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EXHIBIT 1-A
AMENDMENT TO RIGHTS AGREEMENT
THIS AMENDMENT between FSI International, Inc., a Minnesota
corporation (the "Company"), and Xxxxxx Trust and Savings Bank (the "Rights
Agent"), dated as of March 26, 1998 (this "Amendment"), to Rights Agreement
dated as of May 22, 1997 (the "Original Agreement") between the Company and the
Rights Agent.
WHEREAS, the Company and the Rights Agent have entered into
the Original Agreement; and
WHEREAS, the Board of Directors of the Company has determined
to amend the Original Agreement in accordance with Section 27 thereof.
ACCORDINGLY, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. Section 1(a) of the Original Agreement is hereby
amended in its entirety to read as follows:
(a) "Acquiring Person" shall mean any Person (as such term is
defined in this Agreement) who or which, together with all Affiliates
and Associates (as such terms are defined in this Agreement) of such
Person, shall be the Beneficial Owner (as such term is defined in this
Agreement) of 15% or more of the Common Shares of the Company then
outstanding, but shall not include (i) the Company, (ii) any Subsidiary
(as such term is defined in this Agreement) of the Company, (iii) any
employee benefit plan of the Company or of any Subsidiary of the
Company, (iv) any entity holding Common Shares for or pursuant to the
terms of any such plan described in clause (iii) of this sentence or
(v) EQSF Advisers, Inc., X. X. Xxxxxxx Advisers, Inc., or their
Affiliates and Associates (the "Xxxxxxx Funds"), provided, however,
that if the Xxxxxxx Funds shall become the Beneficial Owner of an
aggregate of 19% or more of the Common Shares of the Company then
outstanding (regardless of whether such Common Shares were acquired
before or after the date hereof), then the Xxxxxxx Funds shall be
deemed an "Acquiring Person". Notwithstanding the foregoing, no Person
shall become an "Acquiring Person"(including the Xxxxxxx Funds) as the
result of an acquisition of Common Shares by the Company which, by
reducing the number of Common Shares outstanding, increases the
proportionate number of shares beneficially owned by such Person to 15%
or more (or with respect to the Xxxxxxx Funds, 19% or more) of the
Common Shares of the Company then outstanding; provided, however, that
if a Person shall, together with all Affiliates or Associates of such
Person, become the Beneficial Owner of 15% or more (or with respect to
the Xxxxxxx Funds, 19% or more) of the Common Shares of the Company
then outstanding by reason of share acquisitions by the Company and if
such Person or such Person's Affiliates or Associates shall, after such
share acquisitions by the Company, become the Beneficial Owner of any
additional Common Shares of the Company, and
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immediately after becoming the Beneficial Owner of such additional
Common Shares, such Person shall, together with all Affiliates and
Associates of such Person, be the Beneficial Owner of 15% or more (or
with respect to the Xxxxxxx Funds, 19% or more) of the Common Shares of
the Company then outstanding, then such Person (unless such Person
shall be (1) the Company, (2) any Subsidiary of the Company, (3) any
employee benefit plan of the Company or of any Subsidiary of the
Company, or (4) any entity holding Common Shares for or pursuant to the
terms of any such plan described in clause (3) of this sentence) shall
be deemed an "Acquiring Person". An entity other than the Company or
any Subsidiary of the Company holding Common Shares for or pursuant to
the terms of an employee benefit plan of the Company or of any
Subsidiary of the Company and in addition being the Beneficial Owner of
Common Shares that are not held for or pursuant to the terms of any
such plan shall be deemed to constitute an Acquiring Person,
notwithstanding anything herein stated, if, but only if, it, together
with its Affiliates and Associates, shall be the Beneficial Owner of
15% or more, exclusive of those Common Shares held by it for or
pursuant to the terms of any such plan, of the Common Shares then
outstanding.
2. Section 3(a) of the Original Agreement is hereby
amended in its entirety to read as follows:
(a) Until the earlier of (i) the Close of Business on the 15th
day after the Shares Acquisition Date or (ii) the Close of Business on
the 15th day (or such later date as may be determined by action of the
Board of Directors of the Company prior to such time as any Person
becomes an Acquiring Person) after the date of the commencement by any
Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the
Company or any entity holding Common Shares for or pursuant to the
terms of any such plan) of, or of the first public announcement of the
intention of any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary
of the Company or any entity holding Common Shares for or pursuant to
the terms of any such plan) to commence (which intention shall not have
been withdrawn within five business days (as defined in Rule 14d-1 of
the General Rules and Regulations under the Exchange Act) after such
public announcement), a tender or exchange offer the consummation of
which would result in beneficial ownership by a Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan of
the Company or of any Subsidiary of the Company or any entity holding
Common Shares for or pursuant to the terms of any such plan) of 15% or
more (or by the Xxxxxxx Funds of 19% or more) of the then outstanding
Common Shares (including any such date that is after the date of this
Agreement and prior to the issuance of the Rights, the earlier of such
dates being herein referred to as the "Distribution Date"), (x) the
Rights will be evidenced (subject to the provisions of Section 3(b)) by
the certificates for Common Shares registered in the names of the
holders thereof (which certificates shall also be deemed to be Right
Certificates where the context so requires) and not by separate Right
Certificates, and (y) the right to receive Right Certificates will be
transferable only in connection with the transfer of Common Shares.
Notwithstanding anything stated in this Section 3 to the contrary, the
Distribution Date shall in no event occur until the authority of the
Board of Directors of the Company to redeem the Rights pursuant to
Section 23(a), as such section may be amended pursuant to Section 27,
shall have terminated. As soon as practicable after the Distribution
Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the
Rights Agent will, if requested, send, at the expense of the Company)
by first-class, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the
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Distribution Date, at the address of such holder shown on the records
of the Company, one or more Right Certificates, in substantially the
form of Exhibit B hereto (the "Right Certificates"), evidencing one
Right for each Common Share so held, subject to adjustment pursuant to
Section 11(i). In the event that an adjustment in the number of Rights
per Common Share has been made pursuant to Section 11(i), at the time
Right Certificates are distributed, the Company may, to the extent
provided in Section 14(a), make the necessary and appropriate
adjustments (as set forth in Section 14(a)) so that Right Certificates
are distributed representing only whole numbers of Rights and pay cash
in lieu of fractional Rights pursuant to Section 14(a). As of and after
the Distribution Date, the Rights will be evidenced solely by such
Right Certificates.
3. Section 27 of the Original Agreement is hereby
amended in its entirety to read as follows:
Section 27. Supplements and Amendments. The Company may and
the Rights Agent shall, if so directed by the Company, from time to
time supplement or amend this Agreement without the approval of any
holders of Common Shares or Right Certificates in order (i) to extend
the Final Expiration Date or, provided that at the time of such
amendment (x) no Person has become an Acquiring Person or (y) a
majority of the directors are Continuing Directors, to extend the
period during which the Rights may be redeemed, notwithstanding
anything to the contrary provided in clause (iv), (ii) to cure any
ambiguity, or to correct or supplement any provision contained in this
Agreement which may be defective or inconsistent with any other
provisions in this Agreement, (iii) prior to the Distribution Date, to
otherwise change or supplement any provision in this Agreement in any
manner which the Company may deem necessary or desirable, or (iv)
following the Distribution Date, to otherwise change or supplement any
provision in this Agreement in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the
interests of the holders of Right Certificates (other than Right
Certificates evidencing Rights that shall have become null and void
pursuant to Section 11(a)(ii)). Without limiting the foregoing, the
Company may at any time prior to such time as any Person becomes an
Acquiring Person amend this Agreement to lower the thresholds set forth
in Sections 1(a) and 3(a) from 15% to not less than the greater of (i)
the sum of .001% and the largest percentage of the outstanding Common
Shares then known by the Company to be beneficially owned by any Person
(other than (1) the Company, (2) any Subsidiary of the Company, (3) any
employee benefit plan of the Company or any Subsidiary of the Company,
(4) any entity holding Common Shares for or pursuant to the terms of
any plan described in clause (3) of this sentence or (5) the Xxxxxxx
Funds) or (ii) 10%. Notwithstanding anything in this Agreement to the
contrary, no supplement or amendment that changes the rights and duties
of the Rights Agent under this Agreement shall be effective without the
written consent of the Rights Agent.
4. Notwithstanding the provisions herein, in the event the
Xxxxxxx Funds after the date hereof become the Beneficial Owner of less than 15%
of the Common Shares of the Company then outstanding, the amendments effected
hereby shall, without any action of the Company or the Rights Agent, be of no
further force or effect.
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The Original Agreement shall remain in full force and effect
without amendment except this Amendment and any other amendment made in
accordance with Section 27 of the Agreement. All references in the Original
Agreement to "this Agreement" or the "Agreement" or "hereof" and all references
in this Amendment to the Agreement shall hereafter be deemed to be references to
the Original Agreement as amended by this Amendment and any other amendment made
in accordance with Section 27 of the Agreement. All terms used in this Amendment
that are defined in the Original Agreement but are not defined herein shall have
the meanings ascribed to them in the Original Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the day and year first above written.
FSI International, Inc.
By /s/ Benno Sand
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Its EVP, CAO
Harris Trusts and Savings Bank
By /s/ Xxxxx X. Xxxxxxx
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Its Vice President
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