Document:

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                                                                 Exhibit 10.20

                      PARK SQUARE BUILDING COMMERCIAL LEASE

      THIS INSTRUMENT IS A LEASE, dated as of March 3, 2000, in which The LESSOR
      and LESSEE are the parties hereinafter named, and which relates to space
      in the building (the "Building") located at 31 Saint James Avenue, Boston,
      Massachusetts 02116. The parties to this instrument hereby agree with each
      other as follows:

1.    BASIC LEASE
      PROVISIONS: The following set forth basic data and, where appropriate,
                  constitute definitions of the terms hereinafter listed.

                  A.    BASIC DATA.

                        LESSOR: OMV Associates Limited Partnership

                        LESSOR'S Address: c/o Capital Properties Management,
                  Inc., 31 Saint James Avenue, Boston, MA 02116

                        LESSEE: PaperExchange.com, LLC a Massachusetts limited
                  liability corporation

                        LESSEE'S Original Address: 545 Boylston Street, 8th
                  Floor, Boston, MA 02116

                        LESSEE'S Notice Address (Section 20): The Premises

                        Basic Rent: $1,082,002.50/year       $42.75/psf

                                    As the same may be adjusted and/or abated in
                                    accordance with the terms of this lease.

                        Premises Rentable Area: Agreed to be 25,310 square feet
                  located on the fifth floor of the Building.

                        Permitted Uses: General office use.

                        Escalation Factor: 5.53%, as computed in accordance with
                  the Escalation Factor Computation.

                        Scheduled Completion Period: As defined in Section 26B.

                        Initial Term: Five years commencing on the Commencement
                  Date and expiring at the close of the day immediately
                  preceding the fifth anniversary of the Commencement Date,
                  except that if the Commencement Date shall be other than the
                  first day of a calendar month, the expiration of the Initial
                  Term shall be at the close of the day on the last day of the
                  calendar month on which such anniversary shall fall.

                        Temporary Tenancy: As described in Section 36.

                              Temporary Premises: Agreed to be 14,139 rentable
                        square feet located on the third floor of the building,
                        8,928 rentable square feet on the south side of the
                        corridor (Area A) and 5,211 rentable square feet on the
                        north side of the corridor (Area B) as shown on Exhibit
                        D attached hereto.

                              Temporary Premises Basic Rent:

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                              $300,453.75/yr $25,037.82/mo $21.25/sf

                              Temporary Premises Escalation Factor: None.

                        Security Deposit: $303,720 in cash or letter of credit,
                  as that amount may be adjusted in accordance with Section 5
                  below.

                        Base Operating Expenses: The actual Operating Expenses
                  for the calendar year commencing January 1, 2000 and ending
                  December 31, 2000.

                        Base Taxes: The actual Taxes for the Tax Year commencing
                  July 1, 2000 and ending June 30, 2001.

                        Electricity Cost: $1.50/sf per year payable to LESSOR.

                        Broker: CB Richard Ellis / Whittier Partners and
                  Insignia/ESG

                  B.    ADDITIONAL DEFINITIONS.

                        Agent: Capital Properties Management, Inc., 31 St. James
                  Avenue, Boston, Massachusetts 02116.

                        Business Days: 8:00 a.m. - 6:00 p.m. Monday through
                  Friday and Saturday 9:00 a.m. through 1 p.m. except New Year's
                  Day, President's Day, Patriot's Day, Memorial Day,
                  Independence Day, Labor Day, Columbus Day, Veterans' Day,
                  Thanksgiving Day, Christmas Day (and the following Monday when
                  any such day occurs on Sunday). Unless specifically referred
                  to herein as Business Days, all references in this Lease to
                  "days" shall mean calendar days.

                        Commencement Date: Thirty (30) days after the later of
                  a) the Premises is available for LESSOR to commence LESSOR'S
                  Work, b) the issuance of a building permit and c) commencement
                  by LESSOR of LESSOR'S Work.

                        Escalation Factor Computation: Premises Rentable Area
                  divided by 100% of building rentable area (445,765 square
                  feet).

                        Initial Public Liability Insurance: $1,000,000.00 per
                  occurrence (combined single limit) for property damage,
                  personal injury or death.

                        LESSOR'S Work: As defined in Section 26.

                        LESSOR'S Contribution: $303,720

                        LESSEE'S Contribution: As defined in Section 26

                        Final Plans: As defined in Section 26.

                        Premises: A portion of the Building as shown on Exhibit
                  A attached hereto.

                        Extended Term: As defined in Section 35.

                        First Offer Space: As defined in Section 37.

2.    PREMISES    A portion of the building owned by LESSOR consisting of
                  approximately

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                  25,310 SQUARE FEET OF RENTABLE AREA ON THE FIFTH FLOOR OF THE
                  BUILDING AND SHOWN AS SUITE 500 on the plan attached hereto as
                  "Exhibit A" (the "Premises") together with the right to use in
                  common, with others entitled thereto, the hallways, stairways,
                  and elevators, necessary for access to said Premises, and
                  lavatories nearest thereto.

3.    TERM        The term of this lease shall be for five years commencing on
                  the Commencement Date, or earlier pursuant to Section 36 of
                  this lease and ending sixty months after the Commencement
                  Date.

4.    BASIC RENT  The LESSEE shall pay to the LESSOR rent at the rate described
                  in Section 1 of this Lease, payable in advance on the first
                  day of each month commencing on the Commencement Date or prior
                  in accordance with Section 36, without deduction or set off.

5.    SECURITY    Upon the execution of this lease, the LESSEE shall pay to the
      DEPOSIT     LESSOR a security deposit in cash or a letter of credit in the
                  amount of $303,720.00. The Security Deposit shall be
                  maintained in said amount and held without interest as a
                  security for LESSEE'S performance as therein provided and
                  refunded to the LESSEE at the end of this Lease subject to the
                  LESSEE'S satisfactory compliance with the condition thereof.
                  If LESSEE is not in default during the first twelve months of
                  the term, the security deposit shall be reduced by one months
                  rent to $253,100.00. If LESSEE is not in default during the
                  first twenty four months of the term the security deposit
                  shall be reduced to $202,480.00. If LESSEE is not in default
                  during the first thirty six months of the term the security
                  deposit shall be reduced to $151,860.00 and this shall remain
                  as security deposit for the balance of the Term and for any
                  Extended Term.

6.    ADDITIONAL  A. TAX. If, in any tax year, the real estate taxes on the land
      RENT        and buildings, of which the Premises are a part, are in excess
                  of the amount of the Base Taxes, as finally abated
                  (hereinafter called the "Base Year"), LESSEE will pay to
                  LESSOR, as additional rent hereunder, when and as designated
                  by notice in writing by LESSOR, the amount of the excess
                  multiplied by the Escalation Factor. If the LESSOR obtains an
                  abatement of any such excess real estate tax, a proportionate
                  share of such abatement, less the reasonable fees and costs
                  incurred in obtaining the same, if any, shall be refunded to
                  the LESSEE.

                  B. OPERATING. If, in any calendar year, the Operating Expenses
                  for the Property of which the Premises are a part, are in
                  excess of the amount of the Base Operating Expenses, LESSEE
                  will pay to LESSOR, as additional rent hereunder, within
                  thirty (30) days of receiving notice in writing by LESSOR, the
                  amount of the excess multiplied by the Escalation Factor.
                  Operating Expenses are defined for the purposes of this
                  agreement as: The aggregate costs or expenses reasonably
                  incurred by LESSOR with respect to the operation,
                  administration, cleaning, repair, maintenance and management
                  of the premises including, without limitation, those items
                  enumerated in "Exhibit C" attached hereto and excluding those
                  items shown as exclusions on Exhibit C. Any such accounting by
                  LESSOR shall be binding and conclusive upon LESSEE unless
                  within thirty (30) days after that giving by LESSOR of such
                  accounting, LESSEE shall notify LESSOR that LESSEE disputes
                  the correctness of such accounting, specifying the particular
                  respects in which the accounting is claimed to be incorrect.

                  C. PAYMENT. At LESSOR'S option, payment of Additional Rent
                  shall be on a monthly basis based on LESSOR'S good faith
                  estimate of the Tax and Operating Expenses for the following
                  year.

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                  D. AUDIT. In the event LESSEE elects to audit LESSOR'S
                  statement of Operating Expenses or statement of Taxes in
                  accordance with this clause, such audit must be (i) conducted
                  by an independent nationally recognized accounting firm that
                  is not being compensated by LESSEE on a contingency fee basis,
                  and (ii) completed within sixty (60) days following LESSEE'S
                  notice disputing the correctness of the statement of Operating
                  Expenses or statement of Taxes. Furthermore, all of the
                  information obtained through the LESSEE'S audit with respect
                  to financial matters (including, without limitation, costs,
                  expenses, income) and any other matters pertaining to the
                  LESSOR and/or the Property as well as any compromise,
                  settlement, or adjustment reached between LESSOR and LESSEE
                  relative to the results of the audit shall be held in strict
                  confidence by LESSEE and its officers, agents, and employees;
                  and LESSEE shall cause its auditor and any of its officers,
                  agents, and employees to be similarly bound. As a condition
                  precedent to LESSEE'S exercise of its right to audit, LESSEE
                  must deliver to LESSOR a signed confidentiality agreement from
                  the auditor (in form reasonably acceptable to LESSOR) reached
                  between LESSOR and LESSEE shall be held in strict confidence
                  and shall not be revealed in any manner to any person except
                  upon the prior written consent of LESSOR. LESSEE understands
                  and agrees that this provision is of material importance to
                  the LESSOR and that any violation of the terms of this
                  provision shall result in immediate and irreparable harm to
                  the LESSOR. LESSOR shall have all rights allowed by law or
                  equity if LESSEE, its officers, agents, or employees and/or
                  the auditor violate the terms of this provision, including,
                  without limitation, the right to terminate LESSEE'S right to
                  audit.

7.    UTILITIES   The LESSEE shall pay, as they become due, all bills for
                  electricity and other utilities that are furnished to the
                  Premises and presently separately metered. The LESSOR agrees
                  to provide all other utility service and to furnish reasonably
                  hot and cold water and reasonable heat and air conditioning to
                  the Premises, the hallways, stairways, elevators, and
                  lavatories during normal building business hours on regular
                  business days of the heating and air conditioning seasons of
                  each year, to furnish elevator service and to light
                  passageways and stairways during business hours, and to
                  furnish such cleaning service as is customary in similar
                  buildings in Boston, Massachusetts, all subject to
                  interruption due to any accident, to the making of repairs,
                  alterations, or improvements, to labor difficulties, to
                  inability to obtain fuel, electricity, service, or supplies
                  from the sources from which they are usually obtained for said
                  building, or to any cause beyond the LESSOR'S control.

                  LESSOR shall have no obligation to provide utilities or
                  equipment other than the utilities and equipment within the
                  premises as of the Commencement Date of this lease. In the
                  event LESSEE requires additional utilities or equipment, the
                  installation and maintenance thereof shall be the LESSEE'S
                  sole obligation, provided that such installation shall be
                  subject to the written consent of the LESSOR, not to be
                  unreasonably withheld.

8.    USE OF      The LESSEE agrees to use the Premises in a manner consistent
      LEASED      with the nature of the building and consistent with the other
      PREMISES    LESSEES in the building. The LESSEE shall use the Premises
                  only for the purpose of listed in Section 1 of this Lease and
                  LESSOR represents that such use is a lawful one.

9.    COMPLIANCE  The LESSEE acknowledges that no trade or occupation shall be
      WITH LAWS   conducted in the Premises or use made thereof which will be
                  unlawful, improper, noisy or offensive, or contrary to any law
                  or any municipal by-law or ordinance in force in the city or
                  town in which the Premises are situated. LESSEE agrees to
                  comply with all such laws.

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                  LESSOR makes no representation that uses contemplated by the
                  LESSEE are permitted by law.

10.   FIRE        The LESSEE shall not permit any use of the Premises which will
      INSURANCE   make voidable any insurance on the property of which the
                  Premises are a part, or on the contents of said property or
                  which shall be contrary to any law or regulation from time to
                  time established by the New England Fire Insurance Rating
                  Association, or any similar body, succeeding to its powers.
                  Nor shall LESSEE cause or permit the storage, use, generation,
                  release or disposition of any hazardous materials in, on or
                  about the property by LESSEE, its agents, employees or
                  contractors, other than small amounts of cleaning products and
                  the like used in the ordinary course of business in compliance
                  with all applicable laws. LESSEE will not permit the Premises
                  to be used or operated in a manner that may cause the Premises
                  or the property (the "Property") as defined in Exhibit B
                  attached hereto to be contaminated by any hazardous materials
                  in violation of any hazardous materials laws. LESSEE will
                  immediately advise LESSOR in writing of (1) any and all
                  enforcement, cleanup, remedial, removal, or other governmental
                  or regulatory actions instituted, completed, or threatened
                  pursuant to any hazardous materials laws relating to any
                  hazardous materials affecting the Premises; and (2) all claims
                  made or threatened by any third party against LESSEE, LESSOR,
                  the Premises or the Property relating to damage, contribution,
                  cost recovery, compensation, loss or injury resulting from any
                  hazardous materials on or about the Premises. Without LESSOR'S
                  prior written consent, LESSEE will not take any remedial
                  action or enter into any agreement or settlements in response
                  to the presence of any hazardous materials in, on, or about
                  the Premises.

                  LESSEE will be solely responsible for and will defend,
                  indemnify and hold LESSOR, its agents, and employees harmless
                  from and against all claims, costs, expenses, damages, and
                  liabilities, including employees harmless from and against all
                  claims, costs expenses, damages and liabilities, including
                  attorneys' fees and costs, arising out of or in connection
                  with LESSEE'S breach of its obligations in this Section 10.
                  LESSEE will be solely responsible for and will defend,
                  indemnify, and hold LESSOR, its agents, and employees harmless
                  from and against any and all claims, costs, and liabilities,
                  including attorneys' fees and costs, arising out of or in
                  connection with the removal, cleanup and restoration work and
                  materials necessary to return the Premises and any other
                  property of whatever nature located on the Property to their
                  condition existing prior to the appearance of LESSEE'S
                  hazardous materials on the Premises. LESSEE'S obligations
                  under this Section 10 will survive the expiration or other
                  termination of this Lease.

                  The LESSEE shall not use the Premises in any way which will
                  cause an extra insurance premium. LESSOR confirms that
                  LESSEE'S use of the Premises as general office space shall not
                  cause an extra insurance premium. However, in the event that
                  LESSEE does so, the LESSEE shall, on demand, reimburse the
                  LESSOR, and all other lessees, all extra insurance premiums
                  caused by the LESSEE'S use of the Premises.

11.   MAINTEN-    The LESSEE agrees to maintain the Premises, in good condition,
      ANCE OBLI-  reasonable wear and tear and damage by fire and other casualty
      GATIONS     only excepted, and whenever necessary, to replace plate glass
                  and other glass therein.

                  A. LESSEE'S OBLIGATIONS. The Premises are now in good order
                  and the glass whole. The LESSEE shall not permit the Premises
                  to be overloaded, damaged, stripped, or defaced, nor suffer
                  any waste. LESSEE shall obtain written consent of LESSOR
                  before erecting any sign on the Premises, provided LESSEE
                  shall not need any further consent of LESSOR to erect the
                  signs listed on Exhibit F. The LESSEE

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                  shall keep and maintain the Premises in good order and repair
                  at its own expense. The LESSOR shall at LESSEE'S expense and
                  upon LESSEE'S request, furnish and install all replacement
                  lamps, lighting tubes, bulbs and ballast's which may be
                  required in the Premises during the terms hereof.

                  B. LESSOR'S OBLIGATIONS. The LESSOR agrees to maintain the
                  common areas and the structure and building systems of the
                  building in the same condition as it is at the commencement of
                  the Term or as it may be put in during the Term of this Lease,
                  reasonable wear and tear, damage by fire and other casualty
                  only excepted, unless such maintenance is required because of
                  the LESSEE or those for whose conduct the LESSEE is legally
                  responsible.

                  LESSOR shall never be liable for any failure to make repairs
                  in the Premises unless LESSEE has given notice to LESSOR of
                  the need to make such repairs and LESSOR has failed to
                  commence to make such repairs within a reasonable time after
                  receipt of such notice, or fails to proceed with reasonable
                  diligence to complete such repairs.

12.   ADDITIONS & The LESSEE shall not make structural alterations or additions
      ALTERATIONS to the Premises or the building's systems, but may make
                  non-structural alterations provided the LESSOR consents
                  thereto in writing, which consent shall not be unreasonably
                  withheld or delayed. LESSEE may make non-structural
                  alterations which cost less than $20,000 without LESSOR'S
                  consent, however, LESSEE must provide notice. All such allowed
                  alterations shall be at LESSEE'S expense and shall be in
                  quality at least equal to the present construction. LESSEE
                  shall not permit any mechanics' liens, or similar liens, to
                  remain upon the Premises for labor and material furnished to
                  LESSEE or claimed to have been furnished to LESSEE in
                  connection with work of any character performed or claimed to
                  have been performed at the direction of LESSEE and shall cause
                  any such lien to be released of record forthwith without cost
                  to LESSOR. If such lien is not discharged within ten (10) days
                  after notice to LESSEE of such filing of such lien, LESSEE
                  shall furnish LESSOR, within such ten (10) day period,
                  security satisfactory to LESSOR in the amount of 150% of the
                  claim plus estimated costs to discharge the lien. Any
                  alterations or improvements made by the LESSEE shall become
                  the property of the LESSOR at the termination of occupancy as
                  provided herein.

13.   ASSIGNMENT  The LESSEE shall not assign or sublet the whole or any part of
      & SUBLEAS-  the Premises without LESSOR'S prior written consent, such
      ING         consent shall not be unreasonably withheld or delayed and
                  shall be provided within thirty (30) days of LESSEE'S request.
                  Notwithstanding such consent, LESSEE shall remain liable to
                  LESSOR for the payment of all rent and for the full
                  performance of the covenants and conditions of this lease. If
                  SUBLESSEE or ASSIGNEE is paying rent at an amount greater than
                  in this agreement, fifty percent (50%) of the proceeds after
                  expenses shall be due to LESSOR. No assignment or sublease
                  shall release LESSEE from, and LESSEE shall remain fully
                  liable for, performance of LESSEE'S obligations under the
                  lease. LESSEE shall not sublease or assign to a current or
                  prospective tenant of the Building. Prospective tenants are
                  those tenants who have been introduced to the Property within
                  thirty (30) days of the sublease or assignment proposal or any
                  tenant in negotiation with LESSOR. LESSEE shall not sublease
                  below Fair Market Value, without LESSOR'S prior written
                  consent. LESSEE shall not sublease or assign to any tenant
                  whereby the sublessee or assignees use violates the exclusive
                  use of any tenant at the Property.

                  (a) Submission of Information. If LESSEE requests LESSOR'S
                  consent to a specific assignment or subletting, LESSEE will
                  submit in writing to LESSOR (a) the name and address of the
                  proposed assignee or subtenant; (b) the business terms of the
                  proposed

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                  assignment or sublease; (c) reasonably satisfactory
                  information as to the nature and character of the business of
                  the proposed assignee or subtenant, and as to the nature of
                  its proposed use of the space; (d) banking, financial, or
                  other credit information reasonably and character of the
                  proposed assignee or subtenant; (e) the proposed form of
                  assignment (including lease assumption provisions) or
                  sublease; and (f) any other information reasonably required by
                  Landlord.

                  (b) LESSOR'S Options. In the event of LESSEE'S request for an
                  assignment or sublease of this Lease or of all or any part of
                  the Premises by LESSEE, LESSOR in addition to any rights
                  contained herein, shall have the following options at its
                  discretion:

                        (i)   to give LESSEE written notice of LESSOR'S
                              intention to terminate this Lease as to all or any
                              portion of the Premises on the date such notice is
                              given or on any later date specified therein,
                              whereupon, on the date specified in such notice,
                              LESSEE'S right to possession of the Premises or
                              such portion of the Premise shall cease and this
                              Lease shall thereupon be terminated, except as to
                              any incomplete obligations of LESSEE; or

                        (ii)  to re-enter and take possession of the Premises or
                              the part thereof subject to such transfer, and to
                              enforce all rights of LESSEE, in accordance with
                              such sublet or assignment of the Premises, or any
                              part thereof, as if LESSOR was the sublessor or
                              assignor, and to do whatever LESSEE is permitted
                              to do pursuant to the terms of such sublease or
                              assignment.

                  If LESSOR so elects to exercise it's rights under this Section
                  13(b), LESSEE may, within three (3) days of notice from
                  LESSOR, withdraw its request to assignment or sublease and
                  LESSOR shall have no further rights under this Section in
                  regard to that specific request to assign or sublease.

                  (c) Permitted Transfer. LESSOR consents to an assignment of
                  this Lease or sublease of all or part of the Premises to a
                  wholly-owned subsidiary of LESSEE or the parent of LESSEE or
                  to any corporation into or with which LESSEE may be merged,
                  consolidated or purchases all of LESSEE'S assets; provided
                  that (a) LESSEE promptly provides LESSOR with a fully executed
                  copy of such assignment or sublease; (b) LESSEE is not
                  released from liability under this Lease and (c) the assignee
                  assumes in writing all of the obligations of LESSEE under this
                  Lease.

14.   SUBORDINA-  This Lease shall be subject and subordinate to any and all
      TION        mortgages, deeds of trust and other instruments in the nature
                  of a mortgage, now or at any time hereafter, a lien or liens
                  on the property of which the Premises are a part and the
                  LESSEE shall, when requested, promptly execute and deliver
                  such written instruments as shall be necessary to show the
                  subordination of this lease to said mortgages, deeds of trust
                  or other such instruments in the nature of a mortgage. In the
                  event that LESSEE fails or refuses to execute same, LESSOR may
                  do so as LESSEE'S Attorney-in-Fact. LESSOR shall secure a
                  so-called subordination and non-disturbance agreement from
                  LESSOR'S Mortgagee within forty-five (45) days of LESSOR's
                  execution of this Lease.

15.   LESSOR'S    The LESSOR or agents of the LESSOR may, at reasonable times
      ACCESS      and with reasonable notice, enter to inspect the Premises;
                  exhibit the Premises to prospective purchasers, lenders or
                  tenants; determine LESSEE'S compliance with the Lease; remove
                  placards and signs not approved and affixed as herein
                  provided, and make repairs and alterations to the Premises and
                  Property as LESSOR should elect to do. LESSOR shall

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                  use reasonable efforts to minimize interference with
                  operations of LESSEE'S business at the Premises.

16.   INDEMNIFI-  LESSEE shall save LESSOR harmless, and shall exonerate and
      CATION AND  indemnify LESSOR, from and against any and all claims,
      LIABILITY   liabilities or penalties asserted by or on behalf of any
                  person, firm, corporation or public authority:

                  (i)   on account of or based upon any injury to person, or
                        loss of or damage to property sustained or occurring or
                        emanating from the Premises on account of or based upon
                        the act, omission, fault, negligence or misconduct of
                        any person except LESSOR, its agents officers or
                        employees;

                  (ii)  on account of or based upon any injury to person, or
                        loss of or damage to property, sustained on or occurring
                        elsewhere (other than on the Premises) in or about the
                        Property (and, in particular, without limitation, the
                        elevators, stairways, public corridors, sidewalks,
                        parking areas, concourses, arcades, approaches,
                        areaways, roof, or other appurtenances and facilities
                        used in connection with the Property or the Premises)
                        arising out of the use or occupancy of the Property or
                        Premises by the LESSEE or by any person claiming by,
                        through or under LESSEE, except where such injury, loss
                        or damage was caused by the negligence, fault or
                        misconduct of LESSOR, its agents, officers or employees;

                        and in addition to and not in limitation of either of
                        the foregoing subdivisions (i) and (ii);

                  (iii) on account of or based upon (including moneys due on
                        account of) any work or thing whatsoever done (other
                        than by LESSOR or its contractors, or agents or
                        employees or either) on the Premises; and, in respect of
                        any of the foregoing, from and against all costs,
                        expenses (including reasonable attorneys' fees), and
                        liabilities incurred in or in connection with any such
                        claim, or any action or proceeding brought thereon; and
                        in case any action or proceeding be brought against
                        LESSOR by reason of any such claim. LESSEE upon notice
                        from LESSOR shall at LESSEE'S expense resist or defend
                        such action or proceeding and employ counsel therefore
                        reasonably satisfactory to LESSOR, it being agreed that
                        such counsel as may act for insurance underwriters of
                        LESSEE engaged in such defense shall be deemed
                        satisfactory.

17.   LIABILITY   A. LESSEE'S Liability Insurance. The LESSEE shall maintain
      INSURANCE   with respect to the Premises and the Property of which the
                  Premises are a part commercial general liability insurance in
                  the amount of $1,000,000 with property damage insurance in
                  limits of $100,000 and Workers Compensation insurance insuring
                  against and satisfying LESSEE'S obligations and liabilities
                  under the Workers Compensation Laws of Massachusetts, in
                  responsible companies qualified to do business in
                  Massachusetts and in good standing therein insuring the LESSOR
                  as well as LESSEE against injury to persons or damage to
                  property as provided. LESSEE agrees to increase limits as
                  LESSOR'S mortgagee reasonably requires. The LESSEE shall
                  deposit with the LESSOR certificates for such insurance at or
                  prior to the commencement of the Term, and thereafter within
                  thirty (30) days prior to the expiration of any such policies.
                  All such insurance certificates shall provide that such
                  policies shall not be canceled without at least ten (10) days
                  prior written notice to each assured named therein.

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                  B. LESSOR'S Liability Insurance. LESSOR covenants that it
                  shall maintain throughout the Term of this lease(i)
                  comprehensive general liability insurance against all claims
                  and demands for any injury to person or property which may be
                  claimed to have occurred on the Property in such amounts as
                  are commercially reasonable in the greater Boston,
                  Massachusetts area; and (ii) all risk property insurance.

18.   FIRE,       Should a substantial portion of the Premises, or of the
      CASUALTY,   property of which they are a part, be substantially damaged by
      EMINENT     fire or other casualty, or be taken by eminent domain, the
      DOMAIN      LESSOR may elect to terminate this lease. When such fire,
                  casualty, or taking renders the Premises substantially
                  unsuitable for its intended use, a just and proportionate
                  abatement of rent shall be made, and the LESSEE may elect to
                  terminate this lease if:

                  (a)   The LESSOR fails to give written notice within thirty
                        (30) days of the event of its intention to restore
                        Premises, or

                  (b)   The LESSOR fails to restore the Premises to a condition
                        substantially suitable for their intended use within
                        ninety (90) days of said fire, casualty or taking, as
                        such date may be extended ninety (90) days if LESSOR is
                        diligently working to restore the Premises and extended
                        an additional ninety (90) days for force majeure. LESSOR
                        reserves, and the LESSEE grants the LESSOR, all rights
                        which the LESSEE may have for damages or injury to the
                        Premises for any taking by eminent domain, except for
                        damage to the LESSEE'S fixtures, property, or equipment.

19.   DEFAULT     A)    In the event that:
      AND
      BANKRUPTCY        (i)   The LESSEE shall default in the payment of any
                              installment of rent or other sum herein specified
                              and such default shall continue for five (5) days
                              after written notice thereof; or

                        (ii)  The LESSEE shall default in the observance or
                              performance of any other of the LESSEE'S
                              covenants, agreements, or obligations hereunder
                              and such default shall not be corrected within
                              fifteen (15) days after written notice thereof, as
                              extended if LESSEE is working diligently and
                              continuously to cure; or

                        (iii) The LESSEE or any guarantor of LESSEE'S
                              obligations under the lease, files or is filed
                              against in any bankruptcy, insolvency or
                              reorganization petition; or

                        (iv)  The LESSEE shall be declared bankrupt or insolvent
                              according to law, or, if any assignment shall be
                              made of LESSEE'S property for the benefit of
                              creditors, or

                        (v)   Any attachment is made of the leasehold interest
                              outlined in this lease which is not removed within
                              sixty (60) days; or

                        (vi)  A receiver is appointed to conduct LESSEE'S
                              business (whether or not LESSOR has re-entered the
                              premises) then the LESSOR shall have the right
                              thereafter, while such default continues, to
                              re-enter and take complete possession of the
                              Premises, to terminate this lease, and remove the
                              LESSEE'S effects without prejudice to any remedies
                              which might be otherwise used for arrears of rent
                              or other default. The LESSEE shall indemnify the
                              LESSOR against all loss of rent and additional
                              rent and other payments which the LESSOR may incur
                              by reason of such termination during the residue
                              of the

                                        9
<PAGE>

                              term. If the LESSEE shall default, after
                              reasonable notice thereof; in the observance or
                              performance of any conditions or covenants on
                              LESSEE'S part to be observed or performed under or
                              by virtue of any of the provisions in any article
                              of this lease, the LESSOR, without being under any
                              obligation to do so and without thereby waiving
                              such default, may remedy such default for the
                              account and at the expense of the LESSEE. If the
                              LESSOR makes any expenditures or incurs any
                              obligations for the payment of money in connection
                              therewith, including but not limited to,
                              reasonable attorney's fees in instituting,
                              prosecuting or defending any action or proceeding,
                              such sums paid or obligations incurred, with
                              interest at the rate of 18 per cent per annum and
                              costs, shall be paid to the LESSOR by the LESSEE
                              as additional rent. Any sums not paid when due
                              shall bear interest at 18 per cent per annum until
                              paid. LESSEE shall pay an administrative fee if a
                              check does not clear.

                  B)    LESSOR'S REMEDIES. If any one or more events of default
                        set forth above occurs, LESSOR may, at its election:

                        (i)   Give LESSEE written notice of LESSOR'S intention
                              to terminate this Lease on the earliest date
                              permitted by law or on any later date specified in
                              such notice, in which case LESSEE'S right to
                              possession of the Premises will cease and this
                              Lease will be terminated, except as to LESSEE'S
                              liability, as if the expiration of the term fixed
                              in such notice were the end of the Term;

                        (ii)  Without further demand or notice, and without
                              terminating this Lease, reenter and take
                              possession of the Premises or any part of the
                              Premises, repossess the same, expel LESSEE and
                              those claiming through or under LESSEE and remove
                              the effects of both or either, using such force
                              for such purposes as may be necessary, without
                              being liable for prosecution, without being deemed
                              guilty of any matter of trespass, and without
                              prejudice to any remedies for arrears of Monthly
                              Rent or other amounts payable under this Lease or
                              as a result of any preceding breach of covenants
                              or conditions; or

                        (iii) Without further demand or notice to cure any event
                              of default and charge LESSEE for the cost of
                              effecting such cure, including without limitation
                              reasonable attorneys' fees and interest on the
                              amount of 18 percent per annum, provided that
                              LESSOR will have no obligation to cure any such
                              event of default of LESSEE.

                  If LESSOR elects to reenter as provided in subsection (ii) or
                  if LESSOR takes possession pursuant to legal proceedings or
                  pursuant to any notice provided by law, LESSOR may, from time
                  to time, without terminating this Lease, relet the Premises or
                  any part of the Premises in LESSOR'S or LESSEE'S name, but for
                  the account of LESSEE, for such term or terms (which may be
                  greater or less than the period which would otherwise have
                  constituted the balance of the Term) and on such conditions
                  and upon such other terms (which may include concessions of
                  free rent and alteration and repair of the Premises) as
                  LESSOR, in its reasonable discretion, may determine, and
                  LESSOR may collect and receive the rents from such reletting.
                  LESSOR will in no way be responsible or liable for any failure
                  to relet the Premises, or any part of the Premises, or for any
                  failure to collect any rent due upon such reletting. No such
                  reentry or taking possession of the Premises by LESSOR will be
                  construed as an election on LESSOR'S part to terminate this
                  Lease unless a written notice of such intention is given to
                  LESSEE. No written notice from LESSOR under this Section or
                  under a forcible or unlawful entry and detainer statute or
                  similar law will constitute an election by LESSOR to terminate
                  this Lease unless such notice specifically so states. LESSOR
                  reserves the right following any such reentry or reletting to
                  exercise its right

                                       10
<PAGE>

                  to terminate this Lease by giving LESSEE such written notice,
                  in which event this Lease will terminate as specified in such
                  notice. LESSOR shall use reasonable efforts to relet the
                  Premises.

20.   NOTICE      Any Notice from the LESSOR to the LESSEE relating to the
                  Premises or to the occupancy thereof, shall be in writing and
                  be deemed duly served, if mailed to the Notice Address in
                  Section 1 of this Lease, or other such address as LESSEE may,
                  from time to time, advise in writing, registered or certified
                  mail, return receipt requested, postage prepaid or by
                  overnight carrier, addressed to the LESSEE. Any Notice from
                  the LESSEE to the LESSOR relating to the Premises or to the
                  occupancy thereof, shall be deemed duly served, if mailed to
                  the LESSOR by registered or certified mail, return receipt
                  requested, postage prepaid or by overnight carrier, addressed
                  to the LESSOR at the address in Section 1 of this Lease or
                  such other address as the LESSOR may from time to time advise
                  in writing. All rent notices shall be paid and sent to the
                  LESSOR at its notice address or such other address as may be
                  designated by LESSOR. All notices shall be effective when
                  received or refused.

21.   SURRENDER   The LESSEE shall at the expiration or other termination of
                  this Lease remove all LESSEE'S goods and effects from the
                  Premises, (including, without hereby limiting the generality
                  of the foregoing, all signs and lettering affixed or painted
                  by the LESSEE, either inside or outside the Premises). LESSEE
                  shall deliver to the LESSOR the Premises and all keys, locks
                  thereto, and other fixtures connected therewith and all
                  alterations and additions made to or upon the Premises, in
                  good condition, reasonable wear and tear and, damage by fire
                  or other casualty only excepted. In the event of the LESSEE'S
                  failure to remove any of LESSEE'S property from the Premises,
                  LESSOR is hereby authorized, without liability to LESSEE for
                  loss or damage thereto, and at the sole risk of LESSEE, to
                  remove and store any of the property at LESSEE'S expense, or
                  to retain same under LESSOR'S control or to sell at public or
                  private sale, without notice any or all of the property not so
                  removed and to apply the net proceeds of such sale to the
                  payment of any sum due hereunder, or to destroy such property.
                  The LESSEE shall restore all damage to the Premises which may
                  have occurred during the use of Premises or while vacating the
                  Premises. Any items which the LESSEE installs, which replace
                  items on the Premises when LESSEE took occupancy are deemed to
                  be LESSOR'S property.

22.   BROKERAGE   LESSEE warrants and represents that LESSEE has dealt with no
                  broker other than the broker listed in Section 1 of this lease
                  in connection with the consummation of this Lease and, in the
                  event of any brokerage claims against LESSOR predicated upon
                  prior dealings with LESSEE, LESSEE agrees to defend the same
                  and indemnify LESSOR against any such claim.

23.   LESSOR'S    The LESSOR is not personally liable under this
      LIABILITY   Lease. (a) LESSEE specifically agrees to look solely to the
                  LESSOR'S then equity in the property of which the Premises are
                  a part (and to proceeds thereof) for recovery of any judgment
                  from LESSOR it being specifically agreed that LESSOR (original
                  or successor) shall never be personally liable for any such
                  judgment or for the payment of any monetary obligation to
                  LESSEE. The provisions contained in the foregoing sentence are
                  not intended to, and shall not, limit any right the LESSEE
                  might otherwise have to obtain injunctive relief against
                  LESSOR or to take any action not involving the liability of
                  LESSOR to respond in monetary damages from LESSOR'S assets
                  other than from such property.

24.   WAIVER      Failure on the part of the LESSOR or LESSEE to complain of any
                  action or non-action on the part of the other, no matter how
                  long the same may continue, shall never be a waiver by LESSOR
                  or LESSEE, respectively, of its rights hereunder. Further, no

                                       11

<PAGE>

                  waiver at any time of the provisions hereof, by LESSOR or
                  LESSEE shall be construed as a waiver of any of the other
                  provisions hereof, and a waiver at any time of any of the
                  provisions hereof shall not be construed as a waiver at any
                  subsequent time of the same provisions. The consent or
                  approval of LESSOR or LESSEE to, or of any action by the other
                  requiring such consent or approval, shall not be construed to
                  waive or render unnecessary LESSOR'S or LESSEE'S consent or
                  approval to or of any subsequent similar act by the other.

25.   STATUS      Recognizing that both parties may find it necessary to
      REPORT      establish to third parties, from time to time, the then
                  current status of performance hereunder, either party will,
                  within ten (10) days after receipt of a request therefor,
                  furnish a reasonable statement of the status of this Lease,
                  including without limitation, acknowledgments that (or the
                  extent to which) each party is in compliance with its
                  obligations under the terms of the Lease.

26.   BUILDOUT    Except as specifically provided herein, LESSEE shall accept
                  possession of Premises in "As Is" condition. Except as
                  specifically provided below, LESSOR has no obligation and has
                  made no promise to alter, remodel, improve, repair, decorate
                  or paint the Premises or any part of the Premises, or to pay
                  for such work, and LESSOR has not made any representations to
                  LESSEE with respect to the condition of the Premises.

            A.    PLANS    LESSEE shall cause its architect (the "Architect") to
                           prepare (consistent with the building specifications
                           or standards) and submit to LESSOR for its approval
                           complete architectural plans, drawings and
                           specifications for all LESSOR'S Work (defined below),
                           including, without limitation, complete engineered
                           mechanical and electrical working drawings for the
                           premises, showing the subdivision, layout, finish and
                           decoration work desired by LESSEE therefore, and any
                           internal or external communications or special
                           utility facilities which will require installation of
                           conduits or other improvements within common areas,
                           all in such form and in such detail as my be required
                           by LESSOR. Such complete plans, drawings and
                           specifications are referred to herein as "Final
                           Plans". LESSEE shall submit the Final Plans for the
                           approval of LESSOR, and such final plan shall be
                           delivered to LESSOR no later than April 21, 2000.
                           Within five (5) business days after LESSOR receives
                           the Final Plans for approval, LESSOR shall give its
                           written approval of the Final Plans, or provide
                           LESSEE with specific written objections to the Final
                           Plans. If LESSOR does not respond within such five
                           (5) business day period, LESSOR shall be deemed to
                           have approved the Final Plans on the fifth business
                           day of such period. If LESSOR objects to the Final
                           Plans LESSEE and LESSOR shall meet within three (3)
                           business days after said objection to resolve the
                           objections and to deliver to Architect such
                           information as may be necessary to enable Architect
                           to cause the Final Plans to be revised consistent
                           with LESSOR'S objections. The day on which LESSOR
                           approves, or is deemed to have approved, the Final
                           Plans, shall be hereinafter referred to as the
                           "Approval Date".

            B.    SCHEDULE Based on the Final Plans and on or before the
                           Approval Date, the Architect and LESSOR'S
                           representatives shall reasonably agree on the number
                           of days within which the LESSEE Improvement Work
                           should be substantially complete if pursued with
                           commercially reasonable diligence (the "Scheduled
                           Completion Period").

            C.    WORK     LESSOR shall construct the tenant improvements
                           ("LESSOR'S Work") LESSOR shall pay an amount not to
                           exceed Three Hundred Three Thousand Seven Hundred
                           Twenty and No/100 Dollars ($303,720.00), which sum

                                       12

<PAGE>

                           of completing the space planning, working drawings,
                           engineering, permits, architect's fees and other fees
                           and LESSOR'S Work (the "LESSOR'S Contribution"), and
                           LESSEE shall pay for all costs of completing the
                           LESSOR'S Work in excess of LESSOR'S Contribution
                           ("LESSEE'S Contribution"). LESSEE'S Contribution
                           shall be paid to LESSOR prior to the Commencement of
                           LESSOR'S Work. And, LESSEE shall provide payment for
                           any change orders at the time of LESSEE'S approval of
                           each change order.

            D.    LESSEE   To the extent LESSEE delays in delivering the Final
                  DELAY    Plans to LESSOR as set forth in Section A above, the
                           Commencement Date shall be moved up one day for each
                           such day of delay by LESSEE.

                           i) Any change by LESSEE in any of the Final Plans
                           after LESSEE'S approval thereof:

                           ii) Any other act or omission of LESSEE or its
                           officers, agents, servants or contractors:

                           iii) Any reasonably necessary displacement of any of
                           LESSOR'S Work from its place in LESSOR'S construction
                           schedule resulting from any of the causes for delay
                           referred to in clauses (i), (ii), or this paragraph
                           and the fitting of such Work back into such schedule;
                           then LESSEE shall, from time to time and within ten
                           (10) business days after demand therefor, pay to
                           LESSOR for each day of such delay the amount of Basic
                           Rent, Escalation Charges and other charges that would
                           have been payable hereunder and the LESSEE'S
                           obligation to pay Basic Rent commenced immediately
                           prior to such delay.

            E.    LESSOR   If the LESSOR'S Work is not complete by the Scheduled
                  DELAY    Completion Date, the LESSEE shall be allowed to
                           remain in the Temporary Premises and pay rent on only
                           the Temporary Premises until such time as the
                           Premises are substantially complete. Substantial
                           completion shall be deemed to have occurred when the
                           Architect and LESSOR'S representative reasonably
                           agree that the only remaining LESSOR'S Work to be
                           completed are minor, so-called punch list items.
                           LESSEE shall have the right to remain in the
                           Temporary Premises until seven (7) days after
                           substantial completion of the LESSOR'S Work.

                           The delays referred to above are herein referred to
                           collectively and individually as "LESSEE'S Delay."

            F.    CONCLUSIVE-
                  NESS OF
                  PERFORM- Except to the extent to which LESSEE shall have given
                  ANCE     LESSOR notice, not later than the end of the second
                           full calendar month beginning after substantial
                           completion of the LESSOR'S Work, of any respects in
                           which LESSOR has not performed LESSOR'S Work, LESSOR
                           shall be deemed to have completed the LESSOR'S Work
                           as of such substantial completion date.

27.   LESSOR'S    LESSOR warrants and represents that it is the owner of record
      WARRANTY    of the Premises and that it has authority to grant the
                  leasehold interest conveyed hereby.

28.   SEVERABIL-  To the extent any term or provision of this Lease, or the
      ITY         application thereof to any person or circumstance shall be
                  invalid or unenforceable, the remainder of this Lease,

                                       13

<PAGE>

                  or the application of such term or provision to persons or
                  circumstances other than those as to which it is held invalid
                  or unenforceable, shall not be affected thereby, and each term
                  and provision of this Lease shall be valid and be enforced to
                  the fullest extent permitted by law.

29.   RECORDING   LESSEE agrees not to record this Lease, but, if the Term of
                  this Lease (including any extended term) is seven (7) years or
                  longer, each party hereto agrees, on the request of the other,
                  to execute a so-called Notice of Lease in recordable form and
                  complying with applicable law and reasonably satisfactory to
                  LESSOR'S and LESSEE'S attorneys. Such document shall expressly
                  state that it is executed pursuant to the provisions contained
                  in this Lease, and is not intended to vary the terms and
                  conditions of this Lease.

30.   HOLDING     Any Holding Over by LESSEE after the expiration of the Term of
      OVER        this Lease shall be treated as a tenancy at sufferance at a
                  rate equal to one and one-half times the Basic Rent then in
                  effect plus Additional Rent and other charges herein provided.
                  LESSEE shall also pay to LESSOR all direct damages sustained
                  by reason of any such holding over. Otherwise, such Holding
                  Over shall be on the terms and conditions set forth in this
                  Lease as far as applicable.

31.   GOVERNING   This Lease shall be governed exclusively by the provisions
      LAW         hereof and by the laws of the Commonwealth of Massachusetts,
                  as the same may from time to time exist. No amendment,
                  alteration, modification of, or addition to the Lease will be
                  valid or binding unless expressed in writing and signed by
                  LESSOR and LESSEE. LESSEE agrees to make any modifications of
                  the terms and provisions of this Lease required and requested
                  by any lending institution providing financing for the
                  Building, or Project, as the case may be, provided that no
                  such modifications will materially adversely affect LESSEE'S
                  rights and obligations under this Lease.

32.   RELOCATION  Deleted.

33.   ENTIRE      This Lease and the Exhibits made a part hereof contain the
      AGREEMENT   entire and only agreement between the parties and any and all
                  statements and representations, written and oral, including
                  previous correspondence and agreements between the parties
                  hereto, are merged herein. LESSEE acknowledges that all
                  representations and statements upon which it relied in
                  executing this Lease are contained herein and that the LESSEE
                  in no way relied upon any other statements or representations,
                  written or oral. Any executory agreement hereafter made shall
                  be ineffective to change, modify, discharge or effect an
                  abandonment of this Lease in whole or in part unless such
                  executory agreement is in writing and signed by the party
                  against whom enforcement of the change, modification,
                  discharge or abandonment is sought.

34.   RULES &
      REGULATIONS
                  LESSEE, its employees, agents, licensees, and visitors will at
                  all times, observe faithfully, and comply strictly with, the
                  Rules and Regulations set forth in Exhibit E. LESSOR may from
                  time to time reasonably amend, delete, or modify existing
                  Rules and Regulations, or adopt reasonable new Rules and
                  Regulations for the use, safety, cleanliness, and care of the
                  Premises and the Property, and the comfort, quiet, and
                  convenience of occupants of the Property. Modifications or
                  additions to the Rules and Regulations will be effective upon
                  thirty (30) days' prior written notice to LESSEE from LESSOR.
                  In the event of any breach of any Rules or Regulations or any
                  amendments or additions to such Rules and Regulations, LESSOR
                  will have all remedies that this Lease provides for default by
                  LESSOR, and will in addition have

                                       14

<PAGE>

                  any remedies available at law or in equity, including the
                  right to enjoin any breach of such Rules and Regulations.
                  LESSOR will not be liable to LESSEE for violation of such
                  Rules and Regulations by any other tenant, its employees,
                  agents, visitors, or licensees or any other person. In the
                  event of any conflict between the provisions of this Lease and
                  the Rules and Regulations, the provisions of this Lease will
                  govern.

35.   OPTION TO   Provided that at the time of such exercise (i) there then
      EXTEND      exists no Default of LESSEE, (ii) this Lease is then in full
                  force and effect, and (iii) LESSEE is in actual occupancy of
                  all or substantially all of the Premises, LESSEE shall have
                  the right and option to extend the term of this Lease for one
                  (1) extended term of five years (the "Extended Term"). The
                  Extended Term shall commence on the day immediately succeeding
                  the expiration date of the Initial Term, and shall end on the
                  day immediately preceding the fifth anniversary of the first
                  day of such Extended Term. LESSEE shall exercise such option
                  to extend by giving written notice to LESSOR of its desire to
                  do so not earlier than twelve (12) months and not later than
                  nine (9) months prior to the expiration date of the Initial
                  Term. Provided the conditions of clauses (i), (ii) and (iii)
                  of this section shall have been satisfied, the giving of such
                  notice by LESSEE shall automatically extend the Term of this
                  Lease for the Extended Term, and no instrument of renewal need
                  be executed. In the event that LESSEE fails to give such
                  notice to LESSOR, this Lease shall automatically terminate at
                  the end of the Initial Term, and LESSEE shall have no further
                  option to extend the Term of this Lease. It is agreed that
                  time is of the essence with respect to the giving of such
                  notice. The Extended Term shall be on all the terms and
                  conditions of this Lease, except that (I) option to extend
                  that Term of this Lease shall be deleted, and (II) the Basic
                  Rent for the Extended Term shall be at Fair Market Value, not
                  less than the sum of the rent and all additional rent being
                  paid by LESSEE during the final year of the Initial Term.
                  LESSOR shall designate Fair Market Value, (the "Fair Market
                  Value") by written notice to LESSEE within sixty (60) days of
                  receipt of notice from LESSEE. If LESSEE disagrees with such
                  designation, (the "Designation"), LESSEE shall by written
                  notice within thirty (30) days after receipt of LESSOR'S
                  figure, advise LESSOR of such disagreement; otherwise LESSEE
                  shall conclusively be deemed to have agreed to such
                  Designation.

                  In the event that the Parties are unable to agree, each Party
                  shall appoint an appraiser. Each appraiser so appointed shall
                  be instructed to determine independently the Fair Market Value
                  and then confer. If the two appraisers are unable to determine
                  a Designation acceptable to both parties, they shall appoint a
                  third appraiser. The Designation of this appraiser shall be
                  considered final.

                                       15

<PAGE>

36.   TEMPORARY   LESSEE may occupy the Temporary Premises (the "Temporary
      TENANCY     Tenancy") under the same terms and conditions as the Premises
                  from March 6, 2000 until substantial completion of the
                  Premises except that the Basic Rent shall be $25,037.82 per
                  month, pro-rated for any partial month and there shall be no
                  Additional Rent due for the Temporary Tenancy and the Term
                  shall be extended for the Temporary Tenancy.

37.   RIGHT OF
      FIRST       If at any time during the Term of this Lease of this Lease,
      OFFER       LESSOR shall desire to Lease Suite 550 consisting of 7,272
                  rentable square feet on the fifth floor of the Building or
                  Suite 530 consisting of 3,364 rentable square feet on the
                  fifth floor of the Building as described in Exhibit G1
                  attached hereto or LESSOR shall desire to lease Suite 1000
                  consisting of 22,664 rentable square feet on the tenth floor
                  of the Building as described in Exhibit G2, attached hereto,
                  (the "First Offer Space"), LESSOR shall notify LESSEE and set
                  forth the terms and conditions on which LESSOR is willing to
                  lease the First Offer Space, including, without limitation,
                  rent, build-out allowance and other incentives or inducements
                  to lease, if any. LESSEE acknowledges that LESSOR has granted
                  this Right of First Offer for Suite 1000 to the Yankee Group
                  prior to the Execution of this Lease. Provided that the time
                  of such exercise (i) there then exists no Default of LESSEE,
                  (ii) this Lease is then if full force and effect, and (iii)
                  LESSEE is in actual occupancy of the entire Premises demised
                  thereunder, LESSEE may, by giving notice in writing to LESSOR
                  within three (3) Business Days after receipt of LESSOR'S
                  notice, elect to lease the First Offer Space on the terms so
                  offered by LESSOR. If LESSEE shall so elect to lease the First
                  Offer Space, it shall within seven (7) days after such
                  election enter into an amendment to this Lease incorporating
                  the terms and contained in LESSOR'S notice. If LESSEE shall
                  not elect to lease the First Offer Space within such three (3)
                  Business Day period, or shall fail to enter into such
                  amendment to this Lease within such seven-day period, LESSEE
                  shall have no further rights under this section with respect
                  to the First Offer Space and LESSOR shall be free to lease any
                  or all of such space to other parties.

IN WITNESS WHEREOF, the said parties hereunto set their hands and seals as of
the date above.

LESSEE: PaperExchange.com, LLC    LESSOR: OMV Associates Limited Partnership
                                      BY: Park Square Corporation - its General
                                          Partner
                                      BY: Richard D. Cohen - its President

BY:_________________________

____________________________              _________________________________

Hereunto Duly Authorized

<PAGE>

                                    Premises

Not to Scale                                                  Capital Properties
                                                                  February, 1998

                               [GRAPHIC OMITTED]

                                                       Fifth Floor Stacking Plan
                                                        The Park Square Building

                         Winter Street Architects, Inc.

<PAGE>

                                    EXHIBIT B

                          Legal Description of the Land

All that certain lot, piece or parcel of land situated, lying and being in the
City of Boston, Suffolk County, Massachusetts. with the buildings thereon,
bounded and described as follows:

NORTHERLY:  by Providence Street, six hundred seven and 40/100 (607.40) feet.

EASTERLY:   by Arlington Street, seventy-five and 06/100 (75.06) feet,

SOUTHERLY:  by St. James Avenue, six hundred four and 31/100 (604.31) feet and

WESTERLY:   by Berkeley Street, seventy-five (75) feet

containing 45,439 square feet, more or less and being the same premises conveyed
by deed dated April 30, 1981 and recorded with Suffolk County Registry of Deeds,
Book 9741, Page 184.

                                       18

<PAGE>

                                    EXHIBIT C

                      ITEMS INCLUDED IN OPERATING EXPENSES

Without limitation, Operating Expenses shall include:

1.    All expenses incurred by Lessor or Lessor's agents which shall be directly
      related to employment of personnel for the Property, including amounts
      incurred for wages, salaries and other compensation for services, payroll,
      social security, unemployment and similar taxes, workmen's compensation
      insurance, disability benefits, pensions, hospitalization, retirement
      plans and group insurance, uniforms and working clothes and the cleaning
      thereof, and expenses imposed on Lessor or Lessor's agents pursuant to any
      collective bargaining agreement for the services of employees of Lessor or
      Lessor's agents in connection with the operation, repair, maintenance,
      cleaning, management and protection of the Property, and its mechanical
      systems including, without limitation, day and night supervisors, property
      manager, accountants, bookkeepers, janitors, carpenters, engineers,
      mechanics, electricians and plumbers and personnel engaged in supervision
      of any of the persons mentioned above; provided that, if any such employee
      is also employed for other property of Lessor, such compensation shall be
      suitably prorated among the Property and such other properties.

2.    The cost of services, utilities, materials and supplies furnished or used
      in the operation, repair, maintenance, including without limitation fees,
      if any, imposed upon Lessor, or charged to the Property, by the state or
      municipality in which the Property is located on account of the need of
      the Property for increased or augmented public safety services.

3.    The cost of replacements for tools and other similar equipment used in the
      repair, maintenance, cleaning and protection of the Property, provided
      that, in the case of any such equipment used jointly on other properties,
      such costs shall be suitably prorated among the Property and such other
      properties.

4.    Where the Property is managed by Lessor or an affiliate of Lessor, a sum
      equal to the amounts customarily charged by management firms in the
      Boston/Brookline area for similar properties, but in no event more than
      five (5%) percent of gross annual income, whether or not actually paid, or
      where managed by other than Lessor or an affiliate thereof, the amounts
      charged for management, together with, in either case, reasonable amounts
      charged for legal and other professional fees relating to the Property,
      but excluding such fees and commissions paid in connection with services
      rendered for securing, terminating or renewing leases and administration
      and operation of the Premises.

5.    Reasonable premiums for insurance against damage or loss to the Property
      from such hazards as shall from time to time be required by mortgagees.

6.    If, during the Term of this Lease, Lessor shall make a capital
      expenditure, the total cost of which is not properly includable in
      Operating Expenses for the Operating Year in which it was made, there
      shall nevertheless be included in such Operating Expenses for the
      Operating Year in which it was made and in Operating Expenses for each
      succeeding Operating Year the annual charge-off of such capital
      expenditure; and the useful life shall be determined reasonably by Lessor
      in accordance with generally accepted accounting principles and practices
      in effect at the time of making such expenditure.

7.    Costs for electricity, water and sewer use charges, and other utilities
      supplied to the Property and not paid for directly by Lessees.

8.    Betterment assessments provided the same are apportioned equally over the
      longest period permitted by law, and any other governmental charges or
      taxes not included in Taxes, including linkage payments, if any.

9.    Amounts paid to independent contractors for services, materials, and
      supplies furnished for the operation, repair. maintenance, cleaning and
      protection of the Property.

                                       19

<PAGE>

10.   The following items shall be excluded from the Operating Expenses:

            o     Electricity which is billed directly to LESSEE or any Tenant
                  in the Building.

            o     Mortgage Charges

            o     Brokerage commissions

            o     Cost of work done by LESSOR for a particular tenant for which
                  LESSOR has the right to be reimbursed by such tenant.

                                       20

<PAGE>

                                    Exhibit D
                               Temporary Premises

Not to Scale                                                  Capital Properties
                                                                  February, 1998

                               [GRAPHIC OMITTED]

                                                       Third Floor Stacking Plan
                                                        The Park Square Building

                         Winter Street Architects, Inc.

<PAGE>

                                    EXHIBIT E

                               Rules & Regulations

      1. LESSOR may from time to time adopt appropriate systems and procedures
for the security or safety of the Building, any persons occupying, using or
entering the Building, or any equipment, finishings, or contents of the
Building, and LESSEE will comply with LESSOR'S requirements relative to such
systems and procedures, provided the foregoing shall not impair LESSEE'S right
to have access to the Premises twenty-four hours per day, seven days per week,
fifty-two weeks per year.

      2. The sidewalks, halls, passages, exits, entrances, elevators, and
stairways of the Building will not be obstructed by any tenant or used for any
purpose other than for ingress to and egress from the Building. The halls,
passages, exits, entrances, elevators, escalators, and stairways are not for the
general public, and LESSOR will in all cases retain the right to control and
prevent access to such halls, passages, exits, entrances, elevators, and
stairways of all persons whose presence in the judgment of LESSOR would be
prejudicial to the safety, character, reputation, and interests of the Building
and its tenants, provided that nothing contained in these rules and regulations
will be construed to prevent such access to persons with whom any tenant
normally deals in the ordinary course of its business, unless such persons are
engaged in illegal activities. No lessee and no employee or invitee of any
tenant will go upon the roof of the Building except such roof or portion of such
roof as may be contiguous to a Premises of a particular tenant and may be
designated in writing by LESSOR as a roof deck or roof garden area. No tenant
will be permitted to place or install any object (including without limitation
radio and television antennas, loudspeakers, sound amplifiers, microwave dishes,
solar devices, or similar devices) on the exterior of the Building or on the
roof of the Building.

      3. No sign, placard, picture, name advertisement, or written notice
visible from the exterior of LESSEE'S Premises will be inscribed, painted,
affixed, or otherwise displayed by LESSEE on any part of the Building or the
Premises without the prior written consent of LESSOR, other than signs approved
per this Lease. LESSOR will adopt and furnish to LESSEE general guidelines
relating to signs inside the Building on the office floors. LESSEE agrees to
conform to such guidelines. All approved signs or lettering on doors will be
printed, painted, affixed, or inscribed at the expense of the LESSEE by a person
approved by LESSOR. Other than window treatments expressly permitted by LESSOR
and building standard window treatments, material visible from outside the
Building will not be permitted. In the event of the violation of this rule by
LESSEE, LESSOR may remove the violating items without any liability, and may
charge the expenses incurred by such removal to the tenants or tenants violating
this rules.

      4. No cooking will be done or permitted by any LESSEE on the Premises,
except in areas of the Premises which are specially constructed for cooking and
except that use by LESSEE of microwave ovens and Underwriters' Laboratory
approved equipment for brewing coffee, tea, hot chocolate, and similar beverages
will be permitted, provided that such use is in accordance with all applicable
federal, state and city laws, codes, ordinances, rules and regulations.

      5. No LESSEE will employ any person or persons other than the cleaning
service of LESSOR for the purpose of cleaning the Premises, unless otherwise
agreed to by LESSOR in writing. Except with the written consent of LESSOR, no
person or persons other than those approved by LESSOR will be permitted to enter
the Building for the purpose of cleaning it. No LESSEE will cause any
unnecessary labor by reason of such LESSEE'S carelessness or indifference in the
preservation of good order and cleanliness. Should LESSEE'S actions result in
any increased expenses for any required cleaning, LESSOR reserves the right to
assess LESSEE for such expenses.

      6. The toilet rooms, toilets, urinals, wash bowls and other plumbing
fixtures will not be used for any purposes other than those for which they were
constructed, and no sweepings, rubbish, rags, or other foreign substances will
be thrown in such plumbing fixtures. All damages resulting from any misuse of
the fixtures will be borne by the tenant who, or whose servants, employees,
agents, visitors, or licensees, caused the same.

                                       22

<PAGE>

      7. No LESSEE, or LESSEE'S invitees or licensees, will in any way deface
any part of the Premises or the Building of which they form a part. in those
portions of the Premises where carpet has been provided directly or indirectly
by LESSOR, LESSEE will at its own expense install and maintain pads to protect
the carpet under all furniture having casters other than carpet casters.

      8. No LESSEE will alter, change, replace, or rekey any lock or install a
new lock or a knocker on any door of the Premises. LESSOR, its agents, or
employees will retain a pass (master) key to all door locks on the Premises. Any
new door locks required by LESSEE or any change in keying of existing locks will
be installed or changed by LESSOR following tenant's written request to LESSOR
and will be at LESSEE'S expense. all new locks and rekeyed locks will remain
operable by LESSOR'S pass (master) key. LESSOR will furnish each tenant, free of
charge, with two (2) keys to each suite entry door lock on the Premises. LESSOR
will have the right to collect a reasonable charge for additional keys and cards
requested by any tenant. Each tenant, upon termination of its tenancy, will
deliver to LESSOR all keys and access cards for the Premises and Building that
have been furnished to such tenant.

      9. The elevator designated for freight by LESSOR will be available for use
by all tenants in the Building during the hours and pursuant to such procedures
as LESSOR may determine from time to time. The persons employed to move LESSEE'S
equipment, material, furniture, or other property in or out of the Building must
be acceptable to LESSOR. The moving company must be a locally recognized
professional mover, whose primary business is performing of relocation services,
and must be bonded and fully insured. A certificate or other verification of
such insurance must be received and approved by LESSOR prior to the start of any
moving operations. Insurance must be sufficient, in LESSOR'S sole opinion, to
cover all personal liability, theft or damage to the Project, including but not
limited to floor coverings, doors, walls, elevators, stairs, foliage, and
landscaping. Special care must be taken to prevent damage to foliage and
landscaping during adverse weather. All moving operations will be conducted at
such times and in such a manner as LESSOR will direct, and all moving will take
place during non-Business Hours unless LESSOR agrees in writing otherwise.
LESSEE will be responsible for the provision of building security during all
moving operations, and will be liable for all losses and damages sustained by
any party as a result of the failure to supply adequate security. LESSOR will
have the right to prescribe the weight, size, and position of all equipment,
materials, furniture, or other property brought into the Building. Heavy objects
will, if considered necessary by LESSOR, stand on wood strips of such thickness
as is necessary to property distribute the weight. LESSOR will not be
responsible for loss of or damage to any such property from any cause, and all
damage done to the building by moving or maintaining such property will be
repaired at the expense of LESSEE. LESSOR reserves the right to inspect all such
property to be brought into the building and to exclude from the Building all
such property which violates any of these rules and regulations or the Lease of
which these rules and regulations are a part. Supplies, goods, materials,
packages, furniture, and all other items of every kind delivered to or taken
from the Premises will be delivered or removed through the entrance and route
designated by LESSOR, and LESSOR will not be responsible for the loss or damage
of any such property.

      10. No lessee will use or keep in the Premises or the building any
kerosene, gasoline, or inflammable or combustible or explosive fluid or material
or chemical substance other than limited quantities of such materials or
substances reasonably necessary for the operation or maintenance of office
equipment or limited quantities of cleaning fluids and solvents required in
lessee's normal operations in the Premises, which shall be stored in accordance
with applicable law. Without LESSOR'S prior written approval, no lessee will use
any method of heating or air conditioning other than that supplied by LESSOR. No
lessee will use or keep or permit to be used or kept any foul or noxious gas or
substance in the Premises.

      11. Lessees shall not , prior to or during the Term, either directly or
indirectly, employ or permit the employment of any contractor, mover, mechanic
or laborer, or permit any materials in the Premises, if the use of such
contractor, mover, mechanic or laborer or such materials would, in LESSOR'S
opinion, create any difficulty, strike or jurisdictional dispute with other
contractors, movers, mechanics or laborers engaged by LESSOR, lessee, or others,
or would in any way disturb the construction, maintenance, cleaning, repair,
management, security or operation of the Building, Project or any part thereof.
Any lessee, upon demand by LESSOR, shall cause all contractors, movers,
mechanics, laborers or materials causing such interference, difficulty or
conflict to leave or be removed from the Project immediately.

                                       23

<PAGE>

      12. LESSOR will have the right to prohibit any advertising by LESSEE
mentioning the Building, that in LESSOR'S reasonable opinion, tends to impair
the reputation of the Building or its desirability as a building for offices,
and upon written notice from LESSOR, LESSEE will refrain from or discontinue
such advertising.

      13. LESSEE will not bring any animals (except "Seeing Eye" dogs) or birds
into the building, and will not permit bicycles or other vehicles inside or on
the sidewalks outside the Building except in areas designated from time to time
by LESSOR for such purposes.

      14. All persons entering or leaving the building between the hours of 6
p.m. and 8 a.m. Monday through Friday, and at all hours on Saturdays, Sundays,
and holidays will comply with such off-hour regulations as LESSOR may establish
and modify from time to time. LESSOR reserves the right to limit reasonably or
restrict access to the Building during such time periods.

      15. Each lessee will store all its trash and garbage within its Premises.
No material will be placed in the trash boxes or receptacles if such material is
of such nature that it may not be disposed of in the ordinary and customary
manner of removing and disposing of trash and garbage without being in violation
of any law or ordinance governing such disposal. All garbage and refuse disposal
will be made only through entryways and elevators provided for such purposes and
at such times as LESSOR designates. Removal of any furniture or furnishings,
large equipment, packing crates, packing materials, and boxes will be the
responsibility of each lessee and such items may not be disposed of in the
Buildings trash receptacles nor will they be removed by the Building's
janitorial service, except at LESSOR'S sole option and at the lessee's expense.
No furniture, appliances, equipment, or flammable products of any type may be
disposed of in the Building trash receptacles.

      16. Canvassing, peddling, soliciting, and distributing handbills or any
other written materials in the Building are prohibited, and each lessee will
cooperate to prevent the same.

      17. The requirements of the lessee's will be attended to only upon
application by written, personal, or telephone notice at the office of the
Building. Employees of LESSOR or LESSOR'S agent will not perform any work or do
anything outside of their regular duties unless under special instructions from
LESSOR.

      18. A directory of the Building will be provided for the display of the
name and location of tenants only. all entries on the Building directory display
will conform to standards and style set by LESSOR in its sole discretion. Space
on any exterior signage will be provided in LESSOR'S sole discretion. No lessee
will have any right to the use of any exterior sign.

      19. LESSEE will see that the doors of the Premises are closed and locked
and that all water faucets, water apparatus, and utilities are shut off before
LESSEE or LESSEE'S employees leave the Premises, so as to prevent waste or
damage, and for any failure to comply or carelessness in this regard LESSEE will
make good all injuries sustained by other tenants or occupants of the Building
or LESSOR. On multiple-tenancy floors, all lessee's will keep the doors to the
Building corridors closed at all times except for ingress or egress.

      20. LESSEE will not conduct itself in any manner that is inconsistent with
the character of the building as a first quality building or that will impair
the comfort and convenience of other tenants in the Building.

      21. No act or thing done or omitted to be done by LESSOR or LESSOR'S agent
during the term of the Lease in connection with the enforcement of these rules
and regulations will constitute an eviction by LESSOR of any lessee nor will it
be deemed an acceptance of surrender of the Premises by any lessee, and no
agreement to accept such termination or surrender will be valid unless in a
writing signed by LESSOR. The delivery of keys to any employee or agent of
LESSOR will not operate as a termination of the Lease or a surrender of the
Premises unless such delivery of keys is done in connection with a written
instrument executed by LESSOR approving the termination or surrender.

      22. In these rules and regulations, the term "lessee" includes the
employees, agents, invitees, and licensees of LESSEE and others permitted by
LESSEE to use or occupy the Premises.

                                       24

<PAGE>

      23. LESSOR may waive any one or more of these rules and regulations for
the benefit of any particular lessee or lessees, but no such waiver by LESSOR
will be construed as a waiver of such rules and regulations in favor of any
other lessee or lessees, nor prevent LESSOR from enforcing any such rules and
regulations against any or all of the lessees of the Building after such waiver.

      24. These rules and regulations are in addition to, and will not be
construed to modify or amend, in whole or in part, the terms, covenants,
agreements, and conditions of the Lease.

                                       25

<PAGE>

                                   Exhibit F

                                    Signage

                                     None.

                                       26

<PAGE>

                                   Exhibit G1

                                First Offer Space

Not to Scale                                                  Capital Properties
                                                                  February, 1998

                               [GRAPHIC OMITTED]

                                                       Fifth Floor Stacking Plan
                                                        The Park Square Building

<PAGE>

                                   Exhibit G2
                                First Offer Space

Not to Scale                                                  Capital Properties
                                                                  February, 1998

                               [GRAPHIC OMITTED]

                                                       Tenth Floor Stacking Plan
                                                        The Park Square Building<PAGE>

                                                                     Exhibit 4.1

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

                                  STAPLES, INC.

                                       and

                    CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,

                                 as Rights Agent

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

                      Amended and Restated Rights Agreement

                          Dated as of October 25, 1999

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

<PAGE>

                                RIGHTS AGREEMENT

                  AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of October 25,
1999 (the "Agreement"), between Staples, Inc., a Delaware corporation (the
"Company"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited
liability company, as Rights Agent (the "Rights Agent").

                               W I T N E S S E T H

                  WHEREAS, on February 3, 1994, the Board of Directors of the
Company (the "Board") authorized and declared a dividend distribution of one
Right for each share of Common Stock (as hereinafter defined) of the Company
outstanding at the Close Of Business (as hereinafter defined) on February 15,
1994 (the "Record Date"), and authorized the issuance of one Right (as such
number may hereinafter be adjusted pursuant to the provisions of Section 11(p)
hereof) for each share of Common Stock of the Company issued between the Record
Date (whether originally issued or delivered from the Company's treasury) and
the Distribution Date, each Right initially representing the right to purchase
one one-hundredth of a share of Series A Junior Participating Preferred Stock of
the Company having the rights, powers and preferences set forth in the form of
Certificate of Designations attached hereto as EXHIBIT A, upon the terms and
subject to the conditions hereinafter set forth (the "Rights");

                  WHEREAS, the Company entered into a Rights Agreement, dated as
of February 3, 1994 (the "Original Agreement"), with The First National Bank of
Boston ("FNBB") as the original rights agent;

                  WHEREAS, FNBB has been terminated as the original rights agent
and the Company has appointed the Rights Agent as FNBB's successor; and

                  WHEREAS, the Company and the Rights Agent have agreed to make
certain changes to the Original Agreement as reflected herein.

                  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 any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the shares of Common Stock then outstanding,
but shall not include (i) the Company, (ii) any Subsidiary of the Company, (iii)
any employee benefit plan of the Company or of any Subsidiary of the Company, or
(iv) any Person or entity organized, appointed or established by the Company for
or pursuant to the terms of any such plan. Notwithstanding the foregoing, no
Person shall become an "Acquiring Person" as the result of an acquisition of
Common Stock by the Company which, by reducing the number of shares outstanding,
increases the proportionate number of shares Beneficially Owned by such Person
to 20% or more of the Common Stock of the Company then outstanding; PROVIDED,
HOWEVER, that if a Person shall become the Beneficial

<PAGE>

Owner of 20% or more of the Common Stock of the Company then outstanding by
reason of share purchases by the Company and shall, after such share purchases
by the Company, become the Beneficial Owner of any additional Common Stock of
the Company, then such Person shall be deemed to be an "Acquiring Person."
Notwithstanding the foregoing, if the Board of Directors of the Company
determines in good faith that a Person who would otherwise be an "Acquiring
Person," as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so that such Person
would no longer be an "Acquiring Person, " as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to be an
"Acquiring Person" for any purposes of this Agreement.

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

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

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

                      (i) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time) pursuant to
any agreement, arrangement or understanding (other than customary agreements
with and between underwriters and selling group members with respect to a bona
fide public offering of securities), whether or not in writing, or upon the
exercise of conversion rights, exchange rights, other rights, warrants or
options, or otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed the
"Beneficial Owner" of, or to "Beneficially Own," (A) securities tendered
pursuant to a tender or exchange offer made by such Person or any of such
Person's Affiliates or Associates until such tendered securities are accepted
for purchase or exchange, or (B) securities issuable upon exercise of Rights at
any time prior to the occurrence of a Triggering Event, or (C) securities
issuable 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(a) or Section 22 hereof (the "Original Rights") or pursuant to Section 11(i)
hereof in connection with an adjustment made with respect to any Original
Rights;

                      (ii) which such Person or any of such Person's Affiliates
or Associates, directly or indirectly, has the right to vote or dispose of or
has "Beneficial Ownership" of (as determined pursuant to Rule 13d-3 of the
General Rules and Regulations under the Exchange Act, or any comparable or
successor rule) , including pursuant to any agreement, arrangement or
understanding (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), whether or not in writing; PROVIDED, HOWEVER, that a Person shall
not be deemed the "Beneficial Owner" of, or to "Beneficially Own," any security
under this subparagraph (ii) as a result of an agreement, arrangement or
understanding to vote such security if such agreement, arrangement or
understanding: (A) arises solely from a revocable proxy given in response to a
public proxy or consent solicitation made pursuant to, and in accordance with,
the applicable provisions of the

                                       2
<PAGE>

General Rules and Regulations under the Exchange Act, and (B) is not also then
reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or

                      (iii) which are Beneficially Owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities), 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 (ii) of this paragraph (d)) or disposing of any
voting securities of the Company.

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

                  (e) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of New Jersey or the
State of Connecticut are authorized or obligated by law or executive order to
close.

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

                  (g) "Common Stock", when used in reference to the Company,
shall mean the common stock, $.0006 par value, of the Company, except that
"Common Stock" when used with reference to any Person other than the Company
shall mean the capital stock of such Person with the greatest voting power, or
the equity securities or other equity interest having power to control or direct
the management, of such Person.

                  (h) "Common stock equivalents" shall have the meaning set
forth in Section 11(a) (iii) hereof.

                  (i) "Continuing Director" shall mean (i) any member of the
Board, while such Person is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or Associate, and was a member
of the Board prior to the date of this Agreement, or (ii) any Person who
subsequently becomes a member of the Board, while such Person is a member of the
Board, who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, if such Person's nomination for election or election to
the Board is recommended or approved by a majority of the Continuing Directors.

                  (j) "Current market price" shall have the meaning set forth in
Section 11(d) (i) hereof.

                                       3
<PAGE>

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

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

                  (m) "Exchange Act" shall have the meaning set forth in Section
1(c) hereof.

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

                  (o) "Final Expiration Date" shall mean the Close Of Business
on February 15, 2004.

                  (p) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other entity.

                  (q) "Preferred Stock" shall mean shares of Series A Junior
Participating Preferred Stock, $.01 par value, of the Company having the rights
and preferences set forth in the form of Certificate of Designations attached to
this Agreement as EXHIBIT A and, to the extent that there is not a sufficient
number of shares of Series A Junior Participating Preferred Stock authorized to
permit the full exercise of the Rights, any other series of Preferred Stock,
$.01 par value, of the Company designated f or such purpose containing terms
substantially similar to the terms of the Series A Junior Participating
Preferred Stock.

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

                  (s) "Purchase Price" shall have the meaning set forth in
Section 4(a) hereof.

                  (t) "Record Date" shall have the meaning set forth in the
WHEREAS clause at the beginning of the Agreement.

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

                  (v) "Rights" shall have the meaning set forth in the WHEREAS
clause at the beginning of the Agreement.

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

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

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

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

                                       4
<PAGE>

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

                  (bb) "Stock Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) under the Exchange
Act) by the Company or an Acquiring Person that an Acquiring Person has become
such.

                  (cc) "Subsidiary" shall mean, with reference to any Person,
any corporation of which an amount of voting securities sufficient to elect at
least a majority of the directors of such corporation is Beneficially Owned,
directly or indirectly, by such Person, or otherwise controlled by such Person.

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

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

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

          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. The
Company may from time to time appoint such Co-Rights Agents as it may deem
necessary or desirable. The Rights Agent shall have no duty to supervise, and in
no event shall be liable for, the acts or omissions of any such Co-Rights Agent.

          Section 3. ISSUE OF RIGHTS CERTIFICATES.

                  (a) Until the earlier of (i) the Close Of Business on the
tenth day after the Stock Acquisition Date (or, if the tenth day after the Stock
Acquisition Date occurs before the Record Date, the Close of Business on the
Record Date), or (ii) the Close of Business on the tenth business day after the
date that a tender or exchange offer by any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or of any
Subsidiary of the Company, or any Person or entity organized, appointed or
established by the Company for or pursuant to the terms of any such plan) is
first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act, if upon consummation
thereof, such Person would be the Beneficial Owner of 30% or more of the shares
of Common Stock then outstanding (the earlier of (i) and (ii) being herein
referred to as the "Distribution Date"), (x) the Rights will be evidenced
(subject to the provisions of paragraph (b) of this Section 3) by the
certificates for the Common Stock registered in the names of the holders of the
Common Stock (which certificates for 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 Common Stock (including a transfer to the Company). As soon as
practicable after the Distribution Date, the Company shall promptly notify the
Rights Agent thereof and provide the Rights Agent with a shareholders list of
Common Stock, and the Rights Agent will send by first-class, insured, postage
prepaid mail,

                                       5
<PAGE>

to each record holder of the Common Stock as of the Close Of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more rights certificates, in substantially the form of EXHIBIT B
hereto (the "Rights Certificates"), evidencing one Right for each share of
Common Stock so held, subject to adjustment as provided herein. In the event
that an adjustment in the number of Rights per share of Common Stock has been
made pursuant to Section 11(p) hereof, at the time of distribution of the Right
Certificates, the Company shall make the necessary and appropriate rounding
adjustments (in accordance with Section 14(a) hereof) so that Rights
Certificates representing 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
substantially the form attached hereto as EXHIBIT C, by first-class, postage
prepaid mail, to each record holder of the 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. With respect to certificates for the Common Stock outstanding as
of the Close Of Business on the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates for the Common Stock and the
registered holders of the Common Stock shall also be the registered holders of
the associated Rights. Until the earlier of the Distribution Date or the
Expiration Date (as such term is defined in Section 7 hereof), the transfer of
any certificates representing shares of Common Stock in respect of which Rights
have been issued shall also constitute the transfer of the Rights associated
with such shares of Common Stock.

                  (c) Rights shall be issued in respect of all shares of Common
Stock that are issued (either as an original issuance or from the Company's
treasury) after the Record Date but prior to the earlier of the Distribution
Date or the Expiration Date. Certificates representing such shares of Common
Stock (including, without limitation, certificates issued upon transfer or
exchange of Common Stock) shall also be deemed to be certificates for Rights,
and shall bear the following legend:

                  This certificate also evidences and entitles the holder hereof
                  to certain Rights as set forth in the Rights Agreement between
                  Staples, Inc. (the "Company") and ChaseMellon Shareholder
                  Services, L.L.C. (the "Rights Agent") dated as of October 25,
                  1999 (the "Rights Agreement"), the terms of which are hereby
                  incorporated herein by reference and a copy of which is on
                  file at the principal offices of the Company. Under certain
                  circumstances, as set forth in the Rights Agreement, such
                  Rights will be evidenced by separate certificates and will no
                  longer be evidenced by this certificate. 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 Associates
                  thereof (as such terms are defined in the Rights Agreement),
                  whether currently held

                                       6
<PAGE>

                  by or on behalf of such Person or by any subsequent holder,
                  may become null and void.

With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Stock represented by such certificates shall be
evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented by such certificates. In the event
that the Company purchases or acquires any shares of Common Stock after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed cancelled and retired so that the Company shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding.

          Section 4. FORM OF RIGHTS CERTIFICATES.

                  (a) The Rights Certificates (and the forms of election to
purchase, certification and assignment to be printed on the reverse thereof)
shall each be substantially in the form set forth in EXHIBIT B hereto and may
have such marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement and which do not affect the
rights, duties or responsibilities of the Rights Agent, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or over-the-counter
market on which the Rights may from time to time be listed, or to conform to
usage. Subject to the provisions of Section 11 and Section 22 hereof, the Rights
Certificates, whenever distributed, shall entitle the holders thereof to
purchase such number of one one-hundredths of a share of Preferred Stock as
shall be set forth therein at the price set forth therein (such exercise price
per one one-hundredth of a share, the "Purchase Price"), but the amount and type
of securities purchasable upon the exercise of each Right and the Purchase Price
thereof shall be subject to adjustment as provided herein.

                  (b) Any Rights Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights Beneficially Owned by persons known to
be: (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) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom such
Acquiring Person has any continuing agreement, arrangement or understanding
regarding the transferred Rights or (B) a transfer which the Board of Directors
of the Company has determined is part of a plan, arrangement or understanding
that has as a primary purpose or effect avoidance of Section 7(e) hereof, and,
provided that the Company shall have notified the Rights Agent that this Section
4(b) applies, any Rights Certificate issued pursuant to Section 6 or Section 11
hereof upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain (to the extent feasible)
the following legend:

                                       7
<PAGE>

                  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). Accordingly,
                  this Rights Certificate and the Rights represented hereby may
                  become null and void in the circumstances specified in Section
                  7(e) of such Agreement.

          Section 5. COUNTERSIGNATURE AND REGISTRATION.

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

                  (b) Following the Distribution Date and receipt by the Rights
Agent of all relevant information, the Rights Agent will keep or cause to be
kept, at its office designated as the appropriate place 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 names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates, the Certificate
number and the date of each of the Rights Certificates.

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

                  (a) Subject to the provisions of Section 4(b), Section 7(e)
and Section 14 hereof, at any time after the Close Of Business on the
Distribution Date, and at or prior to the Close Of Business on the Expiration
Date, any Rights Certificate or Certificates (other than Rights Certificates
representing Rights that have become void pursuant to Section 7(e) hereof or
that have been exchanged pursuant to Section 24 hereof) may be transferred,
split up, combined or exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of one one-hundredths
of a share of Preferred Stock (or, following a Triggering Event, Common Stock,
other securities, cash or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitled such holder (or former
holder in the case of a transfer) to purchase. Any registered holder desiring to
transfer, split up, combine or

                                       8
<PAGE>

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,
with the form of assignment and certificate appropriately executed, 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 properly completed and signed the certificate contained 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) or Affiliates or Associates thereof as the Company or
the Rights Agent shall reasonably request. Thereupon the Rights Agent shall,
subject to Section 4(b), Section 7(e) and Section 14 hereof, countersign and
deliver to the Person entitled thereto a 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. The Rights Agent shall have no duty or obligation under
this Section 6 or under any provision of this Agreement which requires the
payment of taxes or governmental charges unless and until it is satisfied that
all such taxes and/or charges as required by the Company have been paid in full.

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

     Section 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.

                  (a) Subject to Section 7(e) hereof, the registered holder of
any Rights Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein including, without limitation, the restrictions on
exercisability set forth in Section 9(c), Section 11(a) (iii) and Section 23(a)
hereof) 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 with respect to the total number of one
one-hundredths of a share (or other securities, cash or other assets, as the
case may be) as to which such surrendered Rights are then exercisable, at or
prior to the earlier of (i) the Final Expiration Date, (ii) the time at which
the Rights expire as provided in Section 13(d) hereof, (iii) the time at which
the Rights are redeemed as provided in Section 23 hereof, or (iv) the time at
which such Rights are exchanged as provided in Section 24 hereof (the earlier of
(i), (ii), (iii) and (iv) being herein referred to as the "Expiration Date").

                  (b) The Purchase Price for each one one-hundredth of a share
of Preferred Stock pursuant to the exercise of a Right shall initially be
$110.00, and shall be subject to

                                       9
<PAGE>

adjustment from time to time as provided in Sections 11 and 13(a) hereof and
shall be payable in accordance with paragraph (c) below.

                  (c) Upon receipt of a Rights Certificate representing
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 per one one-hundredth of a share of Preferred Stock (or
other shares, securities, cash or other assets, as the case may be) to be
purchased as set forth below and an amount equal to any applicable tax or
governmental charge, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) (A) requisition from any transfer agent of the shares of
Preferred Stock (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of one one-hundredths of a
share of Preferred Stock to be purchased and the Company hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of shares of Preferred
Stock issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one one-hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depositary agent) 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 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such 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. The payment of
the Purchase Price (as such amount may be reduced pursuant to Section 11(a)
(iii) hereof) may be made in cash or by certified bank check or money order
payable to the order of the Company. In the event that the Company is obligated
to issue other securities (including Common Stock) of the Company, pay cash
and/or distribute other property pursuant to Section 11(a) hereof, the Company
will make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when
appropriate.

                  (d) In case the registered holder of any Rights Certificate
shall exercise less than all the Rights evidenced thereby, a new Rights
Certificate evidencing Rights equivalent to 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 6 and
Section 14 hereof.

                  (e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a) (ii) Event, any
Rights Beneficially Owned by (i) an Acquiring Person or an Associate or
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any such Associate or Affiliate) who becomes a transferee after the Acquiring
Person becomes such, or (iii) a transferee of an Acquiring Person (or of any
such Associate or Affiliate) who becomes a transferee prior to or concurrently
with the Acquiring Person becoming such and receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person to holders of equity interests in such Acquiring Person or to any Person
with whom the Acquiring Person has any continuing agreement, arrangement or
understanding regarding the transferred Rights or (B) a transfer which the Board

                                       10
<PAGE>

of Directors of the Company has determined is part of a plan, arrangement or
understanding that has as a primary purpose or effect the avoidance of this
Section 7(e), shall become null and void without any further action and no
holder of such Rights shall have any rights whatsoever with respect to such
Rights, whether under any provision of this Agreement or otherwise. The Company
shall notify the Rights Agent when this Section 7(e) applies and shall use all
reasonable efforts to insure that the provisions of this Section 7(e) and
Section 4(b) hereof are complied with, but neither the Company nor the Rights
Agent shall have any liability to any holder of Rights Certificates or other
Person as a result of the Company's failure to make any determinations with
respect to an Acquiring Person or its Affiliates, Associates or transferees
hereunder.

                  (f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported transfer or exercise as set forth in this Section 7 unless such
registered holder shall have (i) properly completed and signed the certificate
following the form of assignment or election to purchase set forth on the
reverse side of the Rights Certificate surrendered for such assignment or
exercise, and (ii) provided such additional evidence of the identity of the
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates
thereof as the 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
any of the provisions of this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any other Rights Certificate purchased or acquired by the Company
otherwise than upon the exercise thereof. The Rights Agent shall deliver all
cancelled Rights Certificates to the Company, or shall, at the written request
of the Company, destroy such cancelled Rights Certificates, and in such case
shall deliver a certificate of destruction thereof to the Company.

          Section 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK.

                  (a) The Company covenants and agrees that it will cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of a Triggering Event, out of its
authorized and unissued shares of Common Stock and/or other securities or out of
its authorized and issued shares held in its treasury), the number of shares of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock and/or other securities) that, as provided in this Agreement including
Section 11(a) (iii) hereof, will be sufficient to permit the exercise in full of
all outstanding Rights.

                  (b) So long as the shares of Preferred Stock (and, following
the occurrence of a Triggering Event, Common Stock and/or other securities)
issuable and deliverable upon the exercise of the Rights are eligible for
listing on any stock exchange, the Company shall use its best efforts to cause,
from and after such time as the Rights become exercisable, all shares

                                       11
<PAGE>

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 to (i) file, as
soon as practicable following the earliest date after the first occurrence of a
Section 11(a) (ii) Event on which the consideration to be delivered by the
Company upon exercise of the Rights has been determined in accordance with
Section 11(a) (iii) hereof, or as soon as is required by law following the
Distribution Date, as the case may be, a registration statement under the Act,
with respect to the securities purchasable upon exercise of the Rights on an
appropriate form, (ii) cause such registration statement to become effective as
soon as practicable after such filing, and (iii) cause such registration
statement to remain effective (with a prospectus at all times meeting the
requirements of the Act) until the earlier of (A) the date as of which the
Rights are no longer exercisable for such securities, and (B) the Expiration
Date. The Company will also take such action as may be appropriate under, or to
ensure compliance with, the securities or "blue sky" laws of the various states
in connection with the exercisability of the Rights. The Company may temporarily
suspend, for a period of time not to exceed ninety (90) days after the date set
forth in clause (i) of the first sentence of this Section 9(c), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall promptly notify the Rights Agent thereof and issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement (with prompt notice thereof to the
Rights Agent) at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained.

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

                  (e) The Company further covenants and agrees that it will pay
when due and payable any and all taxes and governmental charges that may be
payable in respect of the issuance or delivery of the Rights Certificates and of
any certificates for a number of one one-hundredths of a share of Preferred
Stock (or Common Stock and/or other securities, as the case may be) upon the
exercise of Rights. The Company shall not, however, be required to pay any tax
or governmental charge that may be payable in respect of any transfer or
delivery of Rights Certificates to a Person other than, or the issuance or
delivery of a number of one one-hundredths of a share of Preferred Stock (or
Common Stock and/ or other securities, as the case may be) in respect of a name
other than that of, the registered holder of the Rights Certificate evidencing
Rights surrendered for exercise or to issue or deliver any certificates for a
number of one one-hundredths of a share of Preferred Stock (or Common Stock
and/or other securities, as the case may be) in a name other than that of the
registered holder upon the exercise of any Rights until such tax or charge shall
have been paid (any such tax or charge 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 or charge is due.

                                       12
<PAGE>

          Section 10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for a number of one one-hundredths of a share of Preferred Stock (or
Common Stock and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of such fractional shares of Preferred Stock (or Common Stock and/or
other securities, as the case may be) represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Purchase Price
(and all applicable taxes and governmental charges) was made; PROVIDED, HOWEVER,
that if the date of such surrender and payment is a date upon which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are closed, such Person shall be deemed to have
become the record holder of such shares (fractional or otherwise) on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Stock (or Common Stock and/or other securities, as the case may be)
transfer books of the Company are open. Prior to the exercise of the Rights
evidenced thereby, the holder of a Rights Certificate, as such, shall not be
entitled to any rights of a stockholder of the Company with respect to shares
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.

          Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares covered by
each Right and the number of Rights outstanding are subject to adjustment from
time to time as provided in this Section 11.

                  (a) (i) 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) and Section 7(e) hereof, the
Purchase Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification, and the
number and kind of shares of Preferred Stock or capital stock, as the case may
be, issuable on such date, 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 and at a time when the
Preferred Stock transfer books of the Company were open, he would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs that would
require an adjustment under both this Section 11(a) (i) and Section 11(a) (ii)
hereof, the adjustment provided for in this Section 11(a) (i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a) (ii) hereof.

                      (ii) Subject to Section 24 of this Agreement, in the
event:

                                       13
<PAGE>

                      (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, (1) shall 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 the Common Stock of the Company shall remain
outstanding and unchanged, (2) shall, 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 Common Stock, for shares of
other equity securities of the Company, or for securities exercisable for or
convertible into shares of equity securities of the Company (Common Stock or
otherwise) or otherwise obtain from the Company, with or without consideration,
any additional shares of such equity securities or securities exercisable for or
convertible into shares of such equity securities (other than pursuant to a pro
rata distribution to all holders of Common Stock or upon the exercise of Rights
or the conversion of a convertible security of the Company in accordance with
its terms), (3) shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise acquire or dispose of, in one transaction or a series of
transactions, to, from or with (as the case may be) the Company or any of its
Subsidiaries, assets (including securities) on terms and conditions less
favorable to the Company than the Company would be able to obtain in arm's
length negotiation with an unaffiliated third party, other than pursuant to a
transaction set forth in Section 13(a) hereof, (4) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or dispose of in one
transaction or a series of transactions, to, from or with (as the case may be)
the Company or any of the Company's Subsidiaries (other than incidental to the
lines of business, if any, engaged in as of the date hereof between the Company
and such Acquiring Person or Associate or Affiliate) assets having an aggregate
fair market value of more than $2,500,000, other than pursuant to a transaction
set forth in Section 13(a) hereof, (5) shall receive any compensation from the
Company or any of the Company's 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 (6) shall receive the
benefit, directly or indirectly (except proportionately as a stockholder and
except if resulting from a requirement of 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

                     (B) any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan), alone or together with
its Affiliates and Associates, shall, at any time after the Record Date, become
the Beneficial Owner of 25% or more of the shares of Common Stock then
outstanding, unless the event causing the 25% threshold to be crossed is a
transaction set forth in Section 13(a) hereof, or is an acquisition of shares of
Common Stock pursuant to a tender offer or an exchange offer for all outstanding
shares of Common Stock at a price and on terms determined by at least a majority
of the members of the Board of Directors of the Company who are not officers of
the Company and who are not representatives, nominees, Affiliates or Associates
of the Person making such offer, after receiving advice from a nationally
recognized investment banking firm selected by the Board of Directors of the
Company, to be (a) at a price that is fair to stockholders (taking into account
all factors which such members of the Board deem relevant including, without
limitation, prices which could reasonably be achieved if

                                       14
<PAGE>

the Company or its assets were sold on an orderly basis designed to realize
maximum value) and (b) otherwise in the best interests of the Company and its
stockholders, 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 which is directly or indirectly Beneficially Owned by any
Acquiring Person or any Associate or Affiliate of any Acquiring Person, then,
promptly following the first occurrence of a Section 11(a) (ii) Event, proper
provision shall be made so that each holder of a Right (except as provided
below and in Section 7(e) hereof) 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 a number of one one-hundredths of a
share of Preferred Stock, such number of shares of Common Stock of the
Company that equals the result obtained by (x) multiplying the then current
Purchase Price by the then number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the
first occurrence of a Section 11(a) (ii) Event, and (y) dividing that product
(which, following such first occurrence, shall thereafter be referred to as
the "Purchase Price" for each Right and for all purposes of this Agreement)
by 50% of the Current Market Price (determined pursuant to Section 11(d)
hereof) per share of Common Stock on the date of such first occurrence (such
number of shares, the "Adjustment Shares")

                  (iii) In the event that the number of shares of Common 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 the exercise in full of the Rights in
accordance with the foregoing subparagraph (ii) of this Section 11(a), the
Company 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, the "Spread"), and (B) with respect to each Right,
make adequate provision to substitute for the Adjustment Shares, upon payment of
the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase Price,
(3) Common Stock or other equity securities of the Company (including, without
limitation, shares, or units of shares, of preferred stock which the Board of
Directors of the Company has deemed to have the same value as shares of Common
Stock (such shares of preferred stock, "common 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 the Board of Directors of the Company
based upon the advice of a nationally recognized investment banking firm
selected by the Board of Directors of the Company; PROVIDED, HOWEVER, if the
Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within thirty (30) days following the 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) (ii) Trigger Date"), then the
Company shall be

                                       15
<PAGE>

obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, shares of Common Stock (to the extent
available) and then, if necessary, cash, which shares and/or cash have an
aggregate value equal to the Spread. If the Board of Directors of the Company
shall determine in good faith that it is likely that sufficient additional
shares of Common Stock could be authorized for issuance upon exercise in full of
the Rights, the thirty (30) day period set forth above may be extended to the
extent necessary, but not more than ninety (90) days after the Section 11(a)
(ii) Trigger Date, in order that the Company may seek shareholder approval for
the authorization of such additional shares (such period, as it may be extended,
the "Substitution Period"). To the extent that the Company determines that some
action need be taken pursuant to the first and/or second sentences of this
Section 11(a) (iii), the Company (x) shall provide, subject to Section 7(e)
hereof, that such action shall apply uniformly to all outstanding Rights, and
(y) may suspend the exercisability of the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such first sentence and to determine the value thereof. In the event of any such
suspension, the Company shall promptly notify the Rights Agent thereof and issue
a public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement (with prompt notice
thereof to the Rights Agent) at such time as the suspension is no longer in
effect. For purposes of this Section 11(a) (iii), the value of the Common Stock
shall be the Current Market Price (as determined pursuant to Section 11(d)
hereof) per share of the Common Stock on the Section 11(a) (ii) Trigger Date and
the value of any "common stock equivalent" shall be deemed to have the same
value as the Common Stock on such date.

                  (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 (45) calendar days after such record date) Preferred Stock (or shares
having the same rights, privileges and preferences as the 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)
hereof) 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 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 the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights. Shares of
Preferred Stock owned by or held for the account of the Company shall not be
deemed outstanding for the purpose of any

                                       16
<PAGE>

such computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights, options or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase Price
which would then be in effect if such record date had not been fixed.

          (c) In case the Company shall fix a record date for a distribution to
all holders 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 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) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the Current Market Price (as determined pursuant to
Section 11(d) hereof) per share of Preferred Stock on such record date, less the
fair market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to a
share of Preferred Stock and the denominator of which shall be such Current
Market Price (as determined pursuant to Section 11(d) hereof) 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 which would have
been in effect if such record date had not been fixed.

          (d) (i) For the purpose of any computation hereunder, other than
computations made pursuant to Section 11(a) (iii) hereof, the "Current Market
Price" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to but not including such date, and for purposes of computations made pursuant
to Section 11(a) (iii) hereof, the "Current Market Price" per share of Common
Stock on any date shall be deemed to be the average of the daily closing prices
per share of such Common Stock for the ten (10) consecutive Trading Days
immediately following but not including such date; PROVIDED, HOWEVER, that in
the event that the Current Market Price per share of the Common Stock is
determined during a period following the announcement by the issuer of such
Common Stock of (A) a dividend or distribution on such Common Stock payable in
shares of such Common Stock or securities convertible into shares of such Common
Stock (other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Stock, and prior to the expiration of the
requisite thirty (30) Trading Day or ten (10) Trading Day period, as set forth
above, after the ex-dividend date for such dividend or distribution, or the
record date for such subdivision, combination or reclassification, then, and in
each such case, the "Current Market Price" shall be properly adjusted to take
into account ex-dividend trading. The closing price for each day shall be the
last sale price, regular way, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed or admitted to trading on the New York Stock Exchange or,
if the shares of Common Stock are not listed or admitted to trading on the New
York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities

                                       17
<PAGE>

listed on the principal national securities exchange on which the shares of
Common Stock are listed or admitted to trading or, if the shares of Common Stock
are not listed or admitted to trading on any national securities exchange, the
last quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by the Nasdaq National
Market ("Nasdaq") or such other system then in use, or, if on any such date the
shares of Common Stock are not quoted by any such organization, the average of
the closing bid and asked prices as furnished by a professional market maker
making a market in the Common Stock selected by the Board of Directors of the
Company. If on any such date no market maker is making a market in the Common
Stock, the fair value of such shares on such date as determined in good faith by
the Board of Directors of the Company shall be used. The term "Trading Day"
shall mean a day on which the principal national securities exchange on which
the shares of Common Stock are listed or admitted to trading is open for the
transaction of business or, if the shares of Common Stock are not listed or
admitted to trading on any national securities exchange, a Business Day. If the
Common Stock is 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 the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be conclusive for all
purposes.

              (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 the Common Stock in clause (i) of this Section
11(d) (other than the last 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
100 (as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the Common Stock
occurring after the date of this Agreement) multiplied by the Current Market
Price per share of the Common Stock. If neither the Common Stock nor the
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 the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes. For all purposes of this Agreement, the
"Current Market Price" of one one-hundredth of a share of Preferred Stock shall
be equal to the "Current Market Price" of one share of Preferred Stock divided
by 100.

          (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 one percent (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-millionth of a share of Preferred
Stock, or ten-thousandth of a share of Common Stock or other share, as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
(3) years from the date of the transaction which mandates such adjustment, or
(ii) the Expiration Date.

                                       18
<PAGE>

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

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

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

          (i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of one one-hundredths of a share of Preferred Stock purchasable 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 one one-hundredths
of a share of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such adjustment of
the number of Rights shall become that number of Rights (calculated to the
nearest one-ten-thousandth) obtained by dividing the Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase Price. The Company shall
make a public announcement (with prompt notice thereof to the Rights Agent) of
its election to adjust the number of Rights, indicating the record date for the
adjustment, and, if known at the time, the amount of the adjustment to be made.
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 (10) days later than the date of the public announcement. If Rights
Certificates have been issued, upon each adjustment of the number of Rights
pursuant to this Section 11(i), the Company shall, as promptly as practicable,
cause to be distributed to holders of record of Rights Certificates on such
record date Rights Certificates evidencing, subject to Section 14 hereof, the
additional Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed to
such holders of record in substitution and replacement for the 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

                                       19
<PAGE>

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

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

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

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

          (n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of related transactions, assets or earning power
aggregating more than 50% of the assets

                                       20
<PAGE>

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) hereof),
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
shareholders of the Person who constitutes, or would constitute, the "Principal
Party" for purposes of Section 13(a) hereof shall have received a distribution
of Rights previously owned by such Person or any of its Affiliates and
Associates.

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

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

     Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief, reasonably detailed, statement of the facts and
computations accounting for such adjustment, (b) promptly file with the Rights
Agent, and with each transfer agent for the Preferred Stock and the Common
Stock, a copy of such certificate, and (c) mail a brief summary thereof to each
holder of a Rights Certificate (or, if prior to the Distribution Date, to each
holder of a certificate representing shares of Common Stock) in accordance with
Section 26 hereof. 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, (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)

                                       21
<PAGE>

hereof), 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) hereof) 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 Common Stock shall be changed 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), in one transaction or a series of related transactions,
assets or earning power aggregating more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole) to any Person or Persons
(other than the Company or any Subsidiary of the Company in one or more
transactions each of which complies with Section 11(o) hereof), then, and in
each such case and except as contemplated by Section 13(d) hereof, proper
provision shall be made so that: (i) each holder of a Right, except as provided
in Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement, such number of validly authorized and issued, fully paid,
non-assessable and freely tradeable shares of Common Stock of the Principal
Party (as such term is hereinafter defined), not subject to any liens,
encumbrances, rights of first refusal or other adverse claims, as shall be equal
to the result obtained by (1) multiplying the then current Purchase Price by the
number of one one-hundredths of a share 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 one one-hundredths of a share
for which a Right was exercisable immediately prior to the first occurrence of a
Section 11(a) (ii) Event by the Purchase Price in effect immediately prior to
such first occurrence), and dividing that product (which, following the first
occurrence of a Section 13 Event, shall be referred to as the "Purchase Price"
for each Right and for all purposes of this Agreement) by (2) 50% of the Current
Market Price (determined pursuant to Section 11(d) (i) hereof) 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
thereafter be deemed to refer to such Principal Party, it being specifically
intended that the provisions of Section 11 hereof shall apply only to such
Principal Party following the first occurrence of a Section 13 Event; (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 assure that
the provisions hereof shall thereafter be applicable, as nearly as reasonably
may be, in relation to its shares of Common Stock thereafter deliverable upon
the exercise of the Rights; and (v) the provisions of Section 11(a) (ii) hereof
shall be of no 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), the Person that is the issuer of any
securities into which shares of Common Stock of the Company are converted in
such merger or consolidation, and if no securities are so issued, the Person
that is the other party to such merger or consolidation; and

                                       22
<PAGE>

              (ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to such
transaction or transactions;

PROVIDED, HOWEVER, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under Section 12 of the Exchange Act, and such Person is
a direct or indirect Subsidiary of another Person the Common Stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the Common Stocks of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.

          (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 which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13 and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms, set forth in paragraphs (a) and (b) of this Section 13
and further providing that, as soon as practicable after the date of any
consolidation, merger or sale of assets mentioned in paragraph (a) of this
Section 13, the Principal Party will

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

             (ii) will 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.

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 which have not theretofore been exercised shall thereafter become
exercisable in the manner described in Section 13(a).

          (d) Notwithstanding anything in this Agreement to the contrary,
Section 13 shall not be applicable to a transaction described in subparagraphs
(x) and (y) of Section 13(a) if (i) such transaction is consummated with a
Person or Persons who acquired shares of Common Stock pursuant to a tender offer
or exchange offer for all outstanding shares of Common Stock which complies with
the provisions of Section 11(a) (ii) (B) hereof regarding the determination of
the Board of Directors (or a wholly owned subsidiary of any such Person or
Persons), (ii) the price per share of Common Stock offered in such transaction
is not less than the price per share of Common Stock paid to all holders of
shares of Common Stock whose shares were purchased pursuant to such tender offer
or exchange offer, and (iii) the form of consideration being offered to the
remaining holders of shares of Common Stock pursuant to such transaction is the
same as

                                       23
<PAGE>

the form of consideration paid pursuant to such tender offer or exchange offer.
Upon consummation of any such transaction contemplated by this Section 13(d),
all Rights hereunder shall expire.

     Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.

          (a) The Company shall not be required to issue fractions of Rights,
except prior to the Distribution Date as provided in Section 11(p) hereof, or to
distribute Rights Certificates that evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no such sale takes place on such
day, the average of the closing bid and asked prices, regular way, in either
case as reported in the principal consolidated transaction reporting system with
respect to securities listed or admitted to trading on the New York Stock
Exchange or, if the Rights are not listed or admitted to trading on the New York
Stock Exchange, as reported in the principal consolidated transaction reporting
system with respect to securities listed on the principal national securities
exchange on which the Rights are listed or admitted to trading, or if the Rights
are not listed or admitted to trading on any national securities exchange, the
last sum quoted price or, if not so quoted, the average of the high bid and low
asked prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professorial market maker making a market in the Rights selected by the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights the fair value of the Rights on such date as determined in
good faith by the Board of Directors of the Company shall be used.

          (b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-hundredth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates that evidence fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock) . In lieu of fractional shares of Preferred Stock
(other than fractions which are integral multiples of one one-hundredth of a
share of Preferred Stock), 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 current market value of one
one-hundredth of a share of Preferred Stock. For purposes of this Section 14(b),
the current market value of one one-hundredth of a share of Preferred Stock
shall be one one-hundredth of the closing price of a share of Preferred Stock
(as determined pursuant to Section 11(d) (ii) hereof) for the Trading Day
immediately prior to the date of such exercise.

          (c) Following the occurrence of a Triggering Event, the Company shall
not be required to issue fractions of shares of Common Stock upon exercise of
the Rights or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of fractional shares of Common Stock, the Company may pay
to the registered holders of Rights Certificates

                                       24
<PAGE>

at the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of one (1) share of Common
Stock. For purposes of this Section 14(c), the current market value of one share
of Common Stock shall be the closing price of one share of Common Stock (as
determined pursuant to Section 11(d) (i) hereof) for the Trading Day immediately
prior to the date of such exercise.

          (d) The holder of a Right by the acceptance of the Rights 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, except the rights of action expressly given to the Rights Agent in
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock); and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of the Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Stock), may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the Rights evidenced by such Rights Certificate in the manner provided
in such Rights Certificate and in this Agreement. Without limiting the foregoing
or any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at law
for any breach of this Agreement and 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 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 completed and fully executed;

          (c) subject to Section 6(a) and Section 7(f) hereof, 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 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 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) hereof, shall be required to be affected by any notice to the
contrary; and

                                       25
<PAGE>

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

     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 one one-hundredths of a
share of Preferred Stock or any other securities of the Company which may at any
time be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any 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 to receive notice of meetings or
other actions affecting stockholders (except as provided in Section 25 hereof),
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.

     Section 18. CONCERNING THE RIGHTS AGENT.

          (a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the preparation, delivery
administration, execution and amendment of this Agreement and the exercise and
performance of its duties hereunder. The Company also agrees to indemnify the
Rights Agent for, and to hold it harmless against, any loss, liability, damage,
judgment, fine, penalty, claim, demand, settlement, cost or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Rights Agent (as finally determined by a court of competent jurisdiction), for
any action taken, suffered or omitted by the Rights Agent in connection with the
acceptance and administration of this Agreement, including, without limitation,
the costs and expenses of defending against any claim of liability in the
premises.

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

                                       26
<PAGE>

          (c) Anything in this Agreement to the contrary notwithstanding, in no
event shall the Rights Agent be liable for special, punitive, indirect,
incidental or consequential loss or damage of any kind whatsoever (including,
but not limited to, lost profits), even if the Rights Agent has been advised of
the possibility of such loss or damage.

     Section 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.

          (a) Any Person into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any Person
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any Person succeeding to the
shareholder services business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; PROVIDED, HOWEVER, that such Person would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor 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, and only the duties and obligations expressly imposed by this
Agreement (and no implied duties or obligations) upon the following terms and
conditions, by all of which the 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 advice opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent, and the Rights
Agent shall incur no liability for or in respect of any action taken, suffered
or omitted by it in good faith and in accordance with such advice opinion.

          (b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of Current Market Price) be proved or established by the Company
prior to taking, suffering or omitting any action

                                       27
<PAGE>

hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by 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 and protection to the Rights Agent, and
the Rights Agent shall incur no liability for or in respect of any action taken,
suffered or omitted in good faith by it under the provisions of this Agreement
in reliance upon such certificate.

          (c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct (as finally determined by a court of
competent jurisdiction.

          (d) The Rights Agent shall not have any liability for, nor 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.

          (e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Section 11,
Section 13 or Section 24 hereof or responsible for the manner, method or amount
of any such adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after receipt of a certificate describing any
such adjustment, delivered pursuant to 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 Common Stock or Preferred Stock to
be issued pursuant to this Agreement or any Rights Certificate or as to whether
any shares of Common Stock or Preferred Stock will, when so issued, be validly
authorized and issued, fully paid and nonassessable.

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

          (g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from 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 such advice or instructions shall be full authorization and
protection to the Rights Agent and the Rights Agent shall incur no liability for
or in respect of any action taken, suffered or omitted by it in good faith 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

                                       28
<PAGE>

omitted by the Rights Agent with respect to its duties or obligations under this
Rights Agreement and the date on and/or after which such action shall be taken
or omitted and the Rights Agent shall not be liable for any action taken or
omitted in accordance with a proposal included in any such application on or
after the date specified therein (which date shall not be less than five
business days after the date any such officer actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking or omitting any such action, the Rights
Agent has received written instructions in response to such application
specifying the action to be taken or omitted.

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

          (i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company or any other Person resulting from any
such act, default, neglect or misconduct; absent gross negligence, bad faith or
willful misconduct in the selection and continued employment thereof.

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

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

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

                                       29
<PAGE>

Certificate for inspection by the Company), then any registered holder of any
Rights Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a Person organized and doing
business under the laws of the United States (or of any state of the United
States) in good standing, and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Rights Agent a combined capital and surplus of at least $50,000,000 or (b) an
affiliate of a Person described in clause (a) of this sentence. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Stock and the
Preferred Stock, and mail a notice thereof in writing to the registered holders
of the Rights Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.

     Section 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of the
provisions of this Agreement or of the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Rights Certificates made in accordance with
the provisions of this Agreement. In addition, in connection with the issuance
or sale of shares of Common Stock following the Distribution Date and prior to
the redemption or expiration of the Rights, the Company (a) shall, with respect
to shares of 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 the Board of
Directors of the Company, issue Rights Certificates representing 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) The Board of Directors of the Company may, at its option, at any
time prior to the earlier of (i) the Close of Business on the tenth day
following the Stock Acquisition Date (or, if the Stock Acquisition Date shall
have occurred prior to the Record Date, the Close of Business on the tenth day
following the Record Date), or (ii) Close of Business on the Final Expiration
Date, redeem all but not less than all the then outstanding Rights at a
redemption price of $.02 per Right, as such amount may be appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after February 3, 1994 (such redemption price

                                       30
<PAGE>

being hereinafter referred to as the "Redemption Price") and the Company may, at
its option, pay the Redemption Price either in shares of Common Stock (based on
the "Current Market Price", as defined in Section 11(d)(i) hereof, of the shares
of Common Stock at the time of redemption) or cash; PROVIDED, HOWEVER, that
notwithstanding the foregoing if, following the occurrence of a Stock
Acquisition Date and following the expiration of the right of redemption set
forth above in this Section 23(a) but prior to any Triggering Event, either (i)
(A) a Person who is an Acquiring Person shall have transferred or otherwise
disposed of a number of shares of Common Stock in one transaction or series of
transactions, not directly or indirectly involving the Company or any of its
Subsidiaries, which did not result in the occurrence of a Triggering Event such
that such Person is thereafter a Beneficial Owner of 10% or less of the
outstanding shares of Common Stock, and (B) there are no other Persons,
immediately following the occurrence of the event described in clause (A), who
are Acquiring Persons, and (C) a majority of the members of the Board of
Directors approve the reinstatement of the right of redemption pursuant to this
Section 23, or (ii) (A) the Board approves the consolidation, merger or other
combination of the Company with or into, or the sale or other transfer (either
by the Company or one or more of its Subsidiaries), in one transaction or a
series of related transactions, of more than 50% of the assets or earning power
of the Company and its Subsidiaries (taken as a whole), to a Person other than
the Acquiring Person (or any Associate or Affiliate of such Acquiring Person)
who caused the occurrence of such Stock Acquisition Date, and (B) the Board of
Directors of the Company, as part of the approval of such an event described in
the preceding clause (ii) (A), approves the reinstatement of the right of
redemption pursuant to this Section 23, then, in either such case, the right of
redemption shall be reinstated and thereafter be subject to the provisions of
this Section 23. Notwithstanding anything contained in this Agreement to the
contrary, the Rights shall not be exercisable after the first occurrence of a
Section 11(a) (ii) Event until such time as the Company's right of redemption
hereunder has expired (such right of redemption hereunder being deemed to have
expired notwithstanding the existence of the possibility of the reinstatement
thereof as provided above in this Section 23 (a)).

          (b) Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, and without any further action
and without any notice, the right to exercise the Rights will terminate and the
only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. Promptly after the action of the 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 the
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption Price
will be made.

     Section 24. EXCHANGE.

          (a) The Board of Directors of the Company may, at its option, at any
time after a Section 11(a) (ii) Event, exchange all or part, of the then
outstanding and exercisable Rights (which (i) shall not include Rights that have
become null and void pursuant to the provisions of Section 7(e) hereof, and (ii)
shall include, without limitation, any Rights issued after the Distribution Date
in connection with the exercise of options pursuant to the Company's

                                       31
<PAGE>

employee benefit plans, where such option is exercised for securities of the
Company or surrendered for cash) for shares of Common Stock at an exchange ratio
of one share of Common Stock per Right, appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio").

          (b) Immediately upon the action of the Board of Directors of the
Company ordering the exchange of any Rights pursuant to subsection (a) of this
Section 24 and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of the
holders of such Rights shall be to receive that number of shares of Common Stock
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Company shall promptly give public notice of any such
exchange (with prompt notice thereof to the Rights Agent); 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 which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of exchange will state the method by which
the exchange of shares of Common Stock for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged. Any
partial exchange shall be effected pro rata based on the number of Rights (other
than Rights which have become void pursuant to the provisions of Section 7(e)
hereof) held by each holder of Rights.

          (c) In any exchange pursuant to this Section 24, the Company, at its
option, may substitute Preferred Stock (or equivalent preferred stock, as such
term is defined in Section 11(b) hereof) for shares of Common Stock exchangeable
for Rights, at the initial rate of one one-hundredth of a share of Preferred
Stock (or equivalent preferred stock) for each share of Common Stock, as
appropriately adjusted to reflect adjustments in the voting rights of the
Preferred Stock pursuant to Section 3(A) of the Certificate of Designations
attached hereto as EXHIBIT A, so that the fraction of a share of Preferred Stock
delivered in lieu of each share of Common Stock shall have the same voting
rights as one share of Common Stock.

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

          (e) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, there shall be
paid to the registered holders of the Right Certificates with regard to which
such fractional shares of Common Stock would otherwise be issuable, an amount in
cash equal to the same fraction of the current market value of a whole share of
Common Stock. For the purposes of this subsection (e), the current market value
of a whole share of Common Stock shall be the closing price per share of Common
Stock (as determined pursuant to the second sentence of Section 11(d) (1)
hereof) for the Trading Day immediately prior to the date of exchange pursuant
to this Section 24.

                                       32
<PAGE>

     Section 25. 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), or (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, or (iii) to effect any reclassification of its Preferred
Stock (other than a reclassification involving only the subdivision of
outstanding shares of Preferred Stock), or (iv) to effect any consolidation or
merger into or with any other Person (other than a Subsidiary of the Company in
a transaction which complies with Section 11(o) hereof), or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one transaction or a series of related 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) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to the Rights Agent and each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, 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 twenty (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 twenty (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.

          (b) In case any of the events set forth in Section 11(a) (ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to the Rights Agent and each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 26 hereof, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Section 11(a) (ii) hereof,
and (ii) all references in the preceding paragraph to Preferred Stock shall be
deemed thereafter to refer also to Common Stock and/or, if appropriate, other
securities.

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

                  Staples, Inc.
                  500 Staples Drive
                  Framingham, Massachusetts 01702
                  Attention:  Corporate Secretary

                                       33
<PAGE>

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

                  ChaseMellon Shareholder Services, L.L.C.
                  111 Founders Plaza
                  11th Floor
                  East Hartford, CT 06108

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of 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 Company.

     Section 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date and
subject to the penultimate sentence of this Section 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Common Stock. From and after the Distribution Date and
subject to the penultimate sentence of this Section 27, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder (which shortening or
lengthening shall require the concurrence of a majority of the members of the
Board of Directors), 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 Rights Agent or the holders of Rights
Certificates (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person); PROVIDED, this Agreement may not be supplemented or amended
to lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Without limiting the generality of the
foregoing, the Company may at any time prior to such time as any Person first
becomes an Acquiring Person amend this Agreement to lower the thresholds set
forth in Sections 1(a) and/or 3(a) hereof from 20% and/or 30%, respectively, to
not less than, in either case, the greater of (i) any percentage greater than
the largest percentage of the outstanding shares of Common Stock then known by
the Company to be Beneficially Owned by any Person or (ii) 10%. Upon the
delivery of a certificate from an appropriate officer of the Company which
states that the proposed supplement or amendment is in compliance with the terms
of this Section 27, and, provided such supplement or amendment does not change
or increase the Rights Agent's duties, liabilities or obligations hereunder, the
Rights Agent shall execute such supplement or amendment. Notwithstanding
anything contained in this Agreement to the contrary, no supplement or amendment
shall be made which changes the Redemption Price, the Final Expiration Date, the
Purchase Price or the number of one one-hundredths of a share of Preferred Stock
for which a Right is exercisable. Prior to the Distribution Date, the

                                       34
<PAGE>

interests of the holders of Rights shall be deemed coincident with the interests
of the holders of Common Stock.

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

     Section 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such outstanding shares of Common Stock
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule l3d-3 (d) (1) (i) of the General Rules and Regulations
under the Exchange Act. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith, shall (x) be final, conclusive and binding on the Company, the
Rights Agent, the holders of the Rights and all other Persons, and (y) not
subject the Board to any liability to the holders of the Rights. The Rights
Agent is always entitled to assume the Board of Directors acted in good faith
and shall be fully protected an incur no liability in reliance thereon.

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

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

     Section 32. CONFIDENTIALITY. The Rights Agent shall treat the Company's
shareholder list and any of the Company's shareholder information (collectively
"Shareholder Information") as confidential information and agrees not to
disclose or otherwise make available Shareholder Information to any third party,
except as required by law, regulation or governmental or administrative action,
without the prior written consent of the Company. The Rights Agent shall not use
Shareholder Information in connection with its own marketing or other internal
purposes except to the extent necessary to fulfill its obligations under this
Agreement.

                                       35
<PAGE>

     Section 33. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts made
and to be performed entirely within such State.

     Section 34. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.

     Section 35. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

                      [This Space Intentionally Left Blank]

                                       36
<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and their respective corporate or limited
liability company seals to be hereunto affixed and attested, all as of the day
and year first above written.

Attest:                               STAPLES, INC.

By:________________________           By:______________________________
Name:                                 Name:
Title:                                Title:

Attest:                               CHASEMELLON SHAREHOLDER SERVICES, L.L.C.

By:________________________           By:______________________________
Name:                                 Name:
Title:                                Title:

<PAGE>

                                                                       EXHIBIT A

                                      FORM

                                       of

                           CERTIFICATE OF DESIGNATIONS

                                       of

                  SERIES A JUNIOR PARTICIPATING PREFERRED STOCK

                                       of

                                  STAPLES, INC.

                         (Pursuant to Section 151 of the
                        Delaware General Corporation Law)

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

                  Staples, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on February 3, 1994:

                  RESOLVED, that pursuant to the authority granted to and vested
in the Board of Directors of this Corporation (hereinafter called the "Board of
Directors" or the "Board") in accordance with the provisions of the Certificate
of Incorporation (as amended to date, the "Certificate of Incorporation"), the
Board of Directors hereby creates a series of Preferred Stock, $.01 par value
per share (the "Preferred Stock"), of the Corporation and hereby states the
designation and number of shares, and fixes the relative rights, preferences and
limitations thereof as follows:

                  Series A Junior Participating Preferred Stock:

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

<PAGE>

     Section 2. DIVIDENDS AND DISTRIBUTIONS.

          (a) Subject to the rights of the holders of any shares of any series
of Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock, in preference to the holders of Common Stock, par
value $.0006 per share (the "Common Stock"), of the Corporation, and of any
other junior stock, shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds of the Corporation legally available for the
payment of dividends, quarterly dividends payable in cash on March 31, June 30,
September 30 and December 31 in each year (each such date being referred to
herein as a "Quarterly Dividend Payment Date"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1 or (b) subject to the provision for
adjustment hereinafter set forth, 100 times the aggregate per share amount of
all cash dividends, and 100 times the aggregate per share amount (payable in
kind) of all non-cash dividends or other distributions, other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding shares of
Common Stock (by reclassification or otherwise), declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly Dividend Payment Date, since the first issuance of any
share or fraction of a share of Series A Preferred Stock. In the event the
Corporation shall at any time declare or pay any dividend on the Common Stock
payable in shares of Common Stock, or effect a subdivision, combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in shares of Common Stock) into a
greater or lesser number of shares of Common Stock, then in each such case the
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under clause (b) of the preceding sentence shall
be adjusted by multiplying such amount by a fraction, the numerator of which is
the number of shares of Common Stock outstanding immediately after such event
and the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

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

          (c) Dividends shall begin to accrue and be cumulative on outstanding
shares of Series A Preferred Stock from the Quarterly Dividend Payment Date next
preceding the date of issue of such shares, unless the date of issue of such
shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of

                                       2
<PAGE>

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

     Section 3. VOTING RIGHTS. The holders of shares of Series A Preferred Stock
shall have the following voting rights:

          (a) Subject to the provision for adjustment hereinafter set forth,
each share of Series A Preferred Stock shall entitle the holder thereof to 100
votes on all matters submitted to a vote of the stockholders of the Corporation.
In the event the Corporation shall at any time declare or pay any dividend on
the Common Stock payable in shares of Common Stock, or effect a subdivision,
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the number of votes per share to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event shall be adjusted
by multiplying such number by a fraction, the numerator of which is the number
of shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

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

          (c) (i) If any time dividends on any Series A Preferred Stock shall be
in arrears in an amount equal to six quarterly dividends thereon, the holders of
the Series A Preferred Stock, voting as a separate series from all other series
of Preferred Stock and classes of capital stock, shall be entitled to elect two
members of the Board of Directors in addition to any Directors elected by any
other series, class or classes of securities and the authorized number of
Directors will automatically be increased by two. Promptly thereafter, the Board
of Directors of this Corporation shall, as soon as may be practicable, call a
special meeting of holders of Series A Preferred Stock for the purpose of
electing such members of the Board of Directors. Said special meeting shall in
any event be held within 45 days of the occurrence of such arrearage.

              (ii) During any period when the holders of Series A Preferred
Stock, voting as a separate series, shall be entitled and shall have exercised
their right to elect two Directors, then and during such time as such right
continues (a) the then authorized number of Directors shall be increased by two,
and the holders of Series A Preferred Stock, voting as a separate series, shall
be entitled to elect the additional Director so provided for, and (b) each such

                                       3
<PAGE>

additional Director shall not be a member of any existing class of the Board of
Directors, but shall serve until the next annual meeting of stockholders for the
election of Directors, or until his successor shall be elected and shall
qualify, or until his right to hold such office terminates pursuant to the
provisions of this Section 3(c).

             (iii) A Director elected pursuant to the terms hereof may be
removed with or without cause by the holders of Series A Preferred Stock
entitled to vote in an election of such Director.

             (iv) If, during any interval between annual meetings of
stockholders for the election of Directors and while the holders of Series A
Preferred Stock shall be entitled to elect two Directors, there is no such
Director in office by reason of resignation, death or removal, then, promptly
thereafter, the Board of Directors shall cause a special meeting of the holders
of Series A Preferred Stock for the purpose of filling such vacancy and such
vacancy shall be filled at such special meeting. Such special meeting shall in
any event be held within 45 days of the occurrence of such vacancy.

             (v) At such time as the arrearage is fully cured, and all dividends
accumulated and unpaid on any shares of Series A Preferred Stock outstanding are
paid, and, in addition thereto, at least one regular dividend has been paid
subsequent to curing such arrearage, the term of office of any Director elected
pursuant to this Section 3(c), or his successor, shall automatically terminate,
and the authorized number of Directors shall automatically decrease by two, the
rights of the holders of the shares of the Series A Preferred Stock to vote as
provided in this Section 3(c) shall cease, subject to renewal from time to time
upon the same terms and conditions, and the holders of shares of the Series A
Preferred Stock shall have only the limited voting rights elsewhere herein set
forth.

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

     Section 4. CERTAIN RESTRICTIONS.

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

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

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

                                       4
<PAGE>

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

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

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

     Section 5. REACQUIRED SHARES. Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by law.

     Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.

          (a) Upon any liquidation, dissolution or winding up of the
Corporation, no distribution shall be made (1) to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the holders
of shares of Series A Preferred Stock shall have received $100 per share, plus
an amount equal to accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment, provided that the holders
of shares of Series A Preferred Stock shall be entitled to receive an aggregate
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount to be distributed per share to holders
of shares of Common Stock, or (2) to the holders of shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or winding up)
with the Series A Preferred Stock, except distributions made ratably on the
Series A Preferred Stock and all such parity stock in proportion to the total
amounts to which the holders of all such shares are entitled upon such
liquidation, dissolution or winding up.

          (b) Neither the consolidation, merger or other business combination of
the Corporation with or into any other corporation nor the sale, lease, exchange
or conveyance of all

                                       5
<PAGE>

or any part of the property, assets or business of the Corporation shall be
deemed to be a liquidation, dissolution or winding up of the Corporation for
purposes of this Section 6.

          (c) In the event the Corporation shall at any time declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision, combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate amount to which holders of shares of Series A
Preferred Stock were entitled immediately prior to such event under the proviso
in clause (1) of paragraph (a) of this Section 6 shall be adjusted by
multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.

     Section 7. CONSOLIDATION, MERGER, ETC. Notwithstanding anything to the
contrary contained herein, in case the Corporation shall enter into any
consolidation, merger, combination or other transaction in which the shares of
Common Stock are exchanged for or changed into other stock or securities, cash
and/or any other property, then in any such case each share of Series A
Preferred Stock shall at the same time be similarly exchanged or changed into an
amount per share, subject to the provision for adjustment hereinafter set forth,
equal to 100 times the aggregate amount of stock, securities, cash and/or any
other property (payable in kind), as the case may be, into which or for which
each share of Common Stock is changed or exchanged. In the event the Corporation
shall at any time declare or pay any dividend on the Common Stock payable in
shares of Common Stock, or effect a subdivision, combination or consolidation of
the outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or change of shares of Series A
Preferred Stock shall be adjusted by multiplying such amount by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.

     Section 8. NO REDEMPTION. The shares of Series A Preferred Stock shall not
be redeemable.

     Section 9. RANK. The Series A Preferred Stock shall rank, with respect to
the payment of dividends and the distribution of assets, junior to all series of
any other class of the Preferred Stock issued either before or after the
issuance of the Series A Preferred Stock, unless the terms of any such series
shall provide otherwise.

     Section 10. AMENDMENT. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would materially alter or change the
powers, preferences or special rights of the Series A Preferred Stock so as to
affect them adversely without the affirmative vote of the holders of at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.

                                       6
<PAGE>

     Section 11. FRACTIONAL SHARES. Series A Preferred Stock may be issued in
fractions of a share which are integral multiples of one-hundredth of a share
which shall entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends, participate in
distributions and have the benefit of all other rights of holders of Series A
Preferred Stock.

                  IN WITNESS WHEREOF, this Certificate of Designations is
executed on behalf of the Corporation by its Chairman of the Board of Directors
and attested by its Secretary this ___ day of February, 1994.

                                   ---------------------------------------------
                                   John B. Wilson
                                   Executive Vice President-Finance and Strategy

Attest:

------------------------------------
Peter M. Schwarzenbach
Secretary

                                       7
<PAGE>

                                                                       EXHIBIT B

                          [Form of Rights Certificate]

Certificate No. R-                                                 ______ Rights

NOT EXERCISABLE AFTER FEBRUARY 15, 2004 OR EARLIER IF REDEEMED OR EXCHANGED BY
THE COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $.02 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH TERN IS
DEFINED IN THE RIGHTS AGREEMENT) AND 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). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.]1

                               Rights Certificate

                                  STAPLES, INC.

                  This certifies that _______________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Amended and Restated Rights Agreement, dated as of October 25,
1999 (the "Rights Agreement"), between Staples, Inc., a Delaware corporation
(the "Company"), and ChaseMellon Shareholder Services, L.L.C., a New Jersey
limited liability company (the "Rights Agent"), to purchase from the Company
after the Distribution Date (as such term is defined on the Rights Agreement)
and at any time prior to 5:00 P.M. (Boston time) on February 15, 2004 at the
office of the Rights Agent designated for such purpose, or its successors as
Rights Agent, one one-hundredth of a fully paid, non-assessable share of Series
A Junior Participating Preferred Stock (the "Preferred Stock") of the Company,
$.0l par value per share, at a purchase price of $110.00 in cash per one
one-hundredth of a share (the "Purchase Price"), upon presentation and surrender
of this Rights Certificate with the Form of Election to Purchase and related
Certificate duly executed. The number of Rights evidenced by this Rights
Certificate (and the number of one one-hundredths of a share of Preferred Stock
which may be purchased upon exercise hereof) set forth above, and the Purchase
Price set forth above, are the number and Purchase Price as of the Close of
Business on February 15, 1994, based on the Preferred Stock as constituted at
such date. Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed to such terms in the Rights Agreement.

--------
1     The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.

<PAGE>

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

                  As provided in the Rights Agreement, the Purchase Price and
the number and kind of shares of Preferred Stock or other securities which may
be purchased upon the exercise of the Rights evidenced by this Rights
Certificate are subject to modification and adjustment upon the happening of
certain events, including Section 11(a) (ii) Events.

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

                  This Rights Certificate, with or without other Rights
Certificates, upon surrender at the office of the Rights Agent designated for
such purpose, with the Form of Election and Certificate set forth on the reverse
side duly executed, may be exchanged for another Rights Certificate or Rights
Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of one one-hundredths of a share of Preferred
Stock as the Rights evidenced by the Rights Certificate or Rights Certificates
surrendered shall have entitled such holder to purchase. If this Rights
Certificate shall be exercised in part, the 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 at its option at a
redemption price of $.02 per Right at any time prior to the earlier of the Close
of Business on (i) the tenth day following the Stock Acquisition Date (as such
time period may be extended pursuant to the Rights Agreement), and (ii) the
Final Expiration Date. After the expiration of the redemption period, the
Company's right of redemption may be reinstated if either (A) an Acquiring
Person reduces his beneficial ownership to 10% or less of the outstanding shares
of Common Stock in a transaction or series of transactions not involving the
Company, there are no other Acquiring Persons, and such reinstatement is
approved by a majority of the Continuing Directors (as such term is defined in
the Rights Agreement), or (B) the Board approves the merger of the Company with,
or acquisition of the Company by, a Person unrelated to the Acquiring Person,
such reinstatement is part of the approval by the Board of such transaction and
a majority of the Continuing Directors approve such reinstatement.

                                       2
<PAGE>

                  Subject to the provisions of the Rights Agreement, the Company
may, at its option, at any time after a Section 11(a) (ii) Event, subject to the
approval of a majority of the Continuing Directors, exchange all or part of the
Rights evidenced by this Certificate for shares of the Company's Common Stock or
for Preferred Stock (or shares of a class or series of the Company's preferred
stock having the same rights, privileges and preferences as the Preferred
Stock).

                  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-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depositary receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.

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

                                       3
<PAGE>

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

Dated as of ________________, 199___

ATTEST:                                      STAPLES, INC.

                                             By:
------------------------------------------      -------------------------------
Secretary

                                             Title:
                                                   ----------------------------

Countersigned:

CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
     as Rights Agent

By:
   ---------------------------------------
     Authorized Signature

                                       4
<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

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                  (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: __________________, 199_

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

Signature Guaranteed:

                                   CERTIFICATE

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

Dated: __________________, 199_

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

Signature Guaranteed:

<PAGE>

             [Form of Reverse Side of Rights Certificate--Continued]

                          FORM OF ELECTION TO PURCHASE

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

To:      STAPLES, INC.

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

Please insert social security
or other identifying number ____________________________________________________

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

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

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

Please insert social security
or other identifying number ____________________________________________________

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

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Dated: __________________, 199_

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

Signature Guaranteed:

                                       2
<PAGE>

                                   CERTIFICATE

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

Dated: __________________, 199_

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

Signature Guaranteed:

                                     NOTICE

                  The signature to the foregoing Form of Assignment or Form of
Election to Purchase 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 in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent 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 such
Assignment or Election to Purchase will not be honored.

                                       3
<PAGE>

                                                                       EXHIBIT C

                          SUMMARY OF RIGHTS TO PURCHASE
                                 PREFERRED STOCK

                  On February 3, 1994, the Board of Directors of Staples, Inc.
(the "Company") declared a dividend of one preferred stock purchase right (a
"Right") for each outstanding share of the Company's Common Stock to
stockholders of record at the Close of Business on February 15, 1994 (the
"Record Date"). Each Right entitles the registered holder to purchase from the
Company a unit consisting of one one-hundredth of a share (a "Unit") of Series A
Junior Participating Preferred Stock, $.0l par value (the "Preferred Stock"), at
a purchase price of $110.00 in cash per Unit (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in an Amended
and Restated Rights Agreement dated as of October 25, 1999(the "Rights
Agreement") between the Company and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent.

                  Initially, the Rights will be attached to all Common Stock
certificates representing shares then outstanding, and no separate Rights
Certificates will be distributed. The Rights will separate from the Common Stock
and a Distribution Date will occur upon the earlier of (i) 10 days following a
public announcement that a person or group of affiliated or associated persons
(an "Acquiring Person") has acquired, or obtained the right to acquire,
beneficial ownership of 20% or more of the outstanding shares of Common Stock
(the "Stock Acquisition Date"), or (ii) 10 business days following the
commencement of a tender offer or exchange offer that would result in a person
or group beneficially owning 30% or more of such outstanding shares of Common
Stock. Until the Distribution Date (or earlier redemption or expiration of the
rights), (i) the Rights will be evidenced by the Common Stock certificates and
will be transferred with and only with such Common Stock certificates, (ii) new
Common Stock certificates issued after the Record Date will contain a notation
incorporating the Rights Agreement by reference and (iii) the surrender for
transfer of any certificates for Common Stock outstanding, even without such
notation, will also constitute the transfer of the Rights associated with the
Common Stock represented by such certificate.

                  The Rights are not exercisable until the Distribution Date and
will expire at the Close of Business on February 15, 2004, unless earlier
redeemed or exchanged by the Company as described below.

                  As soon as practicable after the Distribution Date, separate
certificates evidencing the Rights ("Rights Certificates") will be mailed to
holders of record of the Common Stock as of the Close of Business on the
Distribution Date and, thereafter, such separate Rights Certificates alone will
represent the Rights. Except as otherwise determined by the Board of Directors
and except in connection with shares of Common Stock issued upon the exercise of
employee stock options, issuances under other employee stock benefit plans or
the conversion of convertible securities issued hereafter, only shares of Common
Stock issued prior to the Distribution Date will be issued with Rights.

                  In the event that (i) the Company is the surviving corporation
in a merger with an Acquiring Person and its Common Stock is not changed or
exchanged, (ii) a Person becomes the beneficial owner of more than 25% of the
then outstanding shares of Common Stock except

<PAGE>

pursuant to an offer that all outstanding shares of Common Stock which the
independent directors determine to be fair to, and otherwise in the best
interests of, shareholders, (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., a
reverse stock split), each holder of a Right will thereafter have the right to
receive, upon exercise, that number of shares of Common Stock (or, in certain
circumstances, cash, property or other securities of the Company) which equals
the exercise price of the Right divided by one-half of the Current Market Price
(as defined in the Rights Agreement) of the Common Stock at the date of the
occurrence of the event. However, Rights are not exercisable following the
occurrence of any of the events set forth above until such time as the Rights
are no longer redeemable by the Company as set forth below. 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. The events set forth in this paragraph are referred to as
"Section 11(a) (ii) Events."

                  For example, at an exercise price of $110 per Right, each
Right not owned by an Acquiring Person (or by certain related parties) following
an event set forth in the preceding paragraph would entitle its holder to
purchase for $110 such number of shares of Common Stock (or other consideration,
as noted above) as equals $110 divided by one-half of the Current Market Price
(as defined in the Rights Agreement) of the Common Stock. Assuming that the
Common Stock had a per share value of $55 at such time, the holder of each valid
Right would be entitled to purchase four shares of Common Stock for $110.

                  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 in which the Company is not the surviving corporation or its Common
Stock is changed or exchanged (other than a merger which follows an offer
determined by the Board to be fair as described in clause (ii) of the second
preceding paragraph), or (ii) 50% or 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 set forth above) shall thereafter have the right
to receive, upon exercise, that number of shares of common stock of the
acquiring company which equals the exercise price of the Right divided by
one-half of the Current Market Price of such common stock at the date of the
occurrence of the event.

                  For example, at an exercise price of $110 per Right, each
Right following an event set forth in the preceding paragraph would entitle its
holder to purchase for $110 such number of shares of common stock of the
acquiring company as equals $110 divided by one-half of the Current Market Price
(as defined in the Rights Agreement) of such common stock. Assuming that such
common stock had a per share value of $55 at such time, the holder of each valid
Right would be entitled to purchase four shares of common stock of the acquiring
company for $110.

                  At any time after the occurrence of a Section 11(a) (ii)
Event, and subject to the concurrence of a majority of the Continuing Directors
(as defined in the Rights Agreement), the Board of Directors of the Company may
exchange the Rights (other than Rights owned by such

                                       2
<PAGE>

Acquiring Person which have become void), in whole or in part, at an exchange
ratio of one share of Common Stock, or one one-hundredth of a share of Preferred
Stock (or of a share of a class or series of the Company's preferred stock
having equivalent rights, preferences and privileges), per Right (subject to
adjustment).

                  The Purchase Price payable, and the number of Units of
Preferred Stock or other securities or property issuable, upon exercise of the
Rights are subject to adjustment from time to time to prevent dilution (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 then-Current Market Price of the
Preferred Stock, or (iii) upon the distribution to holders of the Preferred
Stock of evidences of indebtedness or assets (excluding regular periodic cash
dividends paid out of earnings or retained earnings) or of subscription rights
or warrants (other than those referred to above).

                  The number of Rights associated with each share of Common
Stock is also subject to adjustment in the event of a stock split of the Common
Stock or a stock dividend on the Common Stock payable in Common Stock or
subdivisions, consolidations or combinations of the Common Stock occurring, in
any such case, prior to the Distribution Date.

                  Preferred Stock purchasable upon exercise of the Rights will
not be redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $1 per share and will be entitled to
an aggregate dividend of 100 times the dividend declared per share of Common
Stock. In the event of liquidation, the holders of the Preferred Stock will be
entitled to a minimum preferential liquidation payment of $100 per share and
will be entitled to an aggregate payment of 100 times the payment made per share
of Common Stock. Each share of Preferred Stock will have 100 votes, voting
together with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which Common Stock is exchanged, each
share of Preferred Stock will be entitled to receive 100 times the amount
received per share of Common Stock. These rights are protected by customary
antidilution provisions.

                  Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of one one-hundredth of a share of
Preferred Stock purchasable upon exercise of each Right should approximate the
value of one share of Common Stock.

                  With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least 1% of the
Purchase Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred Stock
on the last trading date prior to the date of exercise.

                  At any time until ten days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in part, at a price of
$.02 per Right (the "Redemption Price"), payable in cash or stock. After the
redemption period has expired, the Company's right of redemption may be
reinstated if either (i) an Acquiring Person reduces his beneficial ownership to
10% or less of the outstanding shares of Common Stock in a transaction or series
of transactions not involving the Company, there are no other Acquiring Persons
and such

                                       3
<PAGE>

reinstatement is approved by a majority of the Continuing Directors, or (ii) the
Board approves the merger of the Company with, or acquisition of the Company by,
a Person unrelated to the Acquiring Person, such reinstatement is part of the
approval by the Board of such transaction and a majority of the Continuing
Directors approve such reinstatement. Immediately upon the action of the Board
of Directors ordering redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.

                  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 Common Stock (or other consideration) of the
Company or for common stock of the acquiring company as set forth above.

                  Other than those provisions relating to the principal economic
terms of the Rights, any of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Company prior to the Distribution Date.
After the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board in order to cure any ambiguity, 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. In addition, prior to such time as a person or group first becomes
an Acquiring Person, the Board may lower the threshold for (i) beneficial
ownership to become an Acquiring Person from 20%, or (ii) exercisability of the
Rights upon a tender or exchange offer from 30% beneficial ownership, to not
less than, in the case of either clause (i) or clause (ii), the greater of (x)
any percentage larger than the largest percentage of the outstanding shares of
Common Stock then known to the Company to be beneficially owned by any person or
group or (y) 10%.

                  A copy of the Rights Agreement has been filed with the
Securities and Exchange Commission as an Exhibit to a Registration _____________
on Form ________ dated ________________. A copy of the Rights Agreement is
available free of charge from the Company. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein by reference.

                                       4

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