Document:

AMENDED AND RESTATED RIGHTS AGREEMENT
                                   DATED AS OF
                                  MAY 4, 2001
                                     BETWEEN
                        SUBURBAN LODGES OF AMERICA, INC.
                                       AND
                    AMERICAN STOCK TRANSFER & TRUST COMPANY,
                                 AS RIGHTS AGENT

<PAGE>

                                                 TABLE OF CONTENTS (1)

<TABLE>
<CAPTION>
                                                                                                                 Page

<S>                                                                                                              <C>
Section 1. Definitions............................................................................................1

Section 2. Appointment of Rights Agent............................................................................5

Section 3. Issue of Rights Certificates...........................................................................5

Section 4. Form of Rights Certificate.............................................................................7

Section 5. Countersignature and Registration......................................................................7

Section 6.  Transfer and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
                  Stolen Rights Certificates......................................................................8

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 Capital Stock.........................................................10

Section 10. Preferred Stock Record Date..........................................................................11

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...........................................20

Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.................................20

Section 14. Fractional Rights and Fractional Shares..............................................................23

Section 15. Rights of Action.....................................................................................24

Section 16. Agreement of Right Holders...........................................................................24

Section 17. Right Certificate Holder Not Deemed a Shareholder....................................................25

Section 18. Concerning the Rights Agent..........................................................................25

Section 19. Merger or Consolidation or Change of Name of Rights Agent............................................26
--------------
(1)  The Table of Contents is not a part of this Agreement.
</TABLE>

                                                         i
<PAGE>

<TABLE>
<CAPTION>

<S>                                                                                                             <C>
Section 20. Duties of Rights Agent...............................................................................26

Section 21. Change of Rights Agent...............................................................................28

Section 22. Issuance of New Right Certificates...................................................................29

Section 23. Redemption...........................................................................................29

Section 24. Exchange.............................................................................................30

Section 25. Notice of Proposed Actions...........................................................................31

Section 26. Notices..............................................................................................32

Section 27. Supplements and Amendments...........................................................................32

Section 28. Successors...........................................................................................33

Section 29. Determinations and Actions by the Board of Directors, etc............................................33

Section 30. Benefits of this Agreement...........................................................................33

Section 31. Severability.........................................................................................33

Section 32. Governing Law........................................................................................34

Section 33. Counterparts.........................................................................................34

Section 34. Descriptive Headings.................................................................................34

Exhibit A -       Form of Board Resolution Establishing and Designating Preferred Stock

Exhibit B -       Form of Rights Certificate

Exhibit C -       Summary Description of the Shareholder Rights Plan
</TABLE>

                                                         ii

<PAGE>

                      AMENDED AND RESTATED RIGHTS AGREEMENT

         THIS AMENDED AND RESTATED  RIGHTS  AGREEMENT (the  "AGREEMENT") is made
and entered into as of May 4, 2001, by and between  SUBURBAN LODGES OF AMERICA,
INC., a Georgia corporation (the "COMPANY"), and AMERICAN STOCK TRANSFER & TRUST
COMPANY, a New York corporation, as Rights Agent (the "RIGHTS AGENT").

                              W I T N E S S E T H:

         WHEREAS, in May 1996 the Board of Directors of the Company approved the
execution  and  delivery of a Rights  Agreement  dated as of May 15, 1996 by and
between the Company and the Rights Agent (the "ORIGINAL  RIGHTS  AGREEMENT") and
authorized and declared a dividend  distribution of one Right (as defined below)
for each  outstanding  share of Common Stock,  par value $0.01 per share, of the
Company (the "COMMON  STOCK") at the close of business on the effective  date of
the Acquisitions (as defined below) and authorized the issuance of one Right for
each share of Common Stock issued in the Public  Offering (as defined  below) or
otherwise  issued between the effective date of the Acquisitions and the earlier
of the Distribution  Date (as defined below) and the Expiration Date (as defined
below),  each Right  representing the right to purchase,  one one-hundredth of a
share of Series A Participating Cumulative Preferred Stock of the Company having
the  rights,   powers  and  preferences  set  forth  in  the  Board   Resolution
Establishing and Designating Series A Preferred Stock attached hereto as EXHIBIT
A, upon the terms and subject to the conditions contained therein (individually,
a "RIGHT," and collectively, the "RIGHTS"); and

         WHEREAS,  the  Board of  Directors  of the  Company  has  approved  the
execution  and delivery of this Amended and Restated  Rights  Agreement  for the
purpose of incorporating  into the Original Rights Agreement certain  amendments
thereto, as further set forth herein, that the Board of Directors has determined
to be in the best interests of the shareholders of the Company;

         NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:

         SECTION 1. DEFINITIONS.  The following terms, as used herein,  have the
following meanings:

         (a)      "ACQUIRING  PERSON"  means 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  shares  of  Common  Stock  then  outstanding;  provided,
however,  that, an "ACQUIRING  PERSON" shall not include the following  Persons:
(i) any Excluded Person, (ii) any Person who, immediately following consummation
of the  Acquisitions  and the Public Offering is the Beneficial  Owner of 25% or
more of the shares of Common Stock then  outstanding,  or (iii) any Person,  who
alone or together with its Affiliates or Associates becomes the Beneficial Owner
of 15% or more of the shares of Common Stock then  outstanding as a result of an
Approved  Acquisition;  provided,  further, that in the event that a Person does
not become an  ACQUIRING  PERSON by reason of clause

<PAGE>
(iii) above,  such Person  nonetheless  shall become an ACQUIRING PERSON if such
Person  thereafter  becomes the Beneficial  Owner of an additional 1% or more of
the Common Stock then  outstanding,  unless the acquisition of such Common Stock
is an  Approved  Acquisition.  Notwithstanding  the  foregoing,  if the Board of
Directors of the Company  (the "BOARD OF  DIRECTORS")  determines  in good faith
that a Person who would otherwise be an "ACQUIRING  PERSON" as defined  pursuant
to the foregoing  provisions of this SECTION 1(A) has become such inadvertently,
and such Person divests as promptly as practicable a sufficient number of shares
of Common Stock so that such Person would no longer be an "ACQUIRING  PERSON" as
defined  pursuant to the foregoing  provisions  of this SECTION 1(A),  then such
Person  shall  not be  deemed  an  Acquiring  Person  for any  purposes  of this
Agreement.

         (b)      "ACQUISITIONS"  means the acquisition by merger or purchase of
16  Suburban  Lodge  facilities  to  be  effective   immediately   prior  to  or
simultaneously  with the closing of the Public  Offering,  and pursuant to which
the Company  will issue  approximately  1,166,000  shares of Common Stock to the
owners of the acquired facilities.

         (c)      "AFFILIATE"  and  "ASSOCIATE"  have  the  respective  meanings
ascribed to such terms in Rule 12b-2 under the  Exchange Act as in effect on the
date hereof.

         (d)      "APPROVED  ACQUISITION"  means any acquisition of Common Stock
that (i)  causes a Person to become the  Beneficial  Owner of (A) 15% or more of
the shares of Common  Stock  then  outstanding,  or (B) if already a  Beneficial
Owner  of 15% or more  of the  shares  of  Common  Stock  then  outstanding,  an
additional 1% or more of the shares of Common Stock then  outstanding,  and (ii)
is approved in advance by the Board of Directors.

         (e)      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 its  Affiliates  or Associates
         beneficially  owns (as  determined  pursuant  to Rule  13d-3  under the
         Exchange Act as in effect on the date hereof), directly or indirectly;

                  (ii) which such Person or any of its Affiliates or Associates,
         directly or indirectly, has

                           (A) the  right  to  acquire  (whether  such  right is
                  exercisable immediately or only upon the occurrence of certain
                  events  or the  passage  of  time  or  both)  pursuant  to any
                  agreement,  arrangement  or  understanding  (whether or not in
                  writing) or upon the exercise of conversion  rights,  exchange
                  rights, rights (other than pursuant to the Rights),  warrants,
                  options or otherwise;  provided,  however, that a Person shall
                  not be deemed the "BENEFICIAL  OWNER" of, or to  "BENEFICIALLY
                  OWN," any securities tendered pursuant to a tender or exchange
                  offer  made  by or on  behalf  of  such  Person  or any of its
                  Affiliates or Associates  until such tendered  securities  are
                  accepted for purchase or exchange; or

                                       2
<PAGE>

                           (B) the right to vote or  dispose  of  (whether  such
                  right is  exercisable  immediately or only upon the occurrence
                  of certain  events or the passage of time or both) pursuant to
                  any agreement, arrangement or understanding (whether or not in
                  writing) or otherwise;  provided, however, that a Person shall
                  not be deemed the "BENEFICIAL  OWNER" of, or to  "BENEFICIALLY
                  OWN," any  security  under  this  clause (B) as a result of an
                  agreement,  arrangement or understanding to vote such security
                  if such  agreement,  arrangement or  understanding  (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 by such Person on Schedule 13D under the
                  Exchange Act (or any comparable or successor report); or

                  (iii) which are beneficially owned, directly or indirectly, by
         any other Person (or any  Affiliate or  Associate  thereof)  with which
         such Person (or any of its Affiliates or Associates) has any agreement,
         arrangement  or  understanding  (whether  or not in  writing)  for  the
         purpose of acquiring,  holding,  voting (except pursuant to a revocable
         proxy as described  in  SUBSECTION  (II)(B)  above) or disposing of any
         such securities;  provided,  however, that nothing in this SECTION 1(E)
         shall  cause any  Person  engaged  in  business  as an  underwriter  of
         securities  who acquires  any  securities  of the Company  through such
         Person's participation in good faith in a firm commitment  underwriting
         to be deemed the "BENEFICIAL OWNER" of, or to "BENEFICIALLY  OWN," such
         securities  until  the  expiration  of 40 days  after  the date of such
         acquisition.

         (f)      "BUSINESS DAY" means any day other than a Saturday,  Sunday or
a day on which  banking  institutions  in the  States of Georgia or New York are
authorized or obligated by law or executive order to close.

         (g)      "CLOSE  OF  BUSINESS"  on any  given  date  means  5:00  P.M.,
Atlanta, Georgia time, on such date; provided, however, that if such date is not
a Business Day, then it shall mean 5:00 P.M., Atlanta, Georgia time, on the next
succeeding Business Day.

         (h)      "COMMON  STOCK"  means the Common  Stock,  par value $0.01 per
share,  of the Company,  except that, when used with respect to any Person other
than the  Company,  "COMMON  STOCK"  means the  capital  stock (or other  equity
interests)  of such  Person  with  the  greatest  voting  power,  or the  equity
securities or other equity  interests  having the power to control or direct the
management of such Person.

         (i)      [INTENTIONALLY OMITTED]

         (j)      "DISTRIBUTION  DATE"  means  the  earlier  of (i) the Close of
Business on the tenth day (or such later day as may be  designated  by action of
the Board of Directors after the Share  Acquisition  Date, and (ii) the Close of
Business on the tenth  Business Day (or such later day as may be  designated  by
action of the Board of  Directors)  after  the date of the  commencement  by any
Person (other than an Excluded  Person) of, or of the first public  announcement
of the

                                       3
<PAGE>

intention by any Person (other than an Excluded Person) to commence, a tender or
exchange offer if, upon  consummation  thereof,  such Person,  together with all
Affiliates and Associates of such Person,  would be the Beneficial  Owner of 15%
or more of the shares of Common Stock then outstanding.

         (k)      "EMPLOYEE BENEFIT PLAN" means any employee benefit plan of the
Company  or any of  its  Subsidiaries  or any  Person  organized,  appointed  or
established  by the  Company or any of its  Subsidiaries  for or pursuant to the
terms of any such plan.

         (l)      "EXCHANGE  ACT" means the Securities  Exchange Act of 1934, as
amended.

         (m)      "EXCLUDED  PERSON" means the Company,  any of its Subsidiaries
or any Employee Benefit Plan.

         (n)      "EXPIRATION   DATE"   means  the  earlier  of  (i)  the  Final
Expiration  Date, and (ii) the time at which all Rights are redeemed as provided
in SECTION 23 or exchanged as provided in SECTION 24.

         (o)      "FINAL EXPIRATION DATE" means the Close of Business on May 15,
2006.

         (p)      "FLIP-IN   EVENT"   means  any  event   described  in  SECTION
11(A)(II)(A),  (B)  OR  (C),  but  excluding  any  event  described  in  SECTION
11(A)(II)(D).

         (q)      "FLIP-OVER   EVENT"  means  any  event  described  in  SECTION
13(A)(X), (Y), OR (Z).

         (r)      "PERSON"  means  an  individual,   corporation,   partnership,
limited  liability   company,   association,   trust  or  any  other  entity  or
organization.

         (s)      "PREFERRED  STOCK" means the Series A Participating Cumulative
Preferred  Stock, par value $0.01 per share, of the Company having the terms set
forth in the form of certificate of designation attached hereto as EXHIBIT A.

         (t)      "PUBLIC  OFFERING" means the issuance and sale of a maximum of
3,450,000 shares of Common Stock pursuant to the Registration  Statement on Form
S-1 No. 333-2876, as amended.

         (u)      "PURCHASE  PRICE" means the price  (subject to  adjustment  as
provided herein) at which a holder of a Right may purchase one  one-hundredth of
a share of  Preferred  Stock  (subject to  adjustment  as provided  herein) upon
exercise of a Right, which price shall initially be $60.00.

         (v)      "QUALIFYING TENDER OFFER" means a tender or exchange offer for
all outstanding  shares of Common Stock of the Company  approved by the Board of
Directors  then in office,  after  taking into account the  potential  long-term
value of the Company and all other factors that they consider relevant.

                                       4
<PAGE>

         (w)      "SECURITIES ACT" means the Securities Act of 1933, as amended.

         (x)      "SHARE  ACQUISITION  DATE" means the date of the first  public
announcement  (including  the  filing  of a report  on  Schedule  13D  under the
Exchange  Act (or any  comparable  or  successor  report))  by the Company or an
Acquiring Person indicating that an Acquiring Person has become such.

         (y)      "SUBSIDIARY"  means,  with  respect to any  Person,  any other
Person of which  securities or other ownership  interests having ordinary voting
power,  in the  absence of  contingencies,  to elect a majority  of the board of
directors or other Persons performing similar functions are at the time directly
or indirectly owned or controlled by such first Person.

         (z)      "TRADING  DAY"  means a day on which  the  principal  national
securities  exchange  or  inter-dealer  quotation  system on which the shares of
Common  Stock  are  listed,  admitted  to  trading  or  quoted  is open  for the
transaction  of  business  or, if the  shares of  Common  Stock are not  listed,
admitted  to  trading  or  quoted  on  any  national   securities   exchange  or
inter-dealer quotation system, a Business Day.

         (aa)     "TRIGGERING  EVENT" means any Flip-in  Event or any  Flip-over
Event.

         SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with SECTION 3, shall prior to the  Distribution  Date also be the
holders of the Common Stock) in accordance with the terms and conditions hereof,
and the Rights Agent hereby accepts such appointment.  The Company may from time
to time appoint such co-Rights Agents as it may deem necessary or desirable.  If
the Company appoints one or more co-Rights Agents, then the respective duties of
the  Rights  Agent  and any  co-Rights  Agents  shall  be as the  Company  shall
determine.

         SECTION 3. ISSUE OF RIGHTS CERTIFICATES.  (a) Prior to the Distribution
Date,  (i) the  Rights  will be  evidenced  (subject  to  SECTION  3(B))  by the
certificates  for the Common Stock and not by separate Rights  Certificates  (as
defined below),  and the registered  holders of the Common Stock shall be deemed
to be the registered  holders of the associated Rights, and (ii) the Rights will
be transferable only in connection with the transfer of the underlying shares of
Common Stock (including a transfer to the Company). As soon as practicable after
the Company has notified the Rights Agent of the  occurrence  of a  Distribution
Date,  the Rights Agent will,  subject to SECTION 7(D),  send,  by  first-class,
insured,  postage  prepaid mail, to each record holder of the Common Stock as of
the Close of Business on the  Distribution  Date,  at the address of such holder
shown  on the  records  of the  Company,  one or more  Rights  Certificates,  in
substantially the form of EXHIBIT B attached hereto (the "RIGHTS CERTIFICATES"),
evidencing one Right  (subject to adjustment as provided  herein) for each share
of Common Stock so held.  If an  adjustment in the number of Rights per share of
Common Stock has been made pursuant to SECTION 11(P), then the Company shall, at
the time of distribution of the Rights  Certificates to record holders of Common
Stock as of the Close of Business on the  Distribution  Date, make the necessary
and appropriate  rounding adjustments (in accordance with SECTION 14(A)) so that
Rights Certificates representing

                                       5
<PAGE>

only whole numbers of Rights are distributed to such holders and cash is paid to
such holders in lieu of any fractional  Rights.  From and after the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.

         (b)      As  soon  as  practicable   after  the   consummation  of  the
Acquisitions,  the Company  will send a summary of the Rights,  by  first-class,
postage  prepaid mail, to each record holder of the Common Stock as of the Close
of Business at the effective time of the consummation of the Acquisitions at the
address of such  holder  shown on the records of the  Company.  A summary of the
Rights,  as in effect on the date  hereof,  is set forth on  EXHIBIT C  attached
hereto.  Until the  Distribution  Date,  the Rights  shall be  evidenced by such
certificates  evidencing the Common Stock,  and the  registered  holders of such
Common Stock shall also be the registered holders of the associated Rights.

         (c)      Rights  shall be issued  in  respect  of all  shares of Common
Stock that become  outstanding  (on original  issuance or out of treasury) after
the   consummation  of  the  Acquisitions  but  prior  to  the  earlier  of  the
Distribution Date or the Expiration Date. Certificates for the Common Stock that
become  outstanding or shall be transferred or exchanged after the  consummation
of the  Acquisitions  but prior to the earlier of the  Distribution  Date or the
Expiration  Date  shall also be deemed to be  certificates  for Rights and shall
have  impressed  on,  printed on,  written on or  otherwise  affixed to them the
following legend:

                           This certificate also evidences certain Rights as set
                  forth in that certain  Amended and Restated  Rights  Agreement
                  between  Suburban  Lodges of America,  Inc. and American Stock
                  Transfer  &  Trust  Company,  dated  as  of May 4,  2001  (the
                  "Rights   Agreement"),   the   terms  of  which   are   hereby
                  incorporated  herein  by  reference  and a copy of which is on
                  file at the principal office of the Company.  The Company will
                  mail to the  holder of this  certificate  a copy of the Rights
                  Agreement  without charge  promptly after receipt of a written
                  request therefor. Under certain circumstances, as set forth in
                  the Rights Agreement, such Rights may be evidenced by separate
                  certificates  and no longer be evidenced by this  certificate,
                  may be redeemed or  exchanged  or may expire.  As 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 such  terms are  defined in the Rights
                  Agreement),  whether  currently  held by or on  behalf of such
                  Person or by any subsequent holder, may be null and void.

         (d)      With  respect to the  certificates  containing  the  foregoing
legend,  until the earlier of the Distribution  Date or the Expiration Date, the
Rights associated with the Common Stock  represented by such certificates  shall
be evidenced by such certificates  alone and registered  holders of Common Stock
shall also be the registered  holders of the associated Rights, and the transfer
of any of such  certificates  shall also  constitute  the transfer of the Rights
associated with the Common Stock represented  thereby.  If the Company purchases
or  acquires  any  shares  of  Common  Stock  after  the   consummation  of  the
Acquisitions but prior to the Distribution Date, any

                                       6
<PAGE>

Rights  associated with such Common Stock shall be deemed  cancelled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Stock that are no longer outstanding.

         SECTION 4. FORM OF RIGHTS CERTIFICATE. (a) The Rights Certificates (and
the forms of assignment,  election to purchase and certificates to be printed on
the reverse  thereof) shall be  substantially  in the form of EXHIBIT B attached
hereto  and may  have  such  marks of  identification  or  designation  and such
legends,  summaries  or  endorsements  printed  thereon as the  Company may deem
appropriate and as are not  inconsistent  with the provisions of this Agreement,
or as may be required to comply with any  applicable  law, rule or regulation or
with any rule or  regulation  of any stock  exchange or  inter-dealer  quotation
system of a registered national  securities  association on which the Rights may
from time to time be listed, traded or quoted or to conform to usage. Subject to
SECTIONS  11 AND 22, the Rights  Certificates,  whenever  distributed,  shall be
dated as of the Distribution Date, shall entitle the holders thereof to purchase
such number of one  one-hundredths of a share of Preferred Stock as shall be set
forth  therein  at the  price  set  forth  therein,  but the  number of such one
one-hundredths  and the Purchase Price thereof shall be subject to adjustment as
provided herein.

         (b)      Any Rights Certificate  representing Rights beneficially owned
by any Person referred to in SECTION 7(D)(I), (II) OR (III) shall (to the extent
feasible) contain the following legend:

                  The Rights  represented by this Rights Certificate are or were
                  beneficially  owned by a Person who was or became an Acquiring
                  Person or an Affiliate or Associate of an Acquiring Person (as
                  such terms are defined in the Rights  Agreement).  This Rights
                  Certificate  and the Rights  represented  hereby may be or may
                  become null and void in the circumstances specified in Section
                  7(d) of the Rights Agreement.

         SECTION  5.   COUNTERSIGNATURE   AND   REGISTRATION.   (a)  The  Rights
Certificates  shall be executed on behalf of the Company by its  Chairman of the
Board,  its  President or any Vice  President,  either  manually or by facsimile
signature,  and shall have  affixed  thereto the  Company's  seal or a facsimile
thereof  which shall be attested by the  Secretary or an Assistant  Secretary of
the Company, either manually or by facsimile signature.  The Rights Certificates
shall be manually  countersigned  by the Rights Agent and shall not be valid for
any purpose  unless so  countersigned.  In case any officer of the Company whose
manual or facsimile  signature is affixed to the Rights Certificates shall cease
to be such officer of the Company  before  countersignature  by the Rights Agent
and  issuance  and  delivery  by the  Company,  such  Rights  Certificates  may,
nevertheless, be countersigned by the Rights Agent and issued and delivered with
the same force and  effect as though  the  individual  who  signed  such  Rights
Certificates  had not  ceased to be such  officer  of the  Company.  Any  Rights
Certificate  may be signed on behalf of the  Company by any Person  who,  at the
actual  date of the  execution  of such  Rights  Certificate,  shall be a proper
officer of the Company to sign such Rights Certificate,  although at the date of
the execution of this Agreement any such Person was not such an officer.

                                       7
<PAGE>

         (b)      Following the Distribution Date, the Rights Agent will keep or
cause  to be  kept,  at  its  principal  office  or  offices  designated  as the
appropriate place for surrender of Rights  Certificates upon exercise,  transfer
or exchange,  books for  registration  and transfer of the Rights  Certificates.
Such books  shall  show with  respect to each  Rights  Certificate  the name and
address of the registered holder thereof,  the number of Rights indicated on the
certificate, and the certificate number.

         SECTION 6.  TRANSFER  AND EXCHANGE OF RIGHTS  CERTIFICATES;  MUTILATED,
DESTROYED,  LOST OR STOLEN  RIGHTS  CERTIFICATES.  (a) Subject to SECTION  4(B),
7(D), AND 14, at any time after the Close of Business on the  Distribution  Date
and  prior  to  the  Close  of  Business  on the  Expiration  Date,  any  Rights
Certificate(s)  may, upon the terms and subject to the  conditions  set forth in
this SECTION 6(A), be transferred or exchanged for another Rights Certificate(s)
evidencing a like number of Rights as the Rights Certificate(s) surrendered. Any
registered  holder  desiring to transfer or exchange  any Rights  Certificate(s)
shall make such  request in writing  delivered  to the Rights  Agent,  and shall
surrender such Rights Certificate(s) (with, in the case of a transfer,  the form
of assignment and  certificate on the reverse side thereof duly executed) to the
Rights Agent at the principal  office or offices of the Rights Agent  designated
for such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action  whatsoever with respect to the transfer of any such surrendered
Rights  Certificate(s)  until the  registered  holder of the Rights has complied
with the  requirements  of SECTION  7(E).  Upon  satisfaction  of the  foregoing
requirements, the Rights Agent shall, subject to SECTIONS 4(B), 7(D), 14 AND 24,
countersign and deliver to the Person entitled  thereto a Rights  Certificate(s)
as so requested.  The Company may require  payment of a sum  sufficient to cover
any transfer tax or other governmental  charge that may be imposed in connection
with any transfer or exchange of any Rights Certificate(s).

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

         SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS;  RESTRICTIONS
ON TRANSFER.  (a) Subject to SECTION 7(D), the  registered  holder of any Rights
Certificate  may  exercise  the Rights  evidenced  thereby  (except as otherwise
provided herein, including, without limitation,  SECTIONS 7(E), 9(C), 11(A), 13,
23, AND 24), in whole or in part,  at any time after the  Distribution  Date and
prior to the Expiration Date upon surrender of the Rights Certificate,  with the
form of election to purchase  and the  certificate  on the reverse  side thereof
duly executed (with signatures guaranteed), to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price (in lawful money of the United States of
America by  certified  check or bank draft  payable to the order of the

                                       8
<PAGE>

Company)  with respect to the Rights then to be exercised and an amount equal to
any applicable transfer tax or other governmental charge.

         (b)      Upon  satisfaction  of the  requirements  of SECTION  7(A) and
subject to SECTION  20(K),  the Rights  Agent shall  thereupon  promptly  (i)(A)
requisition  from any transfer agent of the Preferred  Stock (or make available,
if the Rights Agent is the transfer agent therefor)  certificates  for the total
number of one  one-hundredths of a share of Preferred Stock to be purchased (and
the Company hereby irrevocably  authorizes its transfer agent to comply with all
such  requests),  or (B) if the Company shall have elected to deposit the shares
of Preferred Stock issuable upon exercise of the Rights with a depository agent,
requisition  from the depository  agent depository  receipts  representing  such
number  of  one  one-hundredths  of a  share  of  Preferred  Stock  as are to be
purchased  (in  which  case  certificates  for the  shares  of  Preferred  Stock
represented  by such receipts  shall be deposited by the transfer agent with the
depository  agent),  and the Company will direct the depository  agent to comply
with such request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of issuance of fractional  shares in accordance  with SECTION
14, and (iii) after  receipt of such  certificates  or  depository  receipts and
cash,  if any,  cause  the  same to be  delivered  to or upon  the  order of the
registered holder of such Rights Certificate (with such certificates or receipts
registered in such name or names as may be  designated  by such holder).  If the
Company is  obligated  to  deliver  Common  Stock,  other  securities  or assets
pursuant to this Agreement,  the Company will make all arrangements necessary so
that such other  securities  and assets are  available for  distribution  by the
Rights Agent, if and when appropriate.

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

         (d)      Notwithstanding  anything in this  Agreement to the  contrary,
from and after the first occurrence of a Flip-in Event, any Rights  beneficially
owed by (i) an  Acquiring  Person or an  Associate  or Affiliate of an Acquiring
Person,  (ii) a transferee of an Acquiring  Person (or of any such  Associate or
Affiliate) who becomes a transferee  after the Acquiring Person becomes such, or
(iii)  a  transferee  of an  Acquiring  Person  (or of  any  such  Associate  or
Affiliate) who becomes a transferee prior to or concurrently  with the Acquiring
Person  becoming such and receives such Rights pursuant to either (A) a transfer
(whether  or not for  consideration)  from  the  Acquiring  Person  (or any such
Associate or Affiliate) to holders of equity  interests in such Acquiring Person
(or in any such Associate or Affiliate) or to any Person with whom the Acquiring
Person  (or any such  Associate  or  Affiliate)  has any  continuing  agreement,
arrangement or understanding regarding the transferred Rights, or (B) a transfer
which the Board of Directors has  determined is part of a plan,  arrangement  or
understanding  which has as a primary  purpose or effect the  avoidance  of this
SECTION  7(D) 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;  provided,
however,  that the foregoing  provisions of this SECTION 7(D) shall not apply to
Rights  beneficially owned by an Acquiring Person (or an Associate or Affiliate)
of such  Acquiring  Person or a  transferee  thereof  if such  Person  became an

                                       9
<PAGE>

Acquiring  Person pursuant to a Qualifying  Tender Offer.  The Company shall use
all  reasonable  efforts to insure that the  provisions of SECTION 4(B) AND THIS
SECTION 7(D) and are complied with, but shall have no liability to any holder of
Rights  Certificates  or other  Person  as a result of its  failure  to make any
determinations  with  respect  to an  Acquiring  Person  or its  Affiliates  and
Associates or any transferee of any of them hereunder.

         (e)      Notwithstanding  anything in this  Agreement to the  contrary,
neither the Rights Agent nor the Company  shall be  obligated  to undertake  any
action with respect to a registered  holder of Rights upon the occurrence of any
purported  transfer pursuant to SECTION 6 or exercise pursuant to this SECTION 7
unless  such  registered   holder  (i)  shall  have  completed  and  signed  the
certificate  contained in the form of assignment or election to purchase, as the
case may be, set forth on the reverse side of the Rights Certificate surrendered
for such transfer or exercise, as the case may be, (ii) shall not have indicated
an affirmative  response to clause 1 or 2 thereof, and (iii) shall have provided
such  additional  evidence of the  identity of the  Beneficial  Owner (or former
Beneficial  Owner) or  Affiliates  or  Associates  thereof as the Company  shall
reasonably request.

         SECTION 8.  CANCELLATION  AND  DESTRUCTION OF RIGHT  CERTIFICATES.  All
Rights  Certificates  surrendered  for exercise,  transfer or exchange shall, if
surrendered  to the Company or to any of its agents,  be delivered to the Rights
Agent for  cancellation  or in cancelled  form, or, if surrendered to the Rights
Agent,  shall be cancelled by it, and no Rights  Certificates shall be issued in
lieu thereof except as expressly permitted by this Agreement.  The Company shall
deliver to the Rights  Agent for  cancellation  and  retirement,  and the Rights
Agent  shall  cancel and  retire,  any other  Rights  Certificate  purchased  or
acquired by the Company  otherwise  than upon the exercise  thereof.  The Rights
Agent shall deliver all cancelled Rights  Certificates to the Company, or shall,
at  the  written  request  of  the  Company,   destroy  such  cancelled   Rights
Certificates,   and  in  either  such  case  shall  deliver  a  certificate   of
cancellation or destruction thereof, as appropriate, to the Company.

         SECTION 9.  RESERVATION  AND  AVAILABILITY  OF CAPITAL  STOCK.  (a) The
Company covenants and agrees that it will use reasonable  efforts to cause to be
reserved  and kept  available  out of its  authorized  and  unissued  shares  of
Preferred Stock (and,  following the occurrence of Triggering  Event, out of its
authorized and unissued  shares of Common Stock) a number of shares of Preferred
Stock  (and,  following  the  occurrence  of a  Triggering  Event,  out  of  its
authorized but unissued shares of Common Stock) that will be, except as provided
in  SECTION  11(A)(III),  sufficient  to  permit  the  exercise  in  full of all
outstanding Rights as provided in this Agreement.

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

                                       10
<PAGE>

         (c)      The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the occurrence of a Flip-in Event,
or as soon as is required by law  following the  Distribution  Date, as the case
may be, a  registration  statement  under the Securities Act with respect to the
securities issuable upon exercise of the Rights, (ii) to cause such registration
statement to become  effective  as soon as  practicable  after such filing,  and
(iii)  to  cause  such  registration  statement  to  remain  effective  (with  a
prospectus at all times meeting the  requirements  of the Securities  Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable for
such  securities,  and (B) the Expiration  Date. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the securities
or blue sky laws of the various states in connection with the  exercisability of
the Rights.  The Company may  temporarily  suspend,  for a period of time not to
exceed  90  days  after  the  date  set  forth  in  this  SECTION  9(C)(I),  the
exercisability  of the  Rights in order to  prepare  and file such  registration
statement  and  permit it to become  effective.  Upon any such  suspension,  the
Company  shall notify the Rights Agent and issue a public  announcement  stating
that the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect that
the rights are currently exercisable. Notwithstanding any such provision of this
Agreement to the contrary, the Rights shall not be exercisable for securities in
any jurisdiction if the requisite  qualification in such jurisdiction  shall not
have  been  obtained,  such  exercise  therefor  shall  not be  permitted  under
applicable law or a registration  statement in respect of such securities  shall
not have been declared effective.

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

         (e)      The Company further covenants and agrees that it will pay when
due and  payable  any  and all  federal  and  state  transfer  taxes  and  other
governmental charges which may be payable in respect of the issuance or delivery
of the Rights  Certificates  and of any  certificates  for  Preferred  Stock (or
Common  Stock or other  securities,  as the  case may be) upon the  exercise  of
Rights.  The Company shall not, however,  be required to pay any transfer tax or
other  governmental  charge  which may be payable  in  respect  of any  transfer
involved  in the  issuance  or  delivery  of any Rights  Certificates  or of any
certificates  for Preferred Stock (or Common Stock or other  securities,  as the
case may be) to a Person  other  than the  registered  holder of the  applicable
Rights  Certificate,  and prior to any such  transfer,  issuance or delivery any
such tax or other governmental charge shall have been paid by the holder of such
Rights   Certificate  or  it  shall  have  been  established  to  the  Company's
satisfaction that no such tax or other governmental charge is due.

         SECTION 10.  PREFERRED  STOCK RECORD DATE.  Each Person (other than the
Company) in whose name any  certificate  for Preferred Stock (or Common Stock or
other  securities,  as the case may be) is issued  upon the  exercise  of Rights
shall for all  purposes  be deemed to have  become  the holder of record of such
Preferred  Stock  (or  Common  Stock  or other  securities,  as the case may be)
represented thereby on, and such certificate shall be dated, the date upon which
the Rights  Certificate  evidencing such Rights was duly surrendered and payment
of the Purchase Price (and

                                       11
<PAGE>

any applicable transfer taxes or other governmental charges) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
transfer books of the Company  relating to the Preferred  Stock (or Common Stock
or other securities, as the case may be) 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  applicable  transfer
books of the Company 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)(i)  If the  Company  shall  at any  time  after  the  date  of this
Agreement (A) declare or pay a dividend on the Preferred Stock payable in shares
of Preferred  Stock (or other capital  stock),  (B)  subdivide  the  outstanding
Preferred  Stock into a greater  number of shares,  (C) combine the  outstanding
Preferred Stock into a smaller number of shares,  or (D) issue any shares of its
capital stock in a  reclassification  of the Preferred Stock (including any such
reclassification  in connection  with a  consolidation  or merger  involving the
Company in which the Company is the surviving or continuing corporation), except
as otherwise  provided in SECTION 7(D) and this SECTION 11(A), then the Purchase
Price in effect immediately prior to the record date for such dividend or of the
effective date of such  subdivision,  combination or  reclassification,  and the
number and kind of shares of Preferred  Stock or other capital stock issuable on
such date shall be proportionately adjusted so that each holder of a Right shall
thereafter be entitled to receive,  upon exercise  thereof at the Purchase Price
in effect  immediately  prior to such  date,  the  aggregate  number and kind of
shares of Preferred  Stock or other capital stock, as the case may be, which, if
such Right had been exercised  immediately prior to such date and at a time when
the applicable  transfer books of the Company were open,  such holder would have
been  entitled to receive  upon such  exercise  and by virtue of such  dividend,
subdivision, combination or reclassification.  If an event occurs which requires
an  adjustment  under both this  SECTION  11(A)(I)  and SECTION  11(A)(II),  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).

                  (ii)     Subject to SECTIONS 23 AND 24, if:

                           (A) any Person, alone or together with its Affiliates
                  and  Associates,  shall,  at any time  after  the date of this
                  Agreement become an Acquiring Person (other than pursuant to a
                  Qualifying Tender Offer), or

                           (B) during such time as there is an Acquiring Person,
                  there shall be a reclassification of securities (including any
                  reverse stock split),  recapitalization of the Company, or any
                  merger  or  consolidation  of  the  Company  with  any  of its
                  Subsidiaries   or  any   other   transaction   or   series  of
                  transactions  involving the Company or any of its Subsidiaries
                  (whether  or not  with  or  into  or  otherwise  involving  an
                  Acquired Person),  other than a Flip-over Event(s),  which has
                  the effect, directly or indirectly, of increasing by more than
                  1% the  proportionate  share

                                       12
<PAGE>

                  of  the   outstanding   shares  of  any  class  of  equity  or
                  convertible   securities   of  the   Company  or  any  of  its
                  Subsidiaries  which is  directly  or  indirectly  beneficially
                  owned by any Acquiring Person or any Associate or Affiliate of
                  any Acquiring Person, or

                           (C)  any   Acquiring   Person  or  any  Associate  or
                  Affiliate of any Acquiring  Person, at any time after the date
                  of this  Agreement,  directly or  indirectly,  (1) shall merge
                  into the Company or otherwise  combine or consolidate with the
                  Company and the Company  shall be the  continuing or surviving
                  corporation of such merger,  combination or consolidation and,
                  in connection with such merger,  combination or consolidation,
                  none of the  outstanding  shares  of the  Common  Stock of the
                  Company  shall be changed into or exchanged for stock or other
                  securities  of the  Company or of any other  Person or cash or
                  any other property,  (2) shall, in one transaction or a series
                  of transactions, other than in connection with the exercise of
                  a Right  or  Rights  and  other  than in  connection  with the
                  exercise  or  conversion  of  securities  exercisable  for  or
                  convertible  into  securities of the Company which  securities
                  were  outstanding  prior to the  time  such  Acquiring  Person
                  became  such,  transfer any assets to the Company or to any of
                  its  Subsidiaries in exchange (in whole or in part) for shares
                  of Common Stock,  for other equity  securities of the Company,
                  or for securities  exercisable for or convertible  into shares
                  of  equity   securities  of  the  Company   (Common  Stock  or
                  otherwise)  or  otherwise  obtain  from the  Company,  with or
                  without  consideration,  any additional  shares of such equity
                  securities or securities  exercisable for or convertible  into
                  shares of such equity securities (other than pursuant to a pro
                  rata offer or  distribution  to all holders of Common  Stock),
                  (3) shall sell, purchase, lease, exchange,  mortgage,  pledge,
                  transfer  or  otherwise  dispose  of  assets  (in  one or more
                  transactions),  to, from,  with or of, as the case may be, the
                  Company or any of its Subsidiaries (including,  in the case of
                  Subsidiaries, by way of a merger, combination or consolidation
                  of any Subsidiary),  on terms and conditions less favorable to
                  the  Company  than  the  Company  would be able to  obtain  in
                  arm's-length  negotiations  with an unaffiliated  third party,
                  other than  pursuant  to a  Flip-over  Event,  (4) shall sell,
                  purchase,  lease,  exchange,  mortgage,  pledge,  transfer  or
                  otherwise acquire or dispose of in one transaction or a series
                  of  transactions,  to,  from or with  (as the case may be) the
                  Company or any of its  Subsidiaries  (other than incidental to
                  the  lines of  business,  if any,  engaged  in as of such date
                  between the Company and such Acquiring Person or Associates or
                  Affiliate)  assets  having an  aggregate  fair market value of
                  more than $1,000,000, other than pursuant to a transaction set
                  forth in SECTION  13(A),  (5) shall  receive any  compensation
                  from  the  Company  or  any  of its  Subsidiaries  other  than
                  compensation for full-time  employment as a regular  employee,
                  or fees for serving as a director, at rates in accordance with
                  the Company's (or its  Subsidiaries')  past practices,  or (6)
                  shall  receive the  benefit,  directly or  indirectly  (except
                  proportionately  as a shareholder and except if resulting from
                  a  requirement  of law  or  governmental  regulation),  of any
                  loans, assumptions of loans, advances,  guarantees, pledges or
                  other  financial  assistance,  or any tax credits or other tax
                  advantage, provided by the Company or any of its Subsidiaries,

                                       13
<PAGE>

                           (D)  provided  that the events  described in SECTIONS
                  11(A)(II)(A),  (B) AND (C) shall not include a  repurchase  by
                  the  Company of Common  Stock that is approved by the Board of
                  Directors,  promptly following five days after the date of the
                  occurrence  of the event  described  in  SECTION  11(A)(II)(A)
                  hereof and  promptly  following  the  occurrence  of any event
                  described in SECTION 11(A)(B) or (C) hereof,

         then proper  provision  shall promptly be made so that each holder of a
         Right shall (except as otherwise  provided herein,  including,  without
         limitation,  SECTION  7(D))  thereafter  be entitled  to receive,  upon
         exercise of the Right,  without  payment of the  Purchase  Price and in
         lieu of  Preferred  Stock,  such  number  of duly  authorized,  validly
         issued,  fully  paid and  nonassessable  shares of Common  Stock of the
         Company  (such  shares  being  referred  to herein  as the  "ADJUSTMENT
         SHARES") as shall be equal to the result  obtained  by (x)  multiplying
         the then current Purchase Price by the number of one  one-hundredths of
         a share of Preferred Stock for which a Right is then exercisable  (such
         product being  thereafter  referred to as the "PURCHASE PRICE" for each
         Right  and for all  purposes  of this  Agreement),  and  dividing  that
         product by (y) the current market price (determined pursuant to SECTION
         11(D)(I))  per  share  of  Common  Stock  on the  date  of  such  first
         occurrence;  provided,  however,  that if the  transaction  that  would
         otherwise give rise to the foregoing  adjustment is also subject to the
         provisions of SECTION 13, then only the  provisions of SECTION 13 shall
         apply  and no  adjustment  shall  be  made  pursuant  to  this  SECTION
         11(A)(II).

                  (iii) If the  number  of  shares  of  Common  Stock  which are
         authorized  by  the  Company's   articles  of  incorporation   but  not
         outstanding  or reserved for issuance  other than upon  exercise of the
         Rights is  insufficient to permit the exercise in full of the Rights in
         accordance with SECTION 11(A)(II),  the Company shall (A) determine the
         excess  of (1) the value of the  Adjustment  Shares  issuable  upon the
         exercise of a Right  (computed using the "CURRENT MARKET PRICE" used to
         determine the number of Adjustment Shares), over (2) the Purchase Price
         (such excess being  referred to herein as the  "SPREAD"),  and (B) with
         respect to each Right,  make adequate  provision to substitute  for the
         Adjustment Shares, (1) (to the extent available) Common Stock and then,
         (2) (to the extent  available)  other equity  securities of the Company
         which  the  Board  of  Directors  has   determined  to  be  essentially
         equivalent   to  shares  of  Common   Stock  in  respect  to  dividend,
         liquidation and voting rights (such securities being referred to herein
         as "COMMON  STOCK  EQUIVALENTS"),  and then,  if  necessary,  (3) other
         equity or debt  securities  of the  Company,  cash or other  assets,  a
         reduction in the Purchase  Price or any  combination  of the foregoing,
         having an  aggregate  value (as  determined  by the Board of  Directors
         based upon the advice of a  nationally  recognized  investment  banking
         firm  selected  by the  Board of  Directors)  equal to the value of the
         Adjustment  Shares;  provided,  however,  if the Company shall not have
         made adequate  provision to deliver value  pursuant to clause (B) above
         within  thirty  (30)  days  following  the  latter  of  (x)  the  first
         occurrence  of a Flip-in  Event and (y) the date on which the Company's
         right of  redemption  pursuant to SECTION 23 expires,  then the Company
         shall be obligated  to deliver,  upon the  surrender  for exercise of a
         Right and

                                       14
<PAGE>

         without requiring payment of the Purchase Price, shares of Common Stock
         (to the extent  available),  shares of Preferred  Stock of the Company,
         and then, if necessary,  cash,  which shares and cash have an aggregate
         value equal to the Spread. If the Board of Directors shall determine in
         good  faith  that it is likely  that  sufficient  additional  shares of
         Common Stock could be authorized  for issuance upon exercise in full of
         the Rights,  the 30 day period set forth above (such period,  as it may
         be extended, being referred to herein as the "SUBSTITUTION PERIOD") may
         be  extended  to the  extent  necessary,  but  not  more  than  90 days
         following the first  occurrence of a Flip-In  Event,  in order that the
         Company may seek  shareholder  approval for the  authorization  of such
         additional  shares. If the Company determines that some action is to be
         taken  pursuant  to the  first  or  second  sentence  of  this  SECTION
         11(A)(III),  then the  Company  (x) shall  provide,  subject to SECTION
         7(D), that such action shall apply uniformly to all outstanding Rights,
         and  (y)  may  suspend  the  exercisability  of the  Rights  until  the
         expiration   of  the   Substitution   Period   in  order  to  seek  any
         authorization  of additional  shares or to decide the appropriate  form
         and value of any  consideration  to be delivered as referred to in such
         first or second sentence.  If any such suspension  occurs,  the Company
         shall issue a public  announcement  stating that the  exercisability of
         the  Rights  has  been  temporarily  suspended,  as  well  as a  public
         announcement at such time as the suspension is no longer in effect. For
         purposes  of this  SECTION  11(A)(III),  the value of the Common  Stock
         shall be the  current  market  price  per  share of  Common  Stock  (as
         determined  pursuant to SECTION  11(D)) on the later of the date of the
         first  occurrence  of a Flip-in Event and the first date that the right
         to redeem the Rights  pursuant to SECTION 23 shall  expire;  any common
         stock  equivalent  shall be deemed to have the same value as the Common
         Stock on such date;  and the value of other  securities or assets shall
         be determined pursuant to SECTION 11(D)(III).

         (b)      If  the Company  shall fix a record  date for the  issuance of
rights,  options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period  expiring  within 45 calendar days after
such  record  date)  Preferred  Stock (or  securities  having  the same  rights,
privileges  and  preferences  as the  shares  of  Preferred  Stock  ("EQUIVALENT
PREFERRED  STOCK")) or securities  convertible into or exercisable for Preferred
Stock (or equivalent  preferred  stock) at a price per share of Preferred  Stock
(or equivalent  preferred stock) (in each case, taking account of any conversion
or exercise price) less than the current market price (as determined pursuant to
SECTION  11(D)) per share of Preferred  Stock on such record date,  the Purchase
Price to be in effect after such record date shall be determined by  multiplying
the Purchase Price in effect  immediately prior to such date by a fraction,  the
numerator of which shall be the number of shares of Preferred Stock  outstanding
on such  record  date,  plus the number of shares of  Preferred  Stock which the
aggregate  price (taking  account of any  conversion  or exercise  price) of the
total number of shares of Preferred Stock (and/or equivalent preferred stock) so
to be offered would purchase at such current market price,  and the  denominator
of which shall be the number of shares of Preferred  Stock  outstanding  on such
record date,  plus the number of  additional  shares of Preferred  Stock (and/or
equivalent  preferred stock) so to be offered.  In case such subscription  price
may be paid by delivery of consideration part or all of which shall be in a form
other than cash, the value of such consideration  shall be as determined in good
faith by the Board of  Directors of the Company,  whose  determination  shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes.  Shares of Preferred Stock owned by or

                                       15
<PAGE>

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

         (c)      In  case the Company shall fix a record date for the making of
a  distribution  to  all  holders  of  Preferred   Stock   (including  any  such
distribution  made in connection  with a consolidation  or merger  involving the
Company  in  which  the  Company  is  the  surviving  entity)  of  evidences  of
indebtedness,  equity  securities  other than  Preferred  Stock,  cash or assets
(other than a regular  periodic  cash  dividend  out of the earnings or retained
earnings  of the  Company)  or rights,  options  or  warrants  (excluding  those
referred to in SECTION  11(B)),  the  Purchase  Price to be in effect after such
record date shall be  determined  by  multiplying  the Purchase  Price in effect
immediately  prior to such  record date by a fraction,  the  numerator  of which
shall be the current market price (as determined  pursuant to SECTION 11(D)) per
share of  Preferred  Stock on such record  date,  less the value (as  determined
pursuant  to SECTION  11(D)(III))  of such  evidences  of  indebtedness,  equity
securities,  assets,  rights,  options or  warrants  so to be  distributed  with
respect to one share of Preferred  Stock,  and the denominator of which shall be
such current market price per share of Preferred Stock (as determined by SECTION
11(D)).  Such adjustment shall be made successively  whenever such a record date
is fixed,  and if such  distribution is not so made, 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.

         (d)(i)   For  the  purpose  of any  computation  hereunder  other  than
computations  made  pursuant to SECTION  11(A)(III)  OR 14, the "CURRENT  MARKET
PRICE" per share of Common  Stock on any date shall be deemed to be the  average
of the  daily  closing  prices  per  share  of  such  Common  Stock  for  the 30
consecutive  Trading  Days  immediately  prior to such  date;  for  purposes  of
computations made pursuant to SECTION 11(A)(III), the "CURRENT MARKET PRICE" per
share of Common Stock on any date shall be deemed to be the average of the daily
closing  prices per share of such Common  Stock for the 10  consecutive  Trading
Days  immediately  following  such date; and for purposes of  computations  made
pursuant to SECTION 14, the "CURRENT MARKET PRICE" per share of Common Stock for
any  Trading  Day shall be deemed  to be the  closing  price per share of Common
Stock for such Trading Day; provided,  however, that if the current market price
per  share of the  Common  Stock is  determined  during a period  following  the
announcement  by  the  issuer  of  such  Common  Stock  of  (A)  a  dividend  or
distribution  on such Common  Stock  payable in shares of such  Common  Stock or
securities  exercisable  for or  convertible  into shares of such  Common  Stock
(other than the Rights), or (B) any subdivision, combination or reclassification
of such Common  Stock,  and prior to the  expiration of the requisite 30 Trading
Day or 10 Trading Day period  after the  ex-dividend  date for such  dividend or
distribution,   or  the  record  date  for  such  subdivision,   combination  or
reclassification,  then, and in each such case, the "CURRENT MARKET PRICE" shall
be properly adjusted to take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes  place on such day,  the  average  of the  closing  bid and asked  prices,
regular  way,  in  either  case  as  reported  in  the  principal   consolidated
transaction  reporting  system with respect to securities  listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock  Exchange,  on the principal
national

                                       16
<PAGE>

securities  exchange on which the shares of Common  Stock are listed or admitted
to trading  or, if the  shares of Common  Stock are not  listed or  admitted  to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market,  as reported by The Nasdaq Stock Market or such other system then in use
or, if on any such date the  shares of Common  Stock are not  quoted by any such
organization,  the average of the closing bid and asked prices as furnished by a
professional  market maker  making a market in the Common Stock  selected by the
Board of Directors of the Company. If on any such date no market maker is making
a market in the Common Stock, then the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall be used.
If the  Common  Stock is not  publicly  held or not so  listed  or  traded,  the
"CURRENT MARKET PRICE" per share means the fair value per share as determined in
good faith by the Board of Directors of the Company,  which  determination shall
be described in a statement  filed with the Rights Agent and shall be conclusive
for all purposes.

                  (ii)  For  the  purpose  of  any  computation  hereunder,  the
         "CURRENT MARKET PRICE" per share of Preferred Stock shall be determined
         in the same  manner  set forth  above for the  Common  Stock in SECTION
         11(D)(I) (other than the last sentence thereof).  If the current market
         price per share of Preferred Stock cannot be determined in such manner,
         or if the Preferred Stock is not publicly held or listed or traded in a
         manner described in SECTION  11(d)(i),  then the "CURRENT MARKET PRICE"
         per share of  Preferred  Stock  shall be  conclusively  deemed to be an
         amount equal to 100 (as such number may be  appropriately  adjusted for
         such events as stock splits, stock dividends and recapitalizations with
         respect to the Common Stock occurring after the date of this Agreement)
         multiplied  by the current  market  price per share of Common Stock (as
         determined  pursuant to SECTION  11(D)(I) (other than the last sentence
         thereof)).  If neither  the  Common  Stock nor the  Preferred  Stock is
         publicly  held or so listed or traded,  the "CURRENT  MARKET PRICE" per
         share of the Preferred  Stock shall be determined in the same manner as
         set forth in the last sentence of SECTION 11(D)(I). For all purposes of
         this Agreement,  the "CURRENT MARKET PRICE" of one  one-hundredth  of a
         share of Preferred  Stock shall be equal to the "CURRENT  MARKET PRICE"
         of one share of Preferred Stock divided by 100.

                  (iii) For the purpose of any computation hereunder,  the value
         of any securities or assets other than Common Stock or Preferred  Stock
         shall be the fair  value as  determined  in good  faith by the Board of
         Directors of the Company,  which  determination shall be described in a
         statement  filed with the Rights Agent and shall be conclusive  for all
         purposes.

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

                                       17
<PAGE>

         (f)      If at any time, as a result of an adjustment  made pursuant to
SECTION 11(A)(II) or SECTION 13(A), the holder of any Right shall be entitled to
receive  upon  exercise  of such Right any shares of  capital  stock  other than
Preferred  Stock,  thereafter the number of such other shares so receivable upon
exercise  of any  Right and the  Purchase  Price  thereof  shall be  subject  to
adjustment  from time to time in a manner and on terms as nearly  equivalent  as
practicable to the provisions  with respect to the Preferred  Stock contained in
SECTIONS  11(A),  (B),  (C),  (E),  (G),  (H),  (I),  (J),  (K) AND (M), and the
provisions of SECTIONS 7, 9, 10, 13 AND 14 with respect to the  Preferred  Stock
shall apply on like terms to any such other shares.

         (g)      All  Rights originally issued by the Company subsequent to any
adjustment made hereunder shall evidence the right to purchase,  at the Purchase
Price then in effect,  the then  applicable  number of one  one-hundredths  of a
share of Preferred  Stock and other capital  stock of the Company  issuable from
time to time  hereunder  upon  exercise  of the  Rights,  all subject to further
adjustment as provided herein.

         (h)      Unless  the  Company  shall have  exercised  its  election  as
provided in SECTION  11(I),  upon each  adjustment  of the  Purchase  Price as a
result  of  the  calculations  made  in  SECTIONS  11(B)  AND  (C),  each  Right
outstanding  immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase,  at the adjusted  Purchase Price, that number of
one  one-hundredths  of a share of Preferred  Stock  (calculated  to the nearest
one-millionth)  obtained by (i) multiplying (x) the number of one one-hundredths
of a  share  for  which  a  Right  was  exercisable  immediately  prior  to this
adjustment  by (y) the  Purchase  Price  in  effect  immediately  prior  to such
adjustment of the Purchase  Price,  and (ii) dividing the product so obtained by
the Purchase Price in effect  immediately  after such adjustment of the Purchase
Price.

         (i)      The  Company may elect on or after the date of any  adjustment
of the Purchase Price to adjust the number of Rights,  in lieu of any adjustment
in the number of one  one-hundredths of a share of Preferred Stock issuable 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-hundredths
of a share of Preferred Stock for which such 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  ten-thousandth)  obtained  by  dividing  the  Purchase  Price in effect
immediately  prior to adjustment of the Purchase  Price by the Purchase Price in
effect  immediately  after  adjustment of the Purchase Price.  The Company shall
make a public  announcement  of its  election  to adjust  the  number of Rights,
indicating  the record date for the  adjustment,  and, if known at the time, the
amount of the  adjustment to be made.  This record date may be the date on which
the  Purchase  Price is  adjusted  or any day  thereafter,  but,  if the  Rights
Certificates have been issued,  shall be at least 10 days later than the date of
the public  announcement.  If Rights  Certificates  have been issued,  upon each
adjustment of the number of Rights  pursuant to this SECTION 11(I),  the Company
shall, as promptly as practicable,  cause to be distributed to holders of record
of Rights  Certificates  on such  record  date  Right  Certificates  evidencing,
subject to SECTION  14, the  additional  Rights to which such  holders  shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause  to  be  distributed  to  such  holders  of  record  in  substitution  and
replacement for the Rights  Certificates  held by such holders prior to the date
of  adjustment,  and upon  surrender

                                       18
<PAGE>

thereof, if required by the Company, new Rights Certificates  evidencing all the
Rights to which such holders  shall be entitled  after such  adjustment.  Rights
Certificates so to be distributed shall be issued, executed and countersigned in
the manner provided for herein (and may bear, at the option of the Company,  the
adjusted  Purchase Price) and shall be registered in the names of the holders of
record of  Rights  Certificates  on the  record  date  specified  in the  public
announcement.

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

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

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

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

         (n)      The  Company covenants and agrees that it will not at any time
after the Distribution  Date, (i) consolidate with any other Person,  (ii) merge
with or into any other Person,  (iii) effect a statutory share exchange with any
Person,  or (iv) sell,  lease or otherwise  transfer  (and/or  permit any of its
Subsidiaries  to sell,  lease or otherwise  transfer),  in one  transaction or a
series of related  transactions,  assets aggregating more than 50% of the assets
(measured by either

                                       19
<PAGE>

book value or fair market value) or generating more than 50% of operating income
or cash flow of the Company and its Subsidiaries, taken as a whole, to any other
Person or Persons if (x) at the time of or immediately after such consolidation,
merger,  statutory share exchange, sale, lease or transfer there are any rights,
warrants or other  instruments  or securities  outstanding  or any agreements or
arrangements in effect which would substantially diminish or otherwise eliminate
the  benefits  intended  to  be  afforded  by  the  Rights,  or  (y)  prior  to,
simultaneously with or immediately after such consolidation,  merger,  statutory
share  exchange,  sale,  lease or  transfer,  the  shareholders  of a Person who
constitutes,  or would  constitute,  the  "PRINCIPAL  PARTY" for the purposes of
SECTION 13 shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.

         (o)      The  Company  covenants and agrees that after the Distribution
Date, it will not, except as permitted by SECTIONS 23, 24 OR 27, take (or permit
any  Subsidiary  to take) any  action if at the time such  action is taken it is
reasonably foreseeable that such action will substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights, unless such action
is approved by the Board of Directors.

         (p)      Notwithstanding anything in this Agreement to the contrary, if
at any  time  after  the  consummation  of the  Acquisitions  and  prior  to the
Distribution Date the Company shall (i) pay a dividend on the outstanding shares
of  Common  Stock  payable  in  shares  of  Common  Stock,  (ii)  subdivide  the
outstanding  Common Stock into a larger  number of shares,  or (iii) combine the
outstanding  Common Stock into a smaller number of shares,  the number of Rights
associated  with  each  share of Common  Stock  then  outstanding,  or issued or
delivered  thereafter  shall be  proportionately  adjusted so that the number of
Rights thereafter  associated with each share of Common Stock following any such
event  shall  equal the  result  obtained  by  multiplying  the number of Rights
associated with each share of Common Stock  immediately prior to such event by a
fraction  the  numerator  of which shall be the total number of shares of Common
Stock  outstanding  immediately  prior to the  occurrence  of the  event and the
denominator  of which  shall be the total  number  of  shares  of  Common  Stock
outstanding immediately following the occurrence of such event.

         SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever  an  adjustment  is made as provided in SECTIONS 11 AND 13, the Company
shall (a) promptly  prepare a certificate  setting forth such  adjustment  and a
brief statement of the facts accounting for such  adjustment,  (b) promptly file
with the Rights Agent and with each transfer  agent for the Preferred  Stock and
the  Common  Stock a copy  of such  certificate,  and (c)  mail a brief  summary
thereof to each holder of a Rights Certificate (or, if prior to the Distribution
Date,  to each holder of a certificate  representing  shares of Common Stock) in
the manner set forth in SECTION 26. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment contained therein.

         SECTION  13.  CONSOLIDATION,  MERGER OR SALE OR  TRANSFER  OF ASSETS OR
EARNING POWER.  (a) Except for any transaction with a Person who has consummated
a  Qualifying  Tender  Offer  which  transaction  is  approved  by the  Board of
Directors, if following the Share Acquisition Date, directly or indirectly,

                                       20
<PAGE>

                           (w) the Company shall consolidate with, merge with or
                  into,  or otherwise  combine with,  any other Person,  and the
                  Company shall not be the  continuing or surviving  corporation
                  of such consolidation, merger or combination, or

                           (x) any Person shall  consolidate with, merge with or
                  into, or otherwise combine with, the Company,  and the Company
                  shall  be the  continuing  or  surviving  corporation  of such
                  consolidation,  merger or combination  and, in connection with
                  such consolidation,  merger or combination, all or part of the
                  outstanding  shares of Common  Stock shall be changed  into or
                  exchanged  for other stock or securities of the Company or any
                  other Person or cash or any other property, or

                           (y) the  Company  shall be a party  to any  statutory
                  share  exchange  with any other Person after which the Company
                  is a subsidiary of any other Person, or

                           (z)   the   Company   and/or   one  or  more  of  its
                  Subsidiaries shall sell, lease or otherwise  transfer,  in one
                  transaction  or  a  series  of  related  transactions,  assets
                  aggregating  more than 50% of the assets  (measured  by either
                  book value or fair market value) or  generating  more than 50%
                  of the  operating  income or cash flow of the  Company and its
                  Subsidiaries,  taken  as a  whole,  to  any  other  Person  or
                  Persons,

then, and in each such case, proper provision shall promptly be made so that (i)
each holder of a Right,  except as provided in SECTION 7(D), shall thereafter be
entitled to receive,  upon exercise  thereof at the then current Purchase Price,
such number of duly  authorized,  validly issued,  fully paid and  nonassessable
shares  of freely  tradable  Common  Stock of the  Principal  Party (as  defined
below), not subject to any rights of call or first refusal, liens,  encumbrances
or other claims, as shall be equal to the result obtained by (A) multiplying the
then current  Purchase Price by the number of one  one-hundredths  of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a Flip-over Event (or, if a Flip-in Event has previously occurred,
multiplying the number of such one  one-hundredths of a share of Preferred Stock
for which a Right was exercisable immediately prior to the first occurrence of a
Flip-in Event by the Purchase  Price in effect  immediately  prior to such first
occurrence)  (such product being thereafter  referred to as the "PURCHASE PRICE"
for each  Right and for all  purposes  of this  Agreement),  and  dividing  that
product by (B) 50% of the current market price  (determined  pursuant to SECTION
11(D)(I)) per share of the Common Stock or other  securities  of such  Principal
Party) on the date of consummation of such consolidation,  merger,  combination,
statutory share exchange, sale, lease or transfer;

                  (ii) the Principal  Party shall  thereafter be liable for, and
         shall assume,  by virtue of such  consolidation,  merger,  combination,
         statutory share exchange,  sale, lease or transfer, all the obligations
         and duties of the Company pursuant to this Agreement;

                                       21
<PAGE>

                  (iii) the term "COMPANY"  shall  thereafter be deemed to refer
         to such  Principal  Party,  it  being  specifically  intended  that the
         provisions  of SECTION  11 shall  apply  only to such  Principal  Party
         following the first occurrence of a Flip-over Event;

                  (iv) such  Principal  Party shall take such steps  (including,
         without  limitation,  the authorization and reservation of a sufficient
         number  of  shares  of its  Common  Stock  to  permit  exercise  of all
         outstanding Rights in accordance with this SECTION 13(A)) 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 shares of its Common
         Stock thereafter deliverable upon the exercise of the Rights; and

                  (v) the provisions of SECTION  11(A)(II) shall be of no effect
         following the first occurrence of a Flip-over Event.

         (b)      "PRINCIPAL PARTY" means:

                  (i) in the case of any transaction described in SECTIONS 13(A)
         (W),  (X) OR (Y),  (A) the Person that is the issuer of any  securities
         into which shares of Common Stock of the Company are  converted in such
         merger,  consolidation,  or  combination  or for which shares of Common
         Stock of the Company are exchanged in such  statutory  share  exchange,
         or, if there is more than one such  issuer,  the  issuer of the  Common
         Stock of which has the greatest  aggregate  market value,  or (B) if no
         securities are issued,  (x) the person that survives such consolidation
         or is the other party to the merger,  combination  or  statutory  share
         exchange,  or, if there is more than one such  Person,  the  Person the
         Common Stock of which has the greatest  aggregate  market value, or (y)
         if the Person  that is the other  party to the merger  does not survive
         the merger,  the Person that does  survive  the merger  (including  the
         Company if it survives); and

                  (ii) in the case of any  transactions  described  in  SECTIONS
         13(A)(Z),  the Person that is the party receiving the greatest  portion
         of the assets,  operating income or cash flow  transferred  pursuant to
         such transaction or transactions, or, if each person that is a party to
         such  transaction  or  transactions  receives  the same  portion of the
         assets, operating income or cash flow so transferred, or, if the Person
         receiving the greatest portion of the assets,  operating income or cash
         flow cannot be determined, the person the Common Stock of which has the
         greatest aggregate market value;

provided, however, that in any such case, (A) if the Common Stock of such Person
is not at such time and has not been  continuously  over the preceding  12-month
period  registered  under  Section 12 of the Exchange  Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered,  "PRINCIPAL PARTY" shall refer to such other Person; and
(B) in case such Person is a Subsidiary,  directly or  indirectly,  of more than
one  Person,  the  Common  Stock  of two or more of which  are and have  been so
registered,  "PRINCIPAL  PARTY"  shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.

                                       22
<PAGE>

         (c) The Company shall not  consummate any such  consolidation,  merger,
combination,  statutory  share  exchange,  sale,  lease or  transfer  unless the
Principal  Party  shall have a  sufficient  number of  authorized  shares of its
Common Stock which are not  outstanding  or  otherwise  reserved for issuance to
permit the exercise in full of the Rights in accordance with this SECTION 13 and
unless prior  thereto the Company and such  Principal  Party shall have executed
and  delivered to the Rights Agent a  supplemental  agreement  providing for the
terms set forth in SECTIONS 13(A) AND (B) and further providing that, as soon as
practicable after the date of any consolidation,  merger, combination, statutory
share  exchange,  sale,  lease or  transfer  mentioned  in  SECTION  13(A),  the
Principal  Party will (i) prepare and file a  registration  statement  under the
Securities  Act with  respect  to the Rights and the  securities  issuable  upon
exercise of the Rights on an appropriate  form, and will use its best efforts to
cause such registration statement (A) to become effective as soon as practicable
after such filing,  and (B) to remain  effective (with a prospectus at all times
meeting the  requirements of the Securities Act) until the Expiration  Date; and
(ii) deliver to holders of the Rights  historical  financial  statements for the
Principal Party and each of its Affiliates which comply in all respects with the
requirements for registration on Form 10 under the Exchange Act.

         (d)  The  provisions  of this  SECTION  13  shall  similarly  apply  to
successive  mergers,  consolidations,  combinations,  statutory share exchanges,
sales, leases or other transfers. If any Flip-over Event shall occur at any time
after the occurrence of a Flip-in Event,  the Rights which have not  theretofore
been exercised shall  thereafter  become  exercisable in the manner described in
SECTION 13(A).

         SECTION 14.  FRACTIONAL RIGHTS AND FRACTIONAL  SHARES.  (a) The Company
shall  not be  required  to  issue  fractions  of  Rights,  except  prior to the
Distribution  Date  as  provided  in  SECTION  11(P),  or to  distribute  Rights
Certificates  which evidence  fractional  Rights. In lieu of any such fractional
Rights,  the  Company  shall  pay  to  the  registered  holders  of  the  Rights
Certificates  with regard to which such  fractional  Rights  would  otherwise be
issuable  an amount in cash equal to the same  fraction  of the  current  market
price of a whole Right.  For purposes of this SECTION 14(A),  the current market
price of a whole Right shall be the closing price of a Right for the Trading Day
immediately  prior to the date on which such  fractional  Rights would otherwise
have been  issuable.  The closing price of a Right 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 on the principal national  securities  exchange on which the Rights are
listed or  admitted  to trading  or, if the Rights are not listed or admitted to
trading on any national securities  exchange,  the last quoted price, or, if not
so  quoted,   the  average  of  the  high  bid  and  low  asked  prices  in  the
over-the-counter  market,  as reported by The Nasdaq  Stock Market or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization,  the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the  Company.  If on any such date no such market maker is making a
market in the Rights,  the current market price of the Rights on such date shall
be as determined in good faith by the Board of Directors of the Company.

                                       23
<PAGE>

         (b) The Company  shall not be required to issue  fractions of shares of
Preferred Stock (other than fractions  which are multiples of one  one-hundredth
of a share of  Preferred  Stock) upon  exercise  of the Rights or to  distribute
certificates  which evidence  fractional  shares of Preferred  Stock (other than
fractions  which are  multiples  of one  one-hundredth  of a share of  Preferred
Stock).  In lieu of any such fractional  shares of Preferred  Stock, the Company
shall pay to the  registered  holders  of Rights  Certificates  at the time such
Rights  are  exercised  as herein  provided  an amount in cash equal to the same
fraction  of the  current  market  price  of one  one-hundredth  of a  share  of
Preferred  Stock.  For purposes this SECTION 14(B),  the current market price of
one  one-hundredth  of a share of Preferred Stock shall be one  one-hundredth of
the  closing  price of a share of  Preferred  Stock (as  determined  pursuant to
SECTION  11(D))  for the  Trading  Day  immediately  prior  to the  date of such
exercise.

         (c)  Following  the  occurrence  of any  Triggering  Event  or upon any
exchange  pursuant  to SECTION  24, the  Company  shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute
certificates  which  evidence  fractional  shares  of Common  Stock.  In lieu of
fractional  shares of Common  Stock,  the  Company  shall pay to the  registered
holders  of  Rights  Certificates  at the time  such  Rights  are  exercised  or
exchanged as provided herein an amount in cash equal to the same fraction of the
current  market price of a share of Common  Stock.  For purposes of this SECTION
14(C),  the current market price of a share of Common Stock shall be the closing
price of a share of Common Stock (as  determined  pursuant to SECTION  11(D)(I))
for the Trading Day immediately prior to the date of such exercise or exchange.

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

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

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

                                       24
<PAGE>

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

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

         (c) subject to SECTIONS 6(A) AND 7(E), the Company and the Rights Agent
may deem and treat the Person in whose name a Rights  Certificate  (or, prior to
the Distribution Date, a certificate representing Common Stock) is registered as
the absolute owner thereof and of the Rights evidenced thereby  (notwithstanding
any  notations  of  ownership  or  writing  on  the  Rights  Certificate  or the
certificate  representing  shares of Common  Stock made by anyone other than the
Company or the Rights  Agent)  for all  purposes  whatsoever,  and  neither  the
Company nor the Rights  Agent,  subject to the last  sentence  of SECTION  7(D),
shall be affected by any notice to the contrary; and

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

         SECTION 17.  RIGHTS  CERTIFICATE  HOLDER NOT DEEMED A  SHAREHOLDER.  No
holder, as such, of any Rights  Certificate  shall be entitled to vote,  receive
dividends or be deemed for any purpose the holder of the shares of capital stock
which may at any time be  issuable  on the  exercise  of the Rights  represented
thereby,  nor shall anything  contained  herein or in any Rights  Certificate be
construed to confer upon the holder of any Rights  Certificate,  as such, any of
the rights of a shareholder of the Company or any right to vote for the election
of  directors  or upon any  matter  submitted  to  shareholders  at any  meeting
thereof,  or to give or withhold consent to any corporate  action, or to receive
notice of meetings or other actions affecting  shareholders  (except as provided
in SECTION 25), or to receive  dividends or subscription  rights,  or otherwise,
until the Right or Rights evidenced by such Rights  Certificate  shall have been
exercised in accordance with the provisions hereof.

         SECTION 18.  CONCERNING THE RIGHTS AGENT. (a) The Company agrees to pay
to the Rights Agent  reasonable  compensation  for all  services  rendered by it
hereunder and, from time to time, on demand of the Rights Agent,  its reasonable
expenses and counsel fees and other  disbursements  incurred in the execution or
administration  of this Agreement and the exercise and performance of its duties
hereunder.  The Company  also agrees to  indemnify  the Rights Agent for, and to
hold it harmless  against,  any loss,  liability,  or expense,  incurred without
negligence, bad

                                       25
<PAGE>

faith or willful  misconduct on the part of the Rights Agent,  for anything done
or  omitted  by  the  Rights  Agent  in  connection   with  the  acceptance  and
administration  of this  Agreement or the exercise or  performance of its duties
hereunder,  including  the costs and expenses of defending  against any claim of
liability.

         (b) The Rights  Agent shall be  protected  and shall incur no liability
for or in respect of any action  taken,  suffered or omitted by it in connection
with the  administration of this Agreement or the exercise or performance of its
duties  hereunder in reliance upon any Rights  Certificate  or  certificate  for
Common Stock or for other securities of the Company, instrument of assignment or
transfer,   power  of  attorney,   endorsement,   affidavit,   letter,   notice,
instruction,  direction,  consent,  certificate,  statement,  or other  paper or
document  believed by it to be genuine  and to be signed,  executed  and,  where
necessary, verified or acknowledged, by the proper Person or Persons.

         SECTION 19. MERGER OR  CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any  corporation  into which the Rights Agent or any successor  Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any  merger or  consolidation  to which the Rights  Agent or any  successor
Rights Agent shall be a party,  or any  corporation  succeeding to the corporate
trust or stock  transfer  business of the Rights Agent or any  successor  Rights
Agent,  shall be the successor to the Rights Agent under this Agreement  without
the  execution  or filing of any paper or any  further act on the part of any of
the parties hereto;  provided,  however, that such corporation would be eligible
for appointment as a successor  Rights Agent under the provisions of SECTION 21.
In case at the time such  successor  Rights  Agent  shall  succeed to the agency
created  by this  Agreement,  any of the  Rights  Certificates  shall  have been
countersigned  but not delivered,  any such successor Rights Agent may adopt the
countersignature   of  a  predecessor  Rights  Agent  and  deliver  such  Rights
Certificates  so  countersigned;  and in  case at that  time  any of the  Rights
Certificates shall not have been  countersigned,  any successor Rights Agent may
countersign  such  Rights  Certificates  either  in the name of the  predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such  Rights  Certificates  shall  have the full  force  provided  in the Rights
Certificates and in this Agreement.

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

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

         (a) The Rights Agent may consult  with legal  counsel (who may be legal
counsel  for the  Company),  and the opinion of such  counsel  shall be full and
complete authorization and

                                       26
<PAGE>

protection  to the Rights  Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.

         (b) Whenever in the  performance of its duties under this Agreement the
Rights  Agent  shall  deem it  necessary  or  desirable  that any fact or matter
(including,  without limitation,  the identity of any "ACQUIRING PERSON" and the
determination of "CURRENT MARKET PRICE") be proved or established by the Company
prior to taking,  suffering or omitting to take any action hereunder,  such fact
or matter (unless other evidence in respect thereof is  specifically  prescribed
herein) may be deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board,  the  President,  any Vice  President,  the
Secretary or any Assistant  Secretary of the Company and delivered to the Rights
Agent. Any such certificate shall be full  authorization to the Rights Agent for
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  only  for its own
negligence, bad faith or willful misconduct.

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

         (e) The Rights Agent shall not be under any  responsibility  in respect
of the validity of this  Agreement or the execution and delivery  hereof (except
the due  execution  hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature  thereof);  nor
shall it be  responsible  for any  breach  by the  Company  of any  covenant  or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to SECTION 7(D)) or any adjustment in the terms of
the Rights  (including  the manner,  method or amount  thereof)  provided for in
SECTIONS 3, 11, 13, 23 OR 24, or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights  Certificates  after actual notice of any such  adjustment);
nor  shall it by any act  hereunder  be  deemed  to make any  representation  or
warranty as to the authorization or reservation of any shares of Common Stock or
Preferred  Stock  to  be  issued  pursuant  to  this  Agreement  or  any  Rights
Certificate or as to whether any shares of Common Stock or Preferred Stock will,
when issued, be duly authorized, validly issued, fully paid and nonassessable.

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

         (g) The  Rights  Agent is  hereby  authorized  and  directed  to accept
instructions  with respect to the  performance of its duties  hereunder from the
Chairman of the Board,  the President any Vice  President,  the Secretary or any
Assistant Secretary of the Company,  and to apply to

                                       27
<PAGE>

such officers for advice or instructions  in connection with its duties,  and it
shall not be liable for any action taken,  suffered or omitted to be taken by it
in good faith in accordance with instructions of any such officer.

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

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

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

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

         SECTION 21. CHANGE OF RIGHTS  AGENT.  The Rights Agent or any successor
Rights Agent may resign and be discharged  from its duties under this  Agreement
upon 30 days' written notice mailed to the Company and to each transfer agent of
the Common Stock and  Preferred  Stock by  registered  or certified  mail,  and,
subsequent to the Distribution  Date, to the holders of the Rights  Certificates
by  first-class  mail.  The Company may remove the Rights Agent or any successor
Rights  Agent  upon 30 days'  written  notice,  mailed  to the  Rights  Agent or
successor  Rights Agent,  as the case may be, and to each transfer  agent of the
Common Stock and Preferred Stock by registered or certified mail, and subsequent
to  the  Distribution  Date,  to  the  holders  of the  Rights  Certificates  by
first-class  mail.  If the  Rights  Agent  shall  resign or be  removed or shall
otherwise become  incapable of acting,  the Company shall appoint a successor to
the Rights Agent.  If the Company shall fail to make such  appointment  within a
period of 30 days of giving notice of such removal or after it has been notified
in writing of such  resignation or incapacity by the resigning or  incapacitated
Rights  Agent or by the holder of a Rights  Certificate  (who  shall,  with such
notice,  submit his Rights Certificate for inspection by the Company),  then the
registered holder of any Rights  Certificate may apply to any court of competent
jurisdiction  for the

                                       28
<PAGE>

appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the  Company or by such a court,  shall be (a) a  corporation  organized  and
doing  business  under the laws of the United States or of the States of Georgia
or New York (or any other state of the United States so long as such corporation
is authorized to do business as a banking  institution  in the States of Georgia
or New  York),  in good  standing,  having a  principal  office  in the State of
Georgia,  which is  authorized  under such laws to  exercise  stock  transfer or
corporate  trust powers and is subject to  supervision or examination by federal
or state  authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least  $50,000,000 or (b) an Affiliate of a
corporation described in SECTION 21(A). After appointment,  the successor Rights
Agent shall be vested with the same powers,  rights, duties and responsibilities
as if it had been originally  named as Rights Agent without further act or deed;
but the  predecessor  Rights Agent shall  deliver and transfer to the  successor
Rights  Agent any  property  at the time held by it  hereunder,  and execute and
deliver  any  further  assurance,  conveyance,  act or  deed  necessary  for the
purpose. Not later than the effective date of any such appointment,  the Company
shall file notice thereof in writing with the predecessor  Rights Agent and each
transfer agent of the Common Stock and the Preferred Stock,  and,  subsequent to
the  Distribution  Date,  mail a notice  thereof in  writing  to the  registered
holders of the Rights  Certificates.  Failure to give any notice provided for in
this  SECTION  21, or any  defect  therein,  shall not affect  the  legality  or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.

         SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES.  Notwithstanding any of
the provisions of this  Agreement or of the Rights to the contrary,  the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the  Purchase  Price  and the  number  or kind or  class of  shares  or other
securities issuable or property  purchasable upon exercise of the Rights made in
accordance with the provisions of this Agreement.

         SECTION 23.  REDEMPTION  AND  TERMINATION.  (a) The Company may, at its
option,  but only upon the vote of a majority of the Board of Directors  then in
office,  at any time prior to the  earlier of (i) the Close of  Business  on the
tenth day after the Share  Acquisition  Date (or such later date as the Board of
Directors  may  designate  prior  to  such  time  as the  Rights  are no  longer
redeemable), or (ii) the Final Expiration Date, redeem all but not less than all
of the then  outstanding  Rights at a redemption  price of $0.001 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 referred to herein as the "REDEMPTION  PRICE"), and the Company may,
at its option,  pay the Redemption Price in shares of Common Stock (based on the
"CURRENT  MARKET  VALUE," as defined in SECTION  11(D),  of the shares of Common
Stock at the time of redemption), cash or any other form of consideration deemed
appropriate by the Board of Directors; provided, however, that any redemption of
Rights shall be subject to any additional  approval  procedures  required by the
articles of incorporation or bylaws of the Company.  Notwithstanding anything in
this Agreement to the contrary,  the Rights shall not be  exercisable  after the
first  occurrence of a Flip-in  Event until such time as the Company's  right of
redemption hereunder has expired.

                                       29
<PAGE>

         (b) If,  following  the  occurrence  of a Share  Acquisition  Date  and
following the  expiration of the right of redemption  hereunder (i) a Person who
is an Acquiring Person shall have transferred or otherwise  disposed of a number
of shares of Common  Stock in one  transaction  or series of  transactions,  not
directly or indirectly  involving the Company or any of its Subsidiaries,  which
did not result in the occurrence of a Triggering  Event such that such Person is
thereafter the Beneficial Owner of 10% or less of the outstanding  Common Stock,
and (ii) there are no other Persons immediately  following the occurrence of the
event  described  in clause  (i) who are  Acquiring  Persons,  then the right of
redemption  shall be reinstated  and  thereafter be subject to the provisions of
this SECTION 23.

         (c)  Immediately  upon the  action  of the  Board of  Directors  of the
Company electing to redeem the Rights and without any further action and without
any notice,  the right to exercise the Rights will  terminate and thereafter the
only right of the holders of Rights shall be to receive the Redemption Price for
each Right so held.  The Company shall promptly  thereafter  give notice of such
redemption  to the Rights  Agent and the holders of the Rights in the manner set
forth in SECTION 26; provided,  however, that the failure to give, or any defect
in, such notice  shall not affect the  validity of such  redemption.  Any notice
which is mailed in the manner provided herein shall be deemed given,  whether or
not the holder  receives the notice.  Each such notice of redemption  will state
the method by which the payment of the Redemption Price will be made.

         SECTION  24.  EXCHANGE.  (a) At any time  after any  Person  becomes an
Acquiring Person,  the Company may, upon the election of the Board of Directors,
at its option,  exchange  all or part of the then  outstanding  and  exercisable
Rights (which shall not include Rights that have become void pursuant to SECTION
7(D)) for  shares of Common  Stock at an  exchange  ratio of one share of Common
Stock per Right,  appropriately  adjusted  to  reflect  any stock  split,  stock
dividend or similar  transaction  occurring after the date hereof (such exchange
ratio being hereinafter referred to as the "EXCHANGE RATIO").

         (b) Immediately  upon the action of the Board of Directors  electing to
exchange any Rights pursuant to SECTION 24(A) and without any further action and
without  any  notice,  the right to exercise  such  Rights  will  terminate  and
thereafter  the only right of a holder of such Rights  shall be to receive  that
number of shares of Common Stock equal to the number of such Rights held by such
holder  multiplied by the Exchange Ratio. The Company shall promptly  thereafter
give notice of such  exchange to the Rights  Agent and the holders of the Rights
to be exchanged in the manner set forth in SECTION 26; provided,  however,  that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. Any notice which is mailed in the manner provided herein shall
be deemed given, whether or not the holder receives the notice. Each such notice
of exchange  will state the method by which the exchange of the shares of Common
Stock for Rights will be effected and, in the event of any partial exchange, the
number of Rights which will be exchanged. Any partial exchange shall be effected
pro rata based on the number of Rights (other than Rights which have become void
pursuant to SECTION 7(D)) held by each holder of Rights.

         (c) If there  shall  not be  sufficient  Common  Stock  issued  but not
outstanding  or  authorized  but  unissued  to permit any  exchange of Rights as
contemplated  by this SECTION 24, the Company  shall take all such action as may
be necessary to authorize  additional Common Stock

                                       30
<PAGE>

for issuance upon exchange of the Rights. In the event the Company shall,  after
a good faith  effort,  be unable to take all such action as may be  necessary to
authorize such additional  Common Stock, the Company may substitute common stock
equivalents  (as  defined in  SECTION  11(A)(III))  for  shares of Common  Stock
exchangeable for Rights,  at the initial rate of one common stock equivalent for
each share of Common Stock, as appropriately  adjusted to reflect adjustments in
dividend,  liquidation and voting rights of common stock equivalents pursuant to
the terms  thereof,  so that each common stock  equivalent  delivered in lieu of
each share of Common Stock shall have essentially the same dividend, liquidation
and voting rights as one share of Common Stock.

         (d) The Company  shall not be required  to issue  fractional  shares of
Common Stock or to distribute  certificates which evidence  fractional shares of
Common Stock.  In lieu of such  fractional  shares of Common Stock,  the Company
shall pay to the registered holders of Rights  Certificates with regard to which
such fractional shares of Common Stock would otherwise be issuable, an amount in
cash equal to the same fraction of the current  market value of a whole share of
Common Stock.  For purposes of this SECTION 24(D), the current market value of a
whole  share of Common  Stock  shall be the  closing  price of a share of Common
Stock (as determined  pursuant to SECTION 11(D)) for the Trading Day immediately
prior to the date of the exchange.

         SECTION  25.  NOTICE OF  PROPOSED  ACTIONS.  (a) If the  Company  shall
propose,  at any time  after  the  Distribution  Date,  (i) to pay any  dividend
payable in stock of any class to the holders of  Preferred  Stock or to make any
other  distribution  to the  holders of  Preferred  Stock  (other than a regular
quarterly  cash  dividend out of earnings or retained  earnings of the Company),
(ii) to offer to the  holders  of its  Preferred  Stock  rights or  warrants  to
subscribe for or to purchase any additional  shares of Preferred Stock or shares
of stock of any  class or any other  securities,  rights  or  options,  (iii) to
effect   any   reclassification   of  its   Preferred   Stock   (other   than  a
reclassification  involving  only the  subdivision or combination of outstanding
shares of Preferred  Stock),  (iv) to effect any consolidation or merger with or
into any other Person,  or to effect a statutory share exchange with any Person,
or to effect  and/or to permit  one or more of its  Subsidiaries  to effect  any
sale,  lease or other  transfer,  in one  transaction  or a  series  of  related
transactions,  of assets  aggregating  more than 50% of the assets  (measured by
either  book  value or fair  market  value) or  generating  more than 50% of the
operating  income or cash flow of the Company and its  Subsidiaries,  taken as a
whole,  to any  other  Person or  Persons,  or (v) to  effect  the  liquidation,
dissolution  or winding up of the Company,  then, in each such case, the Company
shall give to each holder of a Right,  to the extent  feasible and in accordance
with  SECTION 26, a notice of such  proposed  action,  which  shall  specify the
record date for the purposes of any such dividend,  distribution  or offering of
rights  or   warrants,   or  the  date  on  which  any  such   reclassification,
consolidation,   merger,   statutory  share  exchange,  sale,  lease,  transfer,
liquidation,  dissolution  or  winding  up is to  take  place  and  the  date of
participation  therein by the holders of Preferred Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered by
clause  (i) or (ii)  above  at  least  20 days  prior  to the  record  date  for
determining  holders of the  Preferred  Stock  entitled to  participate  in such
dividend, distribution or offering, and in the case of any such other action, at
least 20 days  prior to the date of the  taking of such  proposed  action or the
date of participation therein by the holders of Preferred Stock, whichever shall
be the  earlier.  The  failure to give notice  required  by this  Section or any
defect  therein shall

                                       31
<PAGE>

not affect the  legality or  validity of the action  taken by the Company or the
vote upon any such action.

         (b) Notwithstanding  anything in this Agreement to the contrary,  prior
to the Distribution Date a public filling by the Company with the Securities and
Exchange  Commission  shall  constitute  sufficient  notice  to the  holders  of
securities of the Company,  including the Rights, for purposes of this Agreement
and no other notice need be given to such holders.

         (c) If a Triggering Event shall occur,  then, in any such case, (i) the
Company shall as soon as practicable  thereafter give to each holder of a Right,
in accordance  with SECTION 26, a notice of the occurrence of such event,  which
shall specify the event and the  consequences  of the event to holders of Rights
under  SECTION  11(A)(II) OR 13, as the case may be, and (ii) all  references in
SECTION 25(A) to Preferred  Stock shall be deemed  thereafter to refer to Common
Stock or other capital stock, as the case may be.

         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 to or on the
Company  shall be  sufficiently  given or made if sent by  first-class,  postage
prepaid  mail to the  address of the Company  indicated  on the  signature  page
hereof or such other  address  as the  Company  shall  specify in writing to the
Rights  Agent.  Subject to the  provisions  of SECTION  21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right to or on the Rights  Agent shall be  sufficiently  given or made if
sent by  first-class,  postage  prepaid  mail to the address of the Rights Agent
indicated on the signature page hereof or such other address as the Rights Agent
shall specify in writing to the Company.  Notices or demands  authorized by this
Agreement  to be given or made by the Company or the Rights  Agent to the holder
of any Rights  Certificate (or, prior to the Distribution Date, to the holder of
any certificate representing shares of Common Stock) shall be sufficiently given
or made if sent by  first-class,  postage  prepaid  mail to the  address of such
holder shown on the registry books of the Company.

         SECTION 27. SUPPLEMENTS AND AMENDMENTS.  Prior to the Distribution Date
and subject to the penultimate  sentence of this SECTION 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of  this  Agreement   without  the  approval  of  any  holders  of  certificates
representing  shares of Common Stock. From and after the Distribution  Date, and
subject to the  penultimate  sentence  of this  SECTION  27, the Company and the
Rights  Agent  shall,  if the  Company  so  directs,  supplement  or amend  this
Agreement without the approval of any holders of Right Certificates in order (a)
to cure any  ambiguity,  (b) to correct or supplement  any  provision  contained
herein which may be defective or inconsistent with any other provisions  herein,
(c) to  shorten  or  lengthen  any time  period  hereunder,  or (d) to change or
supplement  the  provisions  hereof in any  manner  which the  Company  may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Rights  (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  pursuant to SECTION 27(C) to lengthen (i) a time period
relating  to when the Rights may be  redeemed at such time as the Rights are not
then redeemable,  or (ii) any other time period,  unless  lengthening such other
time period is for the  purpose of  protecting,  enhancing,  or  clarifying  the
rights of, or benefits to the  holders  of, the

                                       32
<PAGE>

Rights.  Upon the delivery of a certificate  from an appropriate  officer of the
Company which states that the proposed  supplement or amendment is in compliance
with the terms of this Section,  the Rights Agent shall execute such  supplement
or  amendment.  Notwithstanding  anything  contained  in this  Agreement  to the
contrary,  no supplement or amendment shall be made which changes the Redemption
Price,  the Final  Expiration  Date,  the  Purchase  Price or the  number of one
one-hundredths  of a share of Preferred  Stock for which a Right is exercisable.
Prior to the Distribution  Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.

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

         SECTION 29.  DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.  For
all  purposes  of this  Agreement,  any  calculation  of the number of shares of
Common Stock  outstanding  at any  particular  time,  including  for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial  Owner,  shall be made in accordance  with
the last sentence of Rule 13d-3(d)(1)(i)  under the Exchange Act as in effect on
the date of this Agreement. The Board of Directors of the Company shall have the
exclusive  power and authority to administer  this Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the  administration  of this Agreement,  including,
without limitation,  the right and power to (a) interpret the provisions of this
Agreement, and (b) make all determinations deemed necessary or advisable for the
administration  of this  Agreement  (including  a  determination  to  redeem  or
exchange  or not to redeem or exchange  the Rights or to amend this  Agreement);
provided,  however,  that any  redemption of Rights shall also be subject to any
additional  approval  procedures  required by the articles of  incorporation  or
bylaws of the  Company.  All such  actions,  calculations,  interpretations  and
determinations  (including, for purposes of clause (y) below, all omissions with
respect  to the  foregoing)  which are done or made by the Board in good  faith,
shall (x) be final,  conclusive  and  binding  on the  Company  (subject  to any
additional  redemption  approval  procedures  referred  to in the proviso to the
immediately preceding sentence), the Rights Agent, the holders of the Rights and
all other parties,  and (y) not subject the Board of Directors of the Company to
any liability to the holders of the Rights.

         SECTION 30. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company,  the Rights Agent and
the  registered   holders  of  the  Rights   Certificates  (and,  prior  to  the
Distribution Date, the certificates representing the shares of Common Stock) any
legal or  equitable  right,  remedy  or claim  under  this  Agreement;  but this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and the registered  holders of the Rights  Certificates (and, prior to the
Distribution Date, the certificates representing the shares of Common Stock).

         SECTION  31.  SEVERABILITY.   If  any  term,  provision,   covenant  or
restriction  of this Agreement is held by a court of competent  jurisdiction  or
other  authority  to be invalid,  void or  unenforceable,  the  remainder of the
terms, provisions,  covenants and restrictions of this

                                       33
<PAGE>

Agreement shall remain in full force and effect and shall in no way be affected,
impaired or invalidated;  provided,  however, that,  notwithstanding anything in
this  Agreement  to the  contrary,  if any such  term,  provision,  covenant  or
restriction  is  held  by  such  court  or  authority  to be  invalid,  void  or
unenforceable  and the Board of Directors of the Company  determines in its good
faith  judgment that severing the invalid  language  from this  Agreement  would
adversely  affect  the  purpose  or  effect  of this  Agreement,  the  right  of
redemption  set forth in SECTION  23 hereof  shall be  reinstated  and shall not
expire until the close of business on the tenth day  following  the date of such
determination by the Board of Directors.

         SECTION 32.  GOVERNING LAW. This Agreement,  each Right and each Rights
Certificate  issued  hereunder  shall be deemed to be a contract  made under the
laws of the State of  Georgia  and for all  purposes  shall be  governed  by and
construed in accordance with the laws of such State (other than its conflicts of
laws rules)  applicable  to contracts to be made and performed  entirely  within
such State,  except that the rights and obligations of the Rights Agent shall be
governed by the laws of the State of New York.

         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 one and
the same instrument.

         SECTION 34. DESCRIPTIVE HEADINGS.  The captions herein are included for
convenience  of reference  only, do not  constitute a part of this Agreement and
shall be ignored in the construction and interpretation hereof.

                                       34
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly  executed by their  respective  authorized  officers as of the day and year
first above written.

                               SUBURBAN LODGES OF AMERICA, INC.

                               By:   /s/ David E. Krischer
                                  ---------------------------------------------
                                   Name:  David E. Krischer
                                   Title: Chief Executive Officer and President

                              Suburban Lodges of America, Inc.
                              300 Galleria Parkway
                              Suite 1200
                              Atlanta, Georgia 30339
                              Attention: President

                              AMERICAN STOCK TRANSFER & TRUST COMPANY

                              By:  /s/ Herbert J. Lemmer
                                 ----------------------------------------------
                                  Herbert J. Lemmer
                                  Title:  Senior Vice President and General
                                          Counsel

                              American Stock Transfer & Trust Company
                              6201 Fifteenth Avenue
                              Brooklyn, New York  11219
                              Attention:  Herbert J. Lemmer

                                       35
<PAGE>
                                                                       Exhibit A

                                     FORM OF
                  BOARD RESOLUTION ESTABLISHING AND DESIGNATING
                        SERIES A PARTICIPATING CUMULATIVE
                                 PREFERRED STOCK

                                       OF

                        SUBURBAN LODGES OF AMERICA, INC.

                   PURSUANT TO SECTION 14-2-602 OF THE GEORGIA
                            BUSINESS CORPORATION CODE

                  SECTION 1.  DESIGNATION  AND  NUMBER OF SHARES.  The shares of
such series shall be designated as "Series A Participating  Cumulative Preferred
Stock" (the "SERIES A PREFERRED STOCK"),  and the number of shares  constituting
such series  shall be  500,000.  Such number of shares of the Series A Preferred
Stock may be increased or decreased  by  resolution  of the Board of  Directors;
provided,  however, that no decrease shall reduce the number of shares of Series
A Preferred  Stock to a number  less than the number of shares then  outstanding
plus the number of shares  issuable upon  exercise or conversion of  outstanding
rights, options or other securities issued by the Corporation.

                  SECTION 2.  DIVIDENDS AND DISTRIBUTIONS.

                  (A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred  Stock  ranking  prior and superior to the
shares of Series A  Preferred  Stock with  respect  to  dividends,  if any,  the
holders of shares of Series A  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 on the last day of March,
June,  September  and  December  of each year (each such date being  referred to
herein  as a  "QUARTERLY  DIVIDEND  PAYMENT  DATE"),  commencing  on  the  first
Quarterly  Dividend  Payment  Date  after  the  first  issuance  of any share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the  nearest  cent)  equal to the greater of (a) $1.00 and (b) subject to the
provision  for  adjustment  hereinafter  set forth,  100 times the aggregate per
share amount (payable in kind) of all cash dividends or other  distributions and
100 times the  aggregate  per share  amount of all  non-cash  dividends or other
distributions  (other than (i) a dividend payable in shares of Common Stock, par
value  $.01  per  share,  of the  Corporation  (the  "COMMON  STOCK")  or (ii) a
subdivision of the outstanding  shares of Common Stock (by  reclassification  or
otherwise)),  declared  on the  Common  Stock  since

                                      A-1
<PAGE>

the immediately  preceding  Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any share
or fraction of a share of Series A Preferred Stock. If the Corporation  shall at
any time after May 5, 1996 (the "RIGHTS  DECLARATION  DATE")  declare or pay any
dividend  on  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)  into a greater or lesser  number of
shares of Common Stock (other than the stock split previously  approved on March
26,  1996),  then in each such case the  amount  to which  holders  of shares of
Series A Preferred  Stock were  entitled  immediately  prior to such event under
clause (b) of the  preceding  sentence  shall be  adjusted by  multiplying  such
amount by a fraction,  the  numerator of which is the number of shares of Common
Stock  outstanding  immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding  immediately prior to
such event.

                  (B) The  Corporation  shall declare a dividend or distribution
on the Series A Preferred Stock as provided in SECTION 2(A) immediately after it
declares a dividend or distribution on the Common Stock (other than as described
in  clauses  (i) and (ii) of the first  sentence  of  SECTION  2(A));  provided,
however,  that if 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 (or, with respect to the
first Quarterly  Dividend Payment Date, the period between the first issuance of
any share or  fraction  of a share of Series A  Preferred  Stock and such  first
Quarterly  Dividend Payment Date), a dividend of $1.00 per share on the Series A
Preferred  Stock  shall  nevertheless  be payable on such  subsequent  Quarterly
Dividend Payment Date.

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

                  SECTION 3. VOTING  RIGHTS.  In  addition  to any other  voting
rights  required by law, the holders of shares of Series A Preferred Stock shall
have the following voting rights:

                  (A) Subject to the provision for  adjustment  hereinafter  set
forth,  each share of Series A Preferred  Stock shall entitle the holder thereof
to  100  votes  on  all  matters  submitted  to a

                                      A-2
<PAGE>

vote of shareholders of the  Corporation.  If the Corporation  shall at any time
after the Rights  Declaration  Date  declare or pay any dividend on 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)  into a greater or lesser number of shares of Common  Stock,  then in
each such case the  number  of votes  per  share to which  holders  of shares of
Series A Preferred Stock were entitled  immediately prior to such event shall be
adjusted by multiplying such number by a fraction, the numerator of which is the
number of shares of Common Stock  outstanding  immediately  after such event and
the  denominator  of which is the  number of shares  of Common  Stock  that were
outstanding immediately prior to such event.

                  (B) Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred  Stock and the holders of shares of Common Stock
shall vote  together  as a single  class on all matters  submitted  to a vote of
shareholders of the Corporation.

                  (C) (i) If at any time  dividends  on any  Series A  Preferred
Stock shall be in arrears in an amount equal to six quarterly  dividends thereon
(whether or not consecutive),  the occurrence of such contingency shall mark the
beginning  of a period  (herein  called a "DEFAULT  PERIOD")  which shall extend
until such time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly  dividend period on all shares of
Series A Preferred Stock then  outstanding  shall have been declared and paid or
set apart for  payment.  During  each  default  period,  all holders of Series A
Preferred Stock and any other series of Preferred Stock then entitled as a class
to elect directors,  voting together as a single class,  irrespective of series,
shall have the right to elect one Director.

                  (ii)  During any  default  period,  such  voting  right of the
holders of Series A  Preferred  Stock may be  exercised  initially  at a special
meeting  called  pursuant  to  SECTION  3(C)(III)  or at any  annual  meeting of
shareholders,  and  thereafter  at annual  meetings of  shareholders;  provided,
however,  that  neither  such  voting  right nor the right of the holders of any
other series of Preferred  Stock,  if any, to increase,  in certain  cases,  the
authorized  number of Directors shall be exercised  unless the holders of 10% in
number of shares of Preferred Stock outstanding shall be present in person or by
proxy.  The absence of a quorum of holders of Common  Stock shall not affect the
exercise by holders of Preferred  Stock of such voting right.  At any meeting at
which  holders of Preferred  Stock shall  exercise  such voting right  initially
during an existing default period, they shall have the right, voting as a class,
to elect  Directors to fill such  vacancy,  if any, in the Board of Directors as
may then exist up to one  Director  or, if such right is  exercised at an annual
meeting,  to elect one  Director.  If the number  which may be so elected at any
special  meeting  does not amount to the  required  number,  the  holders of the
Preferred  Stock  shall  have the right to make such  increase  in the number of
Directors  as shall be  necessary to permit the election by them of the required
number.  After the holders of the  Preferred  Stock shall have  exercised  their
right to elect  Directors in any default  period and during the  continuance  of
such period,  the number of Directors shall not be increased or decreased except
by vote of the holders of Preferred  Stock as herein provided or pursuant to the
rights of any equity securities  ranking senior to or pari passu with the Series
A Preferred Stock.

                                      A-3
<PAGE>

                  (iii)  Notwithstanding  anything to the contrary  contained in
the  Corporation's  Articles of Incorporation  or Bylaws,  unless the holders of
Preferred  Stock  shall,  during an existing  default  period,  have  previously
exercised their right to elect  Directors,  the Board of Directors may order, or
any  shareholder(s)  owning in the  aggregate not less than ten percent (10%) of
the total  number of shares of  Preferred  Stock  outstanding,  irrespective  of
series,  may request,  the calling of a special  meeting of holders of Preferred
Stock,  which  meeting  shall  thereupon  be  called  by the  President,  a Vice
President or the Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Preferred Stock are entitled to vote pursuant
to this SECTION  3(C)(III)  shall be given to each holder of record of Preferred
Stock by  mailing a copy of such  notice to him at his last  address as the same
appears on the books of the Corporation. Such meeting shall be called for a time
not earlier  than 20 days and not later than 60 days after such order or request
or in default of the calling of such meeting  within 60 days after such order or
request,  such  meeting  may be called on similar  notice by any  shareholder(s)
owning in the  aggregate  not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding,  irrespective of series.  Notwithstanding
the  provisions  of this SECTION  3(C)(III),  no such special  meeting  shall be
called during the period within 60 days immediately preceding the date fixed for
the next annual meeting of shareholders.

                  (iv) In any default period,  the holders of Common Stock,  and
other classes of stock of the  Corporation if  applicable,  shall continue to be
entitled to elect the whole number of  Directors  until the holders of Preferred
Stock shall have exercised  their right to elect one Director voting as a class,
after the exercise of which right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their  successors shall have been
elected by such holders or until the expiration of the default  period,  and (y)
any  vacancy  in the Board of  Directors  may  (except  as  provided  in SECTION
3(C)(II) be filled by vote of a majority of the remaining Directors  theretofore
elected by the holders of the class of stock which  elected the  Director  whose
office shall have become  vacant.  References  in this SECTION 3(C) to Directors
elected by the holders of a particular  class of stock shall  include  Directors
elected by such  Directors  to fill  vacancies  as provided in clause (y) of the
foregoing sentence.

                  (v) Immediately  upon the expiration of a default period,  (x)
the right of the holders of Preferred  Stock as a class to elect Directors shall
cease,  (y) the term of any Directors  elected by the holders of Preferred Stock
as a class shall terminate, and (z) the number of Directors shall be such number
as may be provided for in the Articles of Incorporation  or Bylaws  irrespective
of any increase made pursuant to the provisions of SECTION 3(C)(II) (such number
being subject, however, to change thereafter in any manner provided by law or in
the  Articles  of  Incorporation  or  Bylaws).  Any  vacancies  in the  Board of
Directors  effected by the  provisions  of clauses (y) and (z) in the  preceding
sentence may be filled by a majority of the remaining Directors.

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

                                      A-4
<PAGE>

                  SECTION 4.  CERTAIN RESTRICTIONS.

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

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

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

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

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

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

                  SECTION 5. REACQUIRED SHARES. Any shares of Series A Preferred
Stock redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever  shall be  retired  and  cancelled  promptly  after  the  acquisition
thereof.  All such shares shall upon their  cancellation  become  authorized but
unissued shares of Preferred  Stock without  designation as to series and may be
reissued as part of a new series of Preferred  Stock to be created by resolution

                                      A-5
<PAGE>

or  resolutions  of the Board of  Directors  as  permitted  by the  Articles  of
Incorporation or as otherwise permitted under Georgia law.

                  SECTION 6.  LIQUIDATION,  DISSOLUTION  OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the  holders  of shares of stock  ranking  junior  (either  as to
dividends  or upon  liquidation,  dissolution  or  winding  up) to the  Series A
Preferred  Stock  unless,  prior  thereto,  the  holders  of  shares of Series A
Preferred  Stock shall have  received  $1.00 per share,  plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment;  provided,  however,  that the holders of shares of
Series A Preferred  Stock shall be entitled to receive an  aggregate  amount per
share,  subject to the provision for adjustment  hereinafter set forth, equal to
100 times the aggregate  amount to be distributed per share to holders of Common
Stock,  or (2) to the  holders  of  stock  ranking  on a  parity  (either  as to
dividends  or upon  liquidation,  dissolution  or winding  up) with the Series A
Preferred  Stock,  except  distributions  made ratably on the Series A Preferred
Stock and all such other  parity  stock in  proportion  to the total  amounts to
which the  holders  of all such  shares  are  entitled  upon  such  liquidation,
dissolution or winding up. If the Corporation shall at any time after the Rights
Declaration  Date pay any dividend on 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)  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 A  Preferred  Stock  were  entitled
immediately prior to such event under the proviso in clause (1) of the preceding
sentence  shall be  adjusted  by  multiplying  such  amount  by a  fraction  the
numerator  of  which  is the  number  of  shares  of  Common  Stock  outstanding
immediately  after  such  event and the  denominator  of which is the  number of
shares of Common Stock that were outstanding immediately prior to such event.

                  SECTION 7.  CONSOLIDATION OR MERGER.  If 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 or any other  property,  then in any such  case the  shares of
Series A Preferred  Stock shall at the same time be similarly  exchanged  for or
changed  into an amount  per  share,  subject to the  provision  for  adjustment
hereinafter  set  forth,  equal to 100  times  the  aggregate  amount  of stock,
securities,  cash or any other  property,  as the case may be, into which or for
which each share of Common  Stock is exchanged  or changed.  If the  Corporation
shall at any time after the Rights  Declaration  Date pay any dividend on 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) into a greater or lesser number of shares of Common Stock, then in
each such case the amount set forth in the  preceding  sentence  with respect to
the  exchange or change of shares of Series A Preferred  Stock shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number of
shares  of  Common  Stock  outstanding  immediately  after  such  event  and the
denominator  of  which is the  number  of  shares  of  Common  Stock  that  were
outstanding immediately prior to such event.

         SECTION 8. NO  REDEMPTION.  The Series A  Preferred  Stock shall not be
redeemable.

                                      A-6
<PAGE>

                  SECTION  9.  RANK.  The Series A  Preferred  Stock  shall rank
junior (as to dividends and upon liquidation, dissolution and winding up) to all
other  series of the  Corporation's  preferred  stock,  except any  series  that
specifically  provides  that such  series  shall  rank  junior  to the  Series A
Preferred Stock.

                  SECTION 10. FRACTIONAL SHARES. Series A Preferred Stock may be
issued in fractions of a share which shall entitle the holder,  in proportion to
such holder's  fractional shares, to exercise voting rights,  receive dividends,
participate  in  distributions  and to have the  benefit of all other  rights of
holders of Series A Preferred Stock.

                  SECTION 11.  AMENDMENT.  The Articles of  Incorporation of the
Corporation  shall not be further  amended in any manner which would  materially
alter or change  the  powers,  preferences  or  special  rights of the  Series A
Preferred Stock so as to affect them adversely  without the affirmative  vote of
the  holders  of a  majority  or more of the  outstanding  shares  of  Series  A
Preferred Stock, voting separately as a class.

                                      A-7
<PAGE>
         EXHIBIT  B

                           Form of Rights Certificate

Certificate No. R-                                         _______________Rights

NOT  EXERCISABLE  AFTER THE  EARLIER  OF MAY 15,  2006 AND THE DATE ON WHICH THE
RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY THE COMPANY AS SET FORTH IN
THE RIGHTS  AGREEMENT.  THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  AS 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 SUCH TERMS
ARE DEFINED IN THE RIGHTS AGREEMENT),  WHETHER CURRENTLY HELD BY OR ON BEHALF OF
SUCH  PERSON OR BY ANY  SUBSEQUENT  HOLDER,  MAY BE NULL AND VOID.  [THE  RIGHTS
REPRESENTED  BY THIS  RIGHTS  CERTIFICATE  ARE OR WERE  BENEFICIALLY  OWNED BY A
PERSON WHO WAS OR BECAME AN ACQUIRING  PERSON OR AN AFFILIATE OR AN ASSOCIATE OF
AN ACQUIRING  PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS  AGREEMENT).  THIS
RIGHTS  CERTIFICATE AND THE RIGHTS  REPRESENTED HEREBY MAY BE OR MAY BECOME NULL
AND  VOID  IN  THE  CIRCUMSTANCES  SPECIFIED  IN  SECTION  7(d)  OF  THE  RIGHTS
AGREEMENT.)]1

                               RIGHTS CERTIFICATE

                        SUBURBAN LODGES OF AMERICA, INC.

                  This  Rights  Certificate   certifies  that  ,  or  registered
assigns,  is the registered holder of the number of Rights set forth above, each
of which  entitles the holder (upon the terms and subject to the  conditions set
forth in the Amended and  Restated  Rights  Agreement,  dated as of May __, 2001
(the "Rights  Agreement"),  between Suburban Lodges of America,  Inc., a Georgia
corporation  (the  "Company"),  and American Stock Transfer & Trust Company (the
"Rights  Agent")),  to  purchase  from  the  Company,  at  any  time  after  the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
the  Expiration  Date (as such term is  defined in the  Rights  Agreement),  one
one-hundredth{s} of a fully paid, non-assessable share of Series A Participating
Cumulative Preferred Stock (the "Preferred Stock") of the Company, at a purchase
price of $60.00 per one one-hundredth of a share (the "Purchase Price"), payable
in lawful money of the United States of America,  upon  surrender of this Rights
Certificate,  with the form of election to purchase and related certificate duly
executed,  and payment of the  Purchase  Price at an office of the Rights  Agent
designated for such purpose.

----------
1  If  applicable,  insert  this  portion  of the  legend  and  delete the
   preceding sentence.

                                      B-1
<PAGE>

                  Terms used herein and not  otherwise  defined  herein have the
meanings assigned to them in the Rights Agreement.

                  The number of Rights evidenced by this Rights Certificate (and
the number and kind of shares  issuable  upon  exercise  of each  Right) and the
Purchase  Price set forth above are as of May 15, 1996,  and may have been or in
the future may be adjusted as a result of the occurrence of certain  events,  as
more fully provided in the Rights Agreement.

                  Upon  the  occurrence  of  a  Flip-in  Event,  if  the  Rights
evidenced by this Rights  Certificate are beneficially owned by (a) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person,  (b) a transferee of
an  Acquiring  Person  (or any  such  Associate  or  Affiliate)  who  becomes  a
transferee  after the  Acquiring  Person  becomes  such,  or (c)  under  certain
circumstances  specified in the Rights  Agreement,  a transferee of an Acquiring
Person (or any such 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 Flip-in Event.

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

                  Upon  surrender  at the  principal  office or  offices  of the
Rights Agent designated for such purpose and subject to the terms and conditions
set forth in the Rights Agreement,  any Rights Certificate(s) may be transferred
or  exchanged  for another  Rights  Certificate(s)  evidencing  a like number of
Rights as the Rights  Certificate(s)  surrendered.  If this  Rights  Certificate
shall be  exercised  in part,  the holder  shall be  entitled  to  receive  upon
surrender  hereof another Rights  Certificate(s)  for the number of whole Rights
not exercised.

                  Subject to the provisions of the Rights  Agreement,  the Board
of Directors of the Company may, at its option,

                           (a) at any time prior to the earlier of (i) the Close
                  of Business on the tenth day after the Share  Acquisition Date
                  (or such later date as the Board of  Directors  of the Company
                  may  designate  prior to such time as the Rights are no longer
                  redeemable),  and (ii) the Final Expiration  Date,  redeem all
                  but  not  less  than  all the  then  outstanding  Rights  at a
                  redemption price of $0.001 per Right; or

                           (b) at any time after any Person becomes an Acquiring
                  Person,  exchange all or part of the then  outstanding  Rights
                  (other than Rights  held by the  Acquiring  Person and certain
                  related  Persons)  for shares of Common  Stock at an  exchange
                  ratio of one share of Common  Stock per  Right.  If the Rights
                  shall  be

                                      B-2
<PAGE>

                  exchanged in part, the holder of this Rights Certificate shall
                  be entitled to receive upon  surrender  hereof  another Rights
                  Certificate(s) for the number of whole Rights not exchanged.

                  After the expiration of the redemption  period,  the Companies
right of  redemption  may be  reinstated  if an  Acquiring  Person  reduces  his
beneficial  ownership to ten percent or less of the outstanding shares of Common
Stock in a transaction or series of  transactions  not involving the Company and
there is no other Acquiring Person.

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

                  No holder of this  Rights  Certificate  shall be  entitled  to
vote, receive dividends or be deemed for any purpose the holder of the shares of
capital  stock  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 shareholder of
the  Company  or any right to vote for the  election  of  directors  or upon any
matter submitted to shareholders at any meeting thereof,  or to give or withhold
consent to any  corporate  action,  or to receive  notice of  meetings  or other
actions affecting shareholders (except as provided in the Rights Agreement),  or
to receive dividends or subscription  rights,  or otherwise,  until the Right(s)
evidenced by this Rights  Certificate  shall have been  exercised as provided in
the Rights Agreement.

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

                                      B-3
<PAGE>

                  IN WITNESS WHEREOF,  the Company has caused this instrument to
be duly executed under its corporate seal by its authorized officers.

Dated as of ____________________,_______

                                           SUBURBAN LODGES OF AMERICA, INC.

                                           By:_________________________________
                                                    Title:
(SEAL)

Attest:

___________________________________
Secretary

Countersigned:

AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Rights Agent

By:___________________________________
         Authorized Signature

                                      B-4
<PAGE>

                   Form of Reverse Side of Rights Certificate

                               FORM OF ASSIGNMENT

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

FOR VALUE RECEIVED _____________________________________________________________

hereby sells, assigns and transfers unto _______________________________________

________________________________________________________________________________
(Please print name and address of transferee)

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

Dated:_________________________________     ____________________________________
                                                    Signature

Signature Guaranteed:

                                      B-5
<PAGE>

                                   Certificate

                  The undersigned  hereby  certifies by checking the appropriate
boxes that:

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

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

Dated:_________________________________     ____________________________________

                                     NOTICE

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

                                      B-6
<PAGE>

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

                          FORM OF ELECTION TO PURCHASE

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

To:      Suburban Lodges of America, Inc.

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

Please insert social security
or other identifying number

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

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

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

Please insert social security
or other identifying number

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

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

Dated: ____________________, _______

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

Signature Guaranteed:

                                      B-7
<PAGE>

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

                                                                       EXHIBIT C

                    SUBURBAN LODGES OF AMERICA, INC.
                             SHAREHOLDER RIGHTS PLAN
                                Summary of Terms

Form of Security:          The Board of Directors has declared a dividend of one
                           preferred  stock purchase right for each  outstanding
                           share  of the  Company's  Common  Stock,  payable  to
                           holders of record as of the close of  business on the
                           effective date of the  consummation  of the Company's
                           proposed  acquisition of 16 Suburban Lodge facilities
                           (each a "Right," and collectively, the "Rights").

Distribution Date:         The earlier of:

                                    (1) the 10th day after  public  announcement
                                    that any  person  or group  has  become  the
                                    beneficial  owner  of  15%  or  more  of the
                                    Company's  Common Stock (other than pursuant
                                    to  an  Approved   Acquisition  (as  defined
                                    below)); and (2) the 10th business day after
                                    the date of the  commencement of a tender or
                                    exchange offer by any person which would, if
                                    consummated,  result in such person becoming
                                    the  beneficial  owner of 15% or more of the
                                    Company's   Common  Stock,   in  each  case,
                                    subject  to   extension   by  the  Board  of
                                    Directors.

Approved Acquisition:      An  acquisition  of 15% or more of the  Common  Stock
                           then outstanding by any person if such acquisition is
                           approved in advance by the Board of  Directors  or if
                           any  person  has  acquired  such  an  interest,   the
                           acquisition of an additional 1% or more of the Common
                           Stock  then   outstanding  if  such   acquisition  is
                           approved  in  advance  by  the  Board  of  Directors.

Qualifying  Tender Offer:  A tender or exchange  offer for all the Common  Stock
                           which is approved by the Board of Directors.

                                      C-1
<PAGE>

Transfer:                  Prior to the  Distribution  Date,  the Rights will be
                           evidenced  by  the   certificates  for  and  will  be
                           transferred with the Common Stock, and the registered
                           holders of the Common  Stock will be deemed to be the
                           registered   holders   of  the   Rights.

                           After the  Distribution  Date,  the Rights Agent will
                           mail separate  certificates  evidencing the Rights to
                           each  record  holder  of the  Common  Stock as of the
                           close  of  business  of the  Distribution  Date,  and
                           thereafter the Rights will be transferable separately
                           from the Common Stock.

  Exercise:                Prior to the  Distribution  Date, the Rights will not
                           be exercisable.

                           After  the  Distribution  Date,  each  Right  will be
                           exercisable  to purchase,  for $60.00 (the  "Purchase
                           Price"),  one  one-hundredth  of a share of  Series A
                           Participating  Cumulative  Preferred Stock, par value
                           $0.01 per share, of the Company.

  Flip-In:                 If (1) any  person or group (an  "Acquiring  Person")
                           becomes  the  beneficial  owner of 15% or more of the
                           Company's  Common  Stock  (other  than  pursuant to a
                           Qualifying  Tender  Offer),  (2) during  such time as
                           there is an Acquiring  Person,  an event occurs which
                           results in such Acquiring Person's ownership interest
                           in the Company  being  increased by more than 1%, (3)
                           the Company is the surviving  corporation in a merger
                           with an Acquiring  Person and its Common Stock is not
                           changed  or  exchanged,  or (4) an  Acquiring  Person
                           engages in one or more "self-dealing" transactions as
                           set forth in the  Rights  Agreement,  then each Right
                           (other   than  Rights   beneficially   owned  by  the
                           Acquiring Person and certain affiliated persons) will
                           entitle  the  holder to elect to  receive a number of
                           shares of the  Company's  Common Stock (or in certain
                           circumstances,  cash, property or other securities of
                           the  Company)  having  a  market  value  equal to the
                           Purchase  Price.  Notwithstanding  the foregoing,  in
                           most instances following the occurrence of the events
                           set forth in this paragraph,  all Rights that are, or
                           (under certain circumstances  specified in the Rights
                           Agreement) were,  beneficially owned by any Acquiring
                           Person will be null and void. However, Rights are not
                           exercisable  following  the  occurrence of the events
                           set forth  above until such time as the Rights are no
                           longer redeemable by the Company as set forth below.

                                      C-2
<PAGE>

Flip-Over:                 If, after any person has become an  Acquiring  Person
                           (other than pursuant to a Qualifying  Tender  Offer),
                           (1) the  Company  is  involved  in a merger  or other
                           business  combination in which the Company is not the
                           surviving   corporation   or  its  Common   Stock  is
                           exchanged for other securities or assets,  or (2) the
                           Company and/or one or more of its  subsidiaries  sell
                           or otherwise  transfer assets  aggregating  more than
                           50% of the assets or generating  more than 50% of the
                           operating  income or cash flow of the Company and its
                           subsidiaries,  taken as a whole, then each Right will
                           entitle  the  holder to  purchase,  for the  Purchase
                           Price,  a number of  shares  of  common  stock of the
                           other party to such business  combination or sale (or
                           in  certain  circumstances,  an  affiliate)  having a
                           market value of twice the Purchase Price.

Exchange:                  At any time after any person has become an  Acquiring
                           Person the  Company  may,  upon the  election  of the
                           Board  of  Directors,  exchange  all or  part  of the
                           Rights (other than the Rights  beneficially  owned by
                           the Acquiring Person and certain affiliated  persons)
                           for shares of Common  Stock at an  exchange  ratio of
                           one share of Common Stock per Right.

Redemption:                Subject to the applicable provisions in the Company's
                           articles of  incorporation  and bylaws,  the Board of
                           Directors  may redeem all of the Rights at a price of
                           $0.001  per  Right at any time  prior to the close of
                           business   on  the  tenth   day   after  the   public
                           announcement  that any person has become an Acquiring
                           Person   (subject  to   extension  by  the  Board  of
                           Directors).  After any person has become an Acquiring
                           Person,  the  Rights  may be  redeemed  only with the
                           approval  of  the  Board  of  Directors.   After  the
                           redemption period has expired, the Company's right of
                           redemption  may be reinstated if an Acquiring  Person
                           reduces his  beneficial  ownership  to 10% or less of
                           the   outstanding   shares  of  Common   Stock  in  a
                           transaction or series of  transactions  not involving
                           the Company. Immediately upon the action of the Board
                           of Directors  ordering  redemption of the Rights, the
                           Rights  will  terminate  and the  only  right  of the
                           holders  of  the  Rights   will  be  to  receive  the
                           redemption price thereof.

Expiration:                The  Rights  will  expire  on May  15,  2006,  unless
                           earlier exchanged or redeemed.

Amendments:

                           Prior to the Distribution  Date, the Rights Agreement
                           may be amended in any  respect,  other than to change
                           the  Redemption   Price,  the  Expiration  Date,  the
                           Purchase  Price or the number of shares of  Preferred
                           Stock for which a Right is exercisable.

                                      C-3
<PAGE>

                           After the Distribution Date, the Rights Agreement may
                           be amended  in any  respect  that does not  adversely
                           affect the Rights  holders  (other than any Acquiring
                           Person and certain affiliated persons).

Voting Rights:             Rights holders have no rights as a shareholder of the
                           Company,  including  the right to vote and to receive
                           dividends.

Antidilution Provisions:   The Purchase Price payable,  and the number of shares
                           of Preferred  Stock or other  securities  or property
                           issuable  upon  exercise of the Rights are subject to
                           adjustment from time to time to prevent  dilution (1)
                           in  the   event  of  a  stock   dividend   on,  or  a
                           subdivision,  combination or reclassification of, the
                           Preferred Stock, (2) upon the grant to holders of the
                           Preferred  Stock of  certain  rights or  warrants  to
                           subscribe for or purchase Preferred Stock at a price,
                           or securities convertible into Preferred Stock with a
                           conversion price,  less than the then-current  market
                           price  of  the  Preferred  Stock,  or  (3)  upon  the
                           distribution  to  holders of the  Preferred  Stock of
                           evidences  of  indebtedness   or  assets   (excluding
                           regular  periodic cash dividends paid out of earnings
                           or retained  earnings) or of  subscription  rights or
                           warrants.

                           The  number of  outstanding  Rights and the number of
                           1/100ths of a share of Preferred  Stock issuable upon
                           exercise of each Right are also subject to adjustment
                           in the event of a stock split of the Common  Stock or
                           a stock  dividend  on the  Common  Stock  payable  in
                           Common  Stock  or  subdivisions,   consolidations  or
                           combinations  of the Common Stock  occurring prior to
                           the Distribution Date.

                           With  certain   exceptions,   no  adjustment  in  the
                           Purchase  Price  will be  required  until  cumulative
                           adjustments  amount  to at least  1% of the  Purchase
                           Price.  No fractional  shares of Preferred Stock will
                           be issued  (other than  fractions  which are integral
                           multiples  of  1/100th  of a  share  of  a  Preferred
                           Stock),  and in lieu  thereof,  an adjustment in cash
                           will  be  made  based  on  the  market  price  of the
                           Preferred Stock on the last trading date prior to the
                           date of exercise.

Preferred Stock:

                           The dividend and liquidation  rights of the Preferred
                           Stock  are   designed   so  that  the  value  of  one
                           one-hundredth  of a share of Preferred Stock issuable
                           upon exercise of each Right will approximate the same
                           economic   value  of  one  share  of

                                      C-4
<PAGE>

                           Common  Stock,  including  voting  rights.  Shares of
                           Preferred  Stock issuable upon exercise of the Rights
                           will not be redeemable. Each share of Preferred Stock
                           will  entitle  the  holder to a minimum  preferential
                           dividend  of $1.00 per share,  but will  entitle  the
                           holder to an aggregate  dividend payment of 100 times
                           the dividend  declared on each share of Common Stock.
                           In the event of liquidation,  each share of Preferred
                           Stock  will be  entitled  to a  minimum  preferential
                           liquidation payment of $1.00, plus accrued and unpaid
                           dividends  and  distributions  thereon,  but  will be
                           entitled  to an  aggregate  payment  of 100 times the
                           payment made per share of Common Stock.  In the event
                           of any merger,  consolidation or other transaction in
                           which Common  Stock is exchanged  for or changed into
                           other stock or  securities,  cash or other  property,
                           each share of  Preferred  Stock will be  entitled  to
                           receive  100 times the amount  received  per share of
                           Common Stock.

                           Each share of Preferred Stock will be entitled to 100
                           votes  on all  matters  submitted  to a  vote  of the
                           shareholders of the Company,  and shares of Preferred
                           Stock will  generally vote together as one class with
                           the Common Stock and any other voting  capital  stock
                           of the Company on all matters  submitted to a vote of
                           the   Company's   shareholders.   Further,   whenever
                           dividends on the Preferred Stock are in arrears in an
                           amount equal to six quarterly payments, the Preferred
                           Stock,  together  with any other  shares of preferred
                           stock then  entitled to elect  directors,  shall have
                           the right,  as a single class,  to elect one director
                           until the default has been cured.

Taxes:                     While the  dividend of the Rights will not be taxable
                           to  shareholders  or to the Company,  shareholders or
                           the Company may,  depending  upon the  circumstances,
                           recognize taxable income in the event that the Rights
                           become exercisable as set forth above.

                                   ----------

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

                                     C-5AGREEMENT TO ACCEPT STOCK FOR SERVICES

         This Agreement is entered into on April 25, 2001 by and between
Knowledge Transfer Systems, Inc. ("KTSI") and Jennifer L. Brenner
("Shareholder").

          1.   KTSI is a  publicly  held  company  currently  trading on the OTC
               market under the ticker symbol KTSI.  KTSI was formerly  known as
               GoThink!.com. Inc.

          2.   Shareholder  has  provided  services  to KTSI  during the past 12
               months  either as an  employee,  contractor  or  consultant.  The
               parties  stipulate  to the  value  of  these  services  as  being
               $100,000.

          3.   Shareholder  has not received  any payment or other  remuneration
               for the provision of these services to KTSI.

          4.   As full payment of the services  provided by Shareholder to KTSI,
               the parties agree and  stipulate  that  Shareholder  will receive
               2,000,000  shares ("the  Shares") of common  stock of KTSI.  KTSI
               will agree to register, on behalf of Shareholder the Shares under
               Regulation  S-8, so that the Shares will  become  "free  trading"
               shares.

          5.   In  addition  to  the  Shares,   the  parties  have  agreed  that
               Shareholder  will  purchase an additional  2,000,000  shares (the
               "Purchase  Shares") of KTSI common stock at a purchase price of 5
               cents per shares,  for a total  purchase  price of $100,000.  The
               payment  for  such  shares  shall  be  made  in  the  form  of  a
               non-recourse  promissory  note issued by  Shareholder in favor of
               KTSI which note shall be due and  payable on December  31,  2003.
               The  Purchase  shares  shall be issued by KTSI  immediately,  but
               shall be restricted  under  applicable  securities laws and shall
               also be subject to a  "Lockup/Leakout"  agreement  with KTSI for
               a period of 24 months, in a form suitable to both parties.

          6.   The  parties  both  release  each  other from all other forms of
               compensation  or  obligations  except for the obligations
               specifically   referenced   herein,   and Shareholder   agrees
               that   he/she   has  been  fully compensated  for all  services
               rendered  on  behalf of KTSI, or its predecessor.

          7.   This agreement shall be governed in accordance with Nevada law,
               and shall govern all matters related to the issues contained
               herein.

                                                Knowledge Transfer Systems, Inc.

                                                /s/Steve Burke
                                                ________________________________
                                                By: Steve Burke, President

                                                "Shareholder"

                                                /s/Jennifer L. Brenner
                                                ________________________________
                                                By: Jennifer L. Brenner

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00025-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00025-of-00352.parquet"}]]