<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
<TABLE>
<S> <C>
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-12
ON2.COM INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
</TABLE>
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<S> <C> <C>
/X/ 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) 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:
------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / 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:
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(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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</TABLE>
<PAGE>
ON2.COM INC.
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER , 2000
------------------------
As a stockholder of ON2.COM INC., a Delaware corporation (the "Company"),
you are cordially invited to be present, either in person or by proxy, at the
Special Meeting of Stockholders of the Company to be held at at
11 a.m., local time, on November , 2000, for the following purposes:
1. To amend the Company's Certificate of Incorporation, as heretofore
amended, to increase the number of authorized shares of Common Stock, par
value $0.01 per share, to 100,000,000; and
2. To transact such other business as may properly come before the meeting
and any adjournments thereof.
Only stockholders of record at the close of business on October 11, 2000
will be entitled to receive notice of and to vote at the Special Meeting and any
adjournment thereof. The transfer books will not be closed.
We hope you can attend the Special Meeting in person. However, even if you
plan to attend, we ask that you MARK, SIGN, DATE and RETURN the enclosed proxy
promptly in the enclosed self-addressed envelope, so that we may be assured of a
quorum to transact business. If you receive more than one proxy because you own
shares registered in different names or addresses, each proxy should be
completed and returned. Your proxy is revocable and will not affect your right
to vote in person in the event you are able to attend the meeting.
Your attention is directed to the attached Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS,
DOUGLAS A. MCINTYRE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
New York, New York
October , 2000
<PAGE>
ON2.COM INC.
EXECUTIVE OFFICES
375 GREENWICH STREET
NEW YORK, NEW YORK 10013
212/941-2400
------------------------
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER , 2000
------------------------
The Special Meeting of Stockholders of On2.com Inc., a Delaware corporation
(the "Company"), will be held on November , 2000, at the time and place and
for the purposes set forth in the Notice of Special Meeting of Stockholders
accompanying this Proxy Statement. This Proxy Statement is furnished in
connection with the solicitation of proxies by the Board of Directors on behalf
of the Company in connection with such meeting and any continuation or
adjournment thereof. If the Special Meeting is postponed or adjourned for any
reason at any subsequent reconvening of the Special Meeting, all proxies (except
for those proxies that have been effectively revoked or withdrawn) will be voted
in the same manner as such proxies would have been voted at the original
convening of the Special Meeting, notwithstanding that such proxies may have
been effectively voted on the same or any other matter at a previous meeting.
The costs of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, certain directors, officers and employees of the Company
may solicit proxies in person, electronically or by telephone at no additional
compensation. The Company will also request record holders of Common Stock who
are brokerage firms, custodians and fiduciaries to forward proxy material to the
beneficial owners of such shares and upon request will reimburse such record
holders for the costs of forwarding the material in accordance with customary
charges. The Company has retained MacKenzie Partners, Inc., a proxy solicitation
firm, at a cost of up to $10,000 plus expenses, to assist with the solicitation
of proxies.
Any proxy given pursuant to this solicitation may be revoked by the filing
with and receipt by the Secretary of the Company of a written revocation or duly
executed proxy bearing a later date and does not preclude the stockholder from
voting in person at the Special Meeting if he or she so desires. The persons
named in the form of proxy solicited by the Board of Directors will vote all
proxies which have been properly executed. If a stockholder specifies on such
proxy a choice with respect to the proposal to be acted upon, the proxy will be
voted in accordance with such specification. IF NO DIRECTIONS TO THE CONTRARY
ARE INDICATED, THE PERSONS NAMED IN THE PROXY WILL VOTE THE SHARES REPRESENTED
THEREBY FOR THE PROPOSAL LISTED ON THE PROXY CARD. If necessary, and unless the
shares represented by the proxy are voted against the proposal herein, the
persons named in the proxy also may vote in favor of a proposal to recess the
Special Meeting and to reconvene it on a subsequent date or dates without
further notice, in order to solicit and obtain sufficient votes to approve the
matters being considered at the Special Meeting.
This Proxy Statement and the enclosed form of proxy are first being sent to
the stockholders on or about October , 2000.
<PAGE>
VOTING SECURITIES
Only holders of record of the Company's Common Stock, par value $0.01 per
share ("Common Stock"), at the close of business on October 11, 2000 (the
"Record Date") have the right to receive notice of and to vote at the Special
Meeting. As of the Record Date, 26,935,533 shares of Common Stock were issued
and outstanding. Each holder of record of Common Stock is entitled to one vote
for each share held with respect to all matters to be voted upon at the Special
Meeting. Voting rights of the Common Stock are noncumulative.
Presence in person or by proxy of the holders of a majority of the
outstanding shares of Common Stock entitled to vote at the Special Meeting will
constitute a quorum. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock will be required to act on Proposal 1. Shares
for which the holder has elected to abstain or has withheld authority to vote
(including broker non-votes) on a matter will count toward a quorum but will
have different effects on the outcome of the vote on such matter. An abstention
from voting on a matter has the same legal effect as a vote against the matter,
even though the stockholder may interpret such action differently. A "broker
non-vote" is a vote withheld by a broker on a particular matter in accordance
with stock exchange regulations because the broker has not received instructions
from the customer for whose account the shares are held. Under applicable
Delaware law, broker non-votes on a matter will have no effect on the outcome of
the vote.
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
The only persons known by the Company to beneficially own more than five
percent of the Company's Common Stock as of October 11, 2000, are as follows:
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
(NUMBER OF SHARES)(1)
-------------------------------------
PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER TITLE OF CLASS TOTAL OF CLASS
------------------------------------ -------------- --------- --------
<S> <C> <C> <C>
Daniel B. Miller ........................................... Common 1,615,981 6.0%
On2.com Inc.
375 Greenwich Street
New York, NY 10013
Stanley Marder (2) ......................................... Common 2,325,363 8.6%
24 5th Avenue
New York, NY 10011
Travelers Insurance Group (3) .............................. Common 9,882,701 30.8%
399 Park Avenue
New York, NY 10022
Edelson Technology Partners III, L.P. (4) .................. Common 3,033,049 11.0%
300 Tice Boulevard
Woodcliff Lake, NJ 07675
</TABLE>
------------------------
(1) Pursuant to current regulations of the Securities and Exchange Commission,
securities must be listed as "beneficially owned" by a person who directly
or indirectly has or shares the power to vote or to direct the voting of
("voting power") or the power to dispose or to direct the disposition of
("dispositive power") the securities, whether or not the person has any
economic interest in the securities. In addition, a person is deemed a
beneficial owner if he has the right to acquire beneficial ownership within
60 days, whether upon the exercise of a stock option or warrant, conversion
of a convertible security or otherwise.
2
<PAGE>
(2) Based upon information obtained from the Form 13G and Form 13D filed by
Mr. Marder with the Securities and Exchange Commission for June 30, 2000. In
addition, Mr. Marder has subsequently filed Forms 144 with the Securities
and Exchange Commission listing approximately 1,400,000 shares of Common
Stock to be sold.
(3) Includes 4,704,717 common shares, 2,044,304 shares of preferred stock
convertible into common shares and currently exercisable warrants to
purchase 3,133,680 common shares. These securities are beneficially owned by
and through wholly owned subsidiaries of the Travelers Insurance Group.
(4) Includes 2,349,998 common shares and currently exercisable warrants to
purchase 683,051 common shares.
3
<PAGE>
SECURITY OWNERSHIP OF EXECUTIVE OFFICERS AND DIRECTORS
The following information with respect to beneficial ownership, as of
October 11, 2000, of shares of Common Stock is furnished with respect to
(i) each director of the Company, (ii) each executive officer of the Company and
(iii) all current directors and executive officers as a group, together with
their respective percentages. Unless otherwise indicated below, the address of
each person named in the table below is in the care of On2.com Inc., 375
Greenwich Street, New York, New York 10013.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
(NUMBER OF SHARES)(1)
-------------------------------
TITLE OF PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNER CLASS TOTAL OF CLASS
------------------------------------ -------- --------- --------
<S> <C> <C> <C>
Douglas McIntyre, Director, President and Chief Executive
Officer................................................... Common 19,500 *
Daniel B. Miller, Director, Founder and Chief Technology
Officer................................................... Common 1,615,981 6.0%
Mark Meagher, Chief Financial Officer....................... Common -- --
Douglas Song, Senior Vice President, Finance and Corporate
Development (2)........................................... Common 41,666 *
Jack Rivkin, Director (3) .................................. Common -- --
Citigroup Investments, Inc.
399 Park Avenue
New York, NY 10022
Stephen Klein, Director .................................... Common -- --
c/o iBalls
487 Greenwich Street, 5th floor
New York, NY 10013
Strauss Zelnick, Director .................................. Common -- --
BMG Entertainment, Inc.
1540 Broadway, 39th floor
New York, NY 10036
William Newman, Director ................................... Common 660 --
McGuireWoods LLP
9 West 57th Street
New York, NY 10019
All current directors and executive officers as a group (8
persons).................................................. Common 1,677,807 6.2%
</TABLE>
------------------------
* Represents less than one percent (1%)
(1) Pursuant to current regulations of the Securities and Exchange Commission,
securities must be listed as "beneficially owned" by a person who directly
or indirectly has or shares voting power or dispositive power with respect
to the securities, whether or not the person has any economic interest in
the securities. In addition, a person is deemed a beneficial owner if he has
the right to acquire beneficial ownership within 60 days, whether upon the
exercise of a stock option or warrant, conversion of a convertible security
or otherwise.
(2) Represents shares that may be purchased within 60 days of October 11, 2000
pursuant to outstanding vested stock options.
(3) Mr. Rivkin is a Director of On2.com Inc. and Executive Vice President of
Citigroup Investments, Inc., an affiliate of Travelers Insurance Group.
4
<PAGE>
PROPOSAL 1
AMENDMENT TO CERTIFICATE OF INCORPORATION RELATING
TO INCREASED AUTHORIZATION OF COMMON STOCK
The Board of Directors has approved, and recommends to the stockholders for
adoption, an amendment to the Company's Certificate of Incorporation, as
heretofore amended, as set forth in Exhibit A hereto, that would increase the
number of shares of Common Stock authorized for issuance from 50,000,000 to
100,000,000 shares.
The Board of Directors believes that an increase in the number of shares of
authorized Common Stock as contemplated by this Proposal would benefit the
Company and its stockholders by giving the Company the needed flexibility in its
corporate planning and in responding to developments in the Company's business.
Such flexibility might include, without limitation, the issuance and sale of
Common Stock (i) in public or private offerings as a means of obtaining
additional capital for the Company's business, (ii) as consideration, in whole
or in part, for the acquisition of businesses or other assets, (iii) in
connection with the exercise of options or warrants or the conversion of
convertible securities, (iv) pursuant to any stock option plan or other benefit
plan or employment agreement and (v) in connection with stock splits or
dividends and other general corporate purposes. At this time the Board of
Directors does not have any definitive plans for issuing these shares of Common
Stock. The Company will require additional funding to adequately finance the
growth of its current operations and the fulfillment of its strategic
objectives. Therefore, the Company is considering several financing
alternatives, including, but not limited to, obtaining an "equity line of
credit" that would enable the Company to draw down a minimum amount of cash for
shares of Common Stock each month for a specified period of time, typically 12
to 15 months. Usually any proceeds from such an equity line of credit could be
used for general corporate purposes. As of the Record Date, an aggregate of
43,680,312 shares of Common Stock were authorized and outstanding and reserved
for issuance upon the exercise of options and warrants or the conversion of
preferred stock. At current stock price levels, an equity line of credit or
other financing would require the Company to issue more shares than are
currently authorized under the Certificate of Incorporation. There can be no
assurance that the Company will be able to procure an equity line of credit or
any other additional financing on terms acceptable to it, or at all.
The increase in the number of shares authorized for issuance will not have
any immediate effect on the rights of existing stockholders. The Board of
Directors will, however, have the authority to issue the authorized shares
without requiring future stockholders' approval of such issuances, except as may
be required by applicable law or stock exchange regulations. To the extent that
additional authorized shares are issued in the future, they will decrease the
existing stockholders percentage equity ownership and, depending upon the price
at which they are issued, could be dilutive to the existing stockholders. The
holders of Common Stock have no preemptive rights.
The Board of Directors could use the additional shares of Common Stock to
discourage an attempt to change control of the Company. The Board of Directors,
however, has no present intention of issuing any shares of Common Stock for such
purposes and this Proposal is not being recommended in response to any specific
effort of which the Company is aware to obtain control of the Company.
Approval of Proposal No. 1 requires the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock entitled to vote thereon.
RECOMMENDATION:
THE BOARD OF DIRECTORS BELIEVES THAT THE ADOPTION OF THE AMENDMENT TO THE
CERTIFICATE OF INCORPORATION, AS HERETOFORE AMENDED, TO INCREASE THE SHARES OF
COMMON STOCK AUTHORIZED FOR ISSUANCE TO 100,000,000 IS IN THE BEST INTEREST OF
ALL STOCKHOLDERS AND, ACCORDINGLY, RECOMMENDS A VOTE "FOR" PROPOSAL NO 1.
5
<PAGE>
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
matters which will be presented for consideration at the Special Meeting other
than the proposal set forth in this Proxy Statement. If any other matters
properly come before the meeting, it is intended that the persons named in the
Proxy will act in respect thereof in accordance with their best judgment.
This document contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements relate to future events or the Company's
future financial performance. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should," "expect," "plan,"
"anticipate," "believe," "estimate," "predict," "potential" or "continue," the
negative of such terms, or other comparable terminology. The inclusion of
forward-looking statements should not be regarded as a representation by the
Company, or any other person, that such statements will be achieved. These
statements are only predictions. Actual events or results may differ materially.
Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, it cannot guarantee future results,
levels of activity, performance or achievements. In this regard, the business
and operations of the Company are subject to substantial risks that increase the
uncertainty inherent in the forward-looking statements contained in this
document. The Company undertakes no duty to update any of the forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of the foregoing, readers are cautioned not to place undue reliance on
the forward-looking statements contained in this report.
BY ORDER OF THE BOARD OF DIRECTORS,
DENISE BEN-ATTAR
SECRETARY
October , 2000
6
<PAGE>
EXHIBIT A
PROPOSAL NO. 1
Section 1 of Article IV of the Certificate of Incorporation is proposed to
be restated in its entirety as follows:
"Section 1 AUTHORIZED CAPITAL. The aggregate number of shares and the
amount of the total authorized capital of said Corporation shall consist of
100,000,000 shares of common stock, par value $0.01 per share ("Common Stock"),
and 20,000,000 shares of non-voting preferred stock, par value $0.01 per share
("Preferred Stock")."
7
<PAGE>
ON2.COM INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Denise Ben-Attar and Mark Meagher, and each
of them, proxies with full power of substitution, to vote the shares of Common
Stock in On2.com Inc. which the undersigned would be entitled to vote if
personally present at the Special Meeting of Stockholders of the Company to be
held on November , 2000 or any adjournments thereof.
1. TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION, AS HERETOFORE AMENDED,
TO INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK, PAR VALUE $0.01
PER SHARE, TO 100,000,000:
/ / FOR / / AGAINST / / ABSTAIN
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" PROPOSAL 1. PROXIES ARE ALSO GRANTED THE DISCRETION TO VOTE UPON ALL OTHER
MATTERS THAT MAY PROPERLY BE BROUGHT BEFORE THE MEETING OR ANY ADJOURMENT
THEREOF.
The undersigned acknowledges receipt of the Notice of said Special Meeting and
of the Proxy Statement attached thereto.
Dated , 2000
PLEASE SIGN EXACTLY AS NAME APPEARS AT
LEFT. WHEN SIGNING AS ATTORNEY,
EXECUTOR, ADMINISTRATOR, TRUSTEE,
GUARDIAN, ETC., GIVE FULL TITLE AS
SUCH.
Please mark, sign, date and return the
proxy card using the enclosed envelope.
