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EXHIBIT 4
SUMMARY OF COMMON STOCK PURCHASE RIGHTS
On September 30, 1990, the Board of Directors (the "Board") of Koger
Equity, Inc. (the "Company") declared a dividend of one Common Stock purchase
right (a "Right") for every outstanding share of the Company's common stock,
par value $.01 per share, (the "Common Stock"). The Rights were distributed to
stockholders of record as of the close of business on October 11, 1990 (the
"Dividend Record Date"). The terms of the Rights are set forth in a Common
Stock Rights Agreement, dated as of September 30, 1990, as amended and in
effect from time to time (the "Rights Agreement"), between the Company and
Wachovia Bank and Trust Company, N.A., the initial rights agent whose successor
was First Union National Bank of North Carolina, a national association,
appointed pursuant to the First Amendment to the Rights Agreement, dated as of
March 22, 1993 (the "First Amendment") whose successor was Wells Fargo Bank
Minnesota, N.A. ("Wells Fargo" and the "Rights Agent"), formerly Norwest Bank
Minnesota, National Association, appointed pursuant to the Fifth Amendment to
the Rights Agreement, dated as of November 23, 1999 (the "Fifth Amendment").
The Sixth Amendment dated as of August 17, 2000 (the "Sixth Amendment") has
been entered into between the Company and Wells Fargo for the purpose of
extending the Rights Agreement, which would expire on September 30, 2000, for
an additional 10 years through September 30, 2010. The Rights Agreement
provided for the issuance of one Right for every share of Common Stock issued
and outstanding on the Dividend Record Date and for each share of Common Stock
which was or is issued after that date and prior to the "Distribution Date" (as
defined below).
Each Right entitles the holder to purchase from the Company one share
of Common Stock at a price of $50 per share, subject to adjustment. The Rights
will expire on September 30, 2010 (the "Expiration Date"), or the earlier
redemption of the Rights, and are not exercisable until the Distribution Date.
No separate Rights certificates have been issued. Until the
Distribution date (or earlier redemption or expiration of the Rights), (i) the
Rights are evidenced by the Common Stock certificates and are transferred with
and only with such Common Stock certificates, (ii) new Common Stock
certificates issued after the Dividend Record Date upon transfer or new
issuance of the Company's Common Stock contained a notation incorporating the
Rights Agreement by reference and (iii) the surrender for transfer of any of
the Company's Common Stock certificates also constitutes the transfer of the
Rights associated with the Common Stock represented by such certificate.
The Rights will separate from the Common Stock and Rights certificates
will be issued on the Distribution Date. Unless otherwise determined by a
majority of the Continuing Directors (as defined below), the Distribution Date
will occur on the earlier of (i) the fifteenth business day following the later
of the date of a public announcement that a person, including affiliates or
associates or associates of such person (an "Acquiring Person"), except as
described below, has acquired or obtained the right to acquire, beneficial
ownership of 15% or more of the outstanding shares of Common Stock or the date
on which an executive officer of the Company has actual knowledge that an
Acquiring Person became such (the "Stock Acquisition Date") or (ii) the
fifteenth business day following commencement of a tender offer or exchange
offer that would result in any person or its affiliates and associates owning
15% or more of the Company's outstanding Common Stock. In any event, the Board
of Directors may delay the distribution of the certificates. After the
Distribution Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to holders of record of the Company's Common
Stock as of the close of business on the Distribution Date and such separate
Rights Certificates alone will evidence the Rights. "Continuing Director" shall
mean any director of
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the Company who was either (i) a Director prior to the time a Person becomes an
Acquiring Person and is not an Affiliate of such Person or (ii) nominated for
his or her term of office by a majority of the Continuing Directors in office
at the time of such nomination.
Pursuant to the Second Amendment to the Koger Equity, Inc. Common
Stock Rights Agreement, dated as of December 21, 1993, (the "Second
Amendment"), TCW Special Credits, a California general partnership, the TCW
Group, Inc. and their Affiliates (collectively "TCW") would not be considered
an Acquiring Person, and would be an "Exempt Person," but only so long as TCW
is the Beneficial Owner of shares of Common Stock outstanding in an amount not
in excess of an aggregate of the higher of (i) 23% of the shares of Common
Stock then outstanding and (ii) 4,047,350 shares of Common Stock, as adjusted
for any stock splits, stock dividends or other recapitalizations of the Company
on or after December 21, 1993. Pursuant to Amendment No. 3 to the Rights
Agreement, dated as of October 10, 1996 (the "Third Amendment"), collectively
(a) AP-KEI Holdings, LLC, a Delaware limited liability company ("Apollo"), and
its Affiliates [as defined in the Stock Purchase Agreement dated as of October
10, 1996, as amended and in effect from time to time (the "Stock Purchase
Agreement") between the Company and Apollo] would not be considered an
Acquiring Person, and would be an "Exempt Person," but only so long as neither
Apollo nor any of its Affiliates (as defined in the Stock Purchase Agreement)
is the Beneficial Owner (as defined in the Stock Purchase Agreement) of any
Prohibited Security 9as defined in the Stock Purchase Agreement) and (b) any
person who is an Affiliate of Apollo to the extent that such Affiliate would be
an Acquiring Person as a result of Beneficially Owning any Permitted Securities
(as defined in the Stock Purchase Agreement) will not be considered an
Acquiring Person and shall be an Exempt Person. Pursuant to the Fourth
Amendment to Common Stock Rights Agreement dated as of February 27, 1997 (the
"Fourth Amendment"), if any Exempt Person described in the immediately
preceding sentence (each an "Apollo Exempt Person") (1) pledges any Permitted
Securities to one or more financial institutions described in the Rights
Agreement (the "Permitted Assignees") and (2) any such Permitted Assignee
purchases any such Permitted Securities in connection with any foreclosure
proceedings, then (A) each Apollo Exempt Person shall immediately and
automatically cease to be an Exempt Person and (B) such Permitted Assignees,
collectively, shall be deemed to be an Exempt Person, but only so long as none
of such Permitted Assignees is the Beneficial Owner of any Prohibited Security.
(The Fourth Amendment also sets forth in their entirety certain definitions set
forth in the Stock Purchase Agreement and cross-referenced in the Third
Amendment.) According to Company records, at December 31, 1999, the TCW Group,
Inc. and its affiliates beneficially own less than 5% of the outstanding Common
Stock. At December 31, 1999, Apollo and its Affiliates beneficially own
approximately 21.5% of the outstanding Stock with the right to acquire an
additional 3.5%, or in the aggregate 25%, of the outstanding Common Stock
either from the Company or in the market at the option of the Company which
holdings would be Permitted Securities (as defined in the Stock Purchase
Agreement). In addition, any employee benefit plan of the Company will not be
considered an Acquiring Person.
Under the provisions described above, the continued holding of such
shares by Exempt Persons will not cause the Rights to be exercisable. Any
transfer of shares held by an Exempt Person to a third party who, after such
transfer, beneficially owns 15% or more of the outstanding shares of Common
Stock, would cause the Rights to become exercisable, except in the case of a
foreclosure by a pledgee of Apollo or its Affiliates of Permitted Securities if
such pledgee purchases the securities at the foreclosure sale. In addition, any
institution of a tender or exchange offer by an Exempt Person would also
trigger the exercisability of the Rights.
If, at any time after the Stock Acquisition Date, the Company were
acquired in a merger or other business combination, or more than 25% of its
assets or earning power were sold, each holder of a Right would have the right
to exercise such Right and thereby receive common stock of the acquiring
company
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with a market value of two times the exercise price of the Right. For example,
if the exercise price is $50, the holder of each Right would be entitled to
receive $100 in market value of the acquiring company's common shares (e.g., 10
shares if the per share market value is $10) for $50. Also, in the event that
(i) any person or group or affiliated or associated persons (other than the
Company, its subsidiaries, employee benefit plans and an Exempt Person) shall
become an Acquiring Person, or (ii) an Acquiring Person engages in one of a
number of self-dealing transactions specified in the Rights Agreement, each
holder of a Right will, upon payment of the exercise price, have the right to
receive shares of the Company's Common Stock (or, in certain circumstances,
cash, property or other securities of the Company) having a market value of two
times the exercise price of the Right. If the exercise price is $50, the holder
of each right would be entitled to receive $100 in market value of the
Company's common stock for $50. Following the occurrence of any of the events
described in this paragraph (as defined in the Rights Agreement, a "Common
Stock Event"), any rights that are, or (under certain circumstances specified
in the Rights Agreement) were, beneficially owned by any Acquiring Person (or
any affiliates, associates or transferees of any Acquiring Person) shall
immediately become null and void.
The Board may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or part of the then outstanding and exercisable
Rights for shares of Common Stock at an exchange ratio of one share of Common
Stock per Right, appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of declaration of the
Rights (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). The Board, however, may not effect an exchange at any time after any
person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or any such Subsidiary, any entity holding Common
Stock for or pursuant to the terms of any such plan or any Exempt Person),
together with all affiliates of such Person, becomes the beneficial owner of
50% or more of the Common Stock then outstanding. Immediately upon the action
of the Board ordering the exchange of any Rights and without any further action
and without any notice, the right to exercise such Rights will terminate and
the only right thereafter of a holder of such Rights will be to receive that
number of shares of Common Stock equal to the number of such Rights held by the
holder multiplied by the Exchange Ratio.
The exercise price of the Rights, and the number of whole or
fractional shares of the Common 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 Common Stock, (ii) upon the grant to
holders of the Common Stock of certain rights or warrants to subscribe for
shares of the Common Stock or convertible securities at less than the current
market price of the Common Stock of evidences of indebtedness or assets
(excluding cash dividends paid out of the earnings or retained earnings of the
Company and certain other distributions) or of subscription rights or warrants
(other than those referred to above).
With certain exceptions, no adjustments in the exercise price of the
Rights will be required until cumulative adjustments equal at least 1% in such
price. The Company is not obligated to issue fractional shares of any
securities upon the exercise of the Rights and, in lieu thereof, at the
election of the Company, an adjustment in cash may be made based on the market
price of such securities on the last trading date prior to the date of
exercise.
At any time prior to the Expiration Date, the Company, by a majority
vote of the Continuing Directors then in office, may redeem the Rights at a
redemption price of $.01 per Right (the "Redemption Price"), as described in
the Rights Agreement. Immediately upon the action of the Continuing Directors
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electing to redeem the Rights, the right to exercise the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.
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.
Neither the distribution of the Rights nor the subsequent separation
of the Rights on the Distribution Date will be a taxable event for the Company
or its stockholders. Holders of Rights may, depending upon the circumstances,
recognize taxable income upon the occurrence of a Common Stock Event. In
addition, holders of Rights may have taxable income as a result of (i) an
exchange by the Company of shares of Common Stock for Rights as described above
or (ii) certain anti-dilution adjustments made to the terms of the Rights after
the Distribution Date. A redemption of the Rights would be a taxable event to
holders.
The Rights Agreement may be amended by the Continuing Directors at any
time prior to the Distribution Date without the approval of the holders of the
Rights provided, however, no amendment may prejudice the rights of an Exempt
Person. From and after the Distribution Date, the Rights Agreement may be
amended without the approval of the holders of the Rights in order to cure any
ambiguity, to correct any defective or inconsistent provisions, to change any
time period for redemption or any other time period under the Rights Agreement
or to make any other changes that do not adversely affect the interests of the
holders of the Rights (other than any Acquiring Person or its affiliates,
associates or transferees).
As of August 8, 2000, there were 26,841,051 shares of Common Stock
outstanding. Each share of Common Stock outstanding on the Dividend Record Date
received one Right. As long as the Rights are attached to the Common Stock, the
Company has issued and will issue one Right with each newly issued share of
Common Stock so that all shares of Common Stock outstanding on the Distribution
Date will have attached Rights.
The exercise of the Rights may have certain anti-takeover effects. The
Rights distribution will not be dilutive of shareholder's ownership of the
Company and will not affect reported earnings per share. The Company will
receive no proceeds from the distribution of the Rights.
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