This template shareholder rights plan, commonly referred to as "poison pills," contemplates Delaware as the governing law. Since poison pills are governed by state law, any differences between Delaware law and the law of a different state governing a rights plan should always be determined when reviewing or preparing a rights plan. This template includes practical guidance, drafting notes, and optional clauses. Shareholder rights plans are a takeover defense for a board of directors to use against hostile takeovers. Although, numerous studies have shown that poison pills do not prevent hostile takeovers, especially if the acquirer is persistent, shareholders of companies with poison pills typically do receive higher premiums in acquisitions than shareholders of companies without poison pills. Poison pills are designed to, among other things, promote shareholder value by encouraging bidders to negotiate with the board and offer better initial terms and avoid coercive tactics, as well as ...