FIRST AMENDMENT TO
SHAREHOLDER PROTECTION RIGHTS AGREEMENT
THIS FIRST AMENDMENT (this "Amendment"), dated as of October 14, 1997, is
between ISOLYSER COMPANY, INC., a Georgia corporation (the "Company"), and
SUNTRUST BANK, as Rights Agent (the "Rights Agent"):
W I T N E S S E T H :
WHEREAS, in connection with that certain Shareholder Protection Rights
Agreement (the "Agreement") dated as of December 20, 1996 between the Company
and the Rights Agent, the Board of Directors of the Company authorized and
declared a dividend of one Right in respect of each share of Common Stock held
of record as of the close of business on December 31, 1996; and
WHEREAS, the Board of Directors of the Company deems it advisable and in
the best interests of the Company and its shareholders to amend the Agreement in
accordance with Section 5.4 of the Agreement;
NOW, THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the parties hereby agree as follows:
1. Defined Terms. Initially capitalized terms used in this Amendment which
are not otherwise defined herein are used with the same meaning ascribed to such
terms in the Agreement.
2. Replacement of Summary Schedule. The "Summary of Shareholder Protection
Rights Plan" preceding the Agreement is replaced with the summary attached to
this Amendment as Exhibit A and incorporated herein by reference.
3. Amendments.
(a) Section 1.1 is amended by deleting the last sentence contained
within the paragraph of such section defining "Acquiring Person", and inserting
in lieu thereof the following:
Any applicable determination made by the
Company's Board of Directors under the
preceding clause (iii) shall be subject to
Sections 5.1(c) and 5.4 hereof.
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(b) Section 1.1 is amended by adding the following definition to such
section:
"Proxy Contestant" shall mean any Person
included within the definition of the term
"participant" in Schedule 14A of the Securities
Exchange Act, as such Schedule is currently in
effect (for purposes of which the term
"registrant" shall mean the Company), to the
extent the subject solicitation of proxies or
consents is in connection with the election or
removal of directors of the Company, and any
Affiliate or Associate of any such Person.
(c) Section 5.1 of the Agreement is hereby amended by adding to such
Section a new Subsection (c) as follows:
(c) Notwithstanding the other provisions of
this Section 5.1, in the event that a majority
of the Board of Directors of the Company is
comprised of Persons (or their respective
successors) elected at a meeting or by written
consent of shareholders who are not nominated
by the Board of Directors in office immediately
prior to such meeting or action by written
consent and who were elected to the Board of
Directors for the purpose of either
facilitating a Transaction with a Proxy
Contestant or circumventing directly or
indirectly the provisions of this subsection,
then (i) the Rights may not be redeemed for a
period of 365 days following the effectiveness
of such election if such redemption is
reasonably likely to have the purpose or effect
of facilitating such a Transaction with a Proxy
Contestant and (ii) the Rights may not be
redeemed following such 365 day period if such
redemption is reasonably likely to have the
purpose of facilitating such Transaction with a
Proxy Contestant and during such 365 day
period, the Company entered into any agreement,
arrangement or understanding with a Proxy
Contestant which is reasonably likely to have
the purpose or effect of facilitating such
Transaction with a Proxy Contestant.
(d) Section 5.4 of the Agreement is hereby amended by inserting at the
end thereof the following:
Notwithstanding anything contained in this
Agreement to the contrary, in the event that a
majority of the Board of Directors of the
Company is comprised of Persons (or their
respective successors) elected at a meeting or
by written consent of shareholders who are not
nominated by the Board of Directors in office
immediately prior to such meeting or action by
written consent and who were elected to the
Board of Directors for the purpose of either
facilitating a Transaction with a Proxy
Contestant or circumventing directly or
indirectly the provisions of this
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sentence or Section 5.1(c) hereof, then (i) for
a period of 365 days following the
effectiveness of such action, this Agreement
shall not be amended or supplemented, and no
approval may be granted by the Board of
Directors under clause (iii) of the definition
of "Acquiring Person" contained in Section 1.1
hereof, in any manner reasonably likely to have
the purpose or effect of facilitating a
Transaction with a Proxy Contestant and (ii) no
such amendments, supplements or approvals may
be made following such 365 day period if (x)
such amendment, supplement or approval is
reasonably likely to have the purpose or effect
of facilitating a Transaction with a Proxy
Contestant and (y) during such 365 day period,
the Company enters into any agreement,
arrangement or understanding with such Proxy
Contestant which is reasonably likely to have
the purpose or effect of facilitating such a
Transaction with such Proxy Contestant.
4. Counterparts. This Amendment may be executed in any one or more
counterparts, each of which shall be deemed an original and all of which shall
together constitute the same Amendment.
5. Ratification. Except as modified and amended as set forth herein, the
Agreement is hereby adopted, ratified and confirmed without further modification
or amendment.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ISOLYSER COMPANY, INC.
By: _______________________________
Name:_______________________________
Title:______________________________
SUNTRUST BANK
By: _______________________________
Name:_______________________________
Title:______________________________
473363.1
EXHIBIT A
ISOLYSER COMPANY, INC.
SUMMARY OF SHAREHOLDER PROTECTION RIGHTS PLAN
AS AMENDED BY THE FIRST AMENDMENT THERETO
DISTRIBUTION AND TRANSFER OF RIGHTS; RIGHTS CERTIFICATES: The Board has declared
a dividend of one Right for each share of Common Stock outstanding on December
31, 1996. Prior to the Separation Time referred to below, the Rights will be
evidenced by and trade with the Common Stock and will not be exercisable. After
the Separation Time, the Company will mail Rights Certificates to shareholders
and the Rights will become transferable apart from the Common Stock.
SEPARATION TIME: Rights will separate from the Common Stock and become
exercisable following the earlier of (i) the date of the Flip-in Trigger
referred to below or (ii) the tenth business day (or such later day as the Board
may decide) after any person commences a tender offer that would result in such
person holding a total of 15% or more of the Common Stock.
EXERCISE OF RIGHTS: After the Separation Time, each Right will entitle the
holder to purchase, for an Exercise Price of $60.00, Participating Preferred
Stock designed to have economic and voting terms similar to those of one share
of Common Stock.
"FLIP-IN" TRIGGER: Upon announcement that any person has acquired 15% or more of
the outstanding Common Stock, then:
(i) Rights owned by the person acquiring such stock (an "Acquiring Person") or
transferees thereof will automatically become void; and
(ii) each other Right will automatically become a right to buy, for the Exercise
Price, that number of shares of Common Stock or Participating Preferred
Stock having a market value of twice the Exercise Price.
EXCHANGE OPTION: If any person acquires between 15% and 50% of the outstanding
Common Stock, the Board may, in lieu of allowing Rights to be exercised, require
each outstanding Right to be exchanged for one share of Common Stock or
Participating Preferred Stock designed to have economic and voting terms similar
to those of one share of Common Stock.
"FLIP-OVER" TRIGGER: After an Acquiring Person has become such, the Company may
not consolidate or merge with, or sell 50% or more of its assets or earning
power to, any person (a "Flip-Over Transaction or Event") if at the time of such
merger or sale (or agreement to do any of the foregoing) the Acquiring Person
controls the Board of Directors and, in the case of a merger, will receive
different treatment than all other shareholders unless proper provision is made
so that each Right would thereafter become a right to buy, for the Exercise
Price, that number of shares of common stock of such other person having a
market value of twice the Exercise Price.
REDEMPTION: The Rights may be redeemed by the Board, at any time, until a
"Flip-in" Trigger has occurred, at a Redemption Price of $0.001 per Right,
subject to the restriction described below.
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POWER TO AMEND: The Board may amend the Plan in any respect until a "Flip-in"
Trigger has occurred, subject to the restriction described below. Thereafter,
the Board may amend the Plan in any respect not materially adverse to Rights
holders generally.
RESTRICTION ON REDEMPTION AND AMENDMENTS: The right of the Board to redeem the
rights or amend the Plan is restricted in the event of certain circumstances
designed to address a situation where a potential "raider" has obtained control
of the Board through the election or appointment of non-incumbent directors.
These restrictions generally prohibit redemptions or amendments facilitating a
transaction with an Acquiring Person for one year or longer following obtaining
control of the Board.
EXPIRATION: The Rights will expire no later than ten years from the date of
their issuance.
473363.1
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