RIGHTS AGREEMENT

between

BIOMET, INC.

and

LAKE CITY BANK,

as Rights Agent


Dated as of December 16, 1999





<PAGE>

<TABLE>
<CAPTION>
INDEX
<S>            <C>                                                                      <C>
                                                                                         Page


Section 1.     Certain Definitions                                                          1
Section 2.     Appointment of Rights Agent                                                  4
Section 3.     Issuance of Right Certificates                                               4
Section 4.     Form of Right Certificates                                                   6
Section 5.     Countersignature and Registration                                            6
Section 6.     Transfer, Split Up, Combination and Exchange of Right Certificates;
               Mutilated, Destroyed, Lost or Stolen Right Certificates                      7
Section 7.     Exercise of Rights; Purchase Price; Expiration Date of Rights                7
Section 8.     Cancellation and Destruction of Right Certificates                           8
Section 9.     Availability of Capital Stock                                                8
Section 10.    Record Date                                                                  9
Section 11.    Adjustment of Purchase Price, Number of Shares or Number of Rights          10
Section 12.    Certificate of Adjusted Purchase Price or Number of Shares                  16
Section 13.    Consolidation, Merger or Sale or Transfer of Assets or Earning Power        16
Section 14.    Fractional Rights and Fractional Shares                                     18
Section 15.    Rights of Action                                                            19
Section 16.    Agreement of Right Holders                                                  19
Section 17.    Right Certificate Holder Not Deemed a Shareholder                           19
Section 18.    Concerning the Rights Agent                                                 20
Section 19.    Merger or Consolidation or Change of Name of Rights Agent                   20
Section 20.    Duties of Rights Agent                                                      21
Section 21.    Change of Rights Agent                                                      23
Section 22.    Issuance of New Right Certificates                                          23
Section 23.    Redemption                                                                  24
Section 24.    Exchange                                                                    25
Section 25.    Notice of Certain Event                                                     26
Section 26.    Notices                                                                     27
Section 27.    Supplements and Amendments                                                  27
Section 28.    Successors                                                                  27
Section 29.    Benefits of this Agreement                                                  27
Section 30.    Severability                                                                28
Section 31.    Governing Law                                                               28
Section 32.    Counterparts                                                                28
Section 33.    Descriptive Headings                                                        28

</TABLE>


<PAGE>
RIGHTS AGREEMENT


     This  Agreement is made and entered  into as of December 16, 1999,  between
Biomet,  Inc., an Indiana  corporation (the  "Company"),  and Lake City Bank, an
Indiana corporation, (the "Rights Agent").

RECITALS

     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 as of the Close of Business
on December 28, 1999 (the "Record Date"),  each Right  representing the right to
purchase one  one-hundred  thousandth  (.00001) of a Series A Preferred Share of
the  Company  (a  "Preferred  Share  Unit"),  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).  The Rights Agent has agreed to accept its appointment as such, and to
carry out the duties imposed on it hereunder.

     In  consideration  of the  premises  and the mutual  agreements  herein set
forth, the parties hereby agree as follows:

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

     (a)  "Acquiring  Person" shall mean any Person (as such term is hereinafter
defined) who or which,  together with all  Affiliates  and  Associates  (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is  hereinafter  defined)  of 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  that,  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".

     (b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such  terms in Rule  12b-2 of the  General  Rules and  Regulations  under the
Exchange Act (as such term is  hereinafter  defined).


<PAGE>

     (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
     beneficially owns, directly or indirectly;

          (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 these Rights),  warrants or options, or
     otherwise;  provided,  however,  that a  Person  shall  not be  deemed  the
     Beneficial Owner of, or to Beneficially Own,  securities  tendered pursuant
     to a tender or exchange offer made by or on behalf of such Person or any of
     such Person's  Affiliates or Associates until such tendered  securities are
     accepted for purchase or exchange; 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

          (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 Beneficially Own hereunder.

     (d) "Business Day" shall mean any day other than a Saturday, a Sunday, or a
day on which  banking  institutions  in the State of Indiana are  authorized  or
obligated by law or executive order to close.


<PAGE>

     (e) "Close of  Business"  on any given  date shall mean 5:00 P.M.,  Eastern
Standard  Time,  on such  date;  provided,  however,  that if such date is not a
Business  Day it shall  mean  5:00  P.M.,  Eastern  Standard  Time,  on the next
succeeding Business Day.

     (f) "Common  Shares" when used with reference to the Company shall mean the
shares of the Company  designated in its Amended  Articles of  Incorporation  as
"Common  Shares".  "Common  Shares" when used with reference to any Person other
than the Company shall mean the capital stock or other 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) "Company" shall have the meaning set forth in the preamble hereof.

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

     (i)  "Exchange  Act" shall mean the  Securities  Exchange  Act of 1934,  as
amended.

     (j) "Exchange  Date" shall mean the time at which such Rights are exchanged
as provided in Section 24 hereof.

     (k)  "Exchange  Ratio"  shall have the meaning  set forth in Section  24(a)
hereof.

     (l) "Final  Expiration  Date"  shall mean the Close of Business on December
16, 2009.

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

     (n) "Preferred Share Unit" shall mean one-hundred  thousandth (.00001) of a
Series A Preferred Share of the Company.

     (o) "Preferred  Shares" shall mean the shares of the Company  designated in
the Articles of Incorporation of the Company,  as amended as Series A "Preferred
Shares".

     (p) "Purchase  Price" shall  initially be $175.00 for each Preferred  Share
Unit  purchasable  pursuant to the exercise of a Right,  and shall be subject to
adjustment  from time to time as  provided in Section 11 and 13 hereof and shall
be payable in lawful money of the United  States of America in  accordance  with
Section  7(c).

     (q) "Record Date" shall have the meaning set forth in the second  paragraph
hereof.

     (r) "Redemption  Date" shall mean the time at which the Rights are redeemed
as provided in Section 23 hereof.


<PAGE>

     (s)  "Redemption  Price"  shall  have the  meaning  set forth in Section 23
hereof.

     (t)  "Right"  shall  have the  meaning  set forth in the  second  paragraph
hereof.

     (u) "Right  Certificate"  shall have the meaning set forth in Section  3(a)
hereof.

     (v) "Rights Agent" shall have the meaning set forth in the preamble hereof.

     (w) "Rights  Agreement"  shall have the  meaning set forth in Section  3(c)
hereof.

     (x) "Security" shall have the meaning set forth in Section 11(d) hereof.

     (y)  "Shares  Acquisition  Date"  shall  mean  the  first  date  of  public
announcement by the Company or an Acquiring  Person that an Acquiring Person has
become such or such  earlier  date as a majority of the  Directors  shall become
aware of the existence of an Acquiring Person.

     (z)  "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 other
equity interest is owned, directly or indirectly, by such Person.

     (aa)  "Trading  Day" shall  have the  meaning  set forth in  Section  11(d)
hereof.

     Section 2.  Appointment of Rights Agent.  The Company  hereby  appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof,  shall prior to the Distribution  Date also
be the holders of the Common Shares) in accordance with the terms and conditions
hereof,  and the Rights Agent hereby accepts such  appointment.  The Company may
from time to time  appoint  such  co-Rights  Agents as it may deem  necessary or
desirable.

     Section 3. Issuance of Right  Certificates.

     (a)  Until  the  earlier  of (a) the tenth  business  day after the  Shares
Acquisition  Date or (b) the tenth  business  day (or such  later date as may be
determined by action of the Board of Directors  prior to such time as any person
becomes an Acquiring  Person) after the date of the  commencement  by any Person
(other than 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 30% 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"),  (i)  the  Rights  will  be  evidenced  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 (ii)  the  Rights  Certificates  will not be
transferable except as a part of the transfer of certificates for Common Shares,
and until the  Distribution  Date (or the earlier of the Redemption  Date or the
Final Expiration Date), the surrender for transfer of any certificate for Common
Shares  outstanding on the Record Date, with or without a copy of the Summary of
Rights  attached  thereto,  shall also  constitute  the  transfer  of the Rights
associated with the Common Shares  represented  thereby.  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 separate Right  Certificate,  in substantially the form of Exhibit A
hereto (a "Right  Certificate"),  evidencing  one Right for each Common Share so
held.  Following the Close of Business on the Distribution Date, the Rights will
be evidenced  solely by such Right  Certificates.


<PAGE>

     (b) The Company will make available,  as promptly as practicable  following
the  Record  Date,  a  Summary  of  Rights  to  Purchase  Preferred  Shares,  in
substantially the form of Exhibit B hereto, to any holder of Rights from time to
time prior to the Expiration Date upon the request of the holders.

     (c)  Certificates  for Common Shares issued after the Record Date but prior
to the  earliest of the  Distribution  Date,  the  Redemption  Date or the Final
Expiration  Date  (whether  as an  original  issuance  of Common  Shares or as a
transfer or  re-registration  of outstanding Common Shares) 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 BIOMET, INC.
          AND LAKE  CITY  BANK,  DATED AS OF  DECEMBER  16,  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
          OFFICES OF BIOMET, INC. UNDER CERTAIN  CIRCUMSTANCES,  AS SET FORTH IN
          THE RIGHTS  AGREEMENT,  SUCH  RIGHTS  WILL BE  EVIDENCED  BY  SEPARATE
          CERTIFICATES  AND WILL NO LONGER  BE  EVIDENCED  BY THIS  CERTIFICATE.
          BIOMET, INC. WILL MAIL TO THE HOLDER OF THIS CERTIFICATE A COPY OF THE
          RIGHTS  AGREEMENT  WITHOUT  CHARGE AFTER RECEIPT OF A WRITTEN  REQUEST
          THEREFOR.  AS DESCRIBED IN THE RIGHTS AGREEMENT,  RIGHTS ISSUED TO ANY
          PERSON WHO  BECOMES  AN  ACQUIRING  PERSON  (AS  DEFINED IN THE RIGHTS
          AGREEMENT) SHALL BECOME NULL AND VOID.


<PAGE>

     (d) In the event that the Company  purchases or acquires any Common  Shares
after the Record Date but prior to the Distribution  Date, any Rights associated
with such  Common  Shares  shall be deemed  cancelled  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  shares and of  assignment  to be printed on the
reverse  thereof) shall be  substantially  the same as Exhibit A 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 the National Association of Securities
Dealers, Inc. or any stock exchange on which the Rights may from time to time be
listed or quoted, or to conform to usage.  Subject to the provisions of Sections
11, 13, and 22 hereof,  the Right Certificates shall entitle the holders thereof
to purchase  such number of Preferred  Share Units as shall be set forth therein
at the price per Preferred Share Unit set forth therein (the "Purchase  Price"),
but the amount and type of  securities  purchasable  upon the  exercise  of each
Right and the Purchase  Price thereof shall be subject to adjustment as provided
herein.

     Section 5. Countersignature and Registration.

     (a) The Right  Certificates  shall be  executed on behalf of the Company by
its Chairman of the Board, its President, or any of its Vice Presidents,  either
manually or by facsimile  signature,  shall have affixed  thereto the  Company's
seal or a  facsimile  thereof,  and shall be attested  by the  Secretary  or any
Assistant Secretary of the Company,  either manually or by facsimile  signature.
The 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 Rights  Agreement any such person was not such an officer.

     (b) Following the Distribution Date, the Rights Agent will keep or cause to
be kept,  at its  principal  office or such  other  office  designated  for such
purpose,  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.


<PAGE>

     Section  6.  Transfer,   Split  Up,   Combination  and  Exchange  of  Right
Certificates;  Mutilated,  Destroyed,  Lost or Stolen Right Certificates.

     (a) 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  a like  number of
Preferred  Share  Units (or other  securities,  as the case may be) as the Right
Certificate or Right  Certificates by the surrender of the Right  Certificate or
Right  Certificates  to be  transferred,  split up, combined or exchanged at the
office of the Rights Agent  designated  for such  purpose,  duly  endorsed  with
signature guaranteed as provided for in the form of Right Certificate,  and with
the  Certificate  as to beneficial  ownership  duly  executed by the  registered
holder.  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.

     (b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory  to them of the loss,  theft,  destruction or mutilation of a 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  office of the  Rights  Agent  designated  for such
purpose,  together with payment of the Purchase Price for each  Preferred  Share
Unit (or  other  securities,  as the case may be) as to  which  the  Rights  are
exercised, at or prior to the earliest of (a) the Final Expiration Date, (b) the
Redemption Date, or (c) the Exchange Date.

     (b) The Purchase Price for each Preferred Share Unit (or other  securities,
as the case may be)  pursuant  to the  exercise of a Right  shall  initially  be
$175.00,  shall be  subject  to  adjustment  from  time to time as  provided  in
Sections  11 and 13 hereof and shall be  payable  in lawful  money of the United
States of America in accordance with Section 7(c) below.


<PAGE>

     (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 (a) (i) requisition from any transfer agent of the Preferred
Shares  certificates  for the  total  number  of  Preferred  Share  Units  to be
purchased (and the Company hereby  irrevocably  authorizes its transfer agent to
comply  with  all  such  requests),  or  (ii)  requisition  from  the  Company's
depositary  agent,  if any,  depositary  receipts  representing  such  number of
Preferred Share Units 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 its depositary
agent to comply with such request),  (b) 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,  (c)  promptly  after  receipt of such
certificates (or depositary receipts), cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be  designated  by such  holder  and (d) when  appropriate,
after receipt, promptly 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 cancelled form,
or, if surrendered  to the Rights Agent,  shall be cancelled by it, and no Right
Certificates  shall be issued in lieu thereof  except as expressly  permitted by
any of the provisions of this Rights Agreement. The Company shall deliver to the
Rights  Agent for  cancellation  and  retirement,  and the Rights Agent shall so
cancel and retire,  any other  Right  Certificate  purchased  or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall deliver
all  cancelled  Right  Certificates  to the  Company,  or shall,  at the written
request of the Company,  destroy such cancelled Right Certificates,  and in such
case shall  deliver a certificate  of  destruction  thereof to the Company.

     Section 9. Availability of Capital Stock.

     (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
authorized  and issued  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 in  accordance  with  Section  7, and  shall,  to the extent
reasonably  practicable,  so reserve and keep  available a sufficient  number of
Common  Shares  (and/or  other  securities  which may be  required to permit the
exercise in full of the Rights) pursuant to the Agreement. The Company covenants
and agrees that it will take all such action as may be  necessary to ensure that
all securities  delivered upon exercise of Rights shall, at the time of delivery
of the  certificates  for such  securities  (subject to payment of the  Purchase
Price),  be  duly  and  validly   authorized  and  issued  and  fully  paid  and
nonassessable.


<PAGE>

     (b) 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 (or Common Shares and/or other securities,  as the case may
be) 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 (or Common Shares
and/or other  securities,  as the case may be) 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 (or Common Shares and/or other securities,  as the case may be)
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.

     (c) The Company  covenants and agrees that it will (i) prepare and file, as
soon as practicable after the Distribution Date, a registration  statement under
the Securities Act of 1933, as amended (the "Securities Act"), on an appropriate
form with respect to the securities  issuable upon exercise of the Rights,  (ii)
use its best efforts to cause the registration  statement to become effective as
soon as  practicable  after filing,  and (iii) use its best efforts to cause the
registration  statement  to remain  effective  (with a  prospectus  at all times
meeting the  requirements  of the Securities  Act and the rules and  regulations
thereunder)  until the  earlier  of the  exercise  of all of the  Rights and the
Expiration  Date. The Company will also take all actions required to comply with
the state  securities  laws  applicable to the Rights and  Preferred  Shares (or
Common  Shares  and/or  other  securities,  as the  case may be)  issuable  upon
exercise of the Rights.  The Company may  temporarily  suspend,  for a period of
time not to exceed 90 days, the exercisability of the Rights in order to prepare
and file the registration statement. Upon any such suspension, the Company shall
issue a public  announcement  and notice to the Rights  Agent  stating  that the
exercisability  of the Rights has been  temporarily  suspended,  and the Company
shall  issue a public  announcement  and  notice to the  Rights  Agent  when 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 in which any requisite  registration or qualification  has not been
obtained or any requisite  notice of exemption has not been filed.

     Section 10.  Record  Date.  Each person in whose name any  certificate  for
Preferred  Shares (or Common Shares and/or other  securities as the case may be)
is issued upon the  exercise of Rights  shall for all purposes be deemed to have
become the holder of record of the  Preferred  Shares (or Common  Shares  and/or
other  securities  as  the  case  may  be)  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  Share (or Common Share
and/or other  securities  as the case may be) transfer  books of the Company are
closed,  such person  shall be deemed to have  become the record  holder of such
succeeding  Business  Day on which the  Preferred  Share (or Common Share and/or
other  securities  as the case may be)  transfer  books of the Company are open.
Prior to the  exercise of the Rights  evidenced  thereby,  the holder of a Right
Certificate  shall not be entitled to any rights of a holder of Preferred Shares
(or Common  Shares  and/or  other  securities  as the case may be) 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.


<PAGE>

     Section 11.  Adjustment  of Purchase  Price,  Number of Shares or Number of
Rights.  The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.

          (a)  (i) In the event the Company  shall at any time after the date of
          this Agreement (1) declare a dividend on the Preferred  Shares payable
          in Preferred Shares,  (2) subdivide the outstanding  Preferred Shares,
          (3) combine the outstanding  Preferred Shares into a smaller number of
          Preferred Shares or (4) issue any securities 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),  the Purchase Price in effect at
          the time of the record date for such dividend or of the effective date
          of such subdivision,  combination or reclassification,  and the number
          and kind of shares of capital  stock  issuable on such date,  shall be
          proportionately  adjusted  so that the  holder of any Right  exercised
          after such time shall be entitled to receive the aggregate  number and
          kind of  shares  of  capital  stock  which,  if such  Right  had  been
          exercised  immediately  prior  to such  date  and at a time  when  the
          Preferred  Share transfer books of the Company were open,  such holder
          would have owned upon such  exercise  and been  entitled to receive by
          virtue of such dividend, subdivision, combination or reclassification.
          The  adjustments  provided  for in this  Section  11(a)  shall be made
          successively  whenever  such a dividend  is declared or paid or such a
          subdivision, combination or consolidation is effected.

               (ii) In the  event  (1) any  Person  alone or  together  with its
          Affiliates and  Associates  shall become an Acquiring  Person,  or (2)
          during such time as there is an Acquiring  Person,  there shall be any
          reclassification of securities  (including any reverse stock split) or
          recapitalization  or  reorganization  of the  Company  which  has  the
          effect,  directly  or  indirectly  of  increasing  by more than 1% the
          proportionate  share of the outstanding  shares of any class of equity
          securities  of the  Company  or any of its  Subsidiaries  beneficially
          owned by any Acquiring  Person or any Affiliate or Associate  thereof,
          each  holder of a Right  shall,  for a period of sixty (60) days after
          the later of the occurrence of any such event or the effective date of
          the  registration  statement  referred to in Section 9 hereof,  have a
          right to receive,  upon exercise  thereof at a price equal to the then
          current  Purchase Price in accordance with the terms of this Agreement
          such number of Common Shares of the Company (or, in the  discretion of
          the Board,  Preferred  Share Units) as shall equal the result obtained
          by (x)  multiplying  the then current  Purchase Price by the number of
          Preferred  Share  Units  for  which a Right  is then  exercisable  and
          dividing  that product by (y) 50% of the then current per share market
          price of the Company's Common Shares  (determined  pursuant to Section
          11(d) hereof) on the date such Person became an Acquiring  Person.  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.


<PAGE>

          From and after the  occurrence of the earlier of the events  described
          in clauses (i) and (ii) above, any Rights that are or were acquired or
          beneficially  owned by such  Acquiring  Person  (or any  Associate  or
          Affiliate of such  Acquiring  Person)  shall be void 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 or any Associate or Affiliate thereof shall be cancelled.

          In case any event described in clauses (i) and (ii) above 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 this Section 11 (a)(ii).

               (iii) If 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,  including  the calling of a meeting of  shareholders.  If 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
          Share  Units  (or  a  security  with  substantially   similar  rights,
          privileges,  preferences,  voting power and economic rights) such that
          the current per share  market  price of one  Preferred  Share Unit (or
          such other security) is equal to the current per share market price of
          one Common  Share as of the date of issuance of such  Preferred  Share
          Unit (or other security).


<PAGE>

     (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 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).  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  purpose  of any such
computation.  Such adjustment shall be made successively  whenever such a record
date is fixed; and in the event that such rights, options or warrants are not so
issued,  the  Purchase  Price shall be adjusted to be the  Purchase  Price which
would then be in effect if such record date had not been fixed.

     (c) 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 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.


<PAGE>

          (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 (1) a dividend or distribution on such Security payable in
          shares of such Security or securities convertible into such shares, or
          (2) any subdivision,  combination or reclassification of such Security
          and prior to the  expiration of 30 Trading Days after the  ex-dividend
          date for such  dividend or  distribution,  or the record date for such
          subdivision,  combination of 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 hundred 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.


<PAGE>

     (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 hundred  thousandth 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 (a) three
years from the date of the transaction which requires such adjustment or (b) 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 securities of the Company other than Preferred Shares, thereafter the number
of such other  securities  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 Sections  11(a) through  11(c),  inclusive,  and the  provisions of
Sections 7, 9, 10 and 13 with  respect to the  Preferred  Shares  shall apply on
like terms to any such other securities.

     (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 Preferred Share Units
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 Preferred Share Units
obtained by (a) multiplying (x) the number of Preferred Share Units 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 (b) 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 Preferred Share Units  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 Preferred Share Units 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 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.


<PAGE>

     (j)  Irrespective  of any adjustment or change in the Purchase Price or the
number of Preferred  Share Units  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 Preferred  Share Units which were expressed in
the initial  Right  Certificates  issued  hereunder.

     (k) Before  taking any action that would cause an  adjustment  reducing the
Purchase Price of the Preferred Shares issuable upon exercise of the Rights, the
Company  shall  take any  corporate  action  which  may,  in the  opinion of its
counsel,  be necessary  in order that the Company may validly and legally  issue
fully paid and  nonassessable  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
issuance  to the holder of any Right  exercised  after such  record  date of the
Preferred Share Units, Common Shares or other securities of the Company, if any,
issuable upon such exercise over and above the number of Preferred  Share Units,
Common  Shares or other  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 (i)  consolidation or subdivision of the Preferred  Shares,  (ii)
issuance wholly for cash of any Preferred Shares at less than the current market
price, (iii) issuance wholly for cash of Preferred Shares or securities which by
their terms are convertible into or exchangeable for Preferred  Shares,  or (iv)
dividends on Preferred Shares payable in Preferred Shares or issuance of rights,
options or warrants referred to hereinabove in Section 11, hereafter made by the
Company  to  holders  of its  Preferred  Shares  shall  not be  taxable  to such
stockholders.


<PAGE>

     (n) Anything in this Agreement to the contrary notwithstanding in the event
that at any  time  after  the date of this  Rights  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  Preferred  Share  Units
purchasable  after such  event  upon  proper  exercise  of each  Right  shall be
determined by  multiplying  the number of Preferred  Share Units 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 the  preceding  sentence  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 Sections 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  Preferred  Shares and
Common  Shares a copy of such  certificate  and (c) if a  Distribution  Date has
occurred,  mail a brief summary  thereof to each holder of a Right  Certificate.
The Rights  Agent shall be fully  protected in relying on such  certificate  and
shall not be deemed to have  knowledge  of any  adjustment  unless  and until it
shall have received such  certificate.

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

     (a) In the event, directly or indirectly, (i) the Company shall consolidate
with,  or merge  with  and  into,  any  other  Person,  (ii)  any  Person  shall
consolidate with the Company, or merge with and into the Company and the Company
shall  be the  continuing  or  surviving  corporation  of such  merger  and,  in
connection  with such merger,  all or part of the Common Shares shall be changed
into or exchanged for securities of any other Person (or the Company) or cash or
any other  property,  or (iii) the Company shall sell or otherwise  transfer (or
one or more of its  Subsidiaries  shall sell or otherwise  transfer) , in one or
more transactions, assets or earning power aggregating 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 (1) 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 Preferred Share
Units for which a Right is then  exercisable,  in  accordance  with the terms of
this  Agreement  and in lieu of  Preferred  Share  Units,  such number of freely
tradeable Common Shares of such other Person (including the Company as successor
thereto or as the surviving corporation), free and clear of any liens, rights of
call or first refusal,  encumbrances or other adverse claims, as shall equal the
result obtained by (A) multiplying the then current Purchase Price by the number
of Preferred Share Units 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;  (2) 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;  (3) the term  "Company"
shall  thereafter  be deemed to refer to such issuer;  and (4) 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.


<PAGE>

     (b) 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  providing for the
terms set forth in Section 13(a) hereof and further  providing  that, as soon as
practicable  after the date of any  consolidation,  merger,  sale or transfer of
assets mentioned in Section 13(a) hereof,  such issuer at its own expense shall:

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

          (ii) use its best  efforts to qualify or  register  the Rights and the
     securities  purchasable upon exercise of the Rights under the blue sky laws
     of such jurisdictions as may be necessary or appropriate; and

          (iii) deliver to holders of the Rights historical financial statements
     for such issuer and each of its  Affiliates  which  comply in all  material
     respects  with the  requirements  for  registration  on Form 10  under  the
     Exchange Act.

     (c) 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.


<PAGE>

     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 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-hundred
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-hundred  thousandth  of a  Preferred
Share).  Fractions of Preferred Shares in integral  multiples of one one-hundred
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-hundred
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)(ii) hereof) for the
Trading Day immediately  prior to the date of such exercise.


<PAGE>

     (c) The holder of a Right by the acceptance of the Right  expressly  waives
such holder's  right to receive any fractional  Rights or any fractional  shares
upon exercise of a Right (except as expressly  provided above).

     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:

     (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 office of
the Rights Agent designated for such purpose,  duly endorsed or accompanied by a
proper instrument of transfer;  and

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

     Section 17. Right Certificate  Holder Not Deemed a Shareholder.  No holder,
as such,  of any Right  Certificate  shall be deemed  for any  purpose to be the
holder of the Preferred  Shares or any other securities of the Company which may
at any time be issuable on the exercise of the Rights represented  thereby,  nor
shall  anything  contained  herein or in any Right  Certificate  be construed to
confer upon the holder of any Right  Certificate as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof,  or to give or
withhold  consent to any corporate  action,  or to receive notice of meetings or
other actions  affecting  shareholders  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.


<PAGE>

     Section 18.  Concerning the Rights Agent.  The Company agrees to pay to the
Rights Agent reasonable  compensation for all services  rendered by it hereunder
and, from time to time, on demand of the Rights Agent,  its reasonable  expenses
and counsel  fees and other  disbursements  incurred in the  administration  and
execution  of this  Agreement  and the exercise  and  performance  of its duties
hereunder.  The Company  also agrees to  indemnify  the Rights Agent for, and to
hold it harmless  against,  any loss,  liability,  or expense,  incurred without
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection  with the  acceptance
and  administration  of this  Agreement,  including  the costs and  expenses  of
defending against any claim of liability in the premises.

     The Rights Agent shall be protected and shall incur no liability for, or in
respect of any action taken,  suffered or omitted by it in connection  with, its
administration  of this  Agreement  in reliance  upon any 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.

     Section 19. Merger or  Consolidation or Change of Name of Rights Agent. Any
corporation  into which the Rights  Agent or any  successor  Rights Agent may be
merged or with which it may be consolidated,  or any corporation  resulting from
any merger or  consolidation  to which the Rights Agent or any successor  Rights
Agent shall be a party, or any  corporation  succeeding to the stock transfer or
corporate  trust  business of the Rights Agent or any  successor  Rights  Agent,
shall be the  successor  to the Rights  Agent under this  Agreement  without the
execution  or filing of any paper or any  further  act on the part of any of the
parties hereto, provided that such corporation would be eligible for appointment
as a successor  Rights Agent under the provisions of Section 21 hereof.  In case
at the time such  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.


<PAGE>

     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  imposed  by  this  Agreement  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.

     (b)  Whenever in the  performance  of its duties under this  Agreement  the
Rights Agent shall deem it  necessary  or  desirable  that any fact or matter be
proved or  established  by the Company  prior to taking or suffering  any action
hereunder,  such fact or matter  (unless  other  evidence in respect  thereof be
herein  specifically  prescribed)  may be deemed to be  conclusively  proved and
established by a certificate signed by any one of the Chairman of the Board, the
President, any Vice President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent; and such certificate shall be full  authorization
to the Rights  Agent for any action  taken or suffered in good faith by it under
the provisions of this Agreement in reliance upon such certificate.

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

     (d) The  Rights  Agent  shall not be liable  for or by reason of any of the
statements  of fact or  recitals  contained  in this  Agreement  or in the 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 shall not be under any  responsibility  in respect of
the validity of this Agreement or the execution and delivery  hereof (except the
due  execution  hereof by the Rights  Agent) or in respect  of the  validity  or
execution of any 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,  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  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,  Common Shares or other
securities to be issued  pursuant to this Agreement or any Right  Certificate or
as to whether any Preferred Shares, Common Shares or other securities will, when
issued, be validly authorized and issued, fully paid and nonassessable.


<PAGE>

     (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 of  performing  by the Rights Agent of
the provisions of this Agreement.

     (g)  The  Rights  Agent  is  hereby   authorized  and  directed  to  accept
instructions  with respect to the  performance of its duties  hereunder from any
one of the  Chairman  of the  Board,  the  President,  any vice  President,  the
Secretary or the  Treasurer of the  Company,  and to apply to such  officers for
advice or instructions in connection with its duties, and it shall not be liable
for any  action  taken  or  suffered  by it in good  faith  in  accordance  with
instructions  of any such officer or for any delay in acting  while  waiting for
those  instructions.

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

     (h) The Rights Agent and any shareholder,  director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other  securities
of the Company or become pecuniarily  interested in any transaction in which the
Company  may be  interested,  or  contract  with or lend money to the Company or
otherwise  act as fully and freely as though it were not Rights Agent under this
Agreement.  Nothing  herein  shall  preclude the Rights Agent from acting in any
other capacity for the Company or for any other legal entity.

     (i) The Rights  Agent may execute and  exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its  attorneys  or  agents,  and the Rights  Agent  shall not be  answerable  or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the  Company  resulting  from any such  act,  default,
neglect or misconduct,  provided  reasonable care was exercised in the selection
and continued  employment thereof.


<PAGE>

     (j) No provision of this Agreement shall require the Rights Agent to expend
or risk  its own  funds  or  otherwise  incur  any  financial  liability  in the
performance  of any of its duties  hereunder or in the exercise of its rights if
there shall be reasonable  grounds for believing that repayment of such funds or
adequate  indemnification  against  such  risk or  liability  is not  reasonably
assured to it.

     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 Preferred  Shares and Common 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  Preferred  Shares and Common  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, shall be (i)
a corporation  organized and doing  business under the laws of the United States
or the State of Indiana (or of any other  state of the United  States so long as
such corporation is authorized to do business as a banking institution), validly
existing and which is authorized under such laws to exercise  corporate trust or
stock transfer powers and is subject to supervision or examination by federal or
state  authority and which has at the time of its  appointment as Rights Agent a
combined  capital and surplus of at least $50 million or (ii) a subsidiary  of a
corporation  described in clause (i) of this sentence.  After  appointment,  the
successor Rights Agent shall be vested with the same powers,  rights, duties and
responsibilities  as if it had been  originally  named as Rights  Agent  without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the  purpose.  Not later than the  effective  date of any such  appointment  the
Company shall file notice thereof in writing with the  predecessor  Rights Agent
and each  transfer  agent of the Common Shares or 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.


<PAGE>

     Section 23.  Redemption.

     (a) The Board of Directors  of the Company may, at its option,  at any time
prior to the tenth  business day after any Person  becomes an Acquiring  Person,
redeem all but not less than all of the then outstanding  Rights at a redemption
price of $.0001 per Right,  appropriately  adjusted to reflect any stock  split,
stock  dividend or similar  transaction  occurring  after the date hereof  (such
redemption  price  being  hereinafter  referred to as the  "Redemption  Price");
provided,  however,  that  during  the time  period in which the  Rights  may be
redeemed, the Board of Directors of the Company may extend the time during which
the Rights may be redeemed for a time period as may be  determined  by the Board
of  Directors.  Notwithstanding  anything  contained  in this  Agreement  to the
contrary,  the Rights shall not be exercisable after the first occurrence of the
event  described in Section  11(a)(ii) until such time as the Company's right of
redemption  hereunder has expired.  The redemption of the Rights by the Board of
Directors of the Company may be made  effective at such time,  on such basis and
with such  conditions  as the Board of  Directors  of the  Company,  in its sole
discretion,  may  establish.  The Company may, at is option,  pay the Redemption
Price in cash,  Common Shares (based on the current  market price at the time of
redemption) or any other form of consideration  deemed  appropriate by the Board
of Directors.

     (b) In  addition,  in the  exercise  of its sole  discretion  the  Board of
Directors  of the  Company  may  redeem  all but not  less  than all of the then
outstanding  Rights at the Redemption Price following the occurrence of a Shares
Acquisition Date but prior to any event described in Section 13(a) either (a) in
connection  with any event  specified  in Section  13(a) in which all holders of
Preferred  Share  Units are  treated  alike and not  involving  (other than as a
holder of Preferred  Share Units being  treated like all other such  holders) an
Acquiring  Person or an Affiliate  or  Associate  of an Acquiring  Person or any
other Person in which such Acquiring Person, Affiliate or such Associate has any
interest,  or any other Person acting  directly or indirectly on behalf of or in
association  with any such  Acquiring  Person,  Affiliate or  Associate,  or (b)
following  the  occurrence  of an event set forth in, and the  expiration of any
period during which the holder of Rights may exercise the rights under,  Section
11(a)(ii)  if and for as long as the  Acquiring  Person  is not  thereafter  the
Beneficial Owner 15% or more of the outstanding  Common Shares,  and at the time
of  redemption  there are no other persons who are  Acquiring  Persons.

     (c)  Immediately  upon the action of the Board of  Directors of the Company
ordering  the  redemption  of the Rights,  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.  Within ten days after the action of the Board of Directors  ordering the
redemption of the Rights,  the Company  shall give notice of such  redemption to
the holders of the then  outstanding  Rights by mailing  such notice to all such
holders at their last  addresses as they appear upon the  registry  books of the
Rights Agent or, prior to the  Distribution  Date, on the registry  books of the
transfer  agent for the 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, and other
than in connection with the purchase of Common Shares prior to the  Distribution
Date.


<PAGE>

     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,  appropriately
adjusted  to reflect any stock  split,  stock  dividend  or similar  transaction
involving  either the Preferred  Shares or the Common Shares 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 more than 50% 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 Section  24(a) and without any
further  action and without any notice,  the right to exercise such Rights shall
terminate  and the only right  thereafter of a holder of such Rights shall be to
receive that number of Common  Shares equal to the number of such Rights held by
such holder  multiplied by the Exchange  Ratio.  The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice  shall not affect the  validity of such  exchange.
The  Company  promptly  shall mail a notice of any such  exchange  to all of the
holders of such Rights at their last  addresses as they appear upon the registry
books of the  Rights  Agent.  Any notice  which is mailed in the  manner  herein
provided shall be deemed given,  whether or not the holder  receives the notice.
Each such notice of exchange  will state the method by which the exchange of the
Common  Shares for Rights  will be  effected  and,  in the event of any  partial
exchange,  the number of Rights which will be  exchanged.  Any partial  exchange
shall be  effected  pro rata based on the number of Rights  (other  than  Rights
which have become void pursuant to the provisions of Section  11(a)(ii)  hereof)
held by each holder of Rights.

     (c) In any  exchange  pursuant  to this  Section  24, the  Company,  at its
option, may substitute  Preferred Shares (or equivalent preferred stock, as such
term is defined in Section  11(b)  hereof) for some or all of the Common  Shares
exchangeable  for Rights,  at the initial rate of one  Preferred  Share Unit (or
equivalent  preferred  stock) for each Common Share, as appropriate  adjusted to
reflect  adjustments in the voting rights of the Preferred Stock pursuant to the
terms thereof, so that each Preferred Share Unit delivered in lieu of each share
of Common Stock shall have the same voting  rights as one share of Common Stock.


<PAGE>

     (d) The Company  shall not be required to issue  fractions of Common Shares
or Preferred Share Units or to distribute certificates which evidence fractional
Common Shares or Preferred Share Units. In lieu of such fractional Common Shares
or Preferred Share Units, the Company shall pay to the registered holders of the
Right  Certificates  with  regard  to which  such  fractional  Common  Shares or
Preferred Share Units would otherwise be issuable an amount in cash equal to the
same  fraction of the current  market value of a whole Common Share or Preferred
Share Units. For the purposes of this Section 24(d), the current market value of
a whole Common Share or Preferred  Share Unit,  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) 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 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
Preferred Shares,  whichever shall be the earlier.

     (b) In case the event set forth in Section  11(a)(ii)  hereof  shall occur,
then (i) 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
and (ii) all references in the foregoing Section 25(a) to Preferred Shares shall
be deemed thereafter to refer also, if appropriate,  to Common Shares and/or, if
appropriate,  other securities of the Company.


<PAGE>

     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:

          Biomet,  Inc.
          Airport  Industrial Park
          P.O. Box 587
          Warsaw,  Indiana 46581-0587
          Attention: Daniel P. Hann

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:

          Lake City Bank
          P.O. Box 1387
          Warsaw, Indiana 46581-1387
          Attention: Jeanine D. Knowles

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.

     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,  including but not limited to
extending  the Final  Expiration  Date,  any such  supplement or amendment to be
evidenced  by a writing  signed by the Company and the Rights  Agent;  provided,
however,  that this  Agreement  shall not be amended in any manner  which  would
adversely  affect  the  interests  of the  holders  of  Rights.

     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  and 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).


<PAGE>

     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,  each  Right and each Right
Certificate  issued  hereunder  shall be deemed to be a contract  made under the
laws of the State of  Indiana  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.


<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.

                                       BIOMET, INC.



                                       By /s/ Dane A. Miller
                                         --------------------------------------
                                          Dane A. Miller
                                          President and Chief Executive Officer

Attest:


By /s/ Daniel P. Hann
   ---------------------------------
    Daniel P. Hann, Secretary


                                       LAKE CITY BANK



                                       By: /s/ Jeanine D. Knowles
                                         --------------------------------------
                                       Name: Jeanine D. Knowles
                                            -----------------------------------
                                       Title: Vice President & Trust Officer
                                             ----------------------------------
Attest:


By /s/ Peggy L. Terhaar
   ---------------------------------
Name: Peggy L. Terhaar
     -------------------------------
Title: AVP & TO
     -------------------------------

<PAGE>
Exhibit A


Form of Right Certificate


Certificate No. R-                                        _________ Rights

          NOT  EXERCISABLE  AFTER  ________________  OR EARLIER IF REDEMPTION OR
          EXCHANGE  OCCURS.  THE RIGHTS ARE SUBJECT TO  REDEMPTION AT $.0001 PER
          RIGHT AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.


Right Certificate

BIOMET, INC.

     This certifies that  __________________________,  or registered assigns, is
the registered owner of the number Rights set forth above,  each above,  each of
which  entitles  the  owner  thereof,  subject  to  the  terms,  provisions  and
conditions of the Rights Agreement,  dated as of December 16, 1999, (the "Rights
Agreement"),  between Biomet, Inc., an Indiana corporation (the "Company"),  and
Lake City Bank (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.,  Eastern Standard Time, on  ____________________  at the
office of the Rights Agent designated for such purpose,  or at the office of its
successor  as Rights  Agent,  one  one-hundred  thousandth  of a fully  paid and
non-assessable  Preferred Share (the "Preferred Share Units") of the Company, at
a purchase price of $_________ per Preferred Share Unit (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 Preferred Share Units 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  _________________,  based on the Preferred
Share Units as  constituted  at such date. As provided in the Rights  Agreement,
the  Purchase  Price  and the  number  of  Preferred  Share  Units  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  the  Company  and the holders of the Right
Certificates.  Copies  of the  Rights  Agreement  are on file  at the  principal
executive offices of the Company and the  above-mentioned  offices of the Rights
Agent.


<PAGE>

     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 Share Units or other  securities 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 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
$.0001 per Right or (ii) may be exchanged in whole or in part for the  Company's
Common Stock, without par value.

     No fractional Preferred Share Units will be issued upon the exercise of any
Right or Rights  evidenced hereby (other than fraction shares which are integral
multiples of one one-hundred  thousandth of a Preferred Share, which may, at the
election of the  Company,  be  evidenced by  depository  receipts),  but in lieu
thereof,  a cash payment will be made, as provided in the Rights Agreement,  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
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof,  or to give or
withhold  consent to any  corporate  action or to receive  notice of meetings or
other  actions  affecting   shareholders  (except  as  provided  in  the  Rights
Agreement),  or to receive dividends or subscription  rights, or otherwise until
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 purchase
until it shall have been countersigned by the Rights Agent.




<PAGE>


     WITNESS the facsimile signature of the proper officers of the Company,  and
its corporate seal. Dated as of ___________________, 19____.

ATTEST:                                BIOMET, INC.

                                       By
------------------------------           ------------------------------
Countersigned:


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


By
  ----------------------------
   Authorized Signature


<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.

CERTIFICATE

     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

<PAGE>

Form of Reverse Side of Right Certificate --- continued

FORM OF ELECTION TO PURCHASE

(To be executed if holder desires to
exercise the Right Certificate.)


To BIOMET, INC.:

     The  undersigned  hereby  irrevocably  elects  to  exercise  ______  Rights
represented by this Right Certificate to purchase the Preferred  Shares,  Common
Shares or such other  securities  issuable  upon the exercise of such Rights and
requests that  certificates  for such  Preferred  Shares,  Common Shares or such
other securities 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

Signature Guaranteed:


<PAGE>

     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.

CERTIFICATE

     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

NOTICE

     The  signature in the  foregoing  Forms of  Assignment  and  Election  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.


<PAGE>
Exhibit B


SUMMARY OF RIGHTS TO PURCHASE
PREFERRED SHARES


     On December 2, 1989, the Board of Directors of Biomet, Inc. (the "Company")
adopted a Shareholder  Rights Plan that expired on December 2, 1999. On December
11, 1999 the Board of Directors of the Company adopted a new Shareholder  Rights
Plan (the "Rights  Plan")  effective as of December 16, 1999 to replace the 1989
Shareholder Rights Plan.

     The  purpose  of the  Rights  Plan is to deter  certain  coercive  takeover
tactics and enable the Board of Directors to represent  effectively the interest
of  shareholders  in the event of a takeover  attempt.  The Rights Plan does not
deter negotiated  mergers or business  combinations  that the Board of Directors
determines to be in the best interest of the Company and its shareholders.

     To implement the Rights Plan the Board of Directors  declared a dividend of
one preferred share purchase right (a "Right") for each outstanding common share
of the Company (the "Common Shares"). The dividend is payable to shareholders of
record on  December  28,  1999 (the  "Record  Date").  Each Right  entitles  the
registered  holder to purchase from the Company one one-hundred  thousandth of a
Preferred  Share  (the  "Preferred  Share  Units")  at a price  of  $175.00  per
Preferred  Share  Unit  (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 Lake City Bank, as Rights Agent (the
"Rights Agent").

Rights Attach to Common Shares Initially

     Initially and until a  Distribution  Date (as defined  below)  occurs,  the
Rights are  attached to all Common  Shares and no separate  Rights  certificates
will be issued. During this initial period,

          -    the Rights are not exercisable;

          -    the Rights  are  transferred  with the Common  Shares and are not
               transferable separately from the Common Shares;

          -    new Common Shares  certificates  or book entry shares issued will
               contain  a  notation   incorporating   the  Rights  Agreement  by
               reference; and

          -    the  transfer  of any  Common  Shares  will also  constitute  the
               transfer of the Rights associated with those Common Shares.


<PAGE>

Distribution of Rights

     Separate  certificates  evidencing  the Rights will be mailed to holders of
record of the Common Shares on the "Distribution Date." The Distribution Date is
the earlier to occur of the  following  two events (or such later date as may be
determined by the Board of Directors):

          -    10 business days following a public announcement that a person or
               group of affiliated or associated persons (an "Acquiring Person")
               have  acquired  beneficial  ownership  of  15%  or  more  of  the
               outstanding Common Shares; or

          -    10  business  days (or such  later date as may be  determined  by
               action of the Board of Directors prior to such time as any Person
               becomes  an  Acquiring  Person)  after  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 30% or more of such outstanding
               Common Shares.

     Acquisitions  by the  following  persons  will  not  result  in the  person
becoming an Acquiring  Person:  the Company,  any subsidiary or employee benefit
plan of the  Company,  or any other  person  approved in advance by the Board of
Directors.

     After the Distribution  Date, the Rights will be tradeable  separately from
the Common Shares.  After the Distribution Date and after the Company's right to
redeem (as described  below) has expired,  the Rights will be exercisable in two
different ways depending on the circumstances as set forth below.

Right to Purchase Company Stock

     After the  Distribution  Date and after the Company's  redemption right has
expired,  each holder of a Right (except those held by the Acquiring  Person and
its affiliates and associates)  will have the right to purchase,  upon exercise,
that  number of Common  Shares (or, in certain  circumstances,  Preferred  Share
Units or other similar  securities of the Company)  having a market value of two
times the exercise price of the Right, in lieu of such Common Shares, subject to
the availability of a sufficient number of authorized but unissued Common Shares
(such right being called the "Subscription  Right"). The Subscription Right will
be  exercisable  for a 60-day period after the effective  date of a registration
statement  under the  Securities  Act of 1933,  as amended,  covering the Common
Shares.

Right to Purchase Acquiring Person Stock

     Alternatively,  if 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,  each  holder  of a Right  will  thereafter  have the right to
receive,  upon the exercise  thereof at the then current  exercise  price of the
Right,  that number of shares of common stock of the acquiring  company which at
the time of such  transaction will have a market value of two times the exercise
price of the Right (such right being called the "Merger Right").  Each holder of
a Right (other than an Acquiring  Person) will continue to have the Merger Right
whether or not such holder exercises the Subscription Right.


<PAGE>

Exchange of Company Stock for Rights

     At any time after the  acquisition  by a person or group of  affiliated  or
associated  persons of  beneficial  ownership of 15% or more of the  outstanding
Common Shares or the announcement of a tender or exchange offer resulting in the
beneficial  ownership  by a Person  or  group of 30% or more of the  outstanding
Common Shares and prior to the  acquisition by such Person or group of more than
50%  outstanding  Common  Shares,  the Board of  Directors  of the  Company  may
exchange the Rights  (other than Rights owned by such person or group which have
become void),  in whole or in part, at an exchange ratio of one Common Share per
Right (subject to adjustment).

     With  certain  exceptions,  no  adjustment  in the  Purchase  Price will be
required until  cumulative  adjustments  require an adjustment of at least 1% in
such Purchase Price.  No fractional  Common Shares or Preferred Share Units will
be issued and in lieu  thereof,  an adjustment in cash will be made based on the
market price of the Common  Shares or Preferred  Share Units on the last trading
day prior to the date of exercise.

Adjustment of Shares

     The Purchase  Price  payable,  and the number of  Preferred  Share Units or
other securities issuable, upon exercise of the Rights are subject to adjustment
from time to time to prevent  dilution (i) in the event of a stock  dividend on,
or a subdivision, combination or reclassification of, the 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 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 on Preferred Shares) or of subscription  rights or
warrants (other than those referred to above).

     The Purchase  Price  payable,  and the number of  Preferred  Share Units or
other  securities  issuable,  upon  exercise  of the Rights are also  subject to
adjustment  in the  event of a stock  split  of the  Common  Shares,  or a stock
dividend  on the  Common  Shares  payable  in Common  Shares,  or  subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.

Redemption

     At any time prior to the close of business on the tenth day  following  the
acquisition  by a  person  or group  of  affiliated  or  associated  persons  of
beneficial  ownership  of 15% or more of the  outstanding  Common  Shares or the
announcement of a tender or exchange offer resulting in the beneficial ownership
by a Person or group of 30% or more of the outstanding Common Shares and subject
to extension of the  redemption  period by the Board of Directors,  the Board of
Directors of the Company may redeem the Rights in whole,  but not in part,  at a
price of $.0001 per Right (the "Redemption Price"). The redemption of the Rights
may be made  effective at such time,  on such basis and with such  conditions as
the Board of Directors in its sole  discretion may establish.  Additionally  the
Company may,  following  the time that a person has become an Acquiring  Person,
redeem the then outstanding  Rights in whole, but not in part, at the Redemption
Price provided that such  redemption is (i) in connection with a merger or other
business combination transaction or series of transactions involving the Company
in which all holders of Common  Shares are treated  alike but not  involving  an
Acquiring  Person or any person who was an Acquiring Person or (ii) following an
event  giving  rise to, and the  expiration  of the  exercise  period  for,  the
Subscription Right if and for as long as no person  beneficially owns securities
representing 15% or more of the Company's outstanding Common Shares. Immediately
upon any  redemption  of the  Rights,  the right to  exercise  the  Rights  will
terminate  and the only right of the  holders of Rights  will be to receive  the
Redemption Price.


<PAGE>

Expiration of Rights

     The Rights will expire on December 16, 2009 unless the  expiration  date is
extended by amendment  as  described  below or unless the Rights are redeemed or
exchanged by the Company as described above.

Amendments

     As long as the  Rights  are  redeemable,  the  terms of the  Rights  may be
amended by the Board of  Directors  of the  Company  without  the consent of the
holders of the Rights,  except that no such  amendment may adversely  affect the
interests of the holders of the Rights.

Miscellaneous

     The number of  outstanding  Rights and the number of Preferred  Share Units
issuable  upon  exercise of each Right are subject to  adjustment  under certain
circumstances.

     Because of the nature of the Preferred  Shares'  dividend,  liquidation and
voting  rights,  the value of a Preferred  Share Unit that may be purchased upon
exercise of each Right should approximate the value of one Common Share.

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

     A copy of the  Rights  Agreement  has been filed  with the  Securities  and
Exchange  Commission  as an Exhibit to a  Registration  Statement on Form 8-A. A
copy of the Rights  Agreement is available  free of charge from the Company upon
request to the Corporate Secretary of 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.