Document:

Exhibit 10.7

 

INTEL
CORPORATION

 

1997 STOCK OPTION PLAN

 

(Amended and Restated
Effective July 16, 1997)

 

1.                                      PURPOSE

The purpose of
this Intel Corporation 1997 Stock Option Plan (the “Plan”) is to advance the
interests of Intel Corporation, a Delaware corporation (hereinafter “Intel”),
by stimulating the efforts of non-officer employees who are selected to be
participants by heightening the desire of such persons to continue in working
toward and contributing to the success of Intel.  Stock options granted pursuant to this Plan are not incentive
stock options, as defined in Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”).

2.                                      DEFINITIONS

(a)                                  “Board of Directors” means the Board of
Directors of Intel.

(b)                                 “Committee” means the Board of Directors
and/or a committee of the Board of Directors acting pursuant to its
authorization to administer this Plan under Section 4.

(c)                                  “Common Stock” means Intel Corporation’s
Common Stock, par value $.001, as presently constituted, subject to adjustment,
and including other securities, as provided in Section 8.

(d)                                 “Corporation” means Intel and its
Subsidiaries and affiliates, unless the context otherwise requires.

(e)                                  “Plan” means the Intel Corporation 1997
Stock Option Plan.

(f)                                    “Subsidiary” means any corporation (other
than Intel) in an unbroken chain of corporations beginning with Intel where
each of the corporations in the unbroken chain other than the last corporation
owns stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.

(g)                                 “Immediate Family” means the spouse,
children and grandchildren of the Participant (as defined in Section 5 hereof).

3.                                      COMMON STOCK SUBJECT TO THE PLAN AND TO OPTIONS

Subject to adjustment
as provided in Section 8, the maximum number of shares of Common Stock which
may be issued pursuant to this Plan shall not exceed 130,000,000 shares (as
adjusted automatically by the Plan’s terms effective July 13, 1997, to reflect
a stock split effected in the form of a stock distribution).  

 

1.

 

Shares issued
under this Plan may be authorized and unissued shares of Common Stock or shares
of Common Stock reacquired by Intel. 
All or any shares of Common Stock subject to an option which for any
reason are not issued under an option may again be made subject to an option
under the Plan.

4.                                      ADMINISTRATION OF THE PLAN

The Plan shall be
administered by the Board of Directors and/or by a Committee of the Board of
Directors of Intel, as appointed from time to time by the Board of
Directors.  The Board of Directors shall
fill vacancies on and from time to time may remove or add members to the
Committee.  Notwithstanding the
foregoing, unless otherwise restricted by the Board of Directors, the Committee
may appoint one or more separate committees (any such committee, a
“Subcommittee”) composed of one or more directors of Intel (who may but need
not be members of the Committee) and may delegate to any such Subcommittee(s)
the authority to grant options under the Plan to Participants (as defined in
Section 5 hereof), to determine all terms of such options, and/or to administer
the Plan or any aspect of it.  Any
action by any such Subcommittee within the scope of such delegation shall be
deemed for all purposes to have been taken by the Committee.  The Committee shall act pursuant to a
majority vote or majority written consent.

Subject to the
express provisions of this Plan, the Committee shall be authorized and empowered
to do all things necessary or desirable in connection with the administration
of this Plan, including, without limitation: (a) to prescribe, amend and
rescind rules and regulations relating to this Plan and to define terms not
otherwise defined herein; (b) to determine which persons are Participants, to
which of such Participants, if any, an option shall be granted hereunder and
the timing of any such option grants; (c) to determine the number of shares of
Common Stock subject to an option and the exercise or purchase price of such
shares; (d) to establish and verify the extent of satisfaction of any
conditions to exercisability applicable to an option, (e) to waive conditions
to and/or accelerate exercisability of an option, either automatically upon the
occurrence of specified events (including in connection with a change of
control of the Corporation) or otherwise in its discretion; (f) to prescribe
and amend the terms of option grants made under this Plan (which need not be
identical); (g) to determine whether, and the extent to which, adjustments are
required pursuant to Section 8 hereof; and (h) to interpret and construe this
Plan, any rules and regulations under the Plan and the terms and conditions of
any option granted hereunder, and to make exceptions to any such provisions in
good faith and for the benefit of the Corporation.

All decisions,
determinations and interpretations by the Committee regarding the Plan, any
rules and regulations under the Plan and the terms and conditions of any option
granted hereunder, shall be final and binding on all Participants and
optionholders.  The Committee shall
consider such factors as it deems relevant, in its sole and absolute
discretion, to making such decisions, determinations and 

 

2.

 

interpretations
including, without limitation, the recommendations or advice of any officer or
other employee of the Corporation and such attorneys, consultants and
accountants as it may select.

5.                                      PARTICIPANTS

Any person who is
an employee of the Corporation (a “Participant”) shall be eligible to be
considered for the grant of an option hereunder unless such person is an
“officer or director” as contemplated by Rule 4460 of the Nasdaq Stock Market’s
National Market rules. No option shall be granted to any Participant if
immediately after the grant of such option such Participant would own stock,
including stock subject to outstanding options previously granted to him or
her, amounting to more than five percent (5%) of the total combined voting
power or value of all classes of stock of Intel. Any person designated by the
Corporation as an independent contractor shall not be treated as an employee
under the Plan.

6.                                      GRANT, TERMS AND CONDITIONS OF OPTIONS

Options may be
granted at any time and from time to time prior to the termination of the Plan
to Participants selected by the Committee. 
However, subject to adjustment pursuant to Section 8, the aggregate
number of shares of Common Stock subject to options granted under this Plan
during any calendar year to any one Participant shall not exceed one percent
(1%) of the number of shares of Common Stock outstanding on December 28,
1996.  No optionholder shall have any
rights as a stockholder with respect to any shares of Common Stock subject to
an option hereunder until said shares have been issued.  Options granted pursuant to the Plan need
not be identical but each option shall be subject to the following terms and
conditions:

(a)                                  Price:  The exercise
price for each option shall be established by the Committee.  The exercise price shall not be less than
the fair market value of the stock on the date of grant.  The exercise price shall be paid in full at
the time of exercise.  The exercise
price shall be paid in such form of consideration as the Committee in its
discretion shall specify, which may but need not include, e.g., in cash, by
loan (as described in Section 7), by payment under an arrangement with a broker
where payment is made pursuant to an irrevocable direction to the broker to
deliver all or part of the proceeds from the sale of the option shares to the
Corporation, by the surrender of shares of Common Stock owned by the
optionholder exercising the option or issuable under an option held by the
optionholder and having a fair market value on the date of exercise equal to
the option price, or by any combination of the foregoing.

(b)                                 Duration and Exercise or Termination of
Option:  Each option shall be exercisable in such
manner and at such times as the Committee shall determine.  However, each option granted must expire
within a period of 

 

3.

 

not more than ten (10) years from the grant date.  The effective date of each option granted hereunder shall be the
date on which the grant was made.

(c)                                  Suspension or Termination of Option: 
The Chief Executive Officer, President, Chief Operating Officer, Vice
President for Human Resources and General Counsel of the Corporation (any such
person, an “Authorized Officer”) each may provide at any time (including after
a notice of exercise has been delivered) and from time to time that the right
to exercise an option may be suspended pending a determination by an Authorized
Officer or the Committee on whether a Participant to whom the option was
granted or an optionholder has committed an act of embezzlement, fraud,
dishonesty, nonpayment of any obligation owed to the Corporation, breach of
fiduciary duty or deliberate disregard of Corporation rules; has made an
unauthorized disclosure of any Corporation trade secret or confidential
information; has engaged in any conduct constituting unfair competition; has
induced any customer of the Corporation to breach a contract with the
Corporation or any principal for whom the Corporation acts as agent to
terminate such agency relationship; or has engaged in any other act or conduct
proscribed by the Committee from time to time (any such act or conduct,
individually or collectively, sometime hereinafter referred to as
“Misconduct”). No person shall be entitled to exercise any option granted to a
Participant or held by an optionholder if the Authorized Officer or the
Committee, as the case may be, has determined such Participant or optionholder
to have engaged in any Misconduct.

(d)                                 Conditions and Restrictions Upon
Securities Subject to Options:  The
Committee may provide that the shares of Common Stock issued upon exercise of
an option shall be subject to such further conditions or agreements as the
Committee in its discretion may specify prior to the exercise of such option,
including without limitation, conditions on vesting or transferability,
forfeiture or repurchase provisions and method of payment for the shares issued
upon exercise (including the actual or constructive surrender of Common Stock
already owned by the Participant). The Committee may establish rules for the
deferred delivery of Common Stock upon exercise of an option with the deferral
evidenced by use of “Stock Units” equal in number to the number of shares of
Common Stock whose delivery is so deferred. A “Stock Unit” is a bookkeeping
entry representing an amount equivalent to the fair market value of one share
of Common Stock.  Stock Units represent
an unfunded and unsecured obligation of the Corporation except as otherwise
provided by the Committee.  Settlement
of Stock Units upon expiration of the deferral period shall be made in Common
Stock or otherwise as determined by the Committee.  The amount of Common Stock, or other settlement medium, to be so
distributed may be increased by an interest factor or by dividend
equivalents.  Until a Stock Unit is so
settled, the number of shares of Common Stock represented by a Stock Unit shall
be 

 

4.

 

subject to adjustment pursuant to Section 8. 
Any Stock Units that are settled after the holder’s death shall be
distributed to the holder’s designated beneficiary(s) or, if none was
designated, the holder’s estate.

(e)                                  Transferability of Option: 
Unless otherwise provided by the Committee and subject to the
establishment of procedures by the Committee, each option shall be transferable
only:

(1)                                  by will or the laws of descent and
distribution, or

(2)                                  by gift to the Immediate Family,
partnerships whose only partners are the Participant or members of the Immediate
Family, limited liability companies whose only shareholders are the Participant
or members of the Immediate Family, and trusts established solely for the
benefit of the Participant or members of the Immediate Family.

The transferees
described in this subsection ((e)) of Section 6 shall be referred to as
“Permitted Transferees”.

Options are
transferable only to the extent the options are exercisable at the time of
transfer.  Any purported assignment,
transfer or encumbrance that does not qualify under subsections (1) and (2)
above shall be void and unenforceable against the Corporation.

The terms of stock
options granted pursuant to this Plan shall apply to the beneficiaries,
executors and administrators of the Participant and to Permitted Transferees
(including the beneficiaries, executors and administrators of Permitted
Transferees), including the right to agree to any amendment of the applicable
option agreement, except that options transferred to Permitted Transferees
shall not be transferable except by will or the laws of descent and
distribution.

(f)                                    Cancellation: 
The Committee may, at any time prior to exercise and subject to consent
of the Participant, cancel any option previously granted and may or may not
substitute in its place an option at a different price and different type under
different terms or in different amounts.

(g)                                 Other Terms and Conditions: 
Options may also contain such other provisions, which shall not be
inconsistent with any of the foregoing terms, as the Committee shall deem
appropriate.  No option, however, nor
anything contained in the Plan shall confer upon any Participant any right to
continue in the Corporation’s employ or service nor limit in any way the
Corporation’s right to terminate his or her employment or service at any
time.  Option grants may be evidenced by
a written agreement and/or such other written arrangements as may be approved
from time to time by the Committee.

 

5.

 

7.                                      LOANS

The Corporation
may, in the sole discretion of the Committee, make loans for the purpose of
enabling the Participant to exercise an option granted under the Plan and to
pay the tax liability resulting from an option exercise under the Plan.  The Committee shall have full authority to determine
the terms and conditions of such loans. 
Such loans may be secured by the shares of Common Stock received upon
exercise of such option.

8.                                      ADJUSTMENT OF AND CHANGES IN SECURITIES

(a)                                  If the outstanding securities of the
class(es) then subject to this Plan are increased, decreased or exchanged for
or converted into cash, property or a different number or kind of shares or
other securities, or if cash, property or shares or other securities are
distributed in respect of such outstanding securities, in either case as a
result of a reorganization, reclassification, dividend (other than a regular,
quarterly cash dividend) or other distribution, stock split, reverse stock
split, spin-off or the like, or if substantially all of the property and assets
of the Corporation are sold, then, unless the terms of such transaction shall
provide otherwise, the maximum number and type of shares or other securities
that may be subject to options and issued in accord with this Plan shall be
appropriately adjusted.  The Committee
shall determine in its sole discretion the appropriate adjustment to be
effected pursuant to the immediately preceding sentence.  In addition, in connection with any such
change in the class(es) of securities then subject to this Plan, the Committee
may make appropriate and proportionate adjustments in the number and type of
shares or other securities or cash or other property that may be acquired
pursuant to options theretofore granted under this Plan and the exercise price
of such options, and including coordinate adjustments in the number of shares
of Common Stock represented by Stock Units (as referred to in Section 6(d)
hereof).

(b)                                 In the event that, otherwise than as
provided in subsection (a) above, there shall be a change in the number or kind
of the outstanding shares of Common Stock, or any other securities into which
the Common Stock shall have been changed, or for which it shall have been
exchanged, whether by reason of merger, consolidation or otherwise, then if the
Committee, in its sole discretion, shall determine that such change equitably
requires an adjustment to shares or other securities currently subject to
options or Stock Units (as referred to in Section 6(d) hereof) or which may
become subject to options under the Plan, or to prices or terms of outstanding
options, such adjustment shall be made in accordance with such
determination.  In addition, in the
event of such change described in this paragraph, the Committee may accelerate
the time or times at which any option may be exercised or any Stock Unit may be
settled and may 

 

6.

 

provide for cancellation of any such accelerated option which is not exercised
within a time prescribed by the Committee in its sole discretion.

(c)                                  No right to purchase fractional shares or
fractions of other securities shall result from any adjustment in options
pursuant to this Section.  In case of
any such adjustment, the shares or other securities subject to the option shall
be rounded down to the nearest whole share of Common Stock or equivalent other
security, as the case may be.

9.                                      REGISTRATION, LISTING OR QUALIFICATION OF SECURITIES

In the event that
the Committee determines in its discretion that the registration, listing or
qualification of the shares of Common Stock issuable under the Plan on any
securities exchange or under any applicable law or governmental regulation is
necessary as a condition to the issuance of such shares under the option, the
option may not be exercisable or exercised in whole or in part unless such
registration, listing, qualification, consent or approval has been
unconditionally obtained.

10.                               TAX WITHHOLDING

To the extent
required by applicable federal, state, local or foreign law, a Participant or
optionholder shall make arrangements satisfactory to the Committee for the
satisfaction of any withholding tax obligations that arise by reason of an
option exercise or disposition of shares of Common Stock issued upon exercise
of an option.  The Corporation shall not
be required to issue shares of Common Stock or to recognize the disposition of
such shares until such obligations are satisfied.  The Committee may permit these obligations to be satisfied by any
means permitted under Section 6(a) for the payment of the exercise price of an
option.

11.                               OPTION GRANTS BY SUBSIDIARIES

In the case of a
grant of an option to any Participant employed by a Subsidiary, such grant may,
if the Committee so directs, be implemented by Intel issuing any subject shares
to the Subsidiary, for such lawful consideration as the Committee may
determine, upon the condition or understanding that the Subsidiary will
transfer the shares to the optionholder in accordance with the terms of the
option specified by the Committee pursuant to the provisions of the Plan.  Notwithstanding any other provision hereof,
such option may be issued by and in the name of the Subsidiary and shall be
deemed granted on such date as the Committee shall determine.

12.                               EFFECTIVE DATE, AMENDMENT AND TERMINATION OF PLAN

The Plan was
adopted by Intel’s Board of Directors and became effective on January 15,
1997.  The Plan was amended and restated
by the Board of Directors on July 16, 1997, to provide for limited
transferability of options.

 

7.

 

Unless earlier
suspended or terminated by the Board of Directors, or extended as provided
below, no options may be granted after the tenth anniversary of the date the
Plan is approved by the Board of Directors. 
The Board of Directors or the Committee may from time to time extend the
effective term of the Plan and otherwise amend the Plan as determined
appropriate, without action by Intel’s stockholders except to the extent
required by applicable law.  References
in the Plan and in writings evidencing and setting the terms of option grants
which refer to the Code or other applicable law shall also be deemed to refer
to any applicable successor provisions thereof unless otherwise determined by
the Committee. The Plan may be earlier terminated at such earlier time as the
Board of Directors may determine. Termination and expiration of the Plan will
not affect the rights and obligations arising under options theretofore granted
and then in effect.

 

 

 

8.

 

INTEL CORPORATION 1997 STOCK OPTION PLAN

ADDITIONAL INFORMATION FOR AUSTRALIAN PARTICIPANTS

 

This discussion has been
prepared by Intel Corporation’s (“Intel”) solicitors to enable employees who
have not previously owned stock (sometimes also referred to as shares) in an
offshore company to be provided with basic information in relation to the
ownership and trading of Intel stock.

This discussion is
relevant for employees participating in the 1997 Plan, who are Australian
residents for tax purposes, or, though not resident in Australia for tax
purposes, are eligible to participate in the Plan in relation to their
employment in Australia.

THE OPTIONS

•                  The options are to acquire Intel Corporation common
stock (“Stock”) in the future.  Stock
are commonly termed shares in Australia. 
The options are exercisable pursuant to the conditions set out in the
Grant Agreement, which is offered under the Plan Rules.

•                  The exercise price of each option, which is for one
unit of stock, is US$76.00.  You will
need to pay this sum, in US dollars, on exercise.  On [date], the exercise price was equivalent to
A$[________].  Exchange rates are likely
to fluctuate between now and your exercise of the option.

•                  You may contact David Bolt at Intel Australia Pty.
Ltd. on (02) 9935-5800 to obtain details of the applicable Australian Dollar
equivalent of the exercise price. 
Conversion rates are also shown daily in most newspapers.

•                  The Stock issued on exercise of the options will be
quoted on NASDAQ.  A brief description
of the NASDAQ National Market is given below. 
The Stock will not be quoted on the Australian Stock Exchange.  To deal in the Stock, you will probably need
to contact US stockbrokers.

•                  You will receive a copy of Intel’s annual report each
year which describes Intel’s business.

•                  There are risks associated with purchasing stock in a
company which you should consider before exercising your option.  Owning stock does involve risk.  There is no guarantee that a company’s share
price will rise, or that it will pay dividends or issue new stock.  Share prices can fall.

•                  There are company specific risk factors which are
described in the 10-K Statement.

 

9.

 

NASDAQ

The stock issued to
participants in the Plan on exercise of the options will be quoted on the
NASDAQ National market.  NASDAQ stands
for National Association of Securities Dealers Automated Quotations.  It is an over-the-counter trading system for
securities, which has a similar purpose to a stock exchange such as the
Australian Stock Exchange.  It operates
through a computer and telephone communications network.  NASDAQ is an inter-dealer system sponsored
by the National Association of Securities Dealers and is the principal
over-the-counter trading system in the US. 
It is a computerized quotation and trading system consisting of
thousands of computer terminals.

A listing with NASDAQ is
voluntary.  NASDAQ requires that listed
companies meet certain financial standards in terms of assets and shareholder’s
equity.  Generally these requirements
are somewhat lower than those of the New York Stock Exchange and the American
Stock Exchange, the two national securities exchanges operating in the US.

TAXATION IMPLICATIONS OF THE AUSTRALIAN OFFER

This discussion is
relevant for Participants who are residents of Australia for tax purposes, and
those who though not Australian residents, are entitled to participate in the
Plan as a result of services performed in Australia.  It assumes that no Australian Participant will hold more than
five percent (5%) of Intel Common Stock, including Options, nor will control
more than five percent (5%) of the votes which may be cast at a general meeting
of Intel Corporation.

The following are the
taxable events associated with the grant of Options and subsequent Stock
dealings:

Grant of Options

The Options granted to
you will be “qualifying rights” for Australian tax purposes and will not
trigger a tax liability unless you elect to be taxed at grant.

If you elect to be taxed
at grant then, you will be taxed on the deemed value of the Options in the year
of grant.  The “value” of the Options is
determined by reference to rules in the legislation.  It is a function of the market value of the Common Stock, the
Option exercise price and the exercise period. 
By way of example, an Option to acquire stock at a price equal to the
“market value” of that stock on the day of grant of the Option, and which may
be exercised within ten (10) years from the date of grant, will have a deemed
market value on the date of grant of 18.4% of the exercise price.

If you make this
election, then you will have no further tax liability until the Stock obtained
on exercise of the Option is sold, or until dividends or bonus stock are
received.

 

10.

 

It is recommended that
you obtain professional tax advice before you elect to be taxed on the value of
the Options at the date of grant. 
Ordinarily it would not be in your interest to elect to be taxed on the
grant.

Exercise of Options

If you do not make the
election to be taxed at the time of grant of the Options, you will be taxed on
the Options in the year in which they are exercised, subject to the rules below
regarding leaving employment.

If you exercise the
Options and continue to hold the Stock for thirty (30) days after exercise,
then the amount brought to tax will be the deemed “market value” of the Stock
acquired as at the date of exercise, less the exercise price.  The tax legislation sets out the formula for
calculating this value.

The calculation of the
amount brought to tax if the shares are sold on, or within thirty (30) days of
the Options being exercised, is dealt with below.

In any event, you will
need to include an amount in your tax return in the year in which the Option is
exercised.

Subsequent Sale

If you sell the Stock
received from the exercise of the Options on, or within thirty (30) days of,
the date of the exercise of the Options, you will be subject to tax in the year
in which the Options were exercised, on the consideration received for the sale
of the Stock less the Option exercise price.

If the Stock received
from the exercise of the Options is sold outside the thirty (30) day period
from exercise, you also need to pay capital gains tax in the year of sale.  A taxable capital gain will arise in the
year of sale if, and to the extent that, the sale price of the Stock exceeds
the deemed “market value” of the Options at the date of exercise (the value on
which tax was paid on exercise of the relevant Options) plus the exercise
price.  This will ordinarily be the
market value of the stock at the exercise date.  If the Stock is sold twelve (12) months or more from the date of
exercise of the Options, the taxable capital gain will be adjusted to allow for
inflation.

If you made the election
to be taxed on the Options in the year of the grant, the taxable capital gain
which will need to be included in your taxable income on the sale of the Stock
will be calculated on the basis of the sale price of the Stock less the value
of the Options at the date of grant (i.e., the sum which was taxed in the year
of grant) and the Option exercise price. 
The taxable capital gain will be adjusted to allow for inflation if the
sale occurs twelve (12) months or more from the date of grant of the Options.

 

11.

 

Leaving Employment

You will have no tax
liability in respect of those Options which are forfeited on termination of
employment.  Further, any tax which you
elected to pay on the grant of forfeited options may be refunded.

However, if you are still
able to exercise the Options following termination and you had not elected to
be taxed on the grant of the Options, you will be subject to tax in the year in
which your employment terminates on the deemed “market value” of the Options at
the date of termination of employment. 
You will then suffer no more tax in relation to the Options or the Stock
acquired on exercise until the Stock is sold (as described above), or dividends
or bonus Stock is received.

If, however, the Options
are exercised and the Stock is sold within thirty (30) days of termination of
your employment, you will simply be taxed on the sale price less the Option
(exercise) price, and will suffer no further tax in relation to the sale of the
Stock under the capital gains tax regime.

Dividends

Generally, you will be
subject to tax on dividends received in Australia.  The taxable sum will include the amount of US dividend
withholding tax, deducted in the US before remission to you.

An Australian tax credit
will be available for the US dividend withholding tax.  The credit will be limited to the lesser of
the amount of US withholding tax and the Australian tax applicable to the
relevant amount.

The Australian and Foreign Investment Regime

The Australian foreign
Investment Fund (FIF) regime operates to tax Australian residents holding
interests in certain foreign companies on the increase of value of that
interest each year, whether or not realized.

The Common Stock of Intel
Corporation is presently listed on NASDAQ and the FIF regime will not apply to
your Intel Corporation holding.  Intel
Corporation will advise you if this position changes.

Withholding and Reporting

Intel Corporation has no
obligation to report the grant or exercise of your Options or stock to the
Australian tax authorities or to withhold the proceeds of any exercise.  Accordingly, you will be solely responsible
for reporting your gains to the Australian Taxation Office and paying any
required taxes.

 

12.

 

Summary

This summary only briefly
discusses the Australian tax consequences of benefits acquired under the Plan,
based on law currently in effect.

Due to the complexities
of, and possible changes to, the tax law you should seek professional tax
advice.

 

 

 

 

13.EXHIBIT
4.1

 

 

COPART,
INC.

and

EQUISERVE TRUST COMPANY, N.A.

 

 

 

 

PREFERRED STOCK RIGHTS AGREEMENT

Dated as of March 6, 2003

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 1.

  	
  Certain Definitions

  	
  1

  
	
   

  	
   

  	
   

  
	
  Section 2.

  	
  Appointment of Rights
  Agent

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 3.

  	
  Issuance of Rights
  Certificates

  	
  7

  
	
   

  	
   

  	
   

  
	
  Section 4.

  	
  Form of Rights
  Certificates

  	
  9

  
	
   

  	
   

  	
   

  
	
  Section 5.

  	
  Countersignature and
  Registration

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 6.

  	
  Transfer, Split Up,
  Combination and Exchange of Rights Certificates; Mutilated, Destroyed, Lost
  or Stolen Rights Certificates

  	
  10

  
	
   

  	
   

  	
   

  
	
  Section 7.

  	
  Exercise of Rights;
  Exercise Price; Expiration Date of Rights

  	
  11

  
	
   

  	
   

  	
   

  
	
  Section 8.

  	
  Cancellation and
  Destruction of Rights Certificates

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 9.

  	
  Reservation and
  Availability of Preferred Shares

  	
  13

  
	
   

  	
   

  	
   

  
	
  Section 10.

  	
  Record Date

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section
  11.

  	
  Adjustment of Exercise
  Price, Number of Shares or Number of Rights

  	
  15

  
	
   

  	
   

  	
   

  
	
  Section 12.

  	
  Certificate of Adjusted
  Exercise Price or Number of Shares

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 13.

  	
  Consolidation, Merger or
  Sale or Transfer of Assets or Earning Power

  	
  22

  
	
   

  	
   

  	
   

  
	
  Section 14.

  	
  Fractional Rights and
  Fractional Shares

  	
  26

  
	
   

  	
   

  	
   

  
	
  Section 15.

  	
  Rights of Action

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 16.

  	
  Agreement of Rights
  Holders

  	
  27

  
	
   

  	
   

  	
   

  
	
  Section 17.

  	
  Rights Certificate Holder
  Not Deemed a Shareholder

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 18.

  	
  Concerning the Rights
  Agent

  	
  28

  
	
   

  	
   

  	
   

  
	
  Section 19.

  	
  Merger or Consolidation or
  Change of Name of Rights Agent

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 20.

  	
  Duties of Rights Agent

  	
  29

  
	
   

  	
   

  	
   

  
	
  Section 21.

  	
  Change of Rights Agent

  	
  31

  

 

-ii-

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  Section 22.

  	
  Issuance of New Rights
  Certificates

  	
  32

  
	
   

  	
   

  	
   

  
	
  Section 23.

  	
  Redemption

  	
  33

  
	
   

  	
   

  	
   

  
	
  Section 24.

  	
  Exchange

  	
  33

  
	
   

  	
   

  	
   

  
	
  Section 25.

  	
  Notice of Certain Events

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 26.

  	
  Notices

  	
  35

  
	
   

  	
   

  	
   

  
	
  Section 27.

  	
  Supplements and Amendments

  	
  36

  
	
   

  	
   

  	
   

  
	
  Section 28.

  	
  Successors

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 29.

  	
  Determinations and Actions
  by the Board of Directors, etc

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 30.

  	
  Benefits of this Agreement

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 31.

  	
  Severability

  	
  37

  
	
   

  	
   

  	
   

  
	
  Section 32.

  	
  Governing Law

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 33.

  	
  Counterparts

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 34.

  	
  Descriptive Headings

  	
  38

  
	
   

  	
   

  	
   

  
	
  Section 35.

  	
  Limitation of Rights Agent
  Liability

  	
  38

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  Form of Certificate of Determination

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
  Form of Rights Certificate

  	
   

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
  Summary of Rights

  	
   

  

 

 

-iii-

 

PREFERRED
STOCK RIGHTS AGREEMENT

This Preferred Stock
Rights Agreement is dated as of March 6, 2003, between Copart, Inc., a
California corporation, (the “Company”), and EquiServe Trust Company, N.A. (the
“Rights Agent”).

On March 6, 2003, (the “Rights Dividend Declaration Date”),
the Board of Directors of the Company authorized and declared a dividend of one
Preferred Share Purchase Right (a  “Right”) for
each Common Share (as hereinafter defined) of the Company outstanding as of the
Close of Business (as hereinafter defined) on March 21, 2003 (the “Record Date”), each
Right representing the right to purchase one one-thousandth (0.001) of a share
of Series A Participating Preferred Stock (as such number may be adjusted
pursuant to the provisions of this Agreement), having the rights, preferences
and privileges set forth in the form of Certificate of Determination of Rights,
Preferences and Privileges of Series A Participating Preferred Stock
attached hereto as Exhibit A, upon the terms and subject to the
conditions herein set forth, and further authorized and directed the issuance
of one Right (as such number may be adjusted pursuant to the provisions of this
Agreement) with respect to each Common Share that shall become outstanding
between the Record Date and the earlier of the Distribution Date and the
Expiration Date (as such terms are hereinafter defined), and in certain
circumstances after the Distribution Date.

NOW, THEREFORE, in
consideration of the promises and the mutual agreements herein set forth, the
parties hereby agree as follows:

Section
1.               Certain Definitions. 
For purposes of this Agreement, the following terms have the meanings indicated:

(a)           “Acquiring Person” shall mean any Person, who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Common Shares then outstanding, but
shall not include the Company, any Subsidiary of the Company or any employee
benefit plan of the Company or of any Subsidiary of the Company, or any entity
holding Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing, no Person shall be deemed to be an Acquiring Person
as the result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate number
of shares beneficially owned by such Person to 15% or more of the Common Shares
of the Company then outstanding; provided, however, that if a
Person shall become the Beneficial Owner of 15% or more of the Common Shares of
the Company then outstanding by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the Beneficial Owner
of any additional Common Shares of the Company (other than pursuant to a
dividend or distribution paid or made by the Company on the outstanding Common
Shares in Common Shares or pursuant to a split or subdivision of the outstanding
Common Shares), then such Person shall be deemed to be an Acquiring Person
unless upon becoming the Beneficial Owner of such additional Common Shares of
the Company such Person does not beneficially own 15% or more of the Common
Shares of the Company then outstanding. 
Notwithstanding the

foregoing,
(i) if the Company’s Board of Directors determines in good faith that a
Person who would otherwise be an “Acquiring Person,” as defined pursuant to the
foregoing provisions of this paragraph (a), has become such inadvertently
(including, without limitation, because (A) such Person was unaware that
it beneficially owned a percentage of the Common Shares that would otherwise
cause such Person to be an “Acquiring Person,” as defined pursuant to the
foregoing provisions of this paragraph (a), or (B) such Person was
aware of the extent of the Common Shares it beneficially owned but had no
actual knowledge of the consequences of such beneficial ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, and if such Person divested or divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be an
“Acquiring Person,” as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be or to have
become an “Acquiring Person” for any purposes of this Agreement including,
without limitation Section 1(gg) hereof; and (ii) if, as of the date
hereof, any Person is the Beneficial Owner of 15% or more of the Common Shares
outstanding, such Person shall not be or become an “Acquiring Person,” as
defined pursuant to the foregoing provisions of this paragraph (a), unless and
until such time as such Person shall become the Beneficial Owner of additional
Common Shares (other than pursuant to a dividend or distribution paid or made
by the Company on the outstanding Common Shares in Common Shares or pursuant to
a split or subdivision of the outstanding Common Shares), unless, upon becoming
the Beneficial Owner of such additional Common Shares, such Person is not then
the Beneficial Owner of 15% or more of the Common Shares then outstanding.

(b)           “Adjustment Fraction” shall have the meaning set forth
in Section 11(a)(i) hereof.

(c)           “Affiliate” and “Associate” shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement.

(d)           A Person shall be deemed the “Beneficial Owner” of
and shall be deemed to  “beneficially own”
any securities:

(i)            which such Person
or any of such Person’s Affiliates or Associates beneficially owns, directly or
indirectly, for purposes of Section 13(d) of the Exchange Act and
Rule 13d-3 thereunder (or any comparable or successor law or regulation);

(ii)           which such Person
or any of such Person’s Affiliates or Associates has (A) the right to
acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding (other
than customary agreements with and between underwriters and selling group
members with respect to a bona fide public offering of securities), or upon the
exercise of conversion rights, exchange rights, rights (other than the Rights),
warrants or options, or otherwise; provided, however, that a
Person shall not be deemed pursuant to this Section 1(d)(ii)(A) to be the
Beneficial Owner of, or to beneficially own, (1) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or 

-2-

 

any of
such Person’s Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, or (2) securities which a Person or any
of such Person’s Affiliates or Associates may be deemed to have the right to
acquire pursuant to any merger or other acquisition agreement between the
Company and such Person (or one or more of its Affiliates or Associates) if
such agreement has been approved by the Board of Directors of the Company prior
to there being an Acquiring Person; or (B) the right to vote pursuant to
any agreement, arrangement or understanding; provided, however,
that a Person shall not be deemed the Beneficial Owner of, or to beneficially
own, any security under this Section 1(d)(ii)(B) if the agreement,
arrangement or understanding to vote such security (1) arises solely from
a revocable proxy or consent given to such Person in response to a public proxy
or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations of the Exchange Act and (2) is not also
then reportable on Schedule 13D under the Exchange Act (or any comparable
or successor report); or

(iii)          which are
beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person or any of such Person’s
Affiliates or Associates has any agreement, arrangement or understanding,
whether or not in writing (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities) for the purpose of acquiring, holding, voting (except
to the extent contemplated by the proviso to Section 1(d)(ii)(B)) or
disposing of any securities of the Company; provided, however,
that in no case shall an officer or director of the Company be deemed
(x) the Beneficial Owner of any securities beneficially owned by another
officer or director of the Company solely by reason of actions undertaken by such
persons in their capacity as officers or directors of the Company or
(y) the Beneficial Owner of securities held of record by the trustee of
any employee benefit plan of the Company or any Subsidiary of the Company for
the benefit of any employee of the Company or any Subsidiary of the Company,
other than the officer or director, by reason of any influence that such
officer or director may have over the voting of the securities held in the
plan.

(e)           “Business Day” shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in New York are authorized or
obligated by law or executive order to close.

(f)            “Close of Business” on any given date shall mean
5:00 P.M., New York time, on such date; provided, however,
that if such date is not a Business Day it shall mean 5:00 P.M., New York
time, on the next succeeding Business Day.

(g)           “Common Stock Equivalents” shall have the meaning set
forth in Section 11(a)(iii) hereof. 
“Common Shares”
when used with reference to the Company shall mean the shares of Common Stock
of the Company.  Common Shares when used
with reference to any Person other than the Company shall mean the capital
stock (or equity interest) with the greatest voting power of such other Person
or, if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.

-3-

 

(h)           “Company” shall mean Copart, Inc., a California
corporation, subject to the terms of Section 13(a)(iii)(C) hereof.

(i)            “Current Per Share Market Price” of any security (a
“Security” for purposes of this definition), for all computations other than
those made pursuant to Section 11(a)(iii) hereof, shall mean the average
of the daily closing prices per share of such Security for the thirty (30)
consecutive Trading Days immediately prior to such date, and for purposes of
computations made pursuant to Section 11(a)(iii) hereof, the Current Per
Share Market Price of any Security on any date shall be deemed to be the
average of the daily closing prices per share of such Security for the ten (10)
consecutive Trading Days immediately prior to such date; provided, however,
that in the event that the Current Per Share Market Price of the Security is
determined during a period following the announcement by the issuer of such
Security of (i) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares or
(ii) any subdivision, combination or reclassification of such Security,
and prior to the expiration of the applicable thirty (30) Trading Day or ten
(10) Trading Day period, after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or reclassification,
then, and in each such case, the Current Per Share Market Price shall be
appropriately adjusted to reflect the current market price per share equivalent
of such Security. The closing price for each day shall 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 Security is 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 Security is listed or admitted to trading or, if the
Security is not listed or admitted to trading on any national securities
exchange, the last sale price or, if such last sale price is not reported, 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 Security is 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 Security selected by the Board of Directors of the Company.  If on any such date no market maker is
making a market in the Security, the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall be
used.  If the Preferred Shares are not
publicly traded, the Current Per Share Market Price of the Preferred Shares
shall be conclusively deemed to be (x) the Current Per Share Market Price
of the Common Shares as determined pursuant to this Section 1(j), as
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof, multiplied by (y) 1,000.  If the Security is not publicly held or so
listed or traded, Current Per Share Market Price shall mean the fair value per
share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes.

(j)            “Current Value” shall have the meaning set forth in
Section 11(a)(iii) hereof.

 

-4-

 

(k)           “Distribution Date” shall mean the earlier of
(i) the Close of Business on the tenth (10th) Business Day (or
such later date as may be determined by action of the Company’s Board of
Directors) after the Shares Acquisition Date (or, if the tenth (10th)
Business Day after the Shares Acquisition Date occurs before the Record Date,
the Close of Business on the Record Date) or (ii) the Close of Business on
the tenth (10th) Business Day (or such later date as may be
determined by action of the Company’s Board of Directors) after the date that a
tender or exchange offer by any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary
of the Company, or any Person or entity organized, appointed or established by
the Company for or pursuant to the terms of any such plan) is first published
or sent or given within the meaning of Rule 14d-2(a) of the General Rules
and Regulations under the Exchange Act, if, assuming the successful
consummation thereof, such Person would be an Acquiring Person.

(l)            “Equivalent Shares” shall mean Preferred Shares
and any other class or series of capital stock of the Company
which is entitled to the same rights, privileges and preferences as the
Preferred Shares.

(m)          “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended.

(n)           “Exchange Ratio” shall have the meaning set forth in
Section 24(a) hereof.

(o)           “Exercise Price” shall have the meaning set forth
in Section 4(a) hereof.

(p)           “Expiration Date” shall mean the earliest to occur of:
(i) the Close of Business on the Final Expiration Date, (ii) the
Redemption Date, or (iii) the time at which the Board of Directors orders
the exchange of the Rights as provided in Section 24 hereof.

(q)           “Final Expiration Date” shall mean March 21, 2013.

(r)            “Nasdaq”  shall mean The Nasdaq Stock Market, Inc.

(s)           “Person” shall mean any individual, firm, corporation or
other entity, and shall include any successor (by merger or otherwise) of
such entity.

(t)            “Post-Event Transferee” shall have the meaning set forth
in Section 7(e) hereof.

(u)           “Preferred Shares” shall mean shares of Series A Participating Preferred
Stock

 of the Company.

(v)           “Pre-Event Transferee” shall have the meaning set forth
in Section 7(e) hereof.

-5-

 

(w)          “Principal Party”  shall have the meaning set forth in
Section 13(b) hereof.

(x)            “Record Date” shall have the meaning set forth in the
recitals at the beginning of this Agreement.

(y)           “Redemption Date” shall have the meaning set forth in
Section 23(a) hereof.

(z)            “Redemption Price” shall have the meaning set forth in
Section 23(a) hereof.

(aa)         “Rights Agent” shall mean (i) EquiServe Trust
Company, N.A., (ii) its successor or replacement as provided in
Sections 19 and 21 hereof or (iii) any additional Person appointed
pursuant to Section 2 hereof.

(bb)         “Rights Certificate”  shall mean a certificate
substantially in the form attached hereto as Exhibit B.

(cc)         “Rights Dividend Declaration Date” shall have the
meaning set forth in the recitals at the beginning of this Agreement.

(dd)         “Section 11(a)(ii) Trigger Date” shall have the meaning
set forth in Section 11(a)(iii) hereof.

(ee)         “Section 13 Event” shall mean any event described
in clause (i), (ii) or (iii) of Section 13(a) hereof.

(ff)           “Securities Act” shall mean the Securities Act of 1933,
as amended.

(gg)         “Shares Acquisition Date” shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) of the
Exchange Act) by the Company or an Acquiring Person that an Acquiring Person
has become such; provided that, if such Person is determined not to have
become an Acquiring Person pursuant to Section 1(a) hereof, then no Shares
Acquisition Date shall be deemed to have occurred by virtue of such event.

(hh)         “Spread” shall have the meaning set forth in
Section 11(a)(iii) hereof.

(ii)           “Subsidiary” of any Person shall mean any corporation or
other entity of which an amount of voting securities sufficient to elect a
majority of the directors or Persons having 

-6-

 

similar authority
of such corporation or other entity is beneficially owned, directly or
indirectly, by such Person, or any corporation or other entity otherwise
controlled by such Person.

(jj)           “Substitution Period” shall have the meaning set forth
in Section 11(a)(iii) hereof.

(kk)         “Summary of Rights”  shall mean a summary of this
Agreement substantially in the form attached hereto as Exhibit C.

(ll)           “Total Exercise Price” shall have the meaning set forth
in Section 4(a) hereof.

(mm)       “Trading Day” shall mean a day on which the principal
national securities exchange on which a referenced security is listed or
admitted to trading is open for the transaction of business or, if a referenced
security is not listed or admitted to trading on any national securities
exchange, a Business Day.

(nn)         A “Triggering Event” shall be deemed to have occurred upon
any Person becoming an Acquiring Person.

Section
2.               Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the Company
and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the Common Shares)
in accordance with the terms and conditions hereof, 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, upon ten (10) days’ prior written notice to the Rights Agent.  The Rights Agent shall have no duty to
supervise, and shall in no event be liable for, the acts or omissions of any
co-Rights Agent.

Section
3.               Issuance of Rights
Certificates.

(a)           Until the Distribution Date,
(i) the Rights will be evidenced (subject to the provisions of
Sections 3(b) and 3(c) hereof) by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also
be deemed to be Rights Certificates) and not by separate Rights Certificates
and (ii) the right to receive Rights Certificates will be transferable
only in connection with the transfer of Common Shares. Until the earlier of the
Distribution Date or the Expiration Date, the surrender for transfer of
certificates for Common Shares shall also constitute the surrender for transfer
of the Rights associated with the Common Shares represented thereby.  As soon as practicable after the
Distribution Date, the Company will prepare and execute, the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, postage-prepaid mail, to each
record holder of Common Shares as of 

-7-

 

the Close of
Business on the Distribution Date, at the address of such holder shown on the
records of the Company, a Rights Certificate evidencing one Right for each
Common Share so held, subject to adjustment as provided herein.  In the event that an adjustment in the
number of Rights per Common Share has been made pursuant to Section 11
hereof, then at the time of distribution of the Rights Certificates,
the Company shall make the necessary and appropriate rounding adjustments
(in accordance with Section 14(a) hereof) so that Rights Certificates
representing only whole numbers of Rights are distributed and cash is paid in
lieu of any fractional Rights (in accordance with Section 14(a)
hereof).  As of the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates and may be
transferred by the transfer of the Rights Certificates as permitted hereby,
separately and apart from any transfer of Common Shares, and the holders of
such Rights Certificates as listed in the records of the Company or any
transfer agent or registrar for the Rights shall be the record holders thereof.

(b)           On the Record Date or as soon as
practicable thereafter, the Company will send a copy of the Summary of Rights
by first-class, postage-prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Record Date, at the address of such holder
shown on the records of the Company’s transfer agent and registrar. With
respect to certificates for Common Shares outstanding as of the Record Date,
until the Distribution Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof together with the Summary of
Rights.

(c)           Unless the Board of Directors by
resolution adopted at or before the time of the issuance of any Common Shares
after the Record Date but prior to the earlier of the Distribution Date or the
Expiration Date (or, in certain circumstances provided in Section 22
hereof, after the Distribution Date) specifies to the contrary, Rights shall be
issued in respect of all Common Shares that are so issued, and Certificates
representing such Common Shares shall also be deemed to be certificates for
Rights, and shall bear the following legend:

THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN COPART, INC. AND
EQUISERVE TRUST COMPANY, N.A., AS THE RIGHTS AGENT, DATED AS OF MARCH 6, 2003
(THE “RIGHTS AGREEMENT”), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY
REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF
COPART, INC. 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 WITHOUT CHARGE AFTER RECEIPT OF A
WRITTEN REQUEST THEREFOR.  UNDER CERTAIN
CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY,
ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY 

-8-

 

AFFILIATE OR ASSOCIATE THEREOF (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
such certificates containing the foregoing legend, until the earlier of the
Distribution Date or the Expiration Date, the Rights associated with the Common
Shares represented by such certificates shall be evidenced by such certificates
alone, and the surrender for transfer of any such certificate shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby.

(d)           In the event that the Company
purchases or acquires any Common Shares after the Record Date but prior to the
Distribution Date, any Rights associated with such Common Shares shall be
deemed canceled and retired so that the Company shall not be entitled to
exercise any Rights associated with the Common Shares which are no longer
outstanding.

Section 4.               Form
of Rights Certificates.

(a)           The Rights Certificates (and the
forms of election to purchase Common Shares and of assignment to be printed on
the reverse thereof) shall be substantially in the form of Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and 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 a national market system, on which the Rights may from time to time
be listed or included, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Record Date (or in the case of Rights
issued with respect to Common Shares issued by the Company after the Record
Date, as of the date of issuance of such Common Shares) and on their face shall
entitle the holders thereof to purchase such number of one-thousandths (0.001)
of a Preferred Share as shall be set forth therein at the price set forth
therein (such exercise price per one one-thousandth (0.001) of a Preferred
Share being hereinafter referred to as the  “Exercise Price”
and the aggregate Exercise Price of all Preferred Shares issuable upon exercise
of one Right being hereinafter referred to as the  “Total Exercise
Price”), but the number and type of securities purchasable upon
the exercise of each Right and the Exercise Price shall be subject to
adjustment as provided herein.

(b)           Any Rights Certificate issued
pursuant to Section 3(a) or Section 22 hereof that represents Rights
beneficially owned by:  (i) an
Acquiring Person or any Associate or Affiliate of an Acquiring Person,
(ii) a Post-Event Transferee, (iii) a Pre-Event Transferee or
(iv) any subsequent transferee receiving transferred Rights from a
Post-Event Transferee or a Pre-Event Transferee, either directly or through one
or more intermediate transferees, and any Rights Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement
or adjustment of any other Rights Certificate referred to in this sentence,
shall contain (to the extent feasible) the following legend:

-9-

 

THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT).  ACCORDINGLY,
THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND
VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS
AGREEMENT.

Section
5.               Countersignature and
Registration.

(a)           The Rights Certificates shall be
executed on behalf of the Company by its Chairman of the Board, its Chief
Executive Officer, its Chief Financial Officer, its President or any Vice
President, either manually or by facsimile signature, and by the Secretary or
an Assistant Secretary of the Company, either manually or by facsimile
signature, and shall have affixed thereto the Company’s seal (if any) or a
facsimile thereof. The Rights Certificates shall be manually countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned.  In case any officer of the Company who shall
have signed any of the Rights Certificates shall cease 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 on behalf of the Company 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,
shall be 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 office designated for such
purposes, books for registration and transfer of the Rights Certificates issued
hereunder. Such books shall show the names and addresses of the respective
holders of the Rights Certificates, the number of Rights evidenced on its
face by each 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
Sections 7(e), 14 and 24 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
Expiration Date, any Rights Certificate or Rights 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 one-thousandths (0.001) of a Preferred Share (or, following a Triggering
Event, other securities, cash or other assets, as the case may be) as the
Rights Certificate or Rights 

-10-

 

Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Rights Certificates shall make such request in writing delivered to the Rights
Agent, and shall surrender the Rights Certificate or Rights Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose.  Neither
the Rights Agent nor the Company shall be obligated to take any action whatsoever
with respect to the transfer of any such surrendered Rights Certificate until
the registered holder shall have completed and signed the certificate contained
in the form of assignment on the reverse side of such Rights Certificate and
shall have provided such additional evidence of the identity of the Beneficial
Owner (or former Beneficial Owner) or Affiliates or Associates thereof as the
Company shall reasonably request. 
Thereupon the Rights Agent shall, subject to Sections 7(e), 14 and
24 hereof, 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 from the
registered holder 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 Rights Certificates.

(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 reasonably satisfactory to them,
and, at the Company’s request, 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 make and deliver a new Rights Certificate of like tenor to the
Rights Agent for delivery to the registered holder in lieu of the Rights
Certificate so lost, stolen, destroyed or mutilated.

Section
7.               Exercise of Rights; Exercise
Price; Expiration Date of Rights.

(a)           Subject to Sections 7(e), 23(b)
and 24(b) hereof, the registered holder of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided herein) in whole or
in part at any time after the Distribution Date and prior to the Close of
Business on the Expiration Date by surrender of the Rights Certificate, with
the form of election to purchase on the reverse side thereof duly executed, to
the Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the Exercise Price for each one-thousandth (0.001) of
a Preferred Share (or, following a Triggering Event, other securities, cash or
other assets as the case may be) as to which the Rights are exercised.

(b)           The Exercise Price for each
one-thousandth (0.001) of a Preferred Share issuable pursuant to the exercise
of a Right shall initially be $34.43, shall be subject to adjustment from time
to time as provided in Sections 11 and 13 hereof and shall be payable in
lawful money of the United States of America in accordance with
paragraph (c) below.

(c)           Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to purchase duly
executed, accompanied by payment of the Exercise Price for the 

-11-

 

number of
one-thousandths (0.001) of a Preferred Share (or, following a Triggering Event,
other securities, cash or other assets as the case may be) to be purchased and
an amount equal to any applicable transfer tax required to be paid by the
holder of such Rights Certificate in accordance with Section 9(e) hereof,
the Rights Agent shall, subject to Section 20(k) hereof, thereupon
promptly (i) (A) requisition from any transfer agent of the Preferred
Shares (or make available, if the Rights Agent is the transfer agent for the
Preferred Shares) a certificate or certificates for the number of one-thousandths
(0.001) of a Preferred Share (or, following a Triggering Event, other
securities, cash or other assets as the case may be) to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all
such requests or (B) if the Company shall have elected to deposit the
total number of one-thousandths (0.001) of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets as the case may be)
issuable upon exercise of the Rights hereunder with a depository agent,
requisition from the depository agent depository receipts representing such
number of one-thousandths (0.001) of a Preferred Share (or, following a
Triggering Event, other securities, cash or other assets as the case may be) as
are to be purchased (in which case certificates for the Preferred Shares (or,
following a Triggering Event, other securities, cash or other assets as the
case may be) represented by such receipts shall be deposited by the transfer
agent with the depository agent) and the Company hereby directs the depository
agent to comply with such request, (ii) when appropriate, requisition from
the Company the amount of cash to be paid in lieu of issuance of fractional
shares in accordance with Section 14 hereof, (iii) after receipt of
such certificates or depository receipts, cause the same 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) when
appropriate, after receipt thereof, deliver such cash to or upon the order of
the registered holder of such Rights Certificate. The payment of the Exercise
Price (as such amount may be reduced (including to zero) pursuant to
Section 11(a)(iii) hereof) and an amount equal to any applicable transfer
tax required to be paid by the holder of such Rights Certificate in accordance
with Section 9(e) hereof, may be made in cash or by certified bank check,
cashier’s check or bank draft payable to the order of the Company.  In the event that the Company is obligated
to issue securities of the Company other than Preferred Shares, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company
will make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when
appropriate.

(d)           In case the registered holder of any
Rights Certificate shall exercise less than all the Rights evidenced thereby, a
new Rights Certificate evidencing Rights equivalent to the Rights remaining
unexercised shall be issued by the Rights Agent to the registered holder of
such Rights Certificate or to his or her duly authorized assigns, subject to
the provisions of Section 14 hereof.

(e)           Notwithstanding anything in this Agreement
to the contrary, from and after the first occurrence of a Triggering Event, any
Rights beneficially owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee after the
Acquiring Person becomes such (a  “Post-Event Transferee”),
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming 

-12-

 

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 which the Company’s Board of Directors has
determined is part of a plan, arrangement or under­standing which has as a
primary purpose or effect the avoidance of this Section 7(e) (a  “Pre-Event Transferee”) or (iv) any subsequent
transferee receiving transferred Rights from a Post-Event Transferee or a
Pre-Event Transferee, either directly or through one or more intermediate
transferees, shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The Company
shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but shall
have no liability to any holder of Rights Certificates or to any other Person
as a result of its failure to make any determinations with respect to an
Acquiring Person or any of such Acquiring Person’s Affiliates, Associates or
transferees hereunder.

(f)            Notwithstanding anything in this
Agreement to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise as set forth in Section 7 unless such
registered holder shall, in addition to having complied with the requirements
of subsection 7(a), have (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 shall
reasonably request.

Section
8.               Cancellation and Destruction
of Rights Certificates. All Rights Certificates surrendered for the purpose
of exercise, transfer, split up, combination or exchange shall, if surrendered
to the Company or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement.  The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any Rights Certificate purchased or acquired by the Company otherwise
than upon the exercise thereof.  The
Rights Agent shall deliver all canceled Rights Certificates to the Company, or
shall, at the written request of the Company and after any Securities and
Exchange Commission required retention period, destroy such canceled Rights
Certificates, and in such case shall deliver a certificate evidencing the
destruction thereof to the Company.

Section
9.               Reservation and Availability
of Preferred Shares.

(a)           The Company covenants and agrees that
it will use its best efforts to cause to be reserved and kept available out of
its authorized and unissued Preferred Shares not reserved for another purpose
(and, following the occurrence of a Triggering Event, out of its authorized and
unissued Common Shares and/or other securities), the number of Preferred Shares
(and, following 

-13-

 

the occurrence of
the Triggering Event, Common Shares and/or other securities) that will be
sufficient to permit the exercise in full of all outstanding Rights.

(b)           If the Company shall hereafter list
any of its Preferred Shares on a national securities exchange, then so long as
the Preferred Shares (and, following the occurrence of a Triggering Event,
Common Shares and/or other securities) issuable and deliverable upon exercise
of the Rights may be listed on such exchange, the Company shall use its best
efforts to cause, from and after such time as the Rights become exercisable
(but only to the extent that it is reasonably likely that the Rights will be
exercised), all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.

(c)           The Company shall use its best
efforts to (i) file, as soon as practicable following the earliest date
after the first occurrence of a Triggering Event in which the consideration to
be delivered by the Company upon exercise of the Rights is described in
Section 11(a)(ii) or Section 11(a)(iii) hereof, or as soon as is
required by law following the Distribution Date, as the case may be, a
registration statement under the Securities Act with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause
such registration statement to become 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
Securities Act) until the earlier of (A) the date as of which the Rights
are no longer exercisable for such securities and (B) the date of
expiration of the Rights. The Company may temporarily suspend, for a period not
to exceed ninety (90) days after the date set forth in clause (i) of the
first sentence 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 shall issue a public announcement stating, and notify
the Rights Agent, that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement and notification to the Rights
Agent at such time as the suspension is no longer in effect.  The Company will also take such action as
may be appropriate under, or to ensure compliance with, the securities or “blue
sky” laws of the various states in connection with the exercisability of the
Rights.  Notwithstanding any provision
of this Agreement to the contrary, the Rights shall not be exercisable in any
jurisdiction, unless the requisite qualification in such jurisdiction shall
have been obtained, or an exemption therefrom shall be available, and until a
registration statement has been declared and remains effective.

(d)           The Company covenants and agrees that
it will take all such action as may be necessary to ensure that all Preferred
Shares (or other securities of the Company) delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such securities (subject
to payment of the Exercise 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 which may be payable in respect of 

-14-

 

the original
issuance or delivery of the Rights Certificates or of any Preferred Shares (or
other securities of the Company) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a person other
than, or the issuance or delivery of certificates or depository receipts for
the Preferred Shares (or other securities of the Company) in a name other than
that of, the registered holder of the Rights Certificate evidencing Rights
surrendered for exercise or to issue or to deliver any certificates or
depository receipts for Preferred Shares (or other securities of the Company)
upon the exercise of any Rights until any such tax shall have 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.             Record Date. Each Person in
whose name any certificate for a number of one-thousandths (0.001) of a
Preferred Share (or other securities of the Company) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the
holder of record of Preferred Shares (or other securities of the Company)
represented thereby on, and such certificate shall be dated, the date upon
which the Rights Certificate evidencing such Rights was duly surrendered and
payment of the Total Exercise Price with respect to which the Rights have been
exercised (and any applicable transfer taxes) was made; provided, however,
that if the date of such surrender and payment is a date upon which the
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the transfer books of the
Company are open.  Prior to the exercise
of the Rights evidenced thereby, the holder of a Rights Certificate shall not
be entitled to any rights of a holder of Preferred Shares (or other securities
of the Company) for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or
to exercise any preemptive rights, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided herein.

Section
11.             Adjustment of Exercise Price,
Number of Shares or Number of Rights. The Exercise Price, the number and
kind of shares or other property 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)            Anything
in this Agreement to the contrary notwithstanding, in the event that the
Company shall at any time after the date of this Agreement (A) declare a
dividend on the Preferred Shares payable in Preferred Shares,
(B) subdivide the outstanding Preferred Shares, (C) combine the
outstanding Preferred Shares (by reverse stock split or otherwise) into a smaller
number of Preferred Shares, or (D) issue any shares of its capital stock
in a reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), then, in each such event,
except as otherwise provided in this Section 11 and Section 7(e)
hereof: (1) the Exercise Price in effect at the time of the record date
for such dividend or of the effective date of such subdivision, combination or reclassification
shall be adjusted so that the Exercise Price thereafter shall equal the result
obtained by dividing the Exercise Price in effect immediately prior to such
time by a fraction (the  

-15-

 

“Adjustment Fraction”), the numerator of which shall be the total number of
Preferred Shares (or shares of capital stock issued in such reclassification of
the Preferred Shares) outstanding immediately following such time and the
denominator of which shall be the total number of Preferred Shares outstanding
immediately prior to such time; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be less
than the aggregate par value of the shares of capital stock of the Company
issuable upon exercise of such Right; and (2) the number of
one-thousandths (0.001) of a Preferred Share (or share of such other capital
stock) issuable upon the exercise of each Right shall equal the number of
one-thousandths (0.001) of a Preferred Share (or share of such other capital
stock) as was issuable upon exercise of a Right immediately prior to the
occurrence of the event described in clauses (A)-(D) of this
Section 11(a)(i), multiplied by the Adjustment Fraction; provided, however,
that, no such adjustment shall be made pursuant to this Section 11(a)(i)
to the extent that there shall have simultaneously occurred an event described
in clause (A), (B), (C) or (D) of Section 11(n) with a proportionate
adjustment being made thereunder. Each Common Share that shall become
outstanding after an adjustment has been made pursuant to this
Section 11(a)(i) shall have associated with it the number of Rights,
exercisable at the Exercise Price and for the number of one-thousandths (0.001)
of a Preferred Share (or shares of such other capital stock) as one Common
Share has associated with it immediately following the adjustment made pursuant
to this Section 11(a)(i).

(ii)   Subject to Section 24 of this Agreement,
in the event that a Triggering Event shall have occurred, then promptly
following such Triggering Event each holder of a Right, except as provided in
Section 7(e) hereof, shall thereafter have the right to receive for each
Right, upon exercise thereof in accordance with the terms of this Agreement and
payment of the Exercise Price in effect immediately prior to the occurrence of
the Triggering Event, in lieu of a number of one-thousandths (0.001) of a
Preferred Share, such number of Common Shares of the Company as shall
equal the quotient obtained by dividing (A) the product obtained by
multiplying (1) the Exercise Price in effect immediately prior to the
occurrence of the Triggering Event by (2) the number of one-thousandths
(0.001) of a Preferred Share for which a Right was exercisable (or would have
been exercisable if the Distribution Date had occurred) immediately prior to
the first occurrence of a Triggering Event, by (B) fifty percent (50%) of
the Current Per Share Market Price for Common Shares on the date of
occurrence of the Triggering Event; provided, however, that the
Exercise Price and the number of Common Shares of the Company so receivable
upon exercise of a Right shall be subject to further adjustment as appropriate
in accordance with Section 11(e) hereof to reflect any events occurring in
respect of the Common Shares of the Company after the occurrence of the
Triggering Event.

(iii)  In lieu of issuing Common Shares in accordance
with Section 11(a)(ii) hereof, the Company may, if the Company’s Board of
Directors determines that such action is necessary or appropriate and not
contrary to the interest of holders of Rights and, in the event that the number
of Common Shares which are authorized by the Company’s Amended and Restated
Articles of Incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights are not sufficient to permit
the exercise in full of the Rights, or if any necessary regulatory approval for
such issuance has not been obtained by the Company, the 

-16-

 

Company
shall:  (A) determine the excess of
(1) the value of the Common Shares issuable upon the exercise of a Right
(the  “Current Value”) over (2) the Exercise Price
(such excess, the  “Spread”) and (B) with
respect to each Right, make adequate provision to substitute for such Common
Shares, upon exercise of the Rights, (1) cash, (2) a reduction in the
Exercise Price, (3) other equity securities of the Company (including,
without limitation, shares or units of shares of any series of preferred stock
which the Company’s Board of Directors has deemed to have the same value as
Common Shares (such shares or units of shares of preferred stock are herein
called  “Common Stock Equivalents”)),
except to the extent that the Company has not obtained any necessary
shareholder or regulatory approval for such issuance, (4) debt securities
of the Company, except to the extent that the Company has not obtained any
necessary shareholder or regulatory approval for such issuance, (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 determined by
the Company’s Board of Directors based upon the advice of a nationally
recognized investment banking firm selected by the Company’s Board of
Directors; provided, however, that if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the later of (x) the first occurrence of
a Triggering Event and (y) the date on which the Company’s right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the  “Section 11(a)(ii) Trigger
Date”), then the Company shall be obligated to deliver, upon the
surrender for exercise of a Right and without requiring payment of the Exercise
Price, Common Shares (to the extent available), except to the extent that the
Company has not obtained any necessary shareholder or regulatory approval for
such issuance, and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread.  If
the Company’s Board of Directors shall determine in good faith that it is
likely that sufficient additional Common Shares could be authorized for
issuance upon exercise in full of the Rights or that any necessary regulatory
approval for such issuance will be obtained, the thirty (30) day period set
forth above may be extended to the extent necessary, but not more than ninety
(90) days after the Section 11(a)(ii) Trigger Date, in order that the
Company may seek shareholder approval for the authorization of such additional
shares or take action to obtain such regulatory approval (such period, as it
may be extended, the  “Substitution Period”).  To the extent that the Company
determines that some action need be taken pursuant to the first and/or second
sentences of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that such action shall apply uniformly to
all outstanding Rights and (y) may suspend the exercisability of the
Rights until the expiration of the Substitution Period in order to seek
any authorization of additional shares, to take any action to obtain any
required regulatory approval and/or to decide the appropriate form of distribution
to be made pursuant to such first sentence and to determine the value
thereof.  In the event of any such
suspension, the Company shall 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 is no longer in effect.  For purposes of this
Section 11(a)(iii), the value of the Common Shares shall be the Current
Per Share Market Price of the Common Shares on the Section 11(a)(ii)
Trigger Date and the value of any Common Stock Equivalent shall be deemed to
have the same value as the Common Shares on such date.

(b)           In case the Company shall, at any
time after the date of this Agreement, fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling 

-17-

 

such holders (for
a period expiring within forty-five (45) calendar days after such record date)
to subscribe for or purchase Preferred Shares or Equivalent Shares or
securities convertible into Preferred Shares or Equivalent Shares at a price
per share (or having a conversion price per share, if a security convertible
into Preferred Shares or Equivalent Shares) less than the then Current Per Share
Market Price of the Preferred Shares or Equivalent Shares on such record date,
then, in each such case, the Exercise Price to be in effect after such record
date shall be determined by multiplying the Exercise Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares and Equivalent Shares (if any)
outstanding on such record date, plus the number of Preferred Shares or
Equivalent Shares, as the case may be, which the aggregate offering price of
the total number of Preferred Shares or Equivalent Shares, as the case may be,
to be offered or issued (and/or the aggregate initial conversion price of the
convertible securities to be offered or issued) would purchase at such current
market price, and the denominator of which shall be the number of Preferred
Shares and Equivalent Shares (if any) outstanding on such record date, plus the
number of additional Preferred Shares or Equivalent Shares, as the case may be,
to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however,
that in no event shall the consideration to be paid upon the exercise of one
Right be less than the aggregate par value of the shares of capital stock of
the Company issuable upon exercise of one Right. In case such subscription
price may be paid in a consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the Company’s Board of Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding
on the Rights Agent and the holders of the Rights.  Preferred Shares and Equivalent Shares owned by or held for the
account of the Company shall not be deemed outstanding for the purpose of any
such computation.  Such adjustment shall
be made successively whenever such a record date is fixed, and in the event
that such rights, options or warrants are not so issued, the Exercise Price
shall be adjusted to be the Exercise Price which would then be in effect if
such record date had not been fixed.

(c)           In case the Company shall, at any
time after the date of this Agreement, fix a record date for the making of a
distribution to all holders of the Preferred Shares or of any class or series
of Equivalent Shares (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation) of evidences of indebtedness or assets (other than a regular
quarterly cash dividend, if any, or a dividend payable in Preferred Shares) or
subscription rights, options or warrants (excluding those referred to in
Section 11(b)), then, in each such case, the Exercise Price to be in
effect after such record date shall be determined by multiplying the Exercise
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Per Share Market Price of a Preferred
Share or an Equivalent Share on such record date, less the fair market value
per Preferred Share or Equivalent Share (as determined in good faith by the
Board of Directors of the Company, whose determination shall 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 Preferred Share or Equivalent Share, as the case
may be, and the denominator of which shall be such Current Per Share Market
Price of a Preferred Share or Equivalent Share on such record date; 

-18-

 

provided, however, that in no event shall
the consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. Such adjustments shall be made successively whenever
such a record date is fixed, and in the event that such distribution is not so
made, the Exercise Price shall be adjusted to be the Exercise Price which would
have been in effect if such record date had not been fixed.

(d)           Anything herein to the contrary
notwithstanding, no adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least one percent
(1%) of the Exercise Price; provided, however, that any
adjustments which by reason of this Section 11(d) are not required to be
made shall be carried forward and taken into account in any subsequent adjustment.  All calculations under this Section 11
shall be made to the nearest cent or to the nearest ten-thousandth (0.0001) of
a Common Share or other share or one hundred-thousandth (0.00001) of a
Preferred Share, as the case may be. 
Notwithstanding the first sentence of this Section 11(d), any
adjustment required by this Section 11 shall be made no later than the
earlier of (i) three (3) years from the date of the transaction which
requires such adjustment or (ii) the Expiration Date.

(e)           If as a result of an adjustment made
pursuant to Section 11(a) or Section 13(a) hereof, the holder of any
Right thereafter exercised shall become entitled to receive any shares of
capital stock other than Preferred Shares, thereafter the number of such other
shares so receivable upon exercise of any Right and, if required, the Exercise
Price thereof, shall 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 Preferred Shares contained in Sections 11(a), 11(b), 11(c), 11(d),
11(g), 11(h), 11(i), 11(j), 11(k) and 11(l), and the provisions of
Sections 7, 9, 10, 13 and 14 with respect to the Preferred Shares shall
apply on like terms to any such other shares.

(f)            All Rights originally issued by the
Company subsequent to any adjustment made to the Exercise Price hereunder shall
evidence the right to purchase, at the adjusted Exercise Price, the number of
one-thousandths (0.001) of a Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.

(g)           Unless the Company shall have
exercised its election as provided in Section 11(h), upon each adjustment
of the Exercise Price as a result of the calculations made in Section 11(b)
and (c), each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the adjusted
Exercise Price, that number of Preferred Shares (calculated to the nearest one
hundred-thousandth (0.00001) of a share) obtained by (i) multiplying
(x) the number of Preferred Shares covered by a Right immediately prior to
this adjustment, by (y) the Exercise Price in effect immediately prior to
such adjustment of the Exercise Price, and (ii) dividing the product so
obtained by the Exercise Price in effect immediately after such adjustment of
the Exercise Price.

-19-

 

(h)           The Company may elect on or after the
date of any adjustment of the Exercise Price as a result of the calculations
made in Section 11(b) or (c) to adjust the number of Rights, in
substitution for any adjustment in the number of Preferred Shares purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of
one-thousandths (0.001) of a Preferred Share 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 shall become that number of Rights (calculated to the nearest one
hundred-thousandth (0.00001)) obtained by dividing the Exercise Price in effect
immediately prior to adjustment of the Exercise Price by the Exercise Price in
effect immediately after adjustment of the Exercise Price.  The Company shall 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 Exercise Price is adjusted or any day thereafter, but, if any
Rights Certificates have been issued, shall be at least ten (10) 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(h), the Company shall, 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 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company,
shall 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 shall be
entitled after such adjustment.  Rights
Certificates so to be distributed shall be issued, executed and countersigned
in the manner provided for herein (and may bear, at the option of the Company,
the adjusted Exercise Price) and shall be registered in the names of the
holders of record of Rights Certificates on the record date specified in the
public announcement.

(i)            Irrespective of any adjustment or
change in the Exercise Price or the number of Preferred Shares issuable upon
the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Exercise Price per one one-thousandth
(0.001) of a Preferred Share and the number of one-thousandths (0.001) of a
Preferred Share which were expressed in the initial Rights Certificates issued
hereunder.

(j)            Before taking any action that would
cause an adjustment reducing the Exercise Price below the par or stated value,
if any, of the number of one-thousandths (0.001) of a Preferred Share issuable
upon exercise of the Rights, the Company shall take any corporate action which
may, in the opinion of its counsel, be necessary in order that the Company may
validly and legally issue as fully paid and nonassessable shares such number of
one-thousandths (0.001) of a Preferred Share at such adjusted Exercise Price.

(k)           In any case in which this Section 11
shall require that an adjustment in the Exercise 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 issuing to the holder of any Right exercised after
such 

-20-

 

record date of the
number of one-thousandths (0.001) of a Preferred Share and other capital stock
or securities of the Company, if any, issuable upon such exercise over and
above the number of one-thousandths (0.001) of a Preferred Share and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill
or other appropriate instrument evidencing such holder’s right to receive such
additional shares (fractional or otherwise) upon the occurrence of the event
requiring such adjustment.

(l)            Anything in this Section 11 to
the contrary notwithstanding, prior to the Distribution Date, the Company shall
be entitled to make such reductions in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent
that it in its sole discretion shall determine to be advisable in order that
any (i) consolidation or subdivision of the Preferred or Common Shares,
(ii) issuance wholly for cash of any Preferred or Common Shares at less
than the current market price, (iii) issuance wholly for cash of Preferred
or Common Shares or securities which by their terms are convertible into or
exchangeable for Preferred or Common Shares, (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 Preferred or
Common Shares shall not be taxable to such shareholders.

(m)          The Company covenants and agrees that,
after the Distribution Date, it will not, except as permitted by Sections 23,
24 or 27 hereof, take (or permit to be taken) 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.

(n)           In the event that the Company shall
at any time after the date of this Agreement (A) declare a dividend on the
Common Shares payable in Common Shares, (B) subdivide the outstanding
Common Shares, (C) combine the outstanding Common Shares (by reverse stock
split or otherwise) into a smaller number of Common Shares, or (D) issue any
shares of its capital stock in a reclassification of the Common Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), then,
in each such event, except as otherwise provided in this Section 11(a) and
Section 7(e) hereof: (1) each Common Share (or shares of capital
stock issued in such reclassification of the Common Shares) outstanding
immediately following such time shall have associated with it the number of
Rights as were associated with one Common Share immediately prior to the
occurrence of the event described in clauses (A)-(D) above; (2) the
Exercise Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification shall
be adjusted so that the Exercise Price thereafter shall equal the result
obtained by multiplying the Exercise Price in effect immediately prior to such
time by a fraction, the numerator of which shall be the total number of Common
Shares outstanding immediately prior to the event described in clauses (A)-(D)
above, and the denominator of which shall be the total number of Common Shares
outstanding immediately after such event; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right
be less than the aggregate par value of the shares of capital stock of the
Company issuable upon exercise of 

-21-

 

such Right; and
(3) the number of one-thousandths (0.001) of a Preferred Share (or shares
of such other capital stock) issuable upon the exercise of each Right
outstanding after such event shall equal the number of one-thousandths (0.001)
of a Preferred Share (or shares of such other capital stock) as were issuable
with respect to one Right immediately prior to such event. Each Common Share
that shall become outstanding after an adjustment has been made pursuant to
this Section 11(n) shall have associated with it the number of Rights,
exercisable at the Exercise Price and for the number of one-thousandths (0.001)
of a Preferred Share (or shares of such other capital stock) as one Common
Share has associated with it immediately following the adjustment made pursuant
to this Section 11(n).  If an event
occurs which would require an adjustment under both this Section 11(n) and
Section 11(a)(ii) hereof, the adjustment provided for in this
Section 11(n) shall be in addition to, and shall be made prior to, any
adjustment required pursuant to Section 11(a)(ii) hereof.

Section
12.             Certificate of Adjusted Exercise
Price or Number of Shares. Whenever an adjustment is made as provided in
Sections 11 and 13 hereof, the Company shall promptly (a) prepare a
certificate setting forth such adjustment and a brief statement of the facts
accounting for such adjustment, (b) file with the Rights Agent and with
each transfer agent for the Preferred Shares a copy of such certificate and
(c) mail a brief summary thereof to each holder of a Rights Certificate in
accordance with Section 26 hereof. 
Notwithstanding the foregoing sentence, the failure of the Company to
make such certification or give such notice shall not affect the validity of
such adjustment or the force or effect of the requirement for such adjustment.  The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment contained therein and
shall not be deemed to have knowledge of such adjustment unless and until it
shall have received such certificate.

Section
13.             Consolidation, Merger or Sale or
Transfer of Assets or Earning Power.

(a)           In the event that, following a
Triggering Event, directly or indirectly:

(i)    the Company shall consolidate with, or merge
with and into, any other Person (other than a wholly-owned Subsidiary of the
Company in a transaction the principal purpose of which is to change the state
of incorporation of the Company and which complies with Section 11(m)
hereof);

(ii)   any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such consolidation or merger and, in
connection with such merger, all or part of the Common Shares shall be changed
into or exchanged for stock or other securities of any other person (or the
Company); or

(iii)  the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer), in one
or more transactions, assets or earning power aggregating fifty percent (50%)
or more 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
one or more of its wholly owned Subsidiaries in one or more transactions, each
of which individually (and together) complies with Section 11(m) hereof),

-22-

 

then, concurrent
with and in each such case,

(A)          each holder of a Right (except as
provided in Section 7(e) hereof) shall thereafter have the right to
receive, upon the exercise thereof at a price equal to the Total Exercise Price
applicable immediately prior to the occurrence of the Section 13 Event in
accordance with the terms of this Agreement, such number of validly authorized
and issued, fully paid, nonassessable and freely tradable Common Shares of the
Principal Party (as hereinafter defined), free of any liens, encumbrances,
rights of first refusal or other adverse claims, as shall be equal to the
result obtained by dividing such Total Exercise Price by an amount equal to
fifty percent (50%) of the Current Per Share Market Price of the Common Shares
of such Principal Party on the date of consummation of such Section 13
Event, provided, however, that the Exercise Price and the number of
Common Shares of such Principal Party so receivable upon exercise of a Right
shall be subject to further adjustment as appropriate in accordance with
Section 11(e) hereof;

(B)           such Principal Party shall thereafter
be liable for, and shall assume, by virtue of such Section 13 Event, all
the obligations and duties of the Company pursuant to this Agreement;

(C)           the term “Company” shall thereafter
be deemed to refer to such Principal Party, it being specifically intended that
the provisions of Section 11 hereof shall apply only to such Principal Party
following the first occurrence of a Section 13 Event;

(D)          such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
its Common Shares) in connection with the consummation of any such transaction
as may be necessary to ensure that the provisions hereof shall thereafter be
applicable, as nearly as reasonably may be, in relation to its Common Shares
thereafter deliverable upon the exercise of the Rights; and

(E)           upon the subsequent occurrence of any
consolidation, merger, sale or transfer of assets or other extraordinary
transaction in respect of such Principal Party, each holder of a Right shall
thereupon be entitled to receive, upon exercise of a Right and payment of the
Total Exercise Price as provided in this Section 13(a), such cash, shares,
rights, warrants and other property which such holder would have been entitled
to receive had such holder, at the time of such transaction, owned the Common
Shares of the Principal Party receivable upon the exercise of such Right
pursuant to this Section 13(a), and such Principal Party shall take such
steps (including, but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the Rights in accordance with the
terms hereof for such cash, shares, rights, warrants and other property.

(F)           For purposes hereof, the “earning
power” of the Company and its Subsidiaries shall be determined in good faith by
the Company’s Board of Directors on the basis of the operating income of each
business operated by the Company and its Subsidiaries during the three fiscal
years preceding the date of such determination (or, in the case of any business
not operated by the Company or any Subsidiary during three full fiscal years
preceding such date, during the period such business was operated by the
Company or any Subsidiary).

-23-

 

(b)           For purposes of this Agreement, the
term  “Principal Party” shall mean:

(i)    in the case of any transaction described in
clause (i) or (ii) of Section 13(a) hereof: (A) the Person that
is the issuer of the securities into which the Common Shares are converted in
such merger or consolidation, or, if there is more than one such issuer, the issuer
the Common Shares of which have the greatest aggregate market value of shares
outstanding, or (B) if no securities are so issued, (x) the Person
that is the other party to the merger, if such Person survives said merger, or,
if there is more than one such Person, the Person the Common Shares of which
have the greatest aggregate market value of shares outstanding or (y) if
the Person that is the other party to the merger does not survive the merger,
the Person that does survive the merger (including the Company if it survives)
or (z) the Person resulting from the consolidation; and

(ii)   in the case of any transaction described in
clause (iii) of Section 13(a) hereof, the Person that is the party
receiving the greatest portion of the assets or earning power transferred pursuant
to such transaction or transactions, or, if more than one Person that is a
party to such transaction or transactions receives the same portion of the
assets or earning power so transferred and each such portion would, were it not
for the other equal portions, constitute the greatest portion of the assets or
earning power so transferred, or if the Person receiving the greatest portion
of the assets or earning power cannot be determined, whichever of such Persons
is the issuer of Common Shares having the greatest aggregate market value of
shares outstanding; provided that in any such case described in the
foregoing clause (b)(i) or (b)(ii), if the Common Shares of such Person are not
at such time or have not been continuously over the preceding 12-month period
registered under Section 12 of the Exchange Act, then (1) if such
Person is a direct or indirect Subsidiary of another Person the Common Shares
of which are and have been so registered, the term “Principal Party” shall
refer to such other Person, or (2) if such Person is a Subsidiary,
directly or indirectly, of more than one Person, the Common Shares of which are
and have been so registered, the term “Principal Party” shall refer to
whichever of such Persons is the issuer of Common Shares having the greatest
aggregate market value of shares outstanding, or (3) if such Person is
owned, directly or indirectly, by a joint venture formed by two or more Persons
that are not owned, directly or indirectly by the same Person, the rules set
forth in clauses (1) and (2) above shall apply to each of the owners having an
interest in the venture as if the Person owned by the joint venture was a
Subsidiary of both or all of such joint venturers, and the Principal Party in
each such case shall bear the obligations set forth in this Section 13 in
the same ration as its interest in such Person bears to the total of such
interests.

(c)           The Company shall not consummate any
Section 13 Event unless the Principal Party shall have a sufficient number
of authorized Common Shares 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 issuer shall have
executed and delivered to the Rights Agent a supplemental agreement confirming
that such Principal Party shall, upon consummation of such Section 13
Event, assume this Agreement in accordance with Sections 13(a) and 13(b)
hereof, that all rights of first refusal or preemptive rights in respect of the
issuance of Common Shares of such Principal Party upon exercise of outstanding
Rights have been waived, that there are no rights, warrants, instruments or
securities outstanding or any agreements or 

-24-

 

arrangements which, as a result of the consummation of
such transaction, would eliminate or substantially diminish the benefits
intended to be afforded by the Rights and that such transaction shall not
result in a default by such Principal Party under this Agreement, and further
providing that, as soon as practicable after the date of such Section 13
Event, such Principal Party will:

(i)    prepare and file a registration statement
under the Securities Act with respect to the Rights and the securities
purchasable upon exercise of the Rights on an appropriate form, use its best
efforts to cause such registration statement to become effective as soon as
practicable after such filing and use its best efforts to cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date, and
similarly comply with applicable state securities laws;

(ii)   use its best efforts to list (or continue the
listing of) the Rights and the securities purchasable upon exercise of the
Rights on a national securities exchange or to meet the eligibility
requirements for quotation on Nasdaq and list (or continue the listing of) the
Rights and the securities purchasable upon exercise of the Rights on Nasdaq;
and

(iii)  deliver to holders of the Rights historical
financial statements for such Principal Party which comply in all respects with
the requirements for registration on Form 10 (or any successor form) under
the Exchange Act.

In the event that at any
time after the occurrence of a Triggering Event some or all of the Rights shall
not have been exercised at the time of a transaction described in this
Section 13, the Rights which have not theretofore been exercised shall
thereafter be exercisable in the manner described in Section 13(a)
(without taking into account any prior adjustment required by
Section 11(a)(ii)).

(d)           In case the “Principal Party” for
purposes of Section 13(b) hereof has provision in any of its authorized
securities or in its certificate of incorporation or by-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue (other than to holders
of Rights pursuant to Section 13 hereof), in connection with, or as a
consequence of, the consummation of a Section 13 Event, Common Shares or
Equivalent Shares of such Principal Party at less than the then Current Per
Share Market Price thereof or securities exercisable for, or convertible into,
Common Shares or Equivalent Shares of such Principal Party at less than such
then Current Per Share Market Price, or (ii) providing for any special
payment, tax or similar provision in connection with the issuance of the Common
Shares of such Principal Party pursuant to the provisions of Section 13
hereof, then, in such event, the Company hereby agrees with each holder of
Rights that it shall not consummate any such transaction unless prior thereto
the Company and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing that the provision in question
of such Principal Party shall have been canceled, waived or amended, or that
the authorized securities shall be redeemed, so that the applicable provision
will have no effect in connection with or as a consequence of, the consummation
of the proposed transaction.

-25-

 

(e)           The Company covenants and agrees that
it shall not, at any time after the Distribution Date, effect or permit to
occur any Section 13 Event, if (i) at the time or immediately after
such Section 13 Event there are any rights, warrants or other instruments
or securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights, (ii) prior to, simultaneously with or immediately after such
Section 13 Event, the shareholders of the Person who constitutes, or would
constitute, the “Principal Party” for purposes of Section 13(b) hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates or (iii) the form or nature of
organization of the Principal Party would preclude or limit the exercisability
of the Rights.

(f)            The provisions of this Section 13
shall similarly apply to successive mergers or consolidations or sales or other
transfers.

Section
14.             Fractional Rights and Fractional
Shares.

(a)           The Company shall not be required to
issue fractions of Rights or to distribute Rights Certificates which evidence
fractional Rights. In lieu of such fractional Rights, there shall 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 the purposes of this Section 14(a),
the current market value of a whole Right shall 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, as determined pursuant to
the second sentence of Section 1(j) hereof.

(b)           The Company shall not be required to
issue fractions of Preferred Shares (other than fractions that are integral
multiples of one one-thousandth (0.001) of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred
Shares (other than fractions that are integral multiples of one one-thousandth
(0.001) of a Preferred Share). Interests in fractions of Preferred Shares in
integral multiples of one one-thousandth (0.001) of a Preferred Share may, at
the election of the Company, be evidenced by depository receipts, pursuant to
an appropriate agreement between the Company and a depository selected by it; provided,
that such agreement shall provide that the holders of such depository receipts
shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented by such
depository receipts.  In lieu of
fractional Preferred Shares that are not integral multiples of one
one-thousandth (0.001) of a Preferred Share, the Company shall pay to the
registered holders of Rights Certificates at the time such Rights are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of a Preferred Share.  For
purposes of this Section 14(b), the current market value of a Preferred
Share shall be (x) one thousand multiplied by (y) the closing price
of a Common Share (as determined pursuant to the second sentence of
Section 1(j) hereof) for the Trading Day immediately prior to the date of
such exercise.

-26-

 

(c)           The Company shall not be required to
issue fractions of Common Shares or to distribute certificates which evidence
fractional Common Shares upon the exercise or exchange of Rights. In lieu of
such fractional Common Shares, the Company shall pay to the registered holders
of Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current market value of a
Common Share.  For purposes of this
Section 14(c), the current market value of a Common Share shall be the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 1(j) hereof) for the Trading Day immediately prior to the date
of such exercise.

(d)           The holder of a Right by the
acceptance of the Right expressly waives his or her right to receive any
fractional Rights or any fractional shares (other than fractions that are
integral multiples of one one-thousandth (0.001) of a Preferred Share) upon
exercise of a Right.

Section
15.             Rights of Action. All rights
of action in respect of this Agreement, excepting the rights of action given
to the Rights Agent pursuant to Section 18 hereof, are vested in the
respective registered holders of the Rights Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Rights Certificate (or, prior to the Distribution
Date, of the Common Shares), without the consent of the Rights Agent or of the
holder of any other Rights Certificate (or, prior to the Distribution Date, of
the Common Shares), may, in his or her own behalf and for his or her own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his or her
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, and injunctive relief against actual or threatened
violations of, the obligations of any Person subject to this Agreement.

Section
16.             Agreement of Rights Holders.
Every holder of a Right, by accepting the same, 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 the Common
Shares;

(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; and

(c)           subject to Sections 6(a) and
7(f) hereof, the Company and the Rights Agent may deem and treat the person in
whose name the Rights Certificate (or, prior to the Distribution Date, the
associated Common Shares certificate) is registered as the absolute owner
thereof and of the Rights evidenced thereby (notwithstanding any notations of
ownership or writing on the Rights 

-27-

 

Certificates or
the associated Common Shares certificate made by anyone other than the Company
or the Rights Agent) for all purposes whatsoever, and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary.

Section
17.             Rights Certificate Holder Not
Deemed a Shareholder. No holder, as such, of any Rights Certificate shall
be entitled to vote, receive dividends or be deemed for any purpose to be the
holder of the Preferred Shares or any other securities of the Company which may
at any time be issuable on the exercise of the Rights represented thereby, nor
shall anything contained herein or in any Rights Certificate be construed to
confer upon the holder of any Rights Certificate, as such, any of the rights of
a shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders (except as specifically provided in
Section 25 hereof), or to receive dividends or subscription rights, or
otherwise, until the Right or Rights evidenced by such Rights Certificate shall
have been exercised in accordance with the provisions hereof.

Section
18.             Concerning the Rights Agent.

(a)           The Company agrees to pay to the
Rights Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. 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 by the Rights Agent in connection with the
acceptance and administration of this Agreement, including the costs and
expenses of defending against any claim of liability in the premises.  In no event will the Rights Agent be liable
for special, indirect, incidental or consequential loss or damage of any kind
whatsoever, even if the Rights Agent has been advised of the possibility of
such loss or damage.

(b)           The Rights Agent shall be protected
and shall 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 the Preferred Shares or
Common Shares 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
reasonably believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.

-28-

 

Section
19.             Merger or Consolidation or
Change of Name of Rights Agent.

(a)           Any corporation into which the Rights
Agent or any successor Rights Agent may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which the Rights Agent or any successor Rights Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Rights Agent or
any successor Rights Agent, shall 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 hereto; provided, however, that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor
Rights Agent shall succeed to the agency created by this Agreement, any of the
Rights Certificates shall have been countersigned but not delivered, any such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Rights Certificates so countersigned; and in case
at that time any of the Rights Certificates shall not have been countersigned,
any successor Rights Agent may countersign such Rights Certificates either in
the name of the predecessor Rights Agent or in the name of the successor Rights
Agent; and in all such cases such Rights Certificates shall 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 shall be changed and at such time any of the Rights Certificates
shall 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 shall
not have 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 shall 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 thereof, shall 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 shall 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 shall deem it necessary or
desirable that any fact or matter (including, without limitation, the identity
of any Acquiring Person and the determination of Current Per Share Market
Price) be proved or established by the Company prior to taking or suffering any
action hereunder, such fact or matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, 

-29-

 

the Secretary or
any Assistant Secretary of the Company and delivered to the Rights Agent; and
such certificate shall 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 shall be liable
hereunder to the Company and any other Person only for its own gross
negligence, bad faith or willful misconduct.

(d)           The Rights Agent shall 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 (except its countersignature thereof)
or be required to verify the same, but all such statements and recitals are and
shall be deemed to have been made by the Company only.

(e)           The Rights Agent shall not be under
any responsibility in respect of the validity of this Agreement or the
execution and delivery hereof (except the due execution hereof by the Rights
Agent) or in respect of the validity or execution of any Rights Certificate
(except its countersignature thereof); nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Agreement
or in any Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in
Sections 3, 11, 13, 23 or 24, or the ascertaining of the existence of
facts that would require any such change or adjustment (except with respect to
the exercise of Rights evidenced by Rights Certificates after receipt by the
Rights Agent of a certificate furnished pursuant to Section 12 describing
such change or adjustment); nor shall it by any act hereunder be deemed to make
any representation or warranty as to the authorization or reservation of any
Preferred Shares to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Preferred Shares will, when issued, be validly
authorized and issued, fully paid and 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 hereunder from any one of the Chairman of the Board, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Secretary or any Assistant Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered by it in good faith in accordance
with instructions of any such officer or for any delay in acting while waiting
for those instructions. Any application by the Rights Agent for written
instructions from the Company may, at the option of the Rights Agent, set forth
in writing any action proposed to be taken or 

-30-

 

omitted by the
Rights Agent under this Rights Agreement and the date on and/or after which
such action shall be taken or such omission shall be effective.  The Rights Agent shall not be liable for any
action taken by, or omission of, the Rights Agent in accordance with a proposal
included in any such application on or after the date specified in such
application (which date shall not be less than five (5) Business Days after the
date on which any officer of the Company actually receives such application,
unless any such officer shall have consented in writing to an earlier date)
unless, prior to taking any such action (or the effective date in the case of
an omission), the Rights Agent shall have received written instructions in
response to such application specifying the action to be taken or omitted.

(h)           The Rights Agent and any shareholder,
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, or
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 herein shall
preclude the Rights Agent from acting in any other capacity for the Company or
for any other legal entity.

(i)            The Rights Agent may execute and
exercise any of the rights or powers hereby vested in it or perform any duty hereunder
either itself or by or through its attorneys or agents, and the Rights Agent
shall 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
reasonable care was exercised in the selection and continued employment
thereof.

(j)            No provision of this Agreement shall
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 hereunder
or in the exercise of its rights if there shall be 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 Rights
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 and/or 2 thereof, the Rights Agent shall not take any
further action with respect to such requested exercise or 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 thirty (30) days’ notice in writing mailed
to the Company and to each transfer agent of the Preferred Shares and the
Common Shares by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail.  In
the event the transfer agency relationship in effect between the Company and
the Rights Agent terminates, the Rights Agent will be deemed to resign
automatically on the effective date of such 

-31-

 

termination; and
any required notice will be sent by the Company.  The Company may remove the Rights Agent or any successor Rights
Agent upon thirty (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
Preferred Shares and the Common Shares by registered or certified mail, and to
the holders of the Rights Certificates by first-class mail.  If the Rights Agent shall resign or be
removed or shall otherwise become incapable of acting, the Company shall
appoint a successor to the Rights Agent. 
If the Company shall fail to make such appointment within a period of
thirty (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 Agent or by the holder of a Rights Certificate (who shall,
with such notice, submit his or her Rights Certificate for inspection by the
Company), then the registered holder of any Rights Certificate may apply to any
court of competent jurisdiction for the appointment of a new Rights Agent.  After appointment, the successor Rights
Agent shall 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;
but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, 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 shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Preferred
Shares and the Common Shares, and mail a notice thereof 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 therein, shall 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, at its option, 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 Exercise Price and the
number or 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 Common Shares following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company
(a) shall, with respect to Common Shares so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement or upon the
exercise, conversion or exchange of other securities of the Company outstanding
at the date hereof or upon the exercise, conversion or exchange of securities
hereinafter 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 (i) no
such Rights Certificate shall be issued and this sentence shall be null and
void ab initio if, and to the extent that, such issuance or this
sentence would create a significant risk of or result in material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued or would create a significant risk of or result in such options’ or
employee plans’ or arrangements’ failing to qualify for otherwise available
special tax treatment and (ii) no such Rights Certificate shall be issued
if, and to the extent that, appropriate adjustment shall otherwise have been
made in lieu of the issuance thereof.

-32-

 

Section
23.             Redemption.

(a)           The Company may, at its option and
with the approval of the Board of Directors, at any time prior to the Close of
Business on the earlier of (i) the fifth day following the Shares
Acquisition Date (or such later date as may be determined by action of the
Company’s Board of Directors and publicly announced by the Company) and
(ii) the Final Expiration Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $0.001 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being herein referred to
as the  “Redemption Price”) and the
Company may, at its option, pay the Redemption Price either in Common Shares
(based on the Current Per Share Market Price thereof at the time of redemption)
or cash.  Such redemption of the Rights
by the Company may be made effective at such time, on such basis and with such
conditions as the Board of Directors in its sole discretion may establish.  The date on which the Board of Directors
elects to make the redemption effective shall be referred to as the  “Redemption Date.”

(b)           Immediately upon the action of the
Board of Directors of the Company ordering the redemption of the Rights,
evidence of which shall have 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 shall be to
receive the Redemption Price. The Company shall promptly give public notice of
any such redemption; provided, however, that the failure to give,
or any defect in, any such notice shall not affect the validity of such
redemption.  Within ten (10) days after
the action of the Board of Directors ordering the redemption of the Rights, the
Company shall give notice of such redemption to the Rights Agent and the
holders of the then outstanding Rights by mailing such notice to all such
holders at their last addresses as they appear upon the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
transfer agent for the Common Shares. 
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice.  Each such notice of redemption will state the method by which the
payment of the Redemption Price will be made. 
Neither the Company nor any of its Affiliates or Associates may redeem,
acquire or purchase for value any Rights at any time in any manner other than
that specifically set forth in this Section 23 or in Section 24
hereof, and other than in connection with the purchase of Common Shares prior
to the Distribution Date.

Section
24.             Exchange.

(a)           Subject to applicable laws, rules and
regulations, and subject to subsection 24(c) below, the Company may, at its
option, by action of the Board of Directors, at any time after the occurrence
of a Triggering Event, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 7(e) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the  “Exchange Ratio”). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such 

-33-

 

exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, or any entity
holding Common Shares 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 Common Shares then outstanding.

(b)           Immediately upon the action of the
Board of Directors ordering the exchange of any Rights pursuant to
subsection 24(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 that
number of Common Shares equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall give public notice of any
such exchange; provided, however, that the failure to give, or
any defect in, such notice shall not affect the validity of such exchange.  The Company 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 which 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 Common Shares 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 Common Shares issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in accordance with
Section 24(a), the Company shall either take such action as may be
necessary to authorize additional Common Shares for issuance upon exchange of
the Rights or alternatively, at the option of a majority of the Board of
Directors, with respect to each Right (i) pay cash in an amount equal to
the Current Value (as hereinafter defined), in lieu of issuing Common Shares in
exchange therefor, or (ii) issue debt or equity securities or a
combination thereof, having a value equal to the Current Value, in lieu of
issuing Common Shares in exchange for each such Right, where the value of such
securities shall be determined by a nationally recognized investment banking
firm selected by majority vote of the Board of Directors, or (iii) deliver
any combination of cash, property, Common Shares and/or other securities having
a value equal to the Current Value in exchange for each Right. For purposes of
this Section 24(c) only, the Current Value shall mean the product of the
Current Per Share Market Price of Common Shares on the date of the occurrence
of the event described above in subsection (a), multiplied by the number of
Common Shares for which the Right otherwise would be exchangeable if there were
sufficient shares available.  To the
extent that the Company determines that some action need be taken pursuant to
clauses (i), (ii) or (iii) of this Section 24(c), the Board of
Directors may temporarily suspend the exercisability of the Rights for a period
of up to sixty (60) days following the date on which the event described in
Section 24(a) shall have occurred, in order to seek any authorization of
additional Common Shares and/or to decide the appropriate form of distribution
to be made pursuant to the above provision and to determine the value
thereof.  In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended.

-34-

 

(d)           The Company shall not be required to
issue fractions of Common Shares or to distribute certificates which evidence
fractional Common Shares. In lieu of such fractional Common Shares, there shall
be paid to the registered holders of the Rights Certificates with regard to
which such fractional Common Shares would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole Common
Share (as determined pursuant to the second sentence of Section 1(j)
hereof).

(e)           The Company may, at its option, by
majority vote of the Board of Directors, at any time before any Person has
become an Acquiring Person, exchange all or part of the then outstanding Rights
for rights of substantially equivalent value, as determined reasonably and with
good faith by the Board of Directors based upon the advice of one or more
nationally recognized investment banking firms.

(f)            Immediately upon the action of the
Board of Directors ordering the exchange of any Rights pursuant to subsection
24(e) 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 that number of rights
in exchange therefor as has been determined by the Board of Directors in
accordance with subsection 24(e) above. The Company shall give public notice
of any such exchange; provided, however, that the failure to
give, or any defect in, such notice shall not affect the validity of such
exchange.  The Company 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 transfer agent for the
Common Shares of the Company.  Any
notice which 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 Rights will be effected.

Section
25.             Notice of Certain Events.

(a)           In case the Company shall propose to
effect or permit to occur any Triggering Event or Section 13 Event, the
Company shall give notice thereof to each holder of Rights in accordance with
Section 26 hereof at least twenty (20) days prior to occurrence of such
Triggering Event or such Section 13 Event.

(b)           In case any Triggering Event or
Section 13 Event shall occur, then, in any such case, the Company shall as
soon as practicable thereafter give to each holder of a Rights Certificate, in
accordance with Section 26 hereof, a notice of the occurrence of such
event, which shall specify the event and the consequences of the event to holders
of Rights under Sections 11(a)(ii) and 13 hereof.

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
shall be 

-35-

 

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:

 

Copart, Inc.

4665 Business Center Drive

Fairfield, CA 94534

with a copy to:

Wilson Sonsini Goodrich & Rosati

Professional Corporation

650 Page Mill Road

Palo Alto, California 94304-1050

Attention:  Doug Collom

Subject to the provisions
of Section 21 hereof, 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 shall 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:

EquiServe Trust Company, N.A.

150 Royall Street

Canton, MA 02021

Attention: Client Administration

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 shall 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.             Supplements and Amendments.
Prior to the occurrence of a Distribution Date, the Company may supplement or
amend this Agreement in any respect without the approval of any holders of
Rights and the Rights Agent shall, if the Company so directs, execute such
supplement or amendment.  From and after
the occurrence of a Distribution Date, the Company 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 (i) cure any ambiguity,
(ii) correct or supplement any provision contained herein which may be defective
or inconsistent with any other provisions herein, (iii) shorten or
lengthen any time period hereunder or (iv) to change or supplement the
provisions hereunder in any manner that the Company may deem necessary or
desirable and that shall not adversely affect the interests of the holders of
Rights (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person); provided, this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this sentence, (A) a
time period relating to when the Rights may be redeemed at such time as the
Rights are not then redeemable or (B) any other time period unless such
lengthening is for the purpose of protecting, enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights (other than an
Acquiring Person or an Affiliate or Associate of an Acquiring Person).  Upon the delivery of a certificate from an
appropriate officer of 

-36-

 

the Company that
states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, the Rights Agent shall execute such supplement
or amendment.  Prior to the Distribution
Date, the interests of the holders of Rights shall be deemed coincident with
the interests of the holders of Common Shares.

Section
28.             Successors. All the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their respective
successors and assigns hereunder.

Section
29.             Determinations and Actions by
the Board of Directors, etc. For all purposes of this Agreement, any
calculation of the number of Common Shares outstanding at any particular time,
including for purposes of determining the particular percentage of such
outstanding Common Shares of which any Person is the Beneficial Owner, shall 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.  The Board of Directors of the Company shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board, or the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power (i) to interpret the provisions of
this Agreement and (ii) to make all determinations deemed necessary or
advisable for the administration of this Agreement (including 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) which are done or made by
the Board in good faith, shall (x) be final, conclusive and binding on the
Company, the Rights Agent, the holders of the Rights Certificates and all other
parties and (y) with respect to claims specifically arising from the
Agreement, not subject the Board to any liability to the holders of the Rights.

Section
30.             Benefits of this Agreement.
Nothing in this Agreement shall 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, the Common Shares) any legal
or equitable right, remedy or claim pursuant to this Agreement; but this
Agreement shall 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, the Common Shares).

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 shall remain in full force and effect and shall 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 hereof shall be reinstated
and shall not expire until the Close of Business on the tenth day following the
date of such determination by the Board of Directors.

-37-

 

Section
32.             Governing Law. This
Agreement and each Right and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of California and for
all purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed entirely within
such State.

Section
33.             Counterparts. This Agreement
may be executed in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument.

Section
34.             Descriptive Headings.
Descriptive headings of the several Sections of this Agreement are inserted for
convenience only and shall not control or affect the meaning or construction of
any of the provisions hereof.

Section 35.             Limitation
of Rights Agent Liability. Notwithstanding anything to the contrary
contained herein, Rights Agent shall not be liable for any delays or failures
in performance resulting from acts beyond its reasonable control including,
without limitation, acts of God, terrorist acts, shortage of supply, breakdowns
or malfunctions, interruptions or malfunction of computer facilities, or loss
of data due to power failures or mechanical difficulties with information
storage or retrieval systems, labor difficulties, war, or civil unrest.

 

IN WITNESS
WHEREOF, the parties hereto have caused this Agreement to be duly executed as
of the day and year first above written.

 

	
  “COMPANY”

  	
  Copart,
  Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ WILLIS J. JOHNSON

  
	
   

  	
   

  	
  Willis J. Johnson,

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “RIGHTS
  AGENT”

  	
  EquiServe
  Trust Company, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ MARGARET M. PRENTICE

  
	
   

  	
   

  	
  Margaret M. Prentice,

  
	
   

  	
   

  	
  Managing Director

  

 

- 38 -

 

EXHIBIT A

CERTIFICATE OF
DETERMINATION OF

RIGHTS, PREFERENCES AND PRIVILEGES OF

SERIES A PARTICIPATING PREFERRED STOCK OF COPART, INC.

The undersigned, A.
Jayson Adair and Paul A. Styer, do hereby certify:

A.            That they are the duly elected and acting President and
Secretary of Copart, Inc., a California corporation (the  “Corporation”).

B.            That, immediately prior to the filing of this Certificate
of Determination, the Corporation was authorized to issue 5,000,000 shares of
Preferred Stock, and no shares of Preferred Stock were outstanding.

C.            That pursuant to the authority conferred upon the Board
of Directors by the Amended and Restated Articles of Incorporation of the said
Corporation, the said Board of Directors of the Corporation on March 6, 2003
adopted the following resolutions creating a series of Preferred Stock
designated as Series A Participating Preferred:

Creation of Series A
Participating Preferred Stock 

NOW,
THEREFORE, BE IT RESOLVED:  That pursuant
to the authority vested in the Board of Directors of the corporation by the
Amended and Restated Articles of Incorporation, the Board of Directors does
hereby provide for the issue of a series of Preferred Stock of the Corporation
and does hereby fix and herein state and express the designations, powers,
preferences and relative and other special rights and the qualifications,
limitations and restrictions of such series of Preferred Stock as follows:

Section 1.               Designation and Amount.  The shares of such series shall be
designated as “Series A Participating
Preferred Stock.” The number of shares constituting such series
shall be 1,000,000.

Section 2.               Proportional
Adjustment.  In the event that the
Corporation shall at any time after the issuance of any share or shares of
Series A Participating Preferred Stock (i) declare any dividend on Common
Stock of the Corporation (“Common Stock”) payable in shares of Common Stock,
(ii) subdivide the outstanding Common Stock or (iii) combine the
outstanding Common Stock into a smaller number of shares, then in each such
case the Corporation shall simultaneously effect a proportional adjustment to
the number of outstanding shares of Series A Participating Preferred Stock.

 

Section 3.               Dividends and Distributions.

(a)   Subject to the prior and superior right of
the holders of any shares of any series of Preferred Stock ranking prior and
superior to the shares of Series A Participating Preferred Stock with respect
to dividends, the holders of shares of Series A Participating Preferred Stock
shall be entitled to receive when, as and if declared by the Board of Directors
out of funds legally available for the purpose, quarterly dividends payable in
cash on the last day of March, June, September and December in each year (each
such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the
first Quarterly Dividend Payment Date after the first issuance of a share or
fraction of a share of Series A Participating Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to 1,000 times the aggregate per
share amount of all cash dividends, and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions other
than a dividend payable in shares of Common Stock or a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise), declared
on the Common Stock since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any share or fraction of a share of Series A Participating
Preferred Stock.

(b)   The Corporation shall declare a dividend or
distribution on the Series A Participating Preferred Stock as provided in
paragraph (a) above immediately after it declares a dividend or distribution on
the Common Stock (other than a dividend payable in shares of Common Stock).

(c)   Dividends shall begin to accrue on
outstanding shares of Series A Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of Series
A Participating Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date, in
which case dividends on such shares shall begin to accrue from the date of
issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of
holders of shares of Series A Participating Preferred Stock entitled to receive
a quarterly dividend and before such Quarterly Dividend Payment Date, in either
of which events such dividends shall begin to accrue from such Quarterly
Dividend Payment Date.  Accrued but
unpaid dividends shall not bear interest. 
Dividends paid on the shares of Series A Participating Preferred Stock
in an amount less than the total amount of such dividends at the time accrued
and payable on such shares shall be allocated pro rata on a share-by-share
basis among all such shares at the time outstanding.  The Board of Directors may fix a record date for the
determination of holders of shares of Series A Participating Preferred Stock
entitled to receive payment of a dividend or distribution declared thereon,
which record date shall be no more than 30 days prior to the date fixed for the
payment thereof.

Section 4.               Voting
Rights.  The holders of shares of
Series A Participating Preferred Stock shall have the following voting rights:

                                (a)           Each share of Series A Participating
Preferred Stock shall entitle the holder thereof to 1,000 votes on all matters
submitted to a vote of the shareholders of the Corporation.

-2-

 

(b)           Except
as otherwise provided herein or by law, the holders of shares of Series A
Participating Preferred Stock and the holders of shares of Common Stock shall
vote together as one class on all matters submitted to a vote of shareholders
of the Corporation.

(c)           Except
as required by law, the holders of Series A Participating Preferred Stock shall
have no special voting rights and their consent shall not be required (except
to the extent that they are entitled to vote with holders of Common Stock as
set forth herein) for taking any corporate action.

Section 5.               Certain Restrictions.

(a)           The
Corporation shall not declare any dividend on, make any distribution on, or
redeem or purchase or otherwise acquire for consideration any shares of Common
Stock after the first issuance of a share or fraction of a share of Series A
Participating Preferred Stock unless concurrently therewith it shall declare a
dividend on the Series A Participating Preferred Stock as required by
Section 3 hereof.

(b)           Whenever
quarterly dividends or other dividends or distributions payable on the Series A
Participating Preferred Stock as provided in Section 3 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions,
whether or not declared, on shares of Series A Participating Preferred Stock
outstanding shall have been paid in full, the Corporation shall not

                (i)            declare or pay dividends on, make
any other distributions on, or redeem or purchase or otherwise acquire for
consideration any shares of stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Series A Participating
Preferred Stock;

                (ii)           declare or pay dividends on, or make
any other distributions on any shares of stock ranking on a parity (either as
to dividends or upon liquidation, dissolution or winding up) with the Series A
Participating Preferred Stock, except dividends paid ratably on the Series A
Participating Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders
of all such shares are then entitled;

                (iii)          redeem or purchase or otherwise
acquire for consideration shares of any stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Participating Preferred Stock, provided that the Corporation may at any time
redeem, purchase or otherwise acquire shares of any such parity stock in
exchange for shares of any stock of the Corporation ranking junior (either as
to dividends or upon dissolution, liquidation or winding up) to the Series A
Participating Preferred Stock;

                (iv)          purchase or otherwise acquire for
consideration any shares of Series A Participating Preferred Stock, or any
shares of stock ranking on a parity with the Series A 

-3-

 

Participating Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such shares upon such terms as the Board
of Directors, after consideration of the respective annual dividend rates and
other relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable treatment among
the respective series or classes.

(c)           The
Corporation shall not permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of stock of the Corporation
unless the Corporation could, under paragraph (a) of this Section 5,
purchase or otherwise acquire such shares at such time and in such manner.

Section 6.               Reacquired
Shares.  Any shares of Series A
Participating Preferred Stock purchased or otherwise acquired by the
Corporation in any manner whatsoever shall be retired and canceled promptly
after the acquisition thereof.  All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject
to the conditions and restrictions on issuance set forth herein and in the
Articles of Incorporation, as then amended.

Section 7.               Liquidation,
Dissolution or Winding Up.  Upon any
liquidation, dissolution or winding up of the Corporation, the holders of
shares of Series A Participating Preferred Stock shall be entitled to receive
an aggregate amount per share equal to 1,000 times the aggregate amount to be
distributed per share to holders of shares of Common Stock plus an amount equal
to any accrued and unpaid dividends on such shares of Series A Participating
Preferred Stock.

Section 8.               Consolidation,
Merger, etc.  In case the
Corporation shall enter into any consolidation, merger, combination or other
transaction in which the shares of Common Stock are exchanged for or changed
into other stock or securities, cash and/or any other property, then in any
such case the shares of Series A Participating Preferred Stock shall at the
same time be similarly exchanged or changed in an amount per share equal to
1,000 times the aggregate amount of stock, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
share of Common Stock is changed or exchanged.

Section 9.               No
Redemption.  The shares of Series A
Participating Preferred Stock shall not be redeemable.

Section 10.             Ranking.  The Series A Participating Preferred Stock
shall rank junior to all other series of the Corporation’s Preferred Stock as
to the payment of dividends and the distribution of assets, unless the terms of
any such series shall provide otherwise.

Section 11.             Amendment.  The Articles of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preference or special rights of the Series A
Participating Preferred Stock so as to affect them adversely without the 

-4-

 

affirmative vote of the holders of a majority of the outstanding shares
of Series A Participating Preferred Stock, voting separately as a series.

Section 12.     Fractional Shares.  Series A Participating Preferred Stock may
be issued in fractions of a share which shall entitle the holder, in proportion
to such holder’s fractional shares, to exercise voting rights, receive
dividends, participate in distributions and to have the benefit of all other
rights of holders of Series A Participating Preferred Stock.

RESOLVED
FURTHER:  That the President or any Vice President
and the Secretary or any Assistant Secretary of this corporation be, and they
hereby are, authorized and directed to prepare and file a Certificate of
Determination of Rights, Preferences and Privileges in accordance with the
foregoing resolution and the provisions of California law and to take such
actions as they may deem necessary or appropriate to carry out the intent of
the foregoing resolution.”

D.            That the authorized number of shares of Preferred Stock
of the Corporation is 5,000,000, the number of shares constituting
Series A Participating Preferred Stock is 1,000,000, and no such Preferred
Stock has been issued.

We further declare under
penalty of perjury that the matters set forth in the foregoing Certificate of
Determination are true and correct of our own knowledge.

Executed at Fairfield,
California on March __, 2003.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A. Jayson Adair

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Paul A. Styer

  
	
   

  	
   

  	
  Secretary

  

 

-5-

EXHIBIT B

FORM
OF RIGHTS CERTIFICATE

	
  Certificate No. R-

  	
   

  	
  _____________ Rights

  

NOT EXERCISABLE AFTER THE EARLIER OF (i) MARCH 21, 2013,
(ii) THE DATE  TERMINATED BY THE
COMPANY OR (iii) THE DATE THE COMPANY EXCHANGES THE RIGHTS PURSUANT TO THE
RIGHTS AGREEMENT.  THE RIGHTS ARE
SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.001 PER RIGHT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. 
UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID.  [THE RIGHTS
REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).  ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS AGREEMENT.]*

RIGHTS
CERTIFICATE

Copart, 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 March 6, 2003 (the “Rights Agreement”), between Copart, Inc., a California
corporation (the  “Company”), and EquiServe
Trust Company, N.A. (the “Rights Agent”), to purchase from the Company at any
time after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., New York time, on March 21, 2013 at the office of
the Rights Agent designated for such purpose, or at the office of its successor
as Rights Agent, one one-thousandth (0.001) of a fully paid and non-

*The
portion of the legend in bracket shall be inserted only if applicable and shall
replace the preceding sentence.

 

assessable share
of Series A Participating Preferred Stock (the  “Preferred Shares”),
of the Company, at an Exercise Price of $34.43 per one-thousandth (0.001) of a
Preferred Share (the  “Exercise 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 one-thousandths (0.001) of a Preferred
Share which may be purchased upon exercise hereof) set forth above are the
number and Exercise Price as of March 21, 2003 based on the Preferred Shares as
constituted at such date.  As provided
in the Rights Agreement, the Exercise Price and the number and kind of
Preferred Shares or other securities which 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 hereby incorporated
herein by reference and made a part hereof 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
specific circumstances set forth in the Rights Agreement.  Copies of the Rights Agreement are on file
at the principal executive offices of the Company and the above-mentioned
office of the Rights Agent.

Subject to the provisions
of the Rights Agreement, the Rights evidenced by this Rights Certificate
(i) may be redeemed by the Company, at its option, at a redemption price
of $0.001 per Right or (ii) may be exchanged by the Company in whole or in
part for Common Shares, substantially equivalent rights or other consideration
as determined by the Company.

This Rights Certificate,
with or without other Rights Certificates, upon surrender at the office 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 amount of securities as the
Rights evidenced by the Rights Certificate or Rights Certificates surrendered
shall have entitled such holder to purchase. 
If this Rights Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.

No fractional portion of
less than one one-thousandth (0.001) of a Preferred Share 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, as such, shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of the Preferred Shares or of any other
securities of the Company which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors
or upon any matter submitted to shareholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting shareholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until

-2-

 

the Right or
Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.

This Rights Certificate
shall not be valid or obligatory for any purpose until it shall have been
countersigned by the Rights Agent.

WITNESS the facsimile
signature of the proper officers of the Company and its corporate seal.  Dated as of 
_______________, _____.

 

	
  ATTEST:

  	
  Copart, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
  Secretary

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  
	
   

  	
   

  	
   

  
	
  Countersigned:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  EquiServe Trust Company, N.A.

  	
   

  	
   

  
	
  as Rights Agent

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  	
   

  

-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 transfers 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
Medallion Guaranteed:

Signatures must be
guaranteed by an “Eligible Guarantor Institution” (with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934, as amended.

CERTIFICATE

The undersigned
hereby certifies by checking the appropriate boxes that:

(1)           this Rights Certificate [ ] is
[ ] is not being sold, assigned and transferred by or on behalf of a
Person who is or was an Acquiring Person, or an Affiliate or Associate of any
such Person (as such terms are defined in 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 any
such Person.

 

 

	
  Dated: _______________, ____

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  

 

 

Signature
Medallion Guaranteed:

Signatures must be
guaranteed by an “Eligible Guarantor Institution” (with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934, as amended.

Form of Reverse Side of
Rights Certificate — continued

FORM OF ELECTION TO PURCHASE

(To be executed if holder
desires to

exercise the Rights Certificate)

To:___________________________

The undersigned
hereby irrevocably elects to exercise _________________________ Rights
represented by this Rights Certificate to purchase the number of
one-thousandths (0.001) of a Preferred Share issuable upon the exercise of such
Rights and requests that certificates for such number of one-thousandths
(0.001) of a Preferred Share issued in the name of:

Please insert
social security

or
other identifying number

 

	
   

  
	
  (Please print name and address)

  
	
   

  
	
   

  

If such number of
Rights shall not be all the Rights evidenced by this Rights Certificate, a new
Rights Certificate for the balance remaining of such Rights shall 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
Medallion Guaranteed:

Signatures must be
guaranteed by an “Eligible Guarantor Institution” (with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934, as amended.

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 Affiliate or Associate of any
such Person (as such terms are defined in 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 any
such Person.

 

 

	
  Dated: _______________, ____

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  

 

 

Signature
Medallion Guaranteed:

Signatures must be
guaranteed by an “Eligible Guarantor Institution” (with membership in an
approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934, as amended.

 

Form of Reverse Side of
Rights Certificate — continued

NOTICE

The signature in
the foregoing Forms of Assignment and Election must conform to the name as
written upon the face of this Rights Certificate in every particular, without
alteration or enlargement or any change whatsoever.

 

 

 

 

EXHIBIT C

SHAREHOLDER RIGHTS PLAN

Copart,
Inc.

Summary of Rights

 

	
  Distribution
  and Transfer of Rights;  Rights Certificate:

  	
  The Board of Directors has declared a dividend of one Right for each
  share of Common Stock of Copart, Inc. (the “Company”) outstanding.  Prior to the Distribution Date referred to
  below, the Rights will be evidenced by and trade with the certificates for
  the Common Stock.  After the
  Distribution Date, the Company will mail Rights certificates to the Company’s
  shareholders and the Rights will become transferable apart from the Common
  Stock.

  
	
   

  	
   

  
	
  Distribution
  Date:

  	
  Rights will separate from the Common Stock and become exercisable
  following (a) the tenth business day (or such later date as may be
  determined by the Company’s Board of Directors) after a person or group
  acquires beneficial ownership of 15% or more of the Company’s Common Stock or
  (b) the tenth business day (or such later date as may be determined by
  the Company’s Board of Directors) after a person or group announces a tender
  or exchange offer, the consummation of which would result in ownership by a
  person or group of 15% or more of the Company’s Common Stock.

  
	
   

  	
   

  
	
  Preferred
  Stock Purchasable Upon Exercise of Rights:

  	
  After the Distribution Date, each Right will entitle the holder to
  purchase for $34.43 (the “Exercise Price”), a fraction of a share of the
  Company’s Preferred Stock with economic terms similar to that of one share of
  the Company’s Common Stock.

  
	
   

  	
   

  
	
  Flip-In:

  	
  If an acquirer (an “Acquiring Person”) obtains 15% or more of the
  Company’s Common Stock, then each Right (other than Rights owned by an
  Acquiring Person or its affiliates) will entitle the holder thereof to
  purchase, for the Exercise Price, a number of shares of the Company’s Common
  Stock having a then-current market value of twice the Exercise Price.

  
	
   

  	
   

  
	
  Flip-Over:

  	
  If, after an Acquiring Person obtains 15% or more of the Company’s
  Common Stock, (a) the Company merges into another entity, (b) an
  acquiring entity merges into the Company or (c) the Company sells more
  than 50% of the Company’s assets or earning power, then each Right
  (other than Rights owned by an Acquiring Person or its affiliates) will
  entitle the holder thereof to purchase, for the Exercise Price, a number of
  shares of Common Stock of the person engaging in the transaction having a
  then current market value of twice the Exercise Price.

  
	
   

  	
   

  
	
  Exchange
  Provision:

  	
  At any time after the date on which an Acquiring Person obtains 15%
  or  more of the Company’s Common Stock
  and prior to the acquisition by the Acquiring Person of 50% of the
  outstanding Common Stock, the Board of Directors of the Company may exchange
  the Rights (other than Rights owned by the Acquiring Person or its
  affiliates), in whole or in part, for shares of Common Stock of the Company
  at an exchange ratio of one share of Common Stock per Right (subject to
  adjustment).

  

 

	
  Redemption
  of the Rights:

  	
  Rights will be redeemable at the Company’s option for $0.001 per
  Right at any time on or prior to the fifth day (or such later date as may be
  determined by the Company’s Board of Directors) after public announcement
  that a Person has acquired beneficial ownership of 15% or more of the
  Company’s Common Stock (the  “Shares Acquisition Date”).

  
	
   

  	
   

  
	
  Expiration
  of the Rights:

  	
  The Rights expire on the earliest of (a) March 21, 2013 or
  (b) exchange or redemption of the Rights as described above.

  
	
   

  	
   

  
	
  Amendment
  of Terms of Rights:

  	
  The terms of the Rights and the Rights Agreement may be amended in
  any respect without the consent of the Rights holders on or prior to the
  Distribution Date; thereafter, the terms of the Rights and the Rights
  Agreement may be amended without the consent of the Rights holders in order
  to cure any ambiguities or to make changes which do not adversely affect the
  interests of Rights holders (other than the Acquiring Person).

  
	
   

  	
   

  
	
  Voting
  Rights:

  	
  Rights will not have any voting rights.

  
	
   

  	
   

  
	
  Anti-Dilution
  Provisions:

  	
  Rights will have the benefit of certain customary anti-dilution
  provisions.

  
	
   

  	
   

  
	
  Taxes:

  	
  The Rights distribution should not be taxable for federal income tax
  purposes.  However, following an event
  which renders the Rights exercisable or upon redemption of the Rights,
  shareholders may recognize taxable income.

  

The foregoing is a
summary of certain principal terms of the Shareholder Rights Plan only and is
qualified in its entirety by reference to the Preferred Stock Rights Agreement
dated as of March 6, 2003 between the Company and EquiServe Trust Company,
N.A., as Rights Agent (the “Rights Agreement”). 
The Rights Agreement may be amended from time to time.  A copy of the Rights Agreement was filed
with the Securities and Exchange Commission as an Exhibit to a Registration
Statement on Form 8-A dated March 10, 2003. 
A copy of the Rights Agreement is available free of charge from the
Company.

-2-

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