Prepared by Kilpatrick Stockton LLP


EXHIBIT 4.1


SI DIAMOND
TECHNOLOGY, INC.


and


COMPUTERSHARE
TRUST COMPANY, INC.


RIGHTS AGENTS


AMENDED AND
RESTATED RIGHTS AGREEMENT


Dated
effective as of November 16, 2000







TABLE OF CONTENTS

	
Section 1.
	
Certain Definitions
	
1

	 	 	 
	
Section 2.
	
Appointment of Rights Agent
	
6

	 	 	 
	
Section 3. 
	
Issue of Rights Certificates
	
6

	 	 	 
	
Section 4.
	
Form of Rights Certificates
	
8

	 	 	 
	
Section 5.
	
Countersignature and Registration
	
9

	 	 	 
	
Section 6.
	
Transfer, Split Up, Combination, and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates
	
9

	 	 	 
	
Section 7.
	
Exercise of Rights; Purchase Price; Expiration Date of Rights
	
10

	 	 	 
	
Section 8.
	
Cancellation and Destruction of Rights Certificates
	
12

	 	 	 
	
Section 9.
	
Reservation and Availability of Capital Shares
	
12

	 	 	 
	
Section 10.
	
Preferred Share Record Date
	
13

	 	 	 
	
Section 11.
	
Adjustment of Purchase Price
	
14

	 	 	 
	
Section 12.
	
Certificate of Adjusted Purchase Price or Number of Shares
	
21

	 	 	 
	
Section 13.
	
Consolidation, Merger or Sale of Transfer of Assets or Earning Power
	
21

	 	 	 
	
Section 14.
	
Fractional Rights and Fractional Shares
	
24

	 	 	 
	
Section 15.
	
Rights of Action
	
24

	 	 	 
	
Section 16.
	
Agreement of Rights Holders
	
25

	 	 	 
	
Section 17.
	
Rights Certificate Holder Not Deemed a Shareholder
	
25

	 	 	 
	
Section 18.
	
Concerning the Rights Agent
	
26

	 	 	 
	
Section 19.
	
Merger or Consolidation or Change of Name of Rights Agents
	
26

	 	 	 
	
Section 20.
	
Duties of Rights Agent
	
27

	 	 	 
	
Section 21.
	
Change of Rights Agent
	
28

	 	 	 
	
Section 22.
	
Issuance of New Rights Certificates
	
29

	 	 	 
	
Section 23.
	
Redemption and Termination
	
30

	 	 	 
	
Section 24.
	
Exchange
	
30

	 	 	 
	
Section 25.
	
Notice of Certain Events
	
31

	 	 	 
	
Section 26.
	
Notices
	
32

	 	 	 
	
Section 27.
	
Supplements and Amendments
	
33

	 	 	 
	
Section 28.
	
Successors
	
33

	 	 	 
	
Section 29.
	
Determinations and Actions by the Board of Directors, etc.
	
34

	 	 	 
	
Section 30.
	
Benefits of this Agreement
	
34

	 	 	 
	
Section 31.
	
Severability
	
34

	 	 	 
	
Section 32.
	
Governing Law
	
34

	 	 	 
	
Section 33.
	
Counterparts
	
35

	 	 	 
	
Section 34.
	
Descriptive Headings
	
35












AMENDED AND
RESTATED RIGHTS AGREEMENT


                  This Amended and  Restated  Rights  Agreement,  dated  effective  as of November 16, 2000 (the  "Agreement"),
between SI Diamond  Technology,  Inc., a Texas  corporation (the “Company”),  and  Computershare  Trust Company,  Inc.
(formerly American Securities Transfer, Incorporated), a Delaware corporation (the “Rights Agent”).


WITNESSETH:


         WHEREAS,
on June 18, 1998 (the “Rights Dividend Declaration Date”), the Board
of Directors of the Company authorized and declared a dividend of one Right for
each common share of $.001 par value, of the Company (the “Common
Shares”) outstanding at the close of business on June 18, 1998 (the
“Record Date”), and issued one Right (as such number may hereinafter
be adjusted pursuant to the provisions of this Agreement) for each Common Share
of the Company issued (whether originally issued or delivered from the
Company’s treasury) between the Record Date and the earlier of the
Distribution Date (as hereinafter defined) and the expiration or redemption of
the Rights, and, in certain circumstances, after the Distribution Date, each
Right initially representing the right to purchase one one-hundredth of a Series
H Junior Participating Preferred Share of the Company, upon the terms and
subject to the conditions hereinafter set forth (the “Rights”); 


        WHEREAS,
the Board of Directors of the Company has authorized amending the Rights
Agreement, dated as of June 18, 1998, between the Company and the Rights Agent
which amendment will, among other items, permit the Board of Directors of the
Company to redeem the Rights regardless of whether the members of the Board are
newly elected. 


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


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


        “Acquiring
Person” shall mean any Person who or which, together with all
Affiliates and Associates of such Person, shall be the Beneficial Owner of
twenty percent (20 %) or more of the Common Shares then outstanding, but shall
not include any Exempt Person; provided, however, that if the Board of Directors
of the Company determines in good faith that a Person who would otherwise be an
“Acquiring Person” became such inadvertently (including, without
limitation, because (i) such Person was unaware that it beneficially owned a
percentage of the outstanding Common Shares that would otherwise cause such
Person to be an “Acquiring Person” or (ii) such Person was aware of
the extent of its Beneficial Ownership of the Common Shares but had no actual
knowledge of the consequences of such Beneficial Ownership under this Agreement)
and without any intention of changing or influencing control of the Company, and
if such Person as promptly as practicable divested or divests itself of
Beneficial Ownership of a sufficient number of the Common Shares so that such
Person would no longer be an “Acquiring Person,” then such Person
shall not be deemed to be or to have become an “Acquiring Person” for
any purposes of this Agreement. Notwithstanding the foregoing, no Person shall
become an “Acquiring Person” as the result of an acquisition of the
Common Shares by the Company which, by reducing the




 1










 number of shares
outstanding, increases the proportionate number of the Common Shares
beneficially owned by such Person to twenty percent (20 %) or more, of the
Common Shares then outstanding, provided, however, that if a Person shall become
the Beneficial Owner of twenty percent (20%) or more of the Common Shares then
outstanding by reason of such share acquisitions by the Company and shall
thereafter become the Beneficial Owner of any additional Common Shares, then
such Person shall be deemed to be an “Acquiring Person” unless upon
the consummation of the acquisition of such additional Common Shares such Person
does not beneficially own twenty percent (20 %) or more of the Common Shares
then outstanding. 


        “Adjustment
Shares” shall have the meaning set forth in Section 11(a)(ii) hereof. 


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


        A
Person shall be deemed the “Beneficial Owner” of, and shall be
deemed to “beneficially own,’ any securities:" 


	 	        (i)
     that such Person or any of such Person’s Affiliates or Associates, directly
or indirectly, is the “beneficial owner” of (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act, as in
effect on the date of this Agreement) or otherwise has the right to vote or
dispose of, including 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 under this subparagraph (i) as a result of an agreement,
arrangement or understanding to vote such security if such agreement,
arrangement or understanding: (A) arises solely from a revocable proxy given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act and (B) is not also then reportable by such Person on
Schedule 13D under the Exchange Act (or any comparable or successor report); 






	 	        (ii)
     that such Person or any of such Person’s Affiliates or Associates, directly
or indirectly, has the right or obligation to acquire (whether such right or
obligation is exercisable or effective immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, other
rights, warrants or options, or otherwise; provided, however, that a Person
shall not be deemed the “Beneficial Owner” of, or to
“beneficially own,” (A) securities tendered pursuant to a tender or
exchange offer made by such Person or any of such Person’s Affiliates or
Associates until such tendered securities are accepted for purchase or exchange,
or (B) securities issuable upon exercise of Rights at any time prior to the
occurrence of a Triggering Event, or (C) securities issuable upon exercise of
Rights from and after the occurrence of a Triggering Event which Rights were
acquired by such Person or any of such Person’s Affiliates or Associates
prior to the Distribution Date or pursuant to Section 3(a) or Section 22 hereof
(die “Original Rights”) or pursuant to Section 11(i) or Section 11(p)
hereof in connection with an adjustment made with respect to any Original
Rights; or 






 2










	 	        (iii)
     that are beneficially owned, directly or indirectly, by any other Person (or any
Affiliate or Associate thereof) with which such Person or any of such
Person’s Affiliates or Associates has any agreement, arrangement or
understanding (whether or not in writing) for the purpose of acquiring, holding,
voting (except pursuant to a revocable proxy as described in the proviso to
subparagraph (i) of this definition) or disposing of any voting securities of
the Company; 






provided, however, that
nothing in this definition 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 forty days after the date of such acquisition. 


        “Business
Day” shall mean any day other than a Saturday, Sunday or a day on which
banking institutions in the State of Texas are authorized or obligated by law or
executive order to close. 


        “Close
of business” on any given date shall mean 5:00 p.m., Houston, Texas
time, on such date; provided, however, that if such date is not a Business Day,
shall mean 5:00 p.m., Houston, Texas time, on the next succeeding Business Day. 


        “Closing
Price” of a security for any day shall mean the last sales 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, or, if such security is not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such security is listed or admitted to trading, or,
if such security is not listed or admitted to trading on any national securities
exchange, the last quoted sales price on such day or, if not so quoted, the
average of the high bid and low asked prices in the over the counter market on
such day, as reported by the Nasdaq Stock Market or such other self regulatory
organization or registered securities information processor (as such terms are
used under the Exchange Act) that then reports information concerning such
security or, if on such day such security is not quoted by any such entity, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such security selected by the Board of Directors
of the Company. If on such day no market maker is making a market in such
security, the fair value of such security on such day as determined in good
faith by the Board of Directors of the Company shall be used. 


        “Common
Shares” shall mean the common shares, $.001 par value, of the Company,
except that “Common Shares” when used with reference to shares issued
by any Person other firm the Company shall mean the capital shares of such
Person with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person. 




 3









        “Common
Share Equivalents” shall have the meaning set forth in Section
11(a)(iii) hereof. 


        “Company”
shall mean the Person named as the “Company” in the preamble of this
Agreement until a successor Person shall have become such or until a Principal
Party shall assume, and thereafter be liable for, all obligations and duties of
the Company hereunder, pursuant to the applicable provisions of this Agreement,
and thereafter “Company” shall mean such successor Person or Principal
Party. 


          “Current Market Price” shall have the meaning set forth in Section 11(d) hereof



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


        “Distribution
Date” shall mean the earliest of (i) the close of business on the tenth
day after the Shares Acquisition Date (or, if the tenth day after the Shares
Acquisition Date occurs before the Record Date, the close of business on the
Record Date) or (ii) the close of business on the tenth Business Day (or such
later date as may be determined by the Company’s Board of Directors before
the Distribution Date occurs) after the date that a tender offer or exchange
offer by any Person (other than any Exempt Person) is first published or sent or
given within the meaning of Rule 14d-2(a) of the General Rules and Regulations
under the Exchange Act, as in effect on the date of this Agreement, if upon
consummation thereof, such Person would be an Acquiring Person. The Board of
Directors of the Company may defer the date set forth in clause (ii) of the
preceding sentence to a specified later date or to an unspecified later date to
be determined by a subsequent action or event. 


                 “Equivalent Preferred Shares” shall have the meaning set forth in Section 11(b) hereof.


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


              “     Exchange Ratio” shall have the meaning set forth in Section 24 hereof.



        “Exempt
Person” shall mean the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company, and
any Person organized, appointed or established by the Company for or pursuant to
the terms of any such plan. 


        “Expiration
Date” shall mean the earlier of (i) the Final Expiration Date and (ii)
the time at which the Rights are redeemed as provided in Section 23 hereof 


        “Final
Expiration Date” shall mean the close of business on June 18, 2008. 


        “Original
Rights” shall have the meaning set forth in the definition of
“Beneficial Owner.” 


        “Person”
Shall mean any individual, firm, corporation, partnership, limited liability
company, association, trust, unincorporated organization or other entity. 




 4










        “Preferred
Shares” shall mean Series H Junior Participating Preferred Shares,
stated value $1.00 per share, of the Company having the rights, powers and
preferences set forth in the form of the Statement of Resolutions of the Board
of Directors of SI Diamond Technology, Inc. Establishing and Designating Series
of Preferred Stock as “Series H Junior Participating Preferred Stock”
and Fixing and Determining the Relative Rights and Preferences thereof of the
Company attached hereto as Exhibit A and, to the extent that there is not a
sufficient number of Series H Junior Participating Preferred Shares authorized
to permit the full exercise of the Rights, any other series of preferred shares,
stated value $1.00 per share, of the Company designated for such purpose
containing terms substantially similar to the terms of the Series H Junior
Participating Preferred Shares. 


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

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


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


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


        “Rights”
shall have the meaning set forth in the recitals clause at the beginning of this
Agreement. 


        “Rights
Agent” shall mean the Person named as the “Rights Agent” in
the preamble of this Agreement until a successor Rights Agent shall have become
such pursuant to the applicable provisions hereof, and thereafter “Rights
Agent” shall mean such successor Rights Agent. If at any time there is more
than one Person appointed by the Company as Rights Agent pursuant to the
applicable provisions of this Agreement, “Rights Agent’ shall mean and
include each such Person. 


        “Rights
Certificates” shall mean the certificates evidencing the Rights after
the Distribution Date. 


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


        “Section
11(a)(ii) Event” shall mean an event described in Section 11(a)(ii)
hereof. 


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


        “Section
13 Event” shall mean any event described in clause (x), (y) or (z) of
Section 13(a) hereof. 


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


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




 5









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


        “Subsidiary”
shall mean, with reference to any Person, any corporation or other Person of
which an amount of voting securities sufficient to elect at least a majority of
the directors or other persons performing similar functions is beneficially
owned, directly or in directly, by such Person. or otherwise controlled by such
Person. 


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


        “Summary
of Rights” shall mean the Summary of Rights to Purchase Preferred
Shares sent pursuant to Section 3(b) hereof. 


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


        “Triggering
Event” shall mean any Section 11(a)(ii) Event or any Section 13 Event. 


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


        Section
3.     Issue of Rights Certificates.


        (a)
       Until
the Distribution Date, (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for the
Common Shares registered in the names of the holders of the Common Shares and
not by separate certificates, and (y) the Rights will be transferable only in
connection with the transfer of the underlying the Common Shares (including a
transfer to the Company). As soon as practicable after the Distribution Date,
the Rights Agent will send by first class, insured, postage prepaid mail, to
each record holder of the Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more Rights Certificates, evidencing one Right for each Common
Share so held, subject to adjustment as provided herein. In the event that an
adjustment in the number of Rights per Common Share has been made pursuant to
the provisions of this Agreement, at the time of distribution of the Right
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing only whole numbers of Rights are distributed and cash
is paid in lieu of any fractional Rights. As of and after the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates. 



 6








        (b)       With
respect to certificates for the Common Shares outstanding as of the Record Date,
until the Distribution Date or the earlier surrender for transfer thereof or the
Expiration Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates for the Common Shares
together with a copy of the Summary of Rights, and the registered holders of the
Common Shares shall also be the registered holders of the associated Rights.
Until the earlier of the Distribution Date or the Expiration Date, the transfer
of any of the certificates for the Common Shares outstanding on the Record Date,
with or without a copy of the Summary of Rights attached thereto, shall also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificates. 


        (c)       Rights
shall be issued in respect of all the Common Shares that are issued (whether
originally issued or from the Company’s treasury) after the Record Date but
prior to the earlier of the Distribution Date or the expiration or redemption of
the Rights or, in certain circumstances provided in Section 22 hereof, after the
Distribution Date. Certificates issued for the Common Shares that shall so
become outstanding or shall be transferred or exchanged after the Record Date
but prior to the earlier of the Distribution Date or the expiration or
redemption of the Rights shall also be deemed to be certificates for Rights, and
shall bear the following legend: 


	 	        This
certificate also evidences and entitles the holder hereof to certain Rights as
set forth in the Amended and Restated Rights Agreement between SI Diamond
Technology, Inc. (the “Company”) and Computershare Trust Company, Inc.
(formerly American Securities Transfer, Incorporated) (the “Rights
Agent”) dated effective as of November 16, 2000, as it may from time to
time be supplemented or amended (the “Rights Agreement”), the terms of
which are hereby incorporated herein by reference and a copy of which is on file
at the principal offices of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights may be redeemed, may be exchanged,
may expire or may be evidenced by separate certificates and will no longer be
evidenced by this certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request therefor. Under
certain circumstances set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an Acquiring Person or any Affiliate
or Associate thereof (as such terms are defined in the Rights Agreement),
whether currently held by or on behalf of such Person or by any subsequent
holder, will become null and void. 






        With
respect to such certificates containing the foregoing legend, until the earlier
of (i) the Distribution Date or (ii) the expiration or redemption of the Rights,
the Rights associated with the Common Shares represented by such certificates
shall be evidenced by such certificates alone, and registered holders of the
Common Shares shall also be the registered holders of the associated Rights, and
the transfer of any of such certificates shall also constitute the transfer of
the Rights associated with the Common Shares represented by such certificates. 




 7










        Section 4.     Form of Rights Certificates.


        (a)       The
Rights Certificates (and the forms of election to purchase and of assignment to
be printed on the reverse thereof), when, as and if issued, shall be
substantially in the form set forth in Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any shares exchange or quotation system on which the
Rights may from time to time be listed or quoted, or to conform to usage.
Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever issued, shall be dated as of the Record Date and on their
face shall entitle the holders thereof to purchase such number of one-hundredths
of a Preferred Share as shall be set forth therein at the price set forth
therein (such exercise price per one-hundredth of a share, the “Purchase
Price”), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein. 


        (b)       Any
Rights Certificate issued pursuant to Section 3(a) or Section 22 hereof that
represents Rights beneficially owned by (i) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person, (ii) a direct or indirect transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such or (iii) a direct or indirect
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person’s
becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer that a majority of the Board
of Directors has determined is part of a plan, arrangement or understanding that
has as a primary purpose or effect avoidance of Section 7(e) hereof, and any
Rights Certificate issued pursuant to Section 6 or Section 11 hereof upon
transfer, exchange, replacement or adjustment of any other Rights Certificate
referred to in this sentence, shall contain (to the extent feasible) the
following legend, modified as applicable to apply to such Person: 


	 	        The
Rights represented by this Rights Certificate are or were beneficially owned by
a Person who was or became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person (as such terms are defined in the Rights Agreement).
Accordingly, this Rights Certificate and the Rights represented hereby will
become null and void in the circumstances and with the effect specified in
Section 7(e) of such Agreement. 






        The
provisions of Section 7(e) of this Agreement shall be operative whether or not
the foregoing legend is contained on any such Rights Certificate. The Company
shall give notice to the Rights Agent promptly after it becomes aware of the
existence of any Acquiring Person or any Associate or Affiliate thereof. 




 8









        Section 5.       Countersignature and Registration.



        (a)       The
Rights Certificates shall be executed on behalf of the Company by its President
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 Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any
of the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights Certificate may be signed on behalf of the
Company by any person who, at the actual date of the execution of such Rights
Certificate, shall be a proper officer of the Company to sign such Rights
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer. 


        (b)     Following
the Distribution Date, the Rights Agent will keep or cause to be kept, at its
office or offices designated as the appropriate place for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of
the Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates and the
certificate number and the date of each of the Rights Certificates. 



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


        (a)       Subject
to the provisions of Section 4(b), Section 7(e), Section 14 and Section 24
hereof, at any time after the close of business on the Distribution Date, and at
or prior to the close of business on the Expiration Date, any Rights Certificate
or Rights Certificates may be transferred, split up, combined or exchanged for
another Rights Certificate or Rights Certificates, entitling the registered
holder to purchase a like number of one-hundredths of a Preferred Share (or,
following a Triggering Event, the Common Shares, other securities, cash or other
assets, as the use may be) as the Rights Certificate or Rights Certificates
surrendered then entitled such holder (or former holder in the case of a
transfer) to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Rights Certificate or Rights Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Rights Certificates to be transferred, split up, combined
or exchanged at the office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Company shall be obligated to take any
action whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) thereof or of the
Affiliates or Associates thereof as the Company shall reasonably request.
Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e), Section
14 and 




 9











Section 24 hereof, countersign and deliver to the Person entitled thereto
a Rights Certificate or Rights Certificates, as the case may be, as so
requested. The Company may require payment by the holder of a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Rights Certificates. 


        (b)       Upon
receipt by the Company and the Rights Agent of evidence reasonably satisfactory
to them of the loss, theft, destruction or mutilation of a Rights Certificate,
and, in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to them, and 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
execute and deliver a new Rights Certificate of like tenor to the Rights Agent
for countersignature and 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)       Subject
to Section 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein
including, without limitation, the restrictions on exercisability set forth in
Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part
at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the office or offices
of the Rights Agent designated for such purpose, together with payment of the
aggregate Purchase Price with respect to the total number of one-hundredths of a
Preferred Share (or other securities, cash or other assets, as the case may be)
as to which such surrendered Rights are then exercisable, at or prior to the
earliest of (i) the Expiration Date and (ii) the time at which all outstanding
Rights are exchanged as provided in Section 24 hereof. 


        (b)       The
Purchase Price for each one-hundredth of a Preferred Share pursuant to the
exercise of a Right shall initially be $1.00, and shall be subject to adjustment
from time to time as provided in Sections 11 and 13(a) hereof and shall be
payable in accordance with paragraph (c) below. 


        (c)       Upon
receipt of a Rights Certificate representing exercisable Rights, with the form
of election to purchase and the certificate on the reverse side thereof duly
executed, accompanied by payment, with respect to each Right so exercised, of
the Purchase Price per one-one-hundredth of a Preferred Share (or other shares,
securities, cash or other assets, as the case may be) to be purchased as set
forth below and an amount equal to any applicable transfer tax, the Rights Agent
shall, subject to Section 20(a) hereof, thereupon promptly (i)(A) requisition
from any transfer agent of the Preferred Shares (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the




 10










total
number of one-hundredths of a Preferred Share to be purchased, and the Company
hereby irrevocably authorizes its transfer agent to comply with such requests,
or (B) if the Company, in its sole discretion, shall have elected to deposit the
total number of Preferred Shares issuable upon exercise of the Rights hereunder
with a depositary agent, requisition from the depositary agent depositary
receipts representing such number of one-hundredths of a Preferred Share as are
to be purchased (in which case certificates for the Preferred Shares represented
by such receipts shall be deposited by the transfer agent with the depositary
agent) and the Company will direct the depositary agent to comply with such
request, (ii) requisition from the Company the amount of cash, if any, to be
paid in lieu of fractional shares in accordance with Section 14 hereof, (iii)
after receipt of such certificates or depositary receipts, cause the same to be
delivered to or upon the order of the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder and (iv) after receipt thereof, deliver such cash, if any, to or upon the
order of the registered holder of such Rights Certificate. The payment of the
Purchase Price (as such amount may be reduced pursuant to Section 11(a)(iii)
hereof) may be made in cash or by certified check, cashiers or official bank
check or bank draft payable to the order of the Company or the Rights Agent. In
the event that the Company is obligated to issue other securities (including the
Common Shares) of the Company, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Company will make all arrangements
necessary so that such other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate. The
Company reserves the right to require prior to the occurrence of a Triggering
Event that, upon exercise of Rights, a number of Rights be exercised so that
only whole Preferred Shares would be issued. 


        (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, 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, subject to the provisions of Section 14 hereof. 


        (e)      Notwithstanding
anything in this Agreement to the contrary, from and after the first occurrence
of a Section 11(a)(ii) Event, any Rights beneficially owned by (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person other than any such
Person that a majority of the Board of Directors in good faith determines was
not involved in and did not cause or facilitate, directly or indirectly
(including through any change in the Board of Directors), such Section 11(a)(ii)
Event, (ii) a direct or indirect transferee of such Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such or (iii) a direct or indirect transferee of such Acquiring Person
(or of any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person’s becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
such Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom such Acquiring Person has any continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
that a majority of the Board of Directors has determined is part of a plan,
arrangement or understanding that has as a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights Certificates or other Person as
a result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. 




 11









        (f)       Notwithstanding
anything in this Agreement to the contrary, neither the Rights Agent nor the
Company shall be obligated to undertake any action with respect to a registered
holder upon the occurrence of any purported exercise as set forth in 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 Beneficial Owner) or Affiliates or Associates thereof as the Company
shall reasonably request. 


        Section
8. Cancellation and Destruction of Rights Certificates. All Rights
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in canceled form,
or, if surrendered to the Rights Agent, shall be canceled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any 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. 


        Section 9.       Reservation and Availability of Capital Shares.


        (a)       The
Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares (and, following
the occurrence of a Triggering Event, out of its authorized and unissued Common
Shares and/or other securities or out of its authorized and issued shares held
in its treasury), the number of Preferred Shares (and, following the occurrence
of a Triggering Event, the Common Shares and/or other securities) that, as
provided in this Agreement, including Section 11(a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding Rights. 


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


        (c)       The
Company shall use its best efforts to (i) prepare and file, as soon as
practicable following the first occurrence of a Section 11(a)(ii) Event or, if
applicable, as soon as practicable following the earliest date after the first
occurrence of a Section 11(a)(ii) Event on which the consideration to be
delivered by the Company upon exercise of the Rights has been determined
pursuant to this Agreement (including in accordance with Section 11(a)(iii)
hereof), a registration




 12










 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 the Rights are no
longer exercisable for such securities and (B) the Expiration Date. The Company
will also take such action as may be appropriate under, or to ensure compliance
with, the securities or “blue sky” laws of the various states in
connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed 90 days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company shall determine that the
Securities Act requires an effective registration statement under the Securities
Act following the Distribution Date, the Company may temporarily suspend the
exercisability of the Rights until such time as such a registration statement
has been declared effective. Notwithstanding any provision of this Agreement to
the contrary, the Rights shall not be exercisable in any jurisdiction if the
requisite qualification in such jurisdiction shall not have been obtained, the
exercise thereof shall not be permitted under applicable law or any required
registration statement shall not have been declared effective. 


        (d)    The
Company covenants and agrees that it will take all such action as may be
necessary to ensure that all one-hundredths of a Preferred Share (and, following
the occurrence of a Triggering Event, the Common Shares and/or other securities)
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such shares (subject to payment of the Purchase Price), be duly
and validly authorized and issued and fully paid and nonassessable. 


        (e)       The
Company further covenants and agrees that it will pay when due and payable any
and all federal and state transfer taxes and charges that may be payable in
respect of the issuance or delivery of the Rights Certificates and of any
certificates for a number of one-hundredths of a Preferred Share (or the Common
Shares and/or other securities, as the case may be) upon the exercise of Rights.
The Company shall not, however, be required to pay any transfer tax that may be
payable in respect of any transfer or delivery of Rights Certificates to a
Person other than, or the issuance or delivery of a number of one-hundredths of
a Preferred Share (or the Common Shares and/or other securities, as the case may
be) in respect of a name other than that of, the registered holder of the Rights
Certificates evidencing Rights surrendered for exercise or to issue or deliver
any certificates for a number of one-hundredths of a Preferred Share (or the
Common Shares and/or other securities, as the case may be) in a name other than
that of the registered holder upon the exercise of any Rights until such tax
shall have been paid (any such tax being payable by the holder of such Rights
Certificate at the time of surrender) or until it has been established to the
Company’s satisfaction that no such tax is due. 


        Section
10.      Preferred Share Record Date. Each Person in whose name any
certificate for a number of one-hundredths of a Preferred Share (or the Common
Shares and/or other securities, as the case may be) is issued upon the exercise
of Rights shall for all purposes be deemed to have become the holder of record
of such Preferred Shares (fractional or otherwise) (or the Common Shares and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights 




13











was duly surrendered and payment of the purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Shares (or
the Common Shares 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 (fractional or otherwise) on, and such certificate shall
be dated, the next succeeding Business Day on which the Preferred Shares (or the
Common Shares and/or other securities, as the case may be) transfer books of the
Company are open. Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate, as such, shall not be entitled to any rights of
a shareholder of the Company with respect to shares for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein. 


        Section
11. Adjustment of Purchase Price. The Purchase Price, the number and kind
of shares or other securities subject to purchase upon exercise of each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11. 


	 	
(a)       
(i) In the event the Company shall at any time after the Rights Dividend
Declaration Date (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C) combine
the outstanding Preferred Shares into a smaller number of shares or (D) issue
any shares of its capital shares in a reclassification of the Preferred Shares
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing or surviving corporation), except
as otherwise provided in this Section 11(a) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and the
number and kind of Preferred Shares or capital shares, as the case may be,
issuable on such date, shall be proportionately adjusted so that the holder of
any Right exercised after such time shall be entitled to receive, upon payment
of the Purchase Price then in effect, the aggregate number and kind of Preferred
Shares or capital shares, as the case may be, which, if such Right had been
exercised immediately prior to such date and at a time when the Preferred Shares
transfer books of the Company were open, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both this Section 11(a)(i) and Section 11(a)(ii) hereof, the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii)
hereof.





	 	        (ii)    
Subject to Section 24 of this Agreement, in the event any Person shall become an
Acquiring Person, unless the event causing such Person to become an Acquiring
Person is a transaction set forth in Section 13(a) hereof, then, promptly
following the occurrence of such event, each holder of a Right (except as
provided below and in Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof at the then current Purchase Price in accordance
with the terms of this Agreement, in lieu of a number of one-hundredths of a
Preferred Share, such number of the Common Shares of the Company as shall equal
the result obtained by (x) multiplying the then current



14










Purchase Price by the
then number of one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event and (y) dividing that product (which product, following such first
occurrence, shall thereafter be the “Purchase Price” for each Right
and for all purposes of this Agreement) by 50% of the Current Market Price per
Common Share on the date of such first occurrence (such number of shares, the
“Adjustment Shares”); provided that the Purchase Price and the number
of Adjustment Shares shall be further adjusted as provided in this Agreement to
reflect any events occurring after the date of such first occurrence 







	 	        (iii)    
In the event that the number of the Common Shares that are authorized by the
Company’s certificate of incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights is not sufficient
to permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall, to the extent
permitted by applicable law and regulation, (A) determine the excess of (1) the
value of the Adjustment Shares issuable upon the exercise of a Right (computed
using the Current Market Price used to determine the number of Adjustment
Shares) (the “Current Value”) and (2) the Purchase Price (such excess
is herein referred to as the “Spread”), and (B) with respect to each
Right, make adequate provision to substitute for the Adjustment Shares, upon the
exercise of the Rights and payment of the applicable Purchase Price, (1) cash,
(2) a reduction in the Purchase Price, (3) the Common Shares or other equity
securities of the Company (including, without limitation, preferred shares, or
units of preferred shares, that the Board of Directors of the Company has deemed
to have the same value as the Common Shares (such preferred shares are herein
referred to as the “Common Share Equivalents”)), (4) debt securities
of the Company, (5) other assets or (6) any combination of the foregoing, having
an aggregate value equal to the Current Value, where such aggregate value has
been determined by the Board of Directors of the Company based upon the advice
of a nationally recognized investment banking firm selected by the Board of
Directors of the Company; provided, however, if the Company shall not have made
adequate provision to deliver value pursuant to clause (B) above within 30 days
following the later of (x) the first occurrence of a Section 11(a)(ii) Event and
(y) the date on which the Company’s right of redemption pursuant to Section
23(a) expires (the later of (x) and (y) being referred to herein as the
“Section 11(a)(ii) Trigger Date”), then the Company shall be obligated
to deliver, upon the surrender for exercise of a Right and without requiring
payment of the Purchase Price, the Common Shares (to the extent available) and
then, if necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If the Board of Directors of the Company shall determine in good
faith that it is likely that sufficient additional Common Shares could be
authorized for issuance upon exercise in full of the Rights, the 30 day period
set forth above may be extended to the extent necessary, but not more than 90
days after the Section 11(a)(ii) Trigger Date, in order that the Company may
seek shareholder approval for the authorization of such additional shares (such
period, as it may be extended, the “Substitution Period’). To the
extent that the Company determines that some action need be taken pursuant to
the first and/or second sentences of this Section 11(a)(iii), the Company (x)
shall provide, subject to Section 7(e) hereof, that such action shall apply
uniformly to all outstanding Rights, and



15










(y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
value of the Common Shares shall be the Current Market Price per Common Share on
the Section 11(a)(ii) Trigger Date and the value of any Common Share Equivalent
shall be deemed to have the same value as the Common Shares on such date. 







        (b)       In
case the Company shall fix a record date for the issuance of rights, options or
warrants to all holders of Preferred Shares entitling them to subscribe for or
purchase (for a period expiring within 45 calendar days after such record date)
Preferred Shares (or shares having the same rights, privileges and preferences
as the Preferred Shares (“Equivalent Preferred Shares”)) or securities
convertible into Preferred Shares or Equivalent Preferred Shares at a price per
Preferred Share or per Equivalent Preferred Share (or having a conversion price
per share, if a security convertible into Preferred Shares or Equivalent
Preferred Shares) less than the Current Market Price per Preferred Share on such
record date, the Purchase Price to be in effect after such record date shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares outstanding on such record date, plus the number of Preferred
Shares that the aggregate offering price of the total number of Preferred Shares
and/or Equivalent Preferred Shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator of which shall be the
number of Preferred Shares outstanding on such record date, plus the number of
additional Preferred Shares and/or Equivalent Preferred Shares to be offered for
subscription or purchase (or into which the convertible securities so to be
offered are initially convertible). In case such subscription price may be paid
by delivery of consideration, part or all of which may be in a form other than
cash, the value of such consideration shall be as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Preferred Shares owned by or held for the account
of the Company shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a record
date is fixed, and in the event that such rights, options or warrants are not so
issued, the Purchase Price shall be adjusted to be the Purchase Price which
would then be in effect if such record date had not been fixed. 


        (c)       In
case the Company shall fix a record date for a distribution to all holders of
Preferred Shares (including any such distribution made in connection with a
consolidation or merger in which the Company is the continuing corporation) of
evidences of indebtedness, cash (other than a regular quarterly cash dividend
out of the earnings or retained earnings of the Company), assets (other than a
dividend payable in Preferred Shares, but including any dividend payable in
shares other than Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date




16














by a fraction, the
numerator of which shall be the Current Market Price per share of Preferred
Shares on such record date, less the fair market value (as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to a
Preferred Share and the denominator of which shall be such Current Market Price
per share of Preferred Shares. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution is
not so made, the Purchase Price shall be adjusted to be the Purchase Price which
would have been in effect if such record date had not been fixed. 


	 	        (d)       
(i) For the purpose of any computation hereunder, other than computations made
pursuant to Section 11(a)(iii) hereof, the “Current Market Price” per
Common Share of a Person on any date shall be deemed to be the average of the
daily Closing Prices per share of such Common Shares for the 30 consecutive
Trading Days immediately prior to such date, and for purposes of computations
made pursuant to Section 11(a)(iii) hereof, the “Current Market Price”
per Common Share on any date shall be deemed to be the average of the daily
Closing Prices per share of such Common Shares for the 10 consecutive Trading
Days immediately following such date; provided, however, that in the event that
the Current Market Price per Common Share is determined during a period
following the announcement of (A) a dividend or distribution on such Common
Shares other than a regular quarterly cash dividend or the dividend of the
Rights, or (B) any subdivision, combination or reclassification of such Common
Shares, and the ex dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, shall not
have occurred prior to the commencement of the requisite 30 Trading Day or 10
Trading Day period, as set forth above, then, and in each such case, the Current
Market Price shall be properly adjusted to take into account ex dividend
trading. If the Common Shares are not publicly held or not so listed or traded,
“Current Market Price” per share shall mean the fair value per share
as determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent. 






	 	        (ii)
       For the purpose of any computation hereunder, the “Current Market
Price” per Preferred Share (or one-hundredth of a share) shall be
determined in the same manner as set forth above for the Common Shares in clause
(i) of this Section 11(d) (other than the last sentence thereof). If the Current
Market Price per Preferred Share (or one-hundredth of a share) cannot be
determined in the manner provided above or if the Preferred Shares are not
publicly held or listed or traded in a manner described in clause (i) of this
Section 11(d), the “Current Market Price” per Preferred Share shall be
conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalization with respect to the Common Shares occurring after the date of
this Agreement) multiplied by the Current Market Price per Common Share. If
neither the Common Shares nor the Preferred Shares are publicly held or so
listed or traded, Current Market Price per Preferred Share shall mean the fair
value as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed



17










with the Rights
Agent. For all purposes of this Agreement, the Current Market Price of
one-hundredth of a Preferred Share shall be equal to the Current Market Price of
one Preferred Share divided by 100. 







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


        (f)       If
as a result of an adjustment made pursuant to Section 11(a) or Section 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any capital shares other than Preferred Shares, thereafter the number of
such other shares so receivable upon exercise of any Right and the Purchase
Price thereof shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the Preferred Shares contained in Sections 11(a), (b), (c), (e), (f), (g), (h),
(i), 0), (k), and (m) hereof, and the provisions of Sections 7, 9, 10, 13 and 14
hereof with respect to the Preferred Shares shall apply on like terms to any
such other shares. 


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


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


        (i)       The
Company may elect on or after the date of any adjustment of the Purchase Price
to adjust the number of Rights, in lieu of any adjustment in the number of
one-hundredths of a Preferred Share purchasable upon the exercise of a Right.
Each of the Rights outstanding after the adjustment in the number of Rights
shall be exercisable for the number of one-hundredths of a Preferred Share for
which a Right was exercisable immediately prior to such adjustment. Each Right
held of record prior to such adjustment of the number of Rights shall become
that number of Rights (calculated to the nearest ten thousandth) obtained by
dividing the Purchase Price in effect immediately prior to adjustment of the
Purchase Price by the Purchase 




18










Price in effect immediately after adjustment of
the Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights, indicating the record date for the adjustment,
and, if known at the time, the amount of the adjustment to be made. This record
date may be the date on which the Purchase Price is adjusted or any day
thereafter, but, if the Rights Certificates have been issued, shall be at least
10 days later than the date of the public announcement. If Rights Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(i), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment. Rights Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Purchase Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement. 


        (j)       Irrespective
of any adjustment or change in the Purchase Price or the number of
one-hundredths of a Preferred Share issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per one-hundredth of a share and the number of
one-hundredths of a share that were expressed in the initial Rights Certificates
issued hereunder. 


        (k)       Before
taking any action that would cause an adjustment reducing the Purchase Price
below the then stated value, if any, of the number of one-hundredths of a
Preferred Share or of the number of the Common Shares or other securities
issuable upon exercise of the Rights, the Company shall take any corporate
action that may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue fully paid and nonassessable such number
of one-one-hundredths of a Preferred Share or such number of the Common Shares
or other securities at such adjusted Purchase Price. 


        (1)       In
any case in which this Section 11 shall require that an adjustment in the
Purchase Price be made effective as of a record date for a specified event, the
Company may elect to defer until the occurrence of such event the issuance to
the holder of any Right exercised after such record date the number of
one-one-hundredths of a Preferred Share and other capital shares or securities
of the Company, if any, issuable upon such exercise over and above the number of
one one-hundredths of a Preferred Share and other capital shares or securities
of the Company, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the Company
shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder’s right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment. 


        (m)       Anything
in this Section 11 to the contrary notwithstanding, the Company shall be
entitled to make such reductions in the Purchase Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that in
their good faith judgment the Board of




19










Directors of the Company shall determine
to be advisable in order that any (i) consolidation or subdivision of the
Preferred Shares, (ii) issuance wholly for cash of any Preferred Shares at less
than the current market price, (iii) issuance wholly for cash of Preferred
Shares or securities that by their terms are convertible into or exchangeable
for Preferred Shares, (iv) shares dividends or (v) issuance of rights, options
or warrants referred to in this Section 11 hereafter made by the Company to
holders of its Preferred Shares shall not be taxable to such shareholders. 


        (n)       The
Company covenants and agrees that it shall not, at any time after the
Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction that complies with Section 11(o) hereof) or (iii)
sell, lease or transfer (or permit any Subsidiary to sell or transfer), 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 or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof), if (x) at the time of or immediately after
such consolidation, merger, sale, transfer or transaction there are any rights,
warrants or other instruments or securities of the Company or any other Person
outstanding or agreements in effect that would substantially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights, (y)
prior to, simultaneously with or immediately’ after such consolidation,
merger, sale, transfer or transaction, the shareholders or other equity owners
of the Person who constitutes, or would constitute, the “Principal
Party” for purposes of Section 13(a) hereof shall have received a
distribution of Rights previously owned by such Person or any of its Affiliates
or Associates, or (z) the form or nature of organization of the Principal Party
would preclude or limit the exercise of Rights or otherwise diminish
substantially or eliminate the benefits intended to be afforded by the Rights. 


        (o)       The
Company covenants and agrees that, after the Distribution Date, it will not,
except as permitted by Section 23 or Section 27 hereof, take (or permit any
Subsidiary to take) any action if the purpose of such action is to, or if at the
time such action is taken it is reasonably foreseeable that such action will,
diminish substantially or eliminate the benefits intended to be afforded by the
Rights. 


        (p)       Anything
in this Agreement to the contrary notwithstanding, in the event that the Company
shall at any time after the Rights Dividend Declaration Date and prior to the
Distribution Date (i) declare a dividend on the outstanding the Common Shares
payable in the Common Shares, (ii) subdivide the outstanding the Common Shares,
(iii) combine the outstanding Common Shares into a smaller number of shares or
(iv) otherwise reclassify the outstanding Common Shares, the number of Rights
associated with each Common Share then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately adjusted
so that the number of Rights thereafter associated with each Common Share
following any such event shall equal the result obtained by multiplying the
number of Rights associated with each Common Share immediately prior to such
event by a fraction (the “Adjustment Fractions”) the numerator of
which shall be the total number of the Common Shares outstanding immediately
prior to the occurrence of




20










the event and the denominator of which shall be the
total number of the Common Shares outstanding immediately following the
occurrence of such event. In lieu of such adjustment in the number of Rights
associated with one Common Share, the Company may elect to adjust the number of
one one-hundredths of a Preferred Share purchasable upon the exercise of one
Right and the Purchase Price. If the Company makes such election, the number of
Rights associated with one Common Share shall remain unchanged, and the number
of one-one-hundredths of a Preferred Share purchasable upon exercise of one
Right and the Purchase Price shall be proportionately adjusted so that (i) the
number of one-one-hundredths of a Preferred Share purchasable upon exercise of a
Right following such adjustment shall equal the product of the number of
one-one-hundredths of a Preferred Share purchasable upon exercise of a Right
immediately prior to such adjustment multiplied by the Adjustment Fraction and
(ii) the Purchase Price following such adjustment shall equal the product of the
Purchase Price immediately prior to such adjustment multiplied by the Adjustment
Fraction. 


        Section
12.     Certificate of Adjusted Purchase Price or Number of Shares. Whenever
an adjustment is made as provided in Section 11 or Section 13 hereof, 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 Preferred
Shares and the Common Shares, a copy of such certificate and (c) mail a brief
summary thereof to each holder of a Rights Certificate (or, if prior to the
Distribution Date, to each holder of a certificate representing the Common
Shares) in accordance with Section 26 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained. 


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



        (a)       In
the event that, on or after the Shares Acquisition Date, directly or indirectly,
(x) the Company shall 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(o) hereof), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof) shall consolidate with, or merge with or into, the Company, and the
Company shall be the continuing or surviving corporation of such consolidation
or merger and, in connection with such consolidation or merger, all or part of
the outstanding Common Shares shall be changed into or exchanged for shares or
other securities of the Company or any other Person or cash or any other
property, or (z) the Company shall sell, lease or otherwise transfer (or one or
more of its Subsidiaries shall sell, lease or otherwise transfer), 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 Person or Persons (other than the Company
or any Subsidiary of the Company or any combination thereof in one or more
transactions each of which complies with Section 11(o) hereof), then, and in
each such case, proper provision shall be made so that: (i) on and after the
Distribution Date, each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise thereof at
the then current Purchase Price in accordance with the terms of this Agreement,
such number of validly authorized and issued, fully paid, nonassessable and
freely tradable the Common Shares of the Principal Party (as such term is
hereinafter defined), not subject to any liens, encumbrances, rights of first
refusal or other adverse claims, as shall be




21










equal to the result obtained by (1)
multiplying the then current Purchase Price by the number of one-one-hundredths
of a Preferred Share for which a Right was exercisable immediately prior to the
first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has
occurred prior to the first occurrence of a Section 13 Event, multiplying the
number of such one-one-hundredths of a Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event by the Purchase Price in effect immediately prior to such first
occurrence), and dividing that product (which, following the first occurrence of
a Section 13 Event, shall be the Purchase Price for each Right and for all
purposes of this Agreement) by (2) 50% of the Current Market Price per Common
Share of such Principal Party on the date of consummation of such Section 13
Event; (ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term “Company’ shall
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Shares) in connection
with the consummation of any such transaction as may be necessary to assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its Common Shares thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof shall
be of no effect following the first occurrence of any Section 13 Event. 


(b)       “principal Party” shall mean:


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






	 	        (ii)
       in the case of any transaction described in clause (z) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such transaction or
transactions, or, if each Person that is a party to such transaction or
transactions 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 be determined, the Person the Common Shares of which have
the greatest aggregate market value; 






provided, however, that in
any such case, if the Common Shares of such Person are not at such time and have
not been continuously over the preceding twelve month period registered under
Section 12 of the Exchange Act, and if (1) such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, “Principal Party” 




22










shall refer to such other Person; (2)
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of all of which are and have been so registered,
“Principal Party’ shall refer to whichever of such Persons is the
issuer of the Common Shares having the greatest aggregate market value; and (3)
such Person is owned, directly or indirectly, by a joint venture formed by two
or more Persons that are not owned, directly or indirectly, by the same Person,
the rules set forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party 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 this Section
13 in the same ratio as their direct or indirect interests in such Person bear
to the total of such interests. 


        (c)       The
Company shall not consummate any Section 13 Event unless each Principal Party
(or Person that may become a Principal Party as a result of such Section 13
Event) shall have a sufficient number of its the Common Shares authorized that
have not been issued or reserved for issuance to permit the exercise in full of
the Rights in accordance with this Section 13 and unless prior thereto the
Company and each such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further providing that, as soon as
practicable after the date of such Section 13 Event, the Principal Party at its
own expense will 


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






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






	 	        (iii)
       use its best efforts, if the Common Shares of the Principal Party are or shall
become listed on a national securities exchange, to list (or continue the
listing of) the Rights and the securities purchasable upon exercise of the
Rights on such securities exchange and, if the Common Shares of the Principal
Party are not listed on a national securities exchange, to cause the Rights and
the securities purchasable upon exercise of the Rights to be reported by the
Nasdaq Stock Market or such other transaction reporting system then in use; and 






	 	        (iv)
       deliver to holders of the Rights historical financial statements for the
Principal Party and each of its Affiliates that comply in all respects with the
requirements for registration on Form 10 under the Exchange Act. 






        The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any 




23











time after the occurrence of a Section 11(a)(ii) Event, the
Rights that have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a). 


        Section 14.       Fractional Rights and Fractional Shares.


        (a)       The
Company shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in Section 11(p) hereof, or to distribute Rights
Certificates or scrip evidencing fractional Rights. In lieu of such fractional
Rights, there shall be paid to the registered holders of the Rights Certificates
with regard to which such fractional Rights would otherwise be issuable, an
amount in cash equal to the same fraction of the Closing Price of one Right for
the Trading Day immediately prior to the date on which such fractional Rights
would have been otherwise issuable. 


        (b)     The
Company shall not be required to issue fractions of Preferred Shares (other
than, except as provided in Section 7(c) hereof, fractions that are integral
multiples of one-one-hundredth of a Preferred Share) upon exercise of the Rights
or to distribute certificates or scrip evidencing fractional Preferred Shares
(other than, except as provided in Section 7(c) hereof, fractions that are
integral multiples of one-one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one-one-hundredth of a Preferred Share
may, at the election of the Company in its sole discretion, be evidenced by
depositary receipts, pursuant to an appropriate agreement between the Company
and a depositary selected by it, provided that such agreement shall provide that
the holders of such depositary receipts shall have all the rights, privileges
and preferences to which they are entitled as beneficial owners of the Preferred
Shares represented by such depositary receipts. In lieu of fractional Preferred
Shares that are not integral multiples of one-one-hundredth of a Preferred
Share, the Company may pay to the registered holders of Rights Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same fraction of one-one-hundredth of the Closing Price of a Preferred Share
for the Trading Day immediately prior to the date of such exercise. 


        (c)       Following
the occurrence of a Triggering Event, the Company shall not be required to issue
fractions of the Common Shares upon exercise of the Rights or to distribute
certificates or scrip evidencing fractional Common Shares. In lieu of fractional
Common Shares, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the Closing Price of one Common Share for
the Trading Day immediately prior to the date of such exercise. 


        (d)       The
holder of a Right by the acceptance of the Right expressly waives his right to
receive any fractional Rights or any fractional shares upon exercise of a Right,
except as permitted by this Section 14. 


        Section
15. Rights of Action. All rights of action in respect of this Agreement,
other than rights of action vested in the Rights Agent pursuant to Section 18
hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the




24










Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against-the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and shall be entitled to specific performance
of the obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
After a Triggering Event, holders of Rights shall be entitled to recover the
reasonable costs and expenses, including attorneys’ fees, incurred by them
in any action to enforce the provisions of this Agreement. 


                  Section 16.       Agreement of Rights  Holders.
  Every holder of a Right by accepting  the same  consents and
agrees with the Company and the Rights Agent and with every other holder of a Right that:


        (a)       prior
to the Distribution Date, the Rights will not be evidenced by Rights
Certificates and will be transferable only in connection with the transfer of
the Common Shares; 


        (b)       after
the Distribution Date, the Rights Certificates will be transferable only on the
registry books of the Rights Agent if surrendered at the principal office or
offices of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the form of assignment
set forth on the reverse side thereof and the certificate contained therein duly
completed and fully executed; 


        (c)       subject
to Section 6(a) and Section 7(f) hereof, 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 the Common Shares certificate) is registered
as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated the Common Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be affected by any notice to the contrary; and 


        (d)       notwithstanding
anything in this Agreement to the contrary, neither the Company nor the Rights
Agent shall have any liability to any holder of a Right or other Person as a
result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible. 


        Section
17.     Rights Certificate Holder Not Deemed a Shareholder. No holder, as
such, of any Rights Certificate shall be entitled to vote, receive dividends or
be deemed for any




25










purpose the holder of the number of one-one-hundredths of a
Preferred Share or any other securities of the Company that may at any time be
issuable upon the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in Section 25 hereof), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof. 


         Section 18.       Concerning the Rights Agent.


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


        (b)       The
Rights Agent shall be protected and shall incur no liability for or in respect
of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any Rights Certificate or
Common Shares certificate or for other securities of the Company, instrument of
assignment or transfer, power of attorney, endorsement, affidavit, letter,
notice, direction, consent, certificate, statement or other paper or document
believed by it to be genuine and to be signed, executed and, where necessary,
guaranteed, verified or acknowledged, by the proper Person or Persons. 


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


        (a)       Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the corporate trust or
shares 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 paper or any further ut on the part of any of the
parties hereto; provided, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either




26










in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement. 


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


        Section
20. Duties of Rights Agent. The Rights Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions,
by all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound: 


        (a)        The
Rights Agent may consult with legal counsel (who may be legal counsel for the
Company), and the opinion of such counsel shall be full and complete
authorization and protection to the Rights Agent as to any action taken or
omitted by it in good faith and in accordance with such opinion. 


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


        (c)        The
Rights Agent shall be liable hereunder only for its own negligence, bad faith or
willful misconduct. 


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


        (e)      The
Rights Agent shall not be under any responsibility in respect of the validity of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or in respect of the validity or execution of any
Rights Certificate (except its countersignature thereof); nor shall it be
responsible for any breach by the Company of any covenant or condition contained
in this Agreement or in any Rights Certificate; nor shall it be responsible for
any adjustment required under the provisions of Section 11 or Section 13 hereof




27










or responsible for the manner, method or amount of any such adjustment or the
ascertaining of the existence of facts that would require any such adjustment
(except with respect to the exercise of Rights evidenced by Rights Certificates
after actual notice of any such adjustment); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares or the Common Shares or other securities to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any Preferred Shares or the Common Shares or other securities will, when so
issued, be validly authorized and issued, fully paid and nonassessable. 


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


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


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


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


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


        Section
21.      Change of Rights Agent.      The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
days’ notice in writing mailed to the Company, and to each transfer agent
of the Common Shares and the Preferred Shares, by registered or certified mail,
and to the holders, if any, of the Rights Certificates by first class mail. The
Company may remove the Rights Agent or any successor




28










Rights Agent (with or
without cause) upon 30 days’ notice in writing, mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares and the Preferred Shares, by registered or certified mail, and to
the holders of the Rights Certificates by first class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. Notwithstanding the
foregoing provisions of this Section 21, 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 giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company), then the 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 (a) a legal business
entity organized and doing business under the laws of the United States or of
any state of the United States, in good standing, which is authorized to conduct
a stock transfer or corporate trust business 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
$25,000,000 or (b) an Affiliate of a corporation described in clause (a) of this
sentence. After appointment, the successor Rights Agent shall be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent shall deliver and transfer to the successor Rights Agent any property at
the time held by it hereunder, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares
and the Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Rights Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be. 


        Section
22.     Issuance of New Rights Certificates.     Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance
or sale of the Common Shares following the Distribution Date and prior to the
expiration or redemption of the Rights, the Company (a) shall, with respect to
the Common Shares so issued or sold pursuant to the exercise of shares options
or under any employee plan or arrangement granted or awarded on or prior to the
Distribution Date, or upon the exercise, conversion or exchange of securities
issued by the Company on or prior to the Distribution Date, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of the
Company, issue Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no such
Rights Certificate shall be issued if, and to the




29










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 (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof. 


        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 close of business on the tenth day following the Shares
Acquisition Date (or, if the Shares Acquisition Date shall have occurred prior
to the Record Date, the close of business on the tenth day following the Record
Date) as such period may be extended (subject to the provisions of Section 27
hereof) or shortened in the discretion of the Board of Directors (the
“Redemption Period”) and (ii) the Final Expiration Date, cause the
Company to redeem all but not less than all the then outstanding Rights at a
redemption price of $.001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being hereinafter
referred to as the “Redemption Price”). Notwithstanding anything
contained in this Agreement to the contrary, the Rights shall not be exercisable
after the first occurrence of a Section 11(a)(ii) Event or Section 13 Event
until such time as the Company’s right of redemption hereunder has expired.
The Company may, at its option, pay the Redemption Price in cash, Common Shares
(based on the Current Market Price of the Common Shares at the time of
redemption) or any other form of consideration deemed appropriate by the Board
of Directors. 


        (b)       Immediately
upon the effectiveness of the action of the Board of Directors of the Company
ordering the redemption of the Rights (which action may be conditioned on the
occurrence of one or more events or on the existence of one or more facts or may
be effective at some future time), evidence of which shall have been filed with
the Rights Agent and without any further action and without any notice, the
right to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the effectiveness of the action of the Board of Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to all such holders at each holder’s last address as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the Company for the Common Shares.
Any notice that is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of redemption
shall state the method by which the payment of the Redemption Price will be
made. 


          Section 24.
     Exchange.


        (a)       The
Board of Directors of the Company may, at its option, at any time and from time
to time after the first occurrence of a Section 11(a)(ii) Event, exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to the provisions of Section 7(e) hereof)
for Common Shares or Common Share Equivalents or any combination thereof, at an
exchange ratio of one Common Share, or such




30










number of Common Share Equivalents
or units representing fractions thereof as would be deemed to have the same
value as one Common Share, per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the Rights
Dividend Declaration Date (such exchange ratio being hereinafter referred to as
the “Exchange Ratio”). 


        (b)       Immediately
upon the action of the Board of Directors of the Company ordering the exchange
of any Rights pursuant to and in accordance with subsection (a) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of Common Shares and/or Common Share
Equivalents equal to the number of such Rights held by such holder multiplied by
the Exchange Ratio. The Company shall promptly give public notice of any such
exchange; provided, however, that the failure to give, or any defect in, such
notice shall not affect the validity of such exchange. The Company promptly
shall mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of Common Shares and/or Common Share
Equivalents for Rights will be effected and, in the event of any partial
exchange, the number of Rights that will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights. 


        (c)       In
the event that the number of Common Shares that are authorized by the
Company’s certificate of incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights is not sufficient
to permit an exchange of Rights as contemplated in accordance with this Section
24, the Company may, at its option, take all such action as may be necessary to
authorize additional Common Shares for issuance upon exchange of the Rights. 


        (d)       The
Company shall not be required to issue fractions of Common Shares or to
distribute certificates or scrip evidencing fractional Common Shares. In lieu of
such fractional Common Shares, the Company shall pay to the registered holders
of Rights with regard to which such fractional Common Shares would otherwise be
issuable an amount in cash equal to the same fraction of the value of a whole
Common Share. For purposes of this Section 24, the value of a whole Common Share
shall be the Closing Price per Common Share for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24, and the value of any
Common Share Equivalent shall be deemed to have the same value as a Common Share
on such date. 


        Section 25.       Notice of Certain Events.


        (a)      In
case the Company shall propose, at any time after the Distribution Date, (i) to
pay any dividend payable in shares of any class to the holders of Preferred
Shares or to make any other distribution to the holders of Preferred Shares
(other than a regular quarterly cash dividend out of earnings or retained
earnings of the Company), or (ii) to offer to the holders of Preferred Shares
rights or warrants to subscribe for or to purchase any additional Preferred
Shares or shares




 31










of shares of any class or any other securities, rights or
options, or (iii) to effect any reclassification of its Preferred Shares (other
than a reclassification involving only the subdivision of outstanding Preferred
Shares), or (iv) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof), or to effect any sale or other transfer (or to
permit one or more of its Subsidiaries to effect any sale or other transfer), in
one 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 Persons (other than the Company and/or any of its
Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof, or (v) to effect the liquidation, dissolution or winding up of the
Company, then, in each such ca se, the Company shall give to each holder of
record of a Rights Certificate, to the extent feasible and in accordance with
Section 26 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution or winding up is to take place and the
date of participation therein by the holders of the Preferred Shares, if any
such date is to be fixed, and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least 20 days prior to the record
date for determining holders of the Preferred Shares for purposes of such
action, and in the case of any such other action, at least 20 days prior to the
date of the taking of such proposed action or the date of participation therein
by the holders of the Preferred Shares, whichever shall be the earlier. The
failure to give notice required by this Section 25 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. 


        (b)       In
case any Section 11(a)(ii) Event shall occur, then (i) the Company shall as soon
as practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of the
occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii) hereof, and (ii) all
references in the preceding paragraph to Preferred Shares shall be deemed
thereafter to refer to the Common Shares and/or, if appropriate, other
securities. 


        Section
26.     Notices.     Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any Rights Certificate to or on
the Company shall be sufficiently given or made if sent by first class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows: 


                  SI Diamond Technology, Inc.

                  3006 Longhorn Boulevard

                  Suite 107

                  Austin, Texas 78758


Attention: Corporate Secretary

        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 sufficiently given or made if
sent by first class mail, postage prepaid, addressed (until another address is
filed in writing with the Company) as follows: 






 32













                  Computershare Trust Company, Inc.

                  12039 West Alameda Parkway

                  Suite Z-2

                  Lakewood, Colorado 80228



         Attention: Stock Transfer Administration

        Notices
or demands authorized by this Agreement to be given or made by the Company or
the Rights Agent to the holder of any Rights Certificate (or, if prior to the
Distribution Date, to the holder of certificates representing Common Shares)
shall be sufficiently given or made if sent by first class mail, postage
prepaid, addressed to such holder at the address of such holder as shown on the
registry books of the Company. 


        Section
27.     Supplements and Amendments.  Prior to the Shares Acquisition Date and
subject to the penultimate sentence of this Section 27, the Company may, by
resolution of its Board of Directors, in its sole and absolute discretion and
the Rights Agent shall, if the Company so directs, supplement or amend any
provision of this Agreement in any respect without the approval of any holders
of certificates representing the Common Shares. From and after the Shares
Acquisition Date and subject to the penultimate sentence of this Section 27, the
Company may, by resolution of its Board of Directors, and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein that may
be defective or inconsistent with any other provisions herein, (iii) to shorten
or lengthen any time period hereunder or (iv) to change or supplement the
provisions hereunder in any manner that the Company may deem necessary or
desirable and that shall not materially adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate
or Associate of an Acquiring Person or a transferee of any of such Persons);
provided, that this Agreement may not be supplemented or amended to lengthen,
pursuant to clause (iii) of this sentence, (A) a time period relating to when
the Rights may be redeemed at such time as the Rights are not then redeemable or
(B) any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights (other than any Acquiring Person and its Affiliates and
Associates or a transferee of any of such Persons). Upon the delivery of a
certificate from an appropriate of officer of the Company which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment; provided,
however, that the Rights Agent may, but shall not be obligated to, enter into
any such supplement or amendment that affects the Rights Agent’s own
rights, duties or immunities under this Agreement. Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment shall be
made that decreases the Redemption Price, shortens the Final Expiration Date,
increases the initial Purchase Price or decreases the number of
one-one-hundredths of a Preferred Share for which a Right is initially
exercisable. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of the
Common Shares. 


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






 33











        Section
29.       Determinations and Actions by the Board of Directors, etc.      For all
purposes of this Agreement, any calculation of the number of Common Shares
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares of which any Person is
the Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act as in
effect on the date hereof. 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 of the Company
(with, where specifically provided for herein, the concurrence of the Board of
Directors) or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power to (i) interpret the provisions of this Agreement and (ii) make all
determinations deemed necessary or advisable for the administration of this
Agreement (including, without limitations a determination to redeem or not
redeem the Rights or to amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) that are done or made by the Board
of Directors of the Company (with, where specifically provided for herein, the
concurrence of the Board of Directors) in good faith, shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other parties, and (y) not subject the Board of
Directors to any liability to the holders of the Rights. 


        Section
30.        Benefits of this Agreement.     Nothing in this Agreement shall be
construed to give to any Person other than the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of the Common Shares) any legal or equitable right,
remedy or claim under this Agreement; but this Agreement shall be for the sole
and exclusive benefit of the Company, the Rights Agent and the registered
holders of the Rights Certificates (and, prior to the Distribution Date,
registered holders of the Common Shares). 


        Section
31.        Severability.    If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Agreement to the contrary, if any
such term, provision, covenant or restriction is held by such court or authority
to be invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement,
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the close of business on the tenth day following the date
of such determination by the Board of Directors of the Company. 


        Section
32.        Governing Law.    This Agreement, each right and each rights certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Texas and for all purposes shall be governed by and construed in
accordance with the laws of such state applicable to contracts made and to be
performed entirely within such state. 




 34










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


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






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







	   	SI Diamond Technology, Inc.



By:     /s/ Douglas P. Baker                  
                

Its       Secretary                               
                      
	   	




COMPUTERSHARE TRUST COMPANY, INC.



By:     /s/ Kellie Gwinn               
                   

Its       Vice President/Trust Officer             
	   	




AND 



By:     /s/ Ian Yewer                    
              

Its       President                               
        














EXHIBIT A


SI Diamond
Technology, Inc.

         Designation of Series H Junior Participating Preferred Shares.
         Series H Junior Participating Preferred Shares.



        1.          Designation
and Amount. There shall be a series of shares of preferred stock that shall
be designated as “Series H Junior Participating Preferred Shares,” and
the number of shares constituting such series shall be Six Hundred Thousand
(600,000). 


        2.          Dividends and Distributions.


        (A)       Subject
to the prior and superior rights of the holders of any shares of any series of
shares of preferred stock ranking prior and superior to the Series H Junior
Participating Preferred Shares with respect to dividends, the holders of shares
of Series H Junior Participating Preferred Shares, in preference to the holders
of shares of any class or series of shares of the Corporation ranking prior to
the Series H Junior Participating Preferred Shares, 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 15th day
of January, April, July and October 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 H Junior Participating Preferred Shares, in an
amount per share (rounded to the nearest cent) equal to the greater of (a) $1.00
or (b) subject to the provision for adjustment hereinafter set forth, 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
shares of common stock of the Corporation (the “Common Shares”) 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 H Junior Participating Preferred Shares. The
“Adjustment Number” shall initially be 100. In the event the
Corporation shall at any time after June 18, 1998 (the “Rights Declaration
Date”) (i) declare any dividend on Common Shares payable in Common Shares,
(ii) subdivide the outstanding Common Shares or (iii) combine the outstanding
Common Shares 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 Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares that were outstanding
immediately prior to such event. 


        (B)       The
Corporation shall declare a dividend or distribution on the Series H Junior
Participating Preferred Shares as provided in paragraph (A) above immediately
after it declares a dividend or distribution on the Common Shares (other than a
dividend payable in Common Shares); provided that, in the event no dividend or
distribution shall have been declared on the Common Shares during the period
between any Quarterly Dividend Payment Date and the next subsequent Quarterly
Dividend Payment Date, a dividend of $1.00 per share on the Series H




A-1










Junior
Participating Preferred Shares shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date. 


        (C)       Dividends
shall begin to accrue and be cumulative on outstanding Series H Junior
Participating Preferred Shares from the Quarterly Dividend Payment Date next
preceding the date of issue of such Series H Junior Participating Preferred
Shares, unless the date of issue of such shares is prior to the record date for
the first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or unless
the date of issue is a Quarterly Dividend Payment Date or is a date after the
record date for the determination of holders of Series H Junior Participating
Preferred Shares 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
Series H Junior Participating Preferred Shares 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 Series H Junior Participating Preferred Shares 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 


        3.       Voting
Rights. The holders of Series H Junior Participating Preferred Shares shall
have the following voting rights: 


        (A)       Each
Series H Junior Participating Preferred Share shall entitle the holder thereof
to a number of votes equal to the Adjustment Number on all matters submitted to
a vote of the shareholders of the Corporation. 


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


        (C)       (i)
  If at any time dividends on any Series H Junior Participating Preferred Stock
shall be in arrears in an amount equal to six (6) quarterly dividends thereon,
the occurrence of such contingency shall mark the beginning of a period (herein
called a “default period”) which shall extend until such time when all
accrued and unpaid dividends for all previous quarterly dividend periods and for
the current quarterly dividend period on all shares of Series H Junior
Participating Preferred Stock then outstanding shall have been declared and paid
or set apart for payment. During each default period, all holders of Preferred
Stock (including holders of the Series H Junior Participating Preferred Stock)
with dividends in arrears in an amount equal to six (6) quarterly dividends
thereon, voting as a class, irrespective of series, shall have the right to
elect two (2) Directors. 


	 	        (ii)
     During any default period, such voting right of the holders of Series H Junior
Participating Preferred Stock may be exercised initially at a special meeting
called pursuant to subparagraph (iii) of this Section 3(C) 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 ten
percent (10%) in number of shares of 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 Preferred Stock of such
voting



A-2










right. At any meeting at which the holders of Preferred Stock shall
exercise such voting right initially during an existing default period, they
shall have the right, voting as a class, to elect Directors to fill such
vacancies, if any, in the Board of Directors as may then exist up to two (2)
Directors or, if such right is exercised at an annual meeting, to elect two (2)
Directors. If the number which may be so elected at any special meeting does not
amount to the required number, the holders of Preferred Stock shall have the
right to make such increase in the number of Directors as shall be necessary to
permit the election by them of the required number. After the holders of the
Preferred Stock shall have exercised their right to elect Directors in any
default period and during the continuance of such period, the number of
Directors in any default period and during the continuance of such period, the
number of Directors shall not be increased or decreased except by vote of the
holders of the Preferred Stock as herein provided or pursuant to the rights of
any equity securities ranking senior to or pari passu with the Series H Junior
Participating Preferred Stock. 







	 	        (iii)
    Unless the holders of 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 ten percent (10%) of the total number of shares of Preferred Stock
outstanding, irrespective of series, may request, the calling of special meeting
of the holders of Preferred Stock, which meeting shall thereupon be called by
the President, a Vice President or the Secretary of the Corporation. Notice of
such meeting and of any annual meeting at which holders of Preferred Stock are
entitled to vote pursuant to this Paragraph (C)(iii) shall be given to each
holder of record of Preferred Stock by mailing a copy of such notice to him or
her at his or her 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 50 days after such order or request or in default of the
calling of such meeting within 50 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 ten percent (10%) of the total number of shares of
Preferred Stock outstanding. Notwithstanding the provisions of this Paragraph
(C)(iii), no such special meeting shall be called during the period within 50
days immediately preceding the date fixed for the next annual meeting of the
stockholders. 






	 	        (iv)
    In any default period, the holders of Common Stock, and other classes of stock
of the Corporation if applicable, shall continue to be entitled to elect the
whole number of Directors until the holders of Preferred Stock shall have
exercised their right to elect two (2) Directors voting as a class, after the
exercise of which right (x) the Directors so elected by the holders of 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 (except as provided in Paragraph (C)(ii) of this
Section 3) be filled by vote of a majority of the remaining Directors
theretofore elected by the holders of the class of stock which elected the
Director whose office shall



A-3










have become vacant. References in this Paragraph (C)
to Directors elected by the holders of a particular class 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 Preferred Stock as a class to elect Directors shall cease, (y) the
term of any Directors elected by the holders of Preferred Stock as a class shall
terminate, and (z) the number of Directors shall be such number as may be
provided for in the certificate of incorporation or bylaws irrespective of any
increase made pursuant to the provisions of Paragraph (C)(ii) 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 bylaws). 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. 






        (D)       Except
as set forth herein or as provided by law, holders of Series H Junior
Participating Preferred Shares 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 the Common Shares as set forth herein) for taking any corporate
action. 


        4.     Certain Restrictions.



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


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






	 	        (ii)
     declare or pay dividends on or make any other distributions on any shares
ranking on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series H Junior Participating Preferred Shares, except
dividends paid ratably on the Series H Junior Participating Preferred Shares and
all such parity shares 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 any shares ranking on
a parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series H Junior Participating Preferred Shares, provided that the
Corporation may at any time redeem, purchase or otherwise acquire any such
parity shares in exchange for any shares of the Corporation ranking junior (both
as to dividends and upon dissolution, liquidation or winding up) to the Series H
Junior Participating Preferred Shares; or 







A-4











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






        (B)       The
Corporation shall not permit any subsidiary of the Corporation to purchase or
otherwise acquire for consideration any shares of 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. 


        5.       Reacquired
Shares. Any Series H Junior Participating Preferred Shares purchased or
otherwise acquired by the Corporation in any manner whatsoever shall be retired
and canceled promptly after the acquisition thereof All such shares shall upon
their cancellation become authorized but unissued shares of preferred stock and
may be reissued as part of a new series of shares of preferred stock. 


         6.       Liquidation, Dissolution or Winding Up.



        (A)       Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
Corporation, no distribution shall be made to the holders of shares ranking
junior (either as to dividends or upon liquidation or winding up) to the Series
H Junior Participating Preferred Shares, unless, prior thereto, the holders of
Series H Junior Participating Preferred Shares shall have received $1.00 per
share, plus an amount equal to accrued and unpaid dividends and distributions
thereon, whether or not declared, to the date of such payment (the “Series
H Liquidation Preference”). Following the payment of the full amount of the
Series H Liquidation Preference, no additional distributions shall be made to
the holders of Series H Junior Participating Shares unless, prior thereto, the
holders of Common Shares shall have received an amount per share (the
“Common Adjustment”) equal to the quotient obtained by dividing (i)
the Series H Liquidation Preference by (ii) the Adjustment Number. Following the
payment of the full amount of the Series H Liquidation Preference and the Common
Adjustment in respect of all outstanding shares of Series H Junior Participating
Preferred Shares and the Common Shares, respectively, holders of Series H Junior
Participating Preferred Shares and holders of the Common Shares shall receive
their ratable and proportionate share of the remaining assets to be distributed
in the ratio of the Adjustment Number to 1 with respect to such Preferred Shares
and the Common Shares, on a per share basis, respectively. 


        (B)       In
the event, however, that there are not sufficient assets to permit payment in
full of the Series H Liquidation Preference and the liquidation preferences of
all other series of shares of preferred stock, if any, that rank on a parity
with the Series H Junior Participating Preferred Shares, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences. In the event, however,
that there are not




A-5










sufficient assets available to permit payment in full of the
Common Adjustment, then such remaining assets shall be distributed ratably to
the holders of the Common Shares. 


        7.       Consolidation,
Merger, etc. In case the Corporation shall enter into any consolidation,
merger, or other transaction in which the Common Shares are exchanged for or
changed into other shares or securities, cash and/or other property, then in any
such case, the Series H Junior Participating Preferred Shares shall at the same
time be similarly exchanged or changed in an amount per share equal to the
Adjustment Number times the aggregate amount of shares, securities, cash and/or
any other property (payable in kind), as the case may be, into which or for
which each Common Share is changed or exchanged. 


        8.        No
Redemption. The Series H Junior Participating Shares shall not be
redeemable. Notwithstanding the foregoing sentence of this Section, the
Corporation may acquire Series H Junior Participating Preferred Shares in any
other manner permitted by law. 


        9.        Ranking.
The Series H Junior Participating Preferred Shares shall rank junior to all
other series of the Corporation’s preferred stock as to the payment of
dividends and the distribution of assets, unless the terms of any such series
shall provide otherwise. 


        10.        Amendment.
At any time that any Series H Junior Participating Preferred Shares are
outstanding, these Articles of Incorporation shall not be amended in any manner
which would materially alter or change the powers, preferences or special rights
of the Series H Junior Participating Preferred Shares so as to affect them
adversely without the affirmative vote of the holders of a majority or more of
the outstanding Series H Junior Participating Preferred Shares, voting
separately as a class. 


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






A-6









EXHIBIT B


Form of
Rights Certificate


Rights
Certificate No. P
	 	
NOT
EXERCISABLE AFTER JUNE 18, 2008, OR EARLIER IF REDEEMED OR EXCHANGED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY, AT
$.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS WILL BECOME NULL AND VOID.
[THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY
OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN AFFILIATE OR
ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED
HEREBY WELL BECOME NULL AND VOID IN THE CIRCUMSTANCES AND WITH THE EFFECT
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]





RIGHTS
CERTIFICATE


SI Diamond
Technology, Inc.


        This
certifies that ________________________, or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entities
the owner thereof, subject to the terms, provisions and conditions of the
Amended and Restated Rights Agreement, dated effective as of November 16, 2000,
as it may from time to time be supplemented or amended (the “Rights
Agreement”), between SI Diamond Technology, Inc., a Texas corporation (the
“Company”), and Computershare Trust Company, Inc. (formerly American
Securities Transfer, Incorporated), a Delaware company (the “Rights
Agent”), to purchase from the Company at any time prior to 5:00 p.m. (New
York City time) on June 18, 2008, at the office or offices of the Rights Agent
designated for such purpose, or its successor as Rights Agent, one-hundredth of
a fully paid, nonassessable Series H Junior Participating Preferred Share (the
“Preferred Shares”) of the Company, at a purchase price of $____ per
one one-hundredth of a share (the “Purchase Price”), upon presentation
and surrender of this Rights Certificate with the Form of Election to Purchase
and related Certificate set forth on the reverse hereof duly executed. The
Purchase Price may be paid in cash or by certified check, cashiers or official
bank check or bank draft payable to the order of the Company or the Rights
Agent. The number of Rights evidenced by this Rights Certificate (and the number
of shares which may be purchased upon exercise thereof) set forth above, and the
Purchase Price per share set forth above, are the number and Purchase Price as
of ________________, 20___, based on the Preferred Shares as constituted at such
date. The Company reserves the right to require prior to the occurrence of a
Triggering Event (as such term is defined in the Rights Agreement) that a number
of Rights be exercised so that only whole Preferred Shares will be issued. 






B-1











        From
and after the occurrence of a Section 11(a)(ii) Event (as such term is defined
in the Rights Agreement), if the Rights evidenced by this Rights Certificate are
beneficially owned by (i) an Acquiring Person or an Affiliate or Associate of an
Acquiring Person (as such terms are defined in the Rights Agreement), (ii) a
direct or indirect transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a direct or indirect transferee of a person who, concurrently with or
after such transfer, became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person, such Rights shall become null and void in the circumstances
set forth in the Rights Agreement, and no holder hereof shall have any rights
whatsoever with respect to such Rights from and after the occurrence of such
Section 11(a)(ii) Event. 


        As
provided in the Rights Agreement, the Purchase Price and the number and kind of
Preferred Shares or other securities that 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, including Triggering Events. 


        This
Rights Certificate is subject to all of the terms, provision 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, dudes and immunities hereunder of the Rights
Agent, the Company and the holders of the Rights Certificates, which limitations
of rights include the temporary suspension of the exercisability of such Rights
under the specific circumstances set forth in the Rights Agreement. Copies of
the Rights Agreement are on file at the above mentioned office of the Rights
Agent and are also available upon written request to the Company. 


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


        Subject
to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate (i) may be redeemed by the Company at its option at a redemption
price of $.01 per Right, payable, at the election of the Company, in cash or the
Common Shares or such other consideration as the Board of Directors may
determine, at any time prior to the earlier of the close of business on (a) the
tenth day following the Shares Acquisition Date (as defined in the Rights
Agreement) (as such time period may be extended or shortened pursuant to the
Rights Agreement) and (b) the Expiration Date (as such term is defined in the
Rights Agreement) or (ii) may be exchanged in whole or in part for common
shares, no par value, of the Company (the “Common Shares”) and/or
other equity securities of the Company deemed to have the same value as the
Common Shares. Under certain circumstances set forth in the Rights Agreement,
the decision to redeem (or to change such time period) shall require the
concurrence of a majority of




B-2










the Continuing Directors (as defined in the Rights
Agreement). After the expiration of the redemption period, the Company’s
right of redemption may be reinstated if an Acquiring Person reduces his
beneficial ownership to 20% or less of the outstanding Common Shares in a
transaction or series of transactions not involving the Company, and such
reinstatement is approved by the Company’s Board of Directors. 


        No
fractional Preferred Shares will be issued upon the exercise of any Right or
Rights evidenced hereby (other than, except as set forth above, fractions that
are integral multiples of one-one-hundredth of a Preferred Share, which may, at
the election of the Company, be evidenced by depositary receipts), but in lieu
thereof, cash payment will be made, as provided in the Rights Agreement. 


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






B-3
















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


                  Dated as of the _____ day of _________________, ______.



	




   	SI Diamond Technology, Inc.



By:                        
                        

       President
	




   	                               
                 

      Secretary





                                      Form of Reverse Side of Rights Certificate


FORM OF
ASSIGNMENT


                                   (To be executed by the registered holder if such

                                 holder desires to transfer the Rights Certificate.)


        FOR
VALUE RECEIVED __________________________________ hereby sells, assigns and
transfers unto _________________________________ (please print name and address
of transferee) this Rights Certificate, together with all right, title and
interest thereon, and does hereby irrevocably constitute and appoint
________________________________ Attorney, to transfer the within Rights
Certificate on the books of the within named Company, with full power of
substitution. 


                  Dated:  _____________________________


                  Signature:  __________________________



Signature Guaranteed:



B-4











CERTIFICATE



          The undersigned hereby certifies by checking the appropriate boxes that:


         (1) Rights  Certificate is not being sold,  assigned and transferred by or on behalf of a Person who
is or was an  Acquiring  Person or an  Affiliate  or  Associate  of an  Acquiring  Person (as such  terms are  defined
pursuant to the Rights Agreement);


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


                  Dated:  ___________________________


                  Signature:  ________________________


Signature Guaranteed:








NOTICE


        The
signatures to the foregoing Assignment and Certificate 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. 




B-5









FORM OF
ELECTION TO PURCHASE


                                 (To be executed if holder desires to exercise Rights

                                       represented by the Rights Certificate.)


To:              SI Diamond Technology, Inc.

        The
undersigned hereby irrevocably elects to exercise Rights represented by this
Rights Certificate to purchase the Preferred Shares issuable upon the exercise
of the Rights (or such other securities of the Company or of any other person
that may be issuable upon the exercise of the Rights) and requests that
certificates for such shares (or other securities) be issued in the name of and
delivered to: 


______________________________________________________________________________

                                           (Please print name and address)




                    ______________________________________________________________________________

                             (Please insert social security or other identifying number)


        If
such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to: 


______________________________________________________________________________

                                           (Please print name and address)




                    ______________________________________________________________________________

                             (Please insert social security or other identifying number)


                  Dated:  _________________________________


                  Signature:  ______________________________



Signature Guaranteed:




B-6










CERTIFICATE


The undersigned hereby certifies by checking the appropriate boxes that:


   /__/     (1)          The
Rights evidenced by this Rights Certificate 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 pursuant to the
Rights Agreement); 


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


Dated:          _________________________________________________ 




 Signature:          _________________________________________


Signature Guaranteed:







NOTICE


The signatures to the
foregoing Election to Purchase and Certificate 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. 




B-7











EXHIBIT C


Summary of
Rights to Purchase Preferred Shares


        On
June 18, 1998, the Board of Directors of SI Diamond Technology, Inc. (the
“Company”) declared a dividend of one Right for each outstanding
common share, $.001 par value, of the Company (the “Common Shares’),
payable on June 18, 1998, to shareholders of record at the close of business on
that date and entered into a Rights Agreement dated June 18, 1998 (the
“Original Rights Agreement”) between the Company and American
Securities Transfer, Incorporated. On November 16, 2000 the Board of Directors
of the Company authorized the amendment and restatement of the Original Rights
Agreement. The Company entered into an Amended and Restated Rights Agreement
dated effective as of November 16, 2000 (the “Rights Agreement”)
between the Company and Computershare Trust Company, Inc. (formerly American
Securities Transfer, Incorporated), as Rights Agent. Each Right entitles the
registered holder to purchase from the Company a unit (the “Unit”)
consisting of one-one-hundredth of a Series H Junior Participating Preferred
Share, stated value $1.00 per share (the “Preferred Shares”), at a
Purchase Price of $1.00 per Unit, subject to adjustment. The description and
terms of the Rights are set forth in the Rights Agreement. 


        Initially,
the Rights will be attached to all certificates representing outstanding Common
Shares, and no separate Rights Certificates will be distributed. The Rights will
separate from the Common Shares and a “Distribution Date” will occur
upon the earlier of (i) ten days following a public announcement that a person
or group of affiliated or associated persons (an “Acquiring Person”)
has acquired, or obtained the right to acquire, beneficial ownership of 20% or
more of the outstanding Common Shares (the date of the announcement being the
“Shares Acquisition Date”), or (ii) ten business days (or such later
date as may be determined by the Company’s Board of Directors before the
Distribution Date occurs) following the commencement of a tender offer or
exchange offer that would result in a person’s becoming an Acquiring
Person. Until the Distribution Date, (a) the Rights will be evidenced by the
Common Shares certificates (together with a copy of this Summary of Rights or
bearing the notation referred to below) and will be transferred with and only
with such Common Share certificates, (b) new Common Share certificates issued
after June 18, 1998 will contain a notation incorporating the Rights Agreement
by reference and (c) the surrender for transfer of any certificate for Common
Shares outstanding (with or without a copy of this Summary of Rights) will also
constitute the transfer of the Rights associated with the Common Shares
represented by such certificate. The Company, its subsidiaries and their
employee benefit plans will not at any time be deemed Acquiring Persons. 


        The
Rights are not exercisable until the Distribution Date and will expire at the
close of business on June 18, 2008, unless earlier redeemed or exchanged by the
Company as described below. Pursuant to the Rights Agreement, the Company
reserves the right to require prior to the occurrence of a Triggering Event (as
defined below) that, upon any exercise of Rights, a number of Rights be
exercised so that only whole Preferred Shares will be issued. 


        As
soon as practicable after the Distribution Date, Rights Certificates will be
mailed to holders of record of the Common Shares as of the close of business on
the Distribution Date and,




B-8










from and after the Distribution Date, the separate
Rights Certificates alone will represent the Rights. All Common Shares issued
prior to the Distribution Date will be issued with Rights . Common Shares issued
after the Distribution Date in connection with certain employee benefit plans or
upon exercise or conversion of certain securities will be issued with Rights.
Except as otherwise determined by the Board of Directors, no other Common Shares
issued after the Distribution Date will be issued with Rights. 


        In
the event that a Person becomes an Acquiring Person, each holder of a Right will
thereafter have the right to receive, upon exercise of such Right, a number of
Common Shares (or, in certain circumstances, cash, property or other securities
of the Company) having a Current Market Price (as defined in the Rights
Agreement) equal to two times the exercise price of the Right. Notwithstanding
any of the foregoing, following the occurrence of any such event, all Rights
that are, or (under certain circumstances specified in the Rights Agreement)
were, beneficially owned by any Acquiring Person (or by certain related parties)
will be null and void in the circumstances set forth in the Rights Agreement.
However, Rights are not exercisable following the occurrence of any such event
until such time as the Rights are no longer redeemable by the Company as set
forth below. 


        For
example, at the exercise price of $1.00 per Right, each Right not owned by an
Acquiring Person (or by certain related parties) following an event set forth in
the preceding paragraph would entitle its holder to purchase $2.00 worth of the
Common Shares (or other consideration, as noted above), based upon their Current
Market Price, for $1.00. Assuming that the Common Shares had a Current Market
Price of $0.40 per share at such time, the holder of each valid Right would be
entitled to purchase 5 Common Shares for $1.00. 


        In
the event that, at any time on or after the Shares Acquisition Date, (i) the
Company is acquired in a merger or other business combination transaction or
(ii) 50% or more of the Company’s assets or earning power is sold or
transferred, each holder of a Right (except Rights that previously have been
voided as set forth above) shall thereafter have the right to receive, upon
exercise, a number of common shares of the acquiring company having a Current
Market Price equal to two times the exercise price of the Right. The events
described in this and the two preceding paragraphs are collectively referred to
as “Triggering Events.” 


        The
Purchase Price payable, and the number of Units of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) if holders of the Preferred Shares are granted certain rights or
warrants to subscribe for Preferred Shares or convertible securities at less
than the current market price of the Preferred Shares, or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above). 


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





B-9











        The
Preferred Shares purchasable upon exercise of the Rights will not be redeemable.
Each Preferred Share will be entitled to a minimum preferential quarterly
dividend payment of $.01 per share but will be entitled to an aggregate dividend
of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $1.00 per share. 


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


        At
any time until ten days following the Shares Acquisition Date, the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right,
payable, at the option of the Company, in cash, Common Shares or such other
consideration as the Board of Directors may determine. Under certain
circumstances set forth in the Rights Agreement, the decision to redeem the
Rights will require the concurrence of a majority of the Board of Directors.
After the redemption period has expired, the Company’s right of redemption
may be reinstated if an Acquiring Person reduces his beneficial ownership to 20%
or less of the outstanding Common Shares in a transaction or series of
transactions not involving the Company and there are no other Acquiring Persons.
Immediately upon the effectiveness of the action of the Board of Directors
ordering redemption of the Rights, the Rights will terminate and the only right
of the holders of Rights will be to receive the $.01 redemption price. 


        At
any time after a Person becomes an Acquiring Person, the Company may exchange
the Rights (other than Rights owned by an Acquiring Person or an affiliate or an
associate of an Acquiring Person, which will have become void), in whole or in
part, at an exchange ratio of one Common Share, and/or other equity securities
deemed to have the same value as one Common Share, per Right, subject to
adjustment. 


        Until
a Right is exercised, the holder thereof, as such, will have no rights as a
shareholder of the Company, including, without limitation, the right to vote or
to receive dividends. While the distribution of the Rights will not be taxable
to shareholders or to the Company, shareholders may, depending upon the
circumstances, recognize taxable income in the event that the Rights become
exercisable for Common Shares (or other consideration) of the Company or for
common shares of the acquiring company as set forth above or are exchanged as
provided in the preceding paragraph. 


        Other
than those provisions relating to the principal economic terms of the Rights,
any of the provisions of the Rights Agreement may be amended by the Board of
Directors of the Company prior to the Shares Acquisition Date. Thereafter, the
provisions of the Rights Agreement may be amended by the Board of Directors in
order to cure any ambiguity, defect or inconsistency, to make changes that do
not materially adversely effect the interests of holders of Rights (excluding
the interests of any Acquiring Person and certain related parties), or to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to lengthen the time period governing redemption
shall be made at such time as the Rights are not redeemable. 





B-10











        A
copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an exhibit to the Company’s Current Report on Form 8-K dated
December ____, 2000. A copy of the Rights Agreement is available free of charge
from the Company. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is incorporated herein by reference. 






B-11