Document:

<PAGE>   1
                                                                   EXHIBIT 10.5

                                PROMISSORY NOTE

<TABLE>
<CAPTION>
----------------- ------------- ------------- -------------- --------- ----------- ------------ ------------ --------------
     PRINCIPAL       LOAN DATE     MATURITY       LOAN NO.      CALL    COLLATERAL    ACCOUNT      OFFICER       INITIALS
<S>               <C>           <C>           <C>            <C>       <C>         <C>          <C>          <C>
    $860,000        03-31-2000    06-30-2000                                                         JLN
----------------- ------------- ------------- -------------- --------- ----------- ------------ ------------ --------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item.
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

BORROWER: SOUTHERNBANK, N.A.                 LENDER:  THE BANKERS BANK
          P.O. BOX 967                                2410 PACES FERRY ROAD
          BUFORD, GA  30515-0967                      600 PACES SUMMIT
                                                      ATLANTA, GA  30339

===============================================================================

<TABLE>
<S>                                <C>                           <C>
PRINCIPAL AMOUNT: $860,000.00      INITIAL RATE: 7.750%          DATE OF NOTE:   MARCH 31, 2000
</TABLE>

PROMISE TO PAY. SOUTHERNBANK, N.A. (IO) ("BORROWER") PROMISES TO PAY TO THE
BANKERS BANK ("LENDER"), OR ORDER, IN LAWFUL MONEY OF THE UNITED STATES OF
AMERICA, THE PRINCIPAL AMOUNT OF EIGHT HUNDRED SIXTY THOUSAND & 00/100 DOLLARS
($860,000.00), TOGETHER WITH INTEREST ON THE UNPAID OUTSTANDING PRINCIPAL
BALANCE FROM MARCH 31, 2000, UNTIL PAID IN FULL.

PAYMENT. BORROWER WILL PAY THIS LOAN IN ONE PAYMENT OF $860,000 PLUS INTEREST ON
JUNE 30, 2000. THIS PAYMENT DUE ON JUNE 30, 2000, WILL BE FOR ALL PRINCIPAL AND
ACCRUED INTEREST NOT YET PAID. Borrower will pay Lender at Lender's
address shown above or at such other place as Lender may designate in writing.
Unless otherwise agreed or required by applicable law, payments will be applied
first to accrued unpaid interest, then to principal, and any remaining amount
to any unpaid collection costs and late charges.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an index which is the Prime rate as
published in the Money Rates section of the Wall Street Journal. (the "Index").
If two or more rates exist, then the highest rate will prevail. Lender will
tell Borrower the current Index rate upon Borrower's request. Borrower
understands that Lender may make loans based on other rates as well. The
interest rate change will not occur more often than each day. THE INDEX
CURRENTLY IS 8.750% PER ANNUM. THE INTEREST RATE TO BE APPLIED TO THE UNPAID
PRINCIPAL BALANCE OF THIS NOTE WILL BE AT A RATE OF 1.000 PERCENTAGE POINT
UNDER THE INDEX, RESULTING IN AN INITIAL ANNUAL RATE OF SIMPLE INTEREST OF
7.750%. NOTICE: Under no circumstances will the interest rate on this Note be
more than the maximum rate allowed by applicable law.

PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Early payments will not, unless agreed to by
Lender in writing, relieve Borrower of Borrower's obligation to continue to
make payments under the payment schedule. Rather, they will reduce the
principal balance due.

LATE CHARGE. If a payment is 15 DAYS OR MORE LATE, Borrower will be charged
$100.00.

<PAGE>   2

03-06-2000                      PROMISSORY NOTE                         PAGE 2
Loan No. 4021395101               (Continued)

DEFAULT. Borrower will be in default if any of the following happens: (a)
Borrower fails to make any payment when due. (b) Borrower breaks any promise
Borrower has made to Lender, or Borrower fails to comply with or to perform when
due any other term, obligation, covenant, or condition contained in this Note or
any agreement related to this Note, or in any other agreement or loan Borrower
has with Lender. (c) Any representation or statement made or furnished to Lender
by Borrower or on Borrower's behalf is false or misleading in any material
respect either now or at the time made or furnished. (d) Borrower becomes
insolvent, a receiver is appointed for any part of Borrower's property, Borrower
makes an assignment for the benefit of creditors, or any proceeding is commenced
either by Borrower or against Borrower under any bankruptcy or insolvency laws.
(e) Any creditor tries to take any of Borrower's property on or in which Lender
has a lien or security interest. This includes a garnishment of any of
Borrower's accounts with Lender. (f) Any guarantor dies or any of the other
events described in this default section occurs with respect to any guarantor of
this Note. (g) A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired. (h) Lender in good faith deems itself insecure.

LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid principal
balance on this Note and all accrued unpaid interest immediately due, without
notice, and then Borrower will pay that amount. Upon default, including failure
to pay upon final maturity, Lender, at its option, may also, if permitted under
applicable law, increase the variable interest rate on this Note 3.000
percentage points. The interest rate will not exceed the maximum rate permitted
by applicable law. Lender may hire or pay someone else to help collect this
Note if Borrower does not pay. Borrower also will pay Lender that amount. This
includes, subject to any limits under applicable law, Lender's, costs of
collection, including court costs and fifteen percent (15%) of the principal
plus accrued interest as attorneys' fees, it any sums owing under this Note are
collected by or through an attorney-at-law, whether or not there is a lawsuit,
and legal expenses for bankruptcy proceedings (including efforts to modify or
vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. If not prohibited by applicable law,
Borrower also will pay any court costs, in addition to all other sums provided
by law. THIS NOTE HAS BEEN DELIVERED TO LENDER AND ACCEPTED BY LENDER IN THE
STATE OF GEORGIA. SUBJECT TO THE PROVISIONS ON ARBITRATION, THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED in ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of twenty dollars
($20.00) or five percent (5%) of the face amount of the check, whichever is
greater, if Borrower makes a payment an Borrower's loan and the check or
preauthorized charge with which Borrower pays is later dishonored.

RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts

<PAGE>   3

03-06-2000                       PROMISSORY NOTE                         PAGE 3
Loan No. 4021395101                (Continued)

Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on this Note against any and
all such accounts.

ARBITRATION. LENDER AND BORROWER AGREE THAT ALL DISPUTES, CLAIMS AND
CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN NATURE,
ARISING FROM THIS NOTE OR OTHERWISE, INCLUDING WITHOUT LIMITATION CONTRACT AND
TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO THE RULES OF THE AMERICAN
ARBITRATION ASSOCIATION, UPON REQUEST OF EITHER PARTY. No act to take or
dispose of any collateral securing this Note shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
includes, without limitation, obtaining injunctive relief or a temporary
restraining order; invoking a power of sale under any deed of trust or
mortgage; obtaining a writ of attachment or imposition of a receiver; or
exercising any rights relating to personal property, including taking or
disposing of such property with or without judicial process pursuant to Article
9 of the Uniform Commercial Code. Any disputes, claims, or controversies
concerning the lawfulness or reasonableness of any act, or exercise of any
right, concerning any collateral securing this Note, including any claim to
rescind, reform, or otherwise modify any agreement relating to the collateral
securing this Note, shall also be arbitrated, provided however that no
arbitrator shall have the right or the power to enjoin or restrain any act of
any party. Judgment upon any award rendered by any arbitrator may be entered in
any court having jurisdiction. Nothing in this Note shall preclude any party
from seeking equitable relief from a court of competent jurisdiction. The
statute of limitations, estoppel, waiver, laches, and similar doctrines which
would otherwise be applicable in an action brought by a party shall be
applicable in any arbitration proceeding, and the commencement of an
arbitration proceeding shall be deemed the commencement of an action for these
purposes. The

<PAGE>   4

03-06-2000                       PROMISSORY NOTE                         PAGE 4
Loan No. 4021395101                (Continued)

Federal Arbitration Act shall apply to the construction, interpretation, and
enforcement of this arbitration provision.

ACCRUAL METHOD.  INTEREST WILL BE CALCULATED ON AN ACTUAL/360 DAY BASIS.

     GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights
     or remedies under this Note without losing them. Borrower and any other
     person who signs, guarantees or endorses this Note, to the extent allowed
     by law, Waive Presentment, demand for payment, protest and notice of
     dishonor. Upon any change in the terms of this Note, and unless otherwise
     expressly stated in writing, no party who signs this Note, whether as
     maker, guarantor, accommodation maker or endorser, shall be released from
     liability. All such parties waive any right to require Lender to take
     action against any other party who signs this Note as provided in O.C.G.A.
     Section 10-7-24 and agree that Lender may renew or extend (repeatedly and
     for any length of time) this loan, or release any party or guarantor or
     collateral; or impair, fail to realize upon or perfect Lender's security
     interest in the collateral; and lake any other action deemed necessary by
     Lender without the consent of or notice to anyone. All such parties also
     agree that Lender may modify this loan without the consent of or notice to
     anyone other than the party with whom the modification is made.

     IN WITNESS WHEREOF, THIS NOTE HAS BEEN SIGNED AND SEALED BY THE
     UNDERSIGNED, WHO ACKNOWLEDGES A COMPLETED COPY HEREOF.

     BORROWER:

     SOUTHERNBANK, N.A. (IO), INC.

<TABLE>
     <S>                                          <C>
     BY:                             (SEAL)       BY:                                (SEAL)
         ----------------------------                  -------------------------------
         D. ARNOLD TILLMAN, CEO                        M. LAUCH MCKINNON, PRESIDENT
</TABLE>

LENDER:

THE BANKERS BANK

BY:
   ---------------------------------------
   AUTHORIZED OFFICER
<PAGE>   5

                          FORM OF COMMERCIAL GUARANTY

<TABLE>
<CAPTION>
-------------- ------------ ------------ ------------ ----------- ------------ ------------ ------------ ------------
  PRINCIPAL     LOAN DATE    MATURITY     LOAN NO.       CALL     COLLATERAL     ACCOUNT      OFFICER     INITIALS
<S>            <C>          <C>          <C>          <C>         <C>          <C>          <C>          <C>
                                                                                                JLN
-------------- ------------ ------------ ------------ ----------- ------------ ------------ ------------ ------------
 References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
 particular loan or lien.
---------------------------------------------------------------------------------------------------------------------
</TABLE>

BORROWER:    SOUTHERNBANK, N.A. (IO)            LENDER:  THE BANKERS BANK
             P.O. BOX 967                                2410 PACES FERRY ROAD
             BUFORD, GA  30515-0967                      600 PACES FERRY SUMMIT
                                                         ATLANTA, GA  30339
GUARANTOR:

AMOUNT OF GUARANTY. The principal amount of this Guaranty is Eight Hundred Sixty
Thousand & 00/100 Dollars ($860,000.00).

CONTINUING GUARANTY. IN CONSIDERATION OF THE SUM OF FIVE DOLLARS ($5.00) AND
OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND ADEQUACY OF WHICH ARE
HEREBY ACKNOWLEDGED BY GUARANTOR AND TO INDUCE LENDER TO MAKE LOANS OR OTHERWISE
EXTEND CREDIT TO BORROWER, OR TO RENEW OR EXTEND IN WHOLE OR IN PART ANY
EXISTING INDEBTEDNESS OF BORROWER TO LENDER, OR TO MAKE OTHER FINANCIAL
ACCOMMODATIONS TO BORROWER,               ("GUARANTOR") ABSOLUTELY AND
UNCONDITIONALLY GUARANTEES AND PROMISES TO PAY TO THE BANKERS BANK ("LENDER") OR
ITS ORDER, IN LEGAL TENDER OF THE UNITED STATES OF AMERICA, THE INDEBTEDNESS (AS
THAT TERM IS DEFINED BELOW) OF SOUTHERNBANK, N.A. (IO) ("BORROWER") TO LENDER ON
THE TERMS AND CONDITIONS SET FORTH IN THIS GUARANTY. THE OBLIGATIONS OF
GUARANTOR UNDER THIS GUARANTY ARE CONTINUING.

DEFINITIONS. The following words shall have the following meanings when used in
this Guaranty:

          BORROWER. The word "Borrower" means SouthernBank N.A. (IO).

          GUARANTOR. The word "Guarantor" means            .

          GUARANTY. The word "Guaranty" means this Guaranty made by Guarantor
          for the benefit of Lender dated March 31, 2000.

          INDEBTEDNESS. The word "Indebtedness" is used in its most
          comprehensive sense and means and includes any and all of Borrower's
          liabilities, obligations, debts, and indebtedness to Lender, now
          existing or hereinafter incurred or created including, without
          limitation, all loans, advances, interest, costs, debts, overdraft
          indebtedness, lease obligations, other obligations, and liabilities of
          Borrower, or any of them, and any present of future judgments against
          Borrower, or any of them; and whether any such Indebtedness is
          voluntarily or involuntarily incurred, due or not due, absolute or
          contingent, liquidated or unliquidated, determined or undetermined;
          whether Borrower may be liable individually or jointly with others or
          primarily or secondarily, or as guarantor or surety; whether recovery
          on the indebtedness may be or may become barred on unenforceable
          against the Borrower for any reason whatsoever; and whether the
          Indebtedness arises from transactions which may be voidable on account
          of infancy, insanity, ultra vires, or otherwise.

          LENDER. The word "Lender" means The Bankers Bank, its successors and
          assigns.

<PAGE>   6

          RELATED DOCUMENTS. The words "Related Documents" mean and include
          without limitation all promissory notes, credit agreements, loan
          agreements, environmental agreements, guaranties, security agreements,
          security deeds, mortgages, deeds of trust, and all other instruments,
          agreements and documents, whether now or hereafter existing, executed
          in connection with the Indebtedness.

MAXIMUM LIABILITY. THE MAXIMUM LIABILITY OF GUARANTOR UNDER THIS GUARANTY SHALL
NOT EXCEED AT ANY ONE TIME THE SUM OF THE PRINCIPAL AMOUNT OF $860,000, PLUS
ALL INTEREST THEREON, PLUS ALL OF LENDER'S COSTS, EXPENSES, AND ATTORNEYS' FEES
INCURRED IN CONNECTION WITH OR RELATING TO (A) THE COLLECTION OF THE
INDEBTEDNESS, (B) THE COLLECTION AND SALE OF ANY COLLATERAL FOR THE
INDEBTEDNESS OR THIS GUARANTY, OR (C) THE ENFORCEMENT OF THIS GUARANTY.
ATTORNEYS' FEES INCLUDE, WITHOUT LIMITATION, ATTORNEYS' FEES WHETHER OR NOT
THERE IS A LAWSUIT, AND IF THERE IS A LAWSUIT, ANY FEES AND COSTS FOR TRIAL AND
APPEALS.

The above limitation on liability is not a restriction on the amount of the
Indebtedness of Borrower to Lender either in the aggregate or at any one time.
If Lender presently holds one or more guaranties, or hereafter receives
additional guaranties from Guarantor, the rights of Lender under all guaranties
shall be cumulative. This Guaranty shall not (unless specifically provided
below to the contrary) affect or invalidate any such other guaranties. The
liability of Guarantor will be the aggregate liability of Guarantor under the
terms of this Guaranty and any such other unterminated guaranties.

NATURE OF GUARANTY. Guarantor's liability under this Guaranty shall be open and
continuous for so long as this Guaranty remains in force. Guarantor intends to
guarantee at all times the performance and prompt payment when due, whether at
maturity or earlier by reason of acceleration or otherwise, of all Indebtedness
within the limits set forth in the preceding section of this Guaranty.
Accordingly, no payments made upon the Indebtedness will discharge or diminish
the continuing liability of Guarantor in connection with any remaining portions
of the Indebtedness or any of the Indebtedness which subsequently arises or is
thereafter incurred or contracted.

DURATION OF GUARANTY. This Guaranty will take effect when received by Lender
without the necessity of any acceptance by Lender, or any notice to Guarantor or
to Borrower, and will continue in full force until all Indebtedness incurred or
contracted before receipt by Lender of any notice of revocation shall have been
fully and finally paid and satisfied and all other obligations of Guarantor
under this Guaranty shall have been performed in full. If Guarantor elects to
revoke this Guaranty, Guarantor may only do so in writing. Guarantor's written
notice of revocation must be mailed to Lender, by certified mail, at the address
of Lender listed above or such other place as Lender may designate in writing.
Written revocation of this Guaranty will apply only to advances or new
Indebtedness created after actual receipt by Lender of Guarantor's written
revocation. For this purpose and without limitation, the term "new Indebtedness"
does not include Indebtedness which at the time of notice of revocation is
contingent, unliquidated, undetermined or not due and which later becomes
absolute, liquidated, determined or due. This Guaranty will continue to bind
Guarantor for all Indebtedness incurred by Borrower or committed by Lender prior
to receipt of Guarantor's written notice of revocation, including any
extensions, renewals, substitutions or modifications of the Indebtedness. All
renewals, extensions, substitutions, and modifications of the Indebtedness
granted after Guarantor's revocation, are contemplated under this Guaranty and,
specifically will not be considered to be new Indebtedness. This Guaranty shall
bind the estate of Guarantor as to Indebtedness created both before and after
the death or incapacity of Guarantor, regardless of Lender's actual notice of
Guarantor's death. Subject to the foregoing, Guarantor's executor or
administrator or other legal representative may terminate this Guaranty in the
same manner in which Guarantor might have terminated it and with the same
effect. Release of any other guarantor or termination of any other guaranty of
the Indebtedness shall not affect the liability of Guarantor under this
Guaranty. A revocation received by Lender from any one or more Guarantors shall
not affect the liability of any remaining Guarantors under this Guaranty. It is
anticipated that fluctuations may occur in the aggregate amount of Indebtedness
covered by this Guaranty, and it is specifically acknowledged and agreed by
Guarantor that reductions in the amount of Indebtedness, even to zero dollars
($0.00), prior to written revocation of this Guaranty by Guarantor shall not
constitute a termination of this Guaranty. This Guaranty is binding upon
Guarantor and Guarantor's heirs, successors and assigns so long as any of the
guaranteed Indebtedness remains unpaid and even though the Indebtedness
guaranteed may from time to time be zero dollars ($0.00).

<PAGE>   7
GUARANTOR'S AUTHORIZATION TO LENDER. Guarantor authorizes Lender, either before
or after any revocation hereof, WITHOUT NOTICE OR DEMAND AND WITHOUT LESSENING
GUARANTOR'S LIABILITY UNDER THIS GUARANTY, FROM TIME TO TIME: (A) PRIOR TO
REVOCATION AS SET FORTH ABOVE, TO MAKE ONE OR MORE ADDITIONAL SECURED OR
UNSECURED LOANS TO BORROWER, TO LEASE EQUIPMENT OR OTHER GOODS TO BORROWER, OR
OTHERWISE TO EXTEND ADDITIONAL CREDIT TO BORROWER; (B) TO ALTER, COMPROMISE,
RENEW, EXTEND, ACCELERATE, OR OTHERWISE CHANGE ONE OR MORE TIMES THE TIME FOR
PAYMENT OR OTHER TERMS OF THE INDEBTEDNESS OR ANY PART OF THE INDEBTEDNESS,
INCLUDING INCREASES AND DECREASES OF THE RATE OF INTEREST ON THE INDEBTEDNESS;
EXTENSIONS MAY BE REPEATED AND MAY BE FOR LONGER THAN THE ORIGINAL LOAN TERM;
(C) TO TAKE AND HOLD SECURITY FOR THE PAYMENT OF THIS GUARANTY OR THE
INDEBTEDNESS, AND EXCHANGE, ENFORCE, WAIVE, SUBORDINATE, FAIL OR DECIDE NOT TO
PERFECT, AND RELEASE ANY SUCH SECURITY, WITH OR WITHOUT THE SUBSTITUTION OF NEW
COLLATERAL; (D) TO RELEASE, SUBSTITUTE, AGREE NOT TO SUE, OR DEAL WITH ANY ONE
OR MORE OF BORROWER'S SURETIES, ENDORSERS, OR OTHER GUARANTORS ON ANY TERMS OR
IN ANY MANNER LENDER MAY CHOOSE; (E) TO DETERMINE HOW, WHEN AND WHAT APPLICATION
OF PAYMENTS AND CREDITS SHALL BE MADE ON THE INDEBTEDNESS; (F) TO APPLY SUCH
SECURITY AND DIRECT THE ORDER OR MANNER OF SALE THEREOF, INCLUDING WITHOUT
LIMITATION, ANY NONJUDICIAL SALE PERMITTED BY THE TERMS OF THE CONTROLLING
SECURITY AGREEMENT OR DEED OF TRUST, AS LENDER IN ITS DISCRETION MAY DETERMINE;
(G) TO SELL, TRANSFER, ASSIGN, OR GRANT PARTICIPATIONS IN ALL OR ANY PART OF THE
INDEBTEDNESS; AND (H) TO ASSIGN OR TRANSFER THIS GUARANTY IN WHOLE OR IN PART,

GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents and warrants
to Lender that (a) no representations or agreements of any kind have been made
to Guarantor which would limit or qualify in any way the terms of this
Guaranty; (b) this Guaranty is executed at Borrower's request and not at the
request of Lender; (c) Guarantor has full power, right and authority to enter
into this Guaranty; (d) the provisions of this Guaranty do not conflict with or
result in a default under any agreement or other instrument binding upon
Guarantor and do not result in a violation of any law, regulation, court decree
or order applicable to Guarantor; (e) Guarantor has not and will not, without
the prior written consent of Lender, sell, lease, assign, encumber,
hypothecate, transfer, or otherwise dispose of all or substantially all of
Guarantor's assets, or any interest therein; (f) upon Lender's request,
Guarantor will provide to Lender financial and credit information in form
acceptable to Lender, and all such financial information which currently has
been, and all future financial information which will be provided to Lender is
and will be true and correct in all material respects and fairly present the
financial condition of Guarantor as of the dates the financial information is
provided; (g) no material adverse change has occurred in Guarantor's financial
condition since the date of the most recent financial statements provided to
Lender and no event has occurred which may materially adversely affect
Guarantor's financial condition; (h) no litigation, claim, investigation,
administrative proceeding or similar action (including those for unpaid taxes)
against Guarantor is pending or threatened; (i) Lender has made no
representation to Guarantor as to the creditworthiness of Borrower; and (j)
Guarantor has established adequate means of obtaining from Borrower on a
continuing basis

<PAGE>   8

information regarding Borrower's financial condition. Guarantor agrees to keep
adequately informed from such means of any facts, events, or circumstances
which might in any way affect Guarantor's risks under this Guaranty, and
Guarantor further agrees that, absent a request for information, Lender shall
have no obligation to disclose to Guarantor any information or documents
acquired by Lender in the course of its relationship with Borrower.

GUARANTOR'S WAIVERS. Except as prohibited by applicable law, Guarantor waives
any right to require Lender (a) to continue lending money or to extend other
credit to Borrower; (b) to make any presentment, protest, demand, or notice of
any kind, including notice of any nonpayment of the Indebtedness or of any
nonpayment related to any collateral, or notice of any action or nonaction on
the part of Borrower, Lender, any surety, endorser, or other guarantor in
connection with the Indebtedness or in connection with the creation of new or
additional loans or obligations; (c) to resort for payment or to proceed
directly or at once against any person, including Borrower or any other
guarantor; (d) to proceed directly against or exhaust any collateral held by
Lender from Borrower, any other guarantor, or any other person; (e) to give
notice of the terms, time, and place of any public or private sale of personal
property security held by Lender from Borrower or to comply with any other
applicable provisions of the Uniform Commercial Code; (f) to pursue any other
remedy within Lender's power; or (g) to commit any act or omission of any kind,
or at any time, with respect to any matter whatsoever.

If now or hereafter (a) Borrower shall be or become insolvent, and (b) the
Indebtedness shall not at all times until paid be fully secured by collateral
pledged by Borrower, Guarantor hereby forever waives and relinquishes in favor
of Lender and Borrower, and their respective successors, any claim or right to
payment Guarantor may now have or hereafter have or acquire against Borrower,
by subrogation or otherwise, so that at no time shall Guarantor be or become a
"creditor" of Borrower within the meaning of 11 U.S.C. section 547(b), or any
successor provision of the Federal bankruptcy laws.

Guarantor also waives any and all rights or defenses arising by reason of (a)
the provisions of O.C.G.A. Section 10-7-24 concerning Guarantor's right to
require Lender to take action against Borrower or any "one action" or
"anti-deficiency" law or any other law which may prevent Lender from bringing
any action, including a claim for deficiency, against Guarantor, before or
after Lender's commencement or completion of any foreclosure action, either
judicially or by exercise of a power of sale; (b) any election of remedies by
Lender which destroys or otherwise adversely affects Guarantor's subrogation
rights or Guarantor's rights to proceed against Borrower for reimbursement,
including without limitation, any loss of rights Guarantor may suffer by reason
of any law limiting, qualifying, or discharging the Indebtedness; (c) any
disability or other defense of Borrower, of any other guarantor, or of any
other person, or by reason of the cessation of Borrower's liability from any
cause whatsoever, other than payment in full in legal tender, of the
Indebtedness; (d) any right to claim discharge of the Indebtedness on the basis
of unjustified impairment of any collateral for the Indebtedness; (e) any
statute of limitations, if at any time any action or suit brought by Lender
against Guarantor is commenced there is outstanding Indebtedness of Borrower to
Lender which is not barred by any applicable statute of limitations; or (f) any
defenses given to guarantors at law or in equity other than actual payment and
performance of the Indebtedness. If payment is made by Borrower, whether
voluntarily or other, or by any third party, on the Indebtedness and thereafter
Lender is forced to

<PAGE>   9

remit the amount of that payment to Borrower's trustee in bankruptcy or to any
similar person under any federal or State bankruptcy law or law for the relief
of debtors, the Indebtedness shall be considered unpaid for the purpose of
enforcement of this Guaranty.

Guarantor further waives and agrees not to assert or claim at any time any
deductions to the amount guaranteed under this Guaranty for any claim of
setoff, counterclaim, counter demand, recoupment or similar right, whether such
claim, demand or right may be asserted by the Borrower, the Guarantor, or both.

GUARANTOR'S UNDERSTANDING WITH RESPECT TO WAIVERS. Guarantor warrants and
agrees that each of the waivers set forth above is made with Guarantor's full
knowledge of its significance and consequences and that, under the
circumstances, the waivers are reasonable and not contrary to public policy or
law. If any such waiver is determined to be contrary to any applicable law or
public policy, such waiver shall be effective only to the extent permitted by
law or public policy.

LENDER'S RIGHT OF SETOFF. In addition to all liens upon and rights of setoff
against the moneys, securities or other property of Guarantor given to Lender
by law, Lender shall have, with respect to Guarantor's obligations to Lender
under this Guaranty and to the extent permitted by law, a contractual
possessory security interest in and a right of setoff against, and Guarantor
hereby assigns, conveys, delivers, pledges, and transfers to Lender all of
Guarantor's right, title and interest in and to, all deposits, moneys,
securities and other property of Guarantor now or hereafter in the possession
of or on deposit with Lender, whether held in a general or special account or
deposit, whether held jointly with someone else, or whether held for
safekeeping or otherwise, excluding however all IRA, Keogh, and trust accounts.
Every such security interest and right of setoff may be exercised without
demand upon or notice to Guarantor. No security interest or right of setoff
shall be deemed to have been waived by any act or conduct on the part of Lender
or by any neglect to exercise such right of setoff or to enforce such security
interest or by any delay in so doing. Every right of setoff and security
interest shall continue in full force and effect until such right of setoff or
security interest is specifically waived or released by an instrument in
writing executed by Lender.

SUBORDINATION OF BORROWER'S DEBTS TO GUARANTOR. Guarantor agrees that the
Indebtedness of Borrower to Lender, whether now existing or hereafter created,
shall be prior to any claim that Guarantor may now have or hereafter acquire
against Borrower, whether or not Borrower becomes insolvent. Guarantor hereby
expressly subordinates any claim Guarantor may have against Borrower, upon any
account whatsoever, to any claim that Lender may now or hereafter have against
Borrower. In the event of insolvency and consequent liquidation of the assets
of Borrower, through bankruptcy, by an assignment for the benefit of creditors,
by voluntary liquidation ' or otherwise, the assets of Borrower applicable to
the payment of the claims of both Lender and Guarantor shall be paid to Lender
and shall be first applied by Lender to the Indebtedness of Borrower to Lender.
Guarantor does hereby assign to Lender all claims which it may have or acquire
against Borrower or against any assignee or trustee in bankruptcy of Borrower;
provided however, that such assignment shall be effective only for the purpose
of assuring to Lender full payment in legal tender of the indebtedness. If
Lender so requests, any notes or credit agreements now or hereafter evidencing
any debts or obligations of Borrower to

<PAGE>   10

Guarantor shall be marked with a legend that the same are subject to this
Guaranty and shall be delivered to Lender. Guarantor agrees, and Lender hereby
is authorized, in the name of Guarantor, from time to time to execute and file
financing statements and continuation statements and to execute such other
documents and to take such other actions as Lender deems necessary or
appropriate to perfect, preserve and enforce its rights under this Guaranty.

MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Guaranty:

         AMENDMENTS. This Guaranty, together with any Related Documents,
         constitutes the entire understanding and agreement of the parties as
         to the matters set forth in this Guaranty. No alteration of or
         amendment to this Guaranty shall be effective unless given in writing
         and signed by the party or parties sought to be charged or bound by
         the alteration or amendment.

         APPLICABLE LAW. This Guaranty has been delivered to Lender and
         accepted by Lender in the State of Georgia. Subject to the provisions
         on arbitration, this Guaranty shall be governed by and construed in
         accordance with the laws of the State of Georgia.

         ARBITRATION. LENDER AND GUARANTOR AGREE THAT ALL DISPUTES, CLAIMS AND
         CONTROVERSIES BETWEEN THEM, WHETHER INDIVIDUAL, JOINT, OR CLASS IN
         NATURE, ARISING FROM THIS GUARANTY OR OTHERWISE, INCLUDING WITHOUT
         LIMITATION CONTRACT AND TORT DISPUTES, SHALL BE ARBITRATED PURSUANT TO
         THE RULES OF THE AMERICAN ARBITRATION ASSOCIATION, UPON REQUEST OF
         EITHER PARTY. No act to take or dispose of any Collateral shall
         constitute a waiver of this arbitration agreement or be prohibited by
         this arbitration agreement. This includes, without limitation,
         obtaining injunctive relief or a temporary restraining order; invoking
         a power of sale under any deed of trust or mortgage; obtaining a writ
         of attachment or imposition of a receiver; or exercising any rights
         relating to personal property, including taking or disposing of such
         property with or without judicial process pursuant to Article 9 of the
         Uniform Commercial Code. Any disputes, claims, or controversies
         concerning the lawfulness or reasonableness of any act, or exercise of
         any right, concerning any Collateral, including any claim to rescind,
         reform, or otherwise modify any agreement relating to the Collateral,
         shall also be arbitrated, provided however that no arbitrator shall
         have the right or the power to enjoin or restrain any act of any
         party. Judgment upon any award rendered by any arbitrator may be
         entered in any court having jurisdiction. Nothing in this Guaranty
         shall preclude any party from seeking equitable relief from a court of
         competent jurisdiction. The statute of limitations, estoppel, waiver,
         laches, and similar doctrines which would otherwise be applicable in
         an action brought by a party shall be applicable in any arbitration
         proceeding, and the commencement of an arbitration proceeding shall be
         deemed the commencement of an action for these purposes. The Federal
         Arbitration Act shall apply to the construction, interpretation, and
         enforcement of this arbitration provision.

         ATTORNEYS' FEES; EXPENSES. Guarantor agrees to pay upon demand all of
         Lender's costs and expenses, including attorneys' fees and Lender's
         legal expenses, incurred in connection with the enforcement of this
         Guaranty. Lender may pay someone else to help

<PAGE>   11

         enforce this Guaranty, and Guarantor shall pay the costs and expenses
         of such enforcement. Costs and expenses include all costs and expenses
         of collection, including fifteen percent (15%) of the principal plus
         accrued interest as attorneys' fees, if any sums owing under this
         Guaranty are collected by or through an attorney-at-law, whether or not
         there is a lawsuit, including attorneys' fees and legal expenses for
         bankruptcy proceedings (and including efforts to modify or vacate any
         automatic stay or injunction), appeals, and any anticipated
         post-judgment collection services. Guarantor also shall pay all court
         costs and such additional fees as may be directed by the court.

         NOTICES. All notices required to be given by either party to the other
         under this Guaranty shall be in writing, may be sent by telefacsimile
         (unless otherwise required by law), and, except for revocation notices
         by Guarantor, shall be effective when actually delivered or when
         deposited with a nationally recognized overnight courier, or when
         deposited in the United States mail, first class postage prepaid,
         addressed to the party to whom the notice is to be given at the address
         shown above or to such other addresses as either party may designate to
         the other in writing. All revocation notices by Guarantor shall be in
         writing and shall be effective only upon delivery to Lender as provided
         above in the Section titled "DURATION OF GUARANTY." It there is more
         than one Guarantor, notice to any Guarantor will constitute notice to
         all Guarantors. For notice purposes, Guarantor agrees to keep Lender
         informed at all times of Guarantor's current address.

         INTERPRETATION. In all cases where there is more than one Borrower or
         Guarantor, then all words used in this Guaranty in the singular shall
         be deemed to have been used in the plural where the context and
         construction so require; and where there is more than one Borrower
         named in this Guaranty or when this Guaranty is executed by more than
         one Guarantor, the words "Borrower" and "Guarantor" respectively shall
         mean all and any one or more of them. The words "Guarantor,"
         Borrower," and "Lender" include the heirs, successors, assigns, and
         transferees of each of them. Caption headings in this Guaranty are for
         convenience purposes only and are not to be used to interpret or
         define the provisions of this Guaranty. If a court of competent
         jurisdiction finds any provision of this Guaranty to be invalid or
         unenforceable as to any person or circumstance, such finding shall not
         render that provision invalid or unenforceable as to any other persons
         or circumstances, and all provisions of this Guaranty in all other
         respects shall remain valid and enforceable. If any one or more of
         Borrower or Guarantor are corporations or partnerships, it is not
         necessary for Lender to inquire into the powers of Borrower or
         Guarantor or of the officers, directors, partners, or agents acting or
         purporting to act on their behalf, and any Indebtedness made or
         created in reliance upon the professed exercise of such powers shall
         be guaranteed under this Guaranty.

         WAIVER. Lender shall not be deemed to have waived any rights under
         this Guaranty unless such waiver is given in writing and signed by
         Lender. No delay or omission on the part of Lender in exercising any
         right shall operate as a waiver of such right or any other right. A
         waiver by Lender of a provision of this Guaranty shall not prejudice
         or constitute a waiver of Lender's right otherwise to demand strict
         compliance with that provision or any other provision of this
         Guaranty. No prior waiver by Lender, nor any course of dealing between
         Lender and Guarantor, shall constitute a waiver of any of Lender's
         rights or of any of Guarantor's obligations as to any future
         transactions. Whenever the consent of Lender is required under this
         Guaranty, the granting of such

<PAGE>   12

         consent by Lender in any instance shall not constitute continuing
         consent to subsequent instances where such consent is required and in
         all cases such consent may be granted or withheld in the sole
         discretion of Lender.

EACH UNDERSIGNED GUARANTOR ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS
GUARANTY AND AGREES TO ITS TERMS. IN ADDITION, EACH GUARANTOR UNDERSTANDS THAT
THIS GUARANTY IS EFFECTIVE UPON GUARANTOR'S EXECUTION AND DELIVERY OF THIS
GUARANTY TO LENDER AND THAT THE GUARANTY WILL CONTINUE UNTIL TERMINATED IN THE
MANNER SET FORTH IN THE SECTION TITLED "DURATION OF GUARANTY." NO FORMAL
ACCEPTANCE BY LENDER IS NECESSARY TO MAKE THIS GUARANTY EFFECTIVE. THIS
GUARANTY IS DATED MARCH 6, 2000.

IN WITNESS WHEREOF, THIS GUARANTY HAS BEEN SIGNED AND SEALED BY THE
UNDERSIGNED, WHO ACKNOWLEDGES A COMPLETED COPY HEREOF.

X                                           (SEAL)
 -------------------------------------------
     Guarantor

Signed, Sealed and Delivered in the presence of:

X                                           (SEAL)
 -------------------------------------------
     Unofficial Witness

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

Notary Public,_______________________ County

                  (NOTARY SEAL)

My Commission expires:______________________

LENDER:

The Bankers Bank

By:
   -----------------------------------------
     Authorized Officer

<PAGE>   13

                             SCHEDULE OF GUARANTORS

James O. Andrews

James H. Daws

James E. Hinshaw, Sr.

Donald F. Jackson

Lewis A. Massey

Tyler C. McCain

M. Lauch McKinnon

D. Alan Najjar

D. Arnold Tillman, Jr.

Jeffrey S. Tucker

<PAGE>   14

                                          FORM OF CORPORATE RESOLUTION TO BORROW
<TABLE>
<CAPTION>
----------------- ------------- ------------- -------------- --------- ----------- ------------ ------------ --------------
     PRINCIPAL       LOAN DATE     MATURITY       LOAN NO.      CALL    COLLATERAL    ACCOUNT      OFFICER       INITIALS
<S>               <C>           <C>           <C>            <C>       <C>         <C>          <C>
    $750,000.00     03-06-2000    06-28-2000     4021395101                           4021395        JKG
---------------------------------------------------------------------------------------------------------------------------
References in the shaded area are for Lender's use only and do not limit the applicability of this document to any
particular loan or item
---------------------------------------------------------------------------------------------------------------------------
</TABLE>

BORROWER:    SOUTHERNBANK HOLDINGS, INC.        LENDER:   THE BANKERS BANK
             P.O. BOX 967                                 2410 PACES FERRY ROAD
             BUFORD, GA  30515-0967                       600 PACES SUMMIT
                                                          ATLANTA, GA  30339

===============================================================================

I, THE UNDERSIGNED SECRETARY OR ASSISTANT SECRETARY OF SOUTHERNBANK HOLDINGS,
INC. (THE "CORPORATION"), HEREBY CERTIFY THAT the Corporation is organized and
existing under and by virtue of the laws of the State of Georgia as a
corporation for profit, with its principal office at P.O. Box 967, BUFORD, GA
30515-0967, and is duly authorized to transact business in the State of
Georgia.

I FURTHER CERTIFY that at a meeting of the Directors of the Corporation, duly
called and held on __________________________, at which a quorum was present
and voting, or by other duly authorized corporate action in lieu of a meeting,
the following resolutions were

BE IT RESOLVED, that any TWO (2) of the following named officers, employees, or
agents of this Corporation, whose actual signatures are shown below:

<TABLE>
<CAPTION>
     NAMES                    POSITIONS           ACTUAL SIGNATURES
     -----                    ---------           -----------------
     <S>                      <C>                 <C>
     D. Arnold Tillman        CEO                 x
                                                   -----------------------

     M. Lauch McKinnon        President           x
                                                   -----------------------
</TABLE>

acting for and on behalf of the Corporation and as its act and deed be, and
they hereby are, authorized and empowered:

     BORROW MONEY. To borrow from time to time from The Bankers Bank
     ("Lender"), on such terms as may be agreed upon between the Corporation
     and Lender, such sum or sums OF money as in their judgment should be
     borrowed; however, not exceeding at any one time the amount OF SEVEN
     HUNDRED FIFTY THOUSAND & 00/100 DOLLARS ($750,000.00), in addition to such
     sum or sums of money as may be currently borrowed by the Corporation from
     Lender.

     EXECUTE NOTES. To execute and deliver to Lender the promissory note or
     notes, or other evidence of credit accommodations of the Corporation, on
     Lender's forms, at such rates of interest and on such terms as may be
     agreed upon, evidencing the sums of money so borrowed or any indebtedness
     of the Corporation to Lender, and also to execute and deliver to Lender
     one or more renewals, extensions, modifications, refinancings,
     consolidations, or substitutions for one or more of the notes, any portion
     of the notes, or any other evidence of credit accommodations.

<PAGE>   15

     GRANT SECURITY. To mortgage, pledge, transfer, endorse, hypothecate, or
     otherwise encumber and deliver to Lender, as security for the payment of
     any loans or credit accommodations so obtained, any promissory notes so
     executed (including any amendments to or modifications, renewals, and
     extensions of such promissory notes), or any other or further indebtedness
     of the Corporation to Lender at any time owing, however the same may be
     evidenced, any property now or hereafter belonging to the Corporation or
     in which the Corporation now or hereafter may have an interest, including
     without limitation all real property and all personal property (tangible
     or intangible) of the Corporation. Such property may be mortgaged,
     pledged, transferred, endorsed, hypothecated, or encumbered at the time
     such loans are obtained or such indebtedness is incurred, or at any other
     time or times, and may be either in addition to or in lieu of any property
     theretofore mortgaged, pledged, transferred, endorsed, hypothecated, or,
     encumbered.

     EXECUTE SECURITY DOCUMENTS. To execute and deliver to Lender the forms of
     mortgage, deed of trust, pledge agreement, hypothecation agreement, and
     other security agreements and financing statements which may be submitted
     by Lender, and which shall evidence the terms and conditions under and
     pursuant to which such liens and encumbrances . or any of them, are given;
     and also to execute and deliver to Lender any other written instruments,
     any chattel paper, or any other collateral, of any kind or nature, which
     they may in their discretion deem reasonably necessary or proper in
     connection with or pertaining to the giving of the liens and encumbrances.
     Notwithstanding the foregoing, any one of the above authorized persons may
     execute, deliver, or record financing statements.

     NEGOTIATE ITEMS. To draw, endorse, and discount with Lender all drafts,
     trade acceptances, promissory notes, or other evidences of indebtedness
     payable to or belonging to the Corporation in which the Corporation may
     have an interest, and either to receive cash for the same or to cause such
     proceeds to be credited to the account of the Corporation with Lender, or
     to cause such other disposition of the proceeds derived therefrom as they
     may deem advisable.

     FURTHER ACTS. in the case of lines of credit, to designate additional or
     alternate individuals as being authorized to request advances thereunder,
     and in all cases, to do and perform such other acts and things, to pay any
     and all fees and costs, and to execute and deliver such other documents
     and agreements as they may in their discretion deem reasonably necessary
     or proper in order to carry into effect the provisions of these
     Resolutions. The following person or persons currently are authorized to
     request advances and authorize payments under the line OF credit until
     Lender receives written notice of revocation of their authority: D.
     Arnold Tillman, Tyler C. McCain and M. Lauch McKinnon.

BE IT FURTHER RESOLVED, that any and all acts authorized pursuant to these
Resolutions and performed prior to the passage of these Resolutions are hereby
ratified and approved, that these Resolutions shall remain in full force and
effect and Lender may rely on these Resolutions until written notice of their
revocation shall have been delivered to and received by Lender. Any such notice
shall not affect any OF the Corporation's agreements or commitments in effect
at the time notice is given.

<PAGE>   16

BE IT FURTHER RESOLVED, that the Corporation will notify Lender in writing at
Lender's address shown above (or such other addresses as Lender may designate
from time to time) prior to any (a) change in the name of the Corporation, (b)
change in the assumed business name(s) of the Corporation, (c) change in the
management of the Corporation,, (d) change in the authorized signer(s), (e)
conversion of the Corporation to A new or different type of business entity, or
(f) change in any other aspect of the Corporation that directly or indirectly
relates to any agreements between the Corporation and Lender. No change in the
name of the Corporation will take effect until after Lender has been notified.

I FURTHER CERTIFY that the officers, employees, and agents named above are duly
elected, appointed, or employed by or for the Corporation, as the case may be,
and occupy the positions set opposite their respective names; that the
foregoing Resolutions now stand of record on the books of the Corporation; and
that the Resolutions are in full force and effect and have not been modified or
revoked in any manner whatsoever. The Corporation has no corporate seal, and
therefore, no seal is affixed to this certificate,

IN TESTIMONY WHEREOF, I HAVE HEREUNTO SET MY HAND AND SEAL ON MARCH 6, 2000 AND
ATTEST THAT THE SIGNATURES SET OPPOSITE THE NAMES LISTED ABOVE ARE THEIR
GENUINE SIGNATURES.

                                             CERTIFIED TO AND ATTESTED BY:

                                            X                            (SEAL)
                                             ----------------------------

                                            X                            (SEAL)
                                             ----------------------------SENSORY SCIENCE CORPORATION

                                       AND

                        AMERICAN SECURITIES TRANSFER, INC.
                                 (Rights Agent)

                          SHAREHOLDER RIGHTS AGREEMENT

                           DATED AS OF APRIL 13, 2000
<PAGE>
                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
SECTION 1.   CERTAIN DEFINITIONS.............................................  1
SECTION 2.   APPOINTMENT OF RIGHTS AGENT.....................................  5
SECTION 3.   ISSUE OF RIGHTS CERTIFICATES....................................  5
SECTION 4.   FORM OF RIGHT CERTIFICATES......................................  7
SECTION 5.   COUNTERSIGNATURE AND REGISTRATION...............................  7
SECTION 6.   TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT
             CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN
             RIGHT CERTIFICATES..............................................  8
SECTION 7.   EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS...  9
SECTION 8.   CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES.............. 10
SECTION 9.   AVAILABILITY OF COMMON SHARES................................... 10
SECTION 10.  RECORD HOLDERS OF COMMON SHARES ISSUED UPON
             EXERCISE OF RIGHTS.............................................. 10
SECTION 11.  ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF
             COMMON SHARES OR NUMBER OF RIGHTS............................... 11
SECTION 12.  CERTIFICATE OF ADJUSTMENT....................................... 17
SECTION 13.  CONSOLIDATION, MERGER OR SALE OR TRANSFER OF
             ASSETS OR EARNING POWER......................................... 17
SECTION 14.  FRACTIONAL RIGHTS AND FRACTIONAL SHARES......................... 20
SECTION 15.  RIGHTS OF ACTION................................................ 21
SECTION 16.  AGREEMENT OF RIGHT HOLDERS...................................... 21
SECTION 17.  RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER............... 22
SECTION 18.  CONCERNING THE RIGHTS AGENT..................................... 22
SECTION 19.  MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT....... 23
SECTION 20.  DUTIES OF RIGHTS AGENT.......................................... 23
SECTION 21.  CHANGE OF RIGHTS AGENT.......................................... 25
SECTION 22.  ISSUANCE OF NEW RIGHT CERTIFICATES.............................. 26
SECTION 23.  REDEMPTION...................................................... 26

                                      -i-
<PAGE>
SECTION 24.  EXCHANGE........................................................ 27
SECTION 25.  NOTICE OF CERTAIN EVENTS........................................ 28
SECTION 26.  NOTICES......................................................... 28
SECTION 27.  SUPPLEMENTS AND AMENDMENTS...................................... 29
SECTION 28.  SUCCESSORS...................................................... 30
SECTION 29.  DETERMINATIONS BY THE BOARD OF DIRECTORS........................ 30
SECTION 30.  BENEFITS OF THIS RIGHTS AGREEMENT............................... 30
SECTION 31.  SEVERABILITY.................................................... 31
SECTION 32.  GOVERNING LAW................................................... 31
SECTION 33.  COUNTERPARTS.................................................... 31
SECTION 34.  DESCRIPTIVE HEADINGS............................................ 31

                                      -ii-
<PAGE>
                          SHAREHOLDER RIGHTS AGREEMENT

     This Shareholder Rights Agreement (the "Rights Agreement"), effective as of
April 13, 2000, between Sensory Science Corporation, a Delaware corporation (the
"Company"), and American Securities Transfer, Inc. (the "Rights Agent").

                                   WITNESSETH

     WHEREAS,  on  April  13,  2000,  the  Board  of  Directors  of the  Company
authorized  and  declared a  dividend  of one common  share  purchase  Right (as
hereinafter  defined) for each share of the Company's Common Shares  outstanding
at the close of business on April 23, 2000, (the "Record Date"), each such right
initially  representing  the right to purchase one share of the Company's common
stock upon the terms and subject to the  conditions  therein set forth.  At that
time the Board further  authorized and directed the issuance of one common share
purchase Right  (subject to adjustment as provided  herein) with respect to each
share of the Company's Common Shares that became outstanding  between the Record
Date and the Distribution Date (as hereinafter defined);

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

                                   SECTION 1.
                               CERTAIN DEFINITIONS

     For  purposes  of this  Rights  Agreement,  the  following  terms  have the
meanings indicated:

     (a)  "Acquiring  Person" shall mean any Person who or which,  together with
all Affiliates and  Associates of such Person,  shall become,  at any time after
the date of this Rights Agreement  (whether or not such status continues for any
period),  the Beneficial Owner of Common Shares  representing 15% or more of the
Common  Shares then  outstanding,  other than as a result of a Permitted  Offer.
Notwithstanding the foregoing, (A) the term "Acquiring Person" shall not include
the Company,  any  Subsidiary of the Company,  any employee  benefit plan of the
Company or any  Subsidiary of the Company,  or any entity  holding Common Shares
for or pursuant to the terms of any such plan,  (B) no Person shall be deemed to
be an "Acquiring  Person"  either (X) as a result of the  acquisition  of Common
Shares by the Company that, by reducing the number of Common Shares outstanding,
increases the proportional  number of shares  beneficially  owned by such Person
together with all Affiliates and Associates of such Person; except that if (i) a
Person would become an Acquiring Person (but for the operation of this subclause
(X)) as a result of the  acquisition  of Common Shares by the Company,  and (ii)
after such share  acquisition  by the Company,  such Person,  or an Affiliate or
Associate of such Person,  becomes the Beneficial Owner of any additional Common
Shares, then such Person shall be deemed an Acquiring Person, or (Y) if (i) such
Person, or an Affiliate or Associate of such Person,  inadvertently  becomes the
Beneficial  Owner of 15% or more of the outstanding  Common Shares,  (ii) within
eight (8) days  thereafter such Person notifies the Board of Directors that such
Person  did  so  inadvertently   and  (iii)  within  two  (2)  days  after  such

                                      -1-
<PAGE>
notification,  such  Person  is the  Beneficial  Owner  of less  than 15% of the
outstanding  Common  Shares,  and  (C)  a  Person  engaged  in  business  as  an
underwriter  of  securities  shall not be deemed to be an Acquiring  Person as a
result  of  such  Person  participating  in  good  faith  in a  firm  commitment
underwriting  unless such Person is the Beneficial Owner of such securities upon
the expiration of forty (40) days after the commencement of such underwriting.

     (b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such  terms in Rule  12b-2  of the  General  Rules  and  Regulations  (or any
comparable or successor rule or regulation) under the Exchange Act.

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

          (i)  which  such  Person  or  any  of  such  Person's   Affiliates  or
               Associates   beneficially  owns,   directly  or  indirectly,   as
               determined  pursuant  to Rule  13d-3  of the  General  Rules  and
               Regulations  (or any  comparable or successor rule or regulation)
               under the Exchange Act as of the date hereof;

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

          (iii)Which are  beneficially  owned,  directly or  indirectly,  by any
               other  Person  with  which  such  Person or any of such  Person's
               Affiliates  or  Associates  has  any  agreement,  arrangement  or
               understanding  (other than customary  agreements with and between
               underwriters  and selling  group  members  with respect to a bona
               fide public offering of securities)  for the acquiring,  holding,

                                      -2-
<PAGE>
               voting  (except  to the  extent  contemplated  by the  proviso to
               Section  l(c)(ii)(B))  or  disposing  of  any  securities  of the
               Company.   Notwithstanding   anything  in  this   definition   of
               "Beneficial   Owner"   to  the   contrary,   the   phrase   "then
               outstanding,"  when used with reference to a Person's  beneficial
               ownership of securities of the Company,  shall mean the number of
               such  securities  then issued and  outstanding  together with the
               number  of  such   securities   not  then  actually   issued  and
               outstanding which such Person would be deemed to own beneficially
               hereunder.

     (d) "Business Day" shall mean any day other than a Saturday, a Sunday, or a
day on which  banking  institutions  in  Phoenix,  Arizona,  are  authorized  or
obligated by law or executive order to close.

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

     (f) "Common  Shares"  when used with  reference  to the Company  shall mean
shares of the Company's  common stock,  par value $.001 per share, and any other
class or classes or series of common  stock of the  Company  resulting  from any
subdivision, combination, recapitalization or reclassification of shares of such
common stock.  "Common Shares" when used with reference to any Person other than
the Company shall mean the capital stock (or equity  interest) with the greatest
voting power of such other  Person or, if such other  Person is a Subsidiary  of
another  Person,  the  Person or  Persons  that  ultimately  control  such first
mentioned Person.

     (g)  "Company"  shall have the  meaning  set forth in the  recitals to this
Rights Agreement.

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

     (i)  "Exchange  Act" shall mean the  Securities  Exchange  Act of 1934,  as
amended, (or any comparable or successor law or act) as in effect on the date of
this Rights Agreement.

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

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

     (l) "NASDAQ" shall have the meaning set forth in Section 11(d) hereof.

     (m) "Permitted Offer" shall mean a tender or exchange offer that is for all
outstanding  Common  Shares  at a price  and on terms  determined,  prior to the
announcement  or  commencement  of such tender or exchange  offer, by at least a
majority of the members of the Board of  Directors  who are not  officers of the
Company  and who are not (or  would  not  be,  if the  offer  were  consummated)
Acquiring Persons or Affiliates,  Associates, nominees, or representatives of an
Acquiring  Person,  to be adequate and  otherwise  in the best  interests of the

                                      -3-
<PAGE>
Company  and its  stockholders  (other  than  the  Person  or any  Affiliate  or
Associate  thereof  on whose  basis the  offer is being  made).  In  determining
whether an offer is  adequate  or in the best  interests  of the Company and its
shareholders, the Board may take into account all factors that it deems relevant
including,  without  limitation,  (1) the  consideration  being  offered  in the
proposal in relation to the Board's  estimate  of: (i) the current  value of the
Company  in  a  freely   negotiated  sale  of  either  the  Company  by  merger,
consolidation or otherwise, or all or substantially all of the Company's assets,
(ii) the  current  value of the  Company  if orderly  liquidated,  and (iii) the
future  value of the  Company  over a period of years as an  independent  entity
discounted to current value; (2) then existing  political,  economic,  and other
factors bearing on security prices  generally or the current market value of the
Company's  securities  in  particular;  (3) whether the proposal  might  violate
federal,  state,  or local laws;  (4) social,  legal,  and  economic  effects on
employees,  suppliers,  customers,  and others having similar relationships with
the Company,  and the communities in which the Company  conducts its businesses;
5) the  financial  condition  and earnings  prospects  of the Person  making the
proposal  including the Person's  ability to service its debt and other existing
or  likely  financial  obligations;  and (7)  the  competence,  experience,  and
integrity of the Person making the acquisition proposal.

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

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

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

     (q) "Record  Date" shall have the meaning set forth in the recitals to this
Rights Agreement.

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

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

     (t) "Rights" shall mean the rights to purchase Common Shares  authorized by
the Board of Directors of the Company after the Record Date.

     (u) "Rights Agent" shall have the meaning set forth in the recitals to this
Rights Agreement.

     (v) "Rights  Agreement" shall have the meaning set forth in the recitals to
this Rights Agreement.

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

     (x) "Securities Act" shall mean the Securities Act of 1933, as amended, (or
any  comparable  or successor  law or act) as in effect from time to time during
the term of this Rights Agreement.

                                      -4-
<PAGE>
     (y)  "Shares  Acquisition  Date"  shall  mean  the  first  date of a public
announcement  (which,  for purposes of this definition,  shall include,  without
limitation,  a report  filed  pursuant to Section  13(d) (or any  comparable  or
successor  section or  provision)  under the Exchange  Act) by the Company or an
Acquiring  Person that an Acquiring Person has become such;  provided,  that, if
such Person is  determined  not to have become an Acquiring  Person  pursuant to
Section l (a) hereof,  then no Shares  Acquisition  Date shall be deemed to have
occurred.

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

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

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

     (cc) "Voting  Securities" shall have the meaning set forth in Section 13(a)
hereof.

                                   SECTION 2.
                           APPOINTMENT OF RIGHTS AGENT

     The  Company  hereby  appoints  the  Rights  Agent to act as agent  for the
Company and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the  Distribution  Date also be the holders of the Common Shares)
in accordance with the terms and conditions  hereof, and the Rights Agent hereby
accepts  such  appointment.  The  Company  may from  time to time  appoint  such
co-Rights Agents as it may deem necessary or desirable.

                                   SECTION 3.
                          ISSUE OF RIGHTS CERTIFICATES

     (a) Until the  earlier of (i) the close of  business on the tenth day after
the Shares  Acquisition Date or (ii) the close of business on the tenth business
day (or such later date as may be determined by action of the Board of Directors
of the Company  prior to such time as any Person  becomes an  Acquiring  Person)
after the date that a tender or  exchange  offer by any Person  (other  than the
Company, any Subsidiary of the Company, any employee benefit plan of the Company
or of any  Subsidiary of the Company or any entity  holding Common Shares for or
pursuant  to the  terms of any such  plan) is first  published  or sent or given
within the meaning of Rule 14d-2 of the General  Rules and  Regulations  (or any
comparable  or successor  rule or  regulation)  under the Exchange  Act, if upon
consummation  thereof,  such Person would be the Beneficial Owner of 15% or more
of the shares of Common Stock then outstanding;  the earlier of such dates being
herein referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the  certificates  for the
Common Shares registered in the names of the holders thereof (which certificates
shall  also be  deemed  to be  certificates  for  Rights)  and  not by  separate
certificates, and (y) the Rights (and the right to receive separate certificates
("Right  Certificates"))  will be  transferable  only  in  connection  with  the
transfer of the underlying  Common Shares  (including a transfer to the Company)
as more fully set out below. As soon as practicable after the Distribution Date,

                                      -5-
<PAGE>
the Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will,  if requested,
send) by  first-class,  postage-prepaid  mail,  to each record  holder of Common
Shares as of the close of business on the  Distribution  Date, at the address of
such holder  shown on the records of the  Company,  a Right  Certificate,  which
shall  be  in   substantially   the  form  of  Exhibit  A  hereto   (the  "Right
Certificate"),  evidencing  one Right for each Common  Share so held.  As of and
after the  Distribution  Date, the Rights will be evidenced solely by such Right
Certificates.

     (b) As promptly as practicable  following the Record Date, the Company will
send a copy of a Summary of Rights to Purchase Common Shares,  in  substantially
the  form of  Exhibit  B hereto  (the  "Summary  of  Rights"),  by  first-class,
postage-prepaid  mail, to each record holder of Common Shares as of the close of
business on the Record Date,  at the address of such holder shown on the records
of the Company.  Until the  Distribution  Date (or the earlier of the Redemption
Date  or  the  Final  Expiration  Date),  the  surrender  for  transfer  of  any
certificate for Common Shares outstanding, with or without a copy of the Summary
of Rights  attached  thereto,  shall also  constitute the transfer of the Rights
associated with the Common Shares.

     (c)  Certificates  for Common Shares which become  outstanding  (including,
without limitation,  reacquired shares which are subsequently disposed of by the
Company)  after the Record Date but prior to the  earliest  of the  Distribution
Date, the Redemption Date or the Final  Expiration Date shall have impressed on,
printed on, written on or otherwise affixed to them the following legend:

     "This  certificate also evidences and entitles the holder hereof to certain
     rights as set forth in a Shareholder Rights Agreement,  as it may from time
     to time be supplemented or amended, between Sensory Science Corporation and
     American Securities Transfer, Inc., (the "Rights Agreement"),  the terms of
     which are hereby incorporated herein by reference and a copy of which is on
     file at the principal  executive  offices of Sensory  Science  Corporation.
     Under certain  circumstances,  as set forth in the Rights  Agreement,  such
     rights may be redeemed or  exchanged,  may expire,  or may be  evidenced by
     separate  certificates  and no longer  be  evidenced  by this  certificate.
     Sensory Science  Corporation  will mail to the holder of this certificate a
     copy of the Rights Agreement  without charge within five days after receipt
     of a written request therefor.  Under certain circumstances,  rights issued
     to or held by  Acquiring  Persons or their  Affiliates  or  Associates  (as
     defined in the Rights  Agreement) and any subsequent  holder of such rights
     may become null and void."

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

                                      -6-
<PAGE>
                                   SECTION 4.
                           FORM OF RIGHT CERTIFICATES

     (a) The Right  Certificates  (and the forms of election to purchase  and of
assignment to be printed on the reverse thereof) shall be substantially the same
as provided for in Section 3(a) hereof 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 Rights  Agreement,  or as may be required to comply with any  applicable
law or with any rule or  regulation  made  pursuant  thereto or with any rule or
regulation  of any stock  exchange  on which the Rights may from time to time be
listed, or to conform to usage.  Subject to the provisions of Section 22 hereof,
the Right Certificates shall entitle the holders thereof to purchase such number
and kind of Common  Shares as shall be set forth  therein at the price per share
set forth  therein,  but the number and kind of such Common Shares and the price
per share shall be subject to adjustment as provided herein.

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

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

     Notwithstanding  the above  provision,  failure to place such legend on any
Rights  Certificate  representing  Rights  which  are  otherwise  null  and void
pursuant  to the terms of this Rights  Agreement,  shall not affect the null and
void status of such Rights.

                                   SECTION 5.
                        COUNTERSIGNATURE AND REGISTRATION

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

                                      -7-
<PAGE>
at the actual date of the execution of such Right Certificate, shall be a proper
officer of the Company to sign such Right  Certificate,  although at the date of
the execution of this Rights Agreement any such person was not such an officer.

     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 such Right  Certificate  or transfer,  books for  registration  and
transfer of the Right Certificates  issued hereunder.  Such books shall show the
names and  addresses of the  respective  holders of he Right  Certificates,  the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.

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

     Subject to the provisions of Section 14 hereof, at any time after the Close
of Business on the  Distribution  Date, and at or prior to the Close of Business
on the earlier of the Redemption  Date or the Final  Expiration  Date, any Right
Certificate or Right Certificates  (other than Right  Certificates  representing
Rights that have become void pursuant to Section  11(a)(ii)  hereof or that have
been  exchanged  pursuant  to Section 24 hereof) may be  transferred,  split up,
combined or  exchanged  for another  Right  Certificate  or Right  Certificates,
respectively, entitling the registered holder to purchase a like number and kind
of Common Shares as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase.  Any registered  holder  desiring to transfer,
split up, combine or exchange any Right Certificate or Right  Certificates shall
make such request in writing  delivered to the Rights Agent, and shall surrender
the  Right  Certificate  or Right  Certificates  to be  transferred,  split  up,
combined or  exchanged  at the  principal  office or offices of the Rights Agent
designated for such purpose.  Thereupon,  the Rights Agent shall countersign and
deliver  to  the  Person   entitled   thereto  a  Right   Certificate  or  Right
Certificates,  as the case may be, as so  requested.  The  Company  may  require
payment of a sum sufficient to cover any tax or governmental  charge that may be
imposed in connection  with any transfer,  split up,  combination or exchange of
Right Certificates. Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security  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 Right  Certificate  if  mutilated,  the Company  will make and deliver a new
Right  Certificate  of like  tenor  to the  Rights  Agent  for  delivery  to the
registered holder in lieu of the Right Certificate so lost, stolen, destroyed or
mutilated.

                                      -8-
<PAGE>
                                   SECTION 7.
                       EXERCISE OF RIGHTS; PURCHASE PRICE;
                            EXPIRATION DATE OF RIGHTS

     (a) Subject to Section 11(a)(ii) hereof, the registered holder of any Right
Certificate  may  exercise  the Rights  evidenced  thereby  (except as otherwise
provided  herein)  in whole or in part at any time after the  Distribution  Date
upon surrender of the Right  Certificate,  with the form of election to purchase
on the reverse side thereof duly executed,  to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose, together with
payment of the price per share  (rounded to the nearest  cent)  provided  for in
paragraph (b) below (the "Purchase Price") for each Common Share as to which the
Rights are  exercised,  at or prior to the earliest of (i) the close of business
on April 13,  2010 (the  "Final  Expiration  Date"),  (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof (the "Redemption Date"), or
(iii) the time at which such  Rights are  exchanged  as  provided  in Section 24
hereof.

     (b) The Purchase  Price for each Common Share pursuant to the exercise of a
Right shall  initially  be $15.00,  subject to  adjustment  from time to time as
provided in Sections 11 and 13 hereof,  and shall be payable in lawful  money of
the United States of America in accordance with paragraph (c) below.

     (c) Upon receipt of a Right Certificate  representing  exercisable  Rights,
with the form of election to purchase duly  executed,  accompanied by payment of
the Purchase  Price for the Common Shares to be purchased and an amount equal to
any  applicable  transfer  tax  required  to be paid by the holder of such Right
Certificate in accordance  with Section 9 hereof by certified  check,  cashier's
check or money order payable to the order of the Company, the Rights Agent shall
thereupon  promptly (i) requisition from any transfer agent of the Common Shares
certificates  for the  number  and kind of  Common  Shares to be  purchased  (or
depository  receipts  when  appropriate)  and  the  Company  hereby  irrevocably
authorizes  its  transfer  agents to comply  with all such  requests,  (ii) when
appropriate,  requisition from the Company the amount of cash to be paid in lieu
of issuance of  fractional  shares in accordance  with Section 14 hereof,  (iii)
after  receipt of such  certificates,  cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be  designated  by such  holder and (iv) when  appropriate,
after receipt,  deliver such cash to or upon the order of the registered  holder
of such Right Certificate.

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

     (e) So long as the Common  Shares  issuable upon the exercise of Rights may
be listed on any national  securities  exchange,  the Company shall use its best
efforts  to cause all shares  reserved  for such  issuance  to be listed on such
exchange upon official notice of issuance upon such exercise.

                                      -9-
<PAGE>
                                   SECTION 8.
               CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES

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

                                   SECTION 9.
                         AVAILABILITY OF COMMON SHARES

     (a) The Company  covenants and agrees that it will cause to be reserved and
kept available out of its  authorized  and unissued  Common Shares or any Common
Shares held in its  treasury,  the number and kind of Common Shares that will be
sufficient  to  permit  the  exercise  in  full  of all  outstanding  Rights  in
accordance with this Rights Agreement.

     (b) The Company  covenants  and agrees that it will take all such action as
may be necessary to ensure that all Common  Shares  delivered  upon  exercise of
Rights  shall,  at the time of  delivery  of the  certificates  for such  shares
(subject to payment of the Purchase Price),  be duly and validly  authorized and
issued and fully paid and nonassessable Common Shares.

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

                                  SECTION 10.
         RECORD HOLDERS OF COMMON SHARES ISSUED UPON EXERCISE OF RIGHTS

     Each person in whose name any  certificate for Common Shares is issued upon
the  exercise  of Rights  shall for all  purposes  be deemed to have  become the
holder  of  record  of the  Common  Shares  represented  thereby  on,  and  such
certificate shall be dated, the date upon which the Right Certificate evidencing

                                      -10-
<PAGE>
such  Rights was duly  surrendered  and payment of the  Purchase  Price (and any
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Company's  transfer books for the
Common Shares 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 such  transfer  books are open.  Prior to the
exercise  of the Rights  evidenced  thereby,  the holder of a Right  Certificate
shall not be entitled  to any rights of a holder of Common  Shares for which the
Rights evidenced thereby shall be exercisable,  including,  without  limitation,
the right to vote, to receive  dividends or other  distributions  or to exercise
any  preemptive  rights,  and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.

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

     (a) The Purchase  Price,  the number of Common  Shares or other  securities
covered by each  Right,  and the  number of Rights  outstanding  are  subject to
adjustment from time to time as provided in this Section 11.

            (i)   In the event the  Company  shall at any time  after the Record
                  Date (A)  declare a dividend on the Common  Shares  payable in
                  Common  Shares,  (B) subdivide the  outstanding  Common Shares
                  into  a  greater  number  of  such  shares,  (C)  combine  the
                  outstanding  Common  Shares  into a  smaller  number  of  such
                  shares,  or (D) issue any  shares  of its  capital  stock in a
                  reclassification   of  Common  Shares   (including   any  such
                  reclassification  in connection with a consolidation or merger
                  in  which  the  Company  is  the   continuing   or   surviving
                  corporation),  except as  otherwise  provided in this  Section
                  11(a),  the Purchase Price in effect for Rights at the time of
                  the record date for such dividend or of the effective  date of
                  such  subdivision,  combination or  reclassification,  and the
                  number and kind of shares of capital  stock  issuable  on such
                  date, shall be proportionately  adjusted so that the holder of
                  any Right exercised after such time shall, upon payment of the
                  Purchase  Price then in effect,  be  entitled  to receive  the
                  aggregate number and kind of shares of capital stock which, if
                  such Right had been exercised  immediately  prior to such date
                  and at a time when the  Common  Shares  transfer  books of the
                  Company were open,  he would have owned upon such exercise and
                  been   entitled  to  receive  by  virtue  of  such   dividend,
                  subdivision,   combination  or   reclassification;   provided,
                  however,  that in no event shall the  consideration to be paid
                  upon the exercise of one such Right be less than the per share
                  par value of the Common Shares. If an event occurs which would
                  require an adjustment  under both 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).

                                      -11-
<PAGE>
            (ii)  Subject to Section 24 of this Rights  Agreement,  in the event
                  any Person  becomes an  Acquiring  Person,  then the  Purchase
                  Price for each Common Share  issuable  upon exercise of Rights
                  shall be  reduced  to an  amount  equal to 50% of the  current
                  market  price  per  share  of such  Common  Share  (determined
                  pursuant  to Section  11(d)) on the Shares  Acquisition  Date.
                  Notwithstanding  the  above,  if the  transaction  that  would
                  otherwise  give  rise  to the  foregoing  adjustment  is  also
                  subject to the provisions of Section 13 hereof,  then only the
                  provisions  of Section 13 hereof shall apply and no adjustment
                  shall be made pursuant to this Section 11 (a)(ii).

                  From and after the  occurrence of the event  described  above,
                  any Rights that are or were acquired or beneficially  owned by
                  any  Acquiring  Person (or any  Associate or Affiliate of such
                  Acquiring  Person) shall be void and any holder of such Rights
                  shall  thereafter  have no right to exercise such Rights under
                  any provision of this Rights  Agreement.  No Right Certificate
                  shall be issued pursuant to Section 3 that  represents  Rights
                  beneficially  owned by an Acquiring  Person whose Rights would
                  be void pursuant to the preceding sentence or any Associate or
                  Affiliate thereof; no Right Certificate shall be issued at any
                  time upon the  transfer of any Rights to or from an  Acquiring
                  Person whose Rights  would be void  pursuant to the  preceding
                  sentence or any  Associate or Affiliate  thereof or to or from
                  any nominee of such Acquiring Person,  Associate or Affiliate;
                  and any Right  Certificate  delivered  to the Rights Agent for
                  transfer  to or from an  Acquiring  Person (or any  Associate,
                  Affiliate or nominee of such  Acquiring  Person)  whose Rights
                  would be void  pursuant  to the  preceding  sentence  shall be
                  canceled.

            (iii) In the event that there shall not be sufficient  Common Shares
                  issued but not  outstanding  or  authorized  but  unissued  to
                  permit the exercise in full of the Rights in  accordance  with
                  the foregoing  subparagraph  (ii), the Company  shall,  to the
                  extent  permitted by  applicable  law, take all such action as
                  may be  necessary to authorize  additional  Common  Shares for
                  issuance upon exercise of the Rights, including the calling of
                  a meeting of shareholders;  provided,  however, if the Company
                  is unable  to cause the  authorization  of  additional  Common
                  Shares then the Company, to the extent necessary and permitted
                  by applicable  law and any agreements or instruments in effect
                  on the date  hereof  to which  it is a  party,  shall,  at its
                  option  (A) pay cash  equal to twice the  applicable  Purchase
                  Price (as  adjusted  pursuant  to this  Section 11) in lieu of
                  issuing any such Common Shares and requiring payment therefor,
                  or (B) issue  equity  securities  having a value  equal to the
                  market price of Common Shares which  otherwise would have been
                  issuable  pursuant to the foregoing  subparagraph  (ii), which
                  value shall be  determined  by the Board of  Directors  of the
                  Company, whose determination shall be described in a statement
                  filed with the Rights Agent,  or (C)  distribute a combination

                                      -12-
<PAGE>
                  of Common Shares, cash and/or other equity securities having a
                  value  equal to the  market  price of the shares of the Common
                  Shares which are otherwise  issuable pursuant to the foregoing
                  subparagraph (ii), determined in accordance with the preceding
                  clause (B), upon exercise of the related Rights.

     (b) In case the Company  shall fix a record date for the issuance of rights
(other than the  Rights),  options or  warrants to all holders of Common  Shares
entitling them (for a period  expiring within 45 calendar days after such record
date) to subscribe for or purchase Common Shares, or securities convertible into
Common Shares at a price per share (or having a conversion price per share, if a
security  convertible  into Common  Shares) less than the then current per share
market price (as defined in Section  11(d)) of the Common  Shares on such record
date,  the  Purchase  Price to be in effect  after  such  record  date  shall be
determined by multiplying the Purchase Price in effect immediately prior to such
record date by a fraction,  the numerator of which shall be the number of Common
Shares  outstanding  on such record date plus the number of Common  Shares which
the  aggregate  offering  price of the total  number of shares so to be  offered
(and/or the aggregate initial conversion price of the convertible  securities so
to be offered) would  purchase at such current market price and the  denominator
of which shall he the number of Common  Shares  outstanding  on such record date
plus the number of additional  Common Shares to be offered for  subscription  or
purchase  (or  into  which  the  convertible  securities  so to be  offered  are
initially  convertible);   provided,   however,  that  in  no  event  shall  the
consideration  to be paid  upon the  exercise  of one Right be less than the per
share par value of the  shares of capital  stock of the  Company  issuable  upon
exercise  of  one  Right.  In  case  such  subscription  price  may be  paid  in
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.  Common Shares owned by or held for the account of
the  Company  shall  not be  deemed  outstanding  for the  purpose  of any  such
computation.  Such adjustment shall be made successively  whenever such a record
date is fixed; and in the event that such rights, options or warrants are not so
issued,  the  Purchase  Price shall be adjusted to be the  Purchase  Price which
would then be in effect if such record date had not been fixed.

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

                                      -13-
<PAGE>
such  current per share market price of the Common  Shares;  provided,  however,
that in no event  shall the  consideration  to be paid upon the  exercise of one
Right be less than the per share par value of the shares of capital stock of the
Company to be issued upon exercise of one Right.  Such adjustments shall be made
successively  whenever  such a record date is fixed;  and in the event that such
distribution  is not so made,  the Purchase  Price shall again be adjusted to be
the  Purchase  Price  which  would then be in effect if such record date had not
been fixed.

     (d) For the purpose of any  computation  hereunder,  the "current per share
market price" of a Common Share on any date shall be deemed to be the average of
the daily  closing  prices  per share of a Common  Share for the 30  consecutive
Trading Days  immediately  prior to such date;  provided,  however,  that in the
event that the current per share market  price of a Common  Share is  determined
during a period  following the  announcement by the Company of (A) a dividend or
distribution  on the  Common  Shares,  payable  in Common  Shares or  securities
convertible  into  Common  Shares,  or  (B)  any  subdivision,   combination  or
reclassification of the Common Shares, and prior to the expiration of 30 Trading
Days after the ex-dividend date for such dividend or distribution, or the record
date for such subdivision,  combination or  reclassification,  then, and in each
such case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share of a Common Share.  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 Common  Shares are not listed
or  admitted  to trading  on the New York Stock  Exchange,  as  reported  in the
principal  consolidated  transaction reporting system with respect to securities
listed on the principal national  securities exchange on which the Common Shares
are  listed or  admitted  to  trading  or, if Common  Shares  are not  listed or
admitted to trading on any national securities  exchange,  the last quoted price
or, if not so quoted,  the  average of the high bid and low asked  prices in the
over-the-counter  market, as reported by the National  Association of Securities
Dealers,  Inc. Automated Quotations System ("NASDAQ") then in use, or, if on any
such date Common Shares 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 Common  Shares,  selected  by the Board of  Directors  of the
Company.  If on any such  date no  market-maker  is  making a market  in  Common
Shares, the fair value of Common Shares on such date as determined in good faith
by the Board of  Directors  of the Company  shall be used,  whose  determination
shall be described in a statement filed with the Rights Agent. The term "Trading
Day" shall mean a day on which the  principal  national  securities  exchange on
which  Common  Shares  are  listed  or  admitted  to  trading  is  open  for the
transaction  of  business  or, if Common  Shares are not listed or  admitted  to
trading on any national  securities  exchange,  a Business Day. If Common Shares
are not publicly  held or so listed or traded,  "current per share market price"
shall mean the fair value per share as  determined in good faith by the Board of
Directors of the Company,  whose determination shall be described in a statement
filed with the Rights Agent.

     (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,

                                      -14-
<PAGE>
that any  adjustments  which by reason of this Section 11(e) are not required to
be made  shall be carried  forward  and taken  into  account  in any  subsequent
adjustment.  All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one ten-thousandth of a share as the case may be.

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

     (g)  All  Rights  originally  issued  by  the  Company  subsequent  to  any
adjustment  made  hereunder  to the  Purchase  Price  applicable  thereto  shall
evidence the right to purchase,  at the adjusted  Purchase Price,  the number of
Common  Shares or other capital stock  purchasable  from time to time  hereunder
upon  exercise of such  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 related  Right  outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase,  at the adjusted  Purchase Price, the number of Common Shares
(calculated  to the  nearest  one  ten-thousandth  of a share)  obtained  by (i)
multiplying (x) the number of shares covered by such Right  immediately prior to
this  adjustment by (y) the Purchase Price in effect  immediately  prior to such
Purchase  Price  adjustment  and (ii)  dividing  the  product so obtained by the
Purchase Price in effect immediately after such Purchase Price adjustment.

     (i) The  Company  may elect on or after the date of any  adjustment  of the
Purchase Price to adjust the number of Rights in substitution for any adjustment
in the number of Common Shares purchasable upon the exercise of a Right. Each of
such Rights outstanding after such adjustment of the number of such Rights shall
be  exercisable  for the  number  of Common  Shares  for  which  such  Right was
exercisable immediately prior to such adjustment. Each such Right held of record
prior to such  adjustment  of the number of Rights  shall  become that number of
such Rights (calculated to the nearest one ten-thousandth)  obtained by dividing
the Purchase  Price in effect  immediately  prior to adjustment of such Purchase
Price by the Purchase Price in effect  immediately  after such  adjustment.  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 Right
Certificates have been issued,  shall be at least 10 days later than the date of
the public  announcement.  If Right  Certificates  have been  issued,  upon each
adjustment  of the number of such Rights  pursuant to this  Section  11(i),  the
Company shall, as promptly as practicable, cause to be distributed to holders of
record of such Right Certificates on such record date 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 such Right  Certificates  held by such holders
prior to the date of adjustment,  and upon surrender thereof, if required by the
Company, new Right Certificates  evidencing all the Rights to which such holders

                                      -15-
<PAGE>
shall be entitled after such adjustment. Right Certificates so to be distributed
shall be issued,  executed and  countersigned  in the manner provided for herein
and  shall  be  registered  in the  names  of the  holders  of  record  of Right
Certificates on the record date specified in the public announcement.

     (j)  Irrespective  of any adjustment or change in the Purchase Price or the
number of Common  Shares  issuable  upon the  exercise of the Rights,  the Right
Certificates  theretofore  and  thereafter  issued may  continue  to express the
Purchase  Price and the number of Common  Shares  which were  expressed  in such
Right Certificates theretofore issued hereunder.

     (k) Before  taking any action that would cause an  adjustment  reducing the
Purchase Price below the then par value,  if any, of the Common Shares  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  Common  Shares at such
adjusted Purchase Price.

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

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

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

                                      -16-
<PAGE>
                                  SECTION 12.
                            CERTIFICATE OF ADJUSTMENT

     Whenever an adjustment is made as provided in Sections 11 or 13 hereof, the
Company shall promptly (a) prepare a certificate  setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each  transfer  agent for the Common  Shares a copy of
such  certificate and, (c) include a brief summary thereof in the next quarterly
or current  report  filed  pursuant to the  Exchange  Act by the  Company,  and,
following  the  Distribution  Date,  mail such summary to each holder of a Right
Certificate in accordance with Section 25 hereof.

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

     (a) In the event that, on or following the Distribution  Date,  directly or
indirectly,  (x) the Company shall  consolidate with, or merge with and into any
other Person other than a subsidiary of the Company in a  transaction  that does
not violate  Section 11(n) hereof,  (y) the Company shall  consolidate  with, or
merge  with,  any other  Person  other  than a  subsidiary  of the  Company in a
transaction that does not violate Section 11(n) hereof, and the Company shall be
the continuing or surviving  corporation of such  consolidation or merger (other
than,  in a case  of any  transaction  described  in (x) or  (y),  a  merger  or
consolidation which would result in all of the securities  generally entitled to
vote  in  the  election  of  directors  ("voting  securities")  of  the  Company
outstanding  immediately  prior  thereto  continuing  to  represent  (either  by
remaining  outstanding or by being  converted  into  securities of the surviving
entity) all of the voting  securities  of the Company or such  surviving  entity
outstanding  immediately  after such merger or consolidation  and the holders of
such securities not having changed as a result of such merger or consolidation),
or (z) the  Company  shall  sell or  otherwise  transfer  (or one or more of its
Subsidiaries  shall sell or otherwise  transfer),  in one or a series of related
transactions, assets or earning power aggregating more than 50% of the assets or
earning  power of the  Company  and its  Subsidiaries  (taken as a whole) to any
other Person (other than the Company or any  Subsidiary of the Company in one or
more  transactions  each of which does not violate Section 11(n) hereof),  then,
and in each such case  (except as  provided  in Section  13(d)  hereof),  proper
provision  shall be made so that (i) each holder of a Right,  except as provided
in Section 11(a) hereof,  shall  thereafter have the right to receive,  upon the
exercise  thereof at a price equal to the then current  Purchase  Price (without
giving  effect to any  adjustment  to such  Purchase  Price  pursuant to Section
11(a(ii)) multiplied by the number of Common Shares for which such Right is then

                                      -17-
<PAGE>
exercisable,  in accordance with the terms of this Rights Agreement, such number
of freely  tradable  Common  Shares of the Principal  Party,  not subject to any
liens,  encumbrances,  rights of first refusal or other adverse claims, as shall
equal the result  obtained by (A)  multiplying  the then current  Purchase Price
(without  giving effect to any  adjustment to such  Purchase  Price  pursuant to
Section  11(a(ii))  by the number of Common  Shares for which such Right is then
exercisable  and dividing  that product by (B) 50% of the then current per share
market price of the Common Shares of such Principal Party  (determined  pursuant
to Section  11(d)  hereof) on the date of  consummation  of such  consolidation,
merger,  sale or transfer;  (ii) such Principal Party shall thereafter be liable
for,  and  shall  assume,  by  virtue  of such  consolidation,  merger,  sale or
transfer,  all the obligations and duties of the Company pursuant to this Rights
Agreement;  (iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being  specifically  intended that the provisions of Section
11  hereof  shall  apply  only to  such  Principal  Party  following  the  first
occurrence  of an event  described in this  Section 13; and (iv) such  Principal
Party shall take such steps (including, but not limited to, the reservation of a
sufficient  number of its Common Shares in accordance  with Section 9 hereof) in
connection  with  such  consummation  as may be  necessary  to  assure  that the
provisions  hereof shall  thereafter be applicable,  as nearly as reasonably may
be, in relation to the Common Shares thereafter deliverable upon the exercise of
the Rights.

     (b) "Principal Party" shall mean

            (i)   in the case of any transaction  described in clause (x) or (y)
                  of the first sentence of Section 13(a), the Person that is the
                  issuer  of any  securities  into  which  Common  Shares of the
                  Company are converted in such merger or consolidation,  and if
                  no  securities  are so issued,  the  Person  that is the other
                  party  to  such  merger  or   consolidation   (including,   if
                  applicable,  the Company if it is the surviving  corporation);
                  and

            (ii)  in the case of any transaction  described in clause (z) of the
                  first sentence of Section 13(a),  the Person that is the party
                  receiving the greatest portion of the assets or earnings power
                  transferred  pursuant  to such  transaction  or  transactions;
                  provided,  however, that in any of the foregoing cases, (1) if
                  the Common Shares of such Person are not at such time and have
                  not been  continuously  over the  preceding  twelve (12) month
                  period  registered  under  Section  12 (or any  comparable  or
                  successor  section or provision) of the Exchange Act, and such
                  Person is a direct or indirect  Subsidiary  of another  Person
                  the  Common  Shares of which are and have been so  registered,
                  "Principal  Party"  shall refer to such other  Person;  (2) in
                  case such Person is a Subsidiary,  directly or indirectly,  of
                  more  than one  Person,  the  Common  Shares of two or more of
                  which are and have been so registered, "Principal Party" shall
                  refer to whichever of such Persons is the issuer of the Common
                  Shares having the greatest  aggregate market value; and (3) in
                  case such Person is owned, directly or indirectly,  by a joint
                  venture  formed  by two or more  Persons  that are not  owned,
                  directly  or  indirectly,  by the same  Person,  the rules set
                  forth in (1) and (2) above  shall  apply to each of the chains
                  of ownership  having an interest in such joint  ventures as if
                  such  party were a  "Subsidiary"  of both or all of such joint
                  ventures  and the  Principal  Parties in each such chain shall
                  bear the  obligations set forth in this Section 13 in the same
                  ratio as their  direct or  indirect  interests  in such Person
                  bear to the total of such interests.

                                      -18-
<PAGE>
     (c) The Company shall not consummate any such  consolidation,  merger, sale
or transfer  unless the  Principal  Party shall have a sufficient  number of its
authorized  Common Shares which have not been issued or reserved for issuance to
permit the exercise in full of the Rights in accordance with this Section 13 and
unless prior  thereto the Company and such  Principal  Party shall have executed
and  delivered to the Rights Agent a  supplemental  agreement  providing for the
terms  set  forth  in  paragraphs  (a) and (b) of this  Section  13 and  further
providing  that,  as soon as  practicable  after the date of any  consolidation,
merger,  sale or transfer  mentioned  in  paragraph  (a) of this Section 13, the
Principal Party at its own expense shall:

            (i)   prepare and file a registration statement under the Securities
                  Act of 1933,  as amended,  with  respect to the Rights and the
                  securities  purchasable  upon  exercise  of the  Rights  on an
                  appropriate  form, and will use its best efforts to cause such
                  registration  statement  to (A)  become  effective  as soon as
                  practicable after such filing and (B) remain effective (with a
                  prospectus at all times meeting the  requirements of such Act)
                  until the Final Expiration Date;

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

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

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

     (d) Notwithstanding anything in this Agreement to the contrary,  Section 13
shall not be applicable to a transaction  described in subparagraphs (x) and (y)
of Section 13(a) if (i) such transaction is consummated with a Person or Persons
who  acquired  Common  Shares  pursuant to a Permitted  Offer (or a wholly owned
subsidiary  of any such  Person  or  Persons),  (ii) the  price per share of the
Common Shares  offered in such  transaction is not less than the price per share
of Common  Shares whose shares were  purchased  pursuant to such tender offer or
exchange  offer  and  (iii)  the  form of  consideration  being  offered  to the
remaining holders of shares of Common Shares pursuant to such transaction is the
same as the form of consideration paid pursuant to such tender offer or exchange
offer.  Upon  consummation of any such transaction  contemplated by this Section
13(d), all Rights hereunder shall expire.

                                      -19-
<PAGE>
                                  SECTION 14.
                     FRACTIONAL RIGHTS AND FRACTIONAL SHARES

     (a) The Company  shall not be required to issue  fractions  of Rights or to
distribute Right Certificates which evidence  fractional Rights. In lieu of such
fractional  Rights,  there shall be paid to the registered  holders of the Right
Certificates  with regard to which such  fractional  Rights  would  otherwise be
issuable,  an amount in cash equal to the same  fraction of the  current  market
value of a whole  Right.  For the purposes of this  Section  14(a),  the current
market value of a whole Right shall be the closing  price of such Rights for the
Trading Day immediately  prior to the date on which such fractional Rights would
have  been  otherwise  issuable.  The  closing  price  for any day shall be the,
regular  way,  or, in case no such sale takes place on such day,  the average of
the closing bid and asked prices, regular way, in either case as reported in the
principal  consolidated  transaction reporting system with respect to securities
listed or admitted to trading on the New York Stock  Exchange  or, if the Rights
are not  listed or  admitted  to  trading  on the New York  Stock  Exchange,  as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national  securities exchange on which the
Rights are listed or  admitted  to trading  or, if such Rights are not listed or
admitted to trading on any national securities  exchange,  the last quoted price
or, if not so quoted,  the  average of the high bid and low asked  prices in the
over-the-counter  market, as reported by NASDAQ or such other system then in use
or, if on any such date the Rights are not quoted by any such organization,  the
average of the  closing  bid and asked  prices as  furnished  by a  professional
market maker  making a market in such Rights  selected by the Board of Directors
of the  Company.  If on any such date no such market maker is making a market in
the  Rights,  the fair value of such Rights on such date 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, shall be used.

     (b) The Company  shall not be required to issue  fractions of Common Shares
upon (i)  exercise  of the Rights or  exchange  of the Rights for Common  Shares
pursuant to Section 24 of this Rights Agreement,  or to distribute  certificates
which evidence fractional shares of such securities.  Fractions of Common Shares
may, at the  election of the  Company,  be  evidenced  by  depository  receipts,
pursuant to an  appropriate  agreement  between  the  Company  and a  depositary
selected by it;  provided that such agreement  shall provide that the holders of
such  depositary  receipts shall have the rights,  privileges and preferences to
which they are entitled as beneficial owners of the Common Shares represented by
such  depositary  receipts.  In lieu of  fractional  Common Shares or depositary
receipts, the Company may pay to the registered holders of Right Certificates at
the time such Rights are exercised as herein provided an amount in cash equal to
the same  fraction  of the current  market  value of one Common  Share.  For the
purposes of this Section 14(b), the current market value of a Common Share shall
be the closing  price of a Common  Share (as  determined  pursuant to the second
sentence of Section 11(d) hereof) for the Trading Day  immediately  prior to the
date of such exercise.

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

                                      -20-
<PAGE>
                                  SECTION 15.
                                RIGHTS OF ACTION

     All rights of action in respect of this  Rights  Agreement,  excepting  the
rights of action given to the Rights Agent under  Section 18 hereof,  are vested
in the respective  registered  holders of the Right  Certificates (and, prior to
the  Distribution  Date, the registered  holders of the Common Shares);  and any
registered holder of any Right Certificate (or, prior to the Distribution  Date,
of the Common Shares),  without the consent of the Rights Agent or of the holder
of any other Right  Certificate  (or,  prior to the  Distribution  Date,  of the
Common Shares), may, in his own behalf and for his own benefit, enforce, and may
institute  and maintain any suit,  action or  proceeding  against the Company to
enforce,  or  otherwise  act in  respect  of, his right to  exercise  the Rights
evidenced  by such  Right  Certificate  in the  manner  provided  in such  Right
Certificate and in this Rights 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 Rights 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 Rights Agreement.

                                  SECTION 16.
                           AGREEMENT OF RIGHT HOLDERS

     Every holder of a Right,  by accepting  the same,  consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:

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

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

     (c) the Company and the Rights Agent may deem and treat the person in whose
name the Right  Certificate (or, prior to the Distribution  Date, the associated
certificates  for Common Shares) is registered as the absolute owner thereof and
of the Rights evidenced thereby  (notwithstanding  any notations of ownership or
writing on the Rights Certificates the associated certificates for Common Shares
made by anyone  other than the  Company or the  Rights  Agent) for all  purposes
whatsoever,  and neither  the Company nor the Rights  Agent shall be affected by
any notice to the contrary; and

     (d)  notwithstanding  anything in this Rights  Agreement  to the  contrary,
neither the Company nor the Rights Agent shall have any  liability to any holder
of a Right or a  beneficial  interest in a Right or other  Person as a result of
its inability to perform any of its obligations  under this Rights  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

                                      -21-
<PAGE>
authority,  prohibiting or otherwise restraining performance of such obligation;
provided, however, the Company must use its best efforts to have any such order,
decree or ruling lifted or otherwise overturned as soon as possible.

                                  SECTION 17.
                RIGHT CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER

     No holder,  as such,  of any Right  Certificate  shall be entitled to vote,
receive  dividends or be deemed for any purpose the holder of the Common  Shares
or any other  securities of the Company which may at any time be issuable on the
exercise of the Rights represented  thereby, nor shall anything contained herein
or in any Right  Certificate be construed to confer upon the holder of any Right
Certificate,  as such,  any of the rights of a stockholder of the Company or any
right to vote for the  election of  directors  or upon any matter  submitted  to
stockholders  at any  meeting  thereof,  or to give or  withhold  consent to any
corporate  action,  or to receive notice of meetings or other actions  affecting
stockholders  (except as provided in Section 25 hereof), or to receive dividends
or subscription  rights,  or otherwise,  until the Right or Rights  evidenced by
such  Right  Certificate  shall  have  been  exercised  in  accordance  with the
provisions hereof.

                                  SECTION 18.
                           CONCERNING THE RIGHTS AGENT

     The 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  administration  and execution of this Rights  Agreement and the
exercise and  performance  of its duties  hereunder.  The Company also agrees to
indemnify  the Rights  Agent for,  and to hold it  harmless  against,  any loss,
liability,  or  expense,  incurred  without  negligence,  bad  faith or  willful
misconduct on the part of the Rights Agent,  for anything done or omitted by the
Rights Agent in connection with the acceptance and administration of this Rights
Agreement,  including  the costs and expenses of defending  against any claim of
liability in the indemnity  provided for herein shall survive the  expiration of
the Rights and the termination of this Rights Agreement.

     The Rights Agent shall be protected and shall incur no liability for, or in
respect of any action taken,  suffered or omitted by it in connection  with, its
administration  of this Rights Agreement in reliance upon any Right  Certificate
or  certificate  for the Common  Shares or for other  securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction,  consent,  certificate,  statement, or other paper or
document  believed by it to be genuine  and to be signed,  executed  and,  where
necessary,  verified  or  acknowledged,  by the  proper  Person or  Persons,  or
otherwise upon the advice of counsel as set forth in Section 20 hereof.

                                      -22-
<PAGE>
                                  SECTION 19.
            MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT

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

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

                                  SECTION 20.
                             DUTIES OF RIGHTS AGENT

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

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

     (b) Whenever in the  performance of its duties under this Rights  Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter be
proved or  established  by the Company  prior to taking or suffering  any action
hereunder,  such fact or matter  (unless  other  evidence in respect  thereof be
herein  specifically  prescribed)  may be deemed to be  conclusively  proved and
established by a certificate signed by any one of the Chairman of the Board, the

                                      -23-
<PAGE>
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Company and delivered to the Rights Agent; and such certificate
shall be full authorization to the Rights Agent for any action taken or suffered
in good faith by it under the  provisions  of this Rights  Agreement in reliance
upon such certificate.

     (c) The Rights Agent shall be liable hereunder to the Company and any other
Person only for its own 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 Rights  Agreement  or in the
Right Certificates  (except its countersignature on such Rights Certificates) or
be required to verify the same,  but all such  statements  and  recitals are and
shall be deemed to have been made by the Company only.

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

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

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

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

                                      -24-
<PAGE>
     (i) The Rights  Agent may execute and  exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its  attorneys  or  agents,  and the Rights  Agent  shall not be  answerable  or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the  Company  resulting  from any such  act,  default,
neglect or misconduct,  provided  reasonable care was exercised in the selection
and continued employment thereof.

                                  SECTION 21.
                             CHANGE OF RIGHTS AGENT

     The Rights Agent or any successor Rights Agent may resign and be discharged
from its duties  under this  Rights  Agreement  upon 30 days'  notice in writing
mailed  to the  Company  and to each  transfer  agent of the  Common  Shares  by
registered or certified  mail, and to the holders of the Right  Certificates  by
first-class  mail.  The  Company  may remove the Rights  Agent or any  successor
Rights  Agent upon 30 days'  notice in  writing,  mailed to the Rights  Agent or
successor  Rights Agent,  as the case may be, and to each transfer  agent of the
Common Shares by registered or certified  mail,  and to the holders of the Right
Certificates by first-class mail. If the Rights Agent shall resign or be removed
or shall  otherwise  become  incapable of acting,  the Company  shall  appoint a
successor  to  the  Rights  Agent.  If the  Company  shall  fail  to  make  such
appointment  within a period of 30 days after  giving  notice of such removal or
after it has been notified in writing of such  resignation  or incapacity by the
resigning or incapacitated  Rights Agent or by the holder of a Right Certificate
(who shall,  with such notice submit his Right Certificate for inspection by the
Company),  then the registered  holder of any Right Certificate may apply to any
court of competent  jurisdiction  for the appointment of a new Rights Agent. Any
successor  Rights  Agent,  whether  appointed by the Company or by such a court,
shall be (a) corporation or other entity  organized and doing business under the
laws  of the  United  States  or of any  state  of the  United  States,  in good
standing,  which is authorized  under such laws to exercise  corporate  trust or
stock transfer powers and is subject to supervision or examination by federal or
state  authority and which has at the time of its  appointment as Rights Agent a
combined  capital and surplus of at least $25 million,  or (b) an affiliate of a
corporation  or other  entity  described in clause (a) of this  sentence.  After
appointment,  the  successor  Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent  without  further  act or deed;  but the  predecessor  Rights  Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and 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 Shares and mail a
notice thereof in writing to the registered  holders of the Right  Certificates.
Failure to give any notice  provided  for in this  Section 21,  however,  or any
defect therein,  shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.

                                      -25-
<PAGE>
                                  SECTION 22.
                       ISSUANCE OF NEW RIGHT CERTIFICATES

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

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

                                   SECTION 23.
                                   REDEMPTION

     (a) The Board of Directors  of the Company may, at its option,  at any time
prior to such time as any Person becomes an Acquiring Person, redeem all but not
less than all of the then outstanding  Rights at an initial  redemption price of
$.01 per Right ("Redemption Price"). The Redemption Price shall be appropriately
adjusted  to reflect any stock  split,  stock  dividend  or similar  transaction
occurring  after the date hereof.  The  redemption of the Rights by the Board of
Directors  may be made  effective  at such  time,  on such  basis  and with such
conditions as the Board of Directors in its sole discretion may establish.

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

                                      -26-
<PAGE>
whether or not the holder  receives the notice.  Each such notice of  redemption
will state the method by which the payment of the Redemption Price will be made.
Neither the Company nor any of its Affiliates or Associates may redeem,  acquire
or  purchase  for value any  Rights at any time in any  manner  other  than that
specifically  set forth in this  Section 23 or in  Section 24 hereof,  and other
than in connection with the purchase of Common Shares prior to the  Distribution
Date.

                                   SECTION 24.
                                    EXCHANGE

     (a) The Board of Directors  of the Company may, at its option,  at any time
after any Person becomes an Acquiring  Person,  exchange all or part of the then
outstanding  and  exercisable  Rights (which shall not include  Rights that have
become void pursuant to the provisions of Section  11(a)(ii)  hereof) for Common
Shares  at an  exchange  ratio of one  Common  Share  per  Right,  appropriately
adjusted  to reflect any stock  split,  stock  dividend  or similar  transaction
occurring after the date hereof (such exchange ratio being hereinafter  referred
to as  the  "Exchange  Ratio").  Notwithstanding  the  foregoing  the  Board  of
Directors  shall not be empowered to effect such  exchange at any time after any
Person  (other than the Company,  any  Subsidiary  of the Company,  any employee
benefit plan of the Company or any such Subsidiary, or any entity holding Common
Shares  for or  pursuant  to the terms of any such  plan or any trust  agreement
entered  into by the  Company  to secure  benefits  payable  under any  employee
benefit plan of the Company or any Subsidiary of the Company), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of Common
Shares representing 50% or more of the Common Shares then outstanding.

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

     (c) In the event that there shall not be  sufficient  Common  Shares issued
but not  outstanding or authorized but unissued to permit any exchange of Rights
as  contemplated  in accordance with this Section 24, the Company shall take all
such  action as may be  necessary  to  authorize  additional  Common  Shares for
issuance upon exchange of the Rights.

                                      -27-
<PAGE>
                                  SECTION 25.
                            NOTICE OF CERTAIN EVENTS

     (a) In case the Company, following the Distribution Date, shall propose (i)
to pay any dividend payable in stock of any class or series to holders of Common
Shares or to make any other distribution to holders of Common Shares (other than
a regular  quarterly cash  dividend),  (ii) to offer to holders of Common Shares
rights or warrants to subscribe for or to purchase any additional  Common Shares
or any other securities, rights or options, (iii) to effect any reclassification
of Common Shares (other than a  reclassification  involving only the subdivision
of outstanding  Common Shares),  (iv) to effect any consolidation or merger into
or with,  or to effect any sale or other  transfer  (or to permit one or more of
its  Subsidiaries  to  effect  any  sale  or  other  transfer),  in one or  more
transactions,  of 50% or more of the assets or earning  power of the Company and
its Subsidiaries (taken as a whole) to, any other Person (other than the Company
and/or any of its  Subsidiaries in one or more  transactions  each of which does
not violate Section 1l(n) hereof), or (v) to effect the liquidation, dissolution
or winding up of the Company, then, in each such case, the Company shall give to
each holder of a Right  Certificate,  in  accordance  with Section 26 hereof,  a
notice of such proposed action to the extent  feasible,  which shall specify the
record date for the purposes of such stock  dividend,  or distribution of rights
or warrants, or the date on which such reclassification,  consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by holders of Common Shares if any such date is to
be fixed, and such notice shall be so given in the case of any action covered by
clause  (i) or (ii)  above  at  least  10 days  prior  to the  record  date  for
determining  holders of Common  Shares for purposes of such  action,  and in the
case of any such other action,  at least 10 days prior to the date of the taking
of such  proposed  action or the date of  participation  therein  by  holders of
Common  Shares,  whichever  shall be the  earlier.  The  failure to give  notice
required by this Section 25 or any defect  therein shall not affect the legality
or validity of the action taken by the Company or the vote upon any such action.

     (b) In case any of the events set forth in Section  11(a)(ii)  hereof shall
occur,  then the Company shall as soon as  practicable  thereafter  give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
the  occurrence  of such event,  which notice shall  describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof.

                                   SECTION 26.
                                     NOTICES

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

                                      -28-
<PAGE>
     Sensory Science Corporation
     7835 East McClain Drive
     Phoenix, Arizona  85260

     Attention: Chief Financial Officer

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

     American Securities Transfer, Inc.
     P.O. Box 1596
     Lakewood, Colorado  80201-1596

     Attention:  Corporate Services Officer

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

                                  SECTION 27.
                           SUPPLEMENTS AND AMENDMENTS

     Prior to the Distribution  Date, the Company and the Rights Agent shall, if
the  Company  so  directs,  supplement  or amend any  provision  of this  Rights
Agreement  without  the  approval of any  holders of  certificates  representing
Common Shares.  From and after the Distribution Date, the Company and the Rights
Agent  shall,  if the  Company  so  directs,  supplement  or amend  this  Rights
Agreement without the approval of any holders of Right Certificates in order (i)
to cure any  ambiguity,  (ii) to correct or supplement  any provision  contained
herein which may be defective or inconsistent with any other provisions  herein,
(iii) to shorten or  lengthen  any time  period  hereunder  or (iv) to change or
supplement  the  provisions  hereunder  in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, however, that this Rights Agreement
may not be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence,  (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable,  or (B) any other time period unless
such  lengthening is for the purpose of protecting,  enhancing or clarifying the
rights of, and/or the benefits to, the holders of Rights.  Without  limiting the
foregoing,  the Company may at any time prior to such time as any Person becomes
an Acquiring  Person amend this Rights  Agreement  to lower the  thresholds  set
forth in Sections  l(a) and 3(a) hereof from 15% to not less than the greater of
(i) any percentage  greater than the largest  percentage of the then outstanding
Common Shares then known by the Company to be  beneficially  owned by any Person
(other than the Company,  any  Subsidiary of the Company,  any employee  benefit
plan of the Company or any  Subsidiary  of the  Company,  or any entity  holding

                                      -29-
<PAGE>
Common  Shares for or pursuant to the terms of any such plan)  together with all
Affiliates  or  Associates  of such Person,  or (ii) 10%. Upon the delivery of a
certificate  from an  appropriate  officer of the Company  which states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such  supplement or amendment,  provided that
such supplement or amendment does not adversely affect the rights or obligations
of the Rights  Agent under  Section 18 or Section 20 of this  Rights  Agreement.
Prior to the Distribution  Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Shares.

                                   SECTION 28.
                                   SUCCESSORS

     All the  covenants and  provisions  of this Rights  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 BY THE BOARD OF DIRECTORS

     For all purposes of this Rights Agreement, any calculation of the number of
Common Shares  outstanding  at any  particular  time,  including for purposes of
determining the particular percentage of such outstanding Common Shares of which
any Person is the Beneficial  Owner,  shall be made in accordance  with the last
sentence of Rule  13d-3(d)(1)(i)  of the General Rules and  Regulations  (or any
comparable or successor rule or regulation) under the Exchange Act. The Board of
Directors  of the  Company  shall  have the  exclusive  power and  authority  to
administer  this  Rights  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 Rights Agreement,  including,  without
limitation,  the right and power to (i) interpret the  provisions of this Rights
Agreement,  and (ii) make all  determinations  deemed necessary or advisable for
the administration of this Rights Agreement (including a determination to redeem
or not redeem the Rights or to amend the  Rights  Agreement  or a  determination
that an  adjustment  to the  Redemption  Price  or  Exchange  Ratio is or is not
appropriate). All such actions, calculations, interpretations and determinations
(including,  for purposes of clause (y) below,  all omissions with resect to the
foregoing)  which  are done or made by the  Board in good  faith,  shall  (x) be
final,  conclusive and binding on the Company,  the Rights Agent, the holders of
the Rights and all other parties, and (y) not subject the Board to any liability
to the holders of the Rights.

                                  SECTION 30.
                        BENEFITS OF THIS RIGHTS AGREEMENT

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

                                      -30-
<PAGE>
                                   SECTION 31.
                                  SEVERABILITY

     If any term, provision, covenant or restriction of this Rights 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 Rights  Agreement shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.

                                   SECTION 32.
                                  GOVERNING LAW

     This Rights Agreement and each Right Certificate  issued hereunder shall be
deemed to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance  with the laws of such
State  applicable  to contracts to be made and  performed  entirely  within such
State.

                                   SECTION 33.
                                  COUNTERPARTS

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

                                   SECTION 34.
                              DESCRIPTIVE HEADINGS

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

                                      -31-
<PAGE>
     IN WITNESS WHEREOF, the parties hereto have caused this Rights Agreement to
be duly executed and attested, all as of the day and year first above written.

                                        SENSORY SCIENCE CORPORATION

                                        By: /s/ Tom Linnen
                                           -------------------------------------
                                            Chief Financial Officer
                                           -------------------------------------

                                        AMERICAN SECURITIES
                                        TRANSFER, INC.

                                        By: /s/ Laura Sisneros
                                           -------------------------------------
                                            Vice President
                                           -------------------------------------

                                        AMERICAN SECURITIES
                                        TRANSFER, INC.

                                        By: /s/ Kellie Gwinn
                                           -------------------------------------
                                            Vice President/Trust Officer
                                           -------------------------------------

                                      -32-
<PAGE>
                                                                       EXHIBIT A
                            FORM OF RIGHT CERTIFICATE

Certificate No. R- ___________                                   ________ Rights

NOT  EXERCISABLE  AFTER  ______ __,  2010 OR EARLIER IF  REDEMPTION  OR EXCHANGE
OCCURS.  THE RIGHTS ARE SUBJECT TO  REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.

                                Right Certificate

                           SENSORY SCIENCE CORPORATION

     This certifies that  _______________________  or registered assigns, is the
registered owner of the number of Rights set forth above, each of which entitles
the owner thereof, subject to the terms, provisions and conditions of the Rights
Agreement,  dated as of __________  __, 2000 (the "Rights  Agreement"),  between
Sensory  Science  Corporation,   a  Delaware  corporation  (the  "Company")  and
____________________  (the "Rights Agent"),  to purchase from the Company at any
time  after  the  Distribution  Date  (as such  term is  defined  in the  Rights
Agreement) and prior to 5:00 P.M.,  Phoenix,  Arizona time, on  ___________  __,
2010,  at the  principal  office of the  Rights  Agent,  or at the office of its
successor as Rights Agent, one fully paid non-assessable share of Company Common
Stock, par value $.001 per share (the "Stock"),  at a purchase price of $___ per
share (the  "Purchase  Price"),  upon  presentation  and surrender of this Right
Certificate  with the Form of Election to Purchase duly executed.  The number of
Rights  evidenced by this Right  Certificate  (and the number of shares of Stock
which may be purchased upon exercise  hereof) set forth above,  and the Purchase
Price set forth  above,  are the number and  Purchase  Price as of ________  __,
2000,  (the  "Record  Date")  based on the  shares  of Stock of the  Company  as
constituted  at such date.  As provided in the Rights  Agreement,  the  Purchase
Price and the number of shares of Stock which may be purchased upon the exercise
of the Rights  evidenced by this Right  Certificate  are subject to modification
and adjustment upon the happening of certain events.

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

     This Right  Certificate,  with or without  other Right  Certificates,  upon
surrender at the  principal  office of the Rights  Agent,  may be exchanged  for
another Right  Certificate  or  Certificates  of like tenor and date  evidencing
Rights  entitling  the holder to purchase a like  aggregate  number of shares of

                                      -33-
<PAGE>
Stock  as  the  Rights  evidenced  by  the  Right  Certificate  or  Certificates
surrendered  shall  have  entitled  such  holder  to  purchase.  If  this  Right
Certificate  shall be exercised in part, the holder shall be entitled to receive
upon surrender  hereof another Right  Certificate or Certificates for the number
of whole Rights not exercised.

     Subject to the provisions of the Rights Agreement,  the Rights evidenced by
this Right  Certificate  (i) may be  redeemed  by the Company at its option at a
redemption  price of $.01 per Right or (ii) may be exchanged in whole or in part
for  shares of Stock.  No  fractional  shares of Stock  will be issued  upon the
exercise of any Right or Rights  evidenced  hereby,  but in lieu  thereof a cash
payment will be made, as provided in the Rights Agreement.

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

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

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

      Dated as of _________ __, ____.

ATTEST:                                 SENSORY SCIENCE CORPORATION

                                        By:
                                           -------------------------------------

Countersigned:
              -----------------------

By:
   ----------------------------------
[Authorized Signature]

                                      -34-
<PAGE>
EXHIBIT A - FORM OF REVERSE SIDE OF RIGHT CERTIFICATE

                               FORM OF ASSIGNMENT

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

FOR VALUE  RECEIVED  _______________________________  hereby sells,  assigns end
transfers unto

                  (Please print name and address of transferee)

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

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

Signature Guaranteed:

     Signatures  must be  guaranteed  by a member firm of a registered  national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.

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

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

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

                                      -35-
<PAGE>
                                                                       EXHIBIT B

                              SUMMARY OF RIGHTS TO
                             PURCHASE COMMON SHARES

     Effective as of April 13, 2000,  the Board of Directors of Sensory  Science
Corporation (the "Company")  adopted a Shareholder Rights Agreement (the "Rights
Agreement")  and authorized and declared a dividend of one common share purchase
right (a "Right") for each  outstanding  share of common stock,  par value $.001
per share of the Company (the "Common Shares"). The dividend is payable on April
23, 2000, to the  shareholders of record on that date (the "Record  Date"),  and
with respect to Common Shares issued  thereafter until the Distribution Date (as
hereinafter  defined) or the expiration or earlier redemption or exchange of the
Rights.  Except as set forth below, each Right entitles the registered holder to
purchase from the Company,  at any time after the  Distribution  Date one Common
Share at an  initial  price per share of  $15.00,  subject  to  adjustment  (the
"Purchase  Price").  The description and terms of the Rights are as set forth in
the Rights Agreement.

     Initially  the Rights  will be attached  to all  certificates  representing
Common  Shares then  outstanding,  and no separate  Right  Certificates  will be
distributed. The Rights will separate from the Common Shares upon the earlier to
occur of (i) 10 days after the  public  announcement  of a person's  or group of
affiliated or associated persons' having acquired beneficial ownership of 15% or
more of the  outstanding  Common Shares (such person or group being  hereinafter
referred to as an  "Acquiring  Person");  or (ii) 10 days (or such later date as
the Board may determine)  following the  commencement  of, or announcement of an
intention to make, a tender offer or exchange  offer the  consummation  of which
would result in a person or group's becoming an Acquiring Person (the earlier of
such dates being called the "Distribution Date").

     The Rights Agreement provides that, until the Distribution Date, the Rights
will  be  transferred  with,  and  only  with,  the  Common  Shares.  Until  the
Distribution  Date (or  earlier  redemption  or  expiration),  new Common  Share
certificates  issued  after the Record  Date upon  transfer  or new  issuance of
Common  Shares will  contain a notation  incorporating  the Rights  Agreement by
reference.  Until the Distribution Date (or earlier  redemption or expiration of
the Rights),  the surrender for transfer of any  certificates  for Common Shares
outstanding as of the Record Date,  even without such notation or a copy of this
Summary of Rights being attached  thereto,  will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as  practicable  following the  Distribution  Date,  separate  certificates
evidencing the Rights ("Right Certificates") will be mailed to holders of record
of the Common Shares as of the close of business on the  Distribution  Date (and
to each  initial  record  holder  of  certain  Common  Shares  issued  after the
Distribution Date), and such separate Right Certificates alone will evidence the
Rights.

     The Rights are not exercisable until the Distribution Date. The Rights will
expire on April  13,  2010  (the  "Final  Expiration  Date"),  unless  the Final
Expiration  Date is  extended  or unless  the  Rights are  earlier  redeemed  or
exchanged by the Company, in each case, as described below.

                                      -36-
<PAGE>
     In the event that any person becomes an Acquiring  Person (except  pursuant
to a tender or exchange  offer that is for all  outstanding  Common  Shares at a
price and on terms that a majority of certain  members of the Board of Directors
determines  to be  adequate  and in the  best  interests  of  the  Company,  its
stockholders,  and other  relevant  constituencies,  other  than such  Acquiring
Person, its affiliates and associates (a "Permitted  Offer")),  each holder of a
Right will thereafter  have the right (the "Flip-In  Right") to acquire a Common
Share  for a  purchase  price  equal to 50% of the then  current  market  price.
Notwithstanding the foregoing,  all Rights that are, or were, beneficially owned
by any Acquiring  Person or any affiliate or associate  thereof will be null and
void and not exercisable.

     In the event that, at any time  following the  Distribution  Date,  (i) the
Company is acquired in a merger or other  business  combination  transaction  in
which the holders of all of the outstanding  Common Shares  immediately prior to
the  consummation of the transaction are not the holders of all of the surviving
corporation's  voting power,  or (ii) more than 50% of the  Company's  assets or
earning power is sold or transferred, then each holder of a Right (except Rights
which have previously been voided as set forth above) shall  thereafter have the
right (the  "Flip-Over  Right") to  receive,  upon  exercise  and payment of the
Purchase Price,  common shares of the acquiring  company having a value equal to
two times the Purchase  Price.  If a  transaction  would  otherwise  result in a
holder's having a Flip-In as well as a Flip-Over Right,  then only the Flip-Over
Right will be  exercisable;  if a  transaction  results  in a holder's  having a
subsequent to a transaction  resulting in a holder's  having a Flip-In  Right, a
holder  will have  Flip-Over  Rights only to the extent  such  holder's  Flip-In
Rights have not been exercised.

     The  Purchase  Price  payable,  and the  number of  Common  Shares or other
securities  or  property  issuable,  upon  exercise  of Rights  are  subject  to
adjustment  from time to time to  prevent  dilution  (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of Common Shares,
(ii) upon the grant to holders of Common Shares of certain rights or warrants to
subscribe for or purchase  Common Shares at a price,  or securities  convertible
into Common Shares with a conversion  price,  less than the then current  market
price of Common  Shares,  or (iii)  upon the  distribution  to holders of Common
Shares of evidences of indebtedness or assets  (excluding  regular periodic cash
dividends  paid out of  earnings or retained  earnings or  dividends  payable in
Common Shares) or of subscription  rights or warrants (other than those referred
to above).  However,  no adjustment in the Purchase Price will be required until
cumulative adjustments require an adjustment of at least 1%.

     No  fractional  Common  Shares  will  be  issued  and in lieu  thereof,  an
adjustment  in cash will be made based on the market  price of Common  Shares on
the last trading day prior to the date of exercise.

     At any time prior to the time a person  becomes an  Acquiring  Person,  the
Board of  Directors  of the Company  may redeem the Rights in whole,  but not in
part, at a price of $.01 per Right (the "Redemption  Price").  The redemption of
the  Rights  may be made  effective  at such  time on such  basis  and with such

                                      -37-
<PAGE>
conditions  as the Board of  Directors  in its sole  discretion  may  establish.
Immediately upon any redemption of the Rights,  the right to exercise the Rights
will  terminate  and the only right of the  holders of Rights will be to receive
the Redemption Price.

     At any time after any person  becomes an Acquiring  Person and prior to the
acquisition by such person or group of Common Shares representing 50% or more of
the then  outstanding  Common Shares,  the Board of Directors of the Company may
exchange  the Rights  (other  than Rights  which have become null and void),  in
whole or in part, at an exchange ratio of one Common Share per Right (subject to
adjustment).

     All of the  provisions of the Rights  Agreement may be amended prior to the
Distribution  Date by the Board of  Directors  of the  Company for any reason it
deems appropriate. Prior to the Distribution Date, the Board is also authorized,
as it deems  appropriate,  to lower the thresholds for  distribution and Flip-In
Rights to not less  than the  greater  of (i) any  percentage  greater  than the
largest  percentage  then  held by any  shareholder,  or  (ii)  10%.  After  the
Distribution  Date, the provisions of the Rights Agreement may be amended by the
Board in order to cure any ambiguity,  defect or inconsistency,  to make changes
which do not adversely affect the interests of holders of Rights  (excluding the
interests of any  Acquiring  Person),  or,  subject to certain  limitations,  to
shorten or lengthen any time period under the Rights Agreement.

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

     A copy of the  Rights  Agreement  has been filed  with the  Securities  and
Exchange Commission.  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,
which is hereby incorporated herein by reference.

                                      -38-

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