AMENDMENT NO. 1
TO
RIGHTS AGREEMENT
THIS AMENDMENT NO. 1 (this "Amendment"), dated as of May 19, 1999, is
between DSP Group, Inc., a Delaware corporation (the "Corporation"), and Norwest
Bank Minnesota, N.A. (the "Rights Agent").
RECITALS
A. The Corporation and the Rights Agent have previously executed and
delivered that certain Rights Agreement, dated as of June 5, 1997, amended and
restated as of November 9, 1998 (the "Agreement").
B. The Corporation and the Rights Agent wish to enter into this Amendment
and thereby amend the Agreement, in accordance with the terms and provisions set
forth herein.
The parties hereto agree as follows:
AGREEMENT
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Capitalized terms used herein have the meanings
set forth in the Agreement, unless otherwise defined in this Amendment.
ARTICLE II
AMENDMENT TO RIGHTS AGREEMENT
Section 2.1 Amendment. Section 1(a) of the Rights Agreement shall be
amended to read in its entirety as follows:
(a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates or Associates of such Person, shall be the Beneficial
Owner of 15% or more of the shares of Company Common Stock then
outstanding. Notwithstanding the foregoing: (i) an "Acquiring Person"
shall not include (A) the Company, (B) any Subsidiary of the Company, (C)
any employee benefit plan maintained by the Company or any of its
Subsidiaries, (D) any trustee or fiduciary with respect to such employee
benefit plan acting in such capacity or a trustee or fiduciary holding
shares of Company Common Stock for the purpose of funding any such plan or
employee benefits, (E) any Person who has reported or is required to
report Beneficial Ownership of Company Common Stock on Schedule 13G under
the Exchange Act (or any comparable or successor report), but only so long
as (x) such Person is eligible to report such ownership on Schedule 13(G)
under the Exchange Act (or any comparable or successor report), (y) such
Person has not reported and is not required to report such ownership on
Schedule 13(D) under the Exchange Act (or any
1
comparable or successor report) and such Person does not hold shares of
Company Common Stock on behalf of any other Person who is required to
report Beneficial Ownership of such shares of Company Common Stock on such
Schedule 13(D), and (z) such Person does not beneficially own 20% or more
of the shares of Company Common Stock then outstanding, (F) any Person if
(1) the Board of Directors of the Company determines in good faith that
such Person who would otherwise be an "Acquiring Person" became such
inadvertently (including, without limitation, because (x) such Person was
unaware that it beneficially owned a percentage of Company Common Stock
that would otherwise cause such Person to be an "Acquiring Person" or (y)
such Person was aware of the extent of its Beneficial Ownership of Company
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, (2) as promptly as
practicable such Person divested or divests itself of Beneficial Ownership
of a sufficient number of shares of Company Common Stock so that such
Person would no longer beneficially own 15% or more of the then
outstanding shares of Company Common Stock, and (3) such Person does not
become the Beneficial Owner of any additional shares of Company Common
Stock after such Person becomes aware that such Person would be an
Acquiring Person (but for the operation of this clause (i)(F)), unless
upon becoming the Beneficial Owner of such additional shares such Person
is the Beneficial Owner of less than 15% of the then outstanding shares of
Company Common Stock, (G) any Person who becomes the Beneficial Owner of
15% or more of the then outstanding shares of Company Common Stock as a
result of the acquisition of shares of Company Common Stock directly from
the Company in one or more transactions approved by the Board of
Directors, (H) Magnum Technology Limited, an international investment fund
("Magnum"), and its subsidiaries with respect to (1) the shares of Company
Common Stock issued in the transaction contemplated by the Stock Purchase
Agreement by and between the Company and Magnum, dated as of February 2,
1999 (the "Magnum Agreement"), and (2) any additional shares of Company
Common Stock purchased by Magnum and its subsidiaries for so long as
Magnum and its subsidiaries own no more than 35% of the outstanding shares
of Company Common Stock; provided, that (w) any subsidiary of Magnum
holding shares of Company Common Stock shall be subject to all obligations
which would be applicable to Magnum if such shares were held by Magnum,
(x) all or substantially all of the capital stock of Magnum shall not have
been transferred to a single person (including, without limitation, an
entity or individual) or a group as defined under the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated
thereunder, (y) a direct or indirect change in control of Magnum and of
any subsidiary holding shares of Company Common Stock shall not have
occurred and (z) the shares of the Company shall not constitute all or
substantially all of Magnum's assets, and (ii) no Person shall be deemed
an "Acquiring Person" as a result of the acquisition of shares of Company
Common Stock by the Company which, by reducing the number of shares of
Company Common Stock outstanding, increases the proportional number of
shares beneficially owned by such Person; provided, however, that if (A) a
Person would become an Acquiring Person (but for the operation of this
subclause (ii)) as a result of the acquisition of shares of Company Common
Stock by the Company and (B) after such share acquisition by the Company,
such Person becomes the Beneficial Owner of any additional shares of
Company Common Stock, then such Person shall be
2
deemed an Acquiring Person unless upon becoming the Beneficial Owner of
such additional shares such Person is the Beneficial Owner of less than
15% of the then outstanding shares of Company Common Stock. Each Person
identified in subclauses (A), (B), (C) and (D) of this Section (1)(a) is
individually an "Exempt Person" and collectively "Exempt Persons."
ARTICLE III
MISCELLANEOUS
Section 3.1 Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of Delaware applicable to
contracts executed in and to be performed entirely in such State.
Section 3.2 Counterparts. This Amendment may be executed (including by
facsimile) in one or more counterparts, and by different parties hereto in
separate counterparts, each of which when executed shall be deemed an original,
but all of which taken together shall constitute one and the same instrument.
Section 3.3 Headings. The headings contained in this Amendment and for
descriptive purposes only and shall not affect in any way the meaning or
interpretation of this Amendment.
Section 3.4 Construction. The terms of this Amendment shall prevail over
any conflicting provision of the Agreement, but both instruments shall otherwise
be construed and interpreted as a single integrated agreement. All references in
the Agreement to such "Agreement" shall be construed as referring to the
Agreement as it has been amended hereby. The Agreement remains in full force and
effect, in accordance with its terms and as amended hereby, and there are no
other amendments, understandings or agreements except as set forth herein.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above.
By: /s/ IGAL KOHAVI By: /s/ ELIYAHU AYALON
-------------------------- -------------------------
Name: Igal Kohavi Name: Eliyahu Ayalon
Title: Chairman of the Board Title: President and Chief
Executive Officer
Attest: NORWEST BANK MINNESOTA, N.A.
By: /s/ KARRI L. VAN DELL By: /s/ JOHN BAKER
-------------------------- -------------------------
Name: Karri L. Van Dell Name: John Baker
------------------------ -----------------------
Title: AVP Title: Account Manager
----------------------- ----------------------
3