Document:

[LOGO] On2
TECHNOLOGIES

                                                          STOCK OPTION AGREEMENT

      THIS STOCK OPTION AGREEMENT (the "Agreement")  dated as of ______________,
is  entered  into  between  ___________[insert  name]  (the  "Grantee")  and On2
Technologies,  Inc., a Delaware corporation (the "Company").  The Company grants
to Grantee a non-qualified stock option (the "Option") to purchase ______ shares
(the "Option Shares") of common stock, par value $0.01 per share, of the Company
("Common  Stock"),  pursuant  to  the  Company's  On2  Technologies,  Inc.  2005
Incentive  Compensation  Plan (as such may be  amended  from  time to time,  the
"Plan").

1.    Basic Terms of Option.

      (a)   Type of Option.  For  federal  income tax  purposes,  this Option is
            intended to be treated as a [non-qualified] [qualified] Option.

      (b)   Term  of  Option.   The  Option  shall  expire  on  the  earlier  of
            _______________[Eight  years  from  Grant  Date or three (3)  months
            after   the   termination   of   Grantee's   [employment   with  the
            Company][director status].

      (c)   Purchase  Price.  The purchase price per Option Share (the "Purchase
            Price") shall be $_______ [Fill in closing price of stock on the day
            before the date of grant] . The  Purchase  Price shall be payable in
            cash or in shares of Common Stock, as permitted by the Plan.

      (d)   Vesting.  The Options shall vest and become  exercisable as follows:
            [____].   In  the  event   the   Grantee's   [employment   with  the
            Company][director  status]  shall  terminate  before  the Option has
            fully vested, the unvested portion of the Option shall automatically
            terminate on the date of such termination.

      (e)   Method of Exercise.  The Option shall be  exercisable in whole or in
            part at any time, or from time to time, in accordance with the terms
            hereof and of the Plan and in accordance with applicable federal and
            state laws and regulations. The Option, however, may not at any time
            be exercised with respect to a fractional  share.  The Grantee shall
            provide  written  notice of  exercise  of the Option to the  Company
            substantially in the form of Annex A hereto.
<PAGE>

2.    Definitions.

      Unless defined elsewhere in this Agreement,  the capitalized terms used in
      this Agreement shall have the meanings ascribed thereto in the Plan.

3.    Exercise of Option.

      (a)   The Option is  exercisable  upon the  presentation  and surrender of
            this  Agreement  and  written  notice  of  exercise  of  the  Option
            substantially in the form of Annex A hereto,  accompanied by payment
            of the Purchase  Price:  (i) in lawful money of the United States of
            America in cash or by check made  payable to the  Company or (ii) in
            shares of Common Stock in accordance with Section 3(b) hereof.

      (b)   In order to exercise in accordance with Section 3(a)(ii) and in lieu
            of any cash payment required thereunder,  Grantee may substitute for
            all or any portion of the cash  payment,  shares of the Common Stock
            owned by him duly endorsed for transfer having a Market Price on the
            date of exercise at least equal to the payment or portion thereof or
            Grantee may  exercise by means of a  so-called  "cashless  exercise"
            pursuant to which Common  Stock may be issued  directly to Grantee's
            designated  broker/dealer  upon receipt by the Company of the Option
            Price in cash from such broker/dealer.

      (c)   (i) As used herein,  the phrase "Market Price" of the Option Shares,
            at any date shall be deemed to be the last reported sale price,  or,
            in case no such  reported  sale takes place on such day, the average
            of the last  reported  sale  prices for the last  three (3)  trading
            days,  in  either  case  as  officially  reported  by the  principal
            securities  exchange  on which  the  Option  Shares  are  listed  or
            admitted  to  trading,  or, if the  Option  Shares are not listed or
            admitted to trading on any national securities exchange or quoted by
            the National  Association of Securities Dealers Automated  Quotation
            System ("Nasdaq"), the average closing bid price as furnished by the
            National  Association of Securities  Dealers,  Inc. ("NASD") through
            Nasdaq or similar organization if Nasdaq is no longer reporting such
            information.

            (ii)  If the Market Price of the Option  Shares cannot be determined
                  pursuant to Section  3(c)(i)  above,  the Market  Price of the
                  Option  Shares  shall  be  determined  in  good  faith  (using
                  customary  valuation  methods) by resolution of the members of
                  the  Board  of  Directors  of the  Company,  based on the best
                  information available to it.

      (d)   Rights as  Stockholder.  Grantee  shall not be,  nor have any of the
            rights or privileges  of, a stockholder of the Company in respect of
            any shares  purchasable  upon the exercise of any part of the Option
            unless and until certificates  representing such Option Shares shall
            have been issued by the Company in accordance with the terms hereof.

                                       2
<PAGE>

      (e)   Legend.  The Option Shares,  unless  registered under the Securities
            Act of 1933 (the "Act"), shall bear the following legend:

                  THE  SHARES  OF  STOCK  REPRESENTED  BY THIS
                  CERTIFICATE  HAVE NOT BEEN REGISTERED  UNDER
                  THE  SECURITIES ACT OF 1933, AS AMENDED (THE
                  "ACT"),  OR ANY STATE SECURITIES OR BLUE SKY
                  LAWS AND MAY NOT BE SOLD OR  TRANSFERRED  IN
                  THE  ABSENCE  OF  SUCH  REGISTRATION  OR  AN
                  EXEMPTION  THEREFROM  UNDER SAID ACT OR SAID
                  LAWS.

      (f)   Transfer of Option.  The Option is not  transferable  (other than by
            will or the laws of descent and  distribution) by the Grantee and is
            exercisable  only by the  Grantee  during  Grantee's  lifetime.  The
            Grantee  hereby  represents  and  warrants  that the Option  granted
            hereunder and the Option Shares purchased by him/her pursuant to the
            exercise  of all or any part of this Option are and will be acquired
            by him/her for  investment  only, and not with a view to public sale
            or distribution.  The Company is relying on this  representation  in
            granting this Option. Each provision of this paragraph is subject to
            the  condition  that in no event may the Option be  exercised  after
            eight (8) years from the date of grant.

      (g)   Restriction Relating to Certain Mergers. In the event of a merger or
            consolidation of the Company with a third party which is proposed to
            be accounted for as a pooling of interests, the Grantee shall, if so
            requested by the Company and  notwithstanding any other provision of
            this Agreement,  agree not to sell, assign, gift or in any other way
            reduce his or her risk relative to the Option Shares,  and all other
            shares of Common  Stock owned by the  Grantee for such period  after
            the  consummation  of such  merger or  consolidation  as the Company
            shall,  upon the  advice of its  outside  accountants,  conclusively
            determine as  necessary to ensure that such merger or  consolidation
            may be validly accounted for as a pooling of interests.

      (h)   Conditions  to Issuance to be  Satisfied.  The Company  shall not be
            required to issue or deliver  any  certificate  representing  Option
            Shares,  in whole or part,  until (i) such shares are  qualified for
            delivery  under  such  securities  laws and  regulations  or listing
            requirements  as may be  deemed  by the  Board  of  Directors  to be
            applicable  thereto,  (ii) payment in full of the Purchase  Price is
            received by the Company in cash or stock as provided in Section 1(c)
            hereof,   (iii)   receipt  of  any  consents  or  approvals  of  any
            governmental  regulatory  authority that are necessary or desirable,
            as determined  by the Board of  Directors,  as a condition of, or in
            connection  with,  the  granting of this  Option or the  issuance or
            purchase  of  Option  Shares,  and  (iv)  payment  in  cash  of  any
            applicable withholding taxes is received by the Company.

                                       3
<PAGE>

      (i)   Transfer of Option Shares. Upon the exercise of this Option, Grantee
            shall not  transfer,  encumber  or  otherwise  dispose of the Option
            Shares so purchased unless: (i) an effective  registration  covering
            such  Option  Shares  has  been  filed  pursuant  to  the  Act,  and
            applicable  state  law,  and  such  registration  remains  effective
            through the date of such transfer, encumbrance or other disposition,
            or (ii) the Company receives an opinion from the Grantee's  counsel,
            in form reasonably satisfactory to the Company and its counsel, that
            such  transfer is not in  violation of  applicable  federal or state
            laws and regulations.

4.    General Provisions.

      (a)   Administration  and  Construction.  The  provisions  hereof shall be
            administered  and  construed  by  the  Board  of  Directors,   whose
            decisions  shall be  conclusive  and  binding  on the  Company,  the
            Grantee and anyone  claiming under or through either of them. By the
            Grantee's acceptance of this Agreement,  the Grantee and each person
            claiming  under or through  the  Grantee  irrevocably  consents  and
            agrees to all actions,  decisions and  determinations to be taken or
            made by the  Board  of  Directors  in good  faith  pursuant  to this
            Agreement  and the Plan.  The Board of Directors may delegate any or
            all of its duties hereunder and under the Plan to a committee of the
            Board of Directors in accordance with the Plan.

      (b)   No Employment  Rights. No provision of this Agreement or of the Plan
            shall confer upon the Grantee any right to employment by the Company
            or any of its  subsidiaries  or shall in any way affect the right of
            the Company or any such subsidiary to terminate the association with
            the Grantee at any time for any reason or no reason or shall  impose
            upon the Company or any of its  subsidiaries  any  liability for any
            forfeiture  of any  unvested  portion of the Option which may result
            under this Agreement if the Grantee's  association  with the Company
            is so terminated.

      (c)   Recapitalization.  If the  Grantee  receives,  with  respect  to the
            Option,  any other option or warrant to purchase  securities  of the
            Company or of any other entity as a result of any  recapitalization,
            merger,  consolidation,  combination,  or  exchange  of  shares or a
            similar corporate change,  any such other option or warrant received
            by the Grantee shall likewise be subject to the terms and conditions
            of this  Agreement  and  shall be  included  in the  term  "Option."
            Similarly,  any  securities or other property as to which such other
            option or  warrant  is  exercisable  shall be  included  in the term
            "Option  Shares."  In the event of any such  corporate  change,  the
            Purchase  Price set forth in  Section  1(c)  shall be  appropriately
            adjusted by the Board of Directors such that the aggregate price for
            all such Option Shares is not changed.

      (d)   Legal  Representative.  In the event of the  Grantee's  dissolution,
            reference in this  Agreement to the Grantee shall be deemed to refer
            to his or her legal  representative or, where  appropriate,  to such
            person to whom the Grantee's rights under the Plan shall have passed
            by agreement or by the laws of inheritance.

                                       4
<PAGE>

      (e)   Holidays.  If any event  provided for in this Agreement is scheduled
            to take place on a legal holiday, such event shall take place on the
            next succeeding day that is not a legal holiday.

      (f)   Notices to the  Company.  Any notice or other  communication  to the
            Company  pursuant to any provision of this Agreement shall be deemed
            to have been  delivered  when  delivered in person to the  Corporate
            Secretary  of the  Company or when  deposited  in the United  States
            mail, first class postage prepaid,  addressed to 21 Corporate Drive,
            Suite 103, Clifton Park, New York 12065, or at such other address of
            which the  Company  may from time to time give the  Grantee  written
            notice in accordance with Section 4(g) hereof.

      (g)   Notices to the  Grantee.  Any notice or other  communication  to the
            Grantee  pursuant to any provision of this Agreement shall be deemed
            to have been  delivered  when  delivered to the Grantee in person or
            when  deposited  in the United  States  mail,  first  class  postage
            prepaid,  addressed  to the  Grantee  at his or her  address  on the
            security  holder  records of the Company or at such other address of
            which the  Grantee  may from time to time give the  Company  written
            notice in accordance with Section 4(f) hereof.

      (h)   Agreement  Subject to Plan.  This  Agreement  is being  executed and
            delivered  pursuant  to and is subject in all events to the Plan,  a
            copy of which is being  delivered to the Grantee  concurrently  with
            this  Agreement  and  which is  incorporated  in this  Agreement  by
            reference.  Each provision of this Agreement  shall be  administered
            and construed in accordance  with the Plan,  and any provision  that
            cannot  be so  administered  or  construed  shall to that  extent be
            disregarded.

      (i)   Pronouns.  The use herein of masculine or feminine pronouns shall be
            deemed  to  include  the  entity of the  Grantee,  whether a person,
            corporation,   limited  liability  company,   partnership  or  other
            business association.

      (j)   Successors  and Assigns.  This  Agreement  shall be binding upon and
            inure to the benefit of any successor or assignee of the Company and
            to any executor,  administrator,  legal  representative,  legatee or
            distributee of the Grantee.

                                       5
<PAGE>

      (k)   Amendment. The Board of Directors of the Company may modify or amend
            this Option if it determines, in its sole discretion, that amendment
            is necessary or advisable, in light of any addition or change in the
            Code or in the  regulations  issued  thereunder,  or any  federal or
            state securities laws or other applicable laws or regulations, which
            change occurs after the date hereof and by its terms applies to this
            Option.  However,  no  amendment  of this  Option  may,  without the
            consent of the  Grantee,  make any  changes  which  would  adversely
            affect the rights of the Grantee.

                            [Signature Page Follows]

                                       6
<PAGE>

            IN WITNESS  WHEREOF,  the Company and the Grantee have executed this
Agreement, to be effective as of the day and year written above.

                                            ON2 TECHNOLOGIES, INC.

                                            By:
                                               ---------------------------------
                                            Name:  [__________]
                                            Title: [__________]

                                            ------------------------------------
                                            [Insert Name of Grantee]

                                       7
<PAGE>

                                     ANNEX A

On2 Technologies, Inc.
21 Corporate Drive
Suite 103
Clifton Park, NY 12065

Attn: Human Resources

Dear Sir/Madam:

            I am an optionee under the On2 Technologies,  Inc. On2 Technologies,
Inc.  2005  Incentive  Compensation  Plan (the  "Plan"),  having been granted on
____________  an  option  for  ____________  shares  at  an  exercise  price  of
______________  per share.  Of such  grant,  options for  ______________  shares
remain unexercised and unexpired as of this date.

            I hereby exercise the aforesaid options for ___________  shares (the
"Option  Shares")  and  enclose  [my  check of  $__________________________]  [a
certificate   representing   ______________   shares  of  common  stock  of  On2
Technologies, Inc.] in payment of the purchase price for the Option Shares.

                                            Very truly yours,

                                            Sign Name:
                                                      --------------------------
                                            Print Name:
                                                        ------------------------
                                            Dated:
                                                  ------------------------------

                                       8SETTLEMENT AND MUTUAL RELEASE AGREEMENT

THIS SETTLEMENT AND MUTUAL RELEASE AGREEMENT ("Agreement") is made and entered
into effective April 15, 2005, by and among AGU Entertainment Corp, a Delaware
corporation, and each of its subsidiaries, located at 3200 W. Oakland Park Blvd,
Lauderdale Lakes, FL 33311 (collectively "AGU") and Ned Siegel, Neil Strum, and
Strum Brothers Investment, LLC ("SBI") (collectively "Shareholders"),
collectively referred to herein as the "Parties".

         WHEREAS, on March 3, 2004, a subsidiary of AGU, assumed all of the
covenants and obligations of Pyramid Media Group, Inc., a non-affiliated
company, relating to a Distribution Agreement, dated May 1, 2003 with Ark 21
Records L.P., including guaranteeing an obligation to repay $350,000 of notes
payable to Ned Siegel and Neil Strum (the "Notes"); and

         WHEREAS, the Notes are in default, and AGU as guarantor of the Notes,
has requested certain amendments to the terms of the Notes as part of its
on-going obligations under the Notes; and

         WHEREAS, certain other disputes arose between the Shareholders and AGU
regarding the stock ownership AGU provided to the Shareholders arising from a
Memorandum of Understanding dated June 25, 2002 between the founders of the
predecessors in interest of AGU and the Shareholders, and

         WHEREAS, the parties wish to reach an amicable resolution of all
disputes and disagreements between them upon the terms and conditions hereof as
well as make revisions to the Notes upon the terms set forth in this Agreement;

         NOW, THEREFORE, in consideration of the promises, releases, and
obligations of the Parties set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree as follows:

      1.    Terms of Settlement:

            (a)   Upon the closing of a capital raise of not less than $250,000,
                  AGU shall cause to be made all principal and interest payments
                  due under the Notes for the period January through April 2005
                  in the amount of approximately $36,000.

            (b)   All principal payments due under the Notes prior to January
                  2005 that have not been made in accordance with the terms of
                  the Notes shall be deferred, and will become due and payable
                  at the end of the term of the Notes;

<PAGE>

            (c)   AGU hereby agrees to issue 500,000 shares of unregistered
                  common stock to the Shareholders (250,000 shares to Ned Siegel
                  and 250,000 shares to SBI), to be delivered within ten
                  business days from the date hereof. It is the understanding of
                  both parties that the securities set forth herein shall be
                  considered additional securities, as if they were issued as of
                  the original issue date of the founder shares (100 shares
                  converted into 3,311,382 shares at a cost of $100.00) since
                  these shares relate back to a controversy involving the
                  founder shares and the Memorandum of Understanding dated June
                  25, 2003.

            (d)   Notwithstanding anything to the contrary herein, the parties
                  hereto agree to enter into new notes canceling the old Notes
                  with AGU as the borrower thereunder. The new notes will be on
                  the same terms and conditions as the Notes except that the new
                  notes will have a beginning principal balance of $331,240
                  (plus accrued interest) and shall, in addition to the monthly
                  payment of approximately $8,500 per month, require additional
                  principal payments of $50,000 for every $1,000,000 in equity
                  capital raised subsequent to the date hereof as the term
                  equity capital is defined in the Amendment to Assignment and
                  Assumption Agreement dated March 8, 2004;

            (e)   The additional promissory notes of Ned Siegel and Neil Strum
                  in the aggregate amount of $64,000 shall be amended and
                  restated in its entirety to be co-terminus with and have
                  acceleration provisions that are identical to the capital
                  contribution notes of the other principals, including but not
                  limited to David Levy and John Grandinetti;

      2.    Waiver. Shareholders hereby waive all past defaults incurred prior
            to the date hereof relative to the Notes. Shareholders further waive
            any rights to default interest or penalties arising from any past
            defaults on the Notes.

      3.    Representations. David Levy and John Grandinetti hereby represent
            and warrant to the Shareholders that neither they or their families
            or any entity controlled by them, have no ownership interest,
            whether beneficial or otherwise, in the free trading public stock of
            AGU arising from the Lexington Barron stockholders.

      4.    Release of AGU. Shareholders and their respective heirs, successors,
            assigns, shareholders, directors, officers, employees, agents, and
            any corporations, partnerships or other entities owned or controlled
            by them and any parents, subsidiaries, and affiliated companies
            (collectively, "Shareholders"), hereby release and discharge AGU,
            its successors or assigns, shareholders, directors, officers,
            employees, agents, and any corporations, partnerships or other
            entities owned or controlled by it and any of its subsidiaries and
            affiliated companies (collectively, AGU) from any and all claims

<PAGE>

            Shareholders have or may have against AGU now or in the future
            arising out of past defaults on the Notes and their allocation of
            ownership interest in AGU. Shareholders specifically acknowledge
            that this release extinguishes all claims against AGU, whether past
            or present, known or unknown, foreseen or unforeseen, without regard
            to whether such claims are liquidated or contingent, accrued or
            unaccrued, or whether based upon contract, equity, tort, statutory
            violation, rule of the court, including claims that were or could or
            might have been asserted by Shareholders with respect to past
            defaults on the Notes and their allocation of ownership interest in
            AGU. Nothing herein shall prohibit the Shareholders from seeking
            legal remedies with respect to future defaults on the Notes, as
            amended.

      5.    Release of Shareholders. AGU hereby releases and discharges
            Shareholders, their heirs, successors or assigns, from any and all
            claims AGU has or may have against Shareholders arising from the
            allocation of the Shareholder's ownership interest in AGU. AGU
            specifically acknowledges that this release extinguishes all claims
            against PrimeSource, whether past or present, known or unknown,
            foreseen or unforeseen, without regard to whether such claims are
            liquidated or contingent, accrued or unaccrued, or whether based
            upon contract, equity, tort, statutory violation, rule of the court,
            including claims that were or could or might have been asserted by
            AGU with respect to the allocation of the Shareholder's ownership
            interest in AGU.

      6.    Confidentiality. From and after the date of execution of this
            Settlement Agreement, this Settlement Agreement shall be kept and
            maintained confidentially among the Parties. No Party shall disclose
            any part or term of this Settlement Agreement to any other person or
            entity, without the prior written consent of all other parties,
            except, (i) AGU shall be entitled to disclose such facts concerning
            this Settlement Agreement as may be required under applicable laws,
            rules and regulations governing the conduct of business by public
            corporations, including, among other laws, the United States
            Securities Laws; (ii) any Party shall be entitled to disclose any or
            all of the terms of this Settlement Agreement, if compelled to do so
            by an order of a court of competent jurisdiction, or a subpoena
            issued in connection with a judicial proceeding, only after a
            protective order is issued by a court preventing further disclosure
            of the terms of this Settlement Agreement by any of the parties to
            any such litigation; and (iii) any Party shall be entitled to
            disclose any or all of the terms of this Settlement Agreement in any
            judicial or arbitral proceeding commenced in order to enforce the
            terms of this Settlement Agreement.

      7.    No Admission of Liability. By entering into this Agreement, the
            Parties to this Agreement do not admit to any liability to the other
            Party, and each denies liability. This Agreement does not constitute
            any admission by either Party of any liability on the merits of any
            claim or defense which has been or could have been asserted by the
            other Party.

<PAGE>

      8.    Each Party to Bear Its Own Costs. Each Party shall bear its own
            costs and attorneys' fees relative to the settlement of this matter.

      9.    Entire Agreement. This Agreement contains the entire agreement of
            the Parties on the matters covered. Any agreement, statement, or
            promise made by any Party, or by any employee, officer, or agent of
            any Party, as to the matters covered in the Agreement which is not
            in writing and signed by both Parties shall not be binding.

      10.   Amendments. This Agreement may be amended, or a provision waived,
            only by an instrument in writing signed by all of the Parties to
            this Agreement.

      11.   Counterparts. This Agreement may be executed in one or more
            counterparts which together will compromise a binding contract even
            though all signatures may not appear on the same document. Facsimile
            signatures shall be deemed as legally binding as original signatures
            for all purposes.

      12.   Choice of Law. This Agreement is entered into the State of Florida
            and shall be construed and enforced in accordance with the Laws of
            the State of Florida and all actions arising hereunder shall be
            brought in the venue of Broward County, Florida, and each party
            hereto hereby consents to jurisdiction in Broward County, Florida.

      13.   Severability of Provisions. Any provisions of this Agreement which
            is prohibited or unenforceable in any jurisdiction shall, as to such
            jurisdiction, be ineffective to the extent of such provision or
            unenforceability without invalidating the remainder provisions of
            this Agreement.

         AGU Entertainment Corp:

         By: /s/ John W. Poling
            ---------------------------
                 John W. Poling, CFO

         Strum Brothers Investments, LLC

         By: /s/ Neil Strum
            --------------------------
                 Neil Strum

<PAGE>

         /s/ Neil Strum
         -------------------------
             Neil Strum

         /s/ Ned Siegel
         -------------------------
         Ned Siegel

         As to Section 3 of this Agreement, the undersigned agree that the
         representation therein is true and accurate as of the date hereof.

         /s/ David C. Levy                           /s/ John Grandinetti
         -----------------------                     --------------------------
         David C. Levy                               John Grandinetti

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