<PAGE>


                                                                     Exhibit 4.2

 
                    AMENDMENT NO. 1 TO THE RIGHTS AGREEMENT

     
     Amendment No. 1, dated as of January 31, 1997 (the "Amendment"), between 
CELLULAR COMMUNICATIONS OF PUERTO RICO, INC., a Delaware corporation (the 
"Company"), and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, a New York 
corporation (the "Rights Agent").

     WHEREAS, the Company and the Rights Agent entered into a Rights Agreement, 
dated as of January 24, 1992 (the "Rights Agreement"); and

     WHEREAS, the Distribution Date (as defined in the Rights Agreement) has 
not occurred, and that accordingly, the Company and the Rights Agent hereby 
amend the Rights Agreement in accordance with Section 27 thereof.

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

     Section 1.  Amendment to Definition of "Acquiring Person."  Section 1(a) 
                 ---------------------------------------------
of the Rights Agreement is amended to add the following sentence after the last
sentence thereof: Notwithstanding the foregoing, neither CoreComm Incorporated 
nor any of its Affiliates shall become an Acquiring Person as a result of the 
execution of the Agreement and Plan of Merger, dated as of January 31, 1997, by 
and among CoreComm Incorporated, CoreCom Sub Inc. and the Company (the "Merger 
Agreement") or the consummation of the Merger (as defined in the Merger 
Agreement) pursuant to the terms of the Merger Agreement.

     Section 2.  Rights Agreement as Amended.  The term "Agreement" as used in 
                 ---------------------------
the Rights Agreement shall be deemed to refer to the Rights Agreement as amended
hereby. The foregoing amendments shall be effective as of the date hereof and, 
except as set forth herein, the Rights Agreement shall remain in full force and 
effect and shall be otherwise unaffected hereby.

     Section 3.  Counterparts.  This Amendment may be executed in any number of 
                 ------------
counterparts, and each of such counterparts shall for all purposes be deemed an 
original, but all such counterparts shall together constitute but one and the 
same instrument.
<PAGE>
 
        Section 4.  Governing Law.  This Amendment shall be deemed to be a 
                    -------------
contract made under the laws of the State of Delaware and for all purposes shall
be governed by and construed in accordance with the laws of such State 
applicable to contracts made and to be performed entirely within such State.

        Section 5.  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.



                                       2
<PAGE>
 
        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be 
duly executed as of the date first above written.

Attest:                                    CELLULAR COMMUNICATIONS
                                                OF PUERTO RICO, INC.




        [SIGNATURE]                     By              [SIGNATURE]
----------------------------               -------------------------------------
 Name:                                     Name:  George S. Blumenthal
 Title:                                    Title: Chief Executive 
                                                  Officer and Treasurer


Attest:                                     CONTINENTAL STOCK
                                               TRANSFER & TRUST COMPANY
                                                  as Rights Agent



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


                                       3
<PAGE>
 
 
        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be 
duly executed as of the date first above written.

Attest:                                 CELLULAR COMMUNICATIONS
                                            OF PUERTO RICO, INC.




                                        By        
----------------------------               -------------------------------------
Name:                                      Name: George S. Blumenthal 
Title:                                     Title: Chief Executive 
                                                    Officer and Treasurer


Attest:                                 CONTINENTAL STOCK
                                           TRANSFER & TRUST COMPANY
                                              as Rights Agent



[/s/ SIGNATURE APPEARS HERE]            By  [SIGNATURE APPEARS HERE]
----------------------------               -------------------------------------
Name:  [NAME APPEARS HERE]               Name:  [NAME APPEARS HERE]
Title: VP                                Title: Pres.


                                       3

<PAGE>
 
                               RIGHTS AGREEMENT
                               ----------------

RIGHTS AGREEMENT, dated as of January 24, 1992 (the "Agreement"), between
Cellular Communications of Puerto Rico, Inc., a Delaware corporation (the
"Company"), and Continental Stock Transfer & Trust Company, a New York
corporation (the "Rights Agent").

                              W I T N E S S E T H
                              - - - - - - - - - - 

WHEREAS, Cellular Communications, Inc., a Delaware corporation ("CCI") of which
the Company is a wholly owned subsidiary, entered into a certain Restated
Agreement and Plan of Merger and Joint Venture Organization dated as of December
14, 1990 (the "Merger Agreement"). Pursuant to the Merger Agreement, CCI is
obligated to sell in a third party transaction or, alternatively, distribute pro
rata to its stockholders, 100 percent of the capital stock of PRCO and to use
best efforts to obtain all the regulatory approvals necessary to consummate such
a transaction or distribution prior to January 6, 1992.

WHEREAS, the Board of Directors of CCI has put forth a plan calling for the
proposed distribution (the "Stock Distribution") by CCI to the holders of
redeemable participating preferred stock, par value of $.01 per share and CCI
Common Stock, par value of $.O1 per share (collectively, the "CCI Stock") of CCI
of all the issued and outstanding common stock, par value of $.O1 per share
("PRCO Common Stock") of the Company owned by CCI immediately prior to the Stock
Distribution; and

WHEREAS, the Board of Directors of the Company wishes to provide for the
issuance of one Right (as such number may be hereinafter adjusted pursuant to
Section ll(p) hereof) for each share of PRCO Common Stock issued on or after the
date of the Stock Distribution (whether originally issued or delivered from the
Company's treasury) and prior to the Distribution Date, each Right initially
representing the right to purchase one one-hundredth of a share of Series A
Junior Participating Preferred


                                       5
<PAGE>
 
Stock of the Company having the rights, powers and preferences set forth in the
form of Certificate of Designation, Preferences and Rights attached hereto as
Exhibit A, 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:

(a) "Acquiring Person" shall mean any Person who or which, together with all
Affiliates and Associates of such Person, shall, after the date of Stock
Distribution, be the Beneficial Owner of 15% or more of the shares of PRCO
Common Stock then outstanding, but shall not include the Company, any Subsidiary
of the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan.

(b) "Affiliate" and "Associate" shall have the respective meanings ascribed to
such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended and in effect on the date of this
Agreement (the "Exchange Act").

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

(i) which such Person or any of such Person's Affiliates or Associates, 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, rights, warrants or options, or otherwise;
provided, however, that a Person shall not
-------- 


                                       6
<PAGE>
 
be deemed the "Beneficial Owner" of, or to "beneficially own," (A) securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, or (B) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event, or (C)
securities issuable upon exercise of Rights from and after the occurrence of a
Triggering Event which Rights were acquired by such Person or any of such
Person's Affiliates or Associates prior to the Distribution Date or pursuant to
Section 3(a) or Section 22 hereof (the "Original Rights") or pursuant to Section
ll(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 given in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the applicable provisions of the General Rules and Regulations
under the Exchange Act, and (B) is not also then reportable by such Person on 
Schedule 13D under the Exchange Act (or any comparable or successor report); or


                                       7
<PAGE>
 
(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 the proviso to
subparagraph (ii) of this paragraph (c)) or disposing of any voting securities
of the Company; Provided, however, that nothing in this paragraph (c) 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.

(d) "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.

(e) "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.

(f) "Person" shall mean any individual, firm corporation, partnership or other
entity.

(g) "PRCO Common Stock" shall mean the common stock, par value $.01 per share,
of the Company, except that "Common Stock" when used with reference to
any Person other than the Company shall mean the capital stock of such Person
with the greatest voting power, or the equity securities or other equity
interest having power to control or direct the management, of such Person.

(h) "Preferred Stock" shall mean


                                       8
<PAGE>
 
shares of Series A Junior Participating Preferred Stock, stated value $1.00 per
share, of the Company, and, to the extent that there are not a sufficient number
of shares of Series A Junior Participating Preferred Stock authorized to permit
the full exercise of the Rights, any other series of Preferred Stock, stated
value $1.00 per share, of the Company designated for such purpose containing
terms substantially similar to the terms of the Series A Junior Participating
Preferred Stock.

(i) "Section 11(a)(ii) Event" shall mean any event described in Section
ll(a)(ii) hereof.

(j) "Section 13 Event" shall mean any event described in clauses (x), (y) or (z)
of Section 13(a) hereof.

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

(1) "Subsidiary" shall mean, with reference to any Person, any corporation of
which an amount of voting securities sufficient to elect at least a majority of
the directors of such corporation is beneficially owned, directly or indirectly,
by such Person, or otherwise controlled by such Person.

(m) "Triggering Event" shall mean any Section ll(a)(ii) Event or any Section 13
Event.

Section 2. Appointment of Rights Agent. The Company hereby appoints the Rights
           ---------------------------
Agent to act as agent for the Company and the holders of the Rights (who, in
accordance with Section 3 hereof, shall prior to the Distribution Date also be
the holders of the Common Stock) 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.


                                       9
<PAGE>
 
Section 3. Issue of Rights Certificates.
           ----------------------------
           
(a) Until the earlier of (i) the Close of Business on the tenth day after the
Stock Acquisition Date, or (ii) the Close of Business on the tenth business day
(or such later date as the Board shall determine) after the date that a tender
or exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company for or pursusht to the terms of any such plan) is first published or
sent or given within the meaning of Rule 14d-2(a) of the General Rules and
Regulations under the Exchange Act, if upon consummation thereof, such Person
would be the Beneficial Owner of 15% or more of the shares of PRCO Common Stock
then outstanding (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 paragraph (b) of this Section 3) by the certificates for PRCO Common Stock
registered in the names of the holders of the PRCO Common Stock (which
certificates for PRCO Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be 
transferable only in connection with the transfer of the underlying shares of
PRCO Common Stock (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 PRCO Common Stock 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 right certificates, in substantially the
form of Exhibit B hereto (the "Rights Certificates"), evidencing one Right for
each share of PRCO Common Stock so held, subject to adjustment as provided
herein. In the event that an adjustment in the number of Rights per share of
PRCO Common Stock has been made pursuant to Section ll(p) hereof, at the time of
distribution of the Right Certificates, the Company shall make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a) hereof) so
that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As


                                      10
<PAGE>
 
of and after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.

(b) With respect to certificates for PRCO Common Stock outstanding as of the
date of the Stock Distribution, until the Distribution Date, the Rights will be
evidenced by such certificates for PRCO Common Stock and the registered holders
of PRCO Common Stock shall also be the registered holders of the associated
Rights. Until the earlier of the Distribution Date or the Expiration Date (as
such term is defined in Section 7 hereof), the transfer of any certificates
representing shares of PRCO Common Stock in respect of which Rights have been
issued shall also constitute the transfer of the Rights associated with such
shares of PRCO Common Stock.

(c) Rights shall be issued in respect of all shares of PRCO Common Stock which
are issued (whether originally issued or from the Company's treasury) after the
date of the Stock Distribution but prior to the earlier of the Distribution Date
or the Expiration Date. Certificates representing such shares of PRCO Common
Stock shall also be deemed to be certificates for Rights, and shall bear the
following legend:

This certificate also evidences and entitles the holder hereof to certain Rights
as set forth in the Rights Agreement between Cellular Communications Holdings,
Inc. (the "Company") and Continental Stock Transfer & Trust Company (the Rights
Agent") dated as of December __, 1991 (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.


                                      11
<PAGE>
 
Under certain circumstances set forth in the Rights Agreement, Rights issued to,
or held by, any Person who is, was or becomes an Acquiring Person or any
Affiliate or Associates 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.

With respect to such certificates containing the foregoing legend, until the
earlier of (i} the Distribution Date or (ii) the Expiration Date, the Rights
associated with PRCO Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of PRCO Common Stock
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 PRCO Common Stock 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 date of
the Stock Distribution and on their face shall entitle the holders thereof to
purchase such number of one one-hundredths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (such exercise price
per one one-hundredth of a share, the "Purchase Price"), but the amount and type
of securities purchasable upon the exercise


                                      12
<PAGE>
 
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 the Board of Directors of the Company has determined is part of a plan,
arrangement or understanding which has as a primary purpose or effect 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 null and void in the circumstances specified in Section 7(e) of such
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 or any Vice President, either manually or
by facsimile signature, and shall


                                      13
<PAGE>
 
have affixed thereto the Company's seal or a facsimile thereof which shall be
attested by the Secretary or an Assistant Secretary of the Company, either
manually or by facsimile signature. The Rights Certificates shall be manually
countersigned by the Rights Agent and shall not be valid for any purpose unless
so countersigned. In case any officer of the Company who shall have signed any
of the Rights Certificates shall cease to be such officer of the Company before
countersignature by the Rights Agent and issuance and delivery by the Company,
such Rights Certificates, nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Rights Certificates had not ceased to be such officer
of the Company; and any Rights 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 Certificates may be transferred, split up, combined or exchanged for another
Rights Certificate or Certificates, entitling the registered holder to purchase
a like number of one one-hundredths of a share of


                                      14
<PAGE>
 
Preferred Stock (or, following a Triggering Event, PRCO Common Stock, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or 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 Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be 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 of any such surrendered
Rights Certificate until the registered holder shall have completed and signed
the certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Section 4(b), Section 7(e) and Section 14 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 them of the loss, theft, destruction or mutilation of a Rights
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to them, and reimbursement to the Company and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Rights Certificate if
mutilated, the Company will execute and deliver a new Rights Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
owner in lieu of the Rights Certificate so lost, stolen, destroyed or mutilated.


                                      15
<PAGE>
 
        Section 7. Exercise of Rights; Purchase Price; Expiration Date of
                   ------------------------------------------------------
Rights; Termination.
-------------------

        (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-hundredths of a share (or other securities, cash or
other assets, as the case may be) as to which such surrendered Rights are then
exercisable, at or prior to the earlier of (i) the Close of Business on the date
which is ten years from the date of the Stock Distribution (the "Final
Expiration Date"), or (ii) the time at which the Rights are redeemed as provided
in Section 23 hereof (the earlier of (i) and (ii) being herein referred to as
the "Expiration Date"). Notwithstanding anything in this Agreement to the
contrary, this Agreement will terminate on June 1, 1992 (or such later date as
shall be determined by resolution of the Board of Directors of the Company prior
to such date) and thereafter be of no further effect and no Rights shall be
issued hereunder in the event that the Stock Distribution has not theretofore
occurred.

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

        (c) Upon receipt of a Rights Certificate representing exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price per


                                      16
<PAGE>
 
one one-hundredth of a share of Preferred Stock (or other shares, securities,
cash or other assets, as the case may be) to be purchased as set forth below and
an amount equal to any applicable transfer tax, the Rights Agent shall, subject
to Section 20(k) hereof, thereupon promptly (i) (A) requisition from any
transfer agent of the shares of Preferred Stock (or make available, if the
Rights Agent is the transfer agent for such shares) certificates for the total
number of one one-hundredths 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-hundredths of a share of
Preferred Stock as are to be purchased (in which case certificates for the
shares of 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 ll(a)(iii) hereof) shall be made in cash or by certified
bank check or bank draft payable to the order of the Company. In the event that
the Company is obligated to issue other securities (including PRCO Common Stock)
of the Company, pay cash and/or distribute other property pursuant to Section
ll(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


                                      17
<PAGE>
 
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 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 Right pursuant to either (A) a transfer (whether or not
for consideration) from the Acquiring Person to holders of equity interests in
such Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which the Board of Directors of the Company has
determined is part of a plan, arrangement or understanding which has as a
primary purpose or effect the avoidance of this Section 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
insure that the provisions of this Section 7(e) and Section 4(b) hereof are
complied with, but shall have no liability to any holder of Rights Certificates
or other Person as a result of its failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.


                                      18
<PAGE>
 
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Company shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless such registered holder shall have (i)
completed and signed the certificate contained in the form of election to
purchase set forth on the reverse side of the Rights Certificate surrendered for
such exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial owner) or Affiliates or Associates
thereof as the Company shall reasonably request.

Section 8. Cancellation and Destruction of Rights Certificates. All Rights
           ---------------------------------------------------
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in 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 shares of
PRCO Common Stock and/or other securities or out of its authorized and issued
shares held in its treasury), the number of shares of Preferred Stock (and,
following the occurrence of a Triggering Event, PRCO Common Stock and/or other
securities) that, as provided in this Agreement


                                      19
<PAGE>
 
including Section 11(a)(iii) hereof, will be sufficient to permit the exercise
in full of all outstanding Rights.

(b) So long as the shares of Preferred Stock (and, following the occurrence
of a Triggering Event, PRCO 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 best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.

(c) The Company shall use its best efforts to (i) file, as soon as practicable
following the earliest date after the first occurrence of a Section 11(a)(ii)
Event on which the consideration to be delivered by the Company upon exercise of
the Rights has been determined in accordance with Section 11(a)(iii) hereof, a
registration statement under the Securities Act of 1933 (the "Act."), with
respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (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, and (B) the date of the
expiration of the Rights. The Company will also take such action as may be
appropriate under, or to ensure compliance with, the securities or "blue sky"
laws of the various states in connection with the exercisability of the Rights.
The Company may temporarily suspend, for a period of time not to exceed 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. Upon any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. In addition,
if the Company shall determine


                                      20
<PAGE>
 
that a registration statement is required following the Distribution Date, the
Company may 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 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-hundredths of a share of
Preferred Stock (and, following the occurrence of a Triggering Event, PRCO
Common Stock and/or other securities) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares (subject to payment
of the Purchase Price), be duly and validly authorized and issued and fully paid
and nonassessable.

        (e) The Company further covenants and agrees that it will pay when due
and payable any and all federal and state transfer taxes and charges 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-hundredths of a share of Preferred
Stock (or PRCO Common Stock and/or other securities, as the case may be) upon
the exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Rights Certificates to a Person other than, or the issuance or delivery of a
number of one one-hundredths of a share of Preferred Stock (or PRCO Common Stock
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 evidenting Rights
surrendered for exercise or to issue or deliver any certificates for a number of
one one-hundredths of a share of Preferred Stock (or PRCO Common Stock and/or
other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax shall have been
paid (any such tax being payable by the holder of such Rights Certificate at the
time


                                      21
<PAGE>
 
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.

Section 10. Preferred Stock Record Date. Each person in whose name any
            ---------------------------
certificate for a number of one one-hundredths of a share of Preferred Stock (or
PRCO Common Stock and/or other securities, as the case may be) is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of such fractional shares of Preferred Stock (or PRCO Common
Stock and/or other securities, as the case may be) represented thereby on, and
such certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
PRCO Common Stock and/or other securities, as the case may be) transfer books of
the Company are closed, such Person shall be deemed to have become the record
holder of such shares (fractional or otherwise) on, and such certificate shall
be dated, the next succeeding Business Day on which the Preferred Stock (or PRCO
Common Stock 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 shares for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.

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

(a)(i) In the event the Company shall at any time after the date of the Stock
Distribution (A) declare a dividend


                                      22
<PAGE>
 
on the Preferred Stock payable in shares of Preferred Stock, (B) subdivide the
outstanding Preferred Stock, (C) combine the outstanding Preferred Stock into a
smaller number of shares, 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 ll(a) and Section 7(e) hereof, the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of 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
transfer books of the Company were open, he would have owned upon such exercise
and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require an
adjustment under both this Section ll(a)(i) and Section ll(a)(ii) hereof, the
adjustment provided for in this Section ll(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section ll(a)(ii)
hereof.

(ii) In the event any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of the
Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the


                                      23
<PAGE>
 
terms of any such plan), alone or together with its Affiliates and Associates,
shall, at any time after the date of the Stock Distribution, become the
Beneficial Owner of 15% or more of the shares of Common Stock then outstanding,
unless the event causing the 15% threshold to be crossed is a transaction set
forth in Section 13(a) hereof, or is an acquisition of shares of PRCO Common
Stock pursuant to a tender offer or an exchange offer for all outstanding shares
of PRCO Common Stock at a price and on terms determined by at least a majority
of the members of the Board of Directors who are not officers of the Company and
who are not representatives, nominees, Affiliates or Associates of an Acquiring
Person after receiving advice from one or more investment banking firms, to be
(a) at a price which is fair to stockholders (taking into account all factors
which such members of the Board 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 (9b) otherwise in the
best interests of the Company and its stockholders, then, promptly following the
occurrence of any such 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-hundredths of a share of Preferred Stock, such number of
shares of PRCO 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-
hundredths of a share of Preferred Stock for which a Right war exercisable
immediately prior to the first occurrence of a Section 11(a)(ii) Event, and (y)
dividing that product (which, following such first occurrence, shall thereafter
be


                                      24
<PAGE>
 
referred to as the "Purchase Price" for each Right and for all purposes of this
Agreement) by 50% of the current market price (determined pursuant to Section
11(d) hereof) per share of PRCO Common Stock on the date of such first
occurrence (such number of shares, the "Adjustment Shares").

(iii) In the event that the number of shares of PRCO Common Stock which are
authorized by the Company's certificate of incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit the exercise in full of the Rights in accordance with
the foregoing subparagraph (ii) of this Section ll(a), the Company shall (A)
determine the value of the Adjustment Shares issuable upon the exercise of a
Right (the "Current Value"), 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 a Right and payment of the applicable Purchase
Price, (l) cash, (2) a reduction in the Purchase Price, (3) Common Stock or
other equity securities of the Company (including, without limitation, shares,
or units of shares, of preferred stock, such as the Preferred Stock, which the
Board has deemed to have essentially the same value or economic rights as shares
of PRCO Common Stock (such shares 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, having 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 deliv-


                                      25
<PAGE>
 
er 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) 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, shares of PRCO Common Stock (to the extent available) and then, if
necessary, cash, which shares and/or cash have an aggregate value equal to the
Spread. For purposes of the preceding sentence, the term "Spread" shall mean the
excess of (i) the Current Value over (ii) the Purchase Price. If the Board
determines in good faith that it is likely that sufficient additional shares of
PRCO Common Stock 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 shareholder approval for the
authorization of such additional shares (such thirty (30) day period, as it may
be extended, is herein called the "Substitution Period"). To the extent that
action is to be taken pursuant to the first and/or third sentences of this
Section 11(a)(iii), the Company (1) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding Rights, and
(2) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek such shareholder approval for such
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a


                                      26
<PAGE>
 
        public announcement stating that the exercisability of the Rights has
        been temporarily suspended, as well as a public announcement at such
        time as the suspension is no longer in effect. For purposes of this
        Section ll(a)(iii), the value of each Adjustment Share shall be the
        Current Market Price per share of PRCO Common Stock on the Section
        ll(a)(ii) Trigger Date and the per share or per unit value of any PRCO
        Common Stock Equivalent shall be deemed to equal the Current Market
        Price per share of PRCO Common Stock 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 forty-five (45) calendar
days after such record date) Preferred Stock (or shares having the same rights,
privileges and preferences as the shares of 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 share of
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 (as determined pursuant to Section ll(d) hereof)
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 which the
aggregate 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


                                      27
<PAGE>
 
or purchase (or into which the convertible securities so to be offered are
initially convertible). In case such subscription price may be paid by delivery
of consideration part or all of which may be in a form other than cash, the
value of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights. Shares of 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 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
corporation) of evidences of indebtedness' cash {other than a regular quarterly
cash dividend out of the earnings or retained earnings of the Company), assets
(other than a dividend payable in Preferred 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 (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the 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 (as determined pursuant to Section ll(d) hereof) per share of


                                      28
<PAGE>
 
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 ll(a)(iii) hereof, the Current Market Price per share
of PRCO Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such PRCO Common Stock for the thirty (30)
consecutive Trading Days immediately prior to such date, and for purposes of
computations made pursuant to Section ll(a)(iii) hereof, the Current Market
Price per share of PRCO Common Stock on any date shall be deemed to be the
average of the daily closing prices per share of such PRCO 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 PRCO
Common Stock is determined during a period following the announcement by the
issuer of such PRCO Common Stock of (A) a dividend or distribution on such PRCO
Common Stock payable in shares of such PRCO Common Stock or securities
convertible into shares of such PRCO Common Stock (other than the Rights), or
(B) any subdivision, combination or reclassification of such PRCO Common Stock,
and the exdividend date for such dividend or distribution, or the record date
for such subdivision, combination or reclassification shall not have occurred
prior to the commencement of the requisite thirty (30) Trading Day 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


                                      29
<PAGE>
 
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of PRCO Common Stock
are not listed or admitted to trading on the New York Stock Exchange, as
reported in the principal consolidated transaction reporting system, with
respect to securities listed on the principal national securities exchange on
which the shares of PRCO Common Stock are listed or admitted to trading or, if
the shares of PRCO Common Stock 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 National Quotation or the National Association of Securities
Dealers, Inc. Automated Quotation System or such other system then in use, or,
if on any such date the shares of PRCO Common Stock 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 PRCO Common Stock selected by the
Board. If on any such date no market maker is making a market in PRCO Common
Stock, the fair value of such shares on such date as determined in good faith by
the Board shall be used. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which the shares of PRCO Common Stock
are listed or admitted to trading is open for the transaction of business or, if
the shares of PRCO Common Stock are not listed or admitted to trading on any
national securities exchange, a Business Day. If PRCO Common Stock is not
publicly held or not so listed or traded, Current Market Price per share shall
mean the fair value per share as determined in good faith by the Board, whose
determina-


                                      30
<PAGE>
 
tion shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.

  a (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 PRCO Common Stock in clause (i) of this Section ll(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 ll(d), the Current Market Price per share of Preferred Stock shall
be conclusively deemed to be an amount equal to 100 (as such number may be
appropriately adjusted for such events as stock splits, stock dividends and
recapitalizations with respect to PRCO Common Stock occurring after the date of
this Agreement) multiplied by the Current Market Price per share of PRCO Common-
Stock.  If neither PRCO Common Stock nor the Preferred Stock is publicly held or
so listed or traded, Current Market Price per share of the 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 a Unit shall be equal to the Current Market Price of one
share of Preferred Stock divided by 100.

(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Purchase Price;
provided, however, that any adjustments which by reason of this Section ll(e)
--------
are not required to be made shall be carried forward and taken into account in
any subsequent


                                      31
<PAGE>
 
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest ten-thousandth of a share of PRCO 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 dated 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 Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Purchase Price thereof shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent an 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 shares.

(g) All Rights originally issued by the Company subsequent to any adjustment
made to the Purchase Price hereunder shall evidence the right to purchase, at
the adjusted Purchase Price, the number of one one-hundredths 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-hundredths of a
share of Preferred Stock (calculated to the nearest one-millionth) obtained by
(i) multiplying (x) the number of one one-hundredths of a share covered by a
Right immediately prior to this adjustment, by (y)


                                      32
<PAGE>
 
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-hundredths 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-hundredths 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 ll(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,


                                      33
<PAGE>
 
executed and countersigned in the manner provided for herein (and may bear, at
the option of the Company, the adjusted Purchase Price) and shall be registered
in the names of the holders of record of Rights Certificates on the record date
specified in the public announcement.

(j) Irrespective of any adjustment or change in the Purchase Price or the number
of one one-hundredths 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-hundredth of a share and the
number of one one-hundredth of a share which were expressed in the initial
Rights Certificate 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-
hundredths of a share of Preferred Stock issuable upon exercise of the Rights,
the Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable such number of one one-hundredths 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-hundredths 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-hundredths 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 secu-


                                      34
<PAGE>
 
rities upon the occurrence of the event requiring such adjustment.

(m) Anything in this Section 11 to the contrary notwithstanding, the Company
shall be entitled to make such reductions in the Purchase Price, in addition to
those adjustments expressly required by this Section 11, as and to the extent
that in their good faith judgment the Board of Directors of the Company shall
determine to be advisable in order that any (i) consolidation or subdivision of
the Preferred Stock, (ii) issuance wholly for cash of any shares of Preferred
Stock at less than the current market price, (iii) issuance wholly for cash of
shares of Preferred Stock or securities which by their terms are convertible
into or exchangeable for shares of 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 in a transaction which complies with Section ll(o)
hereof)' (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section ll(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 or earning power
aggregating 50% or more 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 ll(o) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale 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 or sale, the shareholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of


                                      35
<PAGE>
 
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 or Section 27 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 date of the Stock Distribution and
prior to the Distribution Date (i) declare a dividend on the outstanding shares
of PRCO Common Stock payable in shares of PRCO Common Stock, (ii) subdivide the
outstanding shares of PRCO Common Stock, or (iii) combine the outstanding shares
of PRCO Common Stock into a smaller number of shares, the number of Rights
associated with each share of PRCO Common Stock then outstanding, or issued or
delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights thereafter associated with
each share of PRCO Common Stock following any such event shall equal the result
obtained by multiplying the number of Rights associated with each share of PRCO
Common Stock immediately prior to such event by a fraction the numerator which
shall be the total number of shares of PRCO Common Stock outstanding immediately
prior to the occurrence of the event and the denominator of which shall be the
total number of shares of PRCO Common Stock outstanding immediately following
the occurrence of such event.

Section 12. Certificate of Adjusted Purchase Price or Number of Shares. 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 PRCO Common Stock, a copy of such certificate,


                                      36
<PAGE>
 
and (c) mail a brief summary thereof to each holder of a Rights Certificate (or,
if prior to the Distribution Date, to each holder of a certificate representing
shares of PRCO Common Stock) in accordance with Section 26 hereof. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained.

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

(a) In the event that, following the Stock Acquisition Date, directly or
indirectly, (x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction which
complies with Section ll(o) hereof), and the Company shall not be the continuing
or surviving corporation of such consolidation or merger, (y) any Person (other
than a Subsidiary of the Company in a transaction which complies with Section
ll(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of PRCO Common Stock shall be changed into
or exchanged for stock or other securities of any other Person 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 50% or more 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 ll(o) hereof), then, and in each such case (except
as may be contemplated by Section 13(d) hereof), proper provision shall be made
so that: (i) 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, non-assessable and freely
traceable shares of Common Stock of the Principal Party (as such term is here-


                                      37
<PAGE>
 
inafter 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-hundredth
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-hundredths 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), and dividing that product (which, following the first occurrence of
a Section 13 Event, shall be referred to as the "Purchase Price" for each Right
and for all purposes of this Agreement) by (2) 50% of the current market price
(determined pursuant to Section 11(d)(i) hereof) per share of the 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 shares of 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) "Princlpal Party" shall mean

(i) in the case of any transaction described in clause (x) or (y) of the first
sentence of Section 13(a),


                                      38
<PAGE>
 
the Person that is the issuer of any securities into which shares of Common
Stock of the Company are converted in such merger or consolidation, and if no
securities are so issued, the Person that is the other party to such merger or
consolidation; and

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

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 twelve (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;
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks 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.

(c) The Company shall not consummate any such consolidation, merger, sale or
transfer unless the Principal Party shall have a sufficient number of authorized
shares of its Common 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 providing
for the terms set forth in paragraphs (a) and (b) of this Section 13 and further
providing that, as soon as practicable after the date of any consolidation,
merger or sale of assets mentioned in paragraph (a) of this Section 13, the
Principal Party will


                                      39
<PAGE>
 
(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; and

(ii) will 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 under the Exchange Act.

The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that a Section 13 Event
shall occur at any 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 subparagraphs (x) and (y) of
Section 13(a) if (i) such transaction is consummated with a Person or Persons
who acquired shares of PRCO Common Stock pursuant to a tender offer or exchange
offer for all outstanding shares of PRCO Common Stock which complies with the
provisions of Section 11(a)(ii)(B) hereof (or a wholly owned subsidiary of any
such Person or Persons), (ii) the price per share of PRCO Common Stock offered
in such transaction is not less than the price per share of PRCO Common Stock
paid to all holders of shares of PRCO Common Stock 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 shares of PRCO Common
Stock pursuant to such transaction is the same as the form of consideration paid
pursuant to such tender offer or exchange offer. Upon con-


                                      40
<PAGE>
 
summation 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 ll(p) 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 thin Section l4(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 New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading, or if the Rights
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the National
Quotation Bureau or NASDAQ or such other system then in use or, if on any such
date the Rights are not quoted by any such organization, the average of the
closing bid and asked prices as furnished by a professional market maker making
a market in the Rights selected by the Board of Directors of the Company. If on
any such date no such market maker is making a market in the Rights the fair
value of the Rights on


                                      41
<PAGE>
 
such date as determined in good faith by the Board of Directors of the Company
shall be used.

    (b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one one-
hundredth 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-hundredth of a
share of Preferred Stock). In lieu of fractional shares of Preferred Stock that
are not integral multiples of one one-hundredth 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-hundredth of a share of
Preferred Stock. For purposes of this Section 14(b), the current market value of
one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (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 PRCO Common Stock upon
exercise of the Rights or to distribute certificates which evidence fractional
shares of PRCO Common Stock. In lieu of fractional shares of PRCO Common 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 (1) share of PRCO Common Stock. For
purposes of this Section l4(c), the current market value of one share of PRCO
Common Stock shall be the closing price of one share of PRCO Common Stock (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


                                      42
<PAGE>
 
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 are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
PRCO Common Stock); and any registered holder of any Rights Certificate (or,
prior to the Distribution Date, of the PRCO Common Stock), without the consent
of the Rights Agent or of the holder of any other Rights Certificate (or, prior
to the Distribution Date, of PRCO Common Stock), 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 PRCO Common Stock;

     (b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the principal
office or offices of the Rights Agent designated for such purposes, duly
endorsed or accompanied by a proper instrument of transfer and with the
appropriate forms and certificates fully executed;

     (c) subject to Section 6(a) and


                                      43
<PAGE>
 
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 PRCO 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 PRCO 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-
hundredths 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 corporate action, or to receive
notice of meetings or


                                      44
<PAGE>
 
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 expense, incurred without negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.

(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 PRCO Common Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.

Section 19. Merger or Consolidation or Chance 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 consolida-


                                      45
<PAGE>
 
tion to which the Rights Agent or any successor Rights Agent shall be a party,
or any corporation succeeding to the corporate trust business of the Rights
Agent or any successor Rights Agent, shall be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties hereto; provided, however, that such
                                              --------
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.

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

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

(a) The Rights Agent may consult


                                      46
<PAGE>
 
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 "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, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and delivered
to the Rights Agent; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.

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

Id) 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 or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.

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


                                      47
<PAGE>
 
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Section 11 or
Section 13 hereof 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 shares of PRCO Common Stock or Preferred
Stock to be issued pursuant to this Agreement or any Rights Certificate or as to
whether any shares of PRCO 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.

(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 Secretary, any Assistant
Secretary, the Treasurer or any Assistant Treasurer of the Company, and to apply
to such officers for advice or instructions in connection with its duties, and
it shall not be liable for any action taken or suffered to be taken by it in
good faith in accordance with instructions of any such officer.

(h) The Rights Agent and any 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
Aqreement. Nothing herein shall preclude the Rights 


                                      48
<PAGE>
 
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 Right Certificate surrendered to the Rights Agent
for exercise or transfer, the certificate attached to the form of assignment or
form of election to purchase, as the case may be, has 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
of transfer without first consulting with the Company.

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


                                      49
<PAGE>
 
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of thirty (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. Any successor
Rights Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
of the State of New York (or of any other state of the United States so long as
such corporation is authorized to do business as a banking institution in the
State of New York), in good standing, having a principal office in the State of
New York, which is authorized under such laws to exercise corporate trust powers
and is subject to supervision or examination by federal or state authority and
which has at the tlme of its appointment as Rights Agent a combined capital and
surplus of at least $100,000,000. After appointment, the successor Rights Agent
shall be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Rights Agent without further act or deed; but
the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights


                                      50
<PAGE>
 
Agent or the appointment of the successor Rights Agent, as the case may be.

Section 22. Issuance of New Rights Certificates. Notwithstanding any of the
            ------------------------------------
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance
or sale of shares of PRCO Common Stock following the Distribution Date and prior
to the redemption or expiration of the Rights, the Company (a) shall, with
respect to shares of PRCO Common Stock 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 of Directors of the
Company, issue Rights Certificates representing the appropriate number of Rights
in connection with such issuance or sale; provided, however, that (i) no such
                                          --------
Rights Certificate shall be issued if, and to the extent that, the Company shall
be advised by counsel that such issuance would create a significant risk of
material adverse tax consequences to the Company or the Person to whom such
Rights Certificate would be issued, and (ii) no such Rights Certificate shall be
issued if, and to the extent that, appropriate adjustment shall otherwise have
been made in lieu of the issuance thereof.

Section 23. Redemption and Termination.
            --------------------------
(a) The Board of Directors of the Company may, at its option, at any time prior
to the earlier of (i) the Close of Business on the tenth day following the Stock
Acquisition Date, or (ii) the Final Expiration Date, redeem all but not less
than all the then outstanding Rights at a redemption price of $.0l per Right, as
such amount may be appropriately adjusted to reflect any stock


                                      51
<PAGE>
 
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, shares of PRCO
Common Stock (based on the "current market price", as defined in Section
11(d)(i) hereof, of PRCO Common Stock at the time of redemption) or any other
form of consideration deemed appropriate by the Board of Directors.

(b) Immediately upon the action of the Board of Directors of the Company
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 of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the Transfer Agent for PRCO 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.

Section 24. Exchange.
            --------

(a) The Board of Directors of the Company may, at its option, at any time and
from time to time after the first occurrence of a Section ll(a)(ii) Event,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that become void pursuant to the provision of the Section
7(e) hereof) for shares of PRCO Common Stock or PRCO Common Stock Equivalents,


                                      52
<PAGE>
 
or any combination thereof, at an exchange ratio of one share of PRCO Common
Stock 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").

  (b) Immediately upon the action of the Board of Directors of the Company
ordering the exchange of any Rights pursuant to subsection (a) of this Section
24 and without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of such
Rights shall be to receive that number of shares of PRCO Common Stock and/or
PRCO Common Stock Equivalents equal to the number of such Rights held by such
holder multiplied by the Exchange Ratio. The Company shall promptly give public
notice of any such exchange; provided, however, that the failure to give, or any
                             --------  -------
defect in, such notice shall not affect the validity of such exchange. The
Company promptly shall mail a notice of any such exchange to all of the holders
of such Rights at their latest addresses as they appear upon the registry books
of the Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each
such notice of exchange will state the method by which the exchange of the
shares of PRCO Common Stock 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 the event that the number of shares of PRCO Common Stock which are
authorized by the Company's Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit any exchange of Rights as contemplated in accordance
with this Section 24, the Company may, at its option, take all such action as
may be necessary to authorize additional shares of PRCO Common Stock for
issuance upon exchange of the Rights.


                                      53
<PAGE>
 
(d) The Company shall not be required to issue fractions of shares of PRCO
Common Stock or to distribute certificates which evidence fractional shares of
PRCO Common Stock. In lieu of such fractional shares of PRCO Common Stock, the
Company shall pay to the registered holders of Rights with regard to which such
fractional shares of PRCO Common Stock would otherwise be issuable an amount in
cash equal to the same fraction of the value of a whole share of PRCO Common
Stock. For purposes of this Section 24, the value of a whole share of PRCO
Common Stock shall be the closing price (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of exchange pursuant to this Section 24, and the value of any common
stock equivalent shall be deemed to have the same value as the common stock on
such date.

Section 25. Notice of Certain Events.
            ------------------------
(a) In case the Company shall propose, at any time after the Distribution Date,
(i) to pay any dividend payable in 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 shares
of 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 shares of 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 50% or more 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)


                                      54
<PAGE>
 
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 26
hereof, a notice of such proposed action, which shall specify the record date
for the purposes of such stock dividend, distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of 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 shares of 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 participatlon therein by the holders of the shares of Preferred Stock
whichever shall be the earlier.

(b) In case any of the events set forth in Section ll(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 26 hereof, a notice of the occurrence of such event,
which shall specify the event and the consequences of the event to holders of
Rights under Section ll(a)(ii) hereof, and (ii) all references in the preceding
paragraph to Preferred Stock shall be deemed thereafter to refer to Common Stock
and/or, if appropriate, other securities.

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


                                      55
<PAGE>
 
Cellular Communications of
Puerto Rico, Inc.
150 East 58th Street, 24th Floor
New York, New York 10155
Attention: Richard J. Lubasch, Esq.

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

Continental Stock Transfer & Trust Company
72 Reade Street
New York, New York
Attention: Chairman of the Board

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
shares of Common Stock) shall be sufficiently given or made if sent by first-
class mail, postage prepaid, addressed to such holder at the address of such
holder as shown on the registry books of the Company.

Section 27. Supplements and Amendments. Prior to the Distribution Date and
            --------------------------
subject to the penultimate sentence of this Section 27, 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 shares of Common Stock. Notwithstanding the foregoing, or any other
provision of this Agreement, the Board of Directors of the Company may, prior to
the Stock Distribution, amend this Agreement to adjust the Purchase Price. From
and after the Distribution Date and subject to the penultimate sentence of this
Section 27, 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


                                      56
<PAGE>
 
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); provided, this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this sentence, (A) a time
period relating to when the Rights may be redeemed at such time as the Right are
not then redeemable, or (B) any other time period unless such lengthening is for
the purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. 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 27, the Rights Agent
shall execute such supplement or amendment. Notwithstanding anything contained
in this Agreement to the contrary, no supplement or amendment shall be made
which changes the Redemption Price, the Final Expiration Date, the Purchase
Price or the number of one-one-hundredths of a share of Preferred Stock for
which a Right is exercisable Prior to the Distribution Date, the interests of
the holders of Rights shall be deemed coincident with the interests of the
holders of PRCO Common Stock.

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

Section 29. Determinations and Actions by the Board of Directors, etc. For all
            ---------------------------------------------------------
purposes of this Agreement, any calculation of the number of shares of PRCO
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of PRCO Common
Stock 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 of Directors of the Company shall


                                      57
<PAGE>
 
have the exclusive power and authority to administer this Agreement and to
exercise all rights and powers specifically granted to the Board or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including a
determination to redeem or not redeem the Rights or to amend the Agreement). All
such actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board in good faith, shall (x) be final, conclusive and
binding on the Company, the Rights Agent, the holders of the Rights and all
other parties, and (y) not subject the Board to any liability to the holders of
the Rights.

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

Section 31. Severability. If any term, provision, covenant or restriction of
            ------------
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated; provided,
                                                                 --------
however, that notwithstanding anything in this Agreement to the contrary, if any
such term, provision, covenant or restriction is held by such court or authority
to be invalid, void or unenforceable and the Board of Directors of the Company
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the


                                      58
<PAGE>
 
purpose or effect of this Agreement, the right of redemption set forth in
Section 23 hereof shall be reinstated and shall not expire until the Close of
Business on the tenth day following the date of such determination by the Board
of Directors.

        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 Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.

        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. Descrintive 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.


                                      59
<PAGE>
 
        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.

Attest:                                 CELLULAR COMMUNICATIONS
                                           OF PUERTO RICO, INC.



By   /s/ Sandra Brown                   By    /s/ Richard J. Bubasch
   ---------------------------             --------------------------------
   Name:  Sandra Brown                     Name:  Richard J. Lubasch
   Title: Assistant Secretary              Title: Senior Vice President,
                                                    General Counsel


Attest:                                 CONTINTENTAL STOCK
                                          TRANSFER & TRUST COMPLY


By   /s/ Michael Nelson                 By    /s/ Fred Bernstein
   ---------------------------             --------------------------------
   Names: Michael Nelson                   Name:  Fred Bernsteln
   Title:                                  Title:


                                      60
<PAGE>
 
                                                                       EXHIBIT A


                 CERTIFICATE OF DESIGNATION, PREFERENCES AND 
           RIGHTS OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK 
                                      of 
                 CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.

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

We, Richard J. Lubasch and Sandra Brown, Senior Vice President and Assistant
Secretary, of Cellular Communications of Puerto Rico, Inc, a corporation
organized and existing under the General Corporation Law of the State of
Delaware, in accordance with the provisions of Section 103 thereof, DO HEREBY
CERTIFY:

That pursuant to the authority conferred upon the Board of Directors by the
Restated Certificate of Incorporation of the said Corporation, the said Board of
Directors on January 23, 1992, adopted the following resolution creating a
series of 80,000 shares of Preferred Stock designated as Series A Junior
Participating Preferred Stock:

RESOLVED, that pursuant to the authority vested in the Board of Directors of
this Corporation in accordance with the provisions of its Restated Certificate
of Incorporation, a series of Preferred Stock of the Corporation be and it
hereby is created, and that the designation and amount thereof and the
voting powers, preferences and relative, participating, optional and
other special rights of the shares of such series, and the qualifications,
limitations or restrictions thereof are as follows:

Section 1. Designation and Amount. The shares of such series shall be designated
           ----------------------
as "Series A Junior Participating Preferred Stock" and the number of shares
constituting such series shall be 80,000.

Section 2. Dividends and Distributions.
           ---------------------------

(A) Subject to the prior and superior rights of the holders of any shares of any
series of Preferred Stock ranking prior and superior to the shares of Series A
Junior Participating Preferred Stock with respect to dividends, the holders of
shares of Series A Junior Participating Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors out of funds legally
available for the purpose, quarterly divi-


                                      61
<PAGE>
 
tion if applicable, shall continue to be entitled to elect the whole number of
Directors until the holders of Preferred Stock shall have exercised their right
to elect two (2) Directors voting as a class, after the exercise of which right
(x) the Directors so elected by the holders of Preferred Stock shall continue in
office until their successors shall have been elected by such holders or until
the expiration of the default period, and (y) any vacancy in the Board of
Directors may (except as provided in paragraph (C)(ii) of this Section 3) be
filled by vote of a majority of the remaining Directors theretofore elected by
the holders of the class of stock which elected the Director whose office shall
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, (a) the right of the
holders of Preferred Stock as a class to elect Directors shall cease, (y) the
term of any Directors elected by the holders of Preferred Stock as a class shall
terminate, and (z) the number of Directors shall be such number as may be
provided for in the certificate of incorporation or By-laws irrespective of any
increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3
(such number being subject, however, to change thereafter in any manner provided
by law or in the certificate of incorporation or By-laws). Any vacancies in the
Board of Directors effected by the provisions of clauses (y) and (z) in the
preceding sentence may be filled by a majority of the remaining Directors.

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

Section 4. Certain Restrictions.
           --------------------
(A) Whenever quarterly dividends or other dividends or distributions payable on
the Series A Junior Participating Preferred Stock as provided in Section 2


                                      62
<PAGE>
 
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on shares of Series A Junior
Participating Preferred Stock outstanding shall have been paid in full, the
Corporation shall not

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

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

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

(iv) purchase or otherwise acquire for consideration any shares of Series A
Junior Participating Preferred Stock, or any shares of stock ranking on a parity
with the Series A Junior Participating Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined by the
Board of Directors) to all holders of such


                                      63
<PAGE>
 
shares upon such terms as the Board of Directors, after consideration of the
respective annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will result in
fair and equitable treatment among the respective series or classes.

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

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

Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation
           --------------------------------------
(voluntary or otherwise), Dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to the
Series A Junior Participating Preferred Stock unless, prior thereto, the holders
of shares of Series A Junior Participating Preferred Stock shall have received
$100 per share, plus an amount equal to accrued and unpaid dividends and
distributions thereon, whether or not declared, to the date of such payment (the
"Series A Liquidation Preference"). Following the payment of the full amount of
the Series A Liquidation Preference, no additional distributions shall be made
to the holders of shares of Series A Junior Participating Preferred Stock
unless, prior thereto, the holders of shares of Common Stock shall have received
an amount per share (the "Common Adjustment") equal to the quotient obtained by
dividing (i) the Series A Liquidation Preference by (ii) 100 (as appropriately
adjusted as set forth in subparagraph C below to reflect such events as stock
splits, stock dividends and recapitalizations


                                      64
<PAGE>
 
with respect to the Common Stock) (such number in clause (ii), the readjustment
Number"). Following the payment of the full amount of the Series A Liquidation
Preference and the Common Adjustment in respect of all outstanding shares of
Series A Junior Participating Preferred Stock and Common Stock, respectively,
holders of Series A Junior Participating Preferred Stock and holders of shares
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 1
with respect to such 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 Series A Liquidation Preference and the
liquidation preferences of all other series of Preferred Stock, if any, which
rank on a parity with the Series A Junior Participating Preferred Stock, then
such remaining assets shall be distributed ratably to the holders of such parity
shares in proportion to their respective liquidation preferences. In the event,
however, that there are not sufficient assets available to permit payment in
full of the Common Adjustment, then such remaining assets shall be distributed
ratably to the holders of Common Stock.

(C) In the event the Corporation shall at any time after the date of the
Stock Distribution (i) declare any dividend on Common Stock payable in shares
of 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 outstanding immediately after such
event and the denominator of which is the number of shares of Common Stock that
were outstanding immediately prior to such event.

Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into
           --------------------------
any consolidation, merger, combination or other transaction in which the shares
of Common Stock are exchanged for or changed into other stock or securities,
cash and/or any other property, then in any such case the shares of Series A
Junior Participating Preferred Stock shall at the same time be similarly
exchanged or changed in an amount per share


                                      65
<PAGE>
 
(subject to the provision for adjustment hereinafter set forth) equal to 100
times the aggregate amount of stock, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each share of
Common Stock is changed or exchanged. In the event the Corporation shall at any
time after the date of the Stock Distribution (i) declare any dividend on Common
Stock payable in shares of 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 shares of Series A 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.

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

Section 9. Ranking. The Series A Junior Participating Preferred Stock shall rank
           -------
junior to all other series of the Corporation's Preferred Stock as to the
payment of dividends and the distribution of assets, unless the terms of any
such series. shall provide otherwise.

Section 10. Amendment. The Restated Certificate of Incorporation of the
            ---------
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A 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 shares
of Series A Junior Participating Preferred Stock, voting separately as a class.

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


                                      66
<PAGE>
 
IN WITNESS WHEREOF, we have executed and subscribed this Certificate and do
affirm the foregoing as true under the penalties of perjury this 24th day of
January, 1992.


                                ---------------------------
                                Richard J. Lubasch 
                                Senior Vice President,
                                General Counsel
Attest:


------------------------
Sandra Brown 
Assistant Secretary


                                      67
<PAGE>
 
                                                                       EXHIBIT B

                         [Form of Rights Certificate]
Certificate No. R-                                                     Rights

NOT EXERCISABLE AFTER          , 200  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 (AS SUCH TERM IS
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 (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). 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.

                              Rights Certificate 

                 CELLULAR COMMUNICATIONS OF PUERTO RICO, 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 December   , 1991 (the "Rights
                                                         --
Agreement"), between Cellular Communications of Puerto Rico, Inc., a Delaware
corporation (the "Company"), and Continental Stock Transfer & Trust Company, a
New York corporation (the "Rights Agent"), to purchase from the Company at any
time prior to 5:00 P.M. (New York City time) on           , 200  at the office
                                                ----------     -

                                      68
<PAGE>
 
or offices of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one one-hundredth of a fully paid, non-assessable share of Series
A Junior Participating Preferred Stock (the "Preferred Stock") of the Company,
at a purchase price of [$  ] per one one-hundredth of a share (the "Purchase
Price"), upon presentation and surrender of this Rights Certificate with the
Form of Election to Purchase and related Certificate duly executed. The number
of Rights evidenced by this Rights Certificate (and the number of shares which
may be purchased upon exercise thereof) set forth above, and the Purchase Price
per share set forth above, are the number and Purchase Price as of [    , 199 ],
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 ll(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are beneficially owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreements), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate, or (iii) under certain circumstances specified in the Rights
Agreement, a transferee of a person who, after such transfer, became an
Acquiring Person, or an Affiliate or Associate of an Acquiring Person, 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 ll(a)(ii)
Event.

        As provided in the Rights Agreement, the Purchase Price and the number
and kind of shares of Preferred 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 Triggering Events.

        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


                                      69
<PAGE>
 
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 above-mentioned office 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 one one-hundredths of a share 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 per Right at any time prior to the earlier of the close of
business on (i) the tenth day following the Stock Acquisition Date (as such time
period may be extended pursuant to the Rights Agreement), and (ii) the Final
Expiration Date.

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

        No holder of this Rights Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of shares of Preferred
Stock or of any other securities of the Company which may at any time be
issuable on the exercise hereof, nor shall anything


                                      70
<PAGE>
 
contained in the Rights Agreement or herein be construed to confer upon the
holder hereof, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof, or to give or withhold consent to any
corporate action, or, to receive notice of meetings or other actions affecting
stockholders (except as provided in the Rights Agreement), or to receive
dividends or subscription rights, or otherwise, until the Right or Rights
evidenced by this 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
corporate seal.



Dated as of January  , 1992



ATTEST:                                    CELLULAR COMMUNICATIONS OF
                                               PUERTO RICO, INC.

_________________________                  By _________________________
      Secretary                                Title:

Countersigned:

CONTINENTAL STOCK TRANSFER 
& TRUST COMPANY


By____________________________
     Authorized Signature


                                      71
<PAGE>
 
                 [Form of Reverse Side of Rights Certificate]

                              FORM OF ASSIGNMENT

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


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

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

--------------------------------------------------------------------------------
this Rights Certificate, together with all right, 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:         , 19
       --------    --
                                                --------------------------------
                                                Signature


Signature Guaranteed: 


                                      72
<PAGE>
 

                                  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
pursuant to the Rights Agreement);

        (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 an Acquiring Person.

Dated:           , 19                         ----------------------------------
      -----------    --                       Signature 


Signature Guaranteed:

                                    NOTICE
                                    ------


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


                                      73
<PAGE>
 
                         FORM OF ELECTION TO PURCHASE
                         ----------------------------

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


To:  CELLULAR COMMUNICATIONS OF PUERTO RICO, INC.:

        The undersigned hereby irrevocably elects to exercise  
                                                           ---------------------
Rights represented by this Rights Certificate to purchase the shares of
Preferred Stock issuable upon the exercise of the Rights (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:        , 19
      --------    --

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


Signature Guaranteed:


                                      74
<PAGE>
 

                                  Certificate
                                  -----------
 
        The undersigned hereby certifies by checking the appropriate boxes that:

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

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

Dated:             , 19
       -----------     --                       --------------------------------
                                                Signature


Signature Guaranteed:


                                    NOTICE
                                    ------

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


                                      75