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Share Name | Share Symbol | Market | Type |
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ON2.Com | AMEX:ONT | AMEX | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.00 | - |
¨
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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
|
x
|
Definitive Additional
Materials
|
¨
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Soliciting Material Pursuant to
§240.14a-12
|
x
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No Fee
Required.
|
¨
|
Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and
0-11.
|
(1)
|
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)
|
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):
|
|
(4)
|
Proposed maximum aggregate value
of transaction:
|
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(5)
|
Total fee
paid:
|
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¨
|
Fee paid previously with
preliminary
materials:
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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.
|
(1)
|
Amount previously
paid:
|
|
(2)
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Form, Schedule or Registration
Statement No.:
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(3)
|
Filing
Party:
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(4)
|
Date
Filed:
|
|
Deloitte
& Touche Oy
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Porkkalankatu
24
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PL
122
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00181
Helsinki
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Puh:
020 755 500
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Fax:
020 755 501
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Y-tunnus:
0989771-5
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Kotipaikka:
Helsinki
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www.deloitte.fi
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4.12.09
|
Grant
of Stock Options / Restricted Stock
|
Grant
of stock option
The
employee will not be taxed at the moment of grant.
Grant
of restricted stock
Although
some shareholder’s rights pass to the employee, the employee will not be
taxed at the moment of grant. There is a risk of forfeiture (losing
shares) in certain circumstances. In addition, the shares are held by an
escrow agent until the end of vesting.
|
|
Exercise
of Stock Options and lapse of vesting period for Restricted Stock and
transfer of shares
|
Exercise
of stock options
Taxation
will take place at the moment of exercise, i.e., when the employee
subscribes the shares or when the employee sells the stock options to a
non-related party.
Taxable
benefit is the fair market value of the share at the date of grant less
any price paid for the shares. The benefit will be treated as taxable
earned income for the employee in the year stock options are
exercised.
If
the stock options are sold, the taxable amount is the sale proceeds
received for the stock options.
You
have the following alternatives when you subscribe for the
shares:
|
1)
Hold the stock in your account
2)
Sell the shares (same-day-sale)
If
you sell your shares immediately upon subscribing (same-day-sale), your
taxable benefit equals the sale price of the shares less any price paid
for the shares.
Please
note that exercising stock options constitutes a taxable benefit to you
immediately upon exercising regardless of whether you hold the shares in
your account or sell them.
Lapse
of vesting period for Restricted Stock and transfer of shares
Taxation
takes place at the moment when the restriction period related to the
restricted stock is lapsed and the shares are released by the escrow agent
(i.e. when the restricted stock become vested). Taxable benefit is the
fair market value of the shares at the date of vesting less any price paid
for the shares.
|
||
Tax
withholding
|
On2
Technologies Finland Oy is liable to withhold advance withholding tax when
you subscribe for the shares or when you sell the stock options (exercise
of stock option).
The
tax withholding regarding the restricted stock will be processed when the
restricted stock becomes vested.
Your
taxable benefit from incentive plan is added to your monthly salary as a
fringe benefit. Income tax due on the incentive plan benefit is withheld
from your cash salary in the month following the exercise of stock options
or the restricted stock becomes vested. The tax is withheld in accordance
with the tax rates stated in your tax card. If your monthly cash salary
does not cover the calculated amount of taxes, the taxable benefit is
proportioned to equal portions for the remaining salary periods of the
calendar year and income tax is withheld accordingly.
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|
Example
1: Employee holds the stock (Stock option)
|
The
following example concerns the tax withholding made on the exercise of
stock options.
Example l
(Note: stock prices used in the example are not
actual)
Employee’s
monthly salary is 3.500 Euros per month. The tax rate in his/her tax card
is 35% up to 3.500 Euros per month, and 45% on the excess. The employee
was granted 100 stock options. The fair market value of the share was 5
Euros at the date of exercise. The employee exercises all 100 stock
options at the same time. His/her taxable benefit is 500 Euros (100 shares
* 5 Euros)
If,
for example, subscribing of the shares takes place in September, the
taxable benefit is added in the employee’s monthly salary in October. The
taxable benefit amounts to 500 Euros (= 100 shares * 5 Euros). Advance
withholding tax in October’s payroll is as
follows:
|
©
2009
Deloitte & Touche Oy
|
2
|
€
|
||||
Monthly
cash salary:
|
3.500,00 | |||
Benefit:
|
500,00 | |||
Taxable
income total:
|
4.000,00 | |||
Employee’s
pension insurance (4,3% < 53 years; 5,4 % > 53 years ) and
unemployment insurance contribution (0,20%) on the monthly cash
salary:
|
157,50 | |||
Tax
withholding in accordance with the tax card (35%*3.500 +
45%*500):
|
1.450,00 | |||
Net
cash salary payable:
|
1.892,50 |
Example
2: Employee sells the stock after the
exercise,
same-day-sale (stock option)
|
In
the following example the employee exercises the stock options and sells
the stock on the same day (same-day-sale).
Example
2
(Note: stock prices used in the example are not
actual)
Employee’s
monthly salary is 3.500 Euros per month. The tax rate in his/her tax card
is 35% up to 3.500 Euros per month, and 45% on the excess. The employee
was granted 100 stock options. The fair market value of the share was
5 Euros at the date of exercise. The employee exercises all 100 stock at
the same time and sells the stock during the same day for a price of 500
Euros (5 Euros / share). The employee’s taxable benefit is 500 Euros (i.e.
the sales proceeds)
If,
for example, the stock is sold in September, the taxable benefit is
added in the employee’s monthly salary in October. The taxable benefit
amounts to 500 Euros. Advance withholding tax in October’s payroll is as
follows:
|
€
|
||||
Monthly
cash salary:
|
3.500,00 | |||
Benefit:
|
500,00 | |||
Taxable
income total:
|
4.000,00 | |||
Employee’s
pension insurance (4,3% < 53 years; 5,4 % > 53 years ) and
unemployment insurance contribution (0,20%) on the monthly cash
salary:
|
157,50 | |||
Tax
withholding in accordance with the tax card (35%*3.500 +
45%*500):
|
1.450,00 | |||
Net
cash salary payable:
|
1.892,50 |
©
2009
Deloitte & Touche Oy
|
3
|
Example
3: Restricted Stock
|
The
following example concerns the tax withholding made on the restricted
stock.
Example
3
(Note: stock prices used in the example are not
actual)
Employee’s
monthly salary is 3.500 Euros per month. The tax rate in his/her tax card
is 35% up to 3.500 Euros per month, and 45% on the excess. The employee
was awarded 100 restricted stock and the stock become vested after a
vesting period of one year. The fair market value of the share was 5 Euros
at the date of vesting. The employee’s taxable benefit is 500 Euros (100
shares * 5 Euros).
If
the restricted stock become vested, for example, in September, the taxable
benefit is added in the employee’s monthly salary in October. The taxable
benefit amounts to 500 Euros (= 100 shares * 5 Euros per share). Advance
withholding tax in October’s payroll is as
follows:
|
€
|
||||
Monthly
cash salary:
|
3.500,00 | |||
Benefit:
|
500,00 | |||
Taxable
income total:
|
4.000,00 | |||
Employee’s
pension insurance (4,3% < 53 years; 5,4 % > 53 years ) and
unemployment insurance contribution (0,20%) on the monthly cash
salary:
|
157,50 | |||
Tax
withholding in accordance with the tax card (35%*3.500 +
45%*500):
|
1.450,00 | |||
Net
cash salary payable:
|
1.892,50 |
Supplementary
tax payment
|
You
can also voluntarily pay income tax due on your incentive plan benefit
directly to the regional tax office. This is called a supplementary
advance tax payment. If you pay supplementary advance tax payment on your
incentive plan benefit, you should apply from the local tax office for a
new tax card in which the benefit and the supplementary advance tax
payment you paid has been taken into account. You should forward your new
tax card to your employer’s payroll contact. Without the new tax card
advance withholding tax due on your incentive plan benefit will be
deducted from your monthly salary regardless of the supplementary advance
tax paid.
|
©
2009
Deloitte & Touche Oy
|
4
|
Statutory
pension-, unemployment- and health insurance contributions
|
Stock
option
Employee’s
sickness insurance premium at a rate of 1,98% (in 2009) is due on your
benefit. The employee’s sickness insurance premium is included in the tax
rate stated in your tax card and is, therefore, withheld from your salary
together with the advance withholding tax. Part of the sickness insurance
payment (so called daily allowance payment of 0,70 %) will not be due on
the benefit. However, the exemption of this portion will be done only in
your final taxation.
No
statutory employee’s pension insurance and unemployment insurance
contributions are payable on your benefit. As the benefit is not
considered salary for pension purposes, it has no influence on your future
pension.
Restricted
stock
Employee’s
sickness insurance premium at a rate of 1,98% (in 2009) is due on your
benefit. The employee’s sickness insurance premium is included in the tax
rate stated in your tax card and is, therefore, withheld from your salary
together with the advance withholding tax. Part of the sickness insurance
payment (so called daily allowance payment of 0,70 %) will not be due on
the benefit. However, the exemption of this portion will be done only in
your final taxation.
No
statutory employee’s pension insurance and unemployment insurance
contributions are payable on your benefit. As the benefit is not
considered salary for pension purposes, it has no influence on your future
pension.
|
Divide
nds
|
Any
dividends you receive on your shares are considered your taxable capital
income. You must to declare your dividend income in your tax return for
the year when you received the dividends.
In
2009, 30% of the dividend received is tax exempt. Taxable part of the
dividend is taxed at the rate of 28% (in 2009).
A
foreign tax (paid to the US on the dividends) credit at the maximum rate
of 15% is granted upon request in the tax return. You should attach
evidence of foreign taxes withheld from your dividends to the tax
return.
|
|
Sale
of stock
|
Stock Option and Restricted
Stock
If
you hold the stock acquired through the incentive plans in your account
and sell them later, the gain will be taxed as your capital income at the
rate of 28% (in 2009). The taxable gain is the difference between the
sales price and the acquisition cost. The acquisition cost is the price
you have paid on the shares and the amount of benefit taxed as your salary
at the time of exercise for stock options and grant for restricted stock.
In addition, actual sales costs may also be deducted from the sales
price.
|
©
2009
Deloitte & Touche Oy
|
5
|
Alternatively,
instead of the actual acquisition costs, it is possible to use a
hypothetical acquisition cost. A hypothetical acquisition cost is 40% of
the sales price when you have owned the shares for at least 10 years and
20% of the sales price if the holding period is shorter than 10 years. No
sales costs are deductible when using this method.
|
||
Any
loss from the sale of shares can be deducted against other capital gains
in the same year and the following three years.
|
||
You
should declare the sale of shares in your tax return for the year of
sale.
|
||
Example
4: Calculating a capital gain
|
Example
4
(Note: stock prices used in the example are not
actual)
The
employee has subscribed for 100 shares using stock options. The fair
market value of the share on the exercise date was 5 Euros. Taxable
benefit of 500 Euros was treated as salary upon exercise (see example 1
above) and processed through payroll.
The
employee sells his/her shares three years later for 7,5 Euros per share.
The broker’s fee for selling the stock is 20 Euros. The employee’s taxable
capital gain is as
follows:
|
€
|
|||||
Proceeds
from the sale of shares (100*7,5):
|
750,00 | ||||
The
amount taxed as salary at exercise
|
500,00 | ||||
Broker’s
fee
|
20,00 | ||||
Taxable
capital gain:
|
230,00 | ||||
Income
tax payable by the employee (28%):
|
64,40 |
Alternatively,
using the hypothetical acquisition cost in the above example would arrive
at the taxable capital gain of 600 Euros (= 750 – (20%*750)). Therefore,
using the actual acquisition cost as shown in the table above is more
beneficial to the employee in this
case.
|
©
2009
Deloitte & Touche Oy
|
6
|
Stock
|
Wealth
tax has been abolished in Finland as of 2006. However, even though wealth
tax is abolished, you are still required to declare the shares you hold at
the end of a tax year (31 December) in your tax
return.
|
Employee
|
On2
Technologies Finland Oy is liable to provide you with a salary statement
at the year end. The benefit from the incentive plan is included in your
employer’s salary statement.
On2
Technologies Finland Oy will also report your taxable benefit in the
employer’s annual and monthly payroll summaries. The summaries are filed
with the regional tax office.
You
are required to report the taxable incentive benefit in your tax
return.
Dividends
received and sale of shares must be declared in the tax
return.
|
©
2009
Deloitte & Touche Oy
|
7
|
©
2009
Deloitte & Touche Oy
|
8
|
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