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Sample Business Contracts

Rights Agreement - SkyMall Inc. and Continental Stock Transfer & Trust Co.

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                                 SKYMALL, INC.

                                      AND

                   CONTINENTAL STOCK TRANSFER & TRUST COMPANY

                                  RIGHTS AGENT




                                RIGHTS AGREEMENT

                         DATED AS OF SEPTEMBER 15, 1999



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                                TABLE OF CONTENTS

DESCRIPTION                                                                 PAGE

1.     Certain Definitions.................................................   1
2.     Appointment of Rights Agent.........................................   5
3.     Issuance of Right Certificates......................................   5
4.     Form of Right Certificates..........................................   7
5.     Countersignature and Registration...................................   8
6.     Transfer, Split Up, Combination and Exchange of Right Certificates;
       Mutilated, Destroyed, Lost or Stolen Right Certificates.............   9
7.     Exercise of Rights; Purchase Price; Expiration Date of Rights.......   9
8.     Cancellation and Destruction of Right Certificates..................  10
9.     Reservation and Availability of Shares of Preferred Stock...........  11
10.    Preferred Stock Record Date.........................................  12
11.    Adjustments to Number and Kind of Shares, Number of Rights or
       Purchase Price......................................................  12
12.    Certification of Adjustments........................................  21
13.    Consolidation, Merger or Sale or Transfer of Assets or Earning
       Power...............................................................  21
14.    Fractional Rights and Fractional Shares.............................  25
15.    Rights of Action....................................................  26
16.    Agreement of Right Holders..........................................  26
17.    Right Certificate Holder Not Deemed a Shareholder...................  27
18.    Concerning the Rights Agent.........................................  27
19.    Merger or Consolidation or Changed Name of Rights Agent.............  27
20.    Duties of Rights Agent..............................................  28
21.    Change of Rights Agent..............................................  30
22.    Issuance of New Right Certificates..................................  31
23.    Redemption..........................................................  31
24.    Exchange of Rights for Common Stock.................................  32
25.    Notice of Proposed Actions..........................................  33
26.    Notices.............................................................  35
27.    Supplements and Amendments..........................................  35
28.    Successors..........................................................  35
29.    Benefits of this Rights Agreement...................................  35
30.    Governing Law.......................................................  35
31.    Counterparts........................................................  35
32.    Descriptive Headings................................................  35
33.    Severability........................................................  35

                                      -i-

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                                RIGHTS AGREEMENT


          This Rights Agreement ("Rights  Agreement"),  is dated as of September
15, 1999,  between SkyMall,  Inc., a Nevada  corporation  (the  "Company"),  and
Continental Stock Transfer & Trust Company (the "Rights Agent").

                                   WITNESSETH:

          WHEREAS,  the Board of Directors of the Company on September  10, 1999
(i)  authorized the issuance of and declared a dividend of one right (a "Right")
for each share of the common  stock,  par value $.001 per share,  of the Company
(the "Common  Stock")  outstanding  as of the Close of Business (as such term is
hereinafter  defined)  on  October  15,  1999 (the  "Record  Date"),  each Right
representing the right to purchase one  one-hundredth of a share of the Series R
Preferred  Stock,  par value  $.001 per share,  of the  Company  (the  "Series R
Preferred Stock") having the rights,  powers and preferences as set forth in the
form of Certificate of Designation  attached hereto as Exhibit A, upon the terms
and subject to the conditions hereinafter set forth, and (ii) further authorized
the  issuance  of one Right with  respect  to each share of Common  Stock of the
Company  that  shall  become  outstanding  between  October  15,  1999,  and the
Distribution Date (as such term is hereinafter defined);

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

          1.   CERTAIN DEFINITIONS. For purposes of this Agreement the following
terms shall have the meanings indicated:

               (a)  "ACQUIRING  PERSON"  shall  mean any Person (as such term is
hereinafter defined) who or which, together with all Affiliates (as such term is
hereinafter  defined) and Associates  (as such term is  hereinafter  defined) of
such Person, shall be the Beneficial Owner (as such term is hereinafter defined)
of fifteen  percent (15%) or more of the outstanding  Common Stock,  without the
prior approval of the Board of Directors;  provided,  however,  that in no event
shall a Person who or which, together with all Affiliates and Associates of such
Person,  is the  Beneficial  Owner of less  than  fifteen  percent  (15%) of the
Company's  outstanding shares of Common Stock, become an Acquiring Person solely
as a result of a reduction of the number of shares of outstanding  Common Stock,
including  repurchases  of  outstanding  shares of Common  Stock by the Company,
which reduction  increases the percentage of outstanding  shares of Common Stock
beneficially  owned by such Person,  provided,  however,  that if a Person shall
become the  Beneficial  Owner of fifteen  percent (15%) or more of the Company's
outstanding  shares  of  Common  Stock  then  outstanding  solely by reason of a
reduction  of the  number of  shares  of  outstanding  Common  Stock,  and shall
thereafter  become the Beneficial Owner of any additional shares of Common Stock
of the  Company,  then such Person shall be deemed to be an  "Acquiring  Person"
unless upon the  consummation of the  acquisition of such  additional  shares of
Common  Stock such  person  does not own  fifteen  percent  (15%) or more of the
shares of Common Stock then outstanding, and provided further, that an Acquiring
Person shall not include an Exempt Person (as such term is hereinafter defined).
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 (including,  without limitation,  because (i) such

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Person was unaware that it beneficially  owned a percentage of Common Stock that
would  otherwise  cause  such  Person to be an  "Acquiring  Person" or (ii) such
Person was aware of the  extent of its  Beneficial  Ownership  but had no actual
knowledge of the consequences of such Beneficial Ownership under this Agreement)
and without any intention of changing or influencing control of the Company, 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 or to have become an "Acquiring Person" for any
purposes of this Agreement.

               (b)  "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 (the "Exchange
Act"), as in effect on the date of this Agreement.

               (c)  A Person shall  be  deemed  the  "BENEFICIAL  OWNER"  of any
securities

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

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

                    (iii) which are beneficially owned,  directly or indirectly,
by any other Person with which such Person or any of such Person's Affiliates or
Associates has any agreement,  arrangement or  understanding  (whether or not in
writing) for the purpose of  acquiring,  holding,  voting except as described in
the proviso to clause (B) of subparagraph (ii) of this Section 1(c) or disposing
of any securities of the Company;  provided,  however,  that no Person who is an
officer,  director or employee of an Exempt  Person  shall be deemed,  solely by
reason of such  Person's  status or  authority  as such,  to be the  "Beneficial
Owner"  of,  to have  "Beneficial  Ownership"  of or to  "beneficially  own" any
securities  that are  "beneficially  owned" (as defined in this  Section  1(c)),

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including,  without limitation,  in a fiduciary capacity, by an Exempt Person or
by any other such officer, director or employee of an Exempt Person.

                    For all purposes of this  Agreement,  any calculation of the
number of shares of Common Stock  outstanding at any particular time,  including
for purposes of determining the particular percentage of such outstanding shares
of Common Stock of which any Person is the  Beneficial  Owner,  shall be made in
accordance  with the last sentence of Rule  13d-3(d)(1)(i)  of the General Rules
and Regulations under the Exchange Act as in effect on the date hereof.

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

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

               (f)  "COMMON STOCK" when used with reference to the Company shall
mean the Common Stock, par value $.001 per share, of the Company. "Common Stock"
when used with  reference  to any Person  other than the Company  which shall be
organized  in  corporate  form  shall  mean the  capital  stock or other  equity
security  with the  greatest  per share  voting power of such Person or, if such
Person is a Subsidiary of or is controlled by another  Person,  the Person which
ultimately controls such first-mentioned  Person.  "Common Stock" when used with
reference to any Person  other than the Company  which shall not be organized in
corporate form shall mean units of beneficial interest which shall represent the
right to participate in profits,  losses,  deductions and credits of such Person
and which shall be entitled to exercise  the  greatest  voting power per unit of
such Person.

               (g)  "COMMON STOCK EQUIVALENTS"  shall have the meaning set forth
in Section 11(a)(iii) hereof.

               (h)  "COMPANY"  shall have the meaning set forth in the  preamble
hereto.

               (i)  "CURRENT  MARKET  PRICE" shall have the meaning set forth in
Section 11(d) hereof.

               (j)  "CURRENT  VALUE" shall have the meaning set forth in Section
11(a)(iii) hereof.

               (k)  "DISTRIBUTION  DATE"  shall  have the  meaning  set forth in
Section 3(a) hereof.

               (l)  "EXCHANGE ACT" shall have the meaning set forth in Section 1
hereof.

               (m)  "EXEMPT PERSON" shall mean the Company or any  Subsidiary of
the Company,  including,  without  limitation,  in its fiduciary  capacity,  any
employee  benefit  plan or employee or director  stock plan of the Company or of
any Subsidiary of the Company, or any Person, organized, appointed,  established

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or holding  Common  Stock for or  pursuant  to the terms of any such plan or any
Person  funding  other  employee  benefits  for  employees of the Company or any
Subsidiary of the Company.

               (n)  "FINAL EXPIRATION  DATE" shall have the meaning set forth in
Section 7(a) hereof.

               (o)  "FLIP-IN  EVENT"  shall mean any event  described in Section
11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) hereof.

               (p)  "FLIP-IN EXERCISE  PAYMENT" shall have the meaning set forth
in Section 11(a)(ii) hereof.

               (q)  "FLIP-IN  TRIGGER  DATE" shall have the meaning set forth in
Section 11(a)(iii) hereof.

               (r)  "FLIP-OVER  EVENT" shall mean any event  described in clause
(x), (y) or (z) of Section 13(a) hereof.

               (s)  "FLIP-OVER  EXERCISE  PAYMENT"  shall  have  the meaning set
forth in Section 13(a) hereof.

               (t)  "NASDAQ"  shall have the meaning  set forth in Section  9(b)
hereof.

               (u)  "PERSON"  shall  mean  any  individual,  firm,  corporation,
partnership, trust or other entity.

               (v)  "PREFERRED  STOCK"  shall mean the Series R Preferred  Stock
having the rights, powers and preferences set forth in Exhibit A hereto, and, to
the extent that there is not a sufficient number of shares of Series R Preferred
Stock authorized to permit the full exercise of the Rights,  any other series of
Preferred Stock,  par value $.001 per share, of the Company  designated for such
purpose  containing  terms  substantially  similar  to the terms of the Series R
Preferred Stock.

               (w)  "PREFERRED  STOCK  EQUIVALENT"  shall  have  the meaning set
forth in Section 11(b) hereof.

               (x)  "PRINCIPAL  PARTY"  shall  have  the  meaning  set  forth in
Section 13(b) hereof.

               (y)  "PURCHASE PRICE" shall have the meaning set forth in Section
4(a) hereof.

               (z)  "RECORD  DATE"  shall  have  the  meaning  set  forth in the
Recitals within this Agreement.

               (aa) "REDEMPTION  DATE"  shall  have  the  meaning  set  forth in
Section 7(a) hereof.

               (bb) "REDEMPTION  PRICE"   shall  have the  meaning  set forth in
Section 23(a) hereof.

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               (cc) "RIGHT  CERTIFICATE"  shall  have the  meaning  set forth in
Section 3(a) hereof.

               (dd) "SECURITIES  ACT"  shall mean the Securities Act of 1933, as
amended.

               (ee) "STOCK ACQUISITION DATE" shall mean the first date of public
announcement by the Company or an Acquiring  Person that an Acquiring Person has
become such or such  earlier  date as a majority of the  directors  shall become
aware of the existence of an Acquiring Person.

               (ff) "SUBSTITUTION  PERIOD"  shall  have the meaning set forth in
Section 11(a)(iii) hereof.

               (gg) "SUBSIDIARY" of a Person shall mean any corporation or other
entity of which  securities or other ownership  interests having ordinary voting
power  sufficient to elect a majority of the board of directors or other persons
performing similar functions are beneficially owned, directly or indirectly,  by
such Person and any corporation or other entity that is otherwise  controlled by
such Person.

               (hh) "SUMMARY  OF RIGHTS"  shall have the  meaning  set  forth in
Section 3(b) hereof.

               (ii) "TRADING  DAY"  shall have the  meaning set forth in Section
11(d) hereof.

               (jj) "TRIGGERING EVENT" shall mean any event described in Section
11(a)(ii)(A), 11(a)(ii)(B) or 11(a)(ii)(C) or Section 13 hereof.

               (kk) "VOTING POWER" shall mean the voting power of all securities
of the Company then outstanding and generally  entitled to vote for the election
of directors of the Company.

               Any determination  required by the definitions  contained in this
Section 1 shall be made by the Board of  Directors  of the  Company  in its good
faith judgment, which determination shall be binding on the Rights Agent and the
holders of the Rights.

          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  upon ten (10) days' prior  written  notice to the Rights
Agent. The Rights Agent shall have no duty to supervise and shall in no event be
liable for the acts or omissions of any such  Co-Rights  Agent(s).  In the event
the Company appoints one or more Co-Rights Agents,  the respective duties of the
Rights Agents and any Co-Rights Agents shall be as the Company shall determine.

          3.   ISSUANCE OF RIGHT CERTIFICATES.

               (a)  Until  the  earlier  of (i) 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
tenth  business  day (or such later date as may be  determined  by action of the
Board of Directors prior to such time as any Person becomes an Acquiring Person)
after the date of the  commencement  by any Person (other than an Exempt Person)

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of, or of the first public  announcement of the intent of any Person (other than
an Exempt Person) to commence (which intention to commence remains in effect for
five (5) business days after such announcement), a tender or exchange offer upon
the successful  consummation of which such Person,  together with its Affiliates
and Associates,  would be the Beneficial  Owner of fifteen percent (15%) or more
of the outstanding Common Stock (irrespective of whether any shares are actually
purchased  pursuant to any such offer)  (including  any such date which is after
the date of this Agreement and prior to the issuance of the Rights;  the earlier
of such dates being  herein  referred to as the  "Distribution  Date"),  (x) the
Rights will be evidenced  (subject to the  provisions of Section 3(c) hereof) by
the  certificates for the Common Stock registered in the names of the holders of
the Common Stock and not by separate Right Certificates, and (y) each Right will
be  transferable  only in  connection  with the transfer of a share  (subject to
adjustment  as  hereinafter  provided) of Common Stock.  As soon as  practicable
after the Distribution Date, the Rights Agent will mail, by first-class, postage
prepaid  mail,  to each  record  holder of the  Common  Stock as of the Close of
Business on the  Distribution  Date, as shown by the records of the Company,  to
the  address  of such  holder  shown on such  records,  a Right  certificate  in
substantially  the form of Exhibit B hereto (a "Right  Certificate")  evidencing
one  Right  for  each  share  of  Common  Stock so  held.  As of and  after  the
Distribution   Date  the  Rights  will  be   evidenced   solely  by  such  Right
Certificates.

               (b)  On the Record Date,  or as soon as  practicable  thereafter,
the Company will send a copy of a Summary of Rights to Purchase Preferred Stock,
substantially  in the form attached hereto as Exhibit C (a "Summary of Rights"),
by  first-class,  postage prepaid mail, to each record holder of Common Stock as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Company.

               (c)  Rights  shall 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 prior to the earlier of the Distribution Date or
the Expiration  Date. With respect to certificates  representing  such shares of
Common Stock, the Rights will be evidenced by such certificates for Common Stock
registered  in the names of the  holders  thereof  together  with the Summary of
Rights.  Until the Distribution Date (or, if earlier,  the Expiration Date), the
surrender for transfer of any  certificate  for Common Stock  outstanding on the
Record Date (with or without a copy of the Summary of Rights attached  thereto),
shall also  constitute the surrender for transfer of the Rights  associated with
the Common Stock represented thereby.

               (d)  Certificates  issued for Common  Stock  (including,  without
limitation, certificates issued upon transfer or exchange of Common Stock) after
the  Record  Date  but  prior to the  earlier  of the  Distribution  Date or the
Expiration  Date shall have  impressed on,  printed on,  written on or otherwise
affixed to them the following legend:

                    This  certificate  also evidences and entitles the
                    holder  hereof to  certain  Rights as set forth in
                    the  Rights  Agreement   between   SkyMall,   Inc.
                    ("SkyMall") and Continental Stock Transfer & Trust
                    Company,  as Rights  Agent,  dated as of September
                    15, 1999,  as the same may be amended from time to
                    time (the "Rights Agreement"),  the terms of which
                    are incorporated herein by reference and a copy of
                    which is on file at the principal executive office

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<PAGE>

                    of SkyMall.  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.  SkyMall
                    will mail to the holder of this certificate a copy
                    of  the  Rights  Agreement  without  charge  after
                    receipt by it of a written request therefor. UNDER
                    CERTAIN  CIRCUMSTANCES  AS  PROVIDED IN THE RIGHTS
                    AGREEMENT, RIGHTS ISSUED TO, BENEFICIALLY OWNED BY
                    OR  TRANSFERRED TO ANY PERSON WHO IS OR BECOMES AN
                    ACQUIRING   PERSON  (AS   DEFINED  IN  THE  RIGHTS
                    AGREEMENT)   OR  AN  ASSOCIATE  OR  AFFILIATE  (AS
                    DEFINED  IN  THE  RIGHTS  AGREEMENT)  THEREOF  AND
                    CERTAIN  TRANSFEREES THEREOF WILL BE NULL AND VOID
                    AND WILL NO LONGER BE TRANSFERABLE.

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

               Notwithstanding  this  paragraph  (d),  the  omission of a legend
shall not affect the  enforceability of any part of this Agreement or the rights
of any holder of the Rights.

          4.   FORM OF RIGHT CERTIFICATES.

               (a) The Right Certificates (and the forms of election to purchase
shares and of assignment to be printed on the reverse thereof),  when, as and if
issued, shall be substantially in the form set forth in Exhibit B hereto and may
have such marks of identification or designation and such legends,  summaries or
endorsements  printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Rights Agreement, or as may be required
to comply with any law or with any rule or regulation  made pursuant  thereto or
with any rule or regulation  of any stock  exchange on which the Rights may from
time to time be listed,  or to conform to usage.  Subject to the  provisions  of
Sections  11, 13 and 22 hereof,  the Right  Certificates  evidencing  the Rights
issued on the Record Date whenever such certificates are issued,  shall be dated
as of the Record Date and the Right Certificates evidencing Rights to holders of
record of Common  Stock  issued  after the Record  Date shall be dated as of the
Record  Date but shall also be dated to  reflect  the date of  issuance  of such
Right  Certificate.  On their face, Right Certificates shall entitle the holders
thereof to purchase,  for each Right, one  one-hundredth of a share of Preferred
Stock, or other securities or property as provided herein,  as the same may from

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time to time be adjusted as provided herein,  at the price per one one-hundredth
of a share of  Preferred  Stock of $65.00,  as the same may from time to time be
adjusted as provided herein (the "Purchase Price").

               (b) Notwithstanding any other provision of this Rights Agreement,
any Right  Certificate that represents Rights that are or were at any time on or
after  the  earlier  of the  Stock  Acquisition  Date or the  Distribution  Date
beneficially  owned by an Acquiring Person or any Affiliate or Associate thereof
(or any  transferee of such Rights) shall have impressed on, printed on, written
on or otherwise  affixed to it (if the Company or the Rights Agent has knowledge
that such Person is an Acquiring Person or an Associate or Affiliate  thereof or
transferee of such Persons or a nominee of any of the  foregoing)  the following
legend:

                    The beneficial owner of the Rights  represented by
                    this Right  Certificate is an Acquiring  Person or
                    an  Affiliate  or  Associate  (as  defined  in the
                    Rights  Agreement)  of an  Acquiring  Person  or a
                    subsequent  holder  of  such  Right   Certificates
                    beneficially  owned by such Persons.  Accordingly,
                    this Right Certificate and the Rights  represented
                    hereby  are null and  void and will no  longer  be
                    transferable as provided in the Rights Agreement.

The  provisions  of Section  11(a)(ii)  and Section 24 of this Rights  Agreement
shall be operative  whether or not the foregoing legend is contained on any such
Right Certificates.

          5.   COUNTERSIGNATURE AND REGISTRATION.

               (a) The Right  Certificates  shall be  executed  on behalf of the
Company by its Chief  Executive  Officer,  its President or any Vice  President,
either  manually  or by  facsimile  signature,  and  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 Right Certificates shall be countersigned,  either manually or by
facsimile,  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 Right  Certificates  shall cease to be such  officer of the  Company  before
countersignature  by the Rights  Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
issued  and  delivered  with the same  force and effect as though the person who
signed such Right Certificates had not ceased to be such officer of the Company;
and any Right  Certificate  may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Right  Certificate,  shall be a
proper  officer of the Company to sign such Right  Certificate,  although at the
date of the  execution of this Rights  Agreement any such person was not such an
officer.

               (b) Following the  Distribution  Date, the Rights Agent will keep
or cause to be kept, at one of its offices designated for such purposes, records
for registration and transfer of the Right Certificates  issued hereunder.  Such
records  shall show the names and  addresses  of the  respective  holders of the
Right  Certificates,  the number of Rights  evidenced on its face by each of the
Right  Certificates,  the  date  of  each  of the  Right  Certificates  and  the
certificate numbers for each of the Right Certificates.

                                        8
<PAGE>

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

               (a) Subject to the provisions of Sections 7(e),  11(a)(ii) and 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 Right  Certificate
or Certificates  (other than Right  Certificates  representing  Rights that have
become void  pursuant to Section  11(a)(ii)  hereof or that have been  exchanged
pursuant to Section 24 hereof) may be (i) transferred or (ii) split up, combined
or exchanged for another Right Certificate or Right Certificates,  entitling the
registered  holder to  purchase a like  number of shares of  Preferred  Stock or
other securities as the Right Certificate or Right Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer any
Right  Certificate  shall  surrender the Right  Certificate at the office of the
Rights Agent  designated  for such  purposes  with the form of assignment on the
reverse  side thereof duly  endorsed (or enclose with such Right  Certificate  a
written  instrument  of  transfer  in form  satisfactory  to the Company and the
Rights Agent),  duly executed by the  registered  holder thereof or his attorney
duly authorized in writing,  and with such signature guaranteed by a member of a
securities  approved medallion program.  Any registered holder desiring to split
up, combine or exchange any Right Certificate shall make such request in writing
delivered to the Rights  Agent,  and shall  surrender the Right  Certificate  or
Right Certificates to be split up, combined or exchanged at the principal office
of the Rights Agent. Thereupon the Rights Agent shall, subject to Sections 4(b),
7(e),  11 and 14 hereof,  countersign  (by manual or  facsimile  signature)  and
deliver  to  the  person   entitled   thereto  a  Right   Certificate  or  Right
Certificates,  as the case may be, as so  requested.  The  Company  may  require
payment of a sum sufficient to cover any tax or governmental  charge that may be
imposed in connection  with any transfer,  split up,  combination or exchange of
Right Certificates.

               (b) Subject to the provisions of Section 11(a)(ii)  hereof,  upon
receipt by the Company and the Rights Agent of evidence reasonably  satisfactory
to them of the loss,  theft,  destruction or mutilation of a Right  Certificate,
and, in case of loss, theft or destruction,  of indemnity or security reasonably
satisfactory  to them,  and, if requested by the Company,  reimbursement  to the
Company of all reasonable expenses incidental thereto, and upon surrender to the
Rights Agent and cancellation of the Right Certificate if mutilated, the Company
will  execute  and deliver a new Right  Certificate  of like tenor to the Rights
Agent for delivery to the registered  owner in lieu of the Right  Certificate so
lost, stolen, destroyed or mutilated.

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

               (a) Subject to Section 11(a)(ii) hereof,  the Rights shall become
exercisable,  and may be  exercised  to  purchase  Preferred  Stock,  except  as
otherwise  provided  herein,  in  whole  or  in  part  at  any  time  after  the
Distribution  Date upon  surrender  of the Right  Certificate,  with the form of
election to  purchase  on the reverse  side  thereof  duly  executed  (with such
signature duly guaranteed),  to the Rights Agent at Two Broadway,  New York, New
York 10004,  together  with payment of the  Purchase  Price with respect to each
Right exercised,  subject to adjustment as hereinafter  provided, at or prior to
the Close of  Business  on the  earlier  of (i)  October  15,  2009 (the  "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 hereof (such date being herein referred to as the "Redemption  Date")
or (iii) the time at which all such Rights are  exchanged as provided in Section

                                       9
<PAGE>

24 hereof (the earliest of (i),  (ii) and (iii) being herein  referred to as the
"Expiration Date").

               (b) The  Purchase  Price and the  number  of shares of  Preferred
Stock or other  securities  or  consideration  to be acquired upon exercise of a
Right shall be subject to  adjustment  from time to time as provided in Sections
11 and 13 hereof.  The  Purchase  Price shall be payable in lawful  money of the
United States of America, in accordance with Section 7(c) hereof.

               (c) Except as provided in Section 11(a)(ii) hereof,  upon receipt
of a Right  Certificate  with the form of election to  purchase  duly  executed,
accompanied  by payment  of the  Purchase  Price (as such  amount may be reduced
pursuant to Section  11(a)(iii)  hereof) or so much thereof as is necessary  for
the shares to be purchased and an amount equal to any  applicable  transfer tax,
by cash,  certified  check or  official  bank check  payable to the order of the
Company or the Rights Agent,  the Rights Agent shall,  subject to Section 20(k),
thereupon  promptly (i)  requisition  from any transfer  agent of the  Preferred
Stock (or make available if the Rights Agent is the transfer agent) certificates
for the number of shares of Preferred  Stock so elected to be purchased  and the
Company will comply and hereby  authorizes  and directs such  transfer  agent to
comply with all such requests,  (ii)  requisition from the Company the amount of
cash to be paid in lieu of  issuance of  fractional  shares in  accordance  with
Section 14(b) hereof,  and (iii) promptly after receipt of such Preferred  Stock
certificates  cause  the  same to be  delivered  to or  upon  the  order  of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder,  and, when  appropriate,  after receipt of the
cash requisitioned  from the Company,  promptly deliver such cash to or upon the
order of the  registered  holder of such  Right  Certificate.  In the event of a
purchase of securities, other than Preferred Stock, pursuant to Section 11(a) or
Section 13 hereof, the Rights Agent shall promptly take the appropriate  actions
corresponding to the foregoing  clauses (i) through (iii). In the event that the
Company is obligated to issue other  securities 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) Except as otherwise  provided herein,  in case the registered
holder  of any  Right  Certificate  shall  exercise  less  than  all the  Rights
evidenced thereby,  a new Right Certificate  evidencing Rights equivalent to the
Rights  remaining  unexercised  shall  be  issued  by the  Rights  Agent  to the
registered holder of such Right  Certificate or to his duly authorized  assigns,
subject to the provisions of Section 14 hereof.

               (e)  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
exercise as set forth in this Section 7 unless such registered holder shall have
(i)  completed and signed the  certificate  contained in the form of election to
purchase set forth on the reverse side of the Right Certificate  surrendered for
such exercise and (ii) provided such additional  evidence of the identity of the
Beneficial  Owner (or  former  Beneficial  Owner) or  Affiliates  or  Associates
thereof as the Company shall reasonably request.

          8.  CANCELLATION  AND  DESTRUCTION  OF RIGHT  CERTIFICATES.  All Right
Certificates  surrendered  for the  purpose  of  exercise,  transfer,  split up,
combination  or exchange  shall,  if surrendered to the Company or to any of its

                                       10
<PAGE>

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

          9.   RESERVATION AND AVAILABILITY OF SHARES OF PREFERRED STOCK.

               (a) The  Company  covenants  and agrees that at all times it will
cause  to be  reserved  and  kept  available,  out of and to the  extent  of its
authorized  and  unissued  shares of  Preferred  Stock not  reserved for another
purpose (and,  following the occurrence of a Triggering Event, other securities)
or held in its treasury, the number of shares of Preferred Stock (and, following
the occurrence of a Triggering  Event,  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,  provided,  however, that
the  Company  shall not be  required  to reserve  and keep  available  shares of
Preferred Stock or other securities sufficient to permit the exercise in full of
all  outstanding  Rights  pursuant  to the  adjustments  set  forth  in  Section
11(a)(ii),  Section  11(a)(iii)  or  Section 13 hereof  unless,  and only to the
extent that, the Rights become exercisable pursuant to such adjustments.

               (b) The Company shall (i) use its best efforts to cause, from and
after such time as the Rights become  exercisable,  the Rights and all shares of
Preferred  Stock (and  following  the  occurrence of a Triggering  Event,  other
securities) issued or reserved for issuance upon exercise thereof to be reported
by the National  Association of Securities  Dealers,  Inc. Automated  Quotations
System  ("Nasdaq") or such other system then in use, and if the Preferred  Stock
shall become  listed on any national  securities  exchange,  to cause,  from and
after such time as the Rights become  exercisable,  the Rights and all shares of
Preferred  Stock (and,  following the  occurrence of a Triggering  Event,  other
securities)  issued or reserved for issuance upon exercise  thereof to be listed
on such exchange upon official notice of issuance upon such exercise and (ii) if
then  necessary,  to permit the offer and  issuance of such shares of  Preferred
Stock (and,  following the occurrence of a Triggering Event,  other securities),
register  and  qualify  such  shares of  Preferred  Stock  (and,  following  the
occurrence of a Triggering Event, other securities) under the Securities Act and
any  applicable  state  securities or "blue sky" laws (to the extent  exemptions
therefrom   are  not   available),   cause  such   registration   statement  and
qualifications  to become  effective  as soon as possible  after such filing and
keep such registration and qualifications effective until the Expiration Date of
the Rights.  The Company may  temporarily  suspend,  for a period of time not to
exceed ninety (90) days,  the  exercisability  of the Rights in order to prepare
and file a  registration  statement  under the  Securities  Act and permit it to
become  effective.  Upon any such  suspension,  the Company shall issue a public
announcement  stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer  in  effect.  Notwithstanding  any  provision  of this  Agreement  to the
contrary,  the Rights shall not be  exercisable in any  jurisdiction  unless the

                                       11
<PAGE>

requisite  qualification in such jurisdiction shall have been obtained and until
a registration  statement under the Securities Act (if required) shall have been
declared effective.

               (c) The Company  covenants  and agrees that it will take all such
action as may be  necessary  to ensure that all shares of  Preferred  Stock (and
following the occurrence of a Triggering Event, 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 in respect  thereof),  be duly
and validly  authorized  and issued and fully paid and  nonassessable  shares in
accordance with applicable law.

               (d) The  Company  further  covenants  and agrees that it will pay
when due and payable any and all federal and state  transfer  taxes which may be
payable in respect of the issuance or delivery of the Right  Certificates  or of
any shares of Preferred Stock (or other securities, as the case may be) upon the
exercise  of Rights.  The  Company  shall not,  however,  be required to pay any
transfer  tax which may be payable in respect of any  transfer  or  delivery  of
Right  Certificates  to a Person  other  than,  or the  issuance  or delivery of
certificates for Preferred Stock (or other securities,  as the case may be) upon
exercise  of Rights in a name other than that of, the  registered  holder of the
Right  Certificate,  and the Company shall not be required to issue or deliver a
Right  Certificate or certificate for Preferred Stock (or other  securities,  as
the case may be) to a person  other than such  registered  holder until any such
tax shall have been paid (any such tax being payable by the holder of such Right
Certificate  at the time of surrender) or until it has been  established  to the
Company's satisfaction that no such tax is due.

          10.  PREFERRED  STOCK  RECORD  DATE.  Each  Person  in whose  name any
certificate for shares of Preferred Stock (or other securities,  as the case may
be) is issued upon the  exercise of Rights  shall for all  purposes be deemed to
have  become  the holder of record of the  shares of  Preferred  Stock (or other
securities,  as the case may be)  represented  thereby on, and such  certificate
shall be dated, the date upon which the Right Certificate evidencing such Rights
was duly  surrendered  and  payment of the  Purchase  Price (and any  applicable
transfer taxes) was made. Prior to the exercise of the Rights evidenced thereby,
the holder of a Right Certificate,  as such, shall not be entitled to any rights
of a shareholder  of the Company with respect to the 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,
if any,  and shall not be entitled to receive any notice of any  proceedings  of
the Company, except as provided herein.

          11.  ADJUSTMENTS  TO NUMBER  AND KIND OF  SHARES,  NUMBER OF RIGHTS OR
PURCHASE  PRICE.  The number and kind of shares  subject  to  purchase  upon the
exercise of each Right, the number of Rights  outstanding and the Purchase Price
are subject to adjustment from time to time as follows:

               (a)  (i)  In  the  event the  Company shall at any time after the
date of this Rights Agreement (A) declare or pay any dividend on Preferred Stock
payable in shares of Preferred  Stock,  (B)  subdivide or split the  outstanding
shares of  Preferred  Stock  into a greater  number of  shares,  (C)  combine or
consolidate the  outstanding  shares of Preferred Stock into a smaller number of
shares or effect a reverse split of the outstanding  shares of Preferred  Stock,
or (D)  issue any  shares  of its  capital  stock in a  reclassification  of the
Preferred  Stock  (including  any such  reclassification  in  connection  with a

                                       12
<PAGE>

consolidation  or merger in which the  Company is the  continuing  or  surviving
corporation),  except as otherwise  provided in this Section 11(a), the Purchase
Price in  effect  at the time of the  record  date for such  dividend  or of the
effective date of such  subdivision,  combination or  reclassification,  and the
number and kind of shares of Preferred  Stock or capital stock,  as the case may
be, issuable on such date, 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  capital  stock or other  securities,  which,  if such  Right had been
exercised  immediately  prior to such date,  the holder thereof would have owned
upon such  exercise  and been  entitled  to receive by virtue of such  dividend,
subdivision,  combination  or  reclassification.  If an event occurs which would
require an  adjustment  under both this Section  11(a)(i) and Section  11(a)(ii)
hereof,  the  adjustment  provided  for in this  Section  11(a)(i)  shall  be in
addition  to, and shall be made prior to, any  adjustment  required  pursuant to
Section 11(a)(ii).

                    (ii) Subject to Section 24, in the event

                         (A) any Acquiring Person or any  Associate or Affiliate
of any Acquiring Person, at any time after the date of this Agreement,  directly
or indirectly,  (1) shall consolidate with or merge with and into the Company or
any of its  Subsidiaries  or  otherwise  combine  with the Company or any of its
Subsidiaries  and the  Company or such  Subsidiary  shall be the  continuing  or
surviving  corporation  of such  consolidation,  merger or  combination  and the
Common Stock of the Company shall remain outstanding and no shares thereof shall
be changed into or exchanged for stock or other  securities of the Company or of
any other  Person or cash or any other  property,  or (2) shall,  in one or more
transactions,  other than in  connection  with the exercise of a Right or Rights
and other than in  connection  with the  exercise or  conversion  of  securities
exercisable  for  or  convertible  into  securities  of  the  Company  or of any
Subsidiary of the Company, transfer any assets or property to the Company or any
of its  Subsidiaries  in  exchange  (in whole or in part) for any  shares of any
class  of  capital  stock  of the  Company  or any  of its  Subsidiaries  or any
securities  exercisable  for or convertible  into shares of any class of capital
stock of the Company or any of its  Subsidiaries,  or otherwise  obtain from the
Company  or  any  of  its  Subsidiaries,  with  or  without  consideration,  any
additional  shares of any class of  capital  stock of the  Company or any of its
Subsidiaries or any securities exercisable for or convertible into shares of any
class of capital stock of the Company or any of its Subsidiaries  (other than as
part of a pro rata offer or  distribution  by the Company or such  Subsidiary to
all holders of such  shares),  or (3) shall  sell,  purchase,  lease,  exchange,
mortgage,  pledge,  transfer  or  otherwise  acquire  (other  than as a pro rata
dividend) or dispose,  to, from or with, as the case may be, in one  transaction
or a series of  transactions,  the  Company or any of its  Subsidiaries,  assets
(including  securities) on terms and conditions less favorable to the Company or
such Subsidiary  than the Company or such Subsidiary  would be able to obtain in
arm's-length  negotiation with an unaffiliated third party, or (4) shall receive
any compensation  from the Company or any of its Subsidiaries for services other
than compensation for employment as a regular or part-time employee, or fees for
serving  as a  director,  at rates in  accordance  with  the  Company's  (or its
Subsidiary's)  past  practices,  or (5) shall  receive the benefit,  directly or
indirectly (except  proportionately as a shareholder),  of any loans,  advances,
guarantees,  pledges or other  financial  assistance  or any tax  credits or tax
advantage  provided  by the  Company  or any of its  Subsidiaries,  or (6) shall
engage  in any  transaction  with  the  Company  (or  any  of its  Subsidiaries)
involving  the sale,  license,  transfer or grant of any right in, or disclosure
of, any patents, copyrights,  trade secrets,  trademarks,  know-how or any other
intellectual  or  industrial  property  rights  recognized  under any  country's

                                       13
<PAGE>

intellectual  property laws which the Company  (including its Subsidiaries) owns
or has the right to use on terms and conditions not approved by the Board; or

                         (B) any Person,  alone or together with its  Affiliates
and Associates, shall become an Acquiring Person; or

                         (C) during such  time as  there is an Acquiring Person,
there shall be any  reclassification of securities  (including any reverse stock
split), or any  recapitalization  of the Company, or any merger or consolidation
of the Company with any of its  Subsidiaries or any other  transaction or series
of transactions involving the Company or any of its Subsidiaries (whether or not
with or into or  otherwise  involving an  Acquiring  Person or any  Affiliate or
Associate  of  such  Acquiring  Person)  which  has  the  effect,   directly  or
indirectly,  of increasing by more than one percent (1%) the proportionate share
of the  outstanding  shares of any class of equity  securities of the Company or
any of its  Subsidiaries,  or securities  exercisable  for or  convertible  into
equity securities of the Company or any of its  Subsidiaries,  which is directly
or indirectly  beneficially  owned by any  Acquiring  Person or any Affiliate or
Associate  of any  Acquiring  Person (any of (A),  (B) or (C) being  referred to
herein as a "Flip-In Event").

                         Then  upon the first  occurrence of such  Flip-In Event
(i) the  Purchase  Price shall be adjusted  to be the  Purchase  Price in effect
immediately   prior  to  the  Flip-In   Event   multiplied   by  the  number  of
one-hundredths  of a share of Preferred  Stock for which a Right was exercisable
immediately  prior to such  Flip-In  Event,  whether  or not such Right was then
exercisable,  and (ii) each holder of a Right,  except as otherwise  provided in
this Section 11(a)(ii) and Section 11(a)(iii) hereof,  shall thereafter have the
right to receive,  upon exercise  thereof at a price equal to the Purchase Price
(as so adjusted),  in accordance with the terms of this Agreement and in lieu of
shares of Preferred Stock,  such number of shares of Common Stock as shall equal
the result  obtained by dividing  the  Purchase  Price (as so adjusted) by fifty
percent  (50%)  of the  Current  Market  Price  per  share of the  Common  Stock
(determined pursuant to Section 11(d) hereof) on the date of such Flip-In Event;
provided,  however,  that the Purchase  Price (as so adjusted) and the number of
shares  of  Common  Stock so  receivable  upon the  exercise  of a Right  shall,
following the Flip-In Event, be subject to further  adjustment as appropriate in
accordance with Section 11(f) hereof. Notwithstanding anything in this Agreement
to the contrary,  however, from and after the Flip-In Event, any Rights that are
beneficially owned by (x) any Acquiring Person (or any Affiliate or Associate of
any Acquiring  Person),  (y) a transferee  of any Acquiring  Person (or any such
Affiliate or Associate) who becomes a transferee  after the Flip-In Event or (z)
a transferee of any Acquiring  Person (or any such  Affiliate or Associate)  who
became a transferee prior to or concurrently  with the Flip-In Event pursuant to
either  (I) a  transfer  from the  Acquiring  Person to  holders  of its  equity
securities  or to  any  Person  with  whom  it  has  any  continuing  agreement,
arrangement  or  understanding,  whether  written or  otherwise,  regarding  the
transferred  Rights  or  (II) a  transfer  which  the  Board  of  Directors  has
determined is part of a plan,  arrangement or understanding,  whether written or
otherwise,  which has the purpose or effect of avoiding the  provisions  of this
paragraph, and subsequent transferees of such Persons, shall be void without any
further  action and any holder of such Rights  shall  thereafter  have no rights
whatsoever  with respect to such Rights under any  provision of this  Agreement.
The Company shall use all  reasonable  efforts to ensure that the  provisions of
this Section  11(a)(ii)  are complied  with,  but shall have no liability to any

                                       14
<PAGE>

holder of Right  Certificates or other Person as a result of its failure to make
any  determinations  with  respect  to an  Acquiring  Person or its  Affiliates,
Associates or transferees hereunder.  From and after the Flip-In Event, no Right
Certificate  shall be issued  pursuant  to  Section 3 or  Section 6 hereof  that
represents  Rights that are or have become void  pursuant to the  provisions  of
this  paragraph,  and any Right  Certificate  delivered to the Rights Agent that
represents  Rights that are or have become void  pursuant to the  provisions  of
this paragraph shall be canceled.

                    (iii) The Company may at its option  substitute  for a share
of Common  Stock  issuable  upon the exercise of Rights in  accordance  with the
foregoing  subparagraph  (ii) such number or  fractions  of shares of  Preferred
Stock having an aggregate current market value equal to the Current Market Price
of a share of Common  Stock.  In the event  that there  shall not be  sufficient
shares of Common Stock issued but not  outstanding or authorized but unissued to
permit the  exercise  in full of the  Rights in  accordance  with the  foregoing
subparagraph  (ii),  the Board of Directors  shall,  to the extent  permitted by
applicable law and any material  agreements  then in effect to which the Company
is a party (A)  determine  the  excess  (the  "Spread")  of (1) the value of the
shares of Common Stock issuable upon the exercise of a Right in accordance  with
the  foregoing  subparagraph  (ii) (the  "Current  Value") over (2) the Purchase
Price (as adjusted in accordance with the foregoing  subparagraph (ii)), and (B)
with respect to each Right (other than Rights which have become void pursuant to
the foregoing  subparagraph (ii)), make adequate provision to substitute for the
shares of Common Stock issuable in accordance with the foregoing  paragraph (ii)
upon  exercise of the Right and payment of the  Purchase  Price (as  adjusted in
accordance  therewith),  (1) cash, (2) a reduction in such Purchase  Price,  (3)
shares of Preferred Stock or other equity securities of the Company,  including,
without  limitation,  shares or fractions of shares of preferred stock which, by
virtue  of  having  dividend,   voting  and  liquidation  rights   substantially
comparable to those of the shares of Common  Stock,  are deemed in good faith by
the Board of  Directors  to have  substantially  the same value as the shares of
Common Stock (such  shares of Preferred  Stock and shares or fractions of shares
of preferred stock being hereinafter referred to as "Common Stock Equivalents"),
(4) debt securities of the Company,  (5) other assets, or (6) any combination of
the  foregoing,  having a value which,  when added to the value of the shares of
Common  Stock  actually  issued  upon  exercise  of such  Right,  shall  have an
aggregate  value equal to the Current Value (less the amount of any reduction in
such Purchase  Price),  where such  aggregate  value has been  determined by the
Board of Directors upon the advice of a nationally recognized investment banking
firm selected in good faith by the Board of Directors;  provided,  however, that
if the Company  shall not make adequate  provision to deliver value  pursuant to
clause (B) above within thirty (30) days following the date of the Flip-In Event
(the "Flip-in Trigger Date"), then the Company shall be obligated to deliver, to
the extent  permitted  by  applicable  law and any material  agreements  then in
effect to which the Company is a party,  upon the  surrender  for  exercise of a
Right and without  requiring  payment of such Purchase  Price,  shares of Common
Stock  (to the  extent  available),  and  then,  if  necessary,  such  number or
fractions of shares of Preferred  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  and/or
Common Stock  Equivalents 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 Flip-In Trigger
Date,  in  order  that  the  Company  may  seek  shareholder  approval  for  the
authorization  of such  additional  shares  of  Common  Stock  or  Common  Stock
Equivalents  (such  thirty  (30)  day  period,  as it  may  be  extended,  being

                                       15
<PAGE>

hereinafter  referred to as the "Substitution  Period").  To the extent that the
Company  determines that some action need be taken pursuant to the second and/or
third  sentence of this  Section  11(a)(iii),  the  Company  (x) shall  provide,
subject to the last sentence of Section 11(a)(ii) 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 the first sentence of
Section 11(a)(iii) and to determine the value thereof.  In the event of any such
suspension,  the Company  shall  issue a public  announcement  stating  that the
exercisability of the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For purposes
of this Section  11(a)(iii),  the value of the Common Stock shall be the Current
Market Price per share of the Common  Stock on the Flip-In  Trigger Date and the
per share or per unit value of any Common  Stock  Equivalent  shall be deemed to
equal the Current  Market Price per share of the Common Stock on such date.  The
Board of Directors  may, but shall not be required to,  establish  procedures to
allocate the right to receive Common Stock upon the exercise of the Rights among
holders of Rights pursuant to this Section 11(a)(iii).

               (b) In case the Company  shall fix a record date for the issuance
of rights  (other  than the  Rights),  options  or  warrants  to all  holders of
Preferred Stock entitling them to subscribe for or purchase Preferred Stock (for
a period expiring within  forty-five (45) calendar days after such record date),
shares having the same rights, privileges and preferences as the Preferred Stock
(a "Preferred Stock Equivalent") or securities  convertible into Preferred Stock
or a Preferred  Stock  Equivalent  at a price per share of Preferred  Stock or a
Preferred  Stock  Equivalent  (or  having a  conversion  price per  share,  if a
security  convertible into Preferred Stock or a Preferred Stock Equivalent) less
than the Current Market Price 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 a Preferred  Stock  Equivalent  (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
is in a form other than cash, the value of such non-cash  consideration shall be
as determined in good faith by the Board of Directors, whose determination shall
be described  in a statement  filed with the Rights  Agent.  Shares of Preferred
Stock  owned by or held for the  account  of the  Company  shall  not be  deemed
outstanding for the purpose of any such  computation.  Such adjustment  shall be
made  successively  whenever such a record date is fixed,  and in the event that
such rights 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, assets (other than a
dividend payable in Preferred Stock, but including any dividend payable in stock

                                       16
<PAGE>

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 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  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 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 the Common  Stock for the thirty (30)
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such  date,  and  for  purpose  of  computations  made  pursuant  to  Section
11(a)(iii)  hereof,  the "Current Market Price" per share of the Common Stock on
any date shall be deemed to be the average of the daily closing prices per share
of the  Common  Stock  for the ten (10)  consecutive  Trading  Days  immediately
following  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 the Common Stock of (i) any dividend
or  distribution  on the  Common  Stock  (other  than a regular  quarterly  cash
dividend  and other  than the  Rights),  (ii) any  subdivision,  combination  or
reclassification  of the  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 occurs, 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 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 sale 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  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.  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  shall be used and shall be binding on the
Rights  Agent.  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

                                       17
<PAGE>

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, 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 (or one  one-hundredth of a 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 (or one  one-hundredth  of a
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
one hundred (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,  and the  "Current  Market
Price" per one one-hundredth of a share of Preferred Stock shall be equal to the
Current Market Price per share of the Common Stock (as appropriately  adjusted).
If neither  the Common  Stock nor the  Preferred  Stock is  publicly  held or so
listed or traded, "Current Market Price" per 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.

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

               (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 shares of  Preferred  Stock
contained in Section  11(a),  (b),  (c),  (e),  (g),  (h), (i), (j), (k) and (m)
hereof,  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 shares of Preferred
Stock  purchasable from time to time hereunder upon exercise of the Rights,  all
subject to further adjustment as provided herein.

                                       18
<PAGE>

               (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-hundredths  of a  share  of  Preferred  Stock  (calculated  to  the  nearest
one-hundred-thousandth)   obtained  by  (i)   multiplying   (x)  the  number  of
one-hundredths  of a share of  Preferred  Stock  covered by a Right  immediately
prior to this adjustment,  by (y) the Purchase Price in effect immediately prior
to such  adjustment  of the  Purchase  Price,  and (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 or any  adjustment  to the number of shares of Preferred
Stock for which a Right may be  exercised  made  pursuant to Sections  11(a)(i),
11(b) or 11(c),  to adjust the number of Rights in lieu of any adjustment in the
number of shares 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 shares 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  hundred-thousandth)  obtained  by
dividing the Purchase  Price in effect  immediately  prior to  adjustment of the
Purchase Price by the Purchase Price in effect  immediately  after adjustment of
the Purchase Price. The Company shall make a public announcement of its election
to adjust the number of Rights,  indicating the record date for the  adjustment,
and, if known at the time, the amount of the adjustment to be made.  This record
date  may be the  date on  which  the  Purchase  Price  is  adjusted  or any day
thereafter,  but, if the Right Certificates have been issued,  shall be at least
ten  (10)  days  later  than  the  date of the  public  announcement.  If  Right
Certificates  have been  issued,  upon each  adjustment  of the number of Rights
pursuant to this Section 11(i),  the Company shall,  as promptly as practicable,
cause to be  distributed  to  holders  of record of Right  Certificates  on such
record date Right  Certificates  evidencing,  subject to Section 14 hereof,  the
additional  Rights to which such  holders  shall be entitled as a result of such
adjustment,  or, at the option of the Company,  shall cause to be distributed to
such  holders  of  record  in   substitution   and  replacement  for  the  Right
Certificates  held by such  holders  prior to the date of  adjustment,  and upon
surrender thereof, if required by the Company, new Right Certificates evidencing
all the Rights to which such holders  shall be entitled  after such  adjustment.
Right  Certificates  so  to  be  distributed  shall  be  issued,   executed  and
countersigned  in the manner provided for herein (and 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 Right  Certificates  on the record date specified in
the public announcement.

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

               (k)  Before  taking any action  that  would  cause an  adjustment
reducing the Purchase  Price below the then par value,  if any, of the shares of
Common Stock,  Preferred  Stock or other capital stock issuable upon exercise of
the Rights,  the Company shall take any corporate  action,  including  using its
best efforts to obtain any  required  shareholder  approvals,  which may, in the

                                       19
<PAGE>

opinion of its  counsel,  be necessary in order that the Company may validly and
legally issue fully paid and  nonassessable  shares of Common  Stock,  Preferred
Stock or  other  capital  stock at such  adjusted  Purchase  Price.  If upon any
exercise of the Rights, a holder is to receive a combination of Common Stock and
Common  Stock  Equivalents,  a  portion  of the  consideration  paid  upon  such
exercise, equal to at least the then par value of a share of Common Stock of the
Company, shall be allocated as the payment for each share of Common Stock of the
Company so received.

               (l) In any case in which this  Section 11 shall  require  that an
adjustment  in the  Purchase  Price be made  effective as of a record date for a
specified  event,  the Company may elect to defer until the  occurrence  of such
event the issuance to the holder of any Right  exercised  after such record date
the shares of  Preferred  Stock and other  capital  stock or  securities  of the
Company,  if any,  issuable  upon such  exercise  over and  above the  shares 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 of Preferred Stock and other capital stock 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  permitted or 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 for cash of
any shares of  Preferred  Stock at less than the  Current  Market  Price,  (iii)
issuance  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 shareholders.

               (n) The  Company  covenants  and agrees that it shall not, at any
time after the Distribution  Date, (i) consolidate  with any other Person,  (ii)
merge with or into any other  Person,  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 fifty percent (50%)
of the assets or earning power of the Company and its  Subsidiaries  (taken as a
whole) to, any other  Person or  Persons,  if (x) at the time of or  immediately
after  such  consolidation,  merger  or sale  there  are any  charter  or by-law
provisions  or  any  rights,   warrants  or  other   instruments  or  securities
outstanding  or agreements in effect which  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.  The Company shall not consummate any such consolidation,  merger or
sale unless prior  thereto the Company and such other Person shall have executed
and delivered to the Rights Agent a supplemental agreement evidencing compliance
with this subsection.

                                       20
<PAGE>

               (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 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,  shall be  proportionately  adjusted  so that the  number  of Rights
thereafter  associated  with each share of Common Stock following any such event
equals 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  or 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.

          12.  CERTIFICATION  OF ADJUSTMENTS.  Whenever an adjustment is made as
provided in Sections 11 and 13 hereof,  the Company shall (a) promptly prepare a
certificate  signed by its Chief  Executive  Officer,  its President or any Vice
President and by the  Treasurer or any  Assistant  Treasurer or the Secretary or
any Assistant Secretary of the Company setting forth such adjustment and a brief
statement of the facts giving rise to 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 Right  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.  Notwithstanding the foregoing sentence,  the failure of
the Company to give such notice shall not affect the validity of or the force or
effect of or the  requirement  for such  adjustment.  The Rights  Agent shall be
fully protected in relying on any certificate  prepared by the Company  pursuant
to Sections 11 and 13 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. Any adjustment to be made pursuant to Sections 11 and
13 of this  Rights  Agreement  shall be  effective  as of the date of the  event
giving rise to such adjustment.

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

               (a) In the event that following the first occurrence of a Flip-In
Event, directly or indirectly,  (x) the Company shall consolidate with, or merge
with and into,  any other Person or Persons and the Company,  as the case maybe,
shall not be the surviving or continuing  corporation of such  consolidation  or
merger,  or (y) any Person or Persons shall  consolidate with, or merge with and
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 of the Company or cash or any other property,  other than, in the case
of  the  transactions  described  in  subparagraphs  (x) or  (y),  a  merger  or
consolidation  which would result in all of the Voting Power  represented by the

                                       21
<PAGE>

securities of the Company  outstanding  immediately prior thereto  continuing to
represent (either by remaining outstanding or by being converted into securities
of the surviving  entity) all of the Voting Power  represented by the securities
of the  Company or such  surviving  entity  outstanding  immediately  after such
merger or consolidation and the holders of such securities not having changed as
a  result  of  such  transactions,  or (z)  the  Company  or one or  more of its
Subsidiaries  shall sell,  mortgage or otherwise transfer to any other Person or
any Affiliate or Associate of such Person,  in one  transaction,  or a series of
related  transactions,  assets or  earning  power  aggregating  more than  fifty
percent (50%) of the assets or earning power of the Company and its Subsidiaries
(taken  as a  whole),  then,  on the  first  occurrence  of any  such  event  (a
"Flip-Over Event"),  proper provision shall be made so that (i) each holder of a
Right  (other than Rights which have become void  pursuant to Section  11(a)(ii)
hereof) shall thereafter have the right to receive, upon the exercise thereof at
the Purchase Price (as theretofore adjusted in accordance with Section 11(a)(ii)
hereof), in accordance with the terms of this Agreement and in lieu of shares of
Preferred  Stock  or  Common  Stock  of the  Company,  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 equal the result  obtained by dividing the Purchase  Price (as
theretofore  adjusted in  accordance  with  Section  11(a)(ii)  hereof) by fifty
percent (50%) of the Current  Market Price per share of the Common Stock of such
Principal  Party  (determined  pursuant to Section  11(d) hereof) on the date of
consummation of such consolidation, merger, sale or transfer; provided, however,
that the Purchase  Price (as  theretofore  adjusted in  accordance  with Section
11(a)(ii)  hereof)  and the number of shares of Common  Stock of such  Principal
Party so  receivable  upon  exercise  of a Right  shall be  subject  to  further
adjustment as appropriate in accordance with Section 11(f) hereof to reflect any
events  occurring in respect of the Common Stock of such  Principal  Party after
the  occurrence  of such  consolidation,  merger,  sale or  transfer;  (ii) such
Principal Party shall  thereafter be liable for, and shall assume,  by virtue of
such Flip-Over  Event, all the obligations and duties of the Company pursuant to
this Rights Agreement;  (iii) the term "Company" for all purposes of this Rights
Agreement shall  thereafter be deemed to refer to such Principal Party, it being
specifically  intended that the provisions of Section 11 hereof shall only apply
to such Principal Party following the first occurrence of a Flip-Over Event; and
(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
accordance  with Section 9 hereof) 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;
provided,   however,  that,  upon  the  subsequent  occurrence  of  any  merger,
consolidation,  sale  of  all or  substantially  all  assets,  recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such  Principal  Party,  each  holder of a Right shall  thereupon  be
entitled  to  receive,  upon  exercise of a Right,  such cash,  shares,  rights,
warrants  and other  property  which such  holder  would have been  entitled  to
receive  had he, at the time of such  transaction,  owned  the  shares of Common
Stock of the Principal Party  purchasable upon the exercise of a Right, and such
Principal  Party  shall  take  such  steps  (including,   but  not  limited  to,
reservation  of  shares  of stock) as may  necessary  to permit  the  subsequent
exercise  of the  Rights in  accordance  with the terms  hereof  for such  cash,
shares, rights, warrants and other property.

                                       22
<PAGE>

               (b)  "Principal Party" shall mean

                    (i) in the case of any  transaction  described in (x) or (y)
of the first sentence of Section 13(a) hereof, (A) the Person that is the issuer
of the securities into which shares of Common Stock of the Company are converted
in such merger or consolidation,  or, if there is more than one such issuer, the
issuer the Common Stock of which has the greatest  aggregate market value or (B)
if no  securities  are so issued,  (x) the Person that is the other party to the
merger or consolidation and that survives said merger or  consolidation,  or, if
there is more than one such Person, the Person the Common Stock of which has the
greatest market value or (y) if the Person that is the other party to the merger
or consolidation  does not survive the merger or consolidation,  the Person that
does survive the merger or consolidation (including the Company if it survives);
and

                    (ii) in the case of any transaction  described in (z) of the
first sentence in Section 13(a) hereof,  the Person that is the party  receiving
the greatest portion of the assets or earning power transferred pursuant to such
transaction  or  transactions,  or,  if each  Person  that  is a  party  to such
transaction or  transactions  receives the same portion of the assets or earning
power so  transferred  or if the Person  receiving  the greatest  portion of the
assets or earning power cannot be determined,  whichever of such Persons that is
the issuer of Common Stock having the greatest  aggregate market value of shares
outstanding;

provided,  however,  that in any such case described in the foregoing paragraphs
(b)(i) or  (b)(ii),  (1) if the Common  Stock of such Person is not at such time
and has not been  continuously  over the preceding  12-month  period  registered
under  Section 12 of the  Exchange  Act, and such Person is a direct or indirect
Subsidiary  of  another  Person  the  Common  Stock  of which is and has been so
registered,  the term "Principal Party" shall refer to such other Person, or (2)
if such Person is a Subsidiary, directly or indirectly, of more than one Person,
the  Common  Stocks of all of which are and have  been so  registered,  the term
"Principal  Party" shall refer to whichever of such Persons is the issuer of the
Common Stock having the greatest market value of shares  outstanding,  or (3) if
such Person is owned,  directly or indirectly,  by a joint venture formed by two
or more Persons that are not owned, directly or indirectly,  by the same Person,
the rules  set forth in  clauses  (1) and (2) above  shall  apply to each of the
owners  having an  interest in the joint  venture as if the Person  owned by the
joint venture was a Subsidiary of both or all of such joint  venturers,  and the
Principal  Party in each such case shall bear the  obligations set forth in this
Section 13 in the same ratio as its  interest in such Person  bears to the total
of such interests.

               (c) The Company shall not consummate any  consolidation,  merger,
sale or transfer  referred to in Section 13(a) unless the Principal  Party shall
have a sufficient  number of authorized shares of its Common Stock that have not
been  issued or  reserved  for  issuance  to permit the  exercise in full of the
Rights in  accordance  with this Section 13 and unless prior thereto the Company
and the Principal  Party  involved  therein shall have executed and delivered to
the Rights Agent an agreement confirming that the requirements of Sections 13(a)
and (b) hereof shall  promptly be performed in  accordance  with their terms and
that such consolidation,  merger, sale or transfer of assets shall not result in
a default by the Principal  Party under this Rights  Agreement as the same shall
have been  assumed by the  Principal  Party  pursuant to Sections  13(a) and (b)
hereof and further  providing that, as soon as practicable  after executing such
agreement  pursuant to this Section 13, the  Principal  Party at its own expense
shall:

                                       23
<PAGE>

                    (i)  prepare  and file a  registration  statement  under the
Securities  Act, if  necessary,  with  respect to the Rights and the  securities
purchasable  upon exercise of the Rights on an  appropriate  form,  use its best
efforts to cause such  registration  statement  to become  effective  as soon as
practicable   after  such  filing  and  use  its  best  efforts  to  cause  such
registration  statement  to remain  effective  (with a  prospectus  at all times
meeting the requirements of the Act) until the date of expiration of the Rights,
and similarly comply with applicable state securities laws;

                    (ii)  use its  best  efforts,  if the  Common  Stock  of the
Principal Party shall become listed on a national securities  exchange,  to list
(or  continue  the listing of) the Rights and the  securities  purchasable  upon
exercise of the Rights on such  securities  exchange and, if the Common Stock of
the Principal Party shall not be listed on a national  securities  exchange,  to
cause the Rights and the securities  purchased upon exercise of the Rights to be
reported by Nasdaq or such other system then in use;

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

                    (iv)  obtain  waivers  of any  rights  of first  refusal  or
preemptive  rights in  respect of the  shares of Common  Stock of the  Principal
Party subject to purchase upon exercise of outstanding Rights.

In the event that any of the  transactions  described  in Section  13(a)  hereof
shall  occur at any time after the  occurrence  of a  transaction  described  in
Section 11(a)(ii)  hereof,  the Rights which have not theretofore been exercised
shall thereafter be exercisable in the manner described in Section 13(a).

               (d)  Furthermore,  in case the  Principal  Party which is to be a
party to a transaction  referred to in this Section 13 has a provision in any of
its authorized  securities or in its Certificate of  Incorporation  or Bylaws or
other instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or as a
consequence of, the  consummation  of a transaction  referred to in this Section
13, shares of Common Stock of such Principal Party at less than the then Current
Market  Price per  share  (determined  pursuant  to  Section  11(d)  hereof)  or
securities  exercisable for, or convertible into, Common Stock of such Principal
Party at less than such then  current  market  price  (other  than to holders of
Rights  pursuant to this Section 13) or (ii) providing for any special  payment,
tax or similar provisions in connection with the issuance of the Common Stock of
such  Principal  Party  pursuant to the  provisions of Section 13; then, in such
event,  the Company  hereby  agrees with each holder of Rights that it shall not
consummate  any such  transaction  unless  prior  thereto  the  Company and such
Principal  Party  shall  have  executed  and  delivered  to the  Rights  Agent a
supplemental  agreement  providing  that  the  provision  in  question  of  such
Principal  Party  shall  have  been  canceled,  waived or  amended,  or that the
authorized  securities shall be redeemed,  so that the applicable provision will
have no effect in connection  with, or as a consequence of, the  consummation of
the proposed transaction.

                                       24
<PAGE>

          14.  FRACTIONAL RIGHTS AND FRACTIONAL SHARES.

               (a) The  Company  shall not be  required  to issue  fractions  of
Rights or to distribute Right Certificates which evidence  fractional Rights. In
lieu of such fractional Rights,  there shall be paid to the holders of record of
the  Right  Certificates  with  regard to which  such  fractional  Rights  would
otherwise be issuable,  an amount in cash equal to the same fraction of the then
current  market value of a whole Right.  For the purposes of this Section 14(a),
the then current  market value of a Right shall be determined in the same manner
as the  Current  Market  Price of a share of Common  Stock  shall be  determined
pursuant to Section 11(d) hereof.

               (b) The  Company  shall not be  required  to issue  fractions  of
shares of Preferred Stock or Preferred Stock  Equivalents  (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  which  evidence
fractional  shares of Preferred  Stock or  Preferred  Stock  Equivalents  (other
fractions  which  are  integral  multiples  of one  one-hundredth  of a share of
Preferred Stock).  Fractions of shares of Preferred Stock in integral  multiples
of  one  one-hundredth  of  a  share  of  Preferred  Stock  or  Preferred  Stock
Equivalents  may, at the  election of the Company,  be  evidenced by  depositary
receipts,  pursuant  to an  appropriate  agreement  between  the  Company  and a
depositary  selected by it,  provided that such agreement shall provide that the
holders of such  depositary  receipts shall have all the rights,  privileges and
preferences  to which they are  entitled as  beneficial  owners of the shares of
Preferred  Stock or Preferred Stock  Equivalents  represented by such depositary
receipts.  In lieu of fractional  shares of Preferred  Stock or Preferred  Stock
Equivalents that are not integral  multiples of one  one-hundredth of a share of
Preferred  Stock or a  Preferred  Stock  Equivalent,  the Company may pay to the
registered  holders of Right  Certificates at the time such Rights are exercised
as herein  provided an amount in cash equal to the same  fraction of the current
market value of one  one-hundredth  of a share of Preferred Stock or a Preferred
Stock  Equivalent.  For purposes of this Section 14(b), the current market value
of one one-hundredth of a share of Preferred Stock or Preferred Stock Equivalent
shall be the  Current  Market  Price of a share of Common  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 Flip-In  Event,  the Company
shall not be required to issue  fractions  of shares or units of Common Stock or
Common Stock  Equivalents or other  securities upon exercise of the Rights or to
distribute certificates which evidence fractional shares of such Common Stock or
Common Stock  Equivalents or other  securities.  In lieu of fractional shares or
units of such Common Stock or Common Stock Equivalents or other securities,  the
Company may pay to the registered holders of Right Certificates at the time such
Rights  are  exercised  as herein  provided  an amount in cash equal to the same
fraction of the Current  Market Value of a share or unit of such Common Stock or
Common Stock Equivalent or other securities. For purposes of this Section 14(c),
the Current  Market Value shall be determined in the manner set forth in Section
11(d) hereof for the Trading Day immediately  prior to the date of such exercise
and, if such Common  Stock  Equivalent  is not  traded,  each such Common  Stock
Equivalent  shall have the value of one  one-hundredth  of a share of  Preferred
Stock.

               (d) The holder of a Right by the acceptance of a Right  expressly
waives his right to receive any fractional  Right or any fractional  shares upon
exercise of a Right.

                                       25
<PAGE>

          15.  RIGHTS OF ACTION.  As of the Record Date, all rights of action in
respect of this Agreement,  other than any rights of action vested in the Rights
Agent pursuant to Sections 18 and 20 below, are vested in the respective holders
of record of the Right  Certificates  (and, prior to the Distribution  Date, the
holders  of record of the Common  Stock);  and any holder of record of any Right
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 Right  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 or any other Person to enforce,
or otherwise  act in respect of, his right to exercise  the Rights  evidenced by
such Right  Certificate in the manner provided in such Right  Certificate and in
this 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,
accordingly,  that  they  will  be  entitled  to  specific  performance  of  the
obligations under, and injunctive relief against actual or threatened violations
of, the obligations of any Person subject to this  Agreement.  Holders of Rights
shall be  entitled  to recover  the  reasonable  costs and  expenses,  including
attorneys'  fees,  incurred by them in any action to enforce the  provisions  of
this Agreement.

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

               (a)  prior  to the  Distribution  Date,  the  Rights  will not be
evidenced by a Right  Certificate  and will be  transferable  only in connection
with the transfer of Common Stock;

               (b) after the Distribution  Date, the Right  Certificates will be
transferable  only on the registry  books of the Rights Agent if  surrendered at
the office of the Rights Agent  designated  for such  purpose,  duly endorsed or
accompanied by a proper instrument of transfer;

               (c) the  Company  and the  Rights  Agent  may deem and  treat the
person in whose name the Right Certificate (or, prior to the Distribution  Date,
the  associated  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 Right  Certificate  or the  associated  Common Stock
certificate  made by anyone  other than the  Company or the Rights  Agent or the
transfer agent of the Common Stock) for all purposes whatsoever, and neither the
Company nor the Rights  Agent  shall be affected by any notice to the  contrary;
and

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

                                       26
<PAGE>

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

          18.  CONCERNING THE RIGHTS AGENT.

               (a) The  Company  agrees to pay to the  Rights  Agent  reasonable
compensation  for all services  rendered by it hereunder and, from time to time,
on demand of the Rights  Agent,  its  reasonable  expenses  and counsel fees and
other disbursements  incurred in the administration and execution of this Rights
Agreement and the exercise and performance of its duties hereunder.  The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless  against,
any loss,  liability or expense incurred without gross negligence,  bad faith or
willful misconduct on the part of the Rights Agent for any thing done or omitted
to  be  done  by  the  Rights  Agent  in  connection  with  the  acceptance  and
administration  of this Rights  Agreement,  including  the cost and  expenses of
defending against any claim of liability in the premises. The indemnity provided
herein shall survive the  expiration of the Rights and the  termination  of this
Rights Agreement. Anything in this agreement to the contrary notwithstanding, in
no event shall the Rights Agent be liable for special, indirect 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  likelihood  of such
loss damage and regardless of the form of action.

               (b) The  Rights  Agent  shall be  protected  and  shall  incur no
liability  for or in respect of any action  taken,  suffered or omitted by it in
connection with its administration of this Rights Agreement in reliance upon any
Right  Certificate,  certificate  for Common  Stock or 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,  guaranteed,  verified or acknowledged, by the proper Person or
Persons.

          19.  MERGER OR CONSOLIDATION OR CHANGED NAME OF RIGHTS AGENT.

               (a) Any corporation  into which the Rights Agent or any successor
Rights  Agent  may be  merged  or  with  which  it may be  consolidated,  or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the  corporate  trust or stock  transfer  business  of the  Rights  Agent or any
successor  Rights  Agent,  shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the  parties  hereto,  provided  that such  corporation  would be
eligible for  appointment  as a successor  Rights Agent under the  provisions of

                                       27
<PAGE>

Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this  Agreement,  any of the Right  Certificates  shall
have been  countersigned but not delivered,  any such successor Rights Agent may
adopt the  countersignature  of the  predecessor  Rights  Agent and deliver such
Right Certificates so countersigned;  and, in case at that time any of the Right
Certificates shall not have been  countersigned,  any successor Rights Agent may
countersign such Right Certificates either in the name of the predecessor Rights
Agent or in the name of the successor  Rights Agent;  and in all such cases such
Right  Certificates shall have the full force provided in the Right Certificates
and in this Agreement.

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

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

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

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

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

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

                                       28
<PAGE>

               (e) The Rights  Agent  shall not be under any  responsibility  in
respect of the validity of this Rights  Agreement or the  execution and delivery
hereof  (except the due  execution  hereof by the Rights Agent) or in respect of
the validity or execution of any Right Certificate (except its  countersignature
thereof);  nor shall it be  responsible  for any  breach by the  Company  of any
covenant  or  condition  contained  in this  Rights  Agreement  or in any  Right
Certificate;  nor shall it be responsible for any adjustment  required under the
provisions  of Sections 11, 13, 23 or 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  Right   Certificates  after  receipt  of  a
Certificate  furnished  pursuant to Section 12 describing any such  adjustment);
nor  shall it by any act  hereunder  be  deemed  to make any  representation  or
warranty as to the authorization or reservation of any shares of Common Stock to
be issued  pursuant to this Rights  Agreement or any Right  Certificate or as to
whether any shares of Common Stock will, when issued, be validly  authorized and
issued, fully paid and nonassessable.

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

               (g) The Rights Agent is hereby  authorized and directed to accept
instructions  with respect to the  performance of its duties  hereunder from the
Chairman of the Board,  the Chief Executive  Officer,  the President or any Vice
President or the  Secretary or any  Assistant  Secretary or the Treasurer or any
Assistant Treasurer of the Company,  and to apply to such officers for advice or
instructions in connection  with its duties,  and it shall not be liable for any
action  taken or  suffered  to be taken by it in good faith in  accordance  with
instructions  of any such  officer.  Any  application  by the  Rights  Agent for
written  instructions  from the Company may, at the option of the Rights  Agent,
set forth in writing  any action  proposed  to be taken or omitted by the Rights
Agent under this Rights Agreement and the date on and/or after which such action
shall be taken or such  omission  shall be  effective.  Subject to Section 20(c)
hereof,  the  Rights  Agent  shall not be  liable  for any  action  taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than  five (5)  Business  Days  after  the date any  officer  of the
Company actually receives such  application,  unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission),  the Rights Agent shall have
received  written  instructions in response to such  application  specifying the
action to be taken or omitted.

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

               (i) The Rights  Agent may execute and  exercise any of the rights
or powers hereby vested in it or perform any duty hereunder  either itself or by
or through its attorneys or agents, and the Rights Agent shall not be answerable

                                       29
<PAGE>

or accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company  resulting from any such act,  default,
neglect or misconduct,  provided  reasonable care was exercised in the selection
and continued employment thereof.

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

               (k) If, with respect to any Right Certificate  surrendered to the
Rights Agent for exercise or transfer,  the certificate contained in the form of
assignment or the form of election to purchase set forth on the reverse thereof,
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.

         21.   CHANGE OF RIGHTS AGENT.  The Rights Agent or any successor Rights
Agent may resign and be discharged  from its duties under this Rights  Agreement
upon thirty (30) days'  notice in writing,  or such  earlier  period as shall be
agreed to in writing,  mailed to the Company and to each  transfer  agent of the
Common Stock by  registered or certified  mail,  and to the holders of the Right
Certificates by first-class mail. The Company may remove the Rights Agent or any
successor  Rights Agent (with or without cause) upon thirty (30) days' notice in
writing, or such earlier period as shall be agreed to 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 by registered or certified mail, and to the holders of
the Right  Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall  otherwise  become  incapable of acting,  the Company  shall
appoint  a  successor  to  the  Rights  Agent.   Notwithstanding  the  foregoing
provisions of this Section 21, in no event shall the resignation or removal of a
Rights  Agent be  effective  until a  successor  Rights  Agent  shall  have been
appointed and have accepted such appointment.  If the Company shall fail to make
such appointment within a period of thirty (30) days after such removal or after
it has been  notified  in  writing  of such  resignation  or  incapacity  by the
resigning or incapacitated  Rights Agent or by the holder of a Right Certificate
(who shall, with such notice, submit his Right Certificate for inspection by the
Company),  then the incumbent  Rights Agent or the holder of record of any Right
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent.  Any successor  Rights  Agent,  whether  appointed by the
Company  or by such a court,  shall be (a) a  corporation  organized  and  doing
business  under the laws of the  United  States or any  State  thereof,  in good
standing,  which is authorized  under such laws to exercise  corporate  trust or
stock transfer powers and is subject to supervision or examination by federal or
state  authority and which has at the time of its  appointment as Rights Agent a
combined  capital  and  surplus  of at  least  $50,000,000  or (b) an  Affiliate
controlled  by a  corporation  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

                                       30
<PAGE>

predecessor Rights Agent and each transfer agent of the Common Stock, and mail a
notice thereof in writing to the registered  holders of the Right  Certificates.
Failure to give any notice  provided  for in this  Section 21,  however,  or any
defect therein,  shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.

          22.  ISSUANCE OF NEW RIGHT  CERTIFICATES.  Notwithstanding  any of the
provisions  of this  Rights  Agreement  or of the  Rights to the  contrary,  the
Company may, at its option,  issue new Right  Certificates  evidencing Rights in
such form as may be approved by its Board of Directors to reflect any adjustment
or change  in the  Purchase  Price per share and the  number or kind or class of
shares of stock or other  securities  or  property  purchasable  under the Right
Certificates made in accordance with the provisions of this Rights Agreement. In
addition,  in  connection  with the  issuance or sale of shares of Common  Stock
following the Distribution Date and prior to the redemption or expiration of the
Rights,  the Company 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,  in  each  case  existing  prior  to  the
Distribution Date, issue Right Certificates  representing the appropriate number
of Rights in connection with such issuance or sale; provided,  however, that (i)
no such  Right  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 Right  Certificate  would be issued,  and (ii) no such Right
Certificate shall be issued, if, and to the extent that,  appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.

          23.  REDEMPTION.

               (a) The Board of Directors of the Company may, at its option,  at
any time prior to the earlier of (x) the first  occurrence of a Flip-In Event or
(y) the Close of Business on the Expiration  Date,  redeem all but not less than
all the then  outstanding  Rights at a redemption  price of $0.001 per Right, as
such amount may be  appropriately  adjusted to reflect  any stock  split,  stock
dividend or similar transaction occurring after the date hereof (such redemption
price being hereinafter referred to as the "Redemption Price").

               (b) Immediately  upon the action of the Board of Directors of the
Company  ordering  the  redemption  of the  Rights (or at such later time as the
Board of Directors may establish for the effectiveness of such redemption),  and
without any further  action and  without any notice,  the right to exercise  the
Rights will  terminate  and the only right  thereafter  of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public
notice of any such redemption;  provided,  however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Within ten (10) days after such action of the Board of  Directors  ordering  the
redemption  of the  Rights (or such  later  time as the Board of  Directors  may
establish for the  effectiveness of such  redemption),  the Company shall mail a
notice of redemption to all the holders of the then outstanding  Rights at their
last  addresses as they appear upon the  registry  books of the Rights Agent or,
prior to the Distribution  Date, on the registry books of the transfer agent for
the Common 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

                                       31
<PAGE>

of  redemption  shall  state the method by which the  payment of the  Redemption
Price will be made. The failure to give notice required by this Section 23(b) or
any defect therein shall not affect the legality or validity of the action taken
by the Company.

               (c) In the case of a redemption  permitted  under Section  23(a),
the Company may, at its option, discharge all of its obligations with respect to
the Rights by (i) issuing a press release announcing the manner of redemption of
the Rights and (ii) mailing  payment of the  Redemption  Price to the registered
holders of the Rights at their last  addresses  as they  appear on the  registry
books of the Rights Agent or, prior to the  Distribution  Date,  on the registry
books of the  transfer  agent of the Common  Stock,  and upon such  action,  all
outstanding Right Certificates shall be null and void without any further action
by the Company.

          24.  EXCHANGE OF RIGHTS FOR COMMON STOCK.

               (a) The Board of Directors of the Company may, at its option,  at
any time after the  occurrence of a Flip-In  Event,  exchange all or part of the
then outstanding and exercisable Rights (which (i) shall not include Rights that
have become void pursuant to the provisions of Section  11(a)(ii) and (ii) shall
include,  without  limitation,  any Rights issued after the Distribution Date in
accordance  with Section 22) 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 the
("Exchange Ratio").  Notwithstanding the foregoing, the Board of Directors shall
not be  empowered  to effect such  exchange at any time after any Person  (other
than an Exempt  Person),  together with all  Affiliates  and  Associates of such
Person, becomes the Beneficial Owner of shares of Common Stock aggregating fifty
percent (50%) or more of the shares of Common Stock then  outstanding.  From and
after the occurrence of an event  specified in Section 13(a) hereof,  any Rights
that  theretofore  have not been exchanged  pursuant to this Section 24(a) shall
thereafter  be  exercisable  only in  accordance  with Section 13 and may not be
exchanged pursuant to this Section 24(a).

               (b) Immediately  upon the action of the Board of Directors of the
Company  ordering the exchange of any Rights  pursuant to subsection (a) of this
Section 24 and without any further  action and without any notice,  the right to
exercise such Rights shall  terminate and the only right  thereafter of a holder
of such Rights  shall be to receive  that number of 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;
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 the shares of Common  Stock for Rights will be
effected and, in the event of any partial  exchange,  the number of Rights which
will be exchanged.  Any partial exchange shall be effected pro rata based on the
number of Rights  (other  than Rights  which have  become  void  pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of Rights.

                                       32
<PAGE>

               (c) In any exchange pursuant to this Section 24, the Company,  at
its option, may substitute, and, in the event that there shall not be sufficient
shares of Common 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 substitute to the extent of such  insufficiency,  for each
share of Common Stock that would otherwise be issuable upon exchange of a Right,
a number of shares of Preferred Stock Equivalents,  or fractions thereof, having
an  aggregate  current per share market  price  (determined  pursuant to Section
11(d) hereof) equal to the current per share market price of one share of Common
Stock  (determined  pursuant  to  Section  11(d)  hereof)  as of the date of the
Flip-In Event.

               (d) In the event that  there  shall not be  sufficient  shares of
Common 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 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,  the
Company  shall pay 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 paragraph (d),
the current  market  value of a whole share of Common Stock shall be the Current
Market Price of a share of Common Stock (as defined in Section  11(d) hereof for
the purposes of computations made other than pursuant to Section 11(a)(iii)) for
the  Trading  Day  immediately  prior to the date of  exchange  pursuant to this
Section 24.

          25.  NOTICE OF PROPOSED ACTIONS.

               (a) In case the  Company,  after  the  Distribution  Date,  shall
propose (i) to effect any of the transactions referred to in Section 11(a)(i) or
to pay any dividend to the holders of record of its  Preferred  Stock payable in
stock of any class or to make any other distribution to the holders of record of
its Preferred Stock (other than a regular  periodic cash  dividend),  or (ii) to
offer to the holders of record of its Preferred Stock or options,  warrants,  or
other  rights  to  subscribe  for  or to  purchase  shares  of  Preferred  Stock
(including any security convertible into or exchangeable for Preferred Stock) or
shares of stock of any other class or any other securities,  options,  warrants,
convertible or exchangeable  securities or other rights,  or (iii) to effect any
reclassification   of  its   Preferred   Stock   or  any   recapitalization   or
reorganization  of the Company,  or (iv) to effect any  consolidation  or merger
with or into, or to effect any sale or other  transfer (or to permit one or more
of its  Subsidiaries  to  effect  any  sale or other  transfer),  in one or more
transactions, of more than fifty percent (50%) of the assets or earning power of
the  Company  and its  Subsidiaries  (taken as a whole) to, any other  Person or
Persons,  or (v) to effect  the  liquidation,  dissolution  or winding up of the
Company,  then,  in each such case,  the  Company  shall give to each  holder of
record of a Right Certificate,  in accordance with Section 26 hereof,  notice of
such  proposed  action,  which shall specify the record date for the purposes of
such  transaction  referred  to  in  Section  11(a)(i),   or  such  dividend  or
distribution,  or the date on  which  such  reclassification,  recapitalization,
reorganization,  consolidation, merger, sale or transfer of assets, liquidation,
dissolution  or winding up is to take place and the record date for  determining
participation  therein by the holders of record of Preferred  Stock, if any such

                                       33
<PAGE>

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 ten (10) days prior to the record
date for  determining  holders of record of the Preferred  Stock for purposes of
such action,  and in the case of any such other  action,  at least ten (10) days
prior  to the  date  of the  taking  of  such  proposed  action  or the  date of
participation  therein by the holders of record of  Preferred  Stock,  whichever
shall be the earlier.

               (b) In  case  any  of the  transactions  referred  to in  Section
11(a)(ii) or Section 13 of this Rights Agreement are proposed, then, in any such
case,  the  Company  shall give to each  holder of Rights,  in  accordance  with
Section 26 hereof,  notice of the proposal of such transaction at least ten (10)
days prior to  consummating  such  transaction,  which notice shall  specify the
proposed  event and the  consequences  of the event to holders  of Rights  under
Section  11(a)(ii)  or  Section  13  hereof,  as the  case  may  be,  and,  upon
consummating  such  transaction,  shall  similarly  give notice  thereof to each
holder of Rights.

               (c) The failure to give notice required by this Section 25 or any
defect  therein shall not affect the legality or validity of the action taken by
the Company or the vote upon any such action.

          26.  NOTICES.  Notices or demands authorized by this  Rights Agreement
to be given or made by the Rights  Agent or by the holder of record of any Right
Certificate or Right to or on behalf of 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:

               SkyMall, Inc.
               1520 E. Pima Street
               Phoenix, Arizona 85034
               Attn: Christine A. Aguilera
                     General Counsel & Secretary

Subject to the provisions of Section 20 hereof,  any notice or demand authorized
by this Rights  Agreement to be given or made by the Company or by the holder of
record of any Right  Certificate  or Right 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:

               Continental Stock Transfer & Trust Company
               Two Broadway
               New York, New York 10004
               Attn: Compliance Department

Notices or demands  authorized  by this Rights  Agreement to be given or made by
the Company or the Rights Agent to the holder of record of any Right Certificate
or  Right  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 it
appears  upon  the  registry  books  of  the  Rights  Agent  or,  prior  to  the
Distribution Date, on the registry books of the Transfer Agent.

                                       34
<PAGE>

          27. SUPPLEMENTS AND AMENDMENTS.  Except as provided in the penultimate
sentence of this Section 27, for so long as the Rights are then redeemable,  the
Company may in its sole and absolute  discretion,  and the Rights Agent shall if
the Company so directs,  supplement or amend any provision of this  Agreement in
any respect without the approval of any holders of the Rights.  At any time when
the Rights  are no longer  redeemable,  except as  provided  in the  penultimate
sentence of this Section 27, the Company may, and the Rights Agent shall, if the
Company so directs,  supplement or amend this Agreement  without the approval of
any  holders  of Right  Certificates  in order to (i) cure any  ambiguity,  (ii)
correct or supplement any provision  contained  herein which may be defective or
inconsistent  with any other  provisions  herein,  (iii) shorten or lengthen any
time period hereunder,  or (iv) change or supplement the provisions hereunder in
any manner which the Company may deem  necessary or desirable;  provided that no
such supplement or amendment shall adversely affect the interests of the holders
of Rights as such (other than an  Acquiring  Person or an Affiliate or Associate
of an Acquiring  Person),  and no such  amendment  may cause the Rights again to
become redeemable or cause the Agreement again to become amendable other than in
accordance with this sentence. Notwithstanding anything contained in this Rights
Agreement  to the  contrary,  no  supplement  or  amendment  shall be made which
changes the Redemption Price.  Prior to the Distribution  Date, the interests of
the  holders of Rights  shall be deemed  coincident  with the  interests  of the
holders of Common Stock.

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

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

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

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

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

          33.  SEVERABILITY.  If any term, provision, covenant or restriction of
this Rights  Agreement  is held by a court of  competent  jurisdiction  or other
authority to be invalid,  illegal or unenforceable,  the remainder of the terms,

                                       35
<PAGE>

provisions,  covenants and restrictions of this Rights Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.

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

                                       SKYMALL, INC.


[SEAL]                                 By: /s/ Robert M. Worsley
                                           -------------------------------------
                                           Robert M. Worsley
                                           President
ATTEST:



By: /s/ Christine A. Aguilera
    ----------------------------------
    Christine A. Aguilera
    Secretary

                                       CONTINENTAL STOCK TRANSFER &
                                          TRUST COMPANY


                                       By: /s/  Roger T. Bernhammer
                                           -------------------------------------

                                           Title: Vice President
                                                  ------------------------------

                                       By: /s/  Tuulikki Huovinen
                                           -------------------------------------

                                           Title: Assistant Secretary
                                                  ------------------------------


                                       36
<PAGE>
                                                                       EXHIBIT A


           CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES AND TERMS
                         OF THE SERIES A PREFERRED STOCK
                                       OF
                                  SKYMALL, INC.


         Pursuant to Section 78.1955 of the Nevada Revised Statutes:

         We, the President and the Secretary,  respectively, of SkyMall, Inc., a
corporation  organized  and existing  under the General  Corporation  Law of the
State of Nevada  (the  "Corporation"),  in  accordance  with the  provisions  of
Section 78.1955 thereof, DO HEREBY CERTIFY:

         That,  pursuant to the authority  conferred upon the Board of Directors
by the Articles of Incorporation  of the Corporation,  on September 10, 1999 the
Board of Directors adopted the following resolution creating a series of 500,000
shares of Preferred Stock designated as Series R Preferred Stock:

          RESOLVED, that pursuant to the authority vested in the Board
          of  Directors of this  Corporation  in  accordance  with the
          provisions   of   its   Second   Restated   Certificate   of
          Incorporation,  as amended,  a series of Preferred  Stock of
          the  Corporation  be and it hereby is created,  and that the
          designation  and amount thereof and the powers,  preferences
          and  relative,  participating,  optional  and other  special
          rights of the shares of such series, and the qualifications,
          limitations or restrictions thereof are as follows:

               Section 1.  DESIGNATION AND AMOUNT.  The shares of such
          series  shall be  designated  as "Series R Preferred  Stock"
          (the "Series R Preferred Stock"), $.001 par value per share,
          and the number of shares  constituting  such series shall be
          500,000.

               Section 2. DIVIDENDS AND DISTRIBUTIONS.

               (A)  The  dividend  rate  on the  shares  of  Series  R
          Preferred  Stock  shall  be  for  each  quarterly   dividend
          (hereinafter  referred to as a "quarterly dividend period"),
          which quarterly  dividend  periods shall commence on January
          1,  April 1, July 1 and  October 1 each year (each such date
          being  referred to herein as a "Quarterly  Dividend  Payment
          Date") (or in the case of original  issuance,  from the date
          of original  issuance)  and shall end on and include the day
          next preceding the first date of the next quarterly dividend
          period, at a rate per quarterly  dividend period (rounded to
          the nearest cent) equal to the greater of (a) $250.00 or (b)
          subject to the  provisions for  adjustment  hereinafter  set
          forth,  100 times the aggregate per share amount of all cash
          dividends,  plus 100 times the  aggregate  per share  amount
          (payable in cash,  based upon the fair  market  value at the
          time the non-cash dividend or other distribution is declared
          as  determined  in good faith by the Board of  Directors) 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 (but not withdrawn)
          on the  Common  Stock,  par value  $.001 per  share,  of the
          Corporation  (the  "Common  Stock")  during the  immediately
          preceding quarterly dividend period, or, with respect to the
          first quarterly dividend period, since the first issuance of
          any  share  or  fraction  of a share of  Series R  Preferred
          Stock.  In the event  this  Company  shall at any time after
          October 15, 1999 (the "Rights Declaration Date") (i) declare

<PAGE>

          any  dividend  on Common  Stock  payable in shares of Common
          Stock, (ii) subdivide the outstanding Common Stock, or (iii)
          combine the  outstanding  Common Stock into a smaller number
          of  shares,  then in each  such  case  the  amount  to which
          holders of shares of Series R 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)  Dividends  shall begin to accrue and be cumulative
          on outstanding  shares of Series R Preferred  Stock from the
          Quarterly  Dividend  Payment Date next preceding the date of
          issue of such shares of Series R Preferred Stock, unless the
          date of issue of such shares is prior to the record date for
          the first  Quarterly  Dividend  Payment  Date, in which case
          dividends on such shares shall begin to accrue from the date
          of issue of such  shares,  or unless  the date of issue is a
          Quarterly  Dividend  Payment  Date  or is a date  after  the
          record  date for the  determination  of holders of shares of
          Series R  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 R 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 R Preferred Stock entitled to receive payment of a
          dividend or distribution declared thereon, which record date
          shall be no more  than 45 days  prior to the date  fixed for
          the payment thereof.

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

               (A) Subject to the provision for adjustment hereinafter
          set forth,  each  share of Series R  Preferred  Stock  shall
          entitle  the  holder  thereof  to 100  votes on all  matters
          submitted to a vote of the  shareholders of the Corporation.
          In the event  the  Corporation  shall at any time  after the
          Rights  Declaration  Date (i) declare any dividend on Common
          Stock payable in shares of Common Stock,  (ii) subdivide the
          outstanding  Common Stock,  or (iii) combine the outstanding
          Common Stock into a smaller  number of shares,  then in each
          such case the number of votes per share to which  holders of
          shares of Series R 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,  in  the
          Certificate  of  Incorporation  or by law,  the  holders  of
          shares of Series R Preferred Stock and the holders of shares
          of Common  Stock  shall  vote  together  as one class on all
          matters   submitted  to  a  vote  of   shareholders  of  the
          Corporation.

               (C) Except as set forth herein,  in the  Certificate of
          Incorporation  and  in  the  Bylaws,  holders  of  Series  R
          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.

                                        2
<PAGE>

               Section 4.  REACQUIRED  SHARES.  Any shares of Series R
          Preferred  Stock  purchased  or  otherwise  acquired  by the
          Corporation  in any manner  whatsoever  shall be retired and
          canceled  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 to be  created by
          resolution or resolutions of the Board of Directors, subject
          to the  conditions  and  restrictions  on issuance set forth
          herein.

               Section 5. LIQUIDATION, DISSOLUTION OR WINDING UP.

               (A)  In  the  event  of  any   voluntary   liquidation,
          dissolution or winding up of the Corporation, the holders of
          the Series R  Preferred  Stock  shall be entitled to receive
          the  greater  of  (a)$6,500.00   per  share,   plus  accrued
          dividends to the date of distribution, whether or not earned
          or  declared,  or (b)an  amount  per  share,  subject to the
          provision for adjustment hereinafter set forth, equal to 100
          times the aggregate  amount to be  distributed  per share to
          holders of Common Stock. In the event the Corporation  shall
          at any time after the Rights Declaration Date (i)declare any
          dividend on Common Stock  payable in shares of Common Stock,
          (ii)subdivide the outstanding  Common Stock, or (iii)combine
          the  outstanding  Common  Stock  into a  smaller  number  of
          shares,  then in each such case the amount to which  holders
          of  shares  of  Series  R  Preferred   Stock  were  entitled
          immediately  prior to such event  pursuant  to 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.

               Section  6.  CONSOLIDATION,  MERGER,  ETC.  In case the
          Corporation  shall  enter  into any  consolidation,  merger,
          combination  or other  transaction  in which  the  shares of
          Common Stock are  exchanged  for or changed into other stock
          or securities,  cash and/or any other property,  then in any
          such case the shares of Series R  Preferred  Stock  shall at
          the same time be similarly exchanged or changed in 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 after the Rights
          Declaration  Date  (i)declare  any  dividend on Common Stock
          payable  in  shares  of  Common  Stock,   (ii)subdivide  the
          outstanding  Common Stock, or  (iii)combine  the outstanding
          Common Stock into a smaller  number of shares,  then in each
          such case the  amount  set forth in the  preceding  sentence
          with respect to the exchange or change of shares of Series R
          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  7. NO  REDEMPTION.  The  shares  of  Series  R
          Preferred Stock shall not be redeemable.

               Section 8. FRACTIONAL SHARES.  Series R Preferred Stock
          may be issued in  fractions  of a share which shall  entitle
          the  holder,  in  proportion  to  such  holder's  fractional
          shares,  to  exercise  voting  rights,   receive  dividends,
          participate  in  distributions  and have the  benefit of all
          other  rights of holders of Series R  Preferred  Stock.  All
          payments  made with respect to fractional  shares  hereunder
          shall be rounded to the nearest whole cent.

                                       3
<PAGE>

               Section 9. CERTAIN RESTRICTIONS.

               (A) Whenever quarterly  dividends or other dividends or
          distributions  payable  on the Series R  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 R  Preferred  Stock
          outstanding  shall have been paid in full,  the  Corporation
          shall not:

                    (i)  declare or pay  dividends  on, make any other
          distributions on, or redeem or purchase or otherwise acquire
          for consideration any shares of stock ranking junior (either
          as to dividends or upon liquidation,  dissolution or winding
          up) to the Series R Preferred Stock;

                    (ii) declare or pay dividends on or make any other
          distributions  on any  shares of stock  ranking  on a parity
          (either as to dividends or upon liquidation,  dissolution or
          winding  up)  with  the  Series R  Preferred  Stock,  except
          dividends  paid ratably on the Series R 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;

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

                    (iv)    purchase   or   otherwise    acquire   for
          consideration any shares of Series R Preferred Stock, or any
          shares  of  stock  ranking  on a parity  with  the  Series R
          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
          9,  purchase or  otherwise  acquire such shares at such time
          and in such manner.

               Section 10. RANKING. The Series R Preferred Stock shall
          be junior to all other Series of the Corporation's preferred
          stock as to the payment of dividends and the distribution of
          assets,  unless  the  terms  of  any  series  shall  provide
          otherwise.

               Section 11. AMENDMENT. The Articles 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 R  Preferred  Stock so as to
          affect them adversely  without the  affirmative  vote of the
          holders of two-thirds or more of the  outstanding  shares of
          Series R Preferred Stock voting together as a single class.

                                       4
<PAGE>

         IN WITNESS  WHEREOF,  we have executed and subscribed this  Certificate
and do affirm the  foregoing  as true under the  penalties of perjury this _____
day of _________, 1999.

                                            SKYMALL, INC.

[SEAL]
                                            By: ________________________________
                                                Robert M. Worsley
                                                President
ATTEST:


By: _____________________________
    Christine A. Aguilera
    Secretary

STATE OF ARIZONA           )
                           ) ss.
County of Maricopa         )

         The foregoing  instrument was acknowledged  before me this _____ day of
____________,  1999 by ROBERT M. WORSLEY,  President of SKYMALL,  INC., a Nevada
corporation, for an on behalf of the Corporation.


                                             ___________________________________
                                             Notary Public
My commission expires:
_____________________


STATE OF ARIZONA           )
                           ) ss.
County of Maricopa         )

         The foregoing  instrument was acknowledged  before me this _____ day of
____________,  1999 by CHRISTINE  A.  AGUILERA,  Secretary  of SKYMALL,  INC., a
Nevada corporation, for an on behalf of the Corporation.


                                             ___________________________________
                                             Notary Public
My commission expires:
_____________________

                                       5
<PAGE>

                                                                       EXHIBIT B

                    [FORM OF FRONT SIDE OF RIGHT CERTIFICATE]

Certificate No. R-_____                                        __________ Rights


NOT EXERCISABLE AFTER OCTOBER 15, 2009, OR EARLIER IF REDEEMED OR EXCHANGED.  AT
THE OPTION OF THE  COMPANY,  THE RIGHTS  MAY BE  REDEEMED  AT $.001 PER RIGHT OR
EXCHANGED FOR PREFERRED STOCK ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. IN
THE EVENT THAT THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE ISSUED TO A PERSON
WHO IS AN ACQUIRING PERSON OR CERTAIN  TRANSFEREE OF THE RIGHTS PREVIOUSLY OWNED
BY SUCH PERSONS,  THIS RIGHT CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY SHALL
BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.


                                  SKYMALL, INC.

                                RIGHT CERTIFICATE

         This certifies that  _________________________,  or registered assigns,
is the registered  owner of the number of Rights set forth above,  each of which
entitles the owner thereof,  subject to the terms,  provisions and conditions of
the Rights Agreement dated as of September 15, 1999 ("Rights Agreement") between
SkyMall,  Inc., a Nevada  corporation  (the  "Company"),  and Continental  Stock
Transfer & Trust Company (the "Rights  Agent"),  to purchase from the Company at
any time  after the  Distribution  Date (as such term is  defined  in the Rights
Agreement)  and prior to 5:00 p.m.  (New York time) on October  15,  2009 at the
principal  office of the  Rights  Agent,  or its  successors  as  Rights  Agent,
designated  for  such  purposes,   one   one-hundredth   of  a  fully  paid  and
nonassessable  share of  Series R  Preferred  Stock of the  Company  ("Preferred
Stock") at a purchase price of $65.00 per one  one-hundredth  of a share, as the
same may from time to time be adjusted in accordance  with the Rights  Agreement
("Purchase  Price"),  upon  presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed.

         Capitalized  terms used herein and not otherwise  defined  herein shall
have the meanings ascribed to such terms in the Rights Agreement.

         As provided in the Rights Agreement,  the Purchase Price and the number
of shares of Preferred Stock or other securities which may be purchased upon the
exercise  of the Rights  evidenced  by this  Right  Certificate  are  subject to
modification  and adjustment  upon the happening of certain events and, upon the
happening of certain events, securities other than shares of Preferred Stock, or
other  property,  may be acquired upon exercise of the Rights  evidenced by this
Right Certificate, as provided by the Rights Agreement.

         Upon the occurrence of a Flip-In 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,  (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 any Affiliate or Associate
of an Acquiring Person, such Rights shall be null and void and will no longer be
transferable  and no holder  hereof  shall have any right  with  respect to such
Rights from and after the occurrence of such Flip-In Events.

         This Right  Certificate  is subject  to all the terms,  provisions  and
conditions of the Rights Agreement,  which terms,  provisions and conditions are
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 of the Rights Agent,
the  Company  and  the  holders  of  record  of the  Right  Certificates,  which
limitation of rights include the temporary  suspension of the  exercisability of
such Rights under the specific  circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal  executive office of
the Company and are available upon written request to the Company.

         This Right Certificate, with or without other Right Certificates,  upon
surrender at the  principal  office of the Rights  Agent,  may be exchanged  for
another  Right  Certificate  or  Right  Certificates  of  like  tenor  and  date
evidencing  Rights  entitling the holder of record to purchase a like  aggregate
number  of  shares  of  Preferred  Stock as the  Rights  evidenced  by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof, another Right Certificate or Right
Certificates for the number of whole Rights not exercised.

         Subject to the provisions of the Rights Agreement, at any time prior to
the earlier of (i) the occurrence of a Flip-In Event (as such term is defined in
the Rights  Agreement) or (ii) the  Expiration  Date (as such term is defined in
the Rights Agreement),  the Rights evidenced by this Certificate may be redeemed
by the Company at its option at a redemption price of $0.001 per Right.  Subject
to the provisions of the Rights  Agreement,  the Company may, at its option,  at
any time after a Flip-In Event,  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).

         In the event (i) any  person or group  becomes an  Acquiring  Person or
(ii) any of the types of  transactions,  acquisitions or other events  described
above as self-dealing  transactions  occur, and prior to the acquisition by such
person or group of 50% or more of the  outstanding  shares of Common Stock,  the
Board may  require  all or any  portion of the  outstanding  Rights  (other than
Rights  owned by such  Acquiring  Person which have become void) to be exchanged
for  Common  Stock on a pro rata  basis,  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).

         No  fractional  shares of  Preferred  Stock  shall 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 option of the Company, be evidenced by depositary receipts),  and no
fractional  shares of Common Stock will be issued upon the exchange of any Right
or Rights  evidenced  hereby,  and in lieu  thereof,  as  provided in the Rights
Agreement,  fractions of shares of Preferred Stock or Common Stock shall receive
an amount in cash equal to the same  fraction of the then  Current  Market Price
(as such term is defined in the Rights  Agreement) of a share of Preferred Stock
or Common Stock, as the case may be.

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

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

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

Dated as of ______________, 19__.

                                            SKYMALL, INC.


[SEAL]                                      By: ________________________________
                                                Robert M. Worsley
                                                President
ATTEST:



By: _____________________________
    Christine A. Aguilera
    Secretary

                                      COUNTERSIGNED:

                                      Continental Stock Transfer & Trust Company
                                                                 As Rights Agent

                                      By: ______________________________________
                                                              Authorized Officer

<PAGE>

                  [FORM OF REVERSE SIDE OF RIGHT CERTIFICATE]

                               FORM OF ASSIGNMENT

   (To be executed by the registered holder if such holder desires to transfer
         any or all of the Rights represented by this Right Certificate)

    FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

________________________________________________________________________________

________________________________________________________________________________
  (Name, address and social security or other identifying number of transferee)

__________________________________  (_____)  of the Rights  represented  by this
Right  Certificate,  together with all right,  title and interest in and to said
Rights,     and     hereby     irrevocably      constitutes     and     appoints
_________________________________  attorney to transfer said Rights on the books
of the within-named Company with full power of substitution.

     Dated: _________________, _____.        ___________________________________
                                             (Signature)
Signature Guaranteed:

___________________________________


                                   CERTIFICATE

     The undersigned hereby certifies by checking the appropriate boxes that:

     (1) the  rights  evidenced  by this Right  Certificate  [ ] are [ ] are not
being sold,  assigned and  transferred by or on behalf of a Person who is or was
an  Acquiring  Person  (as such  capitalized  terms are  defined  in the  Rights
Agreement);

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

     Dated: _________________, _____.        ___________________________________
                                             (Signature)
Signature Guaranteed:

___________________________________



                                     NOTICE

     The signatures to the foregoing  Assignment and the foregoing  Certificate,
if  applicable,  must  correspond  to the name as written  upon the face of this
Right Certificate in every particular,  without alteration or enlargement or any
change  whatsoever,  and must be  guaranteed  by a  participant  in a Securities
Transfer Association ("STA") recognized signature program.

     In the event that the  foregoing  Certificate  is not duly  executed,  with
signature guaranteed,  the Company may deem the Rights represented by this Right
Certificate to be Beneficially  Owned by an Acquiring  Person or an Affiliate or
Associate of an Acquiring Person (as such  capitalized  terms are defined in the
Rights Agreement),  and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.

                          FORM OF ELECTION TO PURCHASE

   (To be executed by the registered holder if such holder desires to exercise
         any or all of the Rights represented by this Right Certificate)

To:  SkyMall, Inc.

     The undersigned hereby irrevocably elects to exercise _____________________
(_______) of the Rights  represented  by this Right  Certificate to purchase the
shares of the Common  Stock of the  Company,  or other  securities  or  property
issuable  upon the  exercise  of said  number of Rights  pursuant  to the Rights
Agreement.

     The undersigned  hereby requests that a certificate for any such securities
and any such property be issued in the name of and delivered to:

________________________________________________________________________________

________________________________________________________________________________
    (Name, address and social security or other identifying number of issuee)

     The undersigned hereby further requests that if said number of Rights shall
not be all  the  Rights  represented  by this  Right  Certificate,  a new  Right
Certificate  for the  remaining  balance of such Rights be issued in the name of
and delivered to:

________________________________________________________________________________
    (Name, address and social security or other identifying number of issuee)


     Dated: _________________, _____.        ___________________________________
                                             (Signature)
Signature Guaranteed:

___________________________________



                                   CERTIFICATE

     The undersigned hereby certifies by checking the appropriate boxes that:

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

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

     Dated: _________________, _____.        ___________________________________
                                             (Signature)
Signature Guaranteed:

___________________________________


                                     NOTICE

     The  signature  to the  foregoing  Election to Purchase  and the  foregoing
Certificate, if applicable, must correspond to the name as written upon the face
of this Right Certificate in every particular, without alteration or enlargement
or any  change  whatsoever,  and  must  be  guaranteed  by a  member  firm  of a
registered national securities exchange, a member of the National Association of
Securities Dealers,  Inc. or a commercial bank or trust company having an office
or correspondent in the United States.

     In the event that the foregoing Certificate is not executed, with signature
guaranteed,   the  Company  may  deem  the  Rights  represented  by  this  Right
Certificate to be Beneficially  Owned by an Acquiring  Person or an Affiliate or
Associate of an Acquiring Person (as such  capitalized  terms are defined in the
Rights Agreement),  and not issue any Right Certificate or Right Certificates in
exchange for this Right Certificate.

<PAGE>
                                                                       EXHIBIT C

UNDER CERTAIN CIRCUMSTANCES, AS SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED
TO,  BENEFICIALLY  OWNED BY OR  TRANSFERRED  TO ANY  PERSON WHO IS OR BECOMES AN
ACQUIRING  PERSON (AS  DEFINED  IN THE  RIGHTS  AGREEMENT)  OR AN  ASSOCIATE  OR
AFFILIATE (AS DEFINED IN THE RIGHTS AGREEMENT)  THEREOF AND CERTAIN  TRANSFEREES
THEREOF WILL BE NULL AND VOID AND WILL NO LONGER BE TRANSFERABLE.


                                  SKYMALL, INC.

                               SUMMARY OF TERMS OF
                                RIGHTS AGREEMENT

NATURE OF RIGHT:    When  exercisable,  each Right (a  "Right")  will  initially
                    entitle the holder to purchase one  one-hundredth of a share
                    of Series R Preferred Stock ("Preferred  Stock") of SkyMall,
                    Inc. (the "Company").

MEANS OF            The Rights will be  distributed  to holders of the Company's
DISTRIBUTION:       outstanding Common Stock as a dividend of one Right for each
                    share of Common  Stock.  The Rights will also be attached to
                    all  future   issuances   of  Common   Stock  prior  to  the
                    Distribution Date (as defined below).

EXERCISABILITY:     Rights become  exercisable  on the earlier of: (i) the tenth
                    day following the date of public announcement by the Company
                    or by any person or group (an "Acquiring  Person") that such
                    person or group has acquired beneficial  ownership of 15% or
                    more of the Company's  outstanding Common Stock, or (ii) the
                    tenth  business  day (unless  extended by the Board prior to
                    the time a person becomes an Acquiring Person) following the
                    commencement,  or  announcement of an intention to commence,
                    by any person or group of a tender or  exchange  offer which
                    would  result  in  such  person  owning  15% or  more of the
                    outstanding Common Stock of the Company (the earlier of such
                    dates  being  referred  to  as  the  "Distribution   Date"),
                    provided that an Acquiring Person does not include an Exempt
                    Person (as such term is  defined  in the Rights  Agreement).
                    Rights will trade  separately from the Common Stock once the
                    Rights become exercisable.

EXERCISE PRICE:     $65.00 per Right,  which is the amount that in the  judgment
                    of the Board of Directors  represents the long-term value of
                    the Common Stock over the term of the Rights  Agreement (the
                    "Exercise Price").

TERM:               The Rights  will  expire  upon the  earlier of (i) ten years
                    after the date of  issuance,  or  October  15,  2009 or (ii)
                    redemption or exchange by the Company as described below.

REDEMPTION OF       Rights are redeemable at a price of $0.001 per Right, by the
RIGHTS:             vote of the Company's Board of Directors,  at any time until
                    the occurrence of a Flip-In Event (defined below).


<PAGE>

PREFERRED STOCK:    The Preferred Stock  purchasable upon exercise of the Rights
                    will be  nonredeemable  and  junior to any  other  series of
                    preferred  stock the  Company  may issue  (unless  otherwise
                    provided in the terms of such other  series).  Each share of
                    Preferred   Stock  will  have  a   preferential   cumulative
                    quarterly  dividend in an amount equal to the greater of (a)
                    $250.00 or (b) 100 times the dividend declared on each share
                    of Common Stock. In the event of liquidation, the holders of
                    Preferred Stock will receive a preferred liquidation payment
                    equal  to the  greater  of (a)  $6,500.00  per  share,  plus
                    accrued dividends to the date of distribution whether or not
                    earned or declared,  or (b) an amount per share equal to 100
                    times the aggregate  payment to be distributed  per share of
                    Common  Stock.  Each share of Preferred  Stock will have 100
                    votes,  voting  together with the shares of Common Stock. In
                    the event of any merger,  consolidation or other transaction
                    in which shares of Common Stock are exchanged for or changed
                    into other  securities,  cash and/or  other  property,  each
                    share of  Preferred  Stock will be  entitled  to receive 100
                    times the  amount  and type of  consideration  received  per
                    share of Common Stock.  The rights of the Preferred Stock as
                    to dividends,  liquidation  and voting,  and in the event of
                    mergers  and  consolidations,  are  protected  by  customary
                    anti-dilution  provisions.  Fractional  shares (in  integral
                    multiples of one  one-hundredth)  of Preferred Stock will be
                    issuable;  however,  the  Company  may  elect to  distribute
                    depositary  receipts in lieu of such fractional  shares.  In
                    lieu of  fractional  shares  other than  fractions  that are
                    multiples of one  one-hundredth of a share, 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.  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.

RIGHTS IN EVENT OF  In the event  that an  Acquiring  Person  engages in certain
SELF-DEALING        self-dealing  transactions  with  the  Company,  or a Person
TRANSACTION OR      becomes  the  beneficial   owner  of  15%  or  more  of  the
ACQUISITION OF      outstanding Common Stock ("Flip-In  Events"),  a holder of a
SUBSTANTIAL AMOUNT  Right thereafter has the right to purchase,  upon payment of
OF COMMON STOCK:    the   then   current   Exercise   Price,   in  lieu  of  one
                    one-hundredth of a share of Preferred Stock,  such number of
                    shares of Common  Stock  having  market value at the time of
                    the  transaction  equal to the  Exercise  Price  divided  by
                    one-half the Current  Market Price (as defined in the Rights
                    Agreement)   of  the  Common  Stock.   Notwithstanding   the
                    foregoing,  Rights  held  by  the  Acquiring  Person  or any
                    Associate or Affiliate  thereof or certain  transferees will
                    be null and void and no longer be transferable.

                                        2
<PAGE>

                    Self-dealing   transactions   are   defined   to  include  a
                    consolidation,  merger or other  combination of an Acquiring
                    Person  with  the  Company  in  which  the  Company  is  the
                    surviving corporation, the transfer of assets to the Company
                    in  exchange  for  securities  of  the  Company,  any  other
                    acquisition  of  securities  of the Company by an  Acquiring
                    Person  (other  than  in a  pro  rata  distribution  to  all
                    shareholders),  the sale, purchase, transfer,  distribution,
                    lease,  mortgage,  pledge  or  acquisition  of assets by the
                    Acquiring  Person to, from or with the Company on other than
                    an arm's length basis,  compensation to an Acquiring  Person
                    for  services  (other  than for  employment  as a regular or
                    part-time  employee or director on a basis  consistent  with
                    the Company's past  practice),  a loan or provision of other
                    financial   assistance   (except    proportionately   as   a
                    shareholder) to an Acquiring  Person or the licensing,  sale
                    or other transfer of proprietary technology or know-how from
                    the Company to the Acquiring Person on terms not approved by
                    the   Board   of    Directors    or   a    reclassification,
                    recapitalization  or other  transaction  with the  effect of
                    increasing   by  more   than  1%  the   Acquiring   Person's
                    proportionate  share  of  any  class  of  securities  of the
                    Company.

RIGHTS IN EVENT     If, following the occurrence of a Flip-In Event, the Company
OF BUSINESS         is  acquired  by any  person in a merger  or other  business
COMBINATION:        combination   transaction  in  which  the  Common  Stock  is
                    exchanged  or  converted  or in which the Company is not the
                    surviving  corporation,  or 50% or  more  of its  assets  or
                    earnings  power  are sold to any  person,  each  holder of a
                    Right  (other than an Acquiring  Person,  or  Affiliates  or
                    Associates  thereof)  shall  thereafter  have  the  right to
                    purchase,  upon payment of the then current  Exercise Price,
                    such  number  of shares  of  common  stock of the  acquiring
                    company  having a current market value equal to the Exercise
                    Price  divided by one-half the Current  Market Price of such
                    common stock.

EXCHANGE OPTION:    In the event (i) any person or group  becomes  an  Acquiring
                    Person   or  (ii)  any  of  the   types   of   transactions,
                    acquisitions or other events described above as self-dealing
                    transactions  occur,  and prior to the  acquisition  by such
                    person or group of 50% or more of the outstanding  shares of
                    Common  Stock,  the Board may  require all or any portion of
                    the  outstanding  Rights  (other than  Rights  owned by such
                    Acquiring Person which have become void) to be exchanged for
                    Common  Stock on a pro rata basis,  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).

FRACTIONAL SHARES:  No  fractional  shares of Common  Stock will be issued  upon
                    exercise of the Rights and,  in lieu  thereof,  a payment in
                    cash will be made to the holder of such Rights  equal to the
                    same  fraction  of the  current  market  value of a share of
                    Common Stock.

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<PAGE>

ADJUSTMENT:         The  Exercise  Price  payable,  and the  number of shares of
                    Preferred  Stock or other  securities or property  issuable,
                    upon exercise of the Rights are subject to  adjustment  from
                    time to time to prevent dilution (i) in the event of a stock
                    dividend   on,   or   a    subdivision,    combination    or
                    reclassification of the Preferred Stock, (ii) upon the grant
                    to  holders  of the  Preferred  Stock of  certain  rights or
                    warrants to subscribe  for  Preferred  Stock or  convertible
                    securities  at less  than the  current  market  price of the
                    Preferred Stock or (iii) upon the distribution to holders of
                    the Preferred  Stock of evidences of  indebtedness or assets
                    (excluding  dividends  payable  in  Preferred  Stock)  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.

RIGHTS AS           The Rights  themselves do not entitle the holder  thereof to
SHAREHOLDER:        any rights as a shareholder,  including, without limitation,
                    voting rights or to receive dividends.

AMENDMENT OF        Until the Rights  become  nonredeemable,  the  Company  may,
RIGHTS:             except  with  respect  to the  redemption  price,  amend the
                    Agreement   in  any   manner.   After  the   Rights   become
                    nonredeemable,  the Company may amend the  Agreement to cure
                    any ambiguity,  to correct or supplement any provision which
                    may be defective or inconsistent  with any other provisions,
                    to  shorten or  lengthen  any time  period  under the Rights
                    Agreement,  or to change or supplement  any provision in any
                    manner the Company may deem necessary or desirable, provided
                    that no such amendment may adversely affect the interests of
                    the holders of the Rights (other than the  Acquiring  Person
                    or its  Affiliates  or  Associates)  or cause the  Rights to
                    again be  redeemable  or the  Agreement  to again be  freely
                    amendable.

A COPY OF THE RIGHTS AGREEMENT IS AVAILABLE,  FREE OF CHARGE,  FROM THE COMPANY.
REQUESTS SHOULD BE DIRECTED TO SKYMALL,  INC.,  1520 EAST PIMA STREET,  PHOENIX,
ARIZONA  85034,  ATTENTION:  SECRETARY.  THIS SUMMARY  DESCRIPTION OF THE RIGHTS
AGREEMENT  DOES NOT PURPORT TO BE COMPLETE  AND IS  QUALIFIED IN ITS ENTIRETY BY
REFERENCE  TO THE  RIGHTS  AGREEMENT,  AS  AMENDED  FROM TIME TO TIME,  WHICH IS
INCORPORATED IN THIS SUMMARY DESCRIPTION BY REFERENCE.

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