RIGHTS AGREEMENT


         Agreement,  dated  as  of  April  7,  1999  between  Aviation  General,
Incorporated,  a Delaware  corporation (the "Company"),  and American Securities
Transfer & Trust, Inc. (the "Rights Agent").

         The Board of  Directors  of the Company has  authorized  and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as  hereinafter  defined)  of the  Company  outstanding  on April 7,  1999 (the
"Record Date"), and to persons who were contractually  obligated on such date to
receive  Common  Shares after such date,  each Right  representing  the right to
purchase one one-thousandth of a 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 become, at any time after the date of this Rights Agreement,  the
         Beneficial  Owner (as such term is hereinafter  defined) of 15% or more
         of the Common  Shares of the Company  then  outstanding,  but shall not
         include  the  Company,  any  Subsidiary  (as such  term is  hereinafter
         defined) of the Company,  any  employee  benefit plan of the Company or
         any Subsidiary of the Company,  or any entity holding Common Shares for
         or  pursuant  to  the  terms  of any  such  plan.  Notwithstanding  the
         foregoing,  no Person shall become an "Acquiring  Person" as the result
         of an acquisition  of Common Shares by the Company  which,  by reducing
         the number of shares outstanding, increases the proportionate number of
         shares  beneficially  owned by such Person to 15% or more of the Common
         Shares of the Company then outstanding;  provided,  however,  that if a
         Person shall become the  Beneficial  Owner of 15% or more of the Common
         Shares of the Company then  outstanding by reason of share purchases by
         the  Company  and shall,  after such share  purchases  by the  Company,
         become the  Beneficial  Owner of any  additional  Common  Shares of the
         Company,  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  (a),  has become such  inadvertently,  and such Person
         divests as promptly as practicable a sufficient number of Common Shares
         so that such Person would no longer be an Acquiring  Person, as defined
         pursuant to the foregoing  provisions of this  paragraph (a), then such
         Person shall not be deemed to be an "Acquiring  Person" for purposes of
         this Agreement.


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                  (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 Securities  Exchange Act of 1934, as amended and
         as in effect on the date of this Agreement (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,   has
                  "beneficial  ownership"  of (as  determined  pursuant  to Rule
                  13d-3 of the General Rules and Regulations  under the Exchange
                  Act),  including  pursuant to any  agreement,  arrangement  or
                  understanding, whether or not in writing;

                           (ii)  which  such  Person  or  any of  such  Person's
                  Affiliates or Associates has (A) the right to acquire (whether
                  such  right  is  exercisable  immediately  or only  after  the
                  passage of time)  pursuant to any  agreement,  arrangement  or
                  understanding   (other  than  customary  agreements  with  and
                  between underwriters and selling group members with respect to
                  a bona  fide  public  offering  of  securities),  or upon  the
                  exercise of conversion rights,  exchange rights, rights (other
                  than the Rights  subject  hereto),  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;  or (B) the right to vote
                  pursuant  to  any  agreement,  arrangement  or  understanding;
                  provided,  however,  that a Person  shall  not be  deemed  the
                  Beneficial  owner of, or to beneficially  own, any security 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 schedule); or

                           (iii)  which  are  beneficially  owned,  directly  or
                  indirectly,  by any other Person with which such Person or any
                  of such Person's  Affiliates or Associates  has any agreement,
                  arrangement or understanding  (other than customary agreements
                  with and between  underwriters  and selling group members with
                  respect to a bona fide public  offering of securities) for the
                  purpose of acquiring,  holding,  voting  (except to the extent
                  contemplated  by  the  proviso  to  Section   1(c)(ii)(B))  or
                  disposing of any securities of the Company.

                  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.


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                  (d) "Business Day" shall mean any day other than a Saturday, a
         Sunday,  or a day  on  which  banking  institutions  in  New  York  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., New York Time, on such date; provided, however, that if such date
         is not a Business  Day it shall mean 5:00 p.m.,  New York Time,  on the
         next succeeding Business Day.

                  (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  capital  stock  (or  equity
         interest)  with the  greatest  voting power of such other Person or, if
         such other  Person is a  Subsidiary  of another  Person,  the Person or
         Persons which ultimately control such first-mentioned Person.

                  (g)  "Distribution  Date"  shall have the meaning set forth in
Section 3 hereof.

                  (h) "Final  Expiration  Date" shall have the meaning set forth
in Section 7 hereof.

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

                  (j) "Preferred  Shares" shall mean shares of Special Preferred
         Stock,  par value $0.01 per share,  of the  Company  having the rights,
         preferences  and limitations set forth in Article VI of the Certificate
         of  Incorporation  of the  Company,  as amended by the  Certificate  of
         Designations attached to this Agreement as Exhibit A.

                  (k)  "Redemption  Date"  shall have the  meaning  set forth in
Section 7 hereof.

                  (l)  "Shares  Acquisition  Date"  shall mean the first date of
         public  announcement  (which,  for purposes of this  definition,  shall
         include,  without  limitation,  a report or schedule  filed pursuant to
         Section  13(d) under the  Exchange  Act) by the Company or an Acquiring
         Person that an Acquiring Person has become such.

                  (m)  "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.

         Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights  Agent to act as agent for the Company in  accordance  with the terms and
conditions  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. Issue of Right  Certificates.  (a) Until the  earlier of (i)
the tenth day after the Shares Acquisition Date (or, if the tenth date after the
Share  Acquisition Date occurs before the Record Date, the Record Date), or (ii)
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

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commencement  by any Person  (other  than the  Company,  any  Subsidiary  of the
Company,  any employee  benefit plan of the Company or of any  Subsidiary of the
Company or any entity  holding Common Shares for or pursuant to the terms of any
such  plan) of, or of the first  public  announcement  of the  intention  of any
Person  (other than the Company,  any  Subsidiary  of the Company,  any employee
benefit  plan of the Company or of any  Subsidiary  of the Company or any entity
holding  Common  Shares  for or  pursuant  to the  terms  of any  such  plan) to
commence,  a tender or exchange offer the  consummation of which would result in
any Person  becoming the Beneficial  Owner of Common Shares  aggregating  15% or
more of the then  outstanding  Common Shares  (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(b) hereof)
by the  certificates  for Common  Shares  registered in the names of the holders
thereof (which  certificates shall also be deemed to be Right  Certificates) and
not by  separate  Right  Certificates,  and  (y)  the  right  to  receive  Right
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 Right  certificate,  in
substantially the form of Exhibit B hereto (a "Right  Certificate"),  evidencing
one Right for each Common Share so held. As of the Distribution Date, the Rights
will be evidenced solely by such Right Certificates.

         (b) 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,  will receive an  Information  Statement that contains a summary of the
Rights  substantially  identical to the Summary of Rights to Purchase  Preferred
Shares in the form of Exhibit C hereto  (the  "Summary  of  Rights").  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 shall also  constitute the transfer of the Rights
associated with the Common Shares represented thereby.

         (c)  Certificates for Common Shares which become  outstanding  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
                  Aviation   General,   Incorporated  and  American   Securities
                  Transfer & Trust, Inc., dated as of April 7, 1999 (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  office of  Aviation  General,  Incorporated.  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.  Aviation
                  General,   Incorporated  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,  as set forth in the Rights  Agreement,  Rights
                  issued to any  Person  who  becomes  an  Acquiring  Person (as
                  defined in the Rights Agreement) may become null and void.

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         With respect to such  certificates  containing  the  foregoing  legend,
until the  Distribution  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 prior to the
Distribution Date, any Rights associated with such Common Shares shall be deemed
canceled  and retired so that the Company  shall not be entitled to exercise any
Rights associated with the Common Shares which are no longer outstanding.

         Section 4. Form of Right Certificates.  The Right Certificates (and the
forms of election to purchase  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 Section 22  hereof,  the Right  Certificates  shall  entitle  the
holders  thereof to purchase such number of one  one-thousandths  of a Preferred
Share as shall be set forth  therein  at the price per one  one-thousandth  of a
Preferred Share set forth therein (the "Purchase Price"), but the number of such
one one-thousandths of a Preferred Share and the Purchase Price shall be subject
to adjustment as provided herein.

         Section 5.  Countersignature  and Registration.  The Right 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 an  Assistant
Secretary of the Company,  either manually or by facsimile signature.  The Right
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 Right  Certificates  shall cease to be
such  officer of the Company  before  countersignature  by the Rights  Agent and
issuance and delivery by the Company, such Right 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 Right
Certificates  had not ceased to be such  officer of the  Company;  and any Right
Certificate  may be signed on behalf of the  Company by any person  who,  at the
actual  date of the  execution  of such  Right  Certificate,  shall  be a proper
officer of the Company to sign such Right  Certificate,  although at the date of
the execution of this Agreement any such person was not such an officer.

         Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal  office,  books for  registration  and transfer of the
Right  Certificates  issued  hereunder.  Such  books  shall  show the  names and
addresses of the  respective  holders of the Right  Certificates,  the number of
Rights  evidenced on its face by each of the Right  Certificates and the date of
each of the Right Certificates.

         Section  6.  Transfer,  Split Up,  Combination  and  Exchange  of Right
Certificates;  Mutilated, Destroyed, Lost or Stolen Right 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  Right
Certificate or Right Certificates  (other than Right  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  Right  Certificate  or Right  Certificates,
entitling the registered holder to purchase

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a  like  number  of one  one-thousandths  of a  Preferred  Share  as  the  Right
Certificate  or Right  Certificates  surrendered  then  entitled  such holder to
purchase.  Any  registered  holder  desiring to transfer,  split up,  combine or
exchange any Right Certificate or Right  Certificates shall make such request in
writing delivered to the Rights Agent, and shall surrender the Right Certificate
or Right Certificates to be transferred,  split up, combined or exchanged at the
principal  office  of  the  Rights  Agent.  Thereupon  the  Rights  Agent  shall
countersign  and deliver to the person entitled  thereto a Right  Certificate or
Right 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
Right 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 Right
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 Right  Certificate  if  mutilated,  the Company  will make and deliver a new
Right  Certificate  of like  tenor  to the  Rights  Agent  for  delivery  to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.

         Section 7.  Exercise  of Rights;  Purchase  Price;  Expiration  Date of
Rights.  (a) The  registered  holder of any Right  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  Right
Certificate,  with the form of election to purchase on the reverse  side thereof
duly executed,  to the Rights Agent at the principal office of the Rights Agent,
together  with payment of the Purchase  Price for each one  one-thousandth  of a
Preferred  Share  as to  which  the  Rights  are  exercised,  at or prior to the
earliest of (i) the close of  business  on April 7, 2009 (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-thousandth of a Preferred Share
purchasable  pursuant to the exercise of a Right shall initially be $80.00,  and
shall be subject to adjustment from time to time as provided in Section 11 or 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  Right  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 Right
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 Preferred
Shares  certificates  for the number of Preferred Shares to be purchased and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests,  or (B)  requisition  from the depositary  agent  depositary  receipts
representing such number of one  one-thousandths  of a Preferred Share as are to
be purchased (in which case certificates for the 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) 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 Right Certificate, registered

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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 Right Certificate.

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

         Section 8.  Cancellation  and  Destruction of Right  Certificates.  All
Right 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 Right
Certificates  shall he issued in lieu thereof  except as expressly  permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement,  and the Rights Agent shall so cancel and
retire,  any other  Right  Certificate  purchased  or  acquired  by the  Company
otherwise  than upon the exercise  thereof.  The Rights Agent shall  deliver all
canceled Right Certificates to the Company,  or shall, at the written request of
the Company,  destroy such canceled Right  Certificates,  and in such case shall
deliver a certificate of destruction thereof to the Company.

         Section 9.  Reservation and Availability of Preferred  Shares.  (a) The
Company  covenants  and  agrees  that it will  cause  to be  reserved  and  kept
available out of its authorized and unissued  Preferred  Shares or any Preferred
Shares  held in its  treasury,  the  number  of  Preferred  Shares  that will be
sufficient to permit the exercise in full of all outstanding Rights.

         (b) So long as the Preferred  Shares (and,  following the  Distribution
Date, Common Shares and/or other  securities)  issuable and deliverable upon the
exercise  of the Rights  are listed on any  national  securities  exchange,  the
Company  shall use its best  efforts  to cause,  from and after such time as the
Rights become exercisable, all shares reserved for issuance to be listed on such
exchange upon official notice of issuance upon such exercise.

         (c) The  Company  shall use its best  efforts  to (i) file,  as soon as
practicable following the earliest date after the Distribution Date on which the
consideration  to be delivered  by the Company  upon  exercise of the Rights has
been determined in accordance  with Section  11(a)(iii)  hereof,  a registration
statement  under the  Securities  Act of 1933 (the  "Act"),  with respect to the
securities  purchasable upon exercise of the Rights on an appropriate form, (ii)
cause such  registration  statement to become  effective as soon as  practicable
after  such  filing,  and (iii)  cause  such  registration  statement  to remain
effective  (with a prospectus at all times meeting the  requirements of the Act)
until  the  earlier  of (A) the  date  as of  which  the  Rights  are no  longer
exercisable for such securities and (B) the Final  Expiration  Date. The Company
will also take such action as may be appropriate  under, or to ensure compliance
with, the securities or "blue sky" laws of the various states in connection with
the  exercisability of the Rights.  The Company may temporarily  suspend,  for a
period of time not to exceed 90 days  after the date set forth in clause  (i) of
the first  sentence of this Section 9(c),  the  exercisability  of the Rights in
order to prepare and file such  registration  statement  and permit it to become
effective.  Upon  any  such  suspension,   the  Company  shall  issue  a  public
announcement  stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer  in  effect.  Notwithstanding  any  provision  of this  Agreement  to the
contrary, the Rights shall not be exercisable in any jurisdiction

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if the  requisite  qualification  in  such  jurisdiction  shall  not  have  been
obtained,  or the exercise  thereof shall not be permitted under applicable law,
or a registration statement shall not have been declared effective.

         (d) The Company  covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred  Shares delivered upon exercise
of Rights shall, at the time of delivery of the  certificates for such Preferred
Shares  (subject  to  payment  of the  Purchase  Price),  be  duly  and  validly
authorized and issued and fully paid and nonassessable shares.

         (e) The Company further  covenants and agrees that it will pay when due
and payable any and all federal and state  transfer  taxes and charges which may
be payable in respect of the issuance or delivery of the Right  Certificates  or
of any  Preferred  Shares upon the  exercise of Rights.  The Company  shall not,
however,  be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right  Certificates  to a person other than,  or the
issuance or delivery of  certificates  or depositary  receipts for the Preferred
Shares  in a name  other  than  that of,  the  registered  holder  of the  Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any  certificates or depositary  receipts for 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 Right  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. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall for
all  purposes  be deemed to have  become the  holder of record of the  Preferred
Shares  represented  thereby on, and such  certificate  shall be dated, the date
upon which the Right 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 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
Preferred  Shares transfer books of the Company are open.  Prior to the exercise
of the Rights evidenced thereby,  the holder of a Right Certificate shall not be
entitled  to any  rights of a holder of  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 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  Preferred  Shares  payable in
Preferred Shares,  (B) subdivide the outstanding  Preferred Shares,  (C) combine
the outstanding  Preferred  Shares into a smaller number of Preferred  Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such  reclassification  in connection with a consolidation
or merger in which the  Company is the  continuing  or  surviving  corporation),
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

                                                       - 8 -

<PAGE>



immediately  prior to such date and at a time when the 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  aggregate  par value of
the shares of capital stock of the Company issuable upon exercise of one Right.

                  (ii) Subject to Section 24 of this Agreement, in the event any
Person becomes an Acquiring Person, 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-thousandths  of a Preferred
Share for which a Right is then  exercisable,  in  accordance  with the terms of
this Agreement and in lieu of 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-thousandths of a Preferred Share
for which a Right is then  exercisable  and dividing the product  thereof by (y)
50% of the then current per share market price (the "Current  Market  Price") of
the Company's Common Shares (determined pursuant to Section 11(d) hereof) on the
date of the occurrence of such event.  In the event that any Person shall become
an Acquiring Person and the Rights shall then be outstanding,  the Company shall
not take any action which would  eliminate or diminish the benefits  intended to
be afforded by the Rights.

                  From and after the  occurrence of such event,  any Rights that
are or were  acquired  or  beneficially  owned by any  Acquiring  Person (or any
Associate or Affiliate of such Acquiring Person) shall be void and any holder of
such Rights  shall  thereafter  have no right to exercise  such Rights under any
provision of this Agreement.  No Right  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 Right  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 Right
Certificate  delivered to the Rights  Agent for transfer to an Acquiring  Person
whose Rights would be void pursuant to the preceding sentence shall be canceled.

                  (iii) 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. In the event
the Company shall, after good faith effort, be unable to take all such action as
may be necessary to authorize such additional  Common Shares,  the Company shall
substitute, for each Common Share that would otherwise be issuable upon exercise
of a Right,  a number of  Preferred  Shares or  fraction  thereof  such that the
current per share market price of one Preferred Share  multiplied by such number
or fraction is equal to the current per share  market  price of one Common Share
as of the date of issuance of such Preferred Shares or fraction thereof.

         (b) In case the  Company  shall fix a record  date for the  issuance of
rights,  options or warrants to all holders of Preferred  Shares  entitling them
(for a period  expiring  within 45  calendar  days  after such  record  date) to
subscribe  for or purchase  Preferred  Shares (or shares having the same rights,
privileges  and  preferences  as the  Preferred  Shares  ("Equivalent  Preferred
Shares"))  or  securities   convertible  into  Preferred  Shares  or  Equivalent
Preferred  Shares at a price per Preferred  Share or Equivalent  Preferred Share
(or  having a  conversion  price  per  share,  if a  security  convertible  into
Preferred Shares or

                                                       - 9 -

<PAGE>



Equivalent  Preferred  Shares) less than the then current per share market price
of the 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 Preferred  Shares
outstanding  on such record date plus the number of  Preferred  Shares which the
aggregate  offering  price  of the  total  number  of  Preferred  Shares  and/or
Equivalent  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
Preferred  Shares  outstanding on such record date plus the number of additional
Preferred  Shares  and/or   Equivalent   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.  Preferred  Shares owned by or held for the account
of the  Company  shall not be deemed  outstanding  for the  purposes 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) In case the  Company  shall fix a record  date for the  making of a
distribution  to all  holders  of  the  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
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  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 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  Preferred  Share and the  denominator  of which shall be such
current per share market price of the 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

                                                      - 10 -

<PAGE>



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.  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.

                  (ii)  For  the  purpose  of  any  computation  hereunder,  the
"current per share market price" of the Preferred  Shares shall be determined in
accordance  with the  method  set forth in Section  11(d)(i).  If the  Preferred
Shares are not publicly  traded,  the  "current  per share market  price" of the
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 thousand.  If
neither  the Common  Shares nor the  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
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 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
Preferred  Shares  contained in paragraphs (a) through (c),  inclusive,  of this
Section 11, and the  provisions  of Sections 7, 9, 10 and 13 hereof with respect
to the Preferred Shares shall apply on like terms to any such other shares.

                                                      - 11 -

<PAGE>



         (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-thousandths of a
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-thousandths of
a Preferred Share  (calculated to the nearest one  one-millionth  of a Preferred
Share) obtained by (i) multiplying  (x) the number of one  one-thousandths  of a
share  covered  by a  Right  immediately  prior  to this  adjustment  by (y) the
Purchase Price in effect  immediately  prior to such  adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase  Price in effect
immediately after such adjustment of the Purchase Price.

         (i) The Company may elect on or after the date of any adjustment of the
Purchase  Price  to  adjust  the  number  of  Rights,  in  substitution  for any
adjustment in the number of one one-thousandths of a 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-thousandths  of  a  Preferred  Share  for  which  a  Right  was  exercisable
immediately  prior to such  adjustment.  Each Right held of record prior to such
adjustment  of  the  number  of  Rights  shall  become  that  number  of  Rights
(calculated to the nearest one one-millionth)  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 Right
Certificates have been issued,  shall be at least 10 days later than the date of
the public  announcement.  If Right  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 Right Certificates on such record date Right 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 Right Certificates held by such holders prior to the date of
adjustment,  and upon surrender thereof,  if required by the Company,  new Right
Certificates  evidencing  all the Rights to which such holders shall be entitled
after such adjustment.  Right 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 Right  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-thousandths  of a  Preferred  Share  issuable  upon the
exercise of the Rights, the Right Certificates theretofore and thereafter issued
may continue to express the Purchase Price and the number of one one-thousandths
of a Preferred  Share which were  expressed  in the initial  Right  Certificates
issued hereunder.

         (k) Before  taking any action that would cause an  adjustment  reducing
the Purchase Price below one  one-thousandth  of the then par value,  if any, of
the Preferred Shares issuable upon exercise

                                                      - 12 -

<PAGE>



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  Preferred  Shares at such adjusted
Purchase Price.

         (l) 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 the  occurrence  of such
event the issuing to the holder of any Right exercised after such record date of
the Preferred  Shares and other  capital stock or securities of the Company,  if
any,  issuable upon such exercise over and above the 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 Preferred  Shares,  issuance
wholly for cash of any Preferred  Shares at less than the current  market price,
issuance wholly for cash of Preferred  Shares or securities which by their terms
are  convertible  into  or  exchangeable  for  Preferred  Shares,  dividends  on
Preferred Shares payable in 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 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 (A) the
number of one  one-thousandths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-thousandths of a 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 (B) 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.

         Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever  an  adjustment  is made as  provided  in Section 11 or 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
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25 hereof.


                                                      - 13 -

<PAGE>



         Section  13.  Consolidation,  Merger or Sale or  Transfer  of Assets or
Earning Power. In the event, directly or indirectly, at any time on or after the
date that any Person  shall become an Acquiring  Person,  (a) the Company  shall
consolidate with, or merge with and into, any other Person, (b) any Person shall
consolidate with the Company, or merge with and into the Company and the Company
shall  be the  continuing  or  surviving  corporation  of such  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 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  assets or  earning  power of the  Company  and its  Subsidiaries
(taken as a whole) to any other  Person other than the Company or one or more of
its  wholly-owned  Subsidiaries,  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-thousandths  of a Preferred Share for which a Right is then exercisable,  in
accordance  with the terms of this  Agreement  and in lieu of Preferred  Shares,
such  number of Common  Shares of such other  Person  (including  the Company as
successor  thereto or as the surviving  corporation),  not subject to any liens,
encumbrances,  rights of first refusal or other adverse  claims,  as shall equal
the result obtained by (A)  multiplying  the then current  Purchase Price by the
number of one  one-thousandths  of a  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 or
transfer,  all the  obligations  and  duties  of the  Company  pursuant  to this
Agreement; (iii) the term "Company," as used in this Agreement, 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 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 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 to be afforded by the Rights.  The provisions of
this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers.

         Section 14.  Fractional Rights and Fractional  Shares.  (a) The Company
shall not be  required  to issue  fractions  of Rights  or to  distribute  Right
Certificates  which  evidence  fractional  Rights.  In lieu  of such  fractional
Rights,  there shall be paid to the registered holders of the Right 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

                                                      - 14 -

<PAGE>



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 Preferred
Shares (other than fractions which are integral  multiples of one one-thousandth
of a Preferred Share) upon exercise of the Rights or to distribute  certificates
which  evidence  fractional  Preferred  Shares (other than  fractions  which are
integral  multiples of one  one-thousandth of a Preferred  Share).  Fractions of
Preferred  Shares in integral  multiples  of one  one-thousandth  of a 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  Preferred  Shares
represented by such depositary receipts.  In lieu of fractional Preferred Shares
that are not integral  multiples of one one-thousandth of a Preferred Share, the
Company shall pay to the registered  holders of Right  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 Preferred Share. For the purposes of
this Section 14(b),  the current market value of a Preferred  Share shall be the
closing  price of a  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.

         (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 in this Section 14).

         Section 15.  Rights of Action.  All rights of action in respect of this
Agreement,  except the rights of action given to the Rights Agent under  Section
18  hereof,  are  vested  in the  respective  registered  holders  of the  Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right 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  Right  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 Right  Certificate in the manner provided
in such Right 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:


                                                      - 15 -

<PAGE>



                  (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 Right  Certificates are
         transferable  only  on the  registry  books  of  the  Rights  Agent  if
         surrendered at the principal office of the Rights Agent,  duly endorsed
         or accompanied by a proper instrument of transfer;

                  (c) the  Company  and the Rights  Agent may deem and treat the
         person  in  whose  name  the  Right   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
         Right  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 or executive order promulgated or enacted by
         any  governmental  authority,   prohibiting  or  otherwise  restraining
         performance of such obligation;  provided,  however,  the Company shall
         use its best efforts to have any such order, decree or ruling lifted or
         otherwise overturned as soon as possible.

         Section  17.  Right  Certificate  Holder Not Deemed a  Stockholder.  No
holder,  as such, of any Right  Certificate  shall be entitled to vote,  receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other  securities  of the  Company  which  may at any  time be  issuable  on the
exercise of the Rights represented  thereby, nor shall anything contained herein
or in any Right  Certificate be construed to confer upon the holder of any Right
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  Right  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,  and its
officers,  agents and directors for, and to hold each of them harmless  against,
any loss, liability, or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent or such indemnified  party in connection with the acceptance
or administration of this Agreement or the exercise or performance of its duties
hereunder,  including  the costs and expenses of defending  against any claim of
liability in the premises.


                                                      - 16 -

<PAGE>



         The Rights  Agent shall be  protected by the Company 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  or the  exercise  or
performance  of its duties  hereunder in reliance upon any Right  Certificate or
certificate for the Preferred Shares or Common Shares or for other securities of
the  Company,   instrument  of  assignment  or  transfer,   power  of  attorney,
endorsement,   affidavit,  letter,  notice,  direction,   consent,  certificate,
statement,  or other  paper or  document  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.

         Notwithstanding anything in this Agreement to the contrary, in no event
shall the Rights Agent be liable for special,  indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits),  even
if the Rights  Agent has been advised of the  likelihood  of such loss or damage
and regardless of the form of the action.

         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 powers 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 he eligible for appointment as a
successor Rights Agent under the provisions of Section 21 hereof. In case at the
time such  successor  Rights Agent shall  succeed to the agency  created by this
Agreement,  any of the Right  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 Right  Certificates so countersigned;
and in case at that  time any of the  Right  Certificates  shall  not have  been
countersigned,   any  successor   Rights  Agent  may   countersign   such  Right
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 Right  Certificates
shall  have  the full  force  provided  in the  Right  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 Right Certificates shall have been countersigned but not
delivered,  the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time any of
the Right Certificates shall not have been  countersigned,  the Rights Agent may
countersign such Right  Certificates  either in its prior name or in its changed
name;  and in all such cases such Right  Certificates  shall have the full force
provided in the Right Certificates and in this Agreement.

         Section 20. Duties of Rights  Agent.  The Rights Agent  undertakes  the
duties  and  obligations  expressly  imposed by this  Agreement  (and no implied
duties or  obligations  shall be read into this  Agreement  against  the  Rights
Agent) upon the following terms and conditions,  by all of which the Company and
the holders of Right 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.


                                                      - 17 -

<PAGE>



                  (b)  Whenever  in the  performance  of its  duties  under this
         Agreement  the Rights Agent shall deem it  necessary or desirable  that
         any fact or matter (including,  without limitation, the identity of any
         Acquiring  Person,  Affiliate or  Associate  and the  determination  of
         current per share market price) be proved or established by the Company
         prior to taking or suffering any action hereunder,  such fact or matter
         (unless  other  evidence  in  respect  thereof  be herein  specifically
         prescribed) may be deemed to be conclusively  proved and established by
         a certificate signed by any person believed in good faith by the Rights
         Agent to be one of the  Chairman  of the  Board,  the  Chief  Executive
         Officer,  the  President,  any Vice  President,  the  Treasurer  or the
         Secretary or any  Assistant  Secretary of the Company and  delivered to
         the Rights Agent; and such certificate  shall be full  authorization to
         the Rights  Agent for any action  taken or suffered in good faith by it
         under  the   provisions  of  this   Agreement  in  reliance  upon  such
         certificate.

                  (c) The Rights Agent shall be liable  hereunder to the Company
         and any other Person only for  consequential  damages  arising from its
         own gross negligence, bad faith or willful misconduct.

                  (d) The Rights  Agent  shall not be liable for or by reason of
         any of the  statements of fact or recitals  contained in this Agreement
         or in the Right Certificates (except its  countersignature  thereof) or
         be required to verify the same,  but all such  statements  and recitals
         are and shall be deemed to have been made by the Company only.

                  (e) The Rights  Agent is serving  as an  administrative  agent
         and,  accordingly,  shall not be under any responsibility in respect of
         the validity of any  provision 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 Right  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 Right 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 hereof, 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 Right Certificates after actual notice to the Rights Agent
         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  Preferred  Shares  to be issued
         pursuant to this  Agreement or any Right  Certificate  or as to whether
         any  Preferred  Shares will,  when issued,  be validly  authorized  and
         issued, fully paid and nonassessable.

                  (f)  The  Company  agrees  that  it  will  perform,   execute,
         acknowledge   and   deliver  or  cause  to  be   performed,   executed,
         acknowledged and delivered all such further and other acts, instruments
         and  assurances  as may  reasonably be required by the Rights Agent for
         the carrying out or performing by the Rights Agent of the provisions of
         this Agreement.

                  (g) The Rights  Agent is hereby  authorized  and  directed  to
         accept  instructions  with  respect  to the  performance  of its duties
         hereunder from any person believed in good faith by the Rights Agent to
         be one  of  the  Chief  Executive  Officer,  the  President,  any  Vice
         President,  the Secretary, any Assistant 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

                                                      - 18 -

<PAGE>



         action  taken  or  suffered  by it in good  faith  in  accordance  with
         instructions  of any such  officer  or for any  delay in  acting  while
         waiting for those instructions.

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

                  (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.

         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 Preferred Shares by registered or certified mail, and to
the  holders of the Right  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  Preferred  Shares by
registered or certified  mail, and to the holders of the Right  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 Right  Certificate (who shall,
with such notice,  submit his Right  Certificate for inspection by the Company),
then the registered  holder of any Right  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, (a) shall be
a corporation  organized and doing  business under the laws of the United States
or of the State of New York (or of any other state of the United  States so long
as such corporation is authorized to do business as a banking institution in the
State of New York),  in good  standing,  which is authorized  under such laws to
exercise corporate trust or stock transfer powers

                                                      - 19 -

<PAGE>



and is subject to supervision  or examination by federal or state  authority and
(b) which,  together with its parent company, has at the time of its appointment
as Rights Agent a combined  capital and surplus of at least $50  million.  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
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right  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 Right Certificates.  Notwithstanding any of
the provisions of this  Agreement or of the Rights to the contrary,  the Company
may, at its option, issue new Right 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  Right  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 such time as any Person becomes an Acquiring
Person,  redeem  all but not  less  than all the then  outstanding  Rights  at a
redemption price of $.01 per Right, as such amount may be 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 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,  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.

         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  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,

                                                      - 20 -

<PAGE>



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 the Company,  any  Subsidiary of the Company,
any employee benefit plan of the Company or any such  Subsidiary,  or any entity
holding  Common Shares for or pursuant to the terms of any such plan),  together
with all Affiliates and Associates of such Person,  becomes the Beneficial Owner
of 50% or more of the Common Shares then outstanding.

         (b)  Immediately  upon the  action  of the  Board of  Directors  of the
Company  ordering the exchange of any Rights  pursuant to paragraph  (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 the event  that  there  shall not be  sufficient  Common  Shares
issued but not  outstanding or authorized but unissued to permit any exchange of
Rights as  contemplated  in  accordance  with this Section 24, the Company shall
take all such action as may be necessary to authorize  additional  Common Shares
for issuance upon exchange of the Rights. In the event the Company shall,  after
good faith  effort,  be unable to take all such  action as may be  necessary  to
authorize such additional Common Shares, the Company shall substitute,  for each
Common share that would otherwise be issuable upon exchange of a Right, a number
of Preferred  Shares or fraction  thereof such that the current per share market
price of one Preferred  Share  multiplied by such number or fraction is equal to
the  current  per  share  market  price  of one  Common  Share as of the date of
issuance of such Preferred Shares or fraction thereof.

         (d) The  Company  shall not be required  to issue  fractions  of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional  Common Shares,  the Company shall pay to the registered
holders of the Right  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  (d),  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  Preferred  Shares or to make any other  distribution  to the holders of its
Preferred Shares (other than a regular  quarterly cash dividend),  (ii) to offer
to the holders of its Preferred Shares rights or warrants to subscribe for or to
purchase any additional  Preferred Shares or shares of stock of any class or any
other securities, rights or options, (iii)

                                                      - 21 -

<PAGE>



to  effect  any   reclassification   of  its  Preferred  Shares  (other  than  a
reclassification   involving  only  the  subdivision  of  outstanding  Preferred
Shares),  (iv) to effect any  consolidation or merger into or with, or to effect
any sale or other  transfer  (or to permit  one or more of its  Subsidiaries  to
effect any sale or other transfer), in one or more transactions,  of 50% or more
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 Right 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,
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  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  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  Preferred
Shares, whichever shall be the earlier.

         (b) In case the 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 Right 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 Right  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:

                                    American Securities Transfer & Trust, Inc.
                                    938 Quail Street
                                    Suite 101
                                    Lakewood, Colorado  80215

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
Right 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:

                                    Aviation General, Incorporated
                                    7200 Northwest 63rd Street
                                    Bethany, Oklahoma 73008

Notices  or  demands  authorized  by this  Agreement  to be given or made by the
Company or the  Rights  Agent to the  holder of any Right  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.

                                                      - 22 -

<PAGE>



         Section 27.  Supplements and  Amendments.  The Company may from time to
time  supplement or amend this Agreement  without the approval of any holders of
Right Certificates in order to cure any ambiguity,  to correct or supplement any
provision contained herein which may be defective or inconsistent with any other
provisions  herein,  or to make any other  provisions with respect to the Rights
which the  Company may deem  necessary  or  desirable,  any such  supplement  or
amendment  to be  evidenced  by a writing  signed by the  Company and the Rights
Agent; provided, however, that from and after such time as any Person becomes an
Acquiring Person,  this Agreement shall not be amended in any manner which would
adversely affect the interests of the holders of Rights (other than an Acquiring
Person or an  Affiliate  or  Associate  of such  person).  Without  limiting the
foregoing,  the Company may at any time prior to such time as any Person becomes
an Acquiring  Person amend this  Agreement to lower the  thresholds  in Sections
1(a) and 3 hereof to not less than the  greater  of (i) the sum of .001% and the
largest percentage of the outstanding Common Shares then known by the Company to
be beneficially  owned by any Person (other than the Company,  any Subsidiary of
the Company,  any employee  benefit plan of the Company or any Subsidiary of the
Company, or any entity holding Common Shares for or pursuant to the terms of any
such  plan) and (ii) 10%.  Notwithstanding  anything  in this  Agreement  to the
contrary,  no supplement or amendment  that changes the rights and duties of the
Rights Agent under this Agreement shall be effective  without the consent of the
Rights Agent.

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

         Section 29. 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 Right 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 Right Certificates (and, prior to the Distribution Date, the Common Shares).

         Section  30.  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 31.  Governing Law. This  Agreement and each Right  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 32. 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 33. 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.


                                                      - 23 -

<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:                                     AVIATION GENERAL, INCORPORATED


By:                                         By:                

Title:                                      Title:          



                                            AMERICAN SECURITIES TRANSFER & TRUST


                                            By:                  

                                            Title:                     



                                                      - 24 -

<PAGE>



                                                                     Exhibit A



                      CERTIFICATE OF DESIGNATIONS
                                  of
                    AVIATION GENERAL, INCORPORATED

                    (Pursuant to Section 151 of the
                   Delaware General Corporation Law)


         Aviation General,  Incorporated,  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 , 1999:

         RESOLVED,  that pursuant to the authority  granted to and vested in the
Board of Directors of the  Corporation in accordance  with the provisions of the
Certificate of Incorporation,  the Board of Directors hereby creates a series of
Preferred  Stock,  par value  $0.01 per share (the  "Preferred  Stock"),  of the
Corporation and hereby states the  designation  and number of shares,  and fixes
the relative rights, preferences and limitations thereof as follows:

         Special Preferred Stock:

         Section (a)  Designation of Amount.  The shares of such series shall be
designated as "Special  Preferred Stock" (the "Special Preferred Stock") and the
number of shares  constituting the Special Preferred Stock shall be 50,000. 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
Special  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  Special
Preferred Stock.

         Section 1.  Dividends and Distributions.

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

                                                       - 1 -

<PAGE>



to the first Quarterly  Dividend  Payment Date,  since the first issuance of any
share or  fraction  of a share of  Special  Preferred  Stock.  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
amount to which  holders of shares of  Special  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
Special  Preferred  Stock  as  provided  in  paragraph  (A) of  this  Section  2
immediately  after 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 per share on the
Special  Preferred  Stock  shall  nevertheless  be  payable  on such  subsequent
Quarterly Dividend Payment Date.

         (C) Dividends  shall begin to accrue and be  cumulative on  outstanding
shares of Special 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 Special  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 Special  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 Special 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 2. Voting  Rights.  The holders of shares of Special  Preferred
Stock shall have the following voting rights:

         (A) Subject to the provision for adjustment hereinafter set forth, each
share of Special Preferred Stock shall entitle the holder thereof to 1,000 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 voting  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 voting Common Stock, then in
each such case the  number  of votes  per  share to which  holders  of shares of
Special  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 voting Common Stock

                                                       - 2 -

<PAGE>



outstanding  immediately  after such event and the  denominator  of which is the
number of shares of voting 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 Special  Preferred Stock and the holders of shares
of voting  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 Special 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  voting  Common  Stock as set forth  herein)  for  taking  any
corporate action.

         Section 3.  Certain Restrictions.

         (A) Whenever  quarterly  dividends or other dividends or  distributions
payable on the Special  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 Special  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 Special Preferred Stock;

                  (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
         Special  Preferred Stock,  except dividends paid ratably on the Special
         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
         Special 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
         (either as to dividends or upon dissolution, liquidation or winding up)
         to the Special Preferred Stock; or

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


                                                       - 3 -

<PAGE>



         (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 4.  Reacquired  Shares.  Any shares of Special  Preferred Stock
purchased  or otherwise  acquired by the  Corporation  in any manner  whatsoever
shall be retired and canceled promptly after the acquisition  thereof.  All such
shares shall upon their  cancellation  become  authorized but unissued shares of
Preferred  Stock and may be reissued as part of a new series of Preferred  Stock
subject to the conditions and restrictions on issuance set forth herein,  in the
Certificate  of  Incorporation,  or in any  other  Certificate  of  Designations
creating  a series  of  Preferred  Stock or any  similar  stock or as  otherwise
required by law.

         Section  5.   Liquidation,   Dissolution   or  Winding   Up.  Upon  any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the  holders  of shares of stock  ranking  junior  (either  as to
dividends  or  upon  liquidation,  dissolution  or  winding  up) to the  Special
Preferred  Stock  unless,  prior  thereto,  the  holders  of shares  of  Special
Preferred  Stock shall have received  $1,000 per share,  plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such  payment,  provided  that the  holders  of shares of Special
Preferred  Stock  shall be entitled  to receive an  aggregate  amount per share,
subject to the provision for adjustment  hereinafter  set forth,  equal to 1,000
times the aggregate  amount to be distributed  per share to holders of shares of
Common  Stock,  or (2) to the  holders  of shares of stock  ranking  on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Special  Preferred  Stock,  except  distributions  made  ratably on the  Special
Preferred  Stock and all such parity stock in proportion to the total amounts to
which the  holders  of all such  shares  are  entitled  upon  such  liquidation,
dissolution  or  winding  up.  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 Special Preferred Stock were entitled  immediately prior to
such event under the proviso in clause (1) 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.

         Section 6.  Consolidation,  Merger,  etc. In case the Corporation shall
enter into any consolidation,  merger, combination or other transaction in which
the shares of Common  Stock are  exchanged  for or changed  into other  stock or
securities,  cash and/or any other property, then in any such case each share of
Special Preferred Stock shall at the same time be similarly exchanged or changed
into an amount per share,  subject to the provision for  adjustment  hereinafter
set forth, equal to 1,000 times the aggregate amount of stock, securities,  cash
and/or any other property  (payable in kind),  as the case may be, into which or
for which each share of Common Stock is changed or  exchanged.  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
amount set forth in the  preceding  sentence  with  respect to the  exchange  or
change of shares of Special Preferred

                                                       - 4 -

<PAGE>



Stock 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.

         Section 7. No Redemption.  The shares of Special  Preferred Stock shall
not be redeemable.

         Section 8. Rank. The Special  Preferred  Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all series
of any other class of the Corporation's Preferred Stock.

         Section  9.  Amendment.   The  Certificate  of   Incorporation  of  the
Corporation  shall not be amended in any manner which would  materially alter or
change the powers,  preferences or special rights of the Special Preferred Stock
so as to affect them adversely without the affirmative vote of the holders of at
least two-thirds of the outstanding  shares of Special  Preferred Stock,  voting
together as a single class.

         Section 10. Fractional Shares. Special Preferred Stock may be issued in
fractions of a share,  which shall  entitle the holder,  in  proportion  to such
holder's  fractional  shares,  to exercise  voting  rights,  receive  dividends,
participate in distributions and have the benefit of all other rights of holders
of Special Preferred Stock.

         IN WITNESS  WHEREOF,  this  Certificate of  Designations is executed on
behalf of the  Corporation  by its President and attested by its Secretary  this
____ day of _________, 1999.




(SEAL)                                               Wirt D. Walker, III



Attest:




Elizabeth Schmitt, Secretary

                                                       - 5 -

<PAGE>



                                                                      Exhibit B


                            FORM OF RIGHT CERTIFICATE

Certificate No. R-                                              ________ Rights

                  NOT  EXERCISABLE  AFTER   ___________,   2009  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.

                                Right Certificate

                           Aviation General, Incorporated

         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 April 7,  1999  (the  "Rights  Agreement"),
between Aviation General,  Incorporated, a Delaware corporation (the "Company"),
and American Securities Transfer & Trust, Inc. (the "Rights Agent"), to purchase
from the  Company  at any time  after  the  Distribution  Date (as such  term is
defined in the Rights  Agreement) and prior to 5:00 p.m, New York Time, on April
7, 2009 at the  principal  office of the Rights  Agent,  or at the office of its
successor as Rights  Agent,  one  one-thousandth  of a fully paid  nonassessable
share of Special  Preferred  Stock,  par value  $0.01 per share (the  "Preferred
Shares"),  of the Company,  at a purchase price of $80.00 per one one-thousandth
of a Preferred Share (the "Purchase Price"),  upon presentation and surrender of
this Right Certificate with the Form of Election to Purchase duly executed.  The
number of Rights  evidenced  by this  Right  Certificate  (and the number of one
one-thousandths  of a  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 April 7,  1999,  based  on the  Preferred  Shares  as
constituted  at such date.  As provided in the Rights  Agreement,  the  Purchase
Price and the number of one  one-thousandths  of a Preferred  Share which may be
purchased  upon the exercise of the Rights  evidenced by this Right  Certificate
are subject to modification and adjustment upon the happening of certain events.

         This Right  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 Right  Certificates.  Copies of
the  Rights  Agreement  are on file at the  principal  executive  office  of the
Company and the above-mentioned office of the Rights Agent.

         This Right Certificate, with or without other Right Certificates,  upon
surrender at the  principal  office of the Rights  Agent,  may be exchanged  for
another  Right  Certificate  or  Right  Certificates  of  like  tenor  and  date
evidencing  Rights  entitling the holder to purchase a like aggregate  number of
Preferred  Shares as the  Rights  evidenced  by the Right  Certificate  or Right
Certificates  surrendered  shall have entitled such holder to purchase.  If this
Right Certificate shall be exercised in part, the holder shall be

                                                        B-1

<PAGE>



entitled to receive upon  surrender  hereof  another Right  Certificate or Right
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 Preferred Shares
or shares of the Company's Common Stock, par value $.01 per share.

         No fractional  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-thousandth of a 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  Right  Certificate  shall be  entitled  to vote or
receive  dividends  or be deemed for any  purpose  the  holder of the  Preferred
Shares  or of any  other  securities  of the  Company  which  may at any time be
issuable on the  exercise  hereof,  nor shall  anything  contained in the Rights
Agreement or herein be construed to confer upon the holder hereof,  as such, any
of the  rights  of a  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  Right
Certificate shall have been exercised as provided in the Rights Agreement.

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


                                                        B-2

<PAGE>



         WITNESS the facsimile  signature of the proper  officers of the Company
and its corporate seal.

Dated as of ____________, 19___.


                         AVIATION GENERAL, INCORPORATED
         [SEAL]

                         By:              
                                   President

ATTEST:



Secretary



Countersigned:


------------------------------


By:                                         
            Authorized Signature



                                                        B-3

<PAGE>



                 Form of Reverse Side of Right Certificate

                             FORM OF ASSIGNMENT

              (To be executed by the registered holder if such
               holder desires to transfer the Right Certificate)


         FOR VALUE RECEIVED                                   
hereby sells, assigns and transfers unto                            

                   (Please print name and address of transferee)


this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably  constitute and appoint Attorney, to transfer the within
Right Certificate on the books of the within-named  Company,  with full power of
substitution. Dated: _____________, 19___

                                                     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
Right  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 Right Certificate -- continued

                          FORM OF ELECTION TO PURCHASE

                              (To be executed by the  registered  holder if such
                         holder  desires to exercise  Rights  represented by the
                         Right Certificate)

To Aviation General, Incorporated

         The   undersigned   hereby   irrevocably   elects  to  exercise  Rights
represented by this Right  Certificate to purchase the Preferred Shares issuable
upon the  exercise  of such  Rights  and  requests  that  certificates  for such
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 Right
Certificate,  a new Right  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, ____________, 19___


                                                     Signature


                                                        B-5

<PAGE>



Signature Guaranteed:

         Signature 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
Right  Certificate  are not  beneficially  owned by an  Acquiring  Person  or an
Affiliate or Associate thereof (as defined in the Rights Agreement).


                                                     Signature


                                                        B-6

<PAGE>



              Form of Reverse Side of Right Certificate -- continued


                                     NOTICE


         The  signature  in the  Form  of  Assignment  or Form  of  Election  to
Purchase,  as the case may be, must conform to the name as written upon the face
of this Right 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 Right  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-7

<PAGE>


                                                                      Exhibit C


                            SUMMARY OF RIGHTS TO PURCHASE
                                  PREFERRED SHARES


         The  Board  of  Directors  of  Aviation   General,   Incorporated  (the
"Company")  has declared a dividend of one  preferred  share  purchase  right (a
"Right") for each  outstanding  share of Common Stock, par value $0.01 per share
(the "Common  Shares"),  of the Company  outstanding on the close of business on
April 7, 1999 (the "Record Date").  Each Right entitles the registered holder to
purchase  from the Company one  one-thousandth  of a share of Special  Preferred
Stock, par value $0.01 per share (the "Preferred  Shares"),  of the Company at a
price of $80.00 per one  one-thousandth  of a  Preferred  Share  (the  "Purchase
Price"), subject to adjustment.  The description and terms of the Rights are set
forth in a Rights  Agreement  (the "Rights  Agreement")  between the Company and
American  Securities  Transfer  & Trust,  Inc.,  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 15% or more of the
outstanding Common Shares 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
or group of  affiliated  persons  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 15% or more of the  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.

         The Rights Agreement  provides that,  until the  Distribution  Date (or
earlier redemption or expiration of the Rights),  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
after the Record  Date 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 April 7, 2009 (the  "Final  Expiration  Date"),  unless the Final
Expiration  Date is  extended  or unless  the  Rights are  earlier  redeemed  or
exchanged by the Company, in each case, as described below.

         The Purchase Price payable, and the number of 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)

                                                        C-1

<PAGE>



in  the  event  of a  stock  dividend  on,  or  a  subdivision,  combination  or
reclassification of, the Preferred Shares, (ii) upon the grant to holders of the
Preferred  Shares of certain  rights or  warrants to  subscribe  for or purchase
Preferred  Shares at a price, or securities  convertible  into Preferred  Shares
with a  conversion  price,  less  than  the  then  current  market  price of the
Preferred  Shares  (as  defined  in the  Rights  Agreement)  or  (iii)  upon the
distribution to holders of the Preferred  Shares of evidences of indebtedness or
assets  (excluding  regular  periodic  cash  dividends  paid out of  earnings or
retained  earnings or dividends  payable in 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-thousandths
of a 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 a  subdivision,
consolidation or combination of the Common Shares  occurring,  in any such case,
prior to the Distribution Date.

         Preferred  Shares  purchasable  upon exercise of the Rights will not be
redeemable.  Each  Preferred  Share will be entitled  to a minimum  preferential
quarterly  dividend payment of $1 per share but will be entitled to an aggregate
dividend of 1,000 times the  dividend  declared per share of common stock of the
Company.  In the event of liquidation,  the holders of the Preferred Shares will
be entitled to a minimum  preferential  liquidation  payment of $1,000 per share
but will be entitled to an aggregate payment of 1,000 times the payment made per
share of common  stock of the  Company.  Each  Preferred  Share  will have 1,000
votes,  voting  together with the common stock of the Company.  Finally,  in the
event of any  merger,  consolidation  or other  transaction  in which  shares of
common stock of the Company are exchanged, each Preferred Share will be entitled
to receive  1,000  times the amount  received  per share of common  stock of the
Company. These rights are protected by customary anti-dilution provisions.

         Because of the nature of the Preferred  Shares'  dividend,  liquidation
and voting rights, the value of the one  one-thousandth  interest in a Preferred
Share  purchasable  upon exercise of each Right should  approximate the value of
one Common Share.

         In the event that any person or group of affiliated  persons becomes an
Acquiring Person,  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  Purchase  Price.  In the event  that,  at any time on or
after the date that any person shall become an Acquiring Person,  the Company is
acquired in a merger or other business combination transaction or 50% or more of
its consolidated assets or earning power are sold, proper 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  Purchase Price,  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 Purchase Price.

         At any time after any person  becomes an Acquiring  Person 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 will have become void), in whole
or in part, at an exchange ratio of one Common Share, or one one-thousandth of a
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).


                                                        C-2

<PAGE>


         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  Preferred  Shares will be issued (other than
fractions  which are  integral  multiples of one  one-thousandth  of a 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  Preferred  Shares on the last trading day prior to the date
of exercise.

         At any time prior to the acquisition by a person or group of affiliated
or associated persons of beneficial  ownership of 15% or more of the outstanding
Common  Shares,  the Board of  Directors of the Company may redeem the Rights in
whole, but not in part, at a price of $.01 per Right (the  "Redemption  Price").
The  redemption  of the Rights may be made  effective at such time on such basis
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 the Rights will
be to receive the Redemption Price.

         Until a right is exercised,  the holder thereof,  as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.

         A copy of the Rights  Agreement  is  available  free of charge from the
Company.  This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement,  which is
hereby incorporated herein by reference.


                                                        C-3