RIGHTS AGREEMENT AMENDMENT
Rights Agreement Amendment, dated as of July 15, 1997 (this "Amendment"),
to the Rights Agreement dated as of May 22, 1995 (the "Rights Agreement"),
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. 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 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inaccurate or out-of-date, or (B) otherwise cause a Distribution Date or the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 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. Notwithstanding anything in this Rights
Agreement, none of Xxx Xxxxxx, Xxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx
Xxxxxx, Xxx Xxxxxxxxx, Meriken Nominees Limited,
Tucker Lemon or Xxxxxx Xxxx or their respective Affiliates
or Associates, or any other Person, shall become an "Acquiring Person" as the
result of entering into, performing the terms of, or consummating the
transactions contemplated by (x) the Agreement and Plan of Reorganization,
dated as of August 4, 1997, as amended from time to time (the "Merger
Agreement"), among the Company, IWK-1 Merger Corporation, a Delaware
corporation and a wholly owned subsidiary of the Company and Showscan
Entertainment, Inc. or (y) the Stockholder Support Agreements entered into
between Showscan Entertainment, Inc. and each of Xxx Xxxxxx, Xxxxx Xxxxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxx Xxxxxx, Xxx Xxxxxxxxx and Meriken Nominees Limited
(collectively, the "Stockholder Support Agreements")."
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 25% of the Common Stock then outstanding."
3. Section 3(a)(ii) of the Rights Agreement is hereby amended and
restated to read in its entirety as follows:
"(ii) the close of business on the tenth day (or such later day 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 of a tender or exchange offer by any Person (other than an Exempt
Person) to acquire (when added to any equity securities as to which such Person
is the Beneficial Owner immediately prior to such commencement) Beneficial
Ownership of 15% (or, in the case of Heartland Advisors, Inc., the percentage
Heartland Advisors, Inc. may hold without ceasing to be an Exempt Person) or
more of the issued and outstanding Common Stock (including any such date which
is after the Declaration Date and prior to the issuance of the Rights), and"
4. Section 3(a) of the Rights Agreement is further amended by adding a
new sentence as the final sentence thereto, which shall 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."
5. This Amendment shall be governed by and construed in accordance with
the laws of the State of Delaware.
6. 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.
7. 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.
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/ Xxx X. Xxxxxx
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Title: Chief Executive Officer
U.S. STOCK TRANSFER CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
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Title: Vice President
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