UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 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 31, 2003




                         BROADWAY FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)




        Delaware                        0-27464                95-4547287
        --------                        -------                ----------
(State or other jurisdiction of  (Commission File Number)    (IRS Employer
 incorporation or organization)                           Identification Number)



     4800 Wilshire Boulevard, Los Angeles, California               90010
     ------------------------------------------------               -----
         (Address of principal executive offices)                (Zip Code)



                                 (323) 634-1700
               Registrant's telephone number, including area code





                                       1
<PAGE>

Item 5.  Other Events and Regulation FD Disclosure.

     On  January  31,  2003,  the  Board  of  Directors  of  Broadway  Financial
Corporation  (the "Company")  declared a dividend  distribution of one preferred
share purchase right (a "Right") for each share of common stock, par value $0.01
per share (the "Common Shares") of the Company outstanding at the close business
on February  13, 2003 (the  "Record  Date").  The  dividend  will be paid on the
Record  Date to  holders  of Common  Shares on such  date.  The  holders  of any
additional  Common Shares issued after the Record Date and before the redemption
or expiration of the Rights (or the  Distribution  Date, as defined  below) will
also be entitled to one Right for each such additional  Common Share. Each right
entitles the registered holder under certain  circumstances to purchase from the
Company one  one-hundredth of a Series A Junior  Participating  Preferred Share,
par value $0.01 per share (the "Participating Preferred Shares"), of the Company
at a price of $35.00 per one  one-hundredth  of a Participating  Preferred Share
(the "Purchase Price"), subject to adjustment.  The description and terms of the
Rights  are set forth in the  Rights  Agreement  dated as of  January  31,  2003
between the  Company and US Stock  Transfer  Corporation,  as rights  agent (the
"Rights Agreement").

     Initially,  the Rights will be attached to and  evidenced  by  certificates
evidencing  Common Shares,  and no separate  certificates for the Rights will be
distributed.  With certain  exceptions,  the Rights will become  exercisable and
will be evidenced by separate certificates only after the earlier to occur of:

(1)  10  days  following  a  public  announcement  that a  person  or  group  of
     affiliated or associated persons has acquired  beneficial  ownership of 15%
     or more of the outstanding  Common Shares  (thereby  becoming an "Acquiring
     Person"), or

(2)  15 business  days (or such later date as may be  determined by the Board of
     Directors  prior to such  time as any  person  or group  of  affiliated  or
     associated  persons becomes an Acquiring Person) following the commencement
     of a tender or exchange offer the consummation of which would result in the
     beneficial  ownership by a person or group of persons of 15% or more of the
     outstanding Common Shares.

(3)  10 business  days (or such later date as may be determined by action of the
     Board of Directors  prior to such time as any person or group of affiliated
     or associated  persons becomes an Acquiring Person) after the filing of any
     application,  request or other document with a governmental  agency seeking
     approval  of,  attempting  to rebut any  presumption  of control  upon,  or
     indicating  an  intention  to enter  into,  any  transaction  or  series of
     transactions  that would result in any person becoming the beneficial owner
     of 15% or more of the outstanding Common Shares. (The first to occur of the
     dates  is  referred  to  in  the  Rights   Agreement   and  herein  as  the
     "Distribution Date").

     Notwithstanding  the foregoing,  the Distribution  Date will not occur with
respect to any person who as of January 31, 2003  beneficially  owns 15% or more
of the outstanding Common Shares (a "Grandfathered Person"),  unless such person
acquires  beneficial  ownership of more than an  additional  1/2% of such Common


                                       2
<PAGE>


Shares.  Upon any sale or other  transfer  of Common  Shares by a  Grandfathered
Person,  the amount of Common Shares that the Grandfathered  Person may continue
to  beneficially  own  without  causing the  Distribution  Date to occur will be
reduced to the Grandfathered  Person's  percentage  beneficial  ownership of the
outstanding  Common  Shares as of the time  immediately  after the sale or other
transfer,  plus an  additional  1/2%. A person will cease to be a  Grandfathered
Person once such person's beneficial  ownership of the outstanding Common Shares
falls below 15%.

     Common Share certificates issued upon transfer or issuance of Common Shares
after the Record Date and prior to the Distribution Date (or earlier  redemption
or  expiration of the Rights) will contain a notation  incorporating  the Rights
Agreement by reference.  If the Board of Directors in good faith determines that
a  person  who  would   otherwise  be  an  Acquiring   Person  has  become  such
inadvertently,  and such person  divests as promptly as practicable a sufficient
number of Common  Shares so that  such  person  would no longer be an  Acquiring
Person,  then such  person  shall not be deemed to be an  Acquiring  Person  for
purposes of the Rights Agreement.

     The Rights will expire on January 31, 2013 (the "Final  Expiration  Date"),
unless the Final  Expiration  Date is  extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.

     The  Purchase  Price  payable,  and the number of  Participating  Preferred
Shares or other securities or property issuable, upon exercise of the Rights are
subject to adjustment under certain  circumstances  from time to time to prevent
dilution.  With certain exceptions,  no adjustment in the Purchase Price will be
required until  cumulative  adjustments  require an adjustment of at least 1% in
such Purchase Price.

     Participating Preferred Shares purchasable upon exercise of the Rights will
not be  redeemable.  Each  Participating  Preferred  Share will be entitled to a
minimum preferential  quarterly distribution payment, when, as and if authorized
by the Board of Directors  out of funds legally  available for such purpose,  of
$1.00 per share but will be entitled to an aggregate  distribution  of 100 times
any  distribution  declared per Common Share. In the event of  liquidation,  the
holders of the  Participating  Preferred  Shares  will be  entitled to a minimum
preferential  liquidation  payment of $1.00 per share but will be entitled to an
aggregate  payment  of 100  times  the  payment  made  per  Common  Share.  Each
Participating  Preferred  Share will have 100 votes,  voting  together  with the
Common Shares. In the event of any merger, consolidation or other transaction in
which Common Shares are exchanged,  each  Participating  Preferred Share will be
entitled to receive 100 times the amount received per Common Share. In the event
of issuance of Participating  Preferred  Shares upon exercise of the Rights,  in
order to  facilitate  trading,  a depositary  receipt may be issued for each one
one-hundredth  of a Participating  Preferred Share. The Rights will be protected
by customary antidilution provisions.

     In the event that any person or group of affiliated  or associated  persons
becomes an Acquiring  Person,  proper provision will be made so that each holder
of a Right, other than Rights  beneficially owned by the Acquiring Person (which
will  thereafter  be void),  will  thereafter  have the right to  receive,  upon
exercise thereof, a number of Common Shares having a market value (determined in
accordance with the Rights  Agreement) equal to two times the Purchase Price. In
lieu of the  issuance  of Common  Shares upon  exercise of Rights,  the Board of


                                       3
<PAGE>


Directors  may  under  certain  circumstances,  and if there is an  insufficient
number of Common Shares  authorized  but unissued to permit the exercise in full
of the Rights, the Board is required to, take such action as may be necessary to
cause the Company to issue or pay upon the exercise of Rights,  cash  (including
by way of a reduction of the Purchase Price),  property, other securities or any
combination  of the  foregoing  having an  aggregate  value equal to that of the
Common  Shares which  otherwise  would have been  issuable  upon exercise of the
Rights.  The Company may permit the Rights to be exercised for 50% of the Common
Shares (or cash, property or other securities that may be substituted for Common
Shares)  that  would   otherwise  be  purchasable   upon  exercise   thereof  in
consideration  of the  surrender  of the Rights so exercised  and without  other
payment of the Purchase Price.

     In the event that,  after any person or group becomes an Acquiring  Person,
the Company is acquired in a merger or other business combination transaction or
50% or more of its  consolidated  assets  or  earning  power  are  sold,  proper
provision will be made so that each holder of a Right will  thereafter  have the
right to receive,  upon the exercise thereof at the then current Purchase Price,
a number  of shares of common  stock of the  acquiring  company  having a market
value  (determined in accordance with the Rights  Agreement)  equal to two times
the Purchase Price.

     At any time after any person or group becomes an Acquiring Person and prior
to the  acquisition  by that  person or group of 50% or more of the  outstanding
Common Shares, the Board of Directors may exchange the Rights (other than Rights
owned by that person or group which will have become void), in whole or in part,
at  an  exchange  ratio  of  one  Common  Share  (or  one   one-hundredth  of  a
Participating Preferred Share) per Right (subject to adjustment).

     As  soon as  practicable  after  the  Distribution  Date,  the  Company  is
obligated to use its best  efforts to file a  registration  statement  under the
Securities  Act of 1933, as amended,  relating to the  securities  issuable upon
exercise of Rights and to cause such registration  statement to become effective
as soon as practicable.

     At any  time  prior to the time a person  or group of  persons  becomes  an
Acquiring Person, the Board of Directors may redeem the Rights, in whole but not
in part,  at a  redemption  price of $0.01 per Right (the  "Redemption  Price"),
payable  in cash,  Common  Shares  or any  other  form of  consideration  deemed
appropriate by the Board of Directors.  The redemption of the Rights may be made
effective at such time,  on such basis and with such  conditions as the Board of
Directors  in  its  sole   discretion  may  establish.   Immediately   upon  the
effectiveness of any redemption of the Rights,  the right to exercise the Rights
will  terminate  and the only right of the  holders of Rights will be to receive
the Redemption Price.

     The terms of the Rights may be  amended by the Board of  Directors  without
the consent of the  holders of the  Rights,  except that from and after the time
any person or group of  affiliated or  associated  persons  becomes an Acquiring
Person,  no such amendment may adversely  affect the interests of the holders of
the Rights.  Until a Right is exercised,  the holder thereof, as such, will have
no rights as a shareholder of the Company,  including,  without limitation,  the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to shareholders or to the Company,  shareholders  may,  depending
upon the  circumstances,  recognize  taxable income in the event that the Rights
become exercisable.


                                       4
<PAGE>

     The Rights  have  certain  anti-takeover  effects.  The  Rights  will cause
substantial  dilution to a person or group that  attempts to acquire the Company
on terms not approved by the Board of Directors. The Rights should not interfere
with any merger or other business combination approved by the Board of Directors
since the Rights may be redeemed by the Company at the Redemption Price prior to
the time that a person or group has acquired beneficial ownership of 15% or more
of the Common Shares.

     The  Rights  Agreement,  which  specifies  the terms of the  Rights and the
Participating  Preferred  Shares,  and the  Company's  February  3,  2003  press
release, in which the declaration of the dividend distribution of the Rights was
announced,  have been filed as  exhibits  to this  report  and are  incorporated
herein by reference.  The foregoing  description  in this Item 5 is qualified in
its entirety by reference to the Rights  Agreement,  including  the  definitions
therein of certain terms.

Item 7.  Financial Statements and Exhibits.

(c)      Exhibits

     4.1  Rights  Agreement  dated  as of  January  31,  2003  between  Broadway
          Financial  Corporation  and US Stock Transfer  Corporation,  as Rights
          Agent,   including   Exhibit  A  thereto  (Form  of   Certificate   of
          Designation,  Rights and  Preferences  relating to the Series A Junior
          Participating  Preferred  Shares) and Exhibit B thereto (Form of Right
          Certificate).

     99.1 Press release issued by Broadway Financial  Corporation on February 3,
          2003 concerning the adoption of the Rights Agreement.



                                       5
<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.

Date:    February 3, 2003

                         BROADWAY FINANCIAL CORPORATION


                         By:      /s/ Paul C. Hudson
                                  --------------------------
                                  Paul C. Hudson
                                  Chief Executive Officer and President



                                       6
<PAGE>




                                                                    Exhibit 4.1


















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

                                RIGHTS AGREEMENT

                                     between

                         BROADWAY FINANCIAL CORPORATION

                                       and

                          US STOCK TRANSFER CORPORATION

                                  Rights Agent

                          Dated as of January 31, 2003


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









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



                                RIGHTS AGREEMENT


     Agreement,  dated  as  of  January  31,  2003  between  Broadway  Financial
Corporation,  a Delaware  corporation  (the  "Company"),  and US Stock  Transfer
Corporation, a California corporation (the "Rights Agent").

     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 as of the close of business
on February 13, 2003 (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 herein set forth, and has further agreed
to  authorize  and direct the  issuance of one Right with respect to each Common
Share that shall  become  outstanding  between  the Record Date and the first to
occur of the Redemption  Date and the Final  Expiration  Date (as such terms are
hereinafter defined).

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

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

     "Acquiring  Person"  shall mean any Person who or which,  together with all
Affiliates and Associates of such Person,  shall be the Beneficial  Owner of 15%
or more of the Common  Shares  then  outstanding,  but shall not include (A) the
Company or any Affiliate or Subsidiary of the Company,  (B) any employee benefit
plan of the  Company or of any  Affiliate  or  Subsidiary  of the Company or any
entity  holding  Common Shares for or pursuant to the terms of any such plan, or
(C) any  Grandfathered  Person,  unless such  Grandfathered  Person  becomes the
Beneficial Owner of a percentage of the Common Shares then outstanding  equal to
or   exceeding   such   Grandfathered   Person's    Grandfathered    Percentage.
Notwithstanding  the foregoing,  no Person shall become an "Acquiring Person" as
the result of (X) an  acquisition  of Common  Shares by the  Company  which,  by
reducing the number of Common Shares  outstanding,  increases the  proportionate
number of Common Shares beneficially owned by such Person to 15% (or in the case
of a  Grandfathered  Person,  the  Grandfathered  Percentage  applicable to such
Grandfathered  Person)  or  more  of  the  Common  Shares  of the  Company  then
outstanding, or (Y) the acquisition by such Person of newly issued Common Shares
directly  from  the  Company  (it  being  understood  that a  purchase  from  an
underwriter  or  other  intermediary  is not an  acquisition  directly  from the
Company);  provided, however, that if a Person shall become the Beneficial Owner
of 15% (or in the case of a Grandfathered  Person, the Grandfathered  Percentage
applicable  to such  Grandfathered  Person) or more of the Common  Shares of the
Company then  outstanding by reason of Common Share  purchases by the Company or
the  acquisition  of newly issued  Common  Shares  directly from the Company and
shall,  after such Common  Share  purchases  or direct  issuance by the Company,
become the Beneficial Owner of any additional Common Shares (other than pursuant
to a stock split,  stock dividend or similar  transaction) of the Company,  then
such Person shall be deemed to be an "Acquiring  Person";  and provided further,

<PAGE>

that any transferee from such Person who becomes the Beneficial  Owner of 15% or
more of the Common Shares of the Company then outstanding shall  nevertheless be
deemed to be an "Acquiring Person."  Notwithstanding the foregoing, if the Board
of  Directors  of the Company  determines  in good faith that a Person who would
otherwise  be an  "Acquiring  Person,"  as  defined  pursuant  to the  foregoing
provisions of this paragraph, has become such inadvertently (including,  without
limitation,  because (i) such Person was unaware  that it  beneficially  owned a
percentage  of Common  Shares  that would  otherwise  cause such Person to be an
"Acquiring Person" or (ii) such Person was aware of the extent of its Beneficial
Ownership of Common Shares but had no actual  knowledge of the  consequences  of
such  Beneficial  Ownership  under this  Agreement),  and such Person divests as
promptly  as  practicable  (and in any event  within  ten  Business  Days  after
notification  by the Company) a sufficient  number of Common Shares so that such
Person  would no longer be an  Acquiring  Person,  as  defined  pursuant  to the
foregoing provisions of this paragraph,  then such Person shall not be deemed to
be an "Acquiring Person" for any purposes of this Agreement.

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

     A Person shall be deemed the  "Beneficial  Owner" of and shall be deemed to
"beneficially own" any securities:

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

     (ii) which such Person or any of such Person's  Affiliates  or  Associates,
          directly or  indirectly,  has (A) the right to acquire  (whether  such
          right  is  exercisable  immediately  or only  upon the  occurrence  of
          certain events, or after the passage of time, or both) pursuant to any
          agreement,  arrangement  or  understanding,  whether  written  or oral
          (other than customary  agreements  with and between  underwriters  and
          selling group  members with respect to a bona fide public  offering of
          securities),  or upon the  exercise  of  conversion  rights,  exchange
          rights,  rights  (other than the  Rights),  warrants  or  options,  or
          otherwise;  provided,  however,  that a Person shall not be deemed the
          Beneficial  Owner  of, or to  beneficially  own,  securities  tendered
          pursuant  to a tender or  exchange  offer made by or on behalf of such
          Person or any of such Person's  Affiliates  or  Associates  until such
          tendered  securities  are accepted  for purchase or exchange;  (B) the
          sole or shared right to vote or dispose of  (including  any such right
          pursuant  to any  agreement,  arrangement  or  understanding,  whether
          written or oral); provided, however, that a Person shall not be deemed
          the Beneficial  Owner of, or to beneficially  own, any security if the
          agreement,  arrangement  or  understanding  to vote such  security (1)
          arises  solely from a revocable  proxy or consent given to such Person
          in response to a public proxy or consent  solicitation  made  pursuant
          to, and in  accordance  with,  the  applicable  rules and  regulations
          promulgated under the Exchange Act and (2) is not also then reportable
          on Schedule 13D under the Exchange Act (or any comparable or successor
          report);  or (C) "beneficial  ownership" of as determined  pursuant to
          Rule 13d-3 of the General  Rules and  Regulations  under the  Exchange
          Act; or


                                       2
<PAGE>

     (iii)which are  beneficially  owned,  directly or indirectly,  by any other
          Person (or any Affiliate or Associate  thereof) with which such Person
          or any of such Person's  Affiliates or Associates  has any  agreement,
          arrangement or understanding (other than customary agreements with and
          between  underwriters and selling group members with respect to a bona
          fide public  offering  of  securities)  for the purpose of  acquiring,
          holding,  voting (except to the extent  contemplated by the proviso to
          clause (B) of  subparagraph  (ii) of this  definition) or disposing of
          any securities of the Company.

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

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

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

               "Common  Shares" when used with  reference  to the Company  shall
          mean the shares of common  stock,  par value  $0.01 per share,  of the
          Company.  "Common Shares" when used with reference to any Person other
          than the  Company  shall mean the capital  stock (or equity  interest)
          with the  greatest  voting  power of such  other  Person or the equity
          securities or other equity  interest having power to control or direct
          the management of such other Person.

               "Distribution Date" shall have the meaning set forth in Section 3
          hereof.

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

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

               "Expiration  Date"  shall have the meaning set forth in Section 7
          hereof.

               "Final  Expiration  Date"  shall  have the  meaning  set forth in
          Section 7 hereof.

               "Grandfathered  Percentage"  shall  mean,  with  respect  to  any
          Grandfathered   Person  at  any  time,  the  percentage  of  the  then
          outstanding  Common Shares that such  Grandfathered  Person,  together
          with all  Affiliates  and  Associates  of such  Grandfathered  Person,
          Beneficially  Owns as of the  Grandfathered  Time,  plus an additional
          1/2%; provided,  however,  that, in the event any Grandfathered Person
          shall sell,  transfer,  or otherwise dispose of any outstanding Common
          Shares after the  Grandfathered  Time,  the  Grandfathered  Percentage
          shall,  subsequent to such sale,  transfer or disposition,  mean, with
          respect  to  such   Grandfathered   Person,  the  lesser  of  (i)  the


                                       3
<PAGE>


          Grandfathered  Percentage as in effect immediately prior to such sale,
          transfer or disposition or (ii) the percentage of the then outstanding
          Common  Shares  that  such  Grandfathered   Person  Beneficially  Owns
          immediately  following  such sale,  transfer or  disposition,  plus an
          additional 1/2%.

               "Grandfathered  Person"  shall  mean  any  Person  who or  which,
          together with all Affiliates and Associates of such Person,  is, as of
          the  Grandfathered  Time, the  Beneficial  Owner of 15% or more of the
          then  outstanding  Common  Shares.  Notwithstanding  anything  to  the
          contrary  provided in this  Agreement,  any  Grandfathered  Person who
          after the Grandfathered Time becomes the Beneficial Owner of less than
          15%  of  the  then  outstanding  Common  Shares  shall  cease  to be a
          Grandfathered  Person and shall be subject to all of the provisions of
          this Agreement in the same manner as any Person who is not and was not
          a Grandfathered Person.

               "Grandfathered  Time"  shall  mean 5.00  p.m.  Pacific  time,  on
          January 31, 2003.

               "Person" shall mean any  individual,  firm,  corporation or other
          entity,  and shall  include any  successor (by merger or otherwise) of
          such entity.

               "Preferred  Shares" shall mean the Series A Junior  Participating
          Preferred Shares, par value $0.01 per share, of the Company having the
          rights  and  preferences  set  forth  in the  form of  Certificate  of
          Designation,  Preferences  and Rights  attached to this  Agreement  as
          Exhibit A.

               "Principal  Party" shall have the meaning set forth in Section 13
          hereof.

               "Purchase  Price"  shall have the  meaning set forth in Section 4
          hereof.

               "Redemption  Date"  shall have the meaning set forth in Section 7
          hereof.

               "Right Certificate" shall have the meaning set forth in Section 3
          hereof.

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

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

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

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

               "Triggering  Event"  shall  mean any event  described  in Section
          11(a)(ii) or Section 13(a).

                                       4
<PAGE>

     Any determination or interpretation  required in connection with any of the
definitions  contained in this Section 1 shall be made by the Board of Directors
of the Company in their good faith judgment,  which determination shall be final
and binding on the Rights Agent and on all shareholders of the Company.

     Section 2.  Appointment of Rights Agent.  The Company  hereby  appoints the
Rights  Agent to act as agent for the Company in  accordance  with the terms and
conditions  hereof and the Rights Agent hereby  accepts  such  appointment.  The
Company  may from  time to time  appoint  such  co-Rights  Agents as it may deem
necessary or desirable  upon ten days' prior written notice to the Rights Agent.
The Rights Agent shall have no duty to supervise and shall in no event be liable
for acts or omissions of any such co-Rights Agents.

     Section 3. Issuance of Right Certificates.

(a)  Until the  earlier of (i) the close of  business on the tenth day after the
     Shares  Acquisition  Date,  (ii) the  close of  business  on the  fifteenth
     Business  Day (or such  later  date as may be  determined  by action of the
     Board of  Directors  prior to such time as any Person  becomes an Acquiring
     Person)  after the date of the  commencement  by any Person (other than the
     Company,  any Affiliate or Subsidiary of the Company,  any employee benefit
     plan of the Company or of any Affiliate or Subsidiary of the Company or any
     entity holding Common Shares for or pursuant to the terms of any such plan)
     of a tender or exchange offer the consummation of which would result in any
     Person  becoming the Beneficial  Owner of Common Shares  aggregating 15% or
     more of the then outstanding  Common Shares, or (iii) the close of business
     on the tenth  Business  Day (or such  later  date as may be  determined  by
     action of the Board of Directors  prior to such time as any Person  becomes
     an  Acquiring  Person)  after  the  date of  filing  by any  Person  of any
     application,  request,  submission  or other  document  with any federal or
     state regulatory  authority  seeking  approval of,  attempting to rebut any
     presumption  of control of, or otherwise  indicating  an intention to enter
     into, any transaction or series of transactions  the  consummation of which
     would result in any Person  becoming the Beneficial  Owner of Common Shares
     aggregating 15% or more of the then outstanding Common Shares, other than a
     transaction in which newly issued Common Shares are issued  directly by the
     Company to such Person  (including any such date which is after the date of
     this Agreement and prior to the issuance of the Rights; the earlier of such
     dates being herein referred to as the "Distribution  Date"), (x) the Rights
     will be evidenced (subject to the provisions of Section 3(b) hereof) by the
     certificates  for  Common  Shares  registered  in the names of the  holders
     thereof (which  certificates  shall also be deemed to be  certificates  for
     Rights)  and not by  separate  certificates,  and (y)  the  Rights  will be
     transferable  only in connection with the transfer of the underlying Common
     Shares (including a transfer to the Company).  As soon as practicable after
     the  Distribution  Date,  the Company will prepare and execute,  the Rights
     Agent will countersign,  and the Company will send or cause to be sent (and
     the  Rights  Agent  will,  if  requested,  send) by  first-class,  insured,
     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,  in substantially
     the form of Exhibit B hereto (a "Right Certificate"),  evidencing one Right
     for each Common Share so held. As of the Distribution Date, the Rights will
     be evidenced solely by such Right Certificates.


                                       5
<PAGE>

(b)  With respect to certificates for Common Shares outstanding as of the Record
     Date,  until the  Distribution  Date,  the Rights will be evidenced by such
     certificates registered in the names of the holders thereof, and registered
     holders  of Common  Shares  shall  also be the  registered  holders  of the
     associated Rights (regardless of whether such ownership is indicated on the
     Common Share  certificates).  Until the earliest of the Distribution  Date,
     the  Redemption  Date or the Final  Expiration  Date,  the  transfer of any
     certificate  for Common  Shares shall also  constitute  the transfer of the
     Rights associated with the Common Shares represented thereby.

(c)  Rights  shall be issued in respect of all  Common  Shares  which are issued
     (whether or not  previously  issued) after the Record Date but prior to the
     earliest  of the  Distribution  Date,  the  Redemption  Date  or the  Final
     Expiration Date.  Certificates  evidencing such Common Shares shall also be
     deemed to be certificates for Rights.  Certificates  evidencing both Common
     Shares and Rights in accordance  with this Section 3 which are executed and
     delivered  (whether  or  not  the  Common  Shares  evidenced  thereby  were
     previously issued or are presented for transfer) by the Company (including,
     without  limitation,  certificates  representing  reacquired  Common Shares
     referred to in the last  sentence of this  paragraph  (c)) after the Record
     Date but prior to the earliest of the  Distribution  Date,  the  Redemption
     Date or the Final  Expiration  Date shall have  impressed  on,  printed on,
     written on or otherwise affixed to them a legend that by itself or together
     with  prior  legends  is  substantially  to  the  following  effect:   This
     certificate also evidences and entitles the holder hereof to certain rights
     as set forth in the Rights Agreement between Broadway Financial Corporation
     (the "Company") and US Stock Transfer Corporation,  dated as of January 31,
     2003 (the "Rights  Agreement"),  the terms of which are hereby incorporated
     herein by reference and a copy of which is on file at the principal offices
     of the Company.  Under  certain  circumstances,  as set forth in the Rights
     Agreement,  the Rights will be evidenced by separate  certificates and will
     no longer be  evidenced by this  certificate.  The Company will mail to the
     holder of this certificate a copy of the Rights Agreement,  as in effect on
     the date of mailing,  without  charge  promptly  after receipt of a written
     request  therefor.  Under  certain  circumstances  set forth in the  Rights
     Agreement,  Rights issued to, or held by, any Person who is, was or becomes
     an Acquiring Person or an Affiliate or Associate thereof (as such terms are
     defined in the Rights Agreement), whether currently held by or on behalf of
     such Person or by any subsequent holder, shall become null and void.

Until the Distribution  Date, the Rights associated with the Common Shares shall
be evidenced by the certificates  evidencing the associated  Common Shares alone
(regardless of whether any such certificate  contains the above legend), and the
transfer  of any such  certificate  shall also  constitute  the  transfer of the
Rights associated with the Common Shares represented  thereby. In the event that
the Company  purchases or acquires  any Common  Shares after the Record Date but
prior to the  Distribution  Date, any Rights  associated with such Common Shares
shall be deemed  canceled and retired so that the Company  shall not be entitled
to exercise  any Rights  associated  with the Common  Shares which are no longer
outstanding.


                                       6
<PAGE>

     Section 4. Form of Right Certificates.

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

(b)  Any Right Certificate  issued pursuant to Section 3(a) or Section 22 hereof
     that evidences Rights beneficially owned by: (i) an Acquiring Person or any
     Associate  or Affiliate of an  Acquiring  Person,  (ii) a transferee  of an
     Acquiring  Person (or any Associate or Affiliate)  who becomes a transferee
     after  the  Acquiring  Person  becomes  an  Acquiring  Person,  or  (iii) a
     transferee  of an  Acquiring  Person (or any  Associate or  Affiliate)  who
     becomes a transferee  prior to or  concurrently  with the Acquiring  Person
     becoming  such and receives  such Rights  pursuant to either (A) a transfer
     (whether or not for consideration)  from the Acquiring Person to holders of
     equity  interests in such  Acquiring  Person or to any Person with whom the
     Acquiring   Person   has   any   continuing   agreement,   arrangement   or
     understanding, whether written or oral, regarding the transferred Rights or
     (B) a  transfer  which  is part of a plan,  arrangement  or  understanding,
     whether  written  or oral,  which has as a primary  purpose  or effect  the
     avoidance of Section 7(e) hereof, and any Right Certificate issued pursuant
     to Section 6 or Section 11 hereof upon transfer,  exchange,  replacement or
     adjustment  of any other Right  Certificate  referred to in this  sentence,
     shall contain (to the extent feasible and otherwise reasonably identifiable
     as such) the following legend:

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

The provisions of Section 7(e) shall apply whether or not any Right  Certificate
actually contains the foregoing legend.

     Section 5. Countersignature and Registration.  The Right Certificates shall
be executed on behalf of the Company by the Chairman of its Board of  Directors,
its Chief Executive  Officer or any of its Executive or Senior Vice  Presidents,
or its Secretary,  either manually or by facsimile signature, shall have affixed
thereto the Company's seal or a facsimile thereof,  and shall be attested by the
Secretary  or an  Assistant  Secretary  of the  Company,  either  manually or by


                                       7
<PAGE>

facsimile signature.  The Right Certificates shall be manually  countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. In
case  any  officer  of the  Company  who  shall  have  signed  any of the  Right
Certificates   shall   cease  to  be  such   officer  of  the   Company   before
countersignature  by the Rights  Agent and issuance and delivery by the Company,
such Right Certificates,  nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right  Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by  any  person  who,  at the  actual  date  of  the  execution  of  such  Right
Certificate,  shall  be a proper  officer  of the  Company  to sign  such  Right
Certificate,  although at the date of the execution of this Rights Agreement any
such person was not such an officer.

     Following the Distribution  Date, the Rights Agent will keep or cause to be
kept, at its office  designated  for such purpose,  books for  registration  and
transfer of the Right Certificates  issued hereunder.  Such books shall show the
names and addresses of the  respective  holders of the Right  Certificates,  the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.

     Section  6.  Transfer,   Division,   Combination   and  Exchange  of  Right
Certificates;  Mutilated, Destroyed, Lost or Stolen Right Certificates.  Subject
to the  provisions of Sections 4(b),  7(e), 14 and 24 hereof,  at any time after
the close of business on the Distribution  Date, and at or prior to the close of
business on the earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate or Right Certificates may be transferred, divided, combined or
exchanged for another Right  Certificate  or Right  Certificates,  entitling the
registered holder to purchase a like number of Preferred Shares (or, following a
Triggering Event, Common Shares or other securities or property, as the case may
be) as the Right  Certificate or Right  Certificates  surrendered  then entitled
such holder to purchase.  Any registered  holder  desiring to transfer,  divide,
combine or exchange any Right Certificate or Right  Certificates shall make such
request in writing  delivered to the Rights Agent, and shall surrender the Right
Certificate  or Right  Certificates  to be  transferred,  divided,  combined  or
exchanged at the office of the Rights Agent designated for such purpose. Neither
the  Rights  Agent  nor the  Company  shall  be  obligated  to take  any  action
whatsoever  with  respect  to  the  transfer  of  any  such  surrendered   Right
Certificate  until the  registered  holder shall have  completed  and signed the
certificate  contained  in the form of  assignment  on the reverse  side of such
Right  Certificate and the Company shall have been provided with such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates  or  Associates  thereof as the  Company  shall  reasonably  request.
Thereupon  the  Rights  Agent  shall,  subject  to  Sections  4  and  7  hereof,
countersign  and deliver to the person entitled  thereto a Right  Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental  charge that may be
imposed in connection  with any transfer,  division,  combination or exchange of
Right Certificates.

     Upon  receipt by the  Company and the Rights  Agent of evidence  reasonably
satisfactory  to them of the loss,  theft,  destruction or mutilation of a Right
Certificate,  and,  in case of  loss,  theft or  destruction,  of  indemnity  or
security  reasonably  satisfactory  to  them,  and,  at the  Company's  request,
reimbursement  to the Company and the Rights  Agent of all  reasonable  expenses
incidental  thereto,  and upon surrender to the Rights Agent and cancellation of


                                       8
<PAGE>


the Right  Certificate  if  mutilated,  the Company  will make and deliver a new
Right  Certificate  of like tenor to the Rights Agent for  countersignature  and
delivery  to the  registered  holder in lieu of the Right  Certificate  so lost,
stolen, destroyed or mutilated.

     Section 7. Exercise of Rights;  Purchase Price;  Expiration Date of Rights.

(a)  Subject  to  Section  7(e)  hereof,  the  registered  holder  of any  Right
     Certificate may exercise the Rights evidenced  thereby (except as otherwise
     provided  herein)  in whole or in part at any time  after the  Distribution
     Date upon surrender of the Right Certificate,  with the form of election to
     purchase on the reverse side thereof duly executed,  to the Rights Agent at
     the office of the Rights Agent  designated for such purpose,  together with
     payment of the Purchase  Price with respect to each  surrendered  Right for
     the total number of Preferred  Shares (or Common Shares or other securities
     or property,  as the case may be) as to which the Rights are exercised,  at
     or prior to the  earliest  of (i) the close of business on January 31, 2013
     (the  "Final  Expiration  Date"),  (ii) the time at which  the  Rights  are
     redeemed as provided in Section 23 hereof (the "Redemption  Date") or (iii)
     the time at which  such  Rights are  exchanged  as  provided  in Section 24
     hereof (the  earliest  to occur of the events  described  in (i),  (ii) and
     (iii) being herein referred to as the "Expiration Date").

(b)  The Purchase Price for each one one-hundredth of a Preferred Share pursuant
     to the exercise of a Right shall  initially be $35.00,  shall be subject to
     adjustment  from time to time as  provided in Sections 11 and 13 hereof and
     shall be  payable  in  lawful  money of the  United  States of  America  in
     accordance with paragraph (c) below.

(c)  Upon receipt of a Right Certificate evidencing exercisable Rights, with the
     form of election to purchase and the certificate on the reverse side of the
     Right  Certificate  duly  executed,  accompanied by payment of the Purchase
     Price for the  Preferred  Shares (or Common  Shares or other  securities or
     property,  as the case may be) to be  purchased  and an amount equal to any
     applicable  transfer  tax  required  to be paid by the holder of such Right
     Certificate  in  accordance  with  Section  9 hereof  by  certified  check,
     cashier's  check or money order  payable to the order of the  Company,  the
     Rights Agent shall thereupon promptly (i) (A) requisition from any transfer
     agent of the Preferred  Shares (or make  available,  if the Rights Agent is
     the transfer agent of the Preferred Shares)  certificates for the number of
     Preferred  Shares  to be  purchased  and  the  Company  hereby  irrevocably
     authorizes its transfer  agent to comply with all such requests,  or (B) if
     the Company  shall have elected to deposit the  Preferred  Shares  issuable
     upon exercise of the Rights with a depositary  agent,  requisition from the
     depositary  agent  depositary  receipts  representing  such  number  of one
     one-hundredths  of a Preferred  Share as are to be purchased (in which case
     certificates  for the Preferred  Shares evidenced by such receipts shall be
     deposited by the transfer agent with the depositary  agent) and the Company
     will direct the  depositary  agent to comply with such  request,  (ii) when
     appropriate,  requisition from the Company the amount of cash to be paid in
     lieu of issuance of fractional shares in accordance with Section 14 hereof,
     (iii) after receipt of such certificates or depositary receipts,  cause the
     same to be delivered to or upon the order of the registered  holder of such
     Right Certificate, registered in such name or names as may be designated by
     such holder and (iv) when appropriate,  after receipt, deliver such cash to


                                       9
<PAGE>

     or upon the order of the registered  holder of such Right  Certificate.  In
     the  event  that  the  Company  is  obligated  to  issue  other  securities
     (including Common Shares) of the Company,  pay cash and/or distribute other
     property  pursuant  to Section  11(a)  hereof,  the  Company  will make all
     arrangements necessary so that such other securities,  cash and/or property
     are  available  for   distribution   by  the  Rights  Agent,  if  and  when
     appropriate.

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

(e)  Notwithstanding  anything in this Agreement to the contrary, from and after
     the occurrence of a Triggering Event, any Rights  beneficially owned by (i)
     an Acquiring  Person or an  Associate or Affiliate of an Acquiring  Person,
     (ii) a  transferee  of an  Acquiring  Person (or of any such  Associate  or
     Affiliate) who becomes a transferee  after the Acquiring  Person becomes an
     Acquiring  Person or (iii) a  transferee  of an  Acquiring  Person  (or any
     Associate or Affiliate) who becomes a transferee  prior to or  concurrently
     with the Acquiring  Person  becoming an Acquiring  Person and receives such
     Rights pursuant to either (x) a transfer (whether or not for consideration)
     from the Acquiring  Person to holders of equity interests in such Acquiring
     Person or to any Person with whom the Acquiring  Person has any  continuing
     agreement, arrangement or understanding, whether written or oral, regarding
     the  transferred  Rights or (y) a  transfer  which  the Board of  Directors
     otherwise  concludes  in good  faith  is part  of a  plan,  arrangement  or
     understanding,  whether written or oral,  which has as a primary purpose or
     effect the  avoidance  of this  Section  7(e),  shall  become null and void
     without any further  action,  and any holder of such Rights shall thereupon
     have no rights  whatsoever  with respect to such Rights,  whether under any
     provision of this Agreement or otherwise,  from and after the occurrence of
     a Triggering Event. The Company shall use all reasonable  efforts to insure
     that the  provisions  of this Section 7(e) hereof are  complied  with,  but
     shall have no liability  to any holder of Rights for the  inability to make
     any  determinations  with respect to an Acquiring Person or its Affiliates,
     Associates or transferees hereunder.

(f)  Notwithstanding  anything in this  Agreement to the  contrary,  neither the
     Rights Agent nor the Company  shall be  obligated  to undertake  any action
     with respect to a registered  holder upon the  occurrence  of any purported
     exercise as set forth in this Section 7 unless the certificate contained in
     the form of election to purchase set forth on the reverse side of the Right
     Certificate  surrendered  for such exercise  shall have been  completed and
     signed by the  registered  holder  thereof and the Company  shall have been
     provided with such  additional  evidence of the identity of the  Beneficial
     Owner (or former Beneficial  Owner) or Affiliates or Associates  thereof as
     the Company shall reasonably request.

(g)  The Company covenants and agrees that it will cause to be reserved and kept
     available  out  of its  authorized  and  unissued  Preferred  Shares  (and,
     following  the  occurrence  of a Triggering  Event,  Common Shares or other
     securities or property as contemplated by Section  11(a)(iii)),  the number


                                       10
<PAGE>


     of Preferred Shares (and,  following the occurrence of a Triggering  Event,
     Common  Shares  and/or  such other  securities  or  property)  that will be
     sufficient to permit the exercise in full of all outstanding Rights.

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

     Section 9. Availability of Preferred Shares; Payment of Taxes and Charges.

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

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

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


                                       11
<PAGE>

transfer books of the Company for the Preferred  Shares (or Common Shares and/or
other  securities,  as the case may be) are open.  Prior to the  exercise of the
Rights  evidenced  thereby,  the  holder  of a Right  Certificate  shall  not be
entitled to any rights of a holder of Preferred  Shares (or Common Shares and/or
other securities, as the case may be) for which the Rights shall be exercisable,
including,  without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.

     Section 11.  Adjustment  of Purchase  Price,  Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.

 (a) (i)  In the  event  the  Company  shall at any time  after the date of this
          Agreement  (A) declare a dividend on the Preferred  Shares  payable in
          Preferred Shares, (B) subdivide the outstanding  Preferred Shares, (C)
          combine the  outstanding  Preferred  Shares  into a smaller  number of
          Preferred Shares or (D) issue any of its shares 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 entity),  except as otherwise provided in this
          Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at
          the time of the record date for such dividend or of the effective date
          of such subdivision,  combination or reclassification,  and the number
          and kind of shares  issuable  on such date,  shall be  proportionately
          adjusted  so that the  holder of any Right  exercised  after such time
          shall be entitled to receive the  aggregate  number and kind of shares
          which, if such Right had been exercised immediately prior to such date
          and at a time when the transfer books of the Company for the Preferred
          Shares  were open,  he would have  owned upon such  exercise  and been
          entitled  to  receive  by  virtue  of  such   dividend,   subdivision,
          combination or reclassification;  provided,  however, that in no event
          shall the  consideration to be paid upon -------- ------- the exercise
          of one Right be less than the aggregate par value of the shares of the
          Company  issuable  upon the exercise of one Right.  If an event occurs
          which would  require an  adjustment  under both  Section  11(a)(i) and
          Section  11(a)(ii),  the  adjustment  provided  for  in  this  Section
          11(a)(i)  shall be in  addition  to,  and shall be made  prior to, any
          adjustment required pursuant to Section 11(a)(ii).

     (ii) Subject  to  Section  24 of this  Agreement,  in the event any  Person
          becomes  an  Acquiring  Person,  each  holder  of a Right,  except  as
          provided  below and in Section 7(e) hereof,  shall  thereafter  have a
          right to receive,  upon exercise  thereof at a price equal to the then
          current Purchase Price multiplied by the number of one  one-hundredths
          of a  Preferred  Share  for  which a Right  is  then  exercisable,  in
          accordance  with the terms of this  Agreement and in lieu of Preferred
          Shares, such number of Common Shares of the Company as shall equal the
          result obtained by (A) multiplying the then current  Purchase Price by
          the  number of one  one-hundredths  of a  Preferred  Share for which a
          Right is then  exercisable and dividing that product by (B) 50% of the
          then  current per share market price of the  Company's  Common  Shares
          (determined  pursuant  to  Section  11(d)  hereof)  on the date of the
          occurrence of such event. In the event that any Person shall become an
          Acquiring Person and the Rights shall then be outstanding, the Company
          shall not take any  action  which  would  eliminate  or  diminish  the
          benefits intended to be afforded by the Rights.

                                       12
<PAGE>

     (iii)In lieu of issuing  Common  Shares of the Company in  accordance  with
          Section 11(a)(ii)  hereof,  the Company may, in the sole discretion of
          the Board of Directors,  elect to (and, in the event that the Board of
          Directors has not exercised the exchange right contained in Section 24
          hereof and there are not  sufficient  issued but not  outstanding  and
          authorized  but unissued  Common Shares to permit the exercise in full
          of the Rights in accordance with the foregoing  subparagraph (ii), the
          Company  shall) take all such action as may be necessary to authorize,
          issue or pay,  upon the  exercise of the Rights,  Preferred  Shares or
          other  preferred  shares  which a majority  of the Board of  Directors
          determines  in good  faith  to be  equivalent  to one or  more  Common
          Shares,  or cash  (including  by way of a  reduction  of the  Purchase
          Price),  property,  other  securities  or  any  combination  of  cash,
          property and such other securities  having an aggregate value equal to
          the value of the Common  Shares of the Company which  otherwise  would
          have been  issuable  pursuant to Section  11(a)(ii),  which  aggregate
          value shall be  determined in good faith by a majority of the Board of
          Directors.  For purposes of the preceding  sentence,  the value of the
          Common Shares shall be determined pursuant to Section 11(d) hereof and
          the value of any equity  securities  which a majority  of the Board of
          Directors  determines in good faith to be equivalent to a Common Share
          (including the Preferred Shares or other preferred  shares  determined
          to be  equivalent to one or more Common  Shares,  in such ratio as the
          Board of Directors shall  determine)  shall be deemed to have the same
          value  as the  Common  Shares.  Any  such  election  by the  Board  of
          Directors must be made and publicly announced within 60 days following
          the date on which the event described in Section  11(a)(ii) shall have
          occurred.  Following the occurrence of the event  described in Section
          11(a)(ii),  a majority  of the Board of  Directors  then in office may
          suspend the exercisability of the Rights for a period of up to 60 days
          following the date on which the event  described in Section  11(a)(ii)
          shall have  occurred to the extent that the Board of Directors has not
          determined  whether to exercise the Company's  right of election under
          this  Section  11(a)(iii).  In the event of any such  suspension,  the
          Company   shall  issue  a  public   announcement   stating   that  the
          exercisability of the Rights has been temporarily suspended.

(b)  In case the  Company  shall fix a record  date for the  issuance of rights,
     options or warrants to all holders of Preferred  Shares entitling them (for
     a period  expiring  within 45  calendar  days  after such  record  date) to
     subscribe  for or  purchase  Preferred  Shares (or  shares  having the same
     rights,  privileges and  preferences as the Preferred  Shares  ("equivalent
     preferred  shares")) or securities  convertible  into  Preferred  Shares or
     equivalent  preferred  shares at a price per Preferred  Share or equivalent
     preferred  share (or having a  conversion  price per  share,  if a security
     convertible into Preferred Shares or equivalent preferred shares) less than
     the then current per share market price of the Preferred Shares (as defined
     in Section  11(d)) on such record date,  the Purchase Price to be in effect
     after such record date shall be  determined  by  multiplying  the  Purchase
     Price in effect  immediately  prior to such record date by a fraction,  the
     numerator of which shall be the number of Preferred  Shares  outstanding on
     such record date plus the number of Preferred  Shares  which the  aggregate
     offering  price of the total number of Preferred  Shares and/or  equivalent
     preferred shares so to be offered (and/or the aggregate initial  conversion
     price of the  convertible  securities so to be offered)  would  purchase at
     such current market price and the  denominator of which shall be the number
     of  Preferred  Shares  outstanding  on such  record date plus the number of
     additional  Preferred  Shares  and/or  equivalent  preferred  shares  to be


                                       13
<PAGE>

     offered  for  subscription  or  purchase  (or into  which  the  convertible
     securities so to be offered are initially convertible);  provided, however,
     that in no event shall the  consideration  to be paid upon the  exercise of
     one Right be less than the aggregate par value of the shares of the Company
     issuable upon  exercise of one Right.  In case such  subscription  price is
     paid in a consideration  part or all of which shall be in a form other than
     cash, the value of such consideration  shall be as determined in good faith
     by the Board of  Directors  of the Company,  whose  determination  shall be
     described  in a statement  filed with the Rights Agent and shall be binding
     on the Rights  Agent and on the  holders of the  Rights.  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 shall
     be made successively whenever such a record date is fixed; and in the event
     that such rights, options or warrants are not so issued, the Purchase Price
     shall be adjusted to be the Purchase Price which would then be in effect if
     such record date had not been fixed.

(c)  In  case  the  Company  shall  fix  a  record  date  for  the  making  of a
     distribution  to all holders of the Preferred  Shares  (including  any such
     distribution made in connection with a consolidation or merger in which the
     Company is the continuing or surviving entity) of evidences of indebtedness
     or assets  (other  than a regular  periodic  cash  dividend  or a  dividend
     payable in Preferred Shares) or subscription  rights or warrants (excluding
     those  referred to in Section 11(b)  hereof),  the Purchase  Price to be in
     effect  after such  record  date shall be  determined  by  multiplying  the
     Purchase  Price  in  effect  immediately  prior  to such  record  date by a
     fraction, the numerator of which shall be the then current per share market
     price of the  Preferred  Shares on such record  date,  less the fair market
     value  (as  determined  in good  faith  by the  Board of  Directors  of the
     Company,  whose  determination shall be described in a statement filed with
     the Rights Agent) of the portion of the assets or evidences of indebtedness
     so  to  be  distributed  or  of  such   subscription   rights  or  warrants
     attributable  to one Preferred  Share and the denominator of which shall be
     such  current per share  market price of the  Preferred  Shares;  provided,
     however,  that in no event  shall  the  consideration  to be paid  upon the
     exercise of one Right be less than the aggregate par value of the shares of
     the Company to be issued upon exercise of one Right. Such adjustments shall
     be made successively whenever such a record date is fixed; and in the event
     that such  distribution  is not so made,  the Purchase Price shall again be
     adjusted  to be the  Purchase  Price  which would then be in effect if such
     record date had not been fixed.

(d)  (i)  For the purpose of any computation hereunder, other than under Section
          11(a)(iii)  hereof,  the  "current  per  share  market  price"  of any
          security (a  "Security"  for the purpose of this Section  11(d)(i)) on
          any date shall be deemed to be the average of the daily closing prices
          per share of such  Security  for the 30  consecutive  Trading Days (as
          such term is hereinafter  defined) immediately prior to such date, and
          for the purpose of any computation  under Section  11(a)(iii)  hereof,
          the "current  per share market  price" of a Security on any date shall
          be deemed to be the average of the daily  closing  prices per share of
          such  Security for thirty (30)  consecutive  Trading Days  immediately
          following  such date;  provided,  however,  that in the event that the
          current per share market price of the Security is determined  during a
          period  following the  announcement  by the issuer of such Security of
          (A) a dividend or distribution on such Security payable in


                                       14
<PAGE>

          shares of such  Security or  securities  convertible  into such shares
          (other  than  the  Rights),  or (B) any  subdivision,  combination  or
          reclassification  of such  Security and prior to the  expiration of 30
          Trading  Days  after  the  ex-dividend   date  for  such  dividend  or
          distribution, or the record date for such subdivision,  combination or
          reclassification,  then, and in each such case, the "current per share
          market price" shall be  appropriately  adjusted to reflect the current
          market price per share equivalent  (ex-dividend) of such Security. The
          closing price for each day shall be the last sale price,  regular way,
          or, in case no such sale takes  place on such day,  the average of the
          closing bid and asked prices,  regular way, in either case as reported
          in  the  principal  consolidated  transaction  reporting  system  with
          respect to  securities  listed or  admitted to trading on the New York
          Stock  Exchange  or, if the  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 the
          Security is listed or  admitted to trading or, if the  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 last high
          bid and low asked prices in the  over-the-counter  market, as reported
          by the National  Association  of Securities  Dealers,  Inc.  Automated
          Quotation  System  ("NASDAQ") or such other system then in use, or, if
          on any such date the Security is not quoted by any such  organization,
          the  average of the  closing bid and asked  prices as  furnished  by a
          professional  market maker making a market in the Security selected by
          the Board of Directors  of the Company.  If on any such date no market
          maker is  making  a market  in the  Security,  the fair  value of such
          Security  on such date (as  determined  in good  faith by the Board of
          Directors of the Company)  shall be used. The term "Trading Day" shall
          mean a day on which the  principal  national  securities  exchange  on
          which the  Security  is listed or  admitted to trading is open for the
          transaction  of business or, if the Security is not listed or admitted
          to trading on any national securities exchange, a Business Day.

     (ii) For the purpose of any computation  hereunder,  the "current per share
          market  price"  of  the  Preferred   Shares  shall  be  determined  in
          accordance  with the  method  set forth in  Section  11(d)(i).  If the
          Preferred  Shares are not  publicly  traded,  the  "current  per share
          market price" of the Preferred Shares shall be conclusively  deemed to
          be the  current  per share  market  price of the Common  Shares of the
          Company as determined  pursuant to Section 11(d)(i) (as  appropriately
          adjusted  to  reflect  any share  split,  share  dividend  or  similar
          transaction  occurring  after  the  date  hereof),  multiplied  by one
          hundred. If neither the Common Shares of the Company nor the Preferred
          Shares are  publicly  held or so listed or traded,  "current per share
          market  price"  shall mean the fair value per share as  determined  in
          good  faith  by  the  Board  of  Directors   of  the  Company,   whose
          determination  shall be described in a statement filed with the Rights
          Agent.

(e)  Anything  herein to the  contrary  notwithstanding,  no  adjustment  in the
     Purchase Price shall be required  unless such  adjustment  would require an
     increase  or  decrease  of at least  1% in the  Purchase  Price;  provided,
     however, that any adjustments which by reason of this Section 11(e) are not
     required to be made shall be carried  forward and taken into account in any
     subsequent adjustment. All calculations under this Section 11 shall be made
     to the  nearest  cent or to the nearest  one  one-millionth  of a Preferred
     Share or one ten-thousandth of any other share or security, as the case may
     be.   Notwithstanding  the  first  sentence  of  this  Section  11(e),  any


                                       15
<PAGE>

     adjustment  required  by this  Section  11 shall be made no later  than the
     earlier of (i) three years from the date of the transaction  which requires
     such adjustment or (ii) the date of the expiration of the right to exercise
     any Rights.

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

(g)  All Rights  originally  issued by the Company  subsequent to any adjustment
     made to the Purchase  Price  hereunder  shall entitle the holder thereof to
     purchase,  at the adjusted Purchase Price, the number of one 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),  upon  each  adjustment  of the  Purchase  Price as a result  of the
     calculations  made in  Sections  11(b)  and  (c),  each  Right  outstanding
     immediately prior to the making of such adjustment shall thereafter entitle
     the holder thereof to purchase, at the adjusted Purchase Price, that number
     of one  one-hundredths  of a Preferred Share (calculated to the nearest one
     one-millionth  of a Preferred  Share)  obtained by (i)  multiplying (A) the
     number  of one  one-hundredths  of a  Preferred  Share  covered  by a Right
     immediately  prior to such  adjustment by (B) the Purchase  Price in effect
     immediately  prior  to such  adjustment  of the  Purchase  Price  and  (ii)
     dividing  the  product  so  obtained  by  the  Purchase   Price  in  effect
     immediately after such adjustment of the Purchase Price.

     (i)  The  Company may elect on or after the date of any  adjustment  of the
          Purchase Price to adjust the number of Rights, in substitution for any
          adjustment in the number of one  one-hundredths  of a Preferred  Share
          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  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 ten-thousandth) obtained by dividing the Purchase Price in
          effect  immediately  prior to adjustment of the Purchase  Price by the
          Purchase Price in effect  immediately after adjustment of the Purchase
          Price. The Company shall make a public announcement of its election to
          adjust  the  number of  Rights,  indicating  the  record  date for the
          adjustment, and, if known at the time, the amount of the adjustment to
          be made.  This record date may be the date on which the Purchase Price
          is adjusted or any day thereafter, but, if the Right Certificates have
          been  issued,  shall be at least  10 days  later  than the date of the
          public announcement. If Right Certificates have been issued, upon each
          adjustment of the number of 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


                                       16
<PAGE>

          Right  Certificates  evidencing,  subject to  Section  14 hereof,  the
          additional  Rights to which such holders shall be entitled as a result
          of such adjustment,  or, at the option of the Company,  shall cause to
          be  distributed  to  such  holders  of  record  in  substitution   and
          replacement for the Right  Certificates  held by such holders prior to
          the date of adjustment, and upon surrender thereof, if required by the
          Company,  new Right  Certificates  evidencing  all the Rights to which
          such  holders  shall  be  entitled   after  such   adjustment.   Right
          Certificates  so to be  distributed  shall  be  issued,  executed  and
          countersigned   in  the  manner  provided  for  herein  and  shall  be
          registered in the names of the holders of record of Right Certificates
          on the record date specified in the public announcement.

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

(k)  Before  taking  any action  that would  cause an  adjustment  reducing  the
     Purchase 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  action  which  may,  in the  opinion  of its  counsel,  be
     necessary  in order that the Company  may  validly and legally  issue fully
     paid and nonassessable Preferred Shares at such adjusted Purchase Price.

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

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

(n)  In the event that at any time after the date of this Agreement and prior to
     the Distribution Date, the Company shall (i) declare or pay any dividend on
     the Common Shares  payable in Common  Shares or (ii) effect a  subdivision,


                                       17
<PAGE>

     combination or consolidation of the Common Shares (by  reclassification  or
     otherwise  than by payment of dividends in Common Shares) into a greater or
     lesser number of Common Shares, then in any such case (x) the number of one
     one-hundredths  of a  Preferred  Share  purchasable  after  such event upon
     proper exercise of each Right shall be determined by multiplying the number
     of one one-hundredths of a Preferred Share so purchasable immediately prior
     to such event by a fraction, the numerator of which is the number of Common
     Shares  outstanding  immediately  before such event and the  denominator of
     which is the number of Common  Shares  outstanding  immediately  after such
     event, and (y) each Common Share  outstanding  immediately after such event
     shall  have  issued  with  respect to it that  number of Rights  which each
     Common Share  outstanding  immediately  prior to such event had issued with
     respect to it. The adjustments  provided for in this Section 11(n) shall be
     made  successively  whenever  such a dividend is declared or paid or such a
     subdivision, combination or consolidation is effected.

(o)  So long as the  shares  issuable  upon the  exercise  of the  Rights may be
     listed on any national securities exchange,  the Company shall use its best
     efforts  to  cause,   from  and  after  such  time  as  the  Rights  become
     exercisable,  all shares  reserved  for such  issuance to be listed on such
     exchange upon official notice of issuance upon such exercise.

(p)  The Company shall use its best efforts to (i) file, as soon as  practicable
     following  the first  occurrence  of a  Triggering  Event,  a  registration
     statement   under  the  Securities  Act  with  respect  to  the  securities
     purchasable upon exercise of the Rights on an appropriate  form, (ii) cause
     such  registration  statement to become  effective  as soon as  practicable
     after such filing,  and (iii) cause such  registration  statement to remain
     effective  (with a prospectus at all times meeting the  requirements of the
     Securities Act) until the date of the expiration of the Rights. The Company
     will also take such action as may be appropriate under the blue sky laws of
     the various states.  The Company may temporarily  suspend,  for a period of
     time not to exceed 90 days,  the  exercisability  of the Rights in order to
     prepare  and file such  registration  statement  or in order to comply with
     such blue sky laws.  Upon any such  suspension,  the Company  shall issue a
     public announcement  stating that the exercisability of the Rights has been
     temporarily suspended.

(q)  In the event that the Rights become exercisable following the occurrence of
     a Triggering  Event, the Company may permit the Rights,  subject to Section
     7(e)  hereof,  to be  exercised  for 50% of the  Common  Shares  (or  cash,
     property or other  securities to be substituted  for Common Shares pursuant
     to Section 11(a)(iii)) that would otherwise be purchasable under subsection
     (a) in  consideration  of the  surrender  to the  Company  of the Rights so
     exercised and without other payment of the Purchase Price. Rights exercised
     under this  subsection  (q) shall be deemed to have been  exercised in full
     and shall be canceled.

     Section 12.  Certificate  of Adjusted  Purchase  Price or Number of Shares.
Whenever  an  adjustment  is made as  provided  in Section 11 or 13 hereof,  the
Company shall promptly (a) prepare a certificate  setting forth such adjustment,
and a brief statement of the facts  accounting for such  adjustment,  (b) file a
copy of such  certificate with the Rights Agent and with each transfer agent for
the Common Shares or the Preferred  Shares and (c) mail a brief summary  thereof


                                       18
<PAGE>

to each holder of a Right Certificate in accordance with Section 25 hereof.  The
Rights Agent shall be fully protected in relying on any such  certificate and on
any adjustment therein contained and may assume that no adjustment has been made
unless and until it shall have received such certificate.

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

(a)  If after the Shares  Acquisition  Date,  directly  or  indirectly,  (x) the
     Company shall  consolidate  with, or merge with and into, any other Person,
     (y) any Person shall  consolidate with the Company,  or merge with and into
     the Company and the Company shall be the continuing or surviving  entity of
     such merger or the  Company  shall be a party to a share  exchange  and, in
     connection with such consolidation,  merger or share exchange,  all or part
     of the Common  Shares shall be changed into or exchanged for stock or other
     securities  of any  other  Person  or the  Company,  or cash  or any  other
     property,  or (z) the Company  shall sell or otherwise  transfer (or one or
     more of its Subsidiaries shall sell or otherwise transfer),  in one or more
     transactions, assets or earning power aggregating 50% or more 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,  then, and in each such case,  proper provision
     shall be made so that (i)  each  holder  of a Right  (except  as  otherwise
     provided  herein)  shall  thereafter  have the right to  receive,  upon the
     exercise  thereof  at a price  equal to the  then  current  Purchase  Price
     multiplied  by the number of one  one-hundredths  of a Preferred  Share for
     which a Right is then  exercisable,  in  accordance  with the terms of this
     Agreement  and  in  lieu  of  Preferred  Shares,  such  number  of  validly
     authorized  and issued,  fully  paid,  non-assessable  and freely  tradable
     common shares of the Principal Party,  free and clear of all liens,  rights
     of call or first refusal,  encumbrances or other adverse  claims,  as shall
     equal the result  obtained by (A)  multiplying  the then  current  Purchase
     Price by the number of one  one-hundredths of a Preferred Share for which a
     Right is then  exercisable (or, if such Right is not then exercisable for a
     number of one  one-hundredths  of a  Preferred  Share,  the  number of such
     fractional  shares  for which it was  exercisable  immediately  prior to an
     event described under Section  11(a)(ii)  hereof) and dividing that product
     by (B) 50% of the then current per share market price of the common  shares
     of such Principal  Party  (determined  pursuant to Section 11(d) hereof) on
     the date of consummation of such  consolidation,  merger, sale or transfer;
     (ii) such Principal Party shall thereafter be liable for, and shall assume,
     by virtue of such consolidation,  merger,  sale or transfer,  or otherwise,
     all the obligations  and duties of the Company  pursuant to this Agreement;
     (iii)  the term  "Company"  shall  thereafter  be  deemed  to refer to such
     Principal  Party and (iv)  such  Principal  Party  shall  take  such  steps
     (including,  but not limited to, the  authorization  and  reservation  of a
     sufficient number of its common shares in accordance with Section 9 hereof)
     in connection with such consummation as may be necessary to assure that the
     provisions  hereof shall thereafter be applicable,  as nearly as reasonably
     may be, in relation to its common shares  thereafter  deliverable  upon the
     exercise of the Rights.


                                       19
<PAGE>

(b)  "Principal Party" shall mean:

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

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

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

(c)  The Company shall not consummate any such  consolidation,  merger,  sale or
     transfer  unless the Principal  Party shall have  sufficient  common shares
     authorized  to permit the full exercise of the Rights and prior thereto the
     Company and such  Principal  Party shall have executed and delivered to the
     Rights Agent a supplemental  agreement providing for the terms set forth in
     paragraphs  (a) and (b) of this Section 13 and further  providing  that, as
     soon as practicable after the date of any consolidation,  merger or sale of
     assets  mentioned in paragraph (a) of this Section 13, the Principal  Party
     will:

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

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

     (iii)take such actions as may be necessary  or  appropriate  under the blue
          sky laws of the various states.


                                       20
<PAGE>

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

     Section 14. Fractional Rights and Fractional Shares.

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

(b)  The Company  shall not be required to issue  fractions of Preferred  Shares
     (other than fractions which are integral  multiples of one one-hundredth of
     a  Preferred   Share)  upon   exercise  of  the  Rights  or  to  distribute
     certificates  which  evidence  fractional   Preferred  Shares  (other  than
     fractions which 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
     evidenced by  depositary  receipts,  pursuant to an  appropriate  agreement
     between the Company and a depositary  selected by it;  provided,  that such
     agreement shall provide that the holders of such depositary  receipts shall
     have all the rights,  privileges and preferences to which they are entitled
     as beneficial owners of the Preferred Shares represented by such depositary
     receipts.  In lieu of  fractional  Preferred  Shares that are not  integral
     multiples of one  one-hundredth  of a Preferred  Share, the Company may, to
     the extent necessary to reduce such fraction to an integral multiple of one
     one-hundredth,  pay to the registered  holders of Right Certificates at the
     time such Rights are  exercised as herein  provided an amount in cash equal
     to the same fraction of the current market value of one  one-hundredth of a
     Preferred Share. For the purposes of this Section 14(b), the current market


                                       21
<PAGE>

     value of one  one-hundredth of a Preferred Share shall be one one-hundredth
     of the closing price of a Preferred  Share (as  determined  pursuant to the
     second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
     prior to the date of such exercise.

(c)  Following the  occurrence of a Triggering  Event,  the Company shall not be
     required to issue fractions of Common Shares upon exercise of the Rights or
     to distribute certificates which evidence fractional Common Shares. In lieu
     of fractional Common Shares,  the Company may pay to the registered holders
     of  Right  Certificates  at the  time  the  Rights  evidenced  thereby  are
     exercised as herein  provided an amount in cash equal to the same  fraction
     of the  current  market  value of one Common  Share.  For  purposes of this
     Section  14(c),  the current  market value of one Common Share shall be the
     closing  price of one Common  Share (as  determined  pursuant to the second
     sentence of Section 11(d)(i) hereof) for the Trading Day immediately  prior
     to the date of such exercise.

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

     Section  15.  Rights of  Action.  All  rights of action in  respect of this
Agreement,  excepting  the  rights of action  given to the  Rights  Agent  under
Section 18 hereof, are vested in the respective  registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares),  without the consent of the Rights
Agent  or of the  holder  of any  other  Right  Certificate  (or,  prior  to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit,  enforce, and may institute and maintain any suit, action or proceeding
against  the Company to enforce,  or  otherwise  act in respect of, his right to
exercise the Rights  evidenced by such Right  Certificate in the manner provided
in such Right Certificate and in this 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 will be entitled to specific performance of
the  obligations  under,  and  injunctive  relief  against  actual or threatened
violations of the obligations of any Person subject to, this Agreement.

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

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

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

(c)  the  Company  and the  Rights  Agent may deem and treat the person in whose
     name the  Right  Certificate  (or,  prior  to the  Distribution  Date,  the
     associated  Common Shares  certificate) is registered as the absolute owner


                                       22
<PAGE>

     thereof and of the Rights evidenced thereby  (notwithstanding any notations
     of ownership or writing on the Right  Certificates or the associated Common
     Shares  certificate  made by anyone  other  than the  Company or the Rights
     Agent) for all purposes whatsoever,  and neither the Company nor the Rights
     Agent shall be affected by any notice to the contrary; and

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

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

     Section 18.  Concerning the Rights Agent.  The Company agrees to pay to the
Rights Agent reasonable  compensation for all services  rendered by it hereunder
and, from time to time, on demand of the Rights Agent,  its reasonable  expenses
and counsel  fees and other  disbursements  incurred in the  administration  and
execution  of this  Agreement  and the exercise  and  performance  of its duties
hereunder.  The Company  also agrees to  indemnify  the Rights Agent for, and to
hold it harmless  against,  any loss,  liability,  or expense,  incurred without
gross  negligence,  bad faith or  willful  misconduct  on the part of the Rights
Agent,  for 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  in the  premises.  The
reimbursement and compensation (to the extent of accrued but unpaid compensation
as of the date of termination)  provisions and the indemnity  provisions of this
Section 18 shall  survive the  expiration of the Rights and the  termination  of
this Agreement.

     The Rights Agent shall be protected and shall incur no liability for, or in
respect of any action taken,  suffered or omitted by it in connection  with, its
administration  of this  Agreement  in reliance  upon any Right  Certificate  or
certificate for the 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


                                       23
<PAGE>

signed, executed and, where necessary,  verified or acknowledged,  by the proper
person or  persons,  or  otherwise  upon the  advice of  counsel as set forth in
Section 20 hereof.

     Section 19. Merger or  Consolidation or Change of Name of Rights Agent. Any
Person into which the Rights Agent or any  successor  Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a
party,  or any  Person  succeeding  to the stock  transfer  or  corporate  trust
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 Person  would be eligible  for  appointment  as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor  Rights Agent shall succeed to the agency  created by this  Agreement,
any of the Right  Certificates  shall have been countersigned but not delivered,
any  such  successor  Rights  Agent  may  adopt  the   countersignature  of  the
predecessor  Rights Agent and deliver such Right  Certificates so countersigned;
and in case at that  time any of the  Right  Certificates  shall  not have  been
countersigned,   any  successor   Rights  Agent  may   countersign   such  Right
Certificates  either in the name of the predecessor  Rights Agent or in the name
of the  successor  Rights Agent;  and in all such cases such Right  Certificates
shall  have  the full  force  provided  in the  Right  Certificates  and in this
Agreement.

     In case at any time the name of the Rights  Agent  shall be changed  and at
such time any of the Right  Certificates  shall have been  countersigned but not
delivered,  the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time 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 the Right Certificates 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 thereof, shall be bound:

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

(b)  Whenever in the  performance  of its duties under this Agreement the Rights
     Agent  shall  deem it  necessary  or  desirable  that any fact or matter 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 is herein specifically prescribed) may be deemed to be conclusively
     proved and  established  by a  certificate  signed by the  Chairman  of the
     Board, the Chief Executive Officer, any Vice President, or the Secretary of
     the Company and delivered to the Rights Agent; and such  certificate  shall


                                       24
<PAGE>

     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 any and  all  losses,  liabilities,  costs,  damages  and
     expenses  (including  attorneys' fees) arising out of or in connection with
     the Rights  Agent's  gross  negligence,  bad faith or  willful  misconduct.
     Anything in this  Agreement  to the contrary  notwithstanding,  in no event
     shall the Rights  Agent be liable for  special,  indirect or  consequential
     loss or damage of any kind  whatsoever  (including  but not limited to lost
     profits),  even if the Rights Agent has been advised of the  likelihood  of
     such loss or damage and regardless of the form of the action.

(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,  and all such  statements and recitals are and shall be deemed to
     have been made by the Company only.

(e)  The Rights  Agent shall not be under any  responsibility  in respect of the
     validity of this Agreement or the execution and delivery hereof (except the
     due execution  hereof by the Rights Agent) or in respect of the validity or
     execution of any 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 the Rights becoming void pursuant to Section 7(e) hereof) or any
     adjustment  in the terms of the Rights  (including  the  manner,  method or
     amount  thereof)  provided  for in  Section  3, 11,  13,  23 or 24,  or the
     ascertaining  of the  existence of facts that would require any such change
     or adjustment  (except with respect to the exercise of Rights  evidenced by
     Right  Certificates  after receipt of a certificate  furnished  pursuant to
     Section  12  describing  a change or  adjustment);  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 to be
     issued pursuant to this Agreement or any Right Certificate or as to whether
     any  Preferred  Shares or Common  Shares  will,  when  issued,  be  validly
     authorized and issued, fully paid and nonassessable.

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

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


                                       25
<PAGE>

     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 and/or after which
     such action shall be taken or such omission shall be effective.  The Rights
     Agent  shall not be liable for any  action  taken by, or  omission  of, the
     Rights Agent in accordance with a proposal included in any such application
     on or after the date specified in such application (which date shall not be
     less than five  Business  Days after the date any  officer  of the  Company
     actually  receives  such  application,  unless any such officer  shall have
     consented in writing to an earlier date)  unless,  prior to taking any such
     action (or the effective date in the case of an omission), the Rights Agent
     shall have received  written  instructions in response to such  application
     specifying the action to be taken or omitted.

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

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

     Section  21.  Change of Rights  Agent.  The Rights  Agent or any  successor
Rights Agent may resign and be discharged  from its duties under this  Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail, and to
the  holders of the Right  Certificates  by  first-class  mail.  The Company may
remove the Rights  Agent or any  successor  Rights Agent upon 30 days' notice in
writing,  mailed to the Rights Agent or successor  Rights Agent, as the case may
be, and to each  transfer  agent of the  Common  Shares or  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,  the Company shall appoint a successor to
the Rights Agent.  If the Company shall fail to make such  appointment  within a
period  of 30 days  after  giving  notice of such  removal  or after it has been
notified  in writing of such  resignation  or  incapacity  by the  resigning  or
incapacitated  Rights Agent or by the holder of a Right  Certificate (who shall,
with such notice,  submit his Right  Certificate for inspection by the Company),
then the registered  holder of any Right  Certificate  may apply to any court of
competent  jurisdiction for the appointment of a new Rights Agent. Any successor


                                       26
<PAGE>

Rights Agent,  whether  appointed by the Company or by such a court,  shall be a
corporation  or bank  organized and doing  business under the laws of the United
States or of any other state of the United  States,  which is  authorized  under
such laws to exercise corporate trust or stock transfer powers and is subject to
supervision or  examination  by federal or state  authority and which has at the
time of its  appointment  as Rights  Agent a combined  capital and surplus of at
least $100  million.  After  appointment,  the  successor  Rights Agent shall be
vested with the same powers,  rights,  duties and  responsibilities as if it had
been  originally  named as Rights  Agent  without  further act or deed;  but the
predecessor  Rights  Agent shall  deliver and transfer to the  successor  Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance,  conveyance, act or deed necessary for the purpose. Not later
than the effective  date of any such  appointment  the Company shall file notice
thereof in writing with the predecessor  Rights Agent and each transfer agent of
the Common Shares or 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 Rights to the contrary,  the Company may,
at its option,  issue new Right  Certificates  evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.

     Section 23. Redemption.

(a)  The  Company  may,  at its  option,  at any time  prior to such time as any
     Person becomes an Acquiring Person, redeem all but not less than all of the
     then  outstanding  Rights  at  a  redemption  price  of  $0.01  per  Right,
     appropriately  adjusted  to reflect  any share  split,  share  dividend  or
     similar transaction  occurring after the date hereof (such redemption price
     being hereinafter referred to as the "Redemption Price"). The redemption of
     the Rights by the Company may be made effective at such time, on such basis
     and with such  conditions as the Board of Directors in its sole  discretion
     may establish.  The Company may, at its option, pay the Redemption Price in
     cash,  Common  Shares  (based on the current per share  market price of the
     Common Shares at the time of redemption) or any other form of consideration
     deemed appropriate by the Board of Directors.

(b)  Immediately  upon the  action  of the  Board of  Directors  of the  Company
     ordering the  redemption  of the Rights (or at the  effective  time of such
     redemption established by the Board of Directors of the Company pursuant to
     the last  sentence of  paragraph  (a) of this  Section 23), and without any
     further  action and without any  notice,  the right to exercise  the Rights
     will terminate and the only right thereafter of the holders of Rights shall
     be to receive the Redemption  Price. The Company shall promptly give public
     notice of any such redemption; provided, however, that the failure to give,
     or any defect in, any such  notice  shall not affect the  validity  of such
     redemption.  Within 10 days  after  such  action of the Board of  Directors
     ordering the redemption of the Rights or, if later,  the  effectiveness  of
     the  redemption  of the Rights  pursuant to the last  sentence of paragraph


                                       27
<PAGE>

     (a), the Company  shall mail a notice of  redemption  to all the holders of
     the then outstanding Rights at their last addresses as they appear upon the
     registry books of the Rights Agent or, prior to the  Distribution  Date, on
     the registry books of the transfer agent for the Common Shares.  Any notice
     which is mailed  in the  manner  herein  provided  shall be  deemed  given,
     whether  or not the  holder  receives  the  notice.  Each  such  notice  of
     redemption  shall state the method by which the  payment of the  Redemption
     Price will be made.  The Company may, at its option,  discharge  all of its
     obligations  with  respect  to the  Rights by  (i)issuing  a press  release
     announcing the manner of redemption of the Rights,  (ii)  depositing with a
     bank  or  trust   company   having  a  capital  and  surplus  of  at  least
     $100,000,000,  funds necessary for such redemption, in trust, to be applied
     to the  redemption  of the  Rights  so  called  for  redemption  and  (iii)
     arranging for the mailing of the Redemption Price to the registered holders
     of  the  Rights;  then,  and  upon  such  action,  all  outstanding  Rights
     Certificates  shall be null and void without further action by the Company.
     Neither the Company nor any of its  Affiliates  or  Associates  may redeem,
     acquire or  purchase  for value any Rights at any time in any manner  other
     than that  specifically set forth in this Section 23, in Section 24 hereof,
     or  in  connection  with  the  purchase  of  Common  Shares  prior  to  the
     Distribution Date.

     Section 24. Exchange.

(a)  The  Company  may,  at its option,  at any time after a  Triggering  Event,
     exchange all or part of the then outstanding and exercisable  Rights (which
     shall not include  Rights that have become void pursuant to the  provisions
     of Section  7(e)  hereof)  for Common  Shares at an  exchange  ratio of one
     Common Share per Right,  appropriately adjusted to reflect any share split,
     share dividend or similar transaction occurring after the date hereof (such
     exchange  ratio  being  referred  to  herein  as  the  "Exchange   Ratio").
     Notwithstanding the foregoing, the Company shall not be empowered to effect
     such  exchange at any time after any Person  (other than the  Company,  any
     Affiliate or  Subsidiary of the Company,  any employee  benefit plan of the
     Company or of any  Affiliate  or  Subsidiary  of the  Company or any entity
     holding  Common  Shares  for or  pursuant  to the terms of any such  plan),
     together with all  Affiliates  and  Associates of such Person,  becomes the
     Beneficial Owner of 50% or more of the Common Shares then outstanding.

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


                                       28
<PAGE>

     partial  exchange  shall be effected pro rata based on the number of Rights
     (other than Rights  which have become void  pursuant to the  provisions  of
     Section 7(e) hereof) held by each holder of Rights.

(c)  In any exchange  pursuant to this  Section 24, the Company,  at its option,
     may substitute  Preferred Shares (or other preferred shares that a majority
     of the Board of Directors  determines in good faith to be equivalent to one
     or more Common Shares) for Common Shares  exchangeable  for Rights,  at the
     initial  rate of one  one-hundredth  of a  Preferred  Share (or such  other
     preferred  share) for each  Common  Share,  as  appropriately  adjusted  to
     reflect  the voting  rights at that time of the  Preferred  Shares (or such
     other preferred shares) pursuant to the terms thereof, so that the fraction
     of a Preferred Share (or other preferred  share)  delivered in lieu of each
     Common Share shall have the same voting rights as one Common Share.

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

(e)  The Company may,  but shall not be required  to, issue  fractions of Common
     Shares,  Preferred Shares (or such other preferred shares) or to distribute
     certificates  which evidence  fractional Common Shares. In lieu of any such
     fractional  shares,  the Company shall pay to the registered holders of the
     Right Certificates with regard to which such fractional Common Shares would
     otherwise  be issuable an amount in cash equal to the same  fraction of the
     current  market  value of a whole  Common  Share.  For the purposes of this
     paragraph  (e),  the current  market value of a whole Common Share shall be
     the closing price of a Common Share (as  determined  pursuant to the second
     sentence of Section 11(d)(i) hereof) for the Trading Day immediately  prior
     to the date of exchange pursuant to this Section 24.

     Section 25. Notice of Certain Events.

(a)  In case the Company shall propose at any time after the  Distribution  Date
     (i) to pay any  dividend  payable in shares of any class to the  holders of
     its Preferred  Shares or to make any other  distribution  to the holders of
     its Preferred Shares (other than a regular  quarterly cash dividend),  (ii)
     to offer to the  holders of its  Preferred  Shares  rights or  warrants  to
     subscribe for or to purchase any additional  Preferred  Shares or shares of
     any class or any other securities,  rights or options,  (iii) to effect any
     reclassification  of its Preferred  Shares  (other than a  reclassification
     involving only the subdivision of outstanding  Preferred  Shares),  (iv) to
     effect any  consolidation  or merger into or with, or to effect any sale or
     other transfer (or to permit one or more of its  Subsidiaries to effect any
     sale or other transfer), in one or more transactions, of 50% or more of the
     assets or earning  power of the  Company and its  Subsidiaries  (taken as a
     whole) to, any other Person, (v) to effect the liquidation,  dissolution or
     winding up of the  Company,  or (vi) to declare or pay any  dividend on the
     Common  Shares  payable  in  Common Shares  or to  effect  a  subdivision,
     combination or consolidation of the Common Shares (by  reclassification  or


                                       29
<PAGE>

     otherwise  than by payment of dividends in Common  Shares),  then,  in each
     such case, the Company shall give to each holder of a Right Certificate, in
     accordance with Section 26 hereof, a notice of such proposed action,  which
     shall specify the record date for the purposes of such share  dividend,  or
     distribution   of  rights  or   warrants,   or  the  date  on  which   such
     reclassification,   consolidation,  merger,  sale,  transfer,  liquidation,
     dissolution,  or winding up is to take place and the date of  participation
     therein by the holders of the Common Shares and/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 10 days prior to
     the  record  date for  determining  holders  of the  Preferred  Shares  for
     purposes of such action, and in the case of any such other action, at least
     10 days prior to the date of the taking of such proposed action or the date
     of  participation  therein  by the  holders  of the  Common  Shares  and/or
     Preferred Shares, whichever shall be the earlier.

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

     Section 26. Notices.  Notices or demands authorized by this 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:

                  Broadway Financial Corporation
                  4800 Wilshire Blvd.
                  Los Angeles, CA  91101
                  Attention:  Secretary

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

                  US Stock Transfer Corporation
                  1745 Gardena Avenue.
                  Glendale, CA  91204
                  Attention: Ms. Bridget Barela

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.  The Company may from time to time,
and the Rights Agent shall if the Company so directs,  supplement  or amend this
Agreement in any respect (including,  without limitation, to change the Purchase
Price or the Final  Expiration  Date) which the Company  may deem  necessary  or


                                       30
<PAGE>

desirable,  any such supplement or amendment to be evidenced by a writing signed
by the Company and the Rights Agent without the approval of any holders of Right
Certificates;  provided,  however,  that from and after  such time as any Person
becomes an Acquiring  Person,  this Agreement shall not be amended in any manner
which would adversely affect the interests of the holders of Rights.

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

     Section 29. 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  (and,  prior to the Distribution
Date,  the Common  Shares) 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 the  registered  holders  of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).

     Section 30. Severability.  If any term, provision,  covenant or restriction
of this  Agreement  is  held  by a court  of  competent  jurisdiction  or  other
authority  to be invalid,  void or  unenforceable,  the  remainder of the terms,
provisions,  covenants and  restrictions  of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.

     Section 31. 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  to be made and  performed
entirely  within such  State,  except that those  provisions  of this  Agreement
affecting the rights,  duties and  responsibilities of the Rights Agent shall be
governed by and construed in accordance with the law of the State of California.

     Section 32.  Counterparts.  This Agreement may be executed in any number of
counterparts and each of such  counterparts  shall for all purposes be deemed to
be an original,  and all such counterparts shall together constitute but one and
the same instrument.

     Section 33. Descriptive  Headings.  Descriptive headings of the 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.

     Section 34. Determinations and Actions by the Board of Directors. The Board
of  Directors of the Company  shall have the  exclusive  power and  authority to
administer  this  Agreement  and to exercise all rights and powers  specifically
granted  to the Board of  Directors  or the  Company or as may be  necessary  or
advisable  in  the   administration  of  this  Agreement,   including,   without
limitation,  the  right  and  power  to (a)  interpret  the  provisions  of this
Agreement, and (b) make all determinations deemed necessary or advisable for the
administration  of this Agreement  (including a  determination  to redeem or not
redeem the Rights or to amend this Agreement). All such actions, interpretations
and  determinations  (including,  for purpose of clause (b) above, all omissions
with respect to the foregoing)  which are done or made by the Board of Directors



                                       31
<PAGE>

in good faith,  shall (x) be final,  conclusive and binding on the Company,  the
Rights Agent, the holders of the Right  Certificates and all other parties,  and
(y) not subject the Board of  Directors  to any  liability to the holders of the
Right Certificates.



















                     [This space intentionally left blank.]



                                       32
<PAGE>


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


                         BROADWAY FINANCIAL CORPORATION


             By:               /s/ Paul C. Hudson
                      -------------------------------------------
                       Title:  Chief Executive Officer and
                                   President

Attest:


            By:               /s/ Alvin D. Kang
                      -------------------------------------------
                       Title:  Chief Financial Officer


                          US STOCK TRANSFER CORPORATION


            By:               /s/ Bridget Barela
                      -------------------------------------------
                       Title:  Assistant Vice President

Attest:


           By:               /s/ Mark Cano
                      -------------------------------------------
                        Title:  Senior Vice President



                                       33
<PAGE>



                                                           Exhibit A


               CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
                OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK,
                                 $0.01 PAR VALUE

                                       of

                         BROADWAY FINANCIAL CORPORATION

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

     Broadway Financial Corporation,  a corporation organized and existing under
the General  Corporation  Law of the State of Delaware (the  "Corporation"),  in
accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:

     That pursuant to the authority conferred upon the Board of Directors by the
Certificate  of  Incorporation  of the  Corporation,  as  amended,  the Board of
Directors on January 31, 2003 adopted the following resolution creating a series
of 25,000 shares of preferred stock designated as "Series A Junior Participating
Preferred Stock," $0.01 par value:

     RESOLVED,  that pursuant to the  authority  granted in the  Certificate  of
Incorporation,  as amended,  of the  Corporation,  the Board of Directors hereby
classifies 25,000, which number shall be subject to adjustment from time to time
in accordance with the Rights Agreement, shares, of the Corporation's authorized
but  unissued   shares  of  preferred   stock  as  shares  of  Series  A  Junior
Participating Preferred Shares of Beneficial Interest, of which the preferences,
conversion  and other rights,  voting  powers,  restrictions,  limitations as to
dividends and other distributions,  qualifications,  and terms and conditions of
redemption shall be as follows:

     Section 1.  Designation  and Amount.  There shall be a series of  preferred
shares of the Corporation,  $0.01 par value per share, which shall be designated
"Series A Junior  Participating  Preferred  Shares"  (the  "Series  A  Preferred
Shares"),  and the number of shares  constituting  that series  shall be 25,000.
Such number of shares may be increased or decreased by  resolution  of the Board
of  Directors  and by  the  filing  of a  certificate  in  accordance  with  the
provisions of the General  Corporation Law of the State of Delaware stating that
such increase or reduction has been so authorized;  provided,  however,  that no
decrease  shall reduce the number of Series A Preferred  Shares to a number less
than the number of Series A Preferred Shares then outstanding plus the number of
Series A Preferred Shares issuable upon exercise of outstanding rights,  options
or  warrants  or  upon  conversion  of  outstanding  securities  issued  by  the
Corporation.

     Section 2. Dividends and Distributions.

(A)  Subject to the prior and  superior  rights of the  holders of any shares of
     any class or series of preferred  shares of the  Corporation  ranking prior
     and superior to the Series A Preferred  Shares with  respect to  dividends,
     the  holders of Series A  Preferred  Shares  shall be  entitled to receive,
     when,  as and if declared by the Board of  Directors  out of funds  legally
     available for such purpose,  quarterly dividends payable in cash to holders
     of record on the last Business Day of January,  April,  July and October in


<PAGE>

     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 Series A Preferred Share or fraction thereof)
     in an amount per share  (rounded to the nearest  cent) equal to the greater
     of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set
     forth, 100 times the aggregate per share amount of all cash dividends,  and
     100 times the aggregate per share amount  (payable in kind) of all non-cash
     dividends or other  distributions  other than a dividend  payable in Common
     Shares  (hereinafter  defined) or a subdivision of the  outstanding  Common
     Shares  (by a  reclassification  or  otherwise),  authorized  on the common
     shares  of  beneficial  interest,   par  value  $0.01  per  share,  of  the
     Corporation (the "Common Shares") since the immediately preceding Quarterly
     Dividend  Payment Date,  or, with respect to the first  Quarterly  Dividend
     Payment Date,  since the first issuance of any Series A Preferred  Share or
     fraction thereof.  In the event the Corporation shall at any time following
     February  13,  2003 (i) declare any  dividend on Common  Shares  payable in
     Common  Shares,  (ii)  subdivide  the  outstanding  Common  Shares or (iii)
     combine the outstanding Common Shares into a smaller number of shares, then
     in each such case the amount to which holders of Series A Preferred  Shares
     were  entitled  immediately  prior to such  event  under  clause (b) of the
     preceding  sentence shall be adjusted by multiplying  each such amount by a
     fraction the numerator of which is the number of Common Shares  outstanding
     immediately  after such event and the denominator of which is the number of
     Common Shares that were outstanding immediately prior to such event.

(B)  The  Corporation  shall declare a dividend or  distribution on the Series A
     Preferred Shares as provided in paragraph (A) above at the time it declares
     a dividend  or  distribution  on the Common  Shares  (other than a dividend
     payable in Common Shares).

(C)  No dividend or distribution (other than a dividend or distribution  payable
     in Common  Shares) shall be paid or payable to the holders of Common Shares
     unless, prior thereto, all accrued but unpaid dividends to the date of that
     dividend  or  distribution  shall have been paid to the holders of Series A
     Preferred Shares.

(D)  Dividends  shall begin to accrue and be cumulative on outstanding  Series A
     Preferred  Shares from the Quarterly  Dividend  Payment Date next preceding
     the date of issuance of such Series A Preferred Shares,  unless the date of
     issuance of such shares is prior to the record date for the first Quarterly
     Dividend  Payment Date, in which case  dividends on such shares shall begin
     to accrue and be  cumulative  from the date of issuance of such shares,  or
     unless the date of issuance is a Quarterly  Dividend  Payment  Date or is a
     date after the  record  date for the  determination  of holders of Series A
     Preferred  Shares entitled to receive a quarterly  dividend and before such
     Quarterly  Dividend  Payment Date, in either of which events such dividends
     shall  begin to  accrue  and be  cumulative  from such  Quarterly  Dividend
     Payment  Date.  Accrued  but  unpaid  dividends  shall  not bear  interest.
     Dividends paid on the Series A Preferred  Shares 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 Series A Preferred Shares entitled
     to receive payment of a dividend or distribution  declared  thereon,  which
     record  date  shall be no more than 30 days prior to the date fixed for the
     payment thereof.


                                       2
<PAGE>


     Section 3. Voting  Rights.  The holders of Series A Preferred  Shares shall
have the following voting rights:

(A)  Subject to the provision for  adjustment  hereinafter  set forth,  each one
     one-hundredth  of a Series A  Preferred  Share  shall  entitle  the  holder
     thereof to one vote on all matters  submitted to a vote of the shareholders
     of  the  Corporation.  In the  event  the  Corporation  shall  at any  time
     following  February  13,  2003 (i) declare  any  dividend on Common  Shares
     payable in Common Shares,  (ii) subdivide the outstanding  Common Shares or
     (iii)  combine  the  outstanding  Common  Shares  into a smaller  number of
     shares,  then in each  such  case the  number  of votes  per share to which
     holders of Series A Preferred  Shares 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 Common Shares  outstanding  immediately
     after  such  event  and the  denominator  of which is the  number of Common
     Shares that were outstanding immediately prior to such event.

(B)  Except as  otherwise  provided  herein,  the  holders of Series A Preferred
     Shares and the holders of Common  Shares and any other shares of beneficial
     interest  of the  Corporation  having  general  voting  rights  shall  vote
     together as one class on all matters submitted to a vote of shareholders of
     the Corporation.

(C)  (i)  Whenever,  at any time or times,  dividends  payable  on any  Series A
          Preferred  Shares  shall be in arrears in an amount  equal to at least
          six full quarterly  dividends  (whether or not declared and whether or
          not  consecutive),  the holders of record of the outstanding  Series A
          Preferred Shares shall have the exclusive right,  voting separately as
          a single class, to elect two directors of the Corporation at a special
          meeting of  shareholders  of the  Corporation or at the  Corporation's
          next annual meeting of  shareholders,  and at each  subsequent  annual
          meeting of  shareholders,  as provided  below.  At elections  for such
          directors,  the holders of Series A Preferred Shares shall be entitled
          to cast one vote for each one  one-hundredth  of a Series A  Preferred
          Share held, subject to adjustment.

     (ii) Upon  the  vesting  of such  right  of the  holders  of the  Series  A
          Preferred  Shares,  the  maximum  authorized  number of members of the
          Board of Directors shall automatically be increased by two and the two
          vacancies  so  created  shall be filled by vote of the  holders of the
          outstanding  Series A Preferred  Shares as  hereinafter  set forth.  A
          special meeting of the  shareholders of the Corporation  then entitled
          to vote  shall be  called  by the  Chairman  of the  Board,  the Chief
          Executive  Officer,  any  Executive  or Senior Vice  President  or the
          Secretary of the  Corporation,  if requested in writing by the holders
          of record of not less than 10% of the Series A  Preferred  Shares then
          outstanding.  At such special meeting,  or, if no such special meeting
          shall  have  been  called,   then  at  the  next  annual   meeting  of
          shareholders of the Corporation, the holders of the Series A Preferred
          Shares shall elect,  voting as above  provided,  two  directors of the
          Corporation to fill the aforesaid  vacancies  created by the automatic
          increase  in the number of members of the Board of  Directors.  At any
          and all such meetings for such election,  the holders of a majority of
          the  outstanding  Series A  Preferred  Shares  shall be  necessary  to
          constitute a quorum for such election, whether present in person or by
          proxy, and such


                                       3
<PAGE>

          two directors  shall be elected by the vote of at least a plurality of
          shares  held  by  such  shareholders  present  or  represented  at the
          meeting.  Any director elected by holders of Series A Preferred Shares
          pursuant  to this  Section  may be  removed  at any  annual or special
          meeting,  by vote of a majority of the shareholders  voting as a class
          who elected such director,  with or without cause. In case any vacancy
          shall occur among the directors elected by the holders of the Series A
          Preferred Shares pursuant to this Section,  such vacancy may be filled
          by the remaining director so elected, or his successor then in office,
          and the director so elected to fill such vacancy shall serve until the
          next meeting of shareholders for the election of directors.  After the
          holders of the Series A Preferred  Shares shall have  exercised  their
          right  to  elect  directors  in any  default  period  and  during  the
          continuance  of such  period,  the  number of  directors  shall not be
          further increased or decreased except by vote of the holders of Series
          A Preferred Shares as herein provided or pursuant to the rights of any
          equity  securities  ranking  senior to or pari passu with the Series A
          Preferred Shares.

     (iii)The right of the  holders of the  Series A  Preferred  Shares,  voting
          separately as a class,  to elect two members of the Board of Directors
          of the Corporation as aforesaid shall continue until,  and only until,
          such time as all arrears in dividends (whether or not declared) on the
          Series A Preferred  Shares  shall have been paid or  declared  and set
          apart for payment, at which time such right shall terminate, except as
          herein or by law expressly provided, subject to revesting in the event
          of each and every subsequent default of the character above-mentioned.
          Upon any  termination  of the  right of the  holders  of the  Series A
          Preferred  Shares as a class to vote for directors as herein provided,
          the term of office of all  directors  then in  office  elected  by the
          holders of Series A Preferred  Shares  pursuant to this Section  shall
          terminate  immediately.  Whenever the term of office of the  directors
          elected by the  holders of the Series A Preferred  Shares  pursuant to
          this Section shall  terminate and the special  voting powers vested in
          the holders of the Series A Preferred  Shares pursuant to this Section
          shall  have  expired,  the  maximum  number of members of the Board of
          Directors of the  Corporation  shall be such number as may be provided
          for in the Bylaws of the Corporation irrespective of any increase made
          pursuant to the provisions of this Section.

(D)  Except as otherwise provided herein or required by law, holders of Series A
     Preferred  Shares  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  Shares as  provided  herein)  for  taking any  corporate
     action.

     Section 4. Certain Restrictions.

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

                                       4
<PAGE>

     (i)  declare  or pay  dividends  on,  make any other  distributions  on, or
          redeem or purchase or otherwise  acquire for  consideration any shares
          ranking   junior   (either  as  to  dividends  or  upon   liquidation,
          dissolution  or winding  up) to the Series A Preferred  Shares,  other
          than dividends paid or payable in such junior shares;

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

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

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

     Section 5. Reacquired  Shares.  Any Series A Preferred  Shares purchased or
otherwise  acquired by the  Corporation  in any manner  whatsoever  shall become
authorized  but  unissued  shares and may be reissued as part of a new series of
preferred  shares to be created by  resolution  or  resolutions  of the Board of
Directors,  subject to the  conditions  and  restrictions  on issuance set forth
herein.

     Section 6. Liquidation, Dissolution or Winding Up.

(A)  Upon  any  voluntary   liquidation,   dissolution  or  winding  up  of  the
     Corporation, no distribution shall be made to the holders of shares ranking
     junior (either as to dividends or upon liquidation,  dissolution or winding
     up) to the Series A Preferred Shares unless,  prior thereto, the holders of
     Series A Preferred  Shares  shall have  received  $1.00 per share,  plus an
     amount equal to accrued and unpaid  dividends  and  distributions  thereon,
     whether  or not  declared,  to the  date of such  payment  (the  "Series  A
     Liquidation  Preference").  Following  payment  of the full  amount  of the
     Series A Liquidation Preference,  no additional distributions shall be made
     to the holders of Series A Preferred  Shares  unless,  prior  thereto,  the
     holders  of Common  Shares  shall  have  received  an amount per share (the
     "Common  Adjustment")  equal to the  quotient  obtained by dividing (i) the
     Series A Liquidation  Preference by (ii) 100 (as appropriately  adjusted as


                                       5
<PAGE>

     set forth in  subparagraph  C below to reflect such events as share splits,
     share  dividends and  recapitalizations  with respect to the Common Shares)
     (such  number in clause (ii) being  referred to herein as, the  "Adjustment
     Number").  Following  the  payment  of the  full  amount  of the  Series  A
     Liquidation  Preference  and  the  Common  Adjustment  in  respect  of  all
     outstanding  Series A  Preferred  Shares and Common  Shares,  respectively,
     holders of Series A  Preferred  Shares and holders of Common  Shares  shall
     receive their ratable and proportionate share of the remaining assets to be
     distributed in the ratio, on a per share basis, of the Adjustment Number to
     1 with respect to such Series A Preferred  Shares and Common  Shares,  on a
     per share basis, respectively.

(B)  In the event,  however,  that there are not sufficient  assets available to
     permit  payment  in full of the  Series A  Liquidation  Preference  and the
     liquidation  preferences of all other series of preferred  shares,  if any,
     which  rank on a parity  with the  Series A  Preferred  Shares,  then  such
     remaining assets shall be distributed  ratably to the holders of the Series
     A Preferred Shares and such parity shares in proportion to their respective
     liquidation preferences.

(C)  In the event the Corporation shall at any time following  February 13, 2003
     (i) declare any dividend on Common Shares  payable in Common  Shares,  (ii)
     subdivide the  outstanding  Common Shares or (iii) combine the  outstanding
     Common Shares into a smaller  number of shares,  then in each such case the
     Adjustment  Number  in  effect  immediately  prior to such  event  shall be
     adjusted by multiplying such Adjustment  Number by a fraction the numerator
     of which is the number of Common Shares outstanding  immediately after such
     event and the denominator of which is the number of Common Shares that were
     outstanding immediately prior to such event.

     Section 7. Consolidation,  Merger, etc. If the Corporation shall enter into
any consolidation,  merger, combination or other transaction in which the Common
Shares are exchanged for or changed into other shares or securities, cash and/or
any other property,  then in any such case, the Series A Preferred  Shares shall
at the same time be  similarly  exchanged  or  changed  in an  amount  per share
(subject to the provision  for  adjustment  hereinafter  set forth) equal to 100
times the aggregate amount of shares, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each Common Share
is  exchanged  or changed.  In the event the  Corporation  shall at any time (i)
declare any dividend on Common Shares payable in Common  Shares,  (ii) subdivide
the  outstanding  Common Shares or (iii) combine the  outstanding  Common Shares
into a smaller number of shares,  then in each such case the amount set forth in
the  preceding  sentence  with  respect  to the  exchange  or change of Series A
Preferred  Shares shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of Common Shares outstanding  immediately after
such event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.

     Section  8.  Redemption.  The  Series  A  Preferred  Shares  shall  not  be
redeemable  by the  Corporation.  The  preceding  sentence  shall  not limit the
ability of the  Corporation  to purchase or otherwise deal in such shares to the
extent permitted by law.


                                       6
<PAGE>

     Section 9. Ranking.  The Series A Preferred Shares shall rank junior to all
other series of the Corporation's  preferred shares (whether with or without par
value) as to the payment of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise.

     Section  10.   Amendment.   Neither  the   Corporation's   Certificate   of
Incorporation  nor  its  Certificate  of  Designation,  Preferences  and  Rights
relating to the Series A Preferred  Shares  shall be amended in any manner which
would materially and adversely alter or change the preferences,  rights or other
terms of the Series A  Preferred  Shares  without  the  affirmative  vote of the
holders of a majority  or more of the  outstanding  Series A  Preferred  Shares,
voting separately as a class.

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

     IN WITNESS WHEREOF,  the Corporation has caused this Certificate to be duly
executed by the undersigned officer this __ day of January, 2003.


                         BROADWAY FINANCIAL CORPORATION


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



                                       7
<PAGE>





                                                                  Exhibit B


                           [Form of Right Certificate]





Certificate No. R-                                             Rights
                                                     ---------

     NOT  EXERCISABLE  AFTER  JANUARY 31,  2013 OR EARLIER IF THE RIGHTS  EXPIRE
     UNDER  CERTAIN  CIRCUMSTANCES  OR ARE EXCHANGED OR REDEEMED BY THE COMPANY.
     THE RIGHTS ARE  SUBJECT TO  REDEMPTION,  AT THE OPTION OF THE  COMPANY,  AT
     $0.01  PER RIGHT ON THE TERMS  SET  FORTH IN THE  RIGHTS  AGREEMENT.  UNDER
     CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS
     SUCH TERM IS DEFINED IN THE RIGHTS  AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
     SUCH  RIGHTS MAY BECOME  NULL AND VOID.  [THE  RIGHTS  REPRESENTED  BY THIS
     CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
     ACQUIRING  PERSON OR AN AFFILIATE  OR ASSOCIATE OF AN ACQUIRING  PERSON (AS
     SUCH TERMS ARE DEFINED IN THE RIGHTS  AGREEMENT).  ACCORDINGLY,  THIS RIGHT
     CERTIFICATE  AND THE  RIGHTS  REPRESENTED  HEREBY  MAY  BECOME  VOID IN THE
     CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*

                                Right Certificate

                         BROADWAY FINANCIAL 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 31, 2003 (the  "Rights  Agreement"),  between  Broadway  Financial
Corporation,  a Delaware  corporation  (the  "Company"),  and US Stock  Transfer
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. (Pacific time) on January 31, 2013 or notice of redemption or
exchange at the office of the Rights Agent (or its  successors  as Rights Agent)
designated for such purpose,  one one-hundredth of a fully paid,  non-assessable
Series A Junior  Participating  Preferred  Share (a  "Preferred  Share")  of the
Company,  at a purchase  price of $35.00 per one  one-hundredth  of a  Preferred
Share (the  "Purchase  Price"),  upon  presentation  and surrender of this Right
Certificate  with the  appropriate  Form of  Election  to  Purchase  and related
Certificate  duly  executed.  The  number  of  Rights  evidenced  by this  Right

<PAGE>

Certificate  (and the number of Preferred  Shares  which may be  purchased  upon
exercise  thereof) set forth above,  and the Purchase Price per Preferred  Share
set forth  above,  are the number and  Purchase  Price as of January  31, 2003 ,
based on the Preferred Shares as constituted at such date. Capitalized terms not
defined in this Right Certificate that are defined in the Rights Agreement shall
have the meanings ascribed to them in the Rights Agreement.

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

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

     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 Right  Certificates,  which
limitations of rights include the temporary  suspension of the exercisability of
such Rights under  certain  circumstances  specified  in such Rights  Agreement.
Copies of the Rights Agreement are on file at the above-mentioned  office of the
Rights Agent and are also available upon written request to the Rights Agent.

     This Right  Certificate,  with or without  other Right  Certificates,  upon
surrender at the principal  corporate  trust office of the Rights Agent,  may be
exchanged for another Right Certificate or Right  Certificates of like tenor and
date evidencing  Rights entitling the holder 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 be redeemed by the Company at its option at a  redemption
price of $0.01 per Right at any time  prior to the  earlier  of (i) such time as
any Person  becomes an  Acquiring  Person or (ii) the close of  business  on the
Final Expiration Date.

     No  fractional  Preferred  Shares will be issued  upon the  exercise of any
Right or Rights  evidenced  hereby  (other  than  fractions  which are  integral
multiples of one one-hundredth of a 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.


                                       2
<PAGE>

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

Dated as of                          ___, 20___.
            ------------------------

                         BROADWAY FINANCIAL CORPORATION


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

Attest:               (SEAL)


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


Countersigned:

US STOCK TRANSFER CORPORATION


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




                                       3
<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.


Date:                                   , 20___
     -----------------------------------         -------------------------------
                                                          Signature

Signature Guaranteed:

                                   Certificate

     The undersigned hereby certifies by checking the appropriate boxes that:

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

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


Date:                                   , 20___
     -----------------------------------          ------------------------------
                                                           Signature

                                     NOTICE

     The signature to the foregoing  Assignment and Certificate  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.



<PAGE>


                          FORM OF ELECTION TO PURCHASE

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

To:      BROADWAY FINANCIAL CORPORATION

     The  undersigned  hereby  irrevocably  elects to  exercise  _______  Rights
evidenced by this Right  Certificate to purchase the Preferred  Shares  issuable
upon the exercise of the Rights (or such other  securities  of the Company or of
any  other  person as may be  issuable  upon the  exercise  of the  Rights)  and
requests that certificates for such shares be issued in the name of:

Please insert social security
or other identifying number:
                              --------------------------------------------------

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

                         (Please print name and address)

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

Please insert social security
or other identifying number:
                              --------------------------------------------------

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

                         (Please print name and address)


Date:                                   , 20___
     -----------------------------------        --------------------------------
                                                          Signature



<PAGE>


Signature Guaranteed:

                                   Certificate

         The undersigned hereby certifies by checking the appropriate boxes
that:

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

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


Date:                                   , 20___
     -----------------------------------         -------------------------------
                                                           Signature



                                     NOTICE

         The signature to the foregoing Election to Purchase and Certificate
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.




<PAGE>

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

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

Section 3.  Issuance of Right Certificates.....................................5

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

Section 5.  Countersignature and Registration..................................7

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

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

Section 8.  Cancellation and Destruction of Right Certificates.................1

Section 9.  Availability of Preferred Shares; Payment of Taxes and Charges.....1

Section 10. Preferred Shares Record Date.......................................1

Section 11. Adjustment  of  Purchase  Price,  Number  of  Shares  or Number of
            Rights.............................................................2

Section 12. Certificate of Adjusted Purchase Price or Number of Shares.........8

Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
            Power.............................................................18

Section 14. Fractional Rights and Fractional Shares...........................20

Section 15. Rights of Action..................................................21

Section 16. Agreement of Right Holders........................................22

Section 17. Right Certificate Holder Not Deemed a Shareholder.................22

Section 18. Concerning the Rights Agent.......................................23

Section 19. Merger or Consolidation or Change of Name of Rights Agent.........23

Section 20. Duties of Rights Agent............................................24

Section 21. Change of Rights Agent............................................26

Section 22. Issuance of New Right Certificates................................26

Section 23. Redemption........................................................26

Section 24. Exchange..........................................................27

Section 25. Notice of Certain Events..........................................28

Section 26. Notices...........................................................29

Section 27. Supplements and Amendments........................................30

Section 28. Successors........................................................30

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

Section 30. Severability......................................................30

Section 31. Governing Law.....................................................30

Section 32. Counterparts......................................................30

Section 33. Descriptive Headings..............................................30

Section 34. Determinations and Actions by the Board of Directors..............30



Exhibit A - Form of Certificate of Designation of Broadway Financial Corporation

Exhibit B - Form of Right Certificate





<PAGE>

                                                                Exhibit 99.1


Broadway Financial Corporation February 3, 2003 Press Release





News Release

FOR IMMEDIATE RELEASE              Contact: Paul C. Hudson, President/CEO
                                            Alvin D. Kang, CFO
                                            (323) 634-1700
                                            www.broadwayfed.com


                         BROADWAY FINANCIAL CORPORATION
                  ANNOUNCES ADOPTION OF SHAREHOLDER RIGHTS PLAN

LOS  ANGELES,  CA -  (BUSINESS  WIRE) - February  3, 2003 -  Broadway  Financial
Corporation  ("Company")  (NASDAQ  Small-Cap:  BYFC),  the  holding  company  of
Broadway  Federal Bank,  f.s.b.  ("Bank"),  today announced  Broadway  Financial
Corporation's  Board of Directors adopted a Shareholder  Rights Plan (the Rights
Plan) on January 31, 2003. The Board's purpose in adopting the Rights Plan is to
protect  shareholder  value in the event of an unsolicited  offer to acquire the
Company,  particularly  one that does not  provide  equitable  treatment  to all
shareholders.  Adoption of the Rights Plan is designed to  encourage a potential
acquiror of the Company to negotiate directly with the Board, and to provide the
Board with greater  leverage in such  negotiations so as to provide the greatest
value for the Company's  shareholders.  The Rights Plan will not interfere  with
any  merger,  acquisition  or  business  combination  that the  Company's  Board
believes to be in the best interest of its shareholders.

Rights  plans have  become  increasingly  common.  The Rights Plan is similar to
rights plans that have been adopted by many public companies.

In  connection  with the  adoption  of the  Rights  Plan,  the Board  declared a
dividend  distribution  of one Right for each  outstanding  common share held by
shareholders  of record  on  February  13,  2003.  The  rights  will not  become
exercisable unless, with certain exceptions,  an investor acquires 15 percent or
more of the  Company's  common  shares,  or  announces a tender offer that would
result in the investor  owning 15 percent or more of the common  shares or makes
certain  regulatory  filings seeking  authority to acquire 15 percent or more of
the common  shares.  If someone does acquire 15 percent or more of the Company's
common shares,  or acquires the Company in a merger or other  transaction,  each
Right would entitle the holder,  other than the investor  triggering  the Rights
and related persons,  to purchase the Company's  common shares,  or shares of an
entity that acquires the Company,  at half of the then current market price. The
Rights Plan can be terminated or amended by the Board at any time.

The  Bank is a  community-oriented  savings  bank,  which  primarily  originates
residential mortgage loans in the Los Angeles geographic areas known as Mid-City
and South Central.  The Bank operates four full service  branches,  three in the
city of Los  Angeles,  and one in the  nearby  city  of  Inglewood,  California.
Shareholders,  analysts and others seeking  information about the Company or the
Bank  are  invited  to  write  to:  Broadway  Financial  Corporation,   Investor
Relations,  4800 Wilshire Blvd., Los Angeles,  CA 90010, or visit our website at
www.broadwayfed.com.





* The portion of the legend in brackets shall be inserted only if applicable and
shall replace the preceding sentence.
[{"type": "8-K", "sequence": "1", "filename": "form8ksrp.txt", "description": "FORM 8-K SHAREHOLDER RIGHTS PLAN", "secsgml_size_bytes": 184899}]
{"company-data": {"conformed-name": "BROADWAY FINANCIAL CORP \\DE\\", "cik": "0001001171", "assigned-sic": "6035", "irs-number": "954547287", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-27464", "film-number": "03539236"}, "business-address": {"street1": "4800 WILSHIRE BLVD", "city": "LOS ANGELES", "state": "CA", "zip": "90010", "phone": "2136341700"}, "mail-address": {"street1": "4800 WILSHIRE BLVD", "city": "LOS ANGELES", "state": "CA", "zip": "90010"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 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 31, 2003

                         BROADWAY FINANCIAL CORPORATION
             (Exact name of registrant as specified in its charter)

        Delaware                        0-27464                95-4547287
        --------                        -------                ----------
(State or other jurisdiction of  (Commission File Number)    (IRS Employer
 incorporation or organization)                           Identification Number)

     4800 Wilshire Boulevard, Los Angeles, California               90010
     ------------------------------------------------               -----
         (Address of principal executive offices)                (Zip Code)

                                 (323) 634-1700
               Registrant's telephone number, including area code

                                       1
Item 5.  Other Events and Regulation FD Disclosure.

     On  January  31,  2003,  the  Board  of  Directors  of  Broadway  Financial
Corporation  (the "Company")  declared a dividend  distribution of one preferred
share purchase right (a "Right") for each share of common stock, par value $0.01
per share (the "Common Shares") of the Company outstanding at the close business
on February  13, 2003 (the  "Record  Date").  The  dividend  will be paid on the
Record  Date to  holders  of Common  Shares on such  date.  The  holders  of any
additional  Common Shares issued after the Record Date and before the redemption
or expiration of the Rights (or the  Distribution  Date, as defined  below) will
also be entitled to one Right for each such additional  Common Share. Each right
entitles the registered holder under certain  circumstances to purchase from the
Company one  one-hundredth of a Series A Junior  Participating  Preferred Share,
par value $0.01 per share (the "Participating Preferred Shares"), of the Company
at a price of $35.00 per one  one-hundredth  of a Participating  Preferred Share
(the "Purchase Price"), subject to adjustment.  The description and terms of the
Rights  are set forth in the  Rights  Agreement  dated as of  January  31,  2003
between the  Company and US Stock  Transfer  Corporation,  as rights  agent (the
"Rights Agreement").

     Initially,  the Rights will be attached to and  evidenced  by  certificates
evidencing  Common Shares,  and no separate  certificates for the Rights will be
distributed.  With certain  exceptions,  the Rights will become  exercisable and
will be evidenced by separate certificates only after the earlier to occur of:

(1)  10  days  following  a  public  announcement  that a  person  or  group  of
     affiliated or associated persons has acquired  beneficial  ownership of 15%
     or more of the outstanding  Common Shares  (thereby  becoming an "Acquiring
     Person"), or

(2)  15 business  days (or such later date as may be  determined by the Board of
     Directors  prior to such  time as any  person  or group  of  affiliated  or
     associated  persons becomes an Acquiring Person) following the commencement
     of a tender or exchange offer the consummation of which would result in the
     beneficial  ownership by a person or group of persons of 15% or more of the
     outstanding Common Shares.

(3)  10 business  days (or such later date as may be determined by action of the
     Board of Directors  prior to such time as any person or group of affiliated
     or associated  persons becomes an Acquiring Person) after the filing of any
     application,  request or other document with a governmental  agency seeking
     approval  of,  attempting  to rebut any  presumption  of control  upon,  or
     indicating  an  intention  to enter  into,  any  transaction  or  series of
     transactions  that would result in any person becoming the beneficial owner
     of 15% or more of the outstanding Common Shares. (The first to occur of the
     dates  is  referred  to  in  the  Rights   Agreement   and  herein  as  the
     "Distribution Date").

     Notwithstanding  the foregoing,  the Distribution  Date will not occur with
respect to any person who as of January 31, 2003  beneficially  owns 15% or more
of the outstanding Common Shares (a "Grandfathered Person"),  unless such person
acquires  beneficial  ownership of more than an  additional  1/2% of such Common

                                       2
Shares.  Upon any sale or other  transfer  of Common  Shares by a  Grandfathered
Person,  the amount of Common Shares that the Grandfathered  Person may continue
to  beneficially  own  without  causing the  Distribution  Date to occur will be
reduced to the Grandfathered  Person's  percentage  beneficial  ownership of the
outstanding  Common  Shares as of the time  immediately  after the sale or other
transfer,  plus an  additional  1/2%. A person will cease to be a  Grandfathered
Person once such person's beneficial  ownership of the outstanding Common Shares
falls below 15%.

     Common Share certificates issued upon transfer or issuance of Common Shares
after the Record Date and prior to the Distribution Date (or earlier  redemption
or  expiration of the Rights) will contain a notation  incorporating  the Rights
Agreement by reference.  If the Board of Directors in good faith determines that
a  person  who  would   otherwise  be  an  Acquiring   Person  has  become  such
inadvertently,  and such person  divests as promptly as practicable a sufficient
number of Common  Shares so that  such  person  would no longer be an  Acquiring
Person,  then such  person  shall not be deemed to be an  Acquiring  Person  for
purposes of the Rights Agreement.

     The Rights will expire on January 31, 2013 (the "Final  Expiration  Date"),
unless the Final  Expiration  Date is  extended or unless the Rights are earlier
redeemed or exchanged by the Company, in each case as described below.

     The  Purchase  Price  payable,  and the number of  Participating  Preferred
Shares or other securities or property issuable, upon exercise of the Rights are
subject to adjustment under certain  circumstances  from time to time to prevent
dilution.  With certain exceptions,  no adjustment in the Purchase Price will be
required until  cumulative  adjustments  require an adjustment of at least 1% in
such Purchase Price.

     Participating Preferred Shares purchasable upon exercise of the Rights will
not be  redeemable.  Each  Participating  Preferred  Share will be entitled to a
minimum preferential  quarterly distribution payment, when, as and if authorized
by the Board of Directors  out of funds legally  available for such purpose,  of
$1.00 per share but will be entitled to an aggregate  distribution  of 100 times
any  distribution  declared per Common Share. In the event of  liquidation,  the
holders of the  Participating  Preferred  Shares  will be  entitled to a minimum
preferential  liquidation  payment of $1.00 per share but will be entitled to an
aggregate  payment  of 100  times  the  payment  made  per  Common  Share.  Each
Participating  Preferred  Share will have 100 votes,  voting  together  with the
Common Shares. In the event of any merger, consolidation or other transaction in
which Common Shares are exchanged,  each  Participating  Preferred Share will be
entitled to receive 100 times the amount received per Common Share. In the event
of issuance of Participating  Preferred  Shares upon exercise of the Rights,  in
order to  facilitate  trading,  a depositary  receipt may be issued for each one
one-hundredth  of a Participating  Preferred Share. The Rights will be protected
by customary antidilution provisions.

     In the event that any person or group of affiliated  or associated  persons
becomes an Acquiring  Person,  proper provision will be made so that each holder
of a Right, other than Rights  beneficially owned by the Acquiring Person (which
will  thereafter  be void),  will  thereafter  have the right to  receive,  upon
exercise thereof, a number of Common Shares having a market value (determined in
accordance with the Rights  Agreement) equal to two times the Purchase Price. In
lieu of the  issuance  of Common  Shares upon  exercise of Rights,  the Board of

                                       3
Directors  may  under  certain  circumstances,  and if there is an  insufficient
number of Common Shares  authorized  but unissued to permit the exercise in full
of the Rights, the Board is required to, take such action as may be necessary to
cause the Company to issue or pay upon the exercise of Rights,  cash  (including
by way of a reduction of the Purchase Price),  property, other securities or any
combination  of the  foregoing  having an  aggregate  value equal to that of the
Common  Shares which  otherwise  would have been  issuable  upon exercise of the
Rights.  The Company may permit the Rights to be exercised for 50% of the Common
Shares (or cash, property or other securities that may be substituted for Common
Shares)  that  would   otherwise  be  purchasable   upon  exercise   thereof  in
consideration  of the  surrender  of the Rights so exercised  and without  other
payment of the Purchase Price.

     In the event that,  after any person or group becomes an Acquiring  Person,
the Company is acquired in a merger or other business combination transaction or
50% or more of its  consolidated  assets  or  earning  power  are  sold,  proper
provision will be made so that each holder of a Right will  thereafter  have the
right to receive,  upon the exercise thereof at the then current Purchase Price,
a number  of shares of common  stock of the  acquiring  company  having a market
value  (determined in accordance with the Rights  Agreement)  equal to two times
the Purchase Price.

     At any time after any person or group becomes an Acquiring Person and prior
to the  acquisition  by that  person or group of 50% or more of the  outstanding
Common Shares, the Board of Directors may exchange the Rights (other than Rights
owned by that person or group which will have become void), in whole or in part,
at  an  exchange  ratio  of  one  Common  Share  (or  one   one-hundredth  of  a
Participating Preferred Share) per Right (subject to adjustment).

     As  soon as  practicable  after  the  Distribution  Date,  the  Company  is
obligated to use its best  efforts to file a  registration  statement  under the
Securities  Act of 1933, as amended,  relating to the  securities  issuable upon
exercise of Rights and to cause such registration  statement to become effective
as soon as practicable.

     At any  time  prior to the time a person  or group of  persons  becomes  an
Acquiring Person, the Board of Directors may redeem the Rights, in whole but not
in part,  at a  redemption  price of $0.01 per Right (the  "Redemption  Price"),
payable  in cash,  Common  Shares  or any  other  form of  consideration  deemed
appropriate by the Board of Directors.  The redemption of the Rights may be made
effective at such time,  on such basis and with such  conditions as the Board of
Directors  in  its  sole   discretion  may  establish.   Immediately   upon  the
effectiveness of any redemption of the Rights,  the right to exercise the Rights
will  terminate  and the only right of the  holders of Rights will be to receive
the Redemption Price.

     The terms of the Rights may be  amended by the Board of  Directors  without
the consent of the  holders of the  Rights,  except that from and after the time
any person or group of  affiliated or  associated  persons  becomes an Acquiring
Person,  no such amendment may adversely  affect the interests of the holders of
the Rights.  Until a Right is exercised,  the holder thereof, as such, will have
no rights as a shareholder of the Company,  including,  without limitation,  the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to shareholders or to the Company,  shareholders  may,  depending
upon the  circumstances,  recognize  taxable income in the event that the Rights
become exercisable.

                                       4
The Rights  have  certain  anti-takeover  effects.  The  Rights  will cause
substantial  dilution to a person or group that  attempts to acquire the Company
on terms not approved by the Board of Directors. The Rights should not interfere
with any merger or other business combination approved by the Board of Directors
since the Rights may be redeemed by the Company at the Redemption Price prior to
the time that a person or group has acquired beneficial ownership of 15% or more
of the Common Shares.

     The  Rights  Agreement,  which  specifies  the terms of the  Rights and the
Participating  Preferred  Shares,  and the  Company's  February  3,  2003  press
release, in which the declaration of the dividend distribution of the Rights was
announced,  have been filed as  exhibits  to this  report  and are  incorporated
herein by reference.  The foregoing  description  in this Item 5 is qualified in
its entirety by reference to the Rights  Agreement,  including  the  definitions
therein of certain terms.

Item 7.  Financial Statements and Exhibits.

(c)      Exhibits

     4.1  Rights  Agreement  dated  as of  January  31,  2003  between  Broadway
          Financial  Corporation  and US Stock Transfer  Corporation,  as Rights
          Agent,   including   Exhibit  A  thereto  (Form  of   Certificate   of
          Designation,  Rights and  Preferences  relating to the Series A Junior
          Participating  Preferred  Shares) and Exhibit B thereto (Form of Right
          Certificate).

     99.1 Press release issued by Broadway Financial  Corporation on February 3,
          2003 concerning the adoption of the Rights Agreement.

                                       5
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.

Date:    February 3, 2003

                         BROADWAY FINANCIAL CORPORATION

                         By:      /s/ Paul C. Hudson
                                  --------------------------
                                  Paul C. Hudson
                                  Chief Executive Officer and President

                                       6
Exhibit 4.1

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

                                RIGHTS AGREEMENT

                                     between

                         BROADWAY FINANCIAL CORPORATION

                                       and

                          US STOCK TRANSFER CORPORATION

                                  Rights Agent

                          Dated as of January 31, 2003

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

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

                                RIGHTS AGREEMENT

     Agreement,  dated  as  of  January  31,  2003  between  Broadway  Financial
Corporation,  a Delaware  corporation  (the  "Company"),  and US Stock  Transfer
Corporation, a California corporation (the "Rights Agent").

     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 as of the close of business
on February 13, 2003 (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 herein set forth, and has further agreed
to  authorize  and direct the  issuance of one Right with respect to each Common
Share that shall  become  outstanding  between  the Record Date and the first to
occur of the Redemption  Date and the Final  Expiration  Date (as such terms are
hereinafter defined).

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

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

     "Acquiring  Person"  shall mean any Person who or which,  together with all
Affiliates and Associates of such Person,  shall be the Beneficial  Owner of 15%
or more of the Common  Shares  then  outstanding,  but shall not include (A) the
Company or any Affiliate or Subsidiary of the Company,  (B) any employee benefit
plan of the  Company or of any  Affiliate  or  Subsidiary  of the Company or any
entity  holding  Common Shares for or pursuant to the terms of any such plan, or
(C) any  Grandfathered  Person,  unless such  Grandfathered  Person  becomes the
Beneficial Owner of a percentage of the Common Shares then outstanding  equal to
or   exceeding   such   Grandfathered   Person's    Grandfathered    Percentage.
Notwithstanding  the foregoing,  no Person shall become an "Acquiring Person" as
the result of (X) an  acquisition  of Common  Shares by the  Company  which,  by
reducing the number of Common Shares  outstanding,  increases the  proportionate
number of Common Shares beneficially owned by such Person to 15% (or in the case
of a  Grandfathered  Person,  the  Grandfathered  Percentage  applicable to such
Grandfathered  Person)  or  more  of  the  Common  Shares  of the  Company  then
outstanding, or (Y) the acquisition by such Person of newly issued Common Shares
directly  from  the  Company  (it  being  understood  that a  purchase  from  an
underwriter  or  other  intermediary  is not an  acquisition  directly  from the
Company);  provided, however, that if a Person shall become the Beneficial Owner
of 15% (or in the case of a Grandfathered  Person, the Grandfathered  Percentage
applicable  to such  Grandfathered  Person) or more of the Common  Shares of the
Company then  outstanding by reason of Common Share  purchases by the Company or
the  acquisition  of newly issued  Common  Shares  directly from the Company and
shall,  after such Common  Share  purchases  or direct  issuance by the Company,
become the Beneficial Owner of any additional Common Shares (other than pursuant
to a stock split,  stock dividend or similar  transaction) of the Company,  then
such Person shall be deemed to be an "Acquiring  Person";  and provided further,
that any transferee from such Person who becomes the Beneficial  Owner of 15% or
more of the Common Shares of the Company then outstanding shall  nevertheless be
deemed to be an "Acquiring Person."  Notwithstanding the foregoing, if the Board
of  Directors  of the Company  determines  in good faith that a Person who would
otherwise  be an  "Acquiring  Person,"  as  defined  pursuant  to the  foregoing
provisions of this paragraph, has become such inadvertently (including,  without
limitation,  because (i) such Person was unaware  that it  beneficially  owned a
percentage  of Common  Shares  that would  otherwise  cause such Person to be an
"Acquiring Person" or (ii) such Person was aware of the extent of its Beneficial
Ownership of Common Shares but had no actual  knowledge of the  consequences  of
such  Beneficial  Ownership  under this  Agreement),  and such Person divests as
promptly  as  practicable  (and in any event  within  ten  Business  Days  after
notification  by the Company) a sufficient  number of Common Shares so that such
Person  would no longer be an  Acquiring  Person,  as  defined  pursuant  to the
foregoing provisions of this paragraph,  then such Person shall not be deemed to
be an "Acquiring Person" for any purposes of this Agreement.

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

     A Person shall be deemed the  "Beneficial  Owner" of and shall be deemed to
"beneficially own" any securities:

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

     (ii) which such Person or any of such Person's  Affiliates  or  Associates,
          directly or  indirectly,  has (A) the right to acquire  (whether  such
          right  is  exercisable  immediately  or only  upon the  occurrence  of
          certain events, or after the passage of time, or both) pursuant to any
          agreement,  arrangement  or  understanding,  whether  written  or oral
          (other than customary  agreements  with and between  underwriters  and
          selling group  members with respect to a bona fide public  offering of
          securities),  or upon the  exercise  of  conversion  rights,  exchange
          rights,  rights  (other than the  Rights),  warrants  or  options,  or
          otherwise;  provided,  however,  that a Person shall not be deemed the
          Beneficial  Owner  of, or to  beneficially  own,  securities  tendered
          pursuant  to a tender or  exchange  offer made by or on behalf of such
          Person or any of such Person's  Affiliates  or  Associates  until such
          tendered  securities  are accepted  for purchase or exchange;  (B) the
          sole or shared right to vote or dispose of  (including  any such right
          pursuant  to any  agreement,  arrangement  or  understanding,  whether
          written or oral); provided, however, that a Person shall not be deemed
          the Beneficial  Owner of, or to beneficially  own, any security if the
          agreement,  arrangement  or  understanding  to vote such  security (1)
          arises  solely from a revocable  proxy or consent given to such Person
          in response to a public proxy or consent  solicitation  made  pursuant
          to, and in  accordance  with,  the  applicable  rules and  regulations
          promulgated under the Exchange Act and (2) is not also then reportable
          on Schedule 13D under the Exchange Act (or any comparable or successor
          report);  or (C) "beneficial  ownership" of as determined  pursuant to
          Rule 13d-3 of the General  Rules and  Regulations  under the  Exchange
          Act; or

                                       2
(iii)which are  beneficially  owned,  directly or indirectly,  by any other
          Person (or any Affiliate or Associate  thereof) with which such Person
          or any of such Person's  Affiliates or Associates  has any  agreement,
          arrangement or understanding (other than customary agreements with and
          between  underwriters and selling group members with respect to a bona
          fide public  offering  of  securities)  for the purpose of  acquiring,
          holding,  voting (except to the extent  contemplated by the proviso to
          clause (B) of  subparagraph  (ii) of this  definition) or disposing of
          any securities of the Company.

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

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

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

               "Common  Shares" when used with  reference  to the Company  shall
          mean the shares of common  stock,  par value  $0.01 per share,  of the
          Company.  "Common Shares" when used with reference to any Person other
          than the  Company  shall mean the capital  stock (or equity  interest)
          with the  greatest  voting  power of such  other  Person or the equity
          securities or other equity  interest having power to control or direct
          the management of such other Person.

               "Distribution Date" shall have the meaning set forth in Section 3
          hereof.

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

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

               "Expiration  Date"  shall have the meaning set forth in Section 7
          hereof.

               "Final  Expiration  Date"  shall  have the  meaning  set forth in
          Section 7 hereof.

               "Grandfathered  Percentage"  shall  mean,  with  respect  to  any
          Grandfathered   Person  at  any  time,  the  percentage  of  the  then
          outstanding  Common Shares that such  Grandfathered  Person,  together
          with all  Affiliates  and  Associates  of such  Grandfathered  Person,
          Beneficially  Owns as of the  Grandfathered  Time,  plus an additional
          1/2%; provided,  however,  that, in the event any Grandfathered Person
          shall sell,  transfer,  or otherwise dispose of any outstanding Common
          Shares after the  Grandfathered  Time,  the  Grandfathered  Percentage
          shall,  subsequent to such sale,  transfer or disposition,  mean, with
          respect  to  such   Grandfathered   Person,  the  lesser  of  (i)  the

                                       3
Grandfathered  Percentage as in effect immediately prior to such sale,
          transfer or disposition or (ii) the percentage of the then outstanding
          Common  Shares  that  such  Grandfathered   Person  Beneficially  Owns
          immediately  following  such sale,  transfer or  disposition,  plus an
          additional 1/2%.

               "Grandfathered  Person"  shall  mean  any  Person  who or  which,
          together with all Affiliates and Associates of such Person,  is, as of
          the  Grandfathered  Time, the  Beneficial  Owner of 15% or more of the
          then  outstanding  Common  Shares.  Notwithstanding  anything  to  the
          contrary  provided in this  Agreement,  any  Grandfathered  Person who
          after the Grandfathered Time becomes the Beneficial Owner of less than
          15%  of  the  then  outstanding  Common  Shares  shall  cease  to be a
          Grandfathered  Person and shall be subject to all of the provisions of
          this Agreement in the same manner as any Person who is not and was not
          a Grandfathered Person.

               "Grandfathered  Time"  shall  mean 5.00  p.m.  Pacific  time,  on
          January 31, 2003.

               "Person" shall mean any  individual,  firm,  corporation or other
          entity,  and shall  include any  successor (by merger or otherwise) of
          such entity.

               "Preferred  Shares" shall mean the Series A Junior  Participating
          Preferred Shares, par value $0.01 per share, of the Company having the
          rights  and  preferences  set  forth  in the  form of  Certificate  of
          Designation,  Preferences  and Rights  attached to this  Agreement  as
          Exhibit A.

               "Principal  Party" shall have the meaning set forth in Section 13
          hereof.

               "Purchase  Price"  shall have the  meaning set forth in Section 4
          hereof.

               "Redemption  Date"  shall have the meaning set forth in Section 7
          hereof.

               "Right Certificate" shall have the meaning set forth in Section 3
          hereof.

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

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

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

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

               "Triggering  Event"  shall  mean any event  described  in Section
          11(a)(ii) or Section 13(a).

                                       4
Any determination or interpretation  required in connection with any of the
definitions  contained in this Section 1 shall be made by the Board of Directors
of the Company in their good faith judgment,  which determination shall be final
and binding on the Rights Agent and on all shareholders of the Company.

     Section 2.  Appointment of Rights Agent.  The Company  hereby  appoints the
Rights  Agent to act as agent for the Company in  accordance  with the terms and
conditions  hereof and the Rights Agent hereby  accepts  such  appointment.  The
Company  may from  time to time  appoint  such  co-Rights  Agents as it may deem
necessary or desirable  upon ten days' prior written notice to the Rights Agent.
The Rights Agent shall have no duty to supervise and shall in no event be liable
for acts or omissions of any such co-Rights Agents.

     Section 3. Issuance of Right Certificates.

(a)  Until the  earlier of (i) the close of  business on the tenth day after the
     Shares  Acquisition  Date,  (ii) the  close of  business  on the  fifteenth
     Business  Day (or such  later  date as may be  determined  by action of the
     Board of  Directors  prior to such time as any Person  becomes an Acquiring
     Person)  after the date of the  commencement  by any Person (other than the
     Company,  any Affiliate or Subsidiary of the Company,  any employee benefit
     plan of the Company or of any Affiliate or Subsidiary of the Company or any
     entity holding Common Shares for or pursuant to the terms of any such plan)
     of a tender or exchange offer the consummation of which would result in any
     Person  becoming the Beneficial  Owner of Common Shares  aggregating 15% or
     more of the then outstanding  Common Shares, or (iii) the close of business
     on the tenth  Business  Day (or such  later  date as may be  determined  by
     action of the Board of Directors  prior to such time as any Person  becomes
     an  Acquiring  Person)  after  the  date of  filing  by any  Person  of any
     application,  request,  submission  or other  document  with any federal or
     state regulatory  authority  seeking  approval of,  attempting to rebut any
     presumption  of control of, or otherwise  indicating  an intention to enter
     into, any transaction or series of transactions  the  consummation of which
     would result in any Person  becoming the Beneficial  Owner of Common Shares
     aggregating 15% or more of the then outstanding Common Shares, other than a
     transaction in which newly issued Common Shares are issued  directly by the
     Company to such Person  (including any such date which is after the date of
     this Agreement and prior to the issuance of the Rights; the earlier of such
     dates being herein referred to as the "Distribution  Date"), (x) the Rights
     will be evidenced (subject to the provisions of Section 3(b) hereof) by the
     certificates  for  Common  Shares  registered  in the names of the  holders
     thereof (which  certificates  shall also be deemed to be  certificates  for
     Rights)  and not by  separate  certificates,  and (y)  the  Rights  will be
     transferable  only in connection with the transfer of the underlying Common
     Shares (including a transfer to the Company).  As soon as practicable after
     the  Distribution  Date,  the Company will prepare and execute,  the Rights
     Agent will countersign,  and the Company will send or cause to be sent (and
     the  Rights  Agent  will,  if  requested,  send) by  first-class,  insured,
     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,  in substantially
     the form of Exhibit B hereto (a "Right Certificate"),  evidencing one Right
     for each Common Share so held. As of the Distribution Date, the Rights will
     be evidenced solely by such Right Certificates.

                                       5
(b)  With respect to certificates for Common Shares outstanding as of the Record
     Date,  until the  Distribution  Date,  the Rights will be evidenced by such
     certificates registered in the names of the holders thereof, and registered
     holders  of Common  Shares  shall  also be the  registered  holders  of the
     associated Rights (regardless of whether such ownership is indicated on the
     Common Share  certificates).  Until the earliest of the Distribution  Date,
     the  Redemption  Date or the Final  Expiration  Date,  the  transfer of any
     certificate  for Common  Shares shall also  constitute  the transfer of the
     Rights associated with the Common Shares represented thereby.

(c)  Rights  shall be issued in respect of all  Common  Shares  which are issued
     (whether or not  previously  issued) after the Record Date but prior to the
     earliest  of the  Distribution  Date,  the  Redemption  Date  or the  Final
     Expiration Date.  Certificates  evidencing such Common Shares shall also be
     deemed to be certificates for Rights.  Certificates  evidencing both Common
     Shares and Rights in accordance  with this Section 3 which are executed and
     delivered  (whether  or  not  the  Common  Shares  evidenced  thereby  were
     previously issued or are presented for transfer) by the Company (including,
     without  limitation,  certificates  representing  reacquired  Common Shares
     referred to in the last  sentence of this  paragraph  (c)) after the Record
     Date but prior to the earliest of the  Distribution  Date,  the  Redemption
     Date or the Final  Expiration  Date shall have  impressed  on,  printed on,
     written on or otherwise affixed to them a legend that by itself or together
     with  prior  legends  is  substantially  to  the  following  effect:   This
     certificate also evidences and entitles the holder hereof to certain rights
     as set forth in the Rights Agreement between Broadway Financial Corporation
     (the "Company") and US Stock Transfer Corporation,  dated as of January 31,
     2003 (the "Rights  Agreement"),  the terms of which are hereby incorporated
     herein by reference and a copy of which is on file at the principal offices
     of the Company.  Under  certain  circumstances,  as set forth in the Rights
     Agreement,  the Rights will be evidenced by separate  certificates and will
     no longer be  evidenced by this  certificate.  The Company will mail to the
     holder of this certificate a copy of the Rights Agreement,  as in effect on
     the date of mailing,  without  charge  promptly  after receipt of a written
     request  therefor.  Under  certain  circumstances  set forth in the  Rights
     Agreement,  Rights issued to, or held by, any Person who is, was or becomes
     an Acquiring Person or an Affiliate or Associate thereof (as such terms are
     defined in the Rights Agreement), whether currently held by or on behalf of
     such Person or by any subsequent holder, shall become null and void.

Until the Distribution  Date, the Rights associated with the Common Shares shall
be evidenced by the certificates  evidencing the associated  Common Shares alone
(regardless of whether any such certificate  contains the above legend), and the
transfer  of any such  certificate  shall also  constitute  the  transfer of the
Rights associated with the Common Shares represented  thereby. In the event that
the Company  purchases or acquires  any Common  Shares after the Record Date but
prior to the  Distribution  Date, any Rights  associated with such Common Shares
shall be deemed  canceled and retired so that the Company  shall not be entitled
to exercise  any Rights  associated  with the Common  Shares which are no longer
outstanding.

                                       6
Section 4. Form of Right Certificates.

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

(b)  Any Right Certificate  issued pursuant to Section 3(a) or Section 22 hereof
     that evidences Rights beneficially owned by: (i) an Acquiring Person or any
     Associate  or Affiliate of an  Acquiring  Person,  (ii) a transferee  of an
     Acquiring  Person (or any Associate or Affiliate)  who becomes a transferee
     after  the  Acquiring  Person  becomes  an  Acquiring  Person,  or  (iii) a
     transferee  of an  Acquiring  Person (or any  Associate or  Affiliate)  who
     becomes a transferee  prior to or  concurrently  with the Acquiring  Person
     becoming  such and receives  such Rights  pursuant to either (A) a transfer
     (whether or not for consideration)  from the Acquiring Person to holders of
     equity  interests in such  Acquiring  Person or to any Person with whom the
     Acquiring   Person   has   any   continuing   agreement,   arrangement   or
     understanding, whether written or oral, regarding the transferred Rights or
     (B) a  transfer  which  is part of a plan,  arrangement  or  understanding,
     whether  written  or oral,  which has as a primary  purpose  or effect  the
     avoidance of Section 7(e) hereof, and any Right Certificate issued pursuant
     to Section 6 or Section 11 hereof upon transfer,  exchange,  replacement or
     adjustment  of any other Right  Certificate  referred to in this  sentence,
     shall contain (to the extent feasible and otherwise reasonably identifiable
     as such) the following legend:

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

The provisions of Section 7(e) shall apply whether or not any Right  Certificate
actually contains the foregoing legend.

     Section 5. Countersignature and Registration.  The Right Certificates shall
be executed on behalf of the Company by the Chairman of its Board of  Directors,
its Chief Executive  Officer or any of its Executive or Senior Vice  Presidents,
or its Secretary,  either manually or by facsimile signature, shall have affixed
thereto the Company's seal or a facsimile thereof,  and shall be attested by the
Secretary  or an  Assistant  Secretary  of the  Company,  either  manually or by

                                       7
facsimile signature.  The Right Certificates shall be manually  countersigned by
the Rights Agent and shall not be valid for any purpose unless countersigned. In
case  any  officer  of the  Company  who  shall  have  signed  any of the  Right
Certificates   shall   cease  to  be  such   officer  of  the   Company   before
countersignature  by the Rights  Agent and issuance and delivery by the Company,
such Right Certificates,  nevertheless, may be countersigned by the Rights Agent
and issued and delivered by the Company with the same force and effect as though
the person who signed such Right  Certificates had not ceased to be such officer
of the Company; and any Right Certificate may be signed on behalf of the Company
by  any  person  who,  at the  actual  date  of  the  execution  of  such  Right
Certificate,  shall  be a proper  officer  of the  Company  to sign  such  Right
Certificate,  although at the date of the execution of this Rights Agreement any
such person was not such an officer.

     Following the Distribution  Date, the Rights Agent will keep or cause to be
kept, at its office  designated  for such purpose,  books for  registration  and
transfer of the Right Certificates  issued hereunder.  Such books shall show the
names and addresses of the  respective  holders of the Right  Certificates,  the
number of Rights evidenced on its face by each of the Right Certificates and the
date of each of the Right Certificates.

     Section  6.  Transfer,   Division,   Combination   and  Exchange  of  Right
Certificates;  Mutilated, Destroyed, Lost or Stolen Right Certificates.  Subject
to the  provisions of Sections 4(b),  7(e), 14 and 24 hereof,  at any time after
the close of business on the Distribution  Date, and at or prior to the close of
business on the earlier of the Redemption Date or the Final Expiration Date, any
Right Certificate or Right Certificates may be transferred, divided, combined or
exchanged for another Right  Certificate  or Right  Certificates,  entitling the
registered holder to purchase a like number of Preferred Shares (or, following a
Triggering Event, Common Shares or other securities or property, as the case may
be) as the Right  Certificate or Right  Certificates  surrendered  then entitled
such holder to purchase.  Any registered  holder  desiring to transfer,  divide,
combine or exchange any Right Certificate or Right  Certificates shall make such
request in writing  delivered to the Rights Agent, and shall surrender the Right
Certificate  or Right  Certificates  to be  transferred,  divided,  combined  or
exchanged at the office of the Rights Agent designated for such purpose. Neither
the  Rights  Agent  nor the  Company  shall  be  obligated  to take  any  action
whatsoever  with  respect  to  the  transfer  of  any  such  surrendered   Right
Certificate  until the  registered  holder shall have  completed  and signed the
certificate  contained  in the form of  assignment  on the reverse  side of such
Right  Certificate and the Company shall have been provided with such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates  or  Associates  thereof as the  Company  shall  reasonably  request.
Thereupon  the  Rights  Agent  shall,  subject  to  Sections  4  and  7  hereof,
countersign  and deliver to the person entitled  thereto a Right  Certificate or
Right Certificates, as the case may be, as so requested. The Company may require
payment of a sum sufficient to cover any tax or governmental  charge that may be
imposed in connection  with any transfer,  division,  combination or exchange of
Right Certificates.

     Upon  receipt by the  Company and the Rights  Agent of evidence  reasonably
satisfactory  to them of the loss,  theft,  destruction or mutilation of a Right
Certificate,  and,  in case of  loss,  theft or  destruction,  of  indemnity  or
security  reasonably  satisfactory  to  them,  and,  at the  Company's  request,
reimbursement  to the Company and the Rights  Agent of all  reasonable  expenses
incidental  thereto,  and upon surrender to the Rights Agent and cancellation of

                                       8
the Right  Certificate  if  mutilated,  the Company  will make and deliver a new
Right  Certificate  of like tenor to the Rights Agent for  countersignature  and
delivery  to the  registered  holder in lieu of the Right  Certificate  so lost,
stolen, destroyed or mutilated.

     Section 7. Exercise of Rights;  Purchase Price;  Expiration Date of Rights.

(a)  Subject  to  Section  7(e)  hereof,  the  registered  holder  of any  Right
     Certificate may exercise the Rights evidenced  thereby (except as otherwise
     provided  herein)  in whole or in part at any time  after the  Distribution
     Date upon surrender of the Right Certificate,  with the form of election to
     purchase on the reverse side thereof duly executed,  to the Rights Agent at
     the office of the Rights Agent  designated for such purpose,  together with
     payment of the Purchase  Price with respect to each  surrendered  Right for
     the total number of Preferred  Shares (or Common Shares or other securities
     or property,  as the case may be) as to which the Rights are exercised,  at
     or prior to the  earliest  of (i) the close of business on January 31, 2013
     (the  "Final  Expiration  Date"),  (ii) the time at which  the  Rights  are
     redeemed as provided in Section 23 hereof (the "Redemption  Date") or (iii)
     the time at which  such  Rights are  exchanged  as  provided  in Section 24
     hereof (the  earliest  to occur of the events  described  in (i),  (ii) and
     (iii) being herein referred to as the "Expiration Date").

(b)  The Purchase Price for each one one-hundredth of a Preferred Share pursuant
     to the exercise of a Right shall  initially be $35.00,  shall be subject to
     adjustment  from time to time as  provided in Sections 11 and 13 hereof and
     shall be  payable  in  lawful  money of the  United  States of  America  in
     accordance with paragraph (c) below.

(c)  Upon receipt of a Right Certificate evidencing exercisable Rights, with the
     form of election to purchase and the certificate on the reverse side of the
     Right  Certificate  duly  executed,  accompanied by payment of the Purchase
     Price for the  Preferred  Shares (or Common  Shares or other  securities or
     property,  as the case may be) to be  purchased  and an amount equal to any
     applicable  transfer  tax  required  to be paid by the holder of such Right
     Certificate  in  accordance  with  Section  9 hereof  by  certified  check,
     cashier's  check or money order  payable to the order of the  Company,  the
     Rights Agent shall thereupon promptly (i) (A) requisition from any transfer
     agent of the Preferred  Shares (or make  available,  if the Rights Agent is
     the transfer agent of the Preferred Shares)  certificates for the number of
     Preferred  Shares  to be  purchased  and  the  Company  hereby  irrevocably
     authorizes its transfer  agent to comply with all such requests,  or (B) if
     the Company  shall have elected to deposit the  Preferred  Shares  issuable
     upon exercise of the Rights with a depositary  agent,  requisition from the
     depositary  agent  depositary  receipts  representing  such  number  of one
     one-hundredths  of a Preferred  Share as are to be purchased (in which case
     certificates  for the Preferred  Shares evidenced by such receipts shall be
     deposited by the transfer agent with the depositary  agent) and the Company
     will direct the  depositary  agent to comply with such  request,  (ii) when
     appropriate,  requisition from the Company the amount of cash to be paid in
     lieu of issuance of fractional shares in accordance with Section 14 hereof,
     (iii) after receipt of such certificates or depositary receipts,  cause the
     same to be delivered to or upon the order of the registered  holder of such
     Right Certificate, registered in such name or names as may be designated by
     such holder and (iv) when appropriate,  after receipt, deliver such cash to

                                       9
or upon the order of the registered  holder of such Right  Certificate.  In
     the  event  that  the  Company  is  obligated  to  issue  other  securities
     (including Common Shares) of the Company,  pay cash and/or distribute other
     property  pursuant  to Section  11(a)  hereof,  the  Company  will make all
     arrangements necessary so that such other securities,  cash and/or property
     are  available  for   distribution   by  the  Rights  Agent,  if  and  when
     appropriate.

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

(e)  Notwithstanding  anything in this Agreement to the contrary, from and after
     the occurrence of a Triggering Event, any Rights  beneficially owned by (i)
     an Acquiring  Person or an  Associate or Affiliate of an Acquiring  Person,
     (ii) a  transferee  of an  Acquiring  Person (or of any such  Associate  or
     Affiliate) who becomes a transferee  after the Acquiring  Person becomes an
     Acquiring  Person or (iii) a  transferee  of an  Acquiring  Person  (or any
     Associate or Affiliate) who becomes a transferee  prior to or  concurrently
     with the Acquiring  Person  becoming an Acquiring  Person and receives such
     Rights pursuant to either (x) a transfer (whether or not for consideration)
     from the Acquiring  Person to holders of equity interests in such Acquiring
     Person or to any Person with whom the Acquiring  Person has any  continuing
     agreement, arrangement or understanding, whether written or oral, regarding
     the  transferred  Rights or (y) a  transfer  which  the Board of  Directors
     otherwise  concludes  in good  faith  is part  of a  plan,  arrangement  or
     understanding,  whether written or oral,  which has as a primary purpose or
     effect the  avoidance  of this  Section  7(e),  shall  become null and void
     without any further  action,  and any holder of such Rights shall thereupon
     have no rights  whatsoever  with respect to such Rights,  whether under any
     provision of this Agreement or otherwise,  from and after the occurrence of
     a Triggering Event. The Company shall use all reasonable  efforts to insure
     that the  provisions  of this Section 7(e) hereof are  complied  with,  but
     shall have no liability  to any holder of Rights for the  inability to make
     any  determinations  with respect to an Acquiring Person or its Affiliates,
     Associates or transferees hereunder.

(f)  Notwithstanding  anything in this  Agreement to the  contrary,  neither the
     Rights Agent nor the Company  shall be  obligated  to undertake  any action
     with respect to a registered  holder upon the  occurrence  of any purported
     exercise as set forth in this Section 7 unless the certificate contained in
     the form of election to purchase set forth on the reverse side of the Right
     Certificate  surrendered  for such exercise  shall have been  completed and
     signed by the  registered  holder  thereof and the Company  shall have been
     provided with such  additional  evidence of the identity of the  Beneficial
     Owner (or former Beneficial  Owner) or Affiliates or Associates  thereof as
     the Company shall reasonably request.

(g)  The Company covenants and agrees that it will cause to be reserved and kept
     available  out  of its  authorized  and  unissued  Preferred  Shares  (and,
     following  the  occurrence  of a Triggering  Event,  Common Shares or other
     securities or property as contemplated by Section  11(a)(iii)),  the number

                                       10
of Preferred Shares (and,  following the occurrence of a Triggering  Event,
     Common  Shares  and/or  such other  securities  or  property)  that will be
     sufficient to permit the exercise in full of all outstanding Rights.

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

     Section 9. Availability of Preferred Shares; Payment of Taxes and Charges.

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

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

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

                                       11
transfer books of the Company for the Preferred  Shares (or Common Shares and/or
other  securities,  as the case may be) are open.  Prior to the  exercise of the
Rights  evidenced  thereby,  the  holder  of a Right  Certificate  shall  not be
entitled to any rights of a holder of Preferred  Shares (or Common Shares and/or
other securities, as the case may be) for which the Rights shall be exercisable,
including,  without limitation, the right to vote, to receive dividends or other
distributions or to exercise any preemptive rights, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided herein.

     Section 11.  Adjustment  of Purchase  Price,  Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.

 (a) (i)  In the  event  the  Company  shall at any time  after the date of this
          Agreement  (A) declare a dividend on the Preferred  Shares  payable in
          Preferred Shares, (B) subdivide the outstanding  Preferred Shares, (C)
          combine the  outstanding  Preferred  Shares  into a smaller  number of
          Preferred Shares or (D) issue any of its shares 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 entity),  except as otherwise provided in this
          Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at
          the time of the record date for such dividend or of the effective date
          of such subdivision,  combination or reclassification,  and the number
          and kind of shares  issuable  on such date,  shall be  proportionately
          adjusted  so that the  holder of any Right  exercised  after such time
          shall be entitled to receive the  aggregate  number and kind of shares
          which, if such Right had been exercised immediately prior to such date
          and at a time when the transfer books of the Company for the Preferred
          Shares  were open,  he would have  owned upon such  exercise  and been
          entitled  to  receive  by  virtue  of  such   dividend,   subdivision,
          combination or reclassification;  provided,  however, that in no event
          shall the  consideration to be paid upon -------- ------- the exercise
          of one Right be less than the aggregate par value of the shares of the
          Company  issuable  upon the exercise of one Right.  If an event occurs
          which would  require an  adjustment  under both  Section  11(a)(i) and
          Section  11(a)(ii),  the  adjustment  provided  for  in  this  Section
          11(a)(i)  shall be in  addition  to,  and shall be made  prior to, any
          adjustment required pursuant to Section 11(a)(ii).

     (ii) Subject  to  Section  24 of this  Agreement,  in the event any  Person
          becomes  an  Acquiring  Person,  each  holder  of a Right,  except  as
          provided  below and in Section 7(e) hereof,  shall  thereafter  have a
          right to receive,  upon exercise  thereof at a price equal to the then
          current Purchase Price multiplied by the number of one  one-hundredths
          of a  Preferred  Share  for  which a Right  is  then  exercisable,  in
          accordance  with the terms of this  Agreement and in lieu of Preferred
          Shares, such number of Common Shares of the Company as shall equal the
          result obtained by (A) multiplying the then current  Purchase Price by
          the  number of one  one-hundredths  of a  Preferred  Share for which a
          Right is then  exercisable and dividing that product by (B) 50% of the
          then  current per share market price of the  Company's  Common  Shares
          (determined  pursuant  to  Section  11(d)  hereof)  on the date of the
          occurrence of such event. In the event that any Person shall become an
          Acquiring Person and the Rights shall then be outstanding, the Company
          shall not take any  action  which  would  eliminate  or  diminish  the
          benefits intended to be afforded by the Rights.

                                       12
(iii)In lieu of issuing  Common  Shares of the Company in  accordance  with
          Section 11(a)(ii)  hereof,  the Company may, in the sole discretion of
          the Board of Directors,  elect to (and, in the event that the Board of
          Directors has not exercised the exchange right contained in Section 24
          hereof and there are not  sufficient  issued but not  outstanding  and
          authorized  but unissued  Common Shares to permit the exercise in full
          of the Rights in accordance with the foregoing  subparagraph (ii), the
          Company  shall) take all such action as may be necessary to authorize,
          issue or pay,  upon the  exercise of the Rights,  Preferred  Shares or
          other  preferred  shares  which a majority  of the Board of  Directors
          determines  in good  faith  to be  equivalent  to one or  more  Common
          Shares,  or cash  (including  by way of a  reduction  of the  Purchase
          Price),  property,  other  securities  or  any  combination  of  cash,
          property and such other securities  having an aggregate value equal to
          the value of the Common  Shares of the Company which  otherwise  would
          have been  issuable  pursuant to Section  11(a)(ii),  which  aggregate
          value shall be  determined in good faith by a majority of the Board of
          Directors.  For purposes of the preceding  sentence,  the value of the
          Common Shares shall be determined pursuant to Section 11(d) hereof and
          the value of any equity  securities  which a majority  of the Board of
          Directors  determines in good faith to be equivalent to a Common Share
          (including the Preferred Shares or other preferred  shares  determined
          to be  equivalent to one or more Common  Shares,  in such ratio as the
          Board of Directors shall  determine)  shall be deemed to have the same
          value  as the  Common  Shares.  Any  such  election  by the  Board  of
          Directors must be made and publicly announced within 60 days following
          the date on which the event described in Section  11(a)(ii) shall have
          occurred.  Following the occurrence of the event  described in Section
          11(a)(ii),  a majority  of the Board of  Directors  then in office may
          suspend the exercisability of the Rights for a period of up to 60 days
          following the date on which the event  described in Section  11(a)(ii)
          shall have  occurred to the extent that the Board of Directors has not
          determined  whether to exercise the Company's  right of election under
          this  Section  11(a)(iii).  In the event of any such  suspension,  the
          Company   shall  issue  a  public   announcement   stating   that  the
          exercisability of the Rights has been temporarily suspended.

(b)  In case the  Company  shall fix a record  date for the  issuance of rights,
     options or warrants to all holders of Preferred  Shares entitling them (for
     a period  expiring  within 45  calendar  days  after such  record  date) to
     subscribe  for or  purchase  Preferred  Shares (or  shares  having the same
     rights,  privileges and  preferences as the Preferred  Shares  ("equivalent
     preferred  shares")) or securities  convertible  into  Preferred  Shares or
     equivalent  preferred  shares at a price per Preferred  Share or equivalent
     preferred  share (or having a  conversion  price per  share,  if a security
     convertible into Preferred Shares or equivalent preferred shares) less than
     the then current per share market price of the Preferred Shares (as defined
     in Section  11(d)) on such record date,  the Purchase Price to be in effect
     after such record date shall be  determined  by  multiplying  the  Purchase
     Price in effect  immediately  prior to such record date by a fraction,  the
     numerator of which shall be the number of Preferred  Shares  outstanding on
     such record date plus the number of Preferred  Shares  which the  aggregate
     offering  price of the total number of Preferred  Shares and/or  equivalent
     preferred shares so to be offered (and/or the aggregate initial  conversion
     price of the  convertible  securities so to be offered)  would  purchase at
     such current market price and the  denominator of which shall be the number
     of  Preferred  Shares  outstanding  on such  record date plus the number of
     additional  Preferred  Shares  and/or  equivalent  preferred  shares  to be

                                       13
offered  for  subscription  or  purchase  (or into  which  the  convertible
     securities so to be offered are initially convertible);  provided, however,
     that in no event shall the  consideration  to be paid upon the  exercise of
     one Right be less than the aggregate par value of the shares of the Company
     issuable upon  exercise of one Right.  In case such  subscription  price is
     paid in a consideration  part or all of which shall be in a form other than
     cash, the value of such consideration  shall be as determined in good faith
     by the Board of  Directors  of the Company,  whose  determination  shall be
     described  in a statement  filed with the Rights Agent and shall be binding
     on the Rights  Agent and on the  holders of the  Rights.  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 shall
     be made successively whenever such a record date is fixed; and in the event
     that such rights, options or warrants are not so issued, the Purchase Price
     shall be adjusted to be the Purchase Price which would then be in effect if
     such record date had not been fixed.

(c)  In  case  the  Company  shall  fix  a  record  date  for  the  making  of a
     distribution  to all holders of the Preferred  Shares  (including  any such
     distribution made in connection with a consolidation or merger in which the
     Company is the continuing or surviving entity) of evidences of indebtedness
     or assets  (other  than a regular  periodic  cash  dividend  or a  dividend
     payable in Preferred Shares) or subscription  rights or warrants (excluding
     those  referred to in Section 11(b)  hereof),  the Purchase  Price to be in
     effect  after such  record  date shall be  determined  by  multiplying  the
     Purchase  Price  in  effect  immediately  prior  to such  record  date by a
     fraction, the numerator of which shall be the then current per share market
     price of the  Preferred  Shares on such record  date,  less the fair market
     value  (as  determined  in good  faith  by the  Board of  Directors  of the
     Company,  whose  determination shall be described in a statement filed with
     the Rights Agent) of the portion of the assets or evidences of indebtedness
     so  to  be  distributed  or  of  such   subscription   rights  or  warrants
     attributable  to one Preferred  Share and the denominator of which shall be
     such  current per share  market price of the  Preferred  Shares;  provided,
     however,  that in no event  shall  the  consideration  to be paid  upon the
     exercise of one Right be less than the aggregate par value of the shares of
     the Company to be issued upon exercise of one Right. Such adjustments shall
     be made successively whenever such a record date is fixed; and in the event
     that such  distribution  is not so made,  the Purchase Price shall again be
     adjusted  to be the  Purchase  Price  which would then be in effect if such
     record date had not been fixed.

(d)  (i)  For the purpose of any computation hereunder, other than under Section
          11(a)(iii)  hereof,  the  "current  per  share  market  price"  of any
          security (a  "Security"  for the purpose of this Section  11(d)(i)) on
          any date shall be deemed to be the average of the daily closing prices
          per share of such  Security  for the 30  consecutive  Trading Days (as
          such term is hereinafter  defined) immediately prior to such date, and
          for the purpose of any computation  under Section  11(a)(iii)  hereof,
          the "current  per share market  price" of a Security on any date shall
          be deemed to be the average of the daily  closing  prices per share of
          such  Security for thirty (30)  consecutive  Trading Days  immediately
          following  such date;  provided,  however,  that in the event that the
          current per share market price of the Security is determined  during a
          period  following the  announcement  by the issuer of such Security of
          (A) a dividend or distribution on such Security payable in

                                       14
shares of such  Security or  securities  convertible  into such shares
          (other  than  the  Rights),  or (B) any  subdivision,  combination  or
          reclassification  of such  Security and prior to the  expiration of 30
          Trading  Days  after  the  ex-dividend   date  for  such  dividend  or
          distribution, or the record date for such subdivision,  combination or
          reclassification,  then, and in each such case, the "current per share
          market price" shall be  appropriately  adjusted to reflect the current
          market price per share equivalent  (ex-dividend) of such Security. The
          closing price for each day shall be the last sale price,  regular way,
          or, in case no such sale takes  place on such day,  the average of the
          closing bid and asked prices,  regular way, in either case as reported
          in  the  principal  consolidated  transaction  reporting  system  with
          respect to  securities  listed or  admitted to trading on the New York
          Stock  Exchange  or, if the  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 the
          Security is listed or  admitted to trading or, if the  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 last high
          bid and low asked prices in the  over-the-counter  market, as reported
          by the National  Association  of Securities  Dealers,  Inc.  Automated
          Quotation  System  ("NASDAQ") or such other system then in use, or, if
          on any such date the Security is not quoted by any such  organization,
          the  average of the  closing bid and asked  prices as  furnished  by a
          professional  market maker making a market in the Security selected by
          the Board of Directors  of the Company.  If on any such date no market
          maker is  making  a market  in the  Security,  the fair  value of such
          Security  on such date (as  determined  in good  faith by the Board of
          Directors of the Company)  shall be used. The term "Trading Day" shall
          mean a day on which the  principal  national  securities  exchange  on
          which the  Security  is listed or  admitted to trading is open for the
          transaction  of business or, if the Security is not listed or admitted
          to trading on any national securities exchange, a Business Day.

     (ii) For the purpose of any computation  hereunder,  the "current per share
          market  price"  of  the  Preferred   Shares  shall  be  determined  in
          accordance  with the  method  set forth in  Section  11(d)(i).  If the
          Preferred  Shares are not  publicly  traded,  the  "current  per share
          market price" of the Preferred Shares shall be conclusively  deemed to
          be the  current  per share  market  price of the Common  Shares of the
          Company as determined  pursuant to Section 11(d)(i) (as  appropriately
          adjusted  to  reflect  any share  split,  share  dividend  or  similar
          transaction  occurring  after  the  date  hereof),  multiplied  by one
          hundred. If neither the Common Shares of the Company nor the Preferred
          Shares are  publicly  held or so listed or traded,  "current per share
          market  price"  shall mean the fair value per share as  determined  in
          good  faith  by  the  Board  of  Directors   of  the  Company,   whose
          determination  shall be described in a statement filed with the Rights
          Agent.

(e)  Anything  herein to the  contrary  notwithstanding,  no  adjustment  in the
     Purchase Price shall be required  unless such  adjustment  would require an
     increase  or  decrease  of at least  1% in the  Purchase  Price;  provided,
     however, that any adjustments which by reason of this Section 11(e) are not
     required to be made shall be carried  forward and taken into account in any
     subsequent adjustment. All calculations under this Section 11 shall be made
     to the  nearest  cent or to the nearest  one  one-millionth  of a Preferred
     Share or one ten-thousandth of any other share or security, as the case may
     be.   Notwithstanding  the  first  sentence  of  this  Section  11(e),  any

                                       15
adjustment  required  by this  Section  11 shall be made no later  than the
     earlier of (i) three years from the date of the transaction  which requires
     such adjustment or (ii) the date of the expiration of the right to exercise
     any Rights.

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

(g)  All Rights  originally  issued by the Company  subsequent to any adjustment
     made to the Purchase  Price  hereunder  shall entitle the holder thereof to
     purchase,  at the adjusted Purchase Price, the number of one 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),  upon  each  adjustment  of the  Purchase  Price as a result  of the
     calculations  made in  Sections  11(b)  and  (c),  each  Right  outstanding
     immediately prior to the making of such adjustment shall thereafter entitle
     the holder thereof to purchase, at the adjusted Purchase Price, that number
     of one  one-hundredths  of a Preferred Share (calculated to the nearest one
     one-millionth  of a Preferred  Share)  obtained by (i)  multiplying (A) the
     number  of one  one-hundredths  of a  Preferred  Share  covered  by a Right
     immediately  prior to such  adjustment by (B) the Purchase  Price in effect
     immediately  prior  to such  adjustment  of the  Purchase  Price  and  (ii)
     dividing  the  product  so  obtained  by  the  Purchase   Price  in  effect
     immediately after such adjustment of the Purchase Price.

     (i)  The  Company may elect on or after the date of any  adjustment  of the
          Purchase Price to adjust the number of Rights, in substitution for any
          adjustment in the number of one  one-hundredths  of a Preferred  Share
          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  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 ten-thousandth) obtained by dividing the Purchase Price in
          effect  immediately  prior to adjustment of the Purchase  Price by the
          Purchase Price in effect  immediately after adjustment of the Purchase
          Price. The Company shall make a public announcement of its election to
          adjust  the  number of  Rights,  indicating  the  record  date for the
          adjustment, and, if known at the time, the amount of the adjustment to
          be made.  This record date may be the date on which the Purchase Price
          is adjusted or any day thereafter, but, if the Right Certificates have
          been  issued,  shall be at least  10 days  later  than the date of the
          public announcement. If Right Certificates have been issued, upon each
          adjustment of the number of 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

                                       16
Right  Certificates  evidencing,  subject to  Section  14 hereof,  the
          additional  Rights to which such holders shall be entitled as a result
          of such adjustment,  or, at the option of the Company,  shall cause to
          be  distributed  to  such  holders  of  record  in  substitution   and
          replacement for the Right  Certificates  held by such holders prior to
          the date of adjustment, and upon surrender thereof, if required by the
          Company,  new Right  Certificates  evidencing  all the Rights to which
          such  holders  shall  be  entitled   after  such   adjustment.   Right
          Certificates  so to be  distributed  shall  be  issued,  executed  and
          countersigned   in  the  manner  provided  for  herein  and  shall  be
          registered in the names of the holders of record of Right Certificates
          on the record date specified in the public announcement.

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

(k)  Before  taking  any action  that would  cause an  adjustment  reducing  the
     Purchase 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  action  which  may,  in the  opinion  of its  counsel,  be
     necessary  in order that the Company  may  validly and legally  issue fully
     paid and nonassessable Preferred Shares at such adjusted Purchase Price.

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

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

(n)  In the event that at any time after the date of this Agreement and prior to
     the Distribution Date, the Company shall (i) declare or pay any dividend on
     the Common Shares  payable in Common  Shares or (ii) effect a  subdivision,

                                       17
combination or consolidation of the Common Shares (by  reclassification  or
     otherwise  than by payment of dividends in Common Shares) into a greater or
     lesser number of Common Shares, then in any such case (x) the number of one
     one-hundredths  of a  Preferred  Share  purchasable  after  such event upon
     proper exercise of each Right shall be determined by multiplying the number
     of one one-hundredths of a Preferred Share so purchasable immediately prior
     to such event by a fraction, the numerator of which is the number of Common
     Shares  outstanding  immediately  before such event and the  denominator of
     which is the number of Common  Shares  outstanding  immediately  after such
     event, and (y) each Common Share  outstanding  immediately after such event
     shall  have  issued  with  respect to it that  number of Rights  which each
     Common Share  outstanding  immediately  prior to such event had issued with
     respect to it. The adjustments  provided for in this Section 11(n) shall be
     made  successively  whenever  such a dividend is declared or paid or such a
     subdivision, combination or consolidation is effected.

(o)  So long as the  shares  issuable  upon the  exercise  of the  Rights may be
     listed on any national securities exchange,  the Company shall use its best
     efforts  to  cause,   from  and  after  such  time  as  the  Rights  become
     exercisable,  all shares  reserved  for such  issuance to be listed on such
     exchange upon official notice of issuance upon such exercise.

(p)  The Company shall use its best efforts to (i) file, as soon as  practicable
     following  the first  occurrence  of a  Triggering  Event,  a  registration
     statement   under  the  Securities  Act  with  respect  to  the  securities
     purchasable upon exercise of the Rights on an appropriate  form, (ii) cause
     such  registration  statement to become  effective  as soon as  practicable
     after such filing,  and (iii) cause such  registration  statement to remain
     effective  (with a prospectus at all times meeting the  requirements of the
     Securities Act) until the date of the expiration of the Rights. The Company
     will also take such action as may be appropriate under the blue sky laws of
     the various states.  The Company may temporarily  suspend,  for a period of
     time not to exceed 90 days,  the  exercisability  of the Rights in order to
     prepare  and file such  registration  statement  or in order to comply with
     such blue sky laws.  Upon any such  suspension,  the Company  shall issue a
     public announcement  stating that the exercisability of the Rights has been
     temporarily suspended.

(q)  In the event that the Rights become exercisable following the occurrence of
     a Triggering  Event, the Company may permit the Rights,  subject to Section
     7(e)  hereof,  to be  exercised  for 50% of the  Common  Shares  (or  cash,
     property or other  securities to be substituted  for Common Shares pursuant
     to Section 11(a)(iii)) that would otherwise be purchasable under subsection
     (a) in  consideration  of the  surrender  to the  Company  of the Rights so
     exercised and without other payment of the Purchase Price. Rights exercised
     under this  subsection  (q) shall be deemed to have been  exercised in full
     and shall be canceled.

     Section 12.  Certificate  of Adjusted  Purchase  Price or Number of Shares.
Whenever  an  adjustment  is made as  provided  in Section 11 or 13 hereof,  the
Company shall promptly (a) prepare a certificate  setting forth such adjustment,
and a brief statement of the facts  accounting for such  adjustment,  (b) file a
copy of such  certificate with the Rights Agent and with each transfer agent for
the Common Shares or the Preferred  Shares and (c) mail a brief summary  thereof

                                       18
to each holder of a Right Certificate in accordance with Section 25 hereof.  The
Rights Agent shall be fully protected in relying on any such  certificate and on
any adjustment therein contained and may assume that no adjustment has been made
unless and until it shall have received such certificate.

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

(a)  If after the Shares  Acquisition  Date,  directly  or  indirectly,  (x) the
     Company shall  consolidate  with, or merge with and into, any other Person,
     (y) any Person shall  consolidate with the Company,  or merge with and into
     the Company and the Company shall be the continuing or surviving  entity of
     such merger or the  Company  shall be a party to a share  exchange  and, in
     connection with such consolidation,  merger or share exchange,  all or part
     of the Common  Shares shall be changed into or exchanged for stock or other
     securities  of any  other  Person  or the  Company,  or cash  or any  other
     property,  or (z) the Company  shall sell or otherwise  transfer (or one or
     more of its Subsidiaries shall sell or otherwise transfer),  in one or more
     transactions, assets or earning power aggregating 50% or more 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,  then, and in each such case,  proper provision
     shall be made so that (i)  each  holder  of a Right  (except  as  otherwise
     provided  herein)  shall  thereafter  have the right to  receive,  upon the
     exercise  thereof  at a price  equal to the  then  current  Purchase  Price
     multiplied  by the number of one  one-hundredths  of a Preferred  Share for
     which a Right is then  exercisable,  in  accordance  with the terms of this
     Agreement  and  in  lieu  of  Preferred  Shares,  such  number  of  validly
     authorized  and issued,  fully  paid,  non-assessable  and freely  tradable
     common shares of the Principal Party,  free and clear of all liens,  rights
     of call or first refusal,  encumbrances or other adverse  claims,  as shall
     equal the result  obtained by (A)  multiplying  the then  current  Purchase
     Price by the number of one  one-hundredths of a Preferred Share for which a
     Right is then  exercisable (or, if such Right is not then exercisable for a
     number of one  one-hundredths  of a  Preferred  Share,  the  number of such
     fractional  shares  for which it was  exercisable  immediately  prior to an
     event described under Section  11(a)(ii)  hereof) and dividing that product
     by (B) 50% of the then current per share market price of the common  shares
     of such Principal  Party  (determined  pursuant to Section 11(d) hereof) on
     the date of consummation of such  consolidation,  merger, sale or transfer;
     (ii) such Principal Party shall thereafter be liable for, and shall assume,
     by virtue of such consolidation,  merger,  sale or transfer,  or otherwise,
     all the obligations  and duties of the Company  pursuant to this Agreement;
     (iii)  the term  "Company"  shall  thereafter  be  deemed  to refer to such
     Principal  Party and (iv)  such  Principal  Party  shall  take  such  steps
     (including,  but not limited to, the  authorization  and  reservation  of a
     sufficient number of its common shares in accordance with Section 9 hereof)
     in connection with such consummation as may be necessary to assure that the
     provisions  hereof shall thereafter be applicable,  as nearly as reasonably
     may be, in relation to its common shares  thereafter  deliverable  upon the
     exercise of the Rights.

                                       19
(b)  "Principal Party" shall mean:

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

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

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

(c)  The Company shall not consummate any such  consolidation,  merger,  sale or
     transfer  unless the Principal  Party shall have  sufficient  common shares
     authorized  to permit the full exercise of the Rights and prior thereto the
     Company and such  Principal  Party shall have executed and delivered to the
     Rights Agent a supplemental  agreement providing for the terms set forth in
     paragraphs  (a) and (b) of this Section 13 and further  providing  that, as
     soon as practicable after the date of any consolidation,  merger or sale of
     assets  mentioned in paragraph (a) of this Section 13, the Principal  Party
     will:

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

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

     (iii)take such actions as may be necessary  or  appropriate  under the blue
          sky laws of the various states.

                                       20
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations  or  sales  or  other  transfers.  In the  event  that one of the
transactions  described  in  Section  13(a)  shall  occur at any time  after the
occurrence of a transaction  described in Section 11(a)(ii)  hereof,  the Rights
which have not theretofore been exercised shall thereafter become exercisable in
the manner described in Section 13(a).

     Section 14. Fractional Rights and Fractional Shares.

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

(b)  The Company  shall not be required to issue  fractions of Preferred  Shares
     (other than fractions which are integral  multiples of one one-hundredth of
     a  Preferred   Share)  upon   exercise  of  the  Rights  or  to  distribute
     certificates  which  evidence  fractional   Preferred  Shares  (other  than
     fractions which 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
     evidenced by  depositary  receipts,  pursuant to an  appropriate  agreement
     between the Company and a depositary  selected by it;  provided,  that such
     agreement shall provide that the holders of such depositary  receipts shall
     have all the rights,  privileges and preferences to which they are entitled
     as beneficial owners of the Preferred Shares represented by such depositary
     receipts.  In lieu of  fractional  Preferred  Shares that are not  integral
     multiples of one  one-hundredth  of a Preferred  Share, the Company may, to
     the extent necessary to reduce such fraction to an integral multiple of one
     one-hundredth,  pay to the registered  holders of Right Certificates at the
     time such Rights are  exercised as herein  provided an amount in cash equal
     to the same fraction of the current market value of one  one-hundredth of a
     Preferred Share. For the purposes of this Section 14(b), the current market

                                       21
value of one  one-hundredth of a Preferred Share shall be one one-hundredth
     of the closing price of a Preferred  Share (as  determined  pursuant to the
     second sentence of Section 11(d)(i) hereof) for the Trading Day immediately
     prior to the date of such exercise.

(c)  Following the  occurrence of a Triggering  Event,  the Company shall not be
     required to issue fractions of Common Shares upon exercise of the Rights or
     to distribute certificates which evidence fractional Common Shares. In lieu
     of fractional Common Shares,  the Company may pay to the registered holders
     of  Right  Certificates  at the  time  the  Rights  evidenced  thereby  are
     exercised as herein  provided an amount in cash equal to the same  fraction
     of the  current  market  value of one Common  Share.  For  purposes of this
     Section  14(c),  the current  market value of one Common Share shall be the
     closing  price of one Common  Share (as  determined  pursuant to the second
     sentence of Section 11(d)(i) hereof) for the Trading Day immediately  prior
     to the date of such exercise.

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

     Section  15.  Rights of  Action.  All  rights of action in  respect of this
Agreement,  excepting  the  rights of action  given to the  Rights  Agent  under
Section 18 hereof, are vested in the respective  registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the Distribution Date, of the Common Shares),  without the consent of the Rights
Agent  or of the  holder  of any  other  Right  Certificate  (or,  prior  to the
Distribution Date, of the Common Shares), may, in his own behalf and for his own
benefit,  enforce, and may institute and maintain any suit, action or proceeding
against  the Company to enforce,  or  otherwise  act in respect of, his right to
exercise the Rights  evidenced by such Right  Certificate in the manner provided
in such Right Certificate and in this 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 will be entitled to specific performance of
the  obligations  under,  and  injunctive  relief  against  actual or threatened
violations of the obligations of any Person subject to, this Agreement.

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

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

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

(c)  the  Company  and the  Rights  Agent may deem and treat the person in whose
     name the  Right  Certificate  (or,  prior  to the  Distribution  Date,  the
     associated  Common Shares  certificate) is registered as the absolute owner

                                       22
thereof and of the Rights evidenced thereby  (notwithstanding any notations
     of ownership or writing on the Right  Certificates or the associated Common
     Shares  certificate  made by anyone  other  than the  Company or the Rights
     Agent) for all purposes whatsoever,  and neither the Company nor the Rights
     Agent shall be affected by any notice to the contrary; and

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

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

     Section 18.  Concerning the Rights Agent.  The Company agrees to pay to the
Rights Agent reasonable  compensation for all services  rendered by it hereunder
and, from time to time, on demand of the Rights Agent,  its reasonable  expenses
and counsel  fees and other  disbursements  incurred in the  administration  and
execution  of this  Agreement  and the exercise  and  performance  of its duties
hereunder.  The Company  also agrees to  indemnify  the Rights Agent for, and to
hold it harmless  against,  any loss,  liability,  or expense,  incurred without
gross  negligence,  bad faith or  willful  misconduct  on the part of the Rights
Agent,  for 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  in the  premises.  The
reimbursement and compensation (to the extent of accrued but unpaid compensation
as of the date of termination)  provisions and the indemnity  provisions of this
Section 18 shall  survive the  expiration of the Rights and the  termination  of
this Agreement.

     The Rights Agent shall be protected and shall incur no liability for, or in
respect of any action taken,  suffered or omitted by it in connection  with, its
administration  of this  Agreement  in reliance  upon any Right  Certificate  or
certificate for the 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

                                       23
signed, executed and, where necessary,  verified or acknowledged,  by the proper
person or  persons,  or  otherwise  upon the  advice of  counsel as set forth in
Section 20 hereof.

     Section 19. Merger or  Consolidation or Change of Name of Rights Agent. Any
Person into which the Rights Agent or any  successor  Rights Agent may be merged
or with which it may be consolidated, or any Person resulting from any merger or
consolidation to which the Rights Agent or any successor Rights Agent shall be a
party,  or any  Person  succeeding  to the stock  transfer  or  corporate  trust
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 Person  would be eligible  for  appointment  as a successor
Rights Agent under the provisions of Section 21 hereof. In case at the time such
successor  Rights Agent shall succeed to the agency  created by this  Agreement,
any of the Right  Certificates  shall have been countersigned but not delivered,
any  such  successor  Rights  Agent  may  adopt  the   countersignature  of  the
predecessor  Rights Agent and deliver such Right  Certificates so countersigned;
and in case at that  time any of the  Right  Certificates  shall  not have  been
countersigned,   any  successor   Rights  Agent  may   countersign   such  Right
Certificates  either in the name of the predecessor  Rights Agent or in the name
of the  successor  Rights Agent;  and in all such cases such Right  Certificates
shall  have  the full  force  provided  in the  Right  Certificates  and in this
Agreement.

     In case at any time the name of the Rights  Agent  shall be changed  and at
such time any of the Right  Certificates  shall have been  countersigned but not
delivered,  the Rights Agent may adopt the countersignature under its prior name
and deliver Right Certificates so countersigned; and in case at that time 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 the Right Certificates 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 thereof, shall be bound:

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

(b)  Whenever in the  performance  of its duties under this Agreement the Rights
     Agent  shall  deem it  necessary  or  desirable  that any fact or matter 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 is herein specifically prescribed) may be deemed to be conclusively
     proved and  established  by a  certificate  signed by the  Chairman  of the
     Board, the Chief Executive Officer, any Vice President, or the Secretary of
     the Company and delivered to the Rights Agent; and such  certificate  shall

                                       24
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 any and  all  losses,  liabilities,  costs,  damages  and
     expenses  (including  attorneys' fees) arising out of or in connection with
     the Rights  Agent's  gross  negligence,  bad faith or  willful  misconduct.
     Anything in this  Agreement  to the contrary  notwithstanding,  in no event
     shall the Rights  Agent be liable for  special,  indirect or  consequential
     loss or damage of any kind  whatsoever  (including  but not limited to lost
     profits),  even if the Rights Agent has been advised of the  likelihood  of
     such loss or damage and regardless of the form of the action.

(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,  and all such  statements and recitals are and shall be deemed to
     have been made by the Company only.

(e)  The Rights  Agent shall not be under any  responsibility  in respect of the
     validity of this Agreement or the execution and delivery hereof (except the
     due execution  hereof by the Rights Agent) or in respect of the validity or
     execution of any 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 the Rights becoming void pursuant to Section 7(e) hereof) or any
     adjustment  in the terms of the Rights  (including  the  manner,  method or
     amount  thereof)  provided  for in  Section  3, 11,  13,  23 or 24,  or the
     ascertaining  of the  existence of facts that would require any such change
     or adjustment  (except with respect to the exercise of Rights  evidenced by
     Right  Certificates  after receipt of a certificate  furnished  pursuant to
     Section  12  describing  a change or  adjustment);  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 to be
     issued pursuant to this Agreement or any Right Certificate or as to whether
     any  Preferred  Shares or Common  Shares  will,  when  issued,  be  validly
     authorized and issued, fully paid and nonassessable.

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

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

                                       25
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 and/or after which
     such action shall be taken or such omission shall be effective.  The Rights
     Agent  shall not be liable for any  action  taken by, or  omission  of, the
     Rights Agent in accordance with a proposal included in any such application
     on or after the date specified in such application (which date shall not be
     less than five  Business  Days after the date any  officer  of the  Company
     actually  receives  such  application,  unless any such officer  shall have
     consented in writing to an earlier date)  unless,  prior to taking any such
     action (or the effective date in the case of an omission), the Rights Agent
     shall have received  written  instructions in response to such  application
     specifying the action to be taken or omitted.

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

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

     Section  21.  Change of Rights  Agent.  The Rights  Agent or any  successor
Rights Agent may resign and be discharged  from its duties under this  Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares or Preferred Shares by registered or certified mail, and to
the  holders of the Right  Certificates  by  first-class  mail.  The Company may
remove the Rights  Agent or any  successor  Rights Agent upon 30 days' notice in
writing,  mailed to the Rights Agent or successor  Rights Agent, as the case may
be, and to each  transfer  agent of the  Common  Shares or  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,  the Company shall appoint a successor to
the Rights Agent.  If the Company shall fail to make such  appointment  within a
period  of 30 days  after  giving  notice of such  removal  or after it has been
notified  in writing of such  resignation  or  incapacity  by the  resigning  or
incapacitated  Rights Agent or by the holder of a Right  Certificate (who shall,
with such notice,  submit his Right  Certificate for inspection by the Company),
then the registered  holder of any Right  Certificate  may apply to any court of
competent  jurisdiction for the appointment of a new Rights Agent. Any successor

                                       26
Rights Agent,  whether  appointed by the Company or by such a court,  shall be a
corporation  or bank  organized and doing  business under the laws of the United
States or of any other state of the United  States,  which is  authorized  under
such laws to exercise corporate trust or stock transfer powers and is subject to
supervision or  examination  by federal or state  authority and which has at the
time of its  appointment  as Rights  Agent a combined  capital and surplus of at
least $100  million.  After  appointment,  the  successor  Rights Agent shall be
vested with the same powers,  rights,  duties and  responsibilities as if it had
been  originally  named as Rights  Agent  without  further act or deed;  but the
predecessor  Rights  Agent shall  deliver and transfer to the  successor  Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance,  conveyance, act or deed necessary for the purpose. Not later
than the effective  date of any such  appointment  the Company shall file notice
thereof in writing with the predecessor  Rights Agent and each transfer agent of
the Common Shares or 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 Rights to the contrary,  the Company may,
at its option,  issue new Right  Certificates  evidencing Rights in such form as
may be approved by its Board of Directors to reflect any adjustment or change in
the Purchase Price and the number or kind or class of shares or other securities
or property purchasable under the Right Certificates made in accordance with the
provisions of this Agreement.

     Section 23. Redemption.

(a)  The  Company  may,  at its  option,  at any time  prior to such time as any
     Person becomes an Acquiring Person, redeem all but not less than all of the
     then  outstanding  Rights  at  a  redemption  price  of  $0.01  per  Right,
     appropriately  adjusted  to reflect  any share  split,  share  dividend  or
     similar transaction  occurring after the date hereof (such redemption price
     being hereinafter referred to as the "Redemption Price"). The redemption of
     the Rights by the Company may be made effective at such time, on such basis
     and with such  conditions as the Board of Directors in its sole  discretion
     may establish.  The Company may, at its option, pay the Redemption Price in
     cash,  Common  Shares  (based on the current per share  market price of the
     Common Shares at the time of redemption) or any other form of consideration
     deemed appropriate by the Board of Directors.

(b)  Immediately  upon the  action  of the  Board of  Directors  of the  Company
     ordering the  redemption  of the Rights (or at the  effective  time of such
     redemption established by the Board of Directors of the Company pursuant to
     the last  sentence of  paragraph  (a) of this  Section 23), and without any
     further  action and without any  notice,  the right to exercise  the Rights
     will terminate and the only right thereafter of the holders of Rights shall
     be to receive the Redemption  Price. The Company shall promptly give public
     notice of any such redemption; provided, however, that the failure to give,
     or any defect in, any such  notice  shall not affect the  validity  of such
     redemption.  Within 10 days  after  such  action of the Board of  Directors
     ordering the redemption of the Rights or, if later,  the  effectiveness  of
     the  redemption  of the Rights  pursuant to the last  sentence of paragraph

                                       27
(a), the Company  shall mail a notice of  redemption  to all the holders of
     the then outstanding Rights at their last addresses as they appear upon the
     registry books of the Rights Agent or, prior to the  Distribution  Date, on
     the registry books of the transfer agent for the Common Shares.  Any notice
     which is mailed  in the  manner  herein  provided  shall be  deemed  given,
     whether  or not the  holder  receives  the  notice.  Each  such  notice  of
     redemption  shall state the method by which the  payment of the  Redemption
     Price will be made.  The Company may, at its option,  discharge  all of its
     obligations  with  respect  to the  Rights by  (i)issuing  a press  release
     announcing the manner of redemption of the Rights,  (ii)  depositing with a
     bank  or  trust   company   having  a  capital  and  surplus  of  at  least
     $100,000,000,  funds necessary for such redemption, in trust, to be applied
     to the  redemption  of the  Rights  so  called  for  redemption  and  (iii)
     arranging for the mailing of the Redemption Price to the registered holders
     of  the  Rights;  then,  and  upon  such  action,  all  outstanding  Rights
     Certificates  shall be null and void without further action by the Company.
     Neither the Company nor any of its  Affiliates  or  Associates  may redeem,
     acquire or  purchase  for value any Rights at any time in any manner  other
     than that  specifically set forth in this Section 23, in Section 24 hereof,
     or  in  connection  with  the  purchase  of  Common  Shares  prior  to  the
     Distribution Date.

     Section 24. Exchange.

(a)  The  Company  may,  at its option,  at any time after a  Triggering  Event,
     exchange all or part of the then outstanding and exercisable  Rights (which
     shall not include  Rights that have become void pursuant to the  provisions
     of Section  7(e)  hereof)  for Common  Shares at an  exchange  ratio of one
     Common Share per Right,  appropriately adjusted to reflect any share split,
     share dividend or similar transaction occurring after the date hereof (such
     exchange  ratio  being  referred  to  herein  as  the  "Exchange   Ratio").
     Notwithstanding the foregoing, the Company shall not be empowered to effect
     such  exchange at any time after any Person  (other than the  Company,  any
     Affiliate or  Subsidiary of the Company,  any employee  benefit plan of the
     Company or of any  Affiliate  or  Subsidiary  of the  Company or any entity
     holding  Common  Shares  for or  pursuant  to the terms of any such  plan),
     together with all  Affiliates  and  Associates of such Person,  becomes the
     Beneficial Owner of 50% or more of the Common Shares then outstanding.

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

                                       28
partial  exchange  shall be effected pro rata based on the number of Rights
     (other than Rights  which have become void  pursuant to the  provisions  of
     Section 7(e) hereof) held by each holder of Rights.

(c)  In any exchange  pursuant to this  Section 24, the Company,  at its option,
     may substitute  Preferred Shares (or other preferred shares that a majority
     of the Board of Directors  determines in good faith to be equivalent to one
     or more Common Shares) for Common Shares  exchangeable  for Rights,  at the
     initial  rate of one  one-hundredth  of a  Preferred  Share (or such  other
     preferred  share) for each  Common  Share,  as  appropriately  adjusted  to
     reflect  the voting  rights at that time of the  Preferred  Shares (or such
     other preferred shares) pursuant to the terms thereof, so that the fraction
     of a Preferred Share (or other preferred  share)  delivered in lieu of each
     Common Share shall have the same voting rights as one Common Share.

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

(e)  The Company may,  but shall not be required  to, issue  fractions of Common
     Shares,  Preferred Shares (or such other preferred shares) or to distribute
     certificates  which evidence  fractional Common Shares. In lieu of any such
     fractional  shares,  the Company shall pay to the registered holders of the
     Right Certificates with regard to which such fractional Common Shares would
     otherwise  be issuable an amount in cash equal to the same  fraction of the
     current  market  value of a whole  Common  Share.  For the purposes of this
     paragraph  (e),  the current  market value of a whole Common Share shall be
     the closing price of a Common Share (as  determined  pursuant to the second
     sentence of Section 11(d)(i) hereof) for the Trading Day immediately  prior
     to the date of exchange pursuant to this Section 24.

     Section 25. Notice of Certain Events.

(a)  In case the Company shall propose at any time after the  Distribution  Date
     (i) to pay any  dividend  payable in shares of any class to the  holders of
     its Preferred  Shares or to make any other  distribution  to the holders of
     its Preferred Shares (other than a regular  quarterly cash dividend),  (ii)
     to offer to the  holders of its  Preferred  Shares  rights or  warrants  to
     subscribe for or to purchase any additional  Preferred  Shares or shares of
     any class or any other securities,  rights or options,  (iii) to effect any
     reclassification  of its Preferred  Shares  (other than a  reclassification
     involving only the subdivision of outstanding  Preferred  Shares),  (iv) to
     effect any  consolidation  or merger into or with, or to effect any sale or
     other transfer (or to permit one or more of its  Subsidiaries to effect any
     sale or other transfer), in one or more transactions, of 50% or more of the
     assets or earning  power of the  Company and its  Subsidiaries  (taken as a
     whole) to, any other Person, (v) to effect the liquidation,  dissolution or
     winding up of the  Company,  or (vi) to declare or pay any  dividend on the
     Common  Shares  payable  in  Common Shares  or to  effect  a  subdivision,
     combination or consolidation of the Common Shares (by  reclassification  or

                                       29
otherwise  than by payment of dividends in Common  Shares),  then,  in each
     such case, the Company shall give to each holder of a Right Certificate, in
     accordance with Section 26 hereof, a notice of such proposed action,  which
     shall specify the record date for the purposes of such share  dividend,  or
     distribution   of  rights  or   warrants,   or  the  date  on  which   such
     reclassification,   consolidation,  merger,  sale,  transfer,  liquidation,
     dissolution,  or winding up is to take place and the date of  participation
     therein by the holders of the Common Shares and/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 10 days prior to
     the  record  date for  determining  holders  of the  Preferred  Shares  for
     purposes of such action, and in the case of any such other action, at least
     10 days prior to the date of the taking of such proposed action or the date
     of  participation  therein  by the  holders  of the  Common  Shares  and/or
     Preferred Shares, whichever shall be the earlier.

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

     Section 26. Notices.  Notices or demands authorized by this 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:

                  Broadway Financial Corporation
                  4800 Wilshire Blvd.
                  Los Angeles, CA  91101
                  Attention:  Secretary

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

                  US Stock Transfer Corporation
                  1745 Gardena Avenue.
                  Glendale, CA  91204
                  Attention: Ms. Bridget Barela

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.  The Company may from time to time,
and the Rights Agent shall if the Company so directs,  supplement  or amend this
Agreement in any respect (including,  without limitation, to change the Purchase
Price or the Final  Expiration  Date) which the Company  may deem  necessary  or

                                       30
desirable,  any such supplement or amendment to be evidenced by a writing signed
by the Company and the Rights Agent without the approval of any holders of Right
Certificates;  provided,  however,  that from and after  such time as any Person
becomes an Acquiring  Person,  this Agreement shall not be amended in any manner
which would adversely affect the interests of the holders of Rights.

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

     Section 29. 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  (and,  prior to the Distribution
Date,  the Common  Shares) 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 the  registered  holders  of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).

     Section 30. Severability.  If any term, provision,  covenant or restriction
of this  Agreement  is  held  by a court  of  competent  jurisdiction  or  other
authority  to be invalid,  void or  unenforceable,  the  remainder of the terms,
provisions,  covenants and  restrictions  of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.

     Section 31. 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  to be made and  performed
entirely  within such  State,  except that those  provisions  of this  Agreement
affecting the rights,  duties and  responsibilities of the Rights Agent shall be
governed by and construed in accordance with the law of the State of California.

     Section 32.  Counterparts.  This Agreement may be executed in any number of
counterparts and each of such  counterparts  shall for all purposes be deemed to
be an original,  and all such counterparts shall together constitute but one and
the same instrument.

     Section 33. Descriptive  Headings.  Descriptive headings of the 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.

     Section 34. Determinations and Actions by the Board of Directors. The Board
of  Directors of the Company  shall have the  exclusive  power and  authority to
administer  this  Agreement  and to exercise all rights and powers  specifically
granted  to the Board of  Directors  or the  Company or as may be  necessary  or
advisable  in  the   administration  of  this  Agreement,   including,   without
limitation,  the  right  and  power  to (a)  interpret  the  provisions  of this
Agreement, and (b) make all determinations deemed necessary or advisable for the
administration  of this Agreement  (including a  determination  to redeem or not
redeem the Rights or to amend this Agreement). All such actions, interpretations
and  determinations  (including,  for purpose of clause (b) above, all omissions
with respect to the foregoing)  which are done or made by the Board of Directors

                                       31
in good faith,  shall (x) be final,  conclusive and binding on the Company,  the
Rights Agent, the holders of the Right  Certificates and all other parties,  and
(y) not subject the Board of  Directors  to any  liability to the holders of the
Right Certificates.

                     [This space intentionally left blank.]

                                       32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested, all as of the day and year first above written.

                         BROADWAY FINANCIAL CORPORATION

             By:               /s/ Paul C. Hudson
                      -------------------------------------------
                       Title:  Chief Executive Officer and
                                   President

Attest:

            By:               /s/ Alvin D. Kang
                      -------------------------------------------
                       Title:  Chief Financial Officer

                          US STOCK TRANSFER CORPORATION

            By:               /s/ Bridget Barela
                      -------------------------------------------
                       Title:  Assistant Vice President

Attest:

           By:               /s/ Mark Cano
                      -------------------------------------------
                        Title:  Senior Vice President

                                       33
Exhibit A

               CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
                OF SERIES A JUNIOR PARTICIPATING PREFERRED STOCK,
                                 $0.01 PAR VALUE

                                       of

                         BROADWAY FINANCIAL CORPORATION

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

     Broadway Financial Corporation,  a corporation organized and existing under
the General  Corporation  Law of the State of Delaware (the  "Corporation"),  in
accordance with the provisions of Section 103 thereof, DOES HEREBY CERTIFY:

     That pursuant to the authority conferred upon the Board of Directors by the
Certificate  of  Incorporation  of the  Corporation,  as  amended,  the Board of
Directors on January 31, 2003 adopted the following resolution creating a series
of 25,000 shares of preferred stock designated as "Series A Junior Participating
Preferred Stock," $0.01 par value:

     RESOLVED,  that pursuant to the  authority  granted in the  Certificate  of
Incorporation,  as amended,  of the  Corporation,  the Board of Directors hereby
classifies 25,000, which number shall be subject to adjustment from time to time
in accordance with the Rights Agreement, shares, of the Corporation's authorized
but  unissued   shares  of  preferred   stock  as  shares  of  Series  A  Junior
Participating Preferred Shares of Beneficial Interest, of which the preferences,
conversion  and other rights,  voting  powers,  restrictions,  limitations as to
dividends and other distributions,  qualifications,  and terms and conditions of
redemption shall be as follows:

     Section 1.  Designation  and Amount.  There shall be a series of  preferred
shares of the Corporation,  $0.01 par value per share, which shall be designated
"Series A Junior  Participating  Preferred  Shares"  (the  "Series  A  Preferred
Shares"),  and the number of shares  constituting  that series  shall be 25,000.
Such number of shares may be increased or decreased by  resolution  of the Board
of  Directors  and by  the  filing  of a  certificate  in  accordance  with  the
provisions of the General  Corporation Law of the State of Delaware stating that
such increase or reduction has been so authorized;  provided,  however,  that no
decrease  shall reduce the number of Series A Preferred  Shares to a number less
than the number of Series A Preferred Shares then outstanding plus the number of
Series A Preferred Shares issuable upon exercise of outstanding rights,  options
or  warrants  or  upon  conversion  of  outstanding  securities  issued  by  the
Corporation.

     Section 2. Dividends and Distributions.

(A)  Subject to the prior and  superior  rights of the  holders of any shares of
     any class or series of preferred  shares of the  Corporation  ranking prior
     and superior to the Series A Preferred  Shares with  respect to  dividends,
     the  holders of Series A  Preferred  Shares  shall be  entitled to receive,
     when,  as and if declared by the Board of  Directors  out of funds  legally
     available for such purpose,  quarterly dividends payable in cash to holders
     of record on the last Business Day of January,  April,  July and October 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 Series A Preferred Share or fraction thereof)
     in an amount per share  (rounded to the nearest  cent) equal to the greater
     of (a) $1.00 or (b) subject to the provision for adjustment hereinafter set
     forth, 100 times the aggregate per share amount of all cash dividends,  and
     100 times the aggregate per share amount  (payable in kind) of all non-cash
     dividends or other  distributions  other than a dividend  payable in Common
     Shares  (hereinafter  defined) or a subdivision of the  outstanding  Common
     Shares  (by a  reclassification  or  otherwise),  authorized  on the common
     shares  of  beneficial  interest,   par  value  $0.01  per  share,  of  the
     Corporation (the "Common Shares") since the immediately preceding Quarterly
     Dividend  Payment Date,  or, with respect to the first  Quarterly  Dividend
     Payment Date,  since the first issuance of any Series A Preferred  Share or
     fraction thereof.  In the event the Corporation shall at any time following
     February  13,  2003 (i) declare any  dividend on Common  Shares  payable in
     Common  Shares,  (ii)  subdivide  the  outstanding  Common  Shares or (iii)
     combine the outstanding Common Shares into a smaller number of shares, then
     in each such case the amount to which holders of Series A Preferred  Shares
     were  entitled  immediately  prior to such  event  under  clause (b) of the
     preceding  sentence shall be adjusted by multiplying  each such amount by a
     fraction the numerator of which is the number of Common Shares  outstanding
     immediately  after such event and the denominator of which is the number of
     Common Shares that were outstanding immediately prior to such event.

(B)  The  Corporation  shall declare a dividend or  distribution on the Series A
     Preferred Shares as provided in paragraph (A) above at the time it declares
     a dividend  or  distribution  on the Common  Shares  (other than a dividend
     payable in Common Shares).

(C)  No dividend or distribution (other than a dividend or distribution  payable
     in Common  Shares) shall be paid or payable to the holders of Common Shares
     unless, prior thereto, all accrued but unpaid dividends to the date of that
     dividend  or  distribution  shall have been paid to the holders of Series A
     Preferred Shares.

(D)  Dividends  shall begin to accrue and be cumulative on outstanding  Series A
     Preferred  Shares from the Quarterly  Dividend  Payment Date next preceding
     the date of issuance of such Series A Preferred Shares,  unless the date of
     issuance of such shares is prior to the record date for the first Quarterly
     Dividend  Payment Date, in which case  dividends on such shares shall begin
     to accrue and be  cumulative  from the date of issuance of such shares,  or
     unless the date of issuance is a Quarterly  Dividend  Payment  Date or is a
     date after the  record  date for the  determination  of holders of Series A
     Preferred  Shares entitled to receive a quarterly  dividend and before such
     Quarterly  Dividend  Payment Date, in either of which events such dividends
     shall  begin to  accrue  and be  cumulative  from such  Quarterly  Dividend
     Payment  Date.  Accrued  but  unpaid  dividends  shall  not bear  interest.
     Dividends paid on the Series A Preferred  Shares 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 Series A Preferred Shares entitled
     to receive payment of a dividend or distribution  declared  thereon,  which
     record  date  shall be no more than 30 days prior to the date fixed for the
     payment thereof.

                                       2
Section 3. Voting  Rights.  The holders of Series A Preferred  Shares shall
have the following voting rights:

(A)  Subject to the provision for  adjustment  hereinafter  set forth,  each one
     one-hundredth  of a Series A  Preferred  Share  shall  entitle  the  holder
     thereof to one vote on all matters  submitted to a vote of the shareholders
     of  the  Corporation.  In the  event  the  Corporation  shall  at any  time
     following  February  13,  2003 (i) declare  any  dividend on Common  Shares
     payable in Common Shares,  (ii) subdivide the outstanding  Common Shares or
     (iii)  combine  the  outstanding  Common  Shares  into a smaller  number of
     shares,  then in each  such  case the  number  of votes  per share to which
     holders of Series A Preferred  Shares 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 Common Shares  outstanding  immediately
     after  such  event  and the  denominator  of which is the  number of Common
     Shares that were outstanding immediately prior to such event.

(B)  Except as  otherwise  provided  herein,  the  holders of Series A Preferred
     Shares and the holders of Common  Shares and any other shares of beneficial
     interest  of the  Corporation  having  general  voting  rights  shall  vote
     together as one class on all matters submitted to a vote of shareholders of
     the Corporation.

(C)  (i)  Whenever,  at any time or times,  dividends  payable  on any  Series A
          Preferred  Shares  shall be in arrears in an amount  equal to at least
          six full quarterly  dividends  (whether or not declared and whether or
          not  consecutive),  the holders of record of the outstanding  Series A
          Preferred Shares shall have the exclusive right,  voting separately as
          a single class, to elect two directors of the Corporation at a special
          meeting of  shareholders  of the  Corporation or at the  Corporation's
          next annual meeting of  shareholders,  and at each  subsequent  annual
          meeting of  shareholders,  as provided  below.  At elections  for such
          directors,  the holders of Series A Preferred Shares shall be entitled
          to cast one vote for each one  one-hundredth  of a Series A  Preferred
          Share held, subject to adjustment.

     (ii) Upon  the  vesting  of such  right  of the  holders  of the  Series  A
          Preferred  Shares,  the  maximum  authorized  number of members of the
          Board of Directors shall automatically be increased by two and the two
          vacancies  so  created  shall be filled by vote of the  holders of the
          outstanding  Series A Preferred  Shares as  hereinafter  set forth.  A
          special meeting of the  shareholders of the Corporation  then entitled
          to vote  shall be  called  by the  Chairman  of the  Board,  the Chief
          Executive  Officer,  any  Executive  or Senior Vice  President  or the
          Secretary of the  Corporation,  if requested in writing by the holders
          of record of not less than 10% of the Series A  Preferred  Shares then
          outstanding.  At such special meeting,  or, if no such special meeting
          shall  have  been  called,   then  at  the  next  annual   meeting  of
          shareholders of the Corporation, the holders of the Series A Preferred
          Shares shall elect,  voting as above  provided,  two  directors of the
          Corporation to fill the aforesaid  vacancies  created by the automatic
          increase  in the number of members of the Board of  Directors.  At any
          and all such meetings for such election,  the holders of a majority of
          the  outstanding  Series A  Preferred  Shares  shall be  necessary  to
          constitute a quorum for such election, whether present in person or by
          proxy, and such

                                       3
two directors  shall be elected by the vote of at least a plurality of
          shares  held  by  such  shareholders  present  or  represented  at the
          meeting.  Any director elected by holders of Series A Preferred Shares
          pursuant  to this  Section  may be  removed  at any  annual or special
          meeting,  by vote of a majority of the shareholders  voting as a class
          who elected such director,  with or without cause. In case any vacancy
          shall occur among the directors elected by the holders of the Series A
          Preferred Shares pursuant to this Section,  such vacancy may be filled
          by the remaining director so elected, or his successor then in office,
          and the director so elected to fill such vacancy shall serve until the
          next meeting of shareholders for the election of directors.  After the
          holders of the Series A Preferred  Shares shall have  exercised  their
          right  to  elect  directors  in any  default  period  and  during  the
          continuance  of such  period,  the  number of  directors  shall not be
          further increased or decreased except by vote of the holders of Series
          A Preferred Shares as herein provided or pursuant to the rights of any
          equity  securities  ranking  senior to or pari passu with the Series A
          Preferred Shares.

     (iii)The right of the  holders of the  Series A  Preferred  Shares,  voting
          separately as a class,  to elect two members of the Board of Directors
          of the Corporation as aforesaid shall continue until,  and only until,
          such time as all arrears in dividends (whether or not declared) on the
          Series A Preferred  Shares  shall have been paid or  declared  and set
          apart for payment, at which time such right shall terminate, except as
          herein or by law expressly provided, subject to revesting in the event
          of each and every subsequent default of the character above-mentioned.
          Upon any  termination  of the  right of the  holders  of the  Series A
          Preferred  Shares as a class to vote for directors as herein provided,
          the term of office of all  directors  then in  office  elected  by the
          holders of Series A Preferred  Shares  pursuant to this Section  shall
          terminate  immediately.  Whenever the term of office of the  directors
          elected by the  holders of the Series A Preferred  Shares  pursuant to
          this Section shall  terminate and the special  voting powers vested in
          the holders of the Series A Preferred  Shares pursuant to this Section
          shall  have  expired,  the  maximum  number of members of the Board of
          Directors of the  Corporation  shall be such number as may be provided
          for in the Bylaws of the Corporation irrespective of any increase made
          pursuant to the provisions of this Section.

(D)  Except as otherwise provided herein or required by law, holders of Series A
     Preferred  Shares  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  Shares as  provided  herein)  for  taking any  corporate
     action.

     Section 4. Certain Restrictions.

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

                                       4
(i)  declare  or pay  dividends  on,  make any other  distributions  on, or
          redeem or purchase or otherwise  acquire for  consideration any shares
          ranking   junior   (either  as  to  dividends  or  upon   liquidation,
          dissolution  or winding  up) to the Series A Preferred  Shares,  other
          than dividends paid or payable in such junior shares;

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

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

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

     Section 5. Reacquired  Shares.  Any Series A Preferred  Shares purchased or
otherwise  acquired by the  Corporation  in any manner  whatsoever  shall become
authorized  but  unissued  shares and may be reissued as part of a new series of
preferred  shares to be created by  resolution  or  resolutions  of the Board of
Directors,  subject to the  conditions  and  restrictions  on issuance set forth
herein.

     Section 6. Liquidation, Dissolution or Winding Up.

(A)  Upon  any  voluntary   liquidation,   dissolution  or  winding  up  of  the
     Corporation, no distribution shall be made to the holders of shares ranking
     junior (either as to dividends or upon liquidation,  dissolution or winding
     up) to the Series A Preferred Shares unless,  prior thereto, the holders of
     Series A Preferred  Shares  shall have  received  $1.00 per share,  plus an
     amount equal to accrued and unpaid  dividends  and  distributions  thereon,
     whether  or not  declared,  to the  date of such  payment  (the  "Series  A
     Liquidation  Preference").  Following  payment  of the full  amount  of the
     Series A Liquidation Preference,  no additional distributions shall be made
     to the holders of Series A Preferred  Shares  unless,  prior  thereto,  the
     holders  of Common  Shares  shall  have  received  an amount per share (the
     "Common  Adjustment")  equal to the  quotient  obtained by dividing (i) the
     Series A Liquidation  Preference by (ii) 100 (as appropriately  adjusted as

                                       5
set forth in  subparagraph  C below to reflect such events as share splits,
     share  dividends and  recapitalizations  with respect to the Common Shares)
     (such  number in clause (ii) being  referred to herein as, the  "Adjustment
     Number").  Following  the  payment  of the  full  amount  of the  Series  A
     Liquidation  Preference  and  the  Common  Adjustment  in  respect  of  all
     outstanding  Series A  Preferred  Shares and Common  Shares,  respectively,
     holders of Series A  Preferred  Shares and holders of Common  Shares  shall
     receive their ratable and proportionate share of the remaining assets to be
     distributed in the ratio, on a per share basis, of the Adjustment Number to
     1 with respect to such Series A Preferred  Shares and Common  Shares,  on a
     per share basis, respectively.

(B)  In the event,  however,  that there are not sufficient  assets available to
     permit  payment  in full of the  Series A  Liquidation  Preference  and the
     liquidation  preferences of all other series of preferred  shares,  if any,
     which  rank on a parity  with the  Series A  Preferred  Shares,  then  such
     remaining assets shall be distributed  ratably to the holders of the Series
     A Preferred Shares and such parity shares in proportion to their respective
     liquidation preferences.

(C)  In the event the Corporation shall at any time following  February 13, 2003
     (i) declare any dividend on Common Shares  payable in Common  Shares,  (ii)
     subdivide the  outstanding  Common Shares or (iii) combine the  outstanding
     Common Shares into a smaller  number of shares,  then in each such case the
     Adjustment  Number  in  effect  immediately  prior to such  event  shall be
     adjusted by multiplying such Adjustment  Number by a fraction the numerator
     of which is the number of Common Shares outstanding  immediately after such
     event and the denominator of which is the number of Common Shares that were
     outstanding immediately prior to such event.

     Section 7. Consolidation,  Merger, etc. If the Corporation shall enter into
any consolidation,  merger, combination or other transaction in which the Common
Shares are exchanged for or changed into other shares or securities, cash and/or
any other property,  then in any such case, the Series A Preferred  Shares shall
at the same time be  similarly  exchanged  or  changed  in an  amount  per share
(subject to the provision  for  adjustment  hereinafter  set forth) equal to 100
times the aggregate amount of shares, securities, cash and/or any other property
(payable in kind), as the case may be, into which or for which each Common Share
is  exchanged  or changed.  In the event the  Corporation  shall at any time (i)
declare any dividend on Common Shares payable in Common  Shares,  (ii) subdivide
the  outstanding  Common Shares or (iii) combine the  outstanding  Common Shares
into a smaller number of shares,  then in each such case the amount set forth in
the  preceding  sentence  with  respect  to the  exchange  or change of Series A
Preferred  Shares shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of Common Shares outstanding  immediately after
such event and the denominator of which is the number of Common Shares that were
outstanding immediately prior to such event.

     Section  8.  Redemption.  The  Series  A  Preferred  Shares  shall  not  be
redeemable  by the  Corporation.  The  preceding  sentence  shall  not limit the
ability of the  Corporation  to purchase or otherwise deal in such shares to the
extent permitted by law.

                                       6
Section 9. Ranking.  The Series A Preferred Shares shall rank junior to all
other series of the Corporation's  preferred shares (whether with or without par
value) as to the payment of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise.

     Section  10.   Amendment.   Neither  the   Corporation's   Certificate   of
Incorporation  nor  its  Certificate  of  Designation,  Preferences  and  Rights
relating to the Series A Preferred  Shares  shall be amended in any manner which
would materially and adversely alter or change the preferences,  rights or other
terms of the Series A  Preferred  Shares  without  the  affirmative  vote of the
holders of a majority  or more of the  outstanding  Series A  Preferred  Shares,
voting separately as a class.

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

     IN WITNESS WHEREOF,  the Corporation has caused this Certificate to be duly
executed by the undersigned officer this __ day of January, 2003.

                         BROADWAY FINANCIAL CORPORATION

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

                                       7
Exhibit B

                           [Form of Right Certificate]

Certificate No. R-                                             Rights
                                                     ---------

     NOT  EXERCISABLE  AFTER  JANUARY 31,  2013 OR EARLIER IF THE RIGHTS  EXPIRE
     UNDER  CERTAIN  CIRCUMSTANCES  OR ARE EXCHANGED OR REDEEMED BY THE COMPANY.
     THE RIGHTS ARE  SUBJECT TO  REDEMPTION,  AT THE OPTION OF THE  COMPANY,  AT
     $0.01  PER RIGHT ON THE TERMS  SET  FORTH IN THE  RIGHTS  AGREEMENT.  UNDER
     CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS
     SUCH TERM IS DEFINED IN THE RIGHTS  AGREEMENT) AND ANY SUBSEQUENT HOLDER OF
     SUCH  RIGHTS MAY BECOME  NULL AND VOID.  [THE  RIGHTS  REPRESENTED  BY THIS
     CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
     ACQUIRING  PERSON OR AN AFFILIATE  OR ASSOCIATE OF AN ACQUIRING  PERSON (AS
     SUCH TERMS ARE DEFINED IN THE RIGHTS  AGREEMENT).  ACCORDINGLY,  THIS RIGHT
     CERTIFICATE  AND THE  RIGHTS  REPRESENTED  HEREBY  MAY  BECOME  VOID IN THE
     CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*

                                Right Certificate

                         BROADWAY FINANCIAL 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 31, 2003 (the  "Rights  Agreement"),  between  Broadway  Financial
Corporation,  a Delaware  corporation  (the  "Company"),  and US Stock  Transfer
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. (Pacific time) on January 31, 2013 or notice of redemption or
exchange at the office of the Rights Agent (or its  successors  as Rights Agent)
designated for such purpose,  one one-hundredth of a fully paid,  non-assessable
Series A Junior  Participating  Preferred  Share (a  "Preferred  Share")  of the
Company,  at a purchase  price of $35.00 per one  one-hundredth  of a  Preferred
Share (the  "Purchase  Price"),  upon  presentation  and surrender of this Right
Certificate  with the  appropriate  Form of  Election  to  Purchase  and related
Certificate  duly  executed.  The  number  of  Rights  evidenced  by this  Right
Certificate  (and the number of Preferred  Shares  which may be  purchased  upon
exercise  thereof) set forth above,  and the Purchase Price per Preferred  Share
set forth  above,  are the number and  Purchase  Price as of January  31, 2003 ,
based on the Preferred Shares as constituted at such date. Capitalized terms not
defined in this Right Certificate that are defined in the Rights Agreement shall
have the meanings ascribed to them in the Rights Agreement.

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

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

     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 Right  Certificates,  which
limitations of rights include the temporary  suspension of the exercisability of
such Rights under  certain  circumstances  specified  in such Rights  Agreement.
Copies of the Rights Agreement are on file at the above-mentioned  office of the
Rights Agent and are also available upon written request to the Rights Agent.

     This Right  Certificate,  with or without  other Right  Certificates,  upon
surrender at the principal  corporate  trust office of the Rights Agent,  may be
exchanged for another Right Certificate or Right  Certificates of like tenor and
date evidencing  Rights entitling the holder 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 be redeemed by the Company at its option at a  redemption
price of $0.01 per Right at any time  prior to the  earlier  of (i) such time as
any Person  becomes an  Acquiring  Person or (ii) the close of  business  on the
Final Expiration Date.

     No  fractional  Preferred  Shares will be issued  upon the  exercise of any
Right or Rights  evidenced  hereby  (other  than  fractions  which are  integral
multiples of one one-hundredth of a 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.

                                       2
No holder of this Right Certificate,  as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Shares or
of any other  securities of the Company which may at any time be issuable on the
exercise hereof,  nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder  hereof,  as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof,  or to give or
withhold consent to any corporate  action,  or, to receive notice of meetings or
other  actions  affecting   shareholders  (except  as  provided  in  the  Rights
Agreement), or to receive dividends or subscription rights, or otherwise,  until
the  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 seal.

Dated as of                          ___, 20___.
            ------------------------

                         BROADWAY FINANCIAL CORPORATION

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

Attest:               (SEAL)

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

Countersigned:

US STOCK TRANSFER CORPORATION

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

                                       3
[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.

Date:                                   , 20___
     -----------------------------------         -------------------------------
                                                          Signature

Signature Guaranteed:

                                   Certificate

     The undersigned hereby certifies by checking the appropriate boxes that:

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

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

Date:                                   , 20___
     -----------------------------------          ------------------------------
                                                           Signature

                                     NOTICE

     The signature to the foregoing  Assignment and Certificate  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.
FORM OF ELECTION TO PURCHASE

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

To:      BROADWAY FINANCIAL CORPORATION

     The  undersigned  hereby  irrevocably  elects to  exercise  _______  Rights
evidenced by this Right  Certificate to purchase the Preferred  Shares  issuable
upon the exercise of the Rights (or such other  securities  of the Company or of
any  other  person as may be  issuable  upon the  exercise  of the  Rights)  and
requests that certificates for such shares be issued in the name of:

Please insert social security
or other identifying number:
                              --------------------------------------------------

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

                         (Please print name and address)

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

Please insert social security
or other identifying number:
                              --------------------------------------------------

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

                         (Please print name and address)

Date:                                   , 20___
     -----------------------------------        --------------------------------
                                                          Signature
Signature Guaranteed:

                                   Certificate

         The undersigned hereby certifies by checking the appropriate boxes
that:

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

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

Date:                                   , 20___
     -----------------------------------         -------------------------------
                                                           Signature

                                     NOTICE

         The signature to the foregoing Election to Purchase and Certificate
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.
Section 1.  Certain Definitions................................................1

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

Section 3.  Issuance of Right Certificates.....................................5

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

Section 5.  Countersignature and Registration..................................7

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

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

Section 8.  Cancellation and Destruction of Right Certificates.................1

Section 9.  Availability of Preferred Shares; Payment of Taxes and Charges.....1

Section 10. Preferred Shares Record Date.......................................1

Section 11. Adjustment  of  Purchase  Price,  Number  of  Shares  or Number of
            Rights.............................................................2

Section 12. Certificate of Adjusted Purchase Price or Number of Shares.........8

Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
            Power.............................................................18

Section 14. Fractional Rights and Fractional Shares...........................20

Section 15. Rights of Action..................................................21

Section 16. Agreement of Right Holders........................................22

Section 17. Right Certificate Holder Not Deemed a Shareholder.................22

Section 18. Concerning the Rights Agent.......................................23

Section 19. Merger or Consolidation or Change of Name of Rights Agent.........23

Section 20. Duties of Rights Agent............................................24

Section 21. Change of Rights Agent............................................26

Section 22. Issuance of New Right Certificates................................26

Section 23. Redemption........................................................26

Section 24. Exchange..........................................................27

Section 25. Notice of Certain Events..........................................28

Section 26. Notices...........................................................29

Section 27. Supplements and Amendments........................................30

Section 28. Successors........................................................30

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

Section 30. Severability......................................................30

Section 31. Governing Law.....................................................30

Section 32. Counterparts......................................................30

Section 33. Descriptive Headings..............................................30

Section 34. Determinations and Actions by the Board of Directors..............30

Exhibit A - Form of Certificate of Designation of Broadway Financial Corporation

Exhibit B - Form of Right Certificate
Exhibit 99.1

Broadway Financial Corporation February 3, 2003 Press Release

News Release

FOR IMMEDIATE RELEASE              Contact: Paul C. Hudson, President/CEO
                                            Alvin D. Kang, CFO
                                            (323) 634-1700
                                            www.broadwayfed.com

                         BROADWAY FINANCIAL CORPORATION
                  ANNOUNCES ADOPTION OF SHAREHOLDER RIGHTS PLAN

LOS  ANGELES,  CA -  (BUSINESS  WIRE) - February  3, 2003 -  Broadway  Financial
Corporation  ("Company")  (NASDAQ  Small-Cap:  BYFC),  the  holding  company  of
Broadway  Federal Bank,  f.s.b.  ("Bank"),  today announced  Broadway  Financial
Corporation's  Board of Directors adopted a Shareholder  Rights Plan (the Rights
Plan) on January 31, 2003. The Board's purpose in adopting the Rights Plan is to
protect  shareholder  value in the event of an unsolicited  offer to acquire the
Company,  particularly  one that does not  provide  equitable  treatment  to all
shareholders.  Adoption of the Rights Plan is designed to  encourage a potential
acquiror of the Company to negotiate directly with the Board, and to provide the
Board with greater  leverage in such  negotiations so as to provide the greatest
value for the Company's  shareholders.  The Rights Plan will not interfere  with
any  merger,  acquisition  or  business  combination  that the  Company's  Board
believes to be in the best interest of its shareholders.

Rights  plans have  become  increasingly  common.  The Rights Plan is similar to
rights plans that have been adopted by many public companies.

In  connection  with the  adoption  of the  Rights  Plan,  the Board  declared a
dividend  distribution  of one Right for each  outstanding  common share held by
shareholders  of record  on  February  13,  2003.  The  rights  will not  become
exercisable unless, with certain exceptions,  an investor acquires 15 percent or
more of the  Company's  common  shares,  or  announces a tender offer that would
result in the investor  owning 15 percent or more of the common  shares or makes
certain  regulatory  filings seeking  authority to acquire 15 percent or more of
the common  shares.  If someone does acquire 15 percent or more of the Company's
common shares,  or acquires the Company in a merger or other  transaction,  each
Right would entitle the holder,  other than the investor  triggering  the Rights
and related persons,  to purchase the Company's  common shares,  or shares of an
entity that acquires the Company,  at half of the then current market price. The
Rights Plan can be terminated or amended by the Board at any time.

The  Bank is a  community-oriented  savings  bank,  which  primarily  originates
residential mortgage loans in the Los Angeles geographic areas known as Mid-City
and South Central.  The Bank operates four full service  branches,  three in the
city of Los  Angeles,  and one in the  nearby  city  of  Inglewood,  California.
Shareholders,  analysts and others seeking  information about the Company or the
Bank  are  invited  to  write  to:  Broadway  Financial  Corporation,   Investor
Relations,  4800 Wilshire Blvd., Los Angeles,  CA 90010, or visit our website at
www.broadwayfed.com.

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