SECOND AMENDMENT TO
AGREEMENT AND PLAN OF
MERGER AND REORGANIZATION
This Second Amendment to Agreement and Plan of Merger and Reorganization
("Amendment") is made effective as of August 31, 1996, between NETTER DIGITAL
ENTERTAINMENT, INC., a Delaware corporation ("NDEI"), NETTER ACQUISITION INC., a
California corporation ("NAC") and VIDESSENCE, INC., California corporation
("Videssence"), with reference to the following facts:
A. NDEI, NAC and Videssence entered into an Agreement and Plan of Merger
and Reorganization dated April 26, 1996 (the "Merger Agreement")
pursuant to which NAC would merge into Videssence, making Videssence
the wholly-owned subsidiary of NDEI.
B. NDEI, NAC and Videssence entered into the First Amendment to Merger
Agreement, dated July 3, 1996 (the "First Amendment") whereby the
parties amended and modified the Merger Agreement.
C. NDEI, NAC and Videssence wish to amend the First Amendment and further
amend the Merger Agreement to merge NAC into Videssence such that
Videssence becomes the wholly-owned subsidiary of NDEI on the terms
and conditions set forth in the Merger Agreement and the First
Amendment, both as modified in this Amendment.
D. Terms with initial capital letters used in this Amendment and not
otherwise defined herein shall have the same meanings set forth in the
Merger Agreement or the First Amendment.
NOW, THEREFORE, the parties hereby agree as follows:
1. Modification to First Amendment: The First Amendment is hereby modified
as follows:
1.1. Section 1.1 to the First Amendment shall be amended and restated
as follows: Operating Profit Escrow Shares. On the Escrow Release Date, provided
Surviving Corporation achieves 1996 Videssence Operating Profit (defined below)
of $347,500 for the period commencing January 1, 1996 and ending on the date
seven months after the Closing Date, Escrow Agent shall deliver from Escrow to
the Videssence Shareholders (on a pro rata basis based on their ownership
interest immediately prior to the Effective Time) all of the 144,444 Operating
Profit Escrow Shares. In the event Surviving Corporation achieves 1996
Videssence Operating Profit of less than $347,500, but at least $173,750 for the
period commencing January 1, 1996 and ending on the date seven months after the
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Closing Date, then Escrow Agent shall deliver from the Operating Profit Escrow
Shares to the Videssence Shareholders (on a pro rata basis) such number of
Netter Shares equal to the product of (i) 144,444, and (ii) the quotient of (x)
the amount by which the actual 1996 Videssence Operating Profit exceeds $173,750
divided by (y) $173,750, and shall deliver to Netter the balance of the
Operating Profit Escrow Shares. If Surviving Corporation fails to achieve 1996
Videssence Operating Profit of at least $173,750 for the period commencing
January 1, 1996 and ending on the date seven months after the Closing Date, the
Videssence Shareholders shall receive none of such Operating Profit Escrow
Shares, all 144,444 of which the Escrow Agent shall deliver to Netter.
1.2. Section 1.5 of the First Amendment shall be amended and restated
as follows: by Netter if any of the conditions in Article VII have not been
satisfied as of October 31, 1996 or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Netter to comply with its
obligations under this Agreement) and Netter has not waived such condition on or
before October 31, 1996; or
1.3. Section 1.6 to the First Amendment shall be amended and restated
as follows: by Videssence, if any of the conditions in Article VIII not been
satisfied as of October 31, 1996 or if satisfaction of such a condition is or
becomes impossible (other than through the failure of Videssence to comply with
their obligations under this Agreement) and Videssence has not waived such
condition on or before October 31, 1996;
1.4. Section 1.7 to the First Amendment shall be amended and restated
as follows: by either Netter or Videssence if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before October
31, 1996, or such later date as the parties may agree upon.
2. Other Provisions Unmodified. Except as expressly modified hereby, the
rights, obligations and terms of the First Amendment and the Merger Agreement
shall remain unmodified and in full force and effect. In the event of a conflict
between the Amendment, the First Amendment and the Merger Agreement, the
Amendment shall be controlling.
3. Counterparts. This Amendment may be executed in several counterparts,
and all so executed shall constitute an agreement, binding on all the parties
hereto, notwithstanding that all of the parties are not signatory to the
original or the same counterpart.
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IN WITNESS WHEREOF, this Amendment is effective as of the date first set
forth above.
NETTER DIGITAL ENTERTAINMENT, INC.,
a Delaware corporation
By /s/Xxxxxxx Xxxxxx
_______________________________________
Xxxxxxx Xxxxxx, President
VIDESSENCE, INC., a California corporation
By /s/Xxxx Xxxxx
_______________________________________
Xxxx Xxxxx, President
NETTER ACQUISITION, INC., a California
corporation
By /s/Xxxxxxx Xxxxxx
______________________________________
Xxxxxxx Xxxxxx, President
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