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                              AMERICA ONLINE, INC.

                                       AND

                                BANKBOSTON, N.A.

                                 AS RIGHTS AGENT

                                RIGHTS AGREEMENT

                            DATED AS OF MAY 12, 1998

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<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

SECTION 1.  CERTAIN DEFINITIONS................................................1

SECTION 2.  APPOINTMENT OF RIGHTS AGENT........................................4

SECTION 3.  ISSUE OF RIGHT CERTIFICATES........................................4

SECTION 4.  FORM OF RIGHT CERTIFICATES.........................................5

SECTION 5.  COUNTERSIGNATURE AND REGISTRATION..................................6

SECTION 6.  TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
            CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT
            CERTIFICATES.......................................................6


SECTION 7.  EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS......7


SECTION 8.  CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.................8

SECTION 9.  AVAILABILITY OF PREFERRED SHARES...................................8

SECTION 10.  PREFERRED SHARES RECORD DATE......................................9

SECTION 11.  ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF
             RIGHTS............................................................9

SECTION 12.  CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.......15

SECTION 13.  CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
             POWER............................................................15

SECTION 14.  FRACTIONAL RIGHTS AND FRACTIONAL SHARES..........................18

SECTION 15.  RIGHTS OF ACTION.................................................19

SECTION 16.  AGREEMENT OF RIGHT HOLDERS.......................................19

SECTION 17.  RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER................19

SECTION 18.  CONCERNING THE RIGHTS AGENT......................................20

SECTION 19.  MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT........20

SECTION 20.  DUTIES OF RIGHTS AGENT...........................................21

SECTION 21.  CHANGE OF RIGHTS AGENT...........................................22

SECTION 22.  ISSUANCE OF NEW RIGHT CERTIFICATES...............................23

SECTION 23.  REDEMPTION.......................................................23

SECTION 24.  EXCHANGE.........................................................24

SECTION 25.  NOTICE OF CERTAIN EVENTS.........................................25

SECTION 26.  NOTICES..........................................................26

<PAGE>

SECTION 27.  SUPPLEMENTS AND AMENDMENTS.......................................26

SECTION 28.  DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.........26

SECTION 29.  SUCCESSORS.......................................................27

SECTION 30.  BENEFITS OF THIS AGREEMENT.......................................27

SECTION 31.  SEVERABILITY.....................................................27

SECTION 32.  GOVERNING LAW....................................................27

SECTION 33.  COUNTERPARTS.....................................................27

SECTION 34.  DESCRIPTIVE HEADINGS.............................................27

Exhibit A -  Certificate of Designation

Exhibit B -  Form of Right Certificate


<PAGE>


                                RIGHTS AGREEMENT

         RIGHTS AGREEMENT (THE  "AGREEMENT"),  dated as of May 12, 1998, between
AMERICA ONLINE,  INC., a Delaware  corporation (the "Company"),  and BANKBOSTON,
N.A.. a national banking association ("Rights Agent").

         The Board of  Directors  of the Company has  authorized  and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter  defined) of the Company outstanding at the close of business on
June 1, 1998 (the "Record Date"),  each Right representing the right to purchase
one one-thousandth of a Preferred Share (as hereinafter defined), upon the terms
and subject to the conditions  herein set forth, and has further  authorized and
directed  the issuance of one Right with respect to each Common Share that shall
become outstanding  between the Record Date and the earliest of the Distribution
Date,  the  Redemption  Date and the Final  Expiration  Date (as such  terms are
hereinafter defined).

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

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

         (a)  "Acquiring  Person"  shall  mean  any  Person  (as  such  term  is
hereinafter  defined) who or which,  together with all Affiliates and Associates
(as such terms are hereinafter  defined) of such Person, shall be the Beneficial
Owner (as such term is hereinafter  defined) of 15% or more of the Common Shares
of the Company then  outstanding.  Notwithstanding  the foregoing,  (A) the term
Acquiring Person shall not include (i) the Company, (ii) any Subsidiary (as such
term is hereinafter defined) of the Company,  (iii) any employee benefit plan of
the Company or any Subsidiary of the Company,  (iv) or any entity holding Common
Shares for or pursuant to the terms of any such employee benefit plan and (B) no
Person  shall  become  an  "Acquiring  Person"  either  (x) as the  result of an
acquisition  of Common  Shares by the Company  which,  by reducing the number of
shares  outstanding,  increases the proportionate  number of shares beneficially
owned by such  Person to 15% or more of the Common  Shares of the  Company  then
outstanding;  provided,  however,  that, if a Person shall become the Beneficial
Owner of 15% or more of the Common  Shares of the Company  then  outstanding  by
reason  of share  acquisitions  by the  Company  and  shall,  after  such  share
acquisitions  by the  Company,  become the  Beneficial  Owner of any  additional
Common  Shares  of the  Company,  then  such  Person  shall be  deemed  to be an
"Acquiring  Person" or (y) if the Board of  Directors  determines  in good faith
that a Person who would otherwise be an "Acquiring  Person," as defined pursuant
to  the   foregoing   provisions  of  this   paragraph   (a),  has  become  such
inadvertently,  and such Person  divests as promptly as practicable a sufficient
number of Common  Shares so that  such  Person  would no longer be an  Acquiring
Person,  as defined pursuant to the foregoing  provisions of this paragraph (a),
then  such  Person  shall  not be deemed  to be an  "Acquiring  Person"  for any
purposes of this Agreement.

<PAGE>

         (b)  "Affiliate"  and  "Associate"  shall have the respective  meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations  under
the  Securities  Exchange Act of 1934, as amended (the  "Exchange  Act"),  as in
effect  on the date of this  Agreement;  provided,  however,  that  the  limited
partners of a limited  partnership  shall not be deemed to be Associates of such
limited partnership solely by virtue of their limited partnership interests.

         (c) A Person  shall be deemed  the  "Beneficial  Owner" of and shall be
deemed to "beneficially own" any securities:

                  (i)      which such Person or any of such Person's  Affiliates
         or Associates  beneficially  owns, directly or indirectly;

                  (ii) which such Person or any of such  Person's  Affiliates or
         Associates  has (A)  the  right  to  acquire  (whether  such  right  is
         exercisable  immediately or only after the passage of time) pursuant to
         any  agreement,  arrangement  or  understanding  (other than  customary
         agreements with and between underwriters and selling group members with
         respect  to a bona fide  public  offering  of  securities)  written  or
         otherwise,  or upon the exercise of conversion rights, exchange rights,
         rights (other than these  Rights),  warrants or options,  or otherwise;
         provided,  however,  that a Person  shall not be deemed the  Beneficial
         Owner of, or to beneficially  own,  securities  tendered  pursuant to a
         Tender  Offer  made  by or on  behalf  of  such  Person  or any of such
         Person's  Affiliates or Associates  until such tendered  securities are
         accepted for purchase or exchange; or (B) the right to vote pursuant to
         any agreement, arrangement or understanding;  provided, however, that a
         Person shall not be deemed the Beneficial  Owner of, or to beneficially
         own, any security if the  agreement,  arrangement or  understanding  to
         vote such security (1) arises solely from a revocable  proxy or consent
         given  to  such  Person  in  response  to a  public  proxy  or  consent
         solicitation  made pursuant to, and in accordance  with, the applicable
         rules and regulations promulgated under the Exchange Act and (2) is not
         also then  reportable  on Schedule  13D under the  Exchange Act (or any
         comparable or successor report); or

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

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

         (d) "Board of Directors or the Board" shall mean the Board of Directors
of the Company.

<PAGE>

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

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

         (g) "Common  Shares" when used with reference to the Company shall mean
the shares of common stock,  par value $.01 per share,  of the Company.  "Common
Shares" when used with reference to any Person other than the Company shall mean
the capital stock (or equity  interest)  with the greatest  voting power of such
other  Person or, if such other Person is a Subsidiary  of another  Person,  the
Person or Persons which ultimately control such first-mentioned Person.

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

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

         (j) "Person" shall mean any individual, firm, corporation, partnership,
limited partnership,  limited liability company, business trust,  unincorporated
association  or other  entity,  and shall  include any  successor  (by merger or
otherwise) of such entity.

         (k)  "Preferred   Shares"  shall  mean  shares  of  Series  A-1  Junior
Participating  Preferred  Stock, par value $.01 per share, of the Company having
the designations and the powers, preferences and rights, and the qualifications,
limitations  and  restrictions  set  forth  in the  Certificate  of  Designation
attached to this Agreement as Exhibit A.

         (l)  "Purchase  Price" shall have the meaning set forth in Section 7(b)
hereof.

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

         (n) "Record Date" shall mean June 1, 1998.

         (o) "Shares  Acquisition Date" shall mean the earlier of the first date
of (i) the public  announcement  by the Company or an  Acquiring  Person that an
Acquiring  Person has become such or (ii) the public  disclosure of facts by the
Company or an Acquiring  Person  indicating that an Acquiring  Person has become
such, provided, however, that if such Person is determined not to have become an
Acquiring  Person  pursuant to (y) of the last  sentence of Section 1(a) hereof,
then no Shares Acquisition Date shall be deemed to have occurred.

         (p)  "Subsidiary"  of any  Person  shall  mean  any  Person  of which a
majority of the voting power of the voting equity  securities or equity interest
is owned, directly or indirectly, by such Person.

<PAGE>

         (q)  "Tender  Offer"  shall  mean a tender or  exchange  offer  made in
accordance with the provisions of the Exchange Act and the rules and regulations
promulgated  thereunder (the "Rules and Regulations"),  including the payment of
applicable fees,  announcement of a tender offer and the dissemination of tender
offer  materials  (as those  terms  are  defined  respectively  in the Rules and
Regulations)  which  the  Board of  Directors  or a  committee  of the  Board of
Directors  authorized by the Board shall have  determined to not be frivolous or
made in good faith; any such determination made promptly and in good faith to be
conclusive for the purposes of this Agreement.

         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 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,  upon ten (10) days' prior written  notice to the Rights  Agent.  The
Rights Agent shall have no duty to supervise, and in no event be liable for, the
acts or omissions of any such co-Rights Agent..

         Section 3.  Issue of Right Certificates.

         (a) Until the  earlier  of the Close of  Business  on (i) the tenth day
following the Shares  Acquisition  Date or (ii) the tenth  business day (or such
later date as may be  determined  by action of the Board of  Directors  prior to
such time as any  Person  becomes  an  Acquiring  Person)  after the date of the
commencement  (determined in accordance  with Rule 14d-2 under the Exchange Act)
by any Person  (other than the  Company,  any  Subsidiary  of the  Company,  any
employee  benefit plan of the Company or of any Subsidiary of the Company or any
entity  holding Common Shares for or pursuant to the terms of any such plan) of,
or of the first public  announcement  of the intention of any Person (other than
the Company,  any  Subsidiary of the Company,  any employee  benefit plan of the
Company or of any  Subsidiary of the Company or any entity holding Common Shares
for or pursuant to the terms of any such plan) to commence, a tender or exchange
offer (which  intention  to commence  remains in effect for five  Business  Days
after such  announcement),  the consummation of which would result in any Person
becoming an Acquiring Person (including any such date which is after the date of
this  Agreement  and prior to the  issuance of the  Rights,  the earlier of such
dates being herein referred to as the "Distribution  Date"), (x) the Rights will
be  evidenced  by  (subject  to the  provisions  of  Section  3(b)  hereof)  the
certificates  for Common Shares  registered in the names of the holders  thereof
(which  certificates  shall also be deemed to be Right  Certificates) and not by
separate Right Certificates (as hereafter defined),  and (y) the Rights (and the
right to receive  Right  Certificates  therefor)  will be  transferable  only in
connection with the transfer of Common Shares.  As soon as practicable after the
Distribution  Date, the Company will prepare and execute,  the Rights Agent will
countersign, and the Company will send or cause to be sent (and the Rights Agent
will, if requested, send) by first-class, insured, postage-prepaid mail, to each
record holder of Common  Shares as of the Close of Business on the  Distribution
Date, at the address of such holder shown on the records of the Company, a Right
Certificate   in   substantially   the  form  of  Exhibit  B  hereto  (a  "Right
Certificate"),  evidencing  one Right for each Common  Share so held.  As of the
Close of Business on the Distribution  Date, the Rights will be evidenced solely
by such Right Certificates.

<PAGE>

         (b) On the  Record  Date,  or as soon as  practicable  thereafter,  the
Company  will send a summary of the Rights and the  Agreement  (the  "Summary of
Rights") by first-class,  postage-prepaid  mail, to each record holder of Common
Shares as of the Close of  Business on the Record  Date,  at the address of such
holder shown on the records of the Company.  With  respect to  certificates  for
Common Shares  outstanding as of the Record Date, until the  Distribution  Date,
the Rights will be evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights attached  thereto.
Until the Distribution  Date (or the earlier of the Redemption Date or the Final
Expiration  Date),  the  surrender  for transfer of any  certificate  for Common
Shares  outstanding on the Record Date, with or without a copy of the Summary of
Rights  attached  thereto,  shall also  constitute  the  transfer  of the Rights
associated with the Common Shares evidenced thereby.

         (c) Certificates for Common Shares which become outstanding (including,
without limitation, reacquired Common Shares referred to in the last sentence of
this  paragraph  (b))  after  June 1,  1998  but  prior to the  earliest  of the
Distribution  Date, the Redemption Date or the Final  Expiration Date shall have
impressed on, printed on, written on or otherwise  affixed to them the following
legend:

        This  certificate  also  evidences  and  entitles  the holder  hereof to
        certain rights (the "Rights") as set forth in a Rights Agreement between
        America Online, Inc. and BankBoston,  N.A., dated as of May 12, 1998, as
        it may,  from time to time,  be 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  executive  offices of America Online,
        Inc. Under certain circumstances,  as set forth in the Rights Agreement,
        such  Rights will be  evidenced  by  separate  certificates  and will no
        longer be evidenced by this certificate.  America Online, Inc. will mail
        to the holder of this certificate a copy of the Rights Agreement without
        charge  after  receipt  of a written  request  therefor.  Under  certain
        circumstances, Rights that are or were acquired or beneficially owned by
        an Acquiring  Person or Associates or Affiliates  thereof (as defined in
        the Rights Agreement) may become null and void.

With respect to such  certificates  containing the foregoing  legend,  until the
Distribution  Date, the Rights associated with the Common Shares  represented by
such  certificates  shall  be  evidenced  by such  certificates  alone,  and the
surrender  for  transfer  of any such  certificate  shall  also  constitute  the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Company  purchases  or acquires  any Common  Shares after the
Record Date but prior to the Distribution  Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Company shall not
be entitled to exercise any Rights  associated  with the Common Shares which are
no longer outstanding.

<PAGE>

         Section 4. Form of Right Certificates.  (a) The Right Certificates (and
the form of election to purchase  Preferred  Shares,  the form of assignment and
the  form of  certification  to be  printed  on the  reverse  thereof)  shall be
substantially  the  same  as  Exhibit  B  hereto  and may  have  such  marks  of
identification  or  designation  and such  legends,  summaries  or  endorsements
printed thereon as the Company may deem  appropriate and as are not inconsistent
with the provisions of this Agreement,  or as may be required to comply with any
applicable law or with any rule or regulation made pursuant  thereto or with any
rule or  regulation  of any stock  exchange on which the Rights may from time to
time be listed, or to conform to usage.  Subject to the provisions of Section 23
and Section 24 hereof,  the Right Certificates shall entitle the holders thereof
to purchase such number of one  one-thousandths of a Preferred Share as shall be
set  forth  therein  at  the  Purchase  Price,   but  the  number  of  such  one
one-thousandths  of a Preferred Share and the Purchase Price shall be subject to
adjustment as provided herein.

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

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

         Section  6.  Transfer,  Split Up,  Combination  and  Exchange  of Right
Certificates;  Mutilated, Destroyed, Lost or Stolen Right Certificates.  Subject
to the provisions of Section 4(b), Section 11(a)(ii),  Section 14 and Section 24
hereof,  at any time after the Close of Business on the  Distribution  Date, and
prior to the Close of  Business  on the  earlier of the  Redemption  Date or the
Final  Expiration  Date,  any Right  Certificate  or Right  Certificates  may be
transferred,  split up,  combined or exchanged for another Right  Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one  one-thousandths  of a  Preferred  Share as the Right  Certificate  or Right
Certificates  surrendered then entitled such holder to purchase.  Any registered
holder desiring to transfer, split up, combine or exchange any Right Certificate
or Right Certificates shall make such request in writing delivered to the Rights
Agent,  and shall  surrender the Right  Certificate or Right  Certificates to be
transferred,  split up,  combined or exchanged at the office 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  Right  Certificate until the registered holder shall have completed
and signed the  certificate  contained in the form of  assignment on the reverse
side of such Right Certificate and shall have provided such additional evidence

<PAGE>

of the  identity  of the  Beneficial  Owner  (or  former  Beneficial  Owner)  or
Affiliates  or  Associates  thereof as the  Company  shall  reasonably  request.
Thereupon the Rights Agent shall,  subject to Section 4(b),  Section  11(a)(ii),
Section 14 and Section 24 hereof, countersign and deliver to the person entitled
thereto a Right  Certificate  or Right  Certificates,  as the case may be, as so
requested.  The Company may require payment of a sum sufficient to cover any tax
or  governmental  charge that may be imposed in  connection  with any  transfer,
split up, combination or exchange of Right Certificates.

         Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory  to them of the loss,  theft,  destruction or mutilation of a Right
Certificate,  and,  in case of  loss,  theft or  destruction,  of  indemnity  or
security  reasonably  satisfactory  to  them,  and,  at the  Company's  request,
reimbursement  to the Company and the Rights  Agent of all  reasonable  expenses
incidental  thereto,  and upon surrender to the Rights Agent and cancellation of
the Right Certificate if mutilated,  the Company will issue, execute and deliver
a new Right  Certificate of like tenor to the Rights Agent for  countersignature
and delivery to the registered  holder in lieu of the Right Certificate so lost,
stolen, destroyed or mutilated.

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

         (a) The  registered  holder of any Right  Certificate  may exercise the
Rights  evidenced  thereby (except as otherwise  provided herein) in whole or in
part at any time  after  the  Distribution  Date  upon  surrender  of the  Right
Certificate,  with the form of election to purchase on the reverse  side thereof
duly executed,  to the Rights Agent at the office of the Rights Agent designated
for such  purpose,  together  with  payment of the  Purchase  Price for each one
one-thousandth  of a  Preferred  Share (or such other  number of shares or other
securities) as to which the Rights are exercised, at or prior to the earliest of
(iii) the Close of Business on May 12, 2008 (the "Final Expiration Date"),  (iv)
the time at which the Rights are  redeemed as provided in Section 23 hereof (the
"Redemption  Date"),  or (v) the time at which  such  Rights  are  exchanged  as
provided in Section 24 hereof.

         (b) The Purchase Price for each one one-thousandth of a Preferred Share
pursuant  to the  exercise  of a Right shall  initially  be $900 (the  "Purchase
Price"),  shall be  subject  to  adjustment  from  time to time as  provided  in
Sections  11 and 13 hereof and shall be  payable  in lawful  money of the United
States of America in accordance with Section 7 (c) hereof.

         (c)  Upon  receipt  of a  Right  Certificate  representing  exercisable
Rights,  with the form of election to purchase  duly  executed,  accompanied  by
payment of the Purchase Price for the shares to be purchased and an amount equal
to any  applicable  transfer tax required to be paid by the holder of such Right
Certificate in accordance  with Section 9 hereof by certified  check,  cashier's
check, bank draft or money order payable to the order of the Company, the Rights
Agent shall thereupon  promptly (i) (A) requisition  from any transfer agent for
the  Preferred  Shares  certificates  for the number of  Preferred  Shares to be
purchased and the Company hereby irrevocably authorizes its transfer agent to

<PAGE>

comply with all such requests,  or (B) if the Company,  in its sole  discretion,
shall have elected to deposit the Preferred Shares issuable upon exercise of the
Rights  hereunder  into a  depository,  requisition  from the  depository  agent
depository  receipts  representing  such  number  of  one  one-thousandths  of a
Preferred  Share as are to be  purchased  (in which  case  certificates  for the
Preferred Shares represented by such receipts shall be deposited by the transfer
agent with the  depository  agent) and the Company hereby directs the depository
agent to comply with such request,  (ii) when appropriate,  requisition from the
Company the amount of cash to be paid in lieu of issuance of  fractional  shares
in accordance with Section 14 hereof,  (iii) after receipt of such  certificates
or depository  receipts,  cause the same to be delivered to or upon the order of
the  registered  holder of such Right  Certificate,  registered  in such name or
names as may be  designated  by such  holder  and (iv) when  appropriate,  after
receipt, deliver such cash to or upon the order of the registered holder of such
Right  Certificate.  In the  event  that  the  Company  is  obligated  to  issue
securities of the Company other than Preferred Shares  (including Common Shares)
of the  Company  pursuant to Section  11(a)  hereof,  the Company  will make all
arrangements   necessary  so  that  such  other  securities  are  available  for
distribution by the Rights Agent, if and when appropriate.

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

         (e) The Company  covenants and agrees that it will cause to be reserved
and kept available out of its authorized  and unissued  Preferred  Shares or any
Preferred Shares held in its treasury,  the number of Preferred Shares that will
be  sufficient  to permit  the  exercise  in full of all  outstanding  Rights in
accordance with this Section 7.

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

<PAGE>

         Section 9.  Availability of Preferred Shares.

         (a) The  Company  covenants  and agrees  that so long as the  Preferred
Shares (and, after the time a person becomes an Acquiring Person,  Common Shares
or any other securities)  issuable upon the exercise of the Rights may be listed
on any national  securities  exchange or quotation system, 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
or quotation system upon official notice of issuance upon such exercise.

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

         (c) The Company further  covenants and agrees that it will pay when due
and payable any and all federal and state  transfer  taxes and charges which may
be payable in respect of the issuance or delivery of the Right  Certificates  or
of any  Preferred  Shares upon the  exercise of Rights.  The Company  shall not,
however,  be required to pay any transfer tax which may be payable in respect of
any transfer or delivery of Right  Certificates  to a person other than,  or the
issuance or delivery of  certificates  or depository  receipts for the Preferred
Shares  in a name  other  than  that of,  the  registered  holder  of the  Right
Certificate evidencing Rights surrendered for exercise or to issue or to deliver
any  certificates or depository  receipts for Preferred Shares upon the exercise
of any  Rights  until  any such tax  shall  have  been  paid (any such tax being
payable by the holder of such Right  Certificate  at the time of  surrender)  or
until it has been established to the Company's  reasonable  satisfaction that no
such tax is due.

         As soon as practicable  after the Shares  Acquisition Date, the Company
shall use its best efforts to:

                  (i)  prepare  and  file a  registration  statement  under  the
         Securities  Act of 1933,  as amended (the  "Act"),  with respect to the
         securities  purchasable  upon exercise of the Rights on an  appropriate
         form, will use its best efforts to cause such registration statement to
         become effective as soon as practicable  after such filing and will use
         its best  efforts  to  cause  such  registration  statement  to  remain
         effective  (with a prospectus at all times meeting the  requirements of
         the Act) until the Final Expiration Date; and

                  (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.

         Section 10. Preferred Shares Record Date. Each person in whose name any
certificate for Preferred Shares or other securities is issued upon the exercise
of Rights  shall for all  purposes be deemed to have become the holder of record
of the Preferred  Shares or other  securities  represented  thereby on, and such
certificate shall be dated, the date upon which the Right Certificate evidencing
such Rights was duly  surrendered  with the forms of election and  certification
duly executed and payment of the Purchase Price (and any applicable transfer

<PAGE>

taxes)  was made;  provided,  however,  that if the date of such  surrender  and
payment is a date upon which the Preferred Shares or other  securities  transfer
books of the Company are closed,  such person shall be deemed to have become the
record holder of such shares on, and such  certificate  shall be dated, the next
succeeding  Business  Day on which  the  Preferred  Shares  or other  securities
transfer  books of the  Company  are open.  Prior to the  exercise of the Rights
evidenced  thereby,  the holder of a Right  Certificate,  as such,  shall not be
entitled  to any  rights of a holder of  Preferred  Shares  for which the Rights
shall be  exercisable,  including,  without  limitation,  the right to vote,  to
receive dividends or other  distributions or to exercise any preemptive  rights,
and shall not be  entitled  to  receive  any  notice of any  proceedings  of the
Company, except as provided herein.

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

         (a) (i) In the event the  Company  shall at any time  after the date of
this  Agreement  (A)  declare a  dividend  on the  Preferred  Shares  payable in
Preferred Shares,  (B) subdivide the outstanding  Preferred Shares,  (C) combine
the outstanding  Preferred  Shares into a smaller number of Preferred  Shares or
(D) issue any shares of its capital stock in a reclassification of the Preferred
Shares (including any such  reclassification  in connection with a consolidation
or merger in which the  Company is the  continuing  or  surviving  corporation),
except as otherwise provided in this Section 11(a), the Purchase Price in effect
at the time of the record  date for such  dividend or of the  effective  date of
such subdivision,  combination or  reclassification,  and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Right  exercised  after such time shall be entitled to
receive the aggregate  number and kind of shares of capital stock which, if such
Right had been exercised  immediately  prior to such date and at a time when the
Preferred Shares transfer books of the Company were open, such holder would have
owned  upon  such  exercise  and been  entitled  to  receive  by  virtue of such
dividend, subdivision, combination or reclassification;  provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the  aggregate par value of the shares of capital stock of the Company
issuable upon  exercise of one Right.  If an event occurs which would require an
adjustment  under both  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 hereof,  in the event any Person
shall become an Acquiring Person, each holder of a Right shall thereafter have a
right to receive,  upon  exercise  thereof at a price equal to the then  current
Purchase Price  multiplied by the number of one  one-thousandths  of a Preferred
Share for which a Right is then  exercisable,  in  accordance  with the terms of
this Agreement and in lieu of Preferred Shares,  such number of Common Shares of
the  Company as shall  equal the result  obtained  by (A)  multiplying  the then
current Purchase Price by the number of one one-thousandths of a Preferred Share
for which a Right is then  exercisable  and dividing  that product by (B) 50% of
the then  current  per  share  market  price of the  Common  Shares  (determined
pursuant to Section  11(d)  hereof) on the date such Person  became an Acquiring
Person.  In the event that any Person shall  become an Acquiring  Person and the
Rights shall then be  outstanding,  the Company  shall not take any action which
would eliminate or diminish the benefits intended to be afforded by the Rights.

<PAGE>

         Notwithstanding  anything in this  Agreement to the contrary,  from and
after the time any Person becomes an Acquiring Person,  any Rights  beneficially
owned  by (i)  such  Acquiring  Person  or an  Associate  or  Affiliate  of such
Acquiring  Person,  (ii) a transferee of such  Acquiring  Person (or of any such
Associate or  Affiliate)  who becomes a transferee  after the  Acquiring  Person
became such,  or (iii) a  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 the Acquiring Person to
holders of equity  interests in such Acquiring Person or to any Person with whom
the Acquiring Person has any continuing agreement,  arrangement or understanding
regarding the transferred  Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan,  arrangement  or  understanding
which  has as a  primary  purpose  or  effect  the  avoidance  of  this  Section
11(a)(ii),  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  insure  that the  provisions  of this  Section
11(a)(ii) and Section 4(b) hereof are complied with, but shall have no liability
to any holder of Right  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.  No Right Certificate shall be
issued at any time upon the  transfer  of any Rights to an  Acquiring  Person or
transferee whose Rights would be void pursuant to the preceding  sentence or any
Associate  or  Affiliate  thereof or to any  nominee of such  Acquiring  Person,
Associate or Affiliate;  and any Right Certificate delivered to the Rights Agent
for transfer to an Acquiring  Person whose Rights would be void  pursuant to the
preceding sentence shall be canceled.

                  (iii) In the event that the number of Common  Shares which are
authorized by the Company's  Certificate of Incorporation and not outstanding or
subscribed  for, or reserved or  otherwise  committed  for issuance for purposes
other than upon exercise of the Rights,  are not sufficient to permit the holder
of each  Right to  purchase  the  number of  Common  Shares to which he would be
entitled  upon  the  exercise  in full of the  Rights  in  accordance  with  the
foregoing  subparagraph  (ii) of paragraph (a) of this Section 11, or should the
Board of Directors so elect,  the Company shall: (A) determine the excess of (1)
the value of the Common Shares issuable upon exercise of a Right  (calculated as
provided in the last sentence of this  subparagraph  (iii))  pursuant to Section
11(a)(ii) hereof (the "Current Value") over (2) the Purchase Price (such excess,
the "Spread"),  and (B) with respect to each Right,  make adequate  provision to
substitute  for such Common  Shares,  upon  payment of the  applicable  Purchase
Price,  any one or more of the following having an aggregate value determined by
the  Board of  Directors  to be equal to the  Current  Value:  (1)  cash,  (2) a
reduction in the Purchase Price, (3) Common Shares or other equity securities of
the Company  (including,  without  limitation,  shares,  or units of shares,  of
preferred  stock which the Board of Directors of the Company has  determined  to
have the same value as shares of Common Stock (such  shares of preferred  stock,
"common stock  equivalents")),  (4) debt securities of the Company, or (5) other
assets; provided, however, if the Company shall not have made adequate provision
to deliver value  pursuant to clause (B) above within thirty (30) days following
the first occurrence of an event triggering the rights to purchase Common Shares
described in Section 11(a)(ii) (the "Section 11(a)(ii) Trigger Date"),  then the
Company shall be obligated to deliver, upon the surrender for exercise of a

<PAGE>

Right and without  requiring  payment of the  Purchase  Price,  shares of Common
Stock (to the extent  available) and then, if necessary,  cash, which shares and
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 thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the Section 11(a)(ii)
Trigger  Date, in order that the Company may seek  stockholder  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(f)
hereof and the last  paragraph  of Section  11(a)(ii)  hereof,  that such action
shall  apply  uniformly  to all  outstanding  Rights,  and (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  make a public  announcement,  and shall  deliver  to the  Rights  Agent a
statement,  stating that the  exercisability  of the Rights has been temporarily
suspended.  At such time as the  suspension is no longer in effect,  the Company
shall make  another  public  announcement,  and  deliver  to the Rights  Agent a
statement, so stating. For purposes of this Section 11(a)(iii), the value of the
Common  Shares  shall be the  current  per share  market  price  (as  determined
pursuant  to  Section  11(d)(i)  hereof)  of the  Common  Shares on the  Section
11(a)(ii)  Trigger  Date and the value of any common stock  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
(for a period  expiring  within 45  calendar  days  after such  record  date) to
subscribe  for  or  purchase   Preferred  Shares  (or  shares  having  the  same
designations  and the powers,  preferences and rights,  and the  qualifications,
limitations and  restrictions  as the Preferred  Shares  ("equivalent  preferred
shares"))  or  securities   convertible  into  Preferred  Shares  or  equivalent
preferred  shares at a price per Preferred  Share or equivalent  preferred share
(or  having a  conversion  price  per  share,  if a  security  convertible  into
Preferred  Shares or  equivalent  preferred  shares)  less than the then current
per-share  market  price of the  Preferred  Shares (as defined in Section  11(d)
hereof) on such  record  date,  the  Purchase  Price to be in effect  after such
record date shall be  determined  by  multiplying  the Purchase  Price in effect
immediately  prior to such  record date by a fraction,  the  numerator  of which
shall be the number of Preferred Shares outstanding on such record date plus the
number of  Preferred  Shares  which the  aggregate  offering  price of the total
number of Preferred Shares and/or  equivalent  preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible  securities so
to be offered) would  purchase at such current market price and the  denominator
of which shall be the number of Preferred Shares outstanding on such record date
plus the number of  additional  Preferred  Shares  and/or  equivalent  preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible);  provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the  aggregate par value of the shares of capital stock of the Company
issuable upon exercise of one Right. In case such subscription price may be paid
in a consideration  part or all of which shall be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company,  whose determination shall be described in a statement
filed with the Rights Agent. Preferred Shares owned by or held for the account

<PAGE>

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

         (c) In case the  Company  shall fix a record  date for the  making of a
distribution  to all  holders  of  the  Preferred  Shares  (including  any  such
distribution  made in  connection  with a  consolidation  or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
Preferred Shares) or subscription  rights or warrants  (excluding those referred
to in Section  11(b)  hereof),  the  Purchase  Price to be in effect  after such
record date shall be  determined  by  multiplying  the Purchase  Price in effect
immediately  prior to such  record date by a fraction,  the  numerator  of which
shall be the then  current per share market  price of the  Preferred  Shares (as
defined in Section 11(d) hereof) on such record date, less the fair market value
(as  determined  in good faith by the Board of Directors  of the Company,  whose
determination  shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of  indebtedness  so to be distributed or
of such  subscription  rights or warrants  applicable to one Preferred Share and
the  denominator  of which shall be such  current per share  market price of the
Preferred Shares; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the  aggregate  par value of
the shares of capital  stock of the  Company to be issued  upon  exercise of one
Right. Such adjustments  shall be made successively  whenever such a record date
is fixed;  and in the event that such  distribution is not so made, the Purchase
Price shall again be  adjusted to be the  Purchase  Price which would then be in
effect if such record date had not been fixed.

         (d) (i) For the purpose of any computation hereunder,  the "current per
share  market  price" of any  security  (a  "Security")  for the purpose of this
Section  11(d)(i))  on any date  shall be deemed to be the  average of the daily
closing  prices per share of such Security for the 30  consecutive  Trading Days
(as such term is hereinafter  defined) immediately prior to such date; provided,
however,  that in the  event  that the  current  per-share  market  price of the
Security is determined  during a period following the announcement by the issuer
of such Security of (A) a dividend or distribution  on such Security  payable in
shares of such Security or securities  convertible into such shares,  or (B) any
subdivision,  combination  or  reclassification  of such  Security or securities
convertible  into  such  shares,   or  (C)  any   subdivision,   combination  or
reclassification of such Security and prior to the expiration of 30 Trading Days
after the ex-dividend date for such dividend or distribution, or the record date
for such subdivision,  combination or  reclassification,  then, and in each such
case,  the current  per-share  market price shall be  appropriately  adjusted to
reflect the current  market price per share  equivalent  of such  Security.  The
closing  price for each day shall be the last sale price,  regular  way,  or, in
case no such sale takes  place on such day,  the  average of the closing bid and
asked  prices,  regular  way,  in  either  case  as  reported  in the  principal
consolidated  transaction  reporting system with respect to securities listed or
admitted to trading on the New York Stock  Exchange  or, if the  Security is not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal  consolidated  transaction reporting system with respect to securities
listed on the principal  national  securities  exchange on which the Security is
listed or admitted to trading or as reported on the Nasdaq  National  Market or,
if the Security is not listed or admitted to trading on any national  securities
exchange or reported on the Nasdaq National Market, the last quoted price or, if

<PAGE>

not so  quoted,  the  average  of the  high  bid and  low  asked  prices  in the
over-the-counter  market, as reported by the National  Association of Securities
Dealers,  Inc. Automated  Quotations System ("Nasdaq") or such other system then
in use,  or,  if on any  such  date  the  Security  is not  quoted  by any  such
organization,  the average of the closing bid and asked prices as furnished by a
professional  market maker making a market in the Security selected by the Board
of Directors of the Company.  The term  "Trading  Day" shall mean a day on which
the principal  national  securities  exchange on which the Security is listed or
admitted to trading is open for the  transaction of business or, if the Security
is not listed or  admitted to trading on any  national  securities  exchange,  a
Business Day.

                  (ii)  For  the  purpose  of  any  computation  hereunder,  the
"current  per-share market price" of the Preferred Shares shall be determined in
accordance  with  the  method  set  forth in  Section  11(d)(i)  hereof.  If the
Preferred Shares are not publicly  traded,  the "current per share market price"
of the Preferred Shares shall be conclusively deemed to be the current per-share
market price of the Common  Shares as  determined  pursuant to Section  11(d)(i)
hereof  (appropriately  adjusted to reflect any stock split,  stock  dividend or
similar transaction occurring after the date hereof) multiplied by one thousand.
If neither the Common  Shares nor the  Preferred  Shares are publicly held or so
listed or traded, "current per share market price" shall mean the fair value per
share as  determined  in good faith by the Board of  Directors or a committee of
the Board of Directors  authorized by the Board,  whose  determination  shall be
described in a statement filed with the Rights Agent.

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

         (f) If as a result of an  adjustment  made  pursuant  to Section  11(a)
hereof,  the holder of any Right  thereafter  exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred  Shares,
thereafter  the number of such other shares so  receivable  upon exercise of any
Right shall be subject to adjustment  from time to time in a manner and on terms
as nearly  equivalent  as  practicable  to the  provisions  with  respect to the
Preferred Shares contained in Section 11(a) through (c) hereof,  inclusive,  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 one-thousandths of a
Preferred  Share  purchasable  from time to time  hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.

<PAGE>

         (h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof,  upon each adjustment of the Purchase Price as a result of
the calculations  made in Section 11(b) and (c) hereof,  each Right  outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right  to  purchase,  at  the  adjusted  Purchase  Price,  that  number  of  one
one-thousandths   of  a  Preferred   Share   (calculated   to  the  nearest  one
ten-millionth  of a Preferred  Share) obtained by (i) multiplying (x) the number
of one one-thousandths 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  substitution  for any
adjustment in the number of one one-thousandths of a Preferred Share purchasable
upon  the  exercise  of a  Right.  Each of the  Rights  outstanding  after  such
adjustment  of the number of Rights shall be  exercisable  for the number of one
one-thousandths  of  a  Preferred  Share  for  which  a  Right  was  exercisable
immediately  prior to such  adjustment.  Each Right held of record prior to such
adjustment  of  the  number  of  Rights  shall  become  that  number  of  Rights
(calculated to the nearest one ten-thousandth) obtained by dividing the Purchase
Price in effect  immediately  prior to adjustment  of the Purchase  Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Company shall make a public announcement of its election to adjust the number of
Rights,  indicating  the record  date for the  adjustment,  and, if known at the
time, the amount of the adjustment to be made.  This record date may be the date
on which the Purchase Price is adjusted or any day thereafter, but, if the Right
Certificates have been issued,  shall be at least 10 days later than the date of
the public  announcement.  If Right  Certificates  have been  issued,  upon each
adjustment of the number of Rights  pursuant to this Section 11(i),  the Company
shall, as promptly as practicable,  cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14  hereof,  the  additional  Rights to which such  holders  shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause  to  be  distributed  to  such  holders  of  record  in  substitution  and
replacement for the Right Certificates held by such holders prior to the date of
adjustment,  and upon surrender thereof,  if required by the Company,  new Right
Certificates  evidencing  all the Rights to which such holders shall be entitled
after such adjustment.  Right Certificates so to be distributed shall be issued,
executed  and  countersigned  in the  manner  provided  for  herein and shall be
registered  in the names of the holders of record of Right  Certificates  on the
record date specified in the public announcement.

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

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

<PAGE>

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

         (m) The Company covenants and agrees that, after the Distribution Date,
it will not, except as permitted by Section 23, Section 24 or Section 27 hereof,
take (or permit any  Subsidiary  to take) any action the purpose of which is to,
or if at the time such  action is taken it is  reasonably  foreseeable  that the
effect of such action is to,  materially  diminish  or  eliminate  the  benefits
intended to be afforded by the Rights.

         (n) Anything in this Section 11 to the  contrary  notwithstanding,  the
Company  shall be entitled to make such  reductions  in the Purchase  Price,  in
addition to those adjustments  expressly  required by this Section 11, as and to
the extent that it in its sole  discretion  shall  determine  to be advisable in
order that any  consolidation or subdivision of the Preferred  Shares,  issuance
wholly for cash of any Preferred  Shares at less than the current  market price,
issuance wholly for cash of Preferred  Shares or securities which by their terms
are  convertible  into  or  exchangeable  for  Preferred  Shares,  dividends  on
Preferred Shares payable in Preferred  Shares or issuance of rights,  options or
warrants referred to hereinabove in Section 11(b) hereof,  hereafter made by the
Company  to  holders  of its  Preferred  Shares  shall  not be  taxable  to such
stockholders.

         (o) In the event that at any time after the date of this  Agreement and
prior to the  Distribution  Date,  the  Company  shall  (i)  declare  or pay any
dividend  on the  Common  Shares  payable  in  Common  Shares  or (ii)  effect a
subdivision,   combination   or   consolidation   of  the   Common   Shares  (by
reclassification  or otherwise  than by payment of  dividends in Common  Shares)
into a greater or lesser number of Common Shares,  then in any such case (A) the
number of one  one-thousandths of a Preferred Share purchasable after such event
upon proper exercise of each Right shall be determined by multiplying the number
of one one-thousandths of a Preferred Share so purchasable  immediately prior to
such event by a fraction,  the numerator of which is the number of Common Shares
outstanding  immediately  before such event and the  denominator of which is the
number of Common Shares  outstanding  immediately after such event, and (B) each
Common  Share  outstanding  immediately  after such event shall have issued with
respect  to it that  number  of  Rights  which  each  Common  Share  outstanding
immediately  prior to such event had issued with respect to it. The  adjustments
provided for in this Section  11(o) shall be made  successively  whenever such a
dividend is declared or paid or such a subdivision, combination or consolidation
is effected.

         (p) The exercise of Rights under  Section  11(a)(ii)  hereof shall only
result in the loss of rights  under  Section  11(a)(ii)  hereof to the extent so
exercised and shall not otherwise  affect the rights  represented  by the Rights
under this Rights  Agreement,  including  the rights  represented  by Section 13
hereof.

<PAGE>

         Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an  adjustment  is made as  provided in Sections 11 and 13 hereof,  the
Company shall promptly (a) prepare a certificate  setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the  Rights  Agent and with each  transfer  agent for the  Common  Shares or the
Preferred Shares a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25 hereof.  The
Rights Agent shall be fully protected in relying on any such  certificate and on
any  adjustment  therein  contained and shall not be deemed to have knowledge of
any adjustment unless and until it shall have received such certificate.

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

         (a) In the event that,  following the Shares Acquisition Date, directly
or indirectly  (x) the Company shall  consolidate  with, or merge with and into,
any other Person,  (y) any Person shall  consolidate with the Company,  or merge
with and into the Company,  and the Company shall be the continuing or surviving
corporation  of such  merger  (other  than,  in the case of  either  transaction
described in (x) or (y), a merger or consolidation  which would result in all of
the voting  power  represented  by the  securities  of the  Company  outstanding
immediately   prior  thereto   continuing  to  represent  (either  by  remaining
outstanding or by being converted into  securities of the surviving  entity) all
of the  voting  power  represented  by the  securities  of the  Company  or such
surviving entity outstanding  immediately after such merger or consolidation and
the holders of such  securities not having changed as a result of such merger or
consolidation),  or (z) the Company shall sell,  mortgage or otherwise  transfer
(or one or more of its Subsidiaries shall sell, mortgage or otherwise transfer),
in one or more  transactions,  assets or earning power aggregating more than 50%
of the assets or earning power of the Company and its  Subsidiaries  (taken as a
whole) to any other  Person,  (other than the Company or any  Subsidiary  of the
Company in one or more transactions each of which individually and the aggregate
does not violate  Section  13(d)  hereof)  then,  and in each such case,  proper
provision shall be made so that (i) following the Distribution Date, each holder
of a Right,  subject  to  Section  11(a)(ii)  hereof,  shall  have the  right to
receive, upon the exercise thereof at a price equal to the then current Purchase
Price multiplied by the number of one  one-thousandths  of a Preferred Share for
which a Right is then exercisable in accordance with the terms of this Agreement
and in lieu of  Preferred  Shares,  such  number of  shares of freely  tradeable
Common Shares of the Principal Party (as hereinafter defined), free and clear of
liens, rights of call or first refusal, encumbrances or other adverse claims, as
shall  be equal to the  result  obtained  by (A)  multiplying  the then  current
Purchase  Price by the number of one  one-thousandths  of a Preferred  Share for
which a Right is then  exercisable  (without  taking into account any adjustment
previously made pursuant to Section  11(a)(ii) hereof) and dividing that product
by (B) 50% of the then current  per-share  market price of the Common  Shares of
such Principal Party  (determined  pursuant to Section 11(d) hereof) on the date
of  consummation  of such  consolidation,  merger,  sale or transfer;  (ii) such
Principal Party shall  thereafter be liable for, and shall assume,  by virtue of
such consolidation,  merger, sale or transfer, all the obligations and duties of
the  Company  pursuant  to  this  Agreement;  (iii)  the  term  "Company"  shall
thereafter be deemed to refer to such  Principal  Party,  it being  specifically
intended that the  provisions of Section 11 hereof shall apply to such Principal
Party; and (iv) such Principal Party shall take such steps  (including,  but not
limited to, the reservation of a sufficient number of its Common Shares in

<PAGE>

accordance with Section 9 hereof) in connection with such consummation as may be
necessary to assure that the provisions  hereof shall  thereafter be applicable,
as nearly as  reasonably  may be, in  relation to its Common  Shares  thereafter
deliverable upon the exercise of the Rights.

         (b)      "Principal Party" shall mean:

                  (i) in the case of any transaction  described in (x) or (y) of
         the first  sentence  of Section  13(a)  hereof,  the Person that is the
         issuer of any  securities  into which Common  Shares of the Company are
         converted in such merger or consolidation,  and if no securities are so
         issued,   the  Person  that  is  the  other  party  to  the  merger  or
         consolidation  (including,  if  applicable,  the Company,  if it is the
         surviving corporation); and

                  (ii) in the case of any  transaction  described  in (z) of the
         first  sentence in Section 13(a)  hereof,  the Person that is the party
         receiving  the  greatest   portion  of  the  assets  or  earning  power
         transferred pursuant to such transaction or transactions;

provided, however, that in any case, (1) if the Common Shares of such Person are
not at such  time and have not been  continuously  over the  preceding  12-month
period  registered  under  Section 12 of the Exchange  Act, and such Person is a
direct or indirect  Subsidiary or Affiliate of another  Person the Common Shares
of which are and have been so registered,  "Principal Party" shall refer to such
other Person;  (2) in case such Person is a Subsidiary,  directly or indirectly,
or Affiliate of more than one Person,  the Common Shares of two or more 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) in case such Person is owned, directly or indirectly, by a
joint  venture  formed by two or more  Persons  that are not owned,  directly or
indirectly,  by the same Person,  the rules set forth 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 such  consolidation,  merger,
sale or transfer  unless the Principal  Party shall have a sufficient  number of
authorized shares of its Common Shares 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  Principal  Party and
each  other  Person  who may  become  a  Principal  Party  as a  result  of such
consolidation, merger, sale or transfer 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 any  consolidation,  merger,  sale or transfer of
assets mentioned in paragraph (a) of this Section 13, the Principal Party at its
own expense will:

                  (i) prepare and file a  registration  statement  under the Act
         with respect to the securities  purchasable upon exercise of the Rights
         on an appropriate form, will use its best efforts to cause such

<PAGE>

         registration statement to become effective as soon as practicable after
         such  filing and will use its best  efforts to cause such  registration
         statement to remain  effective  (with a prospectus at all times meeting
         the requirements of the Act) until the Final Expiration Date;

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

                  (iii)  deliver to holders of the Rights  historical  financial
         statements  for the Principal  Party and each of its  Affiliates  which
         comply in all material  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.

         (d) After the Distribution  Date, the Company covenants and agrees that
it shall not (i)  consolidate  with,  (ii) merge with or into,  or (iii) sell or
transfer to, in one or more  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,  any other Person (other than a Subsidiary of the Company in a
transaction which does not violate Section 11(m) hereof),  if (x) at the time of
or after  such  consolidation,  merger or sale  there are any  charter  or bylaw
provisions  or  any  rights,   warrants  or  other   instruments  or  securities
outstanding, agreements in effect or any other action taken which would diminish
or otherwise eliminate the benefits intended to be afforded by the Rights or (y)
prior to, simultaneously with or immediately after such consolidation, merger or
sale, the stockholders of the Person who constitutes,  or would constitute,  the
APrincipal  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
and  Associates.  The Corporation  shall not consummate any such  consolidation,
merger,  sale or transfer unless prior thereto the Company and such other Person
shall have executed and delivered to the Rights Agent a  supplemental  agreement
evidencing compliance with this Section 13(d).

         Section 14.  Fractional Rights and Fractional Shares.

         (a) The Company  shall not be required to issue  fractions of Rights or
to distribute Right  Certificates  which evidence  fractional Rights. In lieu of
such  fractional  Rights,  there shall be paid to the registered  holders of the
Right  Certificates  with regard to which such fractional Rights would otherwise
be issuable,  an amount in cash equal to the same fraction of the current market
value of a whole  Right.  For the purposes of this  Section  14(a),  the current
market  value of a whole Right shall be the closing  price of the Rights for the
Trading Day immediately  prior to the date on which such fractional Rights would
have been  otherwise  issuable.  The closing price for any day shall be the last
sale price,  regular  way, or, in case no such sale takes place on such day, the
average of the  closing  bid and asked  prices,  regular  way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities  listed or admitted to trading on the New York Stock  Exchange or,
if the  Rights  are not  listed or  admitted  to  trading  on the New York Stock
Exchange, as reported in the principal consolidated transaction reporting system

<PAGE>

with respect to securities listed on the principal national  securities exchange
on which the Rights  are listed or  admitted  to trading or as  reported  on the
Nasdaq  National  Market or, if the Rights are not listed or admitted to trading
on any national  securities  exchange or reported on the Nasdaq National Market,
the last quoted price or, if not so quoted,  the average of the high bid and low
asked prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization,  the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Company or a committee of the Board of Directors  authorized by
the Board.  If on any such date no such  market  maker is making a market in the
Rights, the fair value of the Rights on such date as determined in good faith by
the Board of Directors of the Company shall be used.

         (b) The Company  shall not be required to issue  fractions of Preferred
Shares (other than fractions which are integral  multiples of one one-thousandth
of a Preferred Share) upon exercise of the Rights or to distribute  certificates
which  evidence  fractional  Preferred  Shares (other than  fractions  which are
integral  multiples of one  one-thousandth of a Preferred  Share).  Fractions of
Preferred  Shares in integral  multiples  of one  one-thousandth  of a Preferred
Share may, at the election of the Company, be evidenced by depository  receipts;
provided,  however,  that holders of such depository  receipts shall have all of
the designations and the powers, preferences and rights, and the qualifications,
limitations and restrictions to which they are entitled as beneficial  owners of
the  Preferred  Shares  represented  by  such  depository  receipts.  In lieu of
fractional   Preferred   Shares  that  are  not   integral   multiples   of  one
one-thousandth  of a Preferred  Share,  the Company shall pay to the  registered
holders of Right  Certificates  at the time such Rights are  exercised as herein
provided  an amount in cash equal to the same  fraction  of the  current  market
value of one  Preferred  Share.  For the  purposes of this  Section  14(b),  the
current market value of a Preferred  Share shall be the current per share market
price of the Preferred Shares (as determined  pursuant to the second sentence of
Section  11(d)(i)  hereof) for the Trading Day immediately  prior to the date of
such exercise (or, if not publicly traded,  in accordance with Section 11(d)(ii)
hereof).

         (c)  Following  the  occurrence  of one of the  transactions  or events
specified  in Section  11 giving  rise to the right to  receive  Common  Shares,
common stock equivalents  (other than Preferred Shares) or other securities upon
the exercise of a Right, the Company shall not be required to issue fractions of
Common Shares or units of such Common Shares, capital stock equivalents or other
securities  upon  exercise  of the Rights or to  distribute  certificates  which
evidence   fractional   Common  Shares,   capital  stock  equivalents  or  other
securities.  In lieu of fractional  Common Shares,  capital stock equivalents or
other  securities,  the  Company  shall pay to the  registered  holders of Right
Certificates  at the time such Rights are exercised as herein provided an amount
in cash equal to the same  fraction  of the current  market  value of one Common
Share  or unit  of such  Common  Shares,  capital  stock  equivalents  or  other
securities.  For purposes of this Section 14(c),  the current market value shall
be the  current  per share  market  price (as  determined  pursuant  to  Section
11(d)(i)  hereof)  for the  Trading  Day  immediately  prior to the date of such
exercise and, if such capital stock equivalent is not traded,  each such capital
stock  equivalent  shall  have the value of one  one-thousandth  of a  Preferred
Share.

         (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 provided above).

<PAGE>

         Section 15.  Rights of Action.  All rights of action in respect of this
Agreement,  excepting  the  rights of action  given to the  Rights  Agent  under
Sections 18 and 20 hereof,  are vested in the respective  registered  holders of
the Right  Certificates  (and,  prior to the  Distribution  Date, the registered
holders of the Common Shares) and any registered holder of any Right Certificate
(or, prior to the Distribution Date, of the Common Shares),  without the consent
of the Rights Agent or of the holder of any other Right  Certificate  (or, prior
to the Distribution Date, of the Common Shares),  may, in his own behalf and for
his own benefit,  enforce,  and may institute  and maintain any suit,  action or
proceeding  against the Company to enforce,  or otherwise act in respect of, his
right to exercise the Rights  evidenced by such Right  Certificate in the manner
provided in such Right  Certificate and in this Agreement.  Without limiting the
foregoing or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and will be entitled to specific performance of
the  obligations  under,  and  injunctive  relief  against  actual or threatened
violations of the obligations of any Person subject to, this Agreement.

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

                  (a)  prior  to the  Distribution  Date,  the  Rights  will  be
transferable only in connection with the transfer of the Common Shares;

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

                  (c) the  Company  and the Rights  Agent may deem and treat the
person in whose name the Right Certificate (or, prior to the Distribution  Date,
the associated  Common Shares  certificate)  is registered as the absolute owner
thereof and of the Rights evidenced  thereby  (notwithstanding  any notations of
ownership or writing on the Right  Certificates  or the  associated  certificate
representing  Common Shares of the Company made by anyone other than the Company
or the Rights  Agent) for all purposes  whatsoever,  and neither the Company nor
the Rights Agent shall be affected by any notice to the contrary.

         Section  17.  Right  Certificate  Holder Not Deemed a  Stockholder.  No
holder,  as such, of any Right  Certificate  shall be entitled to vote,  receive
dividends or be deemed for any purpose the holder of the Preferred Shares or any
other  securities  of the  Company  which  may at any  time be  issuable  on the
exercise of the Rights represented  thereby, nor shall anything contained herein
or in any Right  Certificate be construed to confer upon the holder of any Right
Certificate,  as such,  any of the rights of a stockholder of the Company or any
right to vote for the  election of  directors  or upon any matter  submitted  to
stockholders  at any  meeting  thereof,  or to give or  withhold  consent to any
corporate  action,  or to receive notice of meetings or other actions  affecting
stockholders  (except as provided in Section 25 hereof), or to receive dividends
or subscription  rights,  or otherwise,  until the Right or Rights  evidenced by
such  Right  Certificate  shall  have  been  exercised  in  accordance  with the
provisions hereof.

<PAGE>

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

         The Rights Agent shall be protected  and shall incur no liability  for,
or in respect of any action taken, suffered or omitted by it in connection with,
its  administration  of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Shares or for other securities of
the  Company,   instrument  of  assignment  or  transfer,   power  of  attorney,
endorsement,   affidavit,  letter,  notice,  direction,   consent,  certificate,
statement,  or other  paper or  document  believed by it to be genuine and to be
signed, executed and, where necessary,  verified or acknowledged,  by the proper
person or  persons,  or  otherwise  upon the  advice of  counsel as set forth in
Section 20 hereof.

         Section 19. Merger or  Consolidation or Change of Name of Rights Agent.
Any  corporation  or other entity 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 shareholder  services or corporate trust business of the Rights Agent or any
successor  Rights  Agent,  shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties hereto,  provided,  however that such  corporation or
other entity would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof.  In case at the time such successor  Rights
Agent shall  succeed to the agency  created by this  Agreement  any of the Right
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the  countersignature of the predecessor Rights Agent and
deliver such Right  Certificates so countersigned;  and in case at that time any
of the  Right  Certificates  shall not have been  countersigned,  any  successor
Rights Agent may countersign such Right  Certificates  either in the name of the
predecessor  Rights Agent or in the name of the successor  Rights Agent;  and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.

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

<PAGE>

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

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

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

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

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

         (e) The Rights Agent shall not be under any  responsibility  in respect
of the validity of this  Agreement or the execution and delivery  hereof (except
the due  execution  hereof by the Rights Agent) or in respect of the validity or
execution of any Right Certificate (except its  countersignature  thereof);  nor
shall it be  responsible  for any  breach  by the  Company  of any  covenant  or
condition contained in this Agreement or in any Right Certificate;  nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to Section  11(a)(ii) hereof) or any adjustment in
the terms of the  Rights  (including  the  manner,  method  or  amount  thereof)
provided for in Section 3, 11, 13, 23 or 24 hereof,  or the  ascertaining of the
existence of facts that would require any such change or adjustment (except with
respect to the exercise of Rights evidenced by Right  Certificates after receipt
of a  certificate  pursuant  to  Section  12 hereof  describing  such  change or
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  to  be  issued  pursuant  to  this  Agreement  or  any  Right
Certificate or as to whether any Preferred Shares will, when issued,  be validly
authorized and issued, fully paid and nonassessable.

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

<PAGE>

         (g) The  Rights  Agent is  hereby  authorized  and  directed  to accept
instructions  with respect to the  performance of its duties  hereunder from any
one of the  Chairman of the Board,  the Vice  Chairman  of the Board,  the Chief
Executive  Officer,  the  President,  the  Chief  Financial  Officer,  any  Vice
President,  the Secretary or the Treasurer of the Company,  and to apply to such
officers for advice or instructions in connection with its duties,  and it shall
not be liable for any action taken or suffered by it in good faith in accordance
with  instructions  of any such officer or for any delay in acting while waiting
for  those  instructions.  Any  application  by the  Rights  Agent  for  written
instructions  from the Company may, at the option of the Rights Agent, set forth
in writing any action  proposed to be taken or omitted by the Rights  Agent with
respect to its duties or obligations under this Rights Agreement and the date on
and/or  after which such action  shall be taken or omitted and the Rights  Agent
shall not be  liable  for any  action  taken or  omitted  in  accordance  with a
proposal included in any such application on or after the date specified therein
(which date shall not be less than three  business days after the date indicated
in such  application  unless any such officer shall have consented in writing to
an earlier date) unless, prior to taking or omitting any such action, the Rights
Agent  has  received  written  instructions  in  response  to  such  application
specifying the action to be taken or omitted.

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

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

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

         (k) If, with respect to any Right 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 not been
executed,  the Rights  Agent shall not take any further  action with  respect to
such requested exercise of 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

<PAGE>

for the Common Shares or Preferred  Shares by registered or certified  mail, and
to the holders of the Right  Certificates  by first-class  mail. The Company may
remove the Rights  Agent or any  successor  Rights Agent upon 30 days' notice in
writing,  mailed to the Rights Agent or successor  Rights Agent, as the case may
be, and to each  transfer  agent for the Common  Shares or  Preferred  Shares by
registered or certified  mail, and to the holders of the Right  Certificates  by
first-class  mail.  If the  Rights  Agent  shall  resign or be  removed or shall
otherwise become  incapable of acting,  the Company shall appoint a successor to
the Rights Agent.  If the Company shall fail to make such  appointment  within a
period  of 30 days  after  giving  notice of such  removal  or after it has been
notified  in writing of such  resignation  or  incapacity  by the  resigning  or
incapacitated  Rights Agent or by the holder of a Right  Certificate (who shall,
with such notice,  submit his Right  Certificate for inspection by the Company),
then the registered  holder of any Right  Certificate  may apply to any court of
competent  jurisdiction for the appointment of a new Rights Agent. Any successor
Rights Agent,  whether  appointed by the Company or by such a court,  shall be a
corporation  organized and doing business under the laws of the United States or
of any other state of the United States which is  authorized  under such laws to
exercise  corporate trust or stock transfer powers and is subject to supervision
or  examination  by federal or state  authority and which has at the time of its
appointment  as Rights  Agent a  combined  capital  and  surplus  of at least $1
billion. 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 for the Common Shares
or  Preferred  Shares,  and mail a notice  thereof in writing to the  registered
holders of the Right  Certificates.  Failure to give any notice  provided for in
this Section 21, however,  or any defect therein,  shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the appointment
of the successor Rights Agent, as the case may be.

         Section 22. Issuance of New Right Certificates.  Notwithstanding any of
the provisions of this  Agreement or of the Rights to the contrary,  the Company
may, at its option, issue new Right Certificates  evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the  Purchase  Price  and the  number  or kind or  class of  shares  or other
securities  or  property  purchasable  under  the  Right  Certificates  made  in
accordance  with the provisions of this  Agreement.  In addition,  in connection
with the issuance or sale of Common Shares following the  Distribution  Date and
prior to the earlier of the Redemption Date and the Final  Expiration  Date, the
Company (a) shall with  respect to Common  Shares so issued or sold  pursuant to
the exercise of stock options or under any employee plan or arrangement, or upon
the exercise,  conversion or exchange of securities,  notes or debentures issued
by the Company  (other  than the  Rights),  and (b) may,  in any other case,  if
deemed necessary or appropriate by the Board of Directors of the Company,  issue
Right  Certificates  representing the appropriate number of Rights in connection
with such issuance or sale; provided, however, that (i) the Company shall not be
obligated to issue any such Right  Certificates  if, and to the extent that, the
Company  shall  be  advised  by  counsel  that  such  issuance  would  create  a
significant  risk of  material  adverse tax  consequences  to the Company or the
Person  to whom  such  Right  Certificate  would  be  issued,  and (ii) no Right
Certificate shall be issued if, and to the extent that,  appropriate  adjustment
shall otherwise have been made in lieu of the issuance thereof.

<PAGE>

         Section 23.  Redemption.

         (a) The  Rights  may be  redeemed  by action of the Board of  Directors
pursuant to  subsection  (b) of this Section 23 and shall not be redeemed in any
other manner.

         (b) The Board of Directors  of the Company  may, at its option,  at any
time prior to the earlier of (i) the time that any Person  becomes an  Acquiring
Person;  or (ii) the Final Expiration Date,  redeem all but not less than all of
the  then  outstanding  Rights  at  a  redemption  price  of  $.001  per  Right,
appropriately  adjusted to reflect any stock  split,  stock  dividend or similar
transaction  occurring  after  the date  hereof  (such  redemption  price  being
hereinafter referred to as the "Redemption Price"). The redemption of the Rights
by the Board of Directors may be made  effective at such time, on such basis and
subject to such  conditions as the Board of Directors in its sole discretion may
establish.

         (c) In case of a  redemption  permitted  under  Section  23(b)  hereof,
immediately  upon the action of the Board of Directors  of the Company  ordering
the redemption of the Rights  pursuant to subsection (b) of this Section 23, and
without any further  action and  without any notice,  the right to exercise  the
Rights will  terminate  and the only right  thereafter  of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public
notice of any such redemption;  provided,  however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after such action of the Board of Directors or such later date as
is  determined by the Board of Directors  ordering the  redemption of the Rights
pursuant to subsection  (b) the Company shall mail a notice of redemption to all
the  holders  of the then  outstanding  Rights at their last  addresses  as they
appear upon the registry books of the Rights Agent or, prior to the Distribution
Date, on the registry  books of the transfer  agent for the Common  Shares.  Any
notice  which is mailed in the manner  herein  provided  shall be deemed  given,
whether or not the holder  receives the notice.  Each such notice of  redemption
will state the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem,  acquire
or  purchase  for value any  Rights at any time in any  manner  other  than that
specifically  set forth in this  Section 23 or in  Section 24 hereof,  and other
than in connection with the purchase of Common Shares prior to the  Distribution
Date.

         (d) The Company  may,  at its  option,  at any time that the Rights may
otherwise be redeemed  pursuant to  subsection  (b) hereof  discharge all of its
obligations with respect to the Rights by (i) issuing a press release announcing
the  manner  of  redemption  of the  Rights  and  (ii)  mailing  payment  of the
Redemption Price to the registered holders of the Rights at their last addresses
as they  appear on the  registry  books of the  Rights  Agent  or,  prior to the
Distribution  Date, on the registry  books of the transfer  agent for the Common
Shares,  and upon such action,  all outstanding Right Certificates shall be null
and void without any further action by the Company.

         Section 24.  Exchange.

         (a) The Board of Directors  of the Company  may, at its option,  at any
time after any Person becomes an Acquiring  Person,  exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that

<PAGE>

have become void  pursuant to the  provisions of Section  11(a)(ii)  hereof) for
Common Shares at an exchange ratio of one Common Share per Right,  appropriately
adjusted  to reflect any stock  split,  stock  dividend  or similar  transaction
occurring after the date hereof (such exchange ratio being hereinafter  referred
to as the  "Exchange  Ratio").  Notwithstanding  the  foregoing,  the  Board  of
Directors  shall not be empowered to effect such  exchange at any time after any
Person  (other than the Company,  any  Subsidiary  of the Company,  any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares  for or  pursuant  to the  terms of any  such  plan),  together  with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.

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

         (c) In any exchange  pursuant to this  Section 24, the Company,  at its
option,  may substitute  Preferred Shares or common stock equivalents for Common
Shares  exchangeable for Rights, at the initial rate of one  one-thousandth of a
Preferred Share (or an appropriate  number of common stock equivalents) for each
Common Share,  as  appropriately  adjusted to reflect  adjustments in the voting
rights  of the  Preferred  Shares  pursuant  to the terms  thereof,  so that the
fraction of a Preferred  Share delivered in lieu of each Common Share shall have
the same voting rights as one Common Share.

         (d) In the event  that there  shall not be  sufficient  Common  Shares,
Preferred  Shares  or  common  stock  equivalents  authorized  by the  Company's
certificate of incorporation  and not outstanding or subscribed for, or reserved
or otherwise  committed  for issuance for purposes  other than upon  exercise of
Rights, to permit any exchange of Rights as contemplated in accordance with this
Section  24, the  Company  shall  take all such  action as may be  necessary  to
authorize additional Common Shares, Preferred Shares or common stock equivalents
for issuance upon exchange of the Rights.

         (e) The  Company  shall not be required  to issue  fractions  of Common
Shares or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the registered

<PAGE>

holders of the Right  Certificates  with regard to which such fractional  Common
Shares would  otherwise be issuable an amount in cash equal to the same fraction
of the current per share market value of a whole Common Share.  For the purposes
of this  paragraph  (e),  the current per share  market  value of a whole Common
Share shall be the closing  price of a Common Share (as  determined  pursuant to
the second sentence of Section  11(d)(i) hereof) for the Trading Day immediately
prior to the date of exchange pursuant to this Section 24.

         Section 25.  Notice of Certain Events.

         (a) In case the Company shall  propose (i) to pay any dividend  payable
in stock of any  class to the  holders  of its  Preferred  Shares or to make any
other  distribution to the holders of its Preferred Shares (other than a regular
quarterly cash dividend),  (ii) to offer to the holders of its Preferred  Shares
rights or warrants to  subscribe  for or to purchase  any  additional  Preferred
Shares  or  shares  of stock of any  class or any  other  securities,  rights or
options,  (iii) to effect any  reclassification  of its Preferred  Shares (other
than a reclassification  involving only the subdivision of outstanding Preferred
Shares),  (iv) to effect any  consolidation or merger into or with, or to effect
any sale or other  transfer  (or to permit  one or more of its  Subsidiaries  to
effect any sale or other transfer), in one or more transactions,  of 50% or more
of the assets or earning power of the Company and its  Subsidiaries,  taken as a
whole,  to any other  Person,  (v) to effect  the  liquidation,  dissolution  or
winding up of the Company,  or (vi) to declare or pay any dividend on the Common
Shares  payable  in Common  Shares or to effect a  subdivision,  combination  or
consolidation  of the Common Shares (by  reclassification  or otherwise  than by
payment of dividends in Common  Shares),  then,  in each such case,  the Company
shall give to each holder of a Right Certificate,  in accordance with Section 26
hereof,  a notice of such proposed  action,  which shall specify the record date
for the purpose of such stock  dividend,  or distribution of rights or warrants,
or the  date  on  which  such  reclassification,  consolidation,  merger,  sale,
transfer, liquidation,  dissolution, or winding up is to take place and the date
of  participation  therein  by the  holders  of the  Common  Shares  and/or  the
Preferred  Shares,  if any such date is to be fixed, and such notice shall be so
given in the case of any action  covered by clause (i) or (ii) above at least 10
days prior to the record date for  determining  holders of the Preferred  Shares
for purposes of such action,  and in the case of any such other action, at least
10 days prior to the date of the taking of such  proposed  action or the date of
participation  therein by the holders of the Common  Shares and/or the Preferred
Shares, whichever shall be the earlier.

         (b) In case the event  set  forth in  Section  11(a)(ii)  hereof  shall
occur,  then the Company shall as soon as  practicable  thereafter  give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the  occurrence  of such event,  which notice  shall  describe the event and the
consequences of the event to holders of Rights under Section 11(a)(ii) hereof.

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

                           AMERICA ONLINE, INC.
                           22000 AOL Way
                           Dulles, Virginia 20166
                           Attention: General Counsel

<PAGE>

Subject to the provisions of Section 21 hereof,  any notice or demand authorized
by this  Agreement  to be given or made by the  Company  or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently  given or made
if sent by first-class mail,  postage prepaid,  addressed (until another address
is filed in writing with the Company) as follows:

                           BANKBOSTON, N.A.
                           c/o Boston EquiServe Limited Partnership
                           150 Royall Street
                           Canton, Massachusetts  02021
                           Attention:  Client 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 Right  Certificate  shall be
sufficiently  given  or  made  if sent by  first-class  mail,  postage  prepaid,
addressed  to such holder at the address of such holder as shown on the registry
books of the Company.

 . The Company may from time to time, and the Rights Agent shall,  if the Company
so directs,  supplement  or amend this  Agreement  without  the  approval of any
holders  of Right  Certificates  in order to cure any  ambiguity,  to correct or
supplement any provision contained herein which may be defective or inconsistent
with any  other  provisions  herein,  or to make any  change  to or  delete  any
provision  hereof or to adopt any other  provisions  with  respect to the Rights
which the Company may deem necessary or desirable;  provided, however, that from
and after such time that any Person becomes an Acquiring Person,  this Agreement
shall not be amended or supplemented in any manner which would adversely  affect
the interests of the holders of Rights  (other than an Acquiring  Person and its
Affiliates  and  Associates).  Any  supplement  or amendment  authorized by this
Section 27 will be evidenced  by a writing  signed by the Company and the Rights
Agent.

         Section 28.  Determination and Actions by the Board of Directors,  etc.
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,  or the  Company,  or as may be necessary or
advisable in the administration of this Agreement, including without limitation,
the right and power to (i) interpret the provisions of this Agreement,  and (ii)
make all determinations  and calculations  deemed necessary or advisable for the
administration  of this Agreement  (including a  determination  to redeem or not
redeem the Rights or to amend the  Agreement).  All such actions,  calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith,  shall (x) be final,  conclusive  and binding on the Rights Agent
and the holders of the Right Certificates,  and (y) not subject the Board to any
liability to the holders of the Right Certificates.

<PAGE>

     Section 29. Successors.  All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Rights Agent shall bind and inure to
the benefit of their respective successors and assigns hereunder.

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

         Section  31.  Severability.   If  any  term,  provision,   covenant  or
restriction  of this Agreement is held by a court of competent  jurisdiction  or
other  authority  to be invalid,  void or  unenforceable,  the  remainder of the
terms, provisions,  covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

         Section 32.  Governing Law. This  Agreement and each Right  Certificate
issued  hereunder  shall be deemed to be a  contract  made  under the law of the
State of Delaware  and for all  purposes  shall be governed by and  construed in
accordance  with the law of such State  applicable  to  contracts to be made and
performed  entirely  within such State  without  regard to its  conflict of laws
principles.

     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 and their seals  attested,  all as of the day and year first above
written.

ATTEST:                                  AMERICA ONLINE, INC.

By: /S/SHEILA A. CLARK                   By:  /S/LENNERT J. LEADER

                                                 Lennert J. Leader

                                         Title:  Vice President, Deputy General
                                                 Counsel and Assistant Secretary

ATTEST:                                  BANKBOSTON, N.A.

By: /S/LISA QUINN                        By: /S/KATHERINE ANDERSON

                                                Katherine Anderson

                                         Title: Account Manager

<PAGE>

                                                                       EXHIBIT A

               CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS

                                       of

                 SERIES A-1 JUNIOR PARTICIPATING PREFERRED STOCK

                                       of

                              AMERICA ONLINE, INC.

         America  Online,  Inc., a corporation  organized and existing under the
General  Corporation  Law of the  State  of  Delaware  (hereinafter  called  the
"Corporation"),

         DOES HEREBY CERTIFY:

         That,  pursuant to authority  conferred  upon the Board of Directors of
this  Corporation  (the "Board of  Directors")  by the Restated  Certificate  of
Incorporation of this Corporation, and pursuant to the provisions of Section 151
of Title 8 of the Delaware  Code,  the Board of  Directors,  at a meeting of its
members  held  on  May  12 ,  1998,  adopted  a  resolution  providing  for  the
designations, preferences and relative, participating, optional or other rights,
and the  qualifications,  limitations or restrictions  thereof,  of five hundred
thousand  (500,000) shares of the  Corporation's  Preferred Stock, par value one
cent ($.01) per share, which resolution is as follows:

RESOLVED:         That  pursuant to the  authority  granted to and vested in the
                  Board of Directors of this  Corporation in accordance with the
                  provisions of the Restated  Certificate of Incorporation,  the
                  Board of  Directors  hereby  designates  a series of Preferred
                  Stock,  par  value  $.01  per  share,  and  hereby  fixes  the
                  designation  and number of shares,  and the  relative  rights,
                  preferences,  and  limitations  thereof  (in  addition  to any
                  provisions   set  forth  in  the   Restated   Certificate   of
                  Incorporation  which are applicable to preferred  stock of all
                  classes and series) as follows:

Series A-1 Junior Participating Preferred Stock. The preferences, privileges and
restrictions  granted  to or  imposed  on the  Corporation's  Series  A-1 Junior
Participating Preferred Stock, par value $.01 per share, or the holders thereof,
are as follows:

         Section 1.  Designation and Amount.  The shares of such series shall be
designated as "Series A-1 Junior Participating Preferred Stock" (the "Series A-1
Preferred Stock") and the number of shares constituting the Series A-1 Preferred
Stock shall be five hundred thousand (500,000). Such number of shares may be

<PAGE>

increased or decreased by resolution of the Board of Directors;  provided,  that
no decrease shall reduce the number of shares of Series A-1 Preferred Stock to a
number less than the number of shares then outstanding plus the number of shares
reserved  for  issuance  upon the  exercise of  outstanding  options,  rights or
warrants or upon the  conversion  of any  outstanding  securities  issued by the
Corporation convertible into Series A-1 Preferred Stock.

         Section 2.        Dividends and Distributions.

                  (A)  Subject to the rights of the holders of any shares of any
         series of  Preferred  Stock (or any similar  stock)  ranking  prior and
         superior to the Series A-1  Preferred  Stock with respect to dividends,
         the holders of shares of Series A-1 Preferred  Stock,  in preference to
         the holders of Common Stock,  $.01 par value (the "Common  Stock"),  of
         the  Corporation,  and of any other junior stock,  shall be entitled to
         receive,  when,  as and if  declared by the Board of  Directors  out of
         funds legally available for the purpose, quarterly dividends payable in
         cash on the first day of March,  June,  September  and December in each
         year (each such date being referred to herein as a "Quarterly  Dividend
         Payment Date"), commencing on the first Quarterly Dividend Payment Date
         after the first  issuance  of a share or  fraction of a share of Series
         A-1  Preferred  Stock,  in an amount per share  (rounded to the nearest
         cent) equal to the  greater of (a) $1 or (b)  subject to the  provision
         for  adjustment  hereinafter  set forth,  1000 times the  aggregate per
         share amount of all cash  dividends,  and 1000 times the  aggregate per
         share  amount  (payable  in kind) of all  non-cash  dividends  or other
         distributions,  other than a dividend payable in shares of Common Stock
         or a  subdivision  of  the  outstanding  shares  of  Common  Stock  (by
         reclassification or otherwise),  declared on the Common Stock since the
         immediately  preceding Quarterly Dividend Payment Date or, with respect
         to the first Quarterly  Dividend Payment Date, since the first issuance
         of any share or fraction of a share of Series A-1 Preferred  Stock.  In
         the event the Corporation shall at any time declare or pay any dividend
         on the  Common  Stock  payable in shares of Common  Stock,  or effect a
         subdivision or combination or consolidation  of the outstanding  shares
         of Common Stock (by  reclassification or otherwise than by payment of a
         dividend in shares of Common  Stock) into a greater or lesser number of
         shares of  Common  Stock,  then in each  such case the  amount to which
         holders  of  shares  of  Series  A-1  Preferred   Stock  were  entitled
         immediately  prior to such  event  under  clause  (b) of the  preceding
         sentence  shall be adjusted by  multiplying  such amount by a fraction,
         the  numerator  of  which is the  number  of  shares  of  Common  Stock
         outstanding  immediately  after such event and the denominator of which
         is  the  number  of  shares  of  Common  Stock  that  were  outstanding
         immediately prior to such event.

<PAGE>

                  (B) The  Corporation  shall declare a dividend or distribution
         on the Series A-1 Preferred  Stock as provided in paragraph (A) of this
         Section immediately after it declares a dividend or distribution on the
         Common Stock (other than a dividend payable in shares of Common Stock);
         provided that, in the event no dividend or distribution shall have been
         declared on the Common  Stock during the period  between any  Quarterly
         Dividend  Payment  Date  and the  next  subsequent  Quarterly  Dividend
         Payment  Date,  a dividend of $1 per share on the Series A-1  Preferred
         Stock  shall  nevertheless  be  payable  on such  subsequent  Quarterly
         Dividend Payment Date.

                  (C)  Dividends  shall  begin to accrue  and be  cumulative  on
         outstanding  shares of Series A-1  Preferred  Stock from the  Quarterly
         Dividend  Payment Date next preceding the date of issue of such shares,
         unless the date of issue of such shares is prior to the record date for
         the first Quarterly  Dividend  Payment Date, in which case dividends on
         such  shares  shall  begin  to  accrue  from  the date of issue of such
         shares,  or unless the date of issue is a  Quarterly  Dividend  Payment
         Date or is a date  after  the  record  date  for the  determination  of
         holders of shares of Series A-1 Preferred  Stock  entitled to receive a
         quarterly  dividend and before such Quarterly Dividend Payment Date, in
         either of which  events  such  dividends  shall  begin to accrue and be
         cumulative  from such  Quarterly  Dividend  Payment  Date.  Accrued but
         unpaid dividends shall not bear interest.  Dividends paid on the shares
         of Series A-1  Preferred  Stock in an amount less than the total amount
         of such  dividends at the time accrued and payable on such shares shall
         be allocated pro rata on a  share-by-share  basis among all such shares
         at the time  outstanding.  The Board of Directors may fix a record date
         for the  determination  of holders  of shares of Series  A-1  Preferred
         Stock  entitled  to  receive  payment  of a  dividend  or  distribution
         declared  thereon,  which  record  date  shall be not more than 60 days
         prior to the date fixed for the payment thereof.

         Section 3. Voting Rights. The holders of shares of Series A-1 Preferred
Stock shall have the following voting rights:

                  (A) Subject to the provision for  adjustment  hereinafter  set
         forth,  each share of Series A-1  Preferred  Stock  shall  entitle  the
         holder thereof to 1000 votes on all matters  submitted to a vote of the
         stockholders of the Corporation.  In the event the Corporation shall at
         any time  declare or pay any  dividend on the Common  Stock  payable in
         shares of Common  Stock,  or effect a  subdivision  or  combination  or
         consolidation   of  the   outstanding   shares  of  Common   Stock  (by
         reclassification  or otherwise  than by payment of a dividend in shares
         of Common  Stock)  into a greater or lesser  number of shares of Common
         Stock,  then in each such  case the  number of votes per share to which
         holders  of  shares  of  Series  A-1  Preferred   Stock  were  entitled
         immediately  prior to such event shall be adjusted by multiplying  such
         number by a fraction, the numerator of which is the number of shares of
         Common  Stock   outstanding   immediately  after  such  event  and  the
         denominator  of which is the number of shares of Common Stock that were
         outstanding immediately prior to such event.

<PAGE>

                  (B)  Except  as  otherwise   provided  herein,  in  any  other
         Certificate of Designation  creating a series of Preferred Stock or any
         similar stock, or by law, the holders of shares of Series A-1 Preferred
         Stock and the holders of shares of Common  Stock and any other  capital
         stock of the  Corporation  having  general  voting  rights  shall  vote
         together  as  one  class  on  all  matters   submitted  to  a  vote  of
         stockholders of the Corporation.

                  (C) Except as set forth  herein,  or as otherwise  provided by
         law, holders of Series A-1 Preferred Stock shall have no special voting
         rights and their  consent  shall not be required  (except to the extent
         they are  entitled  to vote with  holders of Common  Stock as set forth
         herein) for taking any corporate action.

         Section 4.  Certain Restrictions.

                  (A)  Whenever  quarterly   dividends  or  other  dividends  or
         distributions  payable on the Series A-1 Preferred Stock as provided in
         Section 2 are in arrears,  thereafter  and until all accrued and unpaid
         dividends  and  distributions,  whether or not  declared,  on shares of
         Series A-1 Preferred  Stock  outstanding  shall have been paid in full,
         the Corporation shall not:

                           (i)  declare  or pay  dividends,  or make  any  other
                  distributions,  on any shares of stock ranking  junior (either
                  as to dividends or upon  liquidation,  dissolution  or winding
                  up) to the Series A-1 Preferred Stock;

                           (ii)  declare  or pay  dividends,  or make any  other
                  distributions,  on any  shares  of stock  ranking  on a parity
                  (either as to dividends or upon  liquidation,  dissolution  or
                  winding  up) with  the  Series  A-1  Preferred  Stock,  except
                  dividends  paid ratably on the Series A-1 Preferred  Stock and
                  all such  parity  stock on which  dividends  are payable or in
                  arrears  in  proportion  to the  total  amounts  to which  the
                  holders of all such shares are then entitled;

                           (iii)  redeem or  purchase or  otherwise  acquire for
                  consideration shares of any stock ranking junior (either as to
                  dividends or upon  liquidation,  dissolution or winding up) to
                  the Series A-1 Preferred Stock,  provided that the Corporation
                  may at any time redeem,  purchase or otherwise  acquire shares
                  of any such junior  stock in exchange  for shares of any stock
                  of the  Corporation  ranking junior (either as to dividends or
                  upon dissolution, liquidation or winding up) to the Series A-1
                  Preferred Stock; or

<PAGE>

                           (iv)  redeem or  purchase  or  otherwise  acquire for
                  consideration any shares of Series A-1 Preferred Stock, or any
                  shares  of stock  ranking  on a parity  with  the  Series  A-1
                  Preferred  Stock,  except in accordance  with a purchase offer
                  made in writing or by publication  (as determined by the Board
                  of Directors) to all holders of such shares upon such terms as
                  the Board of Directors,  after consideration of the respective
                  annual   dividend   rates  and  other   relative   rights  and
                  preferences  of  the  respective  series  and  classes,  shall
                  determine  in good  faith  will  result in fair and  equitable
                  treatment among the respective series or classes.

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

         Section 5. Reacquired  Shares. Any shares of Series A-1 Preferred Stock
purchased  or otherwise  acquired by the  Corporation  in any manner  whatsoever
shall be retired and canceled promptly after the acquisition  thereof.  All such
shares shall upon their  cancellation  become  authorized but unissued shares of
Preferred  Stock and may be reissued as part of a new series of Preferred  Stock
subject to the conditions and restrictions on issuance set forth herein,  in the
Restated   Certificate  of  Incorporation,   or  in  any  other  Certificate  of
Designation  creating a series of  Preferred  Stock or any  similar  stock or as
otherwise required by law.

         Section  6.   Liquidation,   Dissolution   or  Winding   Up.  Upon  any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the  holders  of shares of stock  ranking  junior  (either  as to
dividends  or upon  liquidation,  dissolution  or winding  up) to the Series A-1
Preferred  Stock  unless,  prior  thereto,  the  holders of shares of Series A-1
Preferred  Stock shall have  received  $1000 per share,  plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such  payment,  provided that the holders of shares of Series A-1
Preferred  Stock  shall be entitled  to receive an  aggregate  amount per share,
subject to the provision for  adjustment  hereinafter  set forth,  equal to 1000
times the aggregate  amount to be distributed  per share to holders of shares of
Common  Stock,  or (2) to the  holders  of shares of stock  ranking  on a parity
(either as to dividends or upon liquidation, dissolution or winding up) with the
Series A-1 Preferred Stock, except  distributions made ratably on the Series A-1
Preferred  Stock and all such parity stock in proportion to the total amounts to
which the  holders  of all such  shares  are  entitled  upon  such  liquidation,
dissolution  or  winding  up.  In the event  the  Corporation  shall at any time
declare  or pay any  dividend  on the Common  Stock  payable in shares of Common
Stock,  or  effect  a  subdivision  or  combination  or   consolidation  of  the
outstanding  shares of Common Stock (by  reclassification  or otherwise  than by
payment of a dividend in shares of Common Stock) into a greater or lesser number

<PAGE>

of shares of Common Stock,  then in each such case the aggregate amount to which
holders of shares of Series A-1 Preferred Stock were entitled  immediately prior
to such event under the proviso in clause (1) of the preceding sentence shall be
adjusted by multiplying  such amount by a fraction the numerator of which is the
number of shares of Common Stock  outstanding  immediately  after such event and
the  denominator  of which is the  number of shares  of Common  Stock  that were
outstanding immediately prior to such event.

         Section 7.  Consolidation,  Merger,  etc. In case the Corporation shall
enter into any consolidation,  merger, combination or other transaction in which
the shares of Common  Stock are  exchanged  for or changed  into other  stock or
securities,  cash and/or any other property, then in any such case each share of
Series A-1  Preferred  Stock shall at the same time be  similarly  exchanged  or
changed  into an amount  per  share,  subject to the  provision  for  adjustment
hereinafter  set  forth,  equal to 1000  times  the  aggregate  amount of stock,
securities,  cash and/or any other property  (payable in kind),  as the case may
be, into which or for which each share of Common Stock is changed or  exchanged.
In the event the  Corporation  at any time  declares or pays any dividend on the
Common Stock  payable in shares of Common  Stock,  or effects a  subdivision  or
combination  or  consolidation  of the  outstanding  shares of Common  Stock (by
reclassification  or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common  Stock,  then in each
such case the amount set forth in the  preceding  sentence  with  respect to the
exchange or change of shares of Series A-1 Preferred  Stock shall be adjusted by
multiplying  such amount by a fraction,  the numerator of which is the number of
shares  of  Common  Stock  outstanding  immediately  after  such  event  and the
denominator  of  which is the  number  of  shares  of  Common  Stock  that  were
outstanding immediately prior to such event.

     Section 8. No  Redemption.  The shares of Series A-1 Preferred  Stock shall
not be redeemable.

     Section 9. Rank.  The Series A-1  Preferred  Stock  shall rank  junior with
respect to the payment of dividends and the  distribution of assets to all other
series of the Corporation's Preferred Stock.

         Section 10. Amendment. The Restated Certificate of Incorporation of the
Corporation  shall not be amended in any manner which would  materially alter or
change the powers,  preferences  or special  rights of the Series A-1  Preferred
Stock so as to affect them adversely without the affirmative vote of the holders
of at least two-thirds of the outstanding  shares of Series A-1 Preferred Stock,
voting together as a single class.

<PAGE>

     IN WITNESS WHEREOF,  America Online, Inc. has caused this certificate to be
executed by its President this day of May, 1998.

                                                   -----------------------------
                                                   President

<PAGE>

                                                                       EXHIBIT B

                            FORM OF RIGHT CERTIFICATE

CERTIFICATE NO. R-                                                  _____ RIGHTS

     NOT EXERCISABLE AFTER MAY 12, 2008 OR EARLIER IF REDEMPTION OR EXCHANGE
     OCCURS. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT AND TO
            EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.

                                RIGHT CERTIFICATE

                              AMERICA ONLINE, INC.

         This certifies that  ___________________  or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement,  dated as of May 12, 1998 (the "Rights  Agreement"),  between America
Online, Inc., a Delaware corporation (the "Company"), and BankBoston,  N.A. (the
"Rights Agent"), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights  Agreement)  and prior to 5:00 P.M.,
Eastern  Standard  Time,  on May 12,  2008 at the  office  of the  Rights  Agent
designated for such purpose,  or at the office of its successor as Rights Agent,
one  one-thousandth  of a fully paid  non-assessable  share of Series A-1 Junior
Participating  Preferred  Stock,  par  value  $.01  per  share  (the  "Preferred
Shares"),  of the Company, at a purchase price of $900 per one one-thousandth of
a Preferred Share (the "Purchase  Price"),  upon  presentation  and surrender of
this Right Certificate with the Form of Election to Purchase duly executed.  The
number of Rights  evidenced  by this  Right  Certificate  (and the number of one
one-thousandths  of a  Preferred  Share  which may be  purchased  upon  exercise
hereof) set forth above,  and the Purchase Price set forth above, are the number
and  Purchase  Price  as of May  12,  1998  based  on the  Preferred  Shares  as
constituted at such date.

         From and after the time any Person  becomes an  Acquiring  Person,  (as
such terms are defined in the Rights Agreement), if the Rights evidenced by this
Right  Certificate  are  beneficially  owned by (i) an  Acquiring  Person  or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined

<PAGE>

in the  Rights  Agreement),  (ii) a  transferee  of any such  Acquiring  Person,
Associate  or  Affiliate  who becomes a transferee  after the  Acquiring  Person
becomes  such,  or (iii) under  certain  circumstances  specified  in the Rights
Agreement, a transferee of any such Acquiring Person, Associate or Affiliate who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
such, such Rights shall become null and void and no holder hereof shall have any
right with respect to such Rights from and after the time any Person  becomes an
Acquiring Person.

         As provided in the Rights Agreement,  the Purchase Price and the number
of one  one-thousandths  of a Preferred  Share which may be  purchased  upon the
exercise  of the Rights  evidenced  by this  Right  Certificate  are  subject to
modification and adjustment upon the happening of certain events.

         This Right  Certificate is subject to all of the terms,  provisions and
conditions of the Rights  Agreement,  as amended from time to time, which terms,
provisions and conditions are hereby incorporated herein by reference and made a
part hereof and to which  Rights  Agreement  reference is hereby made for a full
description  of the  rights,  limitations  of  rights,  obligations,  duties and
immunities  hereunder  of the Rights  Agent,  the Company and the holders of the
Right Certificates.  Copies of the Rights Agreement are on file at the principal
executive offices of the Company and the  above-mentioned  offices of the Rights
Agent.

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

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this  Certificate (i) may be redeemed by the Company at a redemption price of
$.001 per Right or (ii) may be  exchanged  in whole or in part for shares of the
Company's Common Stock, par value $.01 per share, or other  consideration as set
forth in the Rights Agreement.

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

         No  holder  of this  Right  Certificate  shall be  entitled  to vote or
receive  dividends  or be deemed for any  purpose  the  holder of the  Preferred
Shares or of any other securities of the Company which may at any time be

<PAGE>

issuable on the  exercise  hereof,  nor shall  anything  contained in the Rights
Agreement or herein be construed to confer upon the holder hereof,  as such, any
of the  rights  of a  stockholder  of the  Company  or any right to vote for the
election  of  directors  or upon any matter  submitted  to  stockholders  at any
meeting thereof,  or to give or withhold consent to any corporate  action, or to
receive notice of meetings or other actions  affecting  stockholders  (except as
provided  in the Rights  Agreement),  or to receive  dividends  or  subscription
rights,  or  otherwise,  until  the  Right or  Rights  evidenced  by this  Right
Certificate shall have been exercised as provided in the Rights Agreement.

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

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

ATTEST:                                                     AMERICA ONLINE, INC.

                                                            By:

COUNTERSIGNED:

BANKBOSTON, N.A.

as Rights Agent

By:

  Authorized Signature


<PAGE>


                    Form of Reverse Side of Right Certificate

                               FORM OF ASSIGNMENT

                (To be executed by the registered holder if such

               holder desires to transfer the Right Certificate.)

     FOR VALUE  RECEIVED  ______________________________________  hereby  sells,
assigns and transfers unto

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

______________________________________________________________ this Right

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

Dated:  ____________________

                                                --------------------------------
                                                Signature

             Form of Reverse Side of Right Certificate -- continued


<PAGE>


Signature Guaranteed:

         Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15  promulgated under the Securities  Exchange Act of 1934,
as amended.

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

         The undersigned  hereby certifies that (1) the Rights evidenced by this
Right Certificate are not being sold, assigned or transferred by or on behalf of
a Person who is or was an Acquiring Person or an Affiliate or Associate  thereof
(as defined in the Rights Agreement);  and (2) after due inquiry and to the best
of the knowledge of the undersigned,  the undersigned did not acquire the Rights
evidenced by this Right  Certificate  from any Person who is or was an Acquiring
Person,  or an Affiliate or Associate  thersuch  terms are defined in the Rights
Agreement).

                                                --------------------------------
                                                Signature


<PAGE>


                          FORM OF ELECTION TO PURCHASE

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

TO AMERICA ONLINE, INC.

         The    undersigned    hereby    irrevocably    elects    to    exercise
___________________________  Rights  represented  by this Right  Certificate  to
purchase  the  Preferred  Shares  issuable  upon the exercise of such Rights and
requests that certificates for such Preferred Shares be issued in the name of:

Please insert social security
or other identifying number: ______________

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

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

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

Please insert social security
or other identifying number: ______________

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

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

Dated:  _________________

                                                --------------------------------
                                                Signature

             Form of Reverse Side of Right Certificate -- continued

Signature Guaranteed:

         Signatures must be guaranteed by an "eligible guarantor institution" as
defined in Rule 17Ad-15  promulgated under the Securities  Exchange Act of 1934,
as amended.

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

         The  undersigned  hereby  certifies  that the Rights  evidenced by this
Right  Certificate  are not  being  beneficially  owned  by nor are  they  being
exercised  on behalf of (1) an  Acquiring  Person or an  Affiliate  or Associate
thereof (as defined in the Rights  Agreement);  and (2) after due inquiry and to
the best of the knowledge of the  undersigned,  the  undersigned did not acquire
the Rights evidenced by this Right  Certificate from any Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement).

                                                --------------------------------
                                                Signature

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

                                     NOTICE

         The  signature  in the  Form  of  Assignment  or Form  of  Election  to
Purchase,  as the case may be, must conform to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any change whatsoever.

         In  the  event  the  certification  set  forth  above  in the  Form  of
Assignment  or the Form of  Election  to  Purchase,  as the case may be,  is not
completed,  the Company and the Rights Agent will deem the  beneficial  owner of
the Rights  evidenced by this Right  Certificate to be an Acquiring Person or an
Affiliate or  Associate  thereof (as defined in the Rights  Agreement)  and such
Assignment or Election to Purchase will not be honored.