FIRST AMENDMENT TO RIGHTS AGREEMENT
This First Amendment to Rights Agreement (the "Amendment") is made and
entered into effective as of the 7th day of June, 2000, by and between Evans &
Sutherland Computer Corporation, a Utah corporation (the "Company"), and
American Stock Transfer & Trust Company, as Rights Agent (the "Rights Agent").
Recitals
A. Effective as of November 19, 1998 (the "Record Date"), the Company
and the Rights Agent entered into a Rights Agreement (the "Agreement"), and the
Board of Directors of the Company authorized and declared a dividend of one
preferred share purchase right as described in the Agreement (a "Right") for
each share of Common Stock of the Company outstanding as of the Record Date.
B. The Agreement sets forth certain matters with respect to the nature,
terms, exercise, modification and redemption of the Rights.
C. The rights are currently redeemable, as provided in Section 23 of
the Agreement, because no "Flip-In Event" (as defined in the Agreement) has yet
occurred (meaning that no person has become an "Acquiring Person" as defined in
the Agreement).
D. As provided in Section 27 of the Agreement, so long as the Rights
are redeemable, the Company may in its sole and absolute discretion, and the
Rights Agent shall if the Company so directs, amend any provisions of the
Agreement in any respect without the approval of any holders of the Rights, so
long as no such amendment changes the Redemption Price (as defined in the
Agreement) of the Rights.
E. The Company desires to amend the terms of the Agreement to allow
State of Wisconsin Investment Board ("SWIB"), a current shareholder of the
Company, to increase its equity interest in the Company to up to 19.9%, without
becoming an Acquiring Person, such as would trigger various rights and
obligations under the Agreement.
F. As contemplated by Section 30 of the Agreement, the Board of
Directors of the Company has approved the foregoing amendments to the Agreement.
G. Pursuant to the terms of the Agreement, the Rights Agent will
implement the amendment to the Agreement described herein.
Agreement
NOW THEREFORE, the Company and the Rights Agent agree as follows:
1. Amendment of Agreement to Modify Definition of "Acquiring Person".
The Agreement is hereby amended and modified to provide that SWIB will not be
deemed to be an Acquiring Person until it becomes the Beneficial Owner (as
defined in the Agreement) of more than 19.9% of the shares of Common Stock (as
defined in the Agreement) then outstanding, and all inconsistent provisions of
the Agreement shall be construed to reflect such modification. Unless otherwise
defined herein, all capitalized terms herein shall have the meanings given to
them in the Agreement.
2. Modification of Section 1(a) of Agreement. The definition of
"Acquiring Person" as set forth in Section 1(a) of the Agreement is hereby
modified to reflect the modification referenced above, to read in its entirety
as follows:
"(a) "Acquiring Person" shall mean (Y) any Person (as
such term is hereinafter defined) other than State of Wisconsin
Investment Board ("SWIB") who or which shall be the Beneficial Owner
(as such term is hereinafter defined) of 15% or more of the shares of
Common Stock then outstanding, or (Z) SWIB on such date as it becomes
the Beneficial Owner of more than 19.9% of the shares of Common Stock
then outstanding, but shall not include an Exempt Person (as such term
is hereinafter defined); provided, however, that (i) if the Board of
Directors of the Company determines in good faith that a Person who
would otherwise be an Acquiring Person became such inadvertently
(including, without limitation, because (A) such Person was unaware
that it beneficially owned a percentage of Common Stock that would
otherwise cause such Person to be an Acquiring Person or (B) such
Person was aware of the extent of its Beneficial Ownership of Common
Stock but had no actual knowledge of the consequences of such
Beneficial Ownership under this Agreement) and without any intention of
changing or influencing control of the Company, then such person shall
not be deemed to be or to have become an Acquiring Person for any
purposes of this Agreement unless and until such Person shall have
failed to divest itself, as soon as practicable (as determined, in good
faith, by the Board of Directors of the Company), of Beneficial
Ownership of a sufficient number of shares of Common Stock so that such
Person would no longer otherwise qualify as an Acquiring Person; (ii)
if, as of the date hereof or prior to the first public announcement of
the adoption of this Agreement, any Person is or becomes the Beneficial
Owner of 15% or more of the shares of Common Stock outstanding, such
Person shall not be deemed to be or to become an Acquiring Person
unless and until such time as such Person shall, after the first public
announcement of the adoption of this Agreement, become the Beneficial
Owner of additional shares of Common Stock (other than pursuant to a
dividend or distribution paid or made by the Company on the outstanding
Common Stock or pursuant to a split or subdivision of the outstanding
Common Stock), unless, upon becoming the Beneficial Owner of such
additional shares of Common Stock, such Person is not then the
Beneficial Owner of 15% or more of the shares of Common Stock then
outstanding; and (iii) no Person shall become an Acquiring Person as
the result of an 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 Person to (i) 15% or more of the shares of Common Stock then
outstanding in the case of any Person other than SWIB, or (ii) more
than 19.9% of the shares of Common Stock then outstanding in the case
of SWIB, provided, however, that if a Person shall become the
Beneficial Owner of (i) 15% or more of the shares of Common Stock then
2
outstanding, in the case of any person other than SWIB, or (ii) more
than 19.9% of the shares of Common Stock outstanding, in the case of
SWIB, by reason of such share acquisitions by the Company and shall
thereafter become the Beneficial Owner of any additional shares of
Common Stock (other than pursuant to a dividend or distribution paid or
made by the Company on the outstanding Common Stock or pursuant to a
split or subdivision of the outstanding Common Stock), then such Person
shall be deemed to be an Acquiring Person unless upon becoming the
Beneficial Owner of such additional shares of Common Stock such Person
does not beneficially own either (i) 15% or more (in the case of any
Person other than SWIB), or (ii) more than 19.9% (in the case of SWIB)
of the shares of Common Stock then outstanding. For all purposes of
this Agreement, any calculation of the number of shares of Common Stock
outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made
in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the
General Rules and Regulations under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), as in effect on the date
hereof."
3. Modification of Section 3(a) of the Agreement. The reference in the first
sentence of Section 3(a) of the Agreement to 15%, representing the threshold
Beneficial Ownership of Common Stock by any Person other than an Exempt Person
that would trigger a Distribution Date on the terms set forth in such Section,
is hereby modified to be 15% or more in the case of any Person other than SWIB,
and more than 19.9% in the case of SWIB.
4. Agreement, as Modified, to Continue in Full Force and Effect;
Application of General Provisions. Except as specifically modified hereby, the
Agreement shall continue in full force and effect. This Amendment shall be
considered to be and construed as a part of the Agreement, and the general
provisions of the Agreement, including those set forth in Sections 26 through 34
of the Agreement, shall apply equally to this Amendment.
3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed, effective as of the date first set forth above.
EVANS & SUTHERLAND COMPUTER CORPORATION
By: /s/ James R. Oyler
------------------------------------
Name: James R. Oyler
----------------------------------
Title: President and CEO
---------------------------------
AMERICAN STOCK TRANSFER & TRUST COMPANY,
as Rights Agent
By: /s/ Herbert J. Lemmer
------------------------------------
Name: Herbert J. Lemmer
----------------------------------
Title: Vice President
---------------------------------
4