THIRD AMENDMENT
TO
RIGHTS AGREEMENT
OCTOBER 2, 2001
Third Amendment to the Rights Agreement (the "Agreement"), dated as of May
25, 2000, between Ballantyne of Omaha, Inc. (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey Limited Liability Company, (now known
as Mellon Investor Services LLC) (the "Rights Agent"), as amended by the First
Amendment dated April 30, 2001, and the Second Amendment dated July 25, 2001.
Capitalized terms used in this Third Amendment and not defined herein are
as defined in the Agreement.
WHEREAS, pursuant to Section 27 of the Agreement, for so long as the Rights
are redeemable, the Company may, and the Rights Agent shall if the Company so
directs, supplement or amend any provision of the Agreement in any respect
without the approval of any holders of Rights;
WHEREAS, as of the date hereof the Rights are redeemable;
WHEREAS, on October 2, 2001, the Board of Directors of the Company duly
approved amendment of the Agreement with respect to matters contemplated in this
Third Amendment;
NOW, THEREFORE, pursuant to the provisions of Section 27 of the Agreement,
the Company and the Rights Agent hereby agree as follows:
1. The Company and the Rights Agent hereby amend the second paragraph
of Section 1(k) of the Agreement, so that effective October 2, 2001, such
paragraph, as amended, shall read in its entirety as follows:
A Grandfathered Person shall be BalCo Holdings, L.L.C. ("BalCo"), and
solely with respect to the Common Stock beneficially owned by BalCo, any
creditor of BalCo who is a bona fide pledgee of such Common Stock as of the date
of acquisition thereof by BalCo, and any Permitted Transferee (as defined
below), provided, however, that a Grandfathered Person shall cease to be a
Grandfathered Person at the time that (i) all or any part of its interest in the
Common Stock becomes reportable on a Schedule 13D under the Securities Exchange
Act of 1934, as amended (or any comparable or successor report) as part of a
"group" (as such term is defined or used under Rule 13d-5(b) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended)
which beneficially owns, directly or indirectly, 15% or more of the then
outstanding Common Stock and includes one or more persons (including any
Affiliate or Associate thereof) who (A) are not Grandfathered Persons and (B)
individually own, directly or indirectly, in excess of 2%, or in the aggregate
own in excess of 3%, of the then outstanding Common Stock; or (ii) in the case
of BalCo, the aggregate number of shares of Common Stock BalCo transfers after
October 2, 2001, and its beneficial ownership after such transfers aggregate,
or in the case of all Grandfathered Persons the Grandfathered Persons in the
aggregate beneficially own, more than 32% of the then outstanding Common Stock,
unless such ownership threshold is exceeded as a result of the acquisition of
shares of Common Stock by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares of Common Stock
beneficially owned by such Grandfathered Persons in the aggregate to more than
32% of the shares of Common Stock then outstanding; provided, however, that if
the Grandfathered Persons in the aggregate shall become the Beneficial Owners of
more than 32% of the shares of Common Stock then outstanding by reason of such
share acquisitions by the Company and shall thereafter in the aggregate become
the Beneficial Owners of any additional shares of Common Stock, then each such
Grandfathered Person shall cease to be a Grandfathered Person, unless upon
becoming in the aggregate the Beneficial Owners of such additional shares of
Common Stock (other than pursuant to a dividend or distribution paid or made by
the Company on the outstanding Common Stock in shares of Common Stock or
pursuant to a split or subdivision of the outstanding Common Stock), the
Grandfathered Persons in the aggregate do not beneficially own more than 32% of
the shares of Common Stock then outstanding or (iii) a Grandfathered Person
becomes the beneficial owner of less than 15% of the Common Stock then
outstanding. A Permitted Transferee shall mean any Person who acquires Common
Stock directly or indirectly from BalCo if such Common Stock was beneficially
owned by BalCo as of October 3, 2001, and after giving effect to such
acquisition such Person is the Beneficial Owner of 15% or more but not more than
32% of the shares of Common Stock outstanding at the time of transfer; provided,
that prior to such transfer, BalCo has provided the Board of Directors with
written notification of the name(s) and address(es) of the proposed
transferee(s) and within 14 days from the date of such written notification, the
Company has not provided BalCo with written notification that the Board of
Directors of the Company has determined, in good faith, that (i) such transferee
is objectionable, together with the reasons therefor, or (ii) such Person is
engaged in a business that competes with the business of the Company or any of
its subsidiaries.
2. Except as otherwise expressly provided herein, all provisions of the
Agreement, as heretofore amended, shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the 2nd day of October, 2001.
BALLANTYNE OF OMAHA, INC.
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
Title: President and Chief Executive Officer
MELLON INVESTOR SERVICES LLC
(formerly CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.), a New Jersey Limited
Liability Company
By: /s/ Xxxxx Xxxxx
----------------------------------------
Name: Xxxxx Xxxxx
Title: Assistant Vice President
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