. 

    

    5.           
      REPRESENTATIONS
      AND WARRANTIES.
      Debtor
      represents and warrants that it is duly organized, validly existing, and in
      good
      standing under the laws of the State of Delaware with the power to own its
      assets and to transact business in such states where its business is conducted.
      Debtor represents and warrants that the Note and this Security Agreement have
      been duly and validly authorized, executed and delivered by Debtor and that
      each
      constitutes a valid and binding agreement, enforceable in accordance with its
      terms. Debtor represents that Debtor will at all times maintain the Collateral
      in good state of repair and condition consistent with good business practice,
      including replacement of damaged, destroyed, or obsolete stock certificates;
      will pay any and all taxes thereon or applicable thereto prior to delinquency;
      and shall maintain at all times appropriate insurance thereon to insure the
      Collateral against risk of fire and other such risks as are covered by “extended
      coverage”, theft, burglary and vandalism. 

    

    6.           
      INDEMNITY.
      In the
      case of any adverse claim with respect to the Collateral or any portion thereof
      arising out of any act done, or permitted or acquiesced in by Debtor, Debtor
      indemnifies and agrees to hold Secured Party harmless from and against any
      and
      all claims, losses, liabilities, damages, expenses, costs and actual attorneys’
fees incurred by Secured Party in or by virtue of exercising any right, power
      or
      remedy of Secured Party hereunder or defending, protecting, enforcing or
      prosecuting the security interest hereby created. Any such loss, cost,
      liability, damage or expense so incurred shall be repaid upon demand by Secured
      Party and until so paid shall be deemed a secured obligation
      hereunder.

    

    
      
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    7.           
      NO
      WAIVER BY SECURED PARTY.
      Any
      forbearance, failure, or delay by Secured Party in exercising any right, power
      or remedy hereunder shall not be deemed to be a waiver of such right, power,
      or
      remedy, and any single or partial exercise of any right, power, or remedy of
      Secured Party shall not preclude the later exercise of any other right, power,
      or remedy, each of which shall continue in full force and effect until such
      right, power, or remedy is specifically waived by an instrument in writing,
      executed by Secured Party.

    

    8.            EFFECTIVENESS
      OF AGREEMENT.
      This
      Security Agreement and Debtors’ duties and obligations and Secured Party’s
      powers to dispose of the Collateral, and all other rights, powers and remedies
      granted to Secured Party hereunder shall remain in full force and effect until
      Debtor has satisfied and discharged all of Debtor’s obligations to Secured Party
      secured thereby.

    

    9.           
      WAIVER
      BY DEBTOR. All
      provisions of law, in equity and by statute providing for, relating to, or
      pertaining to pledges or security interests and the sale of pledged property
      or
      property in which a security interest is granted, or which prescribe, prohibit,
      limit or restrict the right to, or conditions, notice or manner of sale,
      together with all limitations of law, in equity, or by statute, on the right
      of
      attachment in the case of secured obligations, are hereby expressly waived
      by
      Debtor to the fullest extent Debtor may lawfully waive same.

    

    10.          
      RELEASE
      OF COLLATERAL.
      Upon
      payment in full by Debtor, in lawful money of the United States of America,
      to
      Secured Party at the address set forth in the Note of all amounts secured
      hereby, and performance of all other obligations of Debtor under this Security
      Agreement, together with any interest thereon and any costs and expenses
      incurred by Secured Party in the enforcement of this Security Agreement or
      of
      any of Secured Party’s rights hereunder, or in the enforcement of any other
      agreements (whether heretofore or hereafter entered into) between Debtor and
      Secured Party, or any of the rights of Secured Party thereunder, and upon the
      request of Debtor therefor, Secured Party will deliver to Debtor, at Debtor’s
      sole cost and expense, such termination statements and such other documents
      of
      release, reconveyance and reassignments as shall be sufficient to discharge
      Debtor of the liabilities secured hereby and to terminate and release the
      security interest in the Collateral created hereby.

    

    11.          
      MISCELLANEOUS. 

    

    11.1
      This
      Security Agreement and all of the rights and duties in connection herewith
      shall
      be governed by and construed in accordance with the laws of the State of
      California without giving effect to principles governing conflicts of
      law.

    

    11.2
      This
      Security Agreement and all of its terms and provisions shall be binding upon
      the
      heirs, successors, transferees and assigns of each of the parties
      hereto.

    

    11.3
      In
      the event any portion of this Security Agreement is determined to be invalid
      or
      unenforceable, the remaining portions shall remain in full force and effect
      as
      if that invalid or unenforceable portion had never been a part
      hereof.

    

    11.4
      In
      the event litigation is commenced to enforce or interpret this Security
      Agreement, or any provision hereof, the prevailing party shall be entitled
      to
      recover its reasonable costs and attorneys’ fees.

    

    
      
        4

      

      
         

        
          

        

      

      
         

      

    

    11.5
      This
      Security Agreement may be amended only by written consent of each of the parties
      hereto.

    

    11.6
      Any
      and all notices, demands, requests, or other communications required or
      permitted by this Security Agreement or by law to be served on, given to, or
      delivered to any party hereto by any other party to this Security Agreement
      shall be in writing and shall be deemed duly served, given, or delivered when
      personally delivered to the party, or in lieu of such personal delivery, when
      deposited in the United States mail, first-class postage prepaid addressed
      to
      the party at the address herein appearing.

    

    11.7
      This
      Security Agreement constitutes the entire agreement between the parties
      pertaining to the subject matter contained herein and supersedes all prior
      and
      contemporaneous agreements, representations and understandings of the parties.
      No waiver of any of the provisions of this Security Agreement shall be deemed,
      or shall constitute a waiver of any other provision, whether or not similar,
      nor
      shall any waiver constitute a continuing waiver. No waiver shall be binding
      unless executed in writing by the party making the waiver.

    

    11.8
      This
      Security Agreement may be executed simultaneously in one or more counterparts,
      each of which shall be deemed an original, and all of which together shall
      constitute one and the same instrument. The exhibits attached hereto are made
      a
      part hereof and are incorporated herein by this reference.

    

    11.9
      Nothing in this Security Agreement, whether express or implied, is intended
      to
      confer any rights or remedies under or by reason of this Security Agreement
      on
      any persons other than the parties to it and their respective successors and
      assigns, nor is anything in this Security Agreement intended to relieve or
      discharge the obligations or liability of any third persons to any party to
      this
      Security Agreement, nor shall any provision give any third person any right
      of
      subrogation or action against any party to this Security Agreement.

    

    11.10
      Each party’s obligations under this Security Agreement are unique. If any party
      should default in its obligations under this Security Agreement, the parties
      each acknowledge that it would be extremely impracticable to measure the
      resulting damages; accordingly, the non-defaulting party, in addition any other
      available rights or remedies, may sue in equity for specific performance without
      the necessity of posting a bond or other security, and the parties each
      expressly waive the defense that a remedy in damages will be adequate.

    

    11.11
      All
      representations, warranties and agreements of the parties contained in this
      Security Agreement, or in any instrument, certificate, opinion or other writing
      provided for in it, shall survive the completion of all acts contemplated
      herein.

    

    11.12
      Whenever the context of this Security Agreement requires, the masculine gender
      includes the feminine or neuter gender, and the singular number includes the
      plural.

    

    11.13
      As
      used herein, the word “days” shall refer to calendar day, including holidays,
      weekends, non-business days, etc.

    

    11.14
      The
      captions contained herein do not constitute part of this Security Agreement
      and
      are used solely for convenience and shall in no way be used to construe, modify,
      limit or otherwise affect this Security Agreement.

    

    

    
      
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    IN
      WITNESS WHEREOF, this Security Agreement is executed as of the date first set
      forth above.

    

    

      
        	
                DEBTOR

              	
                SECURED
                  PARTY

              
	 	 
	
                PATIENT
                  SAFETY TECHNOLOGIES, INC.

              	
                HERBERT
                  LANGSAM REVOCABLE TRUST

              
	 	 
	 	 
	 	 
	
                BY:
                  ______________________________

              	
                BY:___________________________

              
	
                NAME:
                  ___________________________

              	
                Herbert
                  Langsam, Trustee 

              
	
                TITLE:
                   ___________________________

              	
              

      

    

     

     

     

     

     

     

     

    
      
        6ON2 TECHNOLOGIES, INC.
                               21 Corporate Drive
                                    Suite 103
                             Clifton Park, NY 12065

May 1, 2006

Mr. Balraj Joll
104 Overlake Drive E
Medina, WA  98039

RE: EMPLOYMENT AGREEMENT
------------------------

Dear Bill:

The following, when fully executed, shall constitute the employment agreement
(the "Agreement") between you (the "Executive") and us (the "Company"). Certain
capitalized terms used in this Agreement shall, unless defined elsewhere in this
Agreement, have the respective meanings set forth in Section 18:

1. EMPLOYMENT; ACCEPTANCE OF EMPLOYMENT. Beginning on May 8, 2006 (the
"Commencement Date") and during the Term, the Company will employ the Executive
as, and the Executive will be employed to render services to the Company as, its
President & Chief Executive Officer and as the Chief Executive Officer of the
Company's subsidiary, The Duck Corporation. The Executive shall report directly
to the Company's Board of Directors (the "Board") and shall be the senior
executive officer in the Company. The Executive hereby accepts his employment
commencing on the Commencement Date and will render his services to the Company
conscientiously, loyally, competently and to the best of his talents and
abilities on a full-time basis throughout the Term in accordance with the
reasonable direction and control of the Board.

2. EXECUTIVE'S DUTIES.

(a) The Executive's duties shall include those services customarily rendered by
the senior executive responsible for the overall management and operation of the
Company, together with such other duties and services as may reasonably be
assigned to him from time to time by the Board in the conduct of the business of
the Company, its subsidiaries and its other ventures.

(b) The Executive's services shall be rendered primarily at the Company's
offices in New York, New York and Clifton Park, New York, and at such other
locations as the Company may request consistent with its reasonable business
needs.

3. EXCLUSIVITY. During the Term, the Executive shall devote substantially all of
his business time, skill and energies exclusively to the business of the
Company, its subsidiaries and its ventures, and the Executive will not perform
business-related services of any nature for any individual or entity other than
the Company, its subsidiaries and its ventures without the prior written consent
of the Board. Notwithstanding the foregoing, the Executive shall be entitled
during the term of this Agreement to participate in civic and charitable
activities as long as such activities (i) do not interfere with the performance
of his services under this Agreement and (ii) do not present a conflict of
interest or the appearance of a conflict of interest.

4. TERM. Subject to the terms and conditions of Section 8, the term of the
Executive's employment under this Agreement commences on the Commencement Date
and expires at 5:00 PM New York City time on the day immediately prior to the
second anniversary of the Commencement Date. The period of time described in the
preceding sentence is referred to in this Agreement as the "Term." Executive's
employment hereunder shall continue for one (1) additional extension term of one
(1) year unless either party gives notice of non-renewal ("Non-Renewal Notice")
to the other at least ninety (90) days prior to end of the then-current term.

<PAGE>

5. COMPENSATION.

(a) During the Term, the Executive shall receive salary compensation (the "Base
Salary") from the Company, in payment for all of his services under this
Agreement and all rights granted in this Agreement, payable at the rate of
$325,000 for each year of the Term. All payments of Base Salary shall be subject
to required and authorized payroll deductions and shall be made in accordance
with the then standard payroll practices of the Company.

(b) During the Term, the Executive shall be entitled to receive bonus
compensation in cash (the "Bonus") as follows:

(i) for the first Calendar Year Executive will be entitled to receive a Bonus
(the "First Year Bonus") ranging from 33% of Base Salary ($108K) for achievement
of a budget acceptable to the Board to 67% of Base Salary ($217K) if and only if
the Company attains positive earnings before interest, taxes, depreciation and
amortization. The First Year Bonus, if any, will be payable in early 2007, once
financial results for 2006 have been finalized.

(ii) the Bonus for Calendar Year 2007 and for each subsequent full Calendar Year
of the Term (as extended) will be in accordance with a senior management bonus
scheme tied to delivery of revenue and profitability objectives for each year,
metrics and scales as agreed by the Compensation Committee in the fourth quarter
of the prior Calendar Year, with the achievable range for the Bonus between33%
of Base Salary and 100+% of Base Salary based upon actual performance against
such goals. The amount of the Bonus, if any, shall be increased or decreased, at
the Board's discretion, if the Company's performance is better than or is less
than the agreed-upon goals. The Company and the Executive will use their
respective best efforts to agree to such goals for Calendar Year 2007 and each
succeeding Calendar Year of the Term by December 1 of the preceding year. In the
absence of any such agreement, the goals for such year shall be 135% of the
goals metrics and scales set for the immediately preceding Calendar Year.

(iii) Terms of this Agreement relating to the Bonus may be changed by the Board
if the Board deems it advisable in connection with any change in the SEC's or
other relevant rules and regulations relating to executive compensation and
disclosure of executive compensation.

(c) The Company shall pay or reimburse the Executive for all reasonable expenses
related to its business actually incurred or paid by the Executive in the
performance of his duties under this Agreement upon presentation of accountings,
expense statements, vouchers or such other supporting information in such form
and detail as the Company may reasonably require or as the Internal Revenue
Service requires. Without limiting the foregoing, the Company shall pay or
reimburse the Executive for Executive's reasonable relocation, house-hunting and
transitional housing expenses related to his relocation in connection with the
commencement of his employment with the Company, as such expenses may be
reasonably agreed by the parties.

6. STOCK OPTION INCENTIVE. The Company hereby confirms the grant to the
Executive of options to purchase 1,500,000 shares of common stock of the Company
under its 2005 Incentive Compensation Plan (the "Stock Plan") with an exercise
price of $.91 per share, which options shall vest and become exercisable in
accordance with the vesting schedule set forth on Exhibit A attached to this
Agreement. The Company may, in its sole discretion, make additional grants of
options to Executive from time to time. The Company represents and warrants that
the shares covered by the Stock Option Award Agreement have been registered with
the Securities and Exchange Commission ("SEC") so as to be fully tradable, upon
the due issuance thereof, subject to the rules and regulations of the SEC
applicable to the Executive.

<PAGE>

7. EMPLOYEE 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 which are available to other senior executives of the Company on the same
basis as other senior management, subject to the policies of the Company with
respect to all of such programs or plans; PROVIDED, that, except as expressly
set forth in this Agreement, the Company shall not be obligated to institute or
maintain any particular benefit or insurance program or plan or aspect thereof.

(b) During the Term, the Executive shall be entitled to four weeks' paid
vacation per Calendar Year to be scheduled at mutually agreeable times and to be
taken and accrued on the same basis as other senior executives of the Company.
Executive's vacation for the 2006 Calendar Year shall be pro rated based on the
Effective Date of this Agreement.

(c) Travel (and related services) by the Executive in the performance of his
duties under this Agreement shall be at the Company's expense in accordance with
the Company's policies in effect for senior executives of the Company.

8. EARLY TERMINATION; NON-RENEWAL.

(a) Notwithstanding any other provision of this Agreement, the Company may
terminate the Executive's employment prior to the expiration of the Term for
Cause. If the Company terminates the Executive's employment prior to the
expiration of the Term for Cause, or if the Executive voluntarily terminates his
services at any time during the Term (other than for Good Reason), the Company's
obligations to pay compensation under Section 5 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, the Base Salary and reimbursable
expenses accrued (but unpaid) to the date of termination. The Stock Option Award
Agreement sets forth the respective rights of the Executive and the Company with
respect to the stock options referred to therein upon termination of the
Executive's employment for Cause and upon the Executive's voluntary termination
of his employment (other than for Good Reason).

(b) If the Executive dies during the Term, the Company's obligations to pay
compensation under Section 5 shall cease forthwith upon the date of death,
except that the Company will pay the Executive's legal representative(s), within
30 days of his (their) appointment, in full and complete satisfaction of all of
the Company's obligations under this Agreement the Base Salary and reimbursable
expenses accrued (but unpaid) to the date of the Executive's death. The Stock
Option Award Agreement sets forth the respective rights of the Executive and the
Company with respect to the stock options referred to therein upon the
Executive's death.

(c) If, as a result of the Executive's disability or incapacity due to physical
illness or condition, or mental illness during the Term, the Executive is unable
to perform his duties hereunder for a consecutive twenty-six calendar week
period, or for an aggregate period of forty calendar weeks during any twelve
months (or such longer period as may be required to comply with the Family Leave
Act or other applicable law), the Company shall have the right, upon written
notice to the Executive, to terminate the Executive's employment under this
Agreement. If the Executive is terminated pursuant to this Section 7(c), the
Company's obligations to pay compensation under Section 5 shall cease on the
30th day after the date of such notice, except that the Company will pay to the
Executive on or before the 30th such day, in full and complete satisfaction of
all of the Company's obligations under this Agreement, the Base Salary and
reimbursable expenses accrued (but unpaid) to the date of such notice or
termination of the Executive's employment. The Stock Option Award Agreement sets
forth the rights of the Executive and the Company with respect to the stock
options referred to therein upon the Executive's disability or incapacity.

<PAGE>

(d) If the Company terminates the Executive's employment without Cause or if the
Executive resigns for Good Reason, the Company's obligations under this
Agreement to pay further compensation under Section 5 shall cease forthwith,
except that the Company shall pay the Executive:

(i) one year's Base Salary,
(ii) any amount of the Bonus that has become payable with respect to a completed
Calendar Year but has not been paid to the Executive;

(iii) the Board's good faith estimate of the pro rata amount of the Bonus 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 for such
Calendar Year, payable at the end of such Calendar Year;

(iv) an amount equal to all reimbursable expenses accrued (but unpaid) to the
date of termination (subject to submission by the Executive of all documentation
required under Section 5(c) hereof); and

(v) any accrued but unused vacation days paid at the rate set forth in Section
7(b).

(e) If the Company gives timely Non-Renewal Notice to Executive pursuant to
Section 4, Executive shall be entitled to continue receiving payment of the Base
Salary until the date that is six months after the date on which Executive
received notice of non-renewal.

Notwithstanding anything herein to the contrary, payments of the Base Salary or
the Bonus (if any) pursuant to Sections 8(d) or 8(e) hereof shall not be
accelerated and shall remain payable as otherwise provided in this Agreement.
Notwithstanding the foregoing, at all times after termination the Executive
shall have the affirmative duty to seek other employment of comparable stature
and with comparable base compensation to mitigate his right to payment, and the
foregoing payments of the Base Salary and the Bonus shall decrease if and to the
extent that the Executive obtains other employment or provides his services as a
consultant by the amount of compensation payable thereunder in respect of
services provided by the Executive during the time period prior to the
termination of the Term (without giving effect to early termination). In
addition, subject to his not becoming eligible to receive similar benefits
elsewhere on similar terms, for the period of the Term that remains, the Company
shall maintain in effect all employee benefits (excluding any incentive
compensation program) to which the Executive was entitled at any time during the
six months preceding such termination. The Stock Option Award Agreement sets
forth the rights of the Executive and the Company with respect to the stock
options referred to therein upon termination of the Executive's employment
without Cause; PROVIDED, that fifty percent (50%) of Executive's unvested stock
options from each stock option award grant shall vest immediately upon
Termination Not for Cause and PROVIDED, FURTHER, that irrespective of the terms
of any of Executive's stock option agreements with the Company, all of
Executive's vested stock options shall terminate twelve (12) months following
the date of such termination. The provisions of this Section 8(d) are the
exclusive provisions that will apply if a court, arbitrator or administrative
agency should determine that the Company's termination of the Executive's
employment was without Cause or was by reason of a material breach by the
Company of any of its material obligations under this Agreement.

(f) For the purpose of Sections 8(a), 8(b) and 8(c), if and to the extent that
the Executive's employment terminates other than on an anniversary of the
Commencement Date, the amounts of the Base Salary and the Annual Bonus accrued
for the year of termination will each be determined by prorating the respective
annual amounts on a daily basis using a fraction of which the numerator is the
number of days elapsed in the year during which employment of the Executive was
terminated and the denominator of which is 365.

<PAGE>

9. CHANGE OF CONTROL

For purposes of this Agreement, "Change of Control" means the Company completes
a merger or the sale of all or substantially all of its assets. In the event
that, following a Change of Control, Executive is terminated by the Company
without Cause, or Executive voluntarily resigns from his employment with the
Company (or its successor) for Good Reason, the Company's obligations under this
Agreement to pay further compensation under Section 5 shall cease forthwith,
except that the Company shall pay the Executive:

(i) two year's Base Salary;

(ii) any amount of the Bonus that has become payable with respect to a completed
Calendar Year but has not been paid to the Executive; and

(iii) the Board's good faith estimate of the pro rata amount of the Bonus 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 for such
Calendar Year, payable at the end of such Calendar Year;

PROVIDED, that payments of the Base Salary or the Bonus (if any) shall not be
accelerated and shall remain payable as otherwise provided in this Agreement. In
addition, Executive's unvested options to purchase shares of the common stock of
the Company, if any, shall become 100% vested; any right to repurchase such
vested shares shall lapse. It is also PROVIDED, FURTHER, that irrespective of
the terms of any of Executive's stock option agreements with the Company, all of
Executive's vested stock options shall terminate twelve (12) months following
the date of the expiration of the Term. Furthermore, Executive will be entitled
to continue to receive medical benefits under the existing plan for one (1)
year.

10. NONDISCLOSURE.

(a) Except as required in order to perform his obligations under this Agreement,
the Executive shall not, without the prior written consent of the Company,
directly or indirectly, disclose or divulge to any other person or entity any of
the Company's Confidential Information or Trade Secrets at any time (during or
after the Executive's employment) during which such data or information
continues to constitute Confidential Information or a Trade Secret. Except for
his attorney, accountant, financial advisor or spouse or other family member,
the Executive shall not disclose or divulge to any other person (particularly to
any other employee) any material 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 other property belonging to the Company or containing
Confidential Information or Trade Secrets of the Company other than his personal
name and address list and any documents relating to his own employment or
benefits. Following expiration of the Term of this Agreement (not including
early termination pursuant to Section 8), or any termination without Cause, the
Executive may disclose his salary, bonus and benefits hereunder to prospective
employers.

(b) 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, 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 required or becomes legally compelled to disclose any Confidential
Information or Trade Secrets that are legally required, he will exercise all
reasonable efforts to obtain reliable assurances that confidential treatment
will be accorded the Confidential Information to be disclosed.

<PAGE>

11. RESTRICTIVE AGREEMENTS.

(a) During the Restricted Period, the Executive will not, anywhere in the United
States, directly or indirectly, without the prior written consent of the
Company, provide services with or without pay, own, manage, operate, join,
control, participate in or be connected as a stockholder, partner or otherwise
with any business, individual, partner, firm, corporation or other entity that
competes, directly or indirectly, anywhere in the world, with any business of
the Company in which the Company was engaged or in which the Company was
planning to become engaged during the period of the Executive's employment with
the Company.

(b) During the Restricted Period, the Executive will not, directly or
indirectly, without the prior written consent of the Company, solicit or induce,
or attempt to solicit or induce, any employee or other personnel of the Company
(other than an assistant to the Executive) to terminate, alter or lessen that
person's affiliation with the Company or to violate the terms of any agreement
or understanding with the Company.

(c) The obligations of the Executive under Sections 11(a) and 11(b) shall
terminate if the Company terminates the Executive's employment under this
Agreement without Cause.

(d) The Executive hereby acknowledges that (i) the activities in which he may
not engage during the Restricted Period do not unreasonably restrict his ability
to earn a livelihood or impose any hardship; (ii) the restrictions set forth in
subsections (a) and (b) of this Section are reasonable and necessary to protect
the Company; (iii) he is experienced and sophisticated with respect to
employment relations; (iv) he has reviewed this Agreement with or without
counsel's advice, as he chooses, including, without limitation, this Section 11;
and (v) he fully understands all of the provisions of this Agreement, including
without limitation, this Section 11.

12. REPRESENTATIONS AND WARRANTIES.

(a) The Executive hereby represents and warrants that (i) he has the right to
enter into this Agreement with the Company and to grant the rights contained in
this Agreement, and (ii) 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.

(b) The Company represents that (i) it has the corporate right and authority to
enter into this Agreement with the Executive and to grant the options and other
rights contained in this Agreement; (ii) the provisions of this Agreement do not
violate any other contracts or agreements that the Company has entered into with
any other party; (iii) all corporate action necessary to authorize the Company
to enter into and carry out this Agreement have been taken; and (iv) no
provision of this Agreement violates the Articles of Incorporation or Bylaws of
the Company or requires the consent of any other party, whether governmental or
otherwise.

13. SERVICES UNIQUE. The services to be rendered by the Executive under the
terms of this Agreement are of a unique, special and extraordinary nature, and
of a peculiar value, the loss of which may not be reasonably or adequately
compensated in damages in any action at law, and that a breach by the Executive
may cause the Company irreparable injury and damage. It is agreed that the
Company, in addition to any other remedies, shall be entitled to seek injunctive
and other equitable relief to enforce its rights under, and to prevent a breach
of, this Agreement by the Executive.

14. INDEMNIFICATION. The Executive shall be indemnified by the Company to the
maximum extent permitted by applicable law and as provided by Article IX of the
Company's Bylaws. The Executive shall be entitled to coverage under the
Company's director and officer liability insurance policy to the extent that
such coverage is provided to other officers of the Company. The provisions of
this Section 14 shall survive the termination or expiration of this Agreement.

<PAGE>

15. NOTICE AND CURE OF BREACH. Whenever a breach of this Agreement by either
party is relied upon as justification for any action taken by the other party
pursuant to any provision of this Agreement, before such action is taken, the
party asserting the breach of this Agreement shall give the other party at least
14 days' prior written notice of the existence and the nature of such breach
before taking further action hereunder and shall give the party purportedly in
breach of this Agreement the opportunity to correct such breach during the
14-day period, unless a longer period to correct such breach is specifically
provided hereunder.

16. ASSIGNABILITY; ETC. This Agreement shall be nondelegable and nonassignable
by the Executive. This Agreement shall be assignable by the Company to (a) any
corporation resulting from any merger, consolidation or other reorganization to
which the Company is a party or (b) any corporation, partnership, association or
other persons to which the Company transfers all or substantially all of the
assets and business of the Company. All of the terms and provisions of this
Agreement shall be binding upon and shall inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, successors and
permitted assigns.

17. 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 recognized overnight courier service such as Federal Express, (iii) by sending
it by certified mail, postage prepaid, return receipt requested, or (iv) by
confirmed telefax, with notice confirmed to the Executive at the address first
stated above. If to the Company at:

21 Corporate Drive, Suite 103
Clifton Park, New York 12065
Attn: General Counsel
Fax No.: (518) 348-2098

If notice is mailed, such notice shall be effective two business days after
mailing, or if notice is personally delivered or sent by telecopy or other
electronic facsimile transmission or by overnight courier, it shall be effective
upon receipt. The address for notice may be changed by notice given to the other
party pursuant to this Section.

18. DEFINITIONS. As used in this Agreement:

"Affiliate" means any company controlling, controlled by or under common control
with the Company.

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

"Cause" means:

(i) conviction of a felony (other than an offense related to the operation of an
automobile that results only in a fine or other noncustodial penalty) or of any
crime arising out of any material fraud or act of dishonesty against the
Company;

(ii) repeated failure to perform material services required under this
Agreement;

(iii) willful misconduct or gross negligence in the performance of duties;

(iv) gross disregard or willful violation of the legal rights of any employees
of the Company or of the Company's written policies regarding harassment or
discrimination; or

<PAGE>

(v) a material breach of the material provisions of this Agreement (including,
but not limited to, any breach of Sections 10, 11(a), 11(b) or 12(a)).

"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.

"Restricted Period" means the 12 months following the date on which the Term in
fact was terminated by the Company or the Executive or by the expiration of this
Agreement, as the case may be.

"Term" means the term of the Executive's employment under this Agreement as
provided in Section 4.

"Trade Secrets" means 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.

For purposes of this Agreement, "Good Reason" means any of the following
conditions, which are imposed upon Executive (and not upon the Company's
corporate officers generally) without Executive's written consent, and which
condition(s) remain(s) in effect fifteen (15) business days after written notice
to the Board of Directors from Executive of such condition(s): (i) a material
decrease in the Base Salary and/or Executive's employee benefits; (ii) a
material, adverse change in Executive's title, authority, responsibilities or
duties, as measured against the position, authority, duties or responsibilities
of a chief executive officer of a company similar in size, capital structure and
business to the Company (except to the extent that such change is related to any
internal investigation by the Company or is recommended by the Company's
attorneys, auditors or other advisors and relates to alleged actions by
Executive); (iii) a substantial reduction, without reasonable business reasons,
of the facilities or perquisites available to Executive as measured against
those available immediately prior to such reduction; or (iv) the failure by the
Company to obtain the assumption of this Agreement by any successor.

19. WITHHOLDING. All payments made by the Company under this Agreement shall be
reduced by any tax or other amounts required to be withheld by the Company under
applicable law.

20. 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 17 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 17.

(b) To the extent permitted by law, the Executive and the Company irrevocably
waive 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 State 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 State of New York has been brought in an
inconvenient forum.

<PAGE>

(c) This Agreement and the Stock Option Award Agreement contain 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) 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.

(g) 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.

(h) All references to Sections and Exhibits shall be to sections of and exhibits
attached to this Agreement.

21. Counterparts. 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.

22. LEGAL FEES. The Company shall pay to the Executive reasonable legal fees and
expenses incurred by the Executive in the negotiation of this Agreement.

<PAGE>

If the foregoing accurately reflects the Executive's understanding, please
countersign and return one copy of this Agreement to the Company, whereupon this
Agreement shall be a binding agreement between the Executive and the Company.

Sincerely yours,

                                          ON2 TECHNOLOGIES, INC.

                                      By: /s/ James Meyer
                                          --------------------------
                                          Name:  James Meyer
                                          Title: Interim Chief Executive Officer

Accepted and agreed to:

Balraj Joll

  /s/ Bill Joll
---------------------------

<PAGE>

EXHIBIT A

                       STOCK OPTION AWARD VESTING SCHEDULE

o   333,334 VESTING IMMEDIATELY AS OF THE EFFECTIVE DATE
o   333,333 VESTING ON NOVEMBER 8, 2006
o   333,333 VESTING ON MAY 8, 2007
o   500,000 VESTING ON MAY 8, 2008

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