Document:

EXHIBIT 4.2

                          MPOWER HOLDING CORPORATION

                           CERTIFICATE OF DESIGNATION
                       OF THE VOTING POWERS, DESIGNATION,
                    PREFERENCES AND RELATIVE, PARTICIPATING,
              OPTIONAL OR OTHER SPECIAL RIGHTS AND QUALIFICATIONS,
                       LIMITATIONS AND RESTRICTIONS OF THE
                   7.25% SERIES D CONVERTIBLE PREFERRED STOCK

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

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         Mpower Holding Corporation (the "Company"), a corporation organized and
existing under the General Corporation Law of the State of Delaware, does hereby
certify that, pursuant to authority conferred upon the board of directors of the
Company (the "Board of Directors") by its Certificate of Incorporation, as
amended and restated on June 27, 2001 (the "Certificate"), and pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, said Board of Directors, by unanimous written consent or at a meeting
duly called and held, adopted the following resolution (the "Resolution") which
remains in full force and effect:

         RESOLVED that pursuant to the authority vested in the Board of
Directors by its Certificate, the Board of Directors does hereby create,
authorize and provide for the issuance of 7.25% Series D Cumulative Convertible
Preferred Stock, par value $0.001 per share, with a liquidation preference of
$50.00 per share, consisting of 4,250,000 shares having the designations,
preferences, relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth in this
Resolution as follows:

         (a) Designation. There is hereby created out of the authorized and
unissued shares of Preferred Stock of the Company a series of Preferred Stock
designated as the 7.25% Series D Cumulative Convertible Preferred Stock (the
"Series D Preferred Stock"). The number of shares constituting the Series D
Preferred Stock shall be 4,250,000. The liquidation preference of the Series D
Preferred Stock shall be $50.00 per share (the "Liquidation Preference").
Capitalized terms used herein but not defined shall have the meanings assigned
to them in paragraph (1).

                  In addition, the Board of Directors hereby acknowledges that
the Company is the successor of Mpower Communications Corp. ("Mpower"), a Nevada
corporation, for all purposes and, as such, pursuant to the Amended and Restated
Agreement and Plan of Merger dated as of April 12, 2001 (the "Merger
Agreement"), among the Company, Mpower and Mpower Merger Company, Inc., a
Delaware corporation, each and every share of Series D Preferred Stock created
hereby is subject to the same terms (including, but not limited to, all

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powers, rights, preferences, limitations, qualifications, restrictions or
designations) in effect at the Effective Time (as defined in the Merger
Agreement) with respect to a share of 7.25% Series D Cumulative Convertible
Preferred Stock of Mpower (the "Mpower Series D Preferred") outstanding at the
Effective Time (subject to any modification of such terms after the Effective
Time as provided herein) and each and every designation, preference and relative
and other special right, qualification, limitation and restriction on the Series
D Preferred Stock specified herein has been incorporated fully from the
Certificate of Designation governing the Mpower Series D Preferred and, as such,
is hereby modified to the same extent as such designation, preference and
relative and other special right, qualification, limitation and restriction
would have been modified in the Certificate of Designation governing the Mpower
Series D Preferred as of the Effective Time.

         (b) Rank. The Series D Preferred Stock will, with respect to dividend
rights and rights on liquidation, winding-up and dissolution, rank (i) senior to
all classes of Common Stock and to each other class of Capital Stock of the
Company or series of Preferred Stock of the Company established hereafter by the
Board of Directors of the Company, the terms of which do not expressly provide
that such class or series ranks senior to, or on a parity with, the Series D
Preferred Stock as to dividend rights and rights on liquidation, winding-up and
dissolution of the Company (collectively referred to, together with all classes
of Common Stock of the Company, as "Junior Stock"); (ii) on a parity with the
Company's Series C Preferred Stock and each class of Capital Stock of the
Company or series of Preferred Stock of the Company established hereafter by the
Board of Directors of the Company, the terms of which expressly provide that
such class or series will rank on a parity with the Series D Preferred Stock as
to dividend rights and rights on liquidation, winding-up and dissolution
(collectively referred to, together with the Company's Series C Preferred Stock,
as "Parity Stock"); and (iii) junior to each class of Capital Stock of the
Company or series of Preferred Stock of the Company established hereafter by the
Board of Directors of the Company, the terms of which expressly provide that
such class or series will rank senior to the Series D Preferred Stock as to
dividend rights or rights on liquidation, winding-up and dissolution of the
Company (collectively referred to as "Senior Stock").

         (c) Dividends.

                  (i) Subject to the rights of any holders of Senior Stock or
Parity Stock, Holders of the outstanding shares of Series D Preferred Stock will
be entitled to receive, when, as and if declared by the Board of Directors of
the Company, out of funds legally available therefor, dividends on each share of
the Series D Preferred Stock at a rate per annum equal to 7.25% of the
Liquidation Preference of such share payable quarterly (each such quarterly
period being herein called a "Dividend Period"). All dividends on the Series D
Preferred Stock, to the extent accrued, shall be cumulative, whether or not
earned or declared, on a daily basis from the last date through which dividends
have been paid or, if no dividends have been paid, from the Issue Date, and
shall be payable quarterly in arrears on May 15, August 15, November 15 and
February 15 of each year (each a "Dividend Payment Date"), commencing on May 15,
2000 to Holders of record as they appear on the stock register of the Company at
the close of business on the Record Date (as defined hereinafter) immediately
preceding the relevant Dividend Payment Date. No interest or sums of money or
other property or securities in lieu of interest will be

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payable in respect of any accumulated and unpaid dividends. "Record Date" means,
with respect to a Dividend Payment Date, the date established by the Board of
Directors as the record date therefor, which date shall, in any event, be a date
that is not more than 60 calendar days nor less than 15 calendar days before
such Dividend Payment Date.

         Any dividend on the Series D Preferred Stock shall be, at the option of
the Company, payable (A) in cash or (B) through the delivery of a number of
shares of the Company's Common Stock (dividends paid or payable in Common Stock
are hereinafter referred to as "Dividend Common Stock") equal to the total
dividend amount divided by the applicable Discounted Current Market Value (as
defined below) of the Common Stock. No fractional shares of Common Stock shall
be issued as a dividend on the Series D Preferred Stock. Instead, the Company
shall pay to the Transfer Agent for dissolution to the Holders as provided
herein cash in lieu of the fractional portion of one share which may result from
the computation of the number of shares of Dividend Common Stock as set forth in
the first sentence of this paragraph in an amount equal to the same traction of
the last sale price of a share of Common Stock on the Nasdaq National Market (or
the principal national securities exchange or other securities market on which
the Common Stock is then being traded) on the fourth Trading Day immediately
preceding the Dividend Payment Date. The Transfer Agent is hereby authorized to
aggregate any fractional shares of Common Stock that would otherwise be
distributable as dividends, and to sell them at the best available price and
distribute the proceeds to the Holders thereof in proportion to their respective
interests. The Company shall reimburse the Transfer Agent for any expenses
incurred with respect to such sale, including brokerage commissions. If the
Company is precluded from paying cash for fractional shares, it shall pay cash
to the Holders for the fractional shares when it becomes legally and
contractually able to pay such cash.

         The "Discounted Current Market Value" of the Common Stock with respect
to a Dividend Payment Date means the product of (x) 95% and (y) the "Market
Average Value" relating to such Dividend Payment Date. The "Market Average
Value" shall equal the average of the daily closing prices of the Common Stock
for the five consecutive Trading Days ending on (and including) the fourth
Trading Day preceding such Dividend Payment Date. The closing price for each
Trading Day will be the last sales price on such date on the Nasdaq National
Market (or the principal securities exchange or other securities market on which
the Common Stock is then being traded). "Trading Day" means any day on which the
Common Stock is traded for any period on the Nasdaq National Market (or on the
principal securities exchange or other securities market on which the Common
Stock is then being traded).

                  (ii) All dividends paid with respect to shares of the Series D
Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata to the
Holders entitled thereto.

                  (iii) Dividends shall accrue whether or not the Company has
earnings or profits, whether or not there are funds legally available for the
payment of such dividends and whether or not dividends are declared. Dividends
shall accumulate to the extent that such dividends are not paid on the Dividend
Payment Date to which they relate. No dividend whatsoever shall be declared or
paid upon, or any sum set apart for the payment of dividends upon, any
outstanding share of the Series D Preferred Stock with respect to any Dividend
Period

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unless all dividends for all preceding Dividend Periods have been declared and
paid or declared and a sufficient sum set apart for the payment of such
dividend, upon all outstanding shares of Series D Preferred Stock. No dividend
will be declared or paid on any Parity Stock unless full cumulative dividends
have been paid on the Series D Preferred Stock for all prior Dividend Periods;
provided, however, if accrued dividends on the Series D Preferred Stock for all
prior Dividend Periods have not been paid in full, then any, dividend declared
for any dividend period on any Parity Stock will be declared ratably in
proportion to accrued and unpaid dividends on the Series D Preferred Stock and
such Parity Stock and if dividends on any Parity Stock are due and payable and
have not been paid in full, then any dividend declared for any Dividend Period
on the Series D Preferred Stock will be declared ratably in proportion to
accrued and unpaid dividends on the Series D Preferred Stock and such Parity
Stock. The Company shall take all actions required or permitted under the
General Corporate Law of the State of Delaware to permit the payment of
dividends on the Series D Preferred Stock.

                  (iv) The Company will not (A) declare, pay or set apart funds
for the payment of any dividend or other distribution with respect to any Junior
Stock or (B) redeem, purchase or otherwise acquire for consideration any Junior
Stock through a sinking fund or otherwise, unless (1) all accrued and unpaid
dividends with respect to the Series D Preferred Stock at the time such
dividends are payable have been paid or funds have been set apart for payment of
such dividends and (2) sufficient funds have been paid or set apart for, or a
sufficient number of shares of Common Stock have been reserved for, the payment
of the dividend for the current Dividend Period with respect to the Series D
Preferred Stock. Notwithstanding anything in this Certificate of Designation to
the contrary, the Company may declare and pay dividends on Parity Stock which
are payable solely in additional shares of or by the increase in the liquidation
value of Parity Stock or Junior Stock or on Junior Stock which are payable in
additional shares of or by the increase in the liquidation value of Junior
Stock, as applicable, or repurchase, redeem or otherwise acquire Junior Stock in
exchange for Junior Stock and Parity Stock in exchange for Parity Stock or
Junior Stock.

                  (v) Dividends for any past Dividend Period may be declared and
paid at any time, without reference to any regular Dividend Payment Date, to
Holders of record on a date established by the Board of Directors as the record
date therefor, which date shall be no more than 15 Business Days and no less
than one Business Day prior to the date of payment thereof, as such date may be
fixed by the Board of Directors of the Company.

                  (vi) Dividends payable on the Series D Preferred Stock for any
period other than a full Dividend Period shall be computed on the basis of a
360-day year consisting of twelve 30-day months. If a Dividend Payment Date is
not a Business Day, payment of dividends shall he made on the next succeeding
Business Day and dividends accruing for the intervening period shall be paid on
the next succeeding Dividend Payment Date.

         (d) Liquidation Preference.

                  (i) Upon any voluntary or involuntary liquidation. dissolution
or winding-up of the Company, and subject to the rights of holders of Senior
Stock and Parity Stock, each

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Holder of Series D Preferred Stock shall be entitled to be paid, out of the
assets of the Company available for distribution to its stockholders, an amount
equal to the Liquidation Preference for each share of Series D Preferred Stock
held by such Holder, plus, without duplication, an amount in cash equal to all
accumulated and unpaid dividends (whether declared or undeclared) thereon to the
date fixed for liquidation, dissolution or winding-up, before any distribution
is made on any Junior Stock. If, upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, there are not sufficient assets to pay
the amounts payable with respect to the Series D Preferred Stock and all Parity
Stock in full, all accumulated and unpaid dividends on the Series D Preferred
Stock and all Parity Stock will be paid in full and then the Holders of Series D
Preferred Stock and the holders of Parity Stock will share ratably (in
proportion to the other amounts that would be payable on such shares of Series D
Preferred Stock and the Parity Stock, respectively, if all amounts payable
thereon had been paid in full) in any distribution of assets of the Company to
which each is entitled. If, upon any voluntary or involuntary liquidation,
dissolution or winding up of the Company, there are not sufficient assets to pay
all accumulated and unpaid dividends in full, then the Holders of the Series D
Preferred Stock and the holders of Parity Stock will share ratably (in
proportion to the respective accumulated and unpaid dividends) in any
distribution of assets of the Company to which each is entitled. After payment
of the full amount of the Liquidation Preference of the outstanding shares of
Series D Preferred Stock (plus any accumulated and unpaid dividends), the
Holders of shares of Series D Preferred Stock will not be entitled to any
further participation in any distribution of assets of the Company.

                  (ii) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with or into one or more
other entities shall be deemed to be a liquidation, dissolution or winding-up of
the Company.

         (e) Redemption.

                  (i) (A) Mandatory Redemption. On February 15, 2012 (the
"Mandatory Redemption Date"), the Company shall be required to redeem, subject
to the legal availability of funds therefor, all outstanding shares of Series D
Preferred Stock at a price in cash equal to the Liquidation Preference thereof,
plus accumulated and unpaid dividends, if any, whether declared or undeclared,
to the Mandatory Redemption Date (the "Mandatory Redemption Price"). The Company
shall not be required to make sinking fund payments with respect to the Series D
Preferred Stock. The Company shall take all actions required or permitted under
the laws of the State of Delaware to permit such redemption.

         (B) The Provisional Redemption. The Series D Preferred Stock may be
redeemed, in whole or in part, at the option of the Company at a redemption
price of 105.8% of the Liquidation Preference, plus accumulated and unpaid
dividends, if any, whether declared or undeclared, to the date fixed for such
redemption (the "Provisional Redemption Date") (the foregoing amounts, together
with the Additional Payment, as hereinafter defined, being the "Provisional
Redemption Price"), on or after February 15, 2002, but prior to February 15,
2003,

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if the closing price of the Common Stock equals or exceeds 150% of the
Conversion Price for at least 20 Trading Days within any 30 Trading Day period
(such redemption, a "Provisional Redemption"). In the event that the Company
Undertakes a Provisional Redemption, the Holders of shares of Series D Preferred
Stock that are called for Provisional Redemption will also receive a payment
(the "Additional Payment") in an amount equal to the present value (calculated
using the bond equivalent yield on U.S. Treasury notes or bills having a term
nearest in length to that of the Additional Period (as hereinafter defined) as
of the day immediately preceding the date on which a notice of Provisional
Redemption is mailed to the Holders) of the aggregate amount of the dividends
that would thereafter have been payable on the Series D Preferred Stock (whether
or not such dividends have been declared) for the period from the Provisional
Redemption Date to February 15, 2003 (such period being referred to as the
"Additional Period").

         The Provisional Redemption Price shall be, at the option of the
Company, payable (v) in cash, (w) through the delivery of a number of shares of
Common Stock equal to the Provisional Redemption Price divided by the
Provisional Redemption Value (as defined below) of the Common Stock or (x) any
combination of (v) and (w). The "Provisional Redemption Value" of the Common
Stock with respect to a Provisional Redemption Date means the product of (y) 95%
and (z) the average of the daily closing prices of the Common Stock for the five
consecutive Trading Days ending on (and including) the fourth Trading Day
preceding such Provisional Redemption Date. The closing price for each Trading
Day will be the last sales price on such date on the Nasdaq National Market (or
the principal securities exchange or other securities market on which the Common
Stock is then being traded). No fractional shares of Common Stock shall be
issued in connection with the payment of the Provisional Redemption Price.
Instead, the Company shall pay to the Transfer Agent for distribution to the
Holders as provided herein cash in lieu of the fractional portion of one share
which may result from the computation of the number of shares of Common Stock to
be paid as set forth in the first two sentences of this paragraph in an amount
equal to the same fraction of the last sales price of a share of Common Stock on
the Nasdaq National Market (or the principal national securities exchange or
other securities market on which the Common Stock is then being traded) on the
fourth Trading Day immediately preceding the Provisional Redemption Date. The
Transfer Agent is hereby authorized to aggregate any fractional shares of Common
Stock that would otherwise be distributed in connection with the payment of the
Provisional Redemption Price, and to sell them at the best available price and
distribute the proceeds to the Holders thereof in proportion to their respective
interests. The Company shall reimburse the Transfer Agent for any expenses
incurred with respect to such sale, including brokerage commissions. If the
Company is precluded from paying cash for fractional shares, it shall pay cash
to the Holders for the fractional shares, it shall pay when it becomes legally
and contractually able to pay such cash.

         The Company may elect to pay the Provisional Redemption Price by
delivering shares of Common Stock only if:

                  (i) The shares of Common Stock of the Company to be issued as
payment of the Provisional Redemption Price (x) shall not require registration
under any federal securities law before such shares may be freely transferable
without being subject to any transfer

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restrictions under the Securities Act or, if such registration is required, such
registration shall be completed and shall become effective prior to the
Provisional Redemption Date, and (y) shall not require registration with or
approval of any governmental authority under any state laws or any other federal
law before such shares may be validly issued or delivered or if such
registration is required or such approval must be obtained, such registration
shall be completed or such approval shall be obtained prior to the Provisional
Redemption Date;

                  (ii) The shares of Common Stock of the Company to be issued
are, or shall have been, approved for listing on the Nasdaq National Market or
the New York Stock Exchange or listed on another national securities exchange,
in any case, prior to the Provisional Redemption Date; and

                  (iii) All shares of Common Stock of the Company which may be
issued as payment of the Provisional Redemption Price will be issued out of the
Company's authorized but unissued Common Stock and, will upon issue, be duly and
validly issued and fully paid and non-assessable and free of any preemptive or
similar rights.

                      (C) In the case of any partial Provisional Redemption,
selection of the Series D Preferred Stock for redemption will be made by the
Company in compliance with the requirements of the principal national securities
exchange, if any, on which the Series D Preferred Stock is listed, or if the
Series D Preferred Stock is not listed on a national securities exchange, on a
pro rata basis, by lot or such other method as the Company, in its sole
discretion, shall deem fair and appropriate; provided, however, that the Company
may redeem all the shares held by Holders of fewer than 100 shares (or all of
the shares held by the Holders who would hold less than 100 shares as a result
of such redemption) as may be determined by the Company.

                      (D) In the case of a Mandatory Redemption Date or
Provisional Redemption Date falling after a Record Date and prior to the related
Dividend Payment Date, the Holders of the Series D Preferred Stock at the close
of business on such Record Date will be entitled to receive the dividend payable
on such shares on the corresponding Dividend Payment Date, notwithstanding the
redemption of such shares following such Record Date. Except as provided for in
the preceding sentence, no payment or allowance will be made for accrued
dividends on any shares of Series D Preferred Stock called for redemption.

                  (ii) Procedure for Redemption. (A) On and after the Mandatory
Redemption Date or Provisional Redemption Date, as the case may be, unless the
Company defaults in the payment of the applicable redemption price, dividends
will cease to accumulate on shares of Series D Preferred Stock called for
redemption and all rights of Holders of such shares will terminate except for
the right to receive the Mandatory Redemption Price or Provisional Redemption
Price, as the case may be, without interest.

                      (B) With respect to a redemption pursuant to paragraph
(e)(1)(A) or (B), the Company will send a written notice of redemption by first
class mail to each Holder of record of shares of Series D Preferred Stock, not
fewer than 30 days nor more than 60 days prior to the Mandatory Redemption Date
or Provisional Redemption Date, as applicable, at its

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registered address (the "Redemption Notice"); provided, however, that neither
the failure to give such notice nor any deficiency therein shall affect the
validity of the procedure for the redemption of any shares of Series D Preferred
Stock to be redeemed except as to the Holder or Holders to whom the Company has
failed to give said notice or except as to the Holder or Holders whose notice
was defective. The Redemption Notice shall state:

                  (1) that the redemption is pursuant to paragraph (e)(i)(A) or
(B) hereof, as applicable;

                  (2) the Mandatory Redemption Price or Provisional Redemption
Price, as applicable and, in the case of a Provisional Redemption, whether the
Provisional Redemption Price will be paid in cash, through the delivery of
shares of Common Stock, or a combination thereof (and, if a combination thereof,
stating the percentages of the total Provisional Redemption Price that will be
paid in cash and in shares of Common Stock);

                  (3) in the case of a Provisional Redemption as to which all or
a portion of the Provisional Redemption Price is to be paid through the delivery
of shares of Common Stock, that the determination of the number of shares of
Common Stock to be delivered shall be calculated as set forth in paragraph
(e)(i)(B);

                  (4) whether all or less than all the outstanding shares of the
Series D Preferred Stock are to be redeemed and the total number of shares of
the Series D Preferred Stock being redeemed;

                  (5) the Mandatory Redemption Date or Provisional Redemption
Date, as applicable;

                  (6) that the Holder is to surrender to the Company, in the
manner, at the place or places designated, his certificate or certificates
representing the shares of Series D Preferred Stock to be redeemed; and

                  (7) that dividends on the shares of the Series D Preferred
Stock to be redeemed shall cease to accumulate on such Mandatory Redemption Date
or Provisional Redemption Date, as the case may be, unless the Company defaults
in the payment of the Mandatory Redemption Price or Provisional Redemption
Price, as the case may be.

                  (C) Each Holder of Series D Preferred Stock shall surrender
the certificate or certificates representing such shares of Series D Preferred
Stock to the Company, duly endorsed (or otherwise in proper form for transfer,
as determined by the Company), in the manner and at the place designated in the
Redemption Notice, and the full Mandatory Redemption Price or Provisional
Redemption Price, as applicable, for such shares shall be payable in cash and/or
shares of Common Stock, as the case may be, on the Mandatory Redemption Date or
Provisional Redemption Date, as applicable, to the person whose name appears on
such certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.

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                  (D) The Company shall comply with any securities laws and
regulations, to the extent such laws and regulations are applicable, in
connection with any mandatory or provisional redemption.

         (f) Voting Rights.

                  (A) The Holders of Series D Preferred Stock shall not be
entitled to vote on any matter required or permitted to be voted upon by the
stockholders of the Company, except as otherwise required under Delaware law or
as hereinafter provided.

                  (B) (1) If (x) dividends on the Series D Preferred Stock are
in arrears and unpaid for six or more Dividend Periods (whether or not
consecutive), (y) the Company has not redeemed in cash all of the outstanding
shares of Series D Preferred Stock on the Mandatory Redemption Date, or (z)
after the occurrence of a Non-Stock Change of Control, the Company fails to
offer to repurchase or convert the Series D Preferred Stock in accordance with
the terms of paragraph (g)(H)(2) or fails to repurchase or convert any shares of
Series D Preferred Stock accepting such offer on the Repurchase Date (each a
"Voting Rights Triggering Event"), then the Holders of the then outstanding
shares of Series D Preferred Stock (together with the holders of Parity Stock
upon which like rights have been conferred and are exercisable), voting
separately and as a class, shall have the right and power to elect to serve on
the Board of Directors the lesser of (x) two additional members to the Board of
Directors or (y) that number of directors constituting at least 25% of the
members of the Board of Directors, and the number of members of the Board of
Directors shall, subject to paragraph (f)(B)(5), be immediately and
automatically increased by such number.

                  (2) The voting rights set forth in paragraph (f)(B)(1) above
will continue until such time as all dividends in arrears on the Series D
Preferred Stock are paid in full or all Voting Right, Triggering Events are
cured or waived, at which time the term of any directors elected pursuant to the
provisions of paragraph (f)(B)(1) above (subject to the right of holders of any
other Preferred Stock to elect directors pursuant to the terms of the
instruments governing such Preferred Stock) shall terminate forthwith and the
number of directors constituting the Board of Directors shall be decreased by
such number (until the occurrence of any subsequent Voting Rights Triggering
Event).

         At any time alter voting power to elect directors shall have become
vested and be continuing in the Holders of Series D Preferred Stock (together
with the holders of Parity Stock upon which like rights have been conferred and
are exercisable) pursuant to paragraph (f)(B)(1) hereof, or if vacancies shall
exist in the offices of directors elected by such holders, a proper officer of
the Company may, and upon the written request of the Holders of record of at
least 25% of the shares of Series D Preferred Stock then outstanding or the
holders of 25% of the shares of Parity Stock then outstanding upon which like
rights have been conferred and are exercisable addressed to the secretary of the
Company shall, call a special meeting of the Holders of Series D Preferred Stock
and the holders of such Parity Stock for the purpose of electing the directors
which such holders are entitled to elect pursuant to the terms hereof; provided,
however, that no such special meeting shall be called if the next annual meeting
of stockholders

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of the Company is to be held less than 60 days and more than 30 days after the
voting power to elect directors shall have become vested, in which case such
meeting shall be deemed to have been called for such next annual meeting. If
such meeting shall not be called by a proper officer of the Company within 20
days after personal service to the secretary of the Company at its principal
executive offices, then the Holders of record of at least 25% of the outstanding
shares of Series D Preferred Stock or the holders of 25% of the shares of Parity
Stock upon which like rights have been conferred and are exercisable may
designate in writing one of their members to call such meeting at the expense of
the Company, and such meeting may be called by the person so designated upon the
notice required for the annual meetings of stockholders of the Company and shall
be held at the place for holding the annual meetings of stockholders. Any holder
of Series D Preferred Stock or such Parity Stock so designated shall have, and
the Company shall provide, access to the lists of Holders of Series D Preferred
Stock and the holders of such Parity Stock to be called pursuant to the
provisions hereof. If no special meeting of the Holders of Series D Preferred
Stock and the holders of such Parity Stock is called as provided in this
paragraph (f)(B), then such meeting shall be deemed to have been called for the
next annual meeting of stockholders of the Company or special meeting of the
holders of any other Capital Stock of the Company.

                  (3) At any meeting held for the purposes of electing directors
at which the holders of Series D Preferred Stock (together with the holders of
Parity Stock upon which like rights have been conferred and are exercisable)
shall have the right, voting together as a separate class, to elect directors as
aforesaid, the presence in person or by proxy of the holders of at least a
majority in voting power of the outstanding shares of Series D Preferred Stock
(and such Parity Stock) shall be required to constitute a quorum thereof.

                  (4) Any vacancy occurring in the office of a director elected
by the Holders of Series D Preferred Stock (and such Parity Stock) may be filled
by the remaining director elected by the Holders of Series D Preferred Stock
(and such Parity Stock) unless and until such vacancy shall be filled by the
Holders of Series D Preferred Stock (and such Parity Stock).

                  (5) If an event occurs at any time that results in the holders
of any Parity Stock (other than the holders of the Series C Preferred Stock)
having voting rights to elect directors to the Board of Directors, then Holders
of Series D Preferred Stock shall, whether or not such event otherwise
constitutes a Voting Rights Triggering Event pursuant to paragraph (t)(B)(1),
have the voting rights set forth in paragraphs (f)(B)(1) and (f)(B)(2), and such
event shall be deemed (for purposes of this paragraph (f) only) to constitute a
Voting Rights Triggering Event. In addition, in the event that during a time in
which directors elected by the Holders of Series D Preferred Stock pursuant to
this paragraph (f)(B) are serving on the Board of Directors ("Previously-Elected
Directors") an event occurs that results in holders of Parity Stock (other than
the holders of the Series C Preferred Stock) having voting rights to elect
(voting together with the Holders of Series D Preferred Stock) at least two
directors to the Board of Directors, the Holders of Series D Preferred Stock
shall vote together with the holders of such Parity Stock to elect such new
directors, and upon the election of the new directors the Previously-Elected

                                       10
<PAGE>

Directors shall (unless such Previously-Elected Directors are elected as new
directors) cease to serve on the Board of Directors.

                  (C) (1) So long as any shares of the Series D Preferred Stock
are outstanding, the Company will not (i) authorize, create (by way of
reclassification or otherwise), increase the authorized amount of or issue any
class or series of Senior Stock or any obligation or security convertible into,
exchangeable for or evidencing the right to purchase shares of any class or
series of Senior Stock, or (ii) amend the provisions of paragraph (g)(H) hereof,
without the affirmative vote or consent of Holders of at least two-thirds of the
shares of Series D Preferred Stock then outstanding, voting or consenting, as
the case may be, as one class, given in person or by proxy, either in writing or
by resolution adopted at an annual or special meeting. However, without the
consent of any Holder of Series D Preferred Stock, the Company may increase the
authorized number of shares of, issue additional shares of or create additional
classes of Common Stock, increase the authorized number of shares of Preferred
Stock or issue a series of Parity Stock or Junior Stock.

                  (2) So long as any shares of the Series D Preferred Stock are
outstanding, the Company will not (i) amend this Certificate of Designation,
either directly or indirectly, or through merger or consolidation with another
entity, so as to affect adversely the specified rights, preferences, privileges
or voting rights of Holders of shares of Series D Preferred Stock or to increase
or decrease the aggregate number of authorized shares of Series D Preferred
Stock or (ii) waive any Voting Right Triggering Event or compliance with any
provision hereof without the affirmative vote or consent of Holders of at least
a majority of the issued and outstanding shares of Series D Preferred Stock,
voting or consenting, as the case may be, as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or special
meeting.

                  (3) So long as any shares of the Series D Preferred Stock are
outstanding, without the consent of each Holder affected, an amendment or waiver
of the Certificate or of this Certificate of Designation may not (with respect
to any shares of Series D Preferred Stock held by a non-consenting Holder) (i)
alter the voting rights with respect to the Series D Preferred Stock (other than
the waiver of a Voting Rights Triggering Event as provided in paragraph
(f)(C)(2)) or reduce the number of shares of Series D Preferred Stock whose
holders must consent to an amendment, supplement or waiver; (ii) reduce the
Liquidation Preference of or alter the provisions with respect to the redemption
of the Series D Preferred Stock; (iii) reduce the rate of or change the time for
payment of dividends on any share of Series D Preferred Stock; (iv) make any
share of Series D Preferred Stock payable in any form other than that stated in
this Certificate of Designation; (v) after the occurrence of a Change of
Control, amend the provisions of paragraph (g)(H) hereof; or (vi) make any
change in the amendment and waiver provisions of this paragraph (f)(C)(3).

                  (4) Notwithstanding the foregoing, the Company when authorized
by resolutions of its Board of Directors may amend or supplement this
Certificate of Designation without the consent of any Holder to (i) cure any
ambiguity, defect or inconsistency or (ii) make

                                       11
<PAGE>

any other change provided that such amendments or supplements shall not
adversely affect the interests of the Holders.

                  (5) Except as set forth in paragraph (f)(C)(1) or (2) above,
(x) the creation, authorization or issuance of any shares of any Junior Stock or
Parity Stock, including the designation of a series of Preferred Stock, or (y)
the increase or decrease in the amount of authorized Capital Stock of any class,
including Preferred Stock, shall not require the consent of Holders of Series D
Preferred Stock and shall not be deemed to affect adversely the interests,
rights, preferences, privileges or voting rights of shares of Series D Preferred
Stock.

                  (D) In any case in which the Holders of Series D Preferred
Stock shall be entitled to vote pursuant to this paragraph (f) or pursuant to
Delaware law, each Holder of Series D Preferred Stock entitled to vote with
respect to such matters shall be entitled to one vote for each share of Series D
Preferred Stock held; provided that any shares of Series D Preferred Stock that
are held by the Company or by any Person controlled by the Company shall not
entitle the Holders thereof to any votes with respect thereto. For purposes of
this provision, "controlled by," as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting equity securities, by agreement or otherwise.

         (g) Conversion.

                  (A) (1) Except as set forth in paragraph (g)(A)(2) below, at
any time after the Issue Date, at the option of the Holder thereof, any share of
Series D Preferred Stock may be converted into such number of fully paid and
nonassessable shares of Common Stock (calculated as to each conversion to the
nearest 1/10 of a share), as equals the Liquidation Preference divided by the
Conversion Price, determined as hereinafter provided, in effect at the time of
conversion. In case a share of Series D Preferred Stock is called for
redemption, such conversion right in respect of the share of Series D Preferred
Stock so called shall expire at the close of business on the Mandatory
Redemption Date or Provisional Redemption Date, as applicable, unless the
Company defaults in making the payment due upon redemption.

                  (2) On or after February 15, 2003, if the closing price of the
Common Stock equals or exceeds 140% of the then current Conversion Price, as
hereinafter provided, for at least 20 Trading Days within any 30 consecutive
Trading Day period, then the Company shall have the right, at its option, to
cancel the conversion rights of the Holders of the Series D Preferred Stock
described in the paragraph above (the "Conversion Rights"). The closing price
for each Trading Day will be the last sales price on such date on the Nasdaq
National Market (or the principal national securities market or exchange on
which the Common Stock is then being traded). The Company may exercise such
right by issuing a press release for publication on the Dow Jones News Service
(or a comparable news service) prior to the opening of business on the second
Trading Day after any period in which the condition in the preceding sentence
has been met. The press release shall announce that (i) the Company is canceling
the Conversion Rights of the Series D Preferred Stock and (ii) the date such
Conversion Rights will expire (the "Expiration Date"). The press release shall
also provide the Conversion Price and the closing

                                       12
<PAGE>

price of the Common Stock, each as of the close of business of the previous
Trading Day. The Company must notify the Holders of the Series D Convertible
Preferred Stock of the expiration of the Conversion Rights by first-class mail
not more than four business days after the issuance of the press release,
provided, however, that neither the failure to give such notice nor any
deficiency therein shall affect the validity of the procedure for the
elimination of conversion rights except with respect to the Holder or Holders to
whom the Company failed to give such notice or whose notice was defective. The
Company will select the date upon which the Conversion Rights will expire, which
date will be not less than 30 nor more that 60 days after the date of the
issuance of the press release. The Conversion Rights of the Holders of the
Series D Convertible Preferred Stock will terminate at the close of business of
the Expiration Date.

                  (3) The price at which Common Stock shall be delivered upon
conversion (herein called the "Conversion Price") shall be initially $65.34 per
share of Common Stock. The Conversion Price shall be adjusted in certain
instances as provided in paragraph (g)(D) or paragraph (g)(H).

                  (B) In order to exercise the conversion privilege provided for
in paragraph (g)(A)(l), the Holder of any share of Series D Preferred Stock to
be converted shall Surrender the certificate for such share of Series D
Preferred Stock, duly endorsed or assigned to the Company or in blank, at the
office of the Transfer Agent or at any office or agency of the Company
maintained for that purpose, accompanied by written notice to the Company in the
form of Exhibit B that the Holder elects to convert such share of Series D
Preferred Stock or, if fewer than all the shares of Series D Preferred Stock
represented by a single share certificate are to be converted, the number of
shares represented thereby to be converted. Such notice shall also contain the
office or the address to which the Company should deliver shares of Common Stock
issuable upon conversion (and any other payments or certificates related
thereto).

         Holders of shares of Series D Preferred Stock at the close of business
on a Record Date will be entitled to receive the dividend payable on such shares
on the corresponding Dividend Payment Date notwithstanding the conversion of
such shares following such Record Date and prior to such Dividend Payment Date.
However, shares of Series D Preferred Stock surrendered for conversion during
the period between the close of business on any Record Date and the opening of
business on the corresponding Dividend Payment Date (except shares converted
after the issuance of a notice of redemption with respect to a redemption date
during such period, which will be entitled to such dividend) must be accompanied
by payment of an amount equal to the dividend payable on such shares on such
Dividend Payment Date. A Holder of shares of Series D Preferred Stock on a
Record Date who (or whose transferee) tenders any such shares for conversion
into shares of Common Stock on such Dividend Payment Date will receive the
dividend payable by the Company on such shares of Series D Preferred Stock on
such date, and the converting Holder need not include payment of the amount of
such dividend upon surrender of shares of Series D Preferred Stock for
conversion. Except as provided above, the Company will make no payment or
allowance for unpaid dividends, whether or not in arrears, on converted shares.

                                       13
<PAGE>

         Shares of Series D Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the date such shares of
Series D Preferred Stock are surrendered for conversion in accordance with the
foregoing provisions, and at such time the rights of the Holders of such shares
of Series D Preferred Stock as Holders shall cease, and the person or persons
entitled to receive the Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and shall deliver to such office or agency as the converting Holder
shall have designated in its written notice to the Company a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion, together with payment in lieu of any fraction of a share, as
provided in paragraph (g)(C) hereof.

         In the case of any conversion of fewer than all the shares of Series D
Preferred Stock evidenced by a certificate, upon such conversion the Company
shall execute and the Transfer Agent shall authenticate and deliver to the
Holder thereof (at the address designated by such Holder), at the expense of the
Company, a new certificate or certificates representing the number of
unconverted shares of Series D Preferred Stock.

                  (C) No fractional shares of Common Stock shall be issued upon
the conversion of a share of Series D Preferred Stock. If more than one share of
Series D Preferred Stock shall be surrendered for conversion at one time by the
same Holder, the number of full shares of Common Stock which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate shares
of Series D Preferred Stock so surrendered. Instead of any fractional share of
Common Stock which would otherwise be issuable upon conversion of any share of
Series D Preferred Stock, the Company shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the last sales price of
a share of Common Stock on the Nasdaq National Market (or the principal national
securities exchange or other securities market on which the Common Stock is then
being traded) on the last Trading Day immediately preceding the day of
conversion.

                  (D) The Conversion Price shall be adjusted from time to time
by the Company as follows, each a "Conversion Price Adjustment Event" (the
variables have the definitions set forth in paragraph (g)(D)(7) below):

                  (1) If the Company shall make any redemption payment or
payment of a dividend or other distribution payable in shares of Common Stock to
all holders of any class of Capital Stock of the Company, other than the
issuance of shares of Common Stock in connection with the payment (1) in
redemption for, of dividends on, or upon the conversion of, the Series D
Preferred Stock, (2) in redemption for, of dividends on, or upon the conversion
of the Series C Preferred Stock or any Parity Stock in accordance with the
Certificates of Designation governing such securities, or (3) to all Holders of
the Series D Preferred Stock based upon the number of shares of Common Stock
into which the Series D Preferred Stock is then convertible, then the Conversion
Price in effect immediately prior to such event shall be adjusted pursuant to
the formula: X/Y multiplied by CP=ACP.

                                       14
<PAGE>

                  (2) If the Company shall issue to all holders of shares of
Common Stock rights, options or warrants entitling them to subscribe for or
purchase shares of Common Stock or securities convertible into or exchangeable
for shares of Common Stock at an exercise price that is less than the closing
price of a share of Common Stock on the Nasdaq National Market (or the principal
national securities exchange or other securities market on which the Common
Stock is then being traded) on the last Trading Day immediately preceding the
date of issuance of such rights, options or warrants, then the Conversion Price
in effect immediately prior to such event shall be adjusted pursuant to the
formula: X/X+(U((ClosePrice-EP)/ ClosePrice)) multiplied by CP=ACP; provided,
however, that no adjustment will be made with respect to such a distribution if
the Holder of shares of the Series D Preferred Stock would be entitled to
receive such rights, options or warrants at any time on or before the conversion
at any time of shares of the Series D Preferred Stock into Common Stock and
provided, further, that if such rights, options or warrants are only exercisable
upon the occurrence of certain triggering events, then the Conversion Price will
not be adjusted until such triggering events occur. If any options, warrants or
other rights of the nature described in this paragraph (g)(D)(2) ("Rights")
expire without exercise or conversion, the Conversion Price will be readjusted
to the Conversion Price which would otherwise be in effect had the adjustment
made upon the issuance of such Rights been made on the basis of delivery of only
the number of shares of Common Stock actually delivered upon the exercise or
conversion of such Rights.

                  (3) In the case of any subdivision, combination or
reclassification of the Common Stock, then the Conversion Price in effect
immediately prior to such event shall be adjusted pursuant to the formula: X/Y
multiplied by CP=ACP.

                  (4) If the Company shall make any distribution consisting
exclusively of cash (excluding any cash distributed in a transaction for which
paragraph (g)(D)(12) below is applicable) to all holders of shares of Common
Stock (which distribution is not also being made to the Holders of Series D
Preferred Stock based on the number of shares of Common Stock into which the
Series D Preferred Stock is then convertible) in an aggregate amount that,
combined together with (1) all other such cash distributions made within the
then-preceding 12 months in respect of which no adjustment has been made and (2)
any cash and the fair market value (as determined by the Board of Directors in
good faith pursuant to a resolution) of other consideration paid or payable in
respect of any tender offer by the Company or any of its subsidiaries for shares
of Common Stock concluded within the then-preceding 12 months in respect of
which no adjustment has been made, exceeds 15% of the Company's Pre-Distribution
Market Capitalization (as defined in paragraph (g)(D)(7) below), then the
Conversion Price in effect immediately prior to such event shall be adjusted
pursuant to the formula: CP-(CP multiplied by ((Cash-15% PDMC)/PDMC))=ACP. There
will be no adjustment to the Conversion Price if (Cash-15% PDMC) is less than or
equal to zero.

                  (5) In the case of the completion of a tender or exchange
offer made by the Company or any of its subsidiaries for shares of Common Stock
(i) that involves an aggregate consideration that, together with (1) any cash
and other consideration payable in a tender or exchange offer by the Company or
any of its subsidiaries for shares of Common Stock expiring within the
then-preceding 12 months in respect of which no adjustment has been made

                                       15
<PAGE>

and (2) the aggregate amount of any such cash distributions referred to in
paragraph (g)(D)(4) above to all holders of shares of Common Stock within the
then-preceding 12 months in respect of which no adjustments have been made,
exceeds 15% of the Company's Post-Tender Market Capitalization (as defined in
paragraph (g)(D)(7) below) and (ii) where the tender offer price or exchange
offer price pr share of Common Stock is greater than the closing price of the
Common Stock on the Trading Day immediately succeeding the Expiration Time, then
the Conversion Price in effect immediately prior to such event shall be adjusted
pursuant to the formula: CP multiplied by ((EX multiplied by TotSh)/(TPur +
(NetSh multiplied by EX)))=ACP. There will be no adjustment to the Conversion
Price if the tender offer price or exchange offer price per share of Common
Stock is less than or equal to EX or if TOff is not greater than 15% of PTMC.

                  (6) If the Company shall make a distribution to all holders of
Common Stock (which distribution is not also being made to the Holders of the
Series D Preferred Stock based on the number of shares of Common Stock into
which the Series D Preferred Stock is then convertible) consisting of (i)
evidences of indebtedness, (ii) shares of Capital Stock of the Company other
than Common Stuck, or (iii) assets other than cash, including securities, but
excluding those dividends and those issuances of rights, options, warrants and
other distributions for which an adjustment to the Conversion Price as referred
to above is applicable (other than in connection with a merger effected solely
to reflect a change in the jurisdiction of incorporation of the Company), then
the Conversion Price in effect immediately prior to such event shall be adjusted
pursuant to the formula: CP-(Value/#Sh)=ACP.

                  (7) Variables. In the preceding descriptions, the variables
have the following definitions:

         "U" equals the number of shares of Common Stock underlying all rights,
options or warrants issued to holders of Common Stock pursuant to paragraph
(g)(D)(2) above entitling such holders to subscribe for or purchase shares of
Common Stock or securities convertible into or exchangeable for shares of Common
Stock issued in the Conversion Price Adjustment Event;

         "X" equals the total number of shares of Common Stock outstanding
immediately prior to the Conversion Price Adjustment Event (excluding
unexercised options, warrants or rights);

         "Y" equals the total number of shares of Common Stock outstanding
immediately after the Conversion Price Adjustment Event (excluding unexercised
options, warrants or rights);

         "Cash" equals the sum of (a) any distribution consisting exclusively of
cash (excluding any cash distributed upon a merger or consolidation to which
paragraph (g)(D)(12) below applies) to all holders of shares of Common Stock
(which distribution is not also being made to the Holders of Series D Preferred
Stock based upon the number of shares of Common Stock into which the Series D
Preferred Stock is then convertible) and (b) all other such all-cash
distributions made within the then-preceding 12 months in respect of which no
adjustment has been made and (c) any cash and the fair market value of other
consideration (as determined by the Board of Directors in good faith and
pursuant to a resolution) paid or payable in respect of

                                       16
<PAGE>

any tender offer by the Company or any of its subsidiaries for shares of any
class of Common Stock concluded within the then-preceding 12 months in respect
of which no adjustment has been made pursuant to paragraph (g)(D)(4) or (5);

         "ClosePrice" means with respect to any date, the last sales price of a
share of Common Stock on the Nasdaq National Market (or the principal national
securities exchange or other securities market on which the Common Stock is then
being traded) on the last Trading Day immediately preceding such date;

         "EP" equals the exercise price or other consideration to be paid by the
holder upon the conversion or exchange of "U";

         "EX" equals the closing price of the Common Stock on the Trading Day
immediately succeeding the Expiration Time;

         "Expiration Time" means, with respect to a tender or exchange offer
giving rise to a Conversion Price Adjustment Event pursuant to paragraph
(g)(D)(5), the last time that tenders of shares of Common Stock could have been
made pursuant to the terms of such tender or exchange offer (as the same may be
amended);

         "NetSh" means a number of shares of Common Stock equal to (a) TotSh
minus (b) Purchased Shares;

         "PDMC" or "Pre-Distribution Market Capitalization" means, with respect
to a Conversion Price Adjustment Event pursuant to paragraph (g)(D)(4), an
amount equal to the product of (a) the ClosePrice of the Common Stock as of the
record date with respect to the distribution constituting such Conversion Price
Adjustment Event multiplied by (b) the number of shares of Common Stock
outstanding at the close of business on the record date for such distribution;

         "PTMC" or "Post-Tender Market Capitalization" means, with respect to a
Conversion Price Adjustment Event pursuant to paragraph (g)(D)(5), an amount
equal to the product of (a) EX multiplied by (b) TotSh;

         "Purchased Shares" means, in connection with a tender or exchange offer
giving rise to a Conversion Price Adjustment Event pursuant to paragraph
(g)(D)(5), the number of shares of Common Stock accepted (up to any maximum
number of such shares specified in the terms of such tender or exchange offer)
and validly tendered and not withdrawn as of the Expiration Time;

         "#Sh" equals the number of shares of Common Stock receiving the
distribution contemplated in paragraph (g)(D)(6);

         "TOff" equals the sum of (a) the aggregate consideration paid by the
Company or any of its subsidiaries for shares of Common Stock in a tender or
exchange offer made by the Company or any of its subsidiaries for shares of
Common Stock and (b) any cash or other

                                       17
<PAGE>

consideration payable in a tender or exchange offer by the Company or any of its
subsidiaries for shares of Common Stock expiring within the then-preceding 12
months in respect of which no adjustment has been made and (c) the aggregate
amount of any such all-cash distributions referred to in paragraph (g)(D)(4) to
all holders of shares of Common Stock within the then-preceding 12 months in
respect of which no adjustments have been made;

         "TotSh" equals the total number of shares of Common Stock outstanding
(including any shares tendered in the tender or exchange offer) at the
Expiration Time;

         "TPur" equals the product of (a) the fair market value (as determined
by the Board of Directors in good faith pursuant to a resolution) of the
consideration payable for one share of Common Stock under the terms of the
tender or exchange offer giving rise to a Conversion Price Adjustment Event
pursuant to paragraph (g)(D)(5) multiplied by (b) the number of Purchased
Shares;

         "Value" equals the aggregate fair market value of the distribution
described in paragraph (g)(D)(6), as determined in good faith by the Board of
Directors of the Company pursuant to a resolution;

         "CP" equals the Conversion Price immediately prior to the Conversion
Price Adjustment Event;

         "ACP" equals the Conversion Price immediately after the Conversion
Price Adjustment Event.

         An adjustment made pursuant to paragraph (g)(D) shall become effective:
(A) in the case of a Conversion Price Adjustment Event described in paragraph
(g)(D)(1), (2), (4) or (6), immediately following the close of business on the
record date for the determination of holders of Common Stock entitled to
participate in such event; or (B) in the case of a Conversion Price Adjustment
Event described in paragraph (g)(D)(3), the close of business on the day upon
which such corporate action becomes effective; or (C) in the case of a
Conversion Price Adjustment Event described in paragraph (g)(D)(5), the close of
business on the Trading Day immediately succeeding the Expiration Time of such
tender offer or exchange offer.

                  (8) De Minimis Adjustments. No adjustment in the Conversion
Price shall be required (a) unless such adjustment would require an increase or
decrease of at least 1% of such price or (b) with respect to rights, options or
warrants issued pursuant to the Company's employee benefit plans; provided,
however, that any adjustments which by reason of paragraph (g)(D))(8)(a) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this paragraph (g)(D)(8) shall be
made by the Company and shall be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be. No adjustment need be made for a
change in the par value or no par value of the Common Stock.

                  (9) Reductions in Conversion Price. The Company shall be
entitled to make such reductions in the Conversion Price, in addition to those
required by this paragraph

                                       18
<PAGE>

(g)(D), as the Company in its discretion shall determine to be advisable in
order that any stock dividends, subdivision of shares, distribution of rights to
purchase stock or securities or distribution of securities convertible into or
exchangeable for stock hereafter made by the Company to its stockholders shall
not be taxable to the recipients. In the event the Company elects to make such a
reduction in the Conversion Price, the Company will comply with the requirements
of Rule 14e-1 under the Exchange Act, and any other securities laws and
regulations thereunder if and to the extent that such laws and regulations are
applicable in connection with the reduction of the Conversion Price. Whenever
the Conversion Price is so decreased, the Company shall mail to Holders of
record of shares of Series D Preferred Stock a notice of the decrease at least
15 days before the date the decreased Conversion Price takes effect, and such
notice shall state the decreased Conversion Price.

                  (10) Decreases in Conversion Price. The Company from time to
time may decrease the Conversion Price by an amount determined by the Board of
Directors and described in a notice as hereinafter provided for any period of
time if the period is at least 20 days and if the decrease is irrevocable during
such period. Whenever the Conversion Price is so decreased, the Company shall
mail to Holders of record of shares of Series D Preferred Stock a notice of the
decrease at least 15 days before the date the decreased Conversion Price takes
effect, and such notice shall state the decreased Conversion Price and the
period it will be in effect.

                  (11) Distribution of Rights, Options or Warrants. In the event
that, after the issuance of the Series D Preferred Stock, the Company
distributes rights, options or warrants (other than those referred to in
paragraph (g)(D)(2) above and other than a distribution of rights, options or
warrants being made pro rata to the Holders of the Series D Preferred Stock
based upon the number of shares of Common Stock into which the Series D
Preferred Stock is then convertible) pro rata to all holders of shares of Common
Stock, so long as any such rights, options or warrants have not expired or been
redeemed by the Company, the Holder of any shares of Series D Preferred Stock
surrendered for conversion will be entitled to receive upon such conversion, in
addition to the shares of Common Stock then issuable upon such conversion (the
"Conversion Shares"), a number of rights, options or warrants to be determined
as follows:

                      (a) if such conversion occurs on or prior to the date (a
"Distribution Date") for the distribution to the holders of rights, options or
warrants of separate certificates evidencing such rights, options or warrants,
the same number of rights, options or warrants to which a holder of a number of
shares of Common Stock equal to the number of Conversion Shares is entitled at
the time of such conversion in accordance with the terms and provisions
applicable to the rights, options or warrants; and

                      (b) if such conversion occurs after such Distribution
Date, the same number of rights, options or warrants to which a holder of the
number of shares of Common Stock into which such Series D Preferred Stock was
convertible immediately prior to such Distribution Date would have been entitled
on such Distribution Date in accordance with the terms and provisions of and
applicable to the rights, options or warrants.

                                       19
<PAGE>

         (12) Merger or Consolidation. (a) In case of:

                 (i) any merger or consolidation of the Company with or into
another Person: or

                 (ii) any safe, transfer or other disposition to another Person
of all or substantially all of the assets of the Company computed on a
consolidated basis; or

                 (iii) any statutory exchange of securities with another Person,
other than in connection with a merger or acquisition, (any of the events
described in this paragraph (g)(D)(12)(a) being referred to as a "Transaction"),
there will be no adjustment to the Conversion Price except as required by
paragraph (g)(H).

         Upon the occurrence of a Transaction (other than (x) a consolidation or
merger in which the Company is the resulting or continuing Person and which does
not result in any reclassification or exchange of Common Stock outstanding
immediately prior to the merger or consolidation for cash, securities or other
property of another Person or (y) the sale, transfer, assignment or distribution
of shares of Capital Stock or assets to a subsidiary of the Company) and subject
to any adjustment to the Conversion Price required by paragraph (g)(H)(1), each
share of Series D Preferred Stock then outstanding shall, without the consent of
any Holder of Series D Preferred Stock (except as expressly required by
applicable law), become convertible only into the kind and amount of shares of
stock or other securities (of the Company or another issuer), cash or other
property receivable upon such Transaction by a holder of the number of shares of
Common Stock into which such share of Series D Preferred Stock could have been
converted immediately prior to the effective date of such Transaction, assuming
such holder of Common Stock failed to exercise his rights of election, if any,
as to the kind of amount of securities, cash or other property receivable upon
such Transaction.

                 (b) The provisions of this paragraph (g)(D)(12) similarly shall
apply to successive Transactions. The provisions of this paragraph (g)(D)(12),
and the provisions of paragraph (g)(H) to the extent applicable, shall be the
sole right of Holders of Series D Preferred Stock in connection with any
Transaction and, except as expressly provided by applicable law and paragraph
(f), such Holders shall have no separate vote thereon.

                 (13) Notice of Adjustment. Whenever the Conversion Price is
adjusted as provided in this paragraph (g)(D) or paragraph (g)(H), the Company
shall promptly file with the Transfer Agent an Officers' Certificate setting
forth the Conversion Price after such adjustment and setting forth a brief
statement of the facts requiring such adjustment. Promptly after delivery of
such certificate, the Company shall prepare a notice of such adjustment of the
Conversion Price setting forth the adjusted Conversion Price and the date on
which such adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Price to each Holder of Series D Preferred Stock at
such Holder's last address appearing on the register of holders maintained for
that purpose within 20 days of the effective date of such adjustment. Failure to
deliver such notice shall not affect the legality or validity of any such
adjustment.

                                       20
<PAGE>

                 (14) Deferred Issuance. In any case in which this paragraph
(g)(D) provides that an adjustment shall become effective immediately after a
record date for an event, the Company may defer until the occurrence of such
event issuing to the Holder of any share of Series D Preferred Stock converted
after such record date and before the occurrence of such event the additional
Common Stock issuable upon such conversion by reason of the adjustment required
by such event over and above the Common Stock issuable upon such conversion
before giving effect to such adjustment.

                 (15) Treasury Stock. For purposes of this paragraph (g)(D), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include shares issuable in
respect of scrip certificates issued in lieu of fractions of Common Stock. The
Company shall not pay any dividend or make any distribution on Common Stock held
in the treasury of the Company.

                 (E) In case:

                 (1) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of its
earned surplus; or

                 (2) the Company shall authorize the granting to all holders of
its Common Stock of rights or warrants to subscribe for or purchase any shares
of Capital Stock of any class or of any other rights; or

                 (3) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding Common Stock), or of
any consolidation or merger to which the Company is a party and for which
approval of any stockholders of the Company is required, or the sale or transfer
of all or substantially all the assets of the Company: or

                 (4) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company:

then the Company shall cause to be filed with the Transfer Agent and at each
office or agency maintained for the purpose of conversion of the Series D
Preferred Stock, and shall cause to be mailed to all Holders at their last
addresses as they shall appear in the register of Holders 20 days (or 10 days in
any case specified in clause (1) or (2) above) prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, rights or warrants, or, if
a record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights or warrants are to
be determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their Common Stock for securities,
cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up. Failure to give
the notice required by this paragraph (g)(E) or any defect therein shall not
affect the legality or validity of any dividend, distribution, right, warrant,
reclassification,

                                       21
<PAGE>

consolidation, merger, sale, transfer, dissolution, liquidation or winding up,
or the vote upon any such action.

                 (F) The Company shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued shares of Common
Stock (or out of its authorized shares of Common Stock held in the treasury of
the Company), for the purpose of effecting the conversion of the Series D
Preferred Stock, the full number of shares of Common Stock then issuable upon
the conversion of all outstanding shares of Series D Preferred Stock.

                 (G) The Company will pay any and all document, stamp or similar
issue or transfer taxes that may be payable in respect of the issue or delivery
of Common Stock on conversion of the Series D Preferred Stock pursuant hereto.
The Company shall not, however, be required to pay any tax which may be payable
in respect of any transfer involved in the issue and delivery of shares of
Common Stock in a name other than that of the Holder of the share of Series D
Preferred Stock or the shares of Series D Preferred Stock to be converted, and
no such issue or delivery shall be made unless and until the Person requesting
such issue has paid to the Company the amount of any such tax, or has
established to the satisfaction of the Company that such tax has been paid.

                 (H) (1) Notwithstanding any other provision in the preceding
paragraphs to the contrary, if any Common Stock Change of Control occurs, then
the Conversion Price in effect shall be adjusted immediately after such Common
Stock Change of Control as described below and, each share of the Series D
Preferred Stock shall be convertible solely into common stock of the kind
received by holders of Common Stock as the result of such Common Stock Change of
Control. For purposes of calculating any adjustment to be made pursuant to this
paragraph, immediately after a Common Stock Change of Control, the Conversion
Price in effect immediately prior to such Common Stock Change of Control, but
after giving effect to any prior adjustments, shall be adjusted by multiplying
such Conversion Price by a fraction, of which the numerator shall be the
Purchaser Stock Price (as defined in this paragraph (g)(H)(3)) and the
denominator shall be the Applicable Price (as defined in this paragraph
(g)(H)(3)): provided. however, that in the event of a Common Stock Change of
Control in which (x) 100% of the value of the consideration received by a holder
of Common Stock is common stock of the successor, acquirer, or other third party
(and cash, if any, is paid only with respect to any fractional interest in such
common stock resulting from such Common Stock Change of Control) and (y) all of
the Common Stock will have been exchanged for, converted into, or acquired for,
common stock (and cash only with respect to fractional interests) of the
successor, acquirer or other third party, the Conversion Price in effect
immediately prior to such Common Stock Change of Control shall thereupon be
adjusted by multiplying such Conversion Price by a fraction, of which the
numerator shall be one (1) and the denominator shall be the number of shares of
common stock of the successor, acquirer, or other third party received by a
holder of one share of Common Stock as a result of such Common Stock Change of
Control.

                     (2) If a Non-Stock Change of Control occurs, each Holder of
Series D Preferred Stock may require the Company to redeem all such Holder's
shares of Series D Preferred Stock at a price (the "Repurchase Price") equal to
100% of the Liquidation Preference,

                                       22
<PAGE>

plus accumulated and unpaid dividends, if any, whether declared or undeclared,
to the date fixed for such redemption (the "Repurchase Date"); provided,
however, that no Holder of Series D Preferred Stock shall have the right to
require the redemption or repurchase of Series D Preferred Stock prior to the
date on which the Senior Secured Notes mature or such earlier date on which the
Senior Secured Notes have been paid in full (the "Debt Maturity Date").

         Following a Non-Stock Change of Control prior to the Debt Maturity
Date, if the Holders of Series D Preferred Stock, but for the proviso set forth
in the immediately preceding paragraph of this paragraph (H)(2), would have the
right to require the Company to redeem all such Holder's shares of Series D
Preferred Stock, then each Holder of Series D Preferred Stock may, instead of
requiring the Company to redeem or repurchase such Holder's shares of Series D
Preferred Stock, require the Company to convert such Holder's shares of Series D
Preferred Stock into Common Stock on the Repurchase Date as provided below.

         Subject to the conditions set forth below, the Repurchase Price shall
be, at the option of the Company, payable (v) in cash, (w) through the delivery
of a number of shares of Common Stock equal to the Repurchase Price divided by
the Discounted Stock Value or (x) any combination of (v) and (w). The
"Discounted Stock Value" means the product of (y) 95% and (z) the average of the
daily closing prices of the Common Stock for the five consecutive Trading Days
ending on (and including) the fourth Trading Day preceding such Repurchase Date.
The closing price for each Trading Day will be the last sales price on such date
on the Nasdaq National Market (or the principal securities exchange or other
securities market on which the Common Stock is then being traded). No fractional
shares of Common Stock shall be issued in connection with the payment of the
Repurchase Price. Instead, the Company shall pay to the Transfer Agent for
distribution to the Holders as provided herein cash in lieu of the fractional
portion of one share which may result from the computation of the number of
shares of Common Stock as set forth in the first two sentences of this paragraph
in an amount equal to the same fraction of the last sales price of a share of
Common Stock on the Nasdaq National Market (or the principal national securities
exchange or other securities market on which the Common Stock is then being
traded) on the fourth Trading Day immediately preceding the Repurchase Date. The
Transfer Agent is hereby authorized to aggregate any fractional shares of Common
Stock that would otherwise be distributable in connection with the payment of
the Repurchase Price, and to sell them at the best available price and
distribute the proceeds to the Holders thereof in proportion to their respective
interests. The Company shall reimburse the Transfer Agent for any expenses
incurred with respect to such sale, including brokerage commissions. If the
Company is precluded from paying cash for fractional shares, it shall pay cash
to the Holders for the fractional shares when it becomes legally and
contractually able to pay such cash.

         The Company may elect to pay the Repurchase Price by delivering shares
of Common Stock only if:

         (i) The shares of Common Stock of the Company to be issued as payment
of the Repurchase Price (x) shall not require registration under any federal
securities law before such shares may be freely transferable without being
subject to any transfer restrictions under the Securities Act or, if such
registration is required, such registration shall be completed and shall

                                       23
<PAGE>

become effective prior to the Repurchase Date, and (y) shall not require
registration with or approval of any governmental authority under any state law
or any other federal law before such shares may be validly issued or delivered
or if such registration is required or such approval must be obtained, such
registration shall be completed or such approval shall be obtained prior to the
Repurchase Date;

         (ii) The shares of Common Stock of the Company to be issued are, or
shall have been, approved for listing on the Nasdaq National Market or the New
York Stock Exchange or listed on another national securities exchange, in any
case, prior to the Repurchase Date; and

         (iii) All shares of Common Stock of the Company which may be issued as
payment of the Repurchase Price will be issued out of the Company's authorized
but unissued Common Stock and, will upon issue, be duly and validly issued and
fully paid and nonassessable and free of any preemptive or similar rights.

         In the event the Company is restricted from repurchasing shares of the
Series D Preferred Stock on the Repurchase Date pursuant to the terms of its
outstanding indebtedness, Holders of the Series D Preferred Stock may convert
each share of Series D Preferred Stock into a number of shares of Common Stock
equal to the Repurchase Price divided by the Discounted Stock Value.

         In connection with the conversion of shares of Series D Preferred Stock
on the Repurchase Date, the Company shall apply and use its best efforts to have
the shares of Common Stock to be issued upon conversion of the Series D
Preferred Stock approved for listing on the Nasdaq National Market or the New
York Stock Exchange or listing on another national securities exchange prior to
the Repurchase Date. All shares of Common Stock of the Company which may be
issued upon conversion of the Series D Preferred Stock as provided in this
paragraph (H)(2) will be issued out of the Company's authorized but unissued
Common Stock and will, upon issue, be duly and validly issued and fully paid and
non-assessable and free of any pre-emptive or similar rights.

         In the case of a Repurchase Date falling after a Record Date and prior
to the related Dividend Payment Date, the Holders of the Series D Preferred
Stock at the close of business on such Record Date will be entitled to receive
the dividend payable on such shares on the corresponding Dividend Payment Date,
notwithstanding the redemption or conversion of such shares following such
Record Date. Except as provided for in the preceding sentence, no payment or
allowance will be made for accrued dividends on any shares of Series D Preferred
Stock redeemed or converted pursuant to this paragraph (H)(2).

         On and after the Repurchase Date, unless the Company defaults in the
payment of the Repurchase Price or the conversion of the Series D Preferred
Stock, dividends will cease to accumulate on shares of Series D Preferred Stock
to be redeemed or converted and all rights of Holders of such shares will
terminate except for the right to receive the Repurchase Price, without
interest, or the number of shares of Common Stock into which the shares of the
Series D Preferred Stock have been converted.

                                       24
<PAGE>

         Within 30 days after the occurrence of a Non-Stock Change of Control,
the Company will (a) publish a notice of the occurrence of a Non-Stock Change of
Control in the Wall Street Journal or similar daily business publication of
national distribution and (b) send a written notice by first class mail to each
Holder of record of shares of Series D Preferred Stock, at its registered
address, and to the Transfer Agent (the "Company Notice"); provided, however,
that neither the failure to give such notice nor any deficiency therein shall
affect the validity of the procedure for the redemption or conversion of any
shares of Series D Preferred Stock to be redeemed or converted except as to the
Holder or Holders to whom the Company has failed to give said notice or except
as to the Holder or Holders whose notice was defective. The Company Notice shall
state:

         (i) that a Non-Stock Change of Control has occurred,

         (ii) the Repurchase Price, whether shares of the Series D Preferred
Stock will be redeemed or converted, and in the event of a redemption, whether
the Repurchase Price will be paid in cash, through the delivery of shares of
Common Stock, or a combination thereof (and, if a combination thereof, stating
the percentages of the total Repurchase Price that will be paid in cash and in
shares of Common Stock);

         (iii) in the event of a redemption, if all or a portion of the
Repurchase Price is to be paid through the delivery of shares of Common Stock,
that the determination of the number of shares of Common Stock to be delivered
shall be calculated as set forth above;

         (iv) in the event of a conversion, that the determination of the number
of shares of Common Stock to be delivered shall be calculated as set forth
above;

         (v) the Repurchase Date, which shall be no earlier than the 30 days and
no later than 60 days following the date of the Company Notice;

         (vi) that to elect to participate in the redemption or conversion, as
the case may be, the Holder must deliver to the Transfer Agent the certificate
or certificates representing the shares of Series D Preferred Stock to be
redeemed or converted along with a written election to participate, on or before
5:00 p.m., New York City time, on the 30th day after the date of the Company
Notice;

         (vii) that unless the Company defaults in the payment of the Repurchase
Price or the conversion of the Series D Preferred Stock, dividends on the shares
of the Series D Preferred Stock tendered to the Company shall cease to
accumulate on such Repurchase Date; and

         (viii) that any shares of Series D Preferred Stock not tendered to the
Company will continue to accumulate dividends in accordance with the terms
hereof.

         To exercise the repurchase right or conversion right granted by this
paragraph (H)(2), a Holder of Series D Preferred Stock must surrender the
certificate or certificates representing such shares of Series D Preferred
Stock, duly endorsed (or otherwise in proper form

                                       25
<PAGE>

for transfer, as determined by the Company), together with a written notice of
election to participate in the repurchase right or conversion right, as the case
may be, to the Transfer Agent on or before 5:00 p.m., New York City time, on the
30th day after the date of the Company Notice, and on the Repurchase Date (A) in
the event of a redemption, the Repurchase Price for such shares shall be payable
in cash and/or shares of Common Stock, as the case may be, to the person whose
name appears on such certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled and retired, or (B) such shares shall
be converted into shares of Common Stock and each surrendered certificate shall
be canceled and retired.

         On the Repurchase Date, the Company shall, to the extent lawful, (A)
accept for payment or conversion shares of Series D Preferred Stock validly
tendered and (B) promptly deliver the Repurchase Price or the number of shares
of Common Stock into which such shares of Series D Preferred Stock have been
converted to each holder of shares of Series D Preferred Stock validly tendered
to the Company. The Company shall publicly announce the results of the Non-Stock
Change of Control offer on or as soon as practicable after the Repurchase Date.

         The Company shall comply with any securities laws and regulations, to
the extent such laws and regulations are applicable to the repurchase or
conversion of shares of the Series D Preferred Stock, in connection with a
Non-Stock Change of Control.

         Notwithstanding the foregoing, the Company shall not be required to
offer to repurchase or convert, and repurchase or convert, securities tendered
pursuant to this paragraph (H)(2) following a Non-Stock Change of Control if a
third party makes the offer to repurchase securities tendered pursuant to this
paragraph (H)(2) in the manner, at the times and otherwise in compliance with
the requirements set forth in this paragraph (H)(2) and purchases all of the
Series D Preferred Stock validly tendered and not withdrawn pursuant to such
provision.

                  (3) For purposes of this paragraph (H), the following terms
shall have the meanings indicated:

         "Applicable Price" means the average of the closing bid prices for the
Common Stock during the ten Trading Days prior to and including the record date
for the determination of the holders of Common Stock entitled to receive cash,
securities, property or other assets in connection with such Common Stock Change
of Control or, if there is no such record date, the date upon which the holders
of the Common Stock shall have the right to receive such cash, securities,
property or other assets, in each case, as adjusted in good faith by the Board
of Directors to appropriately reflect any of the events referred to in paragraph
(g)(D)(1) through (6).

         "Beneficial Owner" means a beneficial owner as defined in Rules 13d-3
and 13d-5 under the Exchange Act (or any successor rules), including the
provision of such Rules that a Person shall be deemed to have beneficial
ownership of all securities that such Person has a right to acquire within 60
days; provided that a Person will not be deemed a beneficial owner of, or to own
beneficially, any securities if such beneficial ownership (1) arises solely as a
result of a revocable proxy delivered in response to a proxy or consent
solicitation made pursuant to,

                                       26
<PAGE>

and in accordance with, the Exchange Act and (2) is not also then reportable on
Schedule 13D or Schedule 13G (or any successor schedule) under the Exchange Act.

         "Change of Control" means: (i) the sale, lease, transfer, conveyance,
other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all the assets of the
Company and its subsidiaries taken as a whole to any "person" (as such term is
used in Section 13(d)(3) of the Exchange Act), (ii) the adoption of a plan
relating to the liquidation, dissolution or winding-up of the Company, (iii) the
consummation of any transaction (including any merger or consolidation) the
result of which is that any "person" (as defined above) other than any Permitted
Holder becomes the Beneficial Owner, directly or indirectly, of more than 50% of
the Voting Stock of the Company plus any voting stock not yet outstanding but
deemed to be Beneficially Owned by such "person" (as defined above), (iv) the
first day on which the Permitted Holders collectively become the Beneficial
Owners, directly or indirectly, of more than 50% of the Voting Stock of the
Company plus any voting stock not yet outstanding but deemed to be Beneficially
Owned by the Permitted Holders, or (v) the first day on which a majority of the
members of the Board of Directors are not Continuing Directors.

         "Common Stock Change of Control" means any Change of Control in which
more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Common
Stock consists of common stock that for each of the ten consecutive Trading Days
referred to in the definition of "Applicable Price" has been admitted for
listing or admitted for listing subject to notice of issuance on a national
securities exchange or quoted on the Nasdaq National Market; provided, however,
that a Change of Control shall not be a Common Stock Change of Control unless
either (i) the Company continues to exist after the occurrence of such Change of
Control and the outstanding shares of Series D Preferred Stock continue to exist
as outstanding shares of Series D Preferred Stock, or (ii) not later than the
occurrence of such Change of Control, the outstanding shares of Series D
Preferred Stock are converted into or exchanged for shares of convertible
preferred stock of a corporation succeeding to the business of the Company,
which convertible preferred stock has powers, preferences and relative,
participating, optional or other rights, and qualifications, limitations and
restrictions, substantially similar to those of the Series D Preferred Stock.

         "Continuing Directors" means, as of any date of determination,
individuals who on the Issue Date constituted the Board of Directors (together
with any new directors whose election by the Board of Directors or whose
nomination for election by the Company's stockholders was approved by a vote of
a majority of the members of the Board of Directors then in office who either
were members of the Board of Directors on the Issue Date or whose election or
nomination for election was previously so approved).

         "Non-Stock Change of Control" means any Change of Control other than a
Common Stock Change of Control.

         "Permitted Holders" means: (i) Providence Equity Partners Inc., JK&B
Capital, L.P., or any of their affiliates, (ii) any of Maurice J. Gallagher,
Jr., Timothy P. Flynn, Rolla P.

                                       27
<PAGE>

Huff or their respective spouses or lineal descendants and their respective
spouses (collectively, the "Individual Family Holders") whether acting in their
own name or as a majority of persons having the power to exercise the voting
rights attached to, or having investment power over, shares held by others,
(iii) any affiliate of any member of the Individual Family Holders, (iv) any
trust principally for the benefit of one or more members of the Individual
Family Holders (whether or not any member of the Individual Family Holders is a
trustee of such trust) and (v) any charitable foundation whose majority of
members, trustees or directors, as the case may be, are persons referred to in
(ii) above.

         "Purchaser Stock Price" means, the product of (i) the number of shares
of common stock received as consideration in such Common Stock Change of Control
for each share of Common Stock, and (ii) the average of the per share closing
bid prices for the common stock received as consideration in such Common Stock
Change of Control for the ten consecutive Trading Days prior to and including
the record date for the determination of the holders of Common Stock entitled to
receive such common stock, or if there is no such record date, the date upon
which the holders of the Common Stock shall have the right to receive such
common stock, in each case, as adjusted in good faith by the Board of Directors
to appropriately reflect any of the events referred to in paragraph (g)(D)(1)
through (6); provided, however, that if no such closing bid prices exist, then
the Purchaser Stock Price shall be set at a price determined in good faith by
the Board of Directors of the Company.

         "Senior Secured Notes" means Mpower Communications Corp.'s 13% Senior
Secured Notes due 2004.

         (h) Reissuance of Series D Preferred Stock. Shares of Series D
Preferred Stock that have been issued and reacquired in any manner, including
shares purchased, redeemed, converted or exchanged, shall not be reissued as
shares of Series D Preferred Stock and shall (upon compliance with any
applicable provisions of the laws of Delaware) have the status of authorized and
unissued shares of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of Preferred Stock; provided,
however, that so long as any shares of Series D Preferred Stock are outstanding,
any issuance of such shares must be in compliance with the terms hereof. Upon
any such reacquisitions, the number of shares of Series D Preferred Stock
authorized pursuant to this Certificate of Designation shall be reduced by the
number of shares so acquired.

         (i) Business Day. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately succeeding
Business Day.

         (j) Limitation on Mergers and Asset Sales. Without the vote or consent
of the holders of a majority of the then outstanding shares of Series D
Preferred Stock, the Company may not consolidate or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or substantially all
of its assets to, any Person unless: (A) (1) the successor, transferee or lessee
(if not the Company) is organized and existing under the laws of the United
States of America or any State thereof or the District of Columbia; (2) the
Series D Preferred

                                       28
<PAGE>

Stock shall be converted into or exchanged for and shall become shares of such
successor, transferee or lessee, having in respect of such successor,
transferee, or lessee substantially the same powers, preference and relative
participating, optional or other special rights and the qualifications,
limitations or restrictions thereon, that the Series D Preferred Stock had
immediately prior to such transaction; and (3) the Company delivers to the
Transfer Agent an Officers' Certificate and an Opinion of Counsel stating that
such consolidation, merger or transfer complies with this Certificate of
Designation, or (B) (1) the consideration received by the holders of Common
Stock consists entirely of cash, (2) upon consummation of such transaction, each
share of Series D Preferred Stock shall be converted into or exchanged for cash
in an amount at least equal to the greater of (a) the amount which would he paid
to a holder of the number of shares of Common Stock into which such share of
Series D Preferred Stock could convert immediately prior to the consummation of
such transaction and (b) the liquidation preference of such share of Series D
Preferred Stock plus all accumulated and unpaid dividends, if any, whether or
not declared, to the date of the consummation of such transaction and (3) the
Company delivers to the Transfer Agent an Officers' Certificate and an Opinion
of Counsel stating that such consolidation, merger or transfer complies with
this Certificate of Designation, or (C) (1) the consideration to be received by
the holders of Common Stock in respect of each share of Common Stock has a value
which, for any five Business Days during the period commencing on the date that
the Company publicly announces such consolidation, merger or transfer and ending
ten Business Days thereafter, is equal to or greater than 140% of the Conversion
Price in effect on the date of such public announcement by the Company, (2) the
Consolidated Net Worth of the successor, transferee or lessee is equal to or
exceeds an amount equal to the product of two, multiplied by the Consolidated
Net Worth of the Company immediately prior to such consolidation, merger, or
transfer, and (3) the Company delivers to the Transfer Agent an Officers'
Certificate and an Opinion of Counsel stating that such consolidation, merger or
transfer complies with this Certificate of Designation.

         For purposes of this paragraph (j), "Consolidated Net Worth" shall
mean, in respect of any Person, the total amount shown on the balance sheet of
such Person and its consolidated subsidiaries, determined on a consolidated
basis in accordance with generally accepted accounting principles, as of the end
of the most recent fiscal quarter of such Person for which internal financial
statements are then available, prior to the taking of any action for which the
determination is made, as (i) the par or stated value of all of the outstanding
capital stock of such Person, plus (ii) paid-in capital or capital surplus
relating to such capital stock, plus (iii) any retained earnings or earned
surplus, less any accumulated deficit.

         In the event of any consolidation or merger or conveyance, transfer or
lease of all or substantially all of the assets of the Company that is permitted
pursuant to this paragraph (j), the successor resulting from such consolidation
or into which the Company is merged or the transferee or lessee to which such
conveyance, transfer or lease is made, will succeed to, and be substituted for,
and may exercise every right and power of, the Company with respect to the
Series D Preferred Stock, and thereafter, except in the case of a lease, the
predecessor (if still in existence) shall be released from its obligations and
covenants with respect to the Series D Preferred Stock.

                                       29
<PAGE>

         (k) Certificates.

         (i) Form and Dating. The Series D Preferred Stock and the Transfer
Agent's certificate of authentication shall be substantially in the form of
Exhibit A, which is hereby incorporated in and expressly made a part of this
Certificate of Designation. The Series D Preferred Stock certificate may have
notations, legends or endorsements required by law, stock exchange rules,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
Each Series D Preferred Stock certificate shall be dated the date of its
authentication. The terms of the Series D Preferred Stock certificate set forth
in Exhibit A are part of the terms of this Certificate of Designation.

         (ii) Execution and Authentication. Two Officers shall sign the Series D
Preferred Stock certificates for the Company by manual or facsimile signature.
The Company's seal shall be impressed, affixed, imprinted or reproduced on the
Series D Preferred Stock certificates and may be in facsimile form.

         If an Officer whose signature is on a Series D Preferred Stock
certificate no longer holds that office at the time the Transfer Agent
authenticates the Series D Preferred Stock certificate, the Series D Preferred
Stock certificates shall be valid nevertheless. A Series D Preferred Stock
certificate shall not be valid until an authorized signatory of the Transfer
Agent manually signs the certificate of authentication on the Series D Preferred
Stock certificate. The signature shall be conclusive evidence that the Series D
Preferred Stock certificate has been authenticated under this Certificate of
Designation. The Transfer Agent shall authenticate and deliver certificates for
up to 4,250,000 shares of Series D Preferred Stock for original issue upon a
written order of the Company signed by two Officers of the Company. Such order
shall specify the number of shares of Series D Preferred Stock to be
authenticated and the date on which the original issue of Series D Preferred
Stock is to be authenticated.

         The Transfer Agent may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the certificates for Series D
Preferred Stock. Unless limited by the terms of such appointment, an
authenticating agent may authenticate certificates for Series D Preferred Stock
whenever the Transfer Agent may do so. Each reference in this Certificate of
Designation to authentication by the Transfer Agent includes authentication by
such agent. An authenticating agent has the same rights as the Transfer Agent or
agent for service of notices and demands.

         (iii) Transfer and Exchange of Shares of Series D Preferred Stock. (A)
When shares of Series D Preferred Stock are presented to the Transfer Agent with
a request to register the transfer of such shares of Series D Preferred Stock or
to exchange such shares of Series D Preferred Stock for an equal number of
shares of Series D Preferred Stock of other authorized denominations, the
Transfer Agent shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the certificate representing such shares of Series D Preferred Stock
surrendered for transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably

                                       30
<PAGE>

satisfactory to the Company and the Transfer Agent, duly executed by the Holder
thereof or its attorney duly authorized in writing.

         (B) Obligations with Respect to Transfers and Exchanges of Series D
Preferred Stock. (1) To permit registrations of transfers and exchanges, the
Company shall execute and the Transfer Agent shall authenticate certificates
representing shares of Series D Preferred Stock as required pursuant to the
provisions of this paragraph (k)(iii).

         (2) All shares of Series D Preferred Stock issued upon any registration
of transfer or exchange of shares of Series D Preferred Stock shall be the valid
obligations of the Company, entitled to the same benefits under this Certificate
of Designation as the shares of Series D Preferred Stock surrendered upon such
registration of transfer or exchange.

         (3) Prior to due presentment for registration of transfer of any shares
of Series D Preferred Stock, the Transfer Agent and the Company may deem and
treat the person in whose name such shares of Series D Preferred Stock are
registered as the absolute owner of such Series D Preferred Stock and neither
the Transfer Agent nor the Company shall be affected by notice to the contrary.

         (4) No service charge shall be made to a Holder for any registration of
transfer or exchange upon surrender of any certificate representing shares of
Series D Preferred Stock or shares of Common Stock at the office of the Transfer
Agent maintained for that purpose. However, the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Series D
Preferred Stock certificates or Common Stock certificates.

         (C) No Obligation of the Transfer Agent. The Transfer Agent shall have
no obligation or duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Certificate of Designation or under
applicable law with respect to any transfer of any interest in any Series D
Preferred Stock other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Certificate of Designation, and to
examine the same to determine substantial compliance as to form with the express
requirements hereof.

         (iv) Replacement Certificates. If a modified Series D Preferred Stock
certificate is surrendered to the Transfer Agent or if the Holder of a Series D
Preferred Stock certificate claims that the Series D Preferred Stock certificate
has been lost, destroyed or wrongfully taken, the Company shall issue and the
Transfer Agent shall countersign a replacement Series D Preferred Stock
certificate if the reasonable requirements of the Transfer Agent and of Section
8-405 of the Uniform Commercial Code as in effect in the State of New York are
met. If required by the Transfer Agent or the Company, such Holder shall furnish
an indemnity bond sufficient in the judgment of the Company and the Transfer
Agent to protect the Company and the Transfer Agent from any loss which either
of them may suffer if a Series D Preferred Stock

                                       31
<PAGE>

certificate is replaced. The Company and the Transfer Agent may charge the
Holder for their expenses in replacing a Series D Preferred Stock certificate.

         (v) Temporary Certificates. Until definitive Series D Preferred Stock
certificates are ready for delivery, the Company may prepare and the Transfer
Agent shall countersign temporary Series D Preferred Stock certificates.
Temporary Series D Preferred Stock certificates shall be substantially in the
form of definitive Series D Preferred Stock certificates but may have variations
that the Company considers appropriate for temporary Series D Preferred Stock
certificates. Without unreasonable delay, the Company shall prepare and the
Transfer Agent shall countersign definitive Series D Preferred Stock
certificates and deliver them in exchange for temporary Series D Preferred Stock
certificates.

         (vi) Cancellation. In the event the Company shall purchase or otherwise
acquire shares of Series D Preferred Stock, the certificate(s) representing the
same shall thereupon be delivered to the Transfer Agent for cancellation.

         The Transfer Agent and no one else shall cancel and destroy all Series
D Preferred Stock certificates surrendered for transfer, exchange, replacement
or cancellation and deliver a certificate of such destruction to the Company
unless the Company directs the Transfer Agent to deliver canceled Series D
Preferred Stock certificates to the Company. The Company may not issue new
Series D Preferred Stock certificates to replace Series D Preferred Stock
certificates to the extent they evidence Series D Preferred Stock which the
Company has purchased or otherwise acquired.

         (7) Certain Definitions. As used in this Certificate of Designation,
the following terms shall have the following meanings (and (1) terms defined in
the singular have comparable meanings when used in the plural and vice versa,
(2) "including" means including without limitation, (3) "or" is not exclusive,
(4) "to" any date means to and including such date and (5) an accounting term
not otherwise defined has the meaning assigned to it in accordance with United
States generally accepted accounting principles as in effect on the Issue Date
and all accounting calculations will be determined in accordance with such
principles), unless the content otherwise requires:

         "Business Day" means each day which is not a Legal Holiday.

         "Capital Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated. whether
voting or non-voting) in equity of such Person, whether now outstanding or
issued after the Issue Date, including all Common Stock and Preferred Stock.

         "Common Stock" means the Company's common stock, par value $0.001 per
share.

         "Dividend Period" means such period between two consecutive Dividend
Payment Dates and the period from the Issue Date to the first Dividend Payment
Date.

                                       32
<PAGE>

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Holders" means the registered holders from time to time of the Series
D Preferred Stock.

         "Issue Date" means the date on which the Series D Preferred Stock is
initially issued.

         "Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York.

         "Officer" means the Chairman of the Board of Directors, the President,
any Vice President, the Treasurer, the Secretary, any Assistant Secretary or
Assistant Treasurer of the Company.

         "Officers' Certificate" means a certificate signed by two Officers.

         "Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Transfer Agent. The counsel may be an employee of or counsel
to the Company or the Transfer Agent.

         "person" or "Person" means any individual, corporation, partnership,
joint venture, limited liability company, association, joint-stock company,
trust, unincorporated organization, governmental or any agency or political
subdivision thereof or any other entity.

         "Preferred Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now outstanding or issued after the Issue Date, including all series and
classes of such preferred or preference stock.

         "SEC" or "Commission" means the Securities and Exchange Commission.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Series C Preferred Stock" means the 1,250,000 shares of the Company's
Preferred Stock which, as of the Issue Date, have been designated as the Series
C Convertible Preferred Stock.

         "Subsidiary" means with respect to any Person, any corporation,
association or other business entity of which Voting Stock representing more
than 50% of the voting power of shares of outstanding Voting Stock is owned,
directly or indirectly, by such Person, or one or more other Subsidiaries of
such Person.

         "Transfer Agent" means the transfer agent for the Series D Preferred
Stock appointed by the Company, which initially shall be Continental Stock
Transfer and Trust Company.

                                       33
<PAGE>

         "Voting Stock" of a corporation means all classes of Capital Stock of
such corporation then outstanding and normally entitled to vote in the election
of directors.

         (8) SEC Reports and Reports to Holders. So long as any shares of Series
D Preferred Stock remain outstanding, the Company will file with the SEC
(whether or not the Company is required to do so) all such reports and other
information as the Company would be required to file with the SEC pursuant to
Section 13(a) or 15(d) of the Exchange Act. Upon the written request of a Holder
of Series D Preferred Stock, the Company will supply to such Holder, at no cost
to such Holder, copies of such reports or other information.

                    [Signature Page follows on the next page]

                                       34
<PAGE>

         IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be signed by its Chief Executive Officer and President, and
attested to by its Secretary, on June 27, 2001.

                                         MPOWER HOLDING CORPORATION

                                         By: /s/ ROLLA P. HUFF
                                            ------------------------------------
                                            Name:  Rolla P. Huff
                                            Title: Chief Executive Officer
                                                   and President

Attest:

/s/ RUSSELL I. ZUCKERMAN
-----------------------------
Name:  Russell I. Zuckerman
Title: Senior Vice President,
       General Counsel and Secretary

                                         Sworn to this 27th day of June, 2001

                                         By /s/ KAREN A. KOCH
                                            ------------------------------------
                                                Notary Public

                                       35
<PAGE>

                                    EXHIBIT A

                        FORM OF SERIES D PREFERRED STOCK

                                FACE OF SECURITY

Certificate Number: [   ]
Number of Shares of Series D Preferred Stock:  [   ]
CUSIP NO.:  [   ]

              7.25% Series D Cumulative Convertible Preferred Stock
                          (par value $0.001 per share)
                    (liquidation preference $50.00 per share)

                                       of

                           Mpower Holding Corporation

         Mpower Holding Corporation, a Delaware corporation (the "Company"),
hereby certifies that [_______________] (the "Holder") is the registered owner
of fully paid and non-assessable preferred securities of the Company designated
the 7.25% Series D Cumulative Convertible Preferred Stock (par value $0.001 per
share) (liquidation preference $50.00 per share) (the "Series D Preferred
Stock"). The shares of Series D Preferred Stock are transferable on the books
and records of the Transfer Agent, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for
transfer. The Series D Preferred Stock represented hereby are issued and shall
in all respects be subject to the provisions of the Certificate of Designation
of Series D Cumulative Convertible Preferred Stock dated [_______], 2001, as the
same may be amended from time to time (the "Certificate of Designation").
Capitalized terms used herein but not defined shall have the meaning given them
in the Certificate of Designation. The Company will provide a copy of the
Certificate of Designation to a Holder without charge upon written request to
the Company at its principal place of business.

         Reference is hereby made to select provisions of the Series D Preferred
Stock set forth on the reverse hereof, and to the Certificate of Designation,
which select provisions and the Certificate of Designation shall for all
purposes have the same effect as if set forth at this place. Upon receipt of
this certificate, the Holder is bound by the Certificate of Designation and is
entitled to the benefits thereunder.

         This certificate is not valid unless countersigned and registered by
the Transfer Agent.

                                      A-1
<PAGE>

         IN WITNESS WHEREOF, the Company has executed this certificate this [ ]
day of [ ], 2001.

                                             MPOWER HOLDING CORPORATION

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

[Seal]

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

                                      A-2
<PAGE>

                               REVERSE OF SECURITY

         Dividends on each share of Series D Preferred Stock shall be payable at
a rate per annum set forth in the face hereof or as provided in the Certificate
of Designation. Dividends may be paid in cash or in shares of Common Stock of
the Company, at the option of the Company.

         The shares of Series D Preferred Stock shall be redeemable as provided
in the Certificate of Designation and in the Certificate. The shares of Series D
Preferred Stock shall be convertible into the Company's Common Stock in the
manner and according to the terms set forth in the Certificate of Designation.

         As required under Delaware law, the Company shall furnish to any Holder
upon request and without charge, a statement setting forth in full or
summarizing the voting powers, designations, preferences, limitations,
restrictions and relative rights of the various classes of stock of the Company
or series thereof. All such requests should be directed to Mpower Holding
Corporation, 175 Sully's Trail, Pittsford, New York 14534, Attention: General
Counsel.

                                      A-3
<PAGE>

                                  ASSIGNMENT

                  FOR VALUE RECEIVED, the undersigned assigns and transfers the
shares of Series D Preferred Stock evidenced hereby to:
                                                        ------------------------

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

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

--------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)

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

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

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

--------------------------------------------------------------------------------
(Insert address and zip code of assignee)

and irrevocably appoints:

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

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

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

--------------------------------------------------------------------------------
agent to transfer the shares of Series D Preferred Stock evidenced hereby on the
books of the Transfer Agent. The agent may substitute another to act for him or
her.

Date:
        --------------------------------

Signature:
          ------------------------------
(Sign exactly as your name appears on the other side of this Series D Preferred
Stock Certificate)

Signature

Guarantee:1
            -------------------------------------------------------------------

----------
1        (Signature must be guaranteed by an "eligible guarantor institution"
         that is, a bank, stockbroker, savings and loan association or credit
         union meeting the requirements of the Transfer Agent, which
         requirements include membership or participation in the Securities
         Transfer Agents Medallion Program ("STAMP") or such other "signature
         guarantee program" as may be determined by the Transfer Agent in
         addition to, or in substitution for, STAMP, all in accordance with the
         Securities Exchange Act of 1934, as amended.)

                                      A-4
<PAGE>

                                    EXHIBIT B

                              NOTICE OF CONVERSION

                    (To be Executed by the Registered Holder
                in order to Convert the Series D Preferred Stock)

The undersigned hereby irrevocably elects to convert (the "Conversion") shares
of 7.25% Series D Cumulative Convertible Preferred Stock (the "Series D
Preferred Stock"), represented by stock certificate No(s). _________ (the
"Series D Preferred Stock Certificates") into shares of Common Stock ("Common
Stock") of Mpower Holding Corporation (the "Company") according to the
conditions of the Certificate of Designation of the Series D Preferred Stock
(the "Certificate of Designation"), as of the date written below. If shares are
to be issued in the name of a person other than the undersigned, the undersigned
will pay all transfer taxes payable with respect thereto and is delivering
herewith payment of all applicable taxes or evidence that such taxes have been
paid. No fee will be charged to the holder for any conversion, except for
transfer taxes, if any. A copy of each Series D Preferred Stock Certificate is
attached hereto (or evidence of loss, theft or destruction thereof).*

Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in or pursuant to the Certificate of Designation.

Date of Conversion:____________________

Conversion Price:______________________

Number of shares of Series D Preferred Stock to be Converted:________

Number of shares of' Common Stock to be Issued:___________________

Signature:__________________________

Name:_____________________________

Address: ** ________________________

Fax No.: ___________________________

----------

*        The Company is not required to issue shares of Common Stock until the
         original Series D Preferred Stock Certificate(s) (or evidence of loss,
         theft or destruction thereof and indemnity reasonably satisfactory, to
         the Company and the Transfer Agent) to be converted are received by the
         Company or its Transfer Agent. The Company shall issue and deliver
         shares of Common Stock by hand or by delivery to an overnight courier
         not later than three business days following receipt of the original
         Series D Preferred Stock Certificate(s) to be converted.

**       Address where shares of Common Stock and any other payments or
         certificates shall be sent by the Company.

                                      B-1EXHIBIT 4.1

                           MPOWER HOLDING CORPORATION

                                       and

                          CONTINENTAL STOCK TRANSFER &
                                  TRUST COMPANY

                                  Rights Agent

                                Rights Agreement

                            Dated as of June 28, 2001

<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 Rights Certificates......................................7

SECTION 5.    Countersignature and Registration................................8

SECTION 6.    Transfer, Split Up, Combination and Exchange of Rights
              Certificates; Mutilated, Destroyed, Lost or Stolen Rights
              Certificates.....................................................8

SECTION 7.    Exercise of Rights; Purchase Price; Expiration Date of Rights....9

SECTION 8.    Cancellation and Destruction of Rights Certificates.............11

SECTION 9.    Reservation and Availability of Capital Stock...................11

SECTION 10.   Preferred Stock Record Date.....................................12

SECTION 11.   Adjustment of Purchase Price, Number and Kind of Shares
              or Number of Rights.............................................13

SECTION 12.   Certificate of Adjusted Purchase Price or Number of Shares......21

SECTION 13.   Consolidation, Merger or Sale or Transfer of Assets
              or Earning Power................................................21

SECTION 14.   Fractional Rights and Fractional Shares.........................24

SECTION 15.   Rights of Action................................................25

SECTION 16.   Agreement of Rights Holders.....................................25

SECTION 17.   Rights Certificate Holder Not Deemed a Stockholder..............26

SECTION 18.   Concerning the Rights Agent.....................................26

SECTION 19.   Merger or Consolidation or Change of Name of Rights Agent.......26

SECTION 20.   Duties of Rights Agent..........................................27

SECTION 21.   Change of Rights Agent..........................................29

SECTION 22.   Issuance of New Rights Certificates.............................30

                                        i
<PAGE>

SECTION 23.   Redemption and Termination......................................30

SECTION 24.   Notice of Certain Events........................................31

SECTION 25.   Notices.........................................................32

SECTION 26.   Supplements and Amendments......................................32

SECTION 27.   Successors......................................................33

SECTION 28.   Determinations and Actions by the Board of Directors, etc.......33

SECTION 29.   Benefits of this Agreement......................................33

SECTION 30.   Severability....................................................33

SECTION 31.   Governing Law...................................................34

SECTION 32.   Counterparts....................................................34

SECTION 33.   Descriptive Headings............................................34

SECTION 34.   Exchange........................................................34

                                       ii
<PAGE>

                                RIGHTS AGREEMENT

         RIGHTS AGREEMENT, dated as of June 28, 2001 (this "Agreement"), between
Mpower Holding Corporation, a Delaware corporation (the "Company"), and
Continental Stock Transfer & Trust Company, a New York corporation (the "Rights
Agent").

         WHEREAS, effective at the close of business on June 28, 2001 (the
"Rights Dividend Declaration Date"), the Board of Directors of the Company
authorized and declared a distribution of one Right (each, a "Right") for each
share of Common Stock, par value $.001 per share, of the Company (the "Company
Common Stock") outstanding at the Close of Business (as defined below) on June
28, 2001 (the "Record Date"), and has authorized the issuance of one Right (as
such number may hereinafter be adjusted pursuant hereto) for each share of
Company Common Stock issued between the Record Date (whether originally issued
or delivered from the Company's treasury) and, except as otherwise provided in
Section 22, the Distribution Date, each Right initially representing the right
to purchase upon the terms and subject to the conditions hereinafter set forth
one Unit (as defined below) of Series E Preferred Stock (as defined below);

         WHEREAS, the Company desires to set forth certain terms and conditions
governing the Rights; and

         WHEREAS, the Company desires to appoint the Rights Agent to act as
rights agent hereunder, in accordance with the terms and conditions hereof;

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

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

                  (a) "Acquiring Person" shall mean (i) any Person who or which,
         alone or together with all Affiliates and Associates of such Person,
         shall be the Beneficial Owner of 15% or more of the shares of Company
         Common Stock then outstanding but shall not include (x) the Company,
         any Subsidiary of the Company, any employee benefit plan maintained by
         the Company or any of its Subsidiaries or any trustee or fiduciary with
         respect to such plan acting in such capacity, (y) any such Person who
         has become and is such a Beneficial Owner solely because (A) of a
         change in the aggregate number of shares of the Company Common Stock
         since the last date on which such Person acquired Beneficial Ownership
         of any shares of the Company Common Stock or (B) it acquired such
         Beneficial Ownership in the good faith belief that such acquisition
         would not (1) cause such Beneficial Ownership to be equal to or exceed
         15% of the shares of the Company Common Stock then outstanding and such
         Person relied in good faith in computing the percentage of its
         Beneficial Ownership on publicly filed reports or documents of the
         Company that are inaccurate or out-of-date or (2) otherwise cause a
         Distribution Date or the adjustment provided for in Section 11(a)(ii)
         to occur or (z) any Exempt Person. Notwithstanding clause (ii)(B) of
         the prior sentence, if any Person that is not an Acquiring Person due
         to such clause (ii)(B) does not reduce its percentage of

<PAGE>

         Beneficial Ownership of the Company Common Stock to less than 15% by
         the Close of Business on the fifth Business Day after notice from the
         Company (the date of notice being the first day) that such person's
         Beneficial Ownership of the Company Common Stock so equals to or
         exceeds 15%, such Person shall at the end of such five Business Day
         period, become an Acquiring Person (and such clause (ii)(B) shall no
         longer apply to such Person). For purposes of this definition, the
         determination whether any Person acted in "good faith" shall be
         conclusively determined by the Board of Directors of the Company,
         acting by a vote of those directors of the Company whose approval would
         be required to redeem the Rights under Section 23.

                  (b) "Adjustment Shares" has the meaning set forth in Section
         11(a)(ii).

                  (c) "Adjustment Spread" has the meaning set forth in Section
         34(a)(ii).

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

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

                           (i) of which such Person or any of such Person's
                  Affiliates or Associates is considered to be a "beneficial
                  owner" under Rule 13d-3 of the Exchange Act Regulations as in
                  effect on the date of this Agreement; provided, however, that
                  a Person shall not be deemed the "Beneficial Owner" of, or to
                  "beneficially own", or to have "Beneficial Ownership" of, any
                  securities under this subparagraph (i) as a result of an
                  agreement, arrangement or understanding to vote such
                  securities if such agreement, arrangement or understanding (A)
                  arises solely from a revocable proxy given in response to a
                  proxy or consent solicitation made pursuant to, and in
                  accordance with, the applicable provisions of the Exchange Act
                  and the Exchange Act Regulations, and (B) is not reportable by
                  such Person on Schedule 13D under the Exchange Act (or any
                  comparable or successor report);

                           (ii) that are beneficially owned, directly or
                  indirectly, by any other Person (or any Affiliate or Associate
                  of such other Person) with which such Person (or any of such
                  Person's Affiliates or Associates) has any agreement,
                  arrangement or understanding (whether or not in writing), for
                  the purpose of acquiring, holding, voting (except pursuant to
                  a revocable proxy as described in the proviso to subparagraph
                  (i) of this paragraph (c)) or disposing of such securities; or

                           (iii) that such Person or any of such Person's
                  Affiliates or Associates, directly or indirectly, has the
                  right to acquire (whether such right is exercisable
                  immediately or only after the passage of time or upon the
                  satisfaction of conditions) pursuant to any agreement,
                  arrangement or understanding (whether or

                                       2
<PAGE>

                  not in writing) or upon the exercise of conversion rights,
                  exchange rights, rights, warrants or options, or otherwise;

         provided, however, that under this paragraph (e) a Person shall not be
         deemed the "Beneficial Owner" of, or to "beneficially own, or to have
         "Beneficial Ownership" of, (A) securities tendered pursuant to a tender
         or exchange offer made in accordance with Exchange Act Regulations by
         such Person or any of such Person's Affiliates or Associates until such
         tendered securities are accepted for purchase or exchange, (B)
         securities that may be issued upon exercise of Rights at any time prior
         to the occurrence of a Triggering Event or (C) securities that may be
         issued upon exercise of Rights from and after the occurrence of a
         Triggering Event, which Rights were acquired by such Person or any of
         such Person's Affiliates or Associates prior to the Distribution Date
         or pursuant to Section 3(c) or Section 22 or pursuant to Section 11(i)
         in connection with an adjustment made with respect to any such Rights.

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

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

                  (h) "Common Stock" of any Person other than the Company shall
         mean the capital stock of such Person with the greatest voting power,
         or, if such Person shall have no capital stock, the equity securities
         or other equity interest having power to control or direct the
         management of such Person.

                  (i) "Company" has the meaning set forth in the preamble to
         this Agreement.

                  (j) "Company Common Stock" has the meaning set forth in the
         recitals to this Agreement.

                  (k) "Current Value" has the meaning set forth in Section
         11(a)(iii).

                  (l) "Depositary Agent" has the meaning set forth in Section
         7(c).

                  (m) "Distribution Date" has the meaning set forth in Section
         3(a).

                  (n) "Equivalent Preferred Stock" has the meaning set forth in
         Section 11(b).

                  (o) "Exchange Act" shall mean the Securities Exchange Act of
         1934, as amended.

                  (p) "Exchange Act Regulations" shall mean the General Rules
         and Regulations under the Exchange Act.

                                       3
<PAGE>

                  (q) "Exempt Person" shall mean any of West Highland Partners,
         L.P., West Highland Capital, Inc., Mr. Lang H. Gerhard, or Estero
         Partners, LLC (each an "Exempt Party"), provided that in the event
         that, after the date hereof, an Exempt Party acquires Beneficial
         Ownership of any number of shares of Company Common Stock constituting
         more than 1% of the Company Common Stock then outstanding and such
         Exempt Party would otherwise be considered an Acquiring Person, such
         Exempt Party shall no longer be an Exempt Party and shall be an
         Acquiring Person.

                  (r) "Expiration Date" has the meaning set forth in Section
         7(a).

                  (s) "Final Expiration Date" has the meaning set forth in
         Section 7(a).

                  (t) "Person" shall mean any individual, partnership, limited
         liability company, firm, corporation, association, trust,
         unincorporated organization or other entity, as well as any syndicate
         or group deemed to be a person under Section 14(d)(2) of the Exchange
         Act.

                  (u) "Preferred Stock" shall mean the Series E Preferred Stock,
         par value $.001 per share, of the Company having the voting powers,
         designation, preferences and relative, participating, optional or other
         special rights and qualifications, limitations and restrictions
         described in the Certificate of Designations set forth as Exhibit C
         hereto.

                  (v) "preferred stock equivalents" has the meaning specified in
         Section 11(a)(iii).

                  (w) "Principal Party" has the meaning set forth in Section
         13(b).

                  (x) "Purchase Price" has the meaning set forth in Section
         7(b).

                  (y) "Record Date" has the meaning set forth in the recitals to
         this Agreement.

                  (z) "Redemption Price" has the meaning set forth in Section
         23(a).

                  (aa) "Registered Common Stock" has the meaning set forth in
         Section 13(b)(ii).

                  (ba) "Registration Date" has the meaning set forth in Section
         9(c).

                  (ca) "Registration Statement" has the meaning set forth in
         Section 9(c).

                  (da) "Right" has the meaning set forth in the recitals to this
         Agreement.

                  (ea) "Rights Agent" has the meaning set forth in the preamble
         to this Agreement.

                  (fa) "Rights Certificate" has the meaning set forth in Section
         3(a).

                  (ga) "Rights Dividend Declaration Date" has the meaning set
         forth in the recitals to this Agreement.

                                       4
<PAGE>

                  (ha) "Section 11(a)(ii) Event" shall mean any event described
         in Section 11(a)(ii)(A), (B) or (C).

                  (ia) "Section 11(a)(iii) Trigger Date" has the meaning set
         forth in Section 11(a)(iii).

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

                  (ka) "Section 34(a)(i) Exchange Ratio" has the meaning set
         forth in Section 34(a)(i).

                  (la) "Section 34(a)(ii) Exchange Ratio" has the meaning set
         forth in Section 34(a)(ii).

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

                  (na) "Spread" has the meaning set forth in Section 11(a)(iii).

                  (oa) "Stock Acquisition Date" shall mean the first date of
         public announcement (including, without limitation, the filing of any
         report pursuant to Section 13(d) of the Exchange Act) by the Company or
         an Acquiring Person that an Acquiring Person has become such.

                  (pa) "Subsidiary" shall mean, with reference to any Person,
         any other Person of which an amount of voting securities or equity
         interests sufficient to elect at least a majority of the directors or
         equivalent governing body of such other Person is beneficially owned,
         directly or indirectly, by such Person, or otherwise controlled by such
         first-mentioned Person.

                  (qa) "Summary of Rights" has the meaning set forth in Section
         3(b).

                  (ra) "Trading Day" has the meaning set forth in Section
         11(d)(i).

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

                  (ta) "Unit" has the meaning set forth in Section 7(b).

         SECTION 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment. With
the consent of the Rights Agent, 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 Stock Acquisition Date and (ii)
the Close of Business on the tenth Business Day (or such later date as may be
determined by action of the

                                       5
<PAGE>

Company's Board of Directors prior to such time as any Person becomes an
Acquiring Person, and of which the Company will give the Rights Agent prompt
written notice) 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 maintained by the Company or any of its Subsidiaries or any trustee or
fiduciary with respect to such plan acting in such capacity) is first published
or sent or given within the meaning of Rule 14d-4(a) of the Exchange Act
Regulations or any successor rule, if upon consummation thereof such Person
would be the Beneficial Owner of 15% or more of the shares of Company Common
Stock then outstanding (the earlier of (i) and (ii) above being the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for shares of
Company Common Stock registered in the names of the holders of shares of Company
Common Stock as of and subsequent to the Record Date (which certificates for
shares of Company Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Company Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each record holder of shares of
Company Common Stock as of the Close of Business on the Distribution Date, at
the address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each share of Company Common Stock so
held, subject to adjustment as provided herein. In the event that an adjustment
in the number of Rights per share of Company Common Stock has been made pursuant
to Section 11(p), at the time of distribution of the Rights Certificates, the
Company may make the necessary and appropriate rounding adjustments (in
accordance with Section 14(a)) so that Rights Certificates evidencing only whole
numbers of Rights are distributed and cash is paid in lieu of any fractional
Rights. As of and after the Distribution Date, the Rights will be evidenced
solely by such Rights Certificates.

         (b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights to Purchase Preferred Stock, in a form
that may be appended to certificates that evidence shares of Company Common
Stock, in substantially the form attached hereto as Exhibit B (the "Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of shares
of Company Common Stock as of the Close of Business on the Record Date, at the
address of such holder shown on the records of the Company.

         (c) Rights shall, without any further action, be issued in respect of
all shares of Company Common Stock that are issued (including any shares of
Company Common Stock held in treasury) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date. Certificates
evidencing such shares of Company Common Stock issued after the Record Date
shall bear the following legend:

                  "This certificate also evidences and entitles the holder
         hereof to certain Rights as set forth in the Rights Agreement, dated as
         of June 28, 2001 (the "Rights Agreement"), between Mpower Holding
         Corporation (the "Company") and Continental Stock Transfer & Trust
         Company (the "Rights Agent"), the terms of which are hereby
         incorporated herein by reference and a copy of which is on file at the
         principal office of the stock transfer administration office of the
         Rights Agent. Under certain circumstances, as set forth in the Rights
         Agreement, such

                                       6
<PAGE>

         Rights will be evidenced by separate certificates and will no longer be
         evidenced by this certificate. The Company will mail to the holder of
         this certificate a copy of the Rights Agreement, as in effect on the
         date of mailing, without charge promptly after receipt of a written
         request therefor. Under certain circumstances set forth in the Rights
         Agreement, Rights issued to, or held by, any Person who is, was or
         becomes an Acquiring Person or any Affiliate or Associate thereof (as
         such terms are defined in the Rights Agreement), whether currently held
         by or on behalf of such Person or by any subsequent holder, may become
         null and void."

         With respect to certificates evidencing shares of Company Common Stock
(whether or not such certificates include the foregoing legend or have appended
to them the Summary of Rights), until the earlier of the Distribution Date and
the Expiration Date, the Rights associated with the shares of Company Common
Stock evidenced by such certificates shall be evidenced by such certificates
alone and registered holders of the shares of Company Common Stock shall also be
the registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock evidenced by such certificates.

         SECTION 4. Form of Rights Certificates. (a) The Rights Certificates
(and the forms of election to purchase, assignment and certificate to be printed
on the reverse thereof) shall each be substantially in the form set forth in
Exhibit A hereto and may have such marks of identification or designation and
such legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or any rule or
regulation thereunder or with any rule or regulation of any stock exchange on
which the Rights may from time to time be listed or to conform to usage. Subject
to the provisions of Section 11 and Section 22, the Rights Certificates,
whenever distributed, shall be dated as of the Record Date and on their face
shall entitle the holders thereof to purchase such number of Units of Preferred
Stock as shall be set forth therein at the price set forth therein, but the
amount and type of securities, cash or other assets that may be acquired upon
the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.

         (b) Any Rights Certificate issued pursuant hereto that evidences Rights
beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) that becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) that becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and that receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or such Associate or Affiliate) or to any Person with
whom such Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding either the transferred Rights,
shares of Company Common Stock or the Company or (B) a transfer that a majority
of the Company's Board of Directors has determined to be part of a plan,
arrangement or understanding that has as a primary purpose or effect the
avoidance of Section 7(e), shall, upon the written direction of a majority of
the Company's Board of Directors, contain (to the extent feasible) the following
legend:

                                       7
<PAGE>

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

         SECTION 5. Countersignature and Registration. (a) Rights Certificates
shall be executed on behalf of the Company by its Chairman of the Board, the
President or one of its Vice Presidents, under its corporate seal reproduced
thereon attested by its Secretary or one of its Assistant Secretaries. The
signature of any one or more of these officers on the Rights Certificates may be
manual or facsimile. Rights Certificates bearing the manual or facsimile
signatures of the individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the countersignature of such
Rights Certificates or did not hold such offices at the date of such Rights
Certificates. No Rights Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose unless there appears on such Rights
Certificate a countersignature duly executed by the Rights Agent by manual
signature of an authorized signatory, and such countersignature upon any Rights
Certificate shall be conclusive evidence, and the only evidence, that such
Rights Certificate has been duly countersigned as required hereunder.

         (b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for surrender of Rights Certificates
upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the name and address of
each holder of the Rights Certificates, the number of Rights evidenced on its
face by each Rights Certificate and the date of each Rights Certificate.

         SECTION 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
Subject to the provisions of Sections 4(b), 7(e) and 14, at any time after the
Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of Units
of Preferred Stock (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or Certificates to be transferred,
split up, combined or exchanged at the office of the Rights Agent designated for
such purpose. Neither the Rights Agent nor the Company shall be obligated to
take any action whatsoever with respect to the transfer of any such surrendered
Rights Certificate until the registered holder shall have completed and executed
the certificate set forth in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) of the Rights
evidenced by such Rights Certificate or Affiliates or Associates thereof as the
Company shall reasonably request; whereupon the Rights Agent shall, subject to
the provisions of Sections 4(b), 7(e) and 14,

                                       8
<PAGE>

countersign and deliver to the Person entitled thereto a Rights Certificate or
Rights Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.

         (b) If a Rights Certificate shall be mutilated, destroyed, lost or
stolen, upon request by the registered holder of the Rights evidenced thereby
and upon payment to the Company and the Rights Agent of all reasonable expenses
incident thereto, there shall be issued, in exchange for and upon cancellation
of the mutilated Rights Certificate, or in substitution for the lost, stolen or
destroyed Rights Certificate, a new Rights Certificate, in substantially the
form of the prior Rights Certificate, of like tenor and evidencing the
equivalent number of Rights, but, in the case of loss, theft or destruction,
only upon receipt of evidence satisfactory to the Company and the Rights Agent
of such loss, theft or destruction of such Rights Certificate and, if requested
by the Company or the Rights Agent, indemnity also satisfactory to it.

         SECTION 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Prior to the earlier of (i) the Close of Business on the tenth
anniversary hereof (the "Final Expiration Date") and (ii) the time at which the
Rights are redeemed as provided in Section 23 (the earlier of (i) and (ii) being
the "Expiration Date"), the registered holder of any Rights Certificate may,
subject to the provisions of Sections 7(e) and 9(c), exercise the Rights
evidenced thereby in whole or in part at any time after the Distribution Date
upon surrender of the Rights Certificate, with the form of election to purchase
and the certificate on the reverse side thereof duly executed, to the Rights
Agent at the office of the Rights Agent designated for such purpose, together
with payment of the aggregate Purchase Price (as hereinafter defined) for the
number of Units of Preferred Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) for which such surrendered
Rights are then exercisable.

         (b) The purchase price for each one one-thousandth of a share (each
such one one-thousandth of a share being a "Unit") of Preferred Stock upon
exercise of Rights shall be $36.50, subject to adjustment from time to time as
provided in Sections 11 and 13(a) (such purchase price, as so adjusted, being
the "Purchase Price"), and shall be payable in accordance with paragraph (c)
below.

         (c) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with a corporation in good standing
organized under the laws of the United States or any State of the United States,
that 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 (such institution being the "Depositary Agent"), certificates
evidencing the shares of Preferred Stock that may be acquired upon exercise of
the Rights and shall cause such Depositary Agent to enter into an agreement
pursuant to which the Depositary Agent shall issue receipts evidencing interests
in the shares of Preferred Stock so deposited. Upon receipt of a Rights
Certificate evidencing exercisable Rights, with the form of election to purchase
and the certificate duly executed, accompanied by payment, with respect to each
Right so exercised, of the Purchase Price for the Units of Preferred Stock (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) to be purchased thereby as set forth below and an amount equal to
any applicable transfer tax or evidence satisfactory to the Company of payment
of such tax, the Rights Agent shall, subject to Section 20(k), thereupon
promptly

                                       9
<PAGE>

(i) requisition from the Depositary Agent depositary receipts evidencing such
number of Units of Preferred Stock as are to be purchased and the Company will
direct the Depositary Agent to comply with such request, (ii) requisition from
the Company the amount of cash, if any, to be paid in lieu of fractional shares
in accordance with Section 14, (iii) after receipt of such depositary receipts,
cause the same to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may be designated
by such holder, and (iv) after receipt thereof, deliver such cash, if any, to or
upon the order of the registered holder of such Rights Certificate. In the event
that the Company is obligated to issue Company Common Stock, other securities of
the Company, pay cash and/or distribute other property pursuant to Section
11(a), the Company will make all arrangements necessary so that such Company
Common Stock, other securities, cash and/or other property are available for
distribution by the Rights Agent, if and when appropriate. Subject to Section
34, the payment of the Purchase Price (as such amount may be reduced pursuant to
Section 11(a)(iii)) may be made in cash or by certified or bank check payable to
the order of the Company, or by wire transfer of immediately available funds to
the account of the Company (provided that notice of such wire transfer shall be
given by the holder of the related Right to the Rights Agent).

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

         (e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of any Section 11(a)(ii) Event or Section 13
Event, any Rights beneficially owned by (i) an Acquiring Person or an Associate
or Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person
(or of any such Associate or Affiliate) that becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) that becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and that receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Associate or Affiliate) to holders of equity
interests in such Acquiring Person (or such Associate or Affiliate) or to any
Person with whom such Acquiring Person (or such Associate or Affiliate) has any
continuing agreement, arrangement or understanding regarding the transferred
Rights, shares of Company Common Stock or the Company or (B) a transfer that a
majority of the Company's Board of Directors has determined to be part of a
plan, arrangement or understanding that has as a primary purpose or effect the
avoidance of this Section 7(e), shall be null and void without any further
action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) are complied with, but shall
have no liability to any holder of Rights or any other Person as a result of its
failure to make any determination under this Section 7(e) or Section 4(b) with
respect to an Acquiring Person or its Affiliates, Associates or transferees.

         (f) Notwithstanding anything in this Agreement or any Rights
Certificate to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise by such

                                       10
<PAGE>

registered holder unless such registered holder shall have (i) completed and
executed the certificate following the form of election to purchase set forth on
the reverse side of the Rights Certificate surrendered for such exercise and
(ii) provided such additional evidence of the identity of the Beneficial Owner
(or former Beneficial Owner) of the Rights evidenced by such Rights Certificate
or Affiliates or Associates thereof as the Company shall reasonably request.

         SECTION 8. Cancellation and Destruction of Rights Certificates. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any Rights
Certificates acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.

         SECTION 9. Reservation and Availability of Capital Stock. (a) The
Company shall at all times prior to the Expiration Date cause to be reserved and
kept available, out of its authorized and unissued shares of Preferred Stock,
the number of shares of Preferred Stock that, as provided in this Agreement,
will be sufficient to permit the exercise in full of all outstanding Rights.
Upon the occurrence of any events resulting in an increase in the aggregate
number of shares of Preferred Stock (or other equity securities of the Company)
issuable upon exercise of all outstanding Rights above the number then reserved,
the Company shall make appropriate increases in the number of shares so
reserved.

         (b) If the shares of Preferred Stock to be issued and delivered upon
the exercise of the Rights may be listed on any national securities exchange,
the Company shall during the period from the Distribution Date through the
Expiration Date use its best efforts to cause all securities reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.

         (c) The Company shall use its best efforts (i) as soon as practicable
following the occurrence of a Section 11(a)(ii) Event and a determination by the
Company in accordance with Section 11(a)(iii) of the consideration to be
delivered by the Company upon exercise of the Rights or, if so required by law,
as soon as practicable following the Distribution Date (such date being the
"Registration Date"), to file a registration statement on an appropriate form
under the Securities Act with respect to the securities that may be acquired
upon exercise of the Rights (the "Registration Statement"), (ii) to cause the
Registration Statement to become effective as soon as practicable after such
filing, (iii) to cause the Registration Statement to continue to be effective
(and to include a prospectus complying with the requirements of the Securities
Act) until the earlier of (A) the date as of which the Rights are no longer
exercisable for the securities covered by the Registration Statement and (B) the
Expiration Date and (iv) to take as soon as practicable following the
Registration Date such action as may be required to ensure that any acquisition
of securities upon exercise of the Rights complies with any applicable state
securities or "blue sky" laws. If the Registration Statement does not become
effective prior to the close of business on

                                       11
<PAGE>

the 45th Business Day following the occurrence of a Section 11(a)(ii) Event, the
Company shall, unless otherwise determined by a majority of the Company's Board
of Directors, on the 46th Business Day following the occurrence of such Section
11(a)(ii) Event, be obligated to exercise the option described in Section 34.

         (d) The Company shall take such action as may be necessary to ensure
that all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, any other securities that may be delivered upon exercise of
Rights) shall be, at the time of delivery of the certificates or depositary
receipts for such securities, duly and validly authorized and issued and fully
paid and non-assessable.

         (e) The Company shall pay any documentary, stamp or transfer tax
imposed in connection with the issuance or delivery of the Rights Certificates
or upon the exercise of Rights; provided, however, the Company shall not be
required to pay any such tax imposed in connection with the issuance or delivery
of Units of Preferred Stock, or any certificates or depositary receipts for such
Units of Preferred Stock (or, following the occurrence of a Triggering Event,
any other securities, cash or assets, as the case may be) to any person other
than the registered holder of the Rights Certificates evidencing the Rights
surrendered for exercise. The Company shall not be required to issue or deliver
any certificates or depositary receipts for Units of Preferred Stock (or,
following the occurrence of a Triggering Event, any other securities, cash or
assets, as the case may be) to, or in a name other than that of, the registered
holder of the Rights Certificate upon the exercise of any Rights evidenced
thereby until any such tax shall have been paid (any such tax being payable by
the holder of such Rights Certificate at the time of surrender) or until it has
been established to the Company's satisfaction that no such tax is due.

         SECTION 10. Preferred Stock Record Date. Each Person in whose name any
certificate for Units of Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Units of
Preferred Stock (or, following the occurrence of a Triggering Event, other
securities) evidenced thereby on, and such certificate shall be dated, the date
upon which the Rights Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Preferred Stock (or, following the occurrence of a Triggering Event,
other securities) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such securities on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or, following the occurrence of a Triggering Event, other
securities) transfer books of the Company are open; and further provided,
however, that if delivery of Units of Preferred Stock is delayed as a result of
a failure to register such Units of Preferred Stock pursuant to Section 9(c),
such Persons shall be deemed to have become the record holders of such Units of
Preferred Stock only when such Units first become deliverable. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a stockholder of the Company with respect
to securities for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.

                                       12
<PAGE>

         SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of 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.

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

                  (ii) In the event:

                           (A) any Acquiring Person or any Associate or
                  Affiliate of any Acquiring Person, at any time after the date
                  of this Agreement, directly or indirectly, shall (1) merge
                  into the Company or otherwise combine with the Company and the
                  Company shall be the continuing or surviving corporation of
                  such merger or combination and Company Common Stock shall
                  remain outstanding and unchanged, (2) in one transaction or a
                  series of transactions, transfer any assets to the Company or
                  to any of its Subsidiaries in exchange (in whole or in part)
                  for shares of Company Common Stock, for other equity
                  securities of the Company or any such Subsidiary, or for
                  securities exercisable for or convertible into shares of
                  equity securities of the Company or any of its Subsidiaries
                  (whether Company Common Stock or otherwise) or otherwise
                  obtain from the Company or any of its Subsidiaries, with or
                  without consideration, any additional shares of such equity
                  securities or securities exercisable for or convertible into
                  such equity securities (other than pursuant to a pro rata
                  distribution to all holders of Company Common Stock), (3)
                  sell, purchase, lease, exchange, mortgage, pledge, transfer or
                  otherwise acquire or dispose of, in one transaction or a
                  series of transactions, to, from or with the Company or any of
                  its Subsidiaries or any employee benefit plan maintained by
                  the Company or any of its Subsidiaries or any trustee or
                  fiduciary with respect to such plan acting in such capacity,
                  assets (including securities) on terms and conditions less
                  favorable to the

                                       13
<PAGE>

                  Company or such Subsidiary or plan than those that could have
                  been obtained in arm's-length negotiations with an
                  unaffiliated third party, other than pursuant to a transaction
                  set forth in Section 13(a), (4) sell, purchase, lease,
                  exchange, mortgage, pledge, transfer or otherwise acquire or
                  dispose of, in one transaction or a series of transactions,
                  to, from or with the Company or any of the Company's
                  Subsidiaries or any employee benefit plan maintained by the
                  Company or any of its Subsidiaries or any trustee or fiduciary
                  with respect to such plan acting in such capacity (other than
                  transactions, if any, consistent with those engaged in, as of
                  the date hereof, by the Company and such Acquiring Person or
                  such Associate or Affiliate), assets (including securities)
                  having an aggregate fair market value of more than $5,000,000,
                  other than pursuant to a transaction set forth in Section
                  13(a), (5) sell, purchase, lease, exchange, mortgage, pledge,
                  transfer or otherwise acquire or dispose of, in one
                  transaction or a series of transactions, to, from or with the
                  Company or any of its Subsidiaries or any employee benefit
                  plan maintained by the Company or any of its Subsidiaries or
                  any trustee or fiduciary with respect to such plan acting in
                  such capacity, any material trademark or material service
                  mark, other than pursuant to a transaction set forth in
                  Section 13(a), (6) receive, or any designee, agent or
                  representative of such Acquiring Person or any Affiliate or
                  Associate of such Acquiring Person shall receive, any
                  compensation from the Company or any of its Subsidiaries other
                  than compensation for full-time employment as a regular
                  employee at rates in accordance with the Company's (or its
                  Subsidiaries') past practices, or (7) receive the benefit,
                  directly or indirectly (except proportionately as a holder of
                  Company Common Stock or as required by law or governmental
                  regulation), of any loans, advances, guarantees, pledges or
                  other financial assistance or any tax credits or other tax
                  advantage provided by the Company or any of its Subsidiaries
                  or any employee benefit plan maintained by the Company or any
                  of its Subsidiaries or any trustee or fiduciary with respect
                  to such plan acting in such capacity; or

                           (B) any Person shall become an Acquiring Person,
                  unless the event causing such Person to become an Acquiring
                  Person is a transaction set forth in Section 13(a); or

                           (C) during such time as there is an Acquiring Person,
                  there shall be any reclassification of securities (including
                  any reverse stock split), or recapitalization of the Company,
                  or any merger or consolidation of the Company with any of its
                  Subsidiaries or any other transaction or series of
                  transactions involving the Company or any of its Subsidiaries,
                  other than a transaction or transactions to which the
                  provisions of Section 13(a) apply (whether or not with or into
                  or otherwise involving an Acquiring Person), which has the
                  effect, directly or indirectly, of increasing by more than 1%
                  the proportionate share of the outstanding shares of any class
                  of equity securities of the Company or any of its Subsidiaries
                  that is directly or indirectly beneficially owned by any
                  Acquiring Person or any Associate or Affiliate of any
                  Acquiring Person;

         then, immediately upon the date of the occurrence of an event described
         in Section 11(a)(ii)(A), (B) or (C) (a "Section 11(a)(ii) Event"),
         proper provision shall be

                                       14
<PAGE>

         made so that each holder of a Right (except as provided below and in
         Section 7(e)) shall thereafter have the right to receive, upon exercise
         thereof at the then current Purchase Price in accordance with the terms
         of this Agreement, in lieu of the number of Units of Preferred Stock
         for which a Right was exercisable immediately prior to the first
         occurrence of a Section 11(a)(ii) Event, such number of Units of
         Preferred Stock as shall equal the result obtained by (x) multiplying
         the then current Purchase Price by the then number of Units of
         Preferred Stock for which a Right was exercisable immediately prior to
         the first occurrence of a Section 11(a)(ii) Event (such product
         thereafter being, for all purposes of this Agreement other than Section
         13, the "Purchase Price"), and (y) dividing that product by 50% of the
         then current market price (determined pursuant to Section 11(d)) per
         Unit of Preferred Stock on the date of such first occurrence (such
         Units of Preferred Stock being the "Adjustment Shares").

                  (iii) In the event that the number of shares of Preferred
         Stock that are authorized by the Company's Certificate of Incorporation
         but not outstanding or reserved for issuance for purposes other than
         upon exercise of the Rights is not sufficient to permit the exercise in
         full of the Rights in accordance with the foregoing subparagraph (ii)
         of this Section 11(a), the Company, by the vote of a majority of the
         Company's Board of Directors, shall: (A) determine the excess of (1)
         the value of the Adjustment Shares issuable upon the exercise of a
         Right (the "Current Value") over (2) the Purchase Price (such excess
         being the "Spread"), and (B) with respect to each Right, make adequate
         provision to substitute for such Adjustment Shares, upon payment of the
         applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
         Price, (3) Company Common Stock or other equity securities of the
         Company (including, without limitation, shares, or units of shares, of
         preferred stock (such other shares being "preferred stock
         equivalents")), (4) debt securities of the Company, (5) other assets or
         (6) any combination of the foregoing, having an aggregate value equal
         to the Current Value, where such aggregate value has been determined by
         a majority of the Company's Board of Directors, after receiving advice
         from a nationally recognized investment banking firm; provided,
         however, that if the Company shall not have made adequate provision to
         deliver value pursuant to clause (B) above within thirty days following
         the later of (x) the first occurrence of a Section 11(a)(ii) Event and
         (y) the date on which the Company's right of redemption pursuant to
         Section 23(a) expires (the later of (x) and (y) being referred to
         herein as the "Section 11(a)(iii) Trigger Date"), then the Company
         shall be obligated to deliver, upon the surrender for exercise of a
         Right and without requiring payment of the Purchase Price, Units of
         Preferred Stock (to the extent available) and then, if necessary, cash,
         which Units of Preferred Stock and/or cash shall have an aggregate
         value equal to the Spread. To the extent that the Company determines
         that some action need be taken pursuant to the first sentence of this
         Section 11(a)(iii), the Company shall provide, subject to Section 7(e),
         that such action shall apply uniformly to all outstanding Rights. For
         purposes of this Section 11(a)(iii), the value of a Unit of Preferred
         Stock shall be the current market price (as determined pursuant to
         Section 11(d)) per Unit of Preferred Stock on the Section 11(a)(iii)
         Trigger Date and the value of any preferred stock equivalent shall be
         deemed to have the same value as the Preferred Stock on such date.

                                       15
<PAGE>

                  (b) In case the Company shall fix a record date for the
         issuance of rights, options or warrants to all holders of Preferred
         Stock entitling them to subscribe for or purchase (for a period
         expiring within forty-five calendar days after such record date) shares
         of Preferred Stock (or shares having substantially the same rights,
         privileges and preferences as shares of Preferred Stock ("Equivalent
         Preferred Stock")) or securities convertible into Preferred Stock or
         Equivalent Preferred Stock at a price per share of Preferred Stock or
         per share of Equivalent Preferred Stock (or having a conversion price
         per share, if a security convertible into Preferred Stock or Equivalent
         Preferred Stock) less than the current market price (as determined
         pursuant to Section 11(d)) per share of Preferred Stock on such record
         date, the Purchase Price to be in effect after such record date shall
         be determined by multiplying the Purchase Price in effect immediately
         prior to such record date by a fraction, the numerator of which shall
         be the sum of the number of shares of Preferred Stock outstanding on
         such record date plus the number of shares of Preferred Stock which the
         aggregate offering price of the total number of shares of Preferred
         Stock and/or Equivalent Preferred Stock so to be offered (and/or the
         aggregate initial conversion price of the convertible securities so to
         be offered) would purchase at such current market price, and the
         denominator of which shall be the number of shares of Preferred Stock
         outstanding on such record date plus the number of additional shares of
         Preferred Stock and/or Equivalent Preferred Stock to be offered for
         subscription or purchase (or into which the convertible securities so
         to be offered are initially convertible). In case such subscription
         price may be paid by delivery of consideration part or all of which may
         be in a form other than cash, the value of such consideration shall be
         as determined in good faith by a majority of the Company's Board of
         Directors, whose determination shall be described in a statement filed
         with the Rights Agent and shall be binding on the Rights Agent and the
         holders of the Rights. Shares of Preferred Stock owned by or held for
         the account of the Company or any Subsidiary shall not be deemed
         outstanding for the purpose of any such computation. Such adjustment
         shall be made successively whenever such a record date is fixed, and in
         the event that such rights or warrants are not so issued, the Purchase
         Price shall be adjusted to be the Purchase Price that would then be in
         effect if such record date had not been fixed.

                  (c) In case the Company shall fix a record date for a
         distribution to all holders of shares of Preferred Stock (including any
         such distribution made in connection with a consolidation or merger in
         which the Company is the continuing corporation) of evidences of
         indebtedness, cash (other than a regular quarterly cash dividend out of
         the earnings or retained earnings of the Company), assets (other than a
         dividend payable in shares of Preferred Stock, but including any
         dividend payable in stock other than Preferred Stock) or subscription
         rights or warrants (excluding those referred to in Section 11(b)), the
         Purchase Price to be in effect after such record date shall be
         determined by multiplying the Purchase Price in effect immediately
         prior to such record date by a fraction, the numerator of which shall
         be the current market price (as determined pursuant to Section 11(d))
         per share of Preferred Stock on such record date less the fair market
         value (as determined in good faith by a majority of the Company's Board
         of Directors, whose determination shall be described in a statement
         filed with the Rights Agent and shall be binding on the Rights Agent
         and the holder of the Rights) of the cash, assets or evidences of
         indebtedness so to be distributed or of such subscription rights or
         warrants distributable in respect of a share of Preferred Stock and the

                                       16
<PAGE>

         denominator of which shall be such current market price (as determined
         pursuant to Section 11(d)) per share of Preferred Stock. Such
         adjustments shall be made successively whenever such a record date is
         fixed, and in the event that such distribution is not so made, the
         Purchase Price shall be adjusted to be the Purchase Price that would
         have been in effect if such record date had not been fixed.

                  (d) (i) For the purpose of any computation hereunder, the
         "current market price" per share of Company Common Stock or Common
         Stock on any date shall be deemed to be the average of the daily
         closing prices per share of such shares for the ten consecutive Trading
         Days immediately prior to such date; provided, however, if prior to the
         expiration of such requisite ten Trading Day period the issuer
         announces either (A) a dividend or distribution on such shares payable
         in such shares or securities convertible into such shares (other than
         the Rights) or (B) any subdivision, combination or reclassification of
         such shares, then, following the ex-dividend date for such dividend or
         the record date for such subdivision, as the case may be, the "current
         market price" shall be properly adjusted to take into account such
         event. The closing price for each day shall be, if the shares are
         listed and admitted to trading on a national securities exchange, as
         reported in the principal consolidated transaction reporting system
         with respect to securities listed on the principal national securities
         exchange on which such shares are listed or admitted to trading or, if
         such 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 Nasdaq Stock Market Consolidated Quotations
         Service or such other system then in use, or, if on any such date such
         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 such shares selected by a majority of the
         Company's Board of Directors. If on any such date no market maker is
         making a market in such shares, the fair value of such shares on such
         date as determined in good faith by a majority of the Company's Board
         of Directors shall be used. If such shares are not publicly held or not
         so listed or traded, "current market price" per share shall mean the
         fair value per share as determined in good faith by a majority of the
         Company's Board of Directors, whose determination shall be described in
         a statement filed with the Rights Agent and shall be conclusive for all
         purposes. The term "Trading Day" shall mean, if such shares are listed
         or admitted to trading on any national securities exchange, a day on
         which the principal national securities exchange on which such shares
         are listed or admitted to trading is open for the transaction of
         business or, if such shares are not so listed or admitted, a Business
         Day.

                           (ii) For the purpose of any computation hereunder,
                  the "current market price" per share of Preferred Stock shall
                  be determined in the same manner as set forth above for
                  Company Common Stock in clause (i) of this Section 11(d)
                  (other than the fourth sentence thereof). If the current
                  market price per share of Preferred Stock cannot be determined
                  in the manner provided above or if the Preferred Stock is not
                  publicly held or listed or traded in a manner described in
                  clause (i) of this Section 11(d), the "current market price"
                  per share of Preferred Stock shall be conclusively deemed to
                  be an amount equal to 1,000 (as such amount may be
                  appropriately adjusted for such events as stock splits, stock
                  dividends and recapitalizations with respect to Company Common
                  Stock

                                       17
<PAGE>

                  occurring after the date of this Agreement) multiplied by the
                  current market price per share of Company Common Stock. If
                  neither Company Common Stock nor Preferred Stock is publicly
                  held or so listed or traded, "current market price" per share
                  of the Preferred Stock shall mean the fair value per share as
                  determined in good faith by a majority of the Company's Board
                  of Directors, whose determination shall be described in a
                  statement filed with the Rights Agent and shall be binding on
                  the Rights Agent and the holders of the Rights. For all
                  purposes of this Agreement, the "current market price" of a
                  Unit of Preferred Stock shall be equal to the "current market
                  price" of one share of Preferred Stock divided by 1,000.

                  (e) Anything herein to the contrary notwithstanding, no
         adjustment in the Purchase Price shall be required unless such
         adjustment would require an increase or decrease of at least 1% in the
         Purchase Price; provided, however, that any adjustments which by reason
         of this Section 11(e) are not required to be made shall be carried
         forward and taken into account in any subsequent adjustment. All
         calculations under this Section 11 shall be made to the nearest cent or
         to the nearest one-hundredth of a share of Company Common Stock or
         Common Stock or other share or hundred-thousandth of a share of
         Preferred Stock, as the case may be. Notwithstanding the first sentence
         of this Section 11(e), any adjustment required by this Section 11 shall
         be made no later than the earlier of (i) three years from the date of
         the transaction that mandates such adjustment and (ii) the Expiration
         Date.

                  (f) If as a result of an adjustment made pursuant to Section
         11(a)(ii) or 13(a), the holder of any Right thereafter exercised shall
         become entitled to receive any shares of capital stock other than
         Preferred Stock, thereafter the number of such other shares so
         receivable upon exercise of any Right and the Purchase Price thereof
         shall be subject to adjustment from time to time in a manner and on
         terms as nearly equivalent as practicable to the provisions with
         respect to the Preferred Stock contained in Sections 11(a), (b), (c),
         (d), (e), (g), (h), (i), (j), (k), (l) and (m), and the provisions of
         Sections 7, 9, 10, 13 and 14 with respect to the Preferred Stock shall
         apply on like terms to any such other shares.

                  (g) All Rights originally issued by the Company subsequent to
         any adjustment made to the Purchase Price hereunder shall evidence the
         right to purchase, at the adjusted Purchase Price, the number of Units
         of Preferred Stock (or other securities or amount of cash or
         combination thereof) that may be acquired from time to time hereunder
         upon exercise of the Rights, all subject to further adjustment as
         provided herein.

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

                                       18
<PAGE>

         (ii) dividing the product so obtained by the Purchase Price in effect
         immediately after such adjustment of the Purchase Price.

                  (i) The Company may elect on or after the date of any
         adjustment of the Purchase Price to adjust the number of Rights, in
         lieu of any adjustment in the number of Units of Preferred Stock that
         may be acquired upon the exercise of a Right. Each of the Rights
         outstanding after the adjustment in the number of Rights shall be
         exercisable for the number of Units of Preferred Stock for which a
         Right was exercisable immediately prior to such adjustment. Each Right
         held of record prior to such adjustment of the number of Rights shall
         become that number of Rights (calculated to the nearest
         hundred-thousandth) obtained by dividing the Purchase Price in effect
         immediately prior to adjustment of the Purchase Price by the Purchase
         Price in effect immediately after adjustment of the Purchase Price. The
         Company shall make a public announcement of its election to adjust the
         number of Rights, indicating the record date for the adjustment, and,
         if known at the time, the amount of the adjustment to be made. This
         record date may be the date on which the Purchase Price is adjusted or
         any day thereafter, but, if the Rights Certificates have been issued,
         shall be at least ten days later than the date of such public
         announcement. If Rights Certificates have been issued, upon each
         adjustment of the number of Rights pursuant to this Section 11(i), the
         Company shall, as promptly as practicable, cause to be distributed to
         holders of record of Rights Certificates on such record date Rights
         Certificates evidencing, subject to Section 14, the additional Rights
         to which such holders shall be entitled as a result of such adjustment,
         or, at the option of the Company, shall cause to be distributed to such
         holders of record in substitution and replacement for the Rights
         Certificates held by such holders prior to the date of adjustment, and
         upon surrender thereof, if required by the Company, new Rights
         Certificates evidencing all the Rights to which such holders shall be
         entitled after such adjustment. Rights Certificates to be so
         distributed shall be issued, executed and countersigned in the manner
         provided for herein (and may bear, at the option of the Company, the
         adjusted Purchase Price) and shall be registered in the names of the
         holders of record of Rights Certificates on the record date specified
         in the public announcement.

                  (j) Irrespective of any adjustment or change in the Purchase
         Price or the number of Units of Preferred Stock issuable upon the
         exercise of the Rights, the Rights Certificates theretofore and
         thereafter issued may continue to express the Purchase Price per Unit
         and the number of Units of Preferred Stock that were expressed in the
         Initial Rights Certificates issued hereunder without prejudice to any
         such adjustment or change.

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

                  (l) In any case in which this Section 11 shall require that an
         adjustment in the Purchase Price be made effective as of a record date
         for a specified event, the Company may elect to defer until the
         occurrence of such event the issuance to the holder of any

                                       19
<PAGE>

         Right exercised after such record date of that number of Units of
         Preferred Stock and shares of other capital stock or securities of the
         Company, if any, issuable upon such exercise over and above the number
         of Units of Preferred Stock and shares of other capital stock or
         securities of the Company, if any, issuable upon such exercise on the
         basis of the Purchase Price in effect prior to such adjustment;
         provided, however, that the Company shall deliver to such holder a due
         bill or other appropriate instrument evidencing such holder's right to
         receive such additional shares (fractional or otherwise) or securities
         upon the occurrence of the event requiring such adjustment.

                  (m) Anything in this Section 11 to the contrary
         notwithstanding, the Company shall be entitled to make such reductions
         in the Purchase Price, in addition to those adjustments expressly
         required by this Section 11, as and to the extent that in their good
         faith judgment a majority of the Company's Board of Directors shall
         determine to be advisable in order that any (i) consolidation or
         subdivision of the Preferred Stock, (ii) issuance wholly for cash of
         any shares of Preferred Stock at less than the current market price,
         (iii) issuance wholly for cash of shares of Preferred Stock or
         securities that by their terms are convertible into or exchangeable for
         shares of Preferred Stock, (iv) stock dividends or (v) issuance of
         rights, options or warrants referred to in this Section 11, hereafter
         made by the Company to holders of its Preferred Stock, shall not be
         taxable to such holders or shall reduce the taxes payable by such
         holders.

                  (n) The Company shall not, at any time after the Distribution
         Date, (i) consolidate with any other Person (other than a Subsidiary of
         the Company in a transaction that complies with Section 11(o)), (ii)
         merge with or into any other Person (other than a Subsidiary of the
         Company in a transaction that complies with Section 11(o)), or (iii)
         sell or transfer (or permit any Subsidiary to sell or transfer), in one
         transaction, or a series of 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 or Persons
         (other than the Company and/or any of its Subsidiaries in one or more
         transactions each of which complies with Section 11(o)), if (x) at the
         time of or immediately after such consolidation, merger or sale there
         are any rights, warrants or other instruments or securities outstanding
         or agreements in effect that would substantially diminish or otherwise
         eliminate the benefits intended to be afforded by the Rights or (y)
         prior to, simultaneously with or immediately after such consolidation,
         merger or sale, the Person that constitutes, or would constitute, the
         "Principal Party" for purposes of Section 13(a) shall have distributed
         or otherwise transferred to its stockholders or other persons holding
         an equity interest in such Person Rights previously owned by such
         Person or any of its Affiliates and Associates; provided, however, this
         Section 11(n) shall not affect the ability of any Subsidiary of the
         Company to consolidate with, merge with or into, or sell or transfer
         assets or earning power to, any other Subsidiary of the Company.

                  (o) After the Distribution Date, the Company shall not, except
         as permitted by Section 23 or Section 26, take (or permit any
         Subsidiary to take) any action if at the time such action is taken it
         is reasonably foreseeable that such action will diminish substantially
         or otherwise eliminate the benefits intended to be afforded by the
         Rights.

                                       20
<PAGE>

                  (p) Anything in this Agreement to the contrary
         notwithstanding, in the event that the Company shall at any time after
         the Rights Dividend Declaration Date and prior to the Distribution Date
         (i) declare a dividend on the outstanding shares of Company Common
         Stock payable in shares of Company Common Stock, (ii) subdivide the
         outstanding shares of Company Common Stock, (iii) combine the
         outstanding shares of Company Common Stock into a smaller number of
         shares, or (iv) issue any shares of its capital stock in a
         reclassification of Company Common Stock (including any such
         reclassification in connection with a consolidation or merger in which
         the Company is the continuing or surviving corporation), the number of
         Rights associated with each share of Company Common Stock then
         outstanding, or issued or delivered thereafter but prior to the
         Distribution Date, shall be proportionately adjusted so that the number
         of Rights thereafter associated with each share of Company Common Stock
         following any such event shall equal the result obtained by multiplying
         the number of Rights associated with each share of Company Common Stock
         immediately prior to such event by a fraction the numerator of which
         shall be the total number of shares of Company Common Stock outstanding
         immediately prior to the occurrence of the event and the denominator of
         which shall be the total number of shares of Company Common Stock
         outstanding immediately following the occurrence of such event.

         SECTION 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13, the
Company shall (a) promptly prepare a certificate setting forth such adjustment
and a brief statement of the facts accounting for such adjustment, (b) promptly
file with the Rights Agent, and with each transfer agent for the Preferred Stock
and the Company Common Stock, a copy of such certificate, and (c) mail a brief
summary thereof to each holder of a Rights Certificate (or, if prior to the
Distribution Date, to each holder of a certificate evidencing shares of Company
Common Stock) in accordance with Section 25. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.

         SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, following the Stock Acquisition Date,
directly or indirectly, either (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 complies with Section 11(o)), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction that complies
with Section 11(o)) shall consolidate with, or merge with or into, the Company,
and the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Company Common Stock shall be converted
into or exchanged for stock or other securities of any other Person or cash or
any other property, or (z) the Company shall sell or otherwise transfer (or one
or more of its Subsidiaries shall sell or otherwise transfer) to any Person or
Persons (other than the Company or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), in one or more
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 (any such
event described in clause (x), (y) or (z) being a "Section 13 Event"), then, and
in each such case, proper provision shall be made so that: (i) each holder of a
Right, except as provided in

                                       21
<PAGE>

Section 7(e), shall thereafter have the right to receive, upon the exercise
thereof at the then current Purchase Price, such number of validly authorized
and issued, fully paid and non-assessable shares of Common Stock of the
Principal Party, which shares shall not be subject to any liens, encumbrances,
rights of first refusal, transfer restrictions or other adverse claims, as shall
be equal to the result obtained by (1) multiplying the then current Purchase
Price by the number of Units of Preferred Stock for which a Right is exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the number of such Units for which a Right would be
exercisable hereunder but for the occurrence of such Section 11(a)(ii) Event by
the Purchase Price that would be in effect hereunder but for such first
occurrence) and (2) dividing that product (which, following the first occurrence
of a Section 13 Event, shall be the "Purchase Price" for all purposes of this
Agreement) by 50% of the current market price (determined pursuant to Section
11(d)) per share of the Common Stock of such Principal Party on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Company pursuant to this Agreement; (iii)
the term "Company" shall, for all purposes of this Agreement, thereafter be
deemed to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 shall apply only to such Principal Party following the
first occurrence of a Section 13 Event; (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of shares of its Common Stock) in connection with the consummation of any
such transaction as may be necessary to ensure that the provisions of this
Agreement shall thereafter be applicable to its shares of Common Stock
thereafter deliverable upon the exercise of the Rights; and (v) the provisions
of Section 11(a)(ii) shall be of no further effect following the first
occurrence of any Section 13 Event.

                  (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), (A) the Person that is the
         issuer of any securities into which shares of Company Common Stock are
         converted in such merger or consolidation, or, if there is more than
         one such issuer, the issuer of Common Stock that has the highest
         aggregate current market price (determined pursuant to Section 11(d))
         and (B) if no securities are so issued, the Person that is the other
         party to such merger or consolidation, or, if there is more than one
         such Person, the Person the Common Stock of which has the highest
         aggregate current market price (determined pursuant to Section 11(d));
         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 largest portion of the assets or earning power
         transferred pursuant to such transaction or transactions, or, if each
         Person that is a party to such transaction or transactions receives the
         same portion of the assets or earning power transferred pursuant to
         such transaction or transactions or if the Person receiving the largest
         portion of the assets or earning power cannot be determined, whichever
         Person the Common Stock of which has the highest aggregate current
         market price (determined pursuant to Section 11(d)); provided, however,
         that in any such case, (1) if the Common Stock of such Person is not at
         such time and has not been continuously over the preceding twelve-month
         period registered under Section 12 of the Exchange Act ("Registered
         Common Stock"), or such Person is not a corporation, and

                                       22
<PAGE>

         such Person is a direct or indirect Subsidiary of another Person that
         has Registered Common Stock outstanding, "Principal Party" shall refer
         to such other Person; (2) if the Common Stock of such Person is not
         Registered Common Stock or such Person is not a corporation, and such
         Person is a direct or indirect Subsidiary of another Person but is not
         a direct or indirect Subsidiary of another Person that has Registered
         Common Stock outstanding, "Principal Party" shall refer to the ultimate
         parent entity of such first-mentioned Person; (3) if the Common Stock
         of such Person is not Registered Common Stock or such Person is not a
         corporation, and such Person is directly or indirectly controlled by
         more than one Person, and one or more of such other Persons has
         Registered Common Stock outstanding, "Principal Party" shall refer to
         whichever of such other Persons is the issuer of the Registered Common
         Stock having the highest aggregate current market price (determined
         pursuant to Section 11(d)); and (4) if the Common Stock of such Person
         is not Registered Common Stock or such Person is not a corporation, and
         such Person is directly or indirectly controlled by more than one
         Person, and none of such other Persons have Registered Common Stock
         outstanding, "Principal Party" shall refer to whichever ultimate parent
         entity is the corporation having the greatest stockholders' equity or,
         if no such ultimate parent entity is a corporation, shall refer to
         whichever ultimate parent entity is the entity having the greatest net
         assets.

         (c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its Common Stock that 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 the Principal Party will:

                  (i) (A) file on an appropriate form, as soon as practicable
         following the execution of such agreement, a registration statement
         under the Securities Act with respect to the Common Stock that may be
         acquired upon exercise of the Rights, (B) cause such registration
         statement to remain effective (and to include a prospectus complying
         with the requirements of the Securities Act) until the Expiration Date,
         and (C) as soon as practicable following the execution of such
         agreement take such action as may be required to ensure that any
         acquisition of such Common Stock upon the exercise of the Rights
         complies with any applicable state securities or "blue sky" laws; and

                  (ii) deliver to holders of the Rights historical financial
         statements for the Principal Party and each of its Affiliates that
         comply in all respects with the requirements for registration on Form
         10 under the Exchange Act.

         (d) In case the Principal Party that is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its Certificate of Incorporation or By-laws or other instrument
governing its corporate affairs, which provision would have the effect of (i)
causing such Principal Party to issue, in connection with, or as a consequence
of, the consummation of a transaction referred to in this Section 13, shares of
Common Stock of such Principal Party at less than the then current market price
per share (determined pursuant to Section 11(d)) or securities exercisable for,
or convertible into, Common

                                       23
<PAGE>

Stock of such Principal Party at less than such then current market price (other
than to holders of Rights pursuant to this Section 13) or (ii) providing for any
special payment, tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of this
Section 13, then, in such event, the Company shall not consummate any such
transaction unless prior thereto the Company and such Principal Party shall have
executed and delivered to the Rights Agent a supplemental agreement providing
that the provision in question of such Principal Party shall have been
cancelled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.

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

         SECTION 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Rights
Certificates that evidence fractional Rights. In lieu of such fractional Rights,
there shall be paid to the Persons to which such fractional Rights would
otherwise be issuable, an amount in cash equal to such fraction of the market
value of a whole Right. For purposes of this Section 14(a), the market value of
a whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be, if the
Rights are listed or admitted to trading on a national securities exchange, as
reported in the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, if the Rights are not listed or
admitted to trading on any national securities exchange, the last quoted price
or, if not so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by The Nasdaq Stock Market Consolidated
Quotations Service or such other system then in use or, if on any such date the
Rights are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Rights selected by a majority of the Company's Board of Directors. If on any
such date no such market maker is making a market in the Rights, the fair value
of the Rights on such date as determined in good faith by a majority of the
Company's Board of Directors shall be used and such determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes.

         (b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions that are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates that evidence such fractional shares of Preferred Stock
(other than fractions that are integral multiples of one one-thousandth of a
share of Preferred Stock). In lieu of such fractional shares of Preferred Stock
that are not integral multiples of one one-thousandth of a share, the Company
may pay to the registered holders of Rights Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the same fraction of
the then current market price of a share of Preferred Stock on the day of
exercise, determined in accordance with Section 11(d).

                                       24
<PAGE>

         (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 permitted by this Section 14.

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

         SECTION 16. Agreement of Rights Holders. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:

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

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

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

                  (d) notwithstanding anything in this Agreement to the
         contrary, neither the Company nor the Rights Agent shall have any
         liability to any holder of a Right or any other Person as a result of
         its inability to perform any of its obligations under this Agreement by
         reason of any preliminary or permanent injunction or other order,
         decree

                                       25
<PAGE>

         or ruling issued by a court of competent jurisdiction or by a
         governmental, regulatory or administrative agency or commission, or any
         statute, rule, regulation or executive order promulgated or enacted by
         any governmental authority, prohibiting or otherwise restraining
         performance of such obligation; provided, however, the Company must use
         its best efforts to have any such order, decree or ruling lifted or
         otherwise overturned as promptly as practicable.

         SECTION 17. Rights Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of shares of
Preferred Stock or any other securities of the Company that may at any time be
issuable on the exercise of the Rights evidenced thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, except as provided in Section 24, to
receive notice of meetings or other actions affecting stockholders, or to
receive dividends or subscription rights, or otherwise.

         SECTION 18. Concerning the Rights Agent. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses, including reasonable fees and disbursements of its counsel, incurred
in connection with the execution and administration of this Agreement and the
exercise and performance of its duties hereunder. The Company shall indemnify
the Rights Agent for, and hold it harmless against, any loss, liability, or
expense, incurred without gross negligence, bad faith or willful misconduct on
the part of the Rights Agent, for anything done or omitted by the Rights Agent
in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability
hereunder.

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

         SECTION 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust or shareholder services business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any document 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.
In case at the time such successor Rights Agent shall succeed to the agency
created by this Agreement, any of the Rights

                                       26
<PAGE>

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

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

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

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

                  (b) Whenever in the performance of its duties under this
         Agreement the Rights Agent shall deem it necessary or desirable that
         any fact or matter (including, without limitation, the identity of any
         Acquiring Person and the determination of "current market price") be
         proved or established by the Company prior to taking or suffering any
         action hereunder, such fact or matter (unless other evidence in respect
         thereof be specified herein) may be deemed to be conclusively proved
         and established by a certificate signed by the Chairman of the Board,
         the President, any Vice President, the Treasurer, any Assistant
         Treasurer, the Secretary or any Assistant Secretary of the Company and
         delivered to the Rights Agent; and such certificate shall be full
         authorization to the Rights Agent for any action taken or suffered in
         good faith by it under the provisions of this Agreement in reliance
         upon such certificate.

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

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

                                       27
<PAGE>

                  (e) The Rights Agent shall not have any responsibility for the
         validity of this Agreement or the execution and delivery hereof (except
         the due execution and delivery hereof by the Rights Agent) or for the
         validity or execution of any Rights Certificate (except its
         countersignature thereof); nor shall it be responsible for any breach
         by the Company of any covenant or failure by the Company to satisfy
         conditions contained in this Agreement or in any Rights Certificate;
         nor shall it be responsible for any adjustment required under the
         provisions of Section 11 or Section 13 or for the manner, method or
         amount of any such adjustment or the ascertaining of the existence of
         facts that would require any such adjustment (except with respect to
         the exercise of Rights evidenced by Rights Certificates after receipt
         by the Rights Agent of the certificate describing any such adjustment
         contemplated by Section 12); nor shall it by any act hereunder be
         deemed to make any representation or warranty as to the authorization
         or reservation of any shares of Preferred Stock or any other securities
         to be issued pursuant to this Agreement or any Rights Certificate or as
         to whether any shares of Preferred Stock or any other securities will,
         when so issued, be validly authorized and issued, fully paid and
         non-assessable.

                  (f) The Company shall perform, execute, acknowledge and
         deliver or cause to be performed, executed, acknowledged and delivered
         all such further acts, instruments and assurances as may reasonably be
         required by the Rights Agent for the performance by the Rights Agent of
         its duties under this Agreement.

                  (g) The Rights Agent is hereby authorized and directed to
         accept instructions with respect to the performance of its duties
         hereunder from the Chairman of the Board, the President, any Vice
         President, the Secretary, any Assistant Secretary, the Treasurer or any
         Assistant Treasurer of the Company, and to apply to such officers for
         advice or instructions in connection with its duties, and it shall not
         be liable for any action taken or suffered to be taken by it in good
         faith in accordance with instructions of any such officer. Any
         application by the Rights Agent for written instructions from the
         Company may, at the option of the Rights Agent, set forth in writing
         any action proposed to be taken or omitted by the Rights Agent under
         this Rights Agreement and the date on and/or after which such action
         shall be taken or such omission shall be effective. The Rights Agent
         shall not be liable for any action taken by, or omission of, the Rights
         Agent in accordance with a proposal included in any such application on
         or after the date specified in such application (which date shall not
         be less than five Business Days after the date any such officer of the
         Company actually receives such application, unless any such officer
         shall have consented in writing to an earlier date) unless, prior to
         taking any such action (or the effective date in the case of an
         omission), the Rights Agent shall have received written instructions in
         response to such application specifying the action to be taken or
         omitted.

                  (h) The Rights Agent and any 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 Agreement. Nothing herein
         shall preclude the Rights Agent from acting in any other capacity for
         the Company or for any other Person.

                                       28
<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.

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

                  (k) If, with respect to any Rights Certificate surrendered to
         the Rights Agent for exercise or transfer, the certificate attached to
         the form of assignment or form of election to purchase, as the case may
         be, has either not been completed, not signed or indicates an
         affirmative response to clause 1 and/or 2 thereof, the Rights Agent
         shall not take any further action with respect to such requested
         exercise or transfer without first consulting with the Company. If such
         certificate has been completed and signed and shows a negative response
         to clauses 1 and 2 of such certificate, unless previously instructed
         otherwise in writing by the Company (which instructions may impose on
         the Rights Agent additional ministerial responsibilities, but no
         discretionary responsibilities), the Rights Agent may assume without
         further inquiry that the Rights Certificate is not owned by a person
         described in Section 4(b) or Section 7(e) and shall not be charged with
         any knowledge to the contrary.

         SECTION 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty days' prior notice in writing mailed to the Company, and to each
transfer agent of the Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates (or
certificates for the Company Common Stock prior to the Distribution Date) by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty days' prior notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Preferred Stock and the Company Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates (or certificates for the
Company Common Stock prior to the Distribution Date) by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate or, prior to the Distribution Date, the
holder of a certificate for the Company Common Stock (who shall, with such
notice, submit such holder's Rights Certificate or certificate for Company
Common Stock, as the case may be, for inspection by the Company), then any
registered holder of any Rights Certificate or, prior to the Distribution Date,
the holder of a certificate for the Company Common Stock 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) a corporation organized and doing business under the laws of the
United States or any state of the United States in good standing, shall be
authorized to do business as a banking institution in the State of New York,
shall be authorized under such laws to exercise corporate trust or stock
transfer

                                       29
<PAGE>

powers, shall be subject to supervision or examination by federal or state
authorities and shall have at the time of its appointment as Rights Agent a
combined capital and surplus of at least $100,000,000 or (b) an Affiliate of a
corporation described in clause (a). After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Preferred Stock and the Company Common Stock, and mail a
notice thereof in writing to the registered holders of the Rights Certificates
(or certificates for the Company Common Stock prior to the Distribution Date).
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.

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

         SECTION 23. Redemption and Termination. (a) Subject to Section 28, the
Company may, at its option, by action of a majority of the Company's Board of
Directors, at any time prior to the earlier of (i) the Close of Business on the
tenth Day following the Stock Acquisition Date or (ii) the Final Expiration
Date, redeem all but not less than all of the then outstanding Rights at a
redemption price of $.0001 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being the "Redemption
Price"), and the Company may, at its option, by action of a majority of the
Company's Board of Directors, pay the Redemption Price either in shares of
Company Common Stock (based on the current market price, determined in
accordance with Section 11(d), of the shares of Company Common Stock at the time
of redemption) or cash. Subject to the foregoing, the redemption of the Rights
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.

                                       30
<PAGE>

         (b) Immediately upon the action of a majority of the Company's Board of
Directors ordering the redemption of the Rights, evidence of which shall be
filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price for
each Right so held. Promptly after the action of a majority of the Company's
Board of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to all such holders at each holder's
last address as it appears upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for
Company Common Stock. Any notice that is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of redemption will state the method by which the payment of the
Redemption Price will be made.

         SECTION 24. Notice of Certain Events. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend out of earnings or retained earnings of the Company),
(ii) to offer to the holders of Preferred Stock rights or warrants to subscribe
for or to purchase any additional shares of Preferred Stock or shares of stock
of any class or any other securities, rights or options, (iii) to effect any
reclassification of the Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), (iv) to effect
any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)), 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 more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any other Person or Persons (other than the
Company and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o)) or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Rights Certificate (or, prior to the Distribution Date, to each
holder of certificates for Company Common Stock), to the extent feasible and in
accordance with Section 25, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution or winding up is to take place
and the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least 20 days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least 20
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the shares of Preferred Stock, whichever
shall be the earlier; provided, however, no such notice shall be required
pursuant to this Section 24 if any Subsidiary of the Company effects a
consolidation or merger with or into, or effects a sale or other transfer of
assets or earning power to, any other Subsidiary of the Company.

         (b) In case any of the events set forth in Section 11(a)(ii) shall
occur, then, in any such case, the Company shall as soon as practicable
thereafter give to each holder of a Rights Certificate, to the extent feasible
and in accordance with Section 25, a notice of the

                                       31
<PAGE>

occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11(a)(ii).

         SECTION 25. Notices. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing and mailed or
sent or delivered (including by facsimile transmission), if to the Company, at
its address at:

         175 Sully's Trail
         Suite 300
         Pittsford, NY 14534
         Attention:  Russ Zuckerman

         Telecopy No.:  (716) 218-0165

         and if to the Rights Agent, at its address at:

         2 Broadway
         19th Floor
         New York, NY 10004

         Attention:  Compliance Department

         Telecopy No.:  (212) 616-7616

Notices or demands authorized or required by this Agreement to be given or made
by the Company or the Rights Agent to the holder of any Rights Certificate (or,
if prior to the Distribution Date, to the holder of certificates evidencing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for the Company
Common Stock.

         SECTION 26. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates evidencing
shares of Company Common Stock. From and after the Distribution Date and subject
to the penultimate sentence of this Section 26, the Company and the Rights Agent
shall, if the Company so directs, supplement or amend this Agreement without the
approval of any holders of Rights Certificates in order (i) to cure any
ambiguity, (ii) to correct or supplement any provision contained herein that may
be defective or inconsistent with any other provisions herein, (iii) to shorten
or lengthen any time period hereunder or (iv) to change or supplement the
provisions hereunder in any manner which the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Rights Certificates (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person); provided, however, that this Agreement may not be
supplemented or amended to lengthen, pursuant to clause (iii) of this sentence,
(A) subject to Section 30, 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,

                                       32
<PAGE>

enhancing or clarifying the rights of, and/or the benefits to, the holders of
Rights. Upon the delivery of a certificate from an appropriate officer of the
Company or, so long as any Person is an Acquiring Person hereunder, from the
majority of the Company's Board of Directors, that states that the proposed
supplement or amendment is in compliance with the terms of this Section 26, the
Rights Agent shall execute such supplement or amendment. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Company Common Stock.

         SECTION 27. Successors. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

         SECTION 28. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares of
Company Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Company
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof. Except as otherwise specifically
provided herein, the Board of Directors of the Company shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Company or to the
Company, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power (i) to interpret
the provisions of this Agreement and (ii) to make all determinations deemed
necessary or advisable for the administration of this Agreement. All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) that
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 of Directors of the Company or any
member thereof to any liability to the holders of the Rights.

         SECTION 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock) any
legal or equitable right, remedy or claim under this Agreement. This Agreement
shall be for the sole and exclusive benefit of the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of Company Common Stock).

         SECTION 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and a majority of the
Company's Board of Directors determines in its good faith judgment that severing
the invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement and the Rights shall not then be redeemable, the

                                       33
<PAGE>

right of redemption set forth in Section 23 shall be reinstated and shall not
expire until the Close of Business on the tenth Business Day following the date
of such determination by a majority of the Company's Board of Directors.

         SECTION 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware; provided, however, that Sections 18,
19, 20 and 21 shall be governed by, and construed in accordance with, the laws
of the State of New York.

         SECTION 32. Counterparts. This Agreement may be executed (including by
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.

         SECTION 33. Descriptive Headings. The headings contained in this
Agreement are for descriptive purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

         SECTION 34. Exchange. (a) (i) The Company may, at its option, at any
time after any person becomes an Acquiring Person, upon resolution adopted by a
majority of the Company's Board of Directors, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant Section 7(e)) for Units of Preferred Stock at an exchange
ratio of one Unit of Preferred Stock per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter referred to as the
"Section 34(a)(i) Exchange Ratio"). Notwithstanding the foregoing, the Company
may not effect such exchange at any time after any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan maintained by
the Company or any of its Subsidiaries, or any trustee or fiduciary with respect
to such plan acting in such capacity), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
shares of Company Common Stock then outstanding.

         (ii) The Company may, at its option, at any time after any person
becomes an Acquiring Person, upon resolution adopted by a majority of the
Company's Board of Directors, exchange all or part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to Section 7(e)) for Units of Preferred Stock at an exchange ratio
specified in the following sentence, as appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof. Subject to such adjustment, each Right may be exchanged for that number
of Units of Preferred Stock obtained by dividing the Adjustment Spread (as
defined below) by the then current market price (determined pursuant to Section
11(d)) per Unit of Preferred Stock on the earlier of (i) the date on which any
Person becomes an Acquiring Person and (ii) the date on which a tender or
exchange offer by any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such plan acting in
such capacity) is first published or sent or given within the meaning of Rule
14d-4(a) of the Exchange Act Regulations or any successor rule, if upon
consummation thereof such Person would be the Beneficial Owner of 15% or more of
the

                                       34
<PAGE>

shares of Company Common Stock then outstanding (such exchange ratio being the
"Section 34(a)(ii) Exchange Ratio"). The "Adjustment Spread" shall equal (x) the
aggregate market price on the date of such event of the number of Adjustment
Shares determined pursuant to Section 11(a)(ii), minus (y) the Purchase Price.
Notwithstanding the foregoing, the Company may not effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan maintained by the Company or any of its Subsidiaries,
or any trustee or fiduciary with respect to such plan acting in such capacity),
together with all Affiliates and Associates of such Person, becomes the
Beneficial Owner of 50% or more of the shares of the Company Common Stock then
outstanding.

         (b) Immediately upon the action of a majority of the Company's Board of
Directors ordering the exchange of any Rights pursuant to Section 34(a) 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 Units of Preferred Stock equal to the number
of such Rights held by such holder multiplied by the Section 34(a)(i) Exchange
Ratio or Section 34(a)(ii) Exchange Ratio, as the case may be. The Company shall
promptly give public notice of any such exchange; provided, however, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice that is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange shall state the method by which the
exchange of Units of Preferred Stock for Rights will be effected and, in the
event of any partial exchange, the number of Rights that will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights (other
than Rights that have become void pursuant to Section 7(e)) held by each holder
of Rights.

         (c) In the event that the number of shares of Preferred Stock that are
authorized by the Company's Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit any exchange of Rights as contemplated in accordance
with this Section 34, the Company shall take all such action as may be necessary
to authorize additional shares of Preferred Stock for issuance upon exchange of
the Rights or make adequate provision to substitute (1) cash, (2) Company Common
Stock or other equity securities of the Company, (3) debt securities of the
Company, (4) other assets or (5) any combination of the foregoing, having an
aggregate value equal to the Adjustment Spread, where such aggregate value has
been determined by a majority of the Company's Board of Directors.

         (d) The Company shall not be required to issue fractions of Units of
Preferred Stock or to distribute certificates that evidence fractional Units. In
lieu of fractional Units, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exchanged as herein provided an
amount in cash equal to the same fraction of the current market price
(determined pursuant to Section 11(d)) of one Unit of Preferred Stock.

                                       35
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their behalf as of the date first above written.

ATTEST:                                     MPOWER HOLDING CORPORATION

By /S/ RUSSELL I. ZUCKERMAN                 By /s/ ROLLA P. HUFF
   --------------------------------            ---------------------------------
   Name:  Russell I. Zuckerman                 Name:  Rolla P. Huff
   Title: Secretary                            Title: President

ATTEST:                                     CONTINENTAL STOCK TRANSFER &
                                            TRUST COMPANY

By /s/ RICHARD J. MITCHELL                  By /s/ ROGER T. BERNHAMMER
   --------------------------------            ---------------------------------
   Name:  Richard J. Mitchell                  Name:  Roger T. Bernhammer
   Title: Vice President                       Title: Vice President

                                       36
<PAGE>

                                    EXHIBIT A

                          [Form of Rights Certificate]

<PAGE>
                                                                       EXHIBIT A
                                                                       ---------

Certificate No.____  ____Rights

NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS AGREEMENT
REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES (SPECIFIED IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY
ACQUIRING PERSONS (AS DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER
OF SUCH RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
TERMS ARE DEFINED IN THE RIGHTS AGREEMENT REFERRED TO BELOW). ACCORDINGLY, THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN
THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.]

                               RIGHTS CERTIFICATE
                               ------------------

                           MPOWER HOLDING CORPORATION

         This certifies that _____________, or registered assigns, is the
registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement dated as of June 28, 2001 (the "Rights Agreement"; terms
defined therein are used herein with the same meaning unless otherwise defined
herein) between Mpower Holding Corporation, a Delaware corporation (the
"Company"), and Continental Stock Transfer & Trust Company, as Rights Agent
(which term shall include any successor Rights Agent under the Rights
Agreement), to purchase from the Company at any time after the Distribution Date
and prior to the Expiration Date at the office of the Rights Agent, one
one-thousandth of a fully paid and non-assessable share of Series E Preferred
Stock, par value $.001 per share (the "Preferred Stock"), of the Company at the
Purchase Price initially of $36.50 per one one-thousandth share (each such one
one-thousandth of a share being a "Unit") of Preferred Stock, upon presentation
and surrender of this Rights Certificate with the Election to Purchase and
related certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of Units which may be purchased upon exercise
thereof) set forth above, and the Purchase Price per Unit set forth above shall
be subject to adjustment in certain events as provided in the Rights Agreement.

         Upon the occurrence of a Section 11(a)(ii) Event or Section 13 Event,
if the Rights evidenced by this Rights Certificate are beneficially owned by an
Acquiring Person or an Affiliate or Associate of any such Acquiring Person or,
under certain circumstances described in the Rights Agreement, a transferee of
any such Acquiring Person, Associate or Affiliate, such Rights shall become null
and void and no holder hereof shall have any right with respect to such Rights
from and after the occurrence of such Section 11(a)(ii) Event.

         In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase capital
stock of an entity other than

<PAGE>

the Company or receive common stock, cash or other assets, all as provided in
the Rights Agreement.

         This Rights Certificate is subject to all of the terms and conditions
of the Rights Agreement, which terms and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the principal office of the Company and are available
from the Company upon written request.

         This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company under certain circumstances
at its option at a redemption price of $.0001 per Right, payable at the
Company's option in cash or in common stock of the Company, subject to
adjustment in certain events as provided in the Rights Agreement.

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

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

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

                                       2
<PAGE>

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

ATTEST:

                                                MPOWER HOLDING CORPORATION

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

Name:                                           Name:

Title:                                          Title:

Countersigned:

CONTINENTAL STOCK TRANSFER &
TRUST COMPANY, as

Rights Agent

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

Authorized Officer

                                       3
<PAGE>

                  [Form of Reverse Side of Rights Certificate]

                               FORM OF ASSIGNMENT
                               ------------------

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

FOR VALUE RECEIVED______________________________________________________________
hereby sells, assigns and transfers unto________________________________________

________________________________________________________________________________
(Please print name and address of transferee)
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________Attorney, to
transfer the within Rights Certificate on the books of the within-named Company,
with full power of substitution.

Dated:  ____________ ___, 200__

                                                 ________________________
                                                 Signature

Signature Guaranteed:

<PAGE>

                                   CERTIFICATE
                                   -----------

         The undersigned hereby certifies by checking the appropriate boxes
that:

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

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

Dated:  ____________ ___, 200__             _________________________
                                            Signature

Signature Guaranteed:

                  --------------------------------------------
                                     NOTICE
                                     ------

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

         In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.

<PAGE>

                          FORM OF ELECTION TO PURCHASE
                          ----------------------------

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

To:  Mpower Holding Corporation

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

_______________________________________________
(Please print name and address)
_______________________________________________

Please insert social security
or other identifying number:___________________

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

_______________________________________________
(Please print name and address)
_______________________________________________

Please insert social security
or other identifying number:___________________

Dated:  ____________ ___, 200__                 _________________________
                                                Signature

Signature Guaranteed:

<PAGE>

                                   CERTIFICATE
                                   -----------

         The undersigned hereby certifies by checking the appropriate boxes
that:

         (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and

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

Dated:  ____________ ___, 200__             _________________________
                                            Signature

Signature Guaranteed:

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

                                     NOTICE
                                     ------

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

                  In the event the certification set forth above is not
completed, the Company will deem the beneficial owner of the Rights evidenced by
this Rights Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and, in the case of an Assignment,
will affix a legend to that effect on any Rights Certificates issued in exchange
for this Rights Certificate.

<PAGE>

                                    EXHIBIT B

                           [Form of Summary of Rights]

<PAGE>

                                                                       EXHIBIT B
                                                                       ---------

                          SUMMARY OF RIGHTS TO PURCHASE
                                 PREFERRED STOCK

         Effective at the close of business on June 28, 2001, the Board of
Directors of Mpower Holding Corporation (the "Company") declared a distribution
of one Right for each outstanding share of Common Stock, par value $.001 per
share (the "Company Common Stock"), to stockholders of record at the close of
business on June 28, 2001 (the "Record Date") and for each share of Company
Common Stock issued (including shares distributed from Treasury) by the Company
thereafter and prior to the Distribution Date. Each Right entitles the
registered holder, subject to the terms of the Rights Agreement (as defined
below), to purchase from the Company one one-thousandth of a share (a "Unit") of
Series E Preferred Stock, par value $.001 per share (the "Preferred Stock"), at
a Purchase Price of $36.50 per Unit, subject to adjustment. The Purchase Price
is payable in cash or by certified or bank check payable to the order of the
Company or by wire transfer to the account of the Company (provided a notice of
such wire transfer is given by the holder of the related Right to the Rights
Agent). The description and terms of the Rights are set forth in a Rights
Agreement between the Company and Continental Stock Transfer & Trust Company as
Rights Agent (the "Rights Agreement").

         The Company entered into the Rights Agreement in connection with the
Company's corporate reorganization into a holding company structure whereby the
Company became the parent publicly held holding company of Mpower Communications
Corp. and its subsidiaries. The Company entered into the Rights Agreement to
ensure that the holders of the Company's Common Stock have the same rights as
they had as holders of common stock of Mpower Communications Corp. before the
reorganization. Accordingly, the Rights Agreement (including the terms of the
Units and the Preferred Stock) is essentially the same as the rights agreement,
dated December 11, 2000, entered into by Mpower Communications Corp. Copies of
the Rights Agreement and the Certificate of Designation for the Preferred Stock
have been filed with the Securities and Exchange Commission as exhibit to the
Company's Current Report on Form 8-K, dated June 28, 2001. Copies of the Rights
Agreement and the Certificate of Designation are available free of charge from
the Company. This summary description of the Rights and the Preferred Stock does
not purport to be complete and is qualified in its entirety by reference to all
the provisions of the Rights Agreement and the Certificate of Designation,
including the definitions therein of certain terms, which Rights Agreement and
Certificate of Designation are incorporated herein by reference.

The Rights Agreement
--------------------

         Initially, the Rights will attach to all certificates representing
shares of outstanding Company Common Stock, and no separate Rights Certificates
will be distributed. The Rights will separate from the Company Common Stock and
the "Distribution Date" will occur upon the earlier of (i) 10 days following a
public announcement (the date of such announcement being the "Stock Acquisition
Date") that a person or group of affiliated or

<PAGE>

associated persons (other than the Company, any subsidiary of the Company or any
employee benefit plan of the Company or such subsidiary) (an "Acquiring Person")
has acquired, obtained the right to acquire, or otherwise obtained beneficial
ownership of 15% or more of the then outstanding shares of Company Common Stock,
and (ii) 10 business days (or such later date as may be determined by action of
the Board of Directors prior to such time as any person becomes an Acquiring
Person) following the commencement of a tender offer or exchange offer that
would result in a person or group beneficially owning 15% or more of the then
outstanding shares of Company Common Stock. West Highland Partners, L.P., West
Highland Capital, Inc., Mr. Lang H. Gerhard and Estero Partners, LLC, which
collectively own in excess of 15%, may generally purchase up to an additional 1%
without causing the Rights to become exercisable. Until the Distribution Date,
(i) the Rights will be evidenced by Company Common Stock certificates and will
be transferred with and only with such Company Common Stock certificates, (ii)
new Company Common Stock certificates issued after the Record Date (also
including shares distributed from Treasury) will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates representing outstanding Company Common Stock will
also constitute the transfer of the Rights associated with the Company Common
Stock represented by such certificates.

         The Rights are not exercisable until the Distribution Date and will
expire at the close of business on the tenth anniversary of the Rights Agreement
unless earlier redeemed by the Company as described below.

         As soon as practicable after the Distribution Date, Rights Certificates
will be mailed to holders of record of Company Common Stock as of the close of
business on the Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights.

         In the event that (i) the Company is the surviving corporation in a
merger with an Acquiring Person and shares of Company Common Stock shall remain
outstanding, (ii) a Person becomes an Acquiring Person, (iii) an Acquiring
Person engages in one or more "self-dealing" transactions as set forth in the
Rights Agreement, or (iv) during such time as there is an Acquiring Person, an
event occurs which results in such Acquiring Person's ownership interest being
increased by more than 1% (e.g., by means of a recapitalization) (each such
event being a "Section 11(a)(ii) Event"), then, in each such case, each holder
of a Right will thereafter have the right to receive, upon exercise, Units of
Preferred Stock (or, in certain circumstances, Company Common Stock, cash,
property or other securities of the Company) having a value equal to two times
the exercise price of the Right. The exercise price is the Purchase Price
multiplied by the number of Units of Preferred Stock issuable upon exercise of a
Right prior to the events described in this paragraph. Notwithstanding any of
the foregoing, following the occurrence of any of the events set forth in this
paragraph, all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person will be null
and void.

         In the event that, at any time following the Stock Acquisition Date,
(i) the Company is acquired in a merger or other business combination
transaction and the Company is not the surviving corporation (other than a
merger described in the preceding paragraph), (ii) any Person consolidates or
merges with the Company and all or part of the Company Common Stock is converted
or exchanged for securities, cash or property of any other Person or (iii) 50%
or

                                       2
<PAGE>

more of the Company's assets or earning power is sold or transferred, each
holder of a Right (except Rights which previously have been voided as described
above) shall thereafter have the right to receive, upon exercise, common stock
of the ultimate parent of the Acquiring Person having a value equal to two times
the exercise price of the Right.

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

         With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof,
an adjustment in cash may be made based on the market price of the Preferred
Stock prior to the date of exercise.

         At any time until ten business days following the Stock Acquisition
Date, a majority of the Company's Board of Directors may redeem the Rights in
whole, but not in part, at a price of $.0001 per Right (subject to adjustment in
certain events) (the "Redemption Price"), payable, at the election of such
majority of the Company's Board of Directors, in cash or shares of Company
Common Stock. Immediately upon the action of a majority of the Company's Board
of Directors ordering the redemption of the Rights, the Rights will terminate
and the only right of the holders of Rights will be to receive the Redemption
Price.

         The Board of Directors, at its option, may exchange each Right for (i)
one Unit of Preferred Stock or (ii) such number of Units of Preferred Stock as
will equal (x) the difference between the aggregate market price of the number
of Units of Preferred Stock to be received upon a Section 11(a)(ii) Event and
the purchase price set forth in the Rights Agreement, divided by (y) the market
price per Unit of Preferred Stock upon a Section 11(a)(ii) Event.

         Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder 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 stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the Rights become
exercisable for Units of Preferred Stock (or other consideration).

         Any of the provisions of the Rights Agreement may be amended without
the approval of the holders of Company Common Stock at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended 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 to
shorten or lengthen any time period under the Rights Agreement; provided,
however, that no amendment to adjust the time period governing redemption shall
be made at such time as the Rights are not redeemable.

                                       3
<PAGE>

Description of Preferred Stock
------------------------------

         The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and subordinate to any other shares of preferred
stock that may be issued by the Company.

         Each Unit of Preferred Stock will have a minimum preferential quarterly
dividend of $.01 per Unit or any higher per share dividend declared on the
Company Common Stock.

         In the event of liquidation, the holder of a Unit of Preferred Stock
will receive a preferred liquidation payment equal to the greater of $.01 per
Unit and the per share amount paid in respect of a share of Company Common
Stock.

         Each Unit of Preferred Stock will have one vote, voting together with
the Company Common Stock. The holders of Units of Preferred Stock, voting as a
separate class, shall be entitled to elect two directors if dividends on the
Preferred Stock are in arrears for six fiscal quarters.

         In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Unit of Preferred Stock will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock.

         The rights of holders of the Preferred Stock to dividends, liquidation
and voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.

         Because of the nature of the Preferred Stock's dividend, liquidation
and voting rights, the economic value of one Unit of Preferred Stock that may be
acquired upon the exercise of each Right is expected to approximate the economic
value of one share of Company Common Stock.

                                       4
<PAGE>

                                    EXHIBIT C

                [Certificate of Designation for Preferred Stock]

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