EXHIBIT NO. 4.3

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 B COMMON STOCK PURCHASE WARRANT

                To Purchase __________ Shares of Common Stock of

                             ON2 TECHNOLOGIES, INC.

                  THIS SERIES B 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 five year
anniversary of 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

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         said Notice of 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 $0.76,  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  representing  to Holder that

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                    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

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                    number 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 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.

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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        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 the
portion of assets or evidences of indebtedness

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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

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            dividend,  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

                                       9
<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.

                                       10
<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.

                                       11
<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.

                                       12
<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.


                              ********************
<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:





<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.