EXHIBIT NO. 4.2

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE  BEEN  REGISTERED  WITH  THE  SECURITIES  AND  EXCHANGE  COMMISSION  OR THE
SECURITIES   COMMISSION  OF  ANY  STATE  IN  RELIANCE  UPON  AN  EXEMPTION  FROM
REGISTRATION  UNDER THE  SECURITIES  ACT OF 1933,  AS AMENDED  (THE  "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY NOT BE OFFERED  OR SOLD  EXCEPT  PURSUANT  TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER THE  SECURITIES  ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE  REGISTRATION
REQUIREMENTS  OF THE  SECURITIES  ACT AND IN ACCORDANCE  WITH  APPLICABLE  STATE
SECURITIES  LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH  EFFECT,  THE  SUBSTANCE  OF WHICH SHALL BE  REASONABLY  ACCEPTABLE  TO THE
COMPANY.  THIS  SECURITY  AND THE  SECURITIES  ISSUABLE  UPON  EXERCISE  OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION  WITH A BONA FIDE MARGIN  ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                     SERIES A COMMON STOCK PURCHASE WARRANT

                To Purchase __________ Shares of Common Stock of

                             ON2 Technologies, Inc.

      THIS SERIES A COMMON  STOCK  PURCHASE  WARRANT (the  "Warrant")  certifies
that, for value received,  _____________ (the "Holder"),  is entitled,  upon the
terms and subject to the limitations on exercise and the conditions  hereinafter
set forth, at any time on or after the date hereof (the "Initial Exercise Date")
and on or prior to the close of business on the 380th calendar day following the
Initial Exercise Date (the "Termination Date") but not thereafter,  to subscribe
for and  purchase  from ON2  Technologies,  Inc.,  a Delaware  corporation  (the
"Company"),  up to ______  shares (the "Warrant  Shares") of Common  Stock,  par
value $0.01 per share, of the Company (the "Common  Stock").  The purchase price
of one share of Common Stock under this  Warrant  shall be equal to the Exercise
Price, as defined in Section 2(b).

      Section 1.  Definitions.  Capitalized terms used and not otherwise defined
herein shall have the meanings  set forth in that  certain  Securities  Purchase
Agreement (the "Purchase Agreement"),  dated October __, 2004, among the Company
and the purchasers signatory thereto.

      Section 2. Exercise.

            a)    Exercise  of  Warrant.   Exercise  of  the   purchase   rights
      represented  by this  Warrant may be made at any time or times on or after
      the  Initial  Exercise  Date  and on or  before  the  Termination  Date by
      delivery to the Company of a duly executed facsimile copy of the Notice of
      Exercise  Form  annexed  hereto  (or such  other  office  or agency of the
      Company as it may designate by notice in writing to the registered  Holder
      at the  address of such  Holder  appearing  on the books of the  Company);
      provided,  however,  within 5  Trading  Days of the date  said  Notice  of


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      Exercise is delivered to the  Company,  the Holder shall have  surrendered
      this Warrant to the Company and the Company shall have received payment of
      the  aggregate  Exercise  Price of the shares  thereby  purchased  by wire
      transfer or cashier's check drawn on a United States bank.

            b)    Exercise  Price.  The exercise price of the Common Stock under
      this  Warrant  shall  be  $0.65,  subject  to  adjustment  hereunder  (the
      "Exercise Price").

            c)    Cashless Exercise. If at any time after one year from the date
      of issuance of this Warrant there is no effective  Registration  Statement
      registering  the resale of the  Warrant  Shares by the  Holder,  then this
      Warrant  may  also be  exercised  at such  time by  means  of a  "cashless
      exercise" in which the Holder  shall be entitled to receive a  certificate
      for the  number  of  Warrant  Shares  equal to the  quotient  obtained  by
      dividing [(A-B) (X)] by (A), where:

            (A)   = the VWAP on the Trading Day  immediately  preceding the date
                    of such election;

            (B)   = the Exercise Price of this Warrant, as adjusted; and

            (X)   = the number of Warrant Shares  issuable upon exercise of this
                    Warrant  in  accordance   with  the terms of this Warrant by
                    means   of   a   cash   exercise   rather  than  a  cashless
                    exercise.

            d)    Exercise Limitations.

                        i.    Holder's  Restrictions.  The Holder shall not have
                  the right to exercise any portion of this Warrant, pursuant to
                  Section  2(c) or  otherwise,  to the extent that after  giving
                  effect to such issuance after exercise,  the Holder  (together
                  with the Holder's affiliates),  as set forth on the applicable
                  Notice of Exercise,  would beneficially own in excess of 4.99%
                  of the  number  of  shares  of the  Common  Stock  outstanding
                  immediately after giving effect to such issuance. For purposes
                  of the  foregoing  sentence,  the  number  of shares of Common
                  Stock  beneficially  owned by the  Holder  and its  affiliates
                  shall  include the number of shares of Common  Stock  issuable
                  upon  exercise  of this  Warrant  with  respect  to which  the
                  determination  of such  sentence  is  being  made,  but  shall
                  exclude  the number of shares of Common  Stock  which would be
                  issuable  upon (A)  exercise  of the  remaining,  nonexercised
                  portion of this  Warrant  beneficially  owned by the Holder or
                  any of its  affiliates  and (B) exercise or  conversion of the
                  unexercised or nonconverted portion of any other securities of
                  the  Company  (including,   without   limitation,   any  other
                  Preferred  Stock  or  Warrants)  subject  to a  limitation  on
                  conversion or exercise  analogous to the limitation  contained
                  herein  beneficially  owned  by  the  Holder  or  any  of  its
                  affiliates. Except as set forth in the preceding sentence, for
                  purposes of this Section 2(d),  beneficial  ownership shall be
                  calculated  in  accordance  with Section 13(d) of the Exchange
                  Act, it being  acknowledged  by Holder that the Company is not


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                  representing to Holder that such  calculation is in compliance
                  with  Section  13(d) of the  Exchange Act and Holder is solely
                  responsible  for  any  schedules   required  to  be  filed  in
                  accordance  therewith.  To  the  extent  that  the  limitation
                  contained in this Section 2(d) applies,  the  determination of
                  whether  this  Warrant is  exercisable  (in  relation to other
                  securities owned by the Holder) and of which a portion of this
                  Warrant is exercisable shall be in the sole discretion of such
                  Holder,  and the  submission of a Notice of Exercise  shall be
                  deemed  to be such  Holder's  determination  of  whether  this
                  Warrant is exercisable (in relation to other  securities owned
                  by such  Holder)  and of  which  portion  of this  Warrant  is
                  exercisable, in each case subject to such aggregate percentage
                  limitation, and the Company shall have no obligation to verify
                  or confirm the accuracy of such determination. For purposes of
                  this Section 2(d), in  determining  the number of  outstanding
                  shares of Common  Stock,  the Holder may rely on the number of
                  outstanding  shares of Common  Stock as  reflected  in (x) the
                  Company's most recent Form 10-QSB or Form 10-KSB,  as the case
                  may be, (y) a more recent public  announcement  by the Company
                  or (z)  any  other  notice  by the  Company  or the  Company's
                  Transfer  Agent  setting  forth the number of shares of Common
                  Stock  outstanding.  Upon the  written or oral  request of the
                  Holder,  the Company  shall  within two Trading  Days  confirm
                  orally  and in  writing  to the Holder the number of shares of
                  Common  Stock  then  outstanding.  In any case,  the number of
                  outstanding  shares of Common Stock shall be determined  after
                  giving  effect to the  conversion or exercise of securities of
                  the  Company,  including  this  Warrant,  by the Holder or its
                  affiliates   since  the  date  as  of  which  such  number  of
                  outstanding   shares  of  Common  Stock  was   reported.   The
                  provisions  of this  Section  2(d) may be waived by the Holder
                  upon,  at the  election of the Holder,  not less than 61 days'
                  prior  notice  to the  Company,  and  the  provisions  of this
                  Section  2(d) shall  continue to apply until such 61st day (or
                  such  later  date,  as  determined  by the  Holder,  as may be
                  specified in such notice of waiver).

                        ii.   Trading  Market  Restrictions.  If the Company has
                  not  obtained  Shareholder  Approval  (as  defined  below)  if
                  required, then the Company may not issue upon exercise of this
                  Warrant in the  aggregate,  in excess of 19.999% of the number
                  of shares of  Common  Stock  outstanding  on the  Trading  Day
                  immediately  preceding  the Closing  Date,  less any shares of
                  Common  Stock  issued  upon  conversion  of or as  payment  of
                  dividends  on the  Preferred  Stock or upon prior  exercise of
                  this or any other  Warrant  issued  pursuant  to the  Purchase
                  Agreement (such number of shares, the "Issuable Maximum").  If
                  on any  attempted  exercise of this  Warrant,  the issuance of
                  Warrant  Shares  would  exceed the  Issuable  Maximum  and the
                  Company  shall  not  have  previously  obtained  the  vote  of
                  shareholders (the "Shareholder  Approval"),  if any, as may be
                  required  by  the  applicable  rules  and  regulations  of the
                  Trading  Market  (or any  successor  entity)  to  approve  the
                  issuance of shares of Common  Stock in excess of the  Issuable
                  Maximum  pursuant to the terms hereof,  then the Company shall
                  issue to the Holder  requesting a Warrant exercise such number


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                  of Warrant Shares as may be issued below the Issuable  Maximum
                  and, with respect to the remainder of the aggregate  number of
                  Warrant  Shares,  this Warrant shall not be exercisable  until
                  and unless Shareholder Approval has been obtained.

            e)    Mechanics of Exercise.

                        i.    Authorization  of  Warrant  Shares.   The  Company
                  covenants that all Warrant Shares which may be issued upon the
                  exercise of the purchase  rights  represented  by this Warrant
                  will, upon exercise of the purchase rights represented by this
                  Warrant,  be duly authorized,  validly issued,  fully paid and
                  nonassessable  and free from all taxes,  liens and  charges in
                  respect of the issue  thereof  (other than taxes in respect of
                  any transfer occurring contemporaneously with such issue). The
                  Company  covenants  that  during  the  period  the  Warrant is
                  outstanding,  it will reserve from its authorized and unissued
                  Common Stock a sufficient  number of shares to provide for the
                  issuance  of the  Warrant  Shares  upon  the  exercise  of any
                  purchase  rights  under  this  Warrant.  The  Company  further
                  covenants  that its issuance of this Warrant shall  constitute
                  full  authority  to its officers who are charged with the duty
                  of  executing  stock  certificates  to  execute  and issue the
                  necessary   certificates  for  the  Warrant  Shares  upon  the
                  exercise  of the  purchase  rights  under  this  Warrant.  The
                  Company  will  take  all  such  reasonable  action  as  may be
                  necessary to assure that such Warrant  Shares may be issued as
                  provided  herein  without  violation of any  applicable law or
                  regulation,  or of any requirements of the Trading Market upon
                  which the Common Stock may be listed.

                        ii.   Delivery   of    Certificates    Upon    Exercise.
                  Certificates   for  shares   purchased   hereunder   shall  be
                  transmitted by the transfer agent of the Company to the Holder
                  by crediting the account of the Holder's prime broker with the
                  Depository Trust Company through its Deposit  Withdrawal Agent
                  Commission  ("DWAC") system if the Company is a participant in
                  such system, and otherwise by physical delivery to the address
                  specified  by the  Holder in the Notice of  Exercise  within 3
                  Trading Days from the delivery to the Company of the Notice of
                  Exercise  Form,  surrender  of this Warrant and payment of the
                  aggregate  Exercise Price as set forth above  ("Warrant  Share
                  Delivery  Date").  This  Warrant  shall be deemed to have been
                  exercised  on the date the  Exercise  Price is received by the
                  Company.  The  Warrant  Shares  shall be  deemed  to have been
                  issued,  and Holder or any other  person so  designated  to be
                  named  therein  shall be  deemed  to have  become a holder  of
                  record of such  shares  for all  purposes,  as of the date the
                  Warrant has been  exercised  by the delivery to the Company of
                  the Notice of  Exercise  Form and by payment to the Company of
                  the  Exercise  Price and all taxes  required to be paid by the
                  Holder,  if any,  pursuant to Section  2(e)(vii)  prior to the
                  issuance of such shares, have been paid.


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                        iii.  Delivery of New Warrants  Upon  Exercise.  If this
                  Warrant shall have been  exercised in part, the Company shall,
                  at the time of delivery  of the  certificate  or  certificates
                  representing  Warrant Shares,  deliver to Holder a new Warrant
                  evidencing  the rights of Holder to purchase  the  unpurchased
                  Warrant  Shares called for by this Warrant,  which new Warrant
                  shall in all other respects be identical with this Warrant.

                        iv.   Rescission  Rights.  If the Company fails to cause
                  its transfer  agent to transmit to the Holder a certificate or
                  certificates  representing the Warrant Shares pursuant to this
                  Section  2(e)(iv) by the Warrant Share Delivery Date, then the
                  Holder will have the right to rescind such exercise.

                        v.    Compensation  for  Buy-In  on  Failure  to  Timely
                  Deliver  Certificates Upon Exercise.  In addition to any other
                  rights available to the Holder,  if the Company fails to cause
                  its transfer  agent to transmit to the Holder a certificate or
                  certificates  representing  the Warrant Shares  pursuant to an
                  exercise on or before the Warrant Share  Delivery Date, and if
                  after  such  date the  Holder  is  required  by its  broker to
                  purchase (in an open market  transaction or otherwise)  shares
                  of Common  Stock to deliver in  satisfaction  of a sale by the
                  Holder of the  Warrant  Shares  which the  Holder  anticipated
                  receiving  upon such exercise (a  "Buy-In"),  then the Company
                  shall (1) pay in cash to the  Holder  the  amount by which (x)
                  the  Holder's  total  purchase  price   (including   brokerage
                  commissions,  if any)  for  the  shares  of  Common  Stock  so
                  purchased  exceeds (y) the amount  obtained by multiplying (A)
                  the number of Warrant  Shares that the Company was required to
                  deliver to the Holder in connection with the exercise at issue
                  times  (B) the price at which the sell  order  giving  rise to
                  such purchase  obligation was executed,  and (2) at the option
                  of the Holder, either reinstate the portion of the Warrant and
                  equivalent  number of Warrant  Shares for which such  exercise
                  was not  honored or deliver to the Holder the number of shares
                  of Common  Stock that would have been  issued had the  Company
                  timely  complied  with its exercise  and delivery  obligations
                  hereunder.  For example,  if the Holder purchases Common Stock
                  having a total  purchase  price of  $11,000  to cover a Buy-In
                  with  respect  to an  attempted  exercise  of shares of Common
                  Stock  with  an  aggregate  sale  price  giving  rise  to such
                  purchase  obligation  of  $10,000,  under  clause  (1)  of the
                  immediately  preceding  sentence the Company shall be required
                  to pay the Holder $1,000. The Holder shall provide the Company
                  written notice indicating the amounts payable to the Holder in
                  respect of the Buy-In, together with applicable  confirmations
                  and  other  evidence  reasonably  requested  by  the  Company.
                  Nothing  herein  shall  limit a  Holder's  right to pursue any
                  other remedies available to it hereunder,  at law or in equity
                  including,   without   limitation,   a  decree   of   specific
                  performance  and/or  injunctive  relief  with  respect  to the
                  Company's failure to timely deliver certificates  representing
                  shares  of  Common  Stock  upon  exercise  of the  Warrant  as
                  required pursuant to the terms hereof.


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                        vi.   No  Fractional  Shares  or  Scrip.  No  fractional
                  shares or scrip representing fractional shares shall be issued
                  upon the  exercise of this  Warrant.  As to any  fraction of a
                  share which  Holder  would  otherwise  be entitled to purchase
                  upon such exercise, the Company shall pay a cash adjustment in
                  respect  of such  final  fraction  in an amount  equal to such
                  fraction multiplied by the Exercise Price.

                        vii.  Charges,   Taxes   and   Expenses.   Issuance   of
                  certificates  for Warrant  Shares shall be made without charge
                  to  the  Holder  for  any  issue  or  transfer  tax  or  other
                  incidental   expense  in  respect  of  the  issuance  of  such
                  certificate,  all of which taxes and expenses shall be paid by
                  the Company, and such certificates shall be issued in the name
                  of the Holder or in such name or names as may be  directed  by
                  the Holder; provided,  however, that in the event certificates
                  for  Warrant  Shares are to be issued in a name other than the
                  name of the Holder, this Warrant when surrendered for exercise
                  shall be accompanied by the  Assignment  Form attached  hereto
                  duly executed by the Holder; and the Company may require, as a
                  condition  thereto,   the  payment  of  a  sum  sufficient  to
                  reimburse it for any transfer tax incidental thereto.

                        viii. Closing of Books.  The Company  will not close its
                  stockholder  books or records in any manner which prevents the
                  timely exercise of this Warrant, pursuant to the terms hereof.

            f)    Call  Provision.  Subject to the  provisions  of this  Section
      2(f),  if after  the  Effective  Date the VWAP for each of 10  consecutive
      Trading  Days  (the  "Measurement  Period",  which  period  shall not have
      commenced  until after the  Effective  Date)  exceeds 130% of the Exercise
      Price (subject to adjustment as set forth herein) (the "Threshold Price"),
      then the Company may,  within five Trading Days of the end of such period,
      call for  redemption  of all or any portion of this  Warrant for $0.01 per
      share (the "Call  Price") for which a Notice of Exercise  has not yet been
      delivered (such right, a "Call"). To exercise this right, the Company must
      deliver to the Holder an  irrevocable  written  notice (a "Call  Notice"),
      indicating  therein the portion of unexercised  portion of this Warrant to
      which such notice applies. If the conditions set forth below for such Call
      are satisfied from the period from the date of the Call Notice through and
      including  the Call Date (as  defined  below),  then any  portion  of this
      Warrant  subject to such Call Notice for which a Notice of Exercise  shall
      not have been  received  by the Call Date will be  cancelled  at 6:30 p.m.
      (New  York  City  time) on the 10th  Trading  Day  after the date the Call
      Notice is  received  by the  Holder  (such  date,  the "Call  Date").  Any
      unexercised  portion  of this  Warrant to which the Call  Notice  does not
      pertain will be unaffected by such Call Notice.  In  furtherance  thereof,
      the  Company  covenants  and  agrees  that it will  honor all  Notices  of
      Exercise with respect to Warrant  Shares subject to a Call Notice that are
      tendered  through  6:30 p.m.  (New York City time) on the Call  Date.  The
      parties  agree  that any Notice of  Exercise  delivered  following  a Call
      Notice shall first reduce to zero the number of Warrant  Shares subject to


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      such Call Notice prior to reducing the remaining  Warrant Shares available
      for purchase  under this  Warrant.  For example,  if (x) this Warrant then
      permits  the Holder to  acquire  100  Warrant  Shares,  (y) a Call  Notice
      pertains to 75 Warrant  Shares,  and (z) prior to 6:30 p.m. (New York City
      time) on the Call Date the Holder  tenders a Notice of Exercise in respect
      of 50  Warrant  Shares,  then (1) on the Call  Date the right  under  this
      Warrant to acquire 25 Warrant Shares will be automatically  cancelled, (2)
      the Company, in the time and manner required under this Warrant, will have
      issued and  delivered  to the  Holder 50 Warrant  Shares in respect of the
      exercises  following  receipt of the Call Notice,  and (3) the Holder may,
      until the  Termination  Date,  exercise this Warrant for 25 Warrant Shares
      (subject to adjustment as herein  provided and subject to subsequent  Call
      Notices).  Subject  again to the  provisions  of this  Section  2(f),  the
      Company  may  deliver  subsequent  Call  Notices  for any  portion of this
      Warrant  for  which  the  Holder  shall  not have  delivered  a Notice  of
      Exercise.  Notwithstanding  anything  to the  contrary  set  forth in this
      Warrant,  the  Company  may not  deliver  a Call  Notice  or  require  the
      cancellation  of this Warrant (and any Call Notice will be void),  unless,
      from the beginning of the 10th consecutive  Trading Days used to determine
      whether the Common Stock has achieved the Threshold Price through the Call
      Date,  (i) the Company shall have honored in accordance  with the terms of
      this Warrant all Notices of Exercise delivered by 6:30 p.m. (New York City
      time) on the Call Date, (ii) the Registration Statement shall be effective
      as to all Warrant Shares and the prospectus  thereunder  available for use
      by the  Holder  for the  resale of all such  Warrant  Shares and (iii) the
      Common Stock shall be listed or quoted for trading on the Trading  Market.
      The Company's  right to Call the Warrant shall be exercised  ratably among
      the  Holders  based on each  Holder's  initial  purchase  of Common  Stock
      pursuant to the Purchase Agreement.

      Section 3. Certain Adjustments.

            a)    Stock Dividends and Splits. If the Company,  at any time while
      this Warrant is outstanding: (A) pays a stock dividend or otherwise make a
      distribution or  distributions  on shares of its Common Stock or any other
      equity or equity equivalent  securities  payable in shares of Common Stock
      (which,  for  avoidance  of doubt,  shall not include any shares of Common
      Stock  issued by the Company  pursuant to this  Warrant),  (B)  subdivides
      outstanding  shares of Common  Stock into a larger  number of shares,  (C)
      combines  (including by way of reverse stock split)  outstanding shares of
      Common  Stock  into  a  smaller  number  of  shares,   or  (D)  issues  by
      reclassification of shares of the Common Stock any shares of capital stock
      of the Company,  then in each case the Exercise  Price shall be multiplied
      by a  fraction  of which the  numerator  shall be the  number of shares of
      Common Stock (excluding  treasury shares, if any) outstanding  before such
      event and of which the denominator shall be the number of shares of Common
      Stock  outstanding after such event and the number of shares issuable upon
      exercise of this Warrant shall be proportionately adjusted. Any adjustment
      made  pursuant to this  Section 3(a) shall  become  effective  immediately
      after the record date for the  determination  of stockholders  entitled to
      receive  such  dividend  or  distribution   and  shall  become   effective
      immediately  after  the  effective  date  in the  case  of a  subdivision,
      combination or re-classification.


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<PAGE>


            b)    Subsequent  Equity  Sales.  If the  Company or any  Subsidiary
      thereof,  as  applicable,  at any time while this Warrant is  outstanding,
      shall offer,  sell,  grant any option to purchase or offer,  sell or grant
      any right to reprice its securities,  or otherwise dispose of or issue (or
      announce  any  offer,  sale,  grant or any  option  to  purchase  or other
      disposition)  any Common Stock or Common Stock  Equivalents  entitling any
      Person to acquire shares of Common Stock,  at an effective price per share
      less than the then  Exercise  Price  (such  lower  price,  the "Base Share
      Price"  and  such  issuances  collectively,  a  "Dilutive  Issuance"),  as
      adjusted  hereunder  (if the  holder of the Common  Stock or Common  Stock
      Equivalents so issued shall at any time,  whether by operation of purchase
      price  adjustments,  reset provisions,  floating  conversion,  exercise or
      exchange  prices or otherwise,  or due to warrants,  options or rights per
      share which is issued in  connection  with such  issuance,  be entitled to
      receive  shares of Common Stock at an  effective  price per share which is
      less  than the  Exercise  Price,  such  issuance  shall be  deemed to have
      occurred for less than the Exercise Price), then, the Exercise Price shall
      be reduced by multiplying the Exercise Price by a fraction,  the numerator
      of which is the number of shares of Common  Stock  issued and  outstanding
      immediately  prior to the Dilutive  Issuance  plus the number of shares of
      Common Stock which the offering  price for such  Dilutive  Issuance  would
      purchase at the then Exercise Price, and the denominator of which shall be
      the sum of the number of shares of Common  Stock  issued  and  outstanding
      immediately  prior to the Dilutive  Issuance  plus the number of shares of
      Common  Stock so  issued  or  issuable  in  connection  with the  Dilutive
      Issuance,  the  number  of  Warrant  Shares  issuable  hereunder  shall be
      increased such that the aggregate Exercise Price payable hereunder,  after
      taking into account the decrease in the Exercise Price,  shall be equal to
      the aggregate  Exercise Price prior to such  adjustment.  Such adjustments
      shall be made whenever such Common Stock or Common Stock  Equivalents  are
      issued. The Company shall notify the Holder in writing,  no later than the
      Trading Day  following  the  issuance of any Common  Stock or Common Stock
      Equivalents  subject to this section,  indicating  therein the  applicable
      issuance price, or of applicable reset price,  exchange price,  conversion
      price  and  other  pricing  terms  (such  notice  the  "Dilutive  Issuance
      Notice").  For  purposes  of  clarification,  whether  or not the  Company
      provides a Dilutive  Issuance  Notice  pursuant to this Section 3(b), upon
      the occurrence of any Dilutive  Issuance,  after the date of such Dilutive
      Issuance  the Holder is  entitled  to  receive a number of Warrant  Shares
      based  upon  the  Base  Share  Price  regardless  of  whether  the  Holder
      accurately refers to the Base Share Price in the Notice of Exercise.

            c)    Pro Rata  Distributions.  If the Company, at any time prior to
      the Termination Date, shall distribute to all holders of Common Stock (and
      not to Holders of the Warrants) evidences of its indebtedness or assets or
      rights or warrants to subscribe  for or purchase  any security  other than
      the Common Stock (which  shall be subject to Section  3(b)),  then in each
      such case the Exercise Price shall be adjusted by multiplying the Exercise
      Price  in  effect   immediately   prior  to  the  record  date  fixed  for
      determination of stockholders  entitled to receive such  distribution by a
      fraction of which the  denominator  shall be the VWAP determined as of the
      record date mentioned above, and of which the numerator shall be such VWAP
      on such  record  date less the then per share  fair  market  value at such
      record date of the portion of such assets or evidence of  indebtedness  so
      distributed  applicable  to one  outstanding  share of the Common Stock as
      determined  by the Board of  Directors  in good faith.  In either case the
      adjustments  shall be described in a statement  provided to the Holders of


                                       8
<PAGE>


      the portion of assets or evidences of  indebtedness so distributed or such
      subscription  rights  applicable  to  one  share  of  Common  Stock.  Such
      adjustment shall be made whenever any such  distribution is made and shall
      become effective immediately after the record date mentioned above.

            d)    Calculations.  All calculations  under this Section 3 shall be
      made to the nearest  cent or the nearest  1/100th of a share,  as the case
      may be. The number of shares of Common Stock outstanding at any given time
      shall not  includes  shares of  Common  Stock  owned or held by or for the
      account of the Company,  and the  description of any such shares of Common
      Stock shall be considered  on issue or sale of Common Stock.  For purposes
      of this  Section  3, the  number of shares  of Common  Stock  deemed to be
      issued and  outstanding  as of a given date shall be the sum of the number
      of shares of Common Stock (excluding  treasury shares,  if any) issued and
      outstanding.

            e)    Notice to Holders.

                        i.    Adjustment   to  Exercise   Price.   Whenever  the
                  Exercise  Price is adjusted  pursuant  to this  Section 3, the
                  Company shall  promptly  mail to each Holder a notice  setting
                  forth the  Exercise  Price after such  adjustment  and setting
                  forth  a  brief   statement  of  the  facts   requiring   such
                  adjustment.  If the Company  issues a variable rate  security,
                  despite the prohibition thereon in the Purchase Agreement, the
                  Company  shall be deemed to have issued Common Stock or Common
                  Stock  Equivalents  at  the  lowest  possible   conversion  or
                  exercise  price at which such  securities  may be converted or
                  exercised  in the  case of a  Variable  Rate  Transaction  (as
                  defined in the  Purchase  Agreement),  or the lowest  possible
                  adjustment price in the case of an MFN Transaction (as defined
                  in the Purchase Agreement.

                        ii.   Notice to Allow  Exercise  by  Holder.  If (A) the
                  Company shall  declare a dividend (or any other  distribution)
                  on the Common  Stock;  (B) the Company shall declare a special
                  nonrecurring  cash  dividend on or a redemption  of the Common
                  Stock;  (C) the Company  shall  authorize  the granting to all
                  holders of the Common  Stock  rights or warrants to  subscribe
                  for or purchase any shares of capital stock of any class or of
                  any  rights;  (D)  the  approval  of any  stockholders  of the
                  Company   shall   be   required   in   connection   with   any
                  reclassification  of the Common Stock,  any  consolidation  or
                  merger to which the  Company is a party,  any sale or transfer
                  of all or substantially  all of the assets of the Company,  of
                  any  compulsory  share  exchange  whereby the Common  Stock is
                  converted  into other  securities,  cash or property;  (E) the
                  Company  shall   authorize   the   voluntary  or   involuntary
                  dissolution,  liquidation  or winding up of the affairs of the
                  Company;  then,  in each case,  the Company  shall cause to be
                  mailed to the Holder at its last  addresses as it shall appear
                  upon the Warrant Register of the Company, at least 20 calendar
                  days  prior  to  the  applicable   record  or  effective  date
                  hereinafter  specified, a notice stating (x) the date on which
                  a record  is to be taken  for the  purpose  of such  dividend,


                                       9
<PAGE>


                  distribution,  redemption,  rights or warrants, or if a record
                  is not to be taken,  the date as of which the  holders  of the
                  Common  Stock  of  record  to be  entitled  to such  dividend,
                  distributions,  redemption,  rights  or  warrants  are  to  be
                  determined  or (y) the  date on which  such  reclassification,
                  consolidation,  merger,  sale,  transfer or share  exchange is
                  expected  to become  effective  or  close,  and the date as of
                  which it is  expected  that  holders  of the  Common  Stock of
                  record  shall be  entitled  to  exchange  their  shares of the
                  Common   Stock  for   securities,   cash  or  other   property
                  deliverable upon such reclassification, consolidation, merger,
                  sale, transfer or share exchange;  provided,  that the failure
                  to mail such  notice or any defect  therein or in the  mailing
                  thereof shall not affect the validity of the corporate  action
                  required  to be  specified  in  such  notice.  The  Holder  is
                  entitled to exercise  this  Warrant  during the 20-day  period
                  commencing  the date of such notice to the  effective  date of
                  the event triggering such notice.

            f)    Fundamental Transaction. If, at any time while this Warrant is
      outstanding,  (A) the Company effects any merger or  consolidation  of the
      Company with or into another  Person,  (B) the Company effects any sale of
      all or  substantially  all of its  assets  in one or a series  of  related
      transactions,  (C) any tender  offer or  exchange  offer  (whether  by the
      Company  or another  Person) is  completed  pursuant  to which  holders of
      Common Stock are  permitted  to tender or exchange  their shares for other
      securities,   cash  or   property,   or  (D)  the   Company   effects  any
      reclassification  of the Common  Stock or any  compulsory  share  exchange
      pursuant  to which  the  Common  Stock is  effectively  converted  into or
      exchanged  for other  securities,  cash or property  (in any such case,  a
      "Fundamental  Transaction"),  then, upon any subsequent conversion of this
      Warrant,  the Holder  shall have the right to  receive,  for each  Warrant
      Share  that  would  have been  issuable  upon such  exercise  absent  such
      Fundamental Transaction, at the option of the Holder, (a) upon exercise of
      this  Warrant,  the number of shares of Common  Stock of the  successor or
      acquiring   corporation  or  of  the  Company,  if  it  is  the  surviving
      corporation, and Alternate Consideration receivable upon or as a result of
      such   reorganization,    reclassification,   merger,   consolidation   or
      disposition  of assets by a Holder of the number of shares of Common Stock
      for which this Warrant is exercisable  immediately  prior to such event or
      (b) cash equal to the value of this Warrant as  determined  in  accordance
      with  the   Black-Scholes   option   pricing   formula   (the   "Alternate
      Consideration").  For purposes of any such exercise,  the determination of
      the  Exercise  Price  shall  be  appropriately  adjusted  to apply to such
      Alternate  Consideration  based on the amount of  Alternate  Consideration
      issuable  in  respect  of one  share of Common  Stock in such  Fundamental
      Transaction,  and the Company shall apportion the Exercise Price among the
      Alternate  Consideration  in a reasonable  manner  reflecting the relative
      value of any  different  components  of the  Alternate  Consideration.  If
      holders of Common Stock are given any choice as to the securities, cash or
      property  to be  received in a  Fundamental  Transaction,  then the Holder
      shall be given  the  same  choice  as to the  Alternate  Consideration  it
      receives  upon any exercise of this  Warrant  following  such  Fundamental
      Transaction.   To  the  extent   necessary  to  effectuate  the  foregoing
      provisions,  any  successor  to the  Company or  surviving  entity in such
      Fundamental Transaction shall issue to the Holder a new warrant consistent
      with  the  foregoing  provisions  and  evidencing  the  Holder's  right to


                                       10
<PAGE>


      exercise  such  warrant  into  Alternate  Consideration.  The terms of any
      agreement  pursuant to which a Fundamental  Transaction  is effected shall
      include terms  requiring any such successor or surviving  entity to comply
      with the  provisions of this  paragraph (f) and insuring that this Warrant
      (or any such  replacement  security)  will be similarly  adjusted upon any
      subsequent transaction analogous to a Fundamental Transaction.

            g)    Exempt   Issuance.    Notwithstanding   the   foregoing,    no
      adjustments,  Alternate  Consideration  nor notices shall be made, paid or
      issued under this Section 3 in respect of an Exempt Issuance.

            h)    Voluntary  Adjustment By Company.  The Company may at any time
      during the term of this Warrant reduce the then current  Exercise Price to
      any amount and for any period of time deemed  appropriate  by the Board of
      Directors of the Company.

      Section 4. Transfer of Warrant.

            a)    Transferability.  Subject to  compliance  with any  applicable
      securities  laws and the  conditions  set forth in Sections  5(a) and 4(d)
      hereof and to the  provisions  of Section 4.1 of the  Purchase  Agreement,
      this Warrant and all rights  hereunder  are  transferable,  in whole or in
      part,  upon  surrender  of this  Warrant  at the  principal  office of the
      Company,  together with a written assignment of this Warrant substantially
      in the form  attached  hereto duly  executed by the Holder or its agent or
      attorney and funds  sufficient to pay any transfer  taxes payable upon the
      making of such  transfer.  Upon such  surrender  and,  if  required,  such
      payment,  the Company  shall execute and deliver a new Warrant or Warrants
      in the  name of the  assignee  or  assignees  and in the  denomination  or
      denominations specified in such instrument of assignment,  and shall issue
      to the assignor a new Warrant  evidencing  the portion of this Warrant not
      so assigned,  and this Warrant shall promptly be cancelled.  A Warrant, if
      properly  assigned,  may be  exercised by a new holder for the purchase of
      Warrant Shares without having a new Warrant issued.

            b)    New  Warrants.  This  Warrant may be divided or combined  with
      other  Warrants upon  presentation  hereof at the aforesaid  office of the
      Company,   together  with  a  written  notice  specifying  the  names  and
      denominations in which new Warrants are to be issued, signed by the Holder
      or its agent or attorney.  Subject to compliance  with Section 4(a), as to
      any transfer  which may be involved in such division or  combination,  the
      Company  shall  execute  and deliver a new Warrant or Warrants in exchange
      for the Warrant or Warrants to be divided or combined in  accordance  with
      such notice.

            c)    Warrant  Register.  The Company  shall  register this Warrant,
      upon  records  to be  maintained  by the  Company  for that  purpose  (the
      "Warrant Register"),  in the name of the record Holder hereof from time to
      time. The Company may deem and treat the registered Holder of this Warrant
      as the absolute owner hereof for the purpose of any exercise hereof or any
      distribution  to the Holder,  and for all other  purposes,  absent  actual
      notice to the contrary.


                                       11
<PAGE>


            d)    Transfer  Restrictions.  If, at the time of the  surrender  of
      this Warrant in connection with any transfer of this Warrant, the transfer
      of  this  Warrant  shall  not  be  registered  pursuant  to  an  effective
      registration statement under the Securities Act and under applicable state
      securities  or blue sky laws,  the Company may require,  as a condition of
      allowing  such transfer (i) that the Holder or transferee of this Warrant,
      as the case may be,  furnish to the  Company a written  opinion of counsel
      (which  opinion  shall be in  form,  substance  and  scope  customary  for
      opinions of counsel in  comparable  transactions)  to the effect that such
      transfer may be made without  registration  under the  Securities  Act and
      under  applicable  state securities or blue sky laws, (ii) that the holder
      or transferee  execute and deliver to the Company an investment  letter in
      form and substance acceptable to the Company and (iii) that the transferee
      be an "accredited investor" as defined in Rule 501(a)(1),  (a)(2), (a)(3),
      (a)(7),  or (a)(8)  promulgated  under the  Securities  Act or a qualified
      institutional buyer as defined in Rule 144A(a) under the Securities Act.

      Section 5. Miscellaneous.

            a)    Title to Warrant. Prior to the Termination Date and subject to
      compliance  with  applicable  laws and  Section  4 of this  Warrant,  this
      Warrant and all rights hereunder are transferable, in whole or in part, at
      the  office or agency of the  Company  by the  Holder in person or by duly
      authorized  attorney,  upon  surrender of this Warrant  together  with the
      Assignment Form annexed hereto  properly  endorsed.  The transferee  shall
      sign an investment letter in form and substance reasonably satisfactory to
      the Company.

            b)    No Rights as Shareholder Until Exercise. This Warrant does not
      entitle the Holder to any voting  rights or other rights as a  shareholder
      of the Company  prior to the exercise  hereof.  Upon the surrender of this
      Warrant and the payment of the aggregate  Exercise Price (or by means of a
      cashless exercise), the Warrant Shares so purchased shall be and be deemed
      to be issued to such  Holder as the record  owner of such shares as of the
      close of business on the later of the date of such surrender or payment.

            c)    Loss, Theft, Destruction or Mutilation of Warrant. The Company
      covenants  that  upon  receipt  by  the  Company  of  evidence  reasonably
      satisfactory to it of the loss,  theft,  destruction or mutilation of this
      Warrant or any stock  certificate  relating to the Warrant Shares,  and in
      case of loss,  theft or destruction,  of indemnity or security  reasonably
      satisfactory to it (which,  in the case of the Warrant,  shall not include
      the posting of any bond),  and upon  surrender  and  cancellation  of such
      Warrant or stock  certificate,  if  mutilated,  the Company  will make and
      deliver a new Warrant or stock  certificate  of like tenor and dated as of
      such cancellation, in lieu of such Warrant or stock certificate.

            d)    Saturdays,  Sundays,  Holidays,  etc. If the last or appointed
      day for the taking of any action or the  expiration of any right  required
      or granted  herein shall be a Saturday,  Sunday or a legal  holiday,  then
      such  action  may be  taken or such  right  may be  exercised  on the next
      succeeding day not a Saturday, Sunday or legal holiday.


                                       12
<PAGE>


            e)    Authorized Shares.

                  The  Company  covenants  that during the period the Warrant is
            outstanding, it will reserve from its authorized and unissued Common
            Stock a  sufficient  number of shares to provide for the issuance of
            the Warrant  Shares upon the exercise of any  purchase  rights under
            this Warrant.  The Company  further  covenants  that its issuance of
            this Warrant shall constitute full authority to its officers who are
            charged with the duty of executing stock certificates to execute and
            issue the  necessary  certificates  for the Warrant  Shares upon the
            exercise of the purchase rights under this Warrant. The Company will
            take all such  reasonable  action as may be necessary to assure that
            such  Warrant  Shares  may be  issued  as  provided  herein  without
            violation  of  any  applicable   law  or   regulation,   or  of  any
            requirements  of the Trading  Market upon which the Common Stock may
            be listed.

                  Except  and to the  extent as waived  or  consented  to by the
            Holder,  the  Company  shall not by any action,  including,  without
            limitation, amending its certificate of incorporation or through any
            reorganization,   transfer   of   assets,   consolidation,   merger,
            dissolution,  issue or sale of  securities  or any  other  voluntary
            action,  avoid or seek to avoid the observance or performance of any
            of the terms of this  Warrant,  but will at all times in good  faith
            assist in the  carrying  out of all such  terms and in the taking of
            all such actions as may be necessary or  appropriate  to protect the
            rights of Holder as set forth in this  Warrant  against  impairment.
            Without  limiting the generality of the foregoing,  the Company will
            (a) not  increase  the par  value of any  Warrant  Shares  above the
            amount payable therefor upon such exercise immediately prior to such
            increase in par value,  (b) take all such action as may be necessary
            or  appropriate  in order that the  Company  may validly and legally
            issue fully paid and nonassessable  Warrant Shares upon the exercise
            of this  Warrant,  and (c) use  commercially  reasonable  efforts to
            obtain all such  authorizations,  exemptions  or  consents  from any
            public  regulatory  body  having  jurisdiction  thereof  as  may  be
            necessary  to enable the  Company to perform its  obligations  under
            this Warrant.

                  Before  taking any action which would result in an  adjustment
            in  the  number  of  Warrant   Shares  for  which  this  Warrant  is
            exercisable or in the Exercise  Price,  the Company shall obtain all
            such  authorizations or exemptions  thereof, or consents thereto, as
            may be necessary  from any public  regulatory  body or bodies having
            jurisdiction thereof.

            f)    Jurisdiction.   All  questions  concerning  the  construction,
      validity,   enforcement  and  interpretation  of  this  Warrant  shall  be
      determined in accordance with the provisions of the Purchase Agreement.

            g)    Restrictions.  The Holder acknowledges that the Warrant Shares
      acquired upon the exercise of this Warrant,  if not registered,  will have
      restrictions upon resale imposed by state and federal securities laws.


                                       13
<PAGE>


            h)    Nonwaiver and  Expenses.  No course of dealing or any delay or
      failure  to  exercise  any right  hereunder  on the part of  Holder  shall
      operate as a waiver of such right or otherwise  prejudice Holder's rights,
      powers or  remedies,  notwithstanding  the fact that all rights  hereunder
      terminate on the Termination  Date. If the Company willfully and knowingly
      fails to comply with any provision of this  Warrant,  which results in any
      material  damages to the  Holder,  the  Company  shall pay to Holder  such
      amounts as shall be sufficient to cover any costs and expenses  including,
      but not  limited  to,  reasonable  attorneys'  fees,  including  those  of
      appellate  proceedings,  incurred by Holder in collecting  any amounts due
      pursuant  hereto or in otherwise  enforcing  any of its rights,  powers or
      remedies hereunder.

            i)    Notices.  Any notice,  request or other  document  required or
      permitted to be given or  delivered to the Holder by the Company  shall be
      delivered  in  accordance  with  the  notice  provisions  of the  Purchase
      Agreement.

            j)    Limitation of Liability.  No provision  hereof, in the absence
      of any  affirmative  action by Holder to exercise this Warrant or purchase
      Warrant Shares,  and no enumeration  herein of the rights or privileges of
      Holder,  shall give rise to any liability of Holder for the purchase price
      of any Common  Stock or as a  stockholder  of the  Company,  whether  such
      liability is asserted by the Company or by creditors of the Company.

            k)    Remedies.  Holder,  in addition to being  entitled to exercise
      all rights granted by law, including recovery of damages, will be entitled
      to specific  performance  of its rights  under this  Warrant.  The Company
      agrees that monetary  damages would not be adequate  compensation  for any
      loss  incurred  by  reason  of a breach  by it of the  provisions  of this
      Warrant and hereby  agrees to waive the defense in any action for specific
      performance that a remedy at law would be adequate.

            l)    Successors and Assigns. Subject to applicable securities laws,
      this Warrant and the rights and obligations  evidenced  hereby shall inure
      to the benefit of and be binding  upon the  successors  of the Company and
      the  successors  and permitted  assigns of Holder.  The provisions of this
      Warrant are  intended  to be for the  benefit of all Holders  from time to
      time of this Warrant and shall be enforceable by any such Holder or holder
      of Warrant Shares.

            m)    Amendment.  This  Warrant  may be  modified  or amended or the
      provisions  hereof waived with the written  consent of the Company and the
      Holder.

            n)    Severability.   Wherever  possible,  each  provision  of  this
      Warrant shall be  interpreted  in such manner as to be effective and valid
      under  applicable  law,  but if any  provision  of this  Warrant  shall be
      prohibited by or invalid under  applicable  law, such  provision  shall be
      ineffective  to the  extent of such  prohibition  or  invalidity,  without
      invalidating the remainder of such provisions or the remaining  provisions
      of this Warrant.

            o)    Headings.  The  headings  used  in  this  Warrant  are for the
      convenience of reference only and shall not, for any purpose,  be deemed a
      part of this Warrant.


                              ********************


                                       14
<PAGE>


      IN WITNESS WHEREOF,  the Company has caused this Warrant to be executed by
its officer thereunto duly authorized.


Dated:  October __, 2004

                                                 ON2 TECHNOLOGIES, INC.


                                                 By:____________________________
                                                    Name:
                                                    Title:






                                       15
<PAGE>


                               NOTICE OF EXERCISE

To:   ON2 Technologies, Inc.

            (1)   ______The  undersigned  hereby  elects  to  purchase  ________
Warrant  Shares of the  Company  pursuant to the terms of the  attached  Warrant
(only if exercised in full),  and tenders herewith payment of the exercise price
in full, together with all applicable transfer taxes, if any.

            (2)   ______Payment shall take the form of (check applicable box):

                  [ ]   in lawful money of the United States; or

                  [ ]   the  cancellation of such number of Warrant Shares as is
                        necessary,  in accordance  with the formula set forth in
                        subsection  2(c),  to exercise this Warrant with respect
                        to the  maximum  number of  Warrant  Shares  purchasable
                        pursuant to the cashless exercise procedure set forth in
                        subsection 2(c).

            (3)   ______Please issue a certificate or certificates  representing
said Warrant  Shares in the name of the  undersigned or in such other name as is
specified below:

                  _______________________________

The Warrant Shares shall be delivered to the following:
                  _______________________________

                  _______________________________

                  _______________________________

            (4)   Accredited   Investor.   The  undersigned  is  an  "accredited
investor" as defined in Regulation D  promulgated  under the  Securities  Act of
1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity:_______________________________________________________
Signature of Authorized Signatory of Investing Entity:__________________________
Name of Authorized Signatory:___________________________________________________
Title of Authorized Signatory:__________________________________________________
Date:___________________________________________________________________________




<PAGE>



                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)



      FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby
are hereby assigned to
_______________________________________________ whose address is
_______________________________________________________________.

_______________________________________________________________

                                           Dated:  ______________, _______


                  Holder's Signature:_____________________________

                  Holder's Address:_______________________________

                                   _______________________________


Signature Guaranteed:_____________________________________________


NOTE: The signature to this  Assignment Form must correspond with the name as it
appears on the face of the Warrant,  without  alteration or  enlargement  or any
change whatsoever,  and must be guaranteed by a bank or trust company.  Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.