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EXHIBIT 20.1
[MICROSEMI LETTERHEAD APPEARS HERE]
December 22, 2000
To Our Stockholders:
On November 28, 2000, the Board of Directors of Microsemi Corporation (the
"Company") approved the adoption of a Shareholder Rights Plan for the Company,
which is intended to protect stockholder interests in the event of an
unsolicited attempt to acquire the Company on terms that are not in the best
interests of the stockholders. I am enclosing a Summary that provides more
details about the Shareholder Rights Plan. This plan succeeds the Microsemi
Shareholder Rights Plan that was adopted in 1988.
Shareholder rights plans are commonly adopted to assure that all
stockholders are treated fairly in the event of an attempted takeover of a
company. The adoption of the Shareholder Rights Plan in no way weakens the
financial strength of the Company, does not have a dilutive effect and will not
affect reported earnings per share. Further, the adoption of the Plan does not
affect the way you now trade shares of the Company's stock.
The Plan provides for a dividend of one Right for each share of outstanding
common stock. Each Right entitles the holder, on the occurrence of certain
events, to purchase shares of a newly-created class of the Company's preferred
stock. The Company may redeem each Right, on terms spelled out in the Plan, if
approved by the Board of Directors. To implement the Plan, the Company is
distributing the non-cash Rights dividend to stockholders of record as of the
close of business on December 22, 2000. The Rights automatically attach to all
shares outstanding on December 22, 2000, and no separate certificates will be
issued. Shares issued after December 22, 2000 will also have Rights attached.
I would like to emphasize that the Rights are not being distributed in
response to any effort to acquire control of the Company, nor is the Board aware
of any such attempt. The Shareholder Rights Plan was adopted to ensure the
Board's ability to protect stockholder interests against takeover strategies
that may not provide maximum stockholder value.
Moreover, the Plan is not intended to prevent all takeovers of the Company.
The Rights may be redeemed by the Company under certain circumstances and
therefore should not interfere with any merger or business combination that is
approved by the Board.
On behalf of the Board of Directors,
/s/ David R. Sonksen,
David R. Sonksen,
Executive Vice President and
Chief Financial Officer
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SUMMARY OF TERMS OF
THE MICROSEMI CORPORATION
SHAREHOLDER RIGHTS PLAN
On May 20, 1988, the Board of Directors of Microsemi Corporation (the
"Company") first approved a Shareholder Rights Plan. The original Shareholder
Rights Plan, which had a 10-year term, expired. On November 28, 2000 the Board
of Directors of the Company approved the present Shareholder Rights Plan (the
"Plan") and declared a dividend distribution of one Right for each outstanding
share of Microsemi Corporation Common Stock to stockholders of record on the
close of business on Friday, December 22, 2000 (the "Dividend Date"). Each
Right entitles the registered holder to purchase from the Company a unit
consisting of one one-thousandth of a share (a "Fractional Share Unit") of
Series A Junior Participating Preferred Stock, par value $1.00 per share (the
"Preferred Stock"), at a purchase price of $400.00 per Fractional Share, subject
to future adjustments in accordance with the Plan. For example, at an exercise
price of $400 per Right, each Right not owned by an Acquiring Person (or by
certain related parties) following an event set forth in the preceding paragraph
would entitle its holder to purchase $800 worth of Common Stock (or other
consideration, as noted above) for $400. Assuming that the Common Stock had a
per share value of $40.00 at such time, the holder of each valid Right would be
entitled to purchase 20 shares of Common Stock for $400. The description and
terms of the Rights are set forth in a Rights Agreement (the "Rights Agreement")
dated December 22, 2000 between the Company and Mellon Investor Services, LLC, a
New Jersey limited liability company as Rights Agent.
Certificates. After the Dividend Date, the Rights will be attached to
all Common Stock certificates representing shares then outstanding, and no
separate Rights Certificates will be distributed. Subject to extension by the
Board of Directors in certain circumstances, the Rights will separate from the
Common Stock and a distribution date (the "Distribution Date") will occur upon
the earlier of (i) 20 days following a public announcement that a Person or
group of affiliated or associated Persons (an "Acquiring Person") has acquired,
or obtained the right to acquire, beneficial ownership of 30% or more of the
outstanding shares of Common Stock (the "Stock Acquisition Date"); or (ii) 20
days following the commencement of a tender offer or exchange offer that would
result in a Person or group beneficially owning 30% or more of the outstanding
shares of Common Stock. Current 20% stockholders (if any) would be excluded
from the definition of an Acquiring Person until such time as such Person or
group has acquired, or obtained the right to acquire, 30% or more of the
outstanding shares of Common Stock. Also any Person who shall become the
Beneficial Owner of 20% or more of the outstanding shares of Common Stock solely
as a result of an acquisition by the Company of shares of Common Stock would be
excluded from the definition of Acquiring Person until such time thereafter as
such Person shall become the Beneficial Owner (other than by means of a stock
dividend or stock split) of any additional shares of Common Stock. Until the
Distribution Date, (i) the Rights will be evidenced by the Common Stock
certificates and will be transferred with and only with such Common Stock
certificates; (ii) new Common Stock certificates issued will contain a notation
incorporating the Rights Agreement by reference; and (iii) the surrender for
transfer of any certificates for Common Stock outstanding will also constitute
the transfer of the Rights associated with the Common Stock represented by such
certificate.
As soon as practicable after a Distribution Date, if any, Rights
Certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Rights
Certificates will represent the Rights. Except as otherwise determined
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by the Board of Directors, only shares of Common Stock issued prior to the
Distribution Date will be issued with Rights.
Expiration and Exercise. The Rights are not exercisable until the
Distribution Date and will expire at the close of business on December 21, 2010,
unless the Rights are extended or earlier redeemed by the Company as described
below.
"Flip-In". In the event that, at any time following the Dividend
Date, (i) the Company is the surviving corporation in a merger with an Acquiring
Person and its Common Stock is not changed or exchanged; (ii) an Acquiring
Person becomes the beneficial owner of more than 20% of the outstanding shares
of Common Stock; (iii) an Acquiring Person engages in one or more "self-dealing"
transactions as set forth in the Rights Agreement; or (iv) during such time as
there is an Acquiring Person, an event occurs which results in such Acquiring
Person's ownership interest being increased by more than 1% (e.g., a reverse
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stock split), each holder of a Right will thereafter have the right to receive,
upon exercise, Common Stock (or, in certain circumstances, cash, property or
other securities of the Company) having a value equal to two times the exercise
price of the Right.
"Flip-Over". In the event that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or other business
combination transaction in which the Company is not the surviving corporation;
or (ii) 50% or more of the Company's assets or earning power is sold or
transferred, each holder of a Right (except Rights which previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise, common stock of the acquiring company having a value equal to two
times the exercise price of the Right. The events set forth in this paragraph
and in the second preceding paragraph are referred to as the "Triggering
Events."
Notwithstanding any of the foregoing, following the occurrence of any
of the "Flip-In" or "Flip-Over" events set forth in the paragraphs above, all
Rights that are, or (under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring Person will be null and
void. However, Rights are not exercisable following the occurrence of any of the
Flip-Over or Flip-In events set forth above until such time as the Rights are no
longer redeemable by the Company as set forth below.
Permitted Offer. A Permitted Offer does not trigger the
exercisability of the Rights. A tender or exchange offer for all outstanding
Common Stock at a price and on terms determined by the Board of Directors prior
to the purchase to be adequate and in the best interests of the Company and its
stockholders (other than the Acquiring Person) is a Permitted Offer under the
Rights Agreement. The term "Permitted Offer" also includes a tender offer or
an exchange offer commenced on or after the Rights Dividend Record Date by a
bidder for all outstanding shares of Common Stock (i) that remains open for at
least 50 business days; (ii) pursuant to which the bidder together with its
Affiliates and Associates becomes the beneficial owner of 75% of the outstanding
shares of Common Stock immediately upon completion of such offer; (iii) if and
to the extent the consideration offered is cash, states that the bidder has
obtained written financing commitments from recognized financing sources, and/or
has on hand cash or cash equivalents, for the full amount of all financing
necessary to consummate such tender offer and pay all related fees and expenses;
(iv) if all or part of the consideration offered is securities, offers a
security that is to be issued by an entity that has a consolidated net worth at
least equal to that of the Company and its consolidated subsidiaries as of
September 30, 2000; and (v) states that as promptly as practicable following the
completion of such offer, the bidder will propose and seek to consummate a
merger of the Company with the bidder (or a subsidiary thereof) in which each
share of Common Stock not then owned by the bidder will be converted into the
same form and amount of consideration per share as that paid in such offer. In
order to satisfy the requirements of clause (i) of this definition, if the
nature or amount of the consideration offered in such offer is changed after the
offer is commenced, the offer must remain open for at least 50 business days
from the date of such change; provided that the requirement of this sentence
shall not apply (a) if the consideration is increased after the offer is
commenced to an amount that equals or exceeds in value the consideration offered
in any other tender offer or
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exchange offer for shares of Common Stock that is open at the time such increase
is made and (b) such consideration is not thereafter reduced.
Exchange Feature. At any time after any Person becomes an Acquiring
Person and prior to the acquisition by such Person or group of 50% or more of
the outstanding Common Stock, the Board of Directors may exchange the Rights
(other than Rights owned by such Acquiring Person or group which will have
become void), in whole or in part, at an exchange rate of one share of Common
Stock (or a combination of cash, property, Common Stock or other securities
having an equal value) per Right (subject to adjustment).
Adjustment for Dilution. The purchase price payable, and the number
of Fractional Shares of Preferred Stock or other securities or property issuable
upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision,
combination or reclassification of, the Preferred Stock; (ii) if holders of the
Preferred Stock are granted certain rights or warrants to subscribe for
Preferred Stock or convertible securities at less than the current market price
of the Preferred Stock; or (iii) upon the distribution to holders of the
Preferred Stock of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).
With certain exceptions, no adjustment in the purchase price will be
required until cumulative adjustments amount to at least 1% of the purchase
price. No fraction of a Fractional Share will be issued and, in lieu thereof,
an adjustment in cash will be made based on the market price of the Preferred
Stock on the last trading date prior to the date of exercise.
Redemption. At any time until twenty days following the Stock
Acquisition Date (subject to extension by the Directors), the Company may redeem
the Rights in whole, but not in part, at a price of $.00001 per Right. Under
certain circumstances set forth in the Rights Agreement, the decision to redeem
shall require the concurrence of a majority of the Directors that such
redemption of the Rights is fair to the Company. After the redemption period
has expired, the Company's right of redemption may be reinstated if an Acquiring
Person reduces his beneficial ownership to 20% or less of the outstanding shares
of the Common Stock in a transaction or series of transactions not involving the
Company. Immediately upon the action of the Board of Directors ordering
redemption of the Rights, the Rights will terminate and the only right of the
holders of Rights will be to receive the $.00001 redemption price. Rights are
not exercisable while they are subject to redemption.
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No Rights as a Stockholder. Until a Right is exercised, the holder
thereof, as such, will have no rights as a stockholder of the Company,
including, without limitation, the right to vote or to receive dividends. While
the distribution of the Rights will not be taxable to stockholders or to the
Company, stockholders may, depending upon the circumstances, recognize taxable
income in the event that the Rights become exercisable for Common Stock (or
other consideration) of the Company or for common stock of the acquiring company
as set forth above.
Amendments. The Board of Directors of the Company prior to the
Distribution Date may amend any of the provisions of the Rights Agreement.
After the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board in order to cure any ambiguity, to make changes which do
not adversely affect the interests of holders of Rights (excluding the interests
of any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; provided, however, that no amendment to adjust the time period
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governing redemption shall be made at such time as the Rights are not
redeemable.
Availability of Rights Agreement. A copy of the Rights Agreement and
each of the other relevant documents has been filed on or about December 28,
2000 by the Company with the Securities and Exchange Commission as an Exhibit to
a Registration Statement on Form 8-A. The Company's filings, reports and proxy
statements under the Securities Exchange Act are available at the Securities and
Exchange Commission's web site, www.sec.gov. A copy of the Rights Agreement and
these other documents is available free of charge from the Company. This Summary
of Terms of Shareholder Rights Plan does not purport to be complete and is
qualified in its entirety by reference to the definitive Rights Agreement, as
may from time to time be amended, and the other exhibits referred to above, all
of which are incorporated herein by this reference.
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