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                                                                  EXHIBIT (e)(4)

                           TRAVELOCITY HOLDINGS, INC.

                   FIRST AMENDED 1999 LONG-TERM INCENTIVE PLAN

1.       PURPOSE.

The Travelocity Holdings, Inc. Second Amended 1999 Long-Term Incentive Plan is
intended to promote the interests of the Company and its stockholders through
attracting and retaining executive officers, non-employee directors, and
employees essential to the success of the Company and enabling Participants to
share in the long-term growth and success of the Company.

2.       DEFINITIONS.

Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this Plan, have the following meanings:

         ADMINISTRATOR means the Board of Directors, unless it has delegated
         power to act on its behalf to a committee pursuant to Section 4 of the
         Plan.

         AFFILIATE means any other entity approved by the Board of Directors in
         which the Company holds an ownership interest (by value or voting
         rights) of at least 20%, or any other entity approved by the Board of
         Directors which has an ownership interest (by value or voting rights)
         of at least 20% in the Company.

         AGREEMENT means a written agreement implementing the grant of each
         Award, signed by an authorized officer of the Employer or other person
         authorized by the Administrator.

         AWARDS means, individually or collectively, a grant under this Plan of
         any Options or Stock Appreciation Rights.

         BOARD OF DIRECTORS OR BOARD means the Board of Directors of the
         Company.

         CHANGE IN CONTROL means the happening of any of the following:

               (i)     An Acquiring Person (as hereinafter defined), without the
               prior approval of the Travelocity Board of Directors, shall be
               the "Beneficial Owner" (as defined in Rule 13d-3 under the
               Exchange Act, as amended from time to time), directly or
               indirectly, of voting securities of Travelocity entitled to vote
               for the election of directors at any annual or special meeting of
               stockholders of Travelocity (such entitlement, "Voting Power" and
               such securities, "Voting Securities") representing both (a)
               twenty-five percent (25%) or more of the Voting Power of
               Travelocity's then outstanding Voting Securities and (b) a
               percentage of the Voting Power of Travelocity's then outstanding
               Voting Securities which is equal to or greater than the
               percentage of the Voting Power as is represented by Voting
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               Securities Beneficially Owned, directly or indirectly, by Sabre.
               An "Acquiring Person" shall mean any person OTHER THAN (a) an
               employee benefit plan (or a trust forming a part thereof)
               maintained by (1) the Company, Travelocity.com LP (the
               "Partnership") or Travelocity or (2) any corporation or other
               Person of which a majority of its voting power or its voting
               equity securities or equity interest is Beneficially Owned,
               directly or indirectly, by Travelocity or the Partnership (a
               "Related Entity"), or the Company, (b) Travelocity, the
               Partnership or any Related Entity, (c) a Person who has acquired
               the Voting Securities in connection with a "Non-Control
               Transaction" (as hereinafter defined), but only to the extent
               such Voting Securities are acquired in connection with one or
               more Non-Control Transactions, (d) Sabre, and any corporation or
               other Person of which a majority of its voting power or its
               voting equity securities or equity interest is Beneficially
               Owned, directly or indirectly, by Sabre, or (e) AMR Corporation,
               unless at such time AMR Corporation is not, or has not at all
               times been, the Beneficial Owner, directly or indirectly, of at
               least a majority of the voting power or voting equity securities
               or equity interest in Sabre;

               (ii)    The individuals who, as of the effective date of the
               merger of Preview Travel, Inc. with and into Travelocity pursuant
               to the Merger Agreement, dated as of October 3, 1999, by and
               among Sabre, the Company, Travelocity, and Preview Travel, Inc.
               (the "Merger Effective Time") constitute the board of directors
               of Travelocity (the "Incumbent Board") cease for any reason to
               constitute at least a majority of the board of directors of
               Travelocity; provided, however, that any individual becoming a
               director subsequent to the Merger Effective Time whose election,
               or nomination for election by Travelocity's stockholders, was
               approved by a vote of at least a majority of the directors then
               comprising the Incumbent Board shall be considered as though such
               individual were a member of the Incumbent Board, but excluding
               for this purpose, any such individual whose initial assumption of
               office occurs as a result of an actual or threatened election
               contest with respect to the election or removal of directors or
               other actual or threatened solicitation of proxies or consents by
               or on behalf of a Person other than the board of directors of
               Travelocity;

               (iii)   The Consummation of:

                       (a)    A merger, consolidation or similar reorganization
                       of Travelocity or in which securities of Travelocity are
                       issued (a "Merger"), unless the Merger is a "Non-Control
                       Transaction." A "Non-Control Transaction" shall mean a
                       Merger if:

                              (1) the stockholders of Travelocity immediately
                              before such Merger Beneficially Own, directly or
                              indirectly, immediately following the Merger at
                              least fifty percent (50%) of the combined

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                              voting power of the outstanding voting securities
                              of (x) the corporation resulting from such Merger
                              (the "Surviving Corporation"), if fifty percent
                              (50%) or more of the combined voting power of the
                              then outstanding voting securities of the
                              Surviving Corporation is not Beneficially Owned,
                              directly or indirectly by another corporation (a
                              "Parent Corporation"), or (y) the Parent
                              Corporation, if fifty percent (50%) or more of the
                              combined voting power of the Surviving
                              Corporation's then outstanding voting securities
                              is Beneficially Owned, directly or indirectly, by
                              a Parent Corporation; AND

                              (2) the individuals who were members of the board
                              of directors of Travelocity, immediately prior to
                              the execution of the agreement providing for the
                              Merger, constitute at least a majority of the
                              members of the board of directors of, (x) the
                              Surviving Corporation, if fifty percent (50%) or
                              more of the combined voting power of the then
                              outstanding voting securities of the Surviving
                              Corporation is not Beneficially Owned, directly or
                              indirectly by a Parent Corporation, or (y) the
                              Parent Corporation, if fifty percent (50%) or more
                              of the combined voting power of the Surviving
                              Corporation's then outstanding voting securities
                              is Beneficially Owned, directly or indirectly, by
                              a Parent Corporation;

               (iv)    The sale or other disposition of all or substantially all
               of the assets of Travelocity to any Person (other than a transfer
               to a Related Entity or under conditions that would constitute a
               Non-Control Transaction with the disposition of assets being
               regarded as a Merger for this purpose);

               (v)     A complete liquidation or dissolution of Travelocity; or

               (vi)    Any other event to which, in the opinion of the Board,
               the provisions of clauses (i) through (v) are not strictly
               applicable but, in the opinion of the Board, is within the intent
               and effect of such clauses.

Notwithstanding anything else contained herein to the contrary, in no event
shall a Change in Control be deemed to occur solely by reason of (1) a
distribution to Sabre's stockholders, whether as dividend or otherwise, of all
or any portion of the Voting Securities held, directly or indirectly, by Sabre
(including, without limitation, a distribution to Sabre's stockholders of
securities of the Company), or (2) a sale of all or any portion of the Voting
Securities held, directly or indirectly, by Sabre in an underwritten public
offering (including, without limitation, a sale of securities of the Company in
an underwritten public offering), or (3) any Person (the "Subject Person")
acquiring Beneficial Ownership of more than the permitted amount of the then
outstanding Voting Securities as a result of the acquisition of Voting
Securities by Travelocity

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which, by reducing the number of Voting Securities then outstanding, increases
the proportional number of shares Beneficially Owned by the Subject Person,
provided that if a Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities by Travelocity,
and after such share acquisition by Travelocity, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities Beneficially Owned by the
Subject Person, then a Change in Control shall occur.

         CODE means the United States Internal Revenue Code of 1986, as amended.

         COMMITTEE means the Committee to which the Board of Directors has
         delegated power to act under or pursuant to the provisions of the Plan.

         COMMON STOCK means shares of the common stock of Travelocity.com Inc.,
         a Delaware corporation, par value $.001.

         COMPANY means Travelocity Holdings, Inc., a Delaware corporation.

         COVERED PARTICIPANT means a participant who is a "covered employee" as
         identified in Section 162(m)(3) of the Code.

         DISABILITY OR DISABLED means permanent and total disability as defined
         in Section 22(e)(3) of the Code.

         EFFECTIVE DATE means October 1, 1999, the effective date of the Plan.

         ELIGIBLE EMPLOYEE means an employee of an Employer (including, without
         limitation, an employee who is also serving as an officer or director
         of an Employer), designated by the Administrator to be eligible to be
         granted one or more Awards under the Plan.

         EMPLOYER means the Company and each Affiliate that has adopted the Plan
         with the Company's permission.

         EXCHANGE ACT means the Securities Exchange Act of 1934, as amended.

         EXERCISE PRICE means the price per share determined on the grant date
         by the Committee, provided that the Exercise Price shall not be less
         than 100% of Fair Market Value on the grant date; except that the
         Committee in its sole discretion may waive the preceding limitation
         with respect to Awards granted upon the assumption of, in substitution
         for, or upon conversion of similar awards of (a) an Affiliate, with
         respect to Participants transferred from an Affiliate to an Employer,
         or (b) another company with which the Employer or Travelocity
         participates in an acquisition, separation or similar corporate
         transaction. However, in no event shall the Exercise Price ever be less
         than the par value of the Shares.

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         In addition, if an ISO is granted to a Ten Percent Owner, the Exercise
         Price shall not be less than 110% of the Fair Market Value on the date
         of grant.

         FAIR MARKET VALUE of a Share of Common Stock means:

               (1)     If the Common Stock is listed on a national securities
               exchange or traded in the over-the-counter market and sales
               prices are regularly reported for the Common Stock, either (a)
               the average of the high and low prices of the Common Stock on the
               Composite Tape or other comparable reporting system for the
               applicable date or (b) if the Common Stock is not traded on the
               relevant date, the average of the high and low prices of the
               Common Stock on the Composite Tape or other comparable reporting
               system for the most recent day on which the Common Stock was
               traded immediately preceding the applicable date.

               (2)     If the Common Stock is not traded on a national
               securities exchange but is traded on the over-the-counter market,
               if sales prices are not regularly reported for the Common Stock
               for the trading days or day referred to in clause (1), and if bid
               and asked prices for the Common Stock are regularly reported,
               either (a) the average of the bid and the asked price for the
               Common Stock at the close of trading in the over-the-counter
               market for the applicable date or (b) the average of the bid and
               the asked price for the Common Stock at the close of trading in
               the over-the-counter market for the trading day on which Common
               Stock was traded immediately preceding the applicable date, as
               the Administrator shall determine in its sole discretion; and

               (3)     If the Common Stock is neither listed on a national
               securities exchange nor traded in the over-the-counter market,
               such value as the Administrator, in good faith, shall determine.

         INCENTIVE STOCK OPTION OR ISO means an option to purchase Common Stock,
         granted under Section 5 herein, which is designated as an incentive
         stock option and is intended to meet the requirements of Section 422 of
         the Code.

         NON-QUALIFIED OPTION OR NQSO means an option to purchase Common Stock,
         granted under Section 5 herein, which is not intended to qualify as an
         Incentive Stock Option.

         OPTION means an Incentive Stock Option or a Non-Qualified Option.

         PARTICIPANT means an Eligible Employee, non-employee director, or
         consultant of an Employer to whom one or more Awards are granted under
         the Plan. As used herein, "Participant" shall include "Permitted
         Transferees" and "Participant's Survivors" where the context requires.

         PARTICIPANT'S SURVIVORS means a deceased Participant's legal
         representatives and/or any person or persons who acquired the
         Participant's rights to an Award by will or by the

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         laws of descent and distribution.

         PERMITTED TRANSFEREE means any transferee of a Nonqualified Stock
         Option pursuant to a transfer that is approved by the Committee in
         accordance with Section 9 hereof.

         PLAN means the Travelocity Holdings, Inc. 1999 Long-Term Incentive
         Plan, as it may be amended from time to time.

         SABRE means Sabre Holdings Corporation, a Delaware corporation.

         SECURITIES ACT means the Securities Act of 1933, as amended.

         SHARES means shares of the Common Stock as to which Awards have been or
         may be granted under the Plan or any shares of capital stock into which
         the Shares are changed or for which they are exchanged within the
         provisions of Section 16 of the Plan. The Shares issued upon exercise
         of Options granted under the Plan may be authorized and unissued
         shares, Treasury shares, shares transferred from an Affiliate, or
         shares purchased on the open market.

         STOCK APPRECIATION RIGHT OR SAR means the right to receive an amount
         equal to the excess of the Fair Market Value of a Share of Common Stock
         (as determined on the date of exercise) over the Exercise Price of the
         related Award.

         TEN PERCENT OWNER means a Participant who owns, directly or by reason
         of the applicable attribution rules of Code Section 424(d), more than
         10% of the total combined voting power of all classes of capital stock
         of Travelocity or its parent or subsidiary corporations, if any, as
         defined in Code Section 424(e) and (f).

         TRAVELOCITY means Travelocity.com Inc., a Delaware corporation, and a
         subsidiary of the Company.

3.       SHARES SUBJECT TO THE PLAN.

GENERAL. Except as provided below in this Section 3 and Section 12, the number
of Shares that may be transferred in satisfaction of Awards (including ISOs)
granted under this Plan shall be four million, five hundred thousand
(4,500,000). Such number includes Awards which may be originally granted under
this Plan, as well as Awards granted under this Plan in respect to awards of
another entity which are assumed by this Plan. However, except as provided below
in this Section 3 and Section 12, in no event shall Awards be issued hereunder
and under the Travelocity.com LP 1999 Long-Term Incentive Plan ("LP LTIP") which
in the aggregate exceed seven million (7,000,000) Shares.

EVERGREEN. The number of authorized Shares hereunder shall be increased on
January 1, 2001 and on each of the two (2) succeeding January 1, ending on
January 1, 2003, by a number of Shares equal to 3% of the total number of Shares
of Common Stock outstanding as of such date.

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However, in no event shall the additional annual Award authorization under this
Plan and under the LP LTIP in the aggregate exceed 4% of the total number of
Shares of Common Stock outstanding on such date. However, no ISOs shall be
issuable under this paragraph and the maximum number of ISOs shall be determined
without regard to this "evergreen" provision.

LAPSED AWARDS AND SHARE WITHHOLDING. If any Award granted under the Plan shall
be cancelled, forfeited, lapse, expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be exercisable in
whole or in part, or is settled in cash in lieu of Common Stock, such Shares
subject to such Award shall thereafter again be available for grant of an Award
under the Plan. Shares deemed to have been used to pay the exercise price or tax
withholding due with respect to an Option, through share withholding or other
cashless exercise method, shall thereafter again be available for issuance under
the Plan. In addition, in the event a Participant pays for any Option through
the delivery of previously owned Shares, the number of Shares available for
issuance under the Plan shall be increased by the number of Shares surrendered
by the Participant. However, notwithstanding the above, with respect to any
Covered Participants, cancelled Shares shall continue to be counted against the
maximum aggregate number of Shares that may be granted pursuant to Awards.

MAXIMUM LIMIT. No individual Participant may receive in any calendar year Awards
(including ISOs) relating to more than one million shares of Common Stock.

4.       ADMINISTRATION OF THE PLAN.

THE COMMITTEE. Upon appointment of the Committee, the Plan shall be administered
and interpreted by the Committee (and until then, by the Administrator), which
shall have full authority and all powers necessary or desirable for such
administration. The express grant in this Plan of any specific power to the
Committee shall not be construed as limiting any power or authority of the
Committee. In its sole and complete discretion the Committee may adopt, alter,
suspend and repeal such administrative rules, regulations, guidelines, and
practices governing the operation of the Plan as it shall from time to time deem
advisable. In addition to any other powers and subject to the provisions of the
Plan, the Committee shall have the following specific powers: (i) to determine
the terms and conditions upon which the Awards may be made and exercised; (ii)
to determine all terms and provisions of each Agreement, which need not be
identical for all types of Awards nor for the same type of Award to different
participants; (iii) to construe and interpret the Agreements and the Plan; (iv)
to establish, amend, or waive rules or regulations for the Plan's
administration; (v) to accelerate the exercisability of any Award; (vi) to
provide for the grant of Awards upon the assumption of, or in substitution for,
similar awards granted by an acquired or other company with which the Employer
or Travelocity participates in an acquisition, separation, or similar corporate
transaction; and (vii) to make all other determinations and take all other
actions necessary or advisable for the administration of the Plan. The Committee
may take action by a majority vote or by unanimous written consent. The
Committee may seek the assistance or advice of any persons it deems necessary to
the proper administration of the Plan.

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SELECTION OF PARTICIPANTS. The Administrator shall have sole and complete
discretion in determining those persons who shall be Participants in the Plan,
provided that such Participants must be Eligible Employees, non-employee
directors, or consultants of an Employer at the time an Award is granted.
However, only common law employees of Travelocity or a parent or subsidiary (as
defined in Code Section 424(e) and (f)) of Travelocity may be granted ISOs. The
Administrator or Committee may delegate to one or more executive officers of the
Company the authority to make Awards to Participants who are not Executive
Officers of Travelocity (as designated by Travelocity or otherwise covered as
such under Rule 16b-3 of the Exchange Act) ("Executive Officers") or Covered
Participants. Awards made to the Executive Officers or Covered Participants
shall be determined by the Committee.

COMMITTEE DECISIONS. All determinations and decisions made by the Committee
pursuant to the provisions of the Plan shall be final, conclusive, and binding
upon all persons, including the Employer, its stockholders, employees,
Participants, and designated beneficiaries, except when the terms of any sale or
award of shares of Common Stock or any grant of rights or Awards under the Plan
are required by law or by the Certificate of Incorporation or Bylaws of
Travelocity to be approved by Travelocity's Board of Directors or stockholders
prior to any such sale, award or grant.

RULE 16b-3 AND CODE SECTIONS 162(m) AND 422 REQUIREMENTS. Notwithstanding any
other provision of the Plan, the Committee may impose such conditions on any
Award (including approval of any Award by the Board of Directors or Compensation
Committee of Sabre and/or Travelocity), and the Board may amend the Plan in any
such respects, as may be required to satisfy the requirements of Rule 16b-3,
Code Section 162(m), or Code Section 422.

INDEMNIFICATION OF COMMITTEE. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee or
otherwise, the members of the Committee, and any executive officers to whom the
Committee has delegated any of its rights and responsibilities, shall be
indemnified by the Employer against reasonable expenses incurred from their
administration of the Plan, including, without limitation, related attorneys'
fees actually and reasonably incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, and
against all reasonable amounts paid by them in settlement thereof or paid by
them in satisfaction of a judgment in any such action, suit or proceeding, if
such members acted in good faith and in a manner which they believed to be in,
and not opposed to, the best interests of the Employer and its Affiliates.

5.       TERMS AND CONDITIONS OF OPTIONS.

Each Option shall be set forth in writing in an Agreement, duly executed by the
Company and, subject to such conditions as the Administrator may deem
appropriate, including, without limitation, subsequent approval by the
Compensation Committee or Board of Directors of Travelocity and/or Sabre. The
Agreements shall specify whether the Option is intended to be an ISO or a NQSO,
and shall be subject to at least the following terms and conditions:

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         A. GENERAL. Each Option shall be subject to the terms and conditions
         which the Administrator determines to be appropriate and in the best
         interest of the Company, subject to the following minimum standards for
         any Option:

               i.      Option Price: The option price (per share) of the Shares
               covered by each Option shall be determined by the Administrator
               but shall not be less than the Exercise Price as defined above;

               ii.     Each Agreement shall state the number of Shares to which
               it pertains; and

               iii.    Each Agreement shall state the date or dates on which it
               first is exercisable and the date after which it may no longer be
               exercised (which shall not be later than ten years following the
               date granted, or five years for an ISO granted to a Ten Percent
               Owner), and may provide that the Option rights accrue or become
               exercisable in installments over a period of months or years, or
               upon the occurrence of certain conditions or the attainment of
               stated goals or events. No Award may be granted later than ten
               years after the Effective Date (or, if earlier, after the
               termination of the Plan).

         B.    CONVERSION OPTIONS. The Committee, in its discretion, may issue
         Options under this Plan in consideration of options to purchase shares
         of common stock in another entity, which options shall be assumed by
         this Plan, and such Options shall contain those terms and conditions
         which the Committee, in its sole discretion, shall deem appropriate,
         which may be new terms, or which may incorporate the terms of the
         option from which they were converted (including ISO status for 90 days
         following termination of employment with the entity in respect of whose
         stock such prior options were issued). In particular, but not by way of
         limitation, with respect to any individual who previously was employed
         by Sabre (or an affiliate thereof) or Preview Travel, Inc., a Delaware
         corporation, and who subsequently becomes employed by the Employer, the
         Committee in its discretion may allow any options to purchase stock of
         Sabre or Preview Travel, Inc. held by such individual to be converted
         into Options hereunder, and for such Options hereunder to bear the same
         terms as the options from which they were converted, subject to
         appropriate adjustments, as determined by the Committee in its sole
         discretion, to the exercise price and number of shares subject to such
         Options.

         C.    NON-EMPLOYEE DIRECTOR OPTIONS. Non-employee directors of the
         Company (who were not formerly employees of the Company, and who are
         also not employees of Travelocity, Sabre, AMR Corporation, or any other
         Affiliate) shall be awarded up to 20,000 NQSOs when first appointed to
         the Board of Directors, and up to an additional 10,000 NQSOs at each
         annual stockholders' meeting (if the director has served at least six
         months from the initial date of grant).

         D.    ISOs. To the extent that the aggregate Fair Market Value
         (determined as of the date of grant) of Common Stock with respect to
         which ISOs are exercisable for the first

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         time by any Participant in any calendar year (under all plans of the
         Employer and its parent or subsidiary corporations) exceeds $100,000,
         such Options shall be treated as NQSOs. In addition, no Options shall
         be deemed ISOs hereunder unless the Plan is approved by the
         stockholders of Travelocity within 12 months before or after the first
         date any ISO is granted.

6.       EXERCISE OF OPTION AND ISSUE OF SHARES.

An Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company at its principal office address, together with
provision for payment of the full purchase price in accordance with this
paragraph for the Shares as to which such Option is being exercised, and upon
compliance with any other condition(s) set forth in the Agreement. Such written
notice shall be signed by the person exercising the Option, shall state the
number of Shares with respect to which the Option is being exercised and shall
contain any representation required by the Plan or the Agreement. Payment of the
purchase price for the Shares as to which such Option is being exercised shall
be made (a) in United States dollars in cash or by check, or (b) through
delivery of shares of Common Stock (not subject to any security agreement or
pledge) having a Fair Market Value equal as of the date of the exercise to the
cash exercise price of the Option, or (c) in accordance with a cashless exercise
program established with a securities brokerage firm and approved by the
Administrator, or (d) through such other method of payment (such as share
withholding) approved by the Administrator, or (e) by any combination of (a),
(b), (c), and (d) above; provided, however, that options (b), (c), (d), or (e)
may only be utilized (i) to the extent permitted by applicable law and not in
violation of any instrument or agreement to which the Employer or Travelocity is
a party, and (ii) unless otherwise stated in the Agreement, only to the extent
specifically determined by the Administrator in its sole discretion at the time
of exercise. The Committee reserves the right to require any Shares delivered by
the Participant in full or partial payment of the Exercise Price to be limited
to those Shares already owned by the Participant for at least six (6) months. In
addition, if applicable, the Participant must surrender to the Company any
tandem SARs which are cancelled by reason of exercise of an Option.

The Company shall then reasonably promptly deliver the Shares as to which such
Option was exercised to the Participant (or to the Participant's Survivors or
Permitted Transferee, as the case may be). In determining what constitutes
"reasonably promptly," it is expressly understood that the delivery of the
Shares may be delayed by the Company in order to comply with any law or
regulation which requires the Company or Travelocity to take any action with
respect to the Shares prior to their issuance. The Shares shall, upon delivery,
be evidenced by an appropriate certificate or certificates for fully paid,
non-assessable Shares.

The Administrator may, in its discretion, amend any term or condition of an
outstanding Option provided (i) such term or condition as amended is permitted
by the Plan, (ii) any such amendment shall be made only with the consent of the
Participant to whom the Option was granted, if the amendment is materially
adverse to the Participant.

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7.       STOCK APPRECIATION RIGHTS.

         A.    GRANT OF STOCK APPRECIATION RIGHTS. Subject to the terms and
         provisions of the Plan and applicable law, the Committee, at any time
         and from time to time, may grant freestanding Stock Appreciation
         Rights, Stock Appreciation Rights in tandem with an Option, or Stock
         Appreciation Rights in addition to an Option. Stock Appreciation Rights
         granted in tandem with an Option or in addition to an Option may be
         granted at the time the Option is granted or at a later time. No Stock
         Appreciation Rights granted under the Plan may be exercisable after the
         expiration of ten years from the grant date.

         B.    EXERCISE PRICE. The Exercise Price of each Stock Appreciation
         Right shall be determined on the grant date by the Committee, subject
         to the limitation that the Exercise Price shall not be less than 100%
         of Fair Market Value on the grant date. However, Stock Appreciation
         Rights issued upon assumption of, or in substitution for, stock
         appreciation rights of a company with which the Employer or Travelocity
         participates in an acquisition, separation or similar corporate
         transaction may be issued at an Exercise Price less than 100% of the
         Fair Market Value.

         C.    EXERCISE. The Participant is entitled to receive an amount equal
         to the excess of the Fair Market Value over the Exercise Price thereof
         on the date of exercise of the Stock Appreciation Right.

         D.    PAYMENT. Payment upon exercise of the Stock Appreciation Right
         shall be made in the form of cash, Shares, or a combination thereof, as
         determined in the sole and complete discretion of the Committee.
         However, if any payment in the form of Shares results in a fractional
         share, the payment for the fractional share shall be made in cash.

8.       RIGHTS AS A SHAREHOLDER.

No Participant to whom an Option has been granted shall have rights as a
shareholder with respect to any Shares covered by such Option, except after due
exercise of the Option, a tender of the full purchase price for the Shares being
purchased pursuant to such exercise, satisfaction of such other conditions for
the transfer of Shares pursuant to the Option, and registration of the Shares in
the Company's share register in the name of the Participant.

9.       ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.

Unless otherwise provided in the Agreement, an Award granted to a Participant
shall not be transferable by the Participant other than by will or by the laws
of descent and distribution or, other than with respect to ISOs, a domestic
relations order; provided, however, that the designation of a beneficiary of an
Award by a Participant shall not be deemed a transfer prohibited by this
Section. Notwithstanding the foregoing, transfers of NQSOs may be made with the
prior approval of the Committee and on such terms and conditions as the
Committee in its sole discretion shall approve, to the following Permitted
Transferees: (a) in the case of a

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transfer without the payment of any consideration, any "family member" as such
term is defined in Section 1(a)(5) of the General Instructions to Form S-8 under
the Securities Act as in effect at the time of such transfer, (b) to any person
or entity described in clause (ii) of Section 1(a)(5) of the General
Instructions to Form S-8 under the Securities Act as in effect at the time of
such transfer, and (iii) upon a Participant's death, Participant's executors,
administrators, testamentary trustees, legatees and beneficiaries. Further, no
right or interest of any Participant in an Award may be assigned in satisfaction
of any lien, obligation, or liability of the Participant. Except as provided in
this Section, an Award shall be exercisable, during the Participant's lifetime,
only by such Participant (or by his or her legal representative) and no Award
shall be assigned, pledged, or hypothecated in any way (whether by operation of
law or otherwise) or be subject to execution, attachment, or similar process.
Any attempted transfer, assignment, pledge, hypothecation, or other disposition
of any Award or of any rights granted thereunder contrary to the provisions of
this Plan, or the levy of any attachment or similar process upon an Award, shall
be null and void.

10.      EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE."

Except as otherwise provided in an Agreement, in the event of a termination of
service (whether as an employee, director, or consultant) with the Employer or
Travelocity before the Participant has exercised all Awards, then any
outstanding Awards which are unvested shall immediately be cancelled and
forfeited, and the following rules apply:

         A.    TERMINATION FOR REASON OTHER THAN DEATH, DISABILITY, RETIREMENT
         OR CAUSE. A Participant who ceases to be an employee, director, or
         consultant of the Employer or of Travelocity for any reason other than
         termination for cause, Disability, retirement, or death may continue to
         exercise an Award to the extent that the Award is otherwise vested and
         exercisable on the date of such termination of service, for a period of
         three (3) months following such termination (or, if less, the remaining
         term of the Award).

         B.    TERMINATION DUE TO DEATH. If any employee Participant terminates
         employment by reason of death, then any portion of an Award or Awards
         granted to Participant that would have vested over the twelve month
         period following such Participant's death shall immediately vest, and
         the Participant may exercise any Award (to the extent that it is
         otherwise vested and exercisable as of his termination of service or is
         vested as a result of the acceleration provision in this Section) at
         any time during the eighteen (18) month period following his
         termination of service (or, if less, for the remaining term of the
         Award).

         C.    TERMINATION DUE TO DISABILITY. If any employee Participant
         terminates employment by reason of Disability, then any Award granted
         to Participant will continue to vest over the twelve month period
         following such Participant's termination of service, and the
         Participant may exercise any Award (to the extent that it is otherwise
         vested and exercisable as of his termination of service or is vested as
         a result of the additional twelve

<Page>

         (12) month vesting provided in this Section) at any time during the
         eighteen (18) month period following his termination of service (or, if
         less, for the remaining term of the Award).

         D.    TERMINATION DUE TO RETIREMENT. If any employee Participant
         terminates employment by reason of retirement (as defined in the
         Employer's general policy regarding retirement), or any non-employee
         Participant who is a member of the Employer's board of directors has
         attained age 65 or accumulated 5 years of service with the Employer
         (counting service with AMR Corporation, Sabre or Preview Travel, Inc.)
         as of his or her termination date, then such Participant may exercise
         any Award (to the extent that it is otherwise vested and exercisable as
         of his termination of service) at any time during the one (1) year
         period following his termination of service (or, if less, for the
         remaining term of the Award).

         E.    POST-TERMINATION DEATH OR DISABILITY. In the case of a
         Participant's Disability or death within three (3) months after the
         termination of employment, director status, or consultancy (for any
         reason other than the Participant's death, Disability, or termination
         for cause), the Participant or Participant's Survivors may exercise the
         Award (to the extent otherwise vested and exercisable at the time of
         such termination) within eighteen (18) months after the date of the
         Participant's termination, but in no event after the date of expiration
         of the term of the Award.

         F.    WHEN DISABILITY OCCURS. The Administrator shall make the
         determination both as to whether Disability has occurred and the date
         of its occurrence (unless a procedure for such determination is set
         forth in another agreement between the Employer and such Participant,
         in which case such procedure shall be used for such determination). If
         requested, the Participant shall be examined by a physician selected or
         approved by the Administrator, the cost of which examination shall be
         paid for by the Employer.

         G.    POST-TERMINATION FORFEITURE FOR CAUSE. Notwithstanding anything
         herein to the contrary, if subsequent to a Participant's termination of
         employment, termination of director status, or termination of
         consultancy, the Board of Directors determines that, either prior or
         subsequent to the Participant's termination, the Participant engaged in
         conduct which would constitute "cause", then such Participant shall
         forthwith cease to have any right to exercise any Award.

         H.    LEAVES OF ABSENCE. A Participant to whom an Award has been
         granted under the Plan who is on sick leave, military leave, or other
         leave approved by the Administrator of not more than six months (unless
         reemployment upon expiration of the leave is guaranteed by contract or
         statute), shall not, during the period of any such absence, be deemed,
         by virtue of such absence alone, to have terminated such Participant's
         employment, director status, or consultancy with the Company or with an
         Affiliate, except as the Administrator may otherwise expressly provide.
         However, there shall be no

<Page>

         continuing vesting in the Award beyond the first six months of any such
         leave of absence.

         I.    CHANGE IN STATUS. For purposes of this Section, a termination of
         employment shall not be deemed to occur upon the transfer of a
         Participant to an Affiliate, or upon the movement of a Participant from
         employee to consultant status or vice versa, provided such
         Participant's continued participation in the Plan is approved by the
         Board of Directors or the Committee, either individually or by approval
         of a class of persons.

11.      EFFECT OF TERMINATION OF SERVICE "FOR CAUSE."

Except as otherwise provided in an Agreement, the following rules apply if the
Participant's service (whether as an employee, director, or consultant) with the
Employer is terminated "for cause":

         A.    All outstanding and unexercised Awards as of the date the
         Participant is notified that his or her service is terminated "for
         cause", whether vested or unvested, will immediately be forfeited.

         B.    For purposes of this Paragraph, "cause" shall include (and is not
         limited to) dishonesty with respect to the employer, insubordination,
         substantial malfeasance or non-feasance of duty, unauthorized
         disclosure of confidential information, and conduct substantially
         prejudicial to the business of the Company or any Affiliate. The
         determination of the Administrator as to the existence of cause will be
         conclusive on the Participant and the Employer.

         C.    "Cause" is not limited to events which have occurred prior to a
         Participant's termination of service, nor is it necessary that the
         Administrator's finding of "cause" occur prior to termination. If the
         Administrator determines, subsequent to a Participant's termination of
         service but prior to the exercise of an Award, that either prior or
         subsequent to the Participant's termination the Participant engaged in
         conduct which would constitute "cause," then the right to exercise any
         Award is forfeited.

         D.    Any definition in an agreement between the Participant and the
         Company or an Affiliate, which contains a conflicting definition of
         "cause" for termination and which is in effect at the time of such
         termination, shall supersede the definition in this Plan with respect
         to such Participant.

12.      ADJUSTMENTS.

The number and class of Shares subject to each outstanding Award, the Exercise
Price and the aggregate number, type and class of Shares for which Awards
thereafter may be made shall be subject to adjustment, if any, as the Committee
deems appropriate, based on the occurrence of a number of specific and
non-specified events. Such specified events are discussed in this Section, but
such discussion is not intended to provide an exhaustive list of such events
which may necessitate such adjustments. In addition, the Administrator may treat
different Participants and

<Page>

different Awards differently, and may condition any adjustment on the execution
of an appropriate waiver and release agreement.

         A.    If the outstanding Shares are increased, decreased or exchanged
         through merger, consolidation, sale of all or substantially all of the
         property of Travelocity, reorganization, recapitalization,
         reclassification, stock dividend, stock split or other distribution in
         respect to such Shares, for a different number of Shares or type of
         securities, or if additional Shares or new or different Shares or other
         securities are distributed with respect to such Shares, an appropriate
         and proportionate adjustment shall be made in (i) the maximum number of
         Shares available for the Plan, as provided in this Section, (ii) the
         type of shares or other securities available for the Plan, (iii) the
         number of Shares of common stock subject to any then outstanding Awards
         under the Plan, and (iv) the price (including exercise price) for each
         share (or other kind of shares or securities) subject to then
         outstanding Awards, but without change in the aggregate purchase price
         as to which such Awards remain exercisable.

         B.    In the event other events not specified above in this Section,
         such as any extraordinary cash dividend, split-up, spin-off,
         combination, exchange of shares, warrants or rights offering to
         purchase Common Stock, or other similar corporate event, affect the
         Common Stock such that an adjustment is necessary to maintain the
         benefits or potential benefits intended to be provided under this Plan,
         then the Committee in its discretion may make adjustments to any or all
         of (i) the number and type of shares which thereafter may be optioned
         and sold or awarded under the Plan, (ii) the Exercise Price of any
         Award made under the Plan thereafter, and (iii) the number and Exercise
         Price of each Share (or other kind of shares or securities) subject to
         the then outstanding Awards, but without change in the aggregate
         purchase price as to which such Options remain exercisable.

         C.    Any adjustment made by the Committee pursuant to the provisions
         of this Section, subject to approval by the Board of Directors, shall
         be final, binding and conclusive. A notice of such adjustment,
         including identification of the event causing such an adjustment, the
         calculation method of such adjustment, and the change in price and the
         number of shares of Common Stock, or securities, cash or property
         purchasable subject to each Award shall be sent to each Participant. No
         fractional interests shall be issued under the Plan based on such
         adjustments.

         D.    This Section shall not apply to adjustment of Awards if any such
         adjustment would also be made in connection with a Change in Control,
         which is governed by the following Section.

         E.    Notwithstanding the foregoing, any adjustments made pursuant to
         (a)-(d) above with respect to ISOs shall be made only after the
         Administrator determines whether such adjustments would constitute a
         "modification" of such ISOs (as that term is defined in Section 424(h)
         of the Code). If the Administrator determines that such adjustments
         made

<Page>

         with respect to ISOs would constitute a modification of such ISOs, it
         may refrain from making such adjustments, unless the holder of an ISO
         specifically requests in writing that such adjustment be made and such
         writing indicates that the holder has full knowledge of the
         consequences of such "modification" on his or her income tax treatment
         with respect to the ISO.

13.      CHANGE IN CONTROL

In the event of a Change in Control, the Board of Directors, in its sole
discretion, may:

         A.    make appropriate provisions for continuation of Awards granted
         under the Plan or substitute on an equitable basis for the Shares then
         subject to such Awards either the consideration payable with respect to
         the outstanding Shares of Common Stock in connection with the
         transaction or securities of any successor or acquiring entity;

         B.    upon written notice to the Participants, provide that all Awards
         then outstanding must be exercised within a reasonable period of time
         following such notice, after which the Awards will expire; or

         C.    terminate all Awards then outstanding in exchange for a cash
         payment equal to the difference between the fair market value of the
         underlying Shares and the Exercise Price, multiplied by the number of
         Shares subject to Awards held by a Participant.

In the event the Board of Directors chooses alternative (b) or (c), then
unvested Awards outstanding under the Plan will immediately become vested and
exercisable, unless the vesting would prevent a desired pooling of interest
accounting treatment for the Change in Control transaction. To the extent the
Board of Directors elects option (a) and a Participant's employment is
involuntarily terminated without cause within one (1) year following the Change
in Control, then all Awards held by such Participant shall immediately become
vested and remain exercisable for 3 months following such termination of
employment (or, if earlier, for the remainder of the Award's term). Under each
alternative, any Awards held by nonemployee directors of the Employer or
Travelocity will immediately vest.

14.      ISSUANCES OF SECURITIES.

Except as expressly provided herein or in the applicable Agreement, no issuance
by Travelocity of shares of stock of any class, or securities convertible into
shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of Shares subject to Awards.
Except as expressly provided herein or in the applicable Agreement, no
adjustments shall be made for dividends paid in cash or in property (including
without limitation, securities) of Travelocity.

15.      FRACTIONAL SHARES.

No fractional share shall be issued under the Plan and the person exercising
such right shall

<Page>

receive from the Employer cash in lieu of such fractional share equal to the
Fair Market Value thereof.

16.      WITHHOLDING.

         A.    GENERAL. In the event that any federal, state, or local income
         taxes, employment taxes, Federal Insurance Contributions Act
         ("F.I.C.A.") withholdings, or other amounts are required by applicable
         law or governmental regulation to be withheld from the Participant's
         salary, wages, or other remuneration in connection with the exercise of
         an Award or any Disqualifying Disposition (as defined below), the
         Employer may withhold from the Participant's wages, if any, or the
         remuneration, or may require the Participant to advance in cash to the
         Employer, or to any Affiliate which employs or employed the
         Participant, the amount of such withholdings unless a different
         withholding arrangement, including share withholding or the use of
         previously owned shares of Common Stock (which the Committee may
         require to have been held for at least six (6) months), is authorized
         by the Administrator (and permitted by law). In the event the
         Administrator allows withholding of Shares, the Fair Market Value of
         withheld Shares may not exceed the applicable statutory minimum
         withholding requirements. If the Fair Market Value of any Shares
         withheld is less than the amount of payroll withholdings required, the
         Participant may be required to advance the difference in cash to the
         Employer or the Affiliate employer. The Administrator may condition the
         transfer of any Shares or the lifting of any restrictions on any Award
         on the satisfaction by the Participant of the foregoing withholding
         obligations.

         B.    NOTICE TO EMPLOYER OF DISQUALIFYING DISPOSITION. Each Participant
         who receives an ISO must agree to notify the Employer in writing
         immediately after the Participant makes a Disqualifying Disposition of
         any Shares acquired pursuant to the exercise of an ISO. A Disqualifying
         Disposition is any disposition (including any sale) of such shares
         before the later of (a) two years after the date the Participant was
         granted the ISO, or (b) one year after the date the Participant
         acquired shares by exercising the ISO. If the Participant has died
         before such stock is sold, these holding period requirements do not
         apply and no Disqualifying Disposition can occur thereafter.

17.      TERMINATION OF THE PLAN.

This Plan was adopted by the Board effective as of October 1, 1999 and, unless
sooner terminated by the Board of Directors, the Plan shall terminate on
September 30, 2009. The Plan's termination will not materially impair any rights
under any Award already made under the Plan without the consent of the
Participant.

18.      AMENDMENT OF THE PLAN AND AGREEMENTS.

The Plan may be amended by the Board of Directors, including, without
limitation, to the extent necessary to ensure the qualification of any Award
under Rule 16b-3 or Code Section 162(m), or

<Page>

any ISO under Code Section 422, and to the extent necessary to qualify the
Shares issuable upon exercise of any outstanding Awards granted, or Awards to be
granted, under the Plan for listing on any national securities exchange or
quotation in any national automated quotation system of securities dealers. Any
amendment that requires shareholder approval under applicable law or in order to
ensure favorable federal income tax treatment for any ISOs shall be subject to
obtaining such approval. In addition, no amendment shall be made without
shareholder approval if such amendment would:

         (a) expand the classes of persons to whom Awards may be made under
             Section 4, paragraph 2, of the Plan;

         (b) increase the number of Shares authorized for grant under Section 3
             of the Plan;

         (c) increase the maximum number of Shares that may be granted pursuant
             to Awards to any one participant under Section 3, paragraph 4, of
             the Plan;

         (d) permit unrestricted Shares to be granted other than in lieu of cash
             payments under other incentive plans and programs of an Employer or
             Employers;

         (e) allow the creation of additional types of awards;

         (f) permit the reduction of the Exercise Price on an outstanding Option
             or the base price on a Stock Appreciation Right; or

         (g) change any provision of this sentence.

Any modification or amendment of the Plan shall not, without the consent of a
Participant, adversely affect his or her rights under an Award previously
granted to him or her. With the consent of the Participant affected, the
Administrator may amend outstanding Agreements in a manner which may be
materially adverse to the Participant but which is not inconsistent with the
Plan. In the discretion of the Administrator, outstanding Agreements may be
amended by the Administrator in a manner which is not materially adverse to the
Participant.

19.      EMPLOYMENT OR OTHER RELATIONSHIP, NATURE OF PAYMENTS.

Nothing in this Plan or any Agreement shall be deemed to prevent the Employer
from terminating the employment, consultancy, or director status of a
Participant, nor to prevent a Participant from terminating his or her own
employment, consultancy, or director status or to give any Participant a right
to be retained in employment or other service by the Employer for any period of
time.

All Awards shall constitute a special incentive payment to the Participant and
shall not be taken into account in computing the amount of salary or
compensation of the Participant for the purpose of determining any benefits
under any pension, retirement, profit-sharing, bonus, life insurance, or other
benefit plan of the Employer or under any agreement between the Employer

<Page>

and the Participant, unless such plan or agreement specifically provides
otherwise.

20.      CONSTRUCTION OF THE PLAN.

The Plan, and its rules, rights, agreements and regulations, shall be governed,
construed, interpreted and administered solely in accordance with the laws of
the state of Delaware. In the event any provision of the Plan shall be held
invalid, illegal or unenforceable, in whole or in part, for any reason, such
determination shall not affect the validity, legality or enforceability of any
remaining provision, portion of provision or the Plan overall, which shall
remain in full force and effect as if the Plan had been absent the invalid,
illegal or unenforceable provision or portion thereof.

21.      CERTAIN PARTICIPANTS.

All Agreements for Participants subject to Section 16(b) of the Exchange Act
shall be deemed to include any such additional terms, conditions, limitations
and provisions as Rule 16b-3 requires, unless the Administrator in its
discretion determines that any such Award should not be governed by Rule 16b-3.
To the extent any provision of the Plan or any action by the Administrator fails
to so comply with Rule 16b-3, it shall be deemed null and void, to the extent
permitted by law and deemed advisable by the Administrator. All
performance-based Awards to Covered Participants shall be deemed to include any
such additional terms, conditions, limitations and provisions as are necessary
to comply with the performance-based compensation exemption of Section 162(m) of
the Code unless the Administrator in its discretion determines that any such
Award to a Covered Participant is not intended to qualify for the exemption for
performance-based compensation under Section 162(m). All Agreements awarding
ISOs shall be deemed to include any such additional terms conditions,
limitations, and provisions as Code Section 422 requires unless the
Administrator in its discretion determines that any such Option is not intended
or is no longer intended to qualify as an ISO.

22.      LISTING, REGISTRATION AND OTHER LEGAL COMPLIANCE.

Notwithstanding any other provision of this Plan, no Awards or Shares of the
Common Stock shall be required to be issued or granted under the Plan unless
legal counsel to the Company shall be satisfied that such issuance or grant will
be in compliance with all applicable federal and state securities laws and
regulations and any other applicable laws or regulations. The Committee may
require, as a condition of any payment or share issuance, that certain
agreements, undertakings, representations, certificates, and/or information, as
the Committee may deem necessary or advisable, be executed or provided to the
Company to assure compliance with all such applicable laws or regulations. Any
certificates for Shares of the Common Stock delivered under the Plan may be
subject to such legends, stock-transfer orders and such other restrictions as
the Committee may deem advisable under the rules, regulations, or other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed, the NASDAQ National Market System, and
any applicable federal or state securities law. In addition, if, at any time
specified herein (or in any Agreement or otherwise) for (a) the

<Page>

making of any Award, or the making of any determination, (b) the issuance or
other distribution of Common Stock, or (c) the payment of amounts to or through
a Participant with respect to any Award, any law, rule, regulation, or other
requirement of any governmental authority or agency shall require the Employer,
Travelocity, or any Participant (or any estate, designated beneficiary, or other
legal representative thereof) to take any action in connection with any such
determination, any such Shares to be issued or distributed, any such payment, or
the making of any such determination, as the case may be, shall be deferred
until such required action is taken.

23.      GOVERNING LAW.

This Plan shall be construed and enforced in accordance with the law of the
State of Delaware, without giving effect to principles of conflict of laws.EXHIBIT 4.3

                                  APTIMUS, INC.

                                       AND

                          MELLON INVESTOR SERVICES LLC,

                                 as Rights Agent

                                Rights Agreement

                           Dated as of March 12, 2002

<PAGE>

                                TABLE OF CONTENTS

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

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

SECTION 3. ISSUANCE OF RIGHT CERTIFICATES.....................................4

SECTION 4. FORM OF RIGHT CERTIFICATE..........................................6

SECTION 5. COUNTERSIGNATURE AND REGISTRATION..................................7

SECTION 6. TRANSFER, SPLIT-UP, COMBINATION AND EXCHANGE OF RIGHT
  CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHT CERTIFICATE........7

SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS......8

SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.................10

SECTION 9. RESERVATION AND AVAILABILITY OF PREFERRED SHARES...................11

SECTION 10. PREFERRED SHARES RECORD DATE......................................12

SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES
  OR NUMBER OF RIGHTS.........................................................12

SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES........18

SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
  ASSETS OR EARNING POWER.....................................................18

SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES...........................21

SECTION 15. RIGHTS OF ACTION..................................................22

SECTION 16. AGREEMENT OF RIGHT HOLDERS........................................22

SECTION 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER.................23

SECTION 18. CONCERNING THE RIGHTS AGENT.......................................23

                                       i
<PAGE>

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 AND TERMINATION........................................28

SECTION 24. EXCHANGE..........................................................29

SECTION 25. NOTICE OF CERTAIN EVENTS..........................................30

SECTION 26. NOTICES...........................................................31

SECTION 27. SUPPLEMENTS AND AMENDMENTS........................................32

SECTION 28. DETERMINATION AND ACTIONS BY THE BOARD OF DIRECTORS, ETC..........32

SECTION 29. SUCCESSORS........................................................33

SECTION 30. BENEFITS OF THIS AGREEMENT........................................33

SECTION 31. SEVERABILITY......................................................33

SECTION 32. GOVERNING LAW.....................................................33

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

SECTION 34. DESCRIPTIVE HEADINGS..............................................33

   Exhibit A - Certificate of Designation, Preferences and Rights of Series C
               Preferred Stock of Aptimus, Inc.

   Exhibit B - Form of Right Certificate

   Exhibit C - Summary of Rights to Purchase Preferred Shares

                                       ii
<PAGE>

                              RIGHTS AGREEMENT

     THIS RIGHTS  AGREEMENT  (this  "Agreement"),  dated as of  March 12,  2002,
between Aptimus, Inc., a Washington corporation (the "Corporation"),  and Mellon
Investor Services LLC, a New Jersey limited liability  company,  as Rights Agent
(the "Rights Agent").

     The Board of Directors of the  Corporation  has  authorized  and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Corporation outstanding at the close of business
on March 29, 2002 (the  "Record  Date"),  each Right  representing  the right to
purchase one one-thousandth of a Preferred Share (as hereinafter defined),  upon
the terms and  subject  to the  conditions  herein set  forth,  and has  further
authorized  and  directed  the issuance of one Right with respect to each Common
Share that shall become outstanding  between the Record Date and the earliest of
the Distribution Date, the Redemption Date or the Final Expiration Date (as such
terms are hereinafter  defined);  provided,  however,  that Rights may be issued
with  respect  to  Common  Shares  that  shall  become   outstanding  after  the
Distribution  Date and prior to the earlier of the Redemption Date and the Final
Expiration  Date  in  accordance  with  the  provisions  of  Section  22 of this
Agreement.

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

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

          (a)  "Acquiring  Person" shall mean any Person who or which,  together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the then outstanding  Common Shares (other than as a result of
a Permitted  Offer (as hereinafter  defined)) or was such a Beneficial  Owner at
any time after the date hereof,  whether or not such person  continues to be the
Beneficial  Owner  of 15%  or  more  of  the  then  outstanding  Common  Shares.
Notwithstanding the foregoing, (A) the term "Acquiring Person" shall not include
(i) the Corporation, (ii) any Subsidiary of the Corporation,  (iii) any employee
benefit plan of the  Corporation or of any Subsidiary of the  Corporation,  (iv)
any Person or entity organized,  appointed or established by the Corporation for
or pursuant to the terms of any such plan, (v) any Person, who or which together
with all Affiliates  and Associates of such Person becomes the Beneficial  Owner
of 15% or  more  of the  then  outstanding  Common  Shares  as a  result  of the
acquisition  of  Common  Shares  directly  from  the  Corporation,  or (vi)  any
Grandfathered  Stockholder and (B) no Person shall be deemed to be an "Acquiring
Person"  either  (X) as a result  of the  acquisition  of  Common  Shares by the
Corporation  which,  by  reducing  the  number  of  Common  Shares  outstanding,
increases the proportional  number of shares  beneficially  owned by such Person
together with all Affiliates and Associates of such Person; except that if (i) a
Person would become an Acquiring Person (but for the operation of this subclause
X) as a result of the acquisition of Common Shares by the Corporation,  and (ii)
after such share acquisition by the Corporation, such Person, or an Affiliate or
Associate of such Person,  becomes the Beneficial Owner of any additional Common
Shares, then such Person shall be deemed an Acquiring Person, or (Y) if a Person
did so inadvertently, (i) promptly after such Person discovers that such

                                       1
<PAGE>

Person would otherwise have become an Acquiring Person (but for the operation of
this subclause Y), such Person  notifies the Board of Directors that such Person
did so inadvertently and (ii) within 2 days after such notification, such Person
is the Beneficial Owner of less than 15% of the outstanding Common Shares.

          (b) "Act" shall mean the  Securities Act of 1933, as amended and as in
effect on the date of this Agreement.

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

          (d) A Person  shall be deemed the  "Beneficial  Owner" of and shall be
deemed to "Beneficially Own" any securities:

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

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

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

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

                                       2
<PAGE>

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

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

          (g) "Common Shares" when used with reference to the Corporation  shall
mean the shares of Common Stock,  no par value per share, of the Corporation or,
in the event of a subdivision, combination or consolidation with respect to such
shares  of  Common  Stock,  the  shares  of  Common  Stock  resulting  from such
subdivision,  combination  or  consolidation.  "Common  Shares"  when  used with
reference to any Person other than the Corporation  shall mean the capital stock
(or equity  interest) with the greatest voting power of such other Person or, if
such other Person is a Subsidiary of another Person, the Person or Persons which
ultimately control such first-mentioned Person.

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

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

          (j)  "Grandfathered  Stockholder"  shall  mean any  Person  who is the
Beneficial Owner of 15% or more of the outstanding  Common Shares as of the date
hereof and except for acquisition of Common Shares directly from the Corporation
pursuant to an employee  benefit plan or  agreement;  provided,  however,  that,
except as provided in Section 1(a)(B) hereof, any such Grandfathered Stockholder
shall  cease to be a  Grandfathered  Stockholder  if, at any time after the date
hereof,  such  Grandfathered  Stockholder  becomes the Beneficial  Owner of such
percentage  of  outstanding  Common  Shares as is more than 1% greater  than the
percentage of outstanding Common Shares Beneficially Owned by such Grandfathered
Stockholder as of the date hereof, except as a result of a Permitted Offer.

          (k) "Interested  Stockholder"  shall mean any Acquiring  Person or any
Affiliate or  Associate of an Acquiring  Person or any other Person in which any
such  Acquiring  Person,  Affiliate or Associate  has an interest,  or any other
Person  acting  directly or  indirectly on behalf of or in concert with any such
Acquiring Person, Affiliate or Associate.

          (l)  "Permitted  Offer" shall mean a tender or exchange offer which is
for all outstanding  Common Shares at a price and on terms determined,  prior to
the  purchase  of shares  under such  tender or  exchange  offer,  by at least a
majority of the members of the Board of  Directors  who are not  officers of the
Corporation  and who are not  Acquiring  Persons  or  Persons  who would  become
Acquiring  Persons  as  a  result  of  the  offer  in  question  or  Affiliates,
Associates,  nominees  or  representatives  of any such  Person,  to be adequate
(taking into account all factors that such  Directors  deem relevant  including,
without limitation,  prices that could reasonably be achieved if the Corporation
or its assets were sold on an orderly basis  designed to realize  maximum value)
and otherwise in the best interests of the Corporation and its

                                       3
<PAGE>

stockholders  (other than the Person or any  Affiliate or  Associate  thereof on
whose  behalf the offer is being made) taking into account all factors that such
directors may deem relevant.

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

          (n) "Preferred  Shares" shall mean shares of Series C Preferred Stock,
no par  value  per  share  of  the  Corporation,  having  the  relative  rights,
preferences  and  limitations  set  forth  in the  Certificate  of  Designation,
Preferences and Rights attached to this Agreement as Exhibit A.

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

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

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

          (r)  "Shares  Acquisition  Date"  shall  mean the first date of public
announcement  (which,  for purposes of this definition,  shall include,  without
limitation,  a report filed pursuant to the Exchange Act) by the  Corporation or
an Acquiring Person that an Acquiring Person has become such; provided, that, if
such Person is  determined  not to have become an Acquiring  Person  pursuant to
Section  1(a)(B)(Y)  hereof,  then no Shares Acquisition Date shall be deemed to
have occurred.

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

          (t) "Triggering  Event" shall mean any Section  11(a)(ii) Event or any
Section 13 Event.

     Section 2. Appointment of Rights Agent. The Corporation hereby appoints the
Rights Agent to act as agent for the  Corporation  in accordance  with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment. The
Corporation  may from time to time appoint such co-Rights  Agents as it may deem
necessary or desirable. The Rights Agent shall have no duty to supervise, and in
no event shall be liable for, the acts or omissions of any such co-Rights Agent.

     Section 3. Issuance of Right Certificates.

          (a) Until the earlier of (i) the Shares  Acquisition  Date or (ii) the
Close of  Business  on the  tenth  calendar  day (or such  later  date as may be
determined  by action of the Board of  Directors of the  Corporation)  after the
date  of the  commencement  by any  Person  (other  than  the  Corporation,  any
Subsidiary of the  Corporation,  any employee benefit plan of the Corporation or
of any  Subsidiary  of  the  Corporation  or any  Person  or  entity  organized,
appointed

                                       4
<PAGE>

or established by the Corporation for or pursuant to the terms of any such plan)
of, or of the first public  announcement  of the  intention of any Person (other
than the Corporation,  any Subsidiary of the  Corporation,  any employee benefit
plan of the Corporation or of any Subsidiary of the Corporation or any Person or
entity organized, appointed or established by the Corporation for or pursuant to
the terms of any such plan) to commence (which  intention to commence remains in
effect for five  Business  Days after such  announcement),  a tender or exchange
offer the consummation of which would result in any Person becoming an Acquiring
Person  (including,  in the case of both (i) and (ii),  any such  date  which is
after the date of this  Agreement and prior to the issuance of the Rights),  the
earlier of such dates being herein referred to as the  "Distribution  Date," (x)
the Rights will be evidenced  (subject to the provisions of Section 3(b) hereof)
by the  certificates  for Common  Shares  registered in the names of the holders
thereof (which  certificates shall also be deemed to be Right  Certificates) and
not by  separate  Right  Certificates,  and  (y)  the  right  to  receive  Right
Certificates  will be  transferable  only in connection with the transfer of the
underlying Common Shares  (including a transfer to the  Corporation);  provided,
however,  that if a tender  offer is  terminated  prior to the  occurrence  of a
Distribution  Date,  then no  Distribution  Date shall occur as a result of such
tender  offer.  As  soon  as  practicable  after  the  Distribution   Date,  the
Corporation will prepare and execute, the Rights Agent will countersign, and the
Corporation will send or cause to be sent by first-class,  postage-prepaid mail,
to each  record  holder of Common  Shares  as of the  close of  business  on the
Distribution  Date,  at the address of such  holder  shown on the records of the
Corporation, a Right Certificate,  substantially in the form of Exhibit B hereto
(a "Right Certificate"),  evidencing one Right for each Common Share so held. As
of and after the Distribution  Date, the Rights will be evidenced solely by such
Right Certificates.

          (b)  As  promptly  as  practicable  following  the  Record  Date,  the
Corporation  will send a copy of a  Summary  of  Rights  to  Purchase  Preferred
Shares, in substantially the form of Exhibit C hereto (the "Summary of Rights"),
by first-class,  postage-prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Record Date, at the address of such holder shown
on the  records of the  Corporation.  With  respect to  certificates  for Common
Shares  outstanding  as of the Record Date,  until the  Distribution  Date,  the
Rights will be evidenced  by such  certificates  registered  in the names of the
holders thereof together with a copy of the Summary of Rights attached  thereto.
Until the Distribution  Date (or the earlier of the Redemption Date or the Final
Expiration  Date),  the  surrender  for transfer of any  certificate  for Common
Shares  outstanding on the Record Date, with or without a copy of the Summary of
Rights  attached  thereto,  shall also  constitute  the  transfer  of the Rights
associated  with  such  Common  Shares.  As a result  of the  execution  of this
Agreement on March 12, 2002, each share of Common Stock  outstanding as of March
29, 2002 shall,  subject to the terms and  conditions  of this  Agreement,  also
represent  one Right and  shall,  subject  to the terms and  conditions  of this
Agreement,  represent  the right to purchase  one  one-thousandth  of a share of
Preferred Stock.

          (c)   Certificates   for  Common   Shares  which  become   outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this  paragraph (c)) after the Record Date but prior to the earliest
of the  Distribution  Date, the Redemption  Date or the Final  Expiration  Date,
shall be deemed also to be certificates for Rights, and shall bear the following
legend:

                                       5
<PAGE>

     THIS  CERTIFICATE  ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN
     RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN APTIMUS,  INC. AND MELLON
     INVESTOR  SERVICES  LLC, AS RIGHTS  AGENT,  DATED AS OF MARCH 12, 2002 (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 APTIMUS,  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.  APTIMUS, 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
     SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON
     WHO IS, WAS OR BECOMES AN  ACQUIRING  PERSON OR AN  AFFILIATE  OR ASSOCIATE
     THEREOF (AS DEFINED IN THE RIGHTS  AGREEMENT) AND CERTAIN RELATED  PERSONS,
     WHETHER  CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT
     HOLDER, MAY BECOME NULL AND VOID.

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

     Section 4. Form of Right Certificate.

          (a) The Right  Certificates (and the forms of election to purchase 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 Corporation may deem appropriate (which do not affect the rights,  duties or
responsibilities  of the  Rights  Agent)  and as are not  inconsistent  with the
provisions  of  this  Agreement,  or as may  be  required  to  comply  with  any
applicable law or with any rule or regulation made pursuant  thereto or with any
rule or  regulation  of any stock  exchange on which the Rights may from time to
time be listed, or to conform to usage.  Subject to the provisions of Section 11
and Section 22 hereof,  the Right Certificates shall entitle the holders thereof
to purchase such number of one  one-thousandths of a Preferred Share as shall be
set forth therein at the price per one  one-thousandth  of a Preferred Share set
forth  therein (the  "Purchase  Price"),  but the amount and type of  securities
purchasable upon the exercise of each Right and the Purchase Price thereof shall
be subject to adjustment as provided herein.

                                       6
<PAGE>

          (b) Any Right  Certificate  issued pursuant to Section 3(a) or Section
22 hereof that  represents  Rights  which are null and void  pursuant to Section
7(e) of this Agreement and any Right Certificate issued pursuant to Section 6 or
Section 11 hereof upon  transfer,  exchange,  replacement  or  adjustment of any
other Right  Certificate  referred to in this  sentence,  shall  contain (to the
extent feasible) the following legend:

     THE RIGHTS  REPRESENTED BY THIS RIGHT  CERTIFICATE ARE OR WERE BENEFICIALLY
     OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING  PERSON OR AN AFFILIATE OR
     ASSOCIATE OF AN  ACQUIRING  PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
     AGREEMENT).  ACCORDINGLY, THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED
     HEREBY ARE NULL AND VOID.

     Provisions  of Section  7(e) of this Rights  Agreement  shall be  operative
whether or not the foregoing legend is contained on any such Right  Certificate.
The  Corporation  shall  notify the Rights Agent to the extent that this Section
4(b) applies.

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

     Following the  Distribution  Date and receipt by the Rights Agent of a list
of record holders of Rights,  the Rights Agent will keep or cause to be kept, at
its  office  set  forth in  Section  27  hereof  or  offices  designated  as the
appropriate place for surrender of such Right Certificate or transfer, 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  certificate  number  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 Certificate. Subject to
the provisions of Section 4(b),  Section 7(e) and Section 14 hereof, at any time
after the Close of Business  on the  Distribution  Date,  and at or prior to the
Close of Business on the earlier of the Redemption Date or the Final  Expiration
Date, any Right Certificate or Right Certificates may be transferred,  split up,
combined or  exchanged  for another  Right  Certificate  or Right  Certificates,
entitling the

                                       7
<PAGE>

registered  holder  to  purchase  a  like  number  of one  one-thousandths  of a
Preferred Share (or, following a Triggering Event, other securities, as the case
may be) as the Right Certificate or Right Certificates surrendered then entitled
such  holder (or  former  holder in the case of a  transfer)  to  purchase.  Any
registered holder desiring to transfer,  split up, combine or exchange any Right
Certificate or Right  Certificates  shall make such request in writing delivered
to the  Rights  Agent,  and  shall  surrender  the  Right  Certificate  or Right
Certificates to be transferred, split up, combined or exchanged at the office or
offices of the Rights  Agent  designated  for such  purpose.  Neither the Rights
Agent nor the Corporation  shall be obligated to take any action whatsoever with
respect to the  transfer of any such  surrendered  Right  Certificate  until the
registered  holder shall have completed and signed the certificate  contained in
the form of assignment on the reverse side of such Right  Certificate  and shall
have provided such additional  evidence of the identity of the Beneficial  Owner
(or  former  Beneficial  Owner)  or  Affiliates  or  Associates  thereof  as the
Corporation or the Rights Agent shall reasonably  request.  Thereupon the Rights
Agent  shall,  subject  to Section  4(b),  Section  7(e) and  Section 14 hereof,
countersign  and deliver to the Person entitled  thereto a Right  Certificate or
Right  Certificates,  as the case may be, as so requested.  The  Corporation 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. If the Corporation requires the payment referred
to in the  immediately  preceding  sentence  and  notifies  the Rights  Agent in
writing of such  requirement,  then the Rights  Agent  shall not be  required to
process any  transaction  until it receives  written notice from the Corporation
that the Corporation has received payment of all such taxes and/or  governmental
charges.

     Upon  receipt  by  the   Corporation  and  the  Rights  Agent  of  evidence
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 satisfactory to them, and, at the Corporation's request,  reimbursement
to the  Corporation 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  Corporation  will make and deliver a new Right
Certificate of like tenor to the Rights Agent for  countersignature and delivery
to the  registered  holder in lieu of the  Right  Certificate  so lost,  stolen,
destroyed or mutilated.

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

          (a) Subject to Section 7(e) hereof, the registered holder of any Right
Certificate  may  exercise  the Rights  evidenced  thereby  (except as otherwise
provided  herein)  in whole or in part at any time after the  Distribution  Date
upon surrender of the Right  Certificate,  with the form of election to purchase
and the  certificate  on the reverse side thereof duly  executed,  to the Rights
Agent at the office or offices of the Rights Agent  designated for such purpose,
together  with payment of the aggregate  Purchase  Price for the total number of
one  one-thousandths of a Preferred Share (or other securities,  as the case may
be) as to  which  such  surrendered  Rights  are  exercised,  at or prior to the
earliest of (i) the Close of Business  on, [ten years from  adoption  date] 2012
(the "Final Expiration Date"), (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption  Date");  (iii) the time at which
the  Rights  are  exchanged  as  provided  in  Section  24  hereof,  or (iv) the
consummation of a transaction contemplated by Section 13(d) hereof.

                                       8
<PAGE>

          (b) The  Purchase  Price for each one  one-thousandth  of a  Preferred
Share  pursuant to the exercise of a Right shall  initially be $15.00,  shall be
subject to adjustment  from time to time as provided in the next sentence and in
Sections 11 and 13(a) hereof,  and shall be payable in accordance with paragraph
(c) below.  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 Corporation shall (i) declare or pay any dividend on the
Common Shares payable in Common Shares or (ii) effect a subdivision, combination
or consolidation of the Common Shares (by  reclassification or otherwise than by
payment of dividends in Common Shares) into a greater or lesser number of Common
Shares,  then in any such case,  each Common Share  outstanding  following  such
subdivision,  combination  or  consolidation  shall  continue  to have one Right
associated  therewith and the Purchase  Price  following any such event shall be
proportionately  adjusted  to equal  the  result  obtained  by  multiplying  the
Purchase  Price  immediately  prior to such event by a fraction the numerator of
which shall be the total number of Common Shares  outstanding  immediately prior
to the  occurrence of the event and the  denominator of which shall be the total
number of Common Shares outstanding immediately following the occurrence of such
event.  The  adjustment  provided for in the  preceding  sentence  shall be made
successively whenever such a dividend is declared or paid or such a subdivision,
combination or consolidation is effected.

          (c)  Upon  receipt  of a Right  Certificate  representing  exercisable
Rights, with the form of election to purchase and the certificate duly executed,
accompanied by payment of the Purchase Price for the Preferred  Shares (or other
securities,  as the  case may be) to be  purchased  and an  amount  equal to any
applicable tax or governmental  charge required to be paid by the holder of such
Right  Certificate  in  accordance  with  Section 6 hereof by  certified  check,
cashier's  check or money  order  payable to the order of the  Corporation,  the
Rights  Agent shall  thereupon  promptly (i) (A)  requisition  from any transfer
agent of the Preferred Shares certificates for the number of Preferred Shares to
be purchased and the  Corporation  hereby  irrevocably  authorizes  its transfer
agent to comply with all such requests,  or (B) if the Corporation,  in its sole
discretion,  shall have elected to deposit the  Preferred  Shares  issuable upon
exercise  of the  Rights  hereunder  into a  depositary,  requisition  from  the
depositary  agent   depositary   receipts   representing   such  number  of  one
one-thousandths  of a  Preferred  Share as are to be  purchased  (in which  case
certificates  for the Preferred  Shares  represented  by such receipts  shall be
deposited by the transfer agent with the depositary  agent) and the  Corporation
will  direct  the  depositary  agent to  comply  with such  requests,  (ii) when
appropriate,  requisition  from the Corporation the amount of cash to be paid in
lieu of issuance of  fractional  shares in  accordance  with  Section 14 hereof,
(iii) after receipt of such certificates or 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 thereof,  deliver such cash to
or upon the order of the  registered  holder of such Right  Certificate.  In the
event that the  Corporation  is obligated to issue other  securities  (including
Common  Shares)  of the  Corporation  pursuant  to  Section  11(a)  hereof,  the
Corporation will make all  arrangements  necessary so that such other securities
are available for  distribution  by the Rights Agent,  if and when  necessary to
comply with this Agreement.

     In addition,  in the case of an exercise of the Rights by a holder pursuant
to Section  11(a)(ii),  the Rights Agent shall return such Right  Certificate to
the registered holder thereof

                                       9
<PAGE>

after  imprinting,  stamping or  otherwise  indicating  thereon  that the rights
represented by such Right  Certificate no longer include the rights  provided by
Section  11(a)(ii)  of the  Rights  Agreement  and if less  than all the  Rights
represented by such Right Certificate were so exercised,  the Rights Agent shall
indicate on the Right Certificate the number of Rights represented thereby which
continue to include the rights provided by Section 11(a)(ii).

          (d) In case the  registered  holder  of any  Right  Certificate  shall
exercise less than all the Rights  evidenced  thereby,  a new Right  Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be issued
by the Rights Agent to the registered holder of such Right Certificate or to his
duly authorized  assigns,  subject to the provisions of Section 6 and Section 14
hereof,  or the Rights  Agent shall place an  appropriate  notation on the Right
Certificate with respect to those Rights exercised.

          (e) Notwithstanding  anything in this Agreement to the contrary,  from
and  after  the  first  occurrence  of a Section  11(a)(ii)  Event,  any  Rights
Beneficially Owned by (i) an Acquiring Person or an Affiliate or Associate of an
Acquiring Person,  (ii) a transferee of an Acquiring Person (or of any Affiliate
or  Associate  thereof)  who becomes a  transferee  after the  Acquiring  Person
becomes such, or (iii) a transferee of an Acquiring  Person (or of any Affiliate
or Associate thereof) who becomes a transferee prior to or concurrently with the
Acquiring Person becoming such and receives such Rights pursuant to either (A) a
transfer (whether or not for consideration) from the Acquiring Person to holders
of equity  interests  in such  Acquiring  Person or to any Person  with whom the
Acquiring  Person  has a  continuing  agreement,  arrangement  or  understanding
regarding the transferred  Rights or (B) a transfer which the Board of Directors
of the  Corporation  has  determined  is part of an  agreement,  arrangement  or
understanding  which has as a primary  purpose or effect the  avoidance  of this
Section  7(e),  shall  become null and void  without  any further  action and no
holder of such  Rights  shall have any rights  whatsoever  with  respect to such
Rights,  whether  under  any  provision  of this  Agreement  or  otherwise.  The
Corporation  shall  notify the Rights  Agent when this  Section 7(e) applies and
shall use all  reasonable  efforts to insure that the provisions of this Section
7(e) and Section 4(b) hereof are complied  with, but neither the Company nor the
Rights  Agent shall have any  liability to any holder of Right  Certificates  or
other Person as a result of the Corporation's failure to make any determinations
with respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.

          (f)  Notwithstanding  anything  in  this  Agreement  to the  contrary,
neither the Rights Agent nor the Corporation shall be obligated to undertake any
action with respect to a registered  holder upon the occurrence of any purported
exercise as set forth in this Section 7 unless such registered holder shall have
(i)  properly  completed  and signed the  certificate  contained  in the form of
election to  purchase  set forth on the  reverse  side of the Right  Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner (or former  Beneficial  owner) or Affiliates or
Associates  thereof as the  Corporation  or the 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  Corporation or to any of
its agents,  be delivered to the Rights  Agent for  cancellation  or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it,

                                       10
<PAGE>

and no Right  Certificates  shall be issued in lieu thereof  except as expressly
permitted by any of the  provisions of this  Agreement.  The  Corporation  shall
deliver to the Rights Agent for cancellation and retirement, and the Agent shall
so cancel and retire,  any other Right Certificate  purchased or acquired by the
Corporation  otherwise  than upon the exercise  thereof.  The Rights Agent shall
deliver all canceled Right  Certificates  to the  Corporation,  or shall, at the
written request of the  Corporation,  destroy such canceled Right  Certificates,
and in such case  shall  deliver a  certificate  of  destruction  thereof to the
Corporation.

     Section  9.   Reservation  and  Availability  of  Preferred   Shares.   The
Corporation  covenants and agrees that at all times prior to the occurrence of a
Section  11(a)(ii)  Event it will cause to be reserved and kept available out of
its  authorized  and unissued  Preferred  Shares,  or any  authorized and issued
Preferred Shares held in its treasury,  the number of Preferred Shares that will
be  sufficient  to permit the  exercise in full of all  outstanding  Rights and,
after  the  occurrence  of a  Section  11(a)(ii)  Event,  shall,  to the  extent
reasonably  practicable,  so reserve and keep  available a sufficient  number of
Common  Shares  (and/or  other  securities)  which may be required to permit the
exercise in full of the Rights pursuant to this Agreement.

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

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

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

     The Corporation  shall use its commercial best efforts to (i) file, as soon
as practicable  following the Shares Acquisition Date, a registration  statement
under the Act, with respect to the securities  purchasable  upon exercise of the
Rights on an appropriate form, (ii) cause such

                                       11
<PAGE>

registration  statement to become  effective as soon as  practicable  after such
filing, and (iii) cause such registration  statement to remain effective (with a
prospectus  at all times meeting the  requirements  of the Act and the rules and
regulations  thereunder) until the date of the expiration of the rights provided
by  Section  11(a)(ii).  The  Corporation  will also take such  action as may be
appropriate under the blue sky laws of the various states.

     Section 10.  Preferred  Shares  Record Date.  Each Person in whose name any
certificate for Preferred Shares (or Common Shares and/or other  securities,  as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have  become the holder of record of the  Preferred  Shares (or Common
Shares and/or other securities,  as the case may be) represented thereby on, and
such  certificate  shall be  dated,  the date upon  which the Right  Certificate
evidencing  such Rights was duly  surrendered  and payment of the Purchase Price
(and any applicable taxes and governmental charges) was made; provided, however,
that,  if the date of such  surrender  and  payment  is a date  upon  which  the
Preferred Shares (or Common Shares and/or other securities,  as the case may be)
transfer  books of the  Corporation  are closed,  such person shall be deemed to
have become the record holder of such shares on, and such  certificate  shall be
dated, the next succeeding Business Day on which the Preferred Shares (or Common
Shares  and/or  other  securities,  as the  case may be)  transfer  books of the
Corporation are open.

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

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

          (b) In the event any Person, alone or together with its Affiliates and
Associates,  shall become an Acquiring  Person,  then proper  provision shall be
made so that each  holder of a Right  (except as  provided  below and in Section
7(e) hereof) shall, for a period of 60 days after the later of the occurrence of
any such event or the effective  date of an appropriate  registration  statement
under the Act pursuant to Section 9 hereof, have a right to receive, upon

                                       12
<PAGE>

exercise  thereof  at a price  equal  to the then  current  Purchase  Price,  in
accordance with the terms of this  Agreement,  such number of Common Shares (or,
in the discretion of the Board of Directors,  one one-thousandths of a Preferred
Share) as shall equal the result  obtained by (x)  multiplying  the then current
Purchase Price by the then number of one  one-thousandths  of a Preferred  Share
for which a Right was exercisable immediately prior to the first occurrence of a
Section  11(a)(ii)  Event,  and  dividing  that  product  by (y) 50% of the then
current per share market price of the  Corporation's  Common Shares  (determined
pursuant to Section  11(d)  hereof) on the date of such first  occurrence  (such
number  of shares  being  referred  to as the  "Adjustment  Shares");  provided,
however, that if the transaction that would otherwise give rise to the foregoing
adjustment is also subject to the provisions of Section 13 hereof, then only the
provisions  of Section 13 hereof  shall  apply and no  adjustment  shall be made
pursuant to this Section 11(a)(ii);

          (c) In the event that there shall not be sufficient treasury shares or
authorized but unissued (and unreserved) Common Shares to permit the exercise in
full of the Rights in accordance  with the foregoing  subparagraph  (ii) and the
Rights become so exercisable  (and the Board of Directors of the Corporation has
determined to make the Rights  exercisable into fractions of a Preferred Share),
notwithstanding  any other provision of this Agreement,  to the extent necessary
and permitted by applicable law, each Right shall thereafter represent the right
to  receive,  upon  exercise  thereof  at the  then  current  Purchase  Price in
accordance with the terms of this  Agreement,  (x) a number of (or fractions of)
Common Shares (up to the maximum  number of Common Shares which may  permissibly
be issued) and (y) one  one-thousandth  of a Preferred  Share or a number of, or
fractions of other equity  securities of the Corporation  (or, in the discretion
of the Board of Directors, debt) which the Board of Directors of the Corporation
has  determined  to have the same  aggregate  current  market value  (determined
pursuant to Section 11(d)(i) and (ii) hereof, to the extent  applicable,) as one
Common Share (such number of, or fractions of, Preferred Shares,  debt, or other
equity  securities or debt of the  Corporation)  being referred to as a "capital
stock  equivalent",  equal in the aggregate to the number of Adjustment  Shares;
provided,  however, if sufficient Common Shares and/or capital stock equivalents
are  unavailable,  then  the  Corporation  shall,  to the  extent  permitted  by
applicable law, take all such action as may be necessary to authorize additional
Common  Shares or capital  stock  equivalents  for issuance upon exercise of the
Rights,  including if necessary  the calling of a meeting of  stockholders;  and
provided,  further, that if the Corporation is unable to cause sufficient Common
Shares  and/or  capital  stock  equivalents  to be available  for issuance  upon
exercise in full of the Rights,  then each Right shall thereafter  represent the
right to receive the  Adjusted  Number of Shares upon  exercise at the  Adjusted
Purchase Price (as such terms are hereinafter defined). As used herein, the term
"Adjusted  Number of Shares"  shall be equal to that number of (or fractions of)
Common Shares (and/or capital stock equivalents) equal to the product of (x) the
number of  Adjustment  Shares and (y) a fraction,  the numerator of which is the
number of  Common  Shares  (and/or  capital  stock  equivalents)  available  for
issuance  upon  exercise  of the  Rights  and the  denominator  of  which is the
aggregate number of Adjustment  Shares otherwise  issuable upon exercise in full
of all  Rights  (assuming  there  were a  sufficient  number  of  Common  Shares
available)  (such fraction being  referred to as the  "Proration  Factor").  The
"Adjusted  Purchase  Price" shall mean the product of the Purchase Price and the
Proration  Factor.  The Board of  Directors  may,  but shall not be required to,
establish procedures to allocate the right to receive

                                       13
<PAGE>

Common  Shares and capital stock  equivalents  upon exercise of the Rights among
holders of Rights.

          (d) In case the  Corporation  shall fix a record date for the issuance
of rights  (other  than the  Rights),  options  or  warrants  to all  holders of
Preferred  Shares  entitling them (for a period expiring within 45 calendar days
after such record date) to subscribe for or purchase Preferred Shares (or shares
having the same rights,  privileges  and  preferences  as the  Preferred  Shares
("equivalent preferred shares")) or securities convertible into Preferred Shares
or  equivalent  preferred  shares at a price per  Preferred  Share or equivalent
preferred  share  (or  having  a  conversion  price  per  share,  if a  security
convertible into Preferred Shares or equivalent  preferred shares) less than the
then  current per share  market  price of the  Preferred  Shares (as  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 Preferred  Shares  outstanding on such
record date plus the number of  Preferred  Shares which the  aggregate  offering
price of the total number of Preferred Shares and/or equivalent preferred shares
so to  be  offered  (and/or  the  aggregate  initial  conversion  price  of  the
convertible  securities  so to be offered)  would  purchase at such  current per
share  market  price,  and the  denominator  of  which  shall be the  number  of
Preferred  Shares  outstanding on such record date plus the number of additional
Preferred  Shares  and/or   equivalent   preferred  shares  to  be  offered  for
subscription  or purchase  (or into which the  convertible  securities  so to be
offered are initially convertible).  In case such subscription price may be paid
in a consideration  part or all of which shall be in a form other than cash, the
value of such  consideration  shall be  determined in good faith by the Board of
Directors  of the  Corporation,  whose  determination  shall be  described  in a
statement  filed with the Rights  Agent and shall be binding on the Rights Agent
and the holders of the Rights. Preferred Shares owned by or held for the account
of the Corporation  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.

          (e) In case the Corporation  shall fix a record date for the making of
a  distribution  to all  holders of the  Preferred  Shares  (including  any such
distribution  made in  connection  with a  consolidation  or merger in which the
Corporation  is  the  continuing  or  surviving  corporation)  of  evidences  of
indebtedness  or assets  (other  than a regular  quarterly  cash  dividend  or a
dividend  payable  in  Preferred  Shares)  or  subscription  rights or  warrants
(excluding those referred to in Section 11(b) hereof),  the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price  in  effect  immediately  prior to such  record  date by a  fraction,  the
numerator  of  which  shall be the then  current  per  share  market  price  (as
determined  pursuant to Section 11(d)  hereof) of the  Preferred  Shares on such
record  date,  less the fair market  value (as  determined  in good faith by the
Board of Directors of the Corporation, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the  holders of the  Rights) of the  portion of the assets or  evidences  of
indebtedness  so to be  distributed or of such  subscription  rights or warrants
applicable to one  Preferred  Share and the  denominator  of which shall be such
current per share market price of the Preferred  Shares.  Such adjustments shall
be made successively whenever

                                       14
<PAGE>

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.

          (f) 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  thirty  (30)  consecutive
Trading Days (as such term is hereinafter  defined) immediately prior to and not
including 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 thirty (30) Trading Days after and not
including the ex-dividend date for such dividend or distribution,  or the record
date for such subdivision,  combination or  reclassification,  then, and in each
such case, the current per share market price shall be appropriately adjusted to
reflect the current  market price per share  equivalent  of such  Security.  The
closing  price for each day shall be the last sale price,  regular  way,  or, in
case no such sale takes  place on such day,  the  average of the closing bid and
asked  prices,  regular  way,  in  either  case  as  reported  in the  principal
consolidated  transaction  reporting system with respect to securities listed or
admitted to trading on the New York Stock  Exchange  or, if the  Security is not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal  consolidated  transaction reporting system with respect to securities
listed on the principal  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 the National  Association of Securities  Dealers,  Inc. Automated
Quotations  System  ("NASDAQ")  or such other  system then in use, or, if on any
such date the  Security is not quoted by any such  organization,  the average of
the closing bid and asked  prices as furnished  by a  professional  market maker
making a market  in the  Security  selected  by the  Board of  Directors  of the
Corporation.  If on any such date no such market maker is making a market in the
Security,  the fair value of the  Security  on such date as  determined  in good
faith by the  Board of  Directors  of the  Corporation  shall be used.  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.

          (g) For the purpose of any  computation  hereunder,  the  "current per
share market  price" of the  Preferred  Shares shall be determined in accordance
with the method set forth in Section  11(d)(i).  If the Preferred Shares are not
publicly  traded,  the "current per share market price" of the Preferred  Shares
shall be  conclusively  deemed to be the current per share  market  price of the
Common Shares as determined pursuant to Section 11(d)(i) (appropriately adjusted
to reflect any stock  split,  stock  dividend or similar  transaction  occurring
after the date  hereof),  multiplied  by one  thousand  (1,000).  If neither the
Common Shares nor the Preferred Shares are publicly held or so listed or traded,
"current  per  share  market  price"  shall  mean the fair  value  per  share as
determined in good faith by the Board of Directors of the Corporation,

                                       15
<PAGE>

whose  determination  shall be  described  in a statement  filed with the Rights
Agent and shall be binding on the Rights Agent and the holders of the Rights.

          (h) Anything herein to the contrary notwithstanding,  no adjustment in
the Purchase  Price shall be required  unless such  adjustment  would require an
increase or decrease of at least 1% in the Purchase  Price;  provided,  however,
that any  adjustments  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  one-thousandth  of a  Preferred  Share  or  one
ten-thousandth   of  any  other   share  or   security   as  the  case  may  be.
Notwithstanding  the  first  sentence  of this  Section  11(e),  any  adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the  transaction  which  mandates such  adjustment or
(ii) the Final Expiration Date.

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

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

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

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

                                       16
<PAGE>

thousandth)  obtained by dividing the Purchase Price in effect immediately prior
to adjustment of the Purchase Price by the Purchase Price in effect  immediately
after  adjustment of the Purchase  Price.  The  Corporation  shall make a public
announcement  of its  election  to adjust the number of Rights,  indicating  the
record date for the  adjustment,  and,  if known at the time,  the amount of the
adjustment  to be made, a copy of which public  announcement  shall  promptly be
delivered  to the Rights  Agent.  This  record date may be the date on which the
Purchase Price is adjusted or any day thereafter, but, if the Right Certificates
have been  issued,  shall be at least ten (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
Corporation  shall,  as  promptly as  practicable,  cause to be  distributed  to
holders of record of Right  Certificates on such record date Right  Certificates
evidencing,  subject to Section 14 hereof,  the additional  Rights to which such
holders shall be entitled as a result of such  adjustment,  or, at the option of
the  Corporation,  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
Corporation,  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.

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

          (n) 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 Corporation may elect to defer (with prompt notice to the
Rights  Agent of any such  election)  until  the  occurrence  of such  event the
issuance  to the  holder of any  Right  exercised  after  such  record  date the
Preferred Shares, Common Shares or other securities of the Corporation,  if any,
issuable upon such exercise over and above the Preferred  Shares,  Common Shares
or other  securities of the Corporation,  if any,  issuable upon exercise on the
basis of the  Purchase  Price in  effect  prior  to such  adjustment;  provided,
however,  that the Corporation  shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares or other securities, as the case may be, upon the occurrence of the event
requiring such adjustment.

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

                                       17
<PAGE>

          (p) The  Corporation  covenants  and agrees  that it shall not, at any
time after the  Distribution  Date, (i) consolidate with any other Person (other
than a Subsidiary of the  Corporation  in a  transaction  which does not violate
Section  11(n)  hereof),  (ii) merge with or into any other Person (other than a
Subsidiary of the  Corporation in a transaction  which does not violate  Section
11(n)  hereof),  or (iii) sell or transfer (or permit any  Subsidiary to sell or
transfer),  in one transaction,  or a series of related transactions,  assets or
earning  power  aggregating  more than 50% of the assets or earning power of the
Corporation  and its  Subsidiaries  (taken as a whole)  to any  other  Person or
Persons (other than the  Corporation  and/or any of its  Subsidiaries  in one or
more   transactions),   if  (x)  at  the  time  of  or  immediately  after  such
consolidation,  merger,  sale or  transfer  there  are  any  charter  or  by-law
provisions  or  any  rights,   warrants  or  other   instruments  or  securities
outstanding  or  agreements  in  effect  or other  actions  taken,  which  would
materially  diminish or otherwise eliminate the benefits intended to be afforded
by the Rights or (y) prior to,  simultaneously  with or  immediately  after such
consolidation,  merger or sale, the  stockholders of the Person who constitutes,
or would constitute,  the "Principal Party" for purposes of Section 13(a) hereof
shall have received a distribution of Rights  previously owned by such Person or
any of its Affiliates and Associates.  The Corporation  shall not consummate any
such   consolidation,   merger,  sale  or  transfer  unless  prior  thereto  the
Corporation  and such other  Person  shall have  executed  and  delivered to the
Rights Agent a supplemental  agreement  evidencing  compliance with this Section
11(p).

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

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

     Section 12.  Certificate  of Adjusted  Purchase  Price or Number of Shares.
Whenever an  adjustment  is made as  provided  in Sections 11 or 13 hereof,  the
Corporation  shall  promptly  (a)  prepare  a  certificate  setting  forth  such
adjustment,  and  a  brief  reasonably  detailed  statement  of  the  facts  and
computations accounting for such adjustment,  (b) file with the Rights Agent and
with each transfer  agent for the Common Shares and the Preferred  Shares a copy
of such  certificate  and (c) mail a brief  summary  thereof to each holder of a
Right  Certificate in accordance with Section 25 hereof.  The Rights Agent shall
be fully  protected  in relying on any such  certificate  and on any  adjustment
therein contained and shall have no duty with respect to and shall not be deemed
to have  knowledge of 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 that,  on or following the Shares  Acquisition  Date,
directly or indirectly,  (x) the Corporation  shall  consolidate  with, or merge
with and into, any Interested Stockholder or, if in such merger or consolidation
all holders of Common Stock are not treated

                                       18
<PAGE>

alike, any other Person,  (y) the Corporation  shall  consolidate with, or merge
with,  any Interested  Stockholder  or, if in such merger or  consolidation  all
holders  of Common  Stock are not  treated  alike,  any  other  Person,  and the
Corporation   shall  be  the   continuing  or  surviving   corporation  of  such
consolidation  or merger (other than, in a case of any transaction  described in
(x)  or  (y),  a  merger  or  consolidation  which  would  result  in all of the
securities  generally  entitled to vote in the  election of  directors  ("voting
securities") of the Corporation outstanding immediately prior thereto continuing
to  represent  (either  by  remaining  outstanding  or by being  converted  into
securities  of  the  surviving  entity)  all  of the  voting  securities  of the
Corporation or such surviving entity  outstanding  immediately after such merger
or  consolidation  and the holders of such  securities  not having  changed as a
result of such merger or  consolidation),  or (z) the Corporation  shall sell or
otherwise  transfer (or one or more of its Subsidiaries  shall sell or otherwise
transfer),  in one  transaction or a series of related  transactions,  assets or
earning  power  aggregating  more than 50% of the assets or earning power of the
Corporation  and  its  Subsidiaries   (taken  as  a  whole)  to  any  Interested
Stockholder or  Stockholders  or, if in such  transaction  all holders of Common
Stock are not treated alike, any other Person (other than the Corporation or any
Subsidiary of the Corporation in one or more transactions each of which does not
violate  Section 11(n) hereof),  then, and in each such case (except as provided
in Section 13(d) hereof), proper provision shall be made so that (i) each holder
of a Right, except as provided in Section 7(e) hereof, shall thereafter have the
right to receive, upon the exercise thereof at a price equal to the then current
Purchase  Price,  in accordance  with the terms of this Agreement and in lieu of
Preferred  Shares,  such number of freely tradable shares of common stock of the
Principal   Party  (as   hereinafter   defined),   not  subject  to  any  liens,
encumbrances,  rights of first refusal or other adverse  claims,  as shall equal
the result obtained by (A)  multiplying  the then current  Purchase Price by the
number of one  one-thousandths  of a  Preferred  Share for which a Right is then
exercisable (without taking into account any adjustment previously made pursuant
to Section  11(a)(ii))  and dividing that product by (B) 50% of the then current
per share market price of the Common Shares of such Principal Party  (determined
pursuant to Section 11(d) hereof) on the date of consummation of such Section 13
Event;  (ii) such  Principal  Party shall  thereafter  be liable for,  and shall
assume,  by virtue of such Section 13 Event,  all the  obligations and duties of
the Corporation  pursuant to this Agreement;  (iii) the term "Corporation" shall
thereafter be deemed to refer to such  Principal  Party,  it being  specifically
intended  that the  provisions  of  Section 11 hereof  shall  apply only to such
Principal Party following the first  occurrence of a Section 13 Event;  and (iv)
such Principal Party shall take such steps  (including,  but not limited to, the
reservation of a sufficient  number of its Common Shares) in connection with the
consummation  of any such  transaction  as may be  necessary  to assure that the
provisions  hereof shall  thereafter be applicable,  as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the exercise of
the Rights.

          (b)  "Principal  Party" shall mean (i) in the case of any  transaction
described  in clause  (x) or (y) of the first  sentence  of Section  13(a),  the
Person  that is the issuer of any  securities  into which  Common  Shares of the
Corporation are converted in such merger or consolidation,  and if no securities
are  so  issued,  the  Person  that  is  the  other  party  to  such  merger  or
consolidation (including, if applicable,  the Corporation if it is the surviving
corporation); and (ii) in the case of any transaction described in clause (z) of
the first sentence of Section 13(a),  the Person that is the party receiving the
greatest  portion of the assets or earning  power  transferred  pursuant to such
transaction or transactions; provided, however, that in any of the foregoing

                                       19
<PAGE>

cases, (1) if the Common Shares of such Person are not at such time and have not
been  continuously  over the preceding twelve (12) month period registered under
Section  12 of the  Exchange  Act,  and  such  Person  is a direct  or  indirect
Subsidiary  of another  Person  the Common  Shares of which are and have been so
registered, "Principal Party" shall refer to such other Person; (2) in case such
Person is a Subsidiary,  directly or  indirectly,  of more than one Person,  the
Common  Shares  of two or  more  of  which  are and  have  been  so  registered,
"Principal  Party" shall refer to whichever of such Persons is the issuer of the
Common Shares having the greatest  aggregate  market value; and (3) in case such
Person is owned,  directly or  indirectly,  by a joint venture  formed by two or
more Persons that are not owned, directly or indirectly, by the same Person, the
rules  set  forth in (1) and (2)  above  shall  apply to each of the  chains  of
ownership  having an  interest  in such  joint  venture  as if such party were a
"Subsidiary" of both or all of such joint venturers and the Principal Parties in
each such chain shall bear the  obligations  set forth in this Section 13 in the
same ratio as their  direct or  indirect  interests  in such  Person bear to the
total of such interests.

          (c) The  Corporation  shall  not  consummate  any such  consolidation,
merger,  sale or transfer  unless the  Principal  Party shall have a  sufficient
number of its  authorized  shares of common  stock which have not been issued or
reserved for issuance to permit the exercise in full of the Rights in accordance
with this Section 13 and unless prior thereto the Corporation and such Principal
Party shall have  executed  and  delivered  to the Rights  Agent a  supplemental
agreement  providing for the terms set forth in  paragraphs  (a) and (b) of this
Section 13 and further  providing that, as soon as practicable after the date of
any consolidation,  merger,  sale or transfer mentioned in paragraph (a) of this
Section 13, the Principal Party at its own expense shall:

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

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

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

     The  provisions  of this  Section 13 shall  similarly  apply to  successive
mergers or  consolidations  or sales or other  transfers.  The rights under this
Section 13 shall be in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) and shall survive any exercise thereof.

          (d)  Notwithstanding  anything  in  this  Agreement  to the  contrary,
Section 13 shall not be applicable to a transaction  described in  subparagraphs
(x) and (y) of Section  13(a) if: (i) such  transaction  is  consummated  with a
Person or Persons who acquired Common Shares

                                       20
<PAGE>

pursuant to a Permitted  Offer (or a wholly owned  Subsidiary of any such Person
or Persons);  (ii) the price per Common Share offered in such transaction is not
less than the price per Common Share paid to all holders of Common  Shares whose
shares were purchased  pursuant to such Permitted  Offer;  and (iii) the form of
consideration   offered  in  such  transaction  is  the  same  as  the  form  of
consideration  paid pursuant to such Permitted Offer.  Upon  consummation of any
such transaction  contemplated by this Section 13(d), all Rights hereunder shall
expire.

     Section 14. Fractional Rights and Fractional Shares.

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

          (b) The  Corporation  shall  not be  required  to issue  fractions  of
Preferred Shares (other than fractions which are one  one-thousandth or integral
multiples  of one  one-thousandth  of a Preferred  Share)  upon  exercise of the
Rights or to distribute  certificates which evidence fractional Preferred Shares
(other than fractions which are one  one-thousandth or integral multiples of one
one-thousandth of a Preferred Share).  Fractions of Preferred Shares in integral
multiples of one one-thousandth of a Preferred Share may, at the election of the
Corporation,  be evidenced by depositary  receipts,  pursuant to an  appropriate
agreement between the Corporation and a depositary selected by it; provided that
such agreement shall provide that the holders of such depositary  receipts shall
have the  rights,  privileges  and  preferences  to which they are  entitled  as
beneficial  owners  of the  Preferred  Shares  represented  by  such  depositary
receipts. In lieu of fractional Preferred Shares that are not one one-thousandth
or  integral   multiples  of  one  one-thousandth  of  a  Preferred  Share,  the
Corporation  shall pay to the registered  holders of Right  Certificates  at the
time such Rights are exercised as herein provided an amount in cash equal to the
same  fraction of the  current  market  value of one  Preferred  Share.  For the
purposes of this Section 14(b),  the current  market value of a Preferred  Share
shall be the closing

                                       21
<PAGE>

price of a Preferred Share (as determined  pursuant to Section 11(d)(ii) hereof)
for the Trading Day immediately prior to the date of such exercise.

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

          (d) The  holder of a Right by the  acceptance  of the Right  expressly
waives his right to receive any fractional  Rights or any fractional  share upon
exercise of a Right  (except as provided  above).  The Rights Agent shall not be
deemed to have  knowledge of, and shall have no duty in respect of, the issuance
of  fractional  Rights  or  fractional  shares  until  it  shall  have  received
instructions  from the  Corporation  concerning  the issuance of the  fractional
Rights or  fractional  shares  upon  which  instructions  the  Rights  Agent may
conclusively rely.

     Section  15.  Rights of  Action.  All  rights of action in  respect of this
Agreement,  excepting the rights of action given to the Rights Agent  hereunder,
are vested in the respective  registered holders of the Right Certificates (and,
prior to the  Distribution  Date, the registered  holders of the Common Shares);
and  any  registered   holder  of  any  Right  Certificate  (or,  prior  to  the
Distribution  Date,  of the Common  Shares),  without  the consent of the Rights
Agent  or of the  holder  of any  other  Right  Certificate  (or,  prior  to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit,  enforce, and may institute and maintain any suit, action or proceeding
against the Corporation 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, of the Common  Shares) in the manner  provided in such Right
Certificate  (or, prior to the  Distribution  Date, of the Common Shares) 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  Corporation  and the Rights
Agent and with every other holder of a Right that:

                                       22
<PAGE>

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

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

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

          (d)  notwithstanding  anything  in  this  Agreement  to the  contrary,
neither the  Corporation  nor the Rights  Agent shall have any  liability to any
holder  of a Right or a  beneficial  interest  in a Right or other  Person  as a
result of its inability to perform any of its  obligations  under this Agreement
by reason of any preliminary or permanent  injunction or other order,  judgment,
decree or ruling (whether interlocutory or final) 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 Corporation must use its
best  efforts to have any such  order,  decree,  judgment,  or ruling  lifted or
otherwise overturned as soon as possible.

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

     Section 18.  Concerning the Rights Agent. The Corporation  agrees to pay to
the  Rights  Agent  reasonable  compensation  for all  services  rendered  by it
hereunder and, from time to time, on demand of the Rights Agent,  its reasonable
expenses and counsel fees and other  disbursements  incurred in the preparation,
execution,  delivery, amendment,  administration and execution of this Agreement
and the exercise and performance of its duties  hereunder.  The Corporation also
agrees to indemnify the Rights Agent for, and to hold it harmless against, any

                                       23
<PAGE>

loss, liability,  damage,  judgment,  fine, penalty, claim, demand,  settlement,
cost or expense (including, without limitation, the reasonable fees and expenses
of legal counsel), incurred without gross negligence or bad faith on the part of
the Rights Agent (which gross  negligence  or bad faith must be  determined by a
final,  non-appealable order, judgment, decree or ruling of a court of competent
jurisdiction),  for any action taken, suffered or omitted by the Rights Agent in
connection with the acceptance, administration,  exercise and performance of its
duties under this Agreement.  The costs and expenses  incurred in enforcing this
right of  indemnification  shall be paid by the  Corporation.  The provisions of
this  Section 18 and Section 20 below  shall  survive  the  termination  of this
Agreement,  the  exercise or  expiration  of the Rights and the  resignation  or
removal of the Rights Agent.

     The Rights Agent shall be  authorized  to rely on,  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 acceptance  and  administration  of this
Agreement  in reliance  upon any Right  Certificate  or  certificate  for Common
Shares or for other securities of the  Corporation,  instrument of assignment or
transfer, power of attorney, endorsement,  affidavit, letter, notice, direction,
consent,  certificate,  statement,  or other  paper or  document  (collectively,
"Documents") believed by it to be genuine and to be signed,  executed and, where
necessary, verified or acknowledged, by the proper Person or Persons. The Rights
Agent  shall not be  deemed  to have  knowledge  of,  and shall  have no duty in
respect of, any such  Documents,  until it receives  notice or  instructions  in
respect  thereof.  In no case  will the  Rights  Agent be  liable  for  special,
indirect,  punitive,  incidental  or  consequential  loss or  damage of any kind
whatsoever,  even if the Rights Agent has been advised of the likelihood of such
loss or damage.

     Section 19. Merger or  Consolidation or Change of Name of Rights Agent. Any
Person into which the Rights Agent or any  successor  Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a
party,  or any  Person  succeeding  to the  stock  transfer  or the  shareholder
services  business of the Rights Agent or any successor  Rights Agent,  shall be
the successor to the Rights Agent under this Agreement  without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided  that such Person  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 a 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 or in the name of the successor Rights Agent; and in all
such cases such Right  Certificates  shall have the full force  provided  in the
Right  Certificates  and in this Agreement.  In case at any time the name of the
Rights  Agent  shall be changed  and at such time any of the Right  Certificates
shall have been countersigned but not delivered,  the Rights Agent may adopt the
countersignature  under  its  prior  name  and  deliver  Right  Certificates  so
countersigned;  and in case at that time any of the Right Certificates shall not
have  been   countersigned,   the  Rights  Agent  may  countersign   such  Right
Certificates  either in its prior name or in its changed  name;  and in all such
cases such Right  Certificates  shall have the full force  provided in the Right
Certificates and in this Agreement.

                                       24
<PAGE>

     Section 20. Duties of Rights Agent.  The Rights Agent undertakes only those
duties  and  obligations  expressly  imposed by this  Agreement  (and no implied
duties or obligations) upon the following terms and conditions,  by all of which
the  Corporation  and the  holders of Right  Certificates,  by their  acceptance
thereof, shall be bound:

          (a) The Rights Agent may consult with legal  counsel (who may be legal
counsel for the Corporation), and the advice or opinion of such counsel shall be
full and  complete  authorization  and  protection  to the Rights  Agent and the
Rights Agent shall incur no liability for or in respect of, to any action taken,
suffered or omitted by it in good faith and in accordance with such opinion.

          (b) Whenever in the performance of its duties under this Agreement the
Rights  Agent  shall  deem it  necessary  or  desirable  that any fact or matter
(including,  without  limitation,  the identity of an  Acquiring  Person and the
determination  of the  current  market  price  of any  Security)  be  proved  or
established by the Corporation prior to taking, suffering or omitting any action
hereunder,  such fact or matter  (unless  other  evidence in respect  thereof be
herein  specifically  prescribed)  may be deemed to be  conclusively  proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary  of the  Corporation  and  delivered  to the  Rights  Agent;  and such
certificate  shall be full  authorization and protection to the Rights Agent and
the Rights Agent shall incur no liability for or in respect of any action taken,
suffered or omitted 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 Corporation and
any other Person only for its own gross  negligence or bad faith (as  determined
by a final,  non-appealable  order,  judgment,  decree  or  ruling of a court of
competent jurisdiction).  Anything to the contrary notwithstanding,  in no event
shall the Rights Agent be liable for special, punitive, indirect,  consequential
or incidental loss or damage of any kind  whatsoever  (including but not limited
to lost profits), even if the Rights Agent has been advised of the likelihood of
such loss or damage.  Any  liability  of the  Rights  Agent  under  this  Rights
Agreement  will be limited to the amount of fees paid by the  Corporation to the
Rights Agent.

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

          (e) The Rights  Agent shall not have any  liability  for, nor be under
any liability or  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 liable or responsible for
any breach by the  Corporation  of any covenant or  condition  contained in this
Agreement or in any Rights  Certificate;  nor shall it be liable or  responsible
for any  change  in the  exercisability  of the  Rights  (including  the  Rights
becoming  null and void  pursuant  to Section  7(e)  hereof)  or any  adjustment
required under the provisions of Section 11 or Section 13 hereof or liable or

                                       25
<PAGE>

responsible  for the  manner,  method or amount  of any such  adjustment  or the
ascertaining  of the existence of facts that would  require any such  adjustment
(except with respect to the exercise of Rights  evidenced by Right  Certificates
after receipt of the certificate  described in Section 12 hereof);  nor shall it
by any act hereunder be deemed to make any  representation or warranty as to the
authorization  or  reservation  of any  Preferred  Shares or Common Shares to be
issued pursuant to this Agreement or any Right  Certificate or as to whether any
Preferred Shares or Common Shares will, when issued,  be validly  authorized and
issued, fully paid and non-assessable.

          (f) The Corporation 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
one of the Chairman of the Board,  the Chief Executive  Officer,  the President,
any Vice President,  the Treasurer or the Secretary of the  Corporation,  and to
apply to such officers for advice or instructions in connection with its duties,
and such advice or instructions  shall be full  authorization  and protection to
the Rights Agent and the Rights Agent shall incur no liability for or in respect
of any action  taken,  suffered or omitted by it in good faith or lack of action
in  accordance  with the advice or  instructions  of any such officer or for any
delay in acting while waiting for those advice or instructions.  Any application
by the Rights Agent for written  instructions  from the Corporation  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 Rights  Agreement  and the date on or
after which such action  shall be taken or  suffered or such  omission  shall be
effective.  The Rights Agent shall not be liable or  responsible  for any action
taken or suffered  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 Corporation  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  instruction  from any one of the
Chairman of the Board,  the Chief  Executive  Officer,  the President,  any Vice
President, the Treasurer or the Secretary of the Corporation in response to such
application specifying the action to be taken, suffered or omitted.

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

                                       26
<PAGE>

any loss to the  Corporation  or any other Person  resulting  from any such act,
default,  neglect or  misconduct,  absent gross  negligence  or bad faith in the
selection  and  continued  employment  thereof  (each as  determined by a final,
non-appealable  order,  judgment,  decree  or  ruling  of a court  of  competent
jurisdiction).

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

          (k) If,  with  respect to any Rights  Certificate  surrendered  to the
Rights Agent for exercise or transfer,  the certificate  attached to the form of
assignment  or form of  election to  purchase,  as the case may be, has not been
completed,  the Rights  Agent shall not take any further  action with respect to
such  requested   exercise  of  transfer   without  first  consulting  with  the
Corporation.

     Section  21.  Change of Rights  Agent.  The Rights  Agent or any  successor
Rights Agent may resign and be discharged  from its duties under this  Agreement
upon thirty (30) days' notice in writing mailed to the  Corporation  and to each
transfer  agent of the  Common  Shares  or  Preferred  Shares by  registered  or
certified  mail,  and to the holders of the Right  Certificates  by  first-class
mail. The Corporation may remove the Rights Agent or any successor  Rights Agent
upon  thirty  (30)  days'  notice  in  writing,  mailed to the  Rights  Agent or
successor  Rights Agent,  as the case may be, and to each transfer  agent of the
Common  Shares or  Preferred  Shares by  registered  or certified  mail,  and to
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
Corporation  shall appoint a successor to the Rights Agent.  If the  Corporation
shall fail to make such  appointment  within a period of thirty  (30) days after
giving  notice of such removal or after it has been  notified in writing of such
resignation or incapacity by the resigning or  incapacitated  Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the  Corporation),  then the registered  holder of
any Right  Certificate may apply to any court of competent  jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Corporation or by such a court, shall be (a) a Person organized and doing
business under the laws of the United States or of the States of Washington, New
York or  Delaware  (or of any other  state of the United  States so long as such
Person is  authorized  to do business in the States of  Washington,  New York or
Delaware),  in good standing,  which 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  $50,000,000,  or (b) an
Affiliate of a Person  described in clause (a) hereof.  After  appointment,  the
successor Rights Agent shall be vested with the same powers,  rights, duties and
responsibilities  as if it had been  originally  named as Rights  Agent  without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and
execute and deliver any further assurance, conveyance, act or deed necessary for
the  purpose.  Not later than the  effective  date of any such  appointment  the
Corporation  shall file notice  thereof in writing with the  predecessor  Rights
Agent and each transfer agent of the Common Shares or Preferred Shares, and mail
a notice thereof in writing to the registered holders of the Right Certificates.
Failure to give any notice  provided  for in this  Section 21,  however,  or any
defect therein, shall not affect the legality or validity of the resignation or

                                       27
<PAGE>

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  Corporation
may, at its option, issue new Right Certificates  evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the  Purchase  Price  and the  number  or kind or  class of  shares  or other
securities  or  property  purchasable  under  the  Right  Certificates  made  in
accordance with the provisions of this Agreement.

     In  addition,  in  connection  with the  issuance or sale of Common  Shares
following the Distribution  Date and prior to the earlier of the Redemption Date
and the Close of Business on the Final  Expiration  Date,  the  Corporation  (a)
shall with respect to Common  Shares so issued or sold  pursuant to the exercise
of  stock  options  or  under  any  employee  plan or  arrangement,  or upon the
exercise,  conversion or exchange of securities,  notes or debentures  issued by
the  Corporation,  and (b) may,  in any  other  case,  if  deemed  necessary  or
appropriate  by  the  Board  of  Directors  of  the  Corporation,   issue  Right
Certificates  representing  the appropriate  number of Rights in connection with
such issuance or sale; provided,  however, that (i) the Corporation shall not be
obligated to issue any such Right  Certificates  if, and to the extent that, the
Corporation  shall be advised  by  counsel  that such  issuance  would  create a
significant  risk of material adverse tax consequences to the Corporation or the
Person  to whom  such  Right  Certificate  would  be  issued,  and (ii) no Right
Certificate shall be issued if, and to the extent that,  appropriate  adjustment
shall otherwise have been made in lieu of the issuance thereof.

     Section 23. Redemption and Termination.

          (a) The Board of  Directors  of the  Corporation  may,  at its option,
redeem all but not less than all of the then outstanding  Rights at a redemption
price of $.001 per  Right,  as such  amount  may be  appropriately  adjusted  to
reflect any stock split, stock dividend or similar  transaction  occurring after
the date hereof  (such  redemption  price being  hereinafter  referred to as the
"Redemption Price"), at any time prior to the earlier of (x) the occurrence of a
Section  11(a)(ii)  Event, or (y) the Close of Business on the Final  Expiration
Date.

          (b) In addition, the Board of Directors of the Corporation may, at its
option,  at any time following the occurrence of a Section  11(a)(ii)  Event and
the  expiration of any period during which the holder of Rights may exercise the
rights under Section  11(a)(ii) but prior to any Section 13 Event redeem all but
not less than all of the then outstanding  Rights at the Redemption Price (x) in
connection  with any merger,  consolidation  or sale or other  transfer  (in one
transaction or in a series of related  transactions)  of assets or earning power
aggregating  50% or  more  of the  earning  power  of the  Corporation  and  its
subsidiaries  (taken as a whole)  in which all  holders  of  Common  Shares  are
treated alike and not  involving  (other than as a holder of Common Shares being
treated like all other such holders) an Interested Stockholder or (y)(aa) if and
for so long as the Acquiring  Person is not thereafter  the Beneficial  Owner of
15% of the Common  Shares,  and (bb) at the time of  redemption no other Persons
are Acquiring Persons.

          (c)  Notwithstanding  anything  in  Section  23(a)(i)  and (ii) to the
contrary,  in the case the  Corporation  is not permitted to pay the  Redemption
Price under the terms of any

                                       28
<PAGE>

agreement  or  instrument  evidencing  indebtedness  for  borrowed  money of the
Corporation or any Subsidiary, currently in existence or executed after the date
hereof, the payment of the Redemption Price shall be deferred until such time as
such  payment  becomes  permitted  under  the  terms  of any such  agreement  or
instrument;  provided, however, that such deferral shall not, in any way, affect
the right and ability of the Board of Directors of the Corporation to redeem the
Rights.

          (d) In the case of a  redemption  permitted  under  Section  23(a)(i),
immediately  upon the date for redemption set forth (or determined in the manner
specified) in a resolution of the Board of Directors of the Corporation ordering
the  redemption  of the Rights,  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,  except as  provided in Section
23(b), to receive the Redemption  Price for each Right so held. In the case of a
redemption  permitted  only under Section  23(a)(ii),  the right to exercise the
Rights will terminate and represent  only,  except as provided in Section 23(b),
the right to receive the  Redemption  Price upon the later of ten Business  Days
following the giving of such notice or the expiration of any period during which
the rights under  Section  11(a)(ii)  may be exercised.  The  Corporation  shall
promptly give public notice and notify the Rights Agent 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 ten (10) calendar days
after  such  date for  redemption  set  forth in a  resolution  of the  Board of
Directors  ordering the redemption of the Rights,  the Corporation  shall mail a
notice of redemption to all the holders of the then outstanding  Rights at their
last  addresses as they appear upon the  registry  books of the Rights Agent or,
prior to the Distribution  Date, on the registry books of the transfer agent for
the Common  Shares.  Any notice  which is mailed in the manner  herein  provided
shall be deemed given,  whether or not the holder receives the notice. Each such
notice  of  redemption  will  state  the  method  by which  the  payment  of the
Redemption Price will be made. Neither the Corporation nor any of its Affiliates
or Associates  may redeem,  acquire or purchase for value any Rights at any time
in any manner  other  than that  specifically  set forth in this  Section 23 and
other  than in  connection  with the  purchase  of  Common  Shares  prior to the
Distribution Date.

          (e)  The  Corporation  may,  at  its  option,  discharge  all  of  its
obligations with respect to the Rights by (i) issuing a press release announcing
the manner of  redemption of the Rights in  accordance  with this  Agreement and
(ii) mailing  payment of the Redemption  Price to the registered  holders of the
Rights at their  last  addresses  as they  appear on the  registry  books of the
Rights Agent or, prior to the  Distribution  Date, on the registry  books of the
Transfer  Agent of the Common  Shares,  and upon such  action,  all  outstanding
Rights and Right  Certificates shall be null and void without any further action
by the Corporation.

     Section 24. Exchange.

          (a) The Board of Directors of the Corporation  may, at its option,  at
any time after the time that any Person  becomes an Acquiring  Person,  exchange
all or part of the then  outstanding  and  exercisable  Rights  (which shall not
include  Rights  that have become null and void  pursuant to the  provisions  of
Section 7(e) and Section  11(a)(ii) hereof) for Common Shares of the Corporation
at an exchange  ratio of one Common Share per Right,  appropriately  adjusted to
reflect any stock split, stock dividend or similar  transaction  occurring after
the date hereof

                                       29
<PAGE>

(such exchange  ratio being  hereinafter  referred to as the "Exchange  Ratio").
Notwithstanding  the foregoing,  the Board of Directors of the Corporation shall
not be  empowered  to effect such  exchange at any time after any Person  (other
than the Corporation,  any Subsidiary of the  Corporation,  any employee benefit
plan of the Corporation or any such Subsidiary, any Person organized,  appointed
or established by the  Corporation for or pursuant to the terms of any such plan
or any trustee,  administrator  or fiduciary of such a plan),  together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Common Shares then outstanding.

          (b)  Immediately  upon the  action  of the Board of  Directors  of the
Corporation  ordering the exchange of any Rights  pursuant to subsection  (a) of
this Section 24 and without any further action and without any notice, the right
to exercise  such Rights shall  terminate  and the only right  thereafter of the
holders of such Rights shall be to receive that number of Common Shares equal to
the number of such Rights held by such holder  multiplied by the Exchange Ratio.
The Corporation shall promptly give public notice and notify the Rights Agent of
any such exchange;  provided,  however,  that the failure to give, or any defect
in, such notice shall not affect the validity of such exchange.  The Corporation
promptly  shall mail a notice of any such exchange to all of the holders of such
Rights at their last  addresses  as they appear upon the  registry  books of the
Rights Agent.  Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange  will state the method by which the  exchange of the Common  Shares for
Rights will be effected and, in the event of any partial exchange, the number of
Rights will be exchanged.  Any partial exchange shall be effected pro rata based
on the number of Rights  (other  than  Rights  which have  become  null and void
pursuant to the provisions of Section 7(e) and Section 11(a)(ii) hereof) held by
each holder of Rights.

          (c) In any exchange  pursuant to this Section 24, the Corporation,  at
its option, may substitute  Preferred Shares (or equivalent preferred shares, as
such term is  defined  in Section  11(b)  hereof)  for some or all of the Common
Shares  exchangeable for Rights, at the initial rate of one  one-thousandth of a
Preferred  Share (or  equivalent  preferred  share) for each  Common  Share,  as
appropriately  adjusted  to  reflect  adjustments  in the  voting  rights of the
Preferred  Shares  pursuant  to the terms  thereof,  so that the  fraction  of a
Preferred  Share  delivered  in lieu of each  Common  Share  shall have the same
voting rights as one Common Share.

          (d) The Board of Directors of the Corporation  shall not authorize any
exchange transaction referred to in Section 24(a) hereof unless at the time such
exchange is  authorized  there shall be  sufficient  Common  Shares or Preferred
Shares issued but not  outstanding,  or authorized  but unissued,  to permit the
exchange of Rights as contemplated in accordance with this Section 24.

     Section 25. Notice of Certain Events.

          (a) In case the  Corporation  shall  propose  (i) to pay any  dividend
payable in stock of any class to the holders of its Preferred  Shares or to make
any other  distribution  to the holders of its  Preferred  Shares  (other than a
regularly  quarterly  cash  dividend),  (ii)  to  offer  to the  holders  of its
Preferred  Shares  rights  or  warrants  to  subscribe  for or to  purchase  any
additional  Preferred  Shares  or  shares  of  stock of any  class or any  other
securities, rights or options, (iii) to

                                       30
<PAGE>

effect  any   reclassification   of  its   Preferred   Shares   (other   than  a
reclassification   involving  only  the  subdivision  of  outstanding  Preferred
Shares),  (iv) to effect  any  consolidation  or  merger  into or with any other
Person (other than a Subsidiary of the  Corporation in a transaction  which does
not violate  Section 11(n) hereof),  or to effect any sale or other transfer (or
to permit one or more of its  Subsidiaries to effect any sale or other transfer)
in one or more  transactions,  of 50% or more of the assets or earning  power of
the Corporation and its  Subsidiaries  (taken as a whole) to any other Person or
Persons (other than the  Corporation  and/or any of its  Subsidiaries  in one or
more transactions  each of which does not violate Section 11(n) hereof),  or (v)
to effect the liquidation,  dissolution or winding up of the Corporation,  then,
in each such case,  the  Corporation  shall give to the Rights Agent and to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
such  proposed  action  and file a  certificate  with the  Rights  Agent to that
effect,  which  shall  specify  the record  date for the  purposes of such stock
dividend,  or  distribution  of rights or  warrants,  or the date on which  such
reclassification,    consolidation,   merger,   sale,   transfer,   liquidation,
dissolution,  or  winding  up is to take  place  and the  date of  participation
therein by the holders of the Preferred Shares, if any such date is to be fixed,
and such  notice  shall be so given in the case of any action  covered by clause
(i) or (ii) above at least  twenty (20)  calendar  days prior to the record date
for determining holders of the Preferred Shares for purposes of such action, and
in the case of any such other  action,  at least twenty (20) calendar days prior
to the date of the taking of such proposed  action or the date of  participation
therein by the holders of the Preferred Shares, whichever shall be the earlier.

          (b) In case of a Section  11(a)(ii)  Event,  then (i) the  Corporation
shall  as  soon  as  practicable  thereafter  give  to  each  holder  of a Right
Certificate and the Rights Agent, 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) hereof,
and (ii) all references in the preceding paragraph (a) to Preferred Shares shall
be deemed  thereafter to refer also to Common  Shares  and/or,  if  appropriate,
other securities of the Corporation.

     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 Corporation shall be sufficiently given or made in writing and if sent
by first-class mail, postage prepaid,  addressed (until another address is filed
in writing with the Rights Agent) as follows:

     Aptimus, Inc.
     95 S.  Jackson Street, Suite 300
     Seattle, WA 98026
     Attention: General Counsel

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

     Mellon Investor Services LLC
     520 Pike Street, Suite 1220

                                       31
<PAGE>

     Seattle, WA 98101
     Attention:  Relationship Manager

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

     Section 27. Supplements and Amendments.  Except as set forth in the next to
last  sentence  of  this  Section  28,  prior  to  the  Distribution  Date,  the
Corporation  may and the Rights  Agent  shall,  if the  Corporation  so directs,
supplement or amend any provision of this Agreement  without the approval of any
holders  of  certificates   representing  Common  Shares.  From  and  after  the
Distribution  Date,  the  Corporation  may and the Rights  Agent  shall,  if the
Corporation so directs,  supplement or amend this Agreement without the approval
of any holders of Right Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision  contained  herein which may be defective or
inconsistent with any other provisions herein,  (iii) to shorten or lengthen any
time period  hereunder or (iv) to change or supplement the provisions  hereunder
in any manner which the  Corporation  may deem  necessary or desirable and which
shall not adversely  affect the  interests of the holders of Right  Certificates
(other than an  Acquiring  Person or an  Affiliate  or Associate of an Acquiring
Person);  provided,  however,  that this  Agreement may not be  supplemented  or
amended to  lengthen,  pursuant  to clause  (iii) of this  sentence,  (A) a time
period  relating  to when the Rights may be  redeemed at such time as the Rights
are  not  then  redeemable,  or (B)  any  other  time  period  unless  any  such
lengthening is for the purpose of protecting, enhancing or clarifying the rights
of,  and/or the  benefits  to, the  holders of Rights.  Upon the  delivery  of a
certificate from an appropriate officer of the Corporation which states that the
proposed supplement or amendment is in compliance with the terms of this Section
28, and if requested by the Rights Agent an opinion of counsel, the Rights Agent
shall execute such  supplement or  amendment,  provided that such  supplement or
amendment  does not affect  the  Rights  Agent's  rights,  duties,  liabilities,
obligations or immunities under this Agreement.  Prior to the Distribution Date,
the  interests  of the  holders of Rights  shall be deemed  coincident  with the
interests of the holders of Common Shares.

     Section 28.  Determination and Actions by the Board of Directors,  etc. The
Board of  Directors  of the  Corporation  shall  have the  exclusive  power  and
authority to  administer  this  Agreement  and to exercise all rights and powers
specifically  granted  to the  Board of  Directors  of the  Corporation,  or the
Corporation,  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 the Agreement  and whether any proposed  amendment  adversely  affects the
interests  of the  holders  of Right  Certificates).  For all  purposes  of this
Agreement,  any  calculation of the number of Common Shares or other  securities
outstanding at any particular  time,  including for purposes of determining  the
particular  percentage of such outstanding Common Shares or any other securities
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

                                       32
<PAGE>

Regulations  under the Exchange Act as in effect on the date of this  Agreement.
All such actions,  calculations,  interpretations and determinations (including,
for purposes of clause (y) below,  all omissions  with respect to the foregoing)
which  are done or made by the Board of  Directors  of the  Corporation  in good
faith (and the Rights  Agent shall be able to assume that the Board of Directors
of the Corporation acted in such good faith), shall (x) be final, conclusive and
binding  on the  Corporation,  the  Rights  Agent,  the  holders  of  the  Right
Certificates  and all other Persons,  and (y) not subject the Board of Directors
of the  Corporation  to any liability to the holders of the Right  Certificates.
The  Rights  Agent is  entitled  always to  assume  the  Corporation's  Board of
Directors  acted  in good  faith  and  shall  be fully  protected  and  incur no
liability in reliance thereon.

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

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

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

     Section  32.  Governing  Law.  This  Agreement,  each  Right and each Right
Certificate  issued  hereunder  shall be deemed to be a contract  made under the
laws of the State of  Washington  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 that all  provisions
regarding  the rights,  duties,  liabilities,  obligations  or immunities of the
Rights Agent shall be governed by and construed in  accordance  with the laws of
the State of New York applicable to contracts made and to be performed  entirely
within such State.

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

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

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

                                       33
<PAGE>

                               APTIMUS, INC.

                               Attest:

                               By: /s/John Wade         By: /s/Timothy C. Choate
                               -------------------------------------------------
                               Name:  John Wade         Name: Timothy C. Choate
                               Title: Chief Financial   Title: Chief Executive
                                      Officer                  Officer

                               MELLON INVESTOR SERVICES LLC,
                               as Rights Agent

                               By: /s/ Thomas L. Cooper
                               -------------------------------------------------
                               Name:  Thomas L. Cooper
                               Title: Assistant Vice President

                                       34
<PAGE>

                                    Exhibit A

                                  APTIMUS, INC.
                     CERTIFICATE OF DESIGNATION, PREFERENCES
                             AND RIGHTS OF SERIES C
                                 PREFERRED STOCK

     We,  Timothy C.  Choate,  Chief  Executive  Officer  and John  Wade,  Chief
Financial Officer of Aptimus,  Inc., a corporation  organized and existing under
the laws of the State of Washington (the "Corporation"),  in accordance with the
provisions  of Section  23B10.060 of the Revised Code of  Washington,  do hereby
certify;

     That pursuant to the authority conferred upon the Board of Directors by the
Corporation's  Second  Amended  and  Restated  Articles  of  Incorporation  (the
"Articles  of  Incorporation"),  the Board of  Directors  adopted the  following
resolution on March 12, 2002 creating a series of ten thousand  (10,000)  shares
of Preferred Stock designated as Series C Preferred Stock;

     WHEREAS,  the Articles of  Incorporation  provide that the  Corporation  is
authorized  to issue  10,000,000  shares of  preferred  stock,  no par value per
share, now therefore it is:

     RESOLVED,  that pursuant to the authority  vested in the Board of Directors
of the Corporation by Section 2.2.1 of the Articles of  Incorporation,  a series
of Preferred  Stock of the  Corporation be, and it hereby is, created out of the
authorized  but unissued  shares of the capital stock of the  Corporation,  such
series to be  designated  Series C  Preferred  Stock  (the  "Series C  Preferred
Stock"),  to consist of ten thousand (10,000) shares, no par value per share, of
which the  preferences  and relative and other rights,  and the  qualifications,
limitations or restrictions thereof, shall be as follows:

     1.  Future  Increase  or  Decrease.  Subject  to  paragraph  4(e)  of  this
resolution,  the number of shares of said series may at any time or from time to
time be increased or  decreased by the Board of Directors  notwithstanding  that
shares of such series may be outstanding at such time of increase or decrease.

     2. Dividend Rate.

          (a) The  holders  of  shares  of  Series C  Preferred  Stock  shall be
entitled to receive,  when,  as and if declared by the Board of Directors out of
funds legally available for the purpose,  quarterly dividends payable in cash on
the first day of each January,  April,  July and October in each year (each such
date  being  referred  to  herein  as  a  "Quarterly  Dividend  Payment  Date"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
(the "First  Issuance")  of a share or fraction of a share of Series C Preferred
Stock, in an amount per

                                       1
<PAGE>

share  (rounded to the  nearest  cent) equal to the greater of (a) $10.00 or (b)
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 or
a subdivision of the outstanding shares of Common Stock (by  reclassification or
otherwise),  declared  on the Common  Stock,  of par no value per share,  of the
Corporation  (the "Common  Stock")  since the  immediately  preceding  Quarterly
Dividend Payment Date, or, with respect to the first Quarterly  Dividend Payment
Date,  since the first  issuance of any share or fraction of a share of Series C
Preferred Stock. In the event the Corporation  shall at any time after the First
Issuance  declare or pay any dividend on the Common  Stock  payable in shares of
Common Stock,  or effect a subdivision or combination  or  consolidation  of the
outstanding  shares of Common Stock (by  reclassification  or otherwise  than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which holders of
shares of Series C Preferred Stock were entitled immediately prior to such event
under 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) On or after the First Issuance,  no dividend on Common Stock shall
be declared unless concurrently therewith a dividend or distribution is declared
on the Series C  Preferred  Stock as provided in  paragraph  (a) above;  and the
declaration  of any  such  dividend  on the  Common  Stock  shall  be  expressly
conditioned  upon payment or  declaration of and provision for a dividend on the
Series C  Preferred  Stock as  above  provided.  In the  event  no  dividend  or
distribution  shall have been  declared  on the Common  Stock  during the period
between any Quarterly  Dividend  Payment Date and the next subsequent  Quarterly
Dividend  Payment Date, a dividend of $10.00 per share on the Series C Preferred
Stock  shall  nevertheless  be payable  on such  subsequent  Quarterly  Dividend
Payment Date.

          (c) Whenever  quarterly  dividends or other  dividends  payable on the
Series C  Preferred  Stock as provided  in  paragraph  (a) above are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared,  on shares of Series C Preferred Stock  outstanding  shall have
been paid in full,  the  Corporation  shall not 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 C
Preferred Stock, provided that the Corporation may at any time redeem,  purchase
or otherwise  acquire  shares of any such junior stock in exchange for shares of
any  stock  of  the  Corporation  ranking  junior  (as  to  dividends  and  upon
dissolution, liquidation or winding up) to the Series C Preferred Stock.

          (d) Dividends when, as and if declared by the Board of Directors shall
begin to accrue and be  cumulative on  outstanding  shares of Series C Preferred
Stock from the Quarterly  Dividend Payment Date next preceding the date of issue
of such  shares of Series C  Preferred  Stock,  unless the date of issue of such
shares is prior to the  record  date for the first  Quarterly  Dividend  Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such  shares,  or unless the date of issue is a  Quarterly  Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series C Preferred  Stock entitled to receive a quarterly  dividend
and before such Quarterly Dividend

                                       2
<PAGE>

Payment Date, in either of which events such dividends shall begin to accrue and
be cumulative  from such  Quarterly  Dividend  Payment Date.  Accrued but unpaid
dividends shall not bear interest.  The Board of Directors may fix a record date
for the  determination of holders of shares of Series C Preferred Stock entitled
to receive payment of a dividend  distribution  declared  thereon,  which record
date  shall be no more  than 30 days  prior to the date  fixed  for the  payment
thereof.

     3.  Dissolution,  Liquidation and Winding Up. In the event of any voluntary
or  involuntary  dissolution,  liquidation  or winding up of the  affairs of the
Corporation (hereinafter referred to as a "Liquidation"),  the holders of Series
C  Preferred  Stock  shall be  entitled to receive the greater of (i) $1,000 per
share,  plus an amount equal to accrued and unpaid  dividends and  distributions
thereon,  whether  or not  declared,  to the date of such  payment  and (ii) the
aggregate  amount  per share  equal to 1,000  times the  aggregate  amount to be
distributed  per share to  holders  of Common  Stock  (the  "Series C  Preferred
Liquidation  Preference").  In the event the Corporation shall at any time after
the First  Issuance  declare or pay any dividend on the Common Stock  payable in
shares of Common Stock, or effect a subdivision or combination or  consolidation
of the outstanding shares of Common Stock (by reclassification or otherwise than
by  payment of a dividend  in shares of Common  Stock)  into a greater or lesser
number of shares of Common Stock, then in each such case the aggregate amount to
which holders of shares of Series C Preferred  Stock were  entitled  immediately
prior  to  such  event  under  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.

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

          (a) Each share of Series C Preferred  Stock  shall  entitle the holder
thereof to one thousand (1,000) votes on all matters  submitted to a vote of the
stockholders of the Corporation.  In the event the Corporation shall at any time
after the First Issuance declare or pay any dividend on the Common Stock payable
in  shares  of  Common  Stock,   or  effect  a  subdivision  or  combination  or
consolidation of the outstanding shares of Common Stock (by  reclassification or
otherwise  than by  payment  of a  dividend  in shares of Common  Stock)  into a
greater or lesser number of shares of Common  Stock,  then in each such case the
aggregate  amount to which  holders of shares of Series C  Preferred  Stock were
entitled  immediately prior to such event under 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) Except as otherwise  provided  herein,  or by law, the Articles of
Incorporation or the By-laws of the Corporation (the "By-laws"),  the holders of
shares of Series C  Preferred  Stock and the  holders of shares of Common  Stock
shall  vote  together  as  one  class  on all  matters  submitted  to a vote  of
stockholders of the Corporation.

                                       3
<PAGE>

          (c) If and whenever dividends on the Series C Preferred Stock shall be
in arrears in an amount equal to six quarterly  dividend  payments,  then and in
such event the holders of the Series C Preferred Stock,  voting  separately as a
class (subject to the provisions of subparagraph  (d) below),  shall be entitled
at the next annual  meeting of the  stockholders  or at any  special  meeting to
elect  two (2)  directors.  Each  share of  Series C  Preferred  Stock  shall be
entitled to one vote, and holders of fractional shares shall have the right to a
fractional vote. Upon election, such directors shall become additional directors
of the  Corporation  and the authorized  number of directors of the  Corporation
shall  thereupon be  automatically  increased by such number of directors.  Such
right of the  holders  of Series C  Preferred  Stock to elect  directors  may be
exercised  until all dividends in default on the Series C Preferred  Stock shall
have been paid in full, and dividends for the current  dividend  period declared
and funds therefor set apart,  and when so paid and set apart,  the right of the
holders of Series C  Preferred  Stock to elect such  number of  directors  shall
cease, the term of such directors shall thereupon terminate,  and the authorized
number of directors of the Corporation  shall thereupon  return to the number of
authorized  directors  otherwise  in  effect,  but  subject  always  to the same
provisions for the vesting of such special voting rights in the case of any such
future dividend default or defaults.  The fact that dividends have been paid and
set  apart  as  required  by the  preceding  sentence  shall be  evidenced  by a
certificate  executed by the  President and the Chief  Financial  Officer of the
Corporation and delivered to the Board of Directors. The directors so elected by
holders of Series C Preferred Stock shall serve until the certificate  described
in the preceding sentence shall have been delivered to the Board of Directors or
until their respective successors shall be elected or appointed and qualify.

     At any time  when such  special  voting  rights  have been so vested in the
holders of the Series C Preferred  Stock,  the Secretary of the Corporation may,
and upon the  written  request  of the  holders  of record of 10% or more of the
number of shares of the Series C Preferred Stock then  outstanding  addressed to
such  Secretary  at the  principal  office  of the  Corporation  in the State of
Washington,  shall,  call a  special  meeting  of the  holders  of the  Series C
Preferred  Stock for the  election  of the  directors  to be  elected by them as
hereinabove  provided,  to be held in the case of such  written  request  within
forty (40) days after delivery of such request, and in either case to be held at
the  place  and  upon  the  notice  provided  by law and in the  By-laws  of the
Corporation for the holding of meetings of stockholders; provided, however, that
the  Secretary  shall not be required to call such a special  meeting (i) if any
such  request is  received  less than ninety (90) days before the date fixed for
the next ensuing  annual or special  meeting of  stockholders  or (ii) if at the
time any such request is received,  the holders of Series C Preferred  Stock are
not  entitled to elect such  directors by reason of the  occurrence  of an event
specified in the third sentence of subparagraph (d) below.

          (d) If, at any time when the holders of Series C  Preferred  Stock are
entitled  to  elect  directors  pursuant  to the  foregoing  provisions  of this
paragraph 4, the holders of any one or more additional series of Preferred Stock
are entitled to elect  directors by reason of any default or event  specified in
the Articles of  Incorporation,  as in effect at the time of the  certificate of
designation for such series,  and if the terms for such other additional  series
so permit,  the voting  rights of the two or more series  then  entitled to vote
shall be combined (with each series having a number of votes proportional to the
aggregate  liquidation  preference of its outstanding shares). In such case, the
holders of Series C Preferred  Stock and of all such other series then  entitled
so

                                       4
<PAGE>

to vote,  voting as a class,  shall elect such directors.  If the holders of any
such other  series (if  designated)  have elected  such  directors  prior to the
happening of the default or event  permitting  the holders of Series C Preferred
Stock to elect  directors,  or prior to a written  request  for the holding of a
special  meeting  being  received by the Secretary of the  Corporation  from the
holders  of not  less  than  10% of the  then  outstanding  shares  of  Series C
Preferred  Stock,  then such  directors so previously  elected will be deemed to
have been elected by and on behalf of the holders of Series C Preferred Stock as
well as such other  series,  without  prejudice  to the right of the  holders of
Series C  Preferred  Stock  to vote for  directors  if such  previously  elected
directors shall resign, cease to serve or fail to stand for reelection while the
holders of Series C Preferred  Stock are entitled to vote. If the holders of any
such other  series are  entitled  to elect in excess of two (2)  directors,  the
Series C Preferred  Stock shall not participate in the election of more than two
(2) such directors, and those directors whose terms first expire shall be deemed
to be the directors elected by the holders of Series C Preferred Stock; provided
that, if at the expiration of such terms the holders of Series C Preferred Stock
are entitled to vote in the election of directors  pursuant to the provisions of
this  paragraph 4, then the  Secretary of the  Corporation  shall call a meeting
(which  meeting  may be the annual  meeting or special  meeting of  stockholders
referred to in subparagraph  (c)) of holders of Series C Preferred Stock for the
purpose of electing replacement  directors (in accordance with the provisions of
this  paragraph  4) to be held on or  prior  to the  time of  expiration  of the
expiring terms referred to above.

          (e) Except as  otherwise  set forth  herein or  required  by law,  the
Articles of  Incorporation  or the By-laws,  holders of Series C 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 the taking of any  corporate  action.  No consent of the
holders  of  outstanding  shares  of  Series  C  Preferred  Stock  at  any  time
outstanding  shall be required in order to permit the Board of Directors to: (i)
increase  the  number of  authorized  shares of Series C  Preferred  Stock or to
decrease  such  number to a number  not below the sum of the number of shares of
Series C Preferred Stock then  outstanding and the number of shares with respect
to which there are outstanding rights to purchase; or (ii) issue Preferred Stock
which is  senior  to the  Series  C  Preferred  Stock,  junior  to the  Series C
Preferred Stock or on a parity with the Series C Preferred Stock.

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

                                       5
<PAGE>

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.

     6.  Redemption.  The  shares  of  Series C  Preferred  Stock  shall  not be
redeemable.

     7. Conversion  Rights. The Series C Preferred Stock is not convertible into
Common Stock or any other security of the Corporation.

     IN WITNESS  WHEREOF,  the undersigned  Chief Executive  Officer,  and Chief
Financial  Officer of the Corporation each declares under penalty or perjury the
truth,  to the  best of his  knowledge,  of  this  Certificate  of  Designation,
Preferences and Rights of Series C Preferred Stock.

     Executed this _____ day of __________________, 2002.

                                        By:

                                        ----------------------------------------
                                        Name: Timothy C. Choate
                                        Title: Chief Executive Officer

                                        ----------------------------------------
                                        Name:  John Wade
                                        Title  Chief Financial Officer

                                       6
<PAGE>

                                    Exhibit B

                            Form of Right Certificate
                            Certificate No. R- Rights

                      NOT EXERCISABLE AFTER MARCH 29, 2012,
                   OR EARLIER IF REDEEMED BY THE CORPORATION.
             THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.001 PER RIGHT
                 ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.

                                Right Certificate

                                  Aptimus, Inc.

     This certifies that  _____________________,  or registered  assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of March 12, 2002 (the "Rights Agreement"), between Aptimus,
Inc., a Washington corporation (the "Corporation"), and Mellon Investor Services
LLC,  a New Jersey  limited  liability  company,  as Rights  Agent (the  "Rights
Agent"),  to purchase from the  Corporation  at any time after the  Distribution
Date (as such term is defined in the Rights  Agreement)  and prior to 5:00 P.M.,
Seattle,  WA time, on March 29, 2012,  unless the Rights  evidenced hereby shall
have been previously  redeemed by the  Corporation,  at the office or offices of
the Rights Agent designated for such purpose,  or at the office of its successor
as Rights Agent,  one  one-thousandth  of a fully paid  non-assessable  share of
Series C Preferred Stock, of no par value per share (the "Preferred Shares"), of
the  Corporation,  at a  purchase  price of  $15.00  per one  one-thousandth  of
Preferred Share (the "Purchase Price"),  upon presentation and surrender of this
Right  Certificate  with the Form of  Election to Purchase  duly  executed.  The
number of Rights  evidenced  by this  Right  Certificate  (and the number of one
one-thousandths  of a  Preferred  Share  which may be  purchased  upon  exercise
hereof) set forth above,  and the Purchase Price set forth above, are the number
and  Purchase  Price as of March  __,  2002  based on the  Preferred  Shares  as
constituted at such date.

     Upon the occurrence of a Section  11(a)(ii)  Event (as such term is defined
in the Rights Agreement),  if the Rights evidenced by this Right Certificate are
Beneficially  Owned by (i) an  Acquiring  Person or an Affiliate or Associate of
any such Acquiring  Person (as such terms are defined in the Rights  Agreement),
(ii) a transferee  of any such  Acquiring  Person,  Associate  or Affiliate  who
becomes a transferee  after the  Acquiring  Person  becomes such, or (iii) under
certain  circumstances  specified in the Rights  Agreement,  a transferee of any
such Acquiring Person,  Associate or Affiliate who becomes a transferee prior to
or  concurrently  with the Acquiring  Person  becoming  such,  such Rights shall
become null and void and no holder  hereof  shall have any right with respect to
such Rights from and after the occurrence of such Section 11(a)(ii) Event.

     As provided in the Rights  Agreement,  the Purchase Price and the number of
one  one-thousandth  of a  Preferred  Share or  other  securities  which  may be
purchased upon the exercise of

                                       1
<PAGE>

the Rights  evidenced by this Right  Certificate are subject to modification and
adjustment upon the happening of certain events, including Triggering Events (as
such term is defined in the Rights Agreement).

     This  Right  Certificate  is subject  to all of the  terms,  covenants  and
restrictions of the Rights  Agreement,  which terms,  covenants and restrictions
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 Corporation and the holders of the Right  Certificates,  which
limitations of rights include the temporary  suspension of the exercisability of
such Rights under the specific  circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Corporation and the office or offices of the Rights Agent.

     This Right  Certificate,  with or without  other Right  Certificates,  upon
surrender at the  principal  office of the Rights  Agent,  may be exchanged  for
another  Right  Certificate  or  Right  Certificates  of  like  tenor  and  date
evidencing  Rights  entitling the holder to purchase a like aggregate  number of
Preferred  Shares  or other  securities  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  may be redeemed by the  Corporation at a redemption  price of
$.001 per Right  (subject to  adjustment  as  provided in the Rights  Agreement)
payable in cash.

     No  fractional  Preferred  Shares will be issued  upon the  exercise of any
Right  or  Rights   evidenced   hereby  (other  than  fractions  which  are  one
one-thousandth or integral multiples of one one-thousandth of a Preferred Share,
which may, at the  election  of the  Corporation,  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  shall be  entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred  Shares or of
any other securities of the Corporation which may at any time be issuable on the
exercise hereof,  nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder  hereof,  as such, any of the rights of a
stockholder  of the  Corporation  or any  right  to  vote  for the  election  of
directors or upon any matter  submitted to stockholders at any meeting  thereof,
or to give or withhold consent to any corporate  action, or to receive notice of
meetings  or other  actions  affecting  stockholders  (except as provided in the
Rights Agreement), or to receive dividends or other distributions or to exercise
any preemptive 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.

                                       2
<PAGE>

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

     Dated:

     [SEAL]

                                  ATTEST: APTIMUS, INC.

                                  By: By:

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

                                  Countersigned:

                                  MELLON INVESTOR SERVICES LLC,
                                  as Rights Agent

                                  By:

                                  ---------------------------------------------
                                  Authorized Officer

                                       3
<PAGE>

                    Form of Reverse Side of Right Certificate

                               FORM OF ASSIGNMENT

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

     FOR VALUE  RECEIVED_________________  hereby  sells,  assigns and transfers
unto   _____________________________________________   (Please  print  name  and
address of transferee) this Right  Certificate,  together with all right,  title
and  interest  therein,  and does  hereby  irrevocably  constitute  and  appoint
_______________  Attorney, to transfer the within Right Certificate on the books
of the within-named Corporation, with full power of substitution.

                                    Dated:

                                    -------------------------, -----

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

     Signature Guaranteed:

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

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

                                       1
<PAGE>

                          FORM OF ELECTION TO PURCHASE

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

     To the Rights Agent:

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

     Please insert social security or other identifying number _________________

              ----------------------------------------------------
                        (please print name and address)

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

     Please insert social security or other identifying number _________________

              ----------------------------------------------------
                        (please print name and address)

     Dated: ______________________, _______

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

     Signature Guaranteed:

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

                                       1
<PAGE>

Rights  evidenced  by this Rights  Certificate  from any Person who is or was an
Acquiring Person or an Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement).

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

                                     NOTICE

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

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

                                       2
<PAGE>

                                    Exhibit C

                          SUMMARY OF RIGHTS TO PURCHASE
                                PREFERRED SHARES

     On  March  12,  2002  the  Board  of  Directors  of  Aptimus,   Inc.   (the
"Corporation")  declared a dividend distribution of one preferred share purchase
right (a "Right") for each  outstanding  share of Common Stock, no par value per
share (the "Common Shares"), of the Corporation.  The dividend is payable to the
stockholders of record on March 29, 2002 (the "Record  Date"),  and with respect
to Common  Shares  issued  thereafter  until the  Distribution  Date (as defined
below) and, in certain circumstances, with respect to Common Shares issued after
the Distribution  Date.  Except as set forth below,  each Right, when it becomes
exercisable, entitles the registered holder to purchase from the Corporation one
one-thousandth  of a share of Series C Preferred  Stock,  no par value per share
(the  "Preferred  Shares"),  of the  Corporation  at a price of  $15.00  per one
one-thousandth  of  a  Preferred  Share  (the  "Purchase  Price"),   subject  to
adjustment.  The  description  and terms of the Rights are set forth in a Rights
Agreement (the "Rights  Agreement") between the Mellon Investor Services LLC, as
Rights Agent (the "Rights Agent"), dated as of March 12, 2002.

     Initially,  the Rights will be attached  to all  certificates  representing
Common  Shares then  outstanding,  and no separate  Right  Certificates  will be
distributed.  The Rights will  separate from the Common Shares upon the earliest
to occur of (i) a person or group of  affiliated or  associated  persons  having
acquired  beneficial  ownership of 15% or more of the outstanding  Common Shares
(except pursuant to a Permitted Offer, as hereinafter  defined); or (ii) 10 days
(or such later date as the Board may determine)  following the  commencement of,
or  announcement  of an intention to make, a tender offer or exchange  offer the
consummation  of which would  result in a person or group  becoming an Acquiring
Person (as  hereinafter  defined)  (the  earliest of such dates being called the
"Distribution  Date").  A person or group  whose  acquisition  of Common  Shares
causes a  Distribution  Date  pursuant  to  clause  (i)  above is an  "Acquiring
Person."  Entities  owning  15% or more of  Common  Shares as of the date of the
Rights  Agreement  have  been  specifically  excluded  from  the  definition  of
"Acquiring  Person,"  provided that they will become an Acquiring Person if they
individually  acquire Common Shares in excess of 1% of their current  beneficial
ownership.  The date that a person or group  becomes an Acquiring  Person is the
"Shares Acquisition Date."

     The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Common Shares. Until the Distribution
Date (or earlier  redemption  or  expiration  of the  Rights)  new Common  Share
certificates  issued  after the Record  Date upon  transfer  or new  issuance of
Common  Shares will  contain a notation  incorporating  the Rights  Agreement by
reference.  Until the Distribution Date (or earlier  redemption or expiration of
the Rights),  the surrender for transfer of any  certificates  for Common Shares
outstanding as of the Record Date,  even without such notation or a copy of this
Summary of Rights being attached  thereto,  will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the Distribution Date, separate

                                       1
<PAGE>

certificates  evidencing  the Rights  ("Right  Certificates")  will be mailed to
holders  of record of the  Common  Shares  as of the  close of  business  on the
Distribution  Date (and to each initial  record holder of certain  Common Shares
issued after the Distribution  Date), and such separate Right Certificates alone
will evidence the Rights.

     The Rights are not exercisable  until the Distribution Date and will expire
at the close of  business  on March 29,  2012,  unless  earlier  redeemed by the
Corporation as described below.

     In the event that any person becomes an Acquiring Person or an Affiliate or
Associate  thereof,  (except pursuant to a tender or exchange offer which is for
all  outstanding  Common  Shares at a price  and on terms  which a  majority  of
certain  members of the Board of Directors  determines to be adequate and in the
best  interests  of  the  Corporation,   its  stockholders  and  other  relevant
constituencies,  other than such Acquiring Person, its affiliates and associates
(a "Permitted  Offer")),  each holder of a Right will  thereafter have the right
(the "Flip-In Right") to receive upon exercise the number of Common Shares or of
one one-thousandth of a share of Preferred Shares (or, in certain circumstances,
other securities of the Corporation)  having a value  (immediately prior to such
triggering  event)  equal  to  two  times  the  exercise  price  of  the  Right.
Notwithstanding  the foregoing,  following the occurrence of the event described
above,  all Rights that are, or (under  certain  circumstances  specified in the
Rights  Agreement)  were,  beneficially  owned by any  Acquiring  Person  or any
affiliate or associate thereof will be null and void.

     In the event that, at any time following the Shares  Acquisition  Date, (i)
the  Corporation  is  acquired  in  a  merger  or  other  business   combination
transaction  in  which  the  holders  of all of the  outstanding  Common  Shares
immediately  prior to the consummation of the transaction are not the holders of
all of the surviving  corporation's  voting power,  or (ii) more than 50% of the
Corporation's  assets or earning  power is sold or  transferred,  in either case
with or to an Acquiring Person or any Affiliate or Associate or any other person
in which such  Acquiring  Person,  Affiliate or Associate has an interest or any
person acting on behalf of or in concert with such Acquiring  Person,  Affiliate
or Associate,  or, if in such  transaction  all holders of Common Shares are not
treated  alike,  any other person,  then each holder of a Right  (except  Rights
which  previously have been voided as set forth above) shall thereafter have the
right (the "Flip-Over  Right") to receive,  upon exercise,  common shares of the
acquiring company (or in certain circumstances, its parent) having a value equal
to two  times the  exercise  price of the  Right.  The  holder  of a Right  will
continue to have the  Flip-Over  Right  whether or not such holder  exercises or
surrenders the Flip-In Right.

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

                                       2
<PAGE>

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

     Preferred  Shares  purchasable  upon  exercise  of the  Rights  will not be
redeemable.  Each  Preferred  Share will be entitled  to a minimum  preferential
quarterly dividend payment of $10.00 per share but, if greater, will be entitled
to an  aggregate  dividend  per share of 1,000 times the  dividend  declared per
Common Share. In the event of liquidation,  the holders of the Preferred  Shares
will be  entitled  to the  greater  of (i) a  minimum  preferential  liquidation
payment of $1,000 per share and (ii) an aggregate  payment per share of at least
1,000  times the  aggregate  payment  made per Common  Share.  These  rights are
protected by customary antidilution provisions.  In the event that the amount of
accrued and unpaid  dividends on the Preferred  Shares is equivalent to six full
quarterly  dividends or more, the holders of the Preferred Shares shall have the
right,  voting as a class,  to elect two  directors in addition to the directors
elected by the holders of the Common  Shares until all  cumulative  dividends on
the Preferred Shares have been paid through the last quarterly  dividend payment
date or until non-cumulative dividends have been paid regularly for at least one
year.

     With  certain  exceptions,  no  adjustment  in the  Purchase  Price will be
required until  cumulative  adjustments  require an adjustment of at least 1% in
such Purchase Price. No fractional  Preferred  Shares will be issued (other than
fractions   which  are  one   one-thousandth   or  integral   multiples  of  one
one-thousandth  of a  Preferred  Share,  which  may,  at  the  election  of  the
Corporation,  be evidenced  by  depositary  receipts)  and in lieu  thereof,  an
adjustment  in cash  will be made  based on the  market  price of the  Preferred
Shares on the last trading day prior to the date of exercise.

     At any time  prior to the  earlier  to  occur of (i) a person  becoming  an
Acquiring  Person or (ii) the expiration of the Rights,  and under certain other
circumstances,  the Corporation may redeem the Rights in whole, but not in part,
at a price of $.001 per Right (the "Redemption Price") which redemption shall be
effective upon the action of the Board of Directors. Additionally, following the
Shares  Acquisition Date, the Corporation may redeem the then outstanding Rights
in  whole,  but  not in  part,  at the  Redemption  Price,  provided  that  such
redemption  is in  connection  with  a  merger  or  other  business  combination
transaction  or series of  transactions  involving the  Corporation in which all
holders of Common Shares are treated alike but not involving an Acquiring Person
or its  Affiliates or  Associates.  The payment of the  Redemption  Price may be
deferred under certain circumstances as contemplated in the Rights Agreement.

     All of the  provisions of the Rights  Agreement may be amended by the Board
of  Directors  of the  Corporation  prior to the  Distribution  Date.  After the
Distribution  Date, the provisions of the Rights Agreement may be amended by the
Board of Directors in order to cure any ambiguity,  defect or inconsistency,  to
make changes  which do not  adversely  affect the interests of holders of Rights
(excluding  the  interests  of any  Acquiring  Person),  or,  subject to certain
limitations, to shorten or lengthen any time period under the Rights Agreement.

                                       3
<PAGE>

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

                                       4

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