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EXHIBIT 10.7

LEASE AGREEMENT

LEASE AGREEMENT, made this 26th day of September, 2002 between SITTERLY
ASSOCIATES II, LLC, a New York limited liability company with offices c/o Abele
Builders, Inc., 14 Corporate Drive, Clifton Park, New York 12065 (the
Landlord), and On2 Technologies, Inc., Inc., a Delaware corporation with an
office 58 Clifton Country Road, Suite 200, Clifton Park, New York 12065 (the
Tenant).

Recitals. This Lease Agreement (also sometimes called this Lease) is
made with reference to the following facts:

A.     Landlord currently owns a 2-story building containing ±51,200 square feet
located on a certain parcel of land at 21 Corporate Drive, Halfmoon, New York
(the Building). Such parcel of land and the Building are hereinafter
sometimes referred to collectively as the Property. A drawing of the
Building and Tenants space in the Building (exclusive of its share of common
area) is attached hereto as Exhibit A.

B.     The Landlord desires to rent to Tenant ±5,540 square feet of the Building
inclusive of Tenants proportionate share of common area (Leased Property or
Leased Premises), and the Tenant desires to lease the same, upon the terms
and conditions set forth herein.

NOW, THEREFORE, the Landlord and Tenant agree as follows:

1.     Leasing. The Landlord hereby leases to Tenant for a term of three (3) years
and three (3) months beginning on the Lease Commencement Date as defined in
Subparagraph 3(B) below, the Leased Property.

2.     Construction by Landlord and Tenant and Contingencies.

(A)  Construction by Landlord. The Landlord shall, at its own cost and
expense, remove the existing shelving in the storage room and construct a
partition wall in the storage room to create a new conference room and a new
server room. The new conference room shall have new carpet and vinyl base
installed from Landlords standard selection, 2 additional duplex outlets
installed and the existing door relocated. The new server room shall have one
new door installed, 4 additional duplex outlets installed and the existing
vinyl floor cleaned and waxed. The Landlord shall also patch and paint the
walls throughout the space, paint the doors and door frames, replace the carpet
and vinyl base in the private offices and open area with carpet and vinyl base
from Landlords standard selection, install the missing interior doors, install
2 power poles in the open area, install 12 additional duplex outlets and
relocate existing lights as necessary,

(B)  Construction by Tenant and Tenants Access During Construction. The
Tenant, its agents, employees and contractors at Tenants own cost and expense
may enter upon the Leased Premises at all reasonable times after the date
hereof for the purpose of installing improvements, fixtures and other
equipment, upon the express condition that prior to such entry,





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Tenant or Tenants contractors obtain and thereafter maintain comprehensive
general liability insurance including Landlord as an additional insured.

(C)  Intentionally Deleted.

(D)  Intentionally Deleted.

(E)  Contingencies. The obligations of Landlord and Tenant under this
Lease are contingent upon the completion, or waiver, of Landlord obtaining to
its sole satisfaction and discretion (a) all necessary governmental approvals
for leasing of space in the Building to Tenant and (b) the approval by
Landlords mortgagee of this Lease and a Subordination, Non-Disturbance and
Attornment Agreement reasonably agreeable to the Tenant. Each party will
cooperate with the other in pursuit of the satisfaction of these conditions.

3.     Lease Term.

(A)  Intentionally Deleted.

(B)  Lease Commencement Date. The commencement date for the lease term
(the Lease Commencement Date) shall be November 1, 2002, subject to the
satisfaction of the contingencies in Paragraph 2(E).

(C)  Intentionally Deleted.

(D)  Intentionally Deleted.

(E)  Intentionally Deleted.

(F)  Intentionally Deleted.

(G)  Duration of Term. The lease term shall expire three (3) years and
three (3) months from the Lease Commencement Date (the Initial Term or
Term).

4.     Rentals.

(A)  Definitions. The term Rent or Rents shall mean all Base Rents
(see subparagraph 4(B)), and all items denominated as Additional Rent
(hereinafter defined) pursuant to various provisions of this Lease.

(B)  Base Rent. The Tenant shall pay to the Landlord the annual Base Rent
of $13.00 per square foot during the Term, which is agreed to be annual Base
Rent of $72,020.00. Notwithstanding any provision of this Lease to the
contrary, no Base Rent shall be due from Tenant to Landlord for the first three
(3) months of the term.

Base Rent shall be computed on the basis of the actual square feet
encompassed within the Leased Premises (±4,699 sq. ft.) plus the square feet
representing the proportionate share of common area within the Building (±841
sq. ft.). Each payment of Base Rent is net to Landlord and to that end all
costs, expenses and obligations of every kind and nature whatsoever relating to

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the Leased Property which may arise during the term hereof (and extended term
if any) shall be paid by Tenant, unless otherwise specifically set forth
herein. Tenant shall pay the annual Base Rent in twelve (12) equal monthly
installments of $6,001.67 due on the 1st day of each calendar month during the
Term.

(C)  Place and Manner of Payment. All payments of Rent shall be made by
the Tenant to the Landlord without notice or demand. All Rents shall be
payable at the Landlords address as specified above, or at such other place as
Landlord may from time to time designate in writing. All Rent shall be payable
by Tenants check or, if requested by Landlord, by certified or bank cashiers
check or by wire transfer. Payment of Rent shall commence on the Lease
Commencement Date except for the first three (3) months of the term as herein
specifically provided in Subparagraph 4 (B). Rents for any partial month at
the beginning or end of the lease term shall be prorated, on a daily basis.
The extension of the time for payment of any installment of Rent, or the
acceptance by the Landlord of any payment of any installment of Rent, or the
acceptance by the Landlord of any payment other than of the kind or within the
time herein specified, shall not be deemed a waiver of Landlords right to
insist upon having all other payments of Rent made in the manner and at the
time herein specified. All Rent shall be paid to the Landlord without any
abatement, deduction or set-off of any kind or nature whatever, except as
herein specifically provided otherwise.

(D)  Late Charge. Tenant acknowledges that Landlord intends to utilize the
Rent payments to pay Landlords mortgage lender and fund Landlords tax and
insurance escrow and that any delay by Tenant in making its Rent payments may
cause the Landlord to incur late payment penalties and additional charges under
the terms of its mortgage loan. Accordingly, Tenant shall pay Landlord a late
charge of five (5%) percent of any payment of Base Rent or Additional Rent not
received by Landlord within five (5) days of its due date.

5.     Operating Expenses and Other Charges.

(A)  Intentionally deleted.

(B)  Intentionally deleted.

(C)  Intentionally deleted.

(D)  Intentionally deleted.

6.     Tenants Operating Expenses. At such time, if any, as Landlord determines
to separately meter utilities, Tenant shall arrange for all utility meters for
the Leased Premises to be placed in its name for its account. Prior thereto,
Tenant shall pay its pro-rata share of electrical and other utility usage,
based upon the square footage of the Leased Premises divided by the square
footage of the Building, provided that all other tenants in the Building
operate similar businesses in terms of utility usage. Otherwise Landlord and
Tenant shall determine a mutually acceptable usage share for Tenant to pay.
The Tenant shall be solely and separately responsible for payment of all
separately metered electrical, gas and heating oil charges, and Tenant shall
also be responsible for janitorial services for the Leased Premises. Normal
office trash only shall be placed in the dumpster provided by Landlord. Large
packaging and similar materials shall be Tenants

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obligation to remove and shall not be placed in the dumpster. Tenant shall
maintain the thermostat setting in the Leased Premises at a minimum
of 55E to
prevent water lines located inside the Building from freezing and to prevent
other temperature related damages.

7.     All Sums Denominated Additional Rent. All charges, costs and expenses which
the Tenant is required to pay or reimburse the Landlord (in whole or in part)
under this Lease, together with all interest and penalties that may accrue
thereon, and all damages, costs and expenses which Landlord may incur by reason
of any default or other failure on Tenants part to comply with the terms of
this Lease, shall be deemed to be Additional Rent and, in the event of
non-payment by Tenant, Landlord shall have all the rights and remedies with
respect thereto as the Landlord has for the non-payment of base rent. Landlord
represents and warrants that the HVAC and electrical services for the Leased
Premises are in good working order and that to the best of Landlords
knowledge, the Building is in compliance with the New York State Uniform Fire
Protection and Building Code.

8.     Tenants Acceptance of Property. Tenant has inspected and shall accept the
Leased Premises in as is condition as of the date of this Lease, excepting,
however, latent defects.

9.     Access To and Use of Leased Property.

(A)  Permitted Use. The Tenant shall use the Leased Property for office
purposes only.

(B)  Hours of Access. Tenant shall have free access to the Building 24
hours per day, 7 days per week, 365 days per year.

10.     Certain Prohibitions.

(A)  Prohibited Uses. Tenant shall not use or occupy, and shall not permit
or suffer the Leased Property or any part thereof to be used or occupied, for
any business, use or purpose which in any manner:

(1) is in violation of any present or future laws, rules, regulations or
ordinances, applicable to Tenant or to the Leased Property;

(2) would violate the Certificate of Occupancy affecting the Leased
Property;

(3) would make void or voidable any insurance then in force with respect
to the Leased Property or which will make it impossible to obtain fire or any
other insurance on the Leased Property;

(4) would be likely to cause structural damage to the Building or any part
thereof; or

(5) would constitute a public or private nuisance.

The Tenant shall promptly after the discovery of any such prohibited use
take all necessary steps to discontinue such use or compel its discontinuance.

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(B)  Obstructions. Tenant shall not obstruct or encumber the common areas,
or stairways adjacent hereto, nor shall Tenant use such places for any purposes
other than ingress and egress and loading and unloading of materials to and
from the Leased Property.

(C)  Floor Load. Tenant shall not place, or permit any Subtenant to place,
a load upon any floor of the Leased Property which exceeds the load of 100
pounds per square foot live load.

11.     Services Provided by Landlord. Landlord shall provide to the Leased
Property and the
Common Area on a twenty-four (24) hour per day, seven (7) day a week basis
elevator service, heating, ventilation, air-conditioning, electricity, water
and sewage service for the use of Tenant. Tenant shall, at its sole cost and
expense, pay or cause to be paid all charges (including any deposits) for
telephone or other services or utilities furnished to the Premises.

12.     Quiet Enjoyment. The Tenant, upon payment of all rents reserved and upon
the performance of all the terms and conditions of this Lease, shall, during
the lease term and any extended terms, peacefully and quietly enjoy the Leased
Property without any disturbance from Landlord or from any other person
claiming from or through Landlord.

13.     Rights of Mortgagee. Landlord shall cause the mortgage(s) or other lending
documents to provide that the lender shall not have any right to terminate this
Lease, provided that the Tenant is not in default beyond any applicable notice
and cure period under the terms of this Lease and enters into an attornment
agreement satisfactory to such lender. Landlord shall obtain from each current
mortgagee a Subordination, Non-Disturbance and Attornment Agreement reasonably
agreeable to the Tenant.

14.     Repairs and Maintenance. The Tenant shall during the term of this Lease
(and any renewals or extensions thereof), at Tenants sole cost and expense, maintain,
repair and keep the Leased Property in as good condition as it was at the date
of commencement of this Lease, reasonable use, wear and tear excepted. It is
recognized by both Landlord and Tenant that the roof previously leaked and
Landlord has previously repaired the roof and the Landlord agrees to further
maintain in good order and repair the roof, roof covering, exterior walls,
plumbing, electrical, HVAC, and other major building systems and other
structural components of the Building, and to repair the Tenants rentable
space as necessary, at the sole expense of Landlord, to the reasonable
satisfaction of Tenant, if the need for repair to Tenants rentable space is
due to Landlords failure to maintain the roof or other structural components
of the Building. Landlord further agrees to maintain and repair the common
areas of the Building in a first class condition at the sole expense of
Landlord.

15.     Compliance With Laws and Regulations.

(A)  Tenant, at Tenants sole cost and expense, shall comply with all laws,
orders, rules and regulations of any governmental unit and with any direction
of any public officer, which shall impose any duties or obligations concerning
Tenants use or occupancy of the Leased Property, including but not limited to
all environmental laws, rules and regulations relating to the generation,
storage and disposal of waste which are applicable to Tenants use of the
Leased Property. The Tenant, at its sole expense, shall obtain all licenses or
permits which may be

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required for the conduct of its business within the Leased Property, or for the
making of repairs, permitted alterations or improvements, or additions.
Landlord, where necessary and at Tenants sole cost and expense, agrees to join
with Tenant in applying for all such licenses or permits.

(B)  The Tenant shall comply with any and all requirements of all policies
of fire, public liability and other types of insurance at any time in force
with respect to the Leased Property issued by the Board of Fire Underwriters,
or by any other body exercising similar functions.

(C)  Tenant shall promptly give notice to the Landlord of any notice of
violation received by Tenant. Without diminishing any obligation of the
Tenant, if Tenant shall at any time fail to pay any fine and/or correct with
reasonable promptness any such notice of violation, Landlord, after ten (10)
days prior written notice to the Tenant, may pay such fine and/or correct such
violation and the amount of such fine and the reasonable costs and expenses of
Landlord in correcting such violation shall be paid by the Tenant. All such
payments, costs and expenses shall be deemed Additional Rent.

(D)  Tenant shall have the right to contest by appropriate legal action or
proceeding in the name of the Tenant or Landlord or both, the validity or
application of any such law, and Landlord shall cooperate with Tenant and will
execute and deliver any appropriate papers which may be necessary to permit
Tenant to contest the validity or application thereof, provided that Tenant
shall be solely responsible for all legal work and other professional costs and
expenses incurred in connection therewith.

16.     Surrender. At the expiration of the lease term, Tenant shall surrender the
Leased Property in as good condition as it was at the beginning of the term,
reasonable use, wear and tear and damage by casualty or condemnation which
results in termination of the lease excepted. The Tenant shall surrender the
Leased Property broom clean, and shall remove any furniture, furnishings,
fixtures, and equipment which were contained in or installed by Tenant upon the
Leased Property. In the event any such removal causes damage to the Buildings
components, Tenant shall promptly correct the same by restoration to the
condition that existed prior to installation of any such property. Any of
Tenants property not removed within thirty (30) days after the expiration of
the lease term shall, at the option of Landlord, become the property of
Landlord. In removing such property after expiration of the lease term, Tenant
shall not interfere with use of the Leased Property by any replacement tenant.

17.     Alterations and Improvements.

(A)  Landlords Consent. Tenant shall have the right to make changes and
non-structural alterations, additions or improvements in or to the Leased
Property so long as the same do not affect the electrical or mechanical systems
of the Building. Tenant shall not make, or cause or permit the making of, any
structural alterations, additions or improvements, (or otherwise affect the
electrical or mechanical systems) including demolition and rebuilding in or to
the Leased Property without obtaining Landlords prior written consent thereto
in each instance. Plans and Specifications showing the proposed structural
alterations, additions and improvements shall be submitted to Landlord for
approval as part of the application for Landlords consent. Landlords consent
shall not be unreasonably withheld

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(B)  Compliance with Laws. In making, or causing to be made, any
alteration, addition or improvement, Tenant shall comply with all applicable
laws, regulations, ordinances and orders and shall at its sole cost and expense
procure all requisite governmental approvals, authorizations and permits.
Landlord will, on written request from Tenant, execute any documents necessary
to be signed on its part to obtain any such permits.

(C)  Performance of the Work. All alterations, additions and improvements
made by Tenant shall be made in a good and workmanlike manner and shall be
completed promptly. At all times when any such work is in progress, Tenant
shall maintain or cause to be maintained adequate Workers Compensation
insurance covering all persons employed in connection with the work, and
comprehensive general public liability insurance for the mutual benefit of
Landlord and Tenant for the purposes and in the amounts as Landlord may



reasonably require.

(D)  Permits. No alteration or improvement shall be undertaken until the
Tenant has procured and paid for all required permits and authorizations from
the appropriate governmental unit(s).

(E)  Improvements Become Landlords Property. As to any alteration or
improvement which Landlord does not require to be removed by Tenant at the
expiration of the lease term, (Landlord shall notify Tenant of any obligation
to so remove in writing no later than 120 days prior to the expiration of the
term) the components of such alteration or improvement shall become the
absolute property of Landlord at the expiration of the lease without payment of
any consideration herefore unless such alteration or improvement is readily
portable and Tenant desires to remove same, in which case Tenant may do so.
Tenant shall have the option to remove any improvements and restore the Leased
Property to its original condition at Tenants sole cost, provided such removal
is completed in the time and manner required under Paragraph 16.

(F)  Additional Conditions to Alterations. Before making final payment
with respect to any permitted work, the Tenant shall deliver to Landlord
written waivers of lien by any architect, engineer, contractor, materialman,
laborer or other persons supplying materials or labor in connection with the
improvement or alteration whereby such person waives any lien upon or against
the Leased Property, or the Building, or the interest of the Landlord therein.

(G)  Removal of Liens. Tenant shall not permit any mechanics lien or
other similar lien to be filed against the Leased Property or the Building or
against the Landlords interest in the same by reason of any work, labor,
services or material supplied for any alteration or improvement or other work
performed by or on behalf of Tenant in connection with the Building or the
Leased Property. If any such lien shall at any time be filed against the
Leased Property, Tenant shall, within thirty (30) days after written notice
from Landlord, cause such lien to be discharged of record, by payment, deposit,
bond or court order. If Tenant fails to discharge such lien within such thirty
(30) day period, then, in addition to (and not in lieu of) any other right or
remedy of the Landlord, the Landlord may, but shall not be obligated to,
discharge such lien either by payment, deposit, bond, court order or otherwise.
In such event, Landlord shall be entitled to be reimbursed by Tenant for any
payment made to satisfy or discharge such lien (including, without limitation,
legal costs and expenses and bond premiums) together with interest thereon at
the prime rate of Key Bank of New York plus three percent (3%) per annum,

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computed as to each item from the date of payment by Landlord. All such sums
shall be construed as additional rent. Nothing in this paragraph shall be
construed in any way as constituting the consent or request of the Landlord,
express or implied, by inference or otherwise, to any contractor,
subcontractor, laborer or materialman for the performance of any labor or the
furnishing of any materials for any specific improvement, alteration, or repair
of or to the Leased Property, or as giving the Tenant the right, power or
authority to contract for or permit the rendering of any service for the
furnishing of any material without the Landlords prior written consent as
provided above.

18.     Landlord Rights Upon Tenants Default.

(A)  Definition of Default. A default is defined as follows:

(1) If an action or proceeding is commenced by or against the Tenant under
the federal bankruptcy laws or any other federal or state insolvency laws, and
the same is not discharged within sixty (60) days after commencement.

(2) If any trustee, receiver, or committee for the benefit of creditors is
appointed for Tenant or Tenants property and the same is not discharged within
sixty (60) days after appointment.

(3) If Tenant fails to pay any Rent and such failure is not cured within
ten (10) days after written notice of default.

(4) If this Lease is assigned or the Leased Property or any portion
thereof is sublet, other than in accordance with the terms and conditions of
this Lease Agreement and such default is not cured within thirty (30) days
after written notice.

(5) If Tenant ceases to conduct business in the Leased Property or allows
same to become vacant for more than thirty (30) consecutive days.

(6) If Tenant fails to maintain the insurance policy and coverage(s)
required herein.

(7) Intentionally Deleted.

(8) If Tenant defaults in the performance of any other term of provision
of this Lease and such default is not cured within thirty (30) days after
written notice of default. If it is not reasonably possible to completely cure
any such default within such thirty (30) day period, a default shall be deemed
to exist if Tenant fails to commence a cure within thirty (30) days or fails to
diligently prosecute such cure after timely commencement. If such default by
Tenant also constitutes an event of default by Landlord under any mortgage
affecting the Building, and such mortgage contains shorter cure periods, the
shorter time periods shall control.

(B)  Tenants Responsibilities on Default. In the event of any default by
Tenant, re-entry by Landlord, expiration or termination of this Lease or
dispossess by summary proceeding or otherwise, Tenant shall be responsible for
the following:

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(1) Rent up to the time of such re-entry, dispossess, expiration or
termination of this Lease.

(2) The Present Value of Rent for the balance of the full term, all of
which may, at Landlords option, be accelerated by Landlord and made due and
payable as of the date of re-entry by Landlord, termination of this Lease or
entry of a judgment of possession, whichever date first occurs. If Landlord
exercises such option, the Present Value (hereinafter defined) of all such sums
shall become immediately due and payable as of the date on which Landlord
notifies Tenant of Landlords exercises of its option to accelerate as
hereinabove provided, together with all sums past due. As used herein, the
term Present Value means the present value of all sums due under the terms
hereof after the date of re-entry by Landlord, termination of this Lease or
entry of a judgment by possession, whichever date first occurs, discounted at
the rate of eight (8%) percent per annum.

(3) The payment of all reasonable sums incurred by Landlord in putting the
Premises in good order or preparing the same for re-rental, including brokerage
and advertising;

(4) Reasonable attorneys fees and expenses resulting from Landlord
enforcing any of the remedies described below, or in the enforcement of this
Lease or in defending any claim brought against Lessor by Lessee against which
Lessor successfully defends; and

(C)  Landlords Remedies on Default. Upon the occurrence of any default,
Landlord shall have the right to declare the lease term to have come to an end,
and the Landlord shall have the following rights and remedies, in addition to
(and not in lieu of any other rights or remedies Landlord may have at law):

(1) Re-Entry. To reenter or repossess the Leased Property, either by
force, eviction proceedings, summary proceedings, surrender or otherwise, and
to dispossess and remove the Tenant and other occupants, and their property and
effects.

(2) Injunctive Relief. Landlord shall be entitled to enjoin breach by the
Tenant of any of the terms and conditions in this Lease and in such event shall
also be entitled to a preliminary injunction, temporary restraining order, or
similar provisional relief.

(3) Damages. Landlord may seek monetary damages in any re-entry action or
summary proceeding, or commence a separate action or special proceeding against
Tenant and any other responsible parties, to recover monetary damages accruing
by reason of any default, together with interest, plus all reasonable
attorneys fees, disbursements, court costs and other reasonable expenses
incurred in connection therewith. Monetary damages shall include, without
limitation, Base Rent and all Additional Rent due at the time proceedings are
commenced, rent shortages accruing thereafter as set forth in subparagraph (D)
below, plus all costs associated with any reletting of the Leased Property.
Landlord is under no obligation to mitigate its damages.

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(4) Remedies Not Exclusive. Mention in this Lease of any particular
remedy shall not preclude Landlord from any other reasonable remedy, at law or
in equity, it being agreed that the rights and remedies of Landlord are
cumulative.

(D)  Reletting. Landlord may attempt to re-let the Leased Property, for a
term or terms which may, at Landlords option, be less than or exceed the
period which would otherwise have constituted the balance of the term of this
Lease. The Landlord may grant concessions in connection with such re-letting.
Tenant shall also pay Landlord, as liquidated damages, the deficiency between
the rents and additional rents reserved under this Lease and the rents
collected or to be collected on account of the lease or leases of the Leased
Property for the remaining period which would otherwise have constituted the
balance of the term of this Lease. In computing such damages there shall be
added to the deficiency such expenses as Landlord may reasonably incur in
connection with re-letting. Any such damages shall be paid from time to time
upon demand after transmittal by Landlord of its calculations of the amount
then due. Landlord, at Landlords option may make such alterations, repairs,
replacements and/or decorations in the Leased Property as Landlord, in
Landlords sole judgment, considers advisable and necessary for the purpose of
re-letting the Leased Property.

(E)  Waiver of Redemption. Tenant hereby expressly waives any statutory
notice of intention to re-enter or of institution of legal proceedings for
purposes of re-entry. Tenant further waives any and all rights to redeem under
Section 761 of the New York Real Property actions and Proceedings Law, and
under any other present or future law creating any right of redemption or
similar rights in favor of tenants.

19.     Aggrieved Partys Right to Perform Others Obligations.

(A)  Right to Cure. If either party defaults, and the default is not
timely cured, after notice, the other party shall have the option to cure such
default on the others behalf, in which event such defaulting party shall
reimburse the aggrieved party for all sums paid to effect such cure, plus
interest at a rate equal to the highest prevailing prime rate charged by Key
Bank of New York plus three percent (3%), calculated from the date of such
payment, together with all reasonable professional fees, costs, and other
expenses incurred in connection therewith. If payable by Tenant, all such sums
shall be deemed additional rent hereunder.

(B)  Notice to Landlord. Landlord shall in no event be charged with
default in any of its obligations hereunder unless and until Landlord shall
have failed to perform such obligations within thirty (30) days (or such
additional time as is reasonably required to correct any such default) after
written notice to Landlord by Tenant, specifically describing such failure. If
Landlord commences within such thirty (30) day period and proceeds with due
diligence to remedy a defect or to make any change required under this Lease,
it shall not be in default.

(C)  Notice to Mortgagee. If the holder of any mortgage covering the
Leased Property shall have given written notice to Tenant of the address to
which notices to such holder are to be sent, Tenant shall give such holder
written notice simultaneously with any notice given to Landlord of any default
of Landlord, and if Landlord fails to cure any default asserted in said notice
within the time provided above, Tenant shall notify such holder in writing of
the failure to

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cure, and said holder shall have thirty (30) days after receipt of such second
notice to cure such default before Tenant may take any action by reason of such
default.

(D)  Liability of Mortgagee. No mortgagee, or its nominee, shall become
liable under the provisions of this Lease unless and until such time as it
becomes, and then only for so long as it remains, the owner of the Landlords
interest in this Lease, and such liability shall be limited solely to such
mortgagees or nominees interest in the Property.

(E)  Liability of Landlord. Tenant shall look only to the Landlord for the
satisfaction of Tenants remedies for the collection of a judgement (or other
judicial process) regarding the payment of money by Landlord in the event of
any default by Landlord hereunder. The Landlords partners or principals
(disclosed or undisclosed) shall not be subject to levy, execution or other
enforcement procedure for the satisfaction of Tenants remedies under or with
respect to this Lease, the relationship of Tenant and Landlord or Tenants use
and occupancy of the Leased Property.

20.     Landlords Right of Access and Use.

(A)  Landlord and Landlords agents, employees, and representatives may
enter upon the Leased Property upon reasonable prior notice at all reasonable
times, to inspect it, to perform any work which Landlord elects or is required
to undertake, or to perform any work made necessary by reason of the Tenants
default under the Lease, and may also exhibit the Leased Property in connection
with efforts to sell, lease (within the last six (6) months of the Term), or
obtain financing for the Building, provided that such access does not
unreasonably interfere with Tenants use of the Leased Property. Landlords
right of entry shall not be deemed to impose upon Landlord any obligation or
liability for the care, supervision or repair of the Leased Property other than
expressly provided in this Lease.

(B)  Landlord shall provide Tenant with keys for all door locks providing
entry to the Building. Tenant shall provide Landlord with keys for all
interior lockable doors, providing access to or within the Leased Premises upon
request by Landlord. Tenant shall not change such locks without Landlords
written consent.

(C)  The making of any repairs which Landlord is required or permitted to
make under this Lease shall not constitute an eviction of Tenant in whole or in
part and the rent reserved shall in no way abate, while such repairs or

alterations are being made, but such repairs shall be made as expeditiously as
reasonably possible, and be conducted so as to minimize any unreasonable
interference with Tenants business.

21.     Condemnation, Damage and Destruction.

(A)  Restoration Time.

(1) Within fifteen (15) days from the date of any fire or casualty, the
Landlord shall obtain from any reputable A.I.A. architect, a certification
certifying in his/her opinion the time within which the Leased Property and the
reasonable access thereto can be restored and reconstructed under standard
building conditions (hereinafter called the Restoration
Time).

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Landlord shall deliver such certification to the Tenant, and in the event the
damages be so substantial the Leased Property cannot be restored within one
hundred twenty (120) days from the date of Landlords receipt of the insurance
proceeds, from such fire or casualty, based on the certified Restoration Time
hereinabove referred to, then, in that event, either the Landlord or the Tenant
shall have the right (a) within thirty (30) days after receipt of such notice
to advise the other that it elects to terminate the Lease; or (b) that it
requires Landlord to prosecute restoration of the Leased Property in the manner
hereinafter provided. In the event the Landlord or Tenant shall elect to
terminate the Lease, Tenant shall surrender the Leased Property forthwith
provided that it shall continue to pay pro rata net annual Base Rent and
additional rent for any portion of the Leased Property which it continues to
occupy and conduct business from pending such surrender of the Leased Property.

(2) Restoration. In the event this Lease is not terminated in accordance
with Section 21 (A) (1) above, the Landlord shall undertake to restore the
Leased Property substantially to the condition prior to the fire or casualty
subject to then applicable law, with reasonable speed and dispatch, and
Landlord shall diligently prosecute reconstruction in order to restore the
Leased Property for Tenants use as expeditiously as possible.

(3) Rent Abatement. To the extent the Leased Property is unusable for the
conduct of business by Tenant after the casualty, Tenants obligation to pay
rent shall abate and Landlord shall look to the rent insurance provided by
Tenant as required hereunder.

(B)  Condemnation or Taking. If there shall be a taking of all or a
material portion of the Leased Property or the reasonable access thereto by
federal, state, county, city or other authority for public use, or under any
statute, or by right of eminent domain (a Taking), then this Lease shall
terminate as of the date of the Taking and the rent shall be adjusted as of the
date of such termination of this Lease. A Taking of a material portion of the
Leased Property shall be deemed to mean a taking of such scope that the untaken
portion of the Leased Property is insufficient to permit the restoration of the
then existing improvements thereof so as to constitute a complete operating
facility of sufficient size to permit Tenant to conduct its business in
substantially the same manner as prior to the Taking.

(C)  Partial Taking. If there shall be a partial Taking of the Leased
Property which shall not result in a termination of this Lease as provided in
Section 21 (B), then Landlord shall, at its own cost and expense, restore the
remaining portion of the Leased Property within ninety (90) days from such
partial Taking and the rent shall be equitably apportioned according to the
space taken.

(D)  Awards. All compensation awarded or paid upon such a total or partial
Taking of the Leased Property shall belong to and be the property of the
Landlord without any participation by the Tenant; provided, however, that
Tenant shall not be precluded from prosecuting any claims directly against the
condemning authority for moving expenses or other awards specifically set aside
for tenants of the Building, including damages for the taking of the Tenants
leasehold interest, provided that Landlords award for damages in the Taking is
not reduced or diminished.

(E) 
No Obligation. Anything in this Paragraph 21 to the contrary
notwithstanding, it is expressly understood and agreed that Landlord shall not
be obligated, in its sole discretion, to

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repair or replace the Building, in the event that insurance or condemnation
proceeds are retained by the mortgagee of the first lien or such fire, casualty
or condemnation shall occur during the last year of the Initial Term or any
renewal term. In such event, at either Landlords or Tenants option this
Lease shall be terminated and deemed null and void and of no further force and
effect, and both parties shall be released of liability one to the other,
except as otherwise in the Lease provided. Landlord and Tenant agree to
execute at the request of the other a lease termination agreement in recordable
form to evidence the Lease termination.

22.     Tenants Insurance. Tenant shall carry Commercial General Liability
Insurance (1986 Form) written on an occurrence form for the duration of this
Lease. Such insurance shall cover the Leased Premises and the Tenants
contractual obligations as stipulated in this Lease. The Commercial General
Liability policy shall reflect the interests of the Landlord as an additional
insured.

Such insurance shall be provided in amounts not less than:

|                                              |  |                     |           | 
|--------------------------------------------- |  | ------------------- | --------- | 
|Coverage                                      |  | Limits of Liability
|                                              |  |                    
|General Aggregate Limit                       |  | $                   | 2,000,000 | 
|Products/Completed Operations Aggregate Limit |  | $                   | 2,000,000 | 
|Personal/Advertising Injury Occurrence Limit  |  | $                   | 2,000,000 | 
|Each Occurrence Limit                         |  | $                   | 2,000,000 | 
|Fire Damage (any one fire)                    |  | $                   | 300,000   | 
|Medical Expenses (any one person)             |  | $                   | 5,000     | 

Prior to occupying the Leased Premises, Tenant shall provide a Certificate
of Insurance to the Landlord evidencing coverages in compliance with the above
requirements. The Certificate of Insurance shall provide thirty (30) days
advance written notice (if reasonably available) to the Landlord in the event
of the cancellation, change and/or non-renewal of the coverages certified. The
Certificate of Insurance shall be renewed and filed with the Landlord annually
for the duration of this Lease. A copy of the Certificate of Insurance shall
be provided to Landlord upon thirty (30) days written notice.

23.     Intentionally Deleted.

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24.     Assignment and Subletting, Change in Control

(A)  In General. The Tenant may not, voluntarily or by operation of law,
assign, sublet, mortgage or encumber this Lease, for all or any portion of the
remainder of this term, or permit a change in control of Tenant or permit a
transfer of substantially all of the assets of Tenant without the express prior
written consent of the Landlord in each instance which consent shall not be
unreasonably delayed, conditioned or withheld. The Tenant shall remain
primarily liable for the rent reserved in this Lease Agreement and the
performance of all of its terms and conditions notwithstanding any such
assignment or subletting, or change in control or transfer of assets. The
collection or acceptance of any rent or additional rent by the Landlord shall
not be deemed a waiver of this covenant, or the acceptance of the assignee,
subtenant or occupant as a tenant, or release of the Tenant from the further
performance of the terms and conditions of this Lease. Landlords consent to
an assignment or sublease or change in control or transfer of assets shall not
be construed to relieve Tenant from obtaining Landlords written consent for
any further assignment or sublease. Change in control shall mean the transfer
of 51% or more of the voting stock of Tenant or any Guarantor after the date
hereof in one or more of a series of transactions, whether by sale of stock,
merger, liquidation, or other transfer, but there shall be no change in control
if the resulting entity has greater net worth than the Tenant previously had.

(B)  Instruments of Assignment. No assignment or subletting or change in
control of Tenant or transfer of assets of Tenant shall be valid or effective
until there is delivered to Landlord a duplicate original of the written
instrument of assignment or sublease containing the name and address of the
assignee or subtenant and an express assumption by the assignee or subtenant or
new principals of Tenant or new owner of the assets of Tenant of this Lease
Agreement and of all of the obligations under this Lease to be performed by the
Tenant.

(C)  Instruments of Subletting. Any sublease(s) consented to by Landlord
must provide that Tenant (as sublandlord) assigns all rents under the sublease
to Landlord and in the event of default by Tenant hereunder upon written notice
from Landlord all rents under such sublease(s) shall be paid by the subtenants
to Landlord.

25.     Subordination and Attornment.

(A)  Tenant recognizes that Landlord has financed all or part of the
construction costs of the Building through financing which is secured by
mortgages or similar encumbrances upon the land and the Building. In addition,
Landlord may obtain IDA financing involving the execution and delivery of
deed(s), leases, bond(s), mortgage(s) and an installment sale agreement. This
Lease Agreement shall be subject and subordinate to any lease, sale agreement
and mortgage(s) given to secure the financing and any other mortgage now or
hereafter constituting a lien upon the Leased Property, and to all additions,
increases, renewals, modifications, consolidations, replacements or extensions
thereof. Although no instrument or act on the part of the Tenant shall be
necessary to effectuate such subordination, the Tenant agrees to execute,
acknowledge and deliver such further commercially reasonable instruments
subordinating this Lease to such lease or sale agreement and mortgage.
However, Landlord agrees to cause the IDA sale agreement and mortgage, or any
other sale agreement or mortgage, and all other financing instruments to
provide that the Lender shall not have any right to

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terminate this Lease, so long as Tenant is not in default under this Lease
beyond any applicable notice and cure period.

(B)  In the event of the cancellation or termination of the sale agreement,
including any extensions or renewals, or in the event of the foreclosure of any
mortgage, the Tenant shall make full and complete attornment to the IDA and/or
other lender for the balance of the term of this Lease, upon the same covenants
and conditions as are contained herein, so as to establish direct privity of
estate and contract between the IDA and/or other lender and the Tenant with the
same force and effect as though this Lease Agreement were originally made
directly between them. The Tenant shall thereafter make all rent payments
directly to the IDA or to the other lender, as the case may be.

26.     Fees and Expenses. Should either party hereto commence an action against
the other to enforce any obligation under this Lease, the prevailing party
shall be entitled to recover reasonable attorneys fees and expenses from the
other.

27.     Indemnification.

(A)  Indemnification by Landlord. Landlord hereby agrees to indemnify,
defend and hold harmless Tenant, its successors, assigns, subsidiaries,
directors, officers, agents and employees from and against any and all damage,
loss, liability or expense including, but not limited to, reasonable attorneys
fees and legal costs, suffered by same directly or by reason of any claim, suit
or judgment brought by or in favor of any person or persons for damage, loss or
expense due to, but not limited to, bodily injury, including death arising at
any time therefrom, and property damage sustained by such person or persons
which arises out of, is occasioned by or attributable to the acts or omissions
of Landlord, its licensees, concessionaires, agents, employees or contractors
(Landlord Employees), or any breach or default in the performance of any
obligation on Landlords part to be performed under the terms of this Lease,
except to the extent caused by the negligence or the willful misconduct of
Tenant, its employees and agents. If any proceeding is brought against Tenant
by reason of any such claim, Landlord shall defend same at Landlords expense
by counsel satisfactory to Tenant.

(B)  Indemnification by Tenant. Tenant hereby agrees to indemnify, defend
and hold harmless Landlord, its successors, assigns, subsidiaries, directors,
officers, agents and employees from and against any and all damage, loss,
liability or expense including, but not limited to, reasonable attorneys fees
and legal costs, suffered by same directly or by reason of any claim, suit or
judgment brought by or in favor of any person or persons for damage, loss or
expense due to, but not limited to, bodily injury, including death arising at
any time therefrom, and property damage sustained by such person or persons
which arises out of, is occasioned by or attributable to the use or occupancy
of the Leased Premises by Tenant, the acts or omissions of Tenant, its
subtenants, licensees, concessionaires, agents, employees or contractors
(Tenant Employees), or any breach or default in the performance of any
obligation on Tenants part to be performed under the terms of this Lease,
except to the extent caused by the negligence or willful misconduct of
Landlord, its employees and agents. If any proceeding is brought against

Landlord by reason of any such claim, Tenant shall defend same at Tenants
expense by counsel satisfactory to Landlord.

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(C)  Survival. The foregoing indemnities shall survive the expiration of
the Term or any other termination of this Lease. Notwithstanding the
foregoing, Landlord and Tenant agree that neither party hereto is indemnifying
the other for the acts of third parties who are not Landlord Employees (for
whom Landlord shall bear responsibility) or Tenant Employees (for whom Tenant
shall bear responsibility). Each partys agreement to indemnify and hold the
other party harmless pursuant to the foregoing is not intended to and shall not
relieve any insurance carrier of its obligations under policies required to be
maintained under this Lease by Tenant or Landlord, with the indemnitor in each
such case having the right to the benefit of any available insurance proceeds
as a setoff and/or mitigation of any indemnity amounts paid.

(D)  Limitation of Liability. Neither party shall be liable to the other
party for special or consequential damages as a result of any breach of any
provision of this Lease or any negligent act or omission.

(E)  Subrogation. Upon either partys fully assuming and performing its
obligations as set forth in subparagraph (A) or subparagraph (B) hereof,
whichever is applicable, such party (the Indemnifying Party) shall be
subrogated to any rights of the other party (the Indemnified Party) against
any third parties. The Indemnified Party shall promptly notify the
Indemnifying Party of any claim asserted against the Indemnified Party on
account of any injury or claimed injury to persons or property and shall
promptly deliver to the Indemnifying Party the original or a true copy of any
summons or other process, pleading, or notice issued in any suit or other
proceeding to assert or enforce any such claim. The Indemnifying Party shall
have the duty to defend any such suit, to the extent of its indemnification as
set forth in subparagraph (A) or (B) above whichever is applicable, is
applicable thereto.

(F)  Insurance. The Indemnifying Partys obligation to indemnify the
Indemnified Party hereunder shall only apply to the extent any liability, loss
or expense incurred by the Indemnified Party (including reasonable attorneys
fees) is not covered by insurance maintained by Indemnified Party.

28.     Waiver of Subrogation. Without affecting any other rights or remedies,
each party to this Lease hereby releases and relieves the other party
(including such other partys officers, directors, agents, representatives,
employees, affiliated corporations, partners, managers, successors and assigns)
and waives its right to recover damages (whether in contract or tort) against
such other party (and such other partys officers, directors, agents,
representatives, employees, affiliated corporations, partners, managers,
successors and assigns), for any and all losses and damages to the waiving
party, or to any property of the waiving party, arising out of or incident to
any peril covered by insurance maintained by the waiving party as required by
the terms of this Lease, but only to the extent of such insurance. Each party
to this Lease agrees to cause its insurer(s) to include a waiver of subrogation
rights provision in the policies of insurance required to be maintained
pursuant to this Lease.

29.     Notices. Any notice, consent or request required or permitted under this
Lease Agreement shall be in writing and will be deemed sufficiently given if
delivered personally or sent by registered or certified mail, return receipt
requested, to the respective parties at the following addresses:

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| |                 |  |                                                                                                                           
| | --------------- |  | --------------------------------------------------------------------------------------------------------------------------
| | If to Landlord: |  | Sitterly Associates II, LLC
c/o Abele Builders, Inc.
14 Corporate Drive
Clifton Park, New York 12065
Attn: Edward P. Abele
| |                 |  |                                                                                                                           
| | If to Tenant:   |  | Anthony P
On2 Technologies, Inc.
21 Corporate Drive, Suite 10
Clifton Park, New York 12065                                

30.     Modification and Waivers.

(A)  No Oral Modifications or Discharge. This Lease Agreement may not be
discharged or terminated, nor may it be changed, modified or supplemented
orally, but only by a document in writing, signed by both Landlord and Tenant.

(B)  Modification at Request of Mortgage Lenders. If, in connection with
obtaining temporary or permanent financing for any portion of the Leased
Property, any lender shall request reasonable modifications of the Lease as a
condition to such financing, Tenant agrees that Tenant will not unreasonably
withhold, delay or defer the execution of a modification agreement, provided
such modifications do not increase the financial obligations of Tenant
hereunder or materially adversely affect the leasehold interest hereby created
or Tenants reasonable use and enjoyment of the Leased Property.

(C)  No Waiver by Implication; No Oral Waivers. The failure of either
party to seek redress for any default, or to insist upon the strict performance
of any covenant or condition of this Lease shall not constitute an implied
waiver, and shall not prevent any subsequent act or omission from having all
the force and effect of any original default. The receipt by Landlord of rent
or payment of rent by Tenant with knowledge of the breach of any covenant of
this Lease shall not be deemed a waiver of such breach. No provision of this
Lease shall be deemed to have been waived by either party, unless such waiver
be in writing signed by such party. No payment by Tenant or receipt by
Landlord of a lesser amount than the monthly rent herein stipulated shall be
deemed to be other than on account of the earliest stipulated rent, nor shall
any endorsement or statement on any check or any letter accompanying any check
or payment as rent be deemed an accord and satisfaction, and Landlord may
accept such check or payment without prejudice to Landlords right to recover
the balance of such rent or pursue any other remedy in this Lease provided.

31.     Security Deposit. The Tenant will deposit the sum of one (1) months Base
Rent contemporaneously with execution of this Lease, as security for the full
and faithful performance by the Tenant of all of the terms, covenants and
conditions of this Lease upon the Tenants part to be performed. Provided that
Tenant is not in default under any of the terms and provisions of this Lease,
the security deposit shall be returned to Tenant; otherwise, it shall be used
to restore the Leased Premises to the condition required by the terms of this
Lease or otherwise applied against Tenants obligations in the event of a
default.

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32.     Memorandum of Lease. This Lease Agreement shall not be recorded. Landlord
and Tenant shall, at the request of either party, execute and deliver a
memorandum of this Lease Agreement in proper form for recording, but the
memorandum shall not in any circumstances be deemed to modify or change any of
the provisions of this Lease Agreement, the provisions of which shall in all
instances prevail.

33.     Estoppel Certificates. Each party agrees at any time, and from time to
time, upon not less than fifteen (15) days prior notice by the other party, to
execute, acknowledge, and deliver to the other party, a statement in writing
certifying (or, if there have been modifications, that the same is in full
force and effect as modified and stating the modifications) stating the dates
to which the fixed base rent and additional rent have been paid, and stating
whether or not to the best knowledge of the signer, there exists any default
beyond any applicable notice and cure period by the other and, if so,
specifying each such default. It is the parties intent that any such statement
delivered pursuant hereto may be relied upon by the other party and by any
mortgagee or prospective mortgagee of any mortgage affecting the Building or
Tenants interest in this Lease, and by any subtenant or assignee.

34.     Environmental Matters. Insofar as they are applicable to Tenants use of
the Leased Premises, Tenant shall comply with all environmental laws, which
include all federal, state, local and municipal laws, statutes, ordinances,
rules, regulations, orders, decrees or requirements for regulating, relating
to, or imposing liability or standards of conduct concerning the use, storage,
treatment, transportation, manufacture, refinement, handling, production and
disposal of all waste generated on the Leased Property, hazardous materials
covered by any Environmental Law, or otherwise pertaining to environmental
protection, as now or at any time hereafter in effect, including, but not
limited to, the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. Section 9601; the Superfund Amendment and
Reauthorization Act of 1986, Public Law 99-499, 100 Stat. 1613; Toxic
Substances Control Act of 1976; the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901; the Occupational Safety and Health Act, 29 U.S.C. Section
655 and Section 657; the Clean Air Act, 42 U.S.C. Section 7401; the Clean Water
Act, 33 U.S.C. Section 1251; the New York State Environmental Quality Review
Act, New York State Environmental Conservation Law Section 8-1101; the New York
Environmental Conservation Law, together with all amendments thereto,
substitutions therefor, rules and regulations promulgated thereunder and all
amendments to and substitutions for the rules and regulations (the
aforementioned are called the Environmental Laws). Tenant shall defend,
indemnify and hold harmless the Landlord and the Landlords employees, agents,
partners, officers, directors and trustees from any and against any and all

claims, demands, penalties, fines, liabilities, settlements, damages, costs
and/or expenses of whatever kind or nature and/or any other environmental
clean-up of any kind or description, known or unknown, contingent or otherwise,
arising out of or in any way relating to any violation of any Environmental
Laws arising out of Tenants use of the Building and Leased Property and caused
by Tenant, its employees, contractors, invitees or such other persons under
Tenants control. Landlord represents to Tenant that to the best of Landlords
knowledge, as of the date hereof there are no material violations of any
environmental law or any of the above cited statutes. Notwithstanding the
foregoing, Tenant shall have the right to use and store at the Leased Property
in compliance with applicable laws reasonable quantities of office products and
cleaning supplies.

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35.     Construction and Miscellaneous.

(A)  Governing Law. This Lease shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York.

(B)  Grammatical Usage. In construing this Lease, feminine or neuter
pronouns shall be substituted for those masculine in form, and vice versa, and
plural terms shall be substituted for singular and singular for plural, in any
place in which the context so requires.

(C)  Terms Inclusive. The term Landlord and Tenant shall include the
parties named in this Lease, their legal successors in interest, and all
permitted subtenants or assigns.

(D)  Captions. Captions are inserted in the Lease only as a matter of
convenience and for reference and in no way define, limit or describe the scope
of intent of this Lease Agreement or in any way affect this Lease.

(E)  Severability. If any term or provision of this Lease shall, to any
extent, be declared to be invalid or unenforceable, the remainder of this Lease
shall not be affected thereby and the balance of the terms and provisions of
this Lease shall be valid and enforceable to the fullest extent permitted by
Law.

(F)  Counterparts. This Lease Agreement may be executed in several
counterparts, and any signed counterpart shall constitute a legal original for
all purposes. Any such counterparts may be introduced into evidence in any
action or proceeding without having to produce the others.

(G)  Consent. Whenever either partys consent or approval shall be
required herein, unless such consent or approval is expressed herein as being
in the sole or absolute discretion of such party, such consent or approval
shall not be unreasonably or arbitrarily withheld, conditioned or delayed, and
shall be deemed to have been given, unless within thirty (30) days of the other
partys request therefor, the party whose consent has been requested notifies
the other that it is denying such consent or approval, stating in such notice
the reasonable grounds therefor.

(H)  Intentionally deleted.

(I)  Force Majeure. If either party hereto shall be delayed or hindered in
or prevented from the performance of any act required hereunder by reason of
acts of God, governmental emergencies, strikes, lockouts, labor troubles,
inability to procure material, failure of power, restrictive governmental laws
or regulations, riots, insurrection, war or other reason of a like nature not
the fault of the party delayed in performing work or doing acts required under
this Lease, the period for the performance of any such act shall be extended
for a period equivalent to the period of such delay. Notwithstanding the
foregoing, the provisions of this Subparagraph shall at no time operate to
excuse Tenant from any obligations for payment of Rent, or any other payments
required by the terms of this Lease when the same are due, and all such amounts
shall be paid when due, except as otherwise expressly provided in this Lease.

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(J)  Further Action. The parties shall execute and deliver all documents,
provide all information and take or forbear from all such action as may be
necessary or appropriate to achieve the purpose of this Agreement.

(K)  Exclusive Agreement. This Lease Agreement constitutes the entire
agreement between the parties pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto. No
covenant, representation or condition not expressed in this Lease shall affect,
or be deemed to interpret, change or restrict the express provisions hereof.

(L)  Trial by Jury. It is mutually agreed between the Landlord and the
Tenant that each of them shall, and hereby does, waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties against the
other on any matters whatsoever arising out of, or in any way connected with,
this Lease, the Tenants use or occupancy of the Leased Property, and any claim
of injury or damage related to any of the same.

(M)  Amendment or Termination. Except as otherwise provided herein, this
Lease may be modified or amended only with the prior written approval of both
parties, and it may not be discharged or terminated except in writing.

(N)  Authorizations and Representations. Each party hereby severally
represents that it has been duly authorized to execute, deliver and perform
this Lease through its members, officers or agents signing on its behalf and
affixing any appropriate seal hereto.

(O)  Accord and Satisfaction. Landlord is entitled to accept, receive and
cash or deposit any payment made by Tenant for any reason or purpose or in any
amount whatsoever, and apply the same at Landlords option to any obligation of
Tenant and the same shall not constitute payment of any amount owed except that
to which Landlord has applied the same. No endorsement or statement on any
check or payment shall effect Landlords right to recover any and all amounts
owed by Tenant hereunder and Landlords right to pursue any other available
remedy.

(P)  Financing. If Landlord desires to obtain or refinance any mortgage
loan, Tenant shall negotiate in good faith with Landlord concerning any request
made by any lender or proposed lender for changes or modifications in this
Lease subject however to Subsection 30(B). In particular, Tenant shall agree,
upon request of Landlord, to supply any such Lender with such notices and
information as Tenant is required to give to Landlord hereunder and to extend
the rights of Landlord hereunder to any such lender and to consent to such
financing if such consent is requested by such lender. Tenant shall provide
any other consent or statement and shall execute any and all other commercially
reasonable documents that such lender reasonably requires in connection with
such financing, including any commercially reasonable subordination,
non-disturbance and attornment agreement, so long as the same do not adversely
affect any right, benefit or privilege of Tenant under this Lease except in any
non-material respect or materially increase Tenants obligations under this
Lease in any material respect or increase any of Tenants monetary obligations
under this Lease.

36.     Intentionally Deleted.

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IN WITNESS WHEREOF, the parties have executed this Lease Agreement as of
the date first above written.



| | SITTERLY ASSOCIATES II, LLC
| | ---------------------------



| | By: | /s/ Edward P. Abele
Edward P. Abele
| | --- | -----------------------------------



| | Its: General Partner of Sole Member
| | -----------------------------------



| | ON2 TECHNOLOGIES, INC.
| | ----------------------



| | By: | /s/ Mark Meagher
Mark Meagher
| | --- | -----------------------------



| | Its: Chief Financial Officer
| | ----------------------------

21