<PAGE>
Exhibit 4.1
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CAREY INTERNATIONAL, INC.
and
AMERICAN SECURITIES TRANSFER & TRUST COMPANY
as
Rights Agent
Rights Agreement
Dated as of June 20, 2000
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TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
Section 1. Certain Definitions....................................................... 1
Section 2. Appointment of Rights Agent............................................... 4
Section 3. Issuance of Rights Certificates........................................... 4
Section 4. Form of Rights Certificates............................................... 6
Section 5. Countersignature and Registration......................................... 6
Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights
Certificates............................................................ 7
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights............. 8
Section 8. Cancellation and Destruction of Rights Certificates....................... 9
Section 9. Availability of Series One Preferred Shares.............................. 9
Section 10. Series One Preferred Shares Record Date................................... 9
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights........ 10
Section 12. Certificate of Adjusted Purchase Price or Number of Shares................ 16
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power...... 16
Section 14. Fractional Rights and Fractional Shares................................... 17
Section 15. Rights of Action.......................................................... 18
Section 16. Agreement of Right Holders................................................ 19
Section 17. Rights Certificate Holder Not Deemed a Stockholder........................ 19
</TABLE>
(i)
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<TABLE>
<S> <C>
Section 18. Concerning the Rights Agent.............................................. 20
Section 19. Merger or Consolidation or Change of Name of Rights Agent................ 20
Section 20. Duties of Rights Agent................................................... 21
Section 21. Change of Rights Agent................................................... 22
Section 22. Issuance of New Rights Certificates...................................... 23
Section 23. Redemption............................................................... 23
Section 24. Exchange................................................................. 24
Section 25. Notice of Certain Events................................................. 25
Section 26. Notices.................................................................. 26
Section 27. Supplements and Amendments............................................... 27
Section 28. Successors............................................................... 27
Section 29. Determinations and Actions by the Board of Directors, etc................ 27
Section 30. Benefits of this Agreement............................................... 28
Section 31. Severability............................................................. 28
Section 32. Governing Law............................................................ 28
Section 33. Counterparts............................................................. 28
Section 34. Descriptive Headings..................................................... 28
Signatures.............................................................................. 29
</TABLE>
Exhibit A - Form of Certificate of Designations of Series One Preferred Stock
Exhibit B - Form of Rights Certificate
Exhibit C - Summary of Rights to Purchase Series One Preferred Shares
(ii)
<PAGE>
RIGHTS AGREEMENT
Agreement dated as of June 20, 2000, between Carey International, Inc., a
Delaware corporation (the "Company"), and American Securities Transfer & Trust
Company (the "Rights Agent").
The Board of Directors of the Company has authorized and declared a
dividend of one Series One Preferred share purchase right (a "Right") for each
Common Share (as hereinafter defined) of the Company outstanding on the Close of
Business (as hereinafter defined) on July 2, 2000 (the "Record Date"), each
Right representing the right to purchase one one-hundredth of a Series One
Preferred Share (as hereinafter defined), upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined).
Accordingly, in consideration of the premises 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 (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is hereinafter defined) of 20% or more of the Common Shares of the
Company then outstanding, but shall not include (i) the Company, (ii) any
Subsidiary (as such term is hereinafter defined) of the Company, or (iii) any
employee benefit plan of the Company or of any Subsidiary of the Company or any
Person holding Common Shares for or pursuant to the terms of any such plan.
Notwithstanding the foregoing:
(A) no Person who or which was not a Solicitation Participant (as such
term is hereinafter defined) in connection with a Change in Control
(as such term is hereinafter defined) shall become an "Acquiring
Person" as the result of (i) an acquisition of Common Shares by the
Company which, by reducing the number of Common Shares outstanding,
increases the proportionate number of Common Shares beneficially owned
by such Person to 20% or more of the Common Shares of the Company then
outstanding, or (ii) the acquisition by such Person of newly-issued
Common Shares directly from the Company (it being understood that a
purchase from an underwriter or other intermediary is not deemed for
purposes hereof to be a purchase directly from the Company); provided,
however, that if a Person shall become the Beneficial Owner of 25% or
more of the Common Shares of the Company then outstanding by reason of
share purchases by the Company or the receipt of newly-issued Common
Shares directly from the Company and shall, after such share purchases
or direct issuance by the Company, become the Beneficial Owner of any
additional Common Shares of the Company, then such Person shall be
deemed to be an "Acquiring Person"; and
<PAGE>
provided, further, that any transferee from such Person who becomes
the Beneficial Owner of 20% or more of the Common Shares of the
Company then outstanding shall nevertheless be deemed to be an
"Acquiring Person"; and
(B) no Person who or which, at the close of business on the date hereof,
shall be the Beneficial Owner of 20% or more of Common Shares of the
Company then outstanding shall be deemed an "Acquiring Person";
provided, however, that, subject to this Section 1(a), if such Person
is, at the close of business on the date hereof, the Beneficial Owner
of 20% or more of the Common Shares of the Company then outstanding
and shall thereafter become the Beneficial Owner of additional Common
Shares of the Company at any time that the Person is or thereby
becomes the Beneficial Owner of 20% or more of the Common Shares of
the Company then outstanding (other than shares acquired solely as a
result of corporate action of the Company not caused, directly or
indirectly, by such Person), then such Person shall be deemed to be an
"Acquiring Person".
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph, has
become such inadvertently, and such Person divests as promptly as practicable
(and in any event within ten Business Days after notification by the Company) 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, then such Person shall not be deemed to be an "Acquiring Person" for
any purposes of this Agreement.
(b) "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.
(c) 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, directly or indirectly, beneficially owns (as determined
pursuant to Rule 13d-3 of the General Rules and Regulations under the
Exchange Act, as in effect on the date of this Agreement) or has the right
to dispose of;
(ii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, 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 (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, rights
(other than these Rights), warrants or options, or otherwise; provided,
--------
however, that a Person shall not be deemed the Beneficial Owner of, or to
-------
beneficially own, securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange;
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<PAGE>
or (B) the right to vote pursuant to any agreement, arrangement or
understanding (whether or not in writing); provided, however, that a Person
-------- -------
shall not be deemed the Beneficial Owner of, or to beneficially own, any
security 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
promulgated under 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) for the purpose of
acquiring, holding, voting (except to the extent contemplated by the
proviso to Section l(c)(ii)(B)) or disposing of any securities of the
Company; provided, however, that (1) no Person engaged in business as an
-------- -------
underwriter of securities shall be deemed the Beneficial Owner of any
securities acquired through such Person's participation as an underwriter
in good faith in a firm commitment underwriting until the expiration of 40
days after the date of such acquisition, (2) no Person who is a director or
an officer of the Company shall be deemed the Beneficial Owner of any
securities of the Company that are beneficially owned by any other director
or officer of the Company or any Exempt Person solely as a result of his or
her position as director or officer of the Company, and (3) no director,
officer, trustee or beneficiary of an Exempt Person shall be deemed the
Beneficial Owner of any securities of the Company that are held by such
Exempt Person.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities then issued and outstanding together with the number of such
securities not then actually issued and outstanding which such Person would be
deemed to own beneficially hereunder.
(d) "Business Day" shall mean any day other than a Saturday, a Sunday, or
a day on which banking institutions in the District of Columbia are authorized
or obligated by law or executive order to close.
(e) "Close of Business" on any given date shall mean 5:00 P.M., District
of Columbia time, on such date; provided, however, that if such date is not a
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Business Day it shall mean 5:00 P.M., District of Columbia time, on the next
succeeding Business Day.
(f) "Common Shares" when used with reference to the Company shall mean the
shares of common stock, par value $0.01 per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company shall mean
the class of capital stock (or equity interest) with the greatest aggregate
voting power, or the class of equity securities or other equity interests having
power to control or direct the management of such other Person or, if such other
Person is a
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<PAGE>
Subsidiary of another Person, the Person or Persons which ultimately control
such first-mentioned Person.
(g) "Company" shall mean Carey International, Inc., a Delaware
corporation.
(h) "Distribution Date" shall have the meaning set forth in Section 3
hereof.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, as in effect on the date of this Agreement.
(j) "Exempt Person" shall mean (i) the Company, (ii) any Subsidiary of the
Company, (iii) any employee benefit plan of the Company or any Subsidiary of the
Company, or (iv) any entity holding Common Shares for or pursuant to the terms
of any such plan.
(k) "Exchange Ratio" shall have the meaning set forth in Section 24
hereof.
(l) "Final Expiration Date" shall have the meaning set forth in Section 7
hereof.
(m) "Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
(n) "Purchase Price" shall have the meaning set forth in Section 7 hereof.
(o) "Record Date" shall mean the Close of Business on July 2, 2000.
(p) "Redemption Date" shall have the meaning set forth in Section 7
hereof.
(q) "Redemption Price" shall have the meaning set forth in Section 23
hereof.
(r) "Right" shall mean a Series One Preferred Share purchase right.
(s) "Rights Agent" shall mean American Securities Transfer & Trust
Company.
(t) "Rights Certificate" shall have the meaning set forth in Section 3
hereof.
(u) "Series One Preferred Shares" shall mean shares of Series One
Preferred Stock, par value $0.01 per share, of the Company having the rights and
preferences set forth in the Form of Certificate of Designations attached to
this Agreement as Exhibit A.
(v) "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.
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<PAGE>
(w) "Subsidiary" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person, or is
otherwise controlled by such Person.
(x) "Trading Day" shall have the meaning set forth in Section 11.
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.
Section 3. Issuance of Rights Certificates. (a) On the Record Date, or as
-------------------------------
soon as practicable thereafter, the Company will send a copy of a Summary of
Rights to Purchase Series One Preferred Shares, in substantially the form of
Exhibit C hereto (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.
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 a copy
of the Summary of Rights attached thereto. Until the Distribution Date (or the
earlier of the Redemption Date or the Final Expiration Date), the surrender for
transfer of any certificate for Common Shares outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Shares
represented thereby. No certificate for Common Shares that becomes outstanding
after the earliest of the Redemption Date, Distribution Date or Final Expiration
Date will entitle the holder thereof to receive a Rights Certificate.
(b) Certificates for Common Shares that become outstanding (including,
without limitation, reacquired Common Shares referred to in the last sentence of
this paragraph (b)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date shall have
impressed on, printed on, written on or otherwise affixed to them the following
legend:
This certificate also evidences and entitles the holder
hereof to certain rights as set forth in a Rights Agreement
between the Company and Registrar and Rights Agent, dated as
of June 20, 2000 (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 the
Company. Under certain circumstances, as set forth in the
Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The
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<PAGE>
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 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. The Rights shall not be exercisable, and shall be void
so long as held by a holder in any jurisdiction where the
requisite qualification to the issuance to such holder, or
the exercise by such holder, of the Rights in such
jurisdiction shall not have been obtained or be obtainable.
With respect to such certificates containing the foregoing legend, until the
earlier of the Distribution Date or the Final 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. 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.
(c) Until the earlier of (i) the Close of Business on the tenth day after
the Shares Acquisition Date or (ii) the Close of Business on the tenth Business
Day (or such later date as may be determined by action of the Board of Directors
prior to such time as any Person becomes an Acquiring Person) after the date of
the commencement by any Person, other than an Exempt Person, of, or of the first
public announcement of the intention of any Person, other than an Exempt Person,
to commence, a tender or exchange offer the consummation of which would result
in any Person becoming an Acquiring Person (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "Distribution Date"), (x)
the Rights will be evidenced (subject to the provisions of Section 3(a) 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 (y) the right to receive Rights
Certificates will be transferable only in connection with the transfer of Common
Shares. 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, insured, postage-prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Rights Certificate, in
substantially the form of Exhibit B hereto (a "Rights Certificate"), evidencing
one Right for each Common Share so held. As of the Distribution Date, the
Rights will be evidenced solely by such Rights Certificates.
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<PAGE>
Section 4. Form of Rights Certificates. The Rights Certificates (and the
---------------------------
forms of election to purchase Series One Preferred Shares and of assignment to
be printed on the reverse thereof) shall be substantially the same as 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 as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Sections 11, 13, and 22 hereof, the Rights
Certificates shall entitle the holders thereof to purchase such number of one
one-hundredths of a Series One Preferred Share as shall be set forth therein at
the Purchase Price, but the number of such one one-hundredths of a Series One
Preferred Share and the Purchase Price shall be subject to adjustment as
provided herein.
Section 5. Countersignature and Registration. The Rights Certificates
---------------------------------
shall be executed on behalf of the Company by its Chairman of the Board, its
President, any of its Vice Presidents, or its Treasurer, either manually or by
facsimile signature, shall have affixed thereto the Company's seal or a
facsimile thereof, and shall be attested by the Secretary or any Assistant
Secretary of the Company, either manually or by facsimile signature. 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 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.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at one of its offices designated as the appropriate place for surrender of
Rights Certificates upon exercise or transfer, books for registration and
transfer of the Rights Certificates issued 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
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Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. Subject
----------------------------------------------------------------------
to the provisions of Section 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date or the Final Expiration Date, any Rights
Certificate or Rights Certificates (other than Rights Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) 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 one-hundredths
of a Series One
-7-
<PAGE>
Preferred Share as the Rights Certificate or Rights 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 or offices of the
Rights Agent designated for such purpose. Thereupon the Rights Agent shall
countersign and deliver to the person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.
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; Purchase Price; Expiration Date of Rights.
-------------------------------------------------------------
(a) 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 upon 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 or offices of the Rights Agent designated for
such purpose, together with payment of the Purchase Price for each one one-
hundredth of a Series One Preferred Share as to which the Rights are exercised,
at or prior to the earliest of (i) the close of business on July 1, 2010 (the
"Final Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date"), or (iii) the time at
which such Rights are exchanged as provided in Section 24 hereof.
(b) The purchase price for each one one-hundredth of a Series One
Preferred Share pursuant to the exercise of a Right shall initially be $80.00
(the "Purchase Price"), 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 Purchase Price for the shares 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 hereof by certified check, cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) (A) requisition from any transfer agent of the Series One
Preferred Shares (or make available, if the Rights Agent is the transfer agent
therefor) certificates for the number of Series One Preferred Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, or (B-1) if the Company shall have elected to
deposit the total number of shares of Series
-8-
<PAGE>
One Preferred Stock issuable upon exercise of the Rights hereunder with a
depository agent, requisition from the depositary agent depositary receipts
representing such number of one one-hundredths of a Series One Preferred Share
as are to be purchased (in which case certificates for the Series One Preferred
Shares represented by such receipts shall be deposited by the transfer agent
with the depositary agent) and the Company hereby directs the depositary 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) promptly after receipt of such
certificates or depositary 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, deliver such cash to or upon the order of the
registered holder of such Rights Certificate.
(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 duly
authorized assigns, subject to the provisions of Section 14 hereof.
(e) The Company covenants and agrees that it will cause to be reserved and
kept available out of its authorized and unissued Series One Preferred Shares or
any Series One Preferred Shares held in its treasury, the number of Series One
Preferred Shares that will be sufficient to permit the exercise in full of all
outstanding Rights in accordance with this Section 7.
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 Rights Agreement. The Company shall deliver to
the Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Rights Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Rights Certificates to the Company or shall, at the
written request of the Company, destroy such cancelled Rights Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company.
Section 9. Availability of Series One Preferred Shares. The Company
-------------------------------------------
covenants and agrees that it will take all such action as may be necessary to
ensure that all Series One Preferred Shares delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such Series One Preferred
Shares (subject to payment of the Purchase Price), be duly and validly
authorized and issued and fully paid and nonassessable shares.
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 the issuance or delivery of the Rights Certificates or of
any Series One Preferred Shares upon the exercise of Rights.
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<PAGE>
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 depositary
receipts for the Series One Preferred Shares 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 depositary receipts for
Series One Preferred Shares 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 reasonable satisfaction that no such tax is due.
Section 10. Series One Preferred Shares Record Date. Each person in whose
---------------------------------------
name any certificate for Series One Preferred Shares is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of the Series One Preferred Shares 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 Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of such
-------- -------
surrender and payment is a date upon which the Series One Preferred Shares
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 Series One Preferred Shares
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 Series One Preferred Shares 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 Purchase Price, Number of Shares or Number of
-----------------------------------------------------------
Rights. The Purchase Price, the number of Series One Preferred Shares covered
------
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Series One Preferred Shares payable in
Series One Preferred Shares, (B) subdivide the outstanding Series One Preferred
Shares, (C) combine the outstanding Series One Preferred Shares into a smaller
number of Series One Preferred Shares or (D) issue any shares of its capital
stock in a reclassification of the Series One Preferred Shares (including any
such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock issuable on such date, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to receive the
aggregate number and kind of shares of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the Series One
Preferred Shares transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that in no
-------- -------
event shall the consideration to be paid upon the exercise of one Right be less
than the
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<PAGE>
aggregate par value of the shares of capital stock of the Company issuable upon
exercise of one Right. If an event occurs which would require an adjustment
under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
provided for in this Section 11(a)(i) shall be in addition to, and shall be made
prior to, any adjustment required pursuant to Section 11(a)(ii) hereof.
(ii) Subject to the following paragraph of this subparagraph (ii)
and to Section 24 of this Agreement, in the event (A) any Person (other than an
Exempt Person), alone or together with its Affiliates and Associates, becomes an
Acquiring Person (other than through an acquisition described in subparagraph
(iii) of this paragraph (a)) or (B) during such time as there is an Acquiring
Person, there shall be any reclassification of securities (including any reverse
stock split), or recapitalization or reorganization of the Company which has the
effect, directly or indirectly, of increasing by more than 1% the proportionate
share of the outstanding shares of any class of equity securities of the Company
or any of its Subsidiaries beneficially owned by any Acquiring Person or any
Affiliate or Associate thereof, each holder of a Right shall thereafter have a
right to receive, upon exercise thereof at a price equal to the then current
Purchase Price multiplied by the number of one one-hundredths of a Series One
Preferred Share for which a Right is then exercisable, in accordance with the
terms of this Agreement and in lieu of Series One Preferred Shares, such number
of Common Shares of the Company as shall equal the result obtained by (x)
multiplying the then current Purchase Price by the number of one one-hundredths
of a Series One Preferred Share for which a Right is then exercisable and
dividing that product by (y) 50% of the then current per share market price of
the Company's Common Shares (determined pursuant to Section 11(d) hereof) on the
date such Person became an Acquiring Person.
From and after the occurrence of the earlier of the events described in
clauses (A) and (B) above, any Rights that are or were acquired or beneficially
owned by such Acquiring Person (or any Associate or Affiliate of such Acquiring
Person) shall be void without any further action and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
this Agreement and no rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise. No Rights Certificate shall
be issued pursuant to Section 3 that represents Rights beneficially owned by an
Acquiring Person whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof; no Rights Certificate shall be issued at
any time upon the transfer of any Rights to an Acquiring Person whose Rights
would be void pursuant to the preceding sentence or any Associate or Affiliate
thereof or to any nominee of such Acquiring Person, Associate or Affiliate; and
any Rights Certificate delivered to the Rights Agent for transfer to an
Acquiring Person whose Rights would be void pursuant to the preceding sentence
or any Associate or Affiliate thereof shall be canceled.
(iii) The right to purchase Common Shares of the Company pursuant to
subparagraph (ii) of this paragraph (a) shall not arise as a result of any
Person becoming an Acquiring Person through an acquisition of Common Shares
pursuant to a tender offer made in the manner prescribed by Section 14(d) of the
Exchange Act and the rules and regulations promulgated thereunder; provided,
--------
however, that (A) such tender offer shall provide for the acquisition of all the
-------
outstanding Common Shares held by any Person other than such Person and its
Affiliates for cash and (B) such acquisition
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<PAGE>
shall cause such Person, together with all Affiliates and Associates of such
Person, to be the Beneficial Owner of 90% or more of the Common Shares then
outstanding.
(iv) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the exercise in
full of the Rights in accordance with the foregoing subparagraph (ii), the
Company shall take all such action as may be necessary to authorize additional
Common Shares for issuance upon exercise of the Rights.
(b) If the Company shall fix a record date for the issuance of rights,
options or warrants to all holders of Series One Preferred Shares entitling them
(for a period expiring within 45 calendar days after such record date) to
subscribe for or purchase Series One Preferred Shares (or shares having the same
rights, privileges and preferences as the Series One Preferred Shares
("equivalent Series One Preferred Shares")) or securities convertible into
Series One Preferred Shares or equivalent Series One Preferred Shares at a price
per Series One Preferred Share or equivalent Series One Preferred Share (or
having a conversion price per share, if a security convertible into Series One
Preferred Shares or equivalent Series One Preferred Shares) less than the then
current per share market price of the Series One Preferred Shares (as defined in
Section 11(d)) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Series One Preferred Shares outstanding on such record
date plus the number of Series One Preferred Shares which the aggregate offering
price of the total number of Series One Preferred Shares and/or equivalent
Series One Preferred Shares so to be offered (and/or the aggregate initial
conversion price of the convertible securities so to be offered) would purchase
at such current market price and the denominator of which shall be the number of
Series One Preferred Shares outstanding on such record date plus the number of
additional Series One Preferred Shares and/or equivalent Series One Preferred
Shares 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
Board of Directors of the Company, whose determination shall be described in a
statement filed with the Rights Agent. Series One Preferred 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 Purchase Price shall be adjusted to be the
Purchase Price which would then be in effect if such record date had not been
fixed.
(c) If the Company shall fix a record date for the making of a
distribution to all holders of the Series One Preferred 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 or a dividend payable in
Series One Preferred Shares) or subscription rights or warrants (excluding those
referred to in Section 11(b) hereof), the Purchase Price to be in effect after
such record date shall be determined by
-12-
<PAGE>
multiplying the Purchase Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the then current per share market
price of the Series One Preferred Shares on such record date, less the fair
market value (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 assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one Series
One Preferred Share and the denominator of which shall be such current per share
market price of the Series One Preferred Shares; 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 to be
issued 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 Purchase Price shall again be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current per
share market price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the 30 consecutive Trading Days
(as such term is hereinafter defined) 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 (A) a dividend or distribution on such Security payable in
shares of such Security or securities convertible into such shares, or (B) any
subdivision, combination or reclassification of such Security and prior to the
expiration of 30 Trading Days 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
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc. Automated Quotations System ("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 the Security on such date as
determined in good faith by the Board of Directors shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day. If the Security is not
publicly held or not listed or traded, "current per share market price" shall
mean the fair value per share as determined in good
-13-
<PAGE>
faith by the Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent.
(ii) For the purpose of any computation hereunder, the "current per
share market price" of the Series One Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Series One
Preferred Shares are not publicly traded, the "current per share market price"
of the Series One Preferred Shares shall be conclusively deemed to be the
current per share market price of the Common Shares as determined pursuant to
Section 11(d)(i) (appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof), multiplied by
one hundred. If neither the Common Shares nor the Series One Preferred Shares
are 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.
(e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
-------- -------
11(e) 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 one one-millionth of a
Series One Preferred Share or one ten-thousandth of any other share or security
as the case may be. Notwithstanding the first sentence of this Section 11(e),
any adjustment required by this Section 11 shall be made no later than the
earlier of (i) three years from the date of the transaction which requires such
adjustment or (ii) the date of the expiration of the right to exercise any
Rights.
(f) If as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right thereafter exercised shall become entitled to receive
any shares of capital stock of the Company other than Series One Preferred
Shares, thereafter the number of such other shares so receivable upon exercise
of any Right 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
Series One Preferred Shares contained in Section 11(a) through (c), inclusive,
and the provisions of Sections 7, 9, 10 and 13 with respect to the Series One
Preferred Shares shall apply on like terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-hundredths of a
Series One Preferred Share purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of one one-hundredths of a
Series One Preferred Share (calculated to the nearest one one-millionth of a
Series One Preferred Share) obtained by (i) multiplying (x) the number of one
one-hundredths of a share covered by a Right
-14-
<PAGE>
immediately prior to this adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights, in substitution for any
adjustment in the number of one one-hundredths of a Series One Preferred Share
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 one-hundredths of a Series One 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 ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company 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 Purchase Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least 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(i), 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 shall be registered in the names of the holders of
record of Rights Certificates on the record date specified in the public
announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or the
number of one one-hundredths of a Series One Preferred Share issuable upon the
exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one one-
hundredths of a Series One Preferred Share which were expressed in the initial
Rights Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-hundredth of the then par value, if any, of the
Series One Preferred Shares 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 fully paid and
nonassessable Series One Preferred Shares at such adjusted Purchase Price.
(1) In any case in which this Section 11 shall require that an adjustment
in the Purchase Price be made effective as of a record date for a specified
event, the Company may elect to defer until
-15-
<PAGE>
the occurrence of such event the issuing to the holder of any Right exercised
after such record date of the Series One Preferred Shares and other capital
stock or securities of the Company, if any, issuable upon such exercise over and
above the Series One Preferred Shares and other capital stock or securities of
the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
-------- -------
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Series One Preferred Shares,
issuance wholly for cash of any Series One Preferred Shares at less than the
current market price, issuance wholly for cash of Series One Preferred Shares or
securities which by their terms are convertible into or exchangeable for Series
One Preferred Shares, dividends on Series One Preferred Shares payable in Series
One Preferred Shares or issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to holders of its
Series One Preferred Shares shall not be taxable to such stockholders.
(n) In the event that at any time after the date of this Agreement and
prior to the Distribution Date, the Company shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case (i) the
number of one one-hundredths of a Series One Preferred Share purchasable after
such event upon proper exercise of each Right shall be determined by multiplying
the number of one one-hundredths of a Series One Preferred Share so purchasable
immediately prior to such event by a fraction, the numerator of which is the
number of Common Shares outstanding immediately before such event and the
denominator of which is the number of Common Shares outstanding immediately
after such event, and (ii) each Common Share outstanding immediately after such
event shall have issued with respect to it that number of Rights which each
Common Share outstanding immediately prior to such event had issued with respect
to it. The adjustments provided for in this Section 11(n) shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.
(o) The Company covenants and agrees that after the Distribution Date it
shall not, except as permitted by Sections 23 and 27 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.
Section 12. Certificate of Adjusted Purchase 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 Common Shares or the
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<PAGE>
Series One 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 25 hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
--------------------------------------------------------------
Power. In the event that, following the Shares Acquisition Date, directly or
-----
indirectly, (a) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction not
prohibited by Section 11(o) hereof), and the Company shall not be the continuing
or surviving corporation of such consolidation or merger, (b) any Person (other
than a Subsidiary of the Company in a transaction not prohibited by Section
11(o) hereof) shall consolidate with the Company, or merge with and into the
Company and the Company shall be the continuing or surviving corporation of such
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 cash or any other property, or (c) the Company shall
sell, mortgage, license 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 50% or more of the value 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 not prohibited by Section 11(o)
hereof), then, and in each such case, proper provision shall be made so that (i)
each holder of a Right (except as otherwise provided herein) shall thereafter
have the right to receive, upon the exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of one one-hundredths of a
Series One Preferred Share for which a Right is then exercisable, in accordance
with the terms of this Agreement and in lieu of Series One Preferred Shares,
such number of validly authorized and issued, fully paid and non-assessable,
freely tradeable Common Shares of such other Person (including the Company as
successor thereto or as the surviving corporation), free and clear of rights of
call or first refusal, liens, encumbrances or other adverse claims, as shall
equal the result obtained by (A) multiplying the then current Purchase Price by
the number of one one-hundredths of a Series One Preferred Share for which a
Right is then exercisable and dividing that product by (B) 50% of the then
current per share market price of the Common Shares of such other Person
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; (ii) the issuer of such Common
Shares shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale, mortgage, license or transfer, all the obligations
and duties of the Company pursuant to this Agreement; (iii) the term "Company"
shall thereafter be deemed to refer to such issuer; and (iv) such issuer shall
take such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9 hereof) in connection
with such consummation as may be necessary to assure that the provisions hereof
shall thereafter be applicable, as nearly as reasonably may be, in relation to
the Common Shares thereafter deliverable upon the exercise of the Rights. The
Company shall not consummate any such consolidation, merger, sale, mortgage,
license or transfer unless prior thereto the Company and such issuer shall have
executed and delivered to the Rights Agent a supplemental agreement so
providing. The Company shall not, at any time after the Distribution Date,
enter into any transaction of the kind referred to in this Section 13 if at the
time of such transaction there are any rights, warrants, instruments or
securities outstanding or any agreements or arrangements which, as a result of
the consummation of such transaction, would eliminate or substantially diminish
the benefits intended
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<PAGE>
to be afforded by the Rights. The provisions of this Section 13 shall similarly
apply to successive mergers or consolidations or sales, mortgages, licenses 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. The closing price for any 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 Rights
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Rights selected by the Board of Directors of
the Company. If on any such date no such market maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.
(b) The Company shall not be required to issue fractions of Series One
Preferred Shares (other than fractions which are integral multiples of one one-
hundredth of a Series One Preferred Share) upon exercise of the Rights or to
distribute certificates which evidence fractional Series One Preferred Shares
(other than fractions which are integral multiples of one one-hundredth of a
Series One Preferred Share). Fractions of Series One Preferred Shares in
integral multiples of one one-hundredth of a Series One Preferred Share may, at
the election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of such depositary
--------
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Series One Preferred Shares represented by
such depositary receipts. In lieu of fractional Series One Preferred Shares
that are not integral multiples of one one-hundredth of a Series One 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 one Series One Preferred Share.
For the purposes of this Section 14(b), the current market value of a Series One
Preferred Share shall be the closing price of a Series One Preferred Share (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for the
Trading Day immediately prior to the date of such exercise.
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<PAGE>
(c) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
----------------
Agreement, excepting the rights of action given to the Rights Agent under
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 own behalf and for his 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 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 Right 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 office or
offices of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate form of
assignment and the certificate contained therein duly completed and executed;
(c) 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 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; and
(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation
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<PAGE>
or executive order promulgated or enacted by any government authority,
prohibiting or otherwise restraining performance of such obligation; provided,
--------
however, the Company must use its best efforts to have any such order, decree or
-------
ruling lifted or otherwise overturned as soon as possible.
Section 17. Rights Certificate Holder Not Deemed a Stockholder. No
--------------------------------------------------
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the Series One 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 stockholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in 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. 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
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.
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 Series One 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 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.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
---------------------------------------------------------
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 stock transfer or
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 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
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<PAGE>
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.
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 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 a person believed by the Rights Agent to
be the Chairman of the Board, the Chief Executive Officer, the President, a Vice
President, the Treasurer or the 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 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.
-21-
<PAGE>
(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 (including the
Rights becoming void pursuant to Section 11(a)(ii) hereof) or any adjustment in
the terms of the Rights (including the manner, method or amount thereof)
provided for in Section 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 actual
notice that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Series One Preferred Shares to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any Series
One 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 Secretary or the Treasurer 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.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become pecuniarily interested in any transaction in which the
Company may be interested, 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
-22-
<PAGE>
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 certification set forth in the form of
assignment or form of election to purchase, as the case may be, has not been
completed, 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 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Series One Preferred Shares by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent upon 30 days'
notice in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer agent of the Common Shares or Series One
Preferred 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 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 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.
Any successor Rights Agent, whether appointed by the Company or by such a court,
shall be (i) a corporation organized and doing business under the laws of the
United States or any other state of the United States so long as such
corporation is authorized to do business as a banking institution in the
District of Columbia), in good standing, having an office in the District of
Columbia, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million or (ii) an Affiliate of a
corporation described in clause (i) of this sentence. 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 Common Shares or Series One Preferred 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
-23-
<PAGE>
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number 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.
Section 23. Redemption. (a) The Board of Directors of the Company may, at
----------
its option, at any time prior to the Close of Business on the tenth Business Day
after the Shares Acquisition Date, redeem all but not less than all the then
outstanding Rights at a redemption price of $0.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the "Redemption Price"). The Rights may not be redeemed at any
time after the earlier of the Close of Business, on (i) the Shares Acquisition
Date and (ii) the Final Expiration Date. Subject to the foregoing provisions of
this subparagraph (a), the redemption of the Rights by the Board of Directors
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.
(b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23, 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 10 days after such action of the Board of Directors ordering
the redemption of the Rights pursuant to paragraph (a), the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights 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.
(c) In the event the Company shall at any time after the date of this
Rights Agreement (i) pay any dividend on the Common Shares in Common Shares,
(ii) subdivide the outstanding Common Shares into a greater number of shares, or
(iii) combine the outstanding Common Shares into a smaller number of shares,
then and in each such event the Redemption Price after such event shall equal
the Redemption Price immediately prior to such event multiplied by a fraction
the numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares
outstanding immediately prior to such event.
Section 24. Exchange. (a) The Board of Directors of the Company may, at
--------
its option, at any time after any Person becomes an Acquiring Person, exchange
all or part of the then outstanding and
-24-
<PAGE>
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11(a)(ii) 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 exchange at any time after any Person, other than an
Exempt Person, 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 of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange; provided, however, that
-------- -------
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice 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 11(a)(ii)
hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Series One Preferred Shares (or equivalent Series One
Preferred Shares, as such term is defined in Section 11(b) hereof) for Common
Shares exchangeable for Rights, at the initial rate of one one-hundredth of a
Series One Preferred Share (or equivalent Series One Preferred Share) for each
Common Share, as appropriately adjusted to reflect adjustments in the voting
rights of the Series One Preferred Shares pursuant to the terms thereof, so that
the fraction of a Series One Preferred Share delivered in lieu of each Common
Share shall have the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common Shares or
Series One Preferred Shares issued but not outstanding or authorized but
unissued to permit any exchange of Rights as contemplated in accordance with
this Section 24, the Company shall take all such action as may be necessary to
authorize additional Common Shares or Series One Preferred Shares for issuance
upon exchange of the Rights.
(e) 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, the Company shall pay 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. For the purposes of this
paragraph
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<PAGE>
(e), the current market value of a whole Common Share shall be the closing price
of a Common Share (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.
Section 25. Notice of Certain Events. (a) In case the Company shall
------------------------
propose (i) to pay any dividend payable in stock of any class to the holders of
its Series One Preferred Shares or to make any other distribution to the holders
of its Series One Preferred Shares (other than a regular quarterly cash
dividend), (ii) to offer to the holders of its Series One Preferred Shares
rights or warrants to subscribe for or to purchase any additional Series One
Preferred Shares or shares of stock of any class or any other securities, rights
or options, (iii) to effect any reclassification of its Series One Preferred
Shares (other than a reclassification involving only the subdivision of
outstanding Series One Preferred Shares), (iv) to effect any consolidation or
merger into or with, or to effect any sale, mortgage, license or other transfer
(or to permit one or more of its Subsidiaries to effect any such transaction),
in one or more transactions, of 50% or more of the value of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to, any
other Person, (v) to effect the liquidation, dissolution or winding up of the
Company, or (vi) to declare or pay any dividend on the Common Shares payable in
Common Shares or to effect a subdivision, combination or consolidation of the
Common Shares (by reclassification or otherwise than by payment of dividends in
Common Shares), then, in each such case, the Company shall give to each holder
of a Rights Certificate, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, mortgage, license, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Shares and/or Series One
Preferred Shares, if any such date is to be fixed, and such notice shall be so
given in the case of any action covered by clause (i) or (ii) above at least 10
days prior to the record date for determining holders of the Series One
Preferred Shares for purposes of such action, and in the case of any such other
action, at least 10 days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the Common Shares and/or
Series One Preferred Shares, whichever shall be the earlier.
(b) In case any event set forth in Section 11(a)(ii) hereof shall occur,
then 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 notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) 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 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:
Carey International, Inc.
4530 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Attention: Chief Financial Officer
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<PAGE>
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:
American Securities Transfer & Trust Company
12039 West Alameda Pkwy
Lakewood, CO 80228
Attention: Pamela Smith
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 Distribution Date
--------------------------
and subject to the penultimate sentence of this Section 27, the Company may, and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement without the approval of any holders of Common
Shares. From and after the Distribution Date and subject to the penultimate
sentence of this Section 27, the Company may, and the Rights Agent shall at any
time and from time to time, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein
or (iii) to change or supplement the provisions hereunder in any manner which
the Company may deem necessary or desirable and which shall not adversely affect
the interests of the holders of Rights Certificates (other than an Acquiring
Person or an Affiliate or Associate of any such Person); provided, however, that
-------- -------
this Agreement may not be supplemented or amended to lengthen (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 any such Person). Upon the delivery of a certificate
from an appropriate officer of the Company which 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. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the Final Expiration Date, the
Purchase Price or the number of shares of Series One Preferred Stock for which a
Right is exercisable. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Common Share.
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.
-27-
<PAGE>
Section 29. Determinations and Actions by the Board of Directors, etc.
---------------------------------------------------------
The Board of Directors shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board or to the Company, or as may be necessary or advisable in
the administration of this Agreement, including, without limitation, the right
and power to (i) interpret the provisions of this Agreement, and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including without limitation a determination to redeem or not redeem
the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) 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 and all other parties, and (y) not
subject any director 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 or corporation 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 under 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.
Section 32. Governing Law. This Agreement and each Rights Certificate
-------------
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware 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.
[The remainder of this page is intentionally left blank].
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.
Attest: CAREY INTERNATIONAL, INC.
By: /s/ Gary Kessler By: /s/ David H. Haedicke
______________________ _________________________
Title: Assistant Secretary Title: Executive Vice President
______________________ _________________________
Attest: AMERICAN SECURITIES TRANSFER
& COMPANY
By: /s/ Laura Sisneros By: /s/ Kellie Gwinn
______________________ _________________________
Title: Vice President Title: Vice President
______________________ _________________________
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<PAGE>
Exhibit A
---------
FORM OF CERTIFICATE OF DESIGNATION
of
SHARES OF SERIES ONE PREFERRED STOCK
of
CAREY INTERNATIONAL, INC.
(Pursuant to Section 151 of the
Delaware General Corporation Law)
_______________________
Carey International, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on May 12, 2000:
RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of the Corporation (hereinafter called the "Board of Directors" or
the "Board") in accordance with the provisions of the Restated Certificate of
Incorporation, the Board of Directors hereby creates a series of 200,000 shares
of Preferred Stock (the "Preferred Stock"), par value $0.01 per share, of the
Corporation and hereby states the designation and number of shares, and fixes
the relative rights, preferences, and limitations thereof as follows:
Section 1. Designation and Amount. The shares of such series shall be
----------------------
designated as "Series One Preferred Stock" (the "Series One Preferred Stock")
and the number of shares constituting the Series One Preferred Stock shall be
200,000. Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce the number of
--------
shares of Series One Preferred Stock to a number less than the number of shares
then outstanding plus the number of shares reserved for issuance upon the
exercise of outstanding options, rights or warrants or upon the conversion of
any outstanding securities issued by the Corporation convertible into Series One
Preferred Stock.
Section 2. Dividends and Distributions.
---------------------------
(A) Subject to the prior and superior rights of the holders of any shares
of any series of Preferred Stock ranking prior and superior to the shares of
Series One Preferred Stock with respect to dividends, the holders of shares of
Series One Preferred Stock shall be entitled to receive, when,
A-1
<PAGE>
as and if declared by the Board of Directors out of funds legally available for
the purpose, quarterly dividends payable in cash on the first 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 One Preferred Stock, in an amount (if any) per share
(rounded to the nearest cent) equal to the greater of (a) $1.00 or (b) subject
to the provision for adjustment hereinafter set forth, 100 times the aggregate
per share amount of all cash dividends, and 100 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 of the Company 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 One Preferred Stock. In the event the Corporation shall at any time after
the issuance of any share or fraction of a share of Series One Preferred Stock,
declare or pay any dividend on the Common Stock payable in shares of Common
Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which holders of
shares of Series One Preferred Stock were entitled immediately prior to such
event under clause (b) of the preceding sentence shall be adjusted by
multiplying such amount by a fraction, the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) The Corporation shall declare a dividend or distribution on the Series
One Preferred Stock as provided in paragraph (A) of this Section at the same
time it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); provided that, in the event no
dividend or distribution shall have been declared on the Common Stock during the
period between any Quarterly Dividend Payment Date and the next subsequent
Quarterly Dividend Payment Date, a dividend of $1.00 per share on the Series One
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date. No dividend or distribution (other than a dividend
payable in shares of Common Stock) on the Common Stock shall be paid or set
aside for payment on the Common Stock unless the dividend or distribution
required as a result thereof to be paid on the Series One Preferred Stock shall
be simultaneously paid or set aside for payment on the Series One Preferred
Stock.
(C) Dividends shall begin to accrue and be cumulative on outstanding shares
of Series One Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, 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 One 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 and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Series
A-2
<PAGE>
One 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 One Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.
Section 3. Voting Rights. The holders of shares of Series One Preferred
-------------
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
share of Series One Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series One
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or by
law, the holders of shares of Series One Preferred Stock and the holders of
shares of Common Stock and any other capital stock of the Corporation having
general voting rights shall vote together as one class on all matters submitted
to a vote of stockholders of the Corporation.
(C) Except as set forth herein, or as otherwise provided by law, holders of
Series One Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent they are entitled to vote with
holders of Common Stock as set forth herein) for taking any corporate action.
Section 4. Certain Restrictions.
--------------------
(A) Whenever quarterly dividends or other dividends or distributions
payable on the Series One Preferred Stock as provided in Section 2 are in
arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series One Preferred Stock
outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, or make any other distributions, on any
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series One Preferred Stock;
A-3
<PAGE>
(ii) declare or pay dividends, 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 One Preferred
Stock, except dividends paid ratably on the Series One 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 junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series One Preferred Stock,
provided that the Corporation may at any time redeem, purchase or otherwise
acquire shares of any such junior stock in exchange for shares of any stock
of the Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Series One Preferred Stock.
(iv) except as permitted by subclause (v) of this Section 4(A),
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 One 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 (as to dividends and upon dissolution,
liquidation or winding up) to the Series One Preferred Stock; or
(v) purchase or otherwise acquire for consideration any shares of
Series One Preferred Stock, or any shares of stock ranking on a parity with
the Series One Preferred Stock (either as to dividends or upon liquidation,
dissolution or winding up), 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.
(B) 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 4,
purchase or otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any shares of Series One Preferred Stock
-----------------
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled 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.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any voluntary
--------------------------------------
or involuntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding
A-4
<PAGE>
up) to the Series One Preferred Stock unless, prior thereto, the holders of
shares of Series One Preferred Stock shall have received the greater of (i)
$1.00 per share plus an amount equal to any accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment, and
(ii) an aggregate amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount to be distributed
per share to holders of shares of Common Stock. The amount to which holders of
Series One Preferred Stock may be entitled upon liquidation, dissolution or
winding up of the Corporation pursuant hereto is hereinafter referred to as the
"Series One Preferred Liquidation Preference". In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision or combination or consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in shares of Common Stock) into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Series One Preferred Stock were entitled immediately
prior to such event under clause (b) of the preceding sentence shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) In the event that there are not sufficient assets available to permit
payment in full of the Series One Preferred Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Series One Preferred Stock, then such remaining assets
shall be distributed ratably to the holders of such parity shares in proportion
to their respective liquidation preferences.
[The remainder of the page is left intentionally blank]
A-5
<PAGE>
IN WITNESS WHEREOF, this Certificate of Designation is executed on behalf
of the Corporation by its Chief Executive Officer and attested by its Secretary
this __ day of July, 2000.
-----------------------
Chief Executive Officer
Attest:
------------------------
Secretary
A-6
<PAGE>
Exhibit B
---------
FORM OF RIGHTS CERTIFICATE
Certificate No. R- _____ Rights
NOT EXERCISABLE AFTER JULY 1, 2010 OR EARLIER IF REDEMPTION OR
EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER
RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Rights Certificate
Carey International, 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 June 20, 2000 (the "Rights Agreement"), between Carey
International, Inc., a Delaware corporation (the "Company"), and American
Securities Transfer & Trust Company (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., Washington, D.C. time, on July 1, 2010
at the office or offices of the Rights Agent designated for such purpose, or at
the office of its successor as Rights Agent, one one-hundredth of a fully paid
non-assessable share of Series One Preferred Stock, par value $.10 per share
(the "Series One Preferred Shares"), of the Company, at a purchase price of
$80.00 per one one-hundredth of a Series One Preferred Share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase duly executed. The number of Rights evidenced by
this Rights Certificate (and the number of one one-hundredths of a Series One
Preferred Share which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
August 27, 1997, based on the Series One Preferred Shares as constituted at such
date. As provided in the Rights Agreement, the Purchase Price and the number of
one one-hundredths of a Series One Preferred Share 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. Copies of
the Rights Agreement are on file at
B-1
<PAGE>
the principal executive offices of the Company and the above-mentioned office or
offices of the Rights Agent.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the above-mentioned office or offices of the Rights Agent, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing Rights entitling the holder to purchase a like aggregate
number of Series One Preferred Shares 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.
Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of the
Company's Common Stock, par value $.10 per share or Series One Preferred Shares
(or equivalent Series One Preferred Shares, as provided in the Rights
Agreement).
No fractional Series One Preferred Shares will be issued upon the exercise
of any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-hundredth of a Series One Preferred Share, which may, at
the election of the Company, be evidenced by depositary receipts), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Series One 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 stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action, or to
receive notice of meetings or other actions affecting stockholders (except as
provided in the Rights Agreement), or to receive dividends or subscription
rights, or otherwise, until the Right or Rights evidenced by this Rights
Certificate shall have been exercised as provided in the Rights Agreement.
[The remainder of this left is left intentionally blank].
B-2
<PAGE>
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 _________, 2000.
ATTEST: CAREY INTERNATIONAL, INC.
_______________________ By__________________
Countersigned:
______________________
By:___________________
Authorized Signature
B-3
<PAGE>
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 Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
________________________________________________________________________________
The undersigned hereby certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
___________________
Signature
________________________________________________________________________________
B-4
<PAGE>
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 CAREY INTERNATIONAL, INC.:
The undersigned hereby irrevocably elects to exercise ____________ Rights
represented by this Rights Certificate to purchase the Series One Preferred
Shares issuable upon the exercise of such Rights and requests that certificates
for such Series One Preferred Shares be 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 Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
B-5
<PAGE>
Form of Reverse Side of Rights Certificate -- continued
________________________________________________________________________________
The undersigned hereby certifies that the Rights evidenced by this Rights
Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).
________________
Signature
________________________________________________________________________________
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.
In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, the
Company and the Rights Agent will deem the beneficial owner of the Rights
evidenced by this Rights Certificate to be an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement) and such Assignment or
Election to Purchase will not be honored.
B-6
<PAGE>
Exhibit C
---------
SUMMARY
OF
CAREY INTERNATIONAL, INC.
RIGHTS TO PURCHASE SERIES ONE PREFERRED SHARES
On May 12, 2000, the Board of Directors of Carey International, Inc. (the
"Company") adopted a Shareholder Rights Plan pursuant to which a dividend of one
preferred share purchase right (a "Right") for each outstanding share of common
stock, par value $.01 per share (the "Common Shares") of the Company was
distributed to the stockholders of record as of the close of business on July 2,
2000 (the "Record Date"). Each Right entitles the registered holder to purchase
from the Company one one-hundredth of a share of Series One Preferred Stock, par
value $.01 per share (the "Series One Preferred Shares"), of the Company, at a
price of $80.00 per one one-hundredth of a Series One Preferred Share (the
"Purchase Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement dated as of June 20, 2000 (the
"Rights Agreement") between the Company and American Securities Transfer & Trust
Company, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons (an "Acquiring
Person") has acquired beneficial ownership of 20% or more of the outstanding
Common Shares (the "Triggering Percentage") or (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors prior to
such time as any person becomes an Acquiring Person) following the commencement
of, or announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by a person
or group of a Triggering Percentage or more of such outstanding Common Shares
(the earlier of such dates being called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
outstanding as of the Record Date, by such Common Share certificate with a copy
of this Summary of Rights attached thereto unless (i) such person first acquires
a Triggering Percentage or more of the outstanding Common Shares by a purchase
pursuant to a tender offer for all of the Common Shares for cash, which purchase
increases such person's beneficial ownership to 90% or more of the outstanding
Common Shares; or (ii) the Triggering Percentage is achieved as a result of the
Company's repurchase of shares; or (iii) the person acquires a Triggering
Percentage or more of the outstanding Common Shares inadvertently and then
divests a sufficient number of shares within 10 days after notification by the
Company. In addition, the Rights will not become exercisable if a person, at
the close of business on July 2, 2000, holds the Triggering Percentage or more
of Common Shares unless such group or person thereafter acquires additional
Common Shares at a time when holding the Triggering Percentage or more of Common
Shares.
C-1
<PAGE>
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Shares. Until the
Distribution Date (or earlier redemption or expiration of the Rights), new
Common Share certificates issued upon transfer or new issuance of Common Shares
will contain a notation incorporating the Rights Agreement by reference. Until
the Distribution Date (or earlier redemption or expiration of the Rights), the
surrender for transfer of any certificates for Common Shares outstanding as of
the Record Date, even without such notation or a copy of this Summary of Rights
being attached thereto, will also constitute the transfer of the Rights
associated with the Common Shares represented by such certificate. As soon as
practicable following the Distribution Date, separate certificates evidencing
the Rights ("Right Certificates") will be mailed to holders of record of the
Common Shares as of the close of business on the Distribution Date and such
separate Right Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. The Rights
will expire on the close of business on July 1, 2010 (the "Final Expiration
Date"), unless the Rights are earlier redeemed by the Company, as described
below.
The Purchase Price payable, and the number of Series One Preferred Shares
or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Series One Preferred Shares, (ii) upon the grant to holders of the Series One
Preferred Shares of certain rights or warrants to subscribe for or purchase
Series One Preferred Shares at a price, or securities convertible into Series
One Preferred Shares with a conversion price, less than the then current market
price of the Series One Preferred Shares, or (iii) upon the distribution to
holders of the Series One Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Series One Preferred Shares) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths of a
Series One Preferred Share issuable upon exercise of each Right are also subject
to adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.
Series One Preferred Shares purchasable upon exercise of the Rights will
not be redeemable. Each Series One Preferred Share will be entitled to a
quarterly dividend payment equal to the greater of (a) $1.00 or (b) 100 times
the dividend declared per Common Share. In the event of liquidation, the
holders of the Series One Preferred Shares will also be entitled to a
preferential payment equal to the greater of (a) $1.00 per share plus all
accrued and unpaid dividends, whether or not declared, and (b) 100 times the
aggregate payment made per Common Share. Each Series One Preferred Share will
have 100 votes, voting together with the Common Shares. In the event of any
merger, consolidation or other transaction in which Common Shares are exchanged,
each Series One Preferred Share will be entitled to receive 100 times the amount
received per Common Share. These rights are protected by customary antidilution
provisions.
C-2
<PAGE>
Because of the nature of the Series One Preferred Shares' dividend,
liquidation and voting rights, the value of the one one-hundredth interest in a
Series One Preferred Share purchasable upon exercise of each Right should
approximate the value of one Common Share.
In the event that, following the date of the first public announcement that
a person has become an Acquiring Person (the "Shares Acquisition Date"), the
Company is acquired in a merger or other business combination transaction or 50%
or more of the value of its consolidated assets or earning power are sold or
otherwise transferred, proper provision will be made so that each holder of a
Right will thereafter have the right to receive, upon the exercise thereof at
the then current exercise price of the Right, that number of shares of common
stock of the acquiring company which at the time of such transaction will have a
market value of two times the exercise price of the Right. In the event that
any person becomes an Acquiring Person (unless such person first acquires 20% or
more of the outstanding Common Shares by a purchase pursuant to a tender offer
for all of the Common Shares for cash, which purchase increases such person's
beneficial ownership to 90% or more of the outstanding Common Shares), proper
provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of Common Shares
having a market value of two times the exercise price of the Right.
At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 20% or more of the outstanding
Common Shares and prior to the acquisition by such person or group of 50% or
more of the outstanding Common Shares, the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such person or group which have
become void), in whole or in part, at an exchange ratio of one Common Share, or
one one-hundredth of a Series One Preferred Share (or of a share of a class or
series of the Company's preferred stock having equivalent rights, preferences
and privileges), per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Series One Preferred Shares will be issued
(other than fractions which are integral multiples of one one-hundredth of a
Series One Preferred Share, which may, at the election of the Company, be
evidenced by depositary receipts) and in lieu thereof, an adjustment in cash
will be made based on the market price of the Series One Preferred Shares on the
last trading day prior to the date of exercise.
At any time prior to the close of business on the Shares Acquisition Date
(but not thereafter), the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $0.01 per Right (the "Redemption
Price"). Subject to the foregoing, the redemption of the Rights 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. Immediately upon any redemption
of the Rights, the right to exercise the Rights will terminate and the only
right of the holders of Rights will be to receive the Redemption Price.
C-3
<PAGE>
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from and
after the Shares Acquisition Date no such amendment may adversely affect the
interests of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.
C-4
