Document:

Filed by Automated Filing Services Inc. (604) 609-0244 - Chilco River Holdings Inc. - Exhibit 10.1

 EXHIBIT 10.1 

 General Subscription Agreement

  Securities Issued Without Offering Memorandum

  Reg S 

  

 

CHILCO RIVER HOLDINGS INC. 

  

 

Subscription Booklet 

 

 

 

 GENERAL INSTRUCTIONS 

 (1) A prospective subscriber must complete all applicable
  portions of, and sign two copies of this Subscription Agreement in order to
  purchase _____________ Common Shares, of Chilco River Holdings Inc. (the “Company”),
  all on the terms and conditions of which are incorporated herein. 

	 (2)      	 A prospective subscriber should carefully review the Subscription
      Agreement. 
	 
	 (3)      	 The Subscription Agreement is divided into the following sections:
    
	 
	 	 (I)	 General provisions Applicable to All Subscribers; 
	 
	 	 (II)	 Provisions Pertaining to Securities Offered Pursuant
        to Section 4(2) of the Securities Act and/or Regulation D promulgated
        thereunder (other than Rule 504 thereof); 

	 
	 	 (III)	 Provisions Pertaining to Securities Offered Pursuant to Rule 504 of Regulation
      D; 
	 
	 	 (IV) 	 Provisions Pertaining to Securities Offered Pursuant
        to Regulation S as promulgated pursuant to the United States Securities
        Act of 1933, as amended (the "Securities Act"); 

	 
	 	 (V)	 Provisions Relating to Residents of Canada; 
	 
	 	 (VI)	 Provisions relating to Residents of Jurisdictions other than the United
      States or Canada; 
	 
	 	 (VII)	 Assurances; and 
	 
	 	 (VIII)	 Signatures and Amount of Subscriptions. 

      Each Section applicable to the Prospective Subscriber
  has been marked by [X] in the box immediately preceding the section heading.

 (4)     The completed Subscription
  Agreement along with the payment for the securities subscribed for should be
  returned to the Company c/o President. A countersigned copy of the Subscription
  Agreement will be returned to the prospective subscriber upon acceptance thereof
  by the Company. 

           THE COMPANY
  WILL NOT ACCEPT ANY SUBSCRIPTION THAT IS NOT FULLY AND ACCURATELY COMPLETED
  AND SIGNED. 

 CHILCO RIVER HOLDINGS INC.

  SUBSCRIPTION AGREEMENT 

 CHILCO RIVER HOLDINGS INC. 

  420 - 625 HOWE STREET 

  VANCOUVER BC V6C 2T6

  Vancouver, British Columbia 

  V6C 2T6 

 Ladies and Gentlemen: 

	[X]	 	GENERAL PROVISIONS APPLICABLE TO ALL
      SUBSCRIBERS. 

           1. Subscription.

           General.
  The undersigned (the "Subscriber"), intending to be legally bound, hereby
  subscribes for and agrees to purchase the aggregate number of shares of Common
  Stock, ("Shares"), of Chilco River Holdings Inc., a Nevada corporation (the
  "Company"), at a price of US$0.92 per Share, indicated on the signature
  page hereof, on the terms and conditions described herein. The Subscriber herewith
  delivers to the Company the consideration ("Purchase Price") required to purchase
  the Shares subscribed for hereunder by delivery to the Company of a certified
  or official bank check payable to the Company. The Offering is not subject
  to any minimum subscription level, and therefore, any funds invested are available
  to the Company and will not be refunded to the subscriber if the maximum number
  of Shares is not sold. 

           2.
  Subscriber Representations, Warranties and Covenants. The
  Subscriber hereby acknowledges, represents and warrants to, and agrees with,
  the Company as follows: 

           (a)
  the Subscriber is acquiring the Shares for his own account as principal, for
  investment purposes only, and not with a view to, or for, resale or distribution
  of all or any part of the Shares, and no other person has a direct or indirect
  beneficial interest in such Shares; 

           (b)
  the Subscriber acknowledges his understanding that the offering and sale of
  the Shares is intended to be exempt from registration under the Securities Act
  of 1933, as amended (the "Act"), by virtue of (i) Section 4(2) of the Act and/or
  the provisions of Rule 506 of Regulation D ("Regulation D") promulgated thereunder,
  (ii) the provisions of Regulation S ("Regulation S") promulgated under the Act,
  or (iii) Rule 504 of Regulation D; and, in furtherance thereof, the Subscriber
  represents and warrants to and agrees with the Company that the Subscribed has
  the financial ability to bear the economic risk of his investment, has adequate
  means for providing for his current needs and personal contingencies and has
  no need for liquidity with respect to his investment in the Shares; 

           (c) the Subscriber:

                     (i)
  further understands that any documents provided to the Subscriber may not include
  all of the financial and other information which would be disclosed in a registration
  statement filed with the Securities and Exchange Commission (the "Commission")
  pursuant to Section 5 of the Act, (e.g., Form S-1, Form S-4 or Form SB-2) or
  an offering statement filed with the Commission pursuant to Regulation A (Form
  1-A). 

                     (ii)
  has been given the opportunity to ask questions of, and receive answers from
  the Company's concerning the terms and conditions of the Offering of the Shares,
  and has been given the opportunity to obtain such additional information necessary
  to satisfy himself as to the accuracy of the information contained herein or
  that which was otherwise provided in order for him to evaluate the merits and
  risks of investment in the Shares to the extent that the Company possesses such
  information or can acquire it without unreasonable effort or expense and such
  information has not been furnished with any other offering literature except
  as mentioned herein. 

                     (iii)
  has not relied on any oral representation, warranty or information in connection
  with the offering of the Shares by the Company, or any officer, employee, agent,
  affiliate or subsidiary of the Company. 

                     (iv)
  has determined that the Shares are a suitable investment for him and that he/she
  can bear a complete loss of his/her investment therein; and 

                     (v)
  has such knowledge and experience in financial and business matters that he/she
  is capable of evaluating the merits and risks of his investment in the Shares;

          (d)
  if the Subscriber is a partnership, corporation, trust, qualified plan or other
  entity, it is authorized and qualified to become a holder of Shares, and the
  person signing this Subscription Agreement on behalf of such entity has been
  duly authorized to do so; 

          (e)
  any information which the Subscriber has heretofore furnished and herewith furnishes
  to the Company with respect to his financial position and business experience,
  is correct and complete as of the date of this Subscription Agreement and if
  there should be any material change in such information prior to issuance to
  him of Shares, he will immediately furnish such revised or corrected information
  to the Company; 

          (f)
  the foregoing acknowledgements, representations, warranties and agreements shall
  survive the closing at which the Shares are issued; 

          (g)
  the Subscriber acknowledges that he has not purchased the Shares as a result
  of any general solicitation or general advertising; and 

          (h) the Subscriber's
  overall commitment to investments which are not readily marketable is not disproportionate
  to his net worth, and his prospective investment in the Company will not cause
  such overall commitment to become excessive. 

           3. Subscriber
  Awareness. The Subscriber acknowledges that: 

           (a)
  no United States federal or state agency or federal or provincial agency has
  passed upon the Shares or made any finding or determination as to the fairness
  of this investment; nor any such agency passed on the accuracy or determined
  the adequacy of this document. Any representation to the contrary may be a criminal
  offense; 

           (b)
  there is no established market for the Shares and no assurance has been given
  that any resale public market for the Shares will develop; 

           (c)
  the Shares may not be transferred, sold or otherwise disposed of, except as
  may be permitted under the Act and applicable state securities laws pursuant
  to registration or exemption therefrom; and accordingly, the Subscriber may
  be required to bear the financial risks of an investment in the Shares for an
  indefinite period of time; 

           (d)
  the Subscriber acknowledges and understands that any information provided about
  the Company's future plans and prospects is uncertain and subject to all of
  the uncertainties inherent in future predictions. 

           4. Subscriber
  Information. 

	 	 Name:  	  
	 	  	 

	 	 Address:  	  
	 	 	 

	 	  	 (Number and Street)  

	
	
	
	

	 (City)  	 (State/Province)  	 (Country)  	 (Zip or Postal Code)  

	 Address for Correspondence (if different): 
    	  
	 	

	  	 (Number and Street)  

	
	
	
	

	 (City)  	 (State/Province)  	 (Country)  	 (Zip or Postal Code)  

	 Telephone Number:  	  	  
	 	 
	 

	  	 (Area Code)  	 (Number)  

Social Security or Tax Identification Number: _______________________________

           (b) If not a Natural
  Person 

	If not a Natural Person, State in which Formed: 	 
	 	

	If not a Natural Person, Form of Organization: 	 
	 	

	If not a Natural Person, Date of Formation:	 
	 	

	Social Security Number or Tax Identification Number:	 
	 	

	 
	Please provide names and titles of all persons providing the
      information set forth herein. 

	 	Name(s):	 
	 	 	 

	 	Title(s):	 
	 	 	 

           5.
  Indemnity. The Subscriber agrees to indemnify and hold harmless
  the Company and each other person, if any, who controls the Company, within
  the meaning of Section 15 of the Act against any and all loss, liability, claim,
  damage and expense whatsoever (including, but not limited to, any and all expenses
  whatsoever reasonably incurred in investigating, preparing or defending against
  any litigation commenced or threatened or any claim whatsoever) arising out
  of or based upon any false representation or warranty or breach or failure by
  the Subscriber to comply with any covenant or agreement made by the Subscriber
  herein or in any other document furnished by the Subscriber to any of the foregoing
  in connection with this transaction. 

           6. Miscellaneous.

           (a)
  All pronouns and any variations thereof used herein shall be deemed to refer
  to the masculine, feminine, impersonal, singular or plural, as the identity
  of the person or persons may require. 

           (b)
  This Subscription Agreement shall be enforced, governed and construed in all
  respects in accordance with the laws of the United States, as such laws are
  applied by United States courts to agreements entered into and to be performed
  in United States by and between residents of United States, and shall be binding
  upon the Subscriber, the Subscriber's heirs, estate, legal representatives,
  successors and assigns and shall insure to the benefit of the Company, its successors
  and assigns. If any provision of this Subscription Agreement is invalid or unenforceable
  under any applicable statute or rule of law, then such provision shall be deemed
  inoperative to the extent that it may conflict therewith and shall be deemed
  modified to conform with such statute or rule of law. Any provision hereof that
  may prove invalid or unenforceable under any law shall not affect the validity
  or enforceability of any other provision hereof. 

           (c)
  This Subscription Agreement constitutes the entire agreement between the parties
  hereto with respect to the subject matter hereof and may be amended only by
  a writing executed by both parties hereto. 

           (d)
  Except as set forth herein, neither this Subscription Agreement nor any provision
  hereof shall be waived, modified, changed, discharged, terminated, revoked or
  canceled except by an instrument in writing signed by the party effecting the
  same against whom any change, discharge or termination is sought. 

           (e)
  Notices required or permitted to be given hereunder shall be in writing and
  shall be deemed to be sufficiently given when personally delivered or sent by
  registered mail, return receipt requested, addressed: (i) to the Company, at
  420 - 625 HOWE STREET VANCOUVER BC V6C 2T6 Attention: President; or (ii) if
  to the Subscriber, at the address for correspondence set forth in the Questionnaire,
  or at such other address as may have been specified by written notice given
  in accordance with this paragraph 6. 

           (f)
  Failure of the Company to exercise any right or remedy under this Subscription
  Agreement or any other agreement between the Company and the Subscriber, or
  otherwise, or delay by the Company in exercising such right or remedy, will
  not operate as a waiver thereof. No waiver by the Company will be effective
  unless and until it is in writing and signed by the Company. 

           (g)
  Subscribers are not to construe the contents of any subsequent communication
  from the Company as legal, investment, or business advice. Each prospective
  Subscriber is to consult his own counsel or purchaser representative as to legal,
  investment, and related matters concerning his investment. 

           (h)
  The Offering may be withdrawn at any time prior to the issuance of Shares to
  prospective Subscribers. Further, in connection with the offer and sale of the
  Shares, the Company reserves the right, in its sole discretion, to reject any
  subscription in whole or in part or to allot to any prospective subscriber fewer
  than the Shares applied for by such subscriber. The Shares are offered by the
  Company subject to prior sale, acceptance of an offer to purchase, withdrawal,
  cancellation or modification of the offer, without notice. 

           (i)
  This Subscription Agreement does not constitutes an offer to sell or a solicitation
  of any offer to buy any securities offered hereby by anyone in any jurisdiction
  in which such offer or solicitation is not qualified to do so or to anyone to
  whom it is unlawful to make such offer or solicitation. No sale made hereunder
  shall, under any circumstances, create any implication that there has been no
  change in the affairs of the Company since the date thereof or that the information
  contained herein is correct as of any date subsequent to the date thereof. 

           (j)
  If the Subscriber is a resident of the United States, the Subscriber acknowledges
  that the offer and sale of the Shares pursuant to this Subscription Agreement
  has been made in accordance with and subject to the requirements of the applicable
  state law exemptions. 

           (k)
  The Subscriber certifies, under penalty of perjury, that the Subscriber is not
  subject to the backup withholding provisions of the Internal Revenue Code of
  1986, as amended. (Note: The Subscriber is subject to backup withholding if:
  (i) the Subscriber fails to furnish its 

Social Security Number or Taxpayer Identification Number herein;
  (ii) the Internal Revenue Service notifies the Company that the Subscriber furnished
  an incorrect Social Security Number or Taxpayer Identification Number; (iii)
  the Subscriber is notified that it is subject to backup withholding; or (iv)
  the Subscriber fails to certify that it is not subject to backup withholding
  or the Subscriber fails to certify the Subscriber's Social Security Number or
  Taxpayer Identification Number). 

	[    ]	II.	PROVISIONS RELATING TO SECTION 4(2)
      OF THE ACT AND RULE 506 OF REGULATION D.  

 
          1. Subscriber
  Suitability Standards.

                    (a)
  Accredited Subscriber Status.

          The Subscriber
  has to initial those representations applicable to him. 

	 	(1)	FOR INDIVIDUAL SUBSCRIBERS:
	 	 	 	 
	 
	 	 a.      	 The Subscriber represents that he has an individual
        net worth, or together with his spouse a combined net worth in excess
        of $1,000,000. For purposes of this representation, "net worth" means
        the excess of total assets at fair market value, including home*
        , home furnishings and automobiles, over total liabilities. 

	 
	 
	 	 b.      	 The Subscriber represents that he had an individual
        income of more than $200,000 in each of the last two calendar years
        or joint income with his spouse in excess of $300,000 in each of those
        years and reasonably expects to reach the same income level in the current
        calendar year. 

	 	 	 	 
	 	(2)	FOR CORPORATIONS OR PARTNERSHIPS:
    
	 	 	 	 
	 
	 	a.	The Subscriber represents that it is a corporation,
        Massachusetts or similar business trust, or partnership with total assets
        in excess of $5,000,000. 

	 	 	 	 
	 
	 	b.	The Subscriber represents that all of its equity
        owners meet the standard set out in Statement A(1) above ($1,000,000
        net worth) or Statement A(2) above ($200,000 individual income or
        $300,000 joint income). For purposes of this representation, "net
        worth" means the excess of total tangible assets at current value less
        total liabilities. Please list below the 

          *Except
  as otherwise provided in this Subscription Agreement, for purposes of determining
  "net worth," the principal residence owned by an individual must be valued either
  at (A) cost, including the cost of improvements, net of current encumbrances
  upon the property, or (B) the appraised value of the property as determined
  upon a written appraisal used by an institutional lender making a loan to the
  individual secured by the property, including the cost of subsequent improvements,
  net of current encumbrances upon the property. "Institutional lender" means
  a bank, savings and loan company, industrial loan company, credit union or personal
  property broker or a company whose principal business is as a lender upon loans
  secured by real property and that has such loans receivable in the amount of
  $2,000,000 or more. 

 

	 	
        names of all equity owners of Subscriber. EACH SUCH EQUITY OWNER
          MUST COMPLETE APPENDIX A TO THIS SUBSCRIPTION AGREEMENT.
        

      

	 	 Name of All Equity Owners 
	 	 
	 	

	 	 
	 	

	 	 
	 	

	 	(3)	FOR TRUSTS OTHER THAN EMPLOYEE BENEFIT
      TRUSTS: 
	 	 	 	 
	 
	 	 a.      	 The Subscriber represents that it has total assets
        in excess of $5,000,000 and that the investment in Partnership is
        being directed by a sophisticated person as defined below. For purposes
        of this representations, a "sophisticated person" means a person who has
        such knowledge and experience in financial and business matters that he
        or she is capable of evaluating the merits and risks of the prospective
        investment in the Partnership. 

	 
	 
	 	 b.      	 The Subscriber represents that it is (a) a bank
        as defined in Section 3(a)(2) of the Act, (b) acting in its fiduciary
        capacity as trustee, (c) subscribing for the purchase of the securities
        being offered on behalf of a trust. 

	 
	 
	 	 c.      	 The Subscriber represents that it is a revocable
        trust that may be amended or revoked at any time by its grantors and that
        all of its grantors meet the standard set out in Statement A.(1) above
        ($1,000,000 net worth) or Statement A.(2) above $200,000 individual
        income or $300,000 joint income). Please list below the names of all
        grantors. EACH SUCH GRANTOR MUST COMPLETE APPENDIX A TO THIS SUBSCRIPTION
        AGREEMENT. 

	 	Name of Grantors 
	 	 
	 	

	 	(4)	FOR EMPLOYMENT BENEFIT PLANS OR STATE
      PLANS:
	 	 	 	 
	 
	 	 a.      	 The Subscriber represents that it is an employee
        benefit plan within the meaning of Title I of the Employee Retirement
        Income Security Act of 1974, as amended ("ERISA"), with respect to which
        the decision to invest in the Partnership was made by a plan fiduciary
        as defined in Section 3(21) of ERISA that is a bank, savings and loan
        association, insurance company or investment adviser registered under
        the Investment Advisers Act of 1940, as amended (the "Advisers Act").
      

 

	
	 	 b.      	 The Subscriber represents that it has total assets in excess of $5,000,000.
    
	 
	 
	 	 c.      	 The Subscriber represents that it is a self-directed
        plan with respect to which the decision to invest in the Partnership was
        made solely by persons who are "accredited investors" within the meaning
        of Regulation D under the 1933 Act. 

	 
	 
	 	 d.      	 The Subscriber represents that it is a plan established
        and maintained by a state, its political subdivisions, or an agency or
        instrumentality of a state or its political subdivisions, for the benefit
        of its employees, and that it has total assets in excess of $5,000,000.
      

	 	(5)	FOR CHARITABLE
      ORGANIZATIONS:
	 	 	 	 
	 
	 	 	The Subscriber represents
        that it is an organization described in Section 501(c)(3) of the Code
        with total assets in excess of $5,000,000.

	 	 	 	 
	 	(6)	OTHER ACCREDITED
      SUBSCRIBERS:
	 	 	 	 
	 
	 	a. 	The Subscriber represents that it is a bank as defined
        in Section 3(a)(2) of the Act whether acting in its individual or fiduciary
        capacity. 

	 	 	 	 
	 
	 	b. 	The Subscriber represents that it is a savings and
        loan association or other institution specified in Section 3(a)(5)(A)
        of the Act whether acting in its individual or fiduciary capacity. 

	 	 	 	 
	 
	 	c. 	The Subscriber represents that it is a broker or
        dealer registered pursuant to Section 15 of the Securities Exchange Act
        of 1934. 

	 	 	 	 
	 
	 	d. 	The Subscriber represents that it is an insurance company as defined in
      Section 2(13) of the Act. 
	 	 	 	 
	 
	 	e. 	The Subscriber represents that it is an investment
        company registered under the Investment Company Act of 1940, as amended
        (the "1940 Act"). 

	 	 	 	 
	 
	 	f.	The Subscriber represents that it is a business development company as
      defined in Section 2(a)(48) of the 1940 Act. 
	 	 	 	 
	 
	 	g.	The Subscriber represents that it is a Small Business
        Investment Company licensed by the U.S. Small Business Administration
        under Section 301(c) or (3) of the Small Business Investment Act of 1958,
        as amended. 

	 	 	 	 
	 
	 	h.	The Subscriber represents that it is a private business
        development company as defined in Section 202(a)(22) of the Investment
        Advisers Act. 

	 	 	 	 
	 	(B)	FOR NON-ACCREDITED
      SUBSCRIBERS 

           If
  the Subscriber has not initialed any category in Section A(1) through (A) 6
  above, the Subscriber represents that (i) his net worth is at least three (3)
  times his proposed investment, (ii) his annual income has exceed $50,000
  in each of the last two calendar years; and (iii) either alone or together with
  his advisors is capable of evaluating the risks and merits of an investment
  in the Shares. 

           2.
  Investment Intent. The Subscriber is purchasing the Shares for
  his own account for investment purposes and not with a view toward further distribution
  thereof. 

           3.
  Restrictions on Transfer. The Shares have not been registered
  under the Act and are being offered pursuant to exemptions from the registration
  requirements of the Act afforded by Section 4(2) thereof and Rule 506 of Regulation
  D. Accordingly, the Shares may not be transferred, resold or otherwise disposed
  of except as permitted under the Securities Act and applicable state securities
  laws pursuant to registration or exemption therefrom. Purchasers should be aware
  that they will be required to bear the financial risks of the investment for
  an indefinite period of time. 

           4.
  Legends. The Subscriber consents to (i) the placing of a legend
  substantially in the form set forth below on the certificate representing the
  Shares stating that the Shares have not been registered and setting forth the
  restrictions on transfer contemplated hereby and (ii) the placing of a stop
  transfer order on the books of the Corporation and with any transfer agents
  against the Shares. 

           A
  legend shall be placed on certificates representing the Shares substantially
  in the form set forth below: 

  
     THE SHARES EVIDENCED HEREBY
      HAVE NOT BEE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR
      ANY STATE SECURITIES LAWS. NEITHER THE SHARES NOR ANY INTEREST OR PARTICIPATION
      THEREIN MAY BE OFFERED FOR SALE, SOLD OR OTHERWISE ASSIGNED OR TRANSFERRED,
      DIRECTLY OR INDIRECTLY, NOR MAY THE SHARES BE TRANSFERRED ON THE BOOKS OF
      THE CORPORATION, IN THE ABSENCE OF SUCH REGISTRATION WITHOUT AN OPINION
      OF SHAREHOLDER'S COUNSEL, IN FORM ACCEPTABLE TO THE CORPORATION, THAT SUCH
      TRANSACTION IS EXEMPT FROM OR NOT SUBJECT TO REGISTRATION. 

  

	[    ]	III. 	PROVISIONS RELATING TO RULE 504.
      

          The
  Subscriber acknowledges that the Shares are being offered in reliance on the
  provisions of Rule 504 of Regulation D, and hence, will not be subject to the
  limitations on resale set forth in Rule 502(c) of Regulation D. However, the
  Shares may only be resold in those states and other jurisdictions in which an
  exemption for resale exists. Certificates representing the Shares may bear a
  legend to that effect. Presently no such exemptions are available. Hence, 

 a prospective investor should be able to hold the Shares indefinitely.
  No assurance can be given that such exemptions will be available. Prior to this
  offering there has been no or limited trading market for the Common Stock and
  no assurance can be given that an active public market will develop upon consummation
  of the Offering. If Rule 504 were not applicable to the Offering, the Shares,
  in fact would be subject to the limitations on resale otherwise set forth in
  Regulation D. The Shares cannot be resold or transferred in Canada without compliance
  with applicable Canadian Securities laws. 

	[    ]	IV.	PROVISIONS PERTAINING TO REGULATION
      S. 

          If
  the Subscriber is acquiring Securities pursuant to the terms of Regulation S,
  the Subscriber further represents, warrants and covenants that: 

           (1)
  the Subscriber is not a "U.S. person" as that term is defined in Rule 902(o)
  of Regulation S;

           (2)
  the Subscriber is not, and on the Closing Date will not be, an affiliate of
  the Company; 

           (3)
  at the execution of this Subscription Agreement, the Subscriber was outside
  the United States and no offer to purchase the Shares was made to the Subscriber
  in the United States; 

           (4)
  the Subscriber agrees that all offers and sales of the Securities shall be made
  in compliance with any applicable securities laws of any applicable jurisdiction
  and, particularly, in accordance with Rule 903 and 904, as applicable, of Regulation
  S or pursuant to registration of the Securities under the Securities Act or
  pursuant to an exemption from registration. In any case, none of the Securities
  have been and will be offered or sold by Subscriber to, or for the account or
  benefit of a U.S. Person or within the United States until after the end of
  a one year period commencing on the date of the Offering (the "Restricted Period"),
  as certified by the Company to the Subscriber and, thereafter only pursuant
  to an effective registration statement as to the Securities or an applicable
  exemption therefrom;

           (5)
  the Subscriber is not a distributor or dealer; 

           (6)
  the transactions contemplated hereby (a) have not been and will not be prearranged
  by the Subscriber with a purchaser located in the United States or a purchaser
  which is a U.S. Person, and (b) are not and will not be part of a plan or scheme
  by the Subscriber to evade the registration provisions of the Act;

           (7)
  the Subscriber shall take all reasonable steps to ensure compliance with Regulation
  S; 

           (8)
  none of the Subscriber, his affiliates or persons acting on their behalf have
  conducted and shall not conduct any "directed selling efforts" as that term
  is defined in Rule 

 902(b) of Regulation S; nor has the Subscriber, its affiliates
  or persons acting on their behalf have conducted any general solicitation relating
  to the offer and sale of any of the Securities in the United States or elsewhere;

           (9)
  the Subscriber will not engage in any activity for the purpose of, or that could
  reasonably be expected to have the effect of, conditioning the market in the
  United States for any of the Securities;

           (10)
  Neither the Subscriber nor any of his affiliates will directly or indirectly
  maintain any short position, purchase or sell put or call options or otherwise
  engage in any hedging activities in any of the Securities or any other securities
  of the Company until after the end of the Restricted Period; and 

           (11)
  The Subscriber acknowledges that the certificates representing the Shares shall
  bear a legend substantially as follows: 

  
     THE SECURITIES REPRESENTED
      BY THIS SHARE CERTIFICATE HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
      THE SECURITIES ACT AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER
      OR APPLICABLE CANADIAN SECURITIES LAWS INCLUDING THE SECURITIES ACT (BRITISH
      COLUMBIA) (COLLECTIVELY, THE "CANADIAN SECURITIES LAW"), AND MAY NOT BE
      OFFERED OR SOLD DIRECTLY OR INDIRECTLY (A) WITHIN THE UNITED STATES OR TO
      OR FOR THE ACCOUNT OR BENEFIT OF U.S. PERSONS (AS DEFINED IN REGULATION
      S) EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES
      UNDER, OR AN EXEMPTION FROM, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
      ACT AND (B) IN CANADA OR TO RESIDENTS OF CANADA EXCEPT PURSUANT TO PROSPECTUS
      EXEMPTIONS UNDER THE APPLICABLE CANADIAN SECURITIES LAWS.

  

	[    ]	V. 	PROVISIONS RELATED TO RESIDENTS OF CANADA. 

           If
  the Subscriber is a resident of Canada, the Subscriber represents and warrants
  to the Company that: 

	 	 (a)	the Subscriber is purchasing the Shares as principal
        for its own account, and not for the benefit of any other person; 

	 	 	 
	 	 (b)	the Subscriber has the legal capacity and competence
        to enter into and execute this Subscription Agreement and to take all
        actions required pursuant hereto and, if the Subscriber is a corporation,
        it is duly incorporated and validly subsisting under the laws of its jurisdiction
        of incorporation and all necessary approvals by 

 

	 	 	 its directors, shareholders and others
        have been given to authorize execution of this Subscription Agreement
        on behalf of the Subscriber; 

	 
	 	 (c)      	 the Subscriber is purchasing Shares under
        the private issuer or private company exemption from the prospectus requirements
        available under the applicable Securities Act of jurisdiction of the Subscriber's
        residency (the "Jurisdiction") and accordingly acknowledges that the Shares
        may be subject to an indefinite hold period in the Jurisdiction; 

	 
	 	 (d)      	 the Subscriber is aware that the Company,
        at the time of this Subscription, is a private company or private issuer
        within the meaning of the applicable Securities Act of the Subscriber's
        Jurisdiction; 

	 
	 	 (e)      	 the Subscriber is aware that the Company
        is not a reporting issuer in any of the provinces of Canada and accordingly,
        the Shares may be subject to resale restrictions including an indefinite
        hold period in such provinces and that if no further statutory exemption
        from the prospectus and registration requirements of the applicable legislation
        may be relied upon or if no discretionary order or ruling is obtained,
        the Shares will remain subject to restrictions on resale in such provinces
        for an indefinite period of time which may never expire; and 

	 
	 	 (f)      	 the Subscriber acknowledges that because
        this subscription is being made pursuant to the exemption from the prospectus
        and registration requirements under the applicable securities laws (the
        "Exemption"): 

	 
	 	 	 (i)     
      
	 the Subscriber is restricted from using certain
        of the civil remedies available under the applicable securities laws;
      

	 
	 	 	 (ii)      
	 the Subscriber may not receive information that
        might otherwise be required to be provided to the Subscriber under the
        applicable securities laws if the Exemptions were not being used; 

	 
	 	 	 (iii)      
	 the Company is relieved from certain obligations
        that would otherwise apply under the applicable securities laws if the
        Exemptions were not being used; and 

	 
	 	 	 (iv)      
	 the Company is not obligated to become a "reporting
        issuer" (as that terms is defined under the applicable Securities Act)
        in the Jurisdiction. 

	 [   ]  	 VI.  	 PROVISIONS RELATING TO RESIDENTS OF
        JURISDICTIONS OTHER THAN UNITED STATES OR CANADA.  

           If
  the prospective Subscriber is a resident of a jurisdiction (the "International
  Jurisdiction") other than the United States of America, or one of its possessions
  or territories such Subscriber will be required to represent that: 

	 	 (a)      	 he is a resident of the International Jurisdiction;
      

	 
	 	 (b)      	 he is knowledgeable of, or has been independently
        advised as to, the applicable securities laws of the International Jurisdiction,
        if any, which would apply to this subscription; 

	 
	 	 (c)      	 he is purchasing the Shares pursuant to exemptions
        from the prospectus and/or registration requirements under the applicable
        securities laws of that International Jurisdiction; or, if such is not
        applicable, the investor is permitted to purchase the Shares under the
        applicable securities laws of the International Jurisdiction without the
        need to rely on exemptions; 

	 
	 	 (d)      	 the applicable securities laws do not require the
        Company to make any filings or seek any approvals of any kind whatsoever
        from any regulatory authority in the International Jurisdiction; and 

	 
	 	 (e)      	 the investor will, if requested by the Company,
        deliver to the Company a certificate or opinion of local counsel from
        the International Jurisdiction which will confirm the matters referred
        to in subparagraphs (iii) and (iv) above to the satisfaction of the Company,
        acting reasonably. 

	 [X] 	VII. 	 ASSURANCES.  

          1. The Subscriber; 

	 	 (1)      	 acknowledges and agrees that the Company may in
        the near future, if necessary, alter its Articles and/or By-laws so as
        to remove any restrictions therein pertaining to the resale of its shares,
        limitations as to the maximum number of the Company’s shareholders
        and the Company’s ability to sell its shares to the public (the
        “Alteration”) ; and 

	 	 	 
	 	 (2)      	 irrevocably agrees to vote in favor of any shareholder
        resolutions called for by the Company for approval of the Alteration.
      

           2.
  The Subscriber hereby irrevocably appoints the President of the Company, or
  failing him the Secretary of the Company, in office from time to time, as attorney
  in fact for the Subscriber and authorizes him as such to make and sign on the
  Subscriber’s behalf and to deliver: 

	 	 (1)      	 any and all shareholder resolutions which such Attorney
        sees fit in his absolute discretion to give on behalf of the Subscriber
        as called for by the Company at duly constituted shareholder’s meeting
        to approve the Alteration and the 

 

	 	 	 Subscriber hereby appoints such Attorney hereunder
        as his proxy holder to vote the Subscriber’s Shares at such meetings
        on behalf of the Subscriber, and hereby authorizes and directs such Attorney
        to vote in favor of the Alteration; 

	 
	 	 (2)      	 waivers of any notice requirements with respect
        to the calling of meetings of the Shareholders; and 

	 
	 	 (3)      	 any and all documents, consents and materials necessary
        to be signed and delivered by the Subscriber to give full effect to the
        Alteration. 

	 	 	 
	[X]	VIII. 	SIGNATURES AND AMOUNT OF SUBSCRIPTION. 
	 	 	 

          The
  Subscriber hereby subscribes for __________ Shares at a price of US$0.92
  per Share or US$ ___________ in the aggregate. Accordingly, the Subscriber
  has enclosed herewith a check in the amount of US$ __________ representing
  the total purchase price for the subscribed for Shares. 

           In Witness
  Whereof, the Subscriber has executed this Subscription Agreement on this ______th
  day of _______________ , 2005 

 

	Name
      of Subscriber (Please type or Print) 	 
	 	 
	 	 
	Signature
    	 
	 	 
	 	 
	Title:	 

Please print or type name and title of duly authorized signatory
  of a corporate, partnership or other subscriber that is not a natural person.

 Accepted this ________day of ________________, 2005 

 CHILCO RIVER HOLDINGS INC. 

 By: 

  __________________________________

  (Signature of duly authorized signatory) 

 APPENDIX "A" 

  To the Subscription Agreement 

 CHILCO RIVER HOLDINGS INC. 

  420 -625 Howe Street 

  Vancouver British Columbia 

  V6C 2T6 

 Dear Sir: 

           Please
  be advised that the Subscriber is a shareholder, partner, or grantor in (name
  of purchasing entity), a corporation/partnership/trust (circle applicable status).
  The Subscriber is aware that, for purchase of Shares offered by Chilco River
  Holdings Inc. (the "Company"), certain corporations, partnerships, trusts or
  other entities may qualify to purchase Shares, as an "Accredited Investor" as
  defined in Regulation D as promulgated by the Securities and Exchange Commission
  if all of their equity owners are Accredited Investors. 

           The
  Subscriber certifies that the following information is complete and accurate
  and furnished with knowledge that it will be relied upon by the Partnership
  and by the Company. 

	IF THE SUBSCRIBER MEETS EITHER OF THE FOLLOWING
      TESTS, HE SHOULD INITIAL THE APPROPRIATE SPACE BELOW. 

	 1.      	 I certify that I have an individual net worth, or
        my spouse and I have a combined net worth, in excess of $1,000,000.
        For purposes of this Subscription Agreement, "net worth" means the excess
        of total assets at fair market value, including home*, furnishings and
        automobiles, over total liabilities. 

	 	 
	 2.      	 I certify that I had an individual income of more
        than $200,000 in each of the last two calendar years or joint income
        with my spouse in excess of $300,000 in each of those years and I
        reasonably expect to reach the same income level in the current calendar
        year. 

 Dated: _____________, 2005 

 *Notwithstanding anything to the contrary in this Subscription
  Agreement, for purposes of determining "net worth," the principal residence
  owned by an individual will be valued either at (A) cost, including the cost
  of improvements, net of current encumbrances upon the property, or (B) the appraised
  value of the property as determined upon a written appraisal used by an institutional
  lender making a loan to the individual secured by the property, including the
  cost of subsequent improvements, net of current encumbrances upon the property.
  "Institutional lender" means a bank, savings and loan company, industrial loan
  company, credit union or personal property broker or a company whose principal
  business is as a lender upon loans secured by real property and that has such
  loans receivable in the amount of $2,000,000 or more.EXHIBIT 4.1
                                                                     -----------

                               GMX RESOURCES INC.

                                       AND

                                 UMB BANK, N.A.,

                                 AS RIGHTS AGENT

                                RIGHTS AGREEMENT

                            DATED AS OF MAY 17, 2005

<PAGE>

                                TABLE OF CONTENTS

Section 1.   Certain Definitions..............................................1
Section 2.   Appointment of Rights Agent......................................5
Section 3.   Issue of Right Certificates......................................5
Section 4.   Form of Right Certificates.......................................7
Section 5.   Countersignature and Registration................................7
Section 6.   Transfer, Split Up, Combination and Exchange of
             Right Certificates; Mutilated, Destroyed, Lost or
             Stolen Right Certificates........................................7
Section 7.   Exercise of Rights, Purchase Price; Expiration Date of Rights....8
Section 8.   Cancellation and Destruction of Right Certificates...............9
Section 9.   Availability of Shares of Preferred Stock........................9
Section 10.  Preferred Stock Record Date.....................................11
Section 11.  Adjustment of Purchase Price, Number of Shares and
             Number of Rights................................................11
Section 12.  Certificate of Adjusted Purchase Price or Number of Shares......18
Section 13.  Consolidation, Merger or Sale or Transfer of Assets or
             Earnings Power..................................................18
Section 14.  Fractional Rights and Fractional Shares.........................22
Section 15.  Rights of Action................................................23
Section 16.  Agreement of Right Holders......................................23
Section 17.  Right Certificate Holder Not Deemed a Shareholder...............24
Section 18.  Concerning the Rights Agent.....................................24
Section 19.  Merger or Consolidation or Change of Name of Rights Agent.......24
Section 20.  Duties of Rights Agent..........................................25
Section 21.  Change of Rights Agent..........................................27
Section 22.  Issuance of New Right Certificates..............................28
Section 23.  Redemption......................................................28
Section 24.  Exchange........................................................29
Section 25.  Notice of Certain Events........................................30
Section 26.  Notices.........................................................31
Section 27.  Supplements and Amendments......................................31
Section 28.  Successors......................................................32
Section 29.  Benefits of this Agreement......................................32
Section 30.  Determinations and Actions by the Board of Directors............32
Section 31.  Severability....................................................32
Section 32.  Governing Law...................................................32
Section 33.  Counterparts....................................................32
Section 34.  Descriptive Headings............................................33

                                       -i-
<PAGE>

                                RIGHTS AGREEMENT

     Rights Agreement ("Agreement") dated as of May 17, 2005 between GMX
RESOURCES INC., an Oklahoma corporation (the "Company"), and UMB Bank, n.a., as
Rights Agent (the "Rights Agent").

     The Board of Directors of the Company has authorized and directed the
issuance of one preferred share purchase right (a "Right") for each share of
Common Stock (as hereinafter defined) of the Company outstanding on May 31, 2005
(the "Record Date"), each Right representing the right to purchase one
one-thousandth (subject to adjustment) of a share of Preferred Stock (as
hereinafter defined), upon the terms and subject to the conditions herein set
forth, and the Board of Directors has further authorized and directed the
issuance of one Right (subject to adjustment as provided herein) with respect to
each share of Common Stock that shall become outstanding between the Record Date
and the earlier of the Distribution Date, the Redemption Date and the Expiration
Date (as such terms are hereinafter defined); provided, however, that Rights may
be issued with respect to shares of Common Stock that shall become outstanding
after the Distribution Date and prior to the Redemption Date and the Expiration
Date in accordance with Section 22.

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

     SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meaning indicated:

     (a) "Acquiring Person" shall mean any Person (as such term is hereinafter
defined) who or which shall be the Beneficial Owner (as such term is hereinafter
defined) of 20% or more of the shares of Common Stock then outstanding, but
shall not include an Exempt Person (as such term is hereinafter defined);
provided, however, that (i) if the Board of Directors of the Company determines
in good faith that a Person who would otherwise be an "Acquiring Person" has
become such inadvertently (including, without limitation, because (A) such
Person was unaware that it beneficially owned a percentage of Common Stock that
would otherwise cause such Person to be a "Acquiring Person," or (B) such Person
was aware of the extent of its Beneficial Ownership of Common Stock but had no
actual knowledge of the consequences of such Beneficial Ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, and such Person, as promptly as practicable after being advised of such
determination divested or divests himself or itself of Beneficial Ownership of a
sufficient number of shares of Common Stock so that such Person would no longer
be an Acquiring Person, then such Person shall not be deemed to be or to have
become an "Acquiring Person" for any purposes of this Agreement; (ii) if, as of
the date hereof or prior to the first public announcement of the adoption of
this Agreement, any Person is or becomes the Beneficial Owner of 20% or more of
the shares of Common Stock outstanding, such Person shall not be deemed to be or
become an "Acquiring Person" unless and until such time as such Person shall
after the first public announcement of this Agreement, become the Beneficial
Owner of additional shares of Common Stock (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding Common Stock or
pursuant to a split or subdivision of

                                       -1-
<PAGE>

the outstanding Common Stock), unless upon becoming the Beneficial Owner of such
additional shares of Common Stock, such Person is not then the Beneficial Owner
of 20% or more of the shares of Common Stock then outstanding; and (iii) no
Person shall become an "Acquiring Person" as the result of an acquisition of
shares of Common Stock by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by
such Person to 20% or more of the shares of Common Stock then outstanding,
provided, however, that if a Person shall become the Beneficial Owner of 20% or
more of the shares of Common Stock then outstanding by reason of such share
acquisitions by the Company and shall thereafter become the Beneficial Owner of
any additional shares of Common Stock (other than pursuant to a dividend or
distribution paid or made by the Company on the outstanding Common Stock in
shares of Common Stock or pursuant to a split or subdivision of the outstanding
Common Stock), then such Person shall be deemed to be an "Acquiring Person"
unless upon becoming the Beneficial Owner of such additional shares of Common
Stock such Person does not own 20% or more of the shares of Common Stock then
outstanding. For all purposes of this Agreement, any calculation of the number
of shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
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 Securities Exchange Act of 1934, as amended (the
"Exchange Act"), as in effect on the date hereof.

     (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
Exchange Act as in effect on the date of this Agreement.

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

          (i) which such Person or any of such Person's Affiliates or Associates
is deemed to beneficially own, directly or indirectly within the meaning of Rule
13d-3 of the General Rules and Regulations under the Exchange Act as in effect
on the date of this Agreement;

          (ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any agreement,
arrangement or understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide public
offering of securities), or upon the exercise of conversion rights, exchange
rights, rights (other than these Rights), warrants or options, or otherwise;
provided, however, that a Person shall not be deemed the Beneficial Owner of, or
to beneficially own, (x) securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of such Person's Affiliates or
Associates until such tendered securities are accepted for purchase, (y)
securities which such Person has a right to acquire on the exercise of Rights at
any time prior to the time a Person becomes an Acquiring Person, or (z)
securities issuable upon exercise of Rights from and after the time a Person
becomes an Acquiring Person if such Rights were acquired by such Person or any
of such Person's Affiliates or Associates prior to the Distribution

                                       -2-
<PAGE>

Date or pursuant to Section 3(a) or Section 22 hereof ("Original Rights") or
pursuant to Section 11(i) or Section 11(n) with respect to an adjustment to
Original Rights; or (B) the right to vote pursuant to any agreement, arrangement
or understanding; provided, however, that a Person shall not be deemed the
Beneficial Owner of, or to beneficially own, any security by reason of such
agreement, arrangement or understanding if the agreement, arrangement or
understanding to vote such security (1) arises solely from a revocable proxy or
consent given to such Person in response to a public proxy or consent
solicitation made pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act and (2) is not also then
reportable on Schedule 13D under the Exchange Act (or any comparable or
successor report); or

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

     (d) "Business Day" shall mean any day other than a Saturday, a Sunday, or a
day on which banking institutions in the State of New York, or the city in which
the principal office of the Rights Agent is located, 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) "Common Stock" when used with reference to the Company shall mean the
common stock, par value $0.001 per share, of the Company. "Common Stock" when
used with reference to any Person other than the Company shall mean the capital
stock (or, in the case of an unincorporated entity, the equivalent equity
interest) with the greatest voting power of such other Person or, if such other
Person is a subsidiary of another Person, the Person or Persons which ultimately
control such first-mentioned Person.

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

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

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

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

     (k) "Exchange Ratio" shall have the meaning set forth in Section 24 hereof.

     (l) "Exempt Person" shall mean (i) the Company, any Subsidiary (as such
term is hereinafter defined) of the Company, in each case including, without
limitation, in its fiduciary

                                       -3-
<PAGE>

capacity, or any employee benefit plan of the Company or of any Subsidiary of
the Company, or any entity or trustee holding Common Stock for or pursuant to
the terms of any such plan or for the purpose of funding any such plan or
funding other employee benefits for employees of the Company or of any
Subsidiary of the Company; and (ii) Ken L. Kenworthy, Jr. or his spouse Karen
Kenworthy ("Kenworthys") for so long as they are the Beneficial Owner of 20% or
more, but not more than 30% of the shares of Common Stock then outstanding;
provided, however, that if the Kenworthys become the Beneficial Owner of more
than 30% of the shares of Common Stock then outstanding, the Kenworthys shall
cease to be an Exempt Person and shall be deemed to be an Acquiring Person.

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

     (n) "Flip-In Event" shall have the meaning set forth in Section 11(a)(ii)
hereof.

     (o) "NASDAQ" shall mean the National Association of Securities Dealers,
Inc. Automated Quotation System.

     (p) "Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.

     (q) "Preferred Stock" shall mean the Series A Junior Participating
Preferred Stock, $0.001 par value, of the Company having the rights and
preferences set forth in the Form of Certificate of Designation attached to this
Agreement as Exhibit A.

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

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

     (t) "Record Date" shall have the meaning set forth in the second paragraph
hereof.

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

     (v) "Redemption Price" shall have the meaning set forth in Section 23
hereof.

     (w) "Right Certificate" shall have the meaning set forth in Section 3
hereof.

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

     (y) "Securities Act" shall mean the Securities Act of 1933, as amended.

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

     (aa) "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) of the Exchange Act) by the
Company or an Acquiring Person

                                       -4-
<PAGE>

that an Acquiring Person has become such or such earlier date as a majority of
the Board of Directors shall become aware of the existence of an Acquiring
Person.

     (bb) "Subsidiary" of any Person shall mean any corporation or other entity
of which securities or other ownership interests having ordinary voting power
sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly, by
such Person, and any corporation or other entity that is otherwise controlled by
such Person.

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

     (dd) "Summary of Rights" shall have the meaning set forth in Section 3
hereof.

     (ee) "Trading Day" shall have the meaning set forth in Section 11(d)(i)
hereof.

     SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with Section 3 hereof, shall prior to the Distribution Date also
be the holders of Common 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.

     SECTION 3. ISSUE OF RIGHT CERTIFICATES. (a) Until the Close of Business on
the earlier of (i) the tenth day after the Stock Acquisition Date or (ii) the
tenth Business Day (or such later date as may be determined by action of the
Board of Directors of the Company prior to such time as any Person becomes an
Acquiring Person) after the date of the commencement by any Person (other than
an Exempt Person) of, or of the first public announcement of the intention of
such Person (other than an Exempt Person) to commence, a tender or exchange
offer the consummation of which would result in any Person becoming an Acquiring
Person (the earlier of such dates being herein referred to as the "Distribution
Date," provided, however, that if either of such dates occurs after the date of
this Agreement and on or prior to the Record Date, then the Distribution Date
shall be the Record Date, (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Stock
registered in the names of the holders thereof and not by separate Right
Certificates, and (y) the Rights will be transferable only in connection with
the transfer of Common Stock. As soon as practicable after the Distribution
Date, the Company will prepare and execute, the Rights Agent will countersign,
and the Company will send or cause to be sent (and the Rights Agent will, if
requested, by and at the expense of the Company, send) by first-class, insured,
postage-prepaid mail, to each record holder of Common Stock as of the Close of
Business on the Distribution Date (other than any Acquiring Person or any
Associate or Affiliate of an Acquiring Person), at the address of such holder
shown on the records of the Company, a Right Certificate, in substantially the
form of Exhibit B hereto (a "Right Certificate"), evidencing one Right (subject
to adjustment as provided herein) for each share of Common Stock so held. As of
the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.

          (b) On the Record Date, or as soon as practicable thereafter, the
Company will send a copy of a Summary of Rights to Purchase Shares of Preferred
Stock, in substantially the

                                       -5-
<PAGE>

form of Exhibit C hereto (the "Summary of Rights"), by first class, postage
prepaid mail, to each record holder of Common Stock as of the Close of Business
on the Record Date (other than any Acquiring Person or any Associate or
Affiliate of any Acquiring Person), at the address of such holder shown on the
records of the Company. With respect to certificates for Common Stock
outstanding as of the Record Date, until the Distribution Date, the Rights will
be evidenced by such certificates registered in the names of the holders thereof
together with the Summary of Rights. Until the Distribution Date (or the earlier
of the Redemption Date or the Expiration Date), the surrender for transfer of
any certificate for Common Stock outstanding on the Record Date, with or without
a copy of the Summary of Rights, shall also constitute the transfer of the
Rights associated with the Common Stock represented thereby.

          (c) Certificates issued for Common Stock (including, without
limitation, upon transfer of outstanding Common Stock, disposition of Common
Stock out of treasury stock or issuance or reissuance of Common Stock out of
authorized but unissued shares) from and after the Record Date but prior to the
earliest of the Distribution Date, the Redemption Date or the Expiration Date
shall have impressed on, printed on, written on or otherwise affixed to them the
following legend:

          This certificate also evidences and entitles the holder hereof to
          certain rights as set forth in a Rights Agreement between GMX
          RESOURCES INC. and the Rights Agent, as the same may be amended from
          time to time (the "Rights Agreement"), the terms of which are hereby
          incorporated herein by reference and a copy of which is on file at the
          principal executive offices of GMX RESOURCES INC. Under certain
          circumstances, as set forth in the Rights Agreement, such Rights will
          be evidenced by separate certificates and will no longer be evidenced
          by this certificate. GMX RESOURCES INC. will mail to the holder of
          this certificate a copy of the Rights Agreement without charge after
          receipt of a written request therefor. Under certain circumstances, as
          set forth in the Rights Agreement, Rights owned by or transferred to
          any Person who becomes an Acquiring Person (as defined in the Rights
          Agreement) and certain transferees thereof will become null and void
          and will no longer be transferable.

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

          Notwithstanding the preceding paragraph, the omission of a legend
shall not affect the enforceability of any part of this Agreement or the rights
of any holder of the Rights.

                                       -6-
<PAGE>

     SECTION 4. FORM OF RIGHT CERTIFICATES. The Right Certificates (and the
forms of election to purchase shares and of assignment to be printed on the
reverse thereof) shall be substantially in the form set forth in Exhibit B
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of NASDAQ or of
any other stock exchange or interdealer quotation system on which the Rights may
from time to time be listed, or quoted, or to conform to usage. Subject to the
provisions of this Agreement, the Rights Certificates shall entitle the holders
thereof to purchase such number of one one-thousandths of a share of Preferred
Stock as shall be set forth therein at the price per one one-thousandth of a
share of Preferred Stock set forth therein at the Purchase Price, but the number
of such one one-thousandths of a share of Preferred Stock and the Purchase Price
shall be subject to adjustment as provided herein.

     SECTION 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Right Certificates
shall be executed on behalf of the Company by the Chairman of the Board of
Directors, the President, any of the Vice Presidents, the Chief Financial
Officer or the Controller of the Company, either manually or by facsimile
signature, shall have affixed thereto the Company's seal or a facsimile thereof,
and shall be attested by the Secretary or an Assistant Secretary of the Company,
either manually or by facsimile signature. The Right Certificates shall be
manually countersigned by the Rights Agent and shall not be valid for any
purpose unless countersigned. In case any officer of the Company who shall have
signed any of the Right Certificates shall cease to be such officer of the
Company before countersignature by the Rights Agent and issuance and delivery by
the Company, such Right Certificates, nevertheless, may be countersigned by the
Rights Agent and issued and delivered by the Company with the same force and
effect as though the Person who signed such Right Certificates had not ceased to
be such officer of the Company; and any Right Certificate may be signed on
behalf of the Company by any Person who, at the actual date of the execution of
such Right Certificate, shall be a proper officer of the Company to sign such
Right Certificate, although at the date of the execution of this 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 an office or agency designated for such purpose, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the date of each of the Right Certificates.

     SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATES. (a) At
any time after the Close of Business on the Distribution Date, and prior to the
Close of Business on the earlier of the Redemption Date or the Expiration Date,
any Right Certificate or Right Certificates may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-thousandths
of a share of Preferred Stock as the Right Certificate or Right Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Right Certificate or
Right

                                       -7-
<PAGE>

Certificates shall make such request in writing in form reasonably acceptable
and delivered to the Rights Agent, and shall surrender the Right Certificate or
Right Certificates to be transferred, split up, combined or exchanged at the
office or agency of the Rights Agent designated for such purpose. Thereupon the
Rights Agent shall countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Company or the Rights Agent may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer, split up, combination or exchange of Right Certificates.

     (b) At any time after the Close of Business on the Distribution Date and
prior to the Close of Business on the earlier of the Redemption Date or the
Expiration Date, upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security of the Company and the Rights Agent reasonably satisfactory to them,
and, at the Company's or the Rights Agent's request, reimbursement to the
Company and the Rights Agent of all reasonable expenses incidental thereto, and
upon surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Rights Agent will make and deliver a new Right Certificate of
like tenor for delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.

     SECTION 7. EXERCISE OF RIGHTS, PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Except as otherwise provided herein, the Rights shall become exercisable on
the Distribution Date, and thereafter the registered holder of any Right
Certificate may, subject to Section 11(a)(ii) hereof and except as otherwise
provided herein, exercise the Rights evidenced thereby in whole or in part upon
surrender of the Right Certificate, with the form of election to purchase on the
reverse side thereof duly executed with signature guarantee and such individual
information as may be reasonably requested by the Rights Agent, to the Rights
Agent at the office or agency of the Rights Agent designated for such purpose,
together with payment of the Purchase Price for each one one-thousandth of a
share of Preferred Stock as to which the Rights are exercised, at any time which
is both after the Distribution Date and prior to the earliest of (i) the Close
of Business on June 1, 2015 (the "Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the "Redemption Date") or
(iii) the time at which such Rights are exchanged as provided in Section 24
hereof.

          (b) The Purchase Price shall be initially $65.00 for each one
one-thousandth of a share of Preferred Stock purchasable upon the exercise of a
Right. The Purchase Price and the number of one one-thousandths of a share of
Preferred Stock or other securities or property to be acquired upon exercise of
a Right shall be subject to adjustment from time to time as provided in Sections
11 and 13 hereof and shall be payable in lawful money of the United States of
America in accordance with paragraph (c) of this Section 7.

          (c) Except as otherwise provided herein, upon receipt of a Right
Certificate representing exercisable Rights, with the form of election to
purchase duly executed, accompanied by payment of the aggregate Purchase Price
for the shares of Preferred Stock to be purchased and an amount equal to any
applicable transfer tax required to be paid by the holder of such Right
Certificate in accordance with Section 9 hereof, in cash or by certified check,
cashier's check or money order payable to the order of the Company, the Rights
Agent shall thereupon promptly (i) (A) requisition from any transfer agent of
the Preferred Stock, or make available if the Rights Agent is the transfer agent
for the Preferred Stock, certificates for the

                                       -8-
<PAGE>

number of shares of Preferred Stock to be purchased, and the Company hereby
irrevocably authorizes its transfer agent to comply and will cause the transfer
agent to comply with all such requests, or (B) requisition from a depositary
agent appointed by the Company depositary receipts representing interests in
such number of one one-thousandths of a share of Preferred Stock as are to be
purchased (in which case certificates for the Preferred Stock represented by
such receipts shall be deposited by the transfer agent with the depositary
agent), and the Company hereby directs any such depositary agent to comply and
will cause the depositary agent to comply with such request, (ii) when
appropriate, requisition from the Company the amount of cash to be paid in lieu
of issuance of fractional shares in accordance with Section 14 hereof, (iii)
promptly 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 Right
Certificate, registered in such name or names as may be designated by such
holder and (iv) when appropriate, after receipt, promptly deliver such cash to
or upon the order of the registered holder of such Right Certificate.

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

          (e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of Rights upon the occurrence of any
purported transfer or exercise of Rights pursuant to Section 6 hereof or this
Section 7 unless such registered holder shall have (i) completed and signed the
certificate contained in the form of assignment or form of election to purchase
set forth on the reverse side of the Right Certificate surrendered for such
transfer or exercise and (ii) provided such additional evidence of the identity
of the Beneficial Owner (or former Beneficial Owner) thereof as the Company or
Rights Agent shall reasonably request.

     SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Right
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 Right Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall destroy such
cancelled Right Certificates in accordance with applicable laws and regulations,
and in such case shall deliver a certificate of destruction thereof to the
Company.

     SECTION 9. AVAILABILITY OF SHARES OF PREFERRED 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 or any shares of Preferred
Stock held in its treasury, the number of shares of Preferred Stock that will be
sufficient to permit the exercise in full of all outstanding Rights.

                                       -9-
<PAGE>

          (b) So long as the shares of Preferred Stock issuable upon the
exercise of Rights may be listed or admitted to trading on any national
securities exchange, or quoted on NASDAQ, 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 or admitted to trading on such exchange,
or quoted on NASDAQ, upon official notice of issuance upon such exercise.

          (c) From and after such time as the Rights become exercisable, the
Company shall use its best efforts, if then necessary to permit the issuance of
shares of Preferred Stock (and following the time that a Person first becomes an
Acquiring Person, shares of Common Stock and other securities) upon the exercise
of Rights, to register and qualify such shares of Preferred Stock (and following
the time that a Person first becomes an Acquiring Person, shares of Common Stock
and other securities) under the Securities Act and any applicable state
securities or "Blue Sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the date as of which the Rights
are no longer exercisable for such securities and the Expiration Date. The
Company may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file a registration
statement under the Securities Act and permit it to become effective. Upon any
such suspension, the Company shall issue a public announcement and shall as
promptly as practicable thereafter give written notice to the Rights Agent,
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. Notwithstanding any provision of this Agreement to the contrary, the
Rights shall not be exercisable in any jurisdiction unless the requisite
qualification in such jurisdiction shall have been obtained and until a
registration statement under the Securities Act (if required) shall have been
declared effective unless an exemption therefrom is available.

          (d) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that all shares of Preferred Stock (and, following
the time that a Person becomes an Acquiring Person, shares of Common Stock and
other securities) delivered upon exercise of Rights shall, at the time of
delivery of the certificates therefor (subject to payment of the Purchase
Price), be duly and validly authorized and issued and fully paid and
nonassessable shares.

          (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 Right Certificates or
of any shares of Preferred Stock (or Common Stock or other securities) upon the
exercise of Rights. The Company shall not, however, be required to pay any
transfer tax which may be payable in respect of any transfer or delivery of
Right Certificates to a Person other than, or the issuance or delivery of
certificates or depositary receipts for the Preferred Stock (or Common Stock or
other securities) in a name other than that of, the registered holder of the
Right Certificate evidencing Rights surrendered for exercise or to issue or
deliver any certificates or depositary receipts for Preferred Stock upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by that holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's reasonable satisfaction that
no such tax is due.

                                      -10-
<PAGE>

     SECTION 10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for Preferred Stock is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the shares of
Preferred Stock represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; provided, however, that if the date of such surrender and
payment is a date upon which the Preferred Stock transfer books of the Company
are closed, such Person shall be deemed to have become the record holder of such
shares on, and such certificate shall be dated, the next succeeding Business Day
on which the Preferred Stock transfer books of the Company are open. Prior to
the exercise of the Rights evidenced thereby, the holder of a Right Certificate
shall not be entitled to any rights of a holder of Preferred Stock for which the
Rights shall be exercisable, including, without limitation, the right to vote or
to receive dividends or other distributions, 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 AND
NUMBER OF RIGHTS. The Purchase Price, the number of shares of Preferred Stock or
other securities or property purchasable upon exercise of each Right and the
number of Rights outstanding are subject to adjustment from time to time as
provided in this Section 11.

          (a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare and pay a dividend 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 of
Preferred Stock or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this Section 11(a),
the Purchase Price in effect at the time of the record date for such dividend or
of the effective date of such subdivision, combination or reclassification, and
the number and kind of shares of capital stock issuable on such date, shall be
proportionately adjusted so that the holder of any Right exercised after such
time shall be entitled to receive the aggregate number and kind of shares of
capital stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Stock transfer books of the Company were
open, the holder would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the consideration to
be paid upon the exercise of one Right be less than the aggregate par value of
the shares of capital stock of the Company issuable upon exercise of one Right.

               (ii) Subject to Section 24 of this Agreement, in the event that
any Person becomes an Acquiring Person (the first occurrence of such event being
referred to hereinafter as the "Flip-In Event"), then (A) the Purchase Price
shall be adjusted to be the Purchase Price in effect immediately prior to the
Flip-In Event multiplied by the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
Flip-In Event, whether or not such Right was then exercisable, and (B) each
holder of a Right, except as otherwise provided in this Section 11(a)(ii) and
Section 11(a)(iii) hereof, shall thereafter have the right to receive, upon
exercise thereof at a price equal to the Purchase Price (as so adjusted), in
accordance with the terms of this Agreement and in lieu of shares of

                                      -11-
<PAGE>

Preferred Stock, such number of shares of Common Stock (or at the option of the
Company, such number of one one-thousandths of shares of Preferred Stock) as
shall equal the result obtained by dividing the Purchase Price (as so adjusted)
by 50% of the current per share market price of the Common Stock (determined
pursuant to Section 11(d) hereof) on the date of such Flip-In Event; provided,
however, that the Purchase Price as so adjusted and the number of shares of
Common Stock so receivable upon exercise of a Right shall, following the Flip-In
Event, be subject to further adjustment as appropriate in accordance with
Section 11(f) hereof. Notwithstanding anything in this Agreement to the
contrary, however, from and after the Flip-In Event any Rights that are
beneficially owned by (x) any Acquiring Person (or any Affiliate or Associate of
any Acquiring Person), (y) a transferee of any Acquiring Person (or any such
Affiliate or Associate) who becomes a transferee after the Flip-In Event, or (z)
a transferee of any Acquiring Person (or any such Affiliate or Associate) who
became a transferee prior to or concurrently with the Flip-In Event pursuant to
either (I) a transfer from the Acquiring Person to holders of its equity
securities or to any Person with whom it has any continuing agreement,
arrangement or understanding regarding the transferred Rights, or (II) a
transfer which the Board of Directors of the Company has determined is part of a
plan, arrangement or understanding which has the purpose or effect of avoiding
the provisions of this paragraph, and subsequent transferees of such Persons,
shall be void without any further action, and any holder of such Rights shall
thereafter have no rights whatsoever with respect to such Rights under any
provision of this Agreement. The Company shall use all reasonable efforts to
ensure that the provisions of this Section 11(a)(ii) are complied with, but
shall have no liability to any holder of Right Certificates or other Person as a
result of its failure to make any determinations with respect to an Acquiring
Person or its Affiliates, Associates or transferees hereunder. From and after
the Flip-In Event, no Right Certificate shall be issued pursuant to Section 3 or
Section 6 hereof that represents Rights that are or have become void pursuant to
the provisions of this paragraph, and any Right Certificate delivered to the
Rights Agent that represents Rights that are or have become void pursuant to the
provisions of this paragraph shall be cancelled. From and after the occurrence
of an event specified in Section 13(a) hereof, any Rights that theretofore have
not been exercised pursuant to this Section 11(a)(ii) shall thereafter be
exercisable only in accordance with Section 13 and not pursuant to this Section
11(a)(ii).

               (iii) The Company may at its option substitute for a share of
Common Stock issuable upon the exercise of Rights in accordance with the
foregoing subparagraph (ii) such number or fractions of shares of Preferred
Stock having an aggregate current market value equal to the current per share
market price of a share of Common Stock. In the event that there shall not be
sufficient shares of Common Stock issued but not outstanding or authorized but
unissued to permit the exercise in full of the Rights in accordance with the
foregoing subparagraph (ii), the Board of Directors of the Company shall, with
respect to such deficiency, to the extent permitted by applicable law and any
material agreements then in effect to which the Company is a party, (A)
determine the excess (such excess, the "Spread") of (1) the value of the shares
of Common Stock issuable upon the exercise of a Right in accordance with the
foregoing subparagraph (ii) (the "Current Value") over (2) the Purchase Price
(as adjusted in accordance with the foregoing subparagraph (ii)), and (B) with
respect to each Right (other than Rights which have become void pursuant to the
foregoing subparagraph (ii)), make adequate provision to substitute for the
shares of Common Stock issuable in accordance with the foregoing subparagraph
(ii) upon exercise of the Right and payment of the Purchase Price (as adjusted
in

                                      -12-
<PAGE>

accordance therewith), (1) cash, (2) a reduction in the Purchase Price, (3)
shares of Preferred Stock or other equity securities of the Company (including,
without limitation, shares or fractions of shares of preferred stock which, by
virtue of having dividend, voting and liquidation rights substantially
comparable to those of the shares of Common Stock, are deemed in good faith by
the Board of Directors of the Company to have substantially the same value as
the shares of Common Stock (such shares of Preferred Stock and shares or
fractions of shares of Preferred Stock are hereinafter referred to as "Common
Stock Equivalents"), (4) debt securities of the Company, (5) other assets, or
(6) any combination of the foregoing, having a value which, when added to the
value of the shares of Common Stock actually issued upon exercise of such Right,
shall have an aggregate value equal to the Current Value (less the amount of any
reduction in such Purchase Price), where such aggregate value has been
determined by the Board of Directors of the Company upon the advice of a
nationally recognized investment banking firm selected in good faith by the
Board of Directors of the Company; provided, however, that if the Company shall
not make adequate provision to deliver value pursuant to clause (B) above within
thirty (30) days following the Flip-In Event (the date of the Flip-In Event
being the "Section 11(a)(ii) Trigger Date"), then the Company shall be obligated
to deliver, to the extent permitted by applicable law and any material
agreements then in effect to which the Company is a party, upon the surrender
for exercise of a Right and without requiring payment of such Purchase Price,
shares of Common Stock (to the extent available), and then, if necessary, such
number or fractions of shares of Preferred Stock (to the extent available) and
then, if necessary, cash, which shares and/or cash have an aggregate value equal
to the Spread. If, upon the occurrence of the Flip-In Event, the Board of
Directors of the Company shall determine in good faith that it is likely that
sufficient additional shares of Common Stock could be authorized for issuance
upon exercise in full of the Rights, then, if the Board of Directors of the
Company so elects, 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 the Company determines that some action need be taken pursuant to the
second and/or third sentence of this Section 11(a)(iii), the Company (x) shall
provide, subject to Section 11(a)(ii) hereof and the last sentence of this
Section 11(a)(iii) hereof, that such action shall apply uniformly to all
outstanding Rights and (y) may suspend the exercisability of the Rights until
the expiration of the Substitution Period in order to seek any authorization of
additional shares and/or to decide the appropriate form of distribution to be
made pursuant to such second sentence and to determine the value thereof. In the
event of any such suspension, the Company shall issue a public announcement, and
shall as promptly as possible thereafter give written notice to the Rights
Agent, stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. For purposes of this Section 11(a)(iii), the value of the
shares of Common Stock shall be the current per share market price (as
determined pursuant to Section 11(d)(i)) on the Section 11(a)(ii) Trigger Date
and the per share or fractional value of any "Common Stock Equivalent" shall be
deemed to equal the current per share market price of the Common Stock. The
Board of Directors of the Company may, but shall not be required to, establish
procedures to allocate the right to receive shares of Common Stock upon the
exercise of the Rights among holders of Rights pursuant to this Section
11(a)(iii).

                                      -13-
<PAGE>

     (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 (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Preferred Stock (or shares having the same rights, privileges and
preferences as the Preferred Stock ("Equivalent Preferred Shares")) or
securities convertible into Preferred Stock or Equivalent Preferred Shares at a
price per share of Preferred Stock or Equivalent Preferred Shares (or having a
conversion price per share, if a security convertible into shares of Preferred
Stock or Equivalent Preferred Shares) less than the then current per share
market price of the Preferred Stock (determined pursuant to Section 11(d)
hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of shares of Preferred Stock and Equivalent Preferred Shares
outstanding on such record date plus the number of shares of Preferred Stock and
Equivalent Preferred Shares which the aggregate offering price of the total
number of shares of Preferred Stock and/or Equivalent Preferred Shares so to be
offered (and/or the aggregate initial conversion price of the convertible
securities so to be offered) would purchase at such current market price, and
the denominator of which shall be the number of shares of Preferred Stock and
Equivalent Preferred Shares outstanding on such record date plus the number of
additional shares of Preferred Stock and/or Equivalent Preferred Shares to be
offered for subscription or purchase (or into which the convertible securities
so to be offered are initially convertible); provided, however, that in no event
shall the consideration to be paid upon the exercise of one Right be less than
the aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price may be paid in a
consideration part or all of which shall be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors of the Company, whose determination shall be described in a statement
filed with the Rights Agent. Shares of Preferred Stock and Equivalent Preferred
Shares owned by or held for the account of the Company shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.

     (c) In case the Company shall fix a record date for the making of a
distribution to all holders of the Preferred Stock (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of indebtedness
or assets (other than a regular quarterly cash dividend or a dividend payable in
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
then current per share market price of the Preferred Stock (determined pursuant
to Section 11(d) hereof) on such record date, less the fair market value (as
determined in good faith by the Board of Directors of the Company whose
determination shall be described in a statement filed with the Rights Agent) of
the portion of the assets or evidences of indebtedness so to be distributed or
of such subscription rights or warrants applicable to one share of Preferred
Stock, and the denominator of which shall be such current per share market price
(determined pursuant to Section 11(d) hereof) of the Preferred Stock; provided,
however, that in no event shall the consideration to be paid upon the exercise
of one

                                      -14-
<PAGE>

Right be less than the aggregate par value of the shares of capital stock of the
Company to be issued upon exercise of one Right. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event that such
distribution is not so made, the Purchase Price shall again be adjusted to be
the Purchase Price which would then be in effect if such record date had not
been fixed.

     (d) (i) Except as otherwise provided herein, for the purpose of any
computation hereunder, the "current per share market price" of any security (a
"Security" for the purpose of this Section 11(d)(i)) on any date shall be deemed
to be the average of the daily closing prices per share of such Security for the
30 consecutive Trading Days (as such term is hereinafter defined) immediately
prior to such date; provided, however, that in the event that the current per
share market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or distribution on
such Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such
Security, and prior to the expiration of 30 Trading Days after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the current per
share market price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security. The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported by the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on NASDAQ or, if
the Security is not listed or admitted to trading on NASDAQ, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by NASDAQ or such other system then in use, or, if on any
such date the Security is not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Security selected by the Board of Directors of the
Company. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading is
open for the transaction of business or, if the Security is not listed or
admitted to trading on any national securities exchange, a Business Day.

               (ii) For the purpose of any computation hereunder, if the
Preferred Stock is publicly traded, the "current per share market price" of the
Preferred Stock shall be determined in accordance with the method set forth in
Section 11(d)(i). If the Preferred Stock is not publicly traded but the Common
Stock is publicly traded, the "current per share market price" of the Preferred
Stock shall be conclusively deemed to be the current per share market price of
the Common Stock as determined pursuant to Section 11(d)(i) multiplied by the
then applicable Adjustment Number (as defined in and determined in accordance
with the Certificate of Designation for the Preferred Stock). If neither the
Common Stock nor the Preferred Stock is publicly traded, "current per share
market price" shall mean the fair value per share as determined in good faith by
the Board of Directors of the Company, whose determination shall be described in
a statement filed with the Rights Agent.

                                      -15-
<PAGE>

     (e) No adjustment in the Purchase Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Purchase
Price; provided, however, that any adjustments which by reason of this Section
11(e) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this Section 11
shall be made to the nearest cent or to the nearest one hundred-thousandth of a
share of Preferred Stock or one-hundredth of a share of Common Stock or other
share or security as the case may be.

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

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

     (i) The Company may elect on or after the date of any adjustment of the
Purchase Price pursuant to Sections 11(b) or 11(c) hereof to adjust the number
of Rights, in substitution for any adjustment in the number of one
one-thousandths of a share of Preferred Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
one-hundredth 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 and shall as promptly as practicable thereafter give written
notice to the

                                      -16-
<PAGE>

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

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

     (k) Before taking any action that would cause an adjustment reducing the
Purchase Price below the then par value, if any, of the fraction of Preferred
Stock or other shares of capital stock issuable upon exercise of a Right, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of Preferred Stock or other such shares 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 issuing
to the holder of any Right exercised after such record date the Preferred Stock
and other capital stock or securities of the Company, if any, issuable upon such
exercise over and above the 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 upon
the occurrence of the event requiring such adjustment.

     (m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such adjustments in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it in its sole discretion shall determine to be advisable in
order that any consolidation or subdivision of the Preferred Stock, issuance
wholly for cash of any shares of Preferred Stock at less than the current market
price, issuance wholly for cash of Preferred Stock or securities which by their
terms are convertible into or exchangeable for Preferred Stock, dividends on
Preferred Stock payable in shares of

                                      -17-
<PAGE>

Preferred Stock or issuance of rights, options or warrants referred to
hereinabove in Section 11(b), hereafter made by the Company to holders of its
Preferred Stock shall not be taxable to such shareholders.

     (n) Anything in this Agreement to the contrary notwithstanding, in the
event that at any time after the date of this Agreement and prior to the
Distribution Date, the Company shall (i) declare and pay any dividend on the
Common Stock payable in Common Stock or (ii) effect a subdivision, combination
or consolidation of the Common Stock (by reclassification or otherwise than by
payment of a dividend payable in Common Stock) into a greater or lesser number
of shares of Common Stock, then, in each such case, the number of Rights
associated with each share of Common Stock then outstanding, or issued or
delivered thereafter, shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock immediately prior to such event by a
fraction the numerator of which shall be the total number of shares of Common
Stock outstanding immediately prior to the occurrence of the event and the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately following the occurrence of such event.

     (o) The Company agrees that, after the earlier of the Distribution Date or
the Stock Acquisition Date, it will not, except as permitted by Sections 23, 24
or 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 eliminate the benefits intended to be afforded by the Rights.

     SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Common Stock and the
Preferred Stock a copy of such certificate and (c) mail a brief summary thereof
to each holder of a Right Certificate in accordance with Section 25 hereof (if
so required under Section 25 hereof). The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained and
shall not be obligated or responsible for calculating any adjustment and shall
not be deemed to have knowledge of any such adjustment unless and until it shall
have received such certificate.

     SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER. (a) In the event, directly or indirectly, at any time after the Flip-In
Event (i) the Company shall merge with and into any other Person, (ii) any
Person shall consolidate with the Company, or any Person shall merge with and
into the Company and the Company shall be the continuing or surviving
corporation of such merger and, in connection with such merger, all or part of
the Common Stock shall be changed into or exchanged for stock or other
securities of any other Person (or of the Company) or cash or any other
property, or (iii) the Company shall sell or otherwise transfer (or one or more
of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person (other than the Company or one or more of its wholly-owned
Subsidiaries), then upon the first occurrence of

                                      -18-
<PAGE>

such event, proper provision shall be made so that: (A) each holder of record of
a Right (other than Rights which have become void pursuant to Section 11(a)(ii))
shall thereafter have the right to receive, upon the exercise thereof at a price
equal to the then current Purchase Price multiplied by the number of one
one-thousandths of a share of Preferred Stock for which a Right was exercisable
(whether or not such Right was then exercisable) immediately prior to the time
that any Person first became an Acquiring Person (each as subsequently adjusted
thereafter pursuant to Sections 11(a)(i), 11(b), 11(c), 11(e), 11(h), 11(i) and
11(m)), in accordance with the terms of this Agreement and in lieu of Preferred
Stock, such number of validly issued, fully paid and non-assessable and freely
tradable shares of Common Stock of the Principal Party (as defined herein) not
subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall be equal to the result obtained by (1) multiplying the then
current Purchase Price by the number of one one-thousandths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the time
that any Person first became an Acquiring Person (as subsequently adjusted
thereafter pursuant to Sections 11(a)(i), 11(b), 11(c), 11(e), 11(h), 11(i) and
11(m)) and (2) dividing that product by 50% of the then current per share market
price of the Common Stock of such Principal Party (determined pursuant to
Section 11(d)(i) hereof) on the date of consummation of such consolidation,
merger, sale or transfer; provided that the Purchase Price and the number of
shares of Common Stock of such Principal Party issuable upon exercise of each
Right shall be further adjusted as provided in Section 11(f) of this Agreement
to reflect any events occurring in respect of such Principal Party after the
date of such consolidation, merger, sale or transfer; (B) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (C) the term "Company" shall thereafter be
deemed to refer to such Principal Party; and (D) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its shares of Common Stock in accordance with Section 9 hereof) in
connection with such 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 the shares of its Common Stock thereafter
deliverable upon the exercise of the Rights; provided that, upon the subsequent
occurrence of any consolidation, merger, sale or transfer of assets or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price as provided in this Section 13(a), such cash,
shares, rights, warrants and other property which such holder would have been
entitled to receive had such holder, at the time of such transaction, owned the
Common Stock of the Principal Party receivable upon the exercise of a Right
pursuant to this Section 13(a), and such Principal Party shall take such steps
(including, but not limited to, reservation of shares of stock) as may be
necessary to permit the subsequent exercise of the Rights in accordance with the
terms hereof for such cash, shares, rights, warrants and other property.

     (b) "Principal Party" shall mean:

               (i) in the case of any transaction described in (i) or (ii) of
the first sentence of Section 13(a) hereof: (A) the Person that is the issuer of
the securities into which the shares of Common Stock are converted in such
merger or consolidation, or, if there is more than one such issuer, the issuer
the shares of Common Stock of which have the greatest aggregate market value of
shares outstanding, or (B) if no securities are so issued, (x) the Person that
is the

                                      -19-
<PAGE>

other party to the merger, if such Person survives said merger, or, if there is
more than one such Person, the Person the shares of Common Stock of which have
the greatest aggregate market value of shares outstanding, or (y) if the Person
that is the other party to the merger does not survive the merger, the Person
that does survive the merger (including the Company if it survives), or (z) the
Person resulting from the consolidation; and

               (ii) in the case of any transaction described in (iii) of the
first sentence of Section 13(a) hereof, the Person that is the party receiving
the greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power so transferred or if the Person receiving the greatest portion of the
assets or earning power cannot be determined, whichever of such Persons as is
the issuer of Common Stock having the greatest aggregate market value of shares
outstanding; provided, however, that in any such case described in the foregoing
clause (b)(i) or (b)(ii), if the Common Stock of such Person is not at such time
or has not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, then (1) if such Person is a direct or indirect
Subsidiary of another Person the Common Stock of which is and has been so
registered, the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
and the Common Stock of all of such Persons have been so registered, the term
"Principal Party" shall refer to whichever of such Persons is the issuer of
Common Stock having the greatest aggregate market value of shares outstanding,
or (3) if such Person is owned, directly or indirectly, by a joint venture
formed by two or more Persons that are not owned, directly or indirectly, by the
same Person, the rules set forth in clauses (1) and (2) above shall apply to
each of the owners having an interest in the venture as if the Person owned by
the joint venture was a Subsidiary of both or all of such joint venturers, and
the Principal Party in each such case shall bear the obligations set forth in
this Section 13 in the same ratio as its interest in such Person bears to the
total of such interests.

     (c) The Company shall not consummate any consolidation, merger, sale or
transfer referred to in Section 13(a) hereof unless prior thereto the Company
and the Principal Party involved therein shall have executed and delivered to
the Rights Agent an agreement confirming that the requirements of Sections 13(a)
and (b) hereof shall promptly be performed in accordance with their terms and
that such consolidation, merger, sale or transfer of assets shall not result in
a default by the Principal Party under this Agreement as the same shall have
been assumed by the Principal Party pursuant to Sections 13(a) and (b) hereof
and providing that, as soon as practicable after executing such agreement
pursuant to this Section 13, the Principal Party will:

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

                                      -20-
<PAGE>

               (ii) use its best efforts, if the Common Stock of the Principal
Party shall be listed or admitted to trading on NASDAQ or on another national
securities exchange, to list or admit to trading (or continue the listing of)
the Rights and the securities purchasable upon exercise of the Rights on NASDAQ
or such securities exchange, or, if the Common Stock of the Principal Party
shall not be listed or admitted to trading on NASDAQ or a national securities
exchange, to cause the Rights and the securities receivable upon exercise of the
Rights to be reported by such other system then in use;

               (iii) deliver to holders of the Rights historical financial
statements for the Principal Party which comply in all respects with the
requirements for registration on Form 10 (or any successor form) under the
Exchange Act; and

               (iv) obtain waivers of any rights of first refusal or preemptive
rights in respect of the Common Stock of the Principal Party subject to purchase
upon exercise of outstanding Rights.

     (d) In case the Principal Party has a provision in any of its authorized
securities or in its certificate of incorporation or bylaws or other instrument
governing its affairs, which provision would have the effect of (i) causing such
Principal Party to issue (other than to holders of Rights pursuant to this
Section 13), in connection with, or as a consequence of, the consummation of a
transaction referred to in this Section 13, shares of Common Stock or Common
Stock Equivalents of such Principal Party at less than the then current market
price per share thereof (determined pursuant to Section 11(d) hereof) or
securities exercisable for, or convertible into, Common Stock or Common Stock
Equivalents of such Principal Party at less than such then current market price,
or (ii) providing for any special payment, tax or similar provision in
connection with the issuance of the Common Stock of such Principal Party
pursuant to the provisions of Section 13, then, in such event, the Company
hereby agrees with each holder of Rights that it shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
that the provision in question of such Principal Party shall have been
cancelled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.

     (e) The Company covenants and agrees that it shall not, at any time after
the Flip-In Event, enter into any transaction of the type described in clauses
(i) through (iii) of Section 13(a) hereof if (i) at the time of or immediately
after such consolidation, merger, sale, transfer or other transaction 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, (ii) prior to,
simultaneously with or immediately after such consolidation, merger, sale,
transfer or other transaction, the shareholders of the Person who constitutes,
or would constitute, the Principal Party for purposes of Section 13(b) hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates or (iii) the form or nature of organization
of the Principal Party would preclude or limit the exercisability of the Rights.

                                      -21-
<PAGE>

     SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company shall
not be required to issue fractions of Rights or to distribute Right Certificates
which evidence fractional Rights (except prior to the Distribution Date in
accordance with Section 11(n) hereof). In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right Certificates with regard to
which such fractional Rights would otherwise be issuable, an amount in cash
equal to the same fraction of the current market value of a whole Right. For the
purposes of this Section 14(a), the current market value of a whole Right shall
be the closing price of the Rights for the Trading Day immediately prior to the
date on which such fractional Rights would have been otherwise issuable. The
closing price for any day shall be the last sale price, regular way, or, in case
no such sale takes place on such day, the average of the closing bid and asked
prices, regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on NASDAQ or, if the Rights are not listed or admitted to trading on
NASDAQ, 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 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 such date as determined in
good faith by the Board of Directors of the Company shall be used.

     (b) The Company shall not be required to issue fractions of Preferred Stock
(other than fractions which are integral multiples of one one-thousandth of a
share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are integral multiples of one one-thousandth of a share of
Preferred Stock). Interests in fractions of Preferred Stock in integral
multiples of one one-thousandth of a share of Preferred Stock may, at the
election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, that such agreement shall provide that the holders of such depositary
receipts shall have all the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Stock represented by such
depositary receipts. In lieu of fractional shares of Preferred Stock that are
not integral multiples of one one-thousandth of a share of Preferred Stock, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised or exchanged as herein provided an amount in cash
equal to the same fraction of the current market value of a whole share of
Preferred Stock (as determined in accordance with Section 14(a) hereof) for the
Trading Day immediately prior to the date of such exercise or exchange.

     (c) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock upon the exercise or exchange of Rights. In lieu of such fractional
shares of Common Stock, the Company shall pay to the registered holders of the
Right Certificates with regard to which such fractional shares of Common Stock
would otherwise be issuable an amount in cash equal to the

                                      -22-
<PAGE>

same fraction of the current market value of a whole share of Common Stock (as
determined in accordance with Section 14(a) hereof) for the Trading Day
immediately prior to the date of such exercise or exchange.

     (d) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise or exchange of a Right (except as provided above).

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

     SECTION 16. AGREEMENT OF RIGHT HOLDERS. Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:

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

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

     (c) the Company and the Rights Agent may deem and treat the Person in whose
name the Right Certificate (or, prior to the Distribution Date, the Common Stock
certificate) is registered on the books for registration and transfer of the
Rights or the common stock as the case may be, as the absolute owner thereof and
of the Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Right Certificates or the 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 Section 7(e) hereof, shall
be affected by any notice to the contrary.

     (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

                                      -23-
<PAGE>

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 shall use its best efforts to have any such
order, decree or ruling lifted or otherwise overturned as soon as possible.

     SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. No holder,
as such, of any Right Certificate shall be entitled to vote, receive dividends
or be deemed for any purpose the holder of the Preferred Stock or any other
securities of the Company which may at any time be issuable on the exercise or
exchange of the Rights represented thereby, nor shall anything contained herein
or in any Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a shareholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in this Agreement), or to receive dividends or
subscription rights, or otherwise, until the Rights evidenced by such Right
Certificate shall have been exercised or exchanged 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, without limitation, counsel fees and expenses 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, including its members, directors, officers,
employees, shareholders and agents for, and to hold it harmless against, any
loss, liability or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability arising therefrom, directly or indirectly. The indemnity provided
herein shall survive the expiration of the Rights and the termination of this
Agreement.

     (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 Right Certificate or
certificate for the Preferred Stock or 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, guaranteed or acknowledged, by
the proper Person or Persons, or otherwise upon the advice of counsel as set
forth in Section 20 hereof.

     SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT. (a)
Any corporation into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any corporation succeeding to the stock transfer or
corporate trust powers of the Rights Agent or any

                                      -24-
<PAGE>

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

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

     SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes only the
specific duties and obligations imposed by this Agreement upon the following
terms and conditions, by all of which the Company and the holders of Right
Certificates, by their acceptance thereof, shall be bound and no implied duties
or obligations shall be read into this Agreement against the Rights Agent:

     (a) The Rights Agent may consult with legal counsel of its selection (who
may be legal counsel for the Company), and the opinion or advice 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 or advice.

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

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

     (d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its

                                      -25-
<PAGE>

countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only.

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

     (f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or 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 any
person reasonably believed by the Rights Agent to be one of the Chairman of the
Board of Directors, the President, the Chief Financial Officer or the Secretary
of the Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action taken or
suffered by it in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for those instructions. Any application
by the Rights Agent for written instructions from the Company may, at the option
of the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Agreement and the date on and/or after
which such action shall be taken or such omission shall be effective. The Rights
Agent shall not be liable for any action taken by, or omission of, the Rights
Agent in accordance with a proposal included in any such application on or after
the date specified in such application (which date shall not be less than five
Business Days after the date any officer of the Company actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.

     (h) The Rights Agent and any shareholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or other securities
of the Company or become 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

                                      -26-
<PAGE>

were not Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Company or for any other
legal entity.

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

     (j) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
as the case may be, has not been completed, the Rights Agent shall not take any
further action with respect to such requested exercise or transfer without
written instructions from the Company.

     (k) The Rights Agent shall have no responsibility to the Company, any
holders of Rights or any shareholder for interest or earnings on any monies held
by the Rights Agent pursuant to this Agreement; provided, that the Rights Agent
shall use its reasonable efforts to pay promptly in accordance with Section 7
any monies held.

     (l) The Rights Agent shall not be required to take notice or be deemed to
have notice of any event or condition hereunder, including, but not limited to,
a Distribution Date, a Redemption Date, any adjustment of the Purchase Price or
the Common Stock, the existence of an Acquiring Person or a Beneficial Owner or
any other event or condition that may require action by the Rights Agent, unless
the Rights Agent shall be specifically notified in writing of such event or
condition by the Company.

     (m) The Rights Agent shall not be required to take notice or be deemed to
have notice of any fact, event or determination (including, without limitation,
any dates or events defined in this Agreement or the designation of any Person
as an Acquiring Person, Affiliate or Associate) under this Agreement unless and
until the Rights Agent shall be specifically notified in writing by the Company
of such fact, event or determination, and all notices shall be effective if
given in accordance with Section 25 hereof, and in the absence of such notice
the Rights Agent may conclusively assume that no such event or condition exists.

     (n) 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.

     SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Stock or Preferred Stock by registered or certified mail, and,
following the Distribution Date, to the holders of the Right Certificates by
first class mail. The Company may remove the Rights Agent or any

                                      -27-
<PAGE>

successor Rights Agent upon 30 days' notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Common Stock or Preferred Stock by registered or certified mail, and,
following the Distribution Date, to the holders of the Right Certificates by
first class mail. If the Rights Agent shall resign or be removed or shall
otherwise become incapable of acting, the Company shall appoint a successor to
the Rights Agent. If the Company shall fail to make such appointment within a
period of 30 days after giving notice of such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Rights Agent or by the holder of a Right Certificate (who shall,
with such notice, submit his Right Certificate for inspection by the Company),
then the registered holder of any Right Certificate or the Rights Agent 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 any State thereof, which is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as Rights Agent a combined capital and surplus of at least $50
million. 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, and the rights and
obligations of the predecessor thereafter shall cease and terminate; 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 reasonably requested for this
purpose. Not later than the effective date of any such appointment the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock or Preferred Stock, and, following the
Distribution Date, mail a notice thereof in writing to the registered holders of
the Right Certificates. Failure to give any notice provided for in this Section
21, however, or any defect therein, shall not affect the legality or validity of
the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.

     SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Right Certificates evidencing Rights in such forms as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement. In addition, in connection with the issuance or
sale of Common Stock following the Distribution Date and prior to the earlier of
the Redemption Date and the Expiration Date, the Company may with respect to
shares of Common Stock so issued or sold pursuant to, upon or under (i) the
exercise of stock options, (ii) any employee plan or arrangement, (iii) the
exercise, conversion or exchange of securities, notes or debentures issued by
the Company or (iv) a contractual obligation of the Company in each case
existing prior to the Distribution Date, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale.

     SECTION 23. REDEMPTION. (a) The Board of Directors of the Company may, at
any time prior to the Flip-In Event, redeem all but not less than all of the
then outstanding Rights at a redemption price of $.01 per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring in respect of the Common Stock after the date hereof

                                      -28-
<PAGE>

(the redemption price being hereinafter referred to as the "Redemption Price").
The redemption of the Rights may be made effective at such time, on such basis
and with such conditions as the Board of Directors of the Company in its sole
discretion may establish. The Company may, at its option, pay the Redemption
Price in cash, shares of Common Stock (based on the current market price of the
Common Stock at the time of redemption) or any other form of consideration
deemed appropriate by the Board of Directors of the Company.

     (b) Immediately upon the action of the Board of Directors of the Company
ordering the redemption of the Rights pursuant to paragraph (a) of this Section
23 (or at such later time as the Board of Directors of the Company may establish
for the effectiveness of such redemption), and without any further action and
without any notice, the right to exercise the Rights will terminate and the only
right thereafter of the holders of Rights shall be to receive the Redemption
Price. The Company shall promptly give public notice of any such redemption;
provided, however, that the failure to give, or any defect in, any such notice
shall not affect the validity of such redemption. Within 10 days after such
action of the Board of Directors of the Company ordering the redemption of the
Rights (or such later time as the Board of Directors of the Company may
establish for the effectiveness of such redemption), the Company shall mail a
notice of redemption to all the holders of the then outstanding Rights at their
last addresses as they appear upon the registry books of the Rights Agent or,
prior to the Distribution Date, on the registry books of the transfer agent for
the Common 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 shall state the method by which the payment of the Redemption
Price will be made.

     SECTION 24. EXCHANGE. (a) The Board of Directors of the Company may, at its
option, at any time after the Flip-In Event exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have not
become effective or that have become void pursuant to the provisions of Section
11(a)(ii) hereof) for shares of Common Stock at an exchange ratio of one share
of Common Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring in respect of the Common Stock
after the date hereof (such amount per Right being hereinafter referred to as
the "Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors of
the Company shall not be empowered to effect such exchange at any time after an
Acquiring Person shall have become the Beneficial Owner of shares of Common
Stock aggregating 50% or more of the shares of Common Stock then outstanding.
From and after the occurrence of an event specified in Section 13(a) hereof, any
Rights that theretofore have not been exchanged pursuant to this Section 24(a)
shall thereafter be exercisable only in accordance with Section 13 and may not
be exchanged pursuant to this Section 24(a). The exchange of the Rights by the
Board of Directors of the Company may be made effective at such time, on such
basis and with such conditions as the Board of Directors of the Company in its
sole discretion may establish.

     (b) Immediately upon the effectiveness of the action of the Board of
Directors of the Company ordering the exchange of any Rights pursuant to
paragraph (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 Common Stock equal to the number of such Rights held by such holder
multiplied by the Exchange Ratio. The Company shall promptly give public notice
of any such exchange;

                                      -29-
<PAGE>

provided, however, that the failure to give, or any defect in, such notice shall
not affect the validity of such exchange. The Company shall promptly mail a
notice of any such exchange to all of the holders of the Rights so exchanged at
their last addresses as they appear upon the registry books of the Rights Agent.
Any notice which is mailed in the manner herein provided shall be deemed given,
whether or not the holder receives the notice. Each such notice of exchange will
state the method by which the exchange of the shares of Common Stock for Rights
will be effected and, in the event of any partial exchange, the number of Rights
which will be exchanged. Any partial exchange shall be effected pro rata based
on the number of Rights (other than Rights which have become void pursuant to
the provisions of Section 11(a)(ii) hereof) held by each holder of Rights.

     (c) The Company may at its option substitute, and, in the event that there
shall not be sufficient shares of Common Stock issued but not outstanding or
authorized but unissued to permit an exchange of Rights for Common Stock as
contemplated in accordance with this Section 24, the Company shall substitute to
the extent of such insufficiency, for each share of Common Stock that would
otherwise be issuable upon exchange of a Right, a number of shares of Preferred
Stock or fraction thereof (or Equivalent Preferred Shares, as such term is
defined in Section 11(b)) such that the current per share market price
(determined pursuant to Section 11(d) hereof) of one share of Preferred Stock
(or Equivalent Preferred Share) multiplied by such number or fraction is equal
to the current per share market price of one share of Common Stock (determined
pursuant to Section 11(d) hereof) as of the date of such exchange.

     SECTION 25. NOTICE OF CERTAIN EVENTS. (a) In case the Company shall at any
time after the earlier of the Distribution Date or the Stock Acquisition Date
propose (i) to pay any dividend payable in stock of any class to the holders of
its Preferred Stock or to make any other distribution to the holders of its
Preferred Stock (other than a regular quarterly cash dividend), (ii) to offer to
the holders of its 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, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision or combination of outstanding Preferred Stock), (iv) to
effect the liquidation, dissolution or winding up of the Company, (v) to effect
any consolidation or merger into or with, or to effect any sale or other
transfer (or to permit one or more of its subsidiaries to effect any sale or
other transfer), in one or more transactions, of 50% or more of the assets or
earning power of the Company and its subsidiaries (taken as a whole) to, any
other Person, or (vi) to declare or pay any dividend on the Common Stock payable
in Common Stock or to effect a subdivision, combination or consolidation of the
Common Stock (by reclassification or otherwise other than by payment of
dividends in Common Stock), then, in each such case, the Company shall give to
each holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of such proposed action, which shall specify the record date for the
purposes of such stock dividend, or distribution of rights or warrants, or the
date on which such liquidation, dissolution or winding up is to take place and
the date of participation therein by the holders of the Common Stock and/or
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 10
days prior to the record date for determining holders of the Preferred Stock for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Stock and/or Preferred Stock,
whichever shall be the earlier.

                                      -30-
<PAGE>

     (b) In case any event described in Section 11(a)(ii) or Section 13 shall
occur then the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate (or if occurring prior to the Distribution Date,
the holders of the Common Stock) in accordance with Section 26 hereof, a notice
of the occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) and
Section 13 hereof.

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

     GMX RESOURCES INC.
     One Benham Place
     9400 North Broadway, Suite 600
     Oklahoma City, OK 73114

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

     ________________________
     ________________________
     ________________________
     ________________________

     Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.

     SECTION 27. SUPPLEMENTS AND AMENDMENTS. Except as provided in the
penultimate sentence of this Section 27, for so long as the Rights are then
redeemable, the Company may in its sole and absolute discretion, and the Rights
Agent shall if the Company so directs, supplement or amend any provision of this
Agreement in any respect, or terminate this Agreement, in either case without
the approval of any holders of the Rights. At any time when the Rights are no
longer redeemable, except as provided in the penultimate sentence of this
Section 27, the Company may, and the Rights Agent shall, if the Company so
directs, supplement or amend this Agreement without the approval of any holders
of Rights, provided that no such supplement or amendment may (a) adversely
affect the interest of the holder of Rights as such (other than an Acquiring
Person or an Affiliate or Associate of an Acquiring Person), (b) cause this
Agreement again to become amendable other than in accordance with this sentence
or (c) cause the Rights again to become redeemable. Notwithstanding anything
contained in this Agreement to the contrary, no supplement or amendment shall be
made which

                                      -31-
<PAGE>

changes the Redemption Price. Upon the delivery of a certificate from an
appropriate officer of the Company which states that the supplement or amendment
is in compliance with the terms of this Section 27, the Rights Agent shall
execute such supplement or amendment, unless the Rights Agent shall in good
faith determine that such supplement or amendment would adversely affect the
interests of the Rights Agent under this Agreement.

     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. 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 Right Certificates (and, prior to the Distribution
Date, the 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 Right Certificates
(and, prior to the Distribution Date, the Common Stock).

     SECTION 30. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. The Board
of Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise the rights and powers specifically
granted to the Board of Directors of the Company or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement and (ii) make all determinations deemed necessary or advisable for the
administration of this Agreement (including, without limitation, a determination
to redeem or not redeem the Rights or to amend or not amend this Agreement). All
such actions, calculations, interpretations and determinations that are done or
made by the Board of Directors of the Company in good faith shall be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights, as such, and all other parties.

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

     SECTION 32. GOVERNING LAW. This Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Oklahoma and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State, except for Sections 18, 19, 20, and 21 hereof and
relating to rights, duties and obligations of Rights Agent, which shall be
governed by the laws of the State of Missouri without reference to its choice of
law rules.

     SECTION 33. COUNTERPARTS. This Agreement may be executed in any number of
counterparts (including by facsimile signature) 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.

                                      -32-
<PAGE>

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

                        SIGNATURE PAGE FOLLOWS THIS PAGE.

                                      -33-
<PAGE>

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

                                      GMX RESOURCES INC.

                                      By: /s/ Ken L. Kenworthy, Jr.
                                          --------------------------------------
                                          Name:  Ken L. Kenworthy, Jr.
                                          Title:  Chief Executive Officer

                                      UMB Bank, n.a., as Rights Agent

                                      By: /s/ K. Scott Mathews
                                          --------------------------------------
                                          Name:  K. Scott Mathews
                                          Title:  Vice President and Manager of
                                                  Corporate Trust Administration

                                      -34-
<PAGE>

                                    EXHIBIT A

                                      FORM
                                       OF
                           CERTIFICATE OF DESIGNATION
                                       OF
                  SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
                                       OF
                               GMX RESOURCES INC.

                        (PURSUANT TO SECTION 1032 OF THE
                        OKLAHOMA GENERAL CORPORATION ACT)

     GMX RESOURCES INC., a corporation organized and existing under the Oklahoma
General Corporation Act (hereinafter called the "Company"), hereby certifies
that the following resolution was duly adopted by the Board of Directors of the
Company as required by Section 1032 of the Oklahoma General Corporation Act
acting by unanimous written consent pursuant to Section 1027.F.1 of the Oklahoma
General Corporation Act:

     RESOLVED, that pursuant to the authority granted to and vested in the Board
of Directors of the Company (hereinafter called the "Board of Directors" or the
"Board") in accordance with the provisions of the Company's Certificate of
Incorporation, as amended to date (hereinafter called the "Certificate of
Incorporation"), the Board of Directors hereby creates a series of Preferred
Stock, $0.001 par value, of the Company and hereby states the designation and
number of shares, and fixes the relative rights, powers and preferences thereof,
and the limitations thereof, as follows:

          1. Designation and Amount. The shares of such series shall be
     designated as "Series A Junior Participating Preferred Stock" (the "Series
     A Preferred Stock") and the number of shares constituting the Series A
     Preferred Stock shall be 25,000. Such number of shares may be increased or
     decreased by resolution of the Board of Directors; provided, that no
     decrease shall reduce the number of shares of Series A Preferred Stock to a
     number less than the number of shares then outstanding plus the number of
     shares reserved for issuance upon the exercise of outstanding options,
     rights or warrants or upon the conversion of any outstanding securities
     issued by the Company convertible into Series A Preferred Stock.

          2. Dividends and Distributions.

               (A) Subject to the prior and superior rights of the holders of
          any shares of any series of Preferred Stock of the Company (the
          "Preferred Stock") (or any similar stock, class or series of stock of
          the Company ranking prior and superior to the shares of Series A
          Preferred Stock with respect to dividends), the holders of shares of
          Series A Preferred Stock, in preference to the holders of shares of
          any class or series of stock of the Corporation ranking junior to the
          Series A Preferred

                               Page 1 of Exhibit A
<PAGE>

          Stock in respect thereof, shall be entitled to receive, when, as and
          if declared by the Board of Directors out of funds legally available
          for the purpose, quarterly cumulative preferential dividends payable
          in cash on the last day of January, April, July, and October in each
          year (each such date being referred to herein as a "Dividend Payment
          Date"), commencing on the first Dividend Payment Date after the first
          issuance of a share or fraction of a share of Series A Preferred
          Stock, in a quarterly amount per share (rounded to the nearest cent)
          equal to the greater of (a) $1,000 per share or (b) subject to the
          provision for adjustment hereinafter set forth, 1,000 times the
          aggregate per share amount of all cash dividends, and 1,000 times the
          aggregate per share amount (payable in kind) of all non-cash dividends
          or other distributions other than a dividend payable in shares of
          Common Stock, declared on the Common Stock since the immediately
          preceding Dividend Payment Date or, with respect to the first Dividend
          Payment Date, since the first issuance of any share or fraction of a
          share of Series A Preferred Stock. The "Adjustment Number" shall
          initially be 1,000. In the event the Company shall at any time after
          May 31, 2005 declare and pay any dividend on the Common Stock payable
          in shares of Common Stock, or effect a subdivision or combination or
          consolidation of the outstanding shares of Common Stock (by
          reclassification or otherwise than by payment of a dividend in shares
          of Common Stock) into a greater or lesser number of shares of Common
          Stock, then in each such case the amount to which holders of shares of
          Series A Preferred Stock were entitled immediately prior to such event
          under clause (b) of the preceding sentence shall be adjusted by
          multiplying such amount by a fraction, the numerator of which is the
          number of shares of Common Stock outstanding immediately after such
          event and the denominator of which is the number of shares of Common
          Stock that were outstanding immediately prior to such event.

               (B) The Company shall declare a dividend or distribution on the
          Series A Preferred Stock as provided in paragraph (A) of this Section
          immediately after it declares a dividend or distribution on the Common
          Stock (other than a dividend payable in shares of Common Stock);
          provided that, in the event no dividend or distribution shall have
          been declared on the Common Stock during the period between any
          Dividend Payment Date and the next subsequent Dividend Payment Date, a
          dividend of $1,000 per share on the Series A Preferred Stock shall
          nevertheless be payable, when, as and if declared, on such subsequent
          Dividend Payment Date.

               (C) Dividends shall begin to accrue and be cumulative, whether or
          not earned or declared, on outstanding shares of Series A Preferred
          Stock from the Dividend Payment Date next preceding the date of issue
          of such shares, unless the date of issue of such shares is prior to
          the record date for the first Dividend Payment Date, in which case
          dividends on such shares shall begin to accrue from the date of issue
          of such shares, or unless the date of issue is a Dividend Payment Date
          or is a date after the record date for the determination of holders of
          shares of Series A Preferred Stock entitled to receive a quarterly
          dividend and before such Dividend Payment Date, in either of which
          events such dividends shall begin to

                               Page 2 of Exhibit A
<PAGE>

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

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

               (A) Each share of Series A Preferred Stock shall entitle the
          holder thereof to a number of votes equal to the Adjustment Number.

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

               (C) Except as required by law, by Section 3(D) and by Section 10
          hereof, holders of Series A Preferred Stock shall have no special
          voting rights and their consent shall not be required (except to the
          extent they are entitled to vote with holders of Common Stock as set
          forth herein) for taking any corporate action.

               (D) If, at the time of any annual meeting of shareholders for the
          election of directors, the equivalent of six quarterly dividends
          (whether or not consecutive) payable on any share or shares of Series
          A Preferred Stock are in default, the number of directors constituting
          the Board of Directors of the Company shall be increased by two. In
          addition to voting together with the holders of Common Stock for the
          election of other directors of the Company, the holders of record of
          the Series A Preferred Stock, voting separately as a class to the
          exclusion of the holders of Common Stock, shall be entitled at said
          meeting of shareholders (and at each subsequent annual meeting of
          shareholders), unless all dividends in arrears on the Series A
          Preferred Stock have been paid or declared and set apart for payment
          prior thereto, to vote for the election of two directors of the
          Company, the holders of any Series A Preferred Stock being entitled to
          cast a number of votes per share of Series A Preferred Stock as is
          specified in Paragraph (A) of this Section 3. Until the default in
          payments of all dividends which permitted the election of said
          directors shall cease to exist, any director who shall have been so
          elected pursuant to the provisions of this Section 3(D) may be removed
          at any time, without cause, only by the affirmative vote of the
          holders of

                               Page 3 of Exhibit A
<PAGE>

          the shares of Series A Preferred Stock at the time entitled to cast a
          majority of the votes entitled to be case for the election for any
          such director at a special meeting of such holders called for that
          purpose, and any vacancy thereby created may be filled by the vote of
          such holders. If and when such default shall cease to exits, the
          holders of the Series A Preferred Stock shall be divested of the
          foregoing special voting rights, subject to revesting in the event of
          each and every subsequent like default in payments of dividends. Upon
          the termination of the foregoing special voting rights, the terms of
          office of all persons who may have been elected directors pursuant to
          said special voting rights shall forthwith terminate, and the number
          of directors constituting the Board of Directors shall be reduced by
          two. The voting rights granted by this Section 3(D) shall be in
          addition to any other voting rights granted to the holders of the
          Series A Preferred Stock in this Section 3.

          4. Certain Restrictions.

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

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

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

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

                    (iv) redeem or purchase or otherwise acquire for
               consideration any shares of Series A Preferred Stock, or any
               shares of stock ranking on a parity (either as to dividends or
               upon liquidation, dissolution or winding up) with the Series A
               Preferred Stock, except in accordance with a

                               Page 4 of Exhibit A
<PAGE>

               purchase offer made in writing or by publication (as determined
               by the Board of Directors) to all holders of such shares upon
               such terms as the Board of Directors, after consideration of the
               respective annual dividend rates and other relative rights and
               preferences of the respective series and classes, shall determine
               in good faith will result in fair and equitable treatment among
               the respective series or classes.

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

          5. Reacquired Shares. Any shares of Series A Preferred Stock purchased
     or otherwise acquired by the Company in any manner whatsoever shall be
     retired and cancelled promptly after the acquisition thereof. All such
     shares shall upon their retirement 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 any conditions and restrictions on issuance set forth herein.

          6. Liquidation, Dissolution or Winding Up.

               (A) Upon any liquidation, dissolution or winding up of the
          Company, voluntary or otherwise, no distribution shall be made to the
          holders of shares of stock ranking junior upon liquidation,
          dissolution or winding up to the Series A Preferred Stock unless,
          prior thereto, the holders of shares of Series A Preferred Stock shall
          have received an amount per share (the "Series A Liquidation
          Preference") equal to the greater of (i) $1,000 plus an amount equal
          to accrued and unpaid dividends and distributions thereon, whether or
          not declared, to the date of such payment, or (ii) the Adjustment
          Number times the per share amount of all cash and other property to be
          distributed in respect of the Common Stock upon such liquidation,
          dissolution or winding up of the Company.

               (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 classes and
          series of stock of the Company, if any, that rank on a parity with the
          Series A Preferred Stock in respect thereof, then the assets available
          for such distribution shall be distributed ratably to the holders of
          the Series A Preferred Stock and the holders of such parity shares in
          the proportion to their respective liquidation preferences.

               (C) Neither the merger or consolidation of the Company into or
          with another entity nor the merger or consolidation of ay other entity
          into or with the Company shall be deemed to be a liquidation,
          dissolution or winding up of the Company with the meaning of this
          Section 6.

                               Page 5 of Exhibit A
<PAGE>

          7. Consolidation, Merger, Etc. In case the Company shall enter into
     any consolidation, merger, combination or other transaction in which the
     outstanding shares of Common Stock are exchanged for or changed into other
     stock or securities, cash and/or any other property, then in any such case
     each share of Series A Preferred Stock shall at the same time be similarly
     exchanged or changed in an amount per share equal to the Adjustment Number
     times the aggregate amount of 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 converted, exchanged or converted.

          8. No Redemption. The shares of Series A Preferred Stock shall not be
     redeemable from any holder.

          9. Rank. The Series A Preferred Stock shall rank, with respect to the
     payment of dividends and the distribution of assets upon liquidation,
     dissolution or winding up of the Company, junior to all other series of
     Preferred Stock and senior to the Common Stock.

          10. Amendment. At any time that any shares of Series A Preferred Stock
     are outstanding, the Certificate of Incorporation of the Company shall not
     be amended, by merger, consolidation or otherwise, which would materially
     alter or change the powers, preferences or special rights of the Series A
     Preferred Stock as to affect them adversely without the affirmative vote of
     the holders of two-thirds of the outstanding shares of Series A Preferred
     Stock, voting separately as a class.

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

     IN WITNESS WHEREOF, GMX RESOURCES INC. has caused this certificate to be
duly executed on its behalf by the undersigned officers this ____ day of May,
2005.

                                            GMX RESOURCES INC.

                                            By:  _______________________________
                                                 Ken L. Kenworthy, Jr.
                                                 Chief Executive Officer
Attest:

________________________________
Ken L. Kenworthy, Sr., Secretary

                               Page 6 of Exhibit A
<PAGE>

                                    EXHIBIT B

                            FORM OF RIGHT CERTIFICATE

Certificate No. R- ____                                             _____ Rights

NOT EXERCISABLE AFTER JUNE 1, 2015 OR EARLIER IF REDEMPTION OR EXCHANGE OCCURS.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, AS SET
FORTH IN THE RIGHTS AGREEMENT, RIGHTS OWNED BY OR TRANSFERRED TO ANY PERSON WHO
BECOMES AN ACQUIRING PERSON (AS DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN
TRANSFEREES THEREOF WILL BECOME NULL AND VOID AND WILL NO LONGER BE
TRANSFERABLE.

                                RIGHT CERTIFICATE

                               GMX RESOURCES INC.

     This certifies that ___________ or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entitles the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of May 17, 2005 as the same may be amended from time to time
(the "Rights Agreement"), between GMX RESOURCES INC., an Oklahoma corporation
(the "Company"), and UMB Bank, n.a., (the "Rights Agent"), to purchase from the
Company at any time after the Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M., New York City time, on June 1, 2015 at
the office or agency of the Rights Agent designated for such purpose, or of its
successor as Rights Agent, one one-thousandth of a fully paid non-assessable
share of Series A Junior Participating Preferred Stock, $0.001 par value (the
"Preferred Stock"), of the Company, at a purchase price of $65.00 per one
one-thousandth of a share of Preferred Stock (the "Purchase Price"), upon
presentation and surrender of this Right Certificate with the Form of Election
to Purchase duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of one one-thousandths of a share of Preferred Stock
which may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of May 31, 2005
based on the Preferred Stock as constituted at such date. As provided in the
Rights Agreement, the Purchase Price, the number of one one-thousandths of a
share of Preferred Stock (or other securities or property) which may be
purchased upon the exercise of the Rights and the number of Rights evidenced by
this Right Certificate are subject to modification and adjustment upon the
happening of certain events.

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

                               Page 1 of Exhibit B
<PAGE>

mentioned office or agency of the Rights Agent. The Company will mail to the
holder of this Right Certificate a copy of the Rights Agreement without charge
after receipt of a written request therefor.

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

     Subject to the provisions of the Rights Agreement, the Rights evidenced by
this Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for shares of
Preferred Stock or shares of the Company's Common Stock, $0.001 par value per
share.

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

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

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

                               Page 2 of Exhibit B
<PAGE>

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

     Dated as of _____________.

                                         GMX RESOURCES INC.

Attest:

By: ___________________________              By: _______________________________
    Name:_______________________                 Name:__________________________
    Title:______________________                 Title:_________________________

Countersigned:

UMB Bank, n.a.
as Rights Agent

By ____________________
   Authorized Signature

                               Page 3 of Exhibit B
<PAGE>

                    Form of Reverse Side of Right Certificate

                               FORM OF ASSIGNMENT

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

               FOR VALUE RECEIVED _______________________________________ hereby
sell, assign and transfer unto__________________________________________________
________________________________________________________________________________
                  (Please print name and address of transferee)

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

Dated: _________________

                                          ______________________________________
                                          Signature
                                          ______________________________________
                                          ______________________________________
                                          (Please print name and address)

Signature Guaranteed:

     Signatures must be guaranteed by a bank, trust company, broker, dealer or
other eligible institution participating in a recognized signature guarantee
medallion program as defined in Rule 17Ad-15 of the Rules and Regulations
promulgated under the Securities and Exchange Act of 1934.

     The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, were not acquired by the undersigned
from, and are not being assigned to, an Acquiring Person or an Affiliate or
Associate thereof (as defined in the Rights Agreement).

                                          ______________________________________
                                          Signature

                               Page 4 of Exhibit B
<PAGE>

              Form of Reverse Side of Right Certificate - Continued

                          FORM OF ELECTION TO PURCHASE

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

To GMX RESOURCES INC.:

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

________________________________________________________________________________
                         (Please print name and address)

________________________________________________________________________________

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

Please insert social security or other identifying number

________________________________________________________________________________
                         (Please print name and address)

________________________________________________________________________________

Dated:  ____________________
                                          ______________________________________
                                          Signature
                                          (Signature must conform to holder
                                          specified on Right Certificate)
Signature Guaranteed:

     Signature must be guaranteed by bank, trust company, broker, dealer or
other eligible institution participating in a recognized signature guarantee
medallion program as defined in Rule 17Ad-15 of the Rules and Regulations
promulgated under the Securities and Exchange Act of 1934.

     The undersigned certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by, and were not acquired by the
undersigned from, an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement).

                                          ____________________________________
                                          Signature

                               Page 5 of Exhibit B
<PAGE>

                                     NOTICE

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

     In the event the certification set forth above in the Form of Assignment or
the Form of Election to Purchase, as the case may be, is not completed, such
Assignment or Election to Purchase will not be honored.

     UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS
     OWNED BY OR TRANSFERRED TO ANY PERSON WHO BECOMES AN ACQUIRING PERSON (AS
     DEFINED IN THE RIGHTS AGREEMENT) AND CERTAIN TRANSFEREES THEREOF WILL
     BECOME NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.

                               Page 6 of Exhibit B
<PAGE>

                                    EXHIBIT C

                 SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES

INTRODUCTION. On May 17, 2005, the Board of Directors of GMX RESOURCES INC., an
Oklahoma corporation, declared a dividend of one preferred share purchase right
(a "Right") for each outstanding share of common stock, par value $0.001 per
share. The dividend is payable on June 10, 2005, to the shareholders of record
on May 31, 2005.

Our Board has adopted this Rights Agreement to protect shareholders from
coercive or otherwise unfair takeover tactics. In general terms, it works by
imposing a significant penalty upon any person or group which acquires 20% or
more of our outstanding common stock without the approval of our Board. The
Rights Agreement should not interfere with any merger or other business
combination approved by our Board.

For those interested in the specific terms of the Rights Agreement as made
between our Company and UMB Bank, n.a., as the Rights Agent, on May 17, 2005, we
provide the following summary description. Please note, however, that this
description is only a summary, and is not complete, and should be read together
with the entire Rights Agreement. A copy of the Rights Agreement is available
free of charge from our Company.

THE RIGHTS. Our Board authorized the issuance of a Right with respect to each
outstanding share of common stock on May 17, 2005. The Rights will initially
trade with, and will be inseparable from, the common stock. The Rights are
evidenced only by certificates that represent shares of common stock. New Rights
will accompany any new shares of common stock we issue after May 31, 2005 until
the Distribution Date described below.

EXERCISE PRICE. Each Right will allow its holder to purchase from our Company
one one-thousandth of a share of Series A Junior Participating Preferred Stock
("Preferred Share") for $65.00, once the Rights become exercisable. A
description of the terms of the Preferred Shares are set forth in the Rights
Agreement. Prior to exercise, the Right does not give its holder any dividend,
voting, or liquidation rights.

EXERCISABILITY. The Rights will not be exercisable until:

o    10 days after a public announcement that a person or group has become an
     "Acquiring Person" by obtaining beneficial ownership of 20% or more of the
     Company's outstanding common stock, or, if earlier,

o    10 business days (or a later date determined by our Board before any person
     or group becomes an Acquiring Person) after a person or group begins or
     announces an intention to make a tender or exchange offer which, if
     completed, would result in that person or group becoming an Acquiring
     Person.

                               Page 1 of Exhibit C
<PAGE>

We refer to the date when the Rights become exercisable as the "Distribution
Date." Until that date, the common stock certificates will also evidence the
Rights, and any transfer of shares of common stock will constitute a transfer of
Rights. After the Distribution Date, the Rights will separate from the common
stock and be evidenced by Rights certificates that we will mail to all eligible
holders of common stock. Any Rights held by an Acquiring Person are void and may
not be exercised.

Ken L. Kenworthy, Jr. and his spouse Karen Kenworthy, who currently collectively
own approximately 20% of the Common Stock, will not be considered an Acquiring
Person unless they acquire beneficial ownership of more than 30% of the
outstanding Common Stock.

CONSEQUENCES OF A PERSON OR GROUP BECOMING AN ACQUIRING PERSON.

o    FLIP IN. If a person or group becomes an Acquiring Person, all holders of
     Rights except the Acquiring Person may, for the Exercise Price, purchase
     Preferred Stock (or common stock if the Company so determines) with a
     market value equal to twice the Exercise Price, based on the market price
     of the common stock prior to such acquisition.

o    FLIP OVER. If our Company is later acquired in a merger or similar
     transaction after the Rights Distribution Date, all holders of Rights
     except the Acquiring Person may, for the Exercise Price, purchase shares of
     the acquiring corporation with a market value equal to twice the Exercise
     Price, based on the market price of the acquiring corporation's stock prior
     to such merger.

PREFERRED SHARE PROVISIONS. Each one one-thousandth of a Preferred Share, if
issued:

o    will not be redeemable;

o    will rank junior to all other series of the Company's preferred stock and
     senior to the Company's common stock;

o    will entitle holders to quarterly cumulative preferential dividend payments
     of the greater of $1.00 or the per share dividend declared on their common
     stock;

o    will entitle holders upon liquidation to receive the greater of $1.00 or an
     amount equal to the payment made on one share of common stock;

o    will have the same voting power as one share of common stock; and

o    if shares of our common stock are exchanged via merger, consolidation, or a
     similar transaction, will entitle holders to receive the amount received
     per share of common stock.

The value of one one-thousandth interest in a Preferred Share should approximate
the value of one share of common stock.

EXPIRATION. The Rights will expire on June 1, 2015.

                               Page 2 of Exhibit C
<PAGE>

REDEMPTION. Our Board may redeem the Rights for $0.01 per Right at any time
before any person or group becomes an Acquiring Person. If our Board redeems any
Rights, it must redeem all of the Rights. Once the Rights are redeemed, the only
right of the holders of Rights will be to receive the redemption price of $0.01
per Right. The redemption price will be adjusted if we have a stock split or
stock dividends of our common stock.

EXCHANGE. After a person or group becomes an Acquiring Person, but before an
Acquiring Person owns 50% or more of our outstanding common stock, our Board may
exchange the Rights, in whole or in part, at an exchange ratio of one share of
common stock or an equivalent security for each Right, other than Rights held by
an Acquiring Person.

ANTI-DILUTION PROVISIONS. Our Board may adjust the purchase price of the
Preferred Shares, the number of Preferred Shares issuable and the number of
outstanding Rights to prevent dilution that may occur from a stock dividend, a
stock split, a reclassification of the Preferred Shares or common stock. No
adjustments to the Exercise Price of less than 1% will be made.

AMENDMENTS. The terms of the Rights Agreement may be amended, or the Rights
Agreement may be terminated, by our Board without the consent of the holders of
the Rights. After a person or group becomes an Acquiring Person, our Board may
not terminate the Rights Agreement or amend the Rights Agreement in a way that
adversely affects holders of the Rights.

                               Page 3 of Exhibit C

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}]]