Exhibit 4.1




EXHIBIT 4.1 



RIGHTS AGREEMENT 



by and between 



FIVE STAR QUALITY CARE,
INC. 



AND 



EQUISERVE TRUST
COMPANY, N.A., 



as Rights Agent 



     _________________ 



Dated as of March 10,
2004 



     _________________ 










TABLE OF CONTENTS 



	Section 1	Certain Definitions	1 
	Section 2	Appointment of Rights Agent	7 
	Section 3	Issue of Rights Certificates	7 
	Section 4	Form of Rights Certificates	9 
	Section 5	Countersignature and Registration	10 
	Section 6	Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated, Destroyed,
 Lost or Stolen Rights Certificates	
10 
	Section 7	Exercise of Rights; Purchase Price; Expiration Date of Rights	11 
	Section 8	Cancellation and Destruction of Rights Certificates	13 
	Section 9	Reservation and Availability of Capital Stock	13 
	Section 10	Preferred Stock Record Date	15 
	Section 11	Adjustment of Purchase Price, Number and Kind of Shares of tock or Number of Rights	15 
	Section 12	Certificate of Adjusted Purchase Price or Number of Shares of Stock	23 
	Section 13	Consolidation, Merger or Sale or Transfer of Assets, Cash Flow or Earning Power	24 
	Section 14	Fractional Rights and Fractional Shares	27 
	Section 15	Rights of Action	28 
	Section 16	Agreement of Rights Holders	28 
	Section 17	Rights Certificate Holder Not Deemed a Stockholder	29 
	Section 18	Concerning the Rights Agent	29 
	Section 19	Merger or Consolidation or Change of Name of Rights Agent	30 
	Section 20	Duties of Rights Agent	30 
	Section 21	Change of Rights Agent	32 
	Section 22	Issuance of New Rights Certificates	33 
	Section 23	Redemption and Termination	34 
	Section 24	Notice of Certain Events	35 
	Section 25	Notices	35 
	Section 26	Supplements and Amendments	36 
	Section 27	Successors	37 



i





	Section 28	Determinations and Actions by the Board of Directors, etc.	37 
	Section 29	Exchange	37 
	Section 30	Benefits of this Agreement	38 
	Section 31	Severability	39 
	Section 32	Governing Law	39 
	Section 33	Counterparts	39 
	Section 34	Descriptive Headings	39 


INDEX OF EXHIBITS 



	Exhibit A	Form of Articles Supplementary
	Exhibit B	Form of Rights Certificate
	Exhibit C	Form of Summary of Rights



ii








RIGHTS AGREEMENT 



        RIGHTS
AGREEMENT, dated as of March 10, 2004, between Five Star Quality Care, Inc., a Maryland
corporation, and EquiServe Trust Company, N.A., a national banking association, as Rights
Agent. 



W I T N E S S E T H 



        WHEREAS,
on March 10, 2004 (the “Rights Dividend Declaration Date”), the Board of
Directors of the Company authorized and declared a dividend distribution of one Right (as
hereinafter defined) for each share of Common Stock (as hereinafter defined) of the
Company outstanding at the Close of Business (as hereinafter defined) on April 10, 2004
(the “Record Date”), and authorized the issuance of one Right (as such number
may hereinafter be adjusted pursuant to the provisions of Section 11(i) hereof) for each
share of Common Stock of the Company issued between the Record Date (whether originally
issued or delivered from the Company’s treasury) and the Distribution Date (as
hereinafter defined) and under certain circumstances thereafter, each Right initially
representing the right to purchase one one-thousandth of a share of Preferred Stock (as
hereinafter defined) of the Company, upon the terms and subject to the conditions
hereinafter set forth (the “Rights”);  



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



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



        “Acquiring
Person” shall mean any Person who or which, together with all Affiliates and
Associates of such Person, shall be the Beneficial Owner of 10% or more of the Common
Stock of the Company then outstanding, but shall not include an Exempt Person.  



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



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



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



        “Agreement”
shall mean this Rights Agreement as originally executed or as it may from time to time be
supplemented or amended pursuant to the applicable provisions hereof. 



        A
Person shall be deemed the “Beneficial Owner” of, and shall be deemed to
“beneficially own,” any securities: (i) which such Person or any of such
Person’s 









Affiliates or Associates, directly or indirectly, has the right to acquire
(whether such right is exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, other rights, warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the
“Beneficial Owner” of, or to “beneficially own,” (A) securities
tendered pursuant to a tender or exchange offer made by 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) securities issuable upon exercise of Rights at any time
prior to the occurrence of a Triggering Event (as herein after defined), or (C) securities
issuable upon exercise of Rights from and after the occurrence of a Triggering Event which
are Original Rights or securities issued pursuant to Section 11(i) hereof in connection
with an adjustment made with respect to any Original Rights; (ii) which such Person or any
of such Person’s Affiliates or Associates, directly or indirectly, has the right to
vote or dispose of or has “beneficial ownership” of (as determined pursuant to
Rule 13d-3 of the General Rules and Regulations under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in writing;
provided, however, that a Person shall not be deemed the “Beneficial
Owner” of, or to “beneficially own,” any security under this subparagraph
(ii) as a result of an agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding: (A) arises solely from a revocable proxy or
consent given in response to a public proxy or consent solicitation made pursuant to, and
in accordance with, the applicable provisions of the General Rules and Regulations under
the Exchange Act; and (B) is not reportable by such Person 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 (or any Affiliate or Associate thereof)
with which such Person (or any of such Person’s Affiliates or Associates) has any
agreement, arrangement or understanding (whether or not in writing), for the purpose of
acquiring, holding, voting (except pursuant to a revocable proxy as described in clause
(A) of the proviso to subparagraph (ii) of this definition), or disposing of any voting
securities of the Company; provided, however, that nothing in this
definition shall cause a person engaged in business as an underwriter of securities to be
the “Beneficial Owner” of, or to “beneficially own,” any securities
acquired through such person’s participation in good faith in a firm commitment
underwriting until the expiration of forty days after the date of such acquisition and
then only if such securities continue to be owned by such Person at such expiration of
forty days. 



        “Board”
shall mean the Board of Directors of the Company, or such comparable governing body, as
applicable. 



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



        “Close
of Business” on any given date shall mean 5:00 P.M., New York City time, on such
date; provided, however, that if such date is not a Business Day, it shall
mean 5:00 P.M., New York City time, on the next succeeding Business Day. 



2





        “Common
Stock” when used with reference to the Company shall mean the common stock of
beneficial interest, par value $.01 per share, of the Company or any other stock of
beneficial interest or capital stock of the Company into which such stock shall be
reclassified or changed. “Common Stock” when used with reference to any Person
which shall be organized in corporate form, other than the Company, shall mean the capital
stock or other equity security with the greatest voting power or the equity securities or
other equity interest having power to control or direct the management of such Person or,
if such Person is a Subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person and which has or have issued any such outstanding
capital stock, equity securities or equity interest. “Common Stock” when used
with reference to any Person which shall not be organized in corporate form shall mean
units of beneficial interest which (i) shall represent the right to participate generally
in the profits and losses of such Person (including, without limitation, any flow-through
tax benefits resulting from an ownership interest in such Person) and (ii) shall be
entitled to exercise the greatest voting power of such Person or, in the case of a limited
partnership, shall have the power to remove the general partner or partners. 



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



        “Company”
shall mean Five Star Quality Care, Inc., a Maryland corporation, until its successor, if
any, shall have become such, or until a Principal Party, if any, shall assume, and
thereafter be liable for, all obligations and duties of the Company hereunder pursuant to
the applicable provisions of this Agreement, and thereafter “Company” shall mean
such successor or Principal Party. 



        “Continuing
Director” shall mean any member of the Board (while such Person is a member of the
Board) who is not an Acquiring Person, or an Affiliate or Associate of an Acquiring
Person, or a representative or nominee of an Acquiring Person or of any such Affiliate or
Associate, and who either (i) was a member of the Board immediately prior to the date of
this Agreement or (ii) on or subsequent to the date of this Agreement became a member of
the Board and whose nomination for election or election to the Board is recommended or
approved by a majority of the Continuing Directors. 



        “Current
Market Price” shall mean the applicable amount determined pursuant to Section 11(d)
hereof. 



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



        “Distribution
Date” shall have the meaning set forth in Section 3(a) hereof. 



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



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


3





        “Exchange Ratio”
shall have the meaning set forth in Section 29(a) hereof. 



        “Exempt
Person” shall mean (i) the Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit or employee share or stock plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed, established or holding Common
Stock of the Company by, for or pursuant to the terms of any such plan, (iv) any Person
who becomes the Beneficial Owner of 10% or more of the Common Stock of the Company then
outstanding solely as a result of a reduction in the number of shares of Common Stock of
the Company outstanding due to the repurchase of Common Stock of the Company by the
Company, unless and until any such Person, after becoming aware that such Person has
become the Beneficial Owner of 10% or more of the outstanding Common Stock of the Company,
shall acquire Beneficial Ownership of additional Common Stock of the Company constituting
1% or more of the then outstanding Common Stock of the Company, (v) any Person who or
which shall have executed a written agreement with the Company (which shall have been
approved by a majority of the Outside Directors) prior to the date on which such Person
became the Beneficial Owner of 10% or more of the Common Stock of the Company then
outstanding, which agreement imposes one or more limitations (the “Thresholds”)
on the amount of such Person’s Beneficial Ownership of Common Stock of the Company,
if and so long as the Thresholds continue to be binding on such Person and such Person is
in substantial compliance (as determined by a majority of the Outside Directors) with the
terms of such written agreement, (vi) any Person (and any Person which is a successor to
such Person) who, as of immediately prior to the date of this Agreement, was, or could
reasonably be deemed to be, the Beneficial Owner of 10% or more of the Common Stock of the
Company then outstanding, provided that such Person is listed or otherwise reflected as
beneficially owning (or that such Person could be deemed to beneficially own) such amount
of Common Stock of the Company on a publicly available filing made prior to the date of
this Agreement with the Securities and Exchange Commission, which filing is current as of
the date of this Agreement, and Persons that are Affiliates or Associates of such Person
(or such Person’s successor) for so long as they constitute Associates or Affiliates
of such Person (or such Person’s successor) and any Person who has an agreement,
arrangement or understanding (whether or not in writing) with such Persons (or such
Person’s Affiliates or Associates) for the purpose of acquiring, holding, voting or
disposing of any voting securities of the Company for so long as such agreement,
arrangement or understanding is in effect, (vii) any Person who has reported or is
required to report its beneficial ownership of Common Stock of the Company, but which
beneficial ownership level is less than 15%, on Schedule 13G under the Exchange Act (or
any comparable or successor report) or on Schedule 13D under the Exchange Act (or any
comparable or successor report) which Schedule 13D validly does not state any intention to
or reserve the right to control or influence the management or policies of the Company or
engage in any of the actions specified in Item 4 of such schedule (other than the
disposition of the Common Stock of the Company) and, within 10 Business Days of being
requested by the Company to advise it regarding the same, certifies to the Company that
such Person acquired Common Stock of the Company in excess of 9.9% inadvertently or
without knowledge of the terms of the Rights and who or which, together  


4







with all
Affiliates and Associates, thereafter does not acquire additional Common Stock of the
Company while the Beneficial Owner of 10% or more of the Common Stock of the Company then
outstanding; provided, however, that if the Person requested to so certify
fails to do so within 10 Business Days, then such Person shall immediately cease to be an
Exempt Person after such 10-Business-Day period or (viii) any Person who or which is then
serving as the Company’s investment advisor and Persons who are Affiliates or
Associates of that Person. 



        “Expiration
Date” shall have the meaning set forth in Section 7(a) hereof. 



        “Final
Expiration Date” shall mean the Close of Business on April 10, 2014, or such later
date as may be established by the Board prior to the expiration of the Rights. 



        “NASDAQ”
shall have the meaning set forth in Section 11(d)(i) hereof. 



        “Original
Rights” shall mean Rights acquired by a Person or any of such Person’s
Affiliates or Associates prior to the Distribution Date or pursuant to Section 3(a) or
Section 22 hereof. 



        “Outside
Directors” shall mean members of the Board who are not officers of the Company or any
of its Subsidiaries or officers or stockholders of the Person who or which is then serving
as the Company’s investment advisor and who are not Acquiring Persons or
representatives, nominees, Affiliates or Associates of Acquiring Persons. 



        “Person”
shall mean any individual, firm, corporation, partnership, trust or other entity. 



        “Preferred
Stock” shall mean the Junior Participating Preferred Stock of beneficial interest,
par value $.01 per share, of the Company, and having the rights, powers and preferences as
set forth on Exhibit A hereto, and to the extent that there are not a sufficient number of
shares of Junior Participating Preferred Stock authorized to permit the full exercise of
the Rights, any other series of preferred stock of the Company designated for such purpose
containing terms substantially similar to the terms of the Junior Participating Preferred
Stock. 



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



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



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



        “Record
Date” shall have the meaning set forth in the preamble of this Agreement. 



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



        “Rights”
shall have the meaning set forth in the preamble of this Agreement. 


5





        “Rights
Agent” shall mean EquiServe Trust Company, N.A., a national banking association,
until a successor Rights Agent, if any, shall have become such pursuant to the applicable
provisions hereof, and thereafter, “Rights Agent” shall mean such successor
Rights Agent. If at any time there is more than one Person appointed by the Company as
Rights Agent pursuant to the applicable provisions of this Agreement, “Rights
Agent” shall mean and include each such Person. 



        “Rights
Certificates” shall have the meaning set forth in Section 3(a) hereof. 



        “Rights Dividend
Declaration Date” shall have the meaning set forth in the preamble of this Agreement. 



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



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



        “Section
13 Event” shall have the meaning set forth in Section 13(a) hereof. 



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



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



        “Stock
Acquisition Date” shall mean the first date of public announcement by the Company
that an Acquiring Person has become such other than pursuant to a Qualified Offer. 



        “Subsidiary”
shall mean, with reference to any Person, any corporation or other entity of which
securities or other ownership interest having ordinary voting power sufficient, in the
absence of contingencies, to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly beneficially owned or
otherwise controlled, by such Person. 



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



        “Summary
of Rights” shall have the meaning set forth in Section 3(b) hereof. 



        “Thresholds”
shall have the meaning set forth in the definition of “Exempt Person.” 



        “Trading
Day” shall have the meaning set forth in Section 11(d)(ii) hereof. 



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



6






        Section
2. Appointment of Rights Agent. The Company hereby appoints the Rights Agent to
act as agent for the Company and the holders of the Rights (who, in accordance with
Section 3 hereof, shall prior to the Distribution Date also be the holders of the Common
Stock of the Company) in accordance with the terms and conditions hereof, and the Rights
Agent hereby accepts such appointment. The Company may from time to time appoint such
co-Rights Agents as it may deem necessary or desirable, upon 24 hours prior written
notice to the Rights Agent, unless providing such notice shall cause detriment to the
Company. 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 Rights Certificates. 



        (a)              Until
the earlier of (i) the Close of Business on the tenth Business Day (or           such
specified or unspecified later date as may be determined by the Board           before
the occurrence of the Distribution Date) after the Stock Acquisition Date           (or,
if the tenth Business Day after the Stock Acquisition Date occurs before           the
Record Date, the Close of Business on the Record Date) or (ii) the Close of
          Business on the tenth Business Day (or such specified or unspecified later date
          as may be determined by the Board before the occurrence of the Distribution
          Date) after the date that a tender or exchange offer by any Person (other than
a           Person qualifying as an Exempt Person under clauses (i), (ii), (iii) or (vi)
          under the definition of Exempt Person herein) has been commenced within the
          meaning of Rule 14d-2(a) of the General Rules and Regulations under the
Exchange           Act, if upon consummation thereof, such Person would become an
Acquiring Person,           in either instance other than pursuant to a Qualified Offer
(the earlier of (i)           and (ii) being herein referred to as the “Distribution
Date”), (x) the           Rights will be evidenced (subject to the provisions of
paragraphs (b) and (c) of           this Section 3) by the certificates for the Common
Stock of the Company           registered in the names of the holders of the Common Stock
of the Company and           not by separate certificates and (y) the Rights will be
transferable only in           connection with the transfer of the underlying Common
Stock of the Company           (including a transfer to the Company). As soon as
practicable after the           Distribution Date, the Rights Agent will send by
first-class, insured, postage           prepaid mail, to each record holder of the Common
Stock of the Company as of the           Close of Business on the Distribution Date, at
the address of such holder shown           on the records of the Company, one or more
rights certificates in substantially           the form of Exhibit B hereto (the “Rights
Certificates”) evidencing           one Right for each share of Common Stock of the
Company so held, subject to           adjustment as provided herein. In the event that an
adjustment in the number of           Rights per share of Common Stock of the Company has
been made pursuant to           Section 11(i) hereof, at the time of distribution of the
Rights Certificates,           the Company shall make the necessary and appropriate
rounding adjustments (in           accordance with Section 14(a) hereof) so that Rights
Certificates representing           only whole numbers of Rights are distributed and cash
is paid in lieu of any           fractional Rights. As of and after the Distribution
Date, the Rights will be           evidenced solely by such Rights Certificates.  



        (b)              The
Company will make available, as promptly as practicable following the Record
          Date, a copy of a Summary of Rights in substantially 


7







the form attached hereto
as           Exhibit C (the “Summary of Rights”) to any holder of Rights who
may so           request from time to time prior to the Expiration Date. With respect to
          certificates for the Common Stock of the Company outstanding as of the Record
          Date or issued subsequent to the Record Date, unless and until the Distribution
          Date shall occur, the Rights will be evidenced by such certificates for the
          Common Stock of the Company with or without a copy of the Summary of Rights
          attached, and the registered holders of the Common Stock of the Company shall
          also be the registered holders of the associated Rights. Until the earlier of
          the Distribution Date or the Expiration Date, the transfer of any certificates
          representing Common Stock of the Company in respect of which Rights have been
          issued shall also constitute the transfer of the Rights associated with such
          Common Stock of the Company.  



        (c)              Rights
shall be issued in respect of all Common Stock of the Company which are           issued
(whether originally issued or from the Company’s treasury) after the
          Record Date but prior to the earlier of the Distribution Date or the Expiration
          Date, and to the extent provided in Section 22 hereof, in respect of Common
          Stock of the Company issued after the Distribution Date and prior to the
          Expiration Date. Subject to Section 3(a) hereof, certificates representing such
          Common Stock of the Company shall also be deemed to be certificates for Rights,
          and shall bear the following legend if such certificates are issued after the
          Record Date but prior to the earlier of the Distribution Date or the Expiration
          Date:  



	  	
This
certificate also evidences and entitles the holder hereof to certain Rights as set forth
in the Rights Agreement between Five Star Quality Care, Inc. (the “Company”)
and EquiServe Trust Company, N.A. (the “Rights Agent”), dated as of March 10,
2004 (the “Rights Agreement”), the terms of which are hereby incorporated
herein by reference and a copy of which is on file at the principal offices of the
Company. Under certain circumstances, as set forth in the Rights Agreement, such Rights
will be evidenced by separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate a copy of the Rights
Agreement, as in effect on the date of mailing, without charge promptly after receipt of
a written request therefor. Under certain circumstances set forth in the Rights
Agreement, Rights beneficially owned (as such term is defined in the Rights Agreement) by
any Person who is, was or becomes an Acquiring Person, or any Affiliate or Associate
thereof (as such terms are defined in the Rights Agreement), whether currently held by or
on behalf of such Person or by any subsequent holder, may become null and void. The
Rights shall not be exercisable, and shall be void so long as held, by a holder in any
jurisdiction where the requisite qualification to the issuance to such holder, or the
exercise by such holder, of the Rights in such jurisdiction shall not have been obtained
or be obtainable. 




8






        With
respect to such certificates containing the foregoing legend, until the earlier of the
Distribution Date or the Expiration Date, the Rights associated with the Common Stock of
the Company represented by such certificates shall be evidenced by such certificates
alone, and registered holders of Common Stock of the Company shall also be the registered
holders of the associated Rights, and the transfer of any of such certificates shall also
constitute the transfer of the Rights associated with the Common Stock of the Company
represented by such certificates.  



        Section
4.     Form of Rights Certificates. 



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



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



	  	
The
Rights represented by this Rights Certificate are or were beneficially owned by a Person
who was or became an Acquiring Person or an Affiliate or Associate of an Acquiring Person
(as such terms are defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become 







9






	  	
null and void in the circumstances specified
in Section 7(e) of the Rights Agreement. 






        Section
5.     Countersignature and Registration. 



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



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



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



        (a)              Subject
to the provisions of Section 4(b), Section 7(e) and Section 14 hereof,           at any
time after the Close of Business on the Distribution Date, and at or           prior to
the Close of Business on the Expiration Date, any Rights Certificate or           Rights
Certificates (other than Rights Certificates representing Rights that may           have
been exchanged pursuant to Section 29 hereof) may be transferred, split up,
          combined or exchanged for another Rights Certificate or Rights Certificates,
          entitling the registered holder to purchase a like number of one
one-thousandths           of a share of Preferred Stock (or, following a Triggering
Event, Common Stock of           the Company, other securities, cash or other assets, as
the case may be) as the           Rights Certificate or Rights Certificates surrendered
then entitled such holder           (or former holder in the case of a transfer) to
purchase. Any registered holder           desiring to transfer, split up, combine or
exchange any Rights Certificate or           Rights Certificates shall make such request
in writing delivered to the Rights           Agent, and shall surrender the Rights
Certificate or Certificates to be


10







 transferred, split up, combined or exchanged
at the principal office or offices           of the Rights Agent designated for such
purpose. Neither the Rights Agent nor           the Company shall be obligated to take
any action whatsoever with respect to the           transfer or exchange of any such
surrendered Rights Certificate or Rights           Certificates until the registered
holder shall have completed and signed the           certificate contained in the form of
assignment on the reverse side of such           Rights Certificate or Rights
Certificates and shall have 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. Thereupon the
Rights Agent shall, subject to Section 4(b),           Section 7(e), Section 14 and
Section 29 hereof, countersign and deliver to the           Person entitled thereto a
Rights Certificate or Rights Certificates, as the case           may be, as so requested.
The Company may require payment of a sum sufficient to           cover any tax or
governmental charge that may be imposed in connection with any           transfer, split
up, combination or exchange of Rights Certificates.  



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



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



        (a)              Subject
to Section 7(e) hereof, the registered holder of any Rights Certificate           may
exercise the Rights evidenced thereby (except as otherwise provided herein
          including, without limitation, the restrictions on exercisability set forth in
          Section 9(c), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part
          at any time after the Distribution Date upon surrender of the Rights
          Certificate, with the form of election to purchase and the certificate on the
          reverse side thereof duly executed, to the Rights Agent at the principal office
          or offices of the Rights Agent designated for such purpose, together with
          payment of the aggregate Purchase Price with respect to the total number of one
          one-thousandths of a share of Preferred Stock (or Common Stock of the Company,
          other securities, cash or other assets, as the case may be) as to which such
          surrendered Rights are then exercisable, at or prior to the earliest of (i) the
          Final Expiration Date, (ii) the time at which the Rights are redeemed as
          provided in Section 23 hereof or exchanged as provided in Section 29 hereof or
          (iii) the time at which the Rights expire pursuant to Section 13(d) hereof (the
          earliest of (i), (ii) and (iii) being herein referred to as the “Expiration
          Date”).  



        (b)              The
Purchase Price for each one one-thousandth of a share of Preferred Stock
          pursuant to the exercise of a Right shall initially be $25 and shall be subject
          to adjustment from time to time as provided in Sections 11 and 13(a) hereof and
          shall be payable in accordance with paragraph (c) below.  




11






        (c)              Upon
receipt of a Rights Certificate representing exercisable Rights, with the           form
of election to purchase and the certificate on the reverse side of the           Rights
Certificate duly executed, accompanied by payment, with respect to each           Right
so exercised, of the Purchase Price, per one one-thousandth of a share of
          Preferred Stock (or Common Stock of the Company, other securities, cash or
other           assets, as the case, may be) to be purchased as set forth below and an
amount           equal to any applicable transfer tax or other governmental charge, the
Rights           Agent shall, subject to Sections 7(f) and 20(k) hereof, thereupon
promptly (i)           (A) requisition from any transfer agent of the Preferred Stock (or
make           available, if the Rights Agent is the transfer agent for such stock)
          certificates for the total number of one one-thousandths of a share of
Preferred           Stock to be purchased and the Company hereby irrevocably authorizes
its transfer           agent to comply with all such requests, or (B) if the Company
shall have elected           to deposit the total number of shares of Preferred Stock
issuable upon exercise           of the Rights hereunder with a depositary agent,
requisition from the depositary           agent depositary receipts representing such
number of one one-thousandths of a           share of Preferred Stock as are to be
purchased (in which case certificates for           the Preferred Stock represented by
such receipts shall be deposited by the           transfer agent with the depositary
agent) and the Company will direct the           depositary agent to comply with such
request, (ii) requisition from the Company           the amount of cash, if any, to be
paid in lieu of fractional shares in           accordance with Section 14 hereof, (iii)
after receipt of such certificates or           depositary receipts, cause the same to be
delivered to or upon the order of the           registered holder of such Rights
Certificate, registered in such name or names           as may be designated by such
holder, and (iv) after receipt thereof, deliver           such cash, if any, to or upon
the order of the registered holder of such Rights           Certificate. The payment of
the Purchase Price (as such amount may be reduced           pursuant to Section
11(a)(iii) hereof) shall be made in cash or by certified           check, cashier’s
check or bank draft payable to the order of the Company.           In the event that the
Company is obligated to issue other securities of the           Company (including Common
Stock of the Company), pay cash and/or distribute           other property pursuant to
Section 11(a) hereof, the Company will make all           arrangements necessary so that
such other securities, cash and/or other property           are available for
distribution by the Rights Agent, if and when appropriate. The           Company reserves
the right to require prior to the occurrence of a Triggering           Event that, upon
any exercise of Rights, a number of Rights be exercised so that           only whole
shares of Preferred Stock would be issued.  



        (d)              In
case the registered holder of any Rights Certificate shall exercise less than
          all the Rights evidenced thereby, a new Rights Certificate evidencing Rights
          equivalent to the Rights remaining unexercised shall be issued by the Rights
          Agent and delivered to, or upon the order of, the registered holder of such
          Rights Certificate, registered in such name or names as may be designated by
          such holder, subject to the provisions of Section 14 hereof.  



        (e)              Notwithstanding
anything in this Agreement to the contrary, from and after the           first occurrence
of a Section 11(a)(ii) Event, any Rights beneficially owned by           (i) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person,           (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate)           who becomes a
transferee after such Acquiring Person becomes such or (iii) a           transferee of an
Acquiring Person (or of any such Associate or Affiliate) who           becomes a
transferee prior 


12






to or concurrently with the Acquiring Person 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 has been determined by the Continuing Trustees,
          within the maximum period allowed under Maryland law for limiting the power of
          future directors to vote in this regard following a Section 23(a) Event, by a
          majority of the Continuing Directors, or if such determination is not made
until           after such period expires, by a majority of the Board, to be part of a
plan,           arrangement or understanding which has as a primary purpose or effect the
          avoidance of this Section 7(e), shall become null and void without any further
          action and no holder of such Rights shall have any rights whatsoever with
          respect to such Rights, whether under any provision of this Agreement or
          otherwise. The Company shall use all reasonable efforts to ensure that the
          provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
          the Company and the Rights Agent shall have no liability to any holder of
Rights           Certificates or other Person as a result of the Company’s failure
to make           any determinations with respect to an Acquiring Person or any of their
          Affiliates, Associates or transferees hereunder.  



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



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



        Section
9.     Reservation and Availability of Capital Stock. 



        (a)              The
Company covenants and agrees that it will cause to be reserved and kept
          available out of its authorized and unissued shares of Preferred Stock (and,
          following the occurrence of a Triggering Event, out of its authorized and
          unissued 


13






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



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



        (c)              The
Company shall use all reasonable efforts to (i) file, as soon as practicable
          following the earliest date after the first occurrence of a Section 11(a)(ii)
          Event in which the consideration to be delivered by the Company upon exercise
of           the Rights has been determined in accordance with this Agreement, a
registration           statement under the Act on an appropriate form with respect to the
securities           purchasable upon exercise of the Rights, (ii) cause such
registration statement           to become effective as soon as practicable after such
filing and (iii) cause           such registration statement to remain effective (with a
prospectus at all times           meeting the requirements of the Act) until the earlier
of (A) the date as of           which the Rights are no longer exercisable for such
securities or (B) the           Expiration Date. The Company will also take such action
as may be appropriate           under, or to ensure compliance with, the securities or
“blue sky” laws           of the various states in connection with the
exercisability of the Rights. The           Company may, acting by resolution of its
Board, temporarily suspend, for a           period of time not to exceed ninety (90) days
after the date set forth in clause           (i) of the first sentence of this Section
9(c), the exercisability of the Rights           in order to prepare and file such
registration statement and permit it to become           effective. In the event of any
such suspension, the Company shall issue a public           announcement stating that the
exercisability of the Rights has been temporarily           suspended, as well as a
public announcement at such time as the suspension is no           longer in effect. In
addition, if the Company shall determine that a           registration statement is
required in other circumstances following the           Distribution Date, the Company
may similarly temporarily suspend the           exercisability of the Rights until such
time as a registration statement has           been declared effective. Notwithstanding
any provision of this Agreement to the           contrary, the Rights shall not be
exercisable in any jurisdiction if the           requisite qualification in such
jurisdiction shall not have been obtained, the           exercise thereof shall not
otherwise be permitted under applicable law or a           registration statement shall
not have been declared effective.  



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


14





        (e)              The
Company further covenants and agrees that, except as set forth in Section           6(a)
hereof, it will pay when due and payable any and all federal and state           transfer
taxes and similar governmental charges which may be payable in respect           of the
issuance or delivery of the Rights Certificates and of any certificates           for a
number of one one-thousandths of a share of Preferred Stock (or Common           Stock of
the Company and/or other securities, as the case may be) upon the           exercise of
Rights. The Company shall not, however, be required to pay any           transfer tax or
other governmental charge which may be payable in respect of any           transfer or
delivery of Rights Certificates to a Person other than, or the           issuance or
delivery of a number of one one-thousandths of a share of Preferred           Stock (or
Common Stock of the Company and/or other securities, as the case may           be) in
respect of a name other than that of, the registered holder of the Rights
          Certificates evidencing Rights surrendered for exercise, nor shall the Company
          be required to issue or deliver any certificates for a number of one
          one-thousandths of a share of Preferred Stock (or Common Stock of the Company
          and/or other securities, as the case may be) in a name other than that of the
          registered holder upon the exercise of any Rights until such tax or charge
shall           have been paid (any such tax or charge being payable by the holder of
such           Rights Certificate at the time of surrender) or until it has been
established to           the Company’s satisfaction that no such tax or charge is
due.  



        Section
10. Preferred Stock Record Date. Each person in whose name any certificate for a
number of one one-thousandths of a share of Preferred Stock (or Common Stock of the
Company and/or other securities, as the case may be) is issued upon the exercise of
Rights shall for all purposes be deemed to have become the holder of record of such
fractional share of Preferred Stock (or Common Stock of the Company and/or other
securities, as the case may be) represented thereby on, and such certificate shall be
dated, the date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and all applicable transfer taxes and
other governmental charges) was made; provided, however, that if the date
of such surrender and payment is a date upon which the Preferred Stock (or Common Stock
of the Company and/or other securities, as the case may be) transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such stock
(fractional or otherwise) on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or Common Stock of the Company and/or other
securities, as the case may be) transfer books of the Company are open. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate shall not be
entitled to any rights of a stockholder of the Company with respect to stock 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 and Kind of Shares of tock or Number of Rights.
The Purchase Price, the number and kind of shares of stock, or fractions thereof,
purchasable upon the exercise of each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.  


15





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



        (ii)                 In
the event (a “Section 11(a)(ii) Event”) any Person shall, at any           time
after the Rights Dividend Declaration Date, become an Acquiring Person,           unless
the event causing such Person to become an Acquiring Person is (x) a           Section 13
Event or (y) an acquisition of Common Stock of the Company pursuant           to a tender
offer or an exchange offer for all outstanding Common Stock of the           Company at a
price and on terms determined by at least a majority of the Outside           Directors,
after receiving advice from one or more investment banking firms, to           be (a) at
a price which is fair to stockholders and not inadequate (taking into           account
all factors which such Outside Directors deem relevant including,           without
limitation, prices which could reasonably be achieved if the Company or           its
assets were sold on an orderly basis designed to realize maximum value) and           (b)
otherwise in the best interests of the Company and its stockholders (a           “Qualified
Offer”), then promptly after the date of occurrence of a           Section 11(a)(ii)
Event, proper provision shall be made so that each holder of a           Right (except as
provided below and in Section 7(e) hereof) shall thereafter           have the right to
receive, upon exercise thereof at the then current Purchase           Price in accordance
with the terms of this Agreement, in lieu of a number of one           one-thousandths of
a share of Preferred Stock, such number of shares of Common           Stock of the
Company as shall equal the result obtained by (x) multiplying the           then current
Purchase Price by the then number of one one-thousandths of a share           of
Preferred Stock for which a Right was exercisable immediately prior to the
          first occurrence of a Section 11(a)(ii) Event, whether or not such Right was
          then exercisable, and (y) dividing that product (which, following such first
          occurrence, shall thereafter be referred to as the “Purchase Price”          for
each Right and for all purposes of this Agreement) by 50% of the Current           Market
Price per share of Common Stock of the Company on the date of such first
          occurrence (such number of shares of stock being referred to as the
          “Adjustment Shares”).  

16






        (iii)
In the event that the number of shares of Common Stock of the Company           which are
authorized by the Company’s Articles of Incorporation (as the           same may be
amended and restated from time to time) but not outstanding or           reserved for
issuance for purposes other than upon exercise of the Rights is not           sufficient
to permit the exercise in full of the Rights in accordance with the           foregoing
subparagraph (ii) of this Section 11(a), the Company, acting by           resolution of
the Board, shall (A) determine the value of the Adjustment Shares           issuable upon
the exercise of a Right (the “Current Value”) and the           amount by which
it exceeds the Purchase Price attributable to each Right (such           excess being
referred to as the “Spread”), and (B) with respect to           each Right
(subject to Section 7(e) hereof), make adequate provision to           substitute for the
Adjustment Shares, upon the exercise of the Right and payment           of the applicable
Purchase Price, (1) cash, (2) a reduction in the Purchase           Price, (3) equity
securities of the Company other than Common Stock of the           Company (including,
without limitation, preferred stock or units of preferred           stock which the Board
has deemed to have essentially the same value or economic           rights as shares of
Common Stock of the Company (such shares or units of           preferred stock being
referred to as “Common Stock Equivalents”)), (4)           debt securities of
the Company, (5) other assets or (6) any combination of the           foregoing which,
when added to any Common Stock of the Company issued upon such           exercise, have
an aggregate value equal to the Current Value (less the amount of           any reduction
in the Purchase Price), where such aggregate value has been           determined by the
Board based upon the advice of a nationally recognized           investment banking firm
selected by the Board; provided, however,           that if the Company
shall not have made adequate provision to deliver value           pursuant to clause (B)
above within thirty 30 days following the later of (x)           the first occurrence of
a Section 11(a)(ii) Event and (y) the date on which the           Company’s right of
redemption pursuant to Section 23(a) hereof, as such           date may be amended
pursuant to Section 26 hereof, expires (the later of (x) and           (y) being referred
to herein as the “Section 11(a)(ii) Trigger Date”),           then the Company
shall be obligated to deliver, upon the surrender for exercise           of a Right and
without requiring payment of the Purchase Price, Common Stock of           the Company
(to the extent available) and then, if necessary, cash, which stock           and/or cash
have an aggregate value equal to the Spread. If the Board shall           determine in
good faith that it is likely that sufficient additional Common           Stock of the
Company 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, if
          required, for the authorization of such additional stock (such period, as it
may           be extended being referred to herein as the “Substitution Period”).
To           the extent that the Company determines that action should be taken pursuant
to           the first and/or second sentences of this Section 11(a)(iii), the Company
(x)           shall provide, subject to Section 7(e) hereof, that such action shall apply
          uniformly to all outstanding Rights and (y) may suspend the exercisability of
          the Rights until the expiration of the Substitution Period in order to seek any
          authorization of additional stock and/or to decide the appropriate form of
          distribution to be made pursuant to such first sentence and to determine the
          value thereof. In the event of any such suspension, the Company shall issue a
          public announcement stating that the exercisability of the Rights has been
          temporarily suspended, as well as a public announcement at such time as the



17






          suspension is no longer in effect. For purposes of this Section 11(a)(iii), the
          value of each Adjustment Share shall be the Current Market Price per share of
          Common Stock of the Company on the Section 11(a)(ii) Trigger Date and the value
          of any Common Stock Equivalents shall be deemed to equal the value of the
Common           Stock of the Company 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 Stock entitling them to subscribe for or
          purchase (for a period expiring within 45 calendar days after such record date)
          Preferred Stock (or stock having the same rights, privileges and preferences as
          the Preferred Stock (“Equivalent Preferred Stock”)) or securities
          convertible into Preferred Stock or Equivalent Preferred Stock at a price per
          share of Preferred Stock or per Equivalent Preferred Stock (or having a
          conversion price per share, if a security convertible into Preferred Stock or
          Equivalent Preferred Stock) less than the Current Market Price per share of
          Preferred Stock 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 shares of Preferred Stock outstanding on such
record           date, plus the number of shares of Preferred Stock and/or Equivalent
Preferred           Stock which the aggregate subscription or offering price of the total
number of           shares of Preferred Stock and/or Equivalent Preferred Stock 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 shares of Preferred Stock
outstanding on such           record date, plus the number of additional shares of
Preferred Stock and/or           Equivalent Preferred Stock to be offered for
subscription or purchase (or into           which the convertible securities so to be
offered are initially convertible). In           case such subscription price may be paid
by delivery of consideration part or           all of which may be in a form other than
cash, the value of such consideration           shall be as determined in good faith by
the Board, whose determination shall be           described in a statement filed with the
Rights Agent and shall be conclusive for           all purposes. Preferred Stock owned by
or held for the account of the Company           shall not be deemed outstanding for the
purpose of any such computation. Such           adjustment shall be made successively
whenever such a record date is fixed, and           in the event that such rights,
options or warrants are not so issued, the           Purchase Price shall be adjusted to
be the Purchase Price which would then be in           effect if such record date had not
been fixed.  



        (c)          In
case the Company shall fix a record date for a distribution to all holders of
          Preferred Stock (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, cash (other than a regular periodic
          cash dividend out of the earnings or retained earnings of the Company), assets
          (other than a dividend payable in Preferred Stock, but including any dividend
          payable in stock other than Preferred Stock) 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 Current Market Price per share of Preferred
          Stock on such record date, less the fair market value (as determined in good
 


18







          faith by the Board, whose determination shall be described in a statement filed
          with the Rights Agent and shall be binding upon the Rights Agent and the
holders           of the Rights) of the portion of the cash, assets or evidences of
indebtedness           so to be distributed or of such subscription rights or warrants
applicable to a           share of Preferred Stock and the denominator of which shall be
such Current           Market Price per share of Preferred Stock. Such adjustments shall
be made           successively whenever such a record date is fixed, and in the event
that such           distribution is not so made, the Purchase Price shall be adjusted to
be the           Purchase Price which would have been in effect if such record date had
not been           fixed.  



        (d)         (i)
For the purpose of any computation hereunder, other than computations made
          pursuant to Section 11(a)(iii) hereof, the Current Market Price per share of
          Common Stock on any date shall be deemed to be the average of the daily closing
          prices per such share of Common Stock for the thirty (30) consecutive Trading
          Days immediately prior to such date, and for purposes of computations made
          pursuant to Section 11(a)(iii) hereof, the Current Market Price per share of
          Common Stock on any date shall be deemed to be the average of the daily closing
          prices per such share of Common Stock for the ten (10) consecutive Trading Days
          immediately following such date; provided, however, that in the
          event that the Current Market Price per share of Common Stock is determined
          during a period following the announcement by the issuer of such Common Stock
of           (A) a dividend or distribution on such Common Stock payable in Common Stock
or           securities convertible into such Common Stock (other than the Rights) or (B)
any           subdivision, combination, consolidation, reverse stock split or
reclassification           of Common Stock, and the ex-dividend date for such dividend or
distribution, or           the record date for such subdivision, combination,
consolidation, reverse stock           split or reclassification, shall not have occurred
prior to the commencement of           the requisite thirty (30) Trading Days or ten (10)
Trading Day period, as set           forth above, then, and in each such case, the
Current Market Price shall be           properly adjusted to take into account
ex-dividend trading. 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 American Stock
Exchange, or if the Common Stock is not listed or           admitted to trading on the
American 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 Common Stock is listed           or admitted to trading,
or if the Common Stock is not listed or admitted to           trading on any national
securities exchange, the last quoted price, or if not so           quoted, the average of
the high bid and low asked prices in the over-the-counter           market, as reported
by the National Association of Securities Dealers Automated           Quotation System (“NASDAQ”)
or such other system then in use, or if on           any such date the Common Stock 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
Common Stock selected by the Board. If the           Common Stock is not publicly held or
not so listed, traded or quoted, and a           market maker is not making a market on
any such date, Current Market Price per           share of Common Stock shall mean the
fair value per share as determined in good           faith by the Board, whose
determination shall be described in a statement filed           with the Rights Agent and
shall be conclusive for all purposes.  


19





        (ii)
          For the purpose of any computation hereunder, the Current Market Price per
share           of Preferred Stock shall be determined in the same manner as set forth
above for           the Common Stock in clause (i) of this Section 11(d) (other than the
last           sentence thereof). If the Current Market Price per share of Preferred
Stock           cannot be determined in the manner provided above or if the Preferred
Stock is           not publicly held or listed or traded in a manner described in clause
(i) of           this Section 11(d), the Current Market Price per share of Preferred
Stock shall           be conclusively deemed to be an amount equal to 1,000 (as such
number may be           appropriately adjusted for such events as stock splits, stock
dividends and           recapitalizations with respect to the Common Stock occurring
after the date of           this Agreement) multiplied by the Current Market Price per
share of Common           Stock. If neither the Common Stock nor the Preferred Stock is
publicly held or           so listed or traded, Current Market Price per share of
Preferred Stock shall           mean the fair value per share as determined in good faith
by the Board, whose           determination shall be described in a statement filed with
the Rights Agent and           shall be conclusive for all purposes. For all purposes of
this Agreement, the           Current Market Price of one one-thousandth of a share of
Preferred Stock shall           be equal to the Current Market Price of one share of
Preferred Stock divided by           1000. The term “Trading Day” shall mean a
day on which the principal           national securities exchange on which the Common
Stock is listed or admitted to           trading is open for the transaction of business,
or if the Common Stock is not           listed or admitted to trading on any national
securities exchange, a Business           Day.  



        (e)           Anything
herein to the contrary notwithstanding, no adjustment in the Purchase           Price
shall be required unless such adjustment, along with any adjustment           previously
carried forward, would require an increase or decrease of at least           one percent
(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 ten-thousandth of a share of Common Stock or other share           or
one-millionth of a share of Preferred Stock, 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           (3) years from the date of the transaction which mandates such adjustment
or           (ii) the Expiration Date.  



        (f)              If
as a result of an adjustment made pursuant to Section 11(a)(ii) or Section
          13(a) hereof, the holder of any Right thereafter exercised shall become
entitled           to receive any shares of capital stock other than shares of Preferred
Stock,           thereafter the number of such other shares so receivable upon exercise
of any           Right and the Purchase Price thereof (or the number of rights) 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 Stock
contained in           Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k) and (m),
and the           provisions of Sections 7, 9, 10, 13 and 14 hereof with respect to the
Preferred           Stock shall apply on like terms to any such other stock; provided,
however, that the Company shall not be liable for its inability to
          reserve and keep available for issuance upon exercise of the Rights pursuant to
          Section 11(a)(ii) a number of shares of Common Stock of the Company greater
than           the number then authorized by the Company’s Articles of Incorporation
(as           the same may be amended and restated from time to time) but not outstanding
or           reserved for any other purpose.  


20





        (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 share of
          Preferred Stock purchasable from time to time hereunder upon exercise of the
          Rights, all subject to further adjustment as provided herein.  



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



        (i)              The
Company may elect on or after the date of any adjustment of the Purchase           Price
to adjust the number of Rights, in lieu of any adjustment in the number of           one
one-thousandths of a share of Preferred Stock purchasable upon the exercise           of
a Right. Each of the Rights outstanding after the adjustment in the number of
          Rights shall be exercisable for the number of one one-thousandths of a share of
          Preferred Stock 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 Rights Certificates have
          been issued, shall be at least ten (10) days later than the date of the public
          announcement. If Rights Certificates have been issued, upon each adjustment of
          the number of Rights pursuant to this Section 11(i), the Company shall, as
          promptly as practicable, cause to be distributed to holders of record of Rights
          Certificates on such record date Rights Certificates evidencing, subject to
          Section 14 hereof, the additional Rights to which such holders shall be
entitled           as a result of such adjustment, or at the option of the Company, shall
cause to           be distributed to such holders of record in substitution and
replacement for the           Rights Certificates held by such holders prior to the date
of adjustment, and           upon surrender thereof, if required by the Company, new
Rights Certificates           evidencing all the Rights to which such holders shall be
entitled after such           adjustment. Rights Certificates so to be distributed shall
be issued, executed           and countersigned in the manner provided for herein (and
may bear, at the option           of the Company, the adjusted Purchase Price) and shall
be registered in the           names of the holders of record of Rights Certificates on
the record date           specified in the public announcement.  



21






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



        (k)              Before
taking any action that would cause an adjustment reducing the Purchase           Price
below the then stated value, if any, of the number of one one-thousandths           of a
share of Preferred Stock issuable upon exercise of the Rights, the Company
          shall use its best efforts to 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 such number of one one-thousandths
of           a share of Preferred Stock at such adjusted Purchase Price.  



        (l)              In
any case in which this Section 11 shall require that an adjustment in the
          Purchase Price be made effective as of a record date for a specified event, the
          Company may elect to defer until the occurrence of such event the issuance to
          the holder of any Right exercised after such record date the number of one
          one-thousandths of a share of Preferred Stock and other capital stock or
          securities of the Company, if any, issuable upon such exercise over and above
          the number of one one-thousandths of a share of Preferred Stock 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 (fractional or otherwise) or securities upon the
          occurrence of the event requiring such adjustment.  



        (m)              Anything
in this Section 11 to the contrary notwithstanding, the Company shall           be
entitled to make such adjustments in the Purchase Price, in addition to those
          adjustments expressly required by this Section 11, as and to the extent that in
          its good faith judgment the Board shall determine to be advisable in order that
          any (i) consolidation or subdivision of the Preferred Stock, (ii) issuance
          wholly for cash of any Preferred Stock at less than the Current Market Price,
          (iii) issuance wholly for cash of Preferred Stock or securities which by their
          terms are convertible into or exchangeable for Preferred Stock, (iv) stock
          dividends or (v) issuance of rights, options or warrants referred to in this
          Section 11, hereafter made by the Company to holders of its Preferred Stock
          shall not be taxable to such stockholders.  



        (n)              The
Company covenants and agrees that it shall not, at any time after the
          Distribution Date, (i) consolidate with any other Person (other than a
          Subsidiary of the Company in a transaction which complies with Section 11(o)
          hereof), (ii) merge with or into any other Person (other than a Subsidiary of
          the Company in a transaction which complies with Section 11(o) hereof) or (iii)
          sell or transfer (or permit any Subsidiary to sell or transfer), in one
          transaction, or a series of related transactions, assets, cash flow or earning
          power aggregating more than 50% of the assets, cash flow or earning power of
the           Company and its Subsidiaries (taken as a whole) to any other




22









Person or
Persons           (other than the Company and/or any of its Subsidiaries in one or more
          transactions each of which complies with Section 11(o) hereof), if (x) at the
          time of or immediately after such consolidation, merger, sale or transfer there
          are any rights, warrants or other instruments or securities outstanding or
          agreements in effect which would substantially 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, sale or
          transfer, the stockholders of the Person who constitutes, or would constitute,
          the “Principal Party” for purposes of Section 13(a) hereof shall have
          received a distribution of Rights previously owned by such Person or any of its
          Affiliates and Associates.  



        (o)              The
Company covenants and agrees that, after the Distribution Date, it will not,
          except as permitted by Section 23, Section 26, Section 29 or Section 31 hereof,
          take (or permit any Subsidiary to take) any action if at the time such action
is           taken it is reasonably foreseeable that such action will diminish
substantially           or otherwise eliminate the benefits intended to be afforded by
the Rights.  



        (p)              Anything
in this Agreement to the contrary notwithstanding, in the event that           the
Company shall at any time after the Rights Dividend Declaration Date and           prior
to the Distribution Date (i) declare a dividend on the outstanding Common           Stock
of the Company payable in Common Stock of the Company, (ii) subdivide the
          outstanding Common Stock of the Company in a manner not covered in (i) above or
          (iii) combine the outstanding Common Stock of the Company into a smaller number
          of shares, (x) the number of one one-thousandths of a share of Preferred Stock
          then purchasable upon exercise of a Right shall be proportionately adjusted so
          that the number of one one-thousandths of a share of Preferred Stock
purchasable           thereafter upon proper exercise of each Right shall equal the
result obtained by           multiplying the number of one one-thousandths of a share of
Preferred Stock so           purchasable immediately prior to such event by a fraction
the numerator of which           shall be the total number of shares of Common Stock of
the Company outstanding           immediately prior to the occurrence of the event and
the denominator of which           shall be the total number of shares of Common Stock of
the Company outstanding           immediately following the occurrence of such event and
(y) action shall be taken           such that each share of Common Stock of the Company
outstanding immediately           after such event shall have issued with respect to it
that number of Rights           which each share of Common Stock of the Company
outstanding immediately prior to           such event had issued with respect to it. The
adjustments provided for in this           Section 11(p) shall be made successively
whenever such a dividend is declared or           paid or such a subdivision, combination
or consolidation is effected. If an           event occurs which would require an
adjustment under Section 11(a)(ii) and this           Section 11(p), the adjustments
provided for in this Section 11(p) shall be in           addition and prior to any
adjustment required pursuant to Section 11(a)(ii).  



        Section
12. Certificate of Adjusted Purchase Price or Number of Shares of Stock. Whenever
an adjustment is made as provided in Section 11 and Section 13 hereof, the Company shall
(a) promptly prepare a certificate setting forth such adjustment and a brief statement of
the facts accounting for such adjustment, (b) promptly file with the Rights Agent, and
with each transfer agent for the Preferred Stock and the Common 


23








Stock of the Company, a
copy of such certificate and (c) if a Distribution Date has occurred, mail a brief
summary thereof to each holder of a Rights Certificate in accordance with Section 25
hereof. Notwithstanding the foregoing sentence, the failure of the Company to prepare
such certificate or statement or make such filings or mailings shall not affect the
validity of, or the force or effect of, the requirement for such adjustment. The Rights
Agent shall be fully protected in relying on any such certificate and on any adjustment
therein contained.  



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



        (a)
          In the event (a “Section 13 Event”) that, following the Stock
          Acquisition Date, directly or indirectly, (x) the Company shall consolidate or
          otherwise combine with, or merge with or into, any other Person or Persons
          (other than a Subsidiary of the Company in a transaction which complies with
          Section 11(o) hereof), and the Company shall not be the continuing or surviving
          corporation of such consolidation, combination or merger, (y) any Person or
          Persons (other than a Subsidiary of the Company in a transaction which complies
          with Section 11(o) hereof) shall consolidate or combine with, or merge with or
          into, the Company, and the Company shall be the continuing or surviving
          corporation of such consolidation, combination or merger and, in connection
with           such consolidation, combination or merger, all or part of the outstanding
Common           Stock of the Company shall be changed into or exchanged for stock or
other           securities of any other Person or Persons or cash or any other property
or (z)           the Company shall sell or otherwise transfer (or one or more of its
Subsidiaries           shall sell or otherwise transfer), in one transaction or a series
of related           transactions, assets, cash flow or earning power aggregating more
than 50% of           the assets, cash flow or earning power of the Company and its
Subsidiaries           (taken as a whole) to any Person or Persons (other than the
Company or any           Subsidiary of the Company in one or more transactions each of
which complies           with Section 11(o) hereof); provided, however,
that this clause           (z) of Section 13(a) shall not apply to the pro rata
distribution by the Company           of assets (including securities) of the Company or
any of its Subsidiaries to           all holders of the Company’s Common Stock;
then, and in each such case           (except as may be contemplated by Section 13(d)
hereof), proper provision shall           be made so that each holder of a Right, except
as provided in Section 7(e)           hereof, shall thereafter have the right to receive,
upon the exercise thereof at           the then current Purchase Price in accordance with
the terms of this Agreement,           such number of validly authorized and issued,
fully paid, nonassessable and           freely tradable shares of Common Stock of the
Principal Party (as such term is           hereinafter defined), not subject to any
liens, encumbrances, rights of first           refusal or other adverse claims, as shall
be equal to the result obtained by (1)           multiplying the then current Purchase
Price by the number of one one-thousandths           of a share of Preferred Stock for
which a Right is exercisable immediately prior           to the first occurrence of a
Section 13 Event (or, if a Section 11(a)(ii) Event           has occurred prior to the
first occurrence of a Section 13 Event, multiplying           the number of such one
one-thousandths of a share for which a Right was           exercisable immediately prior
to the first occurrence of a Section 11(a)(ii)           Event by the Purchase Price in
effect immediately prior to such first occurrence           of a Section 11(a)(ii)
Event), and (2) dividing that product (which, following           the first occurrence of
a Section 13 Event, shall be referred to as the           “Purchase Price” for
each


24








Right and for all purposes of this           Agreement) by 50% of the Current Market
Price per share of Common Stock of such           Principal Party on the date of
consummation of such Section 13 Event; (ii) such           Principal Party shall
thereafter be liable for, and shall assume, by virtue of           such Section 13 Event,
all the obligations and duties of the Company pursuant to           this Agreement; (iii)
the term “Company” shall thereafter be deemed to           refer to such
Principal Party, it being specifically intended that the           provisions of Section
11 hereof shall apply only to such Principal Party           following the first
occurrence of a Section 13 Event; (iv) such Principal Party           shall take such
steps (including, but not limited to, the reservation of a           sufficient number of
shares of its Common Stock) in connection with the           consummation of any such
transaction as may be necessary to assure that the           provisions hereof shall
thereafter be applicable, as nearly as reasonably may           be, in relation to its
Common Stock thereafter deliverable upon the exercise of           the Rights; and (v)
the provisions of Section 11(a)(ii) hereof shall be of no           effect following the
first occurrence of any Section 13 Event.  



        (b)
          “Principal Party” shall mean (i) in the case of any transaction
          described in clause (x) or (y) of the first sentence of Section 13(a) hereof,
          (A) the Person that is the issuer of any securities into which Common Stock of
          the Company is converted, changed or exchanged in such merger, consolidation or
          combination, or if there is more than one such issuer, the issuer the Common
          Stock of which has the greatest aggregate market value or (B) if no securities
          are so issued, the Person that is the other party to such merger (and survives
          the merger), consolidation or combination (or if there is more than one such
          Person, the Person the Common Stock of which has the greatest aggregate market
          value), or if the other party to the merger does not survive the merger, the
          Person that does survive the merger (including the Company if it survives); and
          (ii) in the case of any transaction described in clause (z) of the first
          sentence of Section 13(a), the Person that is the party receiving the greatest
          portion of the assets, cash flow or earning power transferred pursuant to such
          transaction or transactions or, if each Person that is a party to such
          transaction or transactions receives the same portion of the assets, cash flow
          or earning power so transferred or if the Person receiving the greater portion
          of the assets, cash flow or earning power cannot be determined, whichever of
          such Persons as is the issuer of the Common Stock having the greatest aggregate
          market value; provided, however, that in any such case, (1) if
the           Common Stock of such Person is not at such time and has not been
continuously           over the preceding 12-month period registered under Section 12 of
the Exchange           Act and such Person is a direct or indirect Subsidiary of another
person the           Common Stock of which is and has been so registered, “Principal
Party”          shall refer to such other Person; (2) if the Common Stock of such
Person is not           and has not been so registered and such Person is a Subsidiary,
directly or           indirectly, of more than one Person, the Common Stock 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 Stock having the
greatest           aggregate market value; and (3) if the Common Stock of such Person is
not and           has not been so registered and 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 



25






in the same ratio as their direct or
          indirect interests in such Person bear to the total of such interests.  



        (c)
          The Company shall not consummate any Section 13 Event unless the Principal
Party           shall have a sufficient number of authorized shares of Common Stock which
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 such Principal Party shall have executed and delivered to the
Rights Agent a           supplemental agreement confirming that the requirements of
Sections 13(a) and           (b) hereof shall promptly be performed in accordance with
their terms and that           such Section 13 Event shall not result in a default by the
Principal Party under           this Agreement as the same shall have been assumed by the
Principal Party           pursuant to Sections 13(a) and (b) hereof and further providing
that, as soon as           practicable after the date of such Section 13 Event, the
Principal Party will  



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







	  	        (ii)
          take all such other action as may be necessary to enable the Principal Party to
          issue the securities purchasable upon exercise of the Rights, including but not
          limited to the registration or qualification of such securities under all
          requisite securities laws or jurisdictions of the various states and the
listing           of such securities on such exchanges and trading markets 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 respects with
the           requirements for registration on Form 10 (or any successor form) under the
          Exchange Act; and  







	  	
The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event shall
occur at any time after the occurrence of a Section 11(a)(ii) Event, the Rights which
have not theretofore been exercised shall thereafter become exercisable in the manner
described in Section 13(a).  






     (d)    
          Notwithstanding anything in this Agreement to the contrary, Section 13 shall not
          be applicable to a transaction described in subparagraph (x) or (y) of Section
          13(a) if (i) such transaction is consummated with a Person or Persons (or a
          wholly owned subsidiary of any such Person or Persons) who acquired Common Stock
          of the Company pursuant to a tender offer or exchange offer for all outstanding
          Common Stock of the Company which is a Qualified Offer as such term is defined
          in Section 11(a)(ii) hereof, (ii) the price per share of Common Stock of the
          Company offered in such 


26





transaction is not less than the price per share of
          Common Stock paid to all holders of Common Stock of the Company whose shares
          were purchased pursuant to such tender offer or exchange offer and (iii) the
          form of consideration being offered to the remaining holders of Common Stock
          pursuant to such transaction is the same as the form of consideration paid
          pursuant to such tender offer or exchange offer. Upon consummation of any such
          transaction contemplated by this Section 13(d), all Rights hereunder shall
          expire. 



        Section
14.    Fractional Rights and Fractional Shares. 



        (a)              The
Company shall not be required to issue fractions of Rights, except prior to           the
Distribution Date as provided in Section 11(i) hereof, or to distribute           Rights
Certificates which evidence fractional Rights. In lieu of such fractional
          Rights, there shall be paid to the registered holders of the Rights
Certificates           with regard to which such fractional Rights would otherwise be
issuable, an           amount in cash equal to the same fraction of the current market
value of a whole           Right. For 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 of the Rights 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 American Stock
Exchange or,           if the Rights are not listed or admitted to trading on the
American Stock           Exchange, as reported in the principal consolidated transaction
reporting system           with respect to securities listed on the principal national
securities exchange           on which the Rights are listed or admitted to trading, or
if the Rights are not           listed or admitted to trading on any national securities
exchange, the last           quoted price or, if not so quoted, the average of the high
bid and low asked           prices in the over-the-counter market, as reported by the
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.           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           shall be used.  



        (b)              The
Company shall not be required to issue fractions of shares of Preferred           Stock
(other than fractions which are integral multiples of one one-thousandth           of a
share of Preferred Stock) upon exercise of the Rights or to distribute
          certificates which evidence fractional shares of Preferred Stock (other than
          fractions which are integral multiples of one one-thousandth of a share of
          Preferred Stock). In lieu of fractional shares of Preferred Stock that are not
          integral multiples of one one-thousandth of a share of Preferred Stock, the
          Company may pay to the registered holders of Rights Certificates at the time
          such Rights are exercised as herein provided an amount in cash equal to the
same           fraction of the current market value of one one-thousandth of a share of
          Preferred Stock. For purposes of this Section 14(b), the current market value
of           one one-thousandth of a share of Preferred Stock shall be one one-thousandth
of           the closing price of a share of Preferred Stock or, if unavailable, the
          appropriate alternative 


27









price (in each case as determined pursuant to Section
          11(d)(ii) hereof) for the Trading Day immediately prior to the date of such
          exercise.  



        (c)              Following
the occurrence of a Triggering Event, the Company shall not be           required to
issue fractions of shares of Common Stock of the Company upon           exercise of the
Rights or to distribute certificates which evidence fractional           shares of Common
Stock of the Company. In lieu of fractional shares of Common           Stock of the
Company, the Company may pay to the registered holders of Rights           Certificates
at the time such Rights are exercised as herein provided an amount           in cash
equal to the same fraction of the current market value of one (1) share           of
Common Stock of the Company. For purposes of this Section 14(c), the current
          market value of one share of Common Stock of the Company shall be the closing
          price of one share of Common Stock of the Company or, if unavailable, the
          appropriate alternative price (in each case as determined pursuant to Section
          11(d)(i) hereof) for the Trading Day immediately prior to the date of such
          exercise.  



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



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



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



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



        (b)              after
the Distribution Date, the Rights Certificates are transferable only on           the
registry books of the Rights Agent if surrendered at the principal




28








office or
          offices of the Rights Agent designated for such purposes, duly endorsed or
          accompanied by a proper instrument of transfer and with the appropriate forms
          and certificates fully executed;  



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



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



        Section
17. Rights Certificate Holder Not Deemed a Stockholder. No holder, as such, of any
Rights Certificate shall be entitled to vote, receive dividends or be deemed for any
purpose the holder of the number of one one-thousandths of a share of Preferred Stock 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 Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as such,
any of the rights of a stockholder of the Company 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 trust action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 24 hereof), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights evidenced by
such Rights Certificate shall have been exercised in accordance with the provisions
hereof.  



        Section
18.    Concerning the Rights Agent. 



        (a)              The
Company agrees to pay to the Rights Agent reasonable compensation for all
          services rendered by it hereunder and, from time to time, on demand of the
          Rights Agent, its reasonable expenses and counsel fees and disbursements 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 


29









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.  



        (b)              The
Rights Agent shall be protected and shall incur no liability for or in           respect
of any action taken, suffered or omitted by it in connection with its
          administration of this Agreement in reliance upon any Rights Certificate or
          certificate for Common Stock of the Company 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 reasonably believed by it to be genuine and to be signed,
          executed and, where necessary, verified or acknowledged by the proper Person or
          Persons.  



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



        (a)              Any
corporation into which the Rights Agent or any successor Rights Agent may be
          merged or with which it may be consolidated, or any corporation resulting from
          any merger or consolidation to which the Rights Agent or any successor Rights
          Agent shall be a party, or any corporation succeeding to the corporate trust,
          stock transfer or other stockholder services 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 would be eligible for appointment as a successor Rights Agent
under           the provisions of Section 21 hereof. If at the time such successor Rights
Agent           shall succeed to the agency created by this Agreement, any of the Rights
          Certificates shall have been countersigned but not delivered, any such
successor           Rights Agent may adopt the countersignature of a predecessor Rights
Agent and           deliver such Rights Certificates so countersigned; and if at that
time any of           the Rights Certificates shall not have been countersigned, any
successor Rights           Agent may countersign such Rights Certificates either in the
name of the           predecessor or in the name of the successor Rights Agent; and in
all such cases,           such Rights Certificates shall have the full force provided in
the Rights           Certificates and in this Agreement.  



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



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


30






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



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



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



        (d)              The
Rights Agent shall not be liable for or by reason of any of the statements           of
fact or recitals contained in this Agreement or in the Rights Certificates,           nor
shall it be required to verify the same (except as to its countersignature           on
such Rights Certificates), but all such statements and recitals are and shall
          be deemed to have been made by the Company only.  



        (e)              The
Rights Agent shall not be under any responsibility in respect of the           validity
of this Agreement or the execution and delivery hereof (except the due
          execution hereof by the Rights Agent) or in respect of the validity or
execution           of any Rights Certificate (except its countersignature thereon); nor
shall it be           responsible for any breach by the Company of any covenant or
condition contained           in this Agreement or in any Rights Certificate; nor shall
it be responsible for           any adjustment required under the provisions of Section
11, Section 13 or           Section 29 hereof or responsible for the manner, method or
amount of any such           adjustment or the ascertaining of the existence of facts
that would require any           such adjustment (except with respect to the exercise of
Rights evidenced by           Rights Certificates after actual notice of any such
adjustment); nor shall it by           any act hereunder be deemed to make any
representation or warranty as to the           authorization or reservation of any Common
Stock or Preferred Stock to be issued           pursuant to this Agreement or any Rights
Certificate or as to whether any Common           Stock or Preferred Stock will, when so
issued, be validly authorized and issued,           fully paid and nonassessable.  



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



31






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



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



        Section
21. Change of Rights Agent. The Rights Agent or any successor Rights Agent may
resign and be discharged from its duties under this Agreement upon 30 days’ notice
in writing mailed to the Company, and to each transfer agent of the Common Stock of the
Company and Preferred Stock, by registered or certified mail, and, if such resignation
occurs after the Distribution Date, to the registered holders of the Rights Certificates
by first-class mail. The Company may remove the Rights Agent or any successor Rights
Agent upon 30 days’ notice in writing, mailed to the Rights Agent or successor
Rights Agent, as the case may be, and to each transfer agent of the Common Stock of the
Company and Preferred Stock, by registered or certified mail, and, if such removal occurs
after the Distribution Date, to the holders of the Rights Certificates by first-class
mail. In the event the transfer agency relationship in effect between the



32







Company and the
Rights Agent terminates, the Rights Agent will be deemed to resign automatically on the
effective date of such termination, and if there shall be any required notice, it will be
sent by the Company. 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 Rights
Certificate (who shall, with such notice, submit his Rights Certificate for inspection by
the Company), then any registered holder of any Rights Certificate may apply to any court
of competent jurisdiction for the appointment of a new Rights Agent. If no successor
Rights Agent shall have been appointed within 30 days from effectiveness of such removal
or resignation, and no registered holder of any Rights Certificates have applied pursuant
to this Agreement for the appointment of a new Rights Agent, the Company shall be
automatically designated as successor Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a legal business entity
organized and doing business under the laws of the United States or of any state of the
United States, in good standing, authorized under such laws to exercise corporate trust,
stock transfer or stockholder services powers, 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 $100,000,000 or (b) an affiliate of a legal
business entity described in clause (a) of this sentence. After appointment, the
successor Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without further act
or deed; but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder and shall execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose. Not later than
the effective date of any such appointment, the Company shall file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Common Stock of
the Company and the Preferred Stock and, if such appointment occurs after the
Distribution Date, mail a notice thereof in writing to the registered holders of the
Rights Certificates. Failure to give any notice provided for in this Section 21, however,
or any defect therein, shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as the case
may be.  



Section 22. Issuance of New Rights
Certificates. Notwithstanding any of the provisions of this Agreement or of the Rights
Certificates to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board to reflect any
adjustment or change in the Purchase Price and the number or kind or class of shares or
other securities or property purchasable under the Rights Certificates made in accordance
with the provisions of this Agreement. In addition, in connection with the issuance or
sale of Common Stock of the Company following the Distribution Date and prior to the
redemption or expiration of the Rights, the Company (a) shall, with respect to Common
Stock of the Company so issued or sold pursuant to the exercise of stock options or under
any employee plan or arrangement, granted or awarded as of the Distribution Date, or upon
the exercise, conversion or exchange of securities hereinafter issued by the Company, and
(b) may, in any other case, if deemed necessary or appropriate by the Board, issue Rights
Certificates




33







representing the appropriate number of Rights in connection with such
issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by counsel that
such issuance would create a significant risk of material adverse tax consequences to the
Company or the Person to whom such Rights Certificate would be issued and (ii) no such
Rights Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof. 



        Section
23.    Redemption and Termination. 



        (a)              The
Board may, at its option, at any time prior to the earlier of (i) the Close           of
Business on the tenth Business Day following the Stock Acquisition Date (or,           if
the Stock Acquisition Date shall have occurred prior to the Record Date, the
          Close of Business on the tenth Business Day following the Record Date) or (ii)
          the Final Expiration Date, direct the Company to, and if so directed, the
          Company shall, redeem all but not less than all of the then outstanding Rights
          at a redemption price of $0.01 per Right, as such amount may be appropriately
          adjusted to reflect any stock split, stock dividend or similar transaction
          occurring after the date hereof (such redemption price being hereinafter
          referred to as the “Redemption Price”). Notwithstanding anything
          contained in this Agreement to the contrary, the Rights shall not be
exercisable           after the first occurrence of a Section 11(a)(ii) Event until such
time as the           Company’s right of redemption hereunder has expired. The
Company may, at           its option, pay the Redemption Price in cash, Common Stock of
the Company (based           on the Current Market Price of the Common Stock at the time
of redemption) or           any other form of consideration deemed appropriate by the
Board.  



        (b)              Immediately
upon the action of the Board (with, if required, the concurrence of           a majority
of the Continuing Directors) ordering the redemption of the Rights,           evidence of
which shall have been filed with the Rights Agent, and without any           further
action and without any notice, the right to exercise the Rights will           terminate
and the only right thereafter of the holders of Rights shall be to           receive the
Redemption Price for each Right so held. Promptly after the action           of the Board
ordering the redemption of the Rights, the Company shall give           notice of such
redemption to the Rights Agent and the holders of the then           outstanding Rights
by mailing such notice to all such holders at each           holder’s last address
as it appears upon the registry books of the Rights           Agent or, prior to the
Distribution Date, on the registry books of the transfer           agent for the Common
Stock. 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.  



        (c)              Notwithstanding
the provisions of Section 23(a) hereof, in the event that a           majority of the
Board does not consist of Continuing Directors (the first           occurrence of such an
event referred to herein as a “Section 23(a)           Event”), then for the
maximum period allowed under Maryland law, following           such Section 23(a) Event,
the Rights shall not be redeemed unless there are           Continuing Directors and a
majority of the Continuing Directors concur with the           Board’s decision to
redeem the Rights.  


34






        Section
24. Notice of Certain Events. 



        (a)              In
case the Company shall propose, at any time after the Distribution Date, (i)           to
pay any dividend payable in stock of any class to the holders of Preferred
          Stock or to make any other distribution to the holders of Preferred Stock
(other           than a regular quarterly cash dividend out of earnings or retained
earnings of           the Company), or (ii) to offer to the holders of Preferred Stock
rights or           warrants to subscribe for or to purchase any additional Preferred
Stock or           shares of stock of any class or any other securities, rights or
options, or           (iii) to effect any reclassification of its Preferred Stock (other
than a           reclassification involving only the subdivision of outstanding Preferred
Stock),           or (iv) to effect any consolidation or merger into or with any other
Person           (other than a Subsidiary of the Company in a transaction which complies
with           Section 11(o) hereof), or to effect any sale or other transfer (or to
permit one           or more of its Subsidiaries to effect any sale or other transfer),
in one           transaction or a series of related transactions, of more than 50% of the
assets,           cash flow or earning power of the Company and its Subsidiaries (taken
as a           whole) to any other Person or Persons (other than the Company and/or any
of its           Subsidiaries in one or more transactions each of which complies with
Section           11(o) hereof), or (v) to effect the liquidation, dissolution or winding
up of           the Company, then, in each such case, the Company shall give to each
holder of a           Rights Certificate, to the extent feasible and in accordance with
Section 25           hereof, a notice of such proposed action, which shall specify the
record date           for the purposes of such stock dividend or distribution of rights
or warrants,           or the date on which such reclassification, consolidation, merger,
sale,           transfer, liquidation, dissolution or winding up is to take place and the
date           of participation therein by the holders of the Preferred Stock, 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 twenty (20) days prior to
the           record date for determining holders of the Preferred Stock for purposes of
such           action, and in the case of any such other action, at least twenty (20)
days           prior to the date of the taking of such proposed action or the date of
          participation therein by the holders of the Preferred Stock, whichever shall be
          the earlier.  



        (b)              In
case any of the events set forth in Section 11(a)(ii) hereof shall occur,           then,
in any such case, (i) the Company shall as soon as practicable thereafter           give
to each holder of a Rights Certificate, to the extent feasible and in
          accordance with Section 25 hereof, a notice of the occurrence of such event,
          which shall specify the event and the consequences of the event to holders of
          Rights under Section 11(a)(ii) hereof, and (ii) all references in the preceding
          paragraph to Preferred Stock shall be deemed thereafter to refer to Common
Stock           of the Company and/or, if appropriate, other securities.  



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


35







		Five Star Quality Care, Inc.

400 Centre Street

Newton, Massachusetts 02458

Attention: President






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

		
                  EquiServe Trust Company, N.A.

                  150 Royall Street

                  Canton, MA 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
Rights Certificate (or, if prior to the Distribution Date, to the holder of certificates
representing Common Stock of the Company) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of such holder
as shown on the registry books of the Company. 



        Section
26. Supplements and Amendments. Prior to the Distribution Date the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates representing Common Stock
of the Company. From and after the Distribution Date, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the approval
of any holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to correct
or supplement any provision contained herein which may be defective or inconsistent with
any other provisions herein, (iii) to shorten or lengthen any time period hereunder or
(iv) to change or supplement the provisions hereunder in any manner which the Company may
deem necessary or desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person). Upon the delivery of a certificate from an appropriate
officer of the Company which states that the proposed supplement or amendment is in
compliance with the terms of this Section 26, the Rights Agent shall execute such
supplement or amendment. Notwithstanding anything herein to the contrary, for the maximum
period allowed under Maryland law, following a Section 23(a) Event, in addition to the
other provisions of this Section 26, this Agreement may be amended or supplemented by the
Board only if there are Continuing Directors and a majority of the Continuing Directors
concur with such amendment or supplement. Notwithstanding anything herein to the
contrary, this Agreement may not be amended (other than pursuant to clauses (i) or (ii)
of the preceding sentence) at a time when the Rights are not redeemable. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed coincident with
the interests of the holders of Common Stock of the Company. In no event will the Rights
Agent be required 


36










to execute an amendment or an amended and restated or renewed rights
agreement, which is materially adverse to the interests of the Rights Agent.  



Section 27. Successors. All
the covenants and provisions of this Agreement by or for the benefit of the Company or the
Rights Agent shall bind and inure to the benefit of their respective successors and
assigns hereunder. 



Section 28. Determinations and
Actions by the Board of Directors, etc. For all purposes of this Agreement, any
calculation of the number of shares of Common Stock of the Company or any other class of
capital stock outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding Common Stock of the Company of which any
Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule
13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act. The Board
(with, where specifically provided for herein, the concurrence of Continuing Directors)
shall have the exclusive power and authority to administer this Agreement and to exercise
all rights and powers specifically granted to the Board (with, where specifically provided
for herein, the concurrence of Continuing Directors) or to the Company, or as may be
necessary or advisable in the administration of this Agreement including, without
limitation, the right and power to (a) interpret the provisions of this Agreement and (b)
make all determinations 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 (with, where specifically provided for herein, the concurrence
of Continuing Directors), the Continuing Directors, the Outside Directors or the Company
in good faith, shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties and (y) not subject the Board, the
Continuing Directors or the Outside Directors to any liability to the holders of the
Rights. 



        Section
29.    Exchange. 



        (a)              The
Board may, at its option, at any time after any Person becomes an Acquiring
          Person, exchange all or part of the then outstanding and exercisable Rights
          (which shall not include Rights that have become void pursuant to the provision
          of Section 7(e) hereof) for Common Stock of the Company at an exchange ratio of
          one share of Common Stock of the Company 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 shall not
          be empowered to effect such exchange at any time after any Person (other than a
          Person qualifying as an Exempt Person under clauses (i), (ii), (iii) or (vi)
          under the definition of Exempt Person herein), together with all Affiliates and
          Associates of such Person, becomes the Beneficial Owner of 50% or more of the
          Common Stock of the Company then outstanding.  



        (b)              Immediately
upon the action of the Board ordering the exchange of any Rights           pursuant to
paragraph (a) of this Section 29 and without any 



37






further action and           without
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           shares
of Common Stock of the Company 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 or, prior to the Distribution Date, on           the
registry books of the Transfer Agent for the Common Stock. 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 Stock of the Company 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 7(e) hereof) held by each holder of Rights.  



        (c)              In
any exchange pursuant to this Section 29, the Company, at its option, may
          substitute Preferred Stock (or Equivalent Preferred Stock, as such term is
          defined in Section 11(b) hereof) for Common Stock of the Company exchangeable
          for Rights, at the initial rate of one one-thousandth of a share of Preferred
          Stock (or Equivalent Preferred Stock) for each share of Common Stock of the
          Company, as appropriately adjusted to reflect stock splits, stock dividends and
          other similar transactions.  



        (d)              In
the event that there shall not be sufficient Common Stock of the Company           issued
but not outstanding or authorized but unissued to permit any exchange of           Rights
as contemplated in accordance with this Section 29, the Company shall           take all
such action as may be necessary to authorize additional Common Stock of           the
Company for issuance upon exchange of the Rights.  



        (e)              The
Company shall not be required to issue fractions of shares of Common Stock           of
the Company or to distribute certificates which evidence fractional shares of
          Common Stock of the Company. In lieu of such fractional shares of Common Stock
          of the Company, there shall be paid to the registered holders of the Rights
          Certificates with regard to which such fractional shares of Common Stock of the
          Company would otherwise be issuable an amount in cash equal to the same
fraction           of the current market value of a whole share of Common Stock of the
Company. For           the purposes of this paragraph (e), the current market value of a
whole share of           Common Stock of the Company shall be the closing price of a
share of Common           Stock of the Company or, if unavailable, the appropriate
alternative price (in           each case as determined pursuant to Section 11(d)(i)
hereof) for the Trading Day           immediately prior to the date on which the Board
takes action ordering an           exchange pursuant to this Section 29.  



        Section
30. Benefits of this Agreement. Nothing in this Agreement shall be construed to
give to any Person other than the Company, the Rights Agent and the registered holders of
the Rights Certificates (and, prior to the Distribution Date,



38








registered holders of the
Common Stock of the Company) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company,
the Rights Agent and the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of the Common Stock of the Company).  



        Section
31. Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions
of this Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated; provided, however, that notwithstanding anything
in this Agreement to the contrary, if any such term, provision, covenant or restriction
is held by such court or authority to be invalid, void or unenforceable and the Board
determines in its good faith judgment that severing the invalid language from this
Agreement would adversely affect the purpose or effect of this Agreement, the right of
redemption set forth in Section 23 hereof shall be reinstated and shall not expire until
the Close of Business on the tenth Business Day following the date of such determination
by the Board. Without limiting the foregoing, if any provision of this Agreement
requiring that a determination be made by the Board with the concurrence of a majority of
the Continuing Directors or the Outside Directors is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable, such determination
shall then be made by the Board in accordance with applicable law and the Company’s
Articles of Incorporation (as the same may be amended and restated from time to time) and
Bylaws (as the same may be amended and restated from time to time).  



        Section
32. Governing Law. This Agreement, each Right and each Rights Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of Maryland
and shall for all purposes be governed by and construed in accordance with the laws of
the State of Maryland applicable to contracts made and to be performed entirely within
the State of Maryland, including its principles of conflicts of law. The rights and
duties of the Rights Agent hereunder shall be governed by the laws of the State of
Maryland, including its principles of conflicts of law.  



        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.  





39





SIGNATURE 




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







	

         




Attested by: /s/ Jennifer B. Clark 

              Name: Jennifer B. Clark

              Title: Assistant Secretary

	 	
          FIVE STAR QUALITY CARE, INC.

          

          By: /s/ Evrett W. Benton

              Name: Evrett W. Benton

              Title: President, Chief Operating Officer and Secretary







	
          




Attested by: /s/ Douglas
Ives 

              Name: Douglas
Ives 

              Title: Senior Account Manager	 	
          EQUISERVE TRUST COMPANY, N.A.

          as Rights Agent

          

          By: /s/ Carol Mulvey-Eori

              Name: Carol Mulvey-Eori

              Title: Managing Director












40









Exhibit A 



FIVE STAR QUALITY CARE,
INC. 



ARTICLES SUPPLEMENTARY 



        FIVE
STAR QUALITY CARE, INC., a Maryland corporation, having its principal office in Baltimore
City, Maryland (hereinafter called the “Company”), hereby certifies to the
State Department of Assessments and Taxation of Maryland that:  



        FIRST:
Pursuant to authority expressly vested in the Board of Directors by Article V, Section
5.1 of the Amended and Restated Articles of Incorporation of the Company, dated December
5, 2001 as amended, (the “Articles”), the Board of Directors has duly
reclassified 100,000 unissued shares of Preferred Stock, of the Company (from among the
1,000,000 shares of Preferred Stock, $.01 par value, of the Company which are authorized)
into 100,000 shares of Junior Participating Preferred Stock, par value $.01 per share, of
the Company.  



        SECOND:
The terms (including the designations and any preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemption) of the Junior Participating Preferred Stock, par value $.01 per
share, are as follows:  



1.                 Designation
and Amount. The shares of such series shall be designated as           “Junior
Participating Preferred Stock” and the number of shares           constituting such
series shall be 100,000.  



2.                 Dividends
and Distributions.  



        (a)                 Subject
to the prior and superior rights of the holders of any shares of any           series of
Preferred Stock ranking prior and superior to the Junior Participating
          Preferred Stock with respect to dividends (if any), the holders of Junior
          Participating Preferred Stock shall be entitled to receive, when, as and if
          declared by the Board out of funds legally available for the purpose, quarterly
          dividends payable in cash on the 15th 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 of Junior Participating
Preferred Stock           or fraction thereof, in an amount per share (rounded to the
nearest cent) equal           to the greater of (X) $5 or (Y) subject to the provision
for adjustment           hereinafter set forth, 1,000 times the aggregate per share
amount of all cash           dividends, plus 1,000 times the aggregate per share amount
(payable in kind) of           all non-cash dividends or other distributions, other than
a dividend payable in           common stock of beneficial interest, par value $.01 per
share, of the Company           (the “Common Stock”) or a subdivision of the
outstanding 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 of           Junior Participating Preferred Stock or fraction
thereof. In the event the           Company shall at any time after March 10, 2004 (the
“Rights Declaration           Date”) (i) declare any dividend on Common Stock
payable in Common Stock,           (ii) subdivide the outstanding Common Stock or (iii)
combine the outstanding           Common Stock into a smaller number of shares, then in
each such case the amount           to which holders of shares of Junior Participating
Preferred Stock were entitled           immediately prior to such event under clause (Y)
of the preceding sentence shall           be adjusted by multiplying such amount by a
fraction, the numerator of which is           the number of shares of Common Stock
outstanding immediately after such event           and the denominator of which is the
number of shares of Common Stock that were           outstanding immediately prior to
such event.  



        (b)   
              The
Board shall declare a dividend or distribution on the Junior           Participating
Preferred Stock as provided in paragraph (a) above immediately           after it
declares a dividend or distribution on the Common Stock (other than a           dividend
payable in 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 $5 per share on the Junior Participating
          Preferred Stock shall nevertheless be payable on such subsequent Quarterly
          Dividend Payment Date.  



        (c)   
              Dividends
shall begin to accrue and be cumulative on outstanding           Junior Participating
Preferred Stock from the Quarterly Dividend Payment Date           next preceding the
date of issue of such Junior Participating Preferred Stock           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 Junior Participating 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 Junior Participating
          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
          may fix a record date for the determination of holders of Junior Participating
          Preferred Stock entitled to receive payment of a dividend or distribution
          declared thereon, which record date shall be not less than 10 and not more than
          60 days prior to the date fixed for the payment thereof.  



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



        (a)   
              Subject
to the provision for adjustment hereinafter set forth, each           share of Junior
Participating Preferred Stock shall entitle the holder thereof           to 1,000 votes
on all matters submitted to a vote of the stockholders of the           Company. In the
event that the 


A-2







Board shall at any time after the Rights           Declaration Date (i)
declare any dividend on Common Stock payable in Common           Stock, (ii) subdivide
the outstanding Common Stock or (iii) combine the           outstanding Common Stock into
a smaller number of shares, then in each such case           the number of votes per
share to which holders of Junior Participating 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.  



        (b)
Except as otherwise provided herein or by law, the holders of Junior Participating
Preferred Stock and the holders of Common Stock shall vote together as one class on all
matters submitted to a vote of stockholders of the Company.  



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



        (ii)                 During
any Default Period, such voting right of the holders of Junior           Participating
Preferred Stock may be exercised initially at a special meeting           called pursuant
to subparagraph (iii) of this Section 3(c) or at an annual           meeting of
stockholders, and thereafter at annual meetings of stockholders,           provided that
neither such voting right nor the right of the holders of any           other series of
Preferred Stock, if any, to increase, in certain cases, the           authorized number
of Directors shall be exercised unless the holders of ten           percent (10%) in
number of shares of Preferred Stock outstanding shall be           present in person or
by proxy. The absence of a quorum of the holders of Common           Stock shall not
affect the exercise by the holders of Preferred Stock of such           voting right. At
any meeting at which the holders of Preferred Stock shall           exercise such voting
right initially during an existing Default Period, they           shall have the right,
voting as a class, to elect Directors to fill up to two           (2) vacancies, if any,
in the Board or, if such right is exercised at an annual           meeting, to elect two
(2) Directors. The holders of Preferred Stock shall have           the right to make such
increase in the number of Directors as shall be necessary           to permit the
election by them at any special meeting of two (2) Directors.           After the holders
of Preferred Stock shall have exercised their right to elect           Directors in any
Default Period and during the continuance of such period, the           number of
Directors shall not be increased or decreased except by vote of the           holders of
Preferred Stock as herein provided or pursuant to the rights of any           equity
securities ranking senior to or pari passu with the Junior Participating
          Preferred Stock, if any.  



A-3






        (iii)                 Unless
the holders of Preferred Stock shall, during an existing Default Period,           have
previously exercised their right to elect Directors, the Board may order,           or
any stockholder or stockholders owning in the aggregate not less than ten
          percent (10%) of the total number of shares of Preferred Stock outstanding,
          irrespective of series, may request, the calling of a special meeting of the
          holders of Preferred Stock, which meeting shall thereupon be called by the
Board           or the President, any Vice President or the Secretary of the Company. The
          Secretary of the Company shall give notice of such meeting and of any annual
          meeting at which holders of Preferred Stock are entitled to vote pursuant to
          this paragraph (c)(iii) to each holder of record of Preferred Stock by mailing
a           copy of such notice to him at his last address as the same appears on the
books           of the Company. Such meeting shall be called for a time not earlier than
fifteen           (15) days and not later than sixty (60) days after such order or
request. If           such meeting is not called within sixty (60) days after such order
or request,           such meeting may be called on similar notice by any stockholder or
stockholders           owning in the aggregate not less than ten percent (10%) of the
total number of           shares of Preferred Stock outstanding. Notwithstanding the
provisions of this           paragraph (c)(iii), no such special meeting shall be called
during the period           within sixty (60) days immediately preceding the date fixed
for the next annual           meeting of the stockholders.  



        (iv)                 In
any Default Period, the holders of Common Stock, and (if applicable)           other
classes of stock of beneficial interest of the Company (all Company stock           being
referred to as “Stock”), shall continue to be entitled to elect           the
whole number of Directors until the holders of Preferred Stock shall have
          exercised their rights to elect two (2) Directors voting as a class, after the
          exercise of which right, (X) the Directors so elected by the holders of
          Preferred Stock shall continue in office until their successors shall have been
          elected by such holders or until the expiration of the Default Period, and (Y)
          any vacancy in the Board shall (except as provided in paragraph (c)(ii) of this
          Section 3) be filled by vote of a majority of the remaining Directors
          theretofore elected by the holders of the class or classes of Stock which
          elected the Director whose office shall have become vacant. References in this
          paragraph (c) to Directors elected by the holders of a particular class of
Stock           shall include Directors elected by such Directors to fill vacancies as
provided           in clause (Y) of the foregoing sentence.  



        (v)                 Immediately
upon the expiration of a Default Period, (X) the right of the           holders of
Preferred Stock as a class to elect Directors shall cease, (Y) the           term of any
Directors elected by the holders of Preferred Stock as a class shall           terminate,
and (Z) the number of Directors shall be such number as may be           provided for in
the Articles, any Article Supplementary or the By-Laws of the           Company,
irrespective of any increase made pursuant to the provisions of           paragraph
(c)(ii) of this Section 3 such number being subject, however, to           change
thereafter in any manner provided by law, or in the Articles of           Incorporation,
any Article Supplementary or the By-Laws of the Company). Any           vacancies in the
Board effected by the provisions of clauses (Y) and (Z) in the           preceding
sentence may be filled by a majority of the remaining Directors.  



        (d)                 Except
as set forth herein, holders of Junior Participating Preferred Stock           shall have
no special voting rights and their consent shall not be required           (except to the
extent 


A-4







they are entitled to vote with holders of Common Stock as           set forth
herein) for taking any trust action.  



        4.                 Certain
Restrictions.  



        (a)                 Whenever
quarterly dividends or other dividends or distributions payable on the           Junior
Participating 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 Junior Participating Preferred Stock outstanding
shall have           been paid in full, the Company shall not:  



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



        (ii)                 declare
or pay dividends on or make any other distributions on any Stock ranking           on a
parity (either as to dividends or upon liquidation, dissolution or winding           up)
with the Junior Participating Preferred Stock except dividends paid ratably           on
the Junior Participating 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 Stock are then entitled;  



        (iii)                 redeem
or purchase or otherwise acquire for consideration Stock ranking on a           parity
(either as to dividends or upon liquidation, dissolution or winding up)           with
the Junior Participating Preferred Stock provided that the Company may at           any
time redeem, purchase or otherwise acquire any such parity Stock in exchange
          for any Stock ranking junior (either as to dividends or upon dissolution,
          liquidation or winding up) to the Junior Participating Preferred Stock;  



        (iv)                 purchase
or otherwise acquire for consideration any Junior Participating           Preferred
Stock, or any Stock ranking on a parity with the Junior Participating           Preferred
Stock, except pursuant to Section 4(a)(iii) or in accordance with a           purchase
offer made in writing or by publication (as determined by the Board) to           all
holders of such stock upon such terms as the Board, 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
Company shall not permit any subsidiary of the Company to           purchase or otherwise
acquire for consideration any Stock of the Company unless           the Company could,
under paragraph (a) of this Section 4, purchase or otherwise           acquire such
shares at such time and in such manner.  



        5.                 Reacquired
Stock. Any shares of Junior Participating Preferred Stock, purchased           or
otherwise acquired by the Company in any manner whatsoever shall be retired           and



A-5








cancelled promptly after the acquisition thereof. All such shares shall upon
          their cancellation become authorized but unissued Preferred Stock and may be
          reissued as part of a new series of Preferred Stock to be created by resolution
          or resolutions of the Board, subject to the conditions and restrictions on
          issuance set forth herein.  



        6.                 Liquidation,
Dissolution or Winding Up.  



        (a)                 Upon
any liquidation (voluntary or otherwise), dissolution or winding up of the
          Company, no distribution shall be made to the holders of Stock ranking junior
          (either as to dividends or upon liquidation, dissolution or winding up) to the
          Junior Participating Preferred Stock, unless, prior thereto, the holders of
          Junior Participating Preferred Stock shall have received $1,000.00 per share,
          plus an amount equal to accrued and unpaid dividends and distributions thereon,
          whether or not declared, to the date of such payment (the “Liquidation
          Preference”). Following the payment of the full amount of the Liquidation
          Preference, no additional distributions shall be made to the holders of Junior
          Participating Preferred Stock, unless, prior thereto, the holders of Common
          Stock shall have received an amount per share (the “Common
          Adjustment”) equal to the quotient obtained by dividing (i) the
Liquidation           Preference by (ii) 1,000 (as appropriately adjusted as set forth in
subparagraph           (c) below to reflect such events as stock splits, stock dividends
and           recapitalization with respect to the Common Stock) (such number in clause
(ii)           immediately above being referred to as the “Adjustment Number”).
          Subject to the rights of any other series of Preferred Stock then outstanding,
          if any, following the payment of the full amount of the Liquidation Preference
          and the Common Adjustment in respect of all outstanding shares of Junior
          Participating Preferred Stock and Common Stock, respectively, holders of Junior
          Participating Preferred Stock and holders of Common Stock shall receive their
          ratable and proportionate share of the remaining assets to be distributed in
the           ratio of the Adjustment Number to one (1) with respect to such Junior
          Participating Preferred Stock and Common Stock, on a per share basis,
          respectively.  



        (b)                 In
the event, however, that there are not sufficient assets available to permit
          payment in full of the Liquidation Preference and the liquidation preferences
of           all other series of Preferred Stock, if any, which rank on a parity with the
          Junior Participating Preferred Stock, then such remaining assets shall be
          distributed ratably to the holders of such parity Stock (including the Junior
          Participating Preferred Stock) in proportion to their respective liquidation
          preferences. In the event, however, that there are not sufficient assets
          available to permit payment in full of the Common Adjustment after satisfaction
          of the liquidation preferences of all series of Preferred Stock, if any, then
          such remaining assets shall be distributed ratably to the holders of Common
          Stock.  



        (c)                 In
the event the Company shall at any time after the Rights Declaration Date (i)
          declare any dividend on Common Stock payable in Common Stock, (ii) subdivide
the           outstanding Common Stock or (iii) combine the outstanding Common Stock into
a           smaller number of shares, then in each such case the Adjustment Number in
effect           immediately prior to such event shall be adjusted by multiplying such
Adjustment           Number by a fraction the numerator of which is the number of shares
of Common           Stock 


A-6






     
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.  



         7.       
          Consolidation, Merger, etc. In case the Company shall enter into any
          consolidation, merger, combination or other transaction in which the Common
          Stock is exchanged for or changed into other stock or securities, cash or any
          other property, then in any such case the Junior Participating Preferred Stock
          shall at the same time be similarly exchanged or changed in an amount per share
          (subject to the provision for adjustment hereinafter set forth) equal to 1,000
          times the aggregate amount of shares, securities, cash 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 Company shall at any time
          after the Rights Declaration Date (i) declare any dividend on Common Stock
          payable in Common Stock, (ii) subdivide the outstanding Common Stock or (iii)
          combine the outstanding Common Stock into a smaller number of shares, then in
          each such case the amount set forth in the preceding sentence with respect to
          the exchange or change of Junior Participating 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. 



        8.                 Redemption.
The Junior Participating Preferred Stock shall not be redeemable.  



        9.                 Ranking.
The Junior Participating Preferred Stock shall rank junior to all other           series
of the Company’s Preferred Stock as to the payment of dividends and           the
distribution of assets, unless the terms of any such series shall provide
          otherwise.  



        10.                 Amendment.
At such time as Junior Participating Preferred Stock is outstanding,           neither
the Articles of Incorporation nor this Articles Supplementary shall be           amended,
nor shall an Article Supplementary of the Company be filed or amended,           in any
manner which would materially alter or change the powers, preferences or
          special rights of the Junior Participating Preferred Stock so as to affect them
          adversely without the affirmative vote of the holders of a majority or more of
          the outstanding Junior Participating Preferred Stock voting separately as a
          class.  



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



        IN
WITNESS WHEREOF, FIVE STAR QUALITY CARE, INC. has caused these Articles Supplementary to
be signed in its name and on its behalf by a majority of its entire Board of Directors and
witnessed by its Secretary on March 10, 2004. 


A-7








	
          

          WITNESS:

          _______________________________
	 	
          FIVE STAR QUALITY CARE, INC.

          

          By:_______________________________

              [  ] [President or Vice President]







        THE
UNDERSIGNED, [ ] of FIVE STAR QUALITY CARE, INC., with respect to the foregoing Articles
Supplementary of which this Certificate is made a part, hereby acknowledges in the name
and on behalf of said Company, the foregoing Articles Supplementary to be the act of said
Company and hereby certifies that the matters and facts set forth herein with respect to
the authorization and approval thereof are true in all material respects under the
penalties of perjury. 


	
          

           
	 	
          _______________________________

              [  ] 






A-8







Exhibit B 



Form of Rights
Certificate 


	Certificate No. R-	________ Rights




NOT EXERCISABLE AFTER APRIL 10, 2014
OR EARLIER IF REDEEMED BY THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION
OF THE COMPANY, AT $.01 PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER
CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON, OR AN AFFILIATE
OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED
BY THIS RIGHTS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON. ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]1 



Rights Certificate 



FIVE STAR QUALITY CARE,
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 March 10,
2004 (the “Rights Agreement”), by and between Five Star Quality Care, Inc., a
Maryland corporation (the “Company”), and EquiServe Trust Company, N.A., a
national banking association (the “Rights Agent”), to purchase from the Company
at any time prior to 5:00 P.M. (New York City time), on April 10, 2014, unless such date
is extended prior thereto by the Company’s Board of Directors) (the “Final
Expiration Date”) at the office or offices of the Rights Agent designated for such
purpose, or at the office or offices of its successors as Rights Agent, one one-thousandth
of a fully paid, non-assessable, Junior Participating Preferred Stock, par value $.01 per
share, of the Company (the “Preferred Stock”), or in certain circumstances, to
receive cash, property, Common Stock or other securities of the Company, at a purchase
price of $25 per one one-thousandth of a share of Preferred Stock (the “Purchase
Price”), upon presentation and surrender of this Rights Certificate with the Form of
Election to Purchase and related Certificate duly executed. The number of Rights evidenced
by this Rights Certificate (and 








1 The portion of the
legend in brackets shall be inserted only if applicable and shall replace the preceding
sentence. 


 







the number of shares of Preferred Stock which may be
purchased upon exercise thereof) set forth above, and the Purchase Price set forth above,
are the number of Rights and the Purchase Price as of March 10, 2004, respectively, based
on the Preferred Stock as constituted at such date. The Company reserves the right to
require prior to the occurrence of a Triggering Event (as such term is defined in the
Rights Agreement) that a number of Rights be exercised so that only whole shares of
Preferred Stock will be issued. 



        Upon
the occurrence of a Section 11(a)(ii) Event (as such term is defined in the Rights
Agreement), if the Rights evidenced by this Rights Certificate are beneficially owned by
(i) an Acquiring Person or an Associate or Affiliate of an Acquiring Person (as such terms
are defined in the Rights Agreement), (ii) a transferee of any such Acquiring Person,
Associate or Affiliate who becomes a transferee after such Acquiring Person, Associate or
Affiliate 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 such 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 occurrence of such Section 11(a)(ii) Event. 



        As
provided in the Rights Agreement, the Purchase Price and the number and kind of shares of
Preferred Stock (or the amount of cash, property, Common Stock or other securities) which
may be purchased upon the exercise of the Rights evidenced by this Rights Certificate are
subject to modification and adjustment upon the happening of certain events, including
those events specified in Section 11(a)(ii) and Section 13 of the Rights Agreement. 



        This
Rights Certificate is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated herein by
reference and made a part hereof and to which Rights Agreement reference is hereby made
for a full description of the rights, limitations of rights, obligations, duties and
immunities hereunder of the Rights Agent, the Company and the holders of the Rights
Certificates, which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the Rights
Agreement. Copies of the Rights Agreement are on file at the offices of the Rights Agent
and are also available upon written request to the Rights Agent. 



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



        Subject
to the provisions of the Rights Agreement, the Rights evidenced by this Certificate may be
redeemed by the Company at its option at a redemption price of $.01




B-2








per Right at any time
prior to the earlier of the close of business on (i) the tenth business day following the
Stock Acquisition Date (as such time period may be extended pursuant to the Rights
Agreement) and (ii) the Final Expiration Date. In the event that a majority of the Board
is no longer comprised of Continuing Directors, then for the maximum period allowed under
Maryland law following the time that a majority of the Board is no longer comprised of
Continuing Directors, the rights cannot be redeemed unless there are Continuing Directors
and a majority of the Continuing Directors concur with the Board’s decision to redeem
the rights. In addition, under certain circumstances, at any time after any person becomes
an Acquiring Person, the Rights may be exchanged, in whole or in part, for Common Stock or
preferred stock of the Company having essentially the same value or economic rights as
such stock. Immediately upon the action of the Board of Directors of the Company
authorizing any such exchange, and without any further action or any notice, the Rights
(other than Rights which are not subject to such exchange) will terminate and the Rights
will only enable holders to receive the stock issuable upon such exchange. 



        The
Company is not required to issue fractional shares of Preferred Stock upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral multiples of
one one-thousandth of a share of Preferred Stock, which may, at the election of the
Company, be evidenced by depositary receipts). In lieu thereof, a cash payment may be
made, as provided in the Rights Agreement. 



        No
holder of this Rights Certificate, as such, shall be entitled to vote or receive dividends
or be deemed for any purpose to be the holder of Preferred Stock, Common Stock or of any
other securities of the Company which may at any time be issuable on the exercise hereof,
nor shall anything contained in the Rights Agreement or herein be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the Company or any right
to vote for the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any trust 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 Rights Certificate shall have been exercised as provided in
the Rights Agreement. 



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



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



Dated as of
__________________. 


B-3









	 	FIVE STAR QUALITY CARE, INC. ATTEST:







By:_________________________________

     Name: 
     Title:

	_________________________________
Name:
Secretary 	 
		 
	Countersigned:

[Rights Agent]

By:___________________________ 	 






B-4











Form of Reverse Side of
Rights Certificate 



FORM OF ASSIGNMENT 



(To
be executed by the registered holder if such 



holder
desires to transfer the Rights Certificate.) 



        FOR
VALUE RECEIVED _______________________________________ hereby sells, assigns and transfers
unto ________________________________________________________________________
(Please print name and
address of transferee)
this Rights Certificate, together
with all rights, title and interest therein, and does hereby irrevocably constitute and
appoint ________________________ Attorney, to transfer the within Rights Certificate on
the books of the within-named Company, with full power of substitution.  






Dated:______________________ 



     ____________________________ 
Signature                                             









Signature Guaranteed: 















Certificate 



        The
undersigned hereby certifies by checking the appropriate boxes that: 



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



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






Dated:______________________ 



     ____________________________ 
Signature                                            









Signature Guaranteed: 






NOTICE 



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













FORM OF ELECTION TO
PURCHASE 



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



TO:  FIVE STAR QUALITY CARE, INC. 





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



        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 Rights Certificate, a
new Rights Certificate for the balance 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                                            









Signature Guaranteed: 
















Certificate 



        The
undersigned hereby certifies by checking the appropriate boxes that:  



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



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




Dated:______________________ 



     ____________________________ 
Signature                                             









Signature Guaranteed: 







NOTICE 



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










Exhibit C 




SUMMARY OF RIGHTS
TO PURCHASE PREFERRED
SHARES  




        On
March 10, 2004, the Board of Directors of Five Star Quality Care, Inc. (the
“Company”) declared a dividend distribution of one right for each of the
Company’s outstanding shares of common stock of beneficial interest, par value $.01
per share (the “Common Stock”), to holders of record of the Common Stock at the
close of business on April 10, 2004. Each Right entitles the registered holder to purchase
from the Company one one-thousandth of a share of preferred stock of beneficial interest,
par value $.01 per share, of the Company (the “Preferred Stock”) or in certain
circumstances, to receive cash, property, Common Stock or other securities of the Company,
at a Purchase Price of $25 per one one-thousandth of a share of Preferred Stock, subject
to adjustment (the “Rights”). The description and terms of the Rights are set
forth in a Rights Agreement (the “Rights Agreement”) between the Company and
EquiServe Trust Company, N.A., as Rights Agent. 



        Initially,
the Rights will be attached to all certificates representing the Common Stock and no
separate Rights Certificates will be distributed. Subject to certain exceptions specified
in the Rights Agreement, the Rights will separate from the Common Stock and a Distribution
Date will occur upon the earlier of (i) 10 business days (or such later date as the
Company’s Board of Directors may determine before a Distribution Date occurs)
following a public announcement by the Company that a person or group of affiliated or
associated persons (an “Acquiring Person”) has acquired beneficial ownership of
10% or more of the outstanding Common Stock (the date of such announcement being the
“Stock Acquisition Date”) or (ii) 10 business days (or such later date as the
Company’s Board of Directors may determine before a Distribution Date occurs)
following the commencement of a tender offer or exchange offer that, if consummated, would
result in a person becoming an Acquiring Person. 



        Until
the Distribution Date, (i) the Rights will be evidenced by the certificates for Common
Stock and will be transferred with and only with such Common Stock certificates, (ii) new
Common Stock certificates will contain a notation incorporating the Rights Agreement by
reference, and (iii) the surrender for transfer of any certificates for Common Stock
outstanding will also constitute the transfer of the Rights associated with the Common
Stock represented by such certificates. 



        The
Rights are not exercisable until the Distribution Date and will expire at the close of
business on April 10, 2014, unless such date is extended or the Rights are earlier
redeemed or exchanged by the Company as described below. 



        As
soon as practicable after the Distribution Date, Rights Certificates will be mailed to
holders of record of the Common Stock as of the close of business on the Distribution Date
and, from and after the Distribution Date, the separate Rights Certificates alone will
represent the Rights. Except for Common Stock issued pursuant to 











exercises of stock
options or as awards under an employee plan or arrangement granted or awarded as of the
Distribution Date or upon the exercise, conversion or exchange of securities issued by the
Company after the date of the Rights Agreement, or as otherwise determined by the Board,
Rights will only be issued with respect to Common Stock that was issued prior to the
Distribution Date. 



        In
the event (a “Flip-In Event”) a Person becomes an Acquiring Person (except
pursuant to a tender or exchange offer for all outstanding Common Stock at a price and on
terms which a majority of the Company’s Outside Directors (as defined in the Rights
Agreement) determines to be fair and not inadequate and to otherwise be in the best
interests of the Company and its stockholders (a “Qualified Offer”)), each
holder of a Right will thereafter have the right to receive, upon exercise of such Right,
Common Stock (or, in certain circumstances, cash, property or other securities of the
Company) having a Current Market Price (as defined in the Rights Agreement) equal to two
times the exercise price of the Right. Notwithstanding the foregoing, following the
occurrence of any Flip-In Event, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by any Acquiring Person (or by
certain related parties) will be null and void in the circumstances set forth in the
Rights Agreement. However, Rights will not be exercisable following the occurrence of any
Flip-In Event until such time as the Rights are no longer redeemable by the Company as set
forth below. 



        For
example, at an exercise price of $25 per Right, each Right not owned by an Acquiring
Person (or by certain related parties) following a Flip-In Event would entitle its holder
to purchase $50 worth of Common Stock (or other consideration, as noted above) for $25.
Assuming that the Current Market Value per share of Common Stock is $6.25 at such time,
the holder of each valid Right would be entitled to purchase eight shares of Common Stock
for $25. 



        In
the event (a “Flip-Over Event”) that, at any time on or after the Stock
Acquisition Date, (i) the Company shall take part in a merger or other business
combination transaction and the Company shall not be the surviving entity (other than with
an entity which acquired the shares pursuant to a Qualified Offer) or (ii) the Company
shall take part in a merger or other business combination transaction in which the Company
is the surviving entity and the Common Stock is changed or exchanged (other than with an
entity which acquired the shares pursuant to a Qualified Offer) or (iii) 50% or more of
the Company’s assets, cash flow or earning power is sold or transferred, each holder
of a Right (except Rights which previously have been voided, as set forth above) shall
thereafter have the right to receive, upon exercise, a number of shares of common stock of
the acquiring company having a Current Market Price equal to two times the exercise price
of the Right. 



        At
any time after a person becomes an Acquiring Person and prior to the acquisition by such
person or group of fifty percent (50%) or more of the outstanding Common Stock, the
Company’s Board of Directors may exchange the Rights (other than Rights owned by such
person or group which have become void), in whole or in part, at 




C-2







an exchange ratio of one
share of Common Stock, or one one-thousandth of a share of Preferred Stock (or of a share
of a class or series of the Company’s preferred stock having equivalent rights,
preferences and privileges), per Right (subject to adjustment). 



        The
Purchase Price payable and the number of shares of Preferred Stock (or the amount of cash,
property or other securities) issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the Preferred Stock, (ii) if holders
of the Preferred Stock are granted certain rights or warrants to subscribe for Preferred
Stock or convertible securities at less than the Current Market Price of the Preferred
Stock or (iii) upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of subscription
rights or warrants (other than those referred to above). Pursuant to the Rights Agreement,
the Company reserves the right to require prior to the occurrence of a Triggering Event
that, upon exercise of Rights, a number of Rights be exercised so that only whole shares
of Preferred Stock will be issued. 



        With
certain exceptions, no adjustment in the Purchase Price payable upon exercise of the
Rights will be required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional shares of Preferred Stock upon the
exercise of any Right. In lieu thereof, a cash payment may be made, as provided in the
Rights Agreement. 



        At
any time until 10 business days following the Stock Acquisition Date, the Company may
redeem the Rights in whole, but not in part, at a price of $.01 per Right (payable in
cash, Common Stock or other consideration deemed appropriate by the Company’s Board
of Directors). In the event that a majority of the Board is no longer comprised of
Continuing Directors (a “Section 23(a) Event”), then for the maximum period
allowed under Maryland law following the first occurrence of a Section 23(a) Event, the
rights cannot be redeemed unless there are Continuing Directors and a majority of the
Continuing Directors concur with the Board of Directors’ decision to redeem the
rights. Immediately upon the action of the Company’s Board of Directors ordering
redemption of the Rights (with, where required, the concurrence of the Continuing
Directors), the Rights will terminate and the only right of the holders of Rights will be
to receive the $.01 per Right redemption price. The term “Continuing Directors”
means any member of the Board of Directors of the Company who was a member of the Board of
Directors prior to the date of the Rights Agreement, and any person who is subsequently
elected to the Board of Directors if such person is recommended or approved by a majority
of the Continuing Directors, but shall not include an Acquiring Person, or an affiliate or
associate of an Acquiring Person, or any representative of the foregoing entities. 



        Until
a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of
the Company, including, without limitation, the right to vote or to receive dividends.
While the distribution of the Rights should not be taxable to stockholders or to the
Company, stockholders may, depending upon the circumstances, recognize taxable




C-3






income in
the event that the Rights become exercisable for Common Stock (or cash, property or other
securities) of the Company or for common stock of the acquiring company or in the event of
the redemption of the Rights as set forth above. 



        Any
provision of the Rights Agreement may be amended by the Board of Directors of the Company
prior to the Distribution Date. Thereafter, the provisions of the Rights Agreement may be
amended by the Board of Directors only in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of holders of
Rights (excluding the interests of any Acquiring Person and certain other related parties)
or to shorten or lengthen any time period under the Rights Agreement. For the maximum
period permitted under Maryland law following the first occurrence of a Section 23(a)
Event, the Rights Agreement can only be amended only if there are Continuing Directors and
a majority of the Continuing Directors concur with the amendment. Notwithstanding the
foregoing, after such time as the Rights are not redeemable, the Rights Agreement may only
be amended to cure any ambiguity, defect or inconsistency. 



        As
of April [ ], 2004 there were [________ ] shares of Common Stock outstanding and [no]
shares of Common Stock in the Company’s treasury. Each share of Common Stock
outstanding at the close of business on the Record Date will receive one Right. So long as
the Rights are attached to the shares of Common Stock, one additional Right (as such
number may be adjusted pursuant to the provisions of the Rights Agreement) shall be deemed
to be delivered for each share of Common Stock issued or transferred by the Company in the
future. One hundred thousand shares of Preferred Stock are initially reserved for issuance
upon exercise of the Rights. 



        A
copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Current Report on Form 8-K dated March 10, 2004. A copy of the Rights
Agreement is available free of charge from the Company or the Rights Agent. This summary
description of the Rights does not purport to be complete and is qualified in its entirety
by reference to the Rights Agreement, which is incorporated herein by reference. 


C-4