SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                            _________________________


                                    FORM 8-K


                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934




Date of Report (Date of earliest event reported)         January 9, 2001
                                                         ____________________

                         Laser-Pacific Media Corporation
______________________________________________________________________________
               (Exact Name of Registrant as Specified in Charter)


              Delaware                 0-19407                    95-3824617
______________________________________________________________________________
 (State or Other Jurisdiction     (Commission File              (IRS Employer
       of Incorporation)                Number)             Identification No.)


809 N. Cahuenga Blvd., Hollywood, California                     90038
______________________________________________________________________________
(Address of Principal Executive Offices)                        (Zip Code)


Registrant's telephone number, including area code           (323) 462-6266
                                                             _________________

                                 Not applicable
______________________________________________________________________________
          (Former Name or Former Address, if Changed Since Last Report)




<PAGE>



Item 5.  Other Events.

         On January 9,  2001,  the Board of  Directors  of  Laser-Pacific  Media
Corporation (the "Company")  authorized and declared a dividend of one preferred
stock  purchase  right (a  "Right")  for each share of common  stock,  par value
$.0001 per share, of the Company (the "Common Shares").  The dividend is payable
on  January  24,  2001 (the  "Record  Date") to the  holders of record of Common
Shares as of the close of business on such date.

         The following is a brief  description of the Rights.  It is intended to
provide a general  description  only and is  subject to the  detailed  terms and
conditions of the Rights Agreement (the "Rights  Agreement") dated as of January
12, 2001 by and between the Company  and U.S.  Stock  Transfer  Corporation,  as
Rights Agent (the "Rights Agent").

         1.       Common Share Certificates Representing Rights

         Until the  Distribution  Date (as defined in Section 2 below),  (a) the
Rights shall not be  exercisable,  (b) the Rights shall be attached to and trade
only together with the Common Shares and (c) the stock certificates representing
Common Shares also shall  represent the Rights  attached to such Common  Shares.
Common  Share  certificates  issued  after  the  Record  Date  and  prior to the
Distribution Date shall contain a notation incorporating the Rights Agreement by
reference.

         2.       Distribution Date

         The  "Distribution  Date" is the earliest of (a) the tenth business day
following the date of the first public  announcement that any person (other than
the Company or certain related entities, and with certain additional exceptions)
has become the beneficial  owner of 20% or more of the then  outstanding  Voting
Shares  (such  person  is a "20%  Stockholder"  and  the  date  of  such  public
announcement is the "20% Ownership  Date"),  (b) the tenth business day (or such
later day as shall be designated  by the Board of Directors)  following the date
of the  commencement  of, or the  announcement of an intention to make, a tender
offer or exchange  offer,  the  consummation  of which would cause any person to
become a 20%  Stockholder  or (c) the first date,  on or after the 20% Ownership
Date,  upon  which  the  Company  is  acquired  in a merger  or  other  business
combination  in which the Company is not the surviving  corporation  or in which
the outstanding  Common Shares are changed into or exchanged for stock or assets
of  another  person,  or upon  which 50% or more of the  Company's  consolidated
assets or earning  power are sold (other than in  transactions  in the  ordinary
course of business).  In calculating the percentage of outstanding Voting Shares
that are  beneficially  owned by any  person,  such  person  shall be  deemed to
beneficially  own any Voting  Shares  issuable  upon the  exercise,  exchange or
conversion of any options,  warrants or other securities  beneficially  owned by
such person;  provided,  however,  that such Voting  Shares  issuable  upon such
exercise  shall not be deemed  outstanding  for the purpose of  calculating  the
percentage of Voting Shares that are beneficially owned by any other person.

         Upon the close of business of the  Distribution  Date, the Rights shall
separate  from the Common  Shares,  Right  certificates  shall be issued and the
Rights shall become  exercisable  to purchase  Preferred  Shares as described in
Section 5 below.

         No Person who is the Beneficial Owner of 20% or more of the outstanding
Voting Shares as of January 9, 2001 shall be deemed a 20% Stockholder  unless or
until such Person  shall  acquire,  without  the prior  approval of the Board of
Directors,  Beneficial  Ownership of an  additional 1% of the Voting Shares then
outstanding  and,  following such  acquisition,  is the Beneficial Owner of more
than 20% of the Voting  Shares  then  outstanding.  In  addition,  any Person (a
"Transferee") who purchases Voting Shares from such Person shall not be deemed a
20%  Stockholder  if, after giving effect to such  acquisition,  such Transferee
holds no more  than the sum of the  Voting  Shares  so  acquired  plus 1% of the
Voting Shares then outstanding.

         3.       Issuance of Right Certificates

         As  soon as  practicable  following  the  Distribution  Date,  separate
certificates  representing  only Rights shall be mailed to the holders of record
of Common Shares as of the close of business on the Distribution  Date, and such
separate Right certificates alone shall represent such Rights from and after the
Distribution Date.
<PAGE>

         4.       Expiration of Rights

         The Rights  shall  expire on January 9, 2011 (the  "Expiration  Date"),
unless  earlier  redeemed  or  exchanged,   unless  the  Distribution  Date  has
previously  occurred and the Rights have separated  from the Common  Shares,  in
which case the Rights will remain  outstanding  for ten years from the date they
separate.

         5.       Exercise of Rights

         Unless the Rights have expired or been redeemed or exchanged,  they may
be exercised,  at the option of the holders,  pursuant to paragraphs (a), (b) or
(c) below. No Right may be exercised more than once or pursuant to more than one
of such  paragraphs.  From and after the first  event of the type  described  in
paragraphs  (b) or (c) below,  each Right  that is  beneficially  owned by a 20%
Stockholder  or that was attached to a Common Share that is subject to an option
beneficially owned by a 20% Stockholder shall be void.

                  (a) Right to  Purchase  Preferred  Shares.  From and after the
close of business on the Distribution  Date, each Right (other than a Right that
has become void) shall be exercisable to purchase one one-hundredth (1/100) of a
share of Series B Junior  Participating  Cumulative  Preferred  Stock, par value
$.0001 per share, of the Company (the "Preferred Shares"),  at an exercise price
of $30.00 (Thirty  Dollars) (the "Exercise  Price").  Prior to the  Distribution
Date, the Company may substitute for all or any portion of the Preferred  Shares
that would  otherwise be issuable upon exercise of the Rights,  cash,  assets or
other securities having the same aggregate value as such Preferred  Shares.  The
Preferred Shares are nonredeemable  and, unless otherwise provided in connection
with the creation of a subsequent  series of preferred stock, are subordinate to
any other series of the Company's preferred stock whether issued before or after
the issuance of the Preferred  Shares.  The  Preferred  Shares may not be issued
except upon exercise of Rights.  The holder of a Preferred  Share is entitled to
receive when, as and if declared, the greater of (i) cash and non-cash dividends
in an amount equal to 100 times the  dividends  declared on each Common Share or
(ii) a preferential  annual dividend of $.01 per Preferred Share ($.0001 per one
one-hundredth  (1/100) of a Preferred Share).  In the event of liquidation,  the
holders of Preferred  Shares shall be entitled to receive a liquidation  payment
in an amount equal to the greater of (1) $.01 per  Preferred  Share  ($.0001 per
one  one-hundredth  (1/100) of a Preferred  Share),  plus all accrued and unpaid
dividends and  distributions on the Preferred  Shares, or (2) an amount equal to
100  times the  aggregate  amount  to be  distributed  per  Common  Share.  Each
Preferred  Share  has one  hundred  (100)  votes  per  share  (one  vote per one
one-hundredth  (1/100) of a Preferred  Share),  voting  together with the Common
Shares. In the event of any merger,  consolidation or other transaction in which
Common Shares are exchanged,  the holder of a Preferred  Share shall be entitled
to receive 100 times the amount  received  per Common  Share.  The rights of the
Preferred  Shares  as to  dividends,  voting  and  liquidation  preferences  are
protected by antidilution  provisions.  It is anticipated  that the value of one
one-hundredth  (1/100) of a Preferred Share should  approximate the value of one
Common Share.

                  (b) Right to Purchase  Common Shares of the Company.  From and
after  the  close of  business  on the  tenth  business  day  following  the 20%
Ownership  Date,  each Right  (other than a Right that has become void) shall be
exercisable to purchase, at the Exercise Price (initially $30.00), Common Shares
with a market value equal to two times the Exercise  Price.  If the Company does
not have sufficient Common Shares available for all Rights to be exercised,  the
Company shall  substitute for all or any portion of the Common Shares that would
otherwise  be issuable  upon the exercise of the Rights,  cash,  assets or other
securities having the same aggregate value as such Common Shares.

                  (c) Right to Purchase Common Stock of a Successor Corporation.
If, on or after the 20% Ownership  Date, (i) the Company is acquired in a merger
or  other  business  combination  in  which  the  Company  is not the  surviving
corporation,  (ii) the Company is the surviving corporation in a merger or other
business  combination in which all or part of the outstanding  Common Shares are
changed into or exchanged for stock or assets of another  person or (iii) 50% or
more of the Company's  consolidated assets or earning power are sold (other than
in transactions in the ordinary course of business), then each Right (other than
a Right that has become void) shall  thereafter be exercisable  to purchase,  at
the Exercise Price (initially  $30.00),  shares of common stock of the surviving
corporation  or  purchaser,  respectively  (the  "Surviving  Person"),  with  an
aggregate market value equal to two times the Exercise Price.

         6.       Adjustments to Prevent Dilution

         The Exercise Price, the number of outstanding  Rights and the number of
Preferred  Shares or Common  Shares  issuable  upon  exercise  of the Rights are
subject to adjustment from time to time as set forth in the Rights  Agreement in
order to  prevent  dilution.  With  certain  exceptions,  no  adjustment  in the
Exercise  Price  shall be  required  until  cumulative  adjustments  require  an
adjustment of at least 1%.

         7.       Cash Paid Instead of Issuing Fractional Securities

         No  fractional  securities  shall be issued  upon  exercise  of a Right
(other than  fractions  of Preferred  Shares that are integral  multiples of one
one-hundredth of a Preferred Share and that may, at the election of the Company,
be evidenced by depositary  receipts) and in lieu thereof, an adjustment in cash
shall be made based on the market price of such  securities  on the last trading
date prior to the date of exercise.

         8.       Redemption

         At any  time  prior  to the  earlier  of (a)  the  tenth  business  day
following the 20% Ownership  Date or (b) the first event of the type giving rise
to exercise rights under Section 5(c) above,  the Board of Directors may, at its
option,  direct the Company to redeem the Rights in whole, but not in part, at a
price of $.001 per Right (the  "Redemption  Price"),  and the  Company  shall so
redeem the Rights.  Immediately  upon such action by the Board of Directors (the
date of such action being the "Redemption  Date"), the only right of the holders
of Rights thereafter shall be to receive the Redemption Price.

         9.       Exchange

         At any time during the period of 180 days after the 20% Ownership Date,
the Board of Directors of the Company may, at its option,  authorize  and direct
the exchange of all, but not less than all, of the then  outstanding  Rights for
Common Shares,  one  one-hundredths of Preferred Shares,  debt securities of the
Company,  other property or any  combination of the foregoing,  which, as of the
date of the Board of Directors'  action, has a current market price equal to the
difference between the Exercise Price and the current market price of the shares
that would  otherwise  be  issuable  upon  exercise of a Right on such date (the
"Exchange  Ratio"),  and the Company  shall so exchange the Rights.  Immediately
upon such action by the Board of Directors,  the right to exercise  Rights shall
terminate  and the only right of the  holders of Rights  thereafter  shall be to
receive the  securities  so  designated  by the Board of Directors in accordance
with the Exchange Ratio.

         10.      No Stockholder Rights Prior to Exercise

         Until a Right is exercised,  the holder thereof,  as such, will have no
rights as a stockholder  of the Company  (other than rights  resulting from such
holder's ownership of Common Shares),  including,  without limitation, the right
to vote or to receive dividends.

         11.      Amendment of Rights Agreement

         The Board of Directors may, from time to time,  without the approval of
any holder of Rights,  direct the Company and the Rights Agent to  supplement or
amend any provision of the Rights  Agreement in any manner,  whether or not such
supplement or amendment is adverse to any holder of Rights,  and the Company and
the Rights Agent shall so supplement or amend such provision; provided, however,
that from and after the earliest of (a) the tenth business day following the 20%
Ownership  Date, (b) the first event of the type giving rise to exercise  rights
under Section 5(c) above or (c) the Redemption Date, the Rights Agreement cannot
be  supplemented  or amended in any manner that would  materially  and adversely
affect any  holder of  outstanding  Rights  other  than a 20%  Stockholder  or a
Surviving Person.


<PAGE>


Item 7.  Exhibits.

         (a)      None.

         (b)      None.

         (c)      Exhibits:

         The following exhibits are filed with this report on Form 8-K:


Exhibit No.                        Description

4.1                 Rights  Agreement,  dated as of January  12,  2001,  between
                    Laser-Pacific  Media  Corporation  and U.S.  Stock  Transfer
                    Corporation,  as Rights Agent,  which  includes as Exhibit A
                    the Form of Right  Certificate,  the Form of Assignment  and
                    the Form of Election to Purchase.

4.2                 Certificate  of  Designations  of  Series B Junior
                    Participating  Cumulative Preferred Stock.


<PAGE>


                                   SIGNATURES

                  Pursuant to the requirements of the Securities Exchange Act of
1934,  the  registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.

                                       LASER-PACIFIC MEDIA CORPORATION

Date:  January 19, 2001                By: /s/ James R. Parks
                                               _______________________
                                       Name:  James R. Parks
                                       Its: Chief Executive Officer


<PAGE>


                                  EXHIBIT INDEX




Exhibit No.                        Description

4.1                 Rights  Agreement,  dated as of January  12,  2001,  between
                    Laser-Pacific  Media  Corporation  and U.S.  Stock  Transfer
                    Corporation,  as Rights Agent,  which  includes as Exhibit A
                    the Form of Right  Certificate,  the Form of Assignment  and
                    the Form of Election to Purchase.

4.2                 Certificate  of  Designations  of  Series B Junior
                    Participating  Cumulative Preferred Stock.





<PAGE>


                                                                EXHIBIT 4.1


                                RIGHTS AGREEMENT

                          dated as of January 12, 2001

                                 by and between

                         LASER-PACIFIC MEDIA CORPORATION

                                       and

                        U. S. STOCK TRANSFER CORPORATION

                                 as Rights Agent



<PAGE>
                                TABLE OF CONTENTS
<TABLE>
<S>                                                                                                            <C>
                                                                                                               Page

Section 1.  Certain Definitions..................................................................................1

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

Section 3.  Issuance of Rights Certificates......................................................................6

Section 4.  Form of Right Certificates...........................................................................7

Section 5.  Countersignature and Registration....................................................................8

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

Section 7.  Exercise of Rights...................................................................................9

Section 8.  Cancellation and Destruction of Right Certificates..................................................10

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

Section 10.  Securities Record Date.............................................................................11

Section 11.  Adjustment of Exercise Price, Number of Shares Issuable Upon Exercise of
               Rights or Number of Rights.......................................................................12

Section 12.  Certificate of Adjusted Exercise Price or Number of Shares Issuable Upon
               Exercise of Rights...............................................................................17

Section 13.  Consolidation, Merger or Sale or Transfer of Assets or Earning Power...............................17

Section 14.  Fractional Rights and Fractional Shares............................................................19

Section 15.  Rights of Action...................................................................................20

Section 16.  Agreement of Right Holders.........................................................................20

Section 17.  Right Holder and Right Certificate Holder Not Deemed a Stockholder.................................21

Section 18.  Concerning the Rights Agent........................................................................21

Section 19.  Merger or Consolidation or Change of Name of Rights Agent..........................................22

Section 20.  Duties of Rights Agent.............................................................................22

Section 21.  Change of Rights Agent.............................................................................24

Section 22.  Issuance of New Right Certificates.................................................................25

Section 23.  Redemption of Rights...............................................................................25

Section 24.  Exchange of Rights.................................................................................26

Section 25.  Notice of Certain Events...........................................................................27

Section 26.  Notices............................................................................................27

Section 27.  Supplements and Amendments.........................................................................28

Section 28.  Certain Covenants..................................................................................29

Section 29.  Successors.........................................................................................29

Section 30.  Benefits of this Agreement.........................................................................29

Section 31.  Severability.......................................................................................29

Section 32.  Governing Law......................................................................................29

Section 33.  Counterparts.......................................................................................29

Section 34.  Descriptive Headings...............................................................................30

Exhibit A -- Form of Right Certificate
</TABLE>
<PAGE>
                                RIGHTS AGREEMENT

         This Rights Agreement (the  "Agreement") is made and entered into as of
the 12th day of January, 2001 by and between LASER-PACIFIC MEDIA CORPORATION,  a
Delaware corporation (the "Company"),  and U. S. STOCK TRANSFER  CORPORATION,  a
California corporation, as rights agent (the "Rights Agent").

         WHEREAS,  the Board of  Directors  of the  Company has  authorized  and
declared a dividend of one preferred  share  purchase right (a "Right") for each
Common Share (as hereinafter  defined) of the Company outstanding on January 24,
2001 (the  "Record  Date"),  each Right  representing  the right to purchase one
one-hundredth of a Preferred Share (as hereinafter defined),  upon the terms and
subject to the  conditions  set forth  herein,  and has further  authorized  and
directed  the issuance of one Right with respect to each Common Share that shall
become outstanding  between the Record Date and the earliest of the Distribution
Date, the Redemption  Date or the Expiration Date (as such terms are hereinafter
defined).

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

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

         "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2  promulgated under the Exchange Act, as in effect on
the date hereof.

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

                  (i) that such  Person or any of such  Person's  Affiliates  or
         Associates  beneficially owns, directly or indirectly,  for purposes of
         Section 13(d) of the Exchange Act and Rule 13d-3  promulgated under the
         Exchange Act, in each case as in effect on the date hereof;

                  (ii) that such Person or any of such  Person's  Affiliates  or
         Associates has the right to acquire  (whether such right is exercisable
         immediately,  or only  after  the  passage  of  time,  compliance  with
         regulatory  requirements,  the fulfillment of a condition or otherwise)
         pursuant to any agreement,  arrangement or  understanding,  or upon the
         exercise  of  conversion  rights,  exchange  rights  (other  than these
         Rights), 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 offer or
         exchange  offer  made by or on  behalf  of such  Person  or any of such
         Person's  Affiliates or Associates  until such tendered  securities are
         accepted for purchase or exchange;

                  (iii)  that such  Person or any such  Person's  Affiliates  or
         Associates  has the right to vote,  whether  alone or in  concert  with
         others,  pursuant  to  any  agreement,  arrangement  or  understanding,
         provided,  however,  that a Person  shall not be deemed the  Beneficial
         Owner  of, or to  Beneficially  Own,  any  security  if the  agreement,
         arrangement  or  understanding  to vote such security (A) arises solely
         from a revocable  proxy  given to such  Person or any of such  Person's
         Affiliates  or  Associates  in response to a public proxy  solicitation
         made  pursuant  to and in  accordance  with the  applicable  rules  and
         regulations  promulgated  under the  Exchange  Act, and (B) is not also
         then  reportable  on  Schedule  13D  under  the  Exchange  Act  (or any
         comparable or successor report);

                  (iv) that 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 for the purpose of acquiring, holding, voting (other than
         voting  pursuant to a revocable  proxy as  described  in the proviso to
         clause (iii) of this definition of "Beneficial  Owner") or disposing of
         any securities of the Company; and

                  (v)  that,  on any  day on or  after  the  Distribution  Date,
         evidence   Rights  that  prior  to  such  date  were   represented   by
         certificates  for Common Shares that such Person  Beneficially  Owns on
         such day.

Notwithstanding  anything to the contrary in this Section l(b), a Person engaged
in  business  as an  underwriter  of  securities  shall  not be deemed to be the
Beneficial  Owner of, or to Beneficially  Own, any securities  acquired  through
such  Person's  participation  in good faith in a firm  commitment  underwriting
until the expiration of 40 days after the date of such acquisition.

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

         "Certificate   of   Designations"   shall  mean  the   certificate   of
designations specifying the powers, designations,  preferences and rights of the
Preferred Shares in accordance with the Delaware General Corporation Law.

         "Close of Business" on any given date shall mean 5:00 p.m.,  California
time, on such date; provided,  however, that if such date is not a Business Day,
it shall mean 5:00 p.m., California time, on the next succeeding Business Day.

         "Closing  Price" of a stock or other  security  on any day shall be the
last sale  price,  regular  way,  per share of such  stock or unit of such other
security  on such day 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 such stock or other  security is 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 such stock or other security is listed or admitted
to trading  or, if such stock or other  security  is not listed or  admitted  to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market,  as  reported on the Nasdaq  National  Market  ("NASDAQ")  or such other
system  then in use or, if on any such date such stock or other  security is not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker that makes a market in such stock or
other security and that is selected by the Board of Directors of the Company.

         "Common  Share"  shall  mean one share of the Common  Stock,  par value
$.0001 per share,  of the Company,  unless used with reference to a Person other
than the  Company,  in which case it shall mean one share of each class of stock
of such Person  having the right to vote  generally in the election of directors
or, if such Person is a Subsidiary  of another  Person,  one Common Share of the
Person that ultimately controls such Person.

         "Common  Share  Equivalent"  shall have the  meaning  ascribed to it in
Section 11(a)(iii) hereof.

         "Current  Market  Price"  per  share  of a stock  or unit of any  other
security on any date shall mean the average of the daily Closing  Prices of such
stock  or  other  security  for the 30  consecutive  Trading  Days  through  and
including the Trading Day immediately preceding the date in question;  provided,
however,  that if any event shall have  caused the Closing  Price on any Trading
Day during such 30-day period not to be fully  comparable with the Closing Price
on the date in question  (or, if no Closing  Price is  available  on the date in
question, on the Trading Day immediately  preceding the date in question),  then
each such non-comparable  Closing Price so used shall be appropriately  adjusted
by the Board of Directors in order to make the Closing Price on each Trading Day
during the period used for the  determination  of the Current Market Price fully
comparable  with the Closing Price on such date in question (or, if  applicable,
the immediately  preceding Trading Day). "Current Market Price" per share of any
stock or unit of such other  security  that is not publicly held or so listed or
traded,  and "Current Market Price" of any other  property,  shall mean the fair
value per share of such stock or unit of such other security,  or the fair value
of such other property,  respectively,  as determined in good faith by the Board
of Directors of the Company based upon such  appraisals or valuation  reports of
such independent experts as the Board of Directors shall in good faith determine
appropriate,  which determination shall be described in a statement filed by the
Company with the Rights Agent.

         "Distribution  Date" shall have the meaning ascribed to it in Section 3
hereof.

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

         "Exempt Person" shall mean the Company, any wholly-owned  Subsidiary of
the Company,  any employee benefit plan of the Company or of a Subsidiary of the
Company and any Person holding Voting Shares for or pursuant to the terms of any
such employee benefit plan.

         "Exercise  Price" shall have the meaning ascribed to it in Section 7(c)
hereof.

         "Expiration Date" shall mean January 9, 2011.
<PAGE>

         "Person" shall mean any  individual,  firm,  partnership,  corporation,
association,  group (as such term is used in Rule  13d-5  promulgated  under the
Exchange Act as in effect on the date hereof) or other entity, and shall include
any successor (by merger or otherwise) of such entity.

         "Preferred  Share"  shall  mean  one  share  of  the  Series  B  Junior
Participating  Cumulative  Preferred  Stock,  par value $.0001 per share, of the
Company,  which  shall  have  the  rights  and  preferences  set  forth  in  the
Certificate of Designations for the Preferred Shares.

         "Preferred Share  Equivalent"  shall have the meaning ascribed to it in
Section 11(b) hereof.

         "Record  Date"  shall have the meaning  ascribed to it in the  recitals
hereto.

         "Redemption  Date"  shall  mean the date of the  action of the Board of
Directors of the Company  authorizing and directing the redemption of the Rights
pursuant  to Section  23(a)  hereof or the  exchange  of the Rights  pursuant to
Section 24(a) hereof.

         "Redemption  Price"  shall have the  meaning  ascribed to it in Section
23(a) hereof.

         "Right  Certificate",  as that term is used with  respect to any period
prior to the Distribution Date, shall have the meaning ascribed to it in Section
3(b)  hereof,  and, as that term is used with  respect to any period on or after
the  Distribution  Date,  shall have the meaning  ascribed to it in Section 3(c)
hereof.

         "Rights  Expiration  Date" shall mean the  Expiration  Date,  except if
there has been a Distribution  Date, then it shall mean the tenth anniversary of
the Distribution Date.

         "Section  11(a)(ii)  Event"  shall have the  meaning  ascribed to it in
Section 11(a)(ii) hereof.

         "Section 13(a) Event" shall have the meaning  ascribed to it in Section
13(a) hereof.

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

         "Subsidiary"  of any Person shall mean any  corporation or other Person
of which equity  securities or equity  interests  representing a majority of the
voting  power  are  owned,  directly  or  indirectly,  or which  is  effectively
controlled, by such Person.

         "Surviving  Person"  shall have the  meaning  ascribed to it in Section
13(a) hereof.

         "Trading Day" shall mean, as to any stock or other  security,  a day on
which the principal  national  securities  exchange on which such stock or other
security  is  listed or  admitted  to  trading  is open for the  transaction  of
business  or, if such  stock or other  security  is not  listed or  admitted  to
trading on any national securities exchange, a Business Day.

         "20% Ownership  Date" shall mean the first date of public  announcement
(which, for purposes of this definition,  shall include,  without limitation,  a
report filed  pursuant to Section 13(d) of the Exchange Act) by the Company or a
20%  Stockholder  containing  the facts by virtue of which a Person has become a
20% Stockholder.

         "20%  Stockholder"  shall mean any Person that Beneficially Owns 20% or
more of the Voting Shares of the Company then  outstanding;  provided,  however,
that the term "20% Stockholder"  shall not include:  (i) an Exempt Person;  (ii)
any Person that would not otherwise be a 20%  Stockholder but for a reduction in
the  number of  outstanding  Voting  Shares  resulting  from a stock  repurchase
program or other  similar plan of the Company or from a self tender offer of the
Company,  which  plan or tender  offer  commenced  on or after the date  hereof;
provided,  however,  that the term "20%  Stockholder"  shall include such Person
from and after the first date upon which (A) such Person,  since the date of the
commencement  of such plan or  tender  offer,  shall  have  acquired  Beneficial
Ownership of, in the  aggregate,  a number of Voting Shares of the Company equal
to 1% or more of the Voting Shares of the Company then  outstanding and (B) such
Person,  together  with all  Affiliates  and  Associates  of such Person,  shall
Beneficially  Own  20% or  more  of  the  Voting  Shares  of  the  Company  then
outstanding;  (iii) any Person that would not otherwise be a 20% Stockholder but
for its Beneficial  Ownership of Rights;  (iv) any Person that is the Beneficial
Owner of 20% or more of the  outstanding  Voting  Shares  of the  Company  as of
January  9,  2001;  provided,  however,  that the term "20%  Stockholder"  shall
include  such Person  from and after the first date upon which (A) such  Person,
since January 9, 2001,  shall have  acquired,  without the prior approval of the
Board of Directors of the Company,  Beneficial Ownership of, in the aggregate, a
number of Voting  Shares of the Company equal to 1% or more of the Voting Shares
of the  Company  then  outstanding  and  (B)  such  Person,  together  with  all
Affiliates and Associates of such Person,  shall Beneficially Own 20% or more of
the  Voting  Shares  of the  Company  then  outstanding;  or (v) any  Person  (a
"Transferee") that acquires Voting Shares from a Person described in clause (iv)
above that has not become a 20%  Stockholder  if,  after  giving  effect to such
acquisition,  such  Transferee  Beneficially  Owns no more  than  the sum of the
Voting  Shares  so  acquired  plus 1% of the  Voting  Shares  then  outstanding;
provided, however, that the term "20% Stockholder" shall include such Transferee
from and after the first date upon which (A) such Transferee,  since the date of
such acquisition,  shall have acquired,  without the prior approval of the Board
of Directors of the Company, Beneficial Ownership of, in the aggregate, a number
of Voting  Shares of the Company equal to 1% or more of the Voting Shares of the
Company then outstanding and (B) such  Transferee,  together with all Affiliates
and Associates of such  Transferee,  shall  Beneficially  Own 20% or more of the
Voting Shares of the Company then outstanding.  In calculating the percentage of
the  outstanding  Voting  Shares  that are  Beneficially  Owned by a Person  for
purposes of this definition,  Voting Shares that are Beneficially  Owned by such
Person shall be deemed outstanding,  and Voting Shares that are not Beneficially
Owned by such  Person and that are  subject to  issuance  upon the  exercise  or
conversion of outstanding conversion rights,  exchange rights, rights,  warrants
or options shall not be deemed outstanding.  Any determination made by the Board
of  Directors  of  the  Company  as to  whether  any  Person  is or is not a 20%
Stockholder shall be conclusive and binding upon all holders of Rights.

         "Voting  Share"  shall mean (i) a Common  Share of the Company and (ii)
any other share of capital  stock of the Company  entitled to vote  generally in
the election of directors or entitled to vote together with the Common Shares in
respect of any merger,  consolidation,  sale of all or substantially  all of the
Company's  assets,  liquidation,  dissolution or winding up.  References in this
Agreement to a percentage or portion of the  outstanding  Voting Shares shall be
deemed a reference to the  percentage or portion of the total votes  entitled to
be cast by the holders of the outstanding Voting Shares.

         Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights  Agent to act as agent  for the  Company  and the  holders  of  Rights in
accordance  with the terms and  conditions  hereof,  and the Rights Agent hereby
accepts  such  appointment.  The  Company  may from  time to time  appoint  such
co-Rights Agents as it may deem necessary or desirable.

         Section 3.  Issuance of Rights Certificates.

         (a)  "Distribution  Date" shall mean the date,  after the date  hereof,
that is the  earliest of (i) the tenth  Business Day (or such later day as shall
be  designated  by the Board of Directors of the Company)  following the date of
the  commencement  of, or the first  public  announcement  of the  intent of any
Person,  other than an Exempt  Person,  to  commence a tender  offer or exchange
offer,  the  consummation  of which  would  cause  any  Person  to  become a 20%
Stockholder,  (ii) the date of the first  Section  11(a)(ii)  Event or (iii) the
date of the first Section 13(a) Event.

         (b) Until the Distribution Date, (i) the Rights shall be represented by
certificates  for Common  Shares (all of which  certificates  for Common  Shares
shall  be  deemed  to  be  Right   Certificates)   and  not  by  separate  Right
Certificates, (ii) the record holder of the Common Shares represented by each of
such certificates shall be the record holder of the Rights  represented  thereby
and (iii) the Rights shall be transferable  only in connection with the transfer
of Common Shares.  Until the earliest of the  Distribution  Date, the Redemption
Date or the Expiration Date, the surrender for transfer of such certificates for
Common  Shares shall also  constitute  the  surrender for transfer of the Rights
represented thereby.

         (c) As soon as  practicable  after  the  Distribution  Date,  and after
notification by the Company,  the Rights Agent shall send, at the expense of the
Company,  by first-class,  postage-prepaid  mail to each record holder of Common
Shares, as of the Close of Business on the Distribution  Date, at the address of
such  holder  shown  on  the  records  of  the  Company,   a  Right  Certificate
substantially  in the form of Exhibit A hereto  representing  one Right for each
Common Share so held. From and after the Distribution  Date, the Rights shall be
represented solely by such Right Certificates and may only be transferred by the
transfer of such Right Certificates, and the holders of such Right Certificates,
as listed in the records of the Company or any transfer  agent or registrar  for
such Rights, shall be the record holders of such Rights.

         (d)  Certificates for Common Shares issued at any time after the Record
Date and prior to the earliest of the Distribution  Date, the Redemption 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 a Rights  Agreement  dated as of January
         12, 2001 by and between Laser-Pacific Media Corporation and U. S. Stock
         Transfer  Corporation,  as Rights  Agent (the "Rights  Agreement"),  as
         amended  to  date,  the  terms  and  conditions  of  which  are  hereby
         incorporated  herein by reference and a copy of which is on file at the
         principal  executive  offices of Laser-Pacific  Media Corporation Under
         certain  circumstances  specified in the Rights Agreement,  such Rights
         will be  represented  by  separate  certificates  and will no longer be
         represented by this certificate.  Under certain circumstances specified
         in the Rights Agreement,  Rights  beneficially owned by certain persons
         may become null and void.  Laser-Pacific Media Corporation will mail to
         the record holder of this  certificate  a copy of the Rights  Agreement
         without  charge  promptly   following  receipt  of  a  written  request
         therefor.  As described in the Rights  Agreement,  Rights  Beneficially
         Owned by any Person who becomes a 20%  Stockholder  or any Affiliate or
         Associate of a 20% Stockholder (as such  capitalized  terms are defined
         in the Rights Agreement) shall become null and void.

         (e)  Certificates  for Common Shares issued at any time on or after the
Distribution  Date and prior to the earlier of the Redemption Date or the Rights
Expiration  Date shall have  impressed on,  printed on,  written on or otherwise
affixed to them the following legend:

         This  certificate  does not represent any Right issued  pursuant to the
         terms of a Rights Agreement dated as of January 12, 2001 by and between
         Laser-Pacific  Media Corporation and U. S. Stock Transfer  Corporation,
         as Rights Agent.

         (f) In the event  that at any time on or after the  earlier of the date
of the first  Section  11(a)(ii)  Event or the date of the first  Section  13(a)
Event and prior to the earlier of the Redemption  Date or the Rights  Expiration
Date,  the Company  shall issue any Common  Shares  pursuant to the  exercise of
conversion  rights,  exchange  rights,  rights (other than Rights),  warrants or
options that shall have been issued or granted  prior to the earlier of the date
of the first  Section  11(a)(ii)  Event or the date of the first  Section  13(a)
Event,  then,  unless the Board of Directors of the Company  shall have provided
otherwise  at the  time of the  issuance  or grant  of such  conversion  rights,
exchange  rights,  rights (other than Rights),  warrants or options,  the Rights
Agent  shall,  as soon as  practicable  after  the date of such  event,  send by
first-class, postage-prepaid mail to the record holder of such Common Shares, at
the  address  of such  holder as shown on the  records of the  Company,  a Right
Certificate substantially in the form of Exhibit A hereto representing one Right
for each Common Share so issued.

         (g)  Notwithstanding  the  foregoing  provisions  of this Section , the
Rights Agent shall not send any Right  Certificate to any 20% Stockholder or any
of its  Affiliates  or  Associates  or to any Person if the Rights  held by such
Person are  Beneficially  Owned by a 20% Stockholder or any of its Affiliates or
Associates.  Any determination  made by the Board of Directors of the Company as
to whether any Common Shares are or were Beneficially Owned at any time by a 20%
Stockholder  or  an  Affiliate  or  Associate  of a  20%  Stockholder  shall  be
conclusive and binding upon all holders of Rights.

         Section 4. Form of Right  Certificates.  The Right Certificates and the
form of assignment, including certificate, and the form of election to purchase,
including  certificate,  printed on the reverse thereof, when, as and if issued,
shall be substantially the same as Exhibit A hereto,  and may have such marks of
identification  or  designation  and such  legends,  summaries  or  endorsements
printed thereon as the Company may deem  appropriate and as are not inconsistent
with the provisions of this Agreement,  or as may be required to comply with any
applicable law or with any rule or regulation made pursuant  thereto or with any
rule or regulation of any stock exchange upon which the Rights or the securities
of the  Company  issuable  upon  exercise of the Rights may from time to time be
listed,  or  to  conform  to  usage.   Subject  to  Section  22  hereof,   Right
Certificates,  whenever issued, that are issued in respect of Common Shares that
were issued and  outstanding  as of the Close of  Business  on the  Distribution
Date, shall be dated as of the Distribution Date.

         Section 5.  Countersignature and Registration.

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

         (b) Following  the  Distribution  Date,  the Rights Agent shall keep or
cause to be kept at its principal offices books for registration and transfer of
the Right  Certificates  issued  hereunder.  Such books shall show the names and
addresses of the respective holders of Right Certificates,  the number of Rights
represented  on its face by each  Right  Certificate  and the date of each Right
Certificate.

         Section 6.  Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.

         (a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof,  at
any time after the Close of Business on the  Distribution  Date,  and so long as
the  Rights  represented  thereby  remain  outstanding,  any one or  more  Right
Certificates may be transferred, split-up, combined or exchanged for one or more
Right Certificates representing the same aggregate number of Rights as the Right
Certificates surrendered.  Any registered holder desiring to transfer, split up,
combine or exchange  one or more Right  Certificates  shall make such request in
writing   delivered  to  the  Rights  Agent,   and  shall  surrender  the  Right
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights  Agent with the form of  assignment,  including  certificate,  on the
reverse side thereof  completed and duly executed,  with  signature  guaranteed.
Thereupon, the Rights Agent shall countersign and deliver to the person entitled
thereto one or more Right Certificates, 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) Upon  receipt  by the  Company  and the  Rights  Agent of  evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security  reasonably  satisfactory  to  them  and,  at  the  Company's  request,
reimbursement  to the Company and the Rights  Agent of all  reasonable  expenses
incidental  thereto,  and upon surrender to the Rights Agent and cancellation of
such Right Certificate if mutilated,  the Company shall issue and deliver to the
Rights Agent for delivery to the record  holder of such Right  Certificate a new
Right  Certificate  of like tenor in lieu of such  lost,  stolen,  destroyed  or
mutilated Right Certificate.

         (c)  Notwithstanding  anything to the  contrary in this  Section 6, the
Rights Agent shall not countersign and deliver a Right Certificate to any Person
if such  Right  Certificate  represents,  or would  represent  when held by such
Person, Rights that had become or would become null and void pursuant to Section
7(d) hereof.

         Section 7.  Exercise of Rights.

         (a)      Until the Distribution Date, no Right may be exercised.

         (b) Subject to Section 7(d) and (g) hereof and the other  provisions of
this Agreement, at any time after the Close of Business on the Distribution Date
and prior to the Close of Business on the earlier of the Redemption  Date or the
Rights  Expiration  Date, the  registered  holder of any Right  Certificate  may
exercise the Rights  represented  thereby in whole or in part upon  surrender of
such  Right  Certificate,  with  the form of  election  to  purchase,  including
certificate,  on the reverse  side thereof  completed  and duly  executed,  with
signature  guaranteed,  to the Rights Agent at the office of the Rights Agent at
1745 Gardena Avenue,  Glendale,  California 91204,  together with payment of the
Exercise  Price for each Right  exercised.  Upon the exercise of an  exercisable
Right and payment of the Exercise  Price in  accordance  with the  provisions of
this Agreement,  the holder of such Right shall be entitled to receive,  subject
to adjustment as provided  herein,  one  one-hundredth of a Preferred Share (or,
following the occurrence of a Section  11(a)(ii) Event or a Section 13(a) Event,
Common Shares and/or other securities).

         (c) The "Exercise Price" for the exercise of each Right shall initially
be $30.00 and shall be payable in lawful  money of the United  States of America
in  accordance  with Section 7(f) hereof.  The Exercise  Price and the number of
Preferred Shares (or, following the occurrence of a Section 11(a)(ii) Event or a
Section 13(a) Event,  Common Shares and/or other securities) to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Sections 7(e), 11 and 13 hereof and the other provisions of this Agreement.

         (d)  Notwithstanding  anything in this Agreement to the contrary,  from
and after the earlier of the date of the first  Section  11(a)(ii)  Event or the
date of the first Section 13(a) Event, any Rights that are or were  Beneficially
Owned by a 20% Stockholder or any Affiliate or Associate of a 20% Stockholder at
any time on or after the  Distribution  Date shall be null and void, and for all
purposes of this  Agreement  such Rights  shall  thereafter  be deemed not to be
outstanding,  and any holder of such Rights (whether or not such holder is a 20%
Stockholder or an Affiliate or Associate of a 20% Stockholder)  shall thereafter
have no right to exercise such Rights.

         (e) Prior to the  Distribution  Date,  if the Board of Directors of the
Company shall have determined that such action adequately protects the interests
of the holders of Rights, the Company may, in its discretion, substitute for all
or any portion of the Preferred  Shares that would  otherwise be issuable (after
the Close of Business on the Distribution  Date) upon the exercise of each Right
and payment of the Exercise Price (i) cash, (ii) other equity  securities of the
Company,  (iii) debt  securities of the Company,  (iv) other property or (v) any
combination  of the foregoing,  in each case having an aggregate  Current Market
Price equal to the aggregate  Current  Market Price of the Preferred  Shares for
which  substitution is made.  Subject to Section 7(d) hereof,  in the event that
the Company takes any action  pursuant to this Section  7(e),  such action shall
apply uniformly to all outstanding Rights.

         (f)  Upon  receipt  of a  Right  Certificate  representing  exercisable
Rights, with the form of election to purchase, including certificate,  completed
and duly  executed,  with  signature  guaranteed,  accompanied by payment of the
Exercise  Price  for  each  Right to be  exercised  and an  amount  equal to any
applicable  transfer  tax  required  to be paid  by the  holder  of  such  Right
Certificate in accordance  with Section 9 hereof by certified check or cashier's
check  payable to the order of the  Company,  the Rights  Agent shall  thereupon
promptly (i)  requisition  from the transfer agent of the Preferred  Shares (or,
following the occurrence of a Section  11(a)(ii) Event or a Section 13(a) Event,
Common Shares and/or securities) certificates for the number of Preferred Shares
(or such other securities) to be purchased,  and the Company hereby  irrevocably
authorizes  such transfer  agent to comply with all such  requests,  and/or,  as
provided in Section 14 hereof,  requisition  from the depositary agent described
therein  depositary  receipts  representing  such number of  one-hundredths of a
Preferred Share (or such other securities) as are to be purchased (in which case
certificates for the Preferred Shares (or such other securities)  represented by
such  receipts  shall be deposited by the  transfer  agent with such  depositary
agent) and the Company hereby directs such depositary  agent to comply with such
request, (ii) when appropriate,  requisition from the Company the amount of cash
to be paid in lieu of issuance  of  fractional  Preferred  Shares (or such other
securities)  in accordance  with Section 14 hereof,  (iii) after receipt of such
certificates,  depositary receipts or cash, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered in
such  name  or  names  as may  be  designated  by  such  holder  and  (iv)  when
appropriate,  after receipt  thereof,  deliver such cash to or upon the order of
the registered holder of such Right Certificate.

         (g)  Notwithstanding  the  foregoing  provisions of this Section 7, the
exercisability  of the  Rights  shall  be  suspended  for such  period  as shall
reasonably  be  necessary  for the  Company to register  and  qualify  under the
Securities  Act  and  any  applicable  securities  law of any  jurisdiction  the
Preferred  Shares and/or Common Shares or other securities to be issued pursuant
to the exercise of the Rights; provided, however, that nothing contained in this
Section 7 shall  relieve  the  Company of its  obligations  under  Section  9(c)
hereof.

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

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

         Section 9.  Reservation and Availability of Capital Stock.

         (a) Subject to Sections  7(e) and 9(f) hereof,  the Company shall cause
to be reserved and kept  available  out of its  authorized  and unissued  equity
securities (or out of its authorized  and issued equity  securities  held in its
treasury),  the number of such equity  securities that will from time to time be
sufficient to permit the exercise in full of all outstanding Rights.

         (b) In the event that any  securities  issuable  upon  exercise  of the
Rights are listed on any national securities exchange, the Company shall use its
best  efforts,  from and after such time as the Rights  become  exercisable,  to
cause all such  securities  issued or reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.

         (c) If necessary to permit the issuance of securities  upon exercise of
the  Rights,  the  Company  shall  use its  best  efforts,  from and  after  the
Distribution  Date, to register and qualify such securities under the Securities
Act, the Exchange Act and any other applicable  securities laws and to keep such
registration  effective  until the earlier of the Redemption  Date or the Rights
Expiration Date.

         (d) The  Company  shall  take all such  action as may be  necessary  to
ensure that all securities  delivered upon exercise of the Rights shall,  at the
time of delivery of the certificates for such securities  (subject to payment of
the Exercise  Price),  be duly and validly  authorized and issued and fully paid
and nonassessable securities.

         (e) The Company  shall pay when due and payable any and all federal and
state  transfer taxes and charges that may be payable in respect of the issuance
or delivery of the Right  Certificates or of any securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax that
may be payable in respect of any transfer or delivery of a Right  Certificate to
a Person other than, or the issuance or delivery of a certificate for securities
in respect of a name  other  than that of,  the  registered  holder of the Right
Certificate representing Rights surrendered for exercise, or to issue or deliver
any certificate for securities upon the exercise of any Right 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.

         (f) With respect to the Common Shares and/or other securities  issuable
pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing covenants shall be
applicable only upon and following the occurrence of a Section 11(a)(ii) Event.

         Section  10.  Securities  Record  Date.  Each  Person in whose name any
certificate  for securities of the Company is issued upon the exercise of Rights
shall for all  purposes  be deemed to have  become  the  holder of record of the
securities represented thereby on, and such certificate shall be dated, the date
upon which the Right  Certificate  representing such Rights was duly surrendered
and payment of the Exercise Price (and any applicable  transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the securities transfer books of the Company are closed, such person shall
be deemed to have  become  the  record  holder of such  securities  on, and such
certificate  shall be  dated,  the next  succeeding  Business  Day on which  the
securities transfer books of the Company are open.

         Section 11.  Adjustment of Exercise  Price,  Number of Shares  Issuable
Upon Exercise of Rights or Number of Rights.  The Exercise Price, the number and
kind of securities that may be purchased upon exercise of a Right and the number
of Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.

                  (a)(i) In the event that the  Company  shall at any time after
         the  Close of  Business  on the  Record  Date and prior to the Close of
         Business on the earlier of the Redemption Date or the Rights Expiration
         Date (A) declare or pay any dividend on the Preferred Shares payable in
         Preferred  Shares or  Voting  Shares,  (B)  subdivide  the  outstanding
         Preferred Shares,  (C) combine the outstanding  Preferred Shares into a
         smaller  number of Preferred  Shares or (D) issue  Preferred  Shares or
         other  securities  of the  Company  (other  than  those  for  which  an
         adjustment   is   required   under   Section   11(b)   hereof)   in   a
         reclassification   of  the  Preferred   Shares   (including   any  such
         reclassification  in connection with a consolidation or merger in which
         the  Company  is  the  continuing  or  surviving  corporation)  or in a
         reorganization  of the  Company,  then,  and upon each such event,  the
         number and kind of Preferred Shares or other  securities  issuable upon
         the   exercise  of  a  Right  on  the  date  of  such  event  shall  be
         proportionately  adjusted so that the holder of any Right  exercised on
         or after such date shall be  entitled  to  receive,  upon the  exercise
         thereof and payment of the Exercise  Price,  the  aggregate  number and
         kind of Preferred Shares or other securities or other property,  as the
         case may be, that, if such Right had been exercised  immediately  prior
         to such  date and at a time when such  Right  was  exercisable  and the
         transfer  books of the Company were open,  such holder would have owned
         upon such exercise and would have been entitled to receive by virtue of
         such  dividend,  subdivision,  combination or  reclassification.  If an
         event occurs that would require an  adjustment  under both this Section
         11(a)(i) and Section 11(a)(ii) hereof,  the adjustment  provided for in
         this Section  11(a)(i) shall be in addition to, and shall be made prior
         to, any adjustment required pursuant to Section 11(a)(ii) hereof.

                  (ii)  In  the  event  that a 20%  Ownership  Date  shall  have
         occurred and neither the Redemption  Date nor the Expiration Date shall
         have  occurred  prior to the  tenth  Business  Day  following  such 20%
         Ownership Date (a "Section 11(a)(ii) Event"),  then, and upon each such
         Section 11(a)(ii) Event, proper provision shall be made so that, except
         as  provided  in Section  7(d)  hereof,  each  holder of a Right  shall
         thereafter  have the right to  receive,  upon the  exercise  thereof in
         accordance  with the terms of this  Agreement  and  payment of the then
         current Exercise Price,  such number of Common Shares of the Company as
         shall equal the result  obtained by (A)  multiplying  the then  current
         Exercise  Price by the then  number of  one-hundredths  of a  Preferred
         Share  for  which a Right  was  exercisable  immediately  prior to such
         Section  11(a)(ii) Event (or, if the  Distribution  Date shall not have
         occurred prior to the date of such Section  11(a)(ii) Event, the number
         of  one-hundredths  of a  Preferred  Share for which a Right would have
         been exercisable if the Distribution  Date had occurred on the Business
         Day immediately  preceding the date of such Section  11(a)(ii)  Event),
         and (B) dividing  that product by 50% of the Current  Market Price of a
         Common  Share  on  the  date  of  occurrence  of the  relevant  Section
         11(a)(ii) Event (such number of shares being hereinafter referred to as
         the "Adjustment Shares"). Successive adjustments shall be made pursuant
         to this paragraph each time a Section 11(a)(ii) Event occurs.

                  (iii) In the  event  that on the date of a  Section  11(a)(ii)
         Event the aggregate  number of Common Shares that are authorized by the
         Company's  Certificate of Incorporation,  as amended from time to time,
         but not  outstanding  or reserved for issuance for purposes  other than
         upon  exercise  of the  Rights  is less  than the  aggregate  number of
         Adjustment Shares thereafter  issuable upon the exercise in full of the
         Rights in accordance with Section  11(a)(ii) hereof (the excess of such
         number of Adjustment Shares over and above such number of Common Shares
         being hereinafter referred to as the "Unavailable  Adjustment Shares"),
         then,  and upon each such event,  the Company shall  substitute for the
         pro rata  portion  of the  Unavailable  Adjustment  Shares  that  would
         otherwise  be issuable  thereafter  upon the exercise of each Right and
         payment of the Exercise Price (A) cash, (B) other equity  securities of
         the Company (including,  without limitation,  shares of preferred stock
         of the Company or units of such shares  having the same Current  Market
         Price as one Common  Share (a  "Common  Share  Equivalent")),  (C) debt
         securities of the Company, (D) other property or (E) any combination of
         the  foregoing,  in each case having an aggregate  Current Market Price
         equal  to  the  aggregate  Current  Market  Price  of  the  Unavailable
         Adjustment  Shares for which  substitution is made.  Subject to Section
         7(d) hereof, in the event that the Company takes any action pursuant to
         this  Section  11(a)(iii),  such action  shall apply  uniformly  to all
         outstanding Rights.

         (b) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the  Redemption  Date or the Rights  Expiration  Date, fix a record date for the
issuance  of rights,  options or warrants  to all  holders of  Preferred  Shares
entitling  them  initially to  subscribe  for or purchase  Preferred  Shares (or
shares  having the same rights,  privileges  and  preferences  as the  Preferred
Shares ("Preferred Share Equivalents")) or securities convertible into Preferred
Shares  or  Preferred  Share  Equivalents,  at a price  per  Preferred  Share or
Preferred  Share  Equivalent  (or  having a  conversion  price per  share,  if a
security  convertible into Preferred Shares or Preferred Share Equivalents) less
than the Current Market Price per Preferred Share on such record date, then, and
upon each such event,  the Exercise Price to be in effect after such record date
shall be  determined by  multiplying  the Exercise  Price in effect  immediately
prior to such record date by a fraction,  the  numerator of which shall be equal
to the sum of the number of  Preferred  Shares  outstanding  on such record date
plus the number of Preferred  Shares that the  aggregate  offering  price of the
total number of Preferred  Shares and/or  Preferred  Share  Equivalents to be so
offered  (and/or  the  aggregate  initial  conversion  price of the  convertible
securities to be so offered) would  purchase at such Current  Market Price,  and
the  denominator  of which  shall be equal to the  number  of  Preferred  Shares
outstanding on such record date plus the number of additional  Preferred  Shares
and/or  Preferred Share  Equivalents to be offered for  subscription or purchase
(or into  which  the  convertible  securities  to be so  offered  are  initially
convertible);  provided,  however, that if such rights,  options or warrants are
not exercisable  immediately upon issuance but become  exercisable only upon the
occurrence  of a specified  event or the passage of a specified  period of time,
then the  adjustment  to the Exercise  Price shall be made and become  effective
only  upon the  occurrence  of such  event  or such  passage  of time,  and such
adjustment  shall be made as if the record date for the issuance of such rights,
options or warrants  had been the Business Day  immediately  preceding  the date
upon which such rights, options or warrants became exercisable. Preferred Shares
owned by or held for the account of the Company shall not be deemed  outstanding
for the purpose of any such  computation.  Such adjustment to the Exercise Price
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 Exercise  Price shall
be adjusted to be the Exercise Price that would then be in effect if such record
date had not been fixed.

         (c) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the  Redemption  Date or the Rights  Expiration  Date, fix a record date for the
making of a distribution to all holders of the Preferred  Shares  (including any
such distribution made in connection with a consolidation or merger in which the
Company is the surviving  corporation) of assets (other than a distribution  for
which an  adjustment  is  required  under  Section  11(a)(i)  or (b) hereof or a
regular quarterly cash dividend),  then the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise Price in effect
immediately  prior to such  record date by a fraction,  the  numerator  of which
shall be equal to the excess of the Current Market Price per Preferred  Share on
such  record  date over and above the fair  market  value of the  portion of the
securities or assets to be so distributed  with respect to one Preferred  Share,
and the  denominator  of which shall be equal to such  Current  Market Price per
Preferred Share.  Such adjustments  shall be made  successively  whenever such a
record date is fixed,  and in the event that such a distribution is not so made,
the Exercise Price shall be adjusted to be the Exercise Price that would then be
in effect if such record date had not been fixed.

         (d) For the purpose of any  computation  under this  Section 11, if the
Preferred Shares are not publicly held or traded, the "Current Market Price" per
Preferred Share shall be conclusively  deemed to be the Current Market Price per
Common Share multiplied by 100.

         (e) No adjustment in the Exercise  Price shall be required  unless such
adjustment  would  require an  increase  or  decrease of at least 1% in the then
current Exercise Price;  provided,  however, that any adjustments that by reason
of this Section  11(e) are not required to be made shall be cumulated  and taken
into account in any subsequent  adjustment.  All calculations under this Section
11 shall  be made to the  nearest  cent or to the  nearest  one-thousandth  of a
Common Share or other share or  one-millionth  of a Preferred Share, as the case
may be.

         (f) If, as a result of an  adjustment  made  pursuant to Section  11(a)
hereof,  the holder of any Right shall,  upon exercise  thereof,  be entitled to
receive any  securities of the Company other than  Preferred  Shares,  and if an
event occurs in respect of such securities  that, if it were to occur in respect
of  Preferred  Shares,  would  require an  adjustment  under this  Section 11 in
respect  of  Preferred  Shares,  then the  number of such  other  securities  so
receivable  upon exercise of any Right shall be subject to adjustment  from time
to time in a manner  and on terms as nearly  equivalent  as  practicable  to the
provisions  with respect to Preferred  Shares  contained in this Section 11, and
the other  provisions of this Agreement  with respect to Preferred  Shares shall
apply on like terms to any such other securities.

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

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

         (i) The Company may elect,  on or after the date of any  adjustment  of
the  Exercise  Price,  to adjust  the  number of Rights  instead  of making  any
adjustment in the number of Preferred Shares  purchasable upon the exercise of a
Right.  Each of the Rights  outstanding  after such  adjustment of the number of
Rights  shall be  exercisable  for the number of  one-hundredths  of a Preferred
Share 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 one-thousandth of a
Right)  obtained by dividing the Exercise Price in effect  immediately  prior to
the adjustment of the Exercise Price by the Exercise Price in effect immediately
after such  adjustment  of the Exercise  Price.  The Company shall make a public
announcement  of its  election  to adjust the number of Rights  pursuant to this
Section 11(i),  indicating  the record date for the adjustment  and, if known at
the time, the amount of the  adjustment to be made.  Such record date may be the
date on which the  Exercise  Price is  adjusted or any day  thereafter,  but, if
separate Right Certificates have been issued, it shall be at least 10 days after
the date of such public  announcement.  If separate 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
representing,  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,  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 such adjustment,  and upon surrender thereof if required by the Company,
new Right  Certificates  representing all the Rights to which such holders shall
be entitled after such adjustment. Right Certificates to be so distributed shall
be issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company,  the adjusted  Exercise  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 Exercise Price or
the number of  one-hundredths of a Preferred Share issuable upon the exercise of
one Right, the Right Certificates theretofore and thereafter issued may continue
to express the Exercise Price per one one-hundredth of a Preferred Share and the
number of  Preferred  Shares  issuable  upon the exercise of one Right that were
expressed in the initial Right Certificates issued hereunder.

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

         (l) In any  case  in  which  this  Section  11  shall  require  that an
adjustment  in the  Exercise  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
of the number of  one-hundredths of a Preferred Share and other capital stock or
securities  of the Company,  if any,  issuable upon such exercise over and above
the number of  one-hundredths  of a Preferred  Share and other  capital stock or
securities of the Company,  if any,  issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment;  provided,  however, that
the  Company  shall  deliver  to such  holder a due  bill or  other  appropriate
instrument  representing  such holder's right to receive such additional  shares
upon the occurrence of the event requiring such adjustment.

         (m) Anything in this Section 11 to the  contrary  notwithstanding,  the
Company  shall be entitled  to make such  further  adjustments  in the number of
one-hundredths  of a Preferred  Share that may be purchased upon exercise of one
Right, and such further  adjustments in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that the
Company in its sole discretion shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred  Shares,  (ii) issuance wholly
for cash of any Preferred  Shares at less than the Current Market Price thereof,
(iii) issuance  wholly for cash of Preferred  Shares or securities that by their
terms are convertible into or exchangeable for Preferred Shares,  (iv) dividends
on  Preferred  Shares  payable in  Preferred  Shares or (v)  issuance of rights,
options or warrants  referred to in Section 11(b) hereof,  hereafter made by the
Company  to  holders  of its  Preferred  Shares  shall  not be  taxable  to such
stockholders.

         (n) In the event that the Company shall, at any time after the Close of
Business on the Record  Date and prior to the Close of Business on the  earliest
of the date of the first Section  11(a)(ii) Event, the date of the first Section
13(a) Event,  the  Redemption  Date or the Rights  Expiration  Date, (i) pay any
dividend on the Common  Shares  payable in Common  Shares,  (ii)  subdivide  the
outstanding  Common Shares,  (iii) combine the outstanding  Common Shares into a
smaller   number  of  Common   Shares  or  (iv)   issue   Common   Shares  in  a
reclassification  of the Common Shares (including any such  reclassification  in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, and upon each such event, the Exercise Price to
be in effect after such event shall be  determined by  multiplying  the Exercise
Price in effect immediately prior to such event by a fraction,  the numerator of
which  shall be equal to the  number of Common  Shares  outstanding  immediately
prior to such event and the denominator of which shall be equal to the number of
Common Shares outstanding  immediately after such event.  Successive adjustments
shall be made  pursuant to this Section  11(n) each time such a dividend is paid
or such a subdivision,  combination or reclassification is effected. If an event
occurs  that would  require an  adjustment  under  both this  Section  11(n) and
Section  11(a)(ii)  hereof,  the  adjustment  provided for in this Section 11(n)
shall be in  addition  to, and shall be made prior to, any  adjustment  required
pursuant to Section 11(a)(ii) hereof.

         Section 12.  Certificate of Adjusted Exercise Price or Number of Shares
Issuable Upon Exercise of Rights.  Whenever an adjustment is made as provided in
Section 11 hereof, the Company shall promptly (a) prepare a certificate  setting
forth such  adjustment  and a brief  statement  of the facts giving rise to such
adjustment,  (b) file with the Rights Agent and with each transfer agent for the
securities  issuable upon exercise of the Rights a copy of such  certificate and
(c) mail a brief  summary  thereof to each holder of Rights in  accordance  with
Section 25 hereof.  Notwithstanding the foregoing  sentence,  the failure of the
Company to make such  certification  or to give such notice shall not affect the
validity or the force and effect of such  adjustment.  Any adjustment to be made
pursuant to Sections 11 or 13 hereof  shall be  effective  as of the date of the
event giving rise to such adjustment.  The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained,  and
shall not be obligated or responsible  for  calculating any adjustment nor shall
it be deemed to have  knowledge of such an adjustment  unless and until it shall
have received such certificate.

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

         (a) In the event (a  "Section  13(a)  Event")  that,  at any time on or
after the 20% Ownership Date and prior to the earlier of the Redemption  Date or
the Rights  Expiration  Date,  (1) the Company  shall,  directly or  indirectly,
consolidate  with or merge with and into any other Person and the Company  shall
not be the continuing or surviving  corporation in such consolidation or merger,
(2) any Person shall, directly or indirectly, consolidate with or merge with and
into  the  Company  and  the  Company  shall  be  the  continuing  or  surviving
corporation in such merger and, in connection  with such merger,  all or part of
the  Common  Shares  shall  be  changed  into or  exchanged  for  stock or other
securities  of any  Person or cash or any  other  property,  or (3) the  Company
and/or any one or more of its Subsidiaries shall,  directly or indirectly,  sell
or otherwise  transfer,  in one or more transactions (other than transactions in
the ordinary course of business),  assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any Person or Persons  other than the  Company or one or more of its
wholly-owned  Subsidiaries (such Persons, together with the Persons described in
clauses (1) and (2) above shall be  collectively  referred to in this Section as
the "Surviving Person"),  then, and in each such case, proper provision shall be
made so that:

                  (i) except as provided in Section 7(d) hereof,  each holder of
         a Right shall  thereafter have the right to receive,  upon the exercise
         thereof in accordance  with the terms of this  Agreement and payment of
         the then current  Exercise  Price,  in lieu of the  securities or other
         property  otherwise  purchasable  upon such  exercise,  such  number of
         validly  authorized  and issued,  fully paid and  nonassessable  Common
         Shares of the Surviving  Person (and if such Surviving  Person has more
         than one  class or  series of Common  Shares,  such  number of  validly
         authorized and issued,  fully paid and  nonassessable  Common Shares of
         each series or class) as shall be equal to a fraction, the numerator of
         which is:

                           (A) if a Section  11(a)(ii)  Event  has not  occurred
                  prior to such  Section  13(a)  Event,  the product of the then
                  current   Exercise   Price   multiplied   by  the   number  of
                  one-hundredths  of a  Preferred  Share  purchasable  upon  the
                  exercise of one Right  immediately  prior to the first Section
                  13(a)  Event  (or,  if the  Distribution  Date  shall not have
                  occurred  prior to the date of such Section  13(a) Event,  the
                  number of  one-hundredths of a Preferred Share that would have
                  been so purchasable if the  Distribution  Date had occurred on
                  the  Business  Day  immediately  preceding  the  date  of such
                  Section 13(a) Event), or

                           (B) if a Section  11(a)(ii)  Event has occurred prior
                  to such Section 13(a) Event, the product of the Exercise Price
                  in effect  immediately  prior to such Section  11(a)(ii) Event
                  multiplied  by the  number of  one-hundredths  of a  Preferred
                  Share  purchasable upon the exercise of one Right  immediately
                  prior to such Section 11(a)(ii) Event (or, if the Distribution
                  Date shall not have occurred prior to the date of such Section
                  11(a)(ii) Event, the number of  one-hundredths  of a Preferred
                  Share that would have been so purchasable if the  Distribution
                  Date had occurred on the Business  Day  immediately  preceding
                  the date of such Section 11(a)(ii) Event),

         and the  denominator  of which is 50% of the Current  Market  Price per
         Common Share of the  Surviving  Person on the date of  consummation  of
         such Section 13(a) Event;

                  (ii) the Surviving  Person shall  thereafter be liable for and
         shall  assume,  by  virtue  of  such  consolidation,  merger,  sale  or
         transfer,  all the  obligations  and duties of the Company  pursuant to
         this Agreement;

                  (iii)    the term "Company" shall thereafter be deemed to
         refer to the Surviving Person; and

                  (iv) the  Surviving  Person shall take such steps  (including,
         but not  limited  to, the  reservation  of a  sufficient  number of its
         Common Shares in accordance  with Section 9 hereof) in connection  with
         such  consummation  as may be necessary  to ensure that the  provisions
         hereof shall  thereafter be applicable to its Common Shares  thereafter
         deliverable upon the exercise of Rights.

         (b)  Notwithstanding  the foregoing,  if the Section 13(a) Event is the
sale  or  transfer  in one or more  transactions  of  assets  or  earning  power
aggregating  more than 50% of the assets or earning power of the Company and its
Subsidiaries  (taken as a whole),  but less than 100% thereof,  then each Person
acquiring all or a portion  thereof shall assume the  obligations of the Company
as to a fraction  of each of the Rights  equal to the  fraction of the assets of
the Company and its Subsidiaries (taken as a whole) acquired by such Person, and
the  obligations  of the  Company as to the  remaining  fraction  of each of the
Rights shall continue to be the obligations of the Company.

         (c) The Company shall not consummate a Section 13(a) Event unless prior
thereto the Company and the  Surviving  Person shall have executed and delivered
to the Rights Agent a  supplemental  agreement  confirming  that such  Surviving
Person  shall,  upon  consummation  of such  Section  13(a)  Event,  assume this
Agreement in accordance with Section 13 hereof, that all rights of first refusal
or  preemptive  rights in  respect  of the  issuance  of  Common  Shares of such
Surviving  Person upon exercise of outstanding  Rights have been waived and that
such Section 13(a) Event shall not result in a default by such Surviving  Person
under this Agreement,  and further  providing that, as soon as practicable after
the date of  consummation  of such Section 13(a) Event,  such  Surviving  Person
shall:

                  (i)  prepare  and  file a  registration  statement  under  the
         Securities   Act  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, use its best efforts to cause
         such  registration  statement to remain effective (with a prospectus at
         all times meeting the  requirements  of the  Securities  Act) until the
         Rights  Expiration Date, and similarly comply with all applicable state
         securities laws;

                  (ii) use its best efforts to list (or continue the listing of)
         the Rights and the Common  Shares of the Surviving  Person  purchasable
         upon exercise of the Rights on a national securities  exchange,  or use
         its best efforts to cause the Rights and such Common Shares to meet the
         eligibility requirements for quotation on NASDAQ; and

                  (iii)  deliver to holders of the Rights  historical  financial
         statements for such  Surviving  Person that comply in all respects with
         the  requirements  for  registration on Form 10 (or any successor form)
         under the Exchange Act.

         (d) In the event  that at any time  after the  occurrence  of a Section
11(a)(ii) Event some or all of the Rights shall not have been exercised pursuant
to Section 11 hereof  prior to the date of a Section  13(a)  Event,  such Rights
shall  thereafter be exercisable  only in the manner  described in Section 13(a)
hereof.  In the event that a Section 11(a)(ii) Event occurs on or after the date
of a Section 13(a) Event, Rights shall not be exercisable pursuant to Section 11
hereof but shall instead be exercisable  pursuant to, and only pursuant to, this
Section 13.

         (e) The  provisions  of this Section 13 shall apply to each  successive
merger,  consolidation,  sale or other  transfer  constituting  a Section  13(a)
Event.

         Section 14.  Fractional Rights and Fractional Shares.

         (a) The Company  shall not be required to issue  fractions of Rights or
to distribute  Right  Certificates  that  represent  fractional  Rights.  If the
Company shall determine not to issue such fractional  Rights,  the Company shall
pay to the registered  holders of the Right  Certificates  with respect to which
such fractional Rights would otherwise be issuable,  at the time such fractional
Rights would  otherwise have been issued as provided  herein,  an amount in cash
equal to the same  fraction of the Current  Market Price of a whole Right on the
Business Day  immediately  prior to the date upon which such  fractional  Rights
would otherwise have been issuable.

         (b) The  Company  shall not be required  to issue  fractions  of Common
Shares or Preferred Shares (other than fractions that are integral  multiples of
one  one-hundredth  of a  Preferred  Share)  upon  exercise  of  Rights,  or  to
distribute  certificates  that represent  fractional  Common Shares or Preferred
Shares (other than fractions that are integral multiples of one one-hundredth of
a Preferred Share).  Fractions of Preferred Shares in integral  multiples of one
one-hundredth  of a Preferred  Share may, at the  election  of the  Company,  be
represented 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
Preferred  Shares. If the Company shall determine not to issue fractional Common
Shares or Preferred Shares (or depositary receipts in lieu of Preferred Shares),
the  Company  shall pay to the  registered  holders of Right  Certificates  with
respect  to which  such  fractional  Common  Shares or  Preferred  Shares  would
otherwise be issuable, at the time such Rights are exercised as provided herein,
an amount in cash equal to the same  fraction of the Current  Market  Price of a
whole Common Share or Preferred  Share, as the case may be. For purposes of this
Section  14(b),  the Current  Market  Price of a whole Common Share or Preferred
Share shall be the Closing Price per share for the Trading Day immediately prior
to the date of such exercise.

         (c) The holder of a Right,  by the acceptance of such Right,  expressly
waives such holder's  right to receive any  fractional  Rights or any fractional
Common  Shares or  Preferred  Shares  upon  exercise  of such  Right,  except as
permitted by this Section 14.

         Section 15.  Rights of Action.  All rights of action in respect of this
Agreement,  except the rights of action given to the Rights Agent under  Section
18  hereof,  are  vested  in the  respective  registered  holders  of the  Right
Certificates  and certificates for Common Shares  representing  Rights,  and any
registered  holder of any Right  Certificate or of such  certificate  for Common
Shares,  without the  consent of the Rights  Agent or of the holder of any other
Right  Certificate  or any other  certificate  for Common  Shares  may,  in such
holder's  own  behalf  and for  such  holder's  own  benefit,  enforce,  and may
institute  and maintain any suit,  action or  proceeding  against the Company to
enforce,  or otherwise  act in respect of, such  holder's  right to exercise the
Rights  represented by such Right  Certificate or by such certificate for Common
Shares in the manner provided in such Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically  acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance,  and injunctive relief against actual or threatened violations,  of
the obligations of any Person under this Agreement.

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

         (a) prior to the Distribution  Date, the Rights shall be represented by
certificates  for Common  Shares  registered  in the name of the holders of such
Common Shares (which  certificates for Common Shares shall also constitute Right
Certificates), and each such Right shall be transferable only in connection with
the transfer of such Common Shares;

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

         (c) the Company  and the Rights  Agent may deem and treat the person in
whose name the Right Certificate is registered as the absolute owner thereof and
of the Rights represented thereby (notwithstanding any notations of ownership or
writing on the Right  Certificate by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
<PAGE>

         Section  17.  Right  Holder and Right  Certificate  Holder Not Deemed a
Stockholder.  No holder,  as such,  of any Right or Right  Certificate  shall be
entitled to vote,  receive  dividends or be deemed for any purpose the holder of
the securities of the Company that may at any time be issuable upon the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right  Certificate  be construed to confer upon the holder of any Right or Right
Certificate,  as such,  any of the rights of a stockholder of the Company or any
right to vote for the  election of  directors  or upon any matter  submitted  to
stockholders  at any  meeting  thereof,  to  give  or  withhold  consent  to any
corporate  action,  to receive  notice of  meetings or other  actions  affecting
stockholders  (except as provided in Section 25 hereof), or to receive dividends
or  subscription  rights,  or  otherwise,  in each case  until such Right or the
Rights  represented  by such  Right  Certificate  shall have been  exercised  in
accordance with the provisions hereof.

         Section 18.  Concerning the Rights Agent.

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

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

         (c) Notwithstanding  anything in this Agreement to the contrary,  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 or damage and regardless of the form of the action.

         Section 19.  Merger or Consolidation or Change of Name of Rights Agent.

         (a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with  which it may be  consolidated,  or any  corporation
resulting  from any merger or  consolidation  to which the  Rights  Agent or any
successor  Rights Agent shall be a party, or any  corporation  succeeding to the
corporate trust or stock transfer  business of the Rights Agent or any successor
Rights Agent,  shall be the  successor to the Rights Agent under this  Agreement
without the  execution  or filing of any paper or any further act on the part of
any of the parties hereto,  provided that such corporation would be eligible for
appointment  as a  successor  Rights  Agent under the  provisions  of Section 21
hereof.  If, 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 if 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 such Right Certificate and in
this Agreement.

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

         Section 20. Duties of Rights  Agent.  The Rights Agent  undertakes  the
duties and  obligations  imposed  by this  Agreement  (and no implied  duties or
obligations shall be read into this Agreement against the Rights Agent) upon the
following terms and  conditions,  by all of which the Company and the holders of
Right Certificates, by their acceptance of the Rights, shall be bound:

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

         (b) Whenever in the  performance of its duties under this Agreement the
Rights Agent shall deem it  necessary  or  desirable  that any fact or matter be
proved or  established  by the Company  prior to taking or suffering  any action
hereunder,  such fact or matter  (unless  other  evidence in respect  thereof be
herein  specifically  prescribed)  may be deemed to be  conclusively  proved and
established by a certificate signed by any one of the Chairman of the Board, the
Vice Chairman of the Board,  the President,  any Vice President,  the Treasurer,
the  Secretary or any  Assistant  Secretary of the Company and  delivered to the
Rights Agent;  and such  certificate  shall be full  authorization to the Rights
Agent for any action taken or suffered in good faith by it under the  provisions
of this Agreement in reliance upon such certificate.

         (c) The Rights  Agent shall be liable  hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.

         (d) The Rights Agent shall not be liable for or by reason of any of the
statements  of fact or recitals  contained  in this  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.

         (e) The Rights Agent shall not be under any  responsibility  in respect
of the validity of this  Agreement or the execution and delivery  hereof (except
the due authorization,  execution and delivery 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 Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including any Rights becoming null and void pursuant to Section 7(d)
hereof) or any  adjustment  in the terms of the Rights  (including  the  manner,
method or amount thereof)  provided for in Sections 7, 11, 13 and 23 hereof,  or
the ascertaining of the existence of facts that would require any such change or
adjustment  (except with respect to the exercise of Rights  represented by Right
Certificates  after actual  notice that such change or  adjustment is required);
nor  shall it by any act  hereunder  be  deemed  to make any  representation  or
warranty as to the  authorization  or  reservation  of any  Preferred  Shares or
Common Shares or other securities to be issued pursuant to this Agreement or any
Right  Certificate,  or as to whether any  Preferred  Shares or Common Shares or
other securities 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 Agreement.

         (g) The  Rights  Agent is  hereby  authorized  and  directed  to accept
instructions  with respect to the  performance of its duties  hereunder from any
one of the Chairman of the Board,  the Vice Chairman,  the  President,  any Vice
President,  the Chief Financial  Officer,  the Secretary or the Treasurer of the
Company,  and to apply to such officers for advice or instructions in connection
with its duties,  and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for those instructions. 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  Agreement and the date on or after which
such action shall be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified  in such  application  (which date shall not be less than ten 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 from the Company in response to such application to the contrary.

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

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

         (k) The Rights  Agent shall not be required to take notice or be deemed
to  have  notice  of  any  fact,  event  or  determination  (including,  without
limitation,  any dates or events defined in this Agreement or the designation of
any Person as a 20%  Stockholder,  Affiliate or Associate)  under this Agreement
unless and until the Rights Agent shall be  specifically  notified in writing by
the Company of such fact, event or determination.

         (l) If,  with  respect to any  Rights  Certificate  surrendered  to the
Rights Agent for exercise or transfer,  the certificate  attached to the form of
assignment  or form of  election to  purchase,  as the case may be, has not been
completed,  the Rights  Agent shall not take any further  action with respect to
such requested exercise or transfer without first consulting with the Company.

         Section 21. Change of Rights  Agent.  The Rights Agent or any successor
Rights Agent may resign and be discharged  from its duties under this  Agreement
upon 30-days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares and Preferred  Shares by registered or certified mail, and,
at the  expense of the  Company  to the  holders  of the Right  Certificates  by
first-class  mail.  The  Company  may remove the Rights  Agent or any  successor
Rights  Agent upon  30-days'  notice in writing,  mailed to the Rights  Agent or
successor  Rights Agent,  as the case may be, and to each transfer  agent of the
Common Shares and Preferred  Shares by registered or certified  mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise  become incapable of acting as such, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment  within a period of 30 days after giving notice of such
removal  or  after  it has been  notified  in  writing  of such  resignation  or
incapacity by the resigning or incapacitated  Rights Agent or by the holder of a
Right  Certificate  (who shall,  with such notice,  submit such  holder's  Right
Certificate  for  inspection by the Company),  then the Company shall become the
Rights Agent and the registered holder of any Right Certificate may apply to any
court of competent  jurisdiction  for the appointment of a new Rights Agent. Any
successor  Rights  Agent,  whether  appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the States of New York or California  (or of any other state of the
United  States so long as such  corporation  is  authorized  to do business as a
banking institution in the States of New York or California),  in good standing,
having a principal  office in New York or California,  that is authorized  under
such laws to exercise corporate trust or stock transfer powers and is subject to
supervision  or  examination  by federal or state  authority and that has at the
time of its  appointment  as Rights  Agent a combined  capital and surplus of at
least $50,000,000. 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 of this
Agreement and so that the successor Rights Agent may appropriately act as Rights
Agent hereunder. Not later than the effective date of any such appointment,  the
Company shall file notice thereof in writing with the  predecessor  Rights Agent
and each transfer  agent of the Common Shares and Preferred  Shares,  and mail a
notice thereof in writing to the registered  holders of the Right  Certificates.
Failure to give any notice  provided  for in this  Section 21,  however,  or any
defect therein,  shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
<PAGE>

         Section 22. Issuance of New Right Certificates.  Notwithstanding any of
the provisions of this Agreement or of the Right  Certificates  to the contrary,
the Company may, at its option, issue new Right Certificates in such form as may
be approved by the Board of  Directors  in order to reflect  any  adjustment  or
change in the Exercise  Price and the number or kind or class of shares or other
securities  or property  purchasable  upon  exercise of the Rights in accordance
with the provisions of this Agreement.

         Section 23.  Redemption of Rights.

         (a) Until the earliest of (i) the date of the first  Section  11(a)(ii)
Event,  (ii) the date of the  first  Section  13(a)  Event or (iii)  the  Rights
Expiration  Date,  the Board of  Directors  of the  Company  may, at its option,
authorize  and direct the  redemption of all, but not less than all, of the then
outstanding Rights at a redemption price of $0.001 per Right, as such redemption
price shall be appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (the "Redemption Price"),
and the Company shall so redeem the Rights.

         (b)  Immediately  upon the  action  of the  Board of  Directors  of the
Company  authorizing  and  directing the  redemption  of the Rights  pursuant to
subsection (a) of this Section 23, or at such time and date thereafter as it may
specify,  and without any  further  action and without any notice,  the right to
exercise Rights shall terminate and the only right  thereafter of the holders of
Rights shall be to receive the Redemption  Price.  Within ten (10) Business Days
after the date of such action,  the Company shall give notice of such redemption
to the  holders of Rights by  mailing  such  notice to all  holders of Rights at
their last  addresses as they appear upon the registry books of the Rights Agent
or, if prior to the  Distribution  Date,  on the registry  books of the transfer
agent for the  Common  Shares.  Any notice  that is mailed in the manner  herein
provided shall be deemed given,  whether or not the holder receives such notice,
but neither the  failure to give any such  notice nor any defect  therein  shall
affect  the  legality  or  validity  of such  redemption.  Each  such  notice of
redemption  shall state the method by which the payment of the Redemption  Price
will be made.  Neither the Company nor any of its Affiliates or Associates  may,
directly or indirectly,  redeem, acquire or purchase for value any Rights in any
manner  other than that  specifically  set forth in Section 24 hereof or in this
Section 23, or in  connection  with the  purchase of Common  Shares prior to the
earlier  of the date of the  first  Section  11(a)(ii)  Event or the date of the
first Section 13(a) Event.

         (c) The Company may, at its option,  pay the Redemption  Price in cash,
Common Shares,  Preferred Shares,  other equity securities of the Company,  debt
securities of the Company,  other property or any  combination of the foregoing,
in each case having an aggregate  Current  Market Price on the  Redemption  Date
equal to the Redemption Price.

         Section 24.  Exchange of Rights.

         (a) At any time during the period of 180 days after a Section 11(a)(ii)
Event,  the Board of Directors of the Company may, at its option,  authorize and
direct  the  exchange  of all,  but not less than all,  of the then  outstanding
Rights  for  Common  Shares,  one  one-hundredths  of  Preferred  Shares,   debt
securities of the Company,  other property, or any combination of the foregoing,
in each case  having an  aggregate  Current  Market  Price  equal to the  result
obtained by (i)  multiplying  the Current  Market  Price per Common Share on the
record date for such  exchange by the number of Common  Shares for which a Right
is  exercisable on such record date and (ii)  subtracting  from such product the
Exercise Price on such Record Date (the "Exchange Ratio"), and the Company shall
so exchange the Rights.

         (b)  Immediately  upon the  action  of the  Board of  Directors  of the
Company  authorizing  and  directing  the  exchange  of the Rights  pursuant  to
subsection (a) of this Section 24, or at such time and date thereafter as it may
specify,  and without any  further  action and without any notice,  the right to
exercise Rights shall terminate and the only right  thereafter of the holders of
Rights  shall  be to  receive  the  securities  described  in  Section  24(a) in
accordance with the Exchange Ratio. Within ten (10) Business Days after the date
of such action, the Company shall give notice of such exchange to the holders of
Rights by mailing  such notice to all holders of Rights at their last  addresses
as they appear upon the  registry  books of the Rights Agent or, if prior to the
Distribution  Date, on the registry  books of the transfer  agent for the Common
Shares.  Any notice that is mailed in the manner herein provided shall be deemed
given,  whether or not the holder receives such notice,  but neither the failure
to give any such  notice nor any defect  therein  shall  affect the  legality or
validity of such  exchange.  Each such notice of exchange shall state the method
by which the Rights will be exchanged.
<PAGE>

         (c)  Notwithstanding  the  foregoing,  in the event that the  aggregate
number of Common  Shares that are  authorized by the  Company's  Certificate  of
Incorporation, as amended from time to time, but not outstanding or reserved for
issuance for purposes other than upon exercise or exchange of the Rights is less
than the  aggregate  number of Common  Shares  issuable upon the exchange of the
Rights  in  accordance  with  this  Section  24 (the  excess  of such  number of
authorized  Common  Shares over and above such number of issuable  Common Shares
being hereinafter  referred to as the "Unavailable  Exchange Shares"),  then the
Company shall  substitute for the pro rata portion of the  Unavailable  Exchange
Shares  that would  otherwise  be  issuable  upon the  exchange of the Rights in
accordance  with this Section 24 (i) cash,  (ii) other equity  securities of the
Company (including,  without limitation,  Common Share Equivalents),  (iii) debt
securities of the Company,  (iv) other  property or (v) any  combination  of the
foregoing,  in each case having an aggregate  Current  Market Price equal to the
aggregate  Current  Market Price of the  Unavailable  Exchange  Shares for which
substitution  is made.  Subject to Section  7(d)  hereof,  in the event that the
Company  takes any action  pursuant to this  Section 24, such action shall apply
uniformly to all outstanding Rights.

         Section 25.  Notice of Certain Events.

         (a) In the event that the Company  shall  propose (i) to declare or pay
any dividend on or make any  distribution  with respect to its Common  Shares or
Preferred Shares (other than a regular  quarterly cash dividend),  (ii) to offer
to the  holders of its Common  Shares or  Preferred  Shares  options,  rights or
warrants to subscribe for or to purchase any additional shares thereof or shares
of stock of any  class or any other  securities,  rights  or  options,  (iii) to
effect any reclassification of its Common Shares or Preferred Shares (other than
a reclassification  involving only the subdivision of outstanding shares),  (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 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 and in each such case, the Company shall give to
each holder of a Right  Certificate,  in  accordance  with Section 26 hereof,  a
notice of such  proposed  action  that shall  specify  the  record  date for the
purpose  of  such  dividend  or  distribution,  or  the  date  upon  which  such
reclassification,    consolidation,   merger,   sale,   transfer,   liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of record of the Common Shares or Preferred  Shares,  if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause  (i) or (ii)  above at least 20 days prior to the record  date
for determining holders of the Common Shares or Preferred Shares for purposes of
such action, and in the case of any such other action, at least 20 days prior to
the date of the  taking of such  proposed  action  or the date of  participation
therein by the holders of the Common Shares or Preferred Shares,  whichever date
shall be the earlier. The failure to give the notice required by this Section 25
or any defect  therein  shall not affect the  legality or validity of the action
taken by the Company or the vote upon any such action.

         (b)  Upon the  occurrence  of each  Section  11(a)(ii)  Event  and each
Section 13(a) Event, the Company shall as soon as practicable thereafter give to
each holder of a Right  Certificate,  in  accordance  with Section 26 hereof,  a
notice  of  the  occurrence  of  such  event,   specifying  the  event  and  the
consequences of the event to holders of Rights under Sections 11 and 13 hereof.

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

                           Laser-Pacific Media Corporation
                           809 N. Cahuenga Blvd.
                           Los Angeles, CA  90038
                           Attention: Secretary

Subject to the provisions of Section 21 hereof,  any notice or demand authorized
by this  Agreement  to be given  or made to or on the  Rights  Agent  (i) by the
Company  shall  be  sufficiently  given  or made if sent,  postage  prepaid,  by
registered or certified  mail,  addressed to the principal  office of the Rights
Agent as set forth below  (until  another  address is filed in writing  with the
Company) or (ii) by the holder of any Right  Certificate  shall be  sufficiently
given or made if sent by first-class  mail,  postage  prepaid,  addressed to the
principal  office of the Rights Agent as set forth below (until another  address
is filed in writing  with the  Company),  and shall be deemed  given upon actual
receipt.  The Company  hereby agrees that it shall  encourage the holders of the
Right Certificates, in any and all writings to such holders regarding the Rights
or this  Agreement,  to give or make any  notice  or demand  authorized  by this
Agreement by registered or certified mail,  addressed to the principal office of
the Rights Agent as follows (until another  address is filed in writing with the
Company):

                           U.S. Stock Transfer Corporation
                           1745 Gardena Avenue
                           Glendale, California 91204
                           Re: Laser-Pacific Media Corporation

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

         Section 27.  Supplements and Amendments.

         (a) The  Board of  Directors  of the  Company  may,  from time to time,
without the approval of any holders of Rights, supplement or amend any provision
of this Agreement in any manner,  whether or not such supplement or amendment is
adverse to any holder of Rights, and direct the Rights Agent so to supplement or
amend such  provision,  and the Rights Agent shall so  supplement  or amend such
provision;  provided,  however, that from and after the earliest of (i) the date
of the first Section  11(a)(ii) Event,  (ii) the date of the first Section 13(a)
Event,  (iii) the Redemption  Date or (iv) the Expiration  Date,  this Agreement
shall not be  supplemented  or amended in any manner that would  materially  and
adversely  affect any holder of outstanding  Rights other than a 20% Stockholder
or a Surviving Person.

         (b)  From and  after  the  earlier  of the  date of the  first  Section
11(a)(ii)  Event or the date of the first  Section  13(a) Event and prior to the
Rights  Expiration  Date,  the  Company  shall not effect any  amendment  to the
Certificate of Designations  for the Preferred  Shares that would materially and
adversely  affect the rights,  privileges or preferences of the Preferred Shares
without  the prior  approval of the  holders of  two-thirds  or more of the then
outstanding Rights.  Notwithstanding anything in this Agreement to the contrary,
no  supplement  or  amendment  that  changes the rights and duties of the Rights
Agent under this  Agreement  in any manner  adverse to the Rights  Agent will be
effective  against the Rights Agent without the execution of such  supplement or
amendment by the Rights Agent.

         Section  28.  Certain  Covenants.  Subject to Section 27 hereof and the
other  provisions of this  Agreement,  from and after the earlier of the date of
the first Section  11(a)(ii)  Event or the date of the first Section 13(a) Event
and prior to the earlier of the Redemption Date or the Rights  Expiration  Date,
the Company  shall not (a) issue or sell,  or permit any  Subsidiary to issue or
sell, to a 20% Stockholder or a Surviving  Person, or any Affiliate or Associate
of a 20% Stockholder or a Surviving  Person, or any Person holding Voting Shares
of the Company that are  Beneficially  Owned by a 20% Stockholder or a Surviving
Person,  (i) any rights,  options,  warrants or convertible  securities on terms
similar to, or that materially adversely affect the value of, the Rights or (ii)
Preferred  Shares,  Common Shares or shares of any other class of capital stock,
if such sale is intended to or would  materially  adversely  affect the value of
the Rights, or (b) take any other action that is intended to or would materially
adversely affect the value of the Rights.

         Section 29.  Successors.  All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

         Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company,  the Rights Agent and
the registered holders of the Right Certificates  (other than those representing
Rights that have become null and void) and the  certificates  for Common  Shares
representing Rights (other than those Rights that have become null and void) any
legal or  equitable  right,  remedy  or claim  under  this  Agreement,  and this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and such registered  holders of Right  Certificates  and  certificates for
Common Shares representing Rights.

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

         Section 32.  Governing Law. This  Agreement and each Right  Certificate
issued  hereunder  shall be deemed to be a  contract  made under the laws of the
State of Delaware  and for all  purposes  shall be governed by and  construed in
accordance  with  the  laws of such  state  applicable  to  contracts  made  and
performed entirely within such state, except as to the rights and obligations of
the Rights Agent which shall be governed by and construed in accordance with the
laws of the State of California.

         Section 33. Counterparts.  This Agreement may be executed in any number
of counterparts and each such counterpart shall for all purposes be deemed to be
an original and all such counterparts shall together  constitute but one and the
same instrument.

         Section 34.  Descriptive Headings. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

                            [SIGNATURE PAGE FOLLOWS]



<PAGE>



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


                                         LASER-PACIFIC MEDIA CORPORATION

Attest:

By:  /s/ Robert McClain                 By:    /s/ James R. Parks
     ___________________________               ___________________________
     Name:  Robert McClain                     Name:  James R. Parks
     Title:  Secretary                         Title:  Chairman of the Board
                                               and Chief Executive Officer


                                         U. S. STOCK TRANSFER CORPORATION,
                                         as Rights Agent

Attest:

By:  /s/ Mark Cano                       By:   /s/ William Garza
     ___________________________               ___________________________
     Name:  Mark Cano                          Name:  William Garza
     Title:  Senior Vice President             Title:  Assistant Vice President





<PAGE>



                                    EXHIBIT A

                            Form of Right Certificate

Certificate No. _____                                         __________ Rights

         NOT  EXERCISABLE  AFTER  THE  LATER OF  JANUARY  9,  2011 OR THE  TENTH
         ANNIVERSARY  OF THE  DISTRIBUTION  DATE (AS THAT TERM IS DEFINED IN THE
         RIGHTS  AGREEMENT)  OR EARLIER IF  REDEEMED.  THE RIGHTS ARE SUBJECT TO
         REDEMPTION  AT $0.001  PER  RIGHT ON THE TERMS SET FORTH IN THE  RIGHTS
         AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,  RIGHTS BENEFICIALLY OWNED BY A
         20%  STOCKHOLDER OR AN AFFILIATE OR ASSOCIATE OF A 20%  STOCKHOLDER (AS
         SUCH  TERMS  ARE  DEFINED  IN  THE  RIGHTS   AGREEMENT   AND  AS  THOSE
         CIRCUMSTANCES  ARE SPECIFIED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT
         HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.

                                Right Certificate

                         LASER-PACIFIC MEDIA CORPORATION

         This certifies that _______________________,  or registered assigns, is
the  registered  owner of the  number of Rights set forth  above,  each of which
entitles the owner thereof,  subject to the terms,  provisions and conditions of
the Rights  Agreement  dated as of January  12,  2001 (the  "Rights  Agreement")
between Laser-Pacific Media Corporation, a Delaware corporation (the "Company"),
and U. S. Stock  Transfer  Corporation,  a California  corporation  (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.,
California time, on the later of January 9, 2011 or the tenth anniversary of the
Distribution  Date at the office or agency of the Rights  Agent at 1745  Gardena
Avenue, Glendale, California 91204, or at the office of its successors as Rights
Agent, one one-hundredth of a fully paid non-assessable share of Series B Junior
Participating  Cumulative  Preferred  Stock,  $.0001 par value  (the  "Preferred
Shares"),  of the  Company,  at an  exercise  price of  $30.00  per  Right  (the
"Exercise  Price"),  upon  presentation and surrender of this Right  Certificate
with the Form of  Election  to  Purchase  duly  executed.  The  number of Rights
evidenced by this Right Certificate (and the number of Preferred Shares that may
be purchased upon exercise  thereof) set forth above, and the Exercise Price per
share set forth above,  are the number and Exercise Price as of January 12, 2001
based on the Preferred Shares as constituted at such date.

         As provided in the Rights Agreement,  the Exercise Price and the number
of  Preferred  Shares  that may be  purchased  upon the  exercise  of the Rights
evidenced by this Right  Certificate are subject to modification  and adjustment
upon the happening of certain events.  This Right  Certificate is subject to all
of the terms,  provisions and conditions of the Rights  Agreement,  which terms,
provisions and conditions are hereby incorporated herein by reference and made a
part hereof and to which  Rights  Agreement  reference is hereby made for a full
description  of the  rights,  limitations  of  rights,  obligations,  duties and
immunities  hereunder  of the Rights  Agent,  the Company and the holders of the
Rights Certificates. Copies of the Rights Agreement are on file at the principal
executive  offices of Laser-Pacific  Media  Corporation and the  above-mentioned
offices of the Rights Agent.

         This Right Certificate, with or without other Right Certificates,  upon
surrender at the office or agency of the Rights  Agent at 1745  Gardena  Avenue,
Glendale,  California  91204, may be exchanged for another Right  Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate  number of Preferred Shares 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,  the Rights evidenced by this
Certificate  may,  but are not  required  to, be  redeemed  by the  Company at a
redemption price of $0.001 per Right.

         No fractional  Preferred Shares will be issued upon the exercise of any
Right or  Rights  evidenced  hereby  (other  than  fractions  that are  integral
multiples of one one-hundredth of a Preferred Share,  which may, at the election
of the Company,  be evidenced by depositary  receipts),  but in lieu thereof,  a
cash payment will be made, as provided in the Rights Agreement.

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

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



<PAGE>



         WITNESS the facsimile  signature of the proper  officers of the Company
and its corporate seal. Dated as of _______ __, 200_.



ATTEST:                                       LASER-PACIFIC MEDIA CORPORATION


_________________________________             ________________________________
Secretary                                     President

Countersigned:

U. S. STOCK TRANSFER CORPORATION,
as Rights Agent


By:
         ____________________________________________

Title:
         ____________________________________________



<PAGE>



                    Form of Reverse Side of Right Certificate

                               FORM OF ASSIGNMENT

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

         FOR VALUE RECEIVED _______________________________________ hereby
sells, assigns and transfers unto_______________________________________

__________________________________________________________________________
                  (Please print name and address of transferee)

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

Dated:  ____________________, ____

                                                     ________________________

                                                     Signature
Signature Guaranteed:

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


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



The  undersigned  hereby  certifies  that the  Rights  evidenced  by this  Right
Certificate are not  Beneficially  Owned by a 20% Stockholder or an Affiliate or
Associate thereof (as defined in the Rights Agreement).

                                                     ________________________
                                                     Signature

                                                     (Signature  must conform in
                                                     all  respects  to  name  of
                                                     holder as  specified on the
                                                     face    of    this    Right
                                                     Certificate     in    every
                                                     particular, without
                                                     alteration  or  enlargement
                                                     or any change whatsoever)

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




<PAGE>



             Form of Reverse Side of Right Certificate -- continued

                          FORM OF ELECTION TO PURCHASE

                      (To be executed if holder desires to
                        exercise the Right Certificate.)

TO LASER-PACIFIC MEDIA CORPORATION

         The    undersigned    hereby    irrevocably    elects    to    exercise
___________________ Rights represented by this Right Certificate to purchase the
Preferred Shares or other  securities  issuable upon the exercise of such Rights
and requests that  certificates for such Preferred Shares or other securities be
issued in the following name:

                (please print name, address and social security,
                 tax identification or other identifying number:

                        _________________________

                        _________________________

                        _________________________

                        _________________________

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

                (please print name, address and social security,
                 tax identification or other identifying number:

                        _________________________

                        _________________________

                        _________________________

                        _________________________

Dated:______________________________

                                                     ________________________
                                                     Signature

                                                     (Signature  must conform in
                                                     all  respects  to  name  of
                                                     holder as  specified on the
                                                     face    of    this    Right
                                                     Certificate     in    every
                                                     particular,   without
                                                     alteration  or  enlargement
                                                     or any change whatsoever)
<PAGE>

             Form of Reverse Side of Right Certificate -- continued

Signature Guarantee:

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


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

The  undersigned  hereby  certifies  that the  Rights  evidenced  by this  Right
Certificate are not  Beneficially  Owned by a 20% Stockholder or an Affiliate or
Associate thereof (as defined in the Rights Agreement).

                                                     ________________________
                                                     Signature

                                                     (Signature  must conform in
                                                     all  respects  to  name  of
                                                     holder as  specified on the
                                                     face    of    this    Right
                                                     Certificate     in    every
                                                     particular,    without
                                                     alteration  or  enlargement
                                                     or any change whatsoever)

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

                                     NOTICE

         The  signatures in the foregoing  Forms of Assignment and Election 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.

         In the  event  the  certification  set  forth  above  in the  Forms  of
Assignment and Election is not  completed,  the Company will deem the Beneficial
Owner of the Rights evidenced by this Right  Certificate to be a 20% Stockholder
or an Affiliate or Associate  thereof (as defined in the Rights  Agreement) and,
in the case of an  Assignment,  will affix a legend to that  effect on any Right
Certificates issued in exchange for this Right Certificate.



<PAGE>



                                                                 EXHIBIT 4.2

                           CERTIFICATE OF DESIGNATIONS

                                       OF

                    SERIES B JUNIOR PARTICIPATING CUMULATIVE
                                 PREFERRED STOCK

                          (Par Value $.0001 Per Share)

                                       OF

                         LASER-PACIFIC MEDIA CORPORATION



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



         Laser-Pacific   Media   Corporation,   a  Delaware   corporation   (the
"Corporation"),  certifies  that  pursuant to the authority  conferred  upon the
Board of Directors of the Company (the "Board of Directors") by the  Certificate
of Incorporation  of the Company (the  "Certificate of  Incorporation"),  and in
accordance with the provisions of Section 151 of the General  Corporation Law of
the State of  Delaware,  as amended  (the  "GCL"),  the Board of  Directors,  on
January  9, 2001  adopted  the  following  resolution  creating  a series of its
Preferred Stock, par value $.0001 per share:

         RESOLVED,  that (1) pursuant to the authority  conferred upon the Board
of Directors of the  Corporation  by the  Certificate  of  Incorporation  of the
Corporation,  the Board of Directors hereby  designates  1,000,000 shares of the
preferred  stock,  par value $.0001 per share,  of the  Corporation as "Series B
Junior Participating  Cumulative Preferred Stock" (the "Preferred Shares"),  and
the powers, designations,  preferences and relative, participating, optional and
other rights of the Preferred  Shares and the  qualifications,  limitations  and
restrictions  thereof,  be,  and  they  hereby  are,  as set  forth  below  (the
"Certificate of Designations") and (2) in connection therewith,  the officers of
the  Corporation  be, and each of them  hereby  is,  authorized,  empowered  and
directed  on behalf of the  Corporation  and in its name to execute and file the
Certificate of Designations with the Delaware Secretary of State:

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

         Section 2.  Dividends and Distributions.

         (a) Subject to the rights of the holders of any shares of any series of
Preferred  Stock (or any similar stock) ranking prior and superior to the Series
B Preferred  Stock with respect to dividends,  the holders of shares of Series B
Preferred  Stock,  in preference  to the holders of shares of Common Stock,  par
value  $.0001 per share (the "Common  Stock"),  of the  Corporation,  and of any
other junior  stock,  shall be entitled to receive,  when, as and if declared by
the Board of Directors out of funds legally available for the purpose, quarterly
dividends  payable  in cash on the  first  day of  March,  June,  September  and
December in each year (each such date being  referred to herein as a  "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series B Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (i) $.25 per share  ($1.00 per annum) or (ii)  subject to the  provision  for
adjustment  hereinafter  set forth,  100 times the aggregate per share amount of
all cash  dividends,  and 100 times the aggregate  per share amount  (payable in
kind) of all non-cash  dividends or other  distributions,  other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding  shares of
Common Stock (by  reclassification  or otherwise),  declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly  Dividend  Payment Date,  since the first issuance of any
share or  fraction  of a share of  Series B  Preferred  Stock.  In the event the
Corporation  shall at any time  declare or pay any  dividend on the Common Stock
payable in shares of Common Stock,  or effect a subdivision  or  combination  or
consolidation of the outstanding shares of Common Stock (by  reclassification or
otherwise  than by  payment  of a  dividend  in shares of Common  Stock)  into a
greater or lesser number of shares of Common Stock,  then in each such event the
amount  to which  the  holder  of each  share of  Series B  Preferred  Stock was
entitled  immediately  prior to such event under  clause  (ii) 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 outstanding immediately prior to such event.

         (b) The  Corporation  shall declare a dividend or  distribution  on the
Series  B  Preferred  Stock as  provided  in  paragraph  (a) of this  Section  2
immediately  after it declares a dividend or  distribution  on the Common  Stock
(other than a dividend  payable in shares of Common Stock);  provided,  however,
that, in the event no dividend or  distribution  shall have been declared on the
Common Stock during the period between any Quarterly  Dividend  Payment Date and
the next  subsequent  Quarterly  Dividend  Payment  Date, a dividend of $.25 per
share ($1.00 per annum) on the Series B Preferred  Stock shall  nevertheless  be
payable on such subsequent Quarterly Dividend Payment Date.

         (c) Dividends  shall begin to accrue and be  cumulative on  outstanding
shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next
preceding  the date of issue of such  shares,  unless  the date of issue of such
shares is prior to the  record  date for the first  Quarterly  Dividend  Payment
Date,  in which event  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 B 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 cumulate but
shall not bear  interest.  Dividends  paid on the  shares of Series B  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  B  Preferred  Stock  entitled  to  receive  payment  of  a  dividend  or
distribution declared thereon,  which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.

         Section 3.  Voting Rights. The holders of shares of Series B Preferred
 Stock shall have the following voting rights:

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

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

         (c)  Except as set  forth  herein,  or as  otherwise  provided  by law,
holders of Series B  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.
<PAGE>

         Section 4.  Certain Restrictions.

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

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

                  (ii) authorize, declare or pay dividends on, or make any other
distributions  with respect to, any shares of stock ranking on a parity  (either
as to dividends or upon liquidation,  dissolution or winding up) with the Series
B Preferred Stock, except dividends paid ratably on the Series B 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 junior (either as to dividends or upon  liquidation,
dissolution  or winding up) to the Series B Preferred  Stock,  provided that the
Corporation may at any time redeem,  purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon  liquidation,  dissolution or winding up)
to the Series B Preferred Stock; or

                  (iv) redeem or purchase or otherwise acquire for consideration
any shares of Series B  Preferred  Stock,  or any  shares of stock  ranking on a
parity with the Series B 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,  directly or indirectly, any
shares of stock of the Corporation unless the Corporation could, under paragraph
(a) of this Section 4,  purchase or  otherwise  acquire such shares at such time
and in such manner.

         Section 5.  Reacquired  Shares.  Any shares of Series B 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
subject to the conditions and restrictions on issuance set forth herein,  in the
Charter, in any other certificate of designations creating a series of Preferred
Stock or any similar stock or as otherwise required by law.

         Section  6.   Liquidation,   Dissolution   or  Winding   Up.  Upon  any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made to: (i) the  holders  of shares of stock  ranking  junior  (either as to
dividends  or upon  liquidation,  dissolution  or  winding  up) to the  Series B
Preferred  Stock  unless,  prior  thereto,  the  holders  of  shares of Series B
Preferred  Stock shall have received the greater of (A) $100.00 per share ($1.00
per one  one-hundredth  of a share),  plus an amount equal to accrued and unpaid
dividends and  distributions  thereon,  whether or not declared,  to the date of
such payment, or (B) an aggregate amount per share, subject to the provision for
adjustment  hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share of Common Stock to holders thereof; or (ii) the holders of
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution  or  winding  up)  with  the  Series  B  Preferred   Stock,   except
distributions  made ratably on the Series B Preferred  Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation,  dissolution or winding up. In the event the
Corporation  shall at any time  declare or pay any  dividend on the Common Stock
payable in shares of Common Stock,  or effect a subdivision  or  combination  or
consolidation of the outstanding shares of Common Stock (by  reclassification or
otherwise  than by  payment  of a  dividend  in shares of Common  Stock)  into a
greater or lesser number of shares of Common Stock,  then in each such event the
aggregate amount to which each holder of a share of Series B Preferred Stock was
entitled  immediately  prior to such event  under  clause  (i) 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 outstanding immediately prior to such event.

         Section 7. Consolidation, Merger or Other. In the event 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 or otherwise changed, then in any
such  event  each share of Series B  Preferred  Stock  shall at the same time be
similarly  exchanged  or  changed  into an  amount  per  share,  subject  to the
provision for adjustment hereinafter set forth, equal to 100 times the aggregate
amount of stock,  securities,  cash and/or any other property (payable in kind),
as the case may be,  into  which or for  which  each  share of  Common  Stock is
changed or exchanged.  In the event the Corporation shall at any time declare or
pay any  dividend  on the Common  Stock  payable in shares of Common  Stock,  or
effect a subdivision or combination or consolidation  of the outstanding  shares
of Common Stock (by  reclassification or otherwise than by payment of a dividend
in shares of Common  Stock) into a greater or lesser  number of shares of Common
Stock,  then in each such event the amount set forth in the  preceding  sentence
with  respect to the  exchange or change of shares of Series B  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
outstanding immediately prior to such event.

         Section 8.  No Redemption.  The shares of Series B Preferred Stock
shall not be redeemable.

         Section 9. Rank. The Series B Preferred  Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all series
or classes of the  Corporation's  Preferred Stock whether issued before or after
the issuance of the Series B Preferred Stock.

         Section 10.  Amendment.  The Charter shall not be amended in any manner
that would materially alter or change the powers,  preferences or special rights
of the Series B  Preferred  Stock,  as set forth  herein,  so as to affect  them
adversely  without the affirmative vote of the holders of at least two-thirds of
the outstanding shares of Series B Preferred Stock,  voting together as a single
class.


<PAGE>


         IN WITNESS  WHEREOF,  Laser-Pacific  Media  Corporation has caused this
Certificate of  Designations to be executed on its behalf by its Chief Executive
Officer, James R. Parks, and attested to by its Secretary,  Robert McClain, this
12th day of January, 2001.


                                       LASER-PACIFIC MEDIA CORPORATION


                                       By: /s/ James R. Parks
                                           ______________________________
                                           Name:  James R. Parks
                                           Title: Chief Executive Officer


         THE  UNDERSIGNED,  the Secretary of  Laser-Pacific  Media  Corporation,
hereby  acknowledges,  in the  name  and on  behalf  of  said  corporation,  the
foregoing   Certificate  of  Designations  to  be  the  corporate  act  of  said
corporation  and  further   certifies  that,  to  the  best  of  his  knowledge,
information and belief,  the matters and facts set forth therein with respect to
the approval thereof or otherwise required to be verified under oath are true in
all material respects, under the penalties of perjury.



By:  /s/ Robert McClain
     ________________________________
     Name:  Robert McClain
     Title: Secretary
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SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                            _________________________

                                    FORM 8-K

                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported)         January 9, 2001
                                                         ____________________

                         Laser-Pacific Media Corporation
______________________________________________________________________________
               (Exact Name of Registrant as Specified in Charter)

              Delaware                 0-19407                    95-3824617
______________________________________________________________________________
 (State or Other Jurisdiction     (Commission File              (IRS Employer
       of Incorporation)                Number)             Identification No.)

809 N. Cahuenga Blvd., Hollywood, California                     90038
______________________________________________________________________________
(Address of Principal Executive Offices)                        (Zip Code)

Registrant's telephone number, including area code           (323) 462-6266
                                                             _________________

                                 Not applicable
______________________________________________________________________________
          (Former Name or Former Address, if Changed Since Last Report)
Item 5.  Other Events.

         On January 9,  2001,  the Board of  Directors  of  Laser-Pacific  Media
Corporation (the "Company")  authorized and declared a dividend of one preferred
stock  purchase  right (a  "Right")  for each share of common  stock,  par value
$.0001 per share, of the Company (the "Common Shares").  The dividend is payable
on  January  24,  2001 (the  "Record  Date") to the  holders of record of Common
Shares as of the close of business on such date.

         The following is a brief  description of the Rights.  It is intended to
provide a general  description  only and is  subject to the  detailed  terms and
conditions of the Rights Agreement (the "Rights  Agreement") dated as of January
12, 2001 by and between the Company  and U.S.  Stock  Transfer  Corporation,  as
Rights Agent (the "Rights Agent").

         1.       Common Share Certificates Representing Rights

         Until the  Distribution  Date (as defined in Section 2 below),  (a) the
Rights shall not be  exercisable,  (b) the Rights shall be attached to and trade
only together with the Common Shares and (c) the stock certificates representing
Common Shares also shall  represent the Rights  attached to such Common  Shares.
Common  Share  certificates  issued  after  the  Record  Date  and  prior to the
Distribution Date shall contain a notation incorporating the Rights Agreement by
reference.

         2.       Distribution Date

         The  "Distribution  Date" is the earliest of (a) the tenth business day
following the date of the first public  announcement that any person (other than
the Company or certain related entities, and with certain additional exceptions)
has become the beneficial  owner of 20% or more of the then  outstanding  Voting
Shares  (such  person  is a "20%  Stockholder"  and  the  date  of  such  public
announcement is the "20% Ownership  Date"),  (b) the tenth business day (or such
later day as shall be designated  by the Board of Directors)  following the date
of the  commencement  of, or the  announcement of an intention to make, a tender
offer or exchange  offer,  the  consummation  of which would cause any person to
become a 20%  Stockholder  or (c) the first date,  on or after the 20% Ownership
Date,  upon  which  the  Company  is  acquired  in a merger  or  other  business
combination  in which the Company is not the surviving  corporation  or in which
the outstanding  Common Shares are changed into or exchanged for stock or assets
of  another  person,  or upon  which 50% or more of the  Company's  consolidated
assets or earning  power are sold (other than in  transactions  in the  ordinary
course of business).  In calculating the percentage of outstanding Voting Shares
that are  beneficially  owned by any  person,  such  person  shall be  deemed to
beneficially  own any Voting  Shares  issuable  upon the  exercise,  exchange or
conversion of any options,  warrants or other securities  beneficially  owned by
such person;  provided,  however,  that such Voting  Shares  issuable  upon such
exercise  shall not be deemed  outstanding  for the purpose of  calculating  the
percentage of Voting Shares that are beneficially owned by any other person.

         Upon the close of business of the  Distribution  Date, the Rights shall
separate  from the Common  Shares,  Right  certificates  shall be issued and the
Rights shall become  exercisable  to purchase  Preferred  Shares as described in
Section 5 below.

         No Person who is the Beneficial Owner of 20% or more of the outstanding
Voting Shares as of January 9, 2001 shall be deemed a 20% Stockholder  unless or
until such Person  shall  acquire,  without  the prior  approval of the Board of
Directors,  Beneficial  Ownership of an  additional 1% of the Voting Shares then
outstanding  and,  following such  acquisition,  is the Beneficial Owner of more
than 20% of the Voting  Shares  then  outstanding.  In  addition,  any Person (a
"Transferee") who purchases Voting Shares from such Person shall not be deemed a
20%  Stockholder  if, after giving effect to such  acquisition,  such Transferee
holds no more  than the sum of the  Voting  Shares  so  acquired  plus 1% of the
Voting Shares then outstanding.

         3.       Issuance of Right Certificates

         As  soon as  practicable  following  the  Distribution  Date,  separate
certificates  representing  only Rights shall be mailed to the holders of record
of Common Shares as of the close of business on the Distribution  Date, and such
separate Right certificates alone shall represent such Rights from and after the
Distribution Date.
4.       Expiration of Rights

         The Rights  shall  expire on January 9, 2011 (the  "Expiration  Date"),
unless  earlier  redeemed  or  exchanged,   unless  the  Distribution  Date  has
previously  occurred and the Rights have separated  from the Common  Shares,  in
which case the Rights will remain  outstanding  for ten years from the date they
separate.

         5.       Exercise of Rights

         Unless the Rights have expired or been redeemed or exchanged,  they may
be exercised,  at the option of the holders,  pursuant to paragraphs (a), (b) or
(c) below. No Right may be exercised more than once or pursuant to more than one
of such  paragraphs.  From and after the first  event of the type  described  in
paragraphs  (b) or (c) below,  each Right  that is  beneficially  owned by a 20%
Stockholder  or that was attached to a Common Share that is subject to an option
beneficially owned by a 20% Stockholder shall be void.

                  (a) Right to  Purchase  Preferred  Shares.  From and after the
close of business on the Distribution  Date, each Right (other than a Right that
has become void) shall be exercisable to purchase one one-hundredth (1/100) of a
share of Series B Junior  Participating  Cumulative  Preferred  Stock, par value
$.0001 per share, of the Company (the "Preferred Shares"),  at an exercise price
of $30.00 (Thirty  Dollars) (the "Exercise  Price").  Prior to the  Distribution
Date, the Company may substitute for all or any portion of the Preferred  Shares
that would  otherwise be issuable upon exercise of the Rights,  cash,  assets or
other securities having the same aggregate value as such Preferred  Shares.  The
Preferred Shares are nonredeemable  and, unless otherwise provided in connection
with the creation of a subsequent  series of preferred stock, are subordinate to
any other series of the Company's preferred stock whether issued before or after
the issuance of the Preferred  Shares.  The  Preferred  Shares may not be issued
except upon exercise of Rights.  The holder of a Preferred  Share is entitled to
receive when, as and if declared, the greater of (i) cash and non-cash dividends
in an amount equal to 100 times the  dividends  declared on each Common Share or
(ii) a preferential  annual dividend of $.01 per Preferred Share ($.0001 per one
one-hundredth  (1/100) of a Preferred Share).  In the event of liquidation,  the
holders of Preferred  Shares shall be entitled to receive a liquidation  payment
in an amount equal to the greater of (1) $.01 per  Preferred  Share  ($.0001 per
one  one-hundredth  (1/100) of a Preferred  Share),  plus all accrued and unpaid
dividends and  distributions on the Preferred  Shares, or (2) an amount equal to
100  times the  aggregate  amount  to be  distributed  per  Common  Share.  Each
Preferred  Share  has one  hundred  (100)  votes  per  share  (one  vote per one
one-hundredth  (1/100) of a Preferred  Share),  voting  together with the Common
Shares. In the event of any merger,  consolidation or other transaction in which
Common Shares are exchanged,  the holder of a Preferred  Share shall be entitled
to receive 100 times the amount  received  per Common  Share.  The rights of the
Preferred  Shares  as to  dividends,  voting  and  liquidation  preferences  are
protected by antidilution  provisions.  It is anticipated  that the value of one
one-hundredth  (1/100) of a Preferred Share should  approximate the value of one
Common Share.

                  (b) Right to Purchase  Common Shares of the Company.  From and
after  the  close of  business  on the  tenth  business  day  following  the 20%
Ownership  Date,  each Right  (other than a Right that has become void) shall be
exercisable to purchase, at the Exercise Price (initially $30.00), Common Shares
with a market value equal to two times the Exercise  Price.  If the Company does
not have sufficient Common Shares available for all Rights to be exercised,  the
Company shall  substitute for all or any portion of the Common Shares that would
otherwise  be issuable  upon the exercise of the Rights,  cash,  assets or other
securities having the same aggregate value as such Common Shares.

                  (c) Right to Purchase Common Stock of a Successor Corporation.
If, on or after the 20% Ownership  Date, (i) the Company is acquired in a merger
or  other  business  combination  in  which  the  Company  is not the  surviving
corporation,  (ii) the Company is the surviving corporation in a merger or other
business  combination in which all or part of the outstanding  Common Shares are
changed into or exchanged for stock or assets of another  person or (iii) 50% or
more of the Company's  consolidated assets or earning power are sold (other than
in transactions in the ordinary course of business), then each Right (other than
a Right that has become void) shall  thereafter be exercisable  to purchase,  at
the Exercise Price (initially  $30.00),  shares of common stock of the surviving
corporation  or  purchaser,  respectively  (the  "Surviving  Person"),  with  an
aggregate market value equal to two times the Exercise Price.

         6.       Adjustments to Prevent Dilution

         The Exercise Price, the number of outstanding  Rights and the number of
Preferred  Shares or Common  Shares  issuable  upon  exercise  of the Rights are
subject to adjustment from time to time as set forth in the Rights  Agreement in
order to  prevent  dilution.  With  certain  exceptions,  no  adjustment  in the
Exercise  Price  shall be  required  until  cumulative  adjustments  require  an
adjustment of at least 1%.

         7.       Cash Paid Instead of Issuing Fractional Securities

         No  fractional  securities  shall be issued  upon  exercise  of a Right
(other than  fractions  of Preferred  Shares that are integral  multiples of one
one-hundredth of a Preferred Share and that may, at the election of the Company,
be evidenced by depositary  receipts) and in lieu thereof, an adjustment in cash
shall be made based on the market price of such  securities  on the last trading
date prior to the date of exercise.

         8.       Redemption

         At any  time  prior  to the  earlier  of (a)  the  tenth  business  day
following the 20% Ownership  Date or (b) the first event of the type giving rise
to exercise rights under Section 5(c) above,  the Board of Directors may, at its
option,  direct the Company to redeem the Rights in whole, but not in part, at a
price of $.001 per Right (the  "Redemption  Price"),  and the  Company  shall so
redeem the Rights.  Immediately  upon such action by the Board of Directors (the
date of such action being the "Redemption  Date"), the only right of the holders
of Rights thereafter shall be to receive the Redemption Price.

         9.       Exchange

         At any time during the period of 180 days after the 20% Ownership Date,
the Board of Directors of the Company may, at its option,  authorize  and direct
the exchange of all, but not less than all, of the then  outstanding  Rights for
Common Shares,  one  one-hundredths of Preferred Shares,  debt securities of the
Company,  other property or any  combination of the foregoing,  which, as of the
date of the Board of Directors'  action, has a current market price equal to the
difference between the Exercise Price and the current market price of the shares
that would  otherwise  be  issuable  upon  exercise of a Right on such date (the
"Exchange  Ratio"),  and the Company  shall so exchange the Rights.  Immediately
upon such action by the Board of Directors,  the right to exercise  Rights shall
terminate  and the only right of the  holders of Rights  thereafter  shall be to
receive the  securities  so  designated  by the Board of Directors in accordance
with the Exchange Ratio.

         10.      No Stockholder Rights Prior to Exercise

         Until a Right is exercised,  the holder thereof,  as such, will have no
rights as a stockholder  of the Company  (other than rights  resulting from such
holder's ownership of Common Shares),  including,  without limitation, the right
to vote or to receive dividends.

         11.      Amendment of Rights Agreement

         The Board of Directors may, from time to time,  without the approval of
any holder of Rights,  direct the Company and the Rights Agent to  supplement or
amend any provision of the Rights  Agreement in any manner,  whether or not such
supplement or amendment is adverse to any holder of Rights,  and the Company and
the Rights Agent shall so supplement or amend such provision; provided, however,
that from and after the earliest of (a) the tenth business day following the 20%
Ownership  Date, (b) the first event of the type giving rise to exercise  rights
under Section 5(c) above or (c) the Redemption Date, the Rights Agreement cannot
be  supplemented  or amended in any manner that would  materially  and adversely
affect any  holder of  outstanding  Rights  other  than a 20%  Stockholder  or a
Surviving Person.
Item 7.  Exhibits.

         (a)      None.

         (b)      None.

         (c)      Exhibits:

         The following exhibits are filed with this report on Form 8-K:

Exhibit No.                        Description

4.1                 Rights  Agreement,  dated as of January  12,  2001,  between
                    Laser-Pacific  Media  Corporation  and U.S.  Stock  Transfer
                    Corporation,  as Rights Agent,  which  includes as Exhibit A
                    the Form of Right  Certificate,  the Form of Assignment  and
                    the Form of Election to Purchase.

4.2                 Certificate  of  Designations  of  Series B Junior
                    Participating  Cumulative Preferred Stock.
SIGNATURES

                  Pursuant to the requirements of the Securities Exchange Act of
1934,  the  registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.

                                       LASER-PACIFIC MEDIA CORPORATION

Date:  January 19, 2001                By: /s/ James R. Parks
                                               _______________________
                                       Name:  James R. Parks
                                       Its: Chief Executive Officer
EXHIBIT INDEX

Exhibit No.                        Description

4.1                 Rights  Agreement,  dated as of January  12,  2001,  between
                    Laser-Pacific  Media  Corporation  and U.S.  Stock  Transfer
                    Corporation,  as Rights Agent,  which  includes as Exhibit A
                    the Form of Right  Certificate,  the Form of Assignment  and
                    the Form of Election to Purchase.

4.2                 Certificate  of  Designations  of  Series B Junior
                    Participating  Cumulative Preferred Stock.
EXHIBIT 4.1

                                RIGHTS AGREEMENT

                          dated as of January 12, 2001

                                 by and between

                         LASER-PACIFIC MEDIA CORPORATION

                                       and

                        U. S. STOCK TRANSFER CORPORATION

                                 as Rights Agent
TABLE OF CONTENTS
Page

Section 1.  Certain Definitions..................................................................................1

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

Section 3.  Issuance of Rights Certificates......................................................................6

Section 4.  Form of Right Certificates...........................................................................7

Section 5.  Countersignature and Registration....................................................................8

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

Section 7.  Exercise of Rights...................................................................................9

Section 8.  Cancellation and Destruction of Right Certificates..................................................10

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

Section 10.  Securities Record Date.............................................................................11

Section 11.  Adjustment of Exercise Price, Number of Shares Issuable Upon Exercise of
               Rights or Number of Rights.......................................................................12

Section 12.  Certificate of Adjusted Exercise Price or Number of Shares Issuable Upon
               Exercise of Rights...............................................................................17

Section 13.  Consolidation, Merger or Sale or Transfer of Assets or Earning Power...............................17

Section 14.  Fractional Rights and Fractional Shares............................................................19

Section 15.  Rights of Action...................................................................................20

Section 16.  Agreement of Right Holders.........................................................................20

Section 17.  Right Holder and Right Certificate Holder Not Deemed a Stockholder.................................21

Section 18.  Concerning the Rights Agent........................................................................21

Section 19.  Merger or Consolidation or Change of Name of Rights Agent..........................................22

Section 20.  Duties of Rights Agent.............................................................................22

Section 21.  Change of Rights Agent.............................................................................24

Section 22.  Issuance of New Right Certificates.................................................................25

Section 23.  Redemption of Rights...............................................................................25

Section 24.  Exchange of Rights.................................................................................26

Section 25.  Notice of Certain Events...........................................................................27

Section 26.  Notices............................................................................................27

Section 27.  Supplements and Amendments.........................................................................28

Section 28.  Certain Covenants..................................................................................29

Section 29.  Successors.........................................................................................29

Section 30.  Benefits of this Agreement.........................................................................29

Section 31.  Severability.......................................................................................29

Section 32.  Governing Law......................................................................................29

Section 33.  Counterparts.......................................................................................29

Section 34.  Descriptive Headings...............................................................................30

Exhibit A -- Form of Right Certificate
RIGHTS AGREEMENT

         This Rights Agreement (the  "Agreement") is made and entered into as of
the 12th day of January, 2001 by and between LASER-PACIFIC MEDIA CORPORATION,  a
Delaware corporation (the "Company"),  and U. S. STOCK TRANSFER  CORPORATION,  a
California corporation, as rights agent (the "Rights Agent").

         WHEREAS,  the Board of  Directors  of the  Company has  authorized  and
declared a dividend of one preferred  share  purchase right (a "Right") for each
Common Share (as hereinafter  defined) of the Company outstanding on January 24,
2001 (the  "Record  Date"),  each Right  representing  the right to purchase one
one-hundredth of a Preferred Share (as hereinafter defined),  upon the terms and
subject to the  conditions  set forth  herein,  and has further  authorized  and
directed  the issuance of one Right with respect to each Common Share that shall
become outstanding  between the Record Date and the earliest of the Distribution
Date, the Redemption  Date or the Expiration Date (as such terms are hereinafter
defined).

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

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

         "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2  promulgated under the Exchange Act, as in effect on
the date hereof.

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

                  (i) that such  Person or any of such  Person's  Affiliates  or
         Associates  beneficially owns, directly or indirectly,  for purposes of
         Section 13(d) of the Exchange Act and Rule 13d-3  promulgated under the
         Exchange Act, in each case as in effect on the date hereof;

                  (ii) that such Person or any of such  Person's  Affiliates  or
         Associates has the right to acquire  (whether such right is exercisable
         immediately,  or only  after  the  passage  of  time,  compliance  with
         regulatory  requirements,  the fulfillment of a condition or otherwise)
         pursuant to any agreement,  arrangement or  understanding,  or upon the
         exercise  of  conversion  rights,  exchange  rights  (other  than these
         Rights), 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 offer or
         exchange  offer  made by or on  behalf  of such  Person  or any of such
         Person's  Affiliates or Associates  until such tendered  securities are
         accepted for purchase or exchange;

                  (iii)  that such  Person or any such  Person's  Affiliates  or
         Associates  has the right to vote,  whether  alone or in  concert  with
         others,  pursuant  to  any  agreement,  arrangement  or  understanding,
         provided,  however,  that a Person  shall not be deemed the  Beneficial
         Owner  of, or to  Beneficially  Own,  any  security  if the  agreement,
         arrangement  or  understanding  to vote such security (A) arises solely
         from a revocable  proxy  given to such  Person or any of such  Person's
         Affiliates  or  Associates  in response to a public proxy  solicitation
         made  pursuant  to and in  accordance  with the  applicable  rules  and
         regulations  promulgated  under the  Exchange  Act, and (B) is not also
         then  reportable  on  Schedule  13D  under  the  Exchange  Act  (or any
         comparable or successor report);

                  (iv) that 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 for the purpose of acquiring, holding, voting (other than
         voting  pursuant to a revocable  proxy as  described  in the proviso to
         clause (iii) of this definition of "Beneficial  Owner") or disposing of
         any securities of the Company; and

                  (v)  that,  on any  day on or  after  the  Distribution  Date,
         evidence   Rights  that  prior  to  such  date  were   represented   by
         certificates  for Common Shares that such Person  Beneficially  Owns on
         such day.

Notwithstanding  anything to the contrary in this Section l(b), a Person engaged
in  business  as an  underwriter  of  securities  shall  not be deemed to be the
Beneficial  Owner of, or to Beneficially  Own, any securities  acquired  through
such  Person's  participation  in good faith in a firm  commitment  underwriting
until the expiration of 40 days after the date of such acquisition.

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

         "Certificate   of   Designations"   shall  mean  the   certificate   of
designations specifying the powers, designations,  preferences and rights of the
Preferred Shares in accordance with the Delaware General Corporation Law.

         "Close of Business" on any given date shall mean 5:00 p.m.,  California
time, on such date; provided,  however, that if such date is not a Business Day,
it shall mean 5:00 p.m., California time, on the next succeeding Business Day.

         "Closing  Price" of a stock or other  security  on any day shall be the
last sale  price,  regular  way,  per share of such  stock or unit of such other
security  on such day 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 such stock or other  security is 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 such stock or other security is listed or admitted
to trading  or, if such stock or other  security  is not listed or  admitted  to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market,  as  reported on the Nasdaq  National  Market  ("NASDAQ")  or such other
system  then in use or, if on any such date such stock or other  security is not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker that makes a market in such stock or
other security and that is selected by the Board of Directors of the Company.

         "Common  Share"  shall  mean one share of the Common  Stock,  par value
$.0001 per share,  of the Company,  unless used with reference to a Person other
than the  Company,  in which case it shall mean one share of each class of stock
of such Person  having the right to vote  generally in the election of directors
or, if such Person is a Subsidiary  of another  Person,  one Common Share of the
Person that ultimately controls such Person.

         "Common  Share  Equivalent"  shall have the  meaning  ascribed to it in
Section 11(a)(iii) hereof.

         "Current  Market  Price"  per  share  of a stock  or unit of any  other
security on any date shall mean the average of the daily Closing  Prices of such
stock  or  other  security  for the 30  consecutive  Trading  Days  through  and
including the Trading Day immediately preceding the date in question;  provided,
however,  that if any event shall have  caused the Closing  Price on any Trading
Day during such 30-day period not to be fully  comparable with the Closing Price
on the date in question  (or, if no Closing  Price is  available  on the date in
question, on the Trading Day immediately  preceding the date in question),  then
each such non-comparable  Closing Price so used shall be appropriately  adjusted
by the Board of Directors in order to make the Closing Price on each Trading Day
during the period used for the  determination  of the Current Market Price fully
comparable  with the Closing Price on such date in question (or, if  applicable,
the immediately  preceding Trading Day). "Current Market Price" per share of any
stock or unit of such other  security  that is not publicly held or so listed or
traded,  and "Current Market Price" of any other  property,  shall mean the fair
value per share of such stock or unit of such other security,  or the fair value
of such other property,  respectively,  as determined in good faith by the Board
of Directors of the Company based upon such  appraisals or valuation  reports of
such independent experts as the Board of Directors shall in good faith determine
appropriate,  which determination shall be described in a statement filed by the
Company with the Rights Agent.

         "Distribution  Date" shall have the meaning ascribed to it in Section 3
hereof.

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

         "Exempt Person" shall mean the Company, any wholly-owned  Subsidiary of
the Company,  any employee benefit plan of the Company or of a Subsidiary of the
Company and any Person holding Voting Shares for or pursuant to the terms of any
such employee benefit plan.

         "Exercise  Price" shall have the meaning ascribed to it in Section 7(c)
hereof.

         "Expiration Date" shall mean January 9, 2011.
"Person" shall mean any  individual,  firm,  partnership,  corporation,
association,  group (as such term is used in Rule  13d-5  promulgated  under the
Exchange Act as in effect on the date hereof) or other entity, and shall include
any successor (by merger or otherwise) of such entity.

         "Preferred  Share"  shall  mean  one  share  of  the  Series  B  Junior
Participating  Cumulative  Preferred  Stock,  par value $.0001 per share, of the
Company,  which  shall  have  the  rights  and  preferences  set  forth  in  the
Certificate of Designations for the Preferred Shares.

         "Preferred Share  Equivalent"  shall have the meaning ascribed to it in
Section 11(b) hereof.

         "Record  Date"  shall have the meaning  ascribed to it in the  recitals
hereto.

         "Redemption  Date"  shall  mean the date of the  action of the Board of
Directors of the Company  authorizing and directing the redemption of the Rights
pursuant  to Section  23(a)  hereof or the  exchange  of the Rights  pursuant to
Section 24(a) hereof.

         "Redemption  Price"  shall have the  meaning  ascribed to it in Section
23(a) hereof.

         "Right  Certificate",  as that term is used with  respect to any period
prior to the Distribution Date, shall have the meaning ascribed to it in Section
3(b)  hereof,  and, as that term is used with  respect to any period on or after
the  Distribution  Date,  shall have the meaning  ascribed to it in Section 3(c)
hereof.

         "Rights  Expiration  Date" shall mean the  Expiration  Date,  except if
there has been a Distribution  Date, then it shall mean the tenth anniversary of
the Distribution Date.

         "Section  11(a)(ii)  Event"  shall have the  meaning  ascribed to it in
Section 11(a)(ii) hereof.

         "Section 13(a) Event" shall have the meaning  ascribed to it in Section
13(a) hereof.

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

         "Subsidiary"  of any Person shall mean any  corporation or other Person
of which equity  securities or equity  interests  representing a majority of the
voting  power  are  owned,  directly  or  indirectly,  or which  is  effectively
controlled, by such Person.

         "Surviving  Person"  shall have the  meaning  ascribed to it in Section
13(a) hereof.

         "Trading Day" shall mean, as to any stock or other  security,  a day on
which the principal  national  securities  exchange on which such stock or other
security  is  listed or  admitted  to  trading  is open for the  transaction  of
business  or, if such  stock or other  security  is not  listed or  admitted  to
trading on any national securities exchange, a Business Day.

         "20% Ownership  Date" shall mean the first date of public  announcement
(which, for purposes of this definition,  shall include,  without limitation,  a
report filed  pursuant to Section 13(d) of the Exchange Act) by the Company or a
20%  Stockholder  containing  the facts by virtue of which a Person has become a
20% Stockholder.

         "20%  Stockholder"  shall mean any Person that Beneficially Owns 20% or
more of the Voting Shares of the Company then  outstanding;  provided,  however,
that the term "20% Stockholder"  shall not include:  (i) an Exempt Person;  (ii)
any Person that would not otherwise be a 20%  Stockholder but for a reduction in
the  number of  outstanding  Voting  Shares  resulting  from a stock  repurchase
program or other  similar plan of the Company or from a self tender offer of the
Company,  which  plan or tender  offer  commenced  on or after the date  hereof;
provided,  however,  that the term "20%  Stockholder"  shall include such Person
from and after the first date upon which (A) such Person,  since the date of the
commencement  of such plan or  tender  offer,  shall  have  acquired  Beneficial
Ownership of, in the  aggregate,  a number of Voting Shares of the Company equal
to 1% or more of the Voting Shares of the Company then  outstanding and (B) such
Person,  together  with all  Affiliates  and  Associates  of such Person,  shall
Beneficially  Own  20% or  more  of  the  Voting  Shares  of  the  Company  then
outstanding;  (iii) any Person that would not otherwise be a 20% Stockholder but
for its Beneficial  Ownership of Rights;  (iv) any Person that is the Beneficial
Owner of 20% or more of the  outstanding  Voting  Shares  of the  Company  as of
January  9,  2001;  provided,  however,  that the term "20%  Stockholder"  shall
include  such Person  from and after the first date upon which (A) such  Person,
since January 9, 2001,  shall have  acquired,  without the prior approval of the
Board of Directors of the Company,  Beneficial Ownership of, in the aggregate, a
number of Voting  Shares of the Company equal to 1% or more of the Voting Shares
of the  Company  then  outstanding  and  (B)  such  Person,  together  with  all
Affiliates and Associates of such Person,  shall Beneficially Own 20% or more of
the  Voting  Shares  of the  Company  then  outstanding;  or (v) any  Person  (a
"Transferee") that acquires Voting Shares from a Person described in clause (iv)
above that has not become a 20%  Stockholder  if,  after  giving  effect to such
acquisition,  such  Transferee  Beneficially  Owns no more  than  the sum of the
Voting  Shares  so  acquired  plus 1% of the  Voting  Shares  then  outstanding;
provided, however, that the term "20% Stockholder" shall include such Transferee
from and after the first date upon which (A) such Transferee,  since the date of
such acquisition,  shall have acquired,  without the prior approval of the Board
of Directors of the Company, Beneficial Ownership of, in the aggregate, a number
of Voting  Shares of the Company equal to 1% or more of the Voting Shares of the
Company then outstanding and (B) such  Transferee,  together with all Affiliates
and Associates of such  Transferee,  shall  Beneficially  Own 20% or more of the
Voting Shares of the Company then outstanding.  In calculating the percentage of
the  outstanding  Voting  Shares  that are  Beneficially  Owned by a Person  for
purposes of this definition,  Voting Shares that are Beneficially  Owned by such
Person shall be deemed outstanding,  and Voting Shares that are not Beneficially
Owned by such  Person and that are  subject to  issuance  upon the  exercise  or
conversion of outstanding conversion rights,  exchange rights, rights,  warrants
or options shall not be deemed outstanding.  Any determination made by the Board
of  Directors  of  the  Company  as to  whether  any  Person  is or is not a 20%
Stockholder shall be conclusive and binding upon all holders of Rights.

         "Voting  Share"  shall mean (i) a Common  Share of the Company and (ii)
any other share of capital  stock of the Company  entitled to vote  generally in
the election of directors or entitled to vote together with the Common Shares in
respect of any merger,  consolidation,  sale of all or substantially  all of the
Company's  assets,  liquidation,  dissolution or winding up.  References in this
Agreement to a percentage or portion of the  outstanding  Voting Shares shall be
deemed a reference to the  percentage or portion of the total votes  entitled to
be cast by the holders of the outstanding Voting Shares.

         Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights  Agent to act as agent  for the  Company  and the  holders  of  Rights in
accordance  with the terms and  conditions  hereof,  and the Rights Agent hereby
accepts  such  appointment.  The  Company  may from  time to time  appoint  such
co-Rights Agents as it may deem necessary or desirable.

         Section 3.  Issuance of Rights Certificates.

         (a)  "Distribution  Date" shall mean the date,  after the date  hereof,
that is the  earliest of (i) the tenth  Business Day (or such later day as shall
be  designated  by the Board of Directors of the Company)  following the date of
the  commencement  of, or the first  public  announcement  of the  intent of any
Person,  other than an Exempt  Person,  to  commence a tender  offer or exchange
offer,  the  consummation  of which  would  cause  any  Person  to  become a 20%
Stockholder,  (ii) the date of the first  Section  11(a)(ii)  Event or (iii) the
date of the first Section 13(a) Event.

         (b) Until the Distribution Date, (i) the Rights shall be represented by
certificates  for Common  Shares (all of which  certificates  for Common  Shares
shall  be  deemed  to  be  Right   Certificates)   and  not  by  separate  Right
Certificates, (ii) the record holder of the Common Shares represented by each of
such certificates shall be the record holder of the Rights  represented  thereby
and (iii) the Rights shall be transferable  only in connection with the transfer
of Common Shares.  Until the earliest of the  Distribution  Date, the Redemption
Date or the Expiration Date, the surrender for transfer of such certificates for
Common  Shares shall also  constitute  the  surrender for transfer of the Rights
represented thereby.

         (c) As soon as  practicable  after  the  Distribution  Date,  and after
notification by the Company,  the Rights Agent shall send, at the expense of the
Company,  by first-class,  postage-prepaid  mail to each record holder of Common
Shares, as of the Close of Business on the Distribution  Date, at the address of
such  holder  shown  on  the  records  of  the  Company,   a  Right  Certificate
substantially  in the form of Exhibit A hereto  representing  one Right for each
Common Share so held. From and after the Distribution  Date, the Rights shall be
represented solely by such Right Certificates and may only be transferred by the
transfer of such Right Certificates, and the holders of such Right Certificates,
as listed in the records of the Company or any transfer  agent or registrar  for
such Rights, shall be the record holders of such Rights.

         (d)  Certificates for Common Shares issued at any time after the Record
Date and prior to the earliest of the Distribution  Date, the Redemption 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 a Rights  Agreement  dated as of January
         12, 2001 by and between Laser-Pacific Media Corporation and U. S. Stock
         Transfer  Corporation,  as Rights  Agent (the "Rights  Agreement"),  as
         amended  to  date,  the  terms  and  conditions  of  which  are  hereby
         incorporated  herein by reference and a copy of which is on file at the
         principal  executive  offices of Laser-Pacific  Media Corporation Under
         certain  circumstances  specified in the Rights Agreement,  such Rights
         will be  represented  by  separate  certificates  and will no longer be
         represented by this certificate.  Under certain circumstances specified
         in the Rights Agreement,  Rights  beneficially owned by certain persons
         may become null and void.  Laser-Pacific Media Corporation will mail to
         the record holder of this  certificate  a copy of the Rights  Agreement
         without  charge  promptly   following  receipt  of  a  written  request
         therefor.  As described in the Rights  Agreement,  Rights  Beneficially
         Owned by any Person who becomes a 20%  Stockholder  or any Affiliate or
         Associate of a 20% Stockholder (as such  capitalized  terms are defined
         in the Rights Agreement) shall become null and void.

         (e)  Certificates  for Common Shares issued at any time on or after the
Distribution  Date and prior to the earlier of the Redemption Date or the Rights
Expiration  Date shall have  impressed on,  printed on,  written on or otherwise
affixed to them the following legend:

         This  certificate  does not represent any Right issued  pursuant to the
         terms of a Rights Agreement dated as of January 12, 2001 by and between
         Laser-Pacific  Media Corporation and U. S. Stock Transfer  Corporation,
         as Rights Agent.

         (f) In the event  that at any time on or after the  earlier of the date
of the first  Section  11(a)(ii)  Event or the date of the first  Section  13(a)
Event and prior to the earlier of the Redemption  Date or the Rights  Expiration
Date,  the Company  shall issue any Common  Shares  pursuant to the  exercise of
conversion  rights,  exchange  rights,  rights (other than Rights),  warrants or
options that shall have been issued or granted  prior to the earlier of the date
of the first  Section  11(a)(ii)  Event or the date of the first  Section  13(a)
Event,  then,  unless the Board of Directors of the Company  shall have provided
otherwise  at the  time of the  issuance  or grant  of such  conversion  rights,
exchange  rights,  rights (other than Rights),  warrants or options,  the Rights
Agent  shall,  as soon as  practicable  after  the date of such  event,  send by
first-class, postage-prepaid mail to the record holder of such Common Shares, at
the  address  of such  holder as shown on the  records of the  Company,  a Right
Certificate substantially in the form of Exhibit A hereto representing one Right
for each Common Share so issued.

         (g)  Notwithstanding  the  foregoing  provisions  of this Section , the
Rights Agent shall not send any Right  Certificate to any 20% Stockholder or any
of its  Affiliates  or  Associates  or to any Person if the Rights  held by such
Person are  Beneficially  Owned by a 20% Stockholder or any of its Affiliates or
Associates.  Any determination  made by the Board of Directors of the Company as
to whether any Common Shares are or were Beneficially Owned at any time by a 20%
Stockholder  or  an  Affiliate  or  Associate  of a  20%  Stockholder  shall  be
conclusive and binding upon all holders of Rights.

         Section 4. Form of Right  Certificates.  The Right Certificates and the
form of assignment, including certificate, and the form of election to purchase,
including  certificate,  printed on the reverse thereof, when, as and if issued,
shall be substantially the same as Exhibit A hereto,  and may have such marks of
identification  or  designation  and such  legends,  summaries  or  endorsements
printed thereon as the Company may deem  appropriate and as are not inconsistent
with the provisions of this Agreement,  or as may be required to comply with any
applicable law or with any rule or regulation made pursuant  thereto or with any
rule or regulation of any stock exchange upon which the Rights or the securities
of the  Company  issuable  upon  exercise of the Rights may from time to time be
listed,  or  to  conform  to  usage.   Subject  to  Section  22  hereof,   Right
Certificates,  whenever issued, that are issued in respect of Common Shares that
were issued and  outstanding  as of the Close of  Business  on the  Distribution
Date, shall be dated as of the Distribution Date.

         Section 5.  Countersignature and Registration.

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

         (b) Following  the  Distribution  Date,  the Rights Agent shall keep or
cause to be kept at its principal offices books for registration and transfer of
the Right  Certificates  issued  hereunder.  Such books shall show the names and
addresses of the respective holders of Right Certificates,  the number of Rights
represented  on its face by each  Right  Certificate  and the date of each Right
Certificate.

         Section 6.  Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates.

         (a) Subject to the provisions of Sections 6(c), 7(d) and 14 hereof,  at
any time after the Close of Business on the  Distribution  Date,  and so long as
the  Rights  represented  thereby  remain  outstanding,  any one or  more  Right
Certificates may be transferred, split-up, combined or exchanged for one or more
Right Certificates representing the same aggregate number of Rights as the Right
Certificates surrendered.  Any registered holder desiring to transfer, split up,
combine or exchange  one or more Right  Certificates  shall make such request in
writing   delivered  to  the  Rights  Agent,   and  shall  surrender  the  Right
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights  Agent with the form of  assignment,  including  certificate,  on the
reverse side thereof  completed and duly executed,  with  signature  guaranteed.
Thereupon, the Rights Agent shall countersign and deliver to the person entitled
thereto one or more Right Certificates, 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) Upon  receipt  by the  Company  and the  Rights  Agent of  evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Right Certificate, and, in case of loss, theft or destruction, of indemnity or
security  reasonably  satisfactory  to  them  and,  at  the  Company's  request,
reimbursement  to the Company and the Rights  Agent of all  reasonable  expenses
incidental  thereto,  and upon surrender to the Rights Agent and cancellation of
such Right Certificate if mutilated,  the Company shall issue and deliver to the
Rights Agent for delivery to the record  holder of such Right  Certificate a new
Right  Certificate  of like tenor in lieu of such  lost,  stolen,  destroyed  or
mutilated Right Certificate.

         (c)  Notwithstanding  anything to the  contrary in this  Section 6, the
Rights Agent shall not countersign and deliver a Right Certificate to any Person
if such  Right  Certificate  represents,  or would  represent  when held by such
Person, Rights that had become or would become null and void pursuant to Section
7(d) hereof.

         Section 7.  Exercise of Rights.

         (a)      Until the Distribution Date, no Right may be exercised.

         (b) Subject to Section 7(d) and (g) hereof and the other  provisions of
this Agreement, at any time after the Close of Business on the Distribution Date
and prior to the Close of Business on the earlier of the Redemption  Date or the
Rights  Expiration  Date, the  registered  holder of any Right  Certificate  may
exercise the Rights  represented  thereby in whole or in part upon  surrender of
such  Right  Certificate,  with  the form of  election  to  purchase,  including
certificate,  on the reverse  side thereof  completed  and duly  executed,  with
signature  guaranteed,  to the Rights Agent at the office of the Rights Agent at
1745 Gardena Avenue,  Glendale,  California 91204,  together with payment of the
Exercise  Price for each Right  exercised.  Upon the exercise of an  exercisable
Right and payment of the Exercise  Price in  accordance  with the  provisions of
this Agreement,  the holder of such Right shall be entitled to receive,  subject
to adjustment as provided  herein,  one  one-hundredth of a Preferred Share (or,
following the occurrence of a Section  11(a)(ii) Event or a Section 13(a) Event,
Common Shares and/or other securities).

         (c) The "Exercise Price" for the exercise of each Right shall initially
be $30.00 and shall be payable in lawful  money of the United  States of America
in  accordance  with Section 7(f) hereof.  The Exercise  Price and the number of
Preferred Shares (or, following the occurrence of a Section 11(a)(ii) Event or a
Section 13(a) Event,  Common Shares and/or other securities) to be acquired upon
exercise of a Right shall be subject to adjustment from time to time as provided
in Sections 7(e), 11 and 13 hereof and the other provisions of this Agreement.

         (d)  Notwithstanding  anything in this Agreement to the contrary,  from
and after the earlier of the date of the first  Section  11(a)(ii)  Event or the
date of the first Section 13(a) Event, any Rights that are or were  Beneficially
Owned by a 20% Stockholder or any Affiliate or Associate of a 20% Stockholder at
any time on or after the  Distribution  Date shall be null and void, and for all
purposes of this  Agreement  such Rights  shall  thereafter  be deemed not to be
outstanding,  and any holder of such Rights (whether or not such holder is a 20%
Stockholder or an Affiliate or Associate of a 20% Stockholder)  shall thereafter
have no right to exercise such Rights.

         (e) Prior to the  Distribution  Date,  if the Board of Directors of the
Company shall have determined that such action adequately protects the interests
of the holders of Rights, the Company may, in its discretion, substitute for all
or any portion of the Preferred  Shares that would  otherwise be issuable (after
the Close of Business on the Distribution  Date) upon the exercise of each Right
and payment of the Exercise Price (i) cash, (ii) other equity  securities of the
Company,  (iii) debt  securities of the Company,  (iv) other property or (v) any
combination  of the foregoing,  in each case having an aggregate  Current Market
Price equal to the aggregate  Current  Market Price of the Preferred  Shares for
which  substitution is made.  Subject to Section 7(d) hereof,  in the event that
the Company takes any action  pursuant to this Section  7(e),  such action shall
apply uniformly to all outstanding Rights.

         (f)  Upon  receipt  of a  Right  Certificate  representing  exercisable
Rights, with the form of election to purchase, including certificate,  completed
and duly  executed,  with  signature  guaranteed,  accompanied by payment of the
Exercise  Price  for  each  Right to be  exercised  and an  amount  equal to any
applicable  transfer  tax  required  to be paid  by the  holder  of  such  Right
Certificate in accordance  with Section 9 hereof by certified check or cashier's
check  payable to the order of the  Company,  the Rights  Agent shall  thereupon
promptly (i)  requisition  from the transfer agent of the Preferred  Shares (or,
following the occurrence of a Section  11(a)(ii) Event or a Section 13(a) Event,
Common Shares and/or securities) certificates for the number of Preferred Shares
(or such other securities) to be purchased,  and the Company hereby  irrevocably
authorizes  such transfer  agent to comply with all such  requests,  and/or,  as
provided in Section 14 hereof,  requisition  from the depositary agent described
therein  depositary  receipts  representing  such number of  one-hundredths of a
Preferred Share (or such other securities) as are to be purchased (in which case
certificates for the Preferred Shares (or such other securities)  represented by
such  receipts  shall be deposited by the  transfer  agent with such  depositary
agent) and the Company hereby directs such depositary  agent to comply with such
request, (ii) when appropriate,  requisition from the Company the amount of cash
to be paid in lieu of issuance  of  fractional  Preferred  Shares (or such other
securities)  in accordance  with Section 14 hereof,  (iii) after receipt of such
certificates,  depositary receipts or cash, cause the same to be delivered to or
upon the order of the registered holder of such Right Certificate, registered in
such  name  or  names  as may  be  designated  by  such  holder  and  (iv)  when
appropriate,  after receipt  thereof,  deliver such cash to or upon the order of
the registered holder of such Right Certificate.

         (g)  Notwithstanding  the  foregoing  provisions of this Section 7, the
exercisability  of the  Rights  shall  be  suspended  for such  period  as shall
reasonably  be  necessary  for the  Company to register  and  qualify  under the
Securities  Act  and  any  applicable  securities  law of any  jurisdiction  the
Preferred  Shares and/or Common Shares or other securities to be issued pursuant
to the exercise of the Rights; provided, however, that nothing contained in this
Section 7 shall  relieve  the  Company of its  obligations  under  Section  9(c)
hereof.

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

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

         Section 9.  Reservation and Availability of Capital Stock.

         (a) Subject to Sections  7(e) and 9(f) hereof,  the Company shall cause
to be reserved and kept  available  out of its  authorized  and unissued  equity
securities (or out of its authorized  and issued equity  securities  held in its
treasury),  the number of such equity  securities that will from time to time be
sufficient to permit the exercise in full of all outstanding Rights.

         (b) In the event that any  securities  issuable  upon  exercise  of the
Rights are listed on any national securities exchange, the Company shall use its
best  efforts,  from and after such time as the Rights  become  exercisable,  to
cause all such  securities  issued or reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.

         (c) If necessary to permit the issuance of securities  upon exercise of
the  Rights,  the  Company  shall  use its  best  efforts,  from and  after  the
Distribution  Date, to register and qualify such securities under the Securities
Act, the Exchange Act and any other applicable  securities laws and to keep such
registration  effective  until the earlier of the Redemption  Date or the Rights
Expiration Date.

         (d) The  Company  shall  take all such  action as may be  necessary  to
ensure that all securities  delivered upon exercise of the Rights shall,  at the
time of delivery of the certificates for such securities  (subject to payment of
the Exercise  Price),  be duly and validly  authorized and issued and fully paid
and nonassessable securities.

         (e) The Company  shall pay when due and payable any and all federal and
state  transfer taxes and charges that may be payable in respect of the issuance
or delivery of the Right  Certificates or of any securities upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax that
may be payable in respect of any transfer or delivery of a Right  Certificate to
a Person other than, or the issuance or delivery of a certificate for securities
in respect of a name  other  than that of,  the  registered  holder of the Right
Certificate representing Rights surrendered for exercise, or to issue or deliver
any certificate for securities upon the exercise of any Right 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.

         (f) With respect to the Common Shares and/or other securities  issuable
pursuant to Section 11(a)(ii) and (iii) hereof, the foregoing covenants shall be
applicable only upon and following the occurrence of a Section 11(a)(ii) Event.

         Section  10.  Securities  Record  Date.  Each  Person in whose name any
certificate  for securities of the Company is issued upon the exercise of Rights
shall for all  purposes  be deemed to have  become  the  holder of record of the
securities represented thereby on, and such certificate shall be dated, the date
upon which the Right  Certificate  representing such Rights was duly surrendered
and payment of the Exercise Price (and any applicable  transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the securities transfer books of the Company are closed, such person shall
be deemed to have  become  the  record  holder of such  securities  on, and such
certificate  shall be  dated,  the next  succeeding  Business  Day on which  the
securities transfer books of the Company are open.

         Section 11.  Adjustment of Exercise  Price,  Number of Shares  Issuable
Upon Exercise of Rights or Number of Rights.  The Exercise Price, the number and
kind of securities that may be purchased upon exercise of a Right and the number
of Rights outstanding are subject to adjustment from time to time as provided in
this Section 11.

                  (a)(i) In the event that the  Company  shall at any time after
         the  Close of  Business  on the  Record  Date and prior to the Close of
         Business on the earlier of the Redemption Date or the Rights Expiration
         Date (A) declare or pay any dividend on the Preferred Shares payable in
         Preferred  Shares or  Voting  Shares,  (B)  subdivide  the  outstanding
         Preferred Shares,  (C) combine the outstanding  Preferred Shares into a
         smaller  number of Preferred  Shares or (D) issue  Preferred  Shares or
         other  securities  of the  Company  (other  than  those  for  which  an
         adjustment   is   required   under   Section   11(b)   hereof)   in   a
         reclassification   of  the  Preferred   Shares   (including   any  such
         reclassification  in connection with a consolidation or merger in which
         the  Company  is  the  continuing  or  surviving  corporation)  or in a
         reorganization  of the  Company,  then,  and upon each such event,  the
         number and kind of Preferred Shares or other  securities  issuable upon
         the   exercise  of  a  Right  on  the  date  of  such  event  shall  be
         proportionately  adjusted so that the holder of any Right  exercised on
         or after such date shall be  entitled  to  receive,  upon the  exercise
         thereof and payment of the Exercise  Price,  the  aggregate  number and
         kind of Preferred Shares or other securities or other property,  as the
         case may be, that, if such Right had been exercised  immediately  prior
         to such  date and at a time when such  Right  was  exercisable  and the
         transfer  books of the Company were open,  such holder would have owned
         upon such exercise and would have been entitled to receive by virtue of
         such  dividend,  subdivision,  combination or  reclassification.  If an
         event occurs that would require an  adjustment  under both this Section
         11(a)(i) and Section 11(a)(ii) hereof,  the adjustment  provided for in
         this Section  11(a)(i) shall be in addition to, and shall be made prior
         to, any adjustment required pursuant to Section 11(a)(ii) hereof.

                  (ii)  In  the  event  that a 20%  Ownership  Date  shall  have
         occurred and neither the Redemption  Date nor the Expiration Date shall
         have  occurred  prior to the  tenth  Business  Day  following  such 20%
         Ownership Date (a "Section 11(a)(ii) Event"),  then, and upon each such
         Section 11(a)(ii) Event, proper provision shall be made so that, except
         as  provided  in Section  7(d)  hereof,  each  holder of a Right  shall
         thereafter  have the right to  receive,  upon the  exercise  thereof in
         accordance  with the terms of this  Agreement  and  payment of the then
         current Exercise Price,  such number of Common Shares of the Company as
         shall equal the result  obtained by (A)  multiplying  the then  current
         Exercise  Price by the then  number of  one-hundredths  of a  Preferred
         Share  for  which a Right  was  exercisable  immediately  prior to such
         Section  11(a)(ii) Event (or, if the  Distribution  Date shall not have
         occurred prior to the date of such Section  11(a)(ii) Event, the number
         of  one-hundredths  of a  Preferred  Share for which a Right would have
         been exercisable if the Distribution  Date had occurred on the Business
         Day immediately  preceding the date of such Section  11(a)(ii)  Event),
         and (B) dividing  that product by 50% of the Current  Market Price of a
         Common  Share  on  the  date  of  occurrence  of the  relevant  Section
         11(a)(ii) Event (such number of shares being hereinafter referred to as
         the "Adjustment Shares"). Successive adjustments shall be made pursuant
         to this paragraph each time a Section 11(a)(ii) Event occurs.

                  (iii) In the  event  that on the date of a  Section  11(a)(ii)
         Event the aggregate  number of Common Shares that are authorized by the
         Company's  Certificate of Incorporation,  as amended from time to time,
         but not  outstanding  or reserved for issuance for purposes  other than
         upon  exercise  of the  Rights  is less  than the  aggregate  number of
         Adjustment Shares thereafter  issuable upon the exercise in full of the
         Rights in accordance with Section  11(a)(ii) hereof (the excess of such
         number of Adjustment Shares over and above such number of Common Shares
         being hereinafter referred to as the "Unavailable  Adjustment Shares"),
         then,  and upon each such event,  the Company shall  substitute for the
         pro rata  portion  of the  Unavailable  Adjustment  Shares  that  would
         otherwise  be issuable  thereafter  upon the exercise of each Right and
         payment of the Exercise Price (A) cash, (B) other equity  securities of
         the Company (including,  without limitation,  shares of preferred stock
         of the Company or units of such shares  having the same Current  Market
         Price as one Common  Share (a  "Common  Share  Equivalent")),  (C) debt
         securities of the Company, (D) other property or (E) any combination of
         the  foregoing,  in each case having an aggregate  Current Market Price
         equal  to  the  aggregate  Current  Market  Price  of  the  Unavailable
         Adjustment  Shares for which  substitution is made.  Subject to Section
         7(d) hereof, in the event that the Company takes any action pursuant to
         this  Section  11(a)(iii),  such action  shall apply  uniformly  to all
         outstanding Rights.

         (b) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the  Redemption  Date or the Rights  Expiration  Date, fix a record date for the
issuance  of rights,  options or warrants  to all  holders of  Preferred  Shares
entitling  them  initially to  subscribe  for or purchase  Preferred  Shares (or
shares  having the same rights,  privileges  and  preferences  as the  Preferred
Shares ("Preferred Share Equivalents")) or securities convertible into Preferred
Shares  or  Preferred  Share  Equivalents,  at a price  per  Preferred  Share or
Preferred  Share  Equivalent  (or  having a  conversion  price per  share,  if a
security  convertible into Preferred Shares or Preferred Share Equivalents) less
than the Current Market Price per Preferred Share on such record date, then, and
upon each such event,  the Exercise Price to be in effect after such record date
shall be  determined by  multiplying  the Exercise  Price in effect  immediately
prior to such record date by a fraction,  the  numerator of which shall be equal
to the sum of the number of  Preferred  Shares  outstanding  on such record date
plus the number of Preferred  Shares that the  aggregate  offering  price of the
total number of Preferred  Shares and/or  Preferred  Share  Equivalents to be so
offered  (and/or  the  aggregate  initial  conversion  price of the  convertible
securities to be so offered) would  purchase at such Current  Market Price,  and
the  denominator  of which  shall be equal to the  number  of  Preferred  Shares
outstanding on such record date plus the number of additional  Preferred  Shares
and/or  Preferred Share  Equivalents to be offered for  subscription or purchase
(or into  which  the  convertible  securities  to be so  offered  are  initially
convertible);  provided,  however, that if such rights,  options or warrants are
not exercisable  immediately upon issuance but become  exercisable only upon the
occurrence  of a specified  event or the passage of a specified  period of time,
then the  adjustment  to the Exercise  Price shall be made and become  effective
only  upon the  occurrence  of such  event  or such  passage  of time,  and such
adjustment  shall be made as if the record date for the issuance of such rights,
options or warrants  had been the Business Day  immediately  preceding  the date
upon which such rights, options or warrants became exercisable. Preferred Shares
owned by or held for the account of the Company shall not be deemed  outstanding
for the purpose of any such  computation.  Such adjustment to the Exercise Price
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 Exercise  Price shall
be adjusted to be the Exercise Price that would then be in effect if such record
date had not been fixed.

         (c) In the event that the Company shall, at any time after the Close of
Business on the Record Date and prior to the Close of Business on the earlier of
the  Redemption  Date or the Rights  Expiration  Date, fix a record date for the
making of a distribution to all holders of the Preferred  Shares  (including any
such distribution made in connection with a consolidation or merger in which the
Company is the surviving  corporation) of assets (other than a distribution  for
which an  adjustment  is  required  under  Section  11(a)(i)  or (b) hereof or a
regular quarterly cash dividend),  then the Exercise Price to be in effect after
such record date shall be determined by multiplying the Exercise Price in effect
immediately  prior to such  record date by a fraction,  the  numerator  of which
shall be equal to the excess of the Current Market Price per Preferred  Share on
such  record  date over and above the fair  market  value of the  portion of the
securities or assets to be so distributed  with respect to one Preferred  Share,
and the  denominator  of which shall be equal to such  Current  Market Price per
Preferred Share.  Such adjustments  shall be made  successively  whenever such a
record date is fixed,  and in the event that such a distribution is not so made,
the Exercise Price shall be adjusted to be the Exercise Price that would then be
in effect if such record date had not been fixed.

         (d) For the purpose of any  computation  under this  Section 11, if the
Preferred Shares are not publicly held or traded, the "Current Market Price" per
Preferred Share shall be conclusively  deemed to be the Current Market Price per
Common Share multiplied by 100.

         (e) No adjustment in the Exercise  Price shall be required  unless such
adjustment  would  require an  increase  or  decrease of at least 1% in the then
current Exercise Price;  provided,  however, that any adjustments that by reason
of this Section  11(e) are not required to be made shall be cumulated  and taken
into account in any subsequent  adjustment.  All calculations under this Section
11 shall  be made to the  nearest  cent or to the  nearest  one-thousandth  of a
Common Share or other share or  one-millionth  of a Preferred Share, as the case
may be.

         (f) If, as a result of an  adjustment  made  pursuant to Section  11(a)
hereof,  the holder of any Right shall,  upon exercise  thereof,  be entitled to
receive any  securities of the Company other than  Preferred  Shares,  and if an
event occurs in respect of such securities  that, if it were to occur in respect
of  Preferred  Shares,  would  require an  adjustment  under this  Section 11 in
respect  of  Preferred  Shares,  then the  number of such  other  securities  so
receivable  upon exercise of any Right shall be subject to adjustment  from time
to time in a manner  and on terms as nearly  equivalent  as  practicable  to the
provisions  with respect to Preferred  Shares  contained in this Section 11, and
the other  provisions of this Agreement  with respect to Preferred  Shares shall
apply on like terms to any such other securities.

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

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

         (i) The Company may elect,  on or after the date of any  adjustment  of
the  Exercise  Price,  to adjust  the  number of Rights  instead  of making  any
adjustment in the number of Preferred Shares  purchasable upon the exercise of a
Right.  Each of the Rights  outstanding  after such  adjustment of the number of
Rights  shall be  exercisable  for the number of  one-hundredths  of a Preferred
Share 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 one-thousandth of a
Right)  obtained by dividing the Exercise Price in effect  immediately  prior to
the adjustment of the Exercise Price by the Exercise Price in effect immediately
after such  adjustment  of the Exercise  Price.  The Company shall make a public
announcement  of its  election  to adjust the number of Rights  pursuant to this
Section 11(i),  indicating  the record date for the adjustment  and, if known at
the time, the amount of the  adjustment to be made.  Such record date may be the
date on which the  Exercise  Price is  adjusted or any day  thereafter,  but, if
separate Right Certificates have been issued, it shall be at least 10 days after
the date of such public  announcement.  If separate 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
representing,  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,  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 such adjustment,  and upon surrender thereof if required by the Company,
new Right  Certificates  representing all the Rights to which such holders shall
be entitled after such adjustment. Right Certificates to be so distributed shall
be issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company,  the adjusted  Exercise  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 Exercise Price or
the number of  one-hundredths of a Preferred Share issuable upon the exercise of
one Right, the Right Certificates theretofore and thereafter issued may continue
to express the Exercise Price per one one-hundredth of a Preferred Share and the
number of  Preferred  Shares  issuable  upon the exercise of one Right that were
expressed in the initial Right Certificates issued hereunder.

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

         (l) In any  case  in  which  this  Section  11  shall  require  that an
adjustment  in the  Exercise  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
of the number of  one-hundredths of a Preferred Share and other capital stock or
securities  of the Company,  if any,  issuable upon such exercise over and above
the number of  one-hundredths  of a Preferred  Share and other  capital stock or
securities of the Company,  if any,  issuable upon such exercise on the basis of
the Exercise Price in effect prior to such adjustment;  provided,  however, that
the  Company  shall  deliver  to such  holder a due  bill or  other  appropriate
instrument  representing  such holder's right to receive such additional  shares
upon the occurrence of the event requiring such adjustment.

         (m) Anything in this Section 11 to the  contrary  notwithstanding,  the
Company  shall be entitled  to make such  further  adjustments  in the number of
one-hundredths  of a Preferred  Share that may be purchased upon exercise of one
Right, and such further  adjustments in the Exercise Price, in addition to those
adjustments expressly required by this Section 11, as and to the extent that the
Company in its sole discretion shall determine to be advisable in order that any
(i) consolidation or subdivision of the Preferred  Shares,  (ii) issuance wholly
for cash of any Preferred  Shares at less than the Current Market Price thereof,
(iii) issuance  wholly for cash of Preferred  Shares or securities that by their
terms are convertible into or exchangeable for Preferred Shares,  (iv) dividends
on  Preferred  Shares  payable in  Preferred  Shares or (v)  issuance of rights,
options or warrants  referred to in Section 11(b) hereof,  hereafter made by the
Company  to  holders  of its  Preferred  Shares  shall  not be  taxable  to such
stockholders.

         (n) In the event that the Company shall, at any time after the Close of
Business on the Record  Date and prior to the Close of Business on the  earliest
of the date of the first Section  11(a)(ii) Event, the date of the first Section
13(a) Event,  the  Redemption  Date or the Rights  Expiration  Date, (i) pay any
dividend on the Common  Shares  payable in Common  Shares,  (ii)  subdivide  the
outstanding  Common Shares,  (iii) combine the outstanding  Common Shares into a
smaller   number  of  Common   Shares  or  (iv)   issue   Common   Shares  in  a
reclassification  of the Common Shares (including any such  reclassification  in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), then, and upon each such event, the Exercise Price to
be in effect after such event shall be  determined by  multiplying  the Exercise
Price in effect immediately prior to such event by a fraction,  the numerator of
which  shall be equal to the  number of Common  Shares  outstanding  immediately
prior to such event and the denominator of which shall be equal to the number of
Common Shares outstanding  immediately after such event.  Successive adjustments
shall be made  pursuant to this Section  11(n) each time such a dividend is paid
or such a subdivision,  combination or reclassification is effected. If an event
occurs  that would  require an  adjustment  under  both this  Section  11(n) and
Section  11(a)(ii)  hereof,  the  adjustment  provided for in this Section 11(n)
shall be in  addition  to, and shall be made prior to, any  adjustment  required
pursuant to Section 11(a)(ii) hereof.

         Section 12.  Certificate of Adjusted Exercise Price or Number of Shares
Issuable Upon Exercise of Rights.  Whenever an adjustment is made as provided in
Section 11 hereof, the Company shall promptly (a) prepare a certificate  setting
forth such  adjustment  and a brief  statement  of the facts giving rise to such
adjustment,  (b) file with the Rights Agent and with each transfer agent for the
securities  issuable upon exercise of the Rights a copy of such  certificate and
(c) mail a brief  summary  thereof to each holder of Rights in  accordance  with
Section 25 hereof.  Notwithstanding the foregoing  sentence,  the failure of the
Company to make such  certification  or to give such notice shall not affect the
validity or the force and effect of such  adjustment.  Any adjustment to be made
pursuant to Sections 11 or 13 hereof  shall be  effective  as of the date of the
event giving rise to such adjustment.  The Rights Agent shall be fully protected
in relying on any such certificate and on any adjustment therein contained,  and
shall not be obligated or responsible  for  calculating any adjustment nor shall
it be deemed to have  knowledge of such an adjustment  unless and until it shall
have received such certificate.

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

         (a) In the event (a  "Section  13(a)  Event")  that,  at any time on or
after the 20% Ownership Date and prior to the earlier of the Redemption  Date or
the Rights  Expiration  Date,  (1) the Company  shall,  directly or  indirectly,
consolidate  with or merge with and into any other Person and the Company  shall
not be the continuing or surviving  corporation in such consolidation or merger,
(2) any Person shall, directly or indirectly, consolidate with or merge with and
into  the  Company  and  the  Company  shall  be  the  continuing  or  surviving
corporation in such merger and, in connection  with such merger,  all or part of
the  Common  Shares  shall  be  changed  into or  exchanged  for  stock or other
securities  of any  Person or cash or any  other  property,  or (3) the  Company
and/or any one or more of its Subsidiaries shall,  directly or indirectly,  sell
or otherwise  transfer,  in one or more transactions (other than transactions in
the ordinary course of business),  assets or earning power aggregating more than
50% of the assets or earning power of the Company and its Subsidiaries (taken as
a whole) to any Person or Persons  other than the  Company or one or more of its
wholly-owned  Subsidiaries (such Persons, together with the Persons described in
clauses (1) and (2) above shall be  collectively  referred to in this Section as
the "Surviving Person"),  then, and in each such case, proper provision shall be
made so that:

                  (i) except as provided in Section 7(d) hereof,  each holder of
         a Right shall  thereafter have the right to receive,  upon the exercise
         thereof in accordance  with the terms of this  Agreement and payment of
         the then current  Exercise  Price,  in lieu of the  securities or other
         property  otherwise  purchasable  upon such  exercise,  such  number of
         validly  authorized  and issued,  fully paid and  nonassessable  Common
         Shares of the Surviving  Person (and if such Surviving  Person has more
         than one  class or  series of Common  Shares,  such  number of  validly
         authorized and issued,  fully paid and  nonassessable  Common Shares of
         each series or class) as shall be equal to a fraction, the numerator of
         which is:

                           (A) if a Section  11(a)(ii)  Event  has not  occurred
                  prior to such  Section  13(a)  Event,  the product of the then
                  current   Exercise   Price   multiplied   by  the   number  of
                  one-hundredths  of a  Preferred  Share  purchasable  upon  the
                  exercise of one Right  immediately  prior to the first Section
                  13(a)  Event  (or,  if the  Distribution  Date  shall not have
                  occurred  prior to the date of such Section  13(a) Event,  the
                  number of  one-hundredths of a Preferred Share that would have
                  been so purchasable if the  Distribution  Date had occurred on
                  the  Business  Day  immediately  preceding  the  date  of such
                  Section 13(a) Event), or

                           (B) if a Section  11(a)(ii)  Event has occurred prior
                  to such Section 13(a) Event, the product of the Exercise Price
                  in effect  immediately  prior to such Section  11(a)(ii) Event
                  multiplied  by the  number of  one-hundredths  of a  Preferred
                  Share  purchasable upon the exercise of one Right  immediately
                  prior to such Section 11(a)(ii) Event (or, if the Distribution
                  Date shall not have occurred prior to the date of such Section
                  11(a)(ii) Event, the number of  one-hundredths  of a Preferred
                  Share that would have been so purchasable if the  Distribution
                  Date had occurred on the Business  Day  immediately  preceding
                  the date of such Section 11(a)(ii) Event),

         and the  denominator  of which is 50% of the Current  Market  Price per
         Common Share of the  Surviving  Person on the date of  consummation  of
         such Section 13(a) Event;

                  (ii) the Surviving  Person shall  thereafter be liable for and
         shall  assume,  by  virtue  of  such  consolidation,  merger,  sale  or
         transfer,  all the  obligations  and duties of the Company  pursuant to
         this Agreement;

                  (iii)    the term "Company" shall thereafter be deemed to
         refer to the Surviving Person; and

                  (iv) the  Surviving  Person shall take such steps  (including,
         but not  limited  to, the  reservation  of a  sufficient  number of its
         Common Shares in accordance  with Section 9 hereof) in connection  with
         such  consummation  as may be necessary  to ensure that the  provisions
         hereof shall  thereafter be applicable to its Common Shares  thereafter
         deliverable upon the exercise of Rights.

         (b)  Notwithstanding  the foregoing,  if the Section 13(a) Event is the
sale  or  transfer  in one or more  transactions  of  assets  or  earning  power
aggregating  more than 50% of the assets or earning power of the Company and its
Subsidiaries  (taken as a whole),  but less than 100% thereof,  then each Person
acquiring all or a portion  thereof shall assume the  obligations of the Company
as to a fraction  of each of the Rights  equal to the  fraction of the assets of
the Company and its Subsidiaries (taken as a whole) acquired by such Person, and
the  obligations  of the  Company as to the  remaining  fraction  of each of the
Rights shall continue to be the obligations of the Company.

         (c) The Company shall not consummate a Section 13(a) Event unless prior
thereto the Company and the  Surviving  Person shall have executed and delivered
to the Rights Agent a  supplemental  agreement  confirming  that such  Surviving
Person  shall,  upon  consummation  of such  Section  13(a)  Event,  assume this
Agreement in accordance with Section 13 hereof, that all rights of first refusal
or  preemptive  rights in  respect  of the  issuance  of  Common  Shares of such
Surviving  Person upon exercise of outstanding  Rights have been waived and that
such Section 13(a) Event shall not result in a default by such Surviving  Person
under this Agreement,  and further  providing that, as soon as practicable after
the date of  consummation  of such Section 13(a) Event,  such  Surviving  Person
shall:

                  (i)  prepare  and  file a  registration  statement  under  the
         Securities   Act  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, use its best efforts to cause
         such  registration  statement to remain effective (with a prospectus at
         all times meeting the  requirements  of the  Securities  Act) until the
         Rights  Expiration Date, and similarly comply with all applicable state
         securities laws;

                  (ii) use its best efforts to list (or continue the listing of)
         the Rights and the Common  Shares of the Surviving  Person  purchasable
         upon exercise of the Rights on a national securities  exchange,  or use
         its best efforts to cause the Rights and such Common Shares to meet the
         eligibility requirements for quotation on NASDAQ; and

                  (iii)  deliver to holders of the Rights  historical  financial
         statements for such  Surviving  Person that comply in all respects with
         the  requirements  for  registration on Form 10 (or any successor form)
         under the Exchange Act.

         (d) In the event  that at any time  after the  occurrence  of a Section
11(a)(ii) Event some or all of the Rights shall not have been exercised pursuant
to Section 11 hereof  prior to the date of a Section  13(a)  Event,  such Rights
shall  thereafter be exercisable  only in the manner  described in Section 13(a)
hereof.  In the event that a Section 11(a)(ii) Event occurs on or after the date
of a Section 13(a) Event, Rights shall not be exercisable pursuant to Section 11
hereof but shall instead be exercisable  pursuant to, and only pursuant to, this
Section 13.

         (e) The  provisions  of this Section 13 shall apply to each  successive
merger,  consolidation,  sale or other  transfer  constituting  a Section  13(a)
Event.

         Section 14.  Fractional Rights and Fractional Shares.

         (a) The Company  shall not be required to issue  fractions of Rights or
to distribute  Right  Certificates  that  represent  fractional  Rights.  If the
Company shall determine not to issue such fractional  Rights,  the Company shall
pay to the registered  holders of the Right  Certificates  with respect to which
such fractional Rights would otherwise be issuable,  at the time such fractional
Rights would  otherwise have been issued as provided  herein,  an amount in cash
equal to the same  fraction of the Current  Market Price of a whole Right on the
Business Day  immediately  prior to the date upon which such  fractional  Rights
would otherwise have been issuable.

         (b) The  Company  shall not be required  to issue  fractions  of Common
Shares or Preferred Shares (other than fractions that are integral  multiples of
one  one-hundredth  of a  Preferred  Share)  upon  exercise  of  Rights,  or  to
distribute  certificates  that represent  fractional  Common Shares or Preferred
Shares (other than fractions that are integral multiples of one one-hundredth of
a Preferred Share).  Fractions of Preferred Shares in integral  multiples of one
one-hundredth  of a Preferred  Share may, at the  election  of the  Company,  be
represented 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
Preferred  Shares. If the Company shall determine not to issue fractional Common
Shares or Preferred Shares (or depositary receipts in lieu of Preferred Shares),
the  Company  shall pay to the  registered  holders of Right  Certificates  with
respect  to which  such  fractional  Common  Shares or  Preferred  Shares  would
otherwise be issuable, at the time such Rights are exercised as provided herein,
an amount in cash equal to the same  fraction of the Current  Market  Price of a
whole Common Share or Preferred  Share, as the case may be. For purposes of this
Section  14(b),  the Current  Market  Price of a whole Common Share or Preferred
Share shall be the Closing Price per share for the Trading Day immediately prior
to the date of such exercise.

         (c) The holder of a Right,  by the acceptance of such Right,  expressly
waives such holder's  right to receive any  fractional  Rights or any fractional
Common  Shares or  Preferred  Shares  upon  exercise  of such  Right,  except as
permitted by this Section 14.

         Section 15.  Rights of Action.  All rights of action in respect of this
Agreement,  except the rights of action given to the Rights Agent under  Section
18  hereof,  are  vested  in the  respective  registered  holders  of the  Right
Certificates  and certificates for Common Shares  representing  Rights,  and any
registered  holder of any Right  Certificate or of such  certificate  for Common
Shares,  without the  consent of the Rights  Agent or of the holder of any other
Right  Certificate  or any other  certificate  for Common  Shares  may,  in such
holder's  own  behalf  and for  such  holder's  own  benefit,  enforce,  and may
institute  and maintain any suit,  action or  proceeding  against the Company to
enforce,  or otherwise  act in respect of, such  holder's  right to exercise the
Rights  represented by such Right  Certificate or by such certificate for Common
Shares in the manner provided in such Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically  acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance,  and injunctive relief against actual or threatened violations,  of
the obligations of any Person under this Agreement.

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

         (a) prior to the Distribution  Date, the Rights shall be represented by
certificates  for Common  Shares  registered  in the name of the holders of such
Common Shares (which  certificates for Common Shares shall also constitute Right
Certificates), and each such Right shall be transferable only in connection with
the transfer of such Common Shares;

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

         (c) the Company  and the Rights  Agent may deem and treat the person in
whose name the Right Certificate is registered as the absolute owner thereof and
of the Rights represented thereby (notwithstanding any notations of ownership or
writing on the Right  Certificate by anyone other than the Company or the Rights
Agent) for all purposes whatsoever, and neither the Company nor the Rights Agent
shall be affected by any notice to the contrary.
Section  17.  Right  Holder and Right  Certificate  Holder Not Deemed a
Stockholder.  No holder,  as such,  of any Right or Right  Certificate  shall be
entitled to vote,  receive  dividends or be deemed for any purpose the holder of
the securities of the Company that may at any time be issuable upon the exercise
of the Rights represented thereby, nor shall anything contained herein or in any
Right  Certificate  be construed to confer upon the holder of any Right or Right
Certificate,  as such,  any of the rights of a stockholder of the Company or any
right to vote for the  election of  directors  or upon any matter  submitted  to
stockholders  at any  meeting  thereof,  to  give  or  withhold  consent  to any
corporate  action,  to receive  notice of  meetings or other  actions  affecting
stockholders  (except as provided in Section 25 hereof), or to receive dividends
or  subscription  rights,  or  otherwise,  in each case  until such Right or the
Rights  represented  by such  Right  Certificate  shall have been  exercised  in
accordance with the provisions hereof.

         Section 18.  Concerning the Rights Agent.

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

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

         (c) Notwithstanding  anything in this Agreement to the contrary,  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 or damage and regardless of the form of the action.

         Section 19.  Merger or Consolidation or Change of Name of Rights Agent.

         (a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with  which it may be  consolidated,  or any  corporation
resulting  from any merger or  consolidation  to which the  Rights  Agent or any
successor  Rights Agent shall be a party, or any  corporation  succeeding to the
corporate trust or stock transfer  business of the Rights Agent or any successor
Rights Agent,  shall be the  successor to the Rights Agent under this  Agreement
without the  execution  or filing of any paper or any further act on the part of
any of the parties hereto,  provided that such corporation would be eligible for
appointment  as a  successor  Rights  Agent under the  provisions  of Section 21
hereof.  If, 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 if 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 such Right Certificate and in
this Agreement.

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

         Section 20. Duties of Rights  Agent.  The Rights Agent  undertakes  the
duties and  obligations  imposed  by this  Agreement  (and no implied  duties or
obligations shall be read into this Agreement against the Rights Agent) upon the
following terms and  conditions,  by all of which the Company and the holders of
Right Certificates, by their acceptance of the Rights, shall be bound:

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

         (b) Whenever in the  performance of its duties under this Agreement the
Rights Agent shall deem it  necessary  or  desirable  that any fact or matter be
proved or  established  by the Company  prior to taking or suffering  any action
hereunder,  such fact or matter  (unless  other  evidence in respect  thereof be
herein  specifically  prescribed)  may be deemed to be  conclusively  proved and
established by a certificate signed by any one of the Chairman of the Board, the
Vice Chairman of the Board,  the President,  any Vice President,  the Treasurer,
the  Secretary or any  Assistant  Secretary of the Company and  delivered to the
Rights Agent;  and such  certificate  shall be full  authorization to the Rights
Agent for any action taken or suffered in good faith by it under the  provisions
of this Agreement in reliance upon such certificate.

         (c) The Rights  Agent shall be liable  hereunder to the Company and any
other Person only for its own negligence, bad faith or willful misconduct.

         (d) The Rights Agent shall not be liable for or by reason of any of the
statements  of fact or recitals  contained  in this  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.

         (e) The Rights Agent shall not be under any  responsibility  in respect
of the validity of this  Agreement or the execution and delivery  hereof (except
the due authorization,  execution and delivery 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 Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including any Rights becoming null and void pursuant to Section 7(d)
hereof) or any  adjustment  in the terms of the Rights  (including  the  manner,
method or amount thereof)  provided for in Sections 7, 11, 13 and 23 hereof,  or
the ascertaining of the existence of facts that would require any such change or
adjustment  (except with respect to the exercise of Rights  represented by Right
Certificates  after actual  notice that such change or  adjustment is required);
nor  shall it by any act  hereunder  be  deemed  to make any  representation  or
warranty as to the  authorization  or  reservation  of any  Preferred  Shares or
Common Shares or other securities to be issued pursuant to this Agreement or any
Right  Certificate,  or as to whether any  Preferred  Shares or Common Shares or
other securities 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 Agreement.

         (g) The  Rights  Agent is  hereby  authorized  and  directed  to accept
instructions  with respect to the  performance of its duties  hereunder from any
one of the Chairman of the Board,  the Vice Chairman,  the  President,  any Vice
President,  the Chief Financial  Officer,  the Secretary or the Treasurer of the
Company,  and to apply to such officers for advice or instructions in connection
with its duties,  and it shall not be liable for any action taken or suffered to
be taken by it in good faith in accordance with instructions of any such officer
or for any delay in acting while waiting for those instructions. 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  Agreement and the date on or after which
such action shall be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified  in such  application  (which date shall not be less than ten 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 from the Company in response to such application to the contrary.

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

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

         (k) The Rights  Agent shall not be required to take notice or be deemed
to  have  notice  of  any  fact,  event  or  determination  (including,  without
limitation,  any dates or events defined in this Agreement or the designation of
any Person as a 20%  Stockholder,  Affiliate or Associate)  under this Agreement
unless and until the Rights Agent shall be  specifically  notified in writing by
the Company of such fact, event or determination.

         (l) If,  with  respect to any  Rights  Certificate  surrendered  to the
Rights Agent for exercise or transfer,  the certificate  attached to the form of
assignment  or form of  election to  purchase,  as the case may be, has not been
completed,  the Rights  Agent shall not take any further  action with respect to
such requested exercise or transfer without first consulting with the Company.

         Section 21. Change of Rights  Agent.  The Rights Agent or any successor
Rights Agent may resign and be discharged  from its duties under this  Agreement
upon 30-days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares and Preferred  Shares by registered or certified mail, and,
at the  expense of the  Company  to the  holders  of the Right  Certificates  by
first-class  mail.  The  Company  may remove the Rights  Agent or any  successor
Rights  Agent upon  30-days'  notice in writing,  mailed to the Rights  Agent or
successor  Rights Agent,  as the case may be, and to each transfer  agent of the
Common Shares and Preferred  Shares by registered or certified  mail, and to the
holders of the Right Certificates by first-class mail. If the Rights Agent shall
resign or be removed or shall otherwise  become incapable of acting as such, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment  within a period of 30 days after giving notice of such
removal  or  after  it has been  notified  in  writing  of such  resignation  or
incapacity by the resigning or incapacitated  Rights Agent or by the holder of a
Right  Certificate  (who shall,  with such notice,  submit such  holder's  Right
Certificate  for  inspection by the Company),  then the Company shall become the
Rights Agent and the registered holder of any Right Certificate may apply to any
court of competent  jurisdiction  for the appointment of a new Rights Agent. Any
successor  Rights  Agent,  whether  appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the States of New York or California  (or of any other state of the
United  States so long as such  corporation  is  authorized  to do business as a
banking institution in the States of New York or California),  in good standing,
having a principal  office in New York or California,  that is authorized  under
such laws to exercise corporate trust or stock transfer powers and is subject to
supervision  or  examination  by federal or state  authority and that has at the
time of its  appointment  as Rights  Agent a combined  capital and surplus of at
least $50,000,000. 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 of this
Agreement and so that the successor Rights Agent may appropriately act as Rights
Agent hereunder. Not later than the effective date of any such appointment,  the
Company shall file notice thereof in writing with the  predecessor  Rights Agent
and each transfer  agent of the Common Shares and Preferred  Shares,  and mail a
notice thereof in writing to the registered  holders of the Right  Certificates.
Failure to give any notice  provided  for in this  Section 21,  however,  or any
defect therein,  shall not affect the legality or validity of the resignation or
removal of the Rights Agent or the appointment of the successor Rights Agent, as
the case may be.
Section 22. Issuance of New Right Certificates.  Notwithstanding any of
the provisions of this Agreement or of the Right  Certificates  to the contrary,
the Company may, at its option, issue new Right Certificates in such form as may
be approved by the Board of  Directors  in order to reflect  any  adjustment  or
change in the Exercise  Price and the number or kind or class of shares or other
securities  or property  purchasable  upon  exercise of the Rights in accordance
with the provisions of this Agreement.

         Section 23.  Redemption of Rights.

         (a) Until the earliest of (i) the date of the first  Section  11(a)(ii)
Event,  (ii) the date of the  first  Section  13(a)  Event or (iii)  the  Rights
Expiration  Date,  the Board of  Directors  of the  Company  may, at its option,
authorize  and direct the  redemption of all, but not less than all, of the then
outstanding Rights at a redemption price of $0.001 per Right, as such redemption
price shall be appropriately adjusted to reflect any stock split, stock dividend
or similar transaction occurring after the date hereof (the "Redemption Price"),
and the Company shall so redeem the Rights.

         (b)  Immediately  upon the  action  of the  Board of  Directors  of the
Company  authorizing  and  directing the  redemption  of the Rights  pursuant to
subsection (a) of this Section 23, or at such time and date thereafter as it may
specify,  and without any  further  action and without any notice,  the right to
exercise Rights shall terminate and the only right  thereafter of the holders of
Rights shall be to receive the Redemption  Price.  Within ten (10) Business Days
after the date of such action,  the Company shall give notice of such redemption
to the  holders of Rights by  mailing  such  notice to all  holders of Rights at
their last  addresses as they appear upon the registry books of the Rights Agent
or, if prior to the  Distribution  Date,  on the registry  books of the transfer
agent for the  Common  Shares.  Any notice  that is mailed in the manner  herein
provided shall be deemed given,  whether or not the holder receives such notice,
but neither the  failure to give any such  notice nor any defect  therein  shall
affect  the  legality  or  validity  of such  redemption.  Each  such  notice of
redemption  shall state the method by which the payment of the Redemption  Price
will be made.  Neither the Company nor any of its Affiliates or Associates  may,
directly or indirectly,  redeem, acquire or purchase for value any Rights in any
manner  other than that  specifically  set forth in Section 24 hereof or in this
Section 23, or in  connection  with the  purchase of Common  Shares prior to the
earlier  of the date of the  first  Section  11(a)(ii)  Event or the date of the
first Section 13(a) Event.

         (c) The Company may, at its option,  pay the Redemption  Price in cash,
Common Shares,  Preferred Shares,  other equity securities of the Company,  debt
securities of the Company,  other property or any  combination of the foregoing,
in each case having an aggregate  Current  Market Price on the  Redemption  Date
equal to the Redemption Price.

         Section 24.  Exchange of Rights.

         (a) At any time during the period of 180 days after a Section 11(a)(ii)
Event,  the Board of Directors of the Company may, at its option,  authorize and
direct  the  exchange  of all,  but not less than all,  of the then  outstanding
Rights  for  Common  Shares,  one  one-hundredths  of  Preferred  Shares,   debt
securities of the Company,  other property, or any combination of the foregoing,
in each case  having an  aggregate  Current  Market  Price  equal to the  result
obtained by (i)  multiplying  the Current  Market  Price per Common Share on the
record date for such  exchange by the number of Common  Shares for which a Right
is  exercisable on such record date and (ii)  subtracting  from such product the
Exercise Price on such Record Date (the "Exchange Ratio"), and the Company shall
so exchange the Rights.

         (b)  Immediately  upon the  action  of the  Board of  Directors  of the
Company  authorizing  and  directing  the  exchange  of the Rights  pursuant  to
subsection (a) of this Section 24, or at such time and date thereafter as it may
specify,  and without any  further  action and without any notice,  the right to
exercise Rights shall terminate and the only right  thereafter of the holders of
Rights  shall  be to  receive  the  securities  described  in  Section  24(a) in
accordance with the Exchange Ratio. Within ten (10) Business Days after the date
of such action, the Company shall give notice of such exchange to the holders of
Rights by mailing  such notice to all holders of Rights at their last  addresses
as they appear upon the  registry  books of the Rights Agent or, if prior to the
Distribution  Date, on the registry  books of the transfer  agent for the Common
Shares.  Any notice that is mailed in the manner herein provided shall be deemed
given,  whether or not the holder receives such notice,  but neither the failure
to give any such  notice nor any defect  therein  shall  affect the  legality or
validity of such  exchange.  Each such notice of exchange shall state the method
by which the Rights will be exchanged.
(c)  Notwithstanding  the  foregoing,  in the event that the  aggregate
number of Common  Shares that are  authorized by the  Company's  Certificate  of
Incorporation, as amended from time to time, but not outstanding or reserved for
issuance for purposes other than upon exercise or exchange of the Rights is less
than the  aggregate  number of Common  Shares  issuable upon the exchange of the
Rights  in  accordance  with  this  Section  24 (the  excess  of such  number of
authorized  Common  Shares over and above such number of issuable  Common Shares
being hereinafter  referred to as the "Unavailable  Exchange Shares"),  then the
Company shall  substitute for the pro rata portion of the  Unavailable  Exchange
Shares  that would  otherwise  be  issuable  upon the  exchange of the Rights in
accordance  with this Section 24 (i) cash,  (ii) other equity  securities of the
Company (including,  without limitation,  Common Share Equivalents),  (iii) debt
securities of the Company,  (iv) other  property or (v) any  combination  of the
foregoing,  in each case having an aggregate  Current  Market Price equal to the
aggregate  Current  Market Price of the  Unavailable  Exchange  Shares for which
substitution  is made.  Subject to Section  7(d)  hereof,  in the event that the
Company  takes any action  pursuant to this  Section 24, such action shall apply
uniformly to all outstanding Rights.

         Section 25.  Notice of Certain Events.

         (a) In the event that the Company  shall  propose (i) to declare or pay
any dividend on or make any  distribution  with respect to its Common  Shares or
Preferred Shares (other than a regular  quarterly cash dividend),  (ii) to offer
to the  holders of its Common  Shares or  Preferred  Shares  options,  rights or
warrants to subscribe for or to purchase any additional shares thereof or shares
of stock of any  class or any other  securities,  rights  or  options,  (iii) to
effect any reclassification of its Common Shares or Preferred Shares (other than
a reclassification  involving only the subdivision of outstanding shares),  (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 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 and in each such case, the Company shall give to
each holder of a Right  Certificate,  in  accordance  with Section 26 hereof,  a
notice of such  proposed  action  that shall  specify  the  record  date for the
purpose  of  such  dividend  or  distribution,  or  the  date  upon  which  such
reclassification,    consolidation,   merger,   sale,   transfer,   liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of record of the Common Shares or Preferred  Shares,  if any such
date is to be fixed, and such notice shall be so given in the case of any action
covered by clause  (i) or (ii)  above at least 20 days prior to the record  date
for determining holders of the Common Shares or Preferred Shares for purposes of
such action, and in the case of any such other action, at least 20 days prior to
the date of the  taking of such  proposed  action  or the date of  participation
therein by the holders of the Common Shares or Preferred Shares,  whichever date
shall be the earlier. The failure to give the notice required by this Section 25
or any defect  therein  shall not affect the  legality or validity of the action
taken by the Company or the vote upon any such action.

         (b)  Upon the  occurrence  of each  Section  11(a)(ii)  Event  and each
Section 13(a) Event, the Company shall as soon as practicable thereafter give to
each holder of a Right  Certificate,  in  accordance  with Section 26 hereof,  a
notice  of  the  occurrence  of  such  event,   specifying  the  event  and  the
consequences of the event to holders of Rights under Sections 11 and 13 hereof.

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

                           Laser-Pacific Media Corporation
                           809 N. Cahuenga Blvd.
                           Los Angeles, CA  90038
                           Attention: Secretary

Subject to the provisions of Section 21 hereof,  any notice or demand authorized
by this  Agreement  to be given  or made to or on the  Rights  Agent  (i) by the
Company  shall  be  sufficiently  given  or made if sent,  postage  prepaid,  by
registered or certified  mail,  addressed to the principal  office of the Rights
Agent as set forth below  (until  another  address is filed in writing  with the
Company) or (ii) by the holder of any Right  Certificate  shall be  sufficiently
given or made if sent by first-class  mail,  postage  prepaid,  addressed to the
principal  office of the Rights Agent as set forth below (until another  address
is filed in writing  with the  Company),  and shall be deemed  given upon actual
receipt.  The Company  hereby agrees that it shall  encourage the holders of the
Right Certificates, in any and all writings to such holders regarding the Rights
or this  Agreement,  to give or make any  notice  or demand  authorized  by this
Agreement by registered or certified mail,  addressed to the principal office of
the Rights Agent as follows (until another  address is filed in writing with the
Company):

                           U.S. Stock Transfer Corporation
                           1745 Gardena Avenue
                           Glendale, California 91204
                           Re: Laser-Pacific Media Corporation

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

         Section 27.  Supplements and Amendments.

         (a) The  Board of  Directors  of the  Company  may,  from time to time,
without the approval of any holders of Rights, supplement or amend any provision
of this Agreement in any manner,  whether or not such supplement or amendment is
adverse to any holder of Rights, and direct the Rights Agent so to supplement or
amend such  provision,  and the Rights Agent shall so  supplement  or amend such
provision;  provided,  however, that from and after the earliest of (i) the date
of the first Section  11(a)(ii) Event,  (ii) the date of the first Section 13(a)
Event,  (iii) the Redemption  Date or (iv) the Expiration  Date,  this Agreement
shall not be  supplemented  or amended in any manner that would  materially  and
adversely  affect any holder of outstanding  Rights other than a 20% Stockholder
or a Surviving Person.

         (b)  From and  after  the  earlier  of the  date of the  first  Section
11(a)(ii)  Event or the date of the first  Section  13(a) Event and prior to the
Rights  Expiration  Date,  the  Company  shall not effect any  amendment  to the
Certificate of Designations  for the Preferred  Shares that would materially and
adversely  affect the rights,  privileges or preferences of the Preferred Shares
without  the prior  approval of the  holders of  two-thirds  or more of the then
outstanding Rights.  Notwithstanding anything in this Agreement to the contrary,
no  supplement  or  amendment  that  changes the rights and duties of the Rights
Agent under this  Agreement  in any manner  adverse to the Rights  Agent will be
effective  against the Rights Agent without the execution of such  supplement or
amendment by the Rights Agent.

         Section  28.  Certain  Covenants.  Subject to Section 27 hereof and the
other  provisions of this  Agreement,  from and after the earlier of the date of
the first Section  11(a)(ii)  Event or the date of the first Section 13(a) Event
and prior to the earlier of the Redemption Date or the Rights  Expiration  Date,
the Company  shall not (a) issue or sell,  or permit any  Subsidiary to issue or
sell, to a 20% Stockholder or a Surviving  Person, or any Affiliate or Associate
of a 20% Stockholder or a Surviving  Person, or any Person holding Voting Shares
of the Company that are  Beneficially  Owned by a 20% Stockholder or a Surviving
Person,  (i) any rights,  options,  warrants or convertible  securities on terms
similar to, or that materially adversely affect the value of, the Rights or (ii)
Preferred  Shares,  Common Shares or shares of any other class of capital stock,
if such sale is intended to or would  materially  adversely  affect the value of
the Rights, or (b) take any other action that is intended to or would materially
adversely affect the value of the Rights.

         Section 29.  Successors.  All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.

         Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company,  the Rights Agent and
the registered holders of the Right Certificates  (other than those representing
Rights that have become null and void) and the  certificates  for Common  Shares
representing Rights (other than those Rights that have become null and void) any
legal or  equitable  right,  remedy  or claim  under  this  Agreement,  and this
Agreement shall be for the sole and exclusive benefit of the Company, the Rights
Agent and such registered  holders of Right  Certificates  and  certificates for
Common Shares representing Rights.

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

         Section 32.  Governing Law. This  Agreement and each Right  Certificate
issued  hereunder  shall be deemed to be a  contract  made under the laws of the
State of Delaware  and for all  purposes  shall be governed by and  construed in
accordance  with  the  laws of such  state  applicable  to  contracts  made  and
performed entirely within such state, except as to the rights and obligations of
the Rights Agent which shall be governed by and construed in accordance with the
laws of the State of California.

         Section 33. Counterparts.  This Agreement may be executed in any number
of counterparts and each such counterpart shall for all purposes be deemed to be
an original and all such counterparts shall together  constitute but one and the
same instrument.

         Section 34.  Descriptive Headings. Descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.

                            [SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.

                                         LASER-PACIFIC MEDIA CORPORATION

Attest:

By:  /s/ Robert McClain                 By:    /s/ James R. Parks
     ___________________________               ___________________________
     Name:  Robert McClain                     Name:  James R. Parks
     Title:  Secretary                         Title:  Chairman of the Board
                                               and Chief Executive Officer

                                         U. S. STOCK TRANSFER CORPORATION,
                                         as Rights Agent

Attest:

By:  /s/ Mark Cano                       By:   /s/ William Garza
     ___________________________               ___________________________
     Name:  Mark Cano                          Name:  William Garza
     Title:  Senior Vice President             Title:  Assistant Vice President
EXHIBIT A

                            Form of Right Certificate

Certificate No. _____                                         __________ Rights

         NOT  EXERCISABLE  AFTER  THE  LATER OF  JANUARY  9,  2011 OR THE  TENTH
         ANNIVERSARY  OF THE  DISTRIBUTION  DATE (AS THAT TERM IS DEFINED IN THE
         RIGHTS  AGREEMENT)  OR EARLIER IF  REDEEMED.  THE RIGHTS ARE SUBJECT TO
         REDEMPTION  AT $0.001  PER  RIGHT ON THE TERMS SET FORTH IN THE  RIGHTS
         AGREEMENT. UNDER CERTAIN CIRCUMSTANCES,  RIGHTS BENEFICIALLY OWNED BY A
         20%  STOCKHOLDER OR AN AFFILIATE OR ASSOCIATE OF A 20%  STOCKHOLDER (AS
         SUCH  TERMS  ARE  DEFINED  IN  THE  RIGHTS   AGREEMENT   AND  AS  THOSE
         CIRCUMSTANCES  ARE SPECIFIED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT
         HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID.

                                Right Certificate

                         LASER-PACIFIC MEDIA CORPORATION

         This certifies that _______________________,  or registered assigns, is
the  registered  owner of the  number of Rights set forth  above,  each of which
entitles the owner thereof,  subject to the terms,  provisions and conditions of
the Rights  Agreement  dated as of January  12,  2001 (the  "Rights  Agreement")
between Laser-Pacific Media Corporation, a Delaware corporation (the "Company"),
and U. S. Stock  Transfer  Corporation,  a California  corporation  (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.,
California time, on the later of January 9, 2011 or the tenth anniversary of the
Distribution  Date at the office or agency of the Rights  Agent at 1745  Gardena
Avenue, Glendale, California 91204, or at the office of its successors as Rights
Agent, one one-hundredth of a fully paid non-assessable share of Series B Junior
Participating  Cumulative  Preferred  Stock,  $.0001 par value  (the  "Preferred
Shares"),  of the  Company,  at an  exercise  price of  $30.00  per  Right  (the
"Exercise  Price"),  upon  presentation and surrender of this Right  Certificate
with the Form of  Election  to  Purchase  duly  executed.  The  number of Rights
evidenced by this Right Certificate (and the number of Preferred Shares that may
be purchased upon exercise  thereof) set forth above, and the Exercise Price per
share set forth above,  are the number and Exercise Price as of January 12, 2001
based on the Preferred Shares as constituted at such date.

         As provided in the Rights Agreement,  the Exercise Price and the number
of  Preferred  Shares  that may be  purchased  upon the  exercise  of the Rights
evidenced by this Right  Certificate are subject to modification  and adjustment
upon the happening of certain events.  This Right  Certificate is subject to all
of the terms,  provisions and conditions of the Rights  Agreement,  which terms,
provisions and conditions are hereby incorporated herein by reference and made a
part hereof and to which  Rights  Agreement  reference is hereby made for a full
description  of the  rights,  limitations  of  rights,  obligations,  duties and
immunities  hereunder  of the Rights  Agent,  the Company and the holders of the
Rights Certificates. Copies of the Rights Agreement are on file at the principal
executive  offices of Laser-Pacific  Media  Corporation and the  above-mentioned
offices of the Rights Agent.

         This Right Certificate, with or without other Right Certificates,  upon
surrender at the office or agency of the Rights  Agent at 1745  Gardena  Avenue,
Glendale,  California  91204, may be exchanged for another Right  Certificate or
Right Certificates of like tenor and date evidencing Rights entitling the holder
to purchase a like aggregate  number of Preferred Shares 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,  the Rights evidenced by this
Certificate  may,  but are not  required  to, be  redeemed  by the  Company at a
redemption price of $0.001 per Right.

         No fractional  Preferred Shares will be issued upon the exercise of any
Right or  Rights  evidenced  hereby  (other  than  fractions  that are  integral
multiples of one one-hundredth of a Preferred Share,  which may, at the election
of the Company,  be evidenced by depositary  receipts),  but in lieu thereof,  a
cash payment will be made, as provided in the Rights Agreement.

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

         This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile  signature of the proper  officers of the Company
and its corporate seal. Dated as of _______ __, 200_.

ATTEST:                                       LASER-PACIFIC MEDIA CORPORATION

_________________________________             ________________________________
Secretary                                     President

Countersigned:

U. S. STOCK TRANSFER CORPORATION,
as Rights Agent

By:
         ____________________________________________

Title:
         ____________________________________________
Form of Reverse Side of Right Certificate

                               FORM OF ASSIGNMENT

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

         FOR VALUE RECEIVED _______________________________________ hereby
sells, assigns and transfers unto_______________________________________

__________________________________________________________________________
                  (Please print name and address of transferee)

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

Dated:  ____________________, ____

                                                     ________________________

                                                     Signature
Signature Guaranteed:

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

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

The  undersigned  hereby  certifies  that the  Rights  evidenced  by this  Right
Certificate are not  Beneficially  Owned by a 20% Stockholder or an Affiliate or
Associate thereof (as defined in the Rights Agreement).

                                                     ________________________
                                                     Signature

                                                     (Signature  must conform in
                                                     all  respects  to  name  of
                                                     holder as  specified on the
                                                     face    of    this    Right
                                                     Certificate     in    every
                                                     particular, without
                                                     alteration  or  enlargement
                                                     or any change whatsoever)

--------------------------------------------------------------------------------
Form of Reverse Side of Right Certificate -- continued

                          FORM OF ELECTION TO PURCHASE

                      (To be executed if holder desires to
                        exercise the Right Certificate.)

TO LASER-PACIFIC MEDIA CORPORATION

         The    undersigned    hereby    irrevocably    elects    to    exercise
___________________ Rights represented by this Right Certificate to purchase the
Preferred Shares or other  securities  issuable upon the exercise of such Rights
and requests that  certificates for such Preferred Shares or other securities be
issued in the following name:

                (please print name, address and social security,
                 tax identification or other identifying number:

                        _________________________

                        _________________________

                        _________________________

                        _________________________

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

                (please print name, address and social security,
                 tax identification or other identifying number:

                        _________________________

                        _________________________

                        _________________________

                        _________________________

Dated:______________________________

                                                     ________________________
                                                     Signature

                                                     (Signature  must conform in
                                                     all  respects  to  name  of
                                                     holder as  specified on the
                                                     face    of    this    Right
                                                     Certificate     in    every
                                                     particular,   without
                                                     alteration  or  enlargement
                                                     or any change whatsoever)
Form of Reverse Side of Right Certificate -- continued

Signature Guarantee:

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

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

The  undersigned  hereby  certifies  that the  Rights  evidenced  by this  Right
Certificate are not  Beneficially  Owned by a 20% Stockholder or an Affiliate or
Associate thereof (as defined in the Rights Agreement).

                                                     ________________________
                                                     Signature

                                                     (Signature  must conform in
                                                     all  respects  to  name  of
                                                     holder as  specified on the
                                                     face    of    this    Right
                                                     Certificate     in    every
                                                     particular,    without
                                                     alteration  or  enlargement
                                                     or any change whatsoever)

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

                                     NOTICE

         The  signatures in the foregoing  Forms of Assignment and Election 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.

         In the  event  the  certification  set  forth  above  in the  Forms  of
Assignment and Election is not  completed,  the Company will deem the Beneficial
Owner of the Rights evidenced by this Right  Certificate to be a 20% Stockholder
or an Affiliate or Associate  thereof (as defined in the Rights  Agreement) and,
in the case of an  Assignment,  will affix a legend to that  effect on any Right
Certificates issued in exchange for this Right Certificate.
EXHIBIT 4.2

                           CERTIFICATE OF DESIGNATIONS

                                       OF

                    SERIES B JUNIOR PARTICIPATING CUMULATIVE
                                 PREFERRED STOCK

                          (Par Value $.0001 Per Share)

                                       OF

                         LASER-PACIFIC MEDIA CORPORATION

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

         Laser-Pacific   Media   Corporation,   a  Delaware   corporation   (the
"Corporation"),  certifies  that  pursuant to the authority  conferred  upon the
Board of Directors of the Company (the "Board of Directors") by the  Certificate
of Incorporation  of the Company (the  "Certificate of  Incorporation"),  and in
accordance with the provisions of Section 151 of the General  Corporation Law of
the State of  Delaware,  as amended  (the  "GCL"),  the Board of  Directors,  on
January  9, 2001  adopted  the  following  resolution  creating  a series of its
Preferred Stock, par value $.0001 per share:

         RESOLVED,  that (1) pursuant to the authority  conferred upon the Board
of Directors of the  Corporation  by the  Certificate  of  Incorporation  of the
Corporation,  the Board of Directors hereby  designates  1,000,000 shares of the
preferred  stock,  par value $.0001 per share,  of the  Corporation as "Series B
Junior Participating  Cumulative Preferred Stock" (the "Preferred Shares"),  and
the powers, designations,  preferences and relative, participating, optional and
other rights of the Preferred  Shares and the  qualifications,  limitations  and
restrictions  thereof,  be,  and  they  hereby  are,  as set  forth  below  (the
"Certificate of Designations") and (2) in connection therewith,  the officers of
the  Corporation  be, and each of them  hereby  is,  authorized,  empowered  and
directed  on behalf of the  Corporation  and in its name to execute and file the
Certificate of Designations with the Delaware Secretary of State:

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

         Section 2.  Dividends and Distributions.

         (a) Subject to the rights of the holders of any shares of any series of
Preferred  Stock (or any similar stock) ranking prior and superior to the Series
B Preferred  Stock with respect to dividends,  the holders of shares of Series B
Preferred  Stock,  in preference  to the holders of shares of Common Stock,  par
value  $.0001 per share (the "Common  Stock"),  of the  Corporation,  and of any
other junior  stock,  shall be entitled to receive,  when, as and if declared by
the Board of Directors out of funds legally available for the purpose, quarterly
dividends  payable  in cash on the  first  day of  March,  June,  September  and
December in each year (each such date being  referred to herein as a  "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a share or fraction of a share of Series B Preferred
Stock, in an amount per share (rounded to the nearest cent) equal to the greater
of (i) $.25 per share  ($1.00 per annum) or (ii)  subject to the  provision  for
adjustment  hereinafter  set forth,  100 times the aggregate per share amount of
all cash  dividends,  and 100 times the aggregate  per share amount  (payable in
kind) of all non-cash  dividends or other  distributions,  other than a dividend
payable in shares of Common Stock or a subdivision of the outstanding  shares of
Common Stock (by  reclassification  or otherwise),  declared on the Common Stock
since the immediately preceding Quarterly Dividend Payment Date or, with respect
to the first Quarterly  Dividend  Payment Date,  since the first issuance of any
share or  fraction  of a share of  Series B  Preferred  Stock.  In the event the
Corporation  shall at any time  declare or pay any  dividend on the Common Stock
payable in shares of Common Stock,  or effect a subdivision  or  combination  or
consolidation of the outstanding shares of Common Stock (by  reclassification or
otherwise  than by  payment  of a  dividend  in shares of Common  Stock)  into a
greater or lesser number of shares of Common Stock,  then in each such event the
amount  to which  the  holder  of each  share of  Series B  Preferred  Stock was
entitled  immediately  prior to such event under  clause  (ii) 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 outstanding immediately prior to such event.

         (b) The  Corporation  shall declare a dividend or  distribution  on the
Series  B  Preferred  Stock as  provided  in  paragraph  (a) of this  Section  2
immediately  after it declares a dividend or  distribution  on the Common  Stock
(other than a dividend  payable in shares of Common Stock);  provided,  however,
that, in the event no dividend or  distribution  shall have been declared on the
Common Stock during the period between any Quarterly  Dividend  Payment Date and
the next  subsequent  Quarterly  Dividend  Payment  Date, a dividend of $.25 per
share ($1.00 per annum) on the Series B Preferred  Stock shall  nevertheless  be
payable on such subsequent Quarterly Dividend Payment Date.

         (c) Dividends  shall begin to accrue and be  cumulative on  outstanding
shares of Series B Preferred Stock from the Quarterly Dividend Payment Date next
preceding  the date of issue of such  shares,  unless  the date of issue of such
shares is prior to the  record  date for the first  Quarterly  Dividend  Payment
Date,  in which event  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 B 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 cumulate but
shall not bear  interest.  Dividends  paid on the  shares of Series B  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  B  Preferred  Stock  entitled  to  receive  payment  of  a  dividend  or
distribution declared thereon,  which record date shall be not more than 60 days
prior to the date fixed for the payment thereof.

         Section 3.  Voting Rights. The holders of shares of Series B Preferred
 Stock shall have the following voting rights:

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

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

         (c)  Except as set  forth  herein,  or as  otherwise  provided  by law,
holders of Series B  Preferred  Stock  shall have no special  voting  rights and
their consent  shall not be required  (except to the extent they are entitled to
vote with holders of Common Stock as set forth  herein) for taking any corporate
action.
Section 4.  Certain Restrictions.

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

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

                  (ii) authorize, declare or pay dividends on, or make any other
distributions  with respect to, any shares of stock ranking on a parity  (either
as to dividends or upon liquidation,  dissolution or winding up) with the Series
B Preferred Stock, except dividends paid ratably on the Series B 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 junior (either as to dividends or upon  liquidation,
dissolution  or winding up) to the Series B Preferred  Stock,  provided that the
Corporation may at any time redeem,  purchase or otherwise acquire shares of any
such junior stock in exchange for shares of any stock of the Corporation ranking
junior (either as to dividends or upon  liquidation,  dissolution or winding up)
to the Series B Preferred Stock; or

                  (iv) redeem or purchase or otherwise acquire for consideration
any shares of Series B  Preferred  Stock,  or any  shares of stock  ranking on a
parity with the Series B 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,  directly or indirectly, any
shares of stock of the Corporation unless the Corporation could, under paragraph
(a) of this Section 4,  purchase or  otherwise  acquire such shares at such time
and in such manner.

         Section 5.  Reacquired  Shares.  Any shares of Series B 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
subject to the conditions and restrictions on issuance set forth herein,  in the
Charter, in any other certificate of designations creating a series of Preferred
Stock or any similar stock or as otherwise required by law.

         Section  6.   Liquidation,   Dissolution   or  Winding   Up.  Upon  any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made to: (i) the  holders  of shares of stock  ranking  junior  (either as to
dividends  or upon  liquidation,  dissolution  or  winding  up) to the  Series B
Preferred  Stock  unless,  prior  thereto,  the  holders  of  shares of Series B
Preferred  Stock shall have received the greater of (A) $100.00 per share ($1.00
per one  one-hundredth  of a share),  plus an amount equal to accrued and unpaid
dividends and  distributions  thereon,  whether or not declared,  to the date of
such payment, or (B) an aggregate amount per share, subject to the provision for
adjustment  hereinafter set forth, equal to 100 times the aggregate amount to be
distributed per share of Common Stock to holders thereof; or (ii) the holders of
shares of stock ranking on a parity (either as to dividends or upon liquidation,
dissolution  or  winding  up)  with  the  Series  B  Preferred   Stock,   except
distributions  made ratably on the Series B Preferred  Stock and all such parity
stock in proportion to the total amounts to which the holders of all such shares
are entitled upon such liquidation,  dissolution or winding up. In the event the
Corporation  shall at any time  declare or pay any  dividend on the Common Stock
payable in shares of Common Stock,  or effect a subdivision  or  combination  or
consolidation of the outstanding shares of Common Stock (by  reclassification or
otherwise  than by  payment  of a  dividend  in shares of Common  Stock)  into a
greater or lesser number of shares of Common Stock,  then in each such event the
aggregate amount to which each holder of a share of Series B Preferred Stock was
entitled  immediately  prior to such event  under  clause  (i) 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 outstanding immediately prior to such event.

         Section 7. Consolidation, Merger or Other. In the event 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 or otherwise changed, then in any
such  event  each share of Series B  Preferred  Stock  shall at the same time be
similarly  exchanged  or  changed  into an  amount  per  share,  subject  to the
provision for adjustment hereinafter set forth, equal to 100 times the aggregate
amount of stock,  securities,  cash and/or any other property (payable in kind),
as the case may be,  into  which or for  which  each  share of  Common  Stock is
changed or exchanged.  In the event the Corporation shall at any time declare or
pay any  dividend  on the Common  Stock  payable in shares of Common  Stock,  or
effect a subdivision or combination or consolidation  of the outstanding  shares
of Common Stock (by  reclassification or otherwise than by payment of a dividend
in shares of Common  Stock) into a greater or lesser  number of shares of Common
Stock,  then in each such event the amount set forth in the  preceding  sentence
with  respect to the  exchange or change of shares of Series B  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
outstanding immediately prior to such event.

         Section 8.  No Redemption.  The shares of Series B Preferred Stock
shall not be redeemable.

         Section 9. Rank. The Series B Preferred  Stock shall rank, with respect
to the payment of dividends and the distribution of assets, junior to all series
or classes of the  Corporation's  Preferred Stock whether issued before or after
the issuance of the Series B Preferred Stock.

         Section 10.  Amendment.  The Charter shall not be amended in any manner
that would materially alter or change the powers,  preferences or special rights
of the Series B  Preferred  Stock,  as set forth  herein,  so as to affect  them
adversely  without the affirmative vote of the holders of at least two-thirds of
the outstanding shares of Series B Preferred Stock,  voting together as a single
class.
IN WITNESS  WHEREOF,  Laser-Pacific  Media  Corporation has caused this
Certificate of  Designations to be executed on its behalf by its Chief Executive
Officer, James R. Parks, and attested to by its Secretary,  Robert McClain, this
12th day of January, 2001.

                                       LASER-PACIFIC MEDIA CORPORATION

                                       By: /s/ James R. Parks
                                           ______________________________
                                           Name:  James R. Parks
                                           Title: Chief Executive Officer

         THE  UNDERSIGNED,  the Secretary of  Laser-Pacific  Media  Corporation,
hereby  acknowledges,  in the  name  and on  behalf  of  said  corporation,  the
foregoing   Certificate  of  Designations  to  be  the  corporate  act  of  said
corporation  and  further   certifies  that,  to  the  best  of  his  knowledge,
information and belief,  the matters and facts set forth therein with respect to
the approval thereof or otherwise required to be verified under oath are true in
all material respects, under the penalties of perjury.

By:  /s/ Robert McClain
     ________________________________
     Name:  Robert McClain
     Title: Secretary