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EXHIBIT 2.3
AMENDMENT TWO
TO
AGREEMENT AND PLAN OF MERGER
AMENDMENT TWO TO AGREEMENT AND PLAN OF MERGER, dated as of October 26,
2000, by and among ON2.COM INC., a corporation organized under the laws of the
State of Delaware (the "Parent"), 8C ACQUISITION CORP., a corporation organized
under the laws of the State of Delaware and a wholly-owned subsidiary of the
Parent ("Acquisition"), EIGHT CYLINDER STUDIOS, INC., a corporation organized
under the laws of the State of California ("the Company"), and certain
shareholders of the Company, each of whom is listed on the signature page hereto
(collectively, the "Principal Shareholders").
WHEREAS, the parties hereto entered into an Agreement and Plan of Merger,
dated as of July 13, 2000, and as amended by Amendment One to Agreement and Plan
of Merger, dated as of September 29, 2000 (as amended, the "Merger Agreement"),
pursuant to which the Company shall be merged with and into Acquisition; and
WHEREAS, the parties desire to modify certain terms of the Merger
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and intending to be legally bound thereby, the parties hereto
hereby agree as follows:
1. Capitalized terms used herein without definition shall have the
meanings assigned thereto in the Merger Agreement.
2. Section 2.1(a) of the Merger Agreement is hereby deleted in its
entirety and replaced with the following:
"(a) Except as set forth in Section 2.2(e) hereof, the consideration
payable in the Merger in respect of (i) shares of the Company's
common stock, par value $0.0001 per share ("Company Common Stock"),
shall consist solely of common stock units ("Common Stock Units" or
"Units"), each of which Units shall be composed of 0.02479 shares of
the common stock, par value $0.01 per share, of the Parent ("Parent
Common Stock") and an option (a "Unit Option") to purchase 0.03718
shares of Parent Common Stock granted under the Parent's 2000
Non-Qualified Stock Option Plan (the "Parent Option Plan") and (ii)
shares of the Company's Series A Preferred Stock, par value $0.0001
per share ("Company Preferred Stock"), shall consist solely of
shares of Parent Common Stock."
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3. Section 2.2(a) of the Merger Agreement is hereby deleted in its
entirety and replaced with the following:
"(a) OUTSTANDING CAPITAL STOCK. Each share of Company Common Stock
issued and outstanding as of the Effective Time other than shares owned by
holders who have properly exercised their rights of appraisal within the meaning
of Chapter 13 of the CGCL ("Dissenting Shares") shall, by virtue of the Merger
and without any action on the part of the holder thereof, automatically be
converted into one (1) Common Stock Unit. Each share of Company Preferred Stock
issued and outstanding as of the Effective Time, other than shares owned by
holders who have properly exercised their rights of appraisal within the meaning
of Chapter 13 of the CGCL shall, by virtue of the Merger and without any action
on the part of the holder thereof, automatically be converted into 0.06197
shares of Parent Common Stock. Each of the conversion rates hereinabove stated
in this Section 2.2(a) shall be referred to in this Agreement as an "Exchange
Ratio." The aggregate number of shares of Parent Common Stock issued pursuant to
this Section 2.2(a) shall be referred to in this Agreement as the "Merger
Shares." The aggregate number of shares of Parent Common Stock issuable upon the
exercise of Unit Options shall be referred to in this Agreement as the "Option
Shares." SCHEDULE 2.2 attached hereto sets forth, for each shareholder of the
Company, (i) the aggregate number of Merger Shares and (ii) the aggregate number
of Unit Options issuable in connection with the Merger."
4. Schedule 2.2 to the Merger Agreement is hereby deleted in its
entirety and replaced with Schedule 2.2 as attached hereto.
5. The fourth entry on Section 3.4 of the Disclosure Schedule to the
Merger Agreement is hereby deleted in its entirety and replaced with the
following:
"Options to purchase 5,210,403 shares of the Company's Common Stock
have been issued pursuant to the 1999 Stock Option/Stock Issuance
Incentive Plan (the "Plan"). The Company has reserved 3,289,597
shares of its Common Stock for future issuance under the Plan."
6. Annex A to Schedule 3.4 to the Merger Agreement is hereby deleted in
its entirety and replaced with Annex A to Schedule 3.4 as attached hereto.
7. All other provisions of the Merger Agreement shall remain in full
force and effect.
8. This Agreement may be executed in any number of counterparts, each
of which shall be deemed and original, but all of which together shall
constitute one and the same instrument.
9. The parties hereby agree that this Agreement, and the respective
rights, duties and obligations of the parties hereunder, shall be governed by
and construed in accordance with the laws of New York, without giving effect to
principles of conflicts of law thereunder.
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10. This Agreement is not intended to create any right, claim or remedy
in favor of any person or entity, other than the parties hereto and their
respective successors (or in the case of the Principal Shareholders, their
respective heirs, administrators, executors and personal representatives) and
permitted assigns.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parent, Acquisition, the Company and the Principal
Shareholders named below have caused this Agreement to be duly executed and
delivered as an instrument under seal as of the date first above written.
ON2.COM INC.
By: /s/ Douglas Song
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Name: Douglas Song
Title: Senior Vice President
8C ACQUISITION CORP.
By: /s/ Douglas Song
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Name: Douglas Song
Title: Senior Vice President
EIGHT CYLINDER STUDIOS, INC.
By: /s/ Jon Middleton
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Name: Jon Middleton
Title: President
PRINCIPAL SHAREHOLDERS:
/s/ Jonathon Fishman
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Jonathon Fishman
/s/ Jon Middleton
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Jon Middleton
/s/ Chad Nelson
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Chad Nelson
