Exhibit 1.1





                       NAVISTAR INTERNATIONAL CORPORATION

                                       and

                          HARRIS TRUST AND SAVINGS BANK

                                  Rights Agent




                                Rights Agreement



                           Dated as of April 20, 1999


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                                Table of Contents

                                                                      Page

Section 1.        Certain Definitions                                 - 1 -

Section 2.        Appointment of Rights Agent                         - 8 -

Section 3.        Issuance of Rights Certificates                     - 8 -

Section 4.        Form of Rights Certificates                        - 10 -

Section 5.        Execution, Countersignature and Registration       - 10 -

Section 6.        Transfer, Division, Combination and Exchange
                  of Rights Certificates; Mutilated, Destroyed,
                  Lost or Stolen Rights Certificates                 - 11 -

Section 7.        Exercise of Rights; Purchase Price; Expiration
                  Date of Rights                                     - 11 -

Section 8.        Cancellation and Destruction
                  of Rights Certificates                             - 13 -

Section 9.        Reservation and Availability of Preferred Stock    - 14 -

Section 10.       Preferred Stock Record Date                        - 15 -

Section 11.       Adjustments to Purchase Price, Number of Shares
                  or Number of Rights                                - 15 -

Section 12.       Certification of Adjustments                       - 25 -

Section 13.       Consolidation, Merger or Sale or Transfer of
                  Assets or Earning Power                            - 26 -

Section 14.       Fractional Rights and Fractional Shares            - 28 -

Section 15.       Rights of Action                                   - 29 -

Section 16.       Agreement of Rights Holders Concerning
                  Transfer and Ownership of Rights                   - 29 -

Section 17.       Rights Holder Not Deemed a Stockholder             - 30 -

Section 18.       Concerning the Rights Agent                        - 30 -

Section 19.       Merger or Consolidation or Change of
                  Name of Rights Agent                               - 31 -


                                      - i -


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Section 20.       Duties of Rights Agent                             - 31 -

Section 21.       Change of Rights Agent                             - 33 -

Section 22.       Issuance of New Rights Certificates                - 35 -

Section 23.       Redemption and Termination                         - 35 -

Section 24.       Notice of Certain Events                           - 36 -

Section 25.       Notices                                            - 36 -

Section 26.       Supplements and Amendments                         - 37 -

Section 27.       Successors                                         - 38 -

Section 28.       Benefits of this Agreement.                        - 38 -

Section 29.       Severability                                       - 39 -

Section 30.       Governing Law                                      - 39 -

Section 31.       Counterparts                                       - 39 -

Section 32.       Descriptive Headings                               - 39 -

Section 33.       Grammatical Construction                           - 39 -




Exhibit A -- Certificate of Designation, Preferences and Rights
             of Junior Participating Preferred Stock, Series A

Exhibit B -- Form of Rights Certificate


                                     - ii -


<PAGE>


                                RIGHTS AGREEMENT


     THIS  RIGHTS  AGREEMENT,  dated  as  of  April  20,  1999  is  made between
NAVISTAR INTERNATIONAL  CORPORATION, a Delaware corporation (the "Company"), and
HARRIS TRUST AND SAVINGS  BANK,  an Illinois  banking  corporation  (the "Rights
Agent").
                                    RECITALS
                                    --------

     The Board of  Directors  of the  Company  has  authorized  and declared the
payment of a dividend of one preferred share purchase right (a "Right") for each
share of Common Stock (as defined in Section 1)  outstanding  on the Record Date
(as defined in Section 1) and has  authorized the issuance of one Right for each
share of Common  Stock  issued  after the Record Date and before the earliest of
the Distribution Date, the Redemption Date, the Exchange Date and the Expiration
Date (as such terms are defined in Section 1) and in certain cases following the
Distribution  Date. Each Right will represent,  as of the Record Date, the right
to purchase one  one-thousandth  of one share of Preferred  Stock (as defined in
Section 1) upon the terms and subject to the conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises and the mutual  agreements
set forth in this  Agreement,  the parties  hereby  agree as follows:

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

     (a)  "Acquiring  Person"  means any Person who or which,  together with all
Affiliates  and Associates of such Person,  is (or has  previously  been, at any
time after the date of this Agreement,  whether or not such Person(s)  continues
to be) the Beneficial  Owner of 15% or more of the Common Stock then outstanding
(determined   without  taking  into  account  any   securities   exercisable  or
exchangeable  for,  or  convertible  into,  Common  Stock,  other  than any such
securities  beneficially  owned  by the  Acquiring  Person  and  Affiliates  and
Associates of such Person).  However,  "Acquiring  Person" shall not include any
Exempt Person.

     Notwithstanding   the  foregoing,  a Person shall not become an "Acquiring
Person" solely as the result of an acquisition of Common Stock by the Company or
any Subsidiary  which, by reducing the number of shares  outstanding,  increases
the proportionate  number of shares  beneficially owned by such Person to 15% or
more of the  Common  Stock  then  outstanding  as  determined  above;  provided,
however,  that if a Person  becomes the  Beneficial  Owner of 15% or more of the
Common Stock then  outstanding  as  determined  above solely by reason of such a
share  acquisition  by the Company and such Person  shall,  after  becoming  the
Beneficial  Owner of such  Common  Stock,  become  the  Beneficial  Owner of any
additional  shares of  Common  Stock by any means  whatsoever  (other  than as a
result of the subsequent  occurrence of a stock dividend or a subdivision of the



<PAGE>


Common Stock into a larger number of shares or a similar transaction), then such
Person shall be deemed to be an "Acquiring Person."

     Notwithstanding   the  foregoing,  if the Board of Directors of the Company
determines  in good  faith that a Person who would  otherwise  be an  "Acquiring
Person," as defined  pursuant to the foregoing  provisions of this Section 1(a),
has  become  such  inadvertently,   and  such  Person  divests  as  promptly  as
practicable  a sufficient  number of Common  Shares so that such Person would no
longer be an "Acquiring Person," as defined pursuant to the foregoing provisions
of this Section  1(a),  then such Person shall not be deemed to be an "Acquiring
Person" for any purposes of this Agreement.  The  determination  of whether such
Person's  becoming  an  Acquiring  Person  shall have been  inadvertent  and the
determination  of whether the  divestment of  sufficient  shares shall have been
made as  promptly  as  practicable  shall be made by a majority  of the Board of
Directors of the Company.

     (b)  "Adjustment  Number"  has the  meaning  set  forth  in,  and  shall be
calculated in accordance  with, the Certificate of Designation,  Preferences and
Rights of Junior Participating  Preferred Stock, Series A, attached as Exhibit A
hereto.

     (c)  "Affiliate"  has the  meaning  given to such term in Rule 12b-2 of the
General Rules and  Regulations  under the Exchange Act, as in effect on the date
of this  Agreement;  provided  that,  for purposes of this  Agreement,  the term
"Affiliate" shall not include any Person that is an Exempt Person.

     (d)  "Associate"  has the  meaning  given to such term in Rule 12b-2 of the
General Rules and  Regulations  under the Exchange Act, as in effect on the date
of this  Agreement;  provided  that,  for purposes of this  Agreement,  the term
"Associate"  shall not include any Person that is an Exempt Person.

     (e)  Except  as  provided  below,  a  Person  shall  be  deemed  to be  the
"Beneficial  Owner"  of,  and  shall  be  deemed  to  "beneficially   own,"  any
securities:

          (i) which such Person or any  Affiliate  or  Associate  of such Person
     beneficially owns, directly or indirectly;


          (ii) which such Person or any  Affiliate  or  Associate of such Person
     has, directly or indirectly,  the right or obligation  (whether or not then
     exercisable or effective) to acquire pursuant to any agreement, arrangement
     or  understanding  (whether  or not in  writing),  or upon the  exercise of
     conversion  rights,  exchange  rights,  rights  (other than these  Rights),
     warrants or options, or otherwise;  provided,  however,  that a Person will
     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  Affiliate  or  Associate  of such  Person  until  such
     tendered securities are accepted for purchase or exchange;


                                     - 2 -


<PAGE>


          (iii) which such Person or any  Affiliate  or Associate of such Person
     has, directly or indirectly, the right (whether or not then exercisable) to
     vote, or to direct the voting of, pursuant to any agreement, arrangement or
     understanding (whether or not in writing); provided, however, that a Person
     shall not be deemed the Beneficial  Owner of, or to  beneficially  own, any
     security  pursuant to this clause (iii) if the  agreement,  arrangement  or
     understanding to vote, or to direct the voting of, such security (A) arises
     solely  from a  revocable  proxy or consent  given in  response to a public
     proxy or consent solicitation made pursuant to, and in accordance with, the
     Exchange Act and applicable rules and regulations thereunder and (B) is not
     also then reportable  under Item 6 (or any comparable or successor item) of
     Schedule  13D  under  the  Exchange  Act (or any  comparable  or  successor
     schedule or report);

          (iv) which such Person or any  Affiliate  or  Associate of such Person
     has "beneficial  ownership" of as determined  pursuant to Rule 13d-3 of the
     General  Rules and  Regulations  under the  Exchange  Act or any  successor
     provision; or

          (v) which are beneficially owned, directly or indirectly, by any other
     Person or any  Affiliate  or  Associate of such other Person with whom such
     Person or any  Affiliate  or  Associate  of such Person has any  agreement,
     arrangement or understanding (whether or not in writing) for the purpose of
     acquiring,  holding,  voting  (except  pursuant  to a  revocable  proxy  as
     described  in  clause  (iii)  of this  Section  1(d)) or  disposing  of any
     securities  of  the  Company;  provided,  however,  that  for  purposes  of
     determining  "beneficial  ownership"  of securities  under this  Agreement,
     officers and  directors of the Company  solely by reason of their status as
     such  shall  not  constitute  a group  (notwithstanding  that  they  may be
     Associates  of one  another  or may be  deemed  to  constitute  a group for
     purposes of Section 13(d) the Exchange Act or any successor  provision) and
     shall not be deemed to own shares  owned by another  officer or director of
     the Company.

     Nothing in the preceding  sentence shall cause a Person engaged in business
as an  underwriter  of  securities  to  be  the  "Beneficial  Owner"  of,  or to
"beneficially own," any securities acquired through such Person's  participation
in good faith in a firm commitment  underwriting until the expiration of 40 days
after the date of such acquisition.

     Notwithstanding anything in this Agreement to the contrary, for purposes of
this Agreement,  no Person shall be treated as the "Beneficial  Owner" of, or be
deemed to "beneficially  own," any securities  solely by reason of the ownership
of those securities by any other Person that is an Exempt Person.

     Notwithstanding  anything in this definition of Beneficial Ownership to the
contrary,  the phrase "then outstanding," when used with reference to a Person's
Beneficial Ownership of securities of the Company, shall mean the number of such
securities  then  issued  and  outstanding  together  with  the  number  of such
securities not then actually issued and  outstanding  which such Person would be
deemed to own beneficially under the preceding provisions in this definition.


                                     - 3 -


<PAGE>


     (e) "Business  Combination" has the meaning set forth in Section 13 of this
Agreement.

     (f) "Business Day" means any day other than a Saturday,  Sunday or a day on
which banking  institutions  in the State of New York or Illinois are authorized
or obligated by law or executive order to close.

     (g) "Close of  Business" on any given date means 5:00 p.m.,  New York,  New
York time, on such date; provided,  however, that if such date is not a Business
Day it shall  mean 5:00 p.m.  New York,  New York time,  on the next  succeeding
Business Day.

     (h)  "Common  Equivalent  Share"  has the  meaning  set  forth  in  Section
11(c)(2)(C) of this Agreement.

     (i) "Common  Share" has the  meaning set forth in Section  11(c)(2) of this
Agreement.

     (j) "Common Stock" when used with reference to the Company means the Common
Stock,  par value $.10 per share,  of the Company (as the same may be changed by
reason of any combination, subdivision or reclassification of the Common Stock).
"Common  Stock" when used with  reference to any Person  (other than the Company
prior to a Business  Combination)  means shares of capital  stock of such Person
(if such  Person is a  corporation)  of any class or series,  or units of equity
interests in such Person (if such Person is not a  corporation)  of any class or
series,  the terms of which  shares or units do not limit (as a fixed amount and
not merely in  proportional  terms) the amount of dividends or income payable or
distributable  on such shares or units or the amount of assets  distributable on
such shares or units upon any voluntary or involuntary liquidation,  dissolution
or winding up of such  Person and do not  provide  that such shares or units are
subject to  redemption  at the option of such  Person,  or any shares of capital
stock  or  units  of  equity   interests  into  which  the  foregoing  shall  be
reclassified or changed;  provided,  however, that if at any time there are more
than one such class or series of capital  stock of or equity  interests  in such
Person,  "Common  Stock" of such Person will include all such classes and series
substantially  in the proportion of the total number of shares or other units of
each such class or series outstanding at such time.

     (k) "Current  Market  Price" per share of Common Stock,  Common  Equivalent
Share or any other  security  on any date is the  average  of the daily  closing
prices per share of such  Common  Stock,  Common  Equivalent  Share or any other
security  for the 30  consecutive  Trading  Days  (as such  term is  hereinafter
defined) immediately prior to such date for the purpose of any computation under
this  Agreement;  provided,  however,  that in the event that the Current Market
Price per share of Common Stock,  Common  Equivalent Share or any other security
is determined  during a period  following the announcement by the issuer of such
Common Stock, Common Equivalent Share or any other security of (i) a dividend or
distribution on such Common Stock, Common Equivalent Share or any other security
other  than  a  regular  quarterly  cash  dividend,  or  (ii)  any  subdivision,
combination or reclassification of such Common Stock, Common Equivalent Share or


                                     - 4 -


<PAGE>


any other  security,  and prior to the  expiration  of 30 Trading Days after the
"ex-dividend" date for such dividend or distribution or the record date for such
subdivision,  combination or reclassification,  then, and in each such case, the
"Current Market Price" must be appropriately  adjusted to take into account such
dividend,  distribution,   subdivision,  combination  or  reclassification.  The
closing price for each Trading Day shall be the last sale price, regular way, on
such day,  or, in case no such sale takes place on such day,  the average of the
closing  bid and asked  prices,  regular  way,  on such day,  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
("NYSE") or, if the Common Stock,  Common Equivalent Share or any other security
is not listed or admitted to trading on the NYSE,  as reported in the  principal
consolidated  transaction  reporting system with respect to securities listed on
the principal  United States  national  securities  exchange on which the Common
Stock,  Common  Equivalent  Share or any other security is listed or admitted to
trading or, if the Common Stock,  Common  Equivalent Share or any other 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  Common  Stock,
Common  Equivalent  Share  or any  other  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 a majority
of the Board of Directors  of the  Company.  If no such market maker is making a
market,  the fair market value of such shares on such day shall be determined in
good  faith by a  majority  of the  Board of  Directors  of the  Company,  which
determination  shall be described in a statement filed with the Rights Agent and
shall be binding and conclusive for all purposes. The term "Trading Day" means a
day on which the principal United States national  securities  exchange on which
the Common Stock,  Common  Equivalent  Share or any other  security is listed or
admitted to trading is open for the  transaction  of business  or, if the Common
Stock,  Common  Equivalent Share or any other security is not listed or admitted
to trading on any United States national securities  exchange,  but is traded in
the  over-the-counter  market, then any day for which the high bid and low asked
prices in the  over-the-counter  market are  reported,  or if the Common  Stock,
Common   Equivalent   Share  or  any  other   security  is  not  traded  in  the
over-the-counter  market,  then a Business  Day. If the  Preferred  Stock is not
publicly  traded,  the "Current  Market Price" of the  Preferred  Stock shall be
conclusively  deemed to be the  Current  Market  Price of the  Common  Shares as
determined  pursuant to this paragraph of Section 1  (appropriately  adjusted to
reflect any stock split, stock dividend or similar  transaction  occurring after
the date hereof), multiplied by the Adjustment Number.

     (l)  "Distribution  Date"  means the earlier of (i) the tenth day after the
Stock Acquisition Date and (ii) the tenth Business Day after  commencement of or
public disclosure of an intention to commence  (including,  without  limitation,
any such commencement or public disclosure which occurs before or after the date
of this  Agreement  and prior to the  issuance of the Rights) a tender  offer or
exchange offer by a Person if, after  acquiring the maximum number of securities
sought  pursuant to such offer,  such Person,  or any  Affiliate or Associate of
such Person,  would be an Acquiring Person. A majority of the Board of Directors
of the  Company  may defer the date set  forth in clause  (ii) of the  preceding


                                     - 5 -


<PAGE>


sentence  to a  specified  later  date  or to an  unspecified  later  date to be
determined by a subsequent action or event.

     (m) "Exchange Act" means the  Securities  Exchange Act of 1934, as amended,
and any successor statute.

     (n) "Exchange  Date" means the time at which Rights are exchanged  pursuant
to Section 11(c)(3).

     (o) "Exempt  Event" means with respect to any Person,  the  acquisition  by
such Person of  Beneficial  Ownership  of Common Stock solely as a result of the
occurrence of a Triggering  Event and the effect of such Triggering Event on the
last proviso of clause (ii) of the definition of Beneficial Owner,  other than a
Triggering Event in which such Person becomes an Acquiring Person.

     (p) "Exempt  Person"  means (i) the  Company,  (ii) any  Subsidiary  of the
Company,  (iii) any employee benefit plan of the Company or of any Subsidiary of
the Company,  and (iv) any Person  holding  Common  Stock for any such  employee
benefit plan or for employees of the Company or of any Subsidiary of the Company
pursuant to the terms of any such employee benefit plan.

     (q) "Exercise Amount" means the amount payable by the holder as a condition
to the  exercise  of one  Right.  Until  and  unless  it  shall be  adjusted  in
accordance with this Agreement, the Exercise Amount shall be $175.

     (r) "Expiration Date" means the Close of Business on May 3, 2009.

     (s) "Person"  means any individual, firm,  corporation,  limited  liability
company,  partnership,   joint  venture,   association,   trust,  unincorporated
organization or other entity, and shall include any "group" as that term is used
in Rule 13d-5(b) under the Exchange Act (or any successor provision).

     (t) "Preferred  Stock" means the Company's Junior  Participating  Preferred
Stock,  Series A, par value $1.00 per share,  having the rights and  preferences
set forth in the  Certificate of  Designation,  Preferences and Rights of Junior
Participating Preferred Stock, Series A, attached hereto as Exhibit A.

     (u)  "Principal  Party" means (i) in the case of any  Business  Combination
described in clause (i), (ii) or (iii) of the first  sentence of Section  13(a),
(A) the Person that is the issuer of any securities  into which shares of Common
Stock of the  Company  are  converted  or for which they are  exchanged  in such
Business  Combination  or, if there is more than one such issuer,  the issuer of
the Common  Stock which has the  greatest  aggregate  market  value or (B) if no
securities are so issued,  the Person that survives or results from the Business
Combination  or, if there is more than one such  Person,  the  Person the Common
Stock of which has the greatest  aggregate market value, and (ii) in the case of


                                     - 6 -


<PAGE>


any  Business  Combination  described  in clause  (iv) of the first  sentence in
Section  13(a),  the Person that receives the greatest  portion of the assets or
earning  power  transferred  pursuant to such Business  Combination  or, if each
Person that is a party to such Business Combination receives the same portion of
the assets or  earning  power so  transferred  or if the  Person  receiving  the
greatest portion of the assets or earning power cannot reasonably be determined,
whichever  of such  Persons  is the  issuer of the  Common  Stock  which has the
greatest aggregate market value;  provided,  however,  that in any such case, if
the  Common  Stock  of  such  Person  is not at  such  time  and  has  not  been
continuously  over the preceding  12-month period registered under Section 12 of
the  Exchange Act and such Person is a direct or indirect  Subsidiary  of one or
more other Persons, then (x) "Principal Party" refers to whichever of such other
Persons has Common Stock that is and has been  continuously  over the  preceding
12-month  period  registered  under  Section 12 of the Exchange  Act; (y) if the
Common  Stocks  of two or more of  such  other  Persons  are  and  have  been so
registered,  "Principal  Party" refers to whichever of such other Persons is the
issuer of the Common Stock which has the greatest aggregate market value; or (z)
if the  Common  Stock of none of such  other  Persons  has  been so  registered,
"Principal  Party"  refers to  whichever  of such other  Persons  (other than an
individual)  is the Person  which has the equity  securities  with the  greatest
aggregate market value. In case such Person is owned, directly or indirectly, by
a joint  venture  formed by two or more Persons that are not owned,  directly or
indirectly,  by the same Person,  the rules set forth above apply to each of the
chains of ownership  having an interest in such joint  venture as if such Person
were a  Subsidiary  of both or all of such  joint  venturers  and the  Principal
Parties in each such chain shall bear the obligations set forth in Section 13 in
the same ratio as their direct or indirect  interests in such Person bear to the
total of such interests.

     (v) "Purchase Price:" Until the Trigger Date, the term Purchase Price means
the price at which  one one-thousandth  of a share of Preferred  Stock  shall be
purchasable   with  the  Rights.   The  Purchase   Price  shall be  $175 per one
one-thousandth  of a share of  Preferred  Stock  until  and  unless  it shall be
adjusted  pursuant to this  Agreement.  Immediately  after the Trigger Date, the
term  "Purchase  Price"  shall mean the price per Common  Share for which Common
Shares  shall be  purchasable  with the Rights.  Thereafter  the term  "Purchase
Price"  as  applied  with  respect  to each  kind of  stock  or  other  property
purchasable  with the  Rights  as a result  of  adjustments  prescribed  by this
Agreement shall mean the price at which each share of such stock or the smallest
available unit of such other property is purchasable with the Rights.

     (w) "Record Date" means the Close of Business on May 3, 1999.

     (x) "Redemption Date"  means the  time at which the Rights are scheduled to
be redeemed as provided in Section 23.

     (y) "Redemption Price" has the meaning given to such term in Section 23.

     (z) "Securities Act" means the Securities Act of 1933, as amended,  and any
successor statute.


                                     - 7 -


<PAGE>


     (aa) "Stock  Acquisition Date" means the first date of public disclosure by
the Company,  an  Acquiring  Person or  otherwise  that an Acquiring  Person has
become such.

     (bb)  "Subsidiary"  has the meaning given to such term in Rule 12b-2 of the
General Rules and  Regulations  under the Exchange Act, as in effect on the date
of this Agreement.

     (cc)  "Trigger  Date"  means the first date upon which a Person  becomes an
Acquiring Person.

     (dd)  "Triggering Event" shall mean a Person becoming an Acquiring Person.

   Section 2.  Appointment of Rights Agent.
               ---------------------------
The Company hereby  appoints the Rights Agent to act as agent for the Company in
accordance  with the terms and  conditions  hereof,  and the Rights Agent hereby
accepts  such  appointment.  The  Company  may from  time to time  appoint  such
co-Rights Agents as it may deem necessary or desirable.

   Section 3.  Issuance of Rights Certificates.
               -------------------------------
     (a) Until the Distribution  Date: (i) the Rights shall be issued in respect
of and shall be evidenced by the certificates  representing the shares of Common
Stock  issued  and  outstanding  on the Record  Date and shares of Common  Stock
issued  or which  become  outstanding  after  the  Record  Date and prior to the
earliest of the  Distribution  Date, the Redemption  Date, the Exchange Date and
the Expiration Date (which certificates for Common Stock shall be deemed to also
be certificates  evidencing the Rights), and not by separate certificates;  (ii)
the  registered  holders  of such  shares  of  Common  Stock  shall  also be the
registered  holders of the Rights  associated  with such  shares;  and (iii) the
Rights shall be  transferable  only in connection with the transfer of shares of
Common Stock,  and the surrender for transfer of any certificate for such shares
of Common Stock shall also  constitute  the surrender for transfer of the Rights
associated  with such  shares.  As soon as  practicable  after the  Company  has
notified the Rights Agent of the occurrence of the Distribution Date, the Rights
Agent shall (except as otherwise  provided in Section 7(e)) mail, at the expense
of the Company,  by first-class,  insured,  postage prepaid mail, to each record
holder of the Common Stock as of the Close of Business on the Distribution Date,
as shown by the records of the  Company,  at the address of such holder shown on
such  records,   one  or  more  certificates   evidencing  the  Rights  ("Rights
Certificates"),  in substantially  the form of Exhibit B hereto,  evidencing one
Right (as adjusted from time to time pursuant to this  Agreement) for each share
of Common Stock so held. From and after the  Distribution  Date, the Rights will
be evidenced solely by such Rights Certificates.

     (b) Rights  shall be issued in respect of all shares of Common  Stock which
are  issued  or sold by the  Company  after  the  Record  Date but  prior to the
earliest of the  Distribution  Date, the Redemption  Date, the Exchange Date and
the  Expiration  Date. In addition,  in connection  with the issuance or sale of
Common Stock by the Company  following  the  Distribution  Date and prior to the
earliest of the Redemption  Date, the Exchange Date and the Expiration Date, the
Company  shall,  with  respect to Common Stock so issued or sold (i) pursuant to
the exercise of stock options issued prior to the Distribution Date or under any
employee plan or  arrangement  created prior to the  Distribution  Date, or (ii)


                                     - 8 -


<PAGE>


upon the exercise,  conversion  or exchange of securities  issued by the Company
prior  to  the  Distribution   Date,   issue  Rights  and  Rights   Certificates
representing  the appropriate  number of Rights in connection with such issuance
or sale; provided, however, that (x) no such Rights and Rights Certificate shall
be issued if, and to the extent  that,  the Company  shall be advised by counsel
that such  issuance  would  create a  significant  risk of material  adverse tax
consequences to the Company or the Person to whom such Rights  Certificate would
be issued and (y) no such Rights and Rights Certificates shall be issued if, and
to the extent that,  appropriate  adjustment  shall  otherwise have been made in
lieu  of the  issuance  thereof.  Certificates  issued  after  the  Record  Date
representing shares of Common Stock outstanding on the Record Date and shares of
Common  Stock  issued  after the Record  Date but prior to the  earliest  of the
Distribution  Date,  the  Redemption  Date, the Exchange Date and the Expiration
Date shall have impressed,  printed, or written on, or otherwise affixed to them
a legend substantially in the following form:

                    This certificate also  evidences  and  entitles  the  holder
                    hereof to certain Rights as set forth in a Rights  Agreement
                    between  Navistar  International   Corporation   and  Harris
                    Trust  and  Savings  Bank  as  Rights  Agent,  dated  as  of
                    April 20, 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 Navistar International Corporation. 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.   Navistar
                    International Corporation will mail to  the  holder of  this
                    certificate  a copy  of the  Rights Agreement without charge
                    after receipt of a written  request therefor.  Under certain
                    circumstances,  Rights that were, are or become beneficially
                    owned by Acquiring Persons or their Associates or Affiliates
                    (as  such  terms are  defined  in the Rights  Agreement) may
                     become null and void  and  the holder of any of such Rights
                    (including  any  subsequent holder) shall not have any right
                     to exercise such Rights.

     (c)  Notwithstanding  any other  provision of this  Agreement,  neither the
Company, the Rights Agent nor anyone else shall have any obligation to issue any
Rights  Certificate to an Acquiring  Person or to anyone else in whose hands the


                                     - 9 -


<PAGE>


Rights nominally  represented by such Certificate  shall be null and void either
initially  or in  connection  with a request to  register  a transfer  of Rights
represented  by  a  certificate  previously  issued.  Furthermore,  neither  the
Company,  the Rights  Agent nor anyone else shall be  obligated  to issue Rights
Certificates  to any person  making a tender  offer which if  consummated  could
render such person an Acquiring  Person or to any Affiliate or Associate of such
person until and unless the tender offer is withdrawn  and the person shall have
established to the Company's  reasonable  satisfaction that such person does not
intend to become an Acquiring  Person.  The Company shall be entitled to require
any person  claiming the right to receive a Rights  Certificate  to present such
evidence  as the  Company  shall  require  in good  faith  to  establish  to the
Company's  satisfaction that the Rights represented by that Certificate have not
become null and void under the provisions in Section 7(e) or that the Company is
not entitled to withhold such Certificate  under the provisions of the preceding
sentence.

   Section 4. Form of Rights Certificates.
              ---------------------------
The Rights Certificates (and the form of election to purchase shares and form of
assignment to be printed on the reverse thereof) shall be in  substantially  the
form  of  Exhibit  B  hereto  and may  have  such  marks  of  identification  or
designation and such legends,  summaries or endorsements  printed thereon as the
Company may deem appropriate and as are not inconsistent  with the provisions of
this Agreement, or as may be required to comply with any law or with any rule or
regulation  made  pursuant  thereto or with any rule or  regulation of any stock
exchange  on which the Rights may from time to time be listed,  or to conform to
usage.  Subject to the provisions of this  Agreement,  the Rights  Certificates,
whenever issued,  shall be dated as of the Distribution  Date, and on their face
shall entitle the holders thereof to purchase such number of shares of Preferred
Stock as shall be set forth therein at the Purchase Price set forth therein, but
the number and kind of such  securities  and the Purchase Price shall be subject
to adjustment as provided in this Agreement.


   Section 5. Execution, Countersignature and Registration.
              --------------------------------------------
     (a) Each Rights  Certificate  shall be executed on behalf of the Company by
the Company's  Chief Executive  Officer,  President,  Chief  Financial  Officer,
Treasurer or any Vice President,  either manually or by facsimile signature, and
shall have affixed thereto the Company's seal or a facsimile thereof which shall
be  attested  by the  Company's  Secretary  or an  Assistant  Secretary,  either
manually  or  by  facsimile   signature.   Each  Rights   Certificate  shall  be
countersigned  by the Rights  Agent  either  manually  or, if  permitted  by the
Company, by facsimile signature and shall not be valid for any purpose unless so
countersigned. In case any officer of the Company who shall have signed a Rights
Certificate   shall   cease  to  be  such   officer   of  the   Company   before
countersignature  by the Rights  Agent and issuance and delivery by the Company,
such Rights  Certificate  nevertheless  may be countersigned by the Rights Agent
and issued and delivered with the same force and effect as though the Person who
signed such Rights Certificate had not ceased to be such officer of the Company;
and any Rights  Certificate may be signed on behalf of the Company by any Person
who, at the actual date of the execution of such Rights Certificate,  shall be a
proper officer of the Company to sign such Rights  Certificate,  although at the
date of the execution of this Agreement any such Person was not such an officer.

     (b) Following the  Distribution  Date, the Rights Agent shall keep or cause
to be kept, at its principal stock transfer  office,  books for registration and
transfer of the Rights Certificates issued hereunder.  Such books shall show the
names and addresses of the respective  holders of the Rights  Certificates,  the
number of Rights  evidenced  by each  Rights  Certificate,  and the  certificate
number and the date of issuance of each Rights Certificate.


                                     - 10 -


<PAGE>


   Section 6. Transfer,   Division,   Combination   and   Exchange   of   Rights
              ------------------------------------------------------------------
Certificates;   Mutilated,   Destroyed,  Lost or Stolen  Rights Certificates.
----------------------------------------------------------------------------
     (a) Subject to the  provisions  of Section 3(d) and Section 14, at any time
after  the Close of  Business  on the  Distribution  Date and at or prior to the
Close of Business on the earliest of the Redemption  Date, the Exchange Date and
the  Expiration  Date,  any Rights  Certificate  or Rights  Certificates  may be
transferred,  divided,  combined or exchanged for another Rights  Certificate or
Rights  Certificates,  entitling the registered holder to purchase a like number
of shares of  Preferred  Stock (or  following a  Triggering  Event or a Business
Combination,  other securities,  cash or other property,  as the case may be) as
the Rights  Certificate or Rights  Certificates  surrendered  then entitled such
holder to purchase. Any registered holder desiring to transfer,  divide, combine
or exchange any Rights  Certificate shall make such request in writing delivered
to the  Rights  Agent,  and shall  surrender  the Rights  Certificate  or Rights
Certificates to be transferred,  divided, combined or exchanged at the principal
corporate  office  of  the  Rights  Agent.  Thereupon  the  Rights  Agent  shall
countersign and deliver to the Person entitled  thereto a Rights  Certificate or
Rights Certificates, as the case may be, as so requested. As a condition to such
transfer, division,  combination or exchange, the Company may require payment by
the  surrendering  holder of a sum  sufficient to cover any tax or  governmental
charge that may be imposed in connection therewith. Neither the Rights Agent nor
the Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered  Rights Certificate until the registered holder
shall have duly  completed  and executed the form of  assignment  on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial  Owner (or such former or proposed  Beneficial
Owner)  thereof or such  Beneficial  Owner's  Affiliates  or  Associates  as the
Company shall reasonably request.

     (b) Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss,  theft,  destruction or mutilation of a Rights
Certificate,  and,  in case of  loss,  theft or  destruction,  of  indemnity  or
security  reasonably  satisfactory to them, and reimbursement to the Company and
the  Rights  Agent  of all  reasonable  expenses  incidental  thereto,  and upon
surrender  to the Rights Agent and  cancellation  of the Rights  Certificate  if
mutilated,  the Company will make and deliver a new Rights  Certificate  of like
tenor to the Rights  Agent for delivery to the  registered  owner in lieu of the
Rights Certificate so lost, stolen, destroyed or mutilated.

   Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.
              -------------------------------------------------------------
     (a)  Each  Right  shall  entitle  (except  as  otherwise  provided  in this
Agreement) the registered holder thereof,  upon the exercise thereof as provided
in this  Agreement,  to purchase,  for the Purchase Price, at any time after the
Distribution Date and prior to the earliest of the Expiration Date, the Exchange
Date  and the  Redemption  Date,  one  one-thousandth  (1/1000)  of a  share  of
Preferred Stock, subject to adjustment from time to time as provided in Sections
11 and 13.

     (b) The registered holder of any Rights Certificate may exercise the Rights
evidenced  thereby (except as otherwise  provided in this Agreement) in whole or
in part (except that no fraction of a Right may be  exercised) at any time after


                                     - 11 -


<PAGE>


the  Distribution  Date and prior to the earliest of the  Expiration  Date,  the
Exchange Date and the Redemption Date, by surrendering  the Rights  Certificate,
with the form of election to purchase on the reverse side thereof duly executed,
to the Rights Agent at the principal  stock transfer office of the Rights Agent,
together with payment of the Exercise Amount for each Right exercised.

     (c) Upon receipt of a Rights Certificate  representing  exercisable Rights,
with the form of election to purchase duly  executed,  accompanied by payment of
the  Exercise  Amount  for  each  Right  exercised  and an  amount  equal to any
applicable  transfer tax required to be paid by the surrendering holder pursuant
to Section  9(d),  the Rights Agent  shall,  subject to the  provisions  of this
Agreement, thereupon promptly (i)(A) requisition from any transfer agent for the
Preferred  Stock (or make  available,  if the Rights Agent is the transfer agent
for such shares)  certificates for the Preferred Stock (or other securities,  as
the case may be) to be purchased (and the Company hereby irrevocably  authorizes
its  transfer  agent to comply  with all such  requests),  or (B) if the Company
shall have elected to deposit the total number of shares of Preferred  Stock (or
other securities,  as the case may be) issuable upon exercise of the Rights with
a depositary  agent,  requisition from the depositary agent depositary  receipts
representing such Preferred Stock (or other  securities,  as the case may be) as
are to be purchased  (in which case  certificates  for the  Preferred  Stock (or
other  securities,  as the case may be)  represented  by such receipts  shall be
deposited by the transfer agent with the depositary agent) and the Company shall
direct the depositary  agent to comply with such request;  (ii) after receipt of
such certificates or depositary  receipts,  cause the same to be delivered to or
upon the order of the registered holder of such Rights  Certificate,  registered
in such  name or  names  as may be  designated  by such  holder;  and  (iii)  if
appropriate,  requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 of this Agreement
and,  promptly after receipt thereof,  cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate. In the event that
the Company is obligated to issue other securities  (including  shares of Common
Stock) of the Company,  pay cash and/or  distribute  other property  pursuant to
this Agreement,  the Company will make all  arrangements  necessary so that such
other  securities,  cash and/or other property are available for distribution by
the Rights Agent, if and when appropriate.

     (d) In case the registered holder of any Rights  Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate  evidencing
Rights  equivalent to the Rights  remaining  unexercised  shall be issued by the
Rights Agent and delivered to the registered  holder of such Rights  Certificate
or to his duly authorized assigns, subject to the provisions of Section 3(c) and
Section 14.

     (e) Notwithstanding  anything in this Agreement to the contrary, any Rights
that are or were  formerly  beneficially  owned on or after the  earlier  of the
Distribution  Date  and the  Trigger  Date  by (i) an  Acquiring  Person  or any
Associate  or  Affiliate  of an  Acquiring  Person,  (ii) a direct  or  indirect
transferee  of an  Acquiring  Person (or of an  Associate  or  Affiliate of such
Acquiring  Person) who becomes a transferee  after the Acquiring  Person becomes
such, or (iii) a direct or indirect  transferee of an Acquiring Person (or of an
Associate or Affiliate of such Acquiring  Person) who becomes a transferee prior
to or  concurrently  with the Acquiring  Person  becoming such and receives such


                                     - 12 -



<PAGE>


Rights pursuant to either (A) a direct or indirect  transfer (whether or not for
consideration)  from the Acquiring  Person (or from an Associate or Affiliate of
such Acquiring  Person) to holders of equity  interests in such Acquiring Person
(or to  holders  of equity  interests  in any  Associate  or  Affiliate  of such
Acquiring  Person)  or to any  Person  with  whom the  Acquiring  Person  (or an
Associate or Affiliate of such Acquiring  Person) has any continuing  agreement,
arrangement or understanding regarding the transferred Rights or (B) a direct or
indirect  transfer  which a majority  of the Board of  Directors  of the Company
determines  is part of a  plan,  arrangement  or  understanding  which  has as a
primary purpose or effect the avoidance of this Section 7(e), shall, immediately
upon the  occurrence of a Triggering  Event and without any further  action,  be
null and void and no holder of such Rights shall have any rights whatsoever with
respect to such Rights  whether  under this  Agreement or  otherwise,  provided,
however,  that,  in the case of  transferees  under  clause (ii) or clause (iii)
above, any Rights  beneficially  owned by such transferee shall be null and void
only if and to the extent  such  Rights were  formerly  beneficially  owned by a
Person who was, at the time such Person  beneficially  owned such Rights, or who
later became, an Acquiring Person or an Affiliate or Associate of such Acquiring
Person.  The  Company  shall  use all  reasonable  efforts  to  ensure  that the
provisions of this Section 7(e) are complied  with,  but shall have no liability
to any holder of a Rights  Certificate or to any other Person as a result of the
Company's failure to make, or any delay in making (including any such failure or
delay by the Board of Directors of the Company) any determinations  with respect
to an Acquiring Person or its Affiliates,  Associates or transferees  hereunder.

     (f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company  shall be  obligated  to undertake  any action with
respect to the registered holder of a Rights  Certificate upon the occurrence of
any  purported  exercise as set forth in this  Section 7 unless such  registered
holder shall have (i) completed and signed the certificate contained in the form
of election to purchase set forth on the reverse side of the Rights  Certificate
surrendered for such exercise and (ii) provided such additional  evidence of the
identity  of the  Beneficial  Owner (or  former or  proposed  Beneficial  Owner)
thereof or the Affiliates or Associates of such  Beneficial  Owner (or former or
proposed Beneficial Owner) as the Company shall reasonably request.

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


                                     - 13 -


<PAGE>


   Section 9. Reservation and Availability of Preferred Stock.
              -----------------------------------------------
     (a) The Company  covenants and agrees that it will cause to be reserved and
kept  available  at all  times  out of its  authorized  and  unissued  shares of
Preferred  Stock or its authorized and issued shares of Preferred  Stock held in
its treasury (and,  following the occurrence of a Triggering Event or a Business
Combination,  out of its authorized  and unissued  shares of Common Stock and/or
other  securities  or out of its  authorized  and issued  shares of Common Stock
and/or other securities held in its treasury) free from preemptive rights or any
right of first refusal,  a sufficient  number of shares of Preferred Stock (and,
following the  occurrence of a Triggering  Event,  shares of Common Stock and/or
other securities) to permit the exercise in full of all Rights from time to time
outstanding.

     (b) The Company  further  covenants  and agrees,  so long as the  Preferred
Stock  (and,  following  the  occurrence  of a  Triggering  Event or a  Business
Combination,  shares of Common Stock and/or other securities)  issuable upon the
exercise  of Rights  may be  listed on any  United  States  national  securities
exchange or quoted on any automated quotation system, to use its best efforts to
cause,  from and after the time that the  Rights  become  exercisable,  all such
shares and/or other  securities  reserved for such issuance to be listed on such
exchange or quoted on such automated  quotation  system upon official  notice of
issuance upon such exercise.

     (c) The  Company  further  covenants  and agrees that it will take all such
action as may be necessary  to ensure that all shares of  Preferred  Stock (and,
following the occurrence of a Triggering Event or a Business Combination, shares
of Common Stock and/or other  securities)  delivered upon the exercise of Rights
shall, at the time of delivery of the  certificates  for such shares and/or such
other securities (subject to payment of the Purchase Price), be duly and validly
authorized and issued, fully paid, nonassessable,  freely tradeable, not subject
to liens or encumbrances, and free of preemptive rights, rights of first refusal
or any other  restrictions or limitations on the transfer or ownership  thereof,
of any kind or nature whatsoever.

     (d) 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  original  issuance  or  delivery  of  the  Rights
Certificates  or of any  certificates  for shares of Preferred  Stock (or Common
Stock and/or other securities,  as the case may be) upon the exercise of Rights.
The Company  shall not,  however,  be required to (i) pay any transfer tax which
may be payable in respect of any  transfer  involved in the issuance or delivery
of any Rights  Certificates or the issuance or delivery of any  certificates for
shares of Preferred  Stock (or Common Stock and/or other  securities as the case
may be) to a Person other than, or in a name other than that of, the  registered
holder of the Rights  Certificate  evidencing Rights surrendered for exercise or
(ii)  transfer  or  deliver  any  Rights  Certificate  or issue or  deliver  any
certificates  for  shares of  Preferred  Stock (or  Common  Stock  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
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax is due.


                                     - 14 -


<PAGE>


     (e) The Company  shall (i) as soon as  practicable  following a  Triggering
Event (or such earlier time following the  Distribution  Date as may be required
by law), prepare and file a registration  statement on an appropriate form under
the Securities Act with respect to the securities  purchasable  upon exercise of
the Rights,  (ii) cause such registration  statement to become effective as soon
as practicable after such filing, and (iii) cause such registration statement to
remain effective (with a prospectus at all times meeting the requirements of the
Securities  Act)  until the  earlier  of (A) the date as of which  Rights are no
longer  exercisable for such securities and (B) the Expiration Date. The Company
shall also take such action as may be  necessary  or  appropriate  under,  or to
ensure  compliance with, the securities or "blue sky" laws of the various states
in  connection  with the  exercise  of the Rights.  The Company may  temporarily
suspend,  for a  period  of time  not to  exceed  90 days  after  the  date of a
Triggering Event, the  exercisability of the Rights in order to prepare and file
such  registration  statement and permit it to become  effective.  Upon any such
suspension,  the  Company  shall  make a public  announcement  stating  that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.

   Section 10. Preferred  Stock  Record Date.
               -----------------------------
Each  Person in whose name any  certificate  for shares of  Preferred  Stock (or
Common  Stock 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 Stock (or Common Stock and/or other  securities,  as the
case may be) represented  thereby on, and such  certificate  shall be dated, the
date  upon  which  the  Rights  Certificate  evidencing  such  Rights  was  duly
surrendered  and  payment of the  Purchase  Price (and any  applicable  transfer
taxes)  was made;  provided,  however,  that if the date of such  surrender  and
payment is a date upon which the  Preferred  Stock (or Common Stock 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 shares  (and/or
such other  securities,  as the case may be) on, and such  certificate  shall be
dated, the next succeeding  Business Day on which the Preferred Stock (or Common
Stock and/or other securities, as the case may be) transfer books of the Company
are open.

   Section 11. Adjustments  to Purchase Price,  Number  of  Shares or Number  of
               -----------------------------------------------------------------
Rights.
------
The Purchase Price,  the number and kind of securities,  cash and other property
obtainable  upon  exercise  of each Right and the  number of Rights  outstanding
shall be subject to adjustment from time to time as provided in this Section 11.

     (a)  Adjustments Prior to Trigger Date:

          (1)  In the event the Company shall at any time after the date of this
               Agreement  and prior to the  Trigger  Date (i) pay a dividend  or
               make a  distribution  on the  Common  Stock  payable in shares of
               Common Stock,  (ii) subdivide (by a stock split or otherwise) the
               outstanding  Common Stock into a larger  number of shares,  (iii)
               combine (by a reverse stock split or otherwise)  the  outstanding
               Common  Stock  into a smaller  number  of shares  (and any of the
               actions described in clauses (i), (ii) or (iii) are herein called
               a "stock split") then:


                                     - 15 -


<PAGE>


               (A)  The number of Rights  outstanding  shall be adjusted so that
                    after giving effect to such stock split the number of Rights
                    outstanding  shall be exactly  equal to the number of shares
                    of  Common  Stock  outstanding  (and  so that  prior  to the
                    Distribution  Date one Right shall be associated  with every
                    share of Common Stock outstanding after such stock split);

               (B)  The  Exercise  Amount shall be adjusted by  multiplying  the
                    Exercise  Amount in effect  immediately  prior to such stock
                    split by a  fraction,  the  numerator  of which shall be the
                    number of shares of  Common  Stock  outstanding  immediately
                    prior to such stock split and the denominator of which shall
                    be  the  number  of  shares  of  Common  Stock   outstanding
                    immediately after such stock split;

               (C)  The Purchase Price for each one one-thousandth of a share of
                    Preferred Stock shall not change;  and

               (D)  The fraction of a share of Preferred Stock  purchasable with
                    each Right immediately after such stock split shall be equal
                    to the  product  derived by  multiplying  the  fraction of a
                    share  of  Preferred  Stock   purchasable  with  each  Right
                    immediately  prior to such stock  split  times the  fraction
                    cited in clause (B) above.

          The  following  example  illustrates  the  intended  operation  of the
          preceding  provisions.  Assume that initially,  each Right would (when
          and if it became  exercisable)  entitle  its  holder to  purchase  one
          one-thousandth of a share of Preferred Stock for $180 (and accordingly
          the initial  Exercise  Amount and the initial  Purchase  Price per one
          one-thousandth  of a share of  Preferred  Stock are each $180.  Assume
          further that prior to the  Distribution  Date,  the Company splits its
          Common  Stock two for one  (thereby  doubling  the number of shares of
          Common Stock  outstanding).  The intended  operation of the  preceding
          adjustment  provisions is that:  (i) the number of Rights  outstanding
          would also double;  (ii) one Right would be associated with each share
          of Common Stock  outstanding  after the stock split;  (iii) each Right
          would  have an  Exercise  Amount  equal to $90;  (iv) each  Right will
          entitle  its holder  (when and if the Right  becomes  exercisable)  to
          purchase one  two-thousandth  of one share of Preferred Stock; and (v)
          the Purchase Price for each one one-thousandth of a share of Preferred
          Stock would remain $180 so that the price for each one  two-thousandth
          of a share of  Preferred  Stock  purchasable  with each Right would be
          $90.


                                     - 16 -


<PAGE>


          (2)  Adjustment  in Rights Certificates: In the event the Distribution
               Date    shall  occur  and   the  Company  shall  issue   separate
               certificates  to represent the Rights,  the following  provisions
               shall thereafter apply:

               (A)  In  the   event   the  number  of  Rights  outstanding   are
                    increased  pursuant to  Section 11(a)(1),  the Company shall
                    as  promptly  as   reasonably  possible  distribute  to  the
                    record  holders  of  the  Rights  on the record date for the
                    stock  split giving  rise  to  the  increase  in the  number
                    of  Rights certificates  representing the  additional Rights
                    issuable by reason of such stock split.

               (B)  In the event the number of  Rights outstanding  are  reduced
                    pursuant  to  Section 11(a) by reason of the occurrence of a
                    reverse stock split or its functional equivalent,  then each
                    Rights certificate  outstanding prior  to such reverse stock
                    split shall  thereafter  represent  the  reduced  number  of
                    Rights into  which  the  Rights   represented  by  such
                    certificate immediately prior to such  reverse  stock  split
                    shall have been converted by reason  of  the  occurrence  of
                    that  reverse stock split.

     (b)  Basic  Triggering  Event Adjustments:  Upon the first  occurrence of a
Triggering Event (except as otherwise  provided in this  Agreement),  each Right
shall be changed so that immediately after the Triggering Event:

          (1)  it shall no longer be exercisable for Preferred  Stock but rather
               shall be exercisable for Common Stock;

          (2)  the number of shares of Common Stock which may be  acquired  upon
               exercise of each Right shall be equal to the result  obtained  by
               dividing (x) 50% of the Current Market Price  per share of Common
               Stock on the date of the occurrence of the Triggering  Event into
               (y)  the  Exercise  Amount  in  effect immediately  prior to  the
               Triggering Event; and

          (3)  the Purchase  Price per Common Share purchasable  with each Right
               shall be equal  to 50% of  the Current  Market Price per share of
               Common  Stock  on  the  date  of the occurrence of the Triggering
               Event.

     (c)  Other Post Triggering Event Adjustments.

          (1)  Use of Common Equivalent Shares:In the event that  the  number of
               shares of  Common  Stock which  are  authorized by the  Company's
               certificate  of incorporation, but which are not  outstanding  or
               reserved for issuance for  purposes  other  than upon exercise of
               the Rights ("Available Common Stock") is not sufficient to permit


                                     - 17 -


<PAGE>

               the exercise in full of the Rights  after  the adjustment made in
               accordance with Section 11(b), then:

               (A)  The  Available  Common  Stock shall be  allocated  among the
                    outstanding  Rights so that each  Right  shall  entitle  its
                    holder to purchase  the same  quantity of  Available  Common
                    Stock and a fraction  of a share of  Preferred  Stock  which
                    when multiplied  times the Adjustment  Number then in effect
                    under the terms of the  Preferred  Stock  produces a product
                    equal to the remainder  derived by subtracting the number of
                    shares of Common Stock purchasable with each Right after the
                    allocation  specified  above  from the  number  of shares of
                    Common  Stock  which would have been  purchasable  with such
                    Right if the Corporation  had a sufficient  number of shares
                    of  Common  Stock to  permit  the  Right  to be  exercisable
                    entirely for Common Stock (such  remainder being referred to
                    herein as the "Unallocated Shares").

               (B)  The  fraction  of a share of  Preferred  Stock  equal to the
                    reciprocal  of the  Adjustment  Number in effect at the time
                    the term  shall be  applied  shall be deemed to be a "Common
                    Equivalent  Share"  for  purposes  of  this  Agreement.  The
                    Company shall take all actions reasonably  necessary so that
                    as  nearly  as  possible   each  Common   Equivalent   Share
                    represents  substantially  the same interest in the Company,
                    has the same dividend rate, and has other characteristics as
                    similar as possible to one share of Common  Stock.  The term
                    "Common Share"  whenever it is used in this Agreement  means
                    both a share of Common Stock and a Common  Equivalent Share.

               (C)  If circumstances  after the initial Trigger Date require the
                    use of Common Equivalent  Shares,  the Company shall use its
                    best efforts to obtain  authorization  to issue a sufficient
                    quantity of Common Stock to permit Common Stock to be issued
                    upon  exercise  of the  Rights  and/or any  exercise  of the
                    exchange  right under the following  Section.  Each time the
                    Company's  authorized  Common Stock shall be increased,  the
                    adjustment required under the preceding  paragraphs shall be
                    redone to maximize the amount of Common Stock  issuable upon
                    exercise  of the  Rights.  To the extent  excess  authorized
                    Common Stock remains after the readjustment  required by the
                    preceding  sentence,  the holder of any  outstanding  Common


                                     - 18 -


<PAGE>


                    Equivalent Share shall have the right at any time to require
                    the  Company  to  exchange  that share for a share of Common
                    Stock.

               (D)  In no event,  however,  shall the  Company be  obligated  to
                    reserve any Common Stock for issuance under the Rights until
                    and unless a Triggering Event actually occurs.

               (E)  In no event  shall the  Company  issue any  Preferred  Stock
                    except for  issuances  caused by  exercise of the Rights and
                    except for  issuances  required by this Section 11(c) (1) or
                    Section 11(d)(6).

          (2)  Exchange Option:

               (A)  At any time after the  occurrence of a Triggering  Event and
                    prior to the earlier of (i) the time any Person  (other than
                    an  Exempt   Person),   together  with  all  Affiliates  and
                    Associates of such Person,  becomes the Beneficial  Owner of
                    50% or more of the Common  Stock then  outstanding  and (ii)
                    the  occurrence  of a Business  Combination  (the earlier of
                    such time and  occurrence  begin  referred  to herein as the
                    "Exchange Option Exercise Deadline"), the Board of Directors
                    of the  Company  may,  at its  option,  cause the Company to
                    exchange  for  all  or  part  of  the  then-outstanding  and
                    exercisable Rights (which shall not include Rights that have
                    become  void  pursuant  to the  provisions  of Section  7(e)
                    hereof),  shares of Common Stock at an exchange ratio of one
                    share of Common Stock per Right,  appropriately  adjusted to
                    reflect  any  stock   split,   stock   dividend  or  similar
                    transaction occurring after the date of this Agreement (such
                    exchange  ratio being  referred  to herein as the  "Exchange
                    Ratio").   Notwithstanding  the  foregoing,   the  Board  of
                    Directors  of the Company may  exercise its option to effect
                    an exchange  pursuant to this Section  11(c)(2) prior to the
                    Trigger Date  effective  upon the Trigger Date,  even if the
                    Trigger Date  coincides  with the Exchange  Option  Exercise
                    Deadline.  Any partial  exchange  shall be effected on a pro
                    rata basis based on the number of Rights  (other than Rights
                    which have become void pursuant to the provisions of Section
                    7(e) hereof) held by each holder of Rights.

               (B)  Immediately upon the action of the Board of Directors of the
                    Company  ordering  the  exchange  of any  particular  Rights


                                     - 19 -


<PAGE>


                    pursuant to this  Section  11(c)(2)  and without any further
                    action and without any notice,  the right to exercise  those
                    particular  Rights  shall  terminate  and the  only  right a
                    holder  shall have  thereafter  with respect to any of those
                    particular  Rights  shall be to receive the number of shares
                    of Common  Stock  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 and
                    in addition, the Company shall promptly mail a notice of any
                    such  exchange  to all of the  holders  of  such  Rights  in
                    accordance  with  Section  25 of this  Agreement;  provided,
                    however,  that the  failure to give,  any delay in giving or
                    any defect in, such notice  shall not affect the validity of
                    such  exchange.  Each such notice of exchange will state the
                    method by which the  exchange of the shares of Common  Stock
                    for Rights will be effected and, in the event of any partial
                    exchange, the number of Rights which will be exchanged.  The
                    Company  shall not be required to issue  fractions of shares
                    of Common Stock or to distribute certificates which evidence
                    fractional   shares  of  Common  Stock.   In  lieu  of  such
                    fractional  shares of Common Stock, the Company shall pay to
                    the  registered  holders  of the  Rights  Certificates  with
                    regard to which such fractional shares of Common Stock would
                    otherwise be issuable an amount in cash equal to the product
                    derived by multiplying (x) the subject fraction,  by (y) the
                    last sale price of the  Company's  Common Stock on the fifth
                    Trading  Day  following  the  public   announcement  of  the
                    exchange  by the  Company,  or, in case no such  sale  takes
                    place on such day,  the average of the closing bid and asked
                    prices on such day, in either  case on a when  issued  basis
                    (taking  into  account  the  exchange),  as  reported in the
                    principal  consolidated  transaction  reporting  system with
                    respect to  securities  listed or admitted to trading on the
                    NYSE (or, if the Company's  Common Stock is not so listed or
                    traded,  then as determined in the manner provided under the
                    definition of "Current Market Price,"  adjusted to take into
                    account the exchange). In determining whether any particular
                    holder  shall  be  obligated  to  receive  cash in lieu of a
                    fractional  share,  the holder shall be entitled to have all
                    Rights  beneficially owned by such holder aggregated so that
                    only one fractional  share shall be  attributable to all the
                    Rights so beneficially owned.

     (d)  Antidilution Adjustments After the Trigger Date:


                                     - 20 -


<PAGE>


          (1)  In the event the Company shall at any time after the Trigger Date
               effect any stock split with respect to its Common Stock, then the
               Purchase  Price to be in effect  after such stock  split shall be
               determined   by   multiplying   the  Purchase   Price  in  effect
               immediately prior to such action by a fraction,  the numerator of
               which   shall  be  the  number  of  Common   Shares   outstanding
               immediately  prior to such  stock  split and the  denominator  of
               which   shall  be  the  number  of  Common   Shares   outstanding
               immediately after such stock split.

          (2)  In case the Company  shall at any time after the Trigger Date fix
               a record  date for the  making of a  distribution  to  holders of
               Common Stock (including any such  distribution made in connection
               with a reclassification of the Common Stock or a consolidation or
               merger in which the  Company  is the  surviving  corporation)  of
               securities  (other  than  Common  Stock and  rights,  options  or
               warrants  referred  to in Section  11(d)(3)),  cash (other than a
               regular periodic cash dividend at an annual rate not in excess of
               (x) 125% of the annual rate of the regular cash  dividend paid on
               the Common Stock during the immediately  preceding fiscal year or
               (y) in the event that a regular cash dividend was not paid on the
               Common Stock during such preceding fiscal year, 5% of the Current
               Market  Price of the Common  Stock on the date such  regular cash
               dividend was first declared), property, evidences of indebtedness
               or assets,  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 Current Market Price per share of
               Common Stock on such record date,  less the fair market value (as
               determined  in good faith by a majority of the Board of Directors
               of the  Company,  whose  determination  shall be  described  in a
               statement filed with the Rights Agent) of such securities,  cash,
               property,   evidences  of   indebtedness   or  assets  to  be  so
               distributed  in  respect  of one share of Common  Stock,  and the
               denominator of which shall be such Current Market Price per share
               of Common Stock on such record date.  Such  adjustments  shall be
               made  successively  whenever such a record date is fixed;  and in
               the  event  that such  distribution  is not made  following  such
               adjustment,  the  Purchase  Price shall be  readjusted  to be the
               Purchase  Price  which  would have been in effect if such  record
               date had not been fixed.

          (3)  If the  Company  shall at any time after the  Trigger  Date fix a
               record date for the  issuance  of rights,  options or warrants to
               holders  of Common  Shares  entitling  them to  subscribe  for or
               purchase  Common Shares (or  securities  convertible  into Common
               Shares)  at a  price  per  Common  Share  (or,  in the  case of a
               convertible security, having a conversion price per Common Share)


                                     - 21 -


<PAGE>


               less than the Current  Market  Price per share of Common Stock on
               such record date and  requiring  that the  conversion or purchase
               right be  exercised  within 45  calendar  days after 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 shares of Common Shares
               outstanding on such record date, plus the number of Common Shares
               which the  aggregate  exercise  and/or  conversion  price for the
               total number of Common Shares which are obtainable  upon exercise
               and/or   conversion   of  such  rights,   options,   warrants  or
               convertible  securities  would  purchase at such  Current  Market
               Price, and the denominator of which shall be the number of shares
               of Common Shares outstanding on such record date, plus the number
               of  additional  Common Shares which may be obtained upon exercise
               and/or   conversion   of  such  rights,   options,   warrants  or
               convertible  securities.  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 a majority of the Board of Directors
               of the  Company,  whose  determination  shall be  described  in a
               statement filed with the Rights Agent and shall be binding on the
               Rights  Agent.  Common Shares owned by or held for the account of
               the Company or any  Subsidiary 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 issued  following  such  adjustment,  the Purchase  Price
               shall be  readjusted  to be the  Purchase  Price which would have
               been in effect if such record date had not been fixed.

          (4)  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
               combination or subdivision of the Common Stock,  issuance  wholly
               for cash of any  Common  Stock at less  than the  Current  Market
               Price,  issuance  wholly for cash of Common  Stock or  securities
               which by their  terms are  convertible  into or  exchangeable  or
               exercisable  for Common  Shares,  stock  dividends or issuance of
               rights,  options or  warrants  referred  to in this  Section  11,
               hereafter  made by the  Company to holders of its Common  Shares,
               shall not be taxable to such stockholders.


                                     - 22 -


<PAGE>


          (5)  After each  adjustment of the Purchase  Price  pursuant to any of
               subsections  (1) - (4)  immediately  above,  the number of Common
               Shares  purchasable  with each  Right  shall be  adjusted  to the
               quotient  derived by dividing the Purchase  Price as  constituted
               after giving effect to such adjustment into the Exercise Amount.

          (6)  The Company shall not take any of the actions described in any of
               subsections (1) - (3) above at a time when any Common  Equivalent
               Shares   are   outstanding   unless   the   Company   shall  take
               substantively  identical  actions with respect to the outstanding
               Common   Stock  and   outstanding   Common   Equivalent   Shares.
               Conversely,  the Company  shall not take any actions with respect
               to  outstanding  Common  Equivalent  Shares  analogous  to  those
               described  in any  of  subsections  (1) - (3)  above  unless  the
               Company shall take  substantively  identical actions with respect
               to the outstanding Common Stock and outstanding Common Equivalent
               Shares.

     (e)  Recapitalizations.

          (1)  In the event that after the Trigger Date, the Company shall issue
               any  securities in a  reclassification  of the Common Stock or in
               any other  recapitalization  (including any such reclassification
               in connection with a consolidation or merger in which the Company
               is the surviving corporation), then in each such event:

               (A)  the property  purchasable  with each Right shall be adjusted
                    to be  whatever  the owner of that Right would have owned by
                    reason of both (i) the  exercise  of that Right  immediately
                    prior to such  recapitalization or reclassification and (ii)
                    the effect of that  recapitalization  or reclassification on
                    the property assumed to have been received in such exercise.

               (B)  The Exercise  Amount shall be allocated  among the shares of
                    stock  and/or  other units of  property  for which the Right
                    shall be  exercisable  after giving effect to the adjustment
                    cited in clause (A) based on the fair  market  value of such
                    property to determine the Purchase Price for each such share
                    and/or unit.

          (2)  To illustrate the intended operation of  this  provision,  assume
               that: (i) immediately prior  to  a reclassification,  each  Right
               were exercisable  for 6 Common  Shares  and  the  Exercise Amount
               were  $180 (resulting  in a  purchase  price  of  $30  per Common
               Share);   (ii)  as  a  result  of  the   Reclassification,   each
               outstanding  Common Share is reclassified  into  two  New  Common
               Shares  and  one  Series  B  Share;  and (iii) immediately  after


                                     - 23 -


<PAGE>


               the  reclassification,  the market value of each New Common Share
               was $25 and the market value of  each  Series  B  share  was $10.
               Immediately after the assumed  reclassification, each Right would
               be exercisable  for 12 New  Common  Shares  at a  purchase  price
               of $12.50  per share and six Series B Shares at a  purchase price
               of $5 per share.

     (f)  In the event a Triggering Event shall occur,  or  in  the  event there
shall be a recapitalization or reclassification pursuant to Section 11(e), or in
the event there shall be any merger or other action which shall cause  a  change
in the property purchasable  with the  Rights under Section 13, or  in the event
there shall be  any  other  occurrence or  development  which  shall  cause  the
property purchasable  with the Rights to consist in whole or in part of anything
other than Preferred Stock, then and in any such event:

          (1)  The certificates  representing the Rights shall  automatically be
               deemed to represent the adjusted  terms of the Rights without the
               need to replace such  certificates.  The Company shall thereafter
               make arrangements for the production of certificates representing
               the revised terms of the Rights  resulting  from such  adjustment
               and shall use such certificates to represent Rights for which new
               certificates  shall be issuable by reason of a transfer of record
               ownership or by reason of a request by the existing  record owner
               for a replacement  certificate  representing the revised terms of
               the Rights.

          (2)  The  principles  underlying  the  adjustment  provisions  in this
               Section 11 and  elsewhere in this  Agreement  shall be applied to
               fairly and  proportionately  adjust the shares or other  property
               purchasable with the Rights and the purchase price for each share
               or other property unit  purchasable  with the Rights after giving
               effect to the  adjustments  required  by reason of such  event to
               reflect any subsequent  capital changes or other events.  Without
               limiting by implication the generality of the preceding sentence,
               the  provisions  of  Sections 7, 9, 10, 12, 13, 14 and 24 of this
               Agreement  which related to the  Preferred  Stock shall after the
               occurrence of any such event apply in a  substantively  identical
               manner  to the  shares  or other  property  purchasable  with the
               Rights after giving effect to such event.

     (g)  Before  taking  any  action  that would  cause an  adjustment reducing
the  Purchase  Price per share at which shares are  purchasable  with the Rights
below the par value of those shares, 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  shares at
such adjusted Purchase Price.


                                     - 24 -


<PAGE>


     (h) In any case in which this Section 11 shall  require that an  adjustment
be made  effective  as of a record date for a specified  event,  the Company may
elect to defer until the  occurrence of such event the issuance to the holder of
any Right  exercised after such record date the shares of Common Stock and other
securities, cash or property of the Company, if any, issuable upon such exercise
over and above the shares of Common Stock and other securities, cash or property
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  (fractional or
otherwise)  or other  securities,  cash or property  upon the  occurrence of the
event requiring such adjustment.

     (i) The Company  covenants  and agrees  that on and after the Trigger  Date
neither it nor any combination of it and its subsidiaries  shall (i) consolidate
with any other  Person,  or (ii)  merge  with or into any other  Person or (iii)
directly or indirectly sell, lease, or otherwise  transfer or dispose of (in one
transaction  or a series  of  related  transactions)  assets  or  earning  power
aggregating  more than 50% of the assets or earning power of the Company and its
Subsidiaries  taken  as a whole  to any  other  Person  if (A) at the time of or
immediately  after  such  consolidation,   merger,  sale,  lease,  transfer,  or
disposition  there are any rights,  warrants,  securities  or other  instruments
outstanding  or  agreements  in effect  which  would  substantially  diminish or
otherwise  eliminate  the  benefits  intended to be afforded by the Rights,  (B)
prior to,  simultaneously with or immediately after such consolidation,  merger,
sale,  lease,  transfer,  or disposition the stockholders (or equity holders) of
the Person who  constitutes,  or would  constitute,  the Principal Party in such
transaction  shall have received a distribution  of Rights  previously  owned by
such Person or any of its  Affiliates or Associates or (C) the form or nature of
organization of the Principal  Party would preclude or limit the  exercisability
of the Rights. The Company shall not consummate any such consolidation,  merger,
sale, lease,  transfer, or disposition unless prior thereto the Company and such
other  Person  shall  have   executed  and  delivered  to  the  Rights  Agent  a
supplemental agreement evidencing compliance with this Section 11(i).

     (j) The Company  covenants and agrees that,  after the Trigger Date it will
not, except as permitted by Section 11(c)(2) of this Agreement,  take (or permit
any  Subsidiary  to take) any  action if at the time such  action is taken it is
reasonably  foreseeable that such action will, directly or indirectly,  diminish
or otherwise eliminate the benefits intended to be afforded by the Rights.

   Section 12. Certification of Adjustments.
               ----------------------------
Whenever  an  adjustment  is made as provided in Sections 11 and 13, the Company
shall (a) promptly  prepare a certificate  setting forth such  adjustment  and a
brief statement of the facts accounting for such  adjustment,  (b) promptly file
with  the  Rights  Agent  and  with  each  transfer  agent  for the  stock  then
purchasable  with  the  Rights a copy of such  certificate  and (c) mail a brief
summary  thereof  to each  holder  of a Rights  Certificate  (or,  if no  Rights
Certificates  have been  issued,  to each holder of a  certificate  representing
shares of Common  Stock) in  accordance  with  Section 25.  Notwithstanding  the
foregoing  sentence,  the failure of the  Company to give such notice  shall not
affect the  validity  of or the force or effect of or the  requirement  for such
adjustment.  Any  adjustment  to be made  pursuant to Sections 11 and 13 of this
Agreement  shall be  effective  as of the date of the event  giving rise to such
adjustment.  The Rights  Agent shall be fully  protected  in relying on any such


                                     - 25 -



<PAGE>


certificate and on any adjustment  therein  contained and shall not be obligated
or  responsible  for  calculating  any adjustment nor shall it be deemed to have
knowledge  of such  adjustment  unless  and until it shall  have  received  such
certificate.

   Section 13. Consolidation, Merger or Sale or Transfer of  Assets  or  Earning
               -----------------------------------------------------------------
Power.
-----
     (a) A "Business Combination" shall be deemed to occur in the event that, in
or following a Triggering Event, (i) the Company shall,  directly or indirectly,
consolidate  with,  or merge  with and into,  any  other  Person  (other  than a
Subsidiary of the Company in a transaction  that complies with Section 11(i) and
Section 11(j) of this  Agreement)  in a transaction  in which the Company is not
the   continuing,   resulting  or  surviving   corporation  of  such  merger  or
consolidation,  (ii) any Person  (other  than a  Subsidiary  of the Company in a
transaction  that  complies  with  Section  11(i)  and  Section  11(j)  of  this
Agreement) shall, directly or indirectly, consolidate with the Company, or shall
merge with and into the Company,  in a  transaction  in which the Company is the
continuing,  resulting or surviving  corporation of such merger or consolidation
and, in connection with such merger or consolidation,  all or part of the Common
Stock shall be changed (including,  without  limitation,  any conversion into or
exchange for securities of the Company or of any other Person, cash or any other
property),  (iii) the  Company  shall,  directly or  indirectly,  effect a share
exchange in which all or part of the Common  Stock shall be changed  (including,
without limitation,  any conversion into or exchange for securities of any other
Person,  cash or any other  property)  or (iv) the  Company  shall,  directly or
indirectly,  sell, lease,  exchange,  mortgage,  pledge or otherwise transfer or
dispose of (or one or more of its  Subsidiaries  shall  directly  or  indirectly
sell, lease, exchange, mortgage, pledge or otherwise transfer or dispose of), in
one  transaction  or a series of related  transactions,  assets or earning power
aggregating  more than 50% of the assets or earning power of the Company and its
Subsidiaries  (taken as a whole) to any other Person  (other than the Company or
any of its Subsidiaries in one or more transactions each and all of which comply
with Section 11(i) and Section 11(j) of this Agreement).

     In the event of a Business  Combination,  proper provision shall be made so
that each holder of a Right  (except as  otherwise  provided in this  Agreement)
shall  thereafter  have the right to receive,  upon the  exercise of each Right,
such number of shares of Common Stock of the  Principal  Party as shall be equal
to the result  obtained by dividing the  Exercise  Amount in effect prior to the
Business  Combination by 50% of the Current Market Price per share of the Common
Stock of such Principal  Party  immediately  prior to the  consummation  of such
Business  Combination.  All  shares of Common  Stock of any Person for which any
Right may be exercised after consummation of a Business  Combination as provided
in this Section  13(a) shall,  when issued upon  exercise  thereof in accordance
with this  Agreement,  be duly and validly  authorized  and issued,  fully paid,
nonassessable,  freely tradeable, not subject to liens or encumbrances, and free
of  preemptive  rights,  rights of first  refusal or any other  restrictions  or
limitations  on the  transfer  or  ownership  thereof  of  any  kind  or  nature
whatsoever. The Purchase Price per share for such Common Stock immediately after
such Business  Combination shall be equal to 50% of the Current Market Price per
share of the  Common  Stock of such  Principal  Party  immediately  prior to the
consummation of such Business Combination.


                                     - 26 -


<PAGE>


     (b) After consummation of any Business Combination, (i) the Principal Party
shall be liable for, and shall assume,  by virtue of such  Business  Combination
and without the necessity of any further act, all the  obligations and duties of
the Company pursuant to this Agreement,  (ii) the term "Company" as used in this
Agreement shall  thereafter be deemed to refer to such Principal Party and (iii)
such Principal  Party shall take all steps  (including,  but not limited to, the
reservation  of a sufficient  number of shares of its Common Stock in accordance
with Section 9) in  connection  with such Business  Combination  as necessary to
ensure that the provisions of this Agreement shall thereafter be applicable,  as
nearly as  reasonably  may be, in  relation  to the shares of its  Common  Stock
thereafter deliverable upon the exercise of the Rights.

     (c) The Company shall not consummate any Business  Combination unless prior
thereto (i) the  Principal  Party shall have a sufficient  number of  authorized
shares of its Common  Stock which have not been issued or reserved  for issuance
(other than shares  reserved  for  issuance  pursuant to this  Agreement  to the
holders of Rights) to permit the  exercise  in full of the Rights in  accordance
with this  Section  13, (ii) the  Company  and such  Principal  Party shall have
executed and delivered to the Rights Agent a  supplemental  agreement  providing
for the  fulfillment of the Principal  Party's  obligations and the terms as set
forth in paragraphs (a) and (b) of this Section 13 and further  providing  that,
as soon as  practicable on or after the date of such Business  Combination,  the
Principal Party, at its own expense, shall (A) prepare and file, if necessary, a
registration  statement on an  appropriate  form under the  Securities  Act with
respect  to the Rights  and the  securities  purchasable  upon  exercise  of the
Rights, (B) use its best efforts to cause such registration  statement to become
effective as soon as practicable  after such filing and remain effective (with a
prospectus at all times meeting the  requirements  of the Securities  Act) until
the Expiration Date, (C) deliver to holders of the Rights  historical  financial
statements for the Principal  Party and each of its  Affiliates  which comply in
all respects with the requirements for registration on Form 10 (or any successor
form) under the  Exchange  Act,  (D) use its best efforts to qualify or register
the Rights and the securities  purchasable upon exercise of the Rights under the
state securities or "blue sky" laws of such jurisdictions as may be necessary or
appropriate,  (E) use its best  efforts to list the  Rights  and the  securities
purchasable  upon exercise of the Rights on a United States national  securities
exchange  and (F) obtain  waivers of any rights of first  refusal or  preemptive
rights in respect of the Common Stock of the Principal Party subject to purchase
upon exercise of outstanding  Rights,  (iii) the Company and the Principal Party
shall have  furnished  to the Rights  Agent an  opinion of  independent  counsel
stating that such supplemental agreement is a legal, valid and binding agreement
of the Principal  Party  enforceable  against the Principal  Party in accordance
with its terms,  and (iv) the Company and the  Principal  Party shall have filed
with  the  Rights  Agent  a  certificate  of a  nationally  recognized  firm  of
independent  accountants  setting  forth the number of shares of Common Stock of
such issuer  which may be  purchased  upon the  exercise of each Right after the
consummation of such Business Combination.

     (d) The provisions of this Section 13 shall  similarly  apply to successive
Business Combinations.  In the event a Business Combination shall be consummated
at any time after the  occurrence of a Triggering  Event,  the Rights which have
not  theretofore   been  exercised  shall  thereafter  be  exercisable  for  the
consideration  and in the manner  described in Section 13(a).  The provisions of


                                     - 27 -


<PAGE>


Section 11(b) of this Agreement  shall be applicable to events which occur after
a Business Combination.

     (e) Notwithstanding any other provision of this Agreement, no adjustment to
the number or kind of shares (or fractions of a share),  cash or other  property
for  which a Right  is  exercisable  or the  number  of  Rights  outstanding  or
associated  with each share of Common  Stock or any similar or other  adjustment
shall be made or be  effective  if such  adjustment  would  have the  effect  of
reducing  or limiting  the  benefits  the  holders of the Rights  would have had
absent such  adjustment,  including,  without  limitation,  the  benefits  under
Sections  11 and 13,  unless the terms of this  Agreement  are  amended so as to
preserve  such  benefits,  provided  that this  paragraph  shall not prevent any
change prior to the Trigger Date  permitted by Section  26(a) and provided  that
this Section 13(e) shall not be deemed to limit or impair the right to engage in
an exchange pursuant to Section 11(c)(2).

     (f) The Company  covenants and agrees that it shall not effect any Business
Combination if at the time of, or immediately  after such Business  Combination,
there are any rights,  options,  warrants or other instruments outstanding which
would  diminish or otherwise  eliminate the benefits  intended to be afforded by
the Rights.

     (g) Without  limiting the  generality  of this Section 13, in the event the
nature of the  organization  of any Principal  Party shall preclude or limit the
acquisition of Common Stock of such Principal  Party upon exercise of the Rights
as required by Section 13(a) as a result of a Business Combination,  it shall be
a condition to such Business  Combination  that such Principal  Party shall take
such steps (including, but not limited to, a reorganization) as may be necessary
to ensure that the  benefits  intended to be derived  under this Section 13 upon
the exercise of the Rights are assured to the holders thereof.

   Section 14. Fractional Rights and Fractional Shares.
               ---------------------------------------
     (a) The  Company  shall not be required  to issue  fractional  Rights or to
distribute Rights Certificates which evidence fractional Rights.

     (b) The Company shall permit the issuance and trading of Preferred Stock in
fractional  shares such that the  smallest  fractional  share  tradeable  at any
particular time shall equal the reciprocal of the Adjustment Number in effect at
that  particular  time. The Company shall not be required to issue  fractions of
shares of Preferred Stock (other than fractions which are integral  multiples of
the  reciprocal  of the  Adjustment  Number)  upon  exercise of the Rights or to
distribute  certificates  which evidence  fractional  shares of Preferred  Stock
(other than  fractions  which are integral  multiples of the  reciprocal  of the
Adjustment Number).  Fractions of shares of Preferred Stock 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  Stock.  In lieu of  fractional  shares of
Preferred  Stock  that  are not  integral  multiples  of the  reciprocal  of the


                                     - 28 -


<PAGE>


Adjustment  Number, the Company may at its option (i) issue scrip or warrants in
registered form (either  represented by a certificate or  uncertificated)  or in
bearer form  (represented  by a  certificate)  which shall entitle the holder to
receive the reciprocal of the Adjustment  Number of one share of Preferred Stock
upon the surrender of such scrip or warrants  aggregating  the reciprocal of the
Adjustment Number of one share of Preferred Stock, or (ii) pay to the registered
holders  of  Rights  Certificates  at the  time  such  Rights  Certificates  are
exercised  as  provided  in this  Agreement  an amount in cash equal to the same
fraction  of the  relevant  closing  price of a share of  Preferred  Stock.  For
purposes  of this  Section  14(b),  the  relevant  closing  price  of a share of
Preferred  Stock shall be the closing  price of a share of  Preferred  Stock (as
determined  pursuant to the second sentence of the definition of "Current Market
Price" in Section 1) for the Trading Day  immediately  prior to the date of such
exercise.

     (c) The  Company  shall not be  required  to issue  fractions  of shares of
Common Stock or Common  Equivalent  Shares or to distribute  certificates  which
evidence fractional shares of Common Stock. In lieu of such fractional shares of
Common  Stock,  the Company  shall pay to the  registered  holders of the Rights
Certificates  with regard to which such fractional  shares of Common Stock would
otherwise  be  issuable  an  amount  in cash  equal to the  product  derived  by
multiplying  (x) the subject  fraction,  by (y) the closing  price of a share of
Common Stock (as determined pursuant to the second sentence of the definition of
"Current  Market Price" in Section 1) for the Trading Day  immediately  prior to
the date of such exercise.

     (d) The holder of a Right by his acceptance  thereof  expressly  waives any
right to receive any fractional Rights or any fractional shares upon exercise of
a Right (except as otherwise provided in this Agreement).

   Section 15. Rights of Action.
               ----------------
Except as otherwise provided,  all rights of action in respect of this Agreement
are vested in the respective registered holders of the Rights Certificates (and,
prior to the  Distribution  Date,  any registered  holders of associated  Common
Stock);  and any registered  holder of any Rights  Certificate (or, prior to the
Distribution Date, any share of associated Common Stock), without the consent of
the Rights Agent or of the holder of any other Right, may, on 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
rights  pursuant  to this  Agreement.  Without  limiting  the  foregoing  or any
remedies  available to the holders of Rights,  it is  specifically  acknowledged
that the  holders  of Rights  would not have an  adequate  remedy at law for any
breach of this  Agreement  and will be entitled to specific  performance  of the
obligations under, and injunctive relief against actual or threatened violations
of the obligations of any Person subject to, this Agreement.

   Section 16. Agreement of Rights Holders Concerning  Transfer and Ownership of
               -----------------------------------------------------------------
Rights.
------
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 Common Stock;


                                     - 29 -


<PAGE>


     (b) after  the  Distribution   Date,  the   Rights   Certificates  will  be
transferable  on the registry  books of the Rights Agent only if  surrendered at
the  principal  stock  transfer  office of the Rights  Agent,  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 a Rights  Certificate (or, prior to the  Distribution  Date, the associated
Common Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby  (notwithstanding any notations of ownership or writing
on the Rights  Certificate or the associated  Common Stock  certificate  made by
anyone other than the Company, the transfer agent for the stock purchasable with
such Right or the Rights  Agent) for all  purposes  whatsoever,  and neither the
Company nor the Rights Agent shall be affected by any notice to the contrary.

   Section 17. Rights Holder Not  Deemed  a  Stockholder.
               -----------------------------------------
No holder,  as such, of any Rights  Certificate  shall be entitled to vote or to
receive dividends or distributions or shall be deemed for any purpose the holder
of Preferred Stock or any other securities,  cash or other property which may at
any time be issuable  on the  exercise of the Rights  represented  thereby,  nor
shall  anything  contained  in this  Agreement or in any Rights  Certificate  be
construed to confer upon the holder of any Rights  Certificate,  as such, any of
the rights of a stockholder of the Company,  including,  without limitation, any
right (i) to vote for the election of directors or upon any matter  submitted to
stockholders  at any meeting  thereof,  (ii) to give or withhold  consent to any
corporate action, (iii) to receive notice of meetings or other actions affecting
stockholders  (except as provided  in Section  24),  (iv) to receive  dividends,
distributions or subscription rights, (v) to institute, as a holder of Preferred
Stock or other securities  issuable on exercise of the Rights represented by any
Rights  Certificate,  any  derivative  action  on  behalf  of  the  Company,  or
otherwise,  until and only to the extent that the Right or Rights  evidenced  by
such  Rights  Certificate  shall  have been  exercised  in  accordance  with the
provisions of this Agreement.

   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, willful misconduct or breach of
this Agreement 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 indemnity  provided for herein shall survive the
expiration of the Rights, the termination of this Agreement, and the resignation
or removal of the Rights Agent.  The costs and expenses of enforcing  this right
of  indemnification  shall also be paid by the  Company.

     The Rights  Agent may  conclusively  rely upon and shall be  protected  and
shall  incur no  liability  for or in respect of any action  taken,  suffered or
omitted  by it in  connection  with  its  administration  of this  Agreement  in
reliance upon any Rights  Certificate  or  certificate  for  Preferred  Stock or
Common Stock or for other securities of the Company, instrument of assignment or


                                     - 30 -


<PAGE>


transfer, power of attorney, endorsement,  affidavit, letter, notice, direction,
consent,  certificate,  statement or other paper or document reasonably believed
by it to be genuine and to be signed, executed and, when necessary,  verified or
acknowledged, by the proper Person or Persons.

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

   Section 19. Merger or  Consolidation  or  Change  of  Name of  Rights  Agent.
               ----------------------------------------------------------------
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated,  or any corporation  resulting from
any merger or  consolidation  to which the Rights Agent or any successor  Rights
Agent shall be a party, or any corporation  succeeding to the corporate trust or
stock transfer 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  document  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. In case at the time
such  successor  Rights  Agent  shall  succeed  to the  agency  created  by this
Agreement any of the Rights  Certificates  shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor  Rights Agent and deliver such Rights  Certificate so countersigned;
and in case at that  time any of the  Rights  Certificates  shall  not have been
countersigned,   any  successor   Rights  Agent  may  countersign   such  Rights
Certificate either in the name of the predecessor Rights Agent or in the name of
the successor Rights Agent; and in all such cases such Rights Certificates shall
have the full force provided in the Rights Certificates and in this Agreement.

     In case at any time the name of the Rights  Agent  shall be changed  and at
such time any of the Rights  Certificates  shall have been countersigned but not
delivered,  the Rights Agent may adopt the countersignature under its prior name
and deliver Rights  Certificates so countersigned;  and in case at that time any
of the Rights Certificates shall not have been  countersigned,  the Rights Agent
may  countersign  such  Rights  Certificates  either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.

   Section 20. Duties of Rights Agent.
               ----------------------
The Rights Agent undertakes the duties and obligations imposed by this Agreement
upon the following  terms and  conditions  and no implied  duties or obligations
shall be read into this Agreement  against the Rights Agent, by all of which the
Company and the holders of Rights  Certificates,  by their  acceptance  thereof,
shall be bound:

     (a) Before the Rights Agent acts or refrains from acting,  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.


                                     - 31 -


<PAGE>


     (b) Whenever in the  performance  of  its duties under this  Agreement  the
Rights  Agent  shall  deem it  necessary  or  desirable  that any fact or matter
(including,  without  limitation,  the identity of any  Acquiring  Person or any
Affiliate or Associate of an Acquiring  Person or the  determination  of Current
Market  Price)  be  proved  or  established  by the  Company  prior to taking or
suffering any action  hereunder,  such fact or matter  (unless other evidence in
respect thereof be  specifically  prescribed in this Agreement) may be deemed to
be conclusively  proved and established by a certificate signed by the Chairman,
the Chief Executive Officer,  the President,  the Chief Financial  Officer,  the
General  Counsel,  the  Treasurer,  any Vice  President 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 only for the negligence, bad
faith,  willful misconduct or breach of this Agreement by it or its attorneys or
agent.

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

     (e) The Rights  Agent shall not be under any  responsibility  in respect of
the validity of this  Agreement or the execution and delivery of this  Agreement
(except the due execution and delivery of this Agreement by the Rights Agent) or
in respect of the validity or execution  of any Rights  Certificate  (except its
countersignature  thereof);  nor shall it be  responsible  for any breach by the
Company of any  covenant or  condition  contained  in this  Agreement  or in any
Rights Certificate;  nor shall it be responsible for any change or adjustment in
the terms of the  Rights  (including  the  manner,  method  or  amount  thereof)
provided for in Sections 3, 11, 13 or 23 or the ascertaining of the existence of
facts that would require any such change or  adjustment  (except with respect to
the exercise of Rights evidenced by Rights  Certificates  after actual notice of
any 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 shares of Preferred  Stock,  Common Stock or other securities
to be issued  pursuant  to this  Agreement  or any Rights  Certificate  or as to
whether any shares of Preferred  Stock,  Common Stock or other  securities will,
when issued, be validly authorized and issued, fully paid and nonassessable.

     (f) The  Company  agrees that it will  perform,  execute,  acknowledge  and
deliver or cause to be performed, executed,  acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or  performance  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 the
Chairman,  the Chief  Executive  Officer,  the  President,  the Chief  Financial
Officer, the General Counsel, the Treasurer, any Vice President or the Secretary
of the  Company,  and to apply to such  officers for advice or  instructions  in


                                     - 32 -


<PAGE>


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

     (h) The Rights Agent and any stockholder,  director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other  securities
of the Company or become pecuniarily  interested in any transaction in which the
Company  may be  interested,  or  contract  with or lend money to the Company or
otherwise act as fully and freely as though the Rights Agent were not serving as
such under this  Agreement.  Nothing in this Agreement 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.

     (j) If, with respect to any Rights  Certificate  surrendered  to the Rights
Agent  for  exercise  or  transfer,  the  certificate  attached  to the  form of
assignment  or form of election to purchase,  as the case may be, has either not
been  completed  or  indicates  an  affirmative  response  to  clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise or transfer without first consulting with the Company.

     (k) 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.

     (l) The Rights  Agent  shall not be required to take notice or be deemed to
have notice of any fact, event or determination (including,  without limitation,
any dates or events defined in this  Agreement or the  designation of any Person
as an Acquiring Person,  Affiliate or Associate) under this Agreement unless and
until the Rights Agent shall be specifically  notified in writing by the Company
of such fact, event or determination.

   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 notice of 30 days in writing mailed to


                                     - 33 -



<PAGE>


the Company and to each transfer agent of the Common Stock or Preferred Stock by
registered or certified mail and, at the expense of the Company,  to the holders
of the Rights  Certificates by either (i) first-class mail or (ii) by disclosure
in a periodic report of the Company required to be filed under the Exchange Act,
any  permitted  report under the Exchange Act, a press release of the Company or
in any proxy or other  communication of the Company with its  stockholders.  The
Company may remove the Rights Agent or any successor Rights Agent upon notice of
30 days in writing, mailed to the Rights Agent or successor Rights Agent, as the
case may be, and to each transfer  agent of the Common Stock or Preferred  Stock
by registered or certified  mail, and to the holders of the Rights  Certificates
by either (i) first-class mail or (ii) by disclosure in a periodic report of the
Company  required to be filed under the Exchange Act, any permitted report under
the  Exchange  Act,  a press  release  of the  Company  or in any proxy or other
communication  of the Company with its  stockholders.  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.  Notwithstanding  any other
provision of this  Agreement,  in no event shall the resignation or removal of a
Rights  Agent be  effective  until a  successor  Rights  Agent  shall  have been
appointed and have accepted such appointment.  If the Company shall fail to make
such  appointment  within a period of 30 days after such removal or after it has
been notified in writing of such  resignation  or incapacity by the resigning or
incapacitated  Rights Agent or by any holder of a Rights Certificate (who shall,
with such notice,  submit his Rights Certificate for inspection by the Company),
then  the  incumbent  Rights  Agent  or the  registered  holder  of  any  Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent.  Any successor  Rights  Agent,  whether  appointed by the
Company  or by such a court,  shall be (i) a  corporation  organized  and  doing
business  under the laws of the United States or of the State of Illinois or the
State of New York (or of any other  state of the  United  States so long as such
corporation  is  authorized  to  conduct  a  banking,  corporate  trust or stock
transfer  business  in the State of  Illinois  or the State of New York) in good
standing,  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  $50,000,000 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
such 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  Stock or Preferred  Stock;  the Company
shall also either (i) mail a notice thereof in writing to the registered holders
of the Rights  Certificates  or (ii) make a disclosure with respect thereto in a
periodic report of the Company  required to be filed under the Exchange Act, any
permitted  report under the Exchange  Act, a press  release of the Company or in
any proxy or other  communication of the Company with its stockholders.  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.


                                     - 34 -


<PAGE>


  Section 22.  Issuance of New Rights  Certificates.
               ------------------------------------
Notwithstanding  any  of the  provisions  of  this  Agreement  or of the  Rights
Certificates to the contrary,  the Company may, at its option,  issue new Rights
Certificates  evidencing Rights in such form as may be approved by a majority of
the Board of Directors of the Company to reflect any adjustment or change in the
Purchase Price per share and the number or kind or class of securities,  cash or
other property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement.

  Section 23.  Redemption  and  Termination.
               ----------------------------
     (a) The Board of Directors  of the Company may, at its option,  at any time
prior to the  earlier  of (i) the  Trigger  Date and (ii) the  Expiration  Date,
redeem all but not less than all of the then-outstanding  Rights at a redemption
price of $.01 per Right  (the  "Redemption  Price")  appropriately  adjusted  to
reflect any stock split, stock dividend or similar  transaction  occurring after
the date of this Agreement.  The Company may, at its option,  pay the Redemption
Price in cash,  shares (including  fractional  shares) of Common Stock (based on
the Current  Market Price of the Common Stock at the time of  redemption) or any
other form of consideration  deemed  appropriate by the Board of Directors.  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.

     (b) At the time and date of  effectiveness  set forth in any  resolution of
the Board of Directors of the Company  ordering  the  redemption  of the Rights,
without any further action and without any further 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;  provided,  however,  that  such
resolution of the Board of Directors of the Company may be revoked, rescinded or
otherwise  modified at any time prior to the time and date of effectiveness  set
forth in such  resolution,  in  which  event  the  right  to  exercise  will not
terminate at the time and date originally set for such  termination by the Board
of Directors of the Company.  The Company  shall  promptly give public notice of
any such redemption;  provided, however, that the failure to give, or any defect
in, any such  notice  shall not  affect the  validity  of such  redemption.  The
Company  shall also give  notice of such  redemption  to the Rights  Agent.  The
Company  may  elect to 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 issuance of Rights  Certificates,  on the registry  books of the transfer
agent for the Common Stock. Any notice which is mailed in the manner provided in
this  Agreement  shall be deemed given,  whether or not the holder  receives the
notice.  In connection with any redemption  permitted under this Section 23, the
Company may, at its option, discharge all of its obligations with respect to the
Rights by (i) issuing a press release announcing the manner of redemption of the
Rights  and (ii)  mailing  payment  of the  Redemption  Price to the  registered
holders of the Rights at their last  addresses  as they  appear on the  registry
books of the Rights Agent or, prior to the issuance of the Rights  Certificates,
on the registry books of the transfer agent for the Common Stock,  and upon such
action, all outstanding  Rights  Certificates shall be null and void without any
further action by the Company.  Neither the Company nor any of its Affiliates or
Associates  may redeem,  acquire or purchase for value any Rights at any time in


                                     - 35 -



<PAGE>


any manner other than that  specifically set forth in this Section 23, and other
than in  connection  with the  purchase  of shares of Common  Stock prior to the
earlier of the Trigger Date and the Expiration Date.

  Section 24.  Notice of Certain Events.
               ------------------------
In case the Company, on or after the Distribution Date, shall propose to (a) pay
any dividend  payable in stock of any class to the holders of its Common  Shares
or to make any other  distribution  to the holders of its Common  Shares  (other
than a regular periodic cash dividend at an annual rate not in excess of 125% of
the  annualized  rate of the cash  dividend paid on the Common Shares during the
immediately  preceding  fiscal year),  or (b) offer to the holders of its Common
Shares  rights,  options  or  warrants  to  subscribe  for  or to  purchase  any
additional  shares of Common Shares or shares of stock of any class or any other
securities,  rights or options, or (c) effect any reclassification of the Common
Shares  (other  than  a  reclassification  involving  only  the  subdivision  of
outstanding  shares of Common  Shares,  a change in the par value of such Common
Shares  or a  change  from  par  value  to no par  value),  or (d)  directly  or
indirectly  effect any consolidation or merger into or with, or effect any sale,
lease,  exchange,  or other transfer or disposition (or to permit one or more of
its  Subsidiaries  to effect any sale,  lease,  exchange  or other  transfer  or
disposition),  in one transaction or a series of related  transactions,  of more
than 50% of the  assets or earning  power of the  Company  and its  Subsidiaries
(taken  as a whole)  to,  any  other  Person,  or (e)  effect  the  liquidation,
dissolution  or winding up of the Company,  then, in each such case, the Company
shall give to each holder of a Right, in accordance with Section 25, a notice of
such  proposed  action,  which shall specify any record date for the purposes of
such  stock  dividend  or  distribution  of  rights,  or the date on which  such
reclassification,   consolidation,  merger,  sale,  lease,  exchange,  transfer,
disposition, liquidation, dissolution or winding up is to take place and if such
holders will or may participate  therein,  the date of participation  therein by
the holders of Common 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 (a) or (b) above
at least 20 days prior to the record date for determining  holders of the Common
Shares for purposes of such action, and in the case of any such other action, at
least 20 days  prior to the date of the  taking of such  proposed  action or the
date of  participation  therein,  if  any,  by the  holders  of  Common  Shares,
whichever  shall be the earlier.  The failure to give notice as required by this
Section 24 or any defect  therein  shall not affect the  legality or validity of
the action taken by the Company or the vote upon any such action.

     In case any Triggering Event or Business  Combination shall occur, then, in
any such case, the Company shall as soon as practicable  thereafter give to each
holder of a Rights  Certificate,  in  accordance  with Section 25, notice of the
occurrence of such Triggering Event or Business Combination, which shall specify
the Triggering  Event or Business  Combination  and include a description of the
consequences of such event to holders of Rights under Section 11 or 13.

  Section 25.  Notices.
               -------
Notices  or  demands  authorized  by this  Agreement  to be given or made by the
Rights  Agent or by the holder of any Rights  Certificate  to or on the  Company
shall  be  sufficiently  given  or made if sent  by  first-class  mail,  postage
prepaid,  addressed  (until another  address is filed in writing with the Rights
Agent) as follows:
                           Navistar International Corporation
                           455 North Cityfront Plaza Drive
                           Chicago, Illinois 60611


                                     - 36 -


<PAGE>


Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement  to be given or made by the  Company  or by the  holder of any  Rights
Certificate  to or on the Rights Agent shall be sent by  registered or certified
mail, and shall be deemed given upon receipt,  addressed  (until another address
is filed in writing with the Company) as follows:

                           Harris Trust and Savings Bank
                           111 West Monroe Street
                           Chicago, Illinois 60609

Notices  or  demands  authorized  by this  Agreement  to be given or made by the
Company or the Rights  Agent to the  holder of any Rights  Certificate  shall be
sufficiently  given  or  made  if sent by  first-class  mail,  postage  prepaid,
addressed  to such holder at the address of such holder as shown on the registry
books of the Company (or, if no Rights Certificates have been issued, if sent by
first-class  mail,  postage  prepaid,  addressed to each holder of a certificate
representing  shares of Common  Stock at the  address of such holder as shown on
the Company's Common Stock registry books).

  Section 26.  Supplements and Amendments.
               --------------------------

     (a)  At any time  prior to the  Trigger Date,  a  majority  of the Board of
Directors  of the Company  may,  and the Rights  Agent  shall,  if so  directed,
supplement  or  amend  any  provision  of  this  Agreement,  including,  without
limitation,  the Beneficial Ownership percent as set forth in Section 1 at which
a Person becomes an Acquiring  Person and the definition of Exempt Person as set
forth in Section 1 to include any Person in  addition  to the Persons  described
therein, without the approval of any holders of Rights.

     (b)  Except as otherwise provided in Section 26(c):

          (1)  The   Board   of   Directors  of   the  Company  shall  have  the
               exclusive  power  and  authority  to  administer  this  Agreement
               and to exercise  all rights and powers   specifically  granted to
               the Board of Directors or the  Company,  or as  may  be necessary
               or advisable in the administration of this Agreement,  including,
               without limitation, the right  and  power  to  (i)  interpret the
               provisions of this Agreement and  (ii)  make  all  determinations
               deemed  necessary or advisable  for the  administration  of  this
               Agreement  (including a determination to redeem or not redeem the
               Rights,  to exchange or not exchange the Rights for Common Stock,
               or to amend or supplement this Agreement).


                                     - 37 -


<PAGE>


          (2)  All   such    actions,    calculations,    interpretations    and
               determinations (including,   for  purposes  of  clause (y) below,
               all  omissions  with  respect to the foregoing)  which  are  done
               or made  by  the  Board of  Directors  of  the  Company  in  good
               faith  shall  (x)  be  final,  conclusive  and  binding  on   the
               Company,  the Rights  Agent, the  holders  of the  Rights and all
               other Persons  and (y) not  subject the Board of Directors of the
               Company to any liability to the holders of the Rights.

     (c)  From and after the Trigger Date:

          (1)  No  amendment  or  other  change  shall be made in this Agreement
               or  the  terms  of  the  Rights   which  is inconsistent with the
               provisions set forth in Section 11(j)  or  Section 13(f) or which
               would   otherwise adversely affect the interests  of the  holders
               of Rights Certificates  (other  than an  Acquiring  Person or any
               other  Person  in  whose  hands  the  Rights  are void under  the
               provisions of Section 7(e)).  Notwithstanding  the  foregoing,  a
               majority of  the Board of  Directors  may, and  the  Rights Agent
               shall, if so directed,  amend this Agreement prior to the Trigger
               Date effective upon the Trigger Date.

          (2)  The Board of Directors of the Company  shall not  be  entitled to
               exercise  the powers specified in Section 26(b) after the Trigger
               Date  unless  the  Board of Directors  can establish by clear and
               convincing  evidence that its action satisfies the requirement in
               Section 26(c)(1).

     (d)  Notwithstanding  anything  in  this  Agreement  to  the  contrary,  no
supplement  or amendment  that changes the rights and duties of the Rights Agent
under this  Agreement  will be effective  against the Rights  Agent  without the
execution of such supplement or amendment by the Rights Agent.

  Section 27. 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 28. Benefits of this Agreement.
              --------------------------
Nothing in this  Agreement  shall be  construed to  give  to  any  Person  other
than the  Company,  the Rights  Agent and the  registered  holders of Rights 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 Rights.


                                     - 38 -


<PAGE>


  Section 29. Severability.
              ------------
Whenever possible, each provision of this Agreement shall be interpreted in such
manner as to be valid and enforceable under applicable law, but if any provision
of this  Agreement  shall be held to be  prohibited  by or  unenforceable  under
applicable law, (i) such provision shall be applied to accomplish the objectives
of the provision as originally  written to the fullest  extent  permitted by law
and (ii) all other  provisions of this Agreement  shall remain in full force and
effect. No rule of strict construction,  rule resolving  ambiguities against the
person who drafted the provision giving rise to such ambiguities,  or other such
rule of  interpretation  shall be applied against any party with respect to this
Agreement.

  Section 30. Governing Law.
              --------------
This Agreement and each Rights  Certificate  issued hereunder shall be deemed to
be a contract  made under the laws of the State of Delaware and for all purposes
shall be governed by and  construed  in  accordance  with the  internal  laws of
Delaware  applicable  to  contracts  to be made and  performed  entirely  within
Delaware.

  Section 31. Counterparts.
              ------------
This  Agreement may be executed in  counterparts  and each of such  counterparts
shall for all purposes be deemed to be an original,  and both such  counterparts
shall  together  constitute  but one  and the  same  instrument.

  Section 32. 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 of this Agreement.

  Section 33. Grammatical  Construction.
              -------------------------            
Throughout  this Agreement,  where such meanings would be  appropriate,  (a) any
pronouns  used herein shall  include the  corresponding  masculine,  feminine or
neuter forms  (e.g.,  references  to "he" shall also include  "she" and "it" and
references  to "who" and "whom" shall also  include  "which") and (b) the plural
form of nouns and pronouns shall include the singular and vice-versa.


                                  * * * * *


                                     - 39 -


<PAGE>


     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed and their  respective  corporate seals to be hereunto  affixed and
attested, all as of the day and year first above written.


                                 NAVISTAR INTERNATIONAL CORPORATION

                                 By /s/   Robert C. Lannert
                                    -----------------------------------
                                          Robert C. Lannert
                                  Title:  Executive Vice President
                                            and Chief Financial Officer
                                          (Principal Financial Officer)


                                 HARRIS TRUST AND SAVINGS BANK
                                 as Rights Agent


                                 By /s/   Charles V. Zade
                                    -----------------------------------
                                          Charles V. Zade
                                  Title:  Vice President


                                     - 40 -


<PAGE>


                                                                       Exhibit A
                                                                       ---------


                                     FORM OF
               CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
                OF JUNIOR PARTICIPATING PREFERRED STOCK, SERIES A
                                       OF
                       NAVISTAR INTERNATIONAL CORPORATION

                 Pursuant to Section 151 of the Corporation Law
                            of the State of Delaware


     I,  Steven  K.  Covey,   Corporate  Secretary  of  Navistar   International
Corporation,  a corporation organized and existing under the General Corporation
Law of the State of Delaware,  in accordance  with the provisions of Section 151
thereof, DOES HEREBY CERTIFY:

     That pursuant to the authority conferred upon the Board of Directors by the
Certificate of Incorporation of the Corporation, the Board of Directors on April
20, 1999, adopted the following  resolution  creating a series of 200,000 shares
of Preferred Stock designated as Junior Participating Preferred Stock, Series A:

     RESOLVED,  that, pursuant to the authority vested in the Board of Directors
by PART I of ARTICLE FOURTH of the Restated Certificate of Incorporation and out
of the Preferred Stock authorized  therein,  the Board hereby  authorizes that a
series of Preferred  Stock of the  Corporation be, and it hereby is, created and
approved for issuance in accordance with the Rights  Agreement dated as of April
20, 1999 between the Corporation and Harris Trust and Savings Bank, and that the
designation and amount thereof and the voting powers,  preferences and relative,
participating,  optional and other special  rights of the shares of such series,
and the qualifications,  limitations or restrictions thereof be, and hereby are,
as follows:

  Section 1. Designation and Amount.
             ----------------------
The shares of such series shall be designated as "Junior Participating Preferred
Stock,  Series A" (the  "Series A  Preferred  Stock")  and the  number of shares
constituting  such  series  shall be  200,000.  Such  number  of  shares  may be
increased or decreased by resolution of the Board of Directors;  provided,  that
no decrease  shall reduce the number of shares of Series A Preferred  Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved  for  issuance  upon the  exercise of  outstanding  options,  rights or
warrants or upon the  conversion  of any  outstanding  securities  issued by the
Corporation convertible into Series A Preferred Stock.


<PAGE>


  Section 2. Dividends and  Distributions.
             ----------------------------
     (a) Subject to the prior and  superior  rights of the holders of any shares
  of any series of Preferred  Stock  ranking prior and superior to the shares of
  Series A Preferred  Stock with respect to dividends,  the holders of shares of
  Series A Preferred  Stock, in preference to the holders of Common Stock and of
  any other junior stock, shall be entitled to receive, when, as and if declared
  by the Board of Directors  out of funds  legally  available  for the  purpose,
  quarterly dividends payable  in  cash on the  fifteenth  day of  March,  June,
  September and December in each year (each such date being  referred  to herein
  as a "Quarterly Dividend Payment  Date"),  commencing  on  the first Quarterly
  Dividend Payment  Date  after the first  issuance of a share or  fraction of a
  share of Series A  Preferred  Stock,  in  an  amount per share (rounded to the
  nearest cent) equal to the  greater of (a)  $25.00 or(b) the Adjustment Number
  (as defined below) times the aggregate per share amount of all cash dividends,
  and the  Adjustment  Number  times  the aggregate per share amount (payable in
  kind) of all non-cash  dividends  or other distributions other than a dividend
  payable in shares of Common Stock or a subdivision  of the outstanding  shares
  of Common Stock (by reclassification or otherwise),  declared  on  the  Common
  Stock since  the immediately  preceding  Quarterly  Dividend  Payment Date or,
  with respect to the first Quarterly  Dividend  Payment Date, since  the  first
  issuance of any share or fraction of a share of Series A Preferred Stock.  The
  "Adjustment  Number" shall initially be 1000. In  the  event  the  Corporation
  shall at any time after May 3, 2009 (i) declare or pay any  dividend on Common
  Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common
  Stock into a greater number of shares or (iii) combine the outstanding  Common
  Stock into a smaller  number of shares, then in each such  case the Adjustment
  Number in  effect  immediately  prior  to  such  event  shall be  adjusted  by
  multiplying  such  Adjustment  Number by a fraction,  the  numerator  of which
  is the  number of  shares  of  Common Stock outstanding immediately after such
  event and the  denominator  of which is the number of shares of  Common  Stock
  that were outstanding immediately prior to such event.

     (b) The Corporation  shall declare a dividend or distribution on the Series
  A Preferred Stock as provided in paragraph (a) of this Section immediately
  after it  declares a  dividend  or  distribution  on the Common  Stock  (other
  than a dividend  payable in shares of Common  Stock);  provided  that,  in the
  event no dividend or distribution shall have been declared on the Common Stock
  during the period  between any Quarterly  Dividend  Payment  Date and the next
  subsequent Quarterly  Dividend Payment Date, a dividend of $25.00 per share on
  the Series A Preferred Stock shall nevertheless be payable on such  subsequent
  Quarterly Dividend Payment Date.

     (c) Dividends shall begin to accrue and be cumulative on outstanding shares
  of Series A  Preferred Stock from the  Quarterly  Dividend  Payment  Date next
  preceding the date of issue of such shares of Series A Preferred Stock, unless
  the date of issue of such  shares  is  prior to the record  date for the first


                                      - 2 -


<PAGE>


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

  Section 3. Voting Rights.
             -------------
The  holders of shares of Series A  Preferred  Stock  shall  have the  following
voting rights:

     (a) Each share of Series A Preferred Stock shall entitle the holder thereof
  to a number of votes equal to the Adjustment Number (as adjusted  from time to
  time  pursuant  to Section 2(a) hereof) on all matters  submitted to a vote of
  the stockholders of the Corporation.

     (b) Except as otherwise  provided  herein,  by law or in the Certificate of
  Incorporation or By-Laws, the holders of  shares  of Series A  Preferred Stock
  and the  holders  of  shares of Common  Stock  and any  other capital stock of
  the Corporation having general voting rights shall vote together as one  class
  on all matters submitted to a vote of stockholders of the Corporation.

         (i) If  at any time  dividends on any Series A Preferred   Stock  shall
  be  in  arrears in an amount equal to six  quarterly  dividends  thereon,  the
  occurrence  of such  contingency  shall mark the beginning of a period (herein
  called a "default  period") that shall extend until such time when all accrued
  and unpaid  dividends  for all previous quarterly dividend periods and for the
  current  quarterly  period  on  all  shares  of  Series A Preferred Stock then
  outstanding shall have been declared and paid or set apart for payment. During
  each default  period, (1) the number of Directors shall be  increased  by two,
  effective as of the time of election of such  Directors  as  herein  provided,
  and (2) the holders of Series A  Preferred  Stock  and  the  holders  of other
  Preferred Stock upon which these or like voting rights have been conferred and
  are  exercisable (the "Voting  Preferred  Stock")  with   dividends in arrears
  equal to six quarterly  dividends thereon,  voting as a class, irrespective of
  series,  shall  have the  right  to  elect  such two Directors.

                                      - 3 -


<PAGE>


         (ii) During  any default  period,  such voting  right of the holders of
  Series A  Preferred  Stock  may  be  exercised  initially at a special meeting
  called  pursuant to  subparagraph  (iii) of this Section 3(b) or at any annual
  meeting of stockholders,  and  thereafter at annual  meetings of stockholders,
  provided that such  voting right shall not be exercised  unless the holders of
  at  least  one-third  in  number  of  the  shares  of  Voting  Preferred Stock
  outstanding shall be present  in person or by proxy.  The  absence of a quorum
  of the holders  of Common  Stock shall not affect the  exercise by the holders
  of  Voting Preferred Stock of such voting right.

         (iii)Unless the  holders of Voting  Preferred  Stock  shall,  during an
  existing  default  period, have  previously  exercised  their  right  to elect
  Directors,  the   Board  of  Directors   may  order,  or  any  stockholder  or
  stockholders owning in the aggregate not less than 10% of the total number  of
  shares  of  Voting  Preferred  Stock outstanding,  irrespective of series, may
  request, the calling of a special meeting of the  holders  of Voting Preferred
  Stock, which meeting  shall thereupon  be called by the Chairman of the Board,
  the President,  an Executive Vice President, a Vice President or the Secretary
  of the Corporation.  Notice of such meeting and of any annual meeting at which
  holders of Voting Preferred Stock  are  entitled  to  vote  pursuant  to  this
  paragraph  (b)(iii)  shall be  given  to  each  holder  of  record  of  Voting
  Preferred  Stock by mailing a copy of  such  notice to him at his last address
  as  the  same appears on the  books of the Corporation.  Such meeting shall be
  called for a time  not earlier  than 10 days and not later than 60  days after
  such  order or request or, in default of the calling of such meeting within 60
  days after such order or request, such meeting may be called on similar notice
  by any  stockholder or stockholders  owning  in  the  aggregate  not less than
  10%  of the total  number of shares  of Voting  Preferred  Stock  outstanding.
  Notwithstanding  the  provisions of  this paragraph  (b)(iii), no such special
  meeting shall be called during the period within 60 days immediately preceding
  the date  fixed for the next  annual meeting of the stockholders.

         (iv) In any  default  period,  after the  holders of  Voting  Preferred
  Stock shall  have exercised their right to elect Directors  voting as a class,
  (x) the Directors so elected by the holders of  Voting  Preferred  Stock shall
  continue in  office  until  their  successors shall have  been elected by such
  holders or until the  expiration of the  default  period, and (y) any  vacancy
  in  the  Board  of Directors  may be filled by  vote  of  a  majority  of  the
  remaining  Directors  theretofore  elected  by  the  holders  of  the class or
  classes of stock which  elected the  Director  whose  office shall have become
  vacant. References in this paragraph  (b) to Directors elected by the  holders
  of a particular  class or  classes of stock shall  include  Directors  elected
  by such Directors to fill vacancies as provided in clause (y) of the foregoing
  sentence.

         (v)  Immediately  upon  the  expiration  of a default  period,  (x) the
  right of  the  holders  of  Voting   Preferred   Stock  as  a class  to  elect
  Directors  shall  cease,   (y) the  term  of  any  Directors  elected  by  the
  holders of Voting Preferred Stock  as a  class  shall  terminate  and  (z) the
  number of Directors  shall be  such  number  as may be  provided  for  in  the


                                      - 4 -


<PAGE>


  Certificate  of  Incorporation or By-Laws irrespective  of any increase   made
  pursuant  to  the provisions of paragraph (b) of  this Section 3  (such number
  being subject,  however, to change thereafter in any manner  provided  by  law
  or in the  Certificate of  Incorporation  or  By-Laws).   Any vacancies in the
  Board of Directors effected by the provisions  of clauses  (y) and  (z) in the
  preceding  sentence may be filled by  a majority of the remaining Directors.

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

  Section 4. Certain Restrictions.
             --------------------

     (a) Whenever  quarterly   dividends  or other  dividends  or  distributions
  payable on the Series A  Preferred  Stock  as  provided  in  Section 2  are in
  arrears,   thereafter  and   until  all   accrued  and  unpaid  dividends  and
  distributions, whether or not declared,  on shares of Series A Preferred Stock
  outstanding  shall have been paid in full, the Corporation shall not:

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

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

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

         (iv) purchase  or  otherwise  acquire for  consideration  any shares of
  Series A  Preferred  Stock,  or any shares of stock  ranking on  a parity with
  the Series A Preferred  Stock,  except  in  accordance with a  purchase  offer
  made in  writing  or  by publication (as determined by the Board of Directors)
  to all holders of such shares upon such terms   as  the  Board  of  Directors,
  after consideration of the respective annual dividend rates and other relative


                                      - 5 -


<PAGE>


  rights and   preferences of the respective series and classes, shall determine
  in good faith will result in fair and equitable treatment among the respective
  series or classes.

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

  Section 5. Reacquired Shares.
             -----------------
Any shares of Series A Preferred  Stock  purchased or otherwise  acquired by the
Corporation  in any manner  whatsoever  shall be retired and cancelled  promptly
after the  acquisition  thereof.  All such shares shall upon their  cancellation
become  authorized but unissued shares of preferred stock and may be reissued as
part  of a new  series  of  preferred  stock  to be  created  by  resolution  or
resolutions   of  the  Board  of  Directors,   subject  to  the  conditions  and
restrictions on issuance set forth herein,  in the Certificate of  Incorporation
or By-laws or otherwise required by law.

  Section 6. Liquidation, Dissolution or Winding Up.
             --------------------------------------
Upon  any  liquidation,  dissolution  or  winding  up  of  the  Corporation,  no
distribution  shall be made (A) to the holders of shares of stock ranking junior
(either as to dividends or upon  liquidation,  dissolution or winding up) to the
Series A Preferred Stock unless,  prior thereto, the holders of shares of Series
A Preferred Stock shall have received the greater of (i) $100 per share, plus an
amount equal to accrued and unpaid dividends and distributions thereon,  whether
or not declared,  to the date of such payment,  and (ii) an aggregate amount per
share, equal to the Adjustment Number (as adjusted from time to time pursuant to
Section 2(a) hereof) times the aggregate  amount to be distributed  per share to
holders of Common  Stock,  or (B) to the  holders  of stock  ranking on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred  Stock,  except  distributions  made  ratably on the Series A
Preferred  Stock and all other  such  parity  stock in  proportion  to the total
amounts  to which  the  holders  of all  such  shares  are  entitled  upon  such
liquidation, dissolution or winding up.

  Section 7. Consolidation, Merger, etc.
             --------------------------
In case the Corporation shall enter into any consolidation,  merger, combination
or other  transaction  in which the shares of Common Stock are  exchanged for or
changed into other stock or securities,  cash and/or any other property, then in
any such case the shares of Series A Preferred Stock then  outstanding  shall at
the same time be similarly  exchanged or changed in an amount per share equal to
the  Adjustment  Number (as adjusted  from time to time pursuant to Section 2(a)
hereof) times the aggregate amount of stock,  securities,  cash and/or any other
property  (payable  in kind),  as the case may be,  into which or for which each
share of Common Stock is changed or exchanged. 4.


  Section 8. No Redemption.
             -------------
The shares of Series A Preferred Stock shall not be redeemable.


                                      - 6 -


<PAGE>


  Section 9.  Amendment.
              ---------

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

     IN WITNESS WHEREOF,  I have executed and subscribed this Certificate and do
affirm the  foregoing  as true under the  penalties  of perjury this 20th day of
April, 1999.

                                          --------------------------------------
                                          Steven K. Covey
                                          Corporate Secretary


                                      - 7 -


<PAGE>


                                                                       Exhibit B
                                                                       ---------

                          [Form of Rights Certificate]


Certificate No. R-                                                        Rights
                                                                  --------


         NOT EXERCISABLE AFTER MAY 3, 2009 OR EARLIER IF NOTICE OF REDEMPTION OR
         EXCHANGE IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION OR EXCHANGE, AT
         THE  OPTION  OF THE  COMPANY,  ON THE  TERMS  SET  FORTH IN THE  RIGHTS
         AGREEMENT.

                               Rights Certificate

                       NAVISTAR INTERNATIONAL CORPORATION

     This certifies that  _________________________,  or registered  assigns, is
the  registered  owner of the  number of Rights set forth  above,  each of which
entitles the owner thereof,  subject to the terms,  provisions and conditions of
the  Rights  Agreement  dated as of April 20,  1999,  (the  "Rights  Agreement")
between  Navistar  International   Corporation,   a  Delaware  corporation  (the
"Company"),  and Harris Trust and Savings Bank, an Illinois banking  corporation
(the "Rights  Agent"),  unless notice of redemption or exchange  shall have been
previously given by the Company,  to purchase from the Company at any time after
the  Distribution  Date (as such term is defined in the  Rights  Agreement)  and
prior to 5:00 P.M.  (New York,  New York time) on May 3, 2009,  at the principal
corporate trust office of the Rights Agent, or at the office of its successor as
Rights Agent,  one  one-thousandth  of a fully paid  nonassessable  share of the
Junior  Participating  Preferred Stock,  Series A, par value $1.00 per share, of
the Company (the "Preferred  Stock"), at a purchase price (the "Purchase Price")
of $ per one  one-thousandth  share,  upon  presentation  and  surrender of this
Rights  Certificate  with the Form of Election to Purchase  duly  executed.  The
Purchase  Price may be paid in cash or by  certified  bank  check or bank  draft
payable to the order of the Company.

     This  Rights  Certificate  is subject to all of the terms,  provisions  and
conditions of the Rights Agreement,  which terms,  provisions and conditions are
hereby  incorporated  herein by  reference  and made a part  hereof and to which
Rights Agreement  reference is hereby made for a full description of the rights,
limitations  of rights,  obligations,  duties and  immunities  hereunder  of the
Rights  Agent,  the  Company  and  the  holders  of  the  Rights   Certificates.
Capitalized  terms used but not  defined  in this  Rights  Certificate  that are
defined in the Rights Agreement shall have the same meanings ascribed to them in
the  Rights  Agreement.  Copies  of the  Rights  Agreement  are on  file  at the
principal executive offices of the Company and the above-mentioned office of the
Rights Agent.

     As provided in the Rights  Agreement,  the Purchase Price and the number of
shares of Preferred Stock or other securities,  cash or other property which may
be  purchased  upon  the  exercise  of  the  Rights  evidenced  by  this  Rights
Certificate  are subject to  modification  and adjustment  upon the happening of
certain events.


<PAGE>


     If the Rights  evidenced by this Rights  Certificate  are or were  formerly
beneficially  owned,  on or after the earlier of the  Distribution  Date and the
Trigger  Date,  by (i) an Acquiring  Person or any  Associate or Affiliate of an
Acquiring  Person,  (ii) a direct or indirect  transferee of an Acquiring Person
(or of any Associate or Affiliate of an Acquiring Person) who becomes or becomes
entitled to be a transferee  after the Acquiring Person becomes such, or (iii) a
direct or indirect  transferee  of an  Acquiring  Person (or of an  Associate or
Affiliate  of such  Acquiring  Person) who  becomes or becomes  entitled to be a
transferee prior to or concurrently  with the Acquiring Person becoming such and
receives  such  Rights  pursuant  to either  (A) a direct or  indirect  transfer
(whether  or not for  consideration)  from  the  Acquiring  Person  (or  from an
Associate or Affiliate of such Acquiring  Person) to holders of equity interests
in such Acquiring  Person (or to holders of equity interests in any Associate or
Affiliate  of such  Acquiring  Person) or to any Person with whom the  Acquiring
Person  (or an  Associate  or  Affiliate  of  such  Acquiring  Person)  has  any
continuing  agreement,  arrangement or  understanding  regarding the transferred
Rights or (B) a direct or  indirect  transfer  which a majority  of the Board of
Directors  of  the  Company  determines  is  part  of  a  plan,  arrangement  or
understanding  which has as a primary purpose or effect the avoidance of Section
7(e) of the Rights Agreement, such Rights shall, immediately upon the occurrence
of a Triggering  Event and without any further  action,  be null and void and no
holder of such Rights  (including any  subsequent  holder) shall have any rights
whatsoever  with respect to such Rights  whether  under the Rights  Agreement or
otherwise, provided, however, that, in the case of transferees under clause (ii)
or clause (iii) above, any Rights beneficially owned by such transferee shall be
null and void only if and to the extent such Rights were  formerly  beneficially
owned by a Person  who was,  at the time such  Person  beneficially  owned  such
Rights, or who later became, an Acquiring Person or an Affiliate or Associate of
such Acquiring Person.

     This Rights Certificate,  with or without other Rights  Certificates,  upon
surrender at the principal  corporate  trust office of the Rights Agent,  may be
exchanged for another Rights  Certificate or Rights  Certificates  of like tenor
and date  evidencing  Rights  entitling the holder to purchase a like  aggregate
number of shares of Preferred Stock or other property as the Rights evidenced by
the Rights Certificate or Rights Certificates  surrendered  entitled such holder
to purchase.  If this Rights  Certificate shall be exercised in part, the holder
shall be entitled to receive upon surrender hereof another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.

     Subject to the provisions of the Rights Agreement,  the Rights evidenced by
this Certificate (a) may be redeemed by the Board of Directors of the Company at
its  option at a  redemption  price of $.01 per Right,  subject  to  adjustment,
payable, at the election of the Company, in cash or shares (including fractional
shares) of Common Stock or such other consideration as the Board of Directors of
the Company may  determine,  at any time prior to the earlier of (i) the Trigger
Date and (ii) the  Expiration  Date,  or (b) may be  exchanged  by the  Board of
Directors of the Company,  at its option, in whole or in part, for shares of the
Company's  Common Stock on a  one-for-one  basis,  at any time after the Trigger
Date and prior to (i) any Person  (other than an Exempt  Person),  together with
all Affiliates and Associates of such Person,  becoming the Beneficial  Owner of
50% or more of the Common Stock then  outstanding  and (ii) the  occurrence of a
Business Combination.


                                      - 2 -


<PAGE>


     No  fractional  shares of Preferred  Stock (other than  fractions  that are
integral  multiples of one  one-thousandth of a share of Preferred Stock,  which
may, at the election of the Company,  be evidenced by  depository  receipts) are
required to be issued upon the exercise of any Right or Rights evidenced hereby,
but in lieu thereof the Company may elect to (i) evidence  fractional  shares by
depositary  receipts,  (ii) issue scrip or warrants in  registered  form (either
represented by a certificate or  uncertificated)  or in bearer form (represented
by a  certificate)  which shall  entitle the holder to receive a full share upon
the surrender of such scrip or warrants  aggregating a full share, or (iii) make
a cash payment, as provided in the Rights Agreement.

     No holder of this Rights Certificate, as such, shall be entitled to vote or
to  receive  dividends  on, or shall be deemed  for any  purpose  the holder of,
Preferred Stock or any other securities,  cash or property which may at any time
be issuable on the exercise hereof,  nor shall anything  contained in the Rights
Agreement or this Certificate be construed to confer upon the holder hereof,  as
such,  any of the rights of a  stockholder  of the Company,  including,  without
limitation,  any right to vote for the  election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold consent
to any  corporate  action,  or to receive  notice of meetings  or other  actions
affecting  stockholders  (except as  provided  in the Rights  Agreement),  or to
receive  dividends  or  subscription  rights,  or to  institute,  as a holder of
Preferred  Stock or other  securities  issuable  on the  exercise  of the Rights
represented by this Certificate,  any derivative action, or otherwise, until and
only to the  extent the Right or Rights  evidenced  by this  Rights  Certificate
shall have been exercised as provided in the Rights Agreement.

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

                                    * * * * *


                                      - 3 -


<PAGE>


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



                                    NAVISTAR INTERNATIONAL CORPORATION


                                    By: 
                                        --------------------------------
                                     Title:




Countersigned:



HARRIS TRUST AND SAVINGS BANK
as Rights Agent


By: 
    --------------------------
        Authorized Officer


                                      - 4 -


<PAGE>


                  [Form of Reverse Side of Rights Certificate]

                               FORM OF ASSIGNMENT

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


         FOR  VALUE  RECEIVED  the  undersigned 
                                                --------------------------------
hereby  sells,  assigns  and transfers unto     
                                                --------------------------------

--------------------------------------------------------------------------------
                  (Please print name and address of transferee)
_________ Rights evidenced by this Rights Certificate,  together with all right,
title and interest therein,  and does hereby irrevocably  constitute and appoint
________________________  with a power of Attorney  to transfer  the said Rights
and a Rights  Certificate  evidencing  such  Rights  on the  books  of  Navistar
International Corporation, with full power of substitution.

         A new Rights Certificate  evidencing the remaining balance,  if any, of
such Rights not hereby  sold,  assigned and  transferred  shall be mailed to and
registered in the name of the undersigned  unless such person requests that such
Rights  Certificate be registered in the name of and mailed to (complete only if
a Rights  Certificate  evidencing  any  remaining  balance  of  Rights  is to be
registered in a name other than the undersigned):

Please insert Social Security or
other identifying number of transferee:
                                       ------------------------

--------------------------------------------------------------------------------
                         (Please print name and address)

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


                                     - 1 -


<PAGE>


                                   Certificate

     The undersigned hereby certifies by checking the appropriate boxes that:


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

     (2) after due inquiry and to the best  knowledge  of the  undersigned,  the
undersigned  [ ] did [ ] did not  acquire  any of the Rights  evidenced  by this
Rights  Certificate  from any  Person  who is or was an  Acquiring  Person or an
Affiliate or Associate of an Acquiring Person.

Dated:  
        ---------------------------         ------------------------------------
                                            Signature


Signature Guaranteed:

Signatures  must  be  guaranteed  by  an  eligible  guarantor  institution  with
membership in a recognized  signature guarantee medallion program as approved by
the Stock Transfer Association.

                                     NOTICE

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

     In the event the certification set forth above in the Form of Assignment is
not  completed,  the  Company  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, in the case of an
assignment or other transfer of this Rights  Certificate or any Rights evidenced
hereby,  will affix a legend to that effect on any Rights  Certificate issued in
whole or partial exchange for this Rights Certificate.


                                     - 2 -


<PAGE>


                          FORM OF ELECTION TO PURCHASE

                  (To be executed if holder desires to exercise
               the Rights represented by this Rights Certificate)

To:      NAVISTAR INTERNATIONAL CORPORATION

         The    undersigned    hereby    irrevocably    elects    to    exercise
____________________  Rights  represented by this Rights Certificate to purchase
the  shares  of  Preferred  Stock or other  securities,  cash or other  property
issuable  upon the exercise of such Rights and requests  that  certificates  for
such shares or other securities be issued in the name of, and such cash or other
property be paid to:

Please insert social security
or other identifying number:
                               --------------------


------------------------------------------------------------------------------
                         (Please print name and address)


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


                  A new Rights Certificate  evidencing the remaining balance, if
any, of such Rights not hereby  exercised  shall be mailed to and  registered in
the name of the  undersigned  unless  such  person  requests  that  such  Rights
Certificate  be registered in the name of and mailed to (complete only if Rights
Certificate  evidencing any remaining balance of Rights is to be registered in a
name other than the undersigned):

Please insert social security
or other identifying number:
                               -------------------


--------------------------------------------------------------------------------
                         (Please print name and address)


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


                                     - 1 -


<PAGE>


                                   Certificate

     The undersigned hereby certifies by checking the appropriate boxes that:

     (1) the Rights  evidenced  by this Rights  Certificate  [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate  or Associate of an Acquiring  Person (as such terms are defined in
the Rights Agreement);

     (2) after due inquiry and to the best  knowledge  of the  undersigned,  the
undersigned  [ ] did [ ] did not  acquire  the Rights  evidenced  by this Rights
Certificate from any Person who is or was an Acquiring Person or an Affiliate or
Associate of an Acquiring Person.

Dated:  
        --------------------------          ------------------------------------
                                                          Signature
Signature Guaranteed:

Signatures  must  be  guaranteed  by  an  eligible  guarantor  institution  with
membership in a recognized  signature guarantee medallion program as approved by
the Stock Transfer Association.


                                     NOTICE

     The signature on the foregoing Form of Election to Purchase must correspond
to the  name as  written  upon  the  face of this  Rights  Certificate  in every
particular, without alteration or enlargement or any change whatsoever.

     In the event the  certification  set forth above in the Form of Election to
Purchase is not  completed,  the Company will deem the  beneficial  owner of the
Rights  evidenced by this Rights  Certificate  to be an  Acquiring  Person or an
Affiliate or Associate  thereof (as defined in the Rights Agreement) and, in the
case of an assignment or other transfer of this Rights Certificate or any Rights
evidenced hereby,  will affix a legend to that effect on any Rights  Certificate
issued in whole or partial exchange for this Rights Certificate.


                                     - 2 -