UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
(Amendment
No.
)
Filed by
the Registrant
x
Filed
by a Party other than the Registrant
¨
Check the
appropriate box:
¨
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Preliminary
Proxy Statement
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¨
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Confidential,
For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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¨
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Definitive
Proxy Statement
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¨
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Definitive
Additional Materials
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x
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Soliciting
Material Pursuant to §240.14a-12
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On2
Technologies, Inc.
(Name of Registrant as Specified in Its
Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
Payment
of Filing Fee (Check the appropriate box):
¨
|
Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction
applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was
determined):
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(4)
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Proposed
maximum aggregate value of
transaction:
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¨
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Fee
paid previously with preliminary
materials:
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¨
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its
filing.
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(1)
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Amount
previously paid:
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(2)
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Form,
Schedule or Registration Statement
No.:
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The following letter was distributed
on October 2, 2009 to the U.S. participants in the
On2 Technologies,
Inc. Equity Incentive Plans.
On2
Technologies, Inc.
3
Corporate Drive, Suite 100
Clifton
Park, NY 12065
To the
participants in the On2 Technologies, Inc. (“On2”) Equity Incentive
Plans:
As you
may know, on August 4, 2009, On2 entered into a merger agreement with Google
Inc. (“Google”) and Oxide Inc., a wholly owned subsidiary of Google, pursuant to
which Google will acquire On2. If the proposed merger is completed,
each outstanding share of common stock of On2 (“On2 Common Stock”) will be
converted into $0.60 worth of Google Class A Common Stock (a “Google Share”)
based on an exchange ratio that is more fully described in the merger
agreement. The merger agreement is attached as Appendix A to the
proxy statement/prospectus that is a part of the registration statement on Form
S-4 registering the Google Shares to be issued in the proposed merger that was
filed by Google on September 11, 2009 with the SEC.
The
following questions and answers are intended to address questions you may have
regarding the treatment and taxation of your options to purchase shares of On2
Common Stock (“On2 Options”) and your On2 restricted stock as a result of the
proposed merger.
What
will happen to my On2 Options in connection with the proposed
merger?
All
outstanding On2 Options will be fully vested as of the time that the proposed
merger is completed, which we refer to as the effective time of the
merger. Any holder of an On2 Option with an exercise price of less
than $0.60 per share that is outstanding immediately prior to the effective time
of the merger will have the right to receive that number of Google Shares equal
to the quotient of (i) $0.60 multiplied by the aggregate number of shares
of On2 Common Stock underlying the On2 Option less the sum of the aggregate
exercise price of the On2 Option and any income or withholding tax required
under applicable law and (ii) the “trading price.” (The “trading
price” is defined as the volume weighted average trading price of a Google Share
based on the sales price of every Google Share traded during the 20 trading days
immediately up to and including the second trading day prior to the date of the
On2 special meeting at which On2 stockholders will consider and vote on the
merger agreement.) However, if the preceding formula would result in
the holder of an On2 Option receiving a fraction of a Google Share, the holder
of such On2 Option will instead receive a cash payment equal to the product of
such fractional share and the trading price, without interest. We
refer to the Google Shares and any cash paid in lieu of a fraction of a Google
Share, collectively, as the merger consideration.
Any On2 Option with an
exercise price of $0.60 per share or higher will be automatically cancelled at
the effective time of the merger and the holder of such On2 Option will receive
no consideration for such cancellation. Google will not assume any On2 Options
in connection with the proposed merger
.
Am
I required to exercise my On2 Options to receive Google Shares and/or
cash?
No, you
are not required to exercise your On2 Options to receive the merger
consideration. If you hold On2 Options with an exercise price of less
than $0.60 per share, those On2 Options will automatically be converted into the
right to receive the merger consideration at the effective time of the
merger. However, if the On2 Options you hold are incentive stock
options, your exercise of such On2 Options before the effective time of the
merger may have the indirect result of avoiding withholding and FICA taxes on
any gain upon such exercise. (See below
“How will I be taxed on the Google
Shares and/or cash I receive for my On2 Options?”.)
How
will I be taxed on the Google Shares and/or cash I receive for my On2
Options?
You are
advised to consult your own tax advisor regarding the tax treatment of your On2
Options. As a general matter, however, you will be taxed on $0.60
multiplied by the aggregate number of shares of On2 Common Stock underlying your
On2 Options less the aggregate exercise price of your On2
Options. This amount will be taxed as ordinary compensation income
and will be subject to withholding of U.S. federal, state and local income taxes
and FICA taxes. In calculating the number of Google Shares and/or the
amount of cash you will receive in lieu of any fractional shares, On2 will
deduct the amount of any income or withholding tax required to be paid under
applicable law so that the number of Google Shares and/or the cash payment you
receive will reflect the payment of applicable taxes.
If,
however, your On2 Option is an incentive stock option that is (1) currently
vested; (2) will vest by its terms prior to the effective time of the
merger; or (3) will vest in connection with the terms of the merger
agreement immediately prior to the effective time of the merger,
and you exercise your On2
Option immediately prior to the effective time of the merger
, the
exercise of your On2 Option and the subsequent exchange of the On2 Common Stock
received upon such exercise for Google Shares in connection with the proposed
merger should not be taxable (except to the extent cash is received in lieu
of fractional shares) provided that you do not dispose of the Google Shares
within the later of (i) one year after the exercise of your On2 Option or (ii)
two years after your On2 Option was granted. (Please note,
however, that the spread between the exercise price and the value of the Google
Shares you receive is included in Alternative Minimum Taxable
income.) If you dispose of your Google Shares after satisfying these
holding period requirements, your entire gain will be taxed at the more
favorable capital gain rates. Any cash payment you receive in lieu of
fractional shares will be taxable as ordinary income, but will not be subject to
withholding of U.S. federal, state and local income taxes or FICA
taxes. The foregoing tax treatment described for incentive stock
options is also subject to the requirement that no more than $100,000 of your
incentive stock options will become exercisable for the first time in a year,
whether they were accelerated in connection with the proposed merger or would
otherwise have vested during the year pursuant to their terms. To the
extent that your incentive stock options exceed the limit, they will be treated
as nonqualified stock options subject to taxation as ordinary compensation
income.
If you
decide to exercise your On2 Option immediately before the effective time of the
merger, you may do so by delivering a notice of exercise to On2 in advance of
the effective time of the merger indicating that you are exercising your On2
Option as of immediately before (but conditioned upon) consummation of the
proposed merger.
If you
choose to engage in a cashless exercise of incentive stock options (whether by
using a broker-assisted cashless exercise or surrendering shares otherwise
issuable upon the exercise of your On2 Option), gain with regard
to that portion of the shares of On2 Common Stock subject to the On2 Option
that were withheld to pay the option exercise price will be taxable and
reportable on your W-2. Whether you use a cashless exercise or you pay the
exercise price in cash, any gain on exercise of an incentive stock option prior
to the effective time of the merger will not be subject to withholding or FICA
tax.
What
will happen to my On2 restricted stock in connection with the proposed
merger?
All
outstanding shares of On2 restricted stock will be fully vested as of the
effective time of the merger and each holder of On2 restricted stock outstanding
as of the effective time of the merger will be entitled to that number of Google
Shares equal to the quotient of (i) $0.60 multiplied by the number of
shares of On2 restricted stock less any income or withholding tax required under
applicable law and (ii) the trading price, as defined above. If
the preceding formula would result in the holder of On2 restricted stock
receiving a fraction of a Google Share, the holder of such On2 restricted stock
will instead receive a cash payment equal to the product of such fractional
share and the trading price.
How
will I be taxed on the Google Shares and/or cash I receive for my On2 restricted
stock?
You are
advised to consult your own tax advisor regarding the tax treatment of your On2
restricted stock. As a general matter, however, you will be taxed on $0.60
multiplied by the aggregate number of shares of On2 restricted stock you hold
(unless you have made a valid and timely election under Section 83 of the
Internal Revenue Code of 1986, as amended (a “Section 83(b) election”) with
respect to such shares). This amount will be taxable as ordinary
compensation income and will be subject to withholding of U.S. federal,
state and local income taxes and FICA taxes. In calculating the
number of Google Shares and/or the amount of cash you will receive in lieu of
any fractional shares, On2 will deduct the amount of any income or withholding
tax required under applicable law so that the number of Google Shares and/or the
cash payment you receive will reflect the payment of applicable
taxes.
If you
have previously made a valid and timely Section 83(b) election with respect to
such shares of On2 restricted stock, you will not be taxed on the exchange of
On2 Common Stock for Google Shares, except with respect to cash received in lieu
of a fractional share. Any cash you receive in lieu of a fractional
share will result in a recognition of gain or loss equal to the difference, if
any, between the basis allocable to the fractional share and the amount of cash
received.
Additional
Information and Where to Find It
Google
has filed with the Securities and Exchange Commission (the “SEC”) a Registration
Statement on Form S-4 in connection with the proposed merger, which includes a
preliminary Proxy Statement of On2 and also constitutes a Prospectus of Google.
The definitive Proxy Statement/Prospectus will be mailed to On2 stockholders
prior to the On2 special meeting. The Registration Statement and the Proxy
Statement/Prospectus contain important information about Google, On2, the
proposed merger and related matters.
Investors and security holders are
urged to read the Registration Statement and the Proxy
Statement/Prospectus (including all amendments and supplements to it)
carefully.
Investors and security holders may also obtain free copies of
the Registration Statement and the Proxy Statement/Prospectus and other
documents filed with the SEC by Google and On2 through the web site maintained
by the SEC at www.sec.gov and by contacting Google Investor Relations at
+1-650-253-7663 or On2 Investor Relations at +1-518-881-4299. In addition,
investors and security holders can obtain free copies of the
documents filed with the SEC on Google’s website at investor.google.com and on
On2’s website at www.on2.com.
Participants
in the Solicitation
Google,
On2 and their respective directors and executive officers may be deemed to be
participants in the solicitation of proxies in respect of the proposed
merger. Information regarding Google’s executive officers and directors is
included in Google’s definitive proxy statement, which was filed with the SEC on
March 24, 2009, and information regarding On2’s executive officers and directors
is included in On2’s definitive proxy statement, which was filed with the SEC on
April 7, 2009. The Proxy Statement/Prospectus for the proposed merger also
provides additional information about participants in the solicitation of
proxies from On2 stockholders, which participants' interests may differ from On2
stockholders generally. You can obtain free copies of these documents from
Google or On2 using the contact information below.
Contacts:
Investor
Contact, Google:
Maria
Shim
+1-650-253-7663
marias@google.com
Media
Contact, Google:
Andrew
Pederson
+1-650-450-3896
andrewpederson@google.com
Contact,
On2:
Garo
Toomajanian
+1-518-881-4299
invest@on2.com
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