RIGHTS AGREEMENT AMENDMENT
Rights Agreement Amendment, dated as of July 16, 1999 (this "Amendment"),
to the Rights Agreement dated as of May 22, 1995 (the "Rights Agreement"), as
amended on July 15, 1997, between Iwerks Entertainment, Inc., a Delaware
corporation (the "Company") and U.S. Stock Transfer Corporation, as Rights Agent
(the "Rights Agent").
The Company and the Rights Agent have heretofore executed and delivered
the Rights Agreement and the amendment thereto. Pursuant to Section 27 of the
Rights Agreement, the Company and the Rights Agent may from time to time
supplement or amend the Rights Agreement in accordance with the provisions of
Section 27 thereof.
In consideration of the foregoing premises and mutual agreements set forth
in the Rights Agreement, as amended, and this Amendment, the parties hereto
agree as follows:
1. The definition of "Acquiring Person" in Section 1 of the Rights
Agreement is hereby amended and restated to read in its entirety as follows:
""Acquiring Person" shall mean (i) any Person (as hereinafter
defined) who is an Adverse Person (as hereinafter defined), or (ii) any
Person who or which, together with all Affiliates (as hereinafter defined)
and Associates (as hereinafter defined) of such Person, shall, subsequent
to the Declaration Date, become the Beneficial Owners (as hereinafter
defined) of 15% of more of the shares of Common Stock then outstanding,
but shall not include (x) an Exempt Person (as hereinafter defined) or (y)
any Person who becomes a Beneficial Owner solely because (1) of a change
in the aggregate number of shares of Common Stock outstanding since the
last date on which such Person acquired Beneficial Ownership of any shares
of Common Stock, or (2) it acquired such Beneficial Ownership in the good
faith belief that such acquisition would not (A) cause such Beneficial
Ownership to exceed 15% of the shares of Common Stock then outstanding
(or, in the case of Heartland Advisors, Inc., the percentage Heartland
Advisors, Inc. may hold without ceasing to be an Exempt Person) and such
Person relied in good faith in computing the percentage of its Beneficial
Ownership on publicly filed reports or documents of the Company which are
inaccurate or out-of-date, or (B) otherwise cause a Distribution Date or
the adjustment provided for in Section 11 to occur. Notwithstanding clause
(y) of the prior sentence, if any Person that is not an Acquiring Person
because of the operation of such clause (y) does not reduce its Beneficial
Ownership of shares of Common Stock to 15% or less (or, in the case of
Heartland Advisors, Inc., the percentage Heartland Advisors, Inc. may hold
without ceasing to be an Exempt Person) by the close of business on the
fifth Business Day after notice from the Company (the date of notice being
the first day) that such Person's Beneficial Ownership of Common stock so
exceeds 15% (or, in the case of Heartland Advisors, Inc., the percentage
Heartland Advisors, Inc. may hold without ceasing to be an Exempt Person),
such Person shall, at the end of such five Business Day period, become an
Acquiring Person (and clause (y) shall no longer apply to such
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Person). For purposes of this definition, the determination whether any
Person acted in "good faith" shall be conclusively determined by the Board
of Directors, acting by a vote of those directors of the Company whose
approval would be required to redeem the Rights under Section 24."
2. The definition of "Exempt Person" in Section 1 of the Rights Agreement
is hereby amended and restated to read in its entirety as follows:
""Exempt Person" shall include (i) the Company, (ii) any Subsidiary
(as hereinafter defined) of the Company, (iii) any employee benefit plan
of the Company or any of its Subsidiaries, or any entity holding shares of
Common Stock which was organized, appointed or established by the Company
or any Subsidiary of the Company for or pursuant to the terms of any such
plan and (iv) funds and other advisory accounts managed by Heartland
Advisors, Inc. ("Heartland Advisors, Inc."), so long as its aggregate
Beneficial Ownership of Common Stock does not exceed 30% of the Common
Stock then outstanding."
3. Section 3(a) of the Rights Agreement is amended by deleting the last
sentence thereto, which read in its entirety as follows:
"Notwithstanding anything in this Rights Agreement to the contrary,
a Distribution Date shall not be deemed to have occurred solely as a
result of (i) the approval, execution or delivery of the Merger Agreement
or the Stockholder Support Agreements, or (ii) the consummation of the
Merger (as defined in the Merger Agreement) or the performance of the
terms of the Stockholder Support Agreements, or (iii) the acquisition by
Heartland Advisors, Inc. of Beneficial Ownership of Common Stock, in an
amount less than or equal to 25% of the then outstanding Common Stock."
4. This Amendment shall be governed by and construed in accordance with the
laws of the State of Delaware.
5. This Amendment may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed an original, and all such
counterparts shall together constitute but one and the same instrument.
6. Except as expressly set forth herein, this Amendment shall not by
implication or otherwise alter, modify, amend or in any way affect any of the
terms, conditions, obligations, covenants or agreements contained in the Rights
Agreement, all of which are ratified and affirmed in all respects and shall
continue in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
IWERKS ENTERTAINMENT, INC.
By: /s/ XXXXXXX XXXXXXXXX
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Title: Chief Executive Officer
U.S. STOCK TRANSFER CORPORATION
By: /s/ XXXXXXX XXXXX
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Title: Vice President
