AFFILIATED COMPUTER SERVICES, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent
RIGHTS AGREEMENT
August 11, 1997
Table of Contents
Section Page
1. Certain Definitions 1
2. Appointment of Rights Agent 5
3. Issue of Rights Certificates 5
4. Form of Rights Certificates 7
5. Countersignature and Registration 7
6. Transfer, Split Up, Combination, and Exchange of
Rights Certificates; Mutilated, Destroyed, Lost, or
Stolen Rights Certificates 8
7. Exercise of Rights; Purchase Price;
Expiration Date of Rights 9
8. Cancellation and Destruction of Rights Certificates 11
9. Reservation and Availability of Capital Stock 11
10. Common Stock Record Date 13
11. Adjustment of Purchase Price, Number and Kind of Shares, or
Number of Rights 13
12. Certificate of Adjusted Purchase Price or Number of Shares 20
13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power 21
14. Fractional Rights and Fractional Shares 23
15. Rights of Action 24
16. Agreement of Rights Holders 24
17. Rights Certificate Holder Not Deemed a Xxxxxxxxxxx 00
00. Concerning the Rights Agent 25
i
19. Merger or Consolidation or Change of Name of Rights Agent 26
20. Duties of Rights Agent 27
21. Change of Rights Agent 29
22. Issuance of New Rights Certificates 29
23. Redemption and Termination 30
24. Exchange 31
25. Notice of Certain Events 32
26. Notices 33
27. Supplement and Amendments 33
28. Successors 34
29. Determinations and Actions by the Board of Directors, etc 34
30. Benefits of this Agreement 34
31. Severability 34
32. Governing Law 35
33. Counterparts 35
34. Interpretation 35
Exhibit A -- Form of Rights Certificate
Exhibit B -- Form of Summary of Rights
ii
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of August 11, 1997 (the "Agreement"), between
Affiliated Computer Services, Inc., a Delaware corporation (the "Company"), and
ChaseMellon Shareholder Services, L.L.C. (the "Rights Agent").
BACKGROUND
On August 5, 1997 (the "Rights Dividend Declaration Date"), the Board of
Directors of the Company authorized and declared a dividend distribution of one
Right for each share of Class A common stock, par value $0.01 per share, of the
Company (the "Class A Common Stock") and of one Right for each share of Class B
common stock, par value, $.01 per share, of the Company (the "Class B Common
Stock"), each as outstanding at the Close of Business on August 25, 1997 (the
"Record Date"), and has authorized the issuance of one Right (as such number may
be adjusted pursuant to the provisions of SECTION 11(p)) for each share of Class
A Common Stock and Class B Common Stock issued between the Record Date (whether
originally issued or delivered from the Company's treasury) and the Distribution
Date, each Right initially representing the right to purchase one share of Class
A Common Stock of the Company upon the terms and subject to the conditions set
forth below (the "Rights");
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth in this Agreement, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Acquiring Person" means any Person that, together with all
Affiliates and Associates of such Person, is the Beneficial Owner of 15% or
more of the shares of Class A Common Stock then outstanding, but does not
include (i) the Company; (ii) any Subsidiary of the Company; (iii) any
employee benefit plan of the Company or of any Subsidiary of the Company;
(iv) any Person organized, appointed, or established by the Company for or
pursuant to the terms of any such plan; (v) any Person that becomes an
Acquiring Person pursuant to a Permitted Transaction; (vi) any Person that
has become an Acquiring Person inadvertently and, within five Business Days
of being requested by the Company to advise it regarding the same,
certifies to the Company that such Person acquired beneficial ownership of
shares of Class A Common Stock in excess of 14.9% inadvertently or without
knowledge of the terms of the Rights and such certification is accepted as
true by a Requisite Majority acting in good faith, and such Person divests
as promptly as practicable a sufficient amount of Class A Common Stock so
that such Person would no longer hold in excess of 14.9% of the Class A
Common Stock then
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outstanding; (vii) any Person that becomes an Acquiring Person solely as a
result of a reduction in the number of outstanding shares of Class A Common
Stock in a transaction that is approved by a Requisite Majority, provided
that such Person will immediately be an Acquiring Person in the event such
Person thereafter acquires any additional shares of Class A Common Stock
(other than as a result of a stock split or stock dividend) while the
Beneficial Owner of 15% or more of the shares of Class A Common Stock then
outstanding; or (viii) Xxxxxx Xxxxxx, The Xxxxxx International Trust or any
of their Affiliates.
(c) "Affiliate" and "Associate" have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act and in effect on the date of this Agreement.
(d) A Person will be deemed the "Beneficial Owner" of, and will be
deemed to "beneficially own," any securities that:
(i) such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the right to acquire (whether such right is
exercisable immediately or only after the passage of time or upon the
occurrence of certain events) pursuant to any agreement, arrangement, or
understanding (whether or not in writing) or upon the exercise of
conversion rights, exchange rights, rights, warrants or options, or
otherwise; provided, however, that a Person will not be deemed the
"Beneficial Owner" of, or to "beneficially own," (A) securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Distribution Date, or (C)
securities issuable upon exercise of Rights, which were acquired by such
Person or any of such Person's Affiliates or Associates prior to the
Distribution Date or pursuant to SECTION 3(a) or SECTION 22 (the "Original
Rights") or pursuant to SECTION 11(i) in connection with an adjustment made
with respect to any Original Rights;
(ii) such Person or any of such Person's Affiliates or Associates,
directly or indirectly, has the right to vote or dispose of or has
"beneficial ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act), including pursuant
to any agreement, arrangement, or understanding, whether or not in writing;
provided, however, that a Person will not be deemed the "Beneficial Owner"
of, or to "beneficially own," any security under this SECTION 1(c)(ii) as a
result of an agreement, arrangement, or understanding to vote such security
if such agreement, arrangement, or understanding: (1) arises solely from a
revocable proxy given in response to a public proxy or consent solicitation
made pursuant to, and in accordance with, the applicable provisions of the
General Rules and Regulations under the Exchange Act, and (2) is not also
then reportable by such Person on Schedule 13D under the Exchange Act (or
any comparable or successor report); or
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(iii) are beneficially owned, directly or indirectly, by any other
Person (or any Affiliate or Associate of such Person) with which such
Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement, or understanding (whether or not in writing), for
the purpose of acquiring, holding, voting (except pursuant to a revocable
proxy as described in the proviso in SECTION 1(c)(ii)), or disposing of any
voting securities of the Company;
provided, however, that nothing in this SECTION 1(c) will cause a Person
engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own," any securities acquired through such
Person's participation in good faith in a bona fide firm commitment
underwriting until the expiration of forty days after the date of such
acquisition.
(e) "Business Day" means any day other than a Saturday, Sunday, or a
day on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.
(f) "Close of Business" on any given date will mean 5:00 p.m., New
York, New York time, on such date; provided, however, that if such date is
not a Business Day it will mean 5:00 p.m., New York, New York time, on the
next succeeding Business Day.
(g) "Common Stock" means the Class A common stock, par value $0.01 per
share, of the Company, or the Class B common stock, par value $0.01 per
share, of the Company, as the case may be; "Common Stock" when used with
reference to any Person other than the Company will mean the capital stock of
such Person with the greatest voting power, or the equity securities or other
equity interest having power to control or direct the management, of such
Person.
(h) "Continuing Director" means (i) any member of the Board of
Directors of the Company who (i) is not an Acquiring Person or an Affiliate
or Associate of an Acquiring Person and (ii) was either a member of the Board
of Directors of the Company on the date of this Agreement or who subsequently
became a director of the Company and whose initial election or initial
nomination for election was approved by a majority of the Continuing
Directors then on the Board of Directors of the Company.
(i) "Distribution Date" means the Close of Business on the tenth
Business Day after the earlier to occur of (i) the Stock Acquisition Date or
(ii) the date any Person commences or publicly announces an intention to
commence a tender offer or exchange offer for the Class A Common Stock which
would result in, upon the consummation of such offer, the Person making such
offer, together with all of its Affiliates and Associates, being the
Beneficial Owner of 15% or more of the Class A Common Stock then outstanding
(including any such date that is after the date of this Agreement and prior
to the issuance of the Rights); provided, however, that if the tender offer
or exchange offer that gave rise to the Distribution Date is cancelled,
terminated or
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otherwise withdrawn within ten Business Days of its announcement, such offer
shall be deemed never to have been made and no Distribution Date shall occur
with respect thereto.
(j) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(k) "Permitted Transaction" means a stock acquisition or a tender or
exchange offer pursuant to a definitive agreement by which a Person (who is
not at the time an Acquiring Person) would become an Acquiring Person and
which has been approved by a Requisite Majority prior to the execution of the
definitive agreement providing for the acquisition or the public announcement
of the offer, as the case may be.
(l) "Person" means any individual, firm, corporation, partnership,
limited liability company or other public or private entity.
(m) "Redemption Price" with respect to each Right means $0.01, as such
amount may from time to time be adjusted in accordance with SECTION 11. All
references herein to the Redemption Price means the Redemption Price as in
effect at the time in question.
(n) "Requisite Majority" means, at any time, the affirmative vote of a
majority of the Continuing Directors then in office.
(o) "Rights Shares" means the shares of Class A Common Stock issuable
or issued upon the exercise of the Rights.
(p) "Section 11(a)(ii) Event" means any event described in SECTION
11(a)(ii).
(q) "Section 13 Event" means any event described in clauses (i), (ii),
or (iii) of SECTION 13(a).
(r) "Stock Acquisition Date" means the first date of public
announcement (which, for purposes of this definition, will include, without
limitation, a report filed pursuant to Section 13(d) under the Exchange Act)
by the Company or an Acquiring Person that an Acquiring Person has become an
Acquiring Person.
(s) "Subsidiary" means, with reference to any Person, any entity of
which an amount of voting securities sufficient to elect at least a majority
of the directors or similar Persons of such entity is beneficially owned,
directly or indirectly, by such Person, or otherwise controlled by such
Person.
(t) "Trading Day" means a day on which the principal national
securities exchange or quotation system on which the shares of Class A Common
Stock are listed or admitted to trading is open for the transaction of
business or, if the shares of Class A
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Common Stock are not listed or admitted to trading on any national
securities exchange, a Business Day.
(u) "Triggering Event" means any Section 11(a)(ii) Event or any
Section 13 Event.
Section 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions of this Agreement, and the Rights Agent hereby accepts such
appointment. The Company may from time to time appoint such Co-Rights Agents as
it may deem necessary or desirable.
Section 3. ISSUE OF RIGHTS CERTIFICATES.
(a) Prior to the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of this SECTION 3(b)) by the certificates for
the Class A Common Stock and/or Class B Common Stock, as the case may be,
registered in the names of the holders of the Class A Common Stock and/or
Class B Common Stock, as the case may be, (which certificates for Class A
Common Stock and/or Class B Common Stock, as the case may be, will be
deemed also to be certificates for Rights) and not by separate
certificates, and (ii) the Rights will be transferable only in connection
with the transfer of the underlying shares of Common Stock (Class A Common
Stock or the Class B Common Stock, as the case may be, including a transfer
to the Company). As soon as practicable after the Distribution Date, the
Rights Agent will send by first-class, insured, postage prepaid mail, to
each record holder of the and/or Class B Common Stock, as the case may be,
Common Stock and/or Class B Common Stock, as the case may be, as of the
Distribution Date, at the address of such holder shown on the records of
the Company, one or more rights certificates, in substantially the form of
EXHIBIT A (the "Rights Certificates"), evidencing one Right for each share
of Class A Common Stock and/or Class B Common Stock, as the case may be, so
held, subject to adjustment as provided in this Agreement. In the event
that an adjustment in the number of Rights per share of Class A Common
Stock and/or Class B Common Stock, as the case may be, has been made
pursuant to SECTION 11(p), at the time of distribution of the Rights
Certificates, the Company will make the necessary and appropriate rounding
adjustments (in accordance with SECTION 14(a)) so that Rights Certificates
representing only whole numbers of Rights are distributed and cash is paid
in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates.
(b) As soon as practicable following the Record Date, the Company
will send a copy of a Summary of Rights, in substantially the form of
EXHIBIT B, by first-class, postage prepaid mail, to each record holder of
the Class A Common Stock and/or Class B Common Stock, as the case may be,
as of the Close of Business on the Record Date, at the address of such
holder shown on the records of the Company. With respect to certificates
for the Class A Common Stock and/or Class B Common Stock, as the case may
be, outstanding as of the Record Date, until the Distribution Date, the
Rights will be
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evidenced by such certificates for the Class A Common Stock and/or Class B
Common Stock, as the case may be, and the registered holders of the
Class A Common Stock and/or Class B Common Stock, as the case may be, will
also be the registered holders of the associated Rights. Until the earlier
of the Distribution Date or the Expiration Date (as defined in SECTION 7),
the transfer of any certificates representing shares of Class A Common
Stock and/or Class B Common Stock, as the case may be, in respect of
which Rights have been issued will also constitute the transfer of the
Rights associated with such shares of Class A Common Stock and/or Class B
Common Stock, as the case may be.
(c) Rights will be issued in respect of all shares of Class A Common
Stock and/or Class B Common Stock, as the case may be, that are issued
(whether originally issued or from the Company's treasury) after the Record
Date but prior to the earlier of the Distribution Date or the Expiration
Date. Certificates representing such shares of Class A Common Stock
and/or Class B Common Stock, as the case may be, will also be deemed to be
certificates for Rights, and will bear the following legend:
THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER TO CERTAIN
RIGHTS AS SET FORTH IN THE RIGHTS AGREEMENT BETWEEN AFFILIATED
COMPUTER SERVICES, INC. (THE "COMPANY") AND CHASEMELLON SHAREHOLDER
SERVICES, L.L.C. (THE "RIGHTS AGENT") DATED AS OF AUGUST 11, 1997
(AS AMENDED FROM TIME TO TIME, THE "RIGHTS AGREEMENT"), THE TERMS OF
WHICH ARE HEREBY INCORPORATED IN THIS CERTIFICATE BY REFERENCE AND A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY.
UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT,
SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO
LONGER BE EVIDENCED BY THIS CERTIFICATE. THE COMPANY WILL MAIL TO
THE HOLDER OF THIS CERTIFICATE A COPY OF THE RIGHTS AGREEMENT, AS IN
EFFECT ON THE DATE OF MAILING, WITHOUT CHARGE PROMPTLY AFTER RECEIPT
OF A WRITTEN REQUEST. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE
RIGHTS AGREEMENT, RIGHTS BENEFICIALLY OWNED BY ANY PERSON WHO IS,
WAS, OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR
BY ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.
With respect to the shares of Class A Common Stock and/or Class B
Common Stock, as the case may be, issued after the Record Date, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the
Rights associated with the Class A
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Common Stock and/or Class B Common Stock, as the case may be,
represented by such certificates will be evidenced by such certificates
alone and registered holders of Class A Common Stock and/or Class B
Common Stock, as the case may be, will also be the registered holders
of the associated Rights, and the transfer of any of such certificates
will also constitute the transfer of the Rights associated with the
Class A Common Stock and/or Class B Common Stock, as the case may be,
represented by such certificates.
(d) With respect to Rights associated with shares of Class B Common
Stock, such Rights shall be automatically extinguished and terminated to
the extent the associated shares of Class B Common Stock are converted
into shares of Class A Common Stock, and upon such conversion into Class
A Common Stock, Rights are issued in association with such Class A Common
Stock. In this regard, upon conversion of Class B Common Stock into
Class A Common Stock in accordance with the provisions of the Class B
Common Stock, a Right shall be issued associated with such Class A Common
Stock in lieu of the Right associated with the converted Class B Common
Stock, which Right extinguished and terminated in accordance with the
immediately preceding sentence.
Section 4. FORM OF RIGHTS CERTIFICATES.
The Rights Certificates (and the forms of election to purchase
and of assignment to be printed on the reverse of the rights
certificates) will each be substantially in the form set forth in EXHIBIT
A and may have such marks of identification or designation and such
legends, summaries, or endorsements as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as
may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange or quotation system on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of
SECTION 11 and SECTION 22, the Rights Certificates, whenever distributed,
will be dated as of the Record Date and on their face will entitle the
holders of such Rights Certificates to purchase such number of shares of
Class A Common Stock as is set forth in such Rights Certificates at the
price set forth in such Rights Certificates (such exercise price per
share, the "Purchase Price"), but the amount and type of securities
purchasable upon the exercise of each Right and the Purchase Price will
be subject to adjustment as provided in this Agreement.
Section 5. COUNTERSIGNATURE AND REGISTRATION.
(a) The Rights Certificates will be executed on behalf of the
Company by its Chairman of the Board, its Chief Executive Officer, its
Chief Operating Officer, its President, or any Executive Vice President,
either manually or by facsimile signature, will have affixed thereto the
Company's seal or a facsimile thereof, and will be attested by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Rights Certificates will be countersigned by
the Rights Agent, either manually or by facsimile signature and will not
be valid for any purpose unless so
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countersigned. In case any officer of the Company who has signed any of
the Rights Certificates ceases to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the
Company, such Rights Certificates, nevertheless, may be countersigned by
the Rights Agent and issued and delivered by the Company with the same
force and effect as though the Person who signed such Rights Certificates
had not ceased to be such officer of the Company, and any Rights
Certificate may be signed on behalf of the Company by any Person who, at
the actual date of the execution of such Rights Certificate, is a proper
officer of the Company to sign such Rights Certificate, although at the
date of the execution of this Rights Agreement any such Person was not
such an officer.
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise or
transfer, books for registration and transfer of the Rights Certificates
issued under this Agreement. Such books will show the names and
addresses of the respective holders of the Rights Certificates, the
number of Rights evidenced on the face of the Rights Certificates, and
the date of each of the Rights Certificates.
Section 6. TRANSFER, SPLIT UP, COMBINATION, AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST, OR STOLEN RIGHTS CERTIFICATES.
(a) Subject to the provisions of SECTION 7(e) and SECTION 14, at
any time after the Distribution Date, and at or prior to the Expiration
Date, any Rights Certificate or Certificates may be transferred, split
up, combined, or exchanged for another Rights Certificate or Rights
Certificates, entitling the registered holder to purchase a like number
of Rights Shares (or, following a Triggering Event, preferred stock,
other securities, cash, or other assets, as the case may be) as the
Rights Certificate or Certificates surrendered then entitled such holder
(or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine, or exchange
any Rights Certificate or Rights Certificates will make such request in
writing delivered to the Rights Agent, and will surrender the Rights
Certificate or Rights Certificates to be transferred, split up, combined,
or exchanged at the principal office or offices of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company
will be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered
holder has completed and signed the certificate contained in the form of
assignment on the reverse side of such Rights Certificate and has
provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) or Affiliates or Associates thereof as the
Company requests in good faith. Thereupon, the Rights Agent will,
subject to SECTION 4, SECTION 7(e) and SECTION 14, countersign and
deliver to the Person entitled thereto a Rights Certificate or Rights
Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer, split up,
combination, or exchange of any Rights Certificate.
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(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction, or
mutilation of a Rights Certificate, and, in case of loss, theft, or
destruction, of indemnity or security satisfactory to them, and
reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company will
execute and deliver a new Rights Certificate of like tenor to the Rights
Agent for countersignature and delivery to the registered owner in lieu
of the Rights Certificate so lost, stolen, destroyed, or mutilated.
Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF
RIGHTS.
(a) Subject to SECTION 7(e), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as
otherwise provided in this Agreement including, without limitation, the
restrictions on exercisability set forth in SECTION 9(c), SECTION
11(a)(iii), SECTION 23(a) and SECTION 24) in whole or in part at any time
after the Distribution Date upon surrender of the Rights Certificate,
with the form of election to purchase and the certificate on the reverse
side of the Rights Certificate duly executed, to the Rights Agent at the
principal office or offices of the Rights Agent designated for such
purpose, together with payment of the aggregate Purchase Price for each
share of Class A Common Stock (or other securities, cash or other assets,
as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earlier of (i) the Close of Business on
August 25, 2007, (the "Final Expiration Date"), (ii) the time at which
the Rights are redeemed as provided in SECTION 23 or (iii) the time at
which such rights are exchanged as provided in SECTION 24 (the earlier of
the times, the "Expiration Date")).
(b) The Purchase Price for each share of Class A Common Stock
pursuant to the exercise of a Right will initially be $150.00, subject to
adjustment from time to time as provided in SECTION 11, and SECTION
13(a). The Purchase Price will be payable in accordance with SECTION 7(c).
(c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly
executed, accompanied by payment of the Purchase Price for the shares of
Class A Common Stock (or other shares, securities, cash or other assets,
as the case may be) to be purchased and an amount equal to any applicable
transfer tax, the Rights Agent will, subject to SECTION 20(k), promptly
(i) (A) requisition from any transfer agent of the shares of Class A
Common Stock (or make available, if the Rights Agent is the transfer
agent for such shares) certificates for the total number of shares of
Class A Common Stock to be purchased (the Company hereby irrevocably
authorizing its transfer agent to comply with all such requests) or (B)
if the Company has elected to deposit the shares of Class A Common Stock
with a depository agent, requisition from the depository agent depository
receipts representing such number of shares of Class A Common Stock as
are to be purchased (in which case certificates for the shares of Class A
Common Stock represented by such receipts will be
9
deposited by the transfer agent with the depository agent) and the
Company will direct the depository agent to comply with such request;
(ii) requisition from the Company the amount of cash, if any, to be paid
in lieu of fractional shares in accordance with SECTION 14; (iii) after
receipt of such certificates or depository receipts, cause such
certificates or depository receipts to be delivered to or upon the order
of the registered holder of such Rights Certificate, registered in such
name or names as may be designated by such holder; and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the
registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to SECTION
11(a)(iii)) will be made in cash or by certified bank check or bank draft
payable to the order of the Company. In the event that the Company is
obligated to issue other securities (including Class A Common Stock) of
the Company, pay cash, or distribute other property pursuant to SECTION
11(a), the Company will make all arrangements necessary so that such
other securities, cash, or other property are available for distribution
by the Rights Agent, if and when appropriate. The Company reserves the
right to require prior to the occurrence of a Triggering Event that, upon
any exercise of Rights, a number of Rights be exercised so that only
whole shares of Common Stock would be issued.
(d) If the registered holder of any Rights Certificate exercises
less than all the Rights evidenced by such certificate, a new Rights
Certificate evidencing the unexercised Rights will be issued by the
Rights Agent and delivered to, or upon the order of, the registered
holder of such Rights Certificate, registered in such name or names as
may be designated by such holder, subject to the provisions of SECTION 14.
(e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights beneficially owned by any Person referred to in CLAUSES (i)
through (iii) below will become null and void without any further action
and no holder of such Rights will have any rights whatsoever with respect
to such Rights, under any provision of this Agreement or otherwise: (i)
an Acquiring Person or an Associate or Affiliate of an Acquiring Person,
(ii) a transferee from an Acquiring Person (or from any Associate or
Affiliate of an Acquiring Person) that becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee from an Acquiring
Person (or of any such Associate or Affiliate) that becomes a transferee
prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity
interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement, or
understanding regarding the transferred Rights or (B) a transfer that the
Board of Directors of the Company has determined is part of an agreement,
plan, arrangement, or understanding that has as a substantial purpose or
effect the avoidance of this SECTION 7(e). The Company will use
reasonable efforts to insure that the provisions of this SECTION 7(e) and
SECTION 4(b) are complied with, but will have no liability under this
Agreement to any holder of Rights Certificates or other Person as a
result of its failure to make any determinations with respect to an
Acquiring Person, or any of its Affiliates, Associates, or transferees.
10
(f) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company will be obligated to undertake
any action with respect to a registered holder upon the occurrence of any
purported exercise as set forth in this SECTION 7 unless such registered
holder has (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights
Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company
requests in good faith.
Section 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange (or in connection with conversion of Class B
Common Stock into Class A Common Stock) will, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, will be cancelled by
it, and no Rights Certificates will be issued in lieu thereof except as
expressly permitted by any of the provisions of this Agreement. The Company
will deliver to the Rights Agent for cancellation and retirement, and the
Rights Agent will so cancel and retire, any other Rights Certificate
purchased or acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent will deliver all cancelled Rights Certificates to
the Company, or will, at the written request of the Company, destroy such
cancelled Rights Certificates, and in such case will deliver a certificate of
destruction to the Company.
Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.
(a) The Company will use its best efforts to reserve and keep
available out of its authorized and unissued shares of Class A Common
Stock (and/or or other securities) or its authorized and issued shares of
Class A Common Stock (and/or or other securities) held in its treasury,
the number of shares of Class A Common Stock (and/or other securities)
that will be sufficient to permit the exercise in full of all outstanding
Rights.
(b) So long as the shares of Class A Common Stock (and, following
the occurrence of a Triggering Event, Common Stock or other securities)
issuable and deliverable upon the exercise of the Rights may be listed on
any national securities exchange or automated quotation system, the
Company will use its reasonable efforts to cause, from and after such
time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange or automated quotation system upon
official notice of issuance upon such exercise.
(c) The Company will use its best efforts to (i) file, as soon as
practicable following the first occurrence of a Section 11(a)(ii) Event
on which the consideration to be delivered by the Company upon exercise
of the Rights has been determined in accordance with SECTION 11(a)(iii),
a registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights or issued in an exchange pursuant
to SECTION 24 on an appropriate form, (ii) cause such registration
statement to become
11
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Act) until the earlier of (A) the
date as of which the Rights are no longer exercisable for such
securities, and (B) the Expiration Date. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the
applicable state securities laws in connection with the exercisability of
the Rights. The Company may temporarily suspend, for up to 90 days
after the date described in CLAUSE (i) of this SECTION 9(c), the
exercisability of the Rights in order to prepare and file such
registration statement and permit it to become effective. Upon any such
suspension, the Company will issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension no longer remains in
effect. In addition, if the Company determines that a registration
statement is required following the Distribution Date, the Company may
temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights will not be
exercisable in any jurisdiction if the requisite qualification in such
jurisdiction has not been obtained, the exercise of such Rights is not
permitted under applicable law, or a registration statement has not been
declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Class A Common
Stock (and/or other securities) delivered upon exercise of Rights will,
at the time of delivery of the certificates for such shares upon payment
of the Purchase Price, be duly and validly authorized and issued and
fully paid and nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and charges
that may be payable in respect of the issuance or delivery of the Rights
Certificates and any Class A Common Stock or other certificates issued
upon the exercise of Rights. The Company will not, however, be required
to pay any transfer tax that may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than, or the issuance
or delivery of Class A Common Stock (or other securities, as the case may
be) in respect of a name other than that of the registered holder of the
Rights Certificates or to issue or deliver any Class A Common Stock or
other certificates in a name other than that of the registered holder
until such tax has been paid (any such tax being payable by the holder of
such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.
Section 10. CLASS A COMMON STOCK RECORD DATE. Each Person in whose
name any Rights Share certificate is issued will, for all purposes, be deemed
to have become the record holder of such Rights Shares represented thereby,
and such certificate will be dated, on the date upon which the Rights
Certificate evidencing such Rights was duly surrendered and payment of the
Purchase Price (and all applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which
the Class A Common Stock (other securities, as the case may be) transfer
books of the Company are closed, such Person will be
12
deemed to have become the record holder of the Rights Shares on, and such
certificate will be dated, the next succeeding Business Day on which the
Class A Common Stock (or other securities, as the case may be) transfer books
of the Company are open. Prior to the exercise of the Rights evidenced
thereby, the Rights Certificate holders will not be entitled to any
stockholder rights with respect to Rights Shares, including, without
limitation, the right to vote, to receive dividends or other distributions,
or to exercise any preemptive rights, and will not be entitled to receive any
notice of any proceedings of the Company, except as provided in this
Agreement.
Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES, OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares
covered by each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this SECTION 11.
(a) (i) In the event the Company at any time after the date of this
Agreement (A) declares a dividend on the Class A Common Stock payable in
shares of Class A Common Stock, (B) subdivides the outstanding Class A
Common Stock, (C) combines the outstanding Class A Common Stock into a
smaller number of shares, or (D) issues any shares of its capital stock
in a reclassification of the Class A Common Stock (including, without
limitation, any such reclassification in connection with a consolidation
or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in this SECTION 11(a) and
SECTION 7(e), the Purchase Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of
Class A Common Stock or capital stock, as the case may be, issuable on
such date, will be proportionately adjusted so that the holder of any
Right exercised after such time will be entitled to receive, upon payment
of the Purchase Price then in effect, the aggregate number and kind of
shares of Class A Common Stock or capital stock, as the case may be,
that, if such Right had been exercised immediately prior to such date and
at a time when the Class A Common Stock transfer books of the Company
were open, such holder would have owned upon such exercise and been
entitled to receive by virtue of such dividend, subdivision, combination,
or reclassification. If an event occurs that would require an adjustment
under both this SECTION 11(a)(i) and SECTION 11(a)(ii), the adjustment
provided for in this SECTION 11(a)(i) will be in addition to, and will be
made prior to, any adjustment required pursuant to SECTION 11(a)(ii). In
the event that any event referred to in this SECTION 11 occurs with
respect to the Class B Common Stock, an appropriate adjustment will be
made with respect to the Rights associated with such Class B Common Stock.
(ii) In the event that any Person, alone or together with its
Affiliates and Associates, at any time after the Rights Dividend
Declaration Date, becomes an Acquiring Person, then, proper provision
will be made so that each Right holder (except as provided in SECTION
7(e)) will thereafter have the right to
13
receive, upon exercise of such Right at the then current Purchase Price
in accordance with the terms of this Agreement, such number of Rights
Shares equal to the result obtained by (x) multiplying the then current
Purchase Price by the then number of Rights Shares for which a Right is
then exercisable and (y) dividing that product by 50% of the Current
Market Price (defined in SECTION 11(d)) per share of Class A Common Stock
on the date such Person became an Acquiring Person (such number of Rights
Shares, the "Adjustment Shares").
(iii) In the event that the number of shares of Class A Common
Stock that are authorized by the Company's certificate of incorporation
but not issued, or issued but not outstanding, are not sufficient to
permit the exercise in full of the Rights in accordance with SECTION
11(a)(ii), the Company will, upon the exercise of a Right and payment of
the applicable Purchase Price, (A) determine the value of the Adjustment
Shares issuable upon the exercise of a Right (the "Current Value"), and
(B) with respect to each Right (subject to SECTION 7(e)), make adequate
provision to substitute for the Adjustment Shares (1) cash, (2) a
reduction in the Purchase Price, (3) other equity securities of the
Company (including, without limitation, shares, or units of shares, of
preferred stock), that a Requisite Majority has deemed to have
essentially the same rights, privileges and preferences as shares of
Class A Common Stock ("Class A Common Stock Equivalents")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of
the foregoing, having an aggregate value equal to the Current Value,
where such aggregate value has been conclusively determined by a
Requisite Majority based upon the advice of a nationally recognized
investment banking firm selected by a Requisite Majority; provided,
however, that if the Company has not made adequate provision to deliver
value pursuant to CLAUSE (B) above within 30 days following the first
occurrence of a Section 11(a)(ii) Event, then the Company will be
obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Class A Common
Stock (to the extent available) and then, if necessary, cash, which
shares or cash have an aggregate value equal to the Spread. The term
"Spread" means the excess of (i) the Current Value over (ii) the Purchase
Price. If the Board of Directors determines in good faith that it is
likely that sufficient additional shares of Class A Common Stock could be
authorized for issuance upon exercise in full of the Rights, the 30-day
period set forth above may be extended to the extent necessary, but not
more than 90 days after the Section 11(a)(ii) Trigger Date, in order that
the Company may seek stockholder approval for the authorization of such
additional shares (such 30-day period, as it may be extended, being the
"Substitution Period"). To the extent that action is to be taken
pursuant to this SECTION 11(a)(iii), the Company (1) will provide,
subject to SECTION 7(e), that such action will apply uniformly to all
outstanding Rights, and (2) may suspend the exercisability of the Rights
until the expiration of the Substitution Period in order to seek any
required stockholder approval or to decide the appropriate form of
distribution to be made and the value thereof. In the event of any such
suspension, the Company will issue a public announcement stating that the
14
exercisability of the Rights has been temporarily suspended, as well as a
public announcement at such time as the suspension no longer remains in
effect. For purposes of this SECTION 11(a)(iii), the Current Value of
each Adjustment Share will be the Current Market Price per share of the
Class A Common Stock on the effective date of the Section 11(a)(ii) Event
and the per share or per unit value of any Class A Common Stock
Equivalent will be deemed to equal the Current Market Price per share of
the Common Stock on such date.
(b) In case the Company fixes a record date for the issuance of
rights, options or warrants to all holders of Class A Common Stock
entitling them to subscribe for or purchase (for a period expiring within
45 calendar days after such record date) Class A Common Stock (and/or
Class A Common Stock Equivalents) (or securities convertible into Class A
Common Stock) at a price per share of Class A Common Stock (or having a
conversion price per share, if a security convertible into Class A Common
Stock) less than the Current Market Price per share of Class A Common
Stock on such record date, the Purchase Price to be in effect after such
record date will be determined by multiplying the Purchase Price in
effect immediately prior to such record date by a fraction, (i) the
numerator of which is the number of shares of Class A Common Stock
outstanding on such record date, plus the number of shares of Class A
Common Stock that the aggregate offering price of the total number of
shares of Class A Common Stock (and/or Class A Common Stock Equivalents)
so to be offered (or the aggregate initial conversion price of the
convertible securities so to be offered) would purchase at such Current
Market Price, and (ii) the denominator of which is the number of shares
of Class A Common Stock outstanding on such record date, plus the number
of additional shares of Class A Common Stock (and/or Class A Common Stock
Equivalents) to be offered for subscription or purchase (or into which
the convertible securities so to be offered are initially convertible).
In the event that the number of shares of Class A Common Stock issuable
under the terms of a convertible security, or the conversion or exercise
price of such convertible security, changes after the initial issuance of
such convertible security, an adjustment will be made to the Purchase
Price that conforms with the adjustment set forth in this SECTION 11(b).
In case such subscription price may be paid by delivery of consideration
part or all of which may be in a form other than cash, the value of such
consideration will be as conclusively determined in good faith by the
Board of Directors of the Company, whose determination will be described
in a statement filed with the Rights Agent and will be binding on the
Rights Agent and the holders of the Rights. Shares of Class A Common
Stock owned by or held for the account of the Company will be deemed not
to be outstanding for the purpose of any such computation. Such
adjustment will be made successively whenever such a record date is
fixed, and in the event that such rights or warrants are not so issued,
the Purchase Price will be adjusted to be the Purchase Price that would
then be in effect if such record date had not been fixed.
(c) In case the Company fixes a record date for a distribution to
all holders of Class A Common Stock (including any such distribution made
in connection with a consolidation or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a
regular quarterly cash dividend out of the
15
earnings or retained earnings of the Company), assets (other than a
dividend payable in Class A Common Stock, but including any dividend
payable in stock other than Class A Common Stock) or subscription rights
or warrants (excluding those referred to in SECTION 11(b)), the Purchase
Price to be in effect after such record date will be determined by
multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, (i) the numerator of which is the Current Market
Price per share of Class A Common Stock on such record date, less the
fair market value (as conclusively determined in good faith by the Board
of Directors of the Company, whose determination will be described in a
statement filed with the Rights Agent) of the portion of the cash,
assets, or evidences of indebtedness so to be distributed or of such
subscription rights or warrants applicable to a share of Class A Common
Stock and (ii) the denominator of which is such Current Market Price per
share of Class A Common Stock. Such adjustments will be made
successively whenever such a record date is fixed, and in the event that
such distribution is not so made, the Purchase Price will be adjusted to
be the Purchase Price that would have been in effect if such record date
had not been fixed.
(d) The "Current Market Price" per share of Class A Common Stock on
any date will be deemed to be the average of the daily closing prices per
share of such Class A Common Stock for the 30 consecutive Trading Days
immediately prior to such date; provided, however, that in the event that
the Current Market Price per share of the Class A Common Stock is
determined during a period following the announcement by the issuer of
such Class A Common Stock of (i) a dividend or distribution on such Class
A Common Stock payable in shares of such Class A Common Stock or
securities convertible into shares of such Class A Common Stock (other
than the Rights), or (ii) any subdivision, combination, or
reclassification of such Class A Common Stock, and the ex-dividend date
for such dividend or distribution, or the record date for such
subdivision, combination, or reclassification has not occurred prior to
the commencement of the requisite 30 Trading Day period, as set forth
above, then, and in each such case, the Current Market Price will be
properly adjusted to take into account ex-dividend trading. The closing
price for each day will be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock Exchange or, if the
shares of Class A Common Stock are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the shares of Class A
Common Stock are listed or admitted to trading or, if the shares of Class
A Common Stock are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the
average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use, or, if on
any such date the shares of Class A Common Stock are not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Class A
Common Stock selected by the Board of Directors. If on any such date no
market maker is making a market in the Class A Common Stock, the fair
value of such shares on such date as
16
determined in good faith by the Board of Directors will be used. If the
Class A Common Stock is not publicly held or not so listed or traded,
Current Market Price per share will mean the fair value per share as
determined in good faith by the Board of Directors, the determination of
which will be described in a statement filed with the Rights Agent and
will be conclusive for all purposes.
(e) Anything in this Agreement to the contrary notwithstanding, no
adjustment in the Purchase Price will be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the
Purchase Price; provided, however, that any adjustments that by reason of
this SECTION 11(e) are not required to be made will be carried forward
and taken into account in any subsequent adjustment. All calculations
under this SECTION 11 will be made to the nearest cent or to the nearest
one-hundredth of a share of Class A Common Stock. Notwithstanding the
first sentence of this SECTION 11(e), any adjustment required by this
SECTION 11 will be made no later than the earlier of (i) three (3) years
from the date of the transaction that mandates such adjustment or (ii)
the Final Expiration Date.
(f) If, as a result of an adjustment made pursuant to SECTION
11(a)(ii) or SECTION 13(a), the holder of any Right thereafter exercised
becomes entitled to receive any shares of capital stock other than Class
A Common Stock, then the number of such other shares so receivable upon
exercise of any Right and the Purchase Price will be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Class A
Common Stock contained in SECTIONS 11(a), (b), (c), (e), (g), (h), (i),
(j), (k), (m), and (q) and the provisions of SECTIONS 7, 9, 10, 13, and
14 with respect to the Class A Common Stock will apply on like terms to
any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price under this Agreement will evidence
the right to purchase, at the adjusted Purchase Price, the number of
Rights Shares purchasable from time to time under this Agreement, all
subject to further adjustment as provided in this Agreement.
(h) Unless the Company has exercised its election as provided in
SECTION 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in SECTIONS 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment will thereafter
evidence the right to purchase, at the adjusted Purchase Price, that
number of Rights Shares (calculated to the nearest one-hundredth)
obtained by (i) multiplying (x) the number of Rights Shares covered by a
Right immediately prior to this adjustment, by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price, and
(ii) dividing the product so obtained by the Purchase Price in effect
immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of Rights Shares purchasable upon the exercise
of a Right. Each of the Rights outstanding
17
after such an adjustment in the number of Rights will be exercisable for
the number of Rights Shares for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights will become that number of Rights
(calculated to the nearest one-hundredth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company will make a public announcement of its
election to adjust the number of Rights, indicating the record date for
the adjustment, and, if known at the time, the amount of the adjustment
to be made. This record date may be the date on which the Purchase Price
is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, will be at least ten Business Days later than the date of
the public announcement. If Rights Certificates have been issued, upon
each adjustment of the number of Rights pursuant to this SECTION 11(i),
the Company will, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to SECTION 14, the additional Rights to
which such holders are entitled as a result of such adjustment, or, at
the option of the Company, will cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates
held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Rights Certificates evidencing
all the Rights to which such holders are entitled after such adjustment.
Rights Certificates so to be distributed will be issued, executed, and
countersigned in the manner provided for in this Agreement (and may bear,
at the option of the Company, the adjusted Purchase Price) and will be
registered in the names of the holders of record of Rights Certificates
on the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price
or the Rights Shares, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per Rights Shares and
the number of Rights Shares that were expressed in the initial Rights
Certificates issued under this Agreement.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then stated value, if any, of the
number of Rights Shares, the Company will take any corporate action that
may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue such number of fully paid and
nonassessable Rights Shares at such adjusted Purchase Price.
(l) In any case in which this SECTION 11 requires that an
adjustment in the Purchase Price be made effective as of a record date
for a specified event, the Company may elect to defer until the
occurrence of such event the issuance to the holder of any Right
exercised after such record date the number of Rights Shares and other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of Rights Shares and other capital
stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment;
provided, however, that the Company will deliver to such holder a due
xxxx or other appropriate instrument evidencing such holder's right to
receive such additional
18
shares (fractional or otherwise) or securities upon the occurrence of the
event requiring such adjustment.
(m) Anything in this SECTION 11 to the contrary notwithstanding,
the Company will be entitled to make such reductions in the Purchase
Price, in addition to those adjustments expressly required by this
SECTION 11, as and to the extent that, in its good faith judgment, the
Board of Directors of the Company determines it to be advisable in order
that any (i) consolidation or subdivision of the Class A Common Stock,
(ii) issuance wholly for cash of any shares of Class A Common Stock at
less than the current market price, (iii) issuance wholly for cash of
shares of Class A Common Stock or securities that by their terms are
convertible into or exchangeable for shares of Common Stock and/or its
Class B Common Stock, (iv) stock dividends, or (v) issuance of rights,
options, or warrants referred to in this SECTION 11, hereafter made by
the Company to holders of its Class A Common Stock and/or its Class B
Common Stock will not be taxable to such stockholders.
(n) The Company covenants and agrees that it will not, at any time
after the Distribution Date, (i) consolidate with any other Person (other
than a Subsidiary of the Company in a transaction that complies with
SECTION 11(o)), (ii) merge with, from, or into any other Person (other
than a Subsidiary of the Company in a transaction that complies with
SECTION 11(o)), or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of related
transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a
whole) to any other Person or Persons (other than the Company or any of
its Subsidiaries in one or more transactions each of which complies with
SECTION 11(o)), if (x) at the time of or immediately after such
consolidation, merger, or sale there are any rights, warrants, or other
instruments or securities outstanding or agreements in effect that could
reasonably be expected to substantially diminish or otherwise eliminate
the benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with, or immediately after, such consolidation, merger, or
sale, the stockholders of the Person that constitutes, or would
constitute, the "Principal Party" for purposes of SECTION 13(a) has
received a distribution of Rights previously owned by such Person or any
of its Affiliates and Associates.
(o) The Company covenants and agrees that, after the Distribution
Date, it will not, except as permitted by SECTION 23 or SECTION 27, take
(or permit any Subsidiary to take) any action if at the time such action
is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded
by the Rights.
(p) Notwithstanding anything in this Agreement to the contrary, in
the event that the Company at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declares a
dividend on the outstanding shares of Class A Common Stock or Class B
Common Stock, as the case may be, payable in shares of Class A Common
Stock or Class B Common Stock, as the case may be, (ii) subdivides the
19
outstanding shares of Class A Common Stock, or Class B Common Stock, as
the case may be, or (iii) combines the outstanding shares of Class A
Common Stock or Class B Common Stock, as the case may be, into a smaller
number of shares, the number of Rights associated with each share of
Class A Common Stock or Class B Common Stock, as the case may be, then
outstanding, or issued or delivered thereafter but prior to the
Distribution Date, will be appropriately and proportionately adjusted so
that the number of Rights thereafter associated with each share of Class
A Common Stock or Class B Common Stock, as the case may be, following any
such event will equal the result obtained by multiplying the number of
Rights associated with each share of Class A Common Stock or Class B
Common Stock, as the case may be, immediately prior to such event by a
fraction the numerator of which is the total number of shares of Class A
Common Stock or Class B Common Stock, as the case may be, outstanding
immediately prior to the occurrence of the event and the denominator of
which is the total number of shares of Class A Common Stock or Class B
Common Stock, as the case may be, outstanding immediately following the
occurrence of such event.
(q) In the event that the Rights become exercisable following a
Section 11(a)(ii) Event, the Company, by action of a Requisite Majority,
may permit the Rights, subject to SECTION 7(e), to be exercised for 50%
of the shares of Class A Common Stock (or cash or other securities or
assets to be substituted for the Adjustment Shares pursuant to SECTION
11(a)(iii)) that would otherwise be purchasable under SECTION 11(a) in
consideration of the surrender to the Company of the Rights so exercised
and without other payment of the Purchase Price. Rights exercised under
this SECTION 11(q) will be deemed to have been exercised in full and will
be cancelled.
Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF
SHARES. Whenever an adjustment is made as provided in SECTION 11 or SECTION
13, the Company will (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Class A Common Stock and for the Class B Common Stock, a copy of such
certificate, and (c) mail a brief summary thereof to each holder of a Rights
Certificate (or, if prior to the Distribution Date, to each holder of a
certificate representing shares of Class A Common Stock and/or Class B Common
Stock, as the case may be) in accordance with SECTION 25. The Rights Agent
will be fully protected in relying on any such certificate and on any
adjustment contained in such certificate.
Section 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER.
(a) In the event that, following the Stock Acquisition Date,
directly or indirectly, (i) the Company consolidates with, or merges
with, or into, any other Person (other than a Subsidiary of the Company
in a transaction that complies with SECTION 11(o)), and the Company is
not the continuing or surviving Person of such consolidation or merger;
(ii) any Person (other than a Subsidiary of the Company in a transaction
that complies with SECTION 11(o)) consolidates with, or merges with, or
into, the Company, and the Company is the continuing or surviving
corporation of such consolidation or
20
merger and, in connection with such consolidation or merger, all or part
of the outstanding shares of Class A Common Stock and/or Class B Common
Stock, as the case may be, is changed into or exchanged for stock or
other securities of any other Person or cash or any other property; or
(iii) the Company sells or otherwise transfers (or one or more of its
Subsidiaries sells or otherwise transfers), in one transaction or a
series of related transactions, assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons (other than the
Company or any Subsidiary of the Company in one or more transactions each
of which complies with SECTION 11(o)), then, and in each such case
(except as contemplated by SECTION 13(d)), proper provision will be made
so that (A) each holder of a Right, except as provided in SECTION 7(e) or
SECTION 13(E), will thereafter have the right to receive, upon the
exercise of such Right at the then current Purchase Price in accordance
with the terms of this Agreement, such number of validly authorized and
issued, fully paid, nonassessable, and freely tradable shares of Common
Stock of the Principal Party (as defined below), not subject to any
liens, encumbrances, preemptive rights, rights of first refusal, or other
adverse claims, as are equal to the result obtained by (1) multiplying
the then current Purchase Price by the number of Rights Shares for which
a Right is exercisable immediately prior to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event has occurred prior to
the first occurrence of a Section 13 Event, multiplying the number of
such Rights Shares for which a Right was exercisable immediately prior to
the first occurrence of a Section 11(a)(ii) Event by the Purchase Price
in effect immediately prior to such first occurrence), and (2) dividing
that product (which, following the first occurrence of a Section 13
Event, will be referred to as the "Purchase Price" for each Right and for
all purposes of this Agreement) by 50% of the Current Market Price per
share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event; (B) such Principal Party will
thereafter be liable for, and will assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this
Agreement; (C) the term "Company" will thereafter be deemed to refer to
such Principal Party, it being specifically intended that the provisions
of SECTION 11 will apply only to such Principal Party following the first
occurrence of a Section 13 Event; (D) such Principal Party will take such
steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock) in connection with the consummation
of any such transaction as may be necessary to assure that the provisions
of this Agreement will thereafter be applicable, as nearly as may be, in
relation to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (E) the provisions of SECTION 11(A)(II) will
be of no effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" means
(i) in the case of any transaction described in CLAUSE (i) or
(ii) of the first sentence of SECTION 13(a), the Person that is the
issuer of any securities into which shares of Class A Common Stock
and/or Class B Common Stock, as the case may be, of the Company are
converted in such merger or consolidation, and
21
if no securities are so issued, the Person that is the other party to
such merger or consolidation; and
(ii) in the case of any transaction described in CLAUSE (iii) of
the first sentence of SECTION 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power
transferred pursuant to such transaction or transactions;
provided, however, that in any such case, (1) if the Common Stock of
such Person is not at such time and has not been continuously over
the preceding twelve (12) month period registered under Section 12
of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has
been so registered, "Principal Party" will refer to such other
Person; and (2) in case such Person is a Subsidiary, directly or
indirectly, of more than one Person, with Common Stock that is and
has been so registered, "Principal Party" will refer to whichever of
such Persons is the issuer of the Common Stock having the greatest
aggregate market value.
(c) The Company will not consummate any such consolidation, merger,
sale, or transfer unless the Principal Party has a sufficient number of
authorized shares of its Common Stock that have not been issued or
reserved for issuance to permit the exercise in full of the Rights in
accordance with this SECTION 13 and unless prior thereto the Company and
such Principal Party have executed and delivered to the Rights Agent a
supplemental agreement providing for the Principal Party to assume and
perform the terms set forth in SECTIONS 13(a) and (b) and further
providing that, as soon as practicable after the date of any
consolidation, merger, or transfer mentioned in SECTION 13(a), the
Principal Party will
(i) prepare and file a registration statement under the Act,
with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective
as soon as practicable after such filing and (B) remain effective
(with a prospectus at all times meeting the requirements of the Act)
until the Final Expiration Date; and
(ii) will deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates that
comply in all respects with the requirements for registration on Form
10 under the Exchange Act.
(d) In the event that the Rights become exercisable under SECTION
13(a), the Company, by action of a Requisite Majority, may agree with the
Principal Party that the Principal Party may permit the Rights to be
exercised for 50% of the Common Shares of the Principal Party that would
otherwise be purchasable under SECTION 13(a), in consideration of the
surrender to the Principal Party, as the successor to the Company
22
under SECTION 13(a)(ii), of the Rights so exercised and without other
payment of the Purchase Price. Rights exercised under this SECTION 13(e)
will be deemed to have been exercised in full and cancelled.
(e) The provisions of this SECTION 13 will similarly apply to
successive mergers, consolidations, and sales or other transfers. In the
event that a Section 13 Event occurs at any time after the occurrence of
a Section 11(a)(ii) Event, the Rights that have not theretofore been
exercised will thereafter become exercisable in the manner described in
SECTION 13(a).
Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
(a) The Company will not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in SECTION 11(p), or to
distribute Rights Certificates that evidence fractional Rights. In lieu
of such fractional Rights, there will be paid to the registered holders
of the Rights Certificates with regard to which such fractional Rights
would otherwise be issuable, an amount in cash equal to the same fraction
of the current market value of a whole Right. For purposes of this
SECTION 14(a), the current market value of a whole Right will be the
closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable.
The closing price of the Rights for any day will be the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case
as reported in the principal consolidated transaction reporting system
with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to trading on
the New York Stock Exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed or
admitted to trading, or if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if
not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then
in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date
no such market maker is making a market in the Rights the fair value of
the Rights on such date as conclusively determined in good faith by the
Board of Directors of the Company will be used.
(b) The Company will not be required to issue fractions of shares
of Class A Common Stock upon exercise of the Rights or to distribute
certificates that evidence fractional shares of Class A Common Stock. In
lieu of fractional shares of Class A Common Stock, the Company may pay to
the registered holders of Rights Certificates at the time such Rights are
exercised as provided in this Agreement an amount in cash equal to the
same fraction of the Current Market Price of one share of Class A Common
Stock as of the Trading Day immediately prior to the date of such
exercise.
23
(c) The holder of a Right, by the acceptance of the Rights, expressly
waives the right to receive any fractional Rights or any fractional shares
upon exercise of a Right, except as permitted by this SECTION 14.
Section 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Class A Common Stock and/or Class B Common Stock, as the case may be,); and any
registered holder of any Rights Certificate (or, prior to the Distribution Date,
of the Class A Common Stock and/or Class B Common Stock, as the case may be),
without the consent of the Rights Agent or of the holder of any other Rights
Certificate (or, prior to the Distribution Date, of the Class A Common Stock
and/or Class B Common Stock, as the case may be), may, on its own behalf and for
its own benefit, enforce, and may institute and maintain any suit, action, or
proceeding against the Company to enforce, or otherwise act in respect of, its
right to exercise the Rights evidenced by such Rights Certificate in the manner
provided in such Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the obligations under this Agreement and injunctive relief against actual or
threatened violations of the obligations under this Agreement of any Person
subject to this Agreement.
Section 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the Rights consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Class A Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer,
and with the appropriate forms and certificates fully executed;
(c) subject to SECTION 6(a) and SECTION 7(f), the Company and the
Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated certificate
for Class A Common Stock and/or Class B Common Stock, as the case may be),
is registered as the absolute owner of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated certificate for Class A Common Stock and/or
Class B Common Stock, as the case may be, made by anyone other than the
Company or the Rights Agent) for all purposes whatsoever, and neither the
Company nor the Rights Agent, will be affected by any notice to the
contrary; and
24
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent will have any liability to any
holder of a Right or other Person as a result of its inability to perform
any of its obligations under this Agreement by reason of any preliminary or
permanent injunction or other order, decree, or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory, or administrative
agency or commission, or any statute, rule, regulation, or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation; provided, however,
the Company will use its reasonable best efforts to have any such order,
decree, or ruling lifted or otherwise overturned as soon as possible.
Section 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate will be entitled to vote or receive
dividends or be deemed for any purpose the holder of the number of shares of
Class A Common Stock or any other securities of the Company that may at any time
be issuable on the exercise of the Rights represented thereby, nor will anything
contained in this Agreement or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in SECTION 25), or to receive dividends or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Rights Certificate have been exercised in accordance with the provisions of this
Agreement.
Section 18. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it under this Agreement and, from
time to time, on demand of the Rights Agent, its reasonable expenses and
counsel fees and disbursements and other disbursements incurred in the
administration and execution of this Agreement and the exercise and
performance of its duties under this Agreement. The Company also agrees to
indemnify the Rights Agent for, and to hold it harmless against, any loss,
liability, or expense, incurred without gross negligence, bad faith, or
willful misconduct on the part of the Rights Agent, for anything done or
omitted to be done by the Rights Agent in connection with the acceptance
and administration of this Agreement, including, without limitation, the
costs and expenses of defending against any claim of liability. Anything
to the contrary notwithstanding, in no event shall the Rights Agent be
liable for special, indirect, consequential or incidental loss or damage of
any kind.
(b) The Rights Agent will be protected and will incur no liability
for or in respect of any action taken, suffered, or omitted by it in
connection with its administration of this Agreement in reliance upon any
Rights Certificate or certificate for Class A Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement, or other paper or document believed by it to be
genuine and to be
25
signed, executed, and, where necessary, verified or acknowledged, by the
proper Person or Persons.
Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any Person into or with which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
Person resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent is a party, or any corporation succeeding to
the corporate trust or stockholder services business of the Rights Agent or
any successor Rights Agent, will be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties to this Agreement; provided, however,
that such corporation would be eligible for appointment as a successor
Rights Agent under the provisions of SECTION 21. In case at the time such
successor Rights Agent succeeds to the agency created by this Agreement,
any of the Rights Certificates have been countersigned but not delivered,
any such successor Rights Agent may adopt the countersignature of a
predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates have
not been countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor or in the name of
the successor Rights Agent; and in all such cases such Rights Certificates
will have the full force provided in the Rights Certificates and in this
Agreement.
(b) In case at any time the name of the Rights Agent is changed and
at such time any of the Rights Certificates have been countersigned but not
delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that
time any of the Rights Certificates have not been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or
in its changed name, and in all such cases such Rights Certificates will
have the full force provided in the Rights Certificates and in this
Agreement.
Section 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance of such Rights Certificates, will be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel will be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement
the Rights Agent deems it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person or
Adverse Person and the determination of "Current Market Price") be proved
or established by the Company prior to taking or
26
suffering any action under this Agreement, such fact or matter (unless
other evidence in respect of such fact or matter is specifically
prescribed in this Agreement) may be deemed to be conclusively proved
and established by a certificate signed by the Chairman of the Board,
the Chief Executive Officer, the Chief Operating Officer, the President,
any Executive Vice President, the Treasurer, any Assistant Treasurer, the
Secretary, or any Assistant Secretary of the Company and delivered to
the Rights Agent; and such certificate will be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.
(c) The Rights Agent will be liable under this Agreement only for its
own gross negligence, bad faith or willful misconduct.
(d) The Rights Agent will not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
Rights Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and will be deemed to have been made by the Company only.
(e) The Rights Agent will not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery of this
Agreement (except the due execution of this Agreement by the Rights Agent)
or in respect of the validity or execution of any Rights Certificate
(except its countersignature); nor will it be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in
any Rights Certificate; nor will it be responsible for any adjustment
required under the provisions of SECTION 11 or SECTION 13, or responsible
for the manner, method, or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after actual notice of any such adjustment); nor will
it by any act under this Agreement be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common
Stock to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock will, when so issued, be validly
authorized or issued, fully paid, or nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge,
and deliver or cause to be performed, executed, acknowledged, and delivered
all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or
performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties under this
Agreement from the Chairman of the Board, the Chief Executive Officer, the
Chief Operating Officer, the President, any Executive Vice President, the
Secretary, any Assistant Secretary, the Treasurer, or any Assistant
Treasurer of the Company, and to apply to such officers for advice or
27
instructions in connection with its duties, and it will not be liable for
any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
(h) The Rights Agent and any stockholder, director, officer, or
employee of the Rights Agent may buy, sell, or deal in any of the Rights or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, contract with or lend
money to the Company, or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing in this Agreement will
preclude the Rights Agent from acting in any other capacity for the Company
or for any other Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers vested by this Agreement in it or perform any duty under this
Agreement either itself or by or through its attorneys or agents, and the
Rights Agent will not be answerable or accountable for any act, default,
neglect, or misconduct of any such attorneys or agents or for any loss to
the Company resulting from any such act, default, neglect, or misconduct;
provided, however, reasonable care was exercised in the selection and
continued employment of such Person.
(j) No provision of this Agreement will require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties under this Agreement or in the
exercise of its rights if there are reasonable grounds for believing that
repayment of such funds or adequate indemnification against such risk or
liability is not reasonably assured to it.
(k) If, with respect to any Right Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has
either not been completed or indicates an affirmative response to clause 1
or 2 of such certificate, the Rights Agent will not take any further action
with respect to such requested exercise of transfer without first
consulting with the Company.
Section 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company, and to each transfer
agent of the Class A Common Stock and/or Class B Common Stock, by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 days' notice in writing, mailed to the Rights Agent or successor Rights
Agent, as the case may be, and to each transfer agent of the Class A Common
Stock and/or Class B Common Stock, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
resigns or is removed or otherwise becomes incapable of acting, the Company will
appoint a successor to the Rights Agent. If the Company fails to make such
appointment within a period of 30 days after giving notice of such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights
28
Agent or by the holder of a Rights Certificate (who will, with such notice,
submit such holder's Rights Certificate for inspection by the Company), then
any registered holder of any Rights Certificate may apply to any court of
competent jurisdiction for the appointment of a new Rights Agent. Any
successor Rights Agent, whether appointed by the Company or by such a court,
will be a corporation organized and doing business under the laws of the
United States or a State of the United States, in good standing, that is
authorized under such laws to exercise corporate trust powers and is subject
to supervision or examination by federal or state authority and that has at
the time of its appointment as Rights Agent a combined capital and surplus of
at least $25,000,000. After appointment, the successor Rights Agent will be
vested with the same powers, rights, duties, and responsibilities as if it
had been originally named as Rights Agent without further act or deed, except
that the predecessor Rights Agent will deliver and transfer to the successor
Rights Agent any property at the time held by it under this Agreement and
execute and deliver any further assurance, conveyance, act, or deed necessary
for the purpose. Not later than the effective date of any such appointment,
the Company will file notice of such appointment in writing with the
predecessor Rights Agent and each transfer agent of the Class A Common Stock
and/or Class B Common Stock, and mail a notice of such appointment in writing
to the registered holders of the Rights Certificates. Failure to give any
notice provided for in this SECTION 21, however, or any defect in such
notice, will not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent,
as the case may be.
Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the
Company may, in its discretion, issue new Rights Certificates evidencing
Rights in such form as may be approved by its Board of Directors to reflect
any adjustment or change in the Purchase Price and the number, kind or class
of shares or other securities or property purchasable under the Rights
Certificates made in accordance with the provisions of this Agreement. In
addition, in connection with the issuance or sale of shares of Class A Common
Stock and/or shares of Class B Common Stock following the Distribution Date
and prior to the Expiration Date, the Company (a) will, with respect to
shares of Class A Common Stock and/or shares of Class B Common Stock so
issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, granted or awarded as of the Distribution Date,
or upon the exercise, conversion, or exchange of securities issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate
by the Board of Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with such
issuance or sale; provided, however, that (y) no such Rights Certificate will
be issued if, and to the extent that, the Company is advised by counsel that
such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (z) no such Rights Certificate will be issued if, and to
the extent that, appropriate adjustment has otherwise been made in lieu of
the issuance of such Rights Certificate.
Section 23. REDEMPTION AND TERMINATION.
(a) The Company may, at its option, by action of a Requisite
Majority, at any time prior to the earlier of (i) such time as a Person
becomes an Acquiring Person, or (ii)
29
the Final Expiration Date, redeem all but not fewer than all the then
outstanding Rights at the Redemption Price (the date of such redemption,
the "Redemption Date"), and the Company, at its option, may pay the
Redemption Price either in cash or Class A Common Stock or other securities
of the Company, deemed by the Board of Directors, in the exercise of its
sole discretion, to be at least equivalent in value to the Redemption Price.
(b) Immediately upon the action of a Requisite Majority ordering the
redemption of the Rights, evidence of which has been filed with the Rights
Agent and without any further action and without any notice, the right to
exercise the Rights will terminate and the only right thereafter of the
holders of Rights will be to receive the Redemption Price. Promptly after
the action of a Requisite Majority ordering the redemption of the Rights,
the Company will give notice of such redemption to the Rights Agent and to
the holders of the then outstanding Rights by mailing such notice to all
such holders at each holder's last address as it appears upon the registry
books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Class A Common Stock or Class
B Common Stock, as the case may be. Each such notice of redemption will
state the method by which the payment of the Redemption Price will be made.
Any notice that is mailed in the manner in this Agreement provided will be
deemed given, whether or not the holder receives such notice. In any case,
failure to give such notice by mail, or any defect in the notice, to any
particular holder of Rights shall not affect the sufficiency of the notice
to other holders of Rights.
Section 24. EXCHANGE.
(a) The Board of Directors of the Company may, at its option, at any
time after a Triggering Event, exchange all or part of the then outstanding
and exercisable Rights (which will not include Rights that have become void
pursuant to the provisions of SECTION 7(e) hereof) for shares of Class A
Common Stock, each Right being exchangeable for one share of Class A Common
Stock, appropriately adjusted to reflect any transaction specified in
SECTION 11(a)(i) occurring after the Record Date (such number of shares of
Class A Common Stock issuable in exchange for one Right being referred to
herein as the "Exchange Shares"). Notwithstanding the foregoing, the Board
of Directors shall not be empowered to effect such 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 of its Subsidiaries or any
Person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such Plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of
the Class A Common Stock then outstanding.
(b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of
this SECTION 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter
of a holder of such Rights shall be to receive the Exchange Shares. The
Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect
30
the validity of such exchange. The Company promptly shall mail a notice of
any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any
notice that is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Class A Common
Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of SECTION
7(e) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Class A Common
Stock issued but not outstanding, or authorized but unissued, to permit any
exchange of Rights as contemplated in accordance with this SECTION 24, the
Company shall take all such action as may be necessary to authorize
additional Class A Common Stock for issuance upon exchange of the Rights or
shall take such other action specified in SECTION 11(a)(iii) hereof.
(d) The Company shall not be required to issue fractions of shares of
Class A Common Stock to distribute certificates which evidence fractional
Class A Common Stock. In lieu of such fractional shares, the Company shall
pay to the registered holders of the Right Certificates with regard to
which such fractional shares would otherwise be issuable an amount in cash
equal to the same fraction of the Current Market Price of a whole share of
Class A Common Stock. For the purposes of this SUBSECTION (d), the Current
Market Value of a whole share of Class A Common Stock shall be determined
as of the Trading Day immediately prior to the date of exchange pursuant to
this SECTION 24.
Section 25. NOTICE OF CERTAIN EVENTS.
(a) In case the Company proposes, at any time after the Distribution
Date, (i) to pay any dividend payable in stock of any class to the holders
of Class A Common Stock or Class B Common Stock or to make any other
distribution to the holders of Class A Common Stock or Class B Common Stock
(other than a regular quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders of Class A Common
Stock or Class B Common Stock rights or warrants to subscribe for or to
purchase any additional shares of Class A Common Stock or shares of stock
of any class or any other securities, rights or options, or (iii) to effect
any reclassification of its Class A Common Stock or Class B Common Stock
(other than a reclassification involving only the subdivision of
outstanding shares), or (iv) to effect any consolidation or merger into, or
with any other Person (other than a Subsidiary of the Company in a
transaction that complies with SECTION 11(o)), or to effect any sale or
other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one transaction or a series of related
transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Company or any of its Subsidiaries in one or more
transactions each of which complies with SECTION 11(o)), or (v) to effect
the liquidation, dissolution or
31
winding up of the Company, then, in each such case, the Company will give
to each holder of a Rights Certificate, to the extent feasible and in
accordance with SECTION 26, a notice of such proposed action, which will
specify the record date for the purposes of such stock dividend,
distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the shares of Class A Common Stock and/or Class B
Common Stock, if any such date is to be fixed, and such notice will be so
given in the case of any action covered by CLAUSE (i) or (ii) above at least
20 days prior to the record date for determining holders of the shares of
Class A Common Stock and/or Class B Common Stock for purposes of such
action, and in the case of any such other action, at least 20 days prior to
the date of the taking of such proposed action or the date of participation
therein by the holders of the shares of Class A Common Stock and/or Class B
Common Stock, whichever is the earlier.
(b) In case of a Triggering Event, then (i) the Company will as soon
as practicable give to each holder of a Rights Certificate, to the extent
feasible and in accordance with SECTION 26, a notice of the occurrence of
such event, which will specify the event and the consequences of the event
to holders of Rights under this Agreement, and (ii) all references in
SECTION 25(a) to Class A Common Stock or to Class B Common Stock will be
deemed thereafter to refer to other securities, if appropriate.
Section 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights Certificate
to or on the Company will be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing with
the Rights Agent) as follows:
Affiliated Computer Services, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attention: General Counsel
with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx, Xx.
Subject to the provisions of SECTION 21, any notice or demand authorized by
this Agreement to be given or made by the Company or by the holder of any Rights
Certificate to or on the Rights Agent will be sufficiently given or made if sent
by first-class mail, postage prepaid, addressed (until another address is filed
in writing with the Company) as follows:
32
ChaseMellon Shareholder Services, L.L.C.
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Class A Common Stock and/or Class B Common Stock) will be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed to such
holder at the address of such holder as shown on the registry books of the
Company.
Section 27. SUPPLEMENT AND AMENDMENTS. The Company, by action of its
Board of Directors, and the Rights Agent may from time to time supplement or
amend this Agreement without the approval of any holders of Rights in order to
cure any ambiguity, to correct or supplement any provision contained in this
Agreement that may be defective or inconsistent with any other provisions in
this Agreement, or to make any other provisions in regard to matters or
questions arising under this Agreement that the Company and Rights Agent may
deem necessary or desirable and that will be consistent with, and for the
purpose of fulfilling, the objectives of the Board of Directors in adopting this
Agreement; provided, however, that following the Distribution Date, this
Agreement shall not be amended in any manner that would adversely affect the
basic economic terms of the Rights; provided, further, that, once the Rights are
no longer redeemable in accordance with SECTION 23 of this Agreement, no
amendment to this Agreement may have the effect of making the Rights redeemable.
Section 28. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent will bind and
inure to the benefit of their respective successors and assigns under this
Agreement.
Section 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares of
Class A Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Class A
Common Stock of which any Person is the Beneficial Owner, will be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act as in effect on the date of this
Agreement. The Board of Directors of the Company (with, where specifically
provided for in this Agreement, the concurrence of the Continuing Directors)
will have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board of Directors
(with, where specifically provided for in this Agreement, the concurrence of the
Continuing Directors) or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (a) interpret the provisions of this Agreement, and (b) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, without limitation, a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of CLAUSE (y) below,
all omissions with respect to the foregoing) that are done or made by the Board
of Directors (with, where
33
specifically provided for in this Agreement, the concurrence of the
Continuing Directors) in good faith, will (x) be final, conclusive, and
binding on the Company, the Rights Agent, the holders of the Rights, and all
other parties, and (y) not subject the Board of Directors or the Continuing
Directors to any liability to the holders of the Rights.
Section 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement will
be construed to give to any Person other than the Company, the Rights Agent, and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock) any legal or
equitable right, remedy, or claim under this Agreement; and this Agreement will
be for the sole and exclusive benefit of the Company, the Rights Agent, and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Stock).
Section 31. SEVERABILITY. If any term, provision, covenant, or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, or unenforceable, the remainder of the
terms, provisions, covenants, and restrictions of this Agreement will remain in
full force and effect and will in no way be affected, impaired, or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant, or restriction is held by such
court or authority to be invalid, void, or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in SECTION 23 will
be reinstated and will not expire until the Close of Business on the tenth
Business Day following the date of such determination by the Board of Directors.
Without limiting the foregoing, if any provision requiring action by a Requisite
Majority is held by any court of competent jurisdiction or other authority to be
invalid, void, or unenforceable, such determination will then be made by the
Board of Directors of the Company in accordance with applicable law and the
Company's articles of incorporation and by-laws.
SECTION 32. GOVERNING LAW. THIS AGREEMENT, EACH RIGHT, AND EACH RIGHTS
CERTIFICATE ISSUED UNDER THIS AGREEMENT WILL BE DEEMED TO BE A CONTRACT MADE
UNDER THE LAWS OF THE STATE OF DELAWARE AND FOR ALL PURPOSES WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SUCH STATE APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
Section 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts will for all purposes be deemed to
be an original, and all such counterparts will together constitute but one and
the same instrument.
Section 34. INTERPRETATION. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and will not
control or affect the meaning or construction of any of the provisions of this
Agreement. References in this Agreement to
34
Sections and Exhibits are references to the Sections of and Exhibits to this
Agreement unless the context requires otherwise. In this Agreement, the word
"or" is not exclusive.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
AFFILIATED COMPUTER SERVICES, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
35
Exhibit A
to Rights Agreement
Certificate No. R-
[FORM OF RIGHTS CERTIFICATE]
________ Rights
NOT EXERCISABLE AFTER August 25, 2007 OR EARLIER IF REDEEMED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
AT $0.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
SUCH RIGHTS MAY BECOME NULL AND VOID.
Rights Certificate
AFFILIATED COMPUTER SERVICES, INC.
This certifies that _____________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions, and conditions
of the Rights Agreement, dated as of August 11, 1997 (as amended from time to
time, the "Rights Agreement"), between Affiliated Computer Services, Inc., a
Delaware corporation (the "Company"), and ChaseMellon Shareholder Services,
L.L.C. (the "Rights Agent"), to purchase from the Company at any time prior
to 5:00 p.m. (Dallas, Texas time) on August 25, 2007 at the office or offices
of the Rights Agent designated for such purpose, or its successors as Rights
Agent, one fully paid, nonassessable share of Class A Common Stock (the
"Common Stock") of the Company, at a purchase price of $150.00 per share (the
"Purchase Price"), upon presentation and surrender of this Rights Certificate
with the Form of Election to Purchase and related Certificate duly executed.
The number of Rights evidenced by this Rights Certificate (and the number of
shares that may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are the number and Purchase Price
as of August 25, 1997 based on the Common Stock as constituted at such date.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of shares of Common Stock or other securities, that may be purchased
upon the exercise of the Rights evidenced by this Rights Certificate are
subject to modification and adjustment upon the happening of certain events.
This Rights Certificate is subject to all of the terms, provisions, and
conditions of the Rights Agreement, which terms, provisions, and conditions
are incorporated herein by reference and made a part of this certificate and
to which Rights Agreement reference is hereby made for a full description of
the rights, limitations of rights, obligations, duties, and immunities
hereunder of the Rights Agent, the Company, and the holders of the Rights
Certificates, which limitations of rights include the temporary suspension of
the exercisability of such Rights under the certain
A-1
circumstances set forth in the Rights Agreement. Copies of the Rights
Agreement are on file at the above-mentioned office of the Rights Agent and
are also available upon written request to the Rights Agent. All capitalized
terms not otherwise defined have the meaning set forth in the Rights
Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced
by this Rights Certificate are beneficially owned by (i) an Acquiring Person
or an Affiliate or Associate of any such Acquiring Person, (ii) a transferee
of any such Acquiring Person, Associate, or Affiliate, or (iii) under certain
circumstances specified in the Rights Agreement, a transferee of a Person
who, after such transfer, became an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, such Rights will become null and void and
no holder of this certificate will have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) Event.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the principal office or offices of the Rights Agent designated
for such purpose, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of shares of Common Stock as the Rights
evidenced by the Rights Certificate or Rights Certificates surrendered have
entitled such holder to purchase. If this Rights Certificate is exercised in
part, the holder will be entitled to receive upon surrender of this
certificate another Rights Certificate or Rights Certificates for the number
of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at its option at a
redemption price of $0.01 per Right. In addition, in certain circumstances
the Rights may be exchanged, in whole or in part, for shares of the Common
Stock. Immediately upon the action of the Board of Directors of the Company
authorizing any such exchange, and without any further action or any notice,
the Rights (other than Rights that are not subject to such exchange) will
terminate and the Rights will only enable holders to receive the shares
issuable upon such exchange. Under certain circumstances set forth in the
Rights Agreement, the decision to redeem the Rights will require the
concurrence of a majority of the Continuing Directors.
No fractional shares of Common Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment will
be made, as provided in the Rights Agreement.
No holder of this Rights Certificate will be entitled to vote or receive
dividends or be deemed for any purpose the holder of shares of Common Stock
or of any other securities of the Company that may at any time be issuable on
the exercise hereof, nor will anything contained in the Rights Agreement or
herein be construed to confer upon the holder of this certificate, as such,
any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or,
to receive notice of meetings or other actions affecting stockholders (except
as provided in the Rights Agreement), or to receive dividends or
A-2
subscription rights, or otherwise, until the Right or Rights evidenced by
this Rights Certificate have been exercised as provided in the Rights
Agreement.
This Rights Certificate will not be valid or obligatory for any purpose
until it has been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.
Dated as of:
--------------------
AFFILIATED COMPUTER SERVICES, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Countersigned:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
A-3
[FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the Rights Certificate.)
FOR VALUE RECEIVED hereby sells, assigns, and transfer unto
(Please print name and address of transferee)
This Rights Certificate, together with all right, title, and interest
therein, and does hereby irrevocably constitute and appoint _________________
attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.
Dated:
-----------------
Signature
Signature Guaranteed:
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned, or
transferred by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:
-----------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
A-4
FORM OF ELECTION TO PURCHASE
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.
To: AFFILIATED COMPUTER SERVICES, INC.:
The undersigned hereby irrevocably elects to exercise __________ Rights
represented by this Rights Certificate to purchase the shares of Class A
Common Stock issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person that may be issuable upon
the exercise of the Rights) and requests that certificates for such shares be
issued in the name of and delivered to:
Please insert social security or other identifying number:
----------------
Please print name and address:
--------------------------------------------
---------------------------------------------------------------------------
If such number of Rights are not all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights will be
registered in the name of and delivered to:
Please insert social security or other identifying number:
----------------
Please print name and address:
--------------------------------------------
---------------------------------------------------------------------------
Dated:
-----------------
Signature
Signature Guaranteed:
A-5
Certificate
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Adverse Person or an Affiliate or Associate of any such Acquiring Person or
an Adverse Person (as such terms are defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [ ]
did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or became an Acquiring Person or Adverse Person or an
Affiliate or Associate of an Acquiring Person or an Adverse Person.
Dated:
-----------------
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
A-6
Exhibit B
to Rights Agreement
SUMMARY OF RIGHTS TO PURCHASE
SHARES OF AFFILIATED COMPUTER SERVICES, INC.
CLASS A COMMON STOCK
On August 5, 1997, the Board of Directors of Affiliated Computer Services,
Inc. (the "Company") declared a dividend of one common share purchase right (a
"Right") for each outstanding share of Class A common stock, $0.01 par value
(the "Class A Common Stock") and for each share of Class Common Stock, $0.01
value (the "Class B Common Stock"), of the Company. The dividend was made on
August 25, 1997 (the "Record Date") to the stockholders of record at the close
of business on that date. Each Right entitles the registered holder to purchase
from the Company one share of Class A Common Stock of the Company, at a price of
$150.00 (the "Purchase Price"), subject to adjustment. The description and
terms of the Rights are set forth in a Rights Agreement dated as of August 11,
1997 (the "Rights Agreement") between the Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) ten Business Days following a public
announcement that a person or group of affiliated or associated persons has
acquired, or obtained the right to acquire, beneficial ownership of 15% or more
of the outstanding Class A Common Stock (an "Acquiring Person") or (ii) ten
Business Days following the commencement of, or announcement of an intention to
make, a tender offer or exchange offer, the consummation of which would result
in the beneficial ownership by a person or group of 15% or more of such
outstanding Class A Common Stock (the earlier of such dates being the
"Distribution Date"), the Rights will be evidenced, with respect to any of the
certificates for Class A Common Stock and/or Class B Common Stock outstanding as
of the Record Date, by such certificates for Class A Common Stock and/or Class B
Common Stock with a copy of this Summary of Rights attached to the certificate.
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Class A Common Stock and/or Class B
Common Stock, as the case may be. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new certificates issued after the
Record Date upon transfer or new issuance of Class A Common Stock and/or Class B
Common Stock, as the case may be, will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificates for Class A Common Stock and/or Class B Common Stock, as the case
may be, outstanding even without such notation or a copy of this Summary of
Rights being attached to such Certificate, will also constitute the transfer of
the Rights associated with the Class A Common Stock and/or Class B Common Stock,
as the case may be, represented by such certificate. As soon as practicable
following the Distribution Date, separate certificates evidencing the Rights
(the "Right Certificates") will be mailed to holders of record of the Class A
Common Stock and/or Class B Common Stock, as the
B-1
case may be, as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on August 25, 2007 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed by the
Company, in each case, as described below.
The Purchase Price payable and the number of shares of 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 Class A
Common Stock, (ii) upon the grant to holders of the Class A Common Stock of
certain rights or warrants to subscribe for or purchase Class A Common Stock at
a price or securities convertible into Class A Common Stock with a conversion
price less than the then current market price of the Class A Common Stock; (iii)
upon the distribution to holders of the Class A Common Stock of evidences of
indebtedness or assets or of subscription rights or warrants (other than those
referred to above); or (iv) upon any of the foregoing happens with respect to
the Class B Common Stock.
In the event that any person or entity becomes an Acquiring Person (the
beneficial owner of 15% or more of the Class A Common Stock), provision will be
made so that each holder of a Right, other than Rights beneficially owned by the
Acquiring Person (which will then be void), will have the right to receive upon
exercise that number of shares of Class A Common Stock having a market value of
two times the applicable exercise price of the Right.
The Rights Agreement excludes from the definition of Acquiring Person,
Persons who certify to the Company that they inadvertently acquired in excess of
14.9% of the outstanding Class A Common Stock and thereafter divest such excess
Class A Common Stock or who acquire 15% or more of the Class A Common Stock in a
Permitted Transaction. A "Permitted Transaction" is a stock acquisition or
tender or exchange offer pursuant to a definitive agreement which would result
in a person beneficially owning 15% or more of the Class A Common Stock and
which has been approved by the Board of Directors (including a majority of the
Directors not in association with an Acquiring Person) prior to the execution of
the agreement or the public announcement of the offer.
In the event that the Company is acquired in a merger or other business
combination transaction, or 50% or more of its consolidated assets or earning
power are sold, proper provisions will be made so that each holder of a Right
will have the right to receive, upon the exercise of the Right at the then
applicable exercise price, that number of shares of common stock of the
acquiring company that at the time of such transaction will have a market value
of two times the applicable exercise price of the Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional shares of Class A Common Stock will be
issued and, in lieu of such fractional shares,
B-2
an adjustment in cash will be made based on the market price of the Class A
Common Stock on the last trading day prior to the date of exercise.
After a person becomes an Acquiring Person, the Company's Board of
Directors may exchange the Rights, other than those Rights owned by the
Acquiring Person, in whole or in part, at an exchange ratio of one share of
Class A Common Stock per Right, subject to adjustment. However, the Board of
Directors cannot conduct an exchange at any time after any Person, together with
its Affiliates and Associates, becomes the Beneficial Owner of 50% or more of
the outstanding Class A Common Stock.
At any time prior to any Person becoming an Acquiring Person, a Requisite
Majority may redeem the Rights in whole, but not in part, at a price of $0.01
per Right (the "Redemption Price"). In addition, the Board of Directors may
extend or reduce the period during which the Rights are redeemable, so long as
the Rights are redeemable at the time of such extension or reduction.
Immediately upon any redemption of 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.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, including an amendment
to extend the Final Expiration Date, except that from and after the Distribution
Date no such amendment may adversely affect the economic interests of the
holders of the Rights.
Until a Right is exercised, the holder of the Right, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote, or to receive dividends.
B-3
