Exhibit 4.1


                                RIGHTS AGREEMENT

         This Agreement, dated as of December 4, 2001, between VICON INDUSTRIES,
INC., a New York corporation (the "Company"), and COMPUTERSHARE INVESTOR
SERVICES, LLC, a Delaware limited liability company (the "Rights Agent").

         WHEREAS, the Board of Directors of the Company has authorized and
declared a dividend distribution (the "Distribution") of one Right for each
outstanding share of Common Stock, par value $.01 per share, of the Company
outstanding on December 21, 2001 (the "Record Date") and has authorized the
issuance of one Right with respect to each share of Common Stock of the Company
issued between the Record Date and the earlier of the Distribution Date, the
Expiration Date or the Final Expiration Date (as such terms are hereinafter
defined), and under certain other circumstances, each Right representing the
right to purchase an amount of shares of Common Stock of the Company upon the
terms and subject to the conditions hereinafter set forth;

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

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

     (a)  "Acquiring  Person" shall mean any Person (as such term is hereinafter
defined) who or which,  together with all  Affiliates  and  Associates  (as such
terms are hereinafter defined) of such Person, shall be the Beneficial Owner (as
such term is  hereinafter  defined)  of 20% or more of the  Common  Stock of the
Company then outstanding,  but shall not include the Company, any Subsidiary (as
such term is hereinafter  defined) of the Company,  any employee benefit plan of
the Company or any Subsidiary of the Company, or any entity holding Common Stock
for or pursuant to the terms of any such plan. Notwithstanding the foregoing, no
Person shall become an  "Acquiring  Person" as the result of an  acquisition  of
Common Stock by the Company which, by reducing the number of shares outstanding,
increases the proportionate  number of shares  beneficially owned by such Person
to 20% or more of the Common Stock of the



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

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

     (c) A Person shall be deemed the "Beneficial Owner" of any securities:

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

     (ii) which such Person or any of such Person's Affiliates or Associates has
(A) the right to acquire (whether such right is exercisable  immediately or only
after  the  passage  of  time)  pursuant  to  any   agreement,   arrangement  or
understanding,  or upon the  exercise of  conversion  rights,  exchange  rights,
rights (other than these Rights),  warrants or options, or otherwise,  provided,
however,  that a Person shall not be deemed the  Beneficial  Owner of securities
tendered  pursuant to a tender offer made by such Person or any of such Person's
Affiliates  or  Associates  until such  tendered  securities  are  accepted  for
purchase;  or (B) the right to vote pursuant to any  agreement,  arrangement  or
understanding;  should be 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

     (iii) which are beneficially  owned,  directly or indirectly,  by any other
Person with which such Person or any of such  Person's  Affiliates or Associates
has any agreement, arrangement or understanding (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  second  proviso to Section
1(c)(ii)(B)) for the purpose of acquiring,  holding,  voting or disposing of any
securities of the Company.

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

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

     (f) "Common  Stock" when used with  reference to the Company shall mean the
Common Stock, par value $.01 per share, of the Company. "Common Stock" when used
with  reference to any Person other than the Company shall mean the common stock
with the greatest voting power of such Person or, if such Person is a subsidiary
of another Person,  the Person which  ultimately  controls such  first-mentioned
Person.

     (g) "Person" shall mean any individual, firm, corporation or other entity.

     (h)  "Stock   Acquisition  Date"  shall  mean  the  first  date  of  public
announcement by the Company or an Acquiring  Person that an Acquiring Person has
become such.

     Section 2.  Appointment of Rights Agent.  The Company  hereby  appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,



in accordance with Section 3 hereof shall prior to the Distribution Date also be
the holders of the Common  Stock) in  accordance  with the terms and  conditions
hereof,  and the Rights Agent hereby accepts such  appointment.  The Company may
from time to time  appoint  such  Co-Rights  Agents as it may deem  necessary or
desirable.  Section 3.  Issue of Right  Certificates.  (a) Until the  earlier to
occur of (i) the tenth day  after the Stock  Acquisition  Date or (ii) the tenth
day after the date of the  commencement of a tender or exchange offer for 20% or
more of the  outstanding  shares of Common  Stock by any  Person  other than the
Company  (the  earlier  of  (i)  and  (ii)  being  herein  referred  to  as  the
"Distribution  Date"),  (x)  the  Rights  will  be  evidenced  (subject  to  the
provisions  of  paragraph  (b) of this  Section 3) by the  certificates  for the
Common Stock  registered  in the names of the holders of the Common Stock (which
certificates for Common Stock shall be deemed also to be Right Certificates) and
not by  separate  Right  Certificates,  and  (y)  the  right  to  receive  Right
Certificates will be transferable only in connection with the transfer of Common
Stock.  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,  if  requested  by the Company,
will send) by first-class,  insured, postage prepaid mail, to each record holder
of the Common Stock as of the close of business on the Distribution Date, at the
address of such holder shown on the records of the Company, a Right Certificate,
in  substantially  the form of Exhibit A hereto,  evidencing  one Right for each
share of Common Stock so held. As of the  Distribution  Date, the Rights will be
evidenced solely by such Right Certificates.

     (b) On the Record Date or as soon as  practicable  thereafter,  the Company
will  send  a  copy  of a  Summary  of  Rights  to  Purchase  Common  Stock,  in
substantially  the form attached  hereto as Exhibit B (the "Summary of Rights"),
by first-class,  postage prepaid mail, to each record holder of the Common Stock
as of the close of  business on the Record  Date,  at the address of such holder
shown on the records of the Company. With respect to certificates for the Common
Stock outstanding as of the Record Date, until the Distribution Date, the Rights
will be evidenced by such  certificates  for the Common Stock  registered in the
names of the  holders  of the  Common  Stock.  Until the  Distribution  Date (or
earlier  redemption or expiration of the Rights),  the surrender for transfer of
any of the  certificates  for the Common  Stock  outstanding  on the Record Date
shall also  constitute  the  transfer of the Rights  associated  with the Common
Stock represented by such certificate.



     (c) Certificates for the Common Stock which become outstanding  (including,
without  limitation,  reacquired  shares of Common Stock referred to in the last
sentence of this paragraph issued after the Record Date but prior to the earlier
of the Distribution Date or the Expiration Date or the Final Expiration Date (as
such  terms are  defined in Section 7) shall  have  impressed  on,  printed  on,
written on or otherwise affixed to them the following legend:

  This certificate  also  evidences and  entitles the holder hereof to certain
  Rights as set forth in a Rights Agreement between Vicon Industries, Inc. and
  Computershare  Investor  Services,  LLC  dated as of  December  4, 2001 (the
  "Rights  Agreement"),  the terms of which  are hereby incorporated herein by
  reference and a copy of which is on  file at the principal executive offices
  of Vicon Industries, Inc. Under certain  circumstances,  as set forth in the
  Rights  Agreement,  such Rights will be  evidenced by separate  certificates
  and will no longer be evidenced by this  certificate. Vicon Industries, Inc.
  will mail to the holder of this  certificate  a copy of the Rights Agreement
  without  charge  within  five  days  after  receipt  of  a  written  request
  therefor. As described in the Rights Agreement,  Rights issued to any Person
  who becomes an Acquiring Person  (as defined in the Rights  Agreement) shall
  become null and void.


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

     Section  4. Form of Right  Certificates.  The Right  Certificates  (and the
forms of  election  to purchase  shares and of  assignment  to be printed on the
reverse  thereof)  shall be  substantially  the same as Exhibit A hereto and may
have such marks of identification or designation and such legends,  summaries or
endorsements  printed thereon as the Company may deem appropriate and as are not
inconsistent  with the  provisions of this  Agreement,  or as may be required to
comply with any  applicable  law or with any rule or  regulation  made  pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may  from  time to time be  listed,  or to  conform  to  usage.  Subject  to the
provisions of Section 22 hereof, the Right Certificates,  whenever issued, shall
entitle the holders thereof to purchase such number of shares of Common Stock as
shall be set forth  therein  at the price  per  share  set  forth  therein  (the
"Purchase Price"), but the number of such shares and the Purchase Price shall be
subject to adjustment as provided herein.



     Section 5. Countersignature and Registration.  The Right Certificates shall
be executed on behalf of the Company by its Chairman of the Board, its President
or any Vice  President,  either  manually or by  facsimile  signature,  and have
affixed  thereto  the  Company's  seal or a  facsimile  thereof  which  shall be
attested by the  Secretary  or an Assistant  Secretary  of the  Company,  either
manually or by facsimile  signature.  The Right  Certificates  shall be manually
countersigned  by the Rights Agent and shall not be valid for any purpose unless
so  countersigned.  In case any officer of the Company who shall have signed any
of the Right  Certificates  shall cease to be such officer of the Company before
countersignature  by the Rights  Agent and issuance and delivery by the Company,
such Right Certificates, nevertheless, may be countersigned by the Rights Agent,
issued  and  delivered  with the same  force and effect as though the person who
signed such Right Certificates had not ceased to be such officer of the Company;
and any Right  Certificate  may be signed on behalf of the Company by any person
who, at the actual date of the execution of such Right  Certificate,  shall be a
proper  officer of the Company to sign such Right  Certificate,  although at the
date of the  execution of this Rights  Agreement any such person was not such an
officer.

     Following the Distribution  Date, the Rights Agent will keep or cause to be
kept, at one of its offices in New York, New York,  books for  registration  and
transfer of the Rights Certificates issued hereunder.  Such books shall show the
name 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,   Split  Up,   Combination  and  Exchange  of  Right
Certificates;  Mutilated, Destroyed, Lost or Stolen Right Certificates.  Subject
to the provisions of Section 14 hereof,  at any time after the close of business
on the  Distribution  Date,  and at or prior to the  close  of  business  on the
earlier of the Expiration Date or the Final Expiration Date, any Right



Certificate or Certificates  (other than Right Certificates  representing Rights
that have become void  pursuant  to Section  11(a)(ii)  hereof or that have been
exchanged pursuant to Section 24 hereof) may be transferred,  split up, combined
or exchanged for another Right Certificate or Right Certificates,  entitling the
registered  holder to  purchase a like  number of shares of Common  Stock as the
Right Certificate or Right Certificates  surrendered then entitle such holder to
purchase.  Any  registered  holder  desiring to transfer,  split up,  combine or
exchange any Right  Certificate  shall make such request in writing delivered to
the  Rights  Agent,   and  shall  surrender  the  Right   Certificate  or  Right
Certificates to be transferred, split up, combined or exchanged at the principal
office of the Rights Agent along with an amount equal to any applicable transfer
or other tax or other governmental charge in cash, or by certified check or bank
draft  payable to the order of the  Company.  Thereupon  the Rights  Agent shall
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,  split up,  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 the Right Certificate
if mutilated,  the Company will make and deliver a new Right Certificate of like
tenor to the Rights  Agent for delivery to the  registered  owner in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.

     Section 7. Exercise of Rights;  Purchase Price;  Expiration Date of Rights.
(a) 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 principal  office of the Rights Agent,  together with
payment of the  Purchase  Price for each  share of Common  Stock as to which the
Rights are  exercised,  at or prior to the close of business on the  earliest of
(i) November 30, 2011 (the "Final Expiration Date");  (ii) the date on which the
Rights are  redeemed  as  provided in Section 23 or (iii) the time at which such
Rights are  exchanged as provided in Section 24 (such  earlier date being herein
referred to as the "Expiration Date").



         (b) The Purchase Price for each share of Common Stock pursuant to the
exercise of a Right shall initially be $15, 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 representing exercisable
Rights, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares 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, by certified check or cashier's check
or money order payable to the order of the Company, the Rights Agent shall
thereupon promptly (i) requisition from any transfer agent of the Common Stock
of the Company certificates for the number of shares of Common Stock to be
purchased, and the Company hereby irrevocably authorizes its transfer agent to
comply with all such requests, (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, (iii) promptly after receipt of such
certificates, cause the same to be delivered to or upon the order of the
registered holder of such Right Certificate, registered in such name or names as
may be designated by such holder and (iv) when appropriate, after receipt
promptly deliver such cash to or upon the order of the registered holder of such
Right Certificate.

         (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 to the registered holder of such Right Certificate or to his
duly authorized assigns, subject to the provisions of Section 14 hereof.

         Section 8. Cancellation and Destruction of Right Certificates. All
Right Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled 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 cancelled Right Certificates to the Company, or shall, at the written
request of the Company, destroy such cancelled Right Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.



     Section  9.  Reservation  and  Availability  of  Shares  of  Common  Stock;
Registration of Common Stock. (a) The Company  covenants and agrees that it will
cause to be reserved  and kept  available  out of its  authorized  and  unissued
shares of Common Stock or its  authorized and issued shares of Common Stock held
in its treasury, the number of shares of Common Stock that will be sufficient to
permit the exercise in full of all outstanding Rights in accordance with Section
7.

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

     (c) The Company  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 shares
of Common Stock upon the exercise of Rights. The Company shall not, however,  be
required to pay any transfer tax which may be payable in respect of any transfer
or delivery of Right  Certificates  to a person  other than,  or the issuance or
delivery  of  certificates  for the shares of Common  Stock 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  for Common
Shares 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.  Common  Stock  Record  Date.  Each  person in whose  name any
certificate  for shares of Common  Stock is issued  upon the  exercise of Rights
shall for all  purposes  be deemed to have  become  the  holder of record of the
Common Stock  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 Common Stock  transfer books of the Company are
closed,  such person  shall be deemed to have  become the record  holder of such
shares on, and such certificate shall be dated, the next succeeding business day
on which the Common Stock transfer  books of the Company 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 stockholder of the Company with respect
to  shares  for  which  the  Rights  shall be  exercisable,  including,  without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any  preemptive  rights and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.

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

         (a) (i) In the event the Company shall at any time after the date of
this Agreement (A) declare a dividend on the Common Stock payable in shares of
Common Stock, (B) subdivide the outstanding Common Stock, (C) combine the
outstanding Common Stock into a smaller number of shares or (D) issue any shares
of its capital stock in a reclassification of the Common Stock (including any
such reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time of the
record date for such dividend or of the effective date of such subdivision,
combination or reclassification, and the number and kind of shares of capital
stock 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 of capital stock which, if such Right had
been exercised immediately prior to such date and at a time when the Common
Stock transfer books of the Company were open, he would have owned upon such
exercise and been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification 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 capital stock of the Company issuable upon
exercise of one Right.



     (ii) In the event any Person, at any time after the date of this Agreement,
shall become an Acquiring Person, unless the event causing such Person to become
an Acquiring Person is a transaction set forth in Section 13(a) hereof, or is an
acquisition  of shares of Common Stock pursuant to a tender offer or an exchange
offer  for all  outstanding  shares  of  Common  Stock  at a price  and on terms
determined  by at least a  majority  of the  members  of the  Board  who are not
operating  officers of the Company  and who are not  representatives,  nominees,
Affiliates or Associates of an Acquiring Person, after receiving advice from one
or  more  investment  banking  firms,  to be (a) at a  price  which  is  fair to
stockholders  and not  inadequate  (taking into  account all factors  which such
members of the Board deem relevant,  including, without limitation, prices which
could  reasonably  be  achieved  if the  Company or its  assets  were sold on an
orderly basis  designed to realize  maximum value) and (b) otherwise in the best
interests of the Company and its stockholders,  then the Purchase Price shall be
50% of the  current  market  price per share of the Common  Stock of the Company
(determined  pursuant to Section 11(d)) such Person became an Acquiring  Person.
Notwithstanding  the  foregoing,  any  Rights  that  are or  were  at  any  time
beneficially  owned by the Acquiring Person or any Associate or Affiliate of the
Acquiring  Person  shall  become  void  and  any  holder  of such  Rights  shall
thereafter  have no right to exercise  such Rights  under any  provision of this
Agreement.  No Right  Certificate  shall be issued  pursuant  to  Section 3 that
represents Rights beneficially owned by an Acquiring Person,  whose Rights would
be void  pursuant  to the  preceding  sentence  or any  Associate  or  Affiliate
thereof;  no Right  Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring  Person,  whose Rights would be void  pursuant to the
preceding  sentence or any  Associate or Affiliate  thereof or to any nominee of
such  Acquiring  Person,  Associate  or  Affiliate;  and any  Right  Certificate
delivered to the Rights Agent for transfer to an Acquiring Person,  whose Rights
would be void pursuant to the preceding sentence shall be cancelled.

     (b) In the event the Company  shall fix a record  date for the  issuance of
rights, options or warrants to all holders of Common Stock entitling them (for a
period expiring within 45 calendar days after such record date) to subscribe for
or purchase Common Stock (or securities convertible into Common



Stock) at a price per share of Common  Stock (or having a  conversion  price per
share of Common Stock,  if a security  convertible  into Common Stock) less than
the current market price per share of Common Stock (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,  of which the  numerator  shall be the
number of shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate offering price of the total number
of  shares  of Common  Stock so to be  offered  (and/or  the  aggregate  initial
conversion price of the convertible  securities so to be offered) would purchase
at such current market price and of which the denominator shall be the number of
shares  of Common  Stock  outstanding  on such  record  date plus the  number of
additional shares of Common Stock to be 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 capital stock of the Company  issuable upon exercise of one Right.  In
the event such subscription  price may be 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.
Shares of Common Stock owned by or held for the account of the Company shall not
be deemed  outstanding for the purpose of any such computation.  Such adjustment
shall be made  successively  whenever  such a record  date is fixed;  and in the
event that such  rights,  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 the event the  Company  shall fix a record  date for the making of a
distribution  to all holders of Common Stock  (including  any such  distribution
made in connection  with a  consolidation  or merger in which the Company is the
continuing  or surviving  corporation)  of evidences of  indebtedness  or assets
(other than a regular  periodic cash dividend at a rate not in excess of 125% of
the rate of the last cash  dividend  theretofore  paid or a dividend  payable in
Common Stock) or subscription rights or warrants (excluding those referred to in
Section11(b)),  the Purchase  Price to be in effect after such record date shall
be determined by multiplying the Purchase Price in effect  immediately  prior to
such  record  date by a fraction,  of which the  numerator  shall be the current
market  price per share of Common  Stock (as  defined in Section  11(d)) 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
applicable  to one share of Common Stock and of which the  denominator  shall be
such current market price per share of Common Stock; 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 capital stock 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) For the  purpose of any  computation  hereunder,  the  "current  market
price" per share of Common  Stock on any date shall be deemed to be the  average
of the  daily  closing  prices  per  share  of  such  Common  Stock  for  the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date; provided, however, that in the event that the current market price
per  share  of  Common  Stock  is  determined  during  a  period  following  the
announcement  by  the  issuer  of  such  Common  Stock  of  (A)  a  dividend  or
distribution  on such Common  Stock  payable in shares of such  Common  Stock or
securities convertible into shares of such Common Stock, or (B) any subdivision,
combination  or  reclassificiation  of  such  Common  Stock,  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 market price shall be
appropriately  adjusted  to reflect the current  market  price per Common  Stock
equivalent. 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 American  Stock  Exchange or, if the shares
of Common  Stock are not listed or  admitted  to trading on the  American  Stock
Exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national  securities exchange
on which the shares of Common Stock are listed or admitted to trading or, if the
shares of Common  Stock are not listed or  admitted  to trading on any  national
securities exchange,  the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
the National Association of Securities Dealers,  Inc. Automated Quotation System
("NASDAQ")  or such other system then in use, or, if on any such date the shares
of Common  Stock are not  quoted by any such  organization,  the  average of the
closing bid and asked prices as furnished by a professional  market maker making
a market in the Common Stock  selected by the Board of Directors of the Company.
If on any such date no market maker is making a market in the Common Stock,  the
fair value of such shares on such date as  determined in good faith by the Board
of Directors of the Company  shall be used.  The term "Trading Day" shall mean a
day on which the principal national  securities  exchange on which the shares of
Common  Stock are listed or admitted to trading is open for the  transaction  of
business or, if the shares of Common Stock are not listed or admitted to trading
on any national securities exchange, a Monday, Tuesday,  Wednesday,  Thursday or
Friday on which banking institutions in the State of New York are not authorized
or  obligated  by law or  executive  order to close.  If the Common Stock is not
publicly held or not so listed or traded, "current market price" per share shall
mean the fair  value  per  share as  determined  in good  faith by the  Board of
Directors of the Company,  whose determination shall be described in a statement
filed with the Rights Agent.



     (e) No  adjustment  in the  Purchase  Price shall be  required  unless such
adjustment  would  require an increase or decrease of at least 1% in such 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  ten-thousandth of a share as the case
may be. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the  transaction  which mandates 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),  the
holder of any Right  thereafter  exercised  shall become entitled to receive any
shares of  capital  stock of the  Company  other  than  shares of Common  Stock,
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 shares
contained  in Section  11(a)  through  (c),  inclusive,  and the  provisions  of
Sections 7, 9, 10 and 13 with  respect to the shares of Common Stock shall apply
on like terms to any such other shares.

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

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

     (i) The  Company  may elect on or after the date of any  adjustment  of the
Purchase  Price  to  adjust  the  number  of  Rights,  in  substitution  for any
adjustment in the number of shares of Common Stock 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 shares of Common  Stock for
which a Right was exercisable  immediately prior to such adjustment.  Each Right
held of record  prior to such  adjustment  of the number of Rights  shall become
that number of Rights (calculated to the nearest one ten-thousandth) obtained by



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

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

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

     (l) In any case in which this Section 11 shall  require that an  adjustment
in the  Purchase  Price be made  effective  as of a record  date for a specified
event,  the Company may elect to defer  until the  occurrence  of such event the
issuing to the holder of any Right  exercised  after such record date the shares
of Common Stock and other capital  stock or  securities of the Company,  if any,
issuable  upon such exercise over and above the shares of Common Stock and other
capital stock or securities of the Company,  if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however,  that the  Company  shall  deliver  to such  holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares 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 Common Stock, issuance wholly
for cash of any Common  Stock at less than the current  market  price,  issuance
wholly  for  cash of  Common  Stock or  securities  which  by  their  terms  are
convertible into or exchangeable  for Common Stock,  stock dividends or issuance
of rights,  options or warrants  referred  to  hereinabove  in this  Section 11,
hereafter  made by the  Company  to holders  of its  Common  Stock  shall not be
taxable to such stockholders.

     Section 12.  Certificate  of Adjusted  Purchase  Price or Number of Shares.
Whenever  an  adjustment  is made as provided in Sections 11 and 13, the Company
shall (a) promptly prepare a certificate  setting forth such  adjustment,  and a
brief statement of the facts accounting for such  adjustment,  (b) promptly file
with the Rights Agent and with each  transfer  agent for the Common Stock a copy
of such  certificate  and (c) mail a brief  summary  thereof to each holder of a
Right Certificate in accordance with Section 25.

     Section 13. Consolidation,  Merger or Sale or Transfer of Assets or Earning
Power. In the event,  directly or indirectly,  (a) the Company shall consolidate
with, or merge with and into, any other Person, (b) any Person shall consolidate
with or, merge with and into,  the Company,  the Company shall be the continuing
or surviving corporation of such merger and, in connection with such merger, all
or part of the Common  Stock  shall be changed  into or  exchanged  for stock or
other  securities of any other Person or cash or any other property,  or (c) 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  more than 50% of the assets or earning power of the
Company and its subsidiaries  (taken as a whole) to any other Person,  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 the  then-current  Purchase  Price in
accordance  with the terms of this  Agreement,  such  number of shares of Common
Stock of such  other  Person  as shall be equal to the  result  obtained  by (x)
multiplying  the  then-current  Purchase Price by the number of shares of Common
Stock for which a Right is then exercisable and dividing that product by (y) 50%
of the current  market  price per share of the Common Stock of such other Person
(determined  pursuant  to  Section  11(d)) on the date of  consummation  of such
consolidation,  merger,  sale or transfer;  (ii) the issuer of such Common Stock
shall   thereafter  be  liable  for,  and  shall  assume,   by  virtue  of  such
consolidation,  merger, sale or transfer,  all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall thereafter be
deemed to refer to such  issuer;  and (iv) such  issuer  shall  take such  steps
(including, but not limited to, the reservation of a sufficient number of shares



of its  Common  Stock in  accordance  with  Section 9) 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 the
shares of its Common  Stock  thereafter  deliverable  upon the  exercise  of the
Rights. The Company shall not consummate any such consolidation, merger, sale or
transfer  unless prior  thereto the Company and such issuer shall have  executed
and delivered to the Rights Agent a  supplemental  agreement so  providing.  The
Company shall not consummate any such  consolidation,  merger,  sale or transfer
unless  prior  thereto  the  Company and such  issuer  shall have  executed  and
delivered to the Rights Agent a supplemental agreement so providing. The Company
shall not enter into any  transaction of the kind referred to in this Section 13
if at the time of such transaction there are any rights,  warrants,  instruments
or securities  outstanding or any agreements or arrangements  which, as a result
of the  consummation  of such  transaction,  would  eliminate  or  substantially
diminish the benefits  intended to be afforded by the Rights.  The provisions of
this Section 13 shall similarly apply to successive mergers or consolidations or
sales or other transfers.

     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 shall
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  l4(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  American  Stock  Exchange  or, if the  Rights are not listed or
admitted to trading on the American 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 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 shares upon
exercise of the Rights or to distribute certificates which evidence fractional
shares. In lieu of fractional shares, the Company may pay to the registered
holders of Right Certificates at the time such Right Certificates are exercised
as herein provided an amount in cash equal to the same fraction of the current
market value of a share of Common Stock. For purposes of this Section l4(b), the
current market value of a share of Common Stock shall be the closing price of a
share of Common Stock (as determined pursuant to the second sentence of Section
ll(d) for the Trading Day immediately prior to the Date of such exercise.

         (c) The holder of a Right by the acceptance of the Rights expressly
waives his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as 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,  are  vested  in the  respective  registered  holders  of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Stock);  and any registered holder of any Right Certificate (or, prior to
the Distribution  Date, of the Common Stock),  without the consent of the Rights
Agent  or of the  holder  of any  other  Right  Certificate  (or,  prior  to the
Distribution Date, of the Common Stock),  may, in his own behalf and for his own
benefit,  enforce, and may institute and maintain any suit, action or proceeding
against  the Company 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 Common Stock;

(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; and



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

     Section 17. Right Certificate  Holder Not Deemed a Stockholder.  No holder,
as such, of any Right Certificate  shall be entitled to vote,  receive dividends
or be deemed for any purpose the holder of Common Stock or any other  securities
of the Company  which may at any time be issuable on the  exercise of the Rights
represented  thereby,  nor  shall  anything  contained  herein  or in any  Right
Certificate be construed to confer upon the holder of any Right Certificate,  as
such, any of the rights of a stockholder of the Company or any right to vote for
the election of directors or upon any matter  submitted to  stockholders  at any
meeting thereof,  or to give or withhold consent to any corporate  action, or to
receive notice of meetings or other actions  affecting  stockholders  (except as
provided in Section 24), 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 and its
affiliates  and  each  of  their  directors,   officers,  employees  and  agents
(collectively,  the  "Indemnified  Parties")  for,  and to  hold  them  harmless
against, any damage, loss,  liability,  cost or expense,  incurred without gross
negligence,  bad  faith or  willful  misconduct  on the part of the  Indemnified
Parties,  for anything done or omitted by the Indemnified  Parties in connection
with the acceptance and  administration  of this Agreement,  including the costs
and  expenses  of  defending  against  any claim or demand of  liability  in the
premises. The Rights Agent and its affiliates 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 Common  Stock or for other  securities  of the
Company,  instrument of assignment or transfer, power of attorney,  endorsement,
affidavit, letter, notice, direction, consent, certificate,  statement, or other
paper or document  believed by it to be genuine and to be signed,  executed  and
where necessary, verified or acknowledged, by the proper person or persons.



     Section 19. Merger or  Consolidation or Change of Name of Rights Agent. Any
corporation  into which the Rights  Agent or any  successor  Rights Agent may be
merged or with which it may be consolidated,  or any corporation  resulting from
any merger or  consolidation  to which the Rights Agent or any successor  Rights
Agent shall be a party,  or any  corporation  succeeding to the corporate  trust
business  of the  Rights  Agent  or any  successor  Rights  Agent,  shall be the
successor  to the Rights  Agent under this  Agreement  without the  execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such corporation  would be eligible for appointment as a successor
Rights  Agent  under  the  provisions  of  Section  2l. 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  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 of its own choice
(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 be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by the Chairman of the Board, the President
or any Vice President and by the Treasurer or any Assistant Treasurer or the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; and such certificate shall be full authorization to the Rights Agent for



any action taken or suffered in good faith by it under the provision of this
Agreement in reliance upon such certificate.

         (c) The Rights Agent shall be liable hereunder only for its own gross
negligence, bad faith or willful misconduct. In no event shall the Rights Agent
be liable for special, indirect, punitive or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits).

         (d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Right
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shal1 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 adjustment required under the provisions of Sections 3,
11, 13, 23 or 24 or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock to be issued pursuant
to this Agreement or any Right Certificate or as to whether any shares of Common
Stock will, when issued, be validly authorized and issued, fully paid and
nonassessable.

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

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



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

         (i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof .

     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 Stock by registered or certified  mail,  and to the holders of the
Right  Certificates by first-class mail. The Company may remove the Rights Agent
or any  successor  Rights Agent 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 Stock by registered or certified mail, and to the holders of
the Right  Certificates by first-class mail. If the Rights Agent shall resign or
be removed or shall  otherwise  become  incapable of acting,  the Company  shall
appoint a successor to the Rights Agent.  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  Rights  Agent,  whether  appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of the State of New York (or of any other  state of the United  States
so  long  as  such  corporation  is  authorized  to  do  business  as a  banking
institution  in the State of New York),  in good  standing,  having a  principal
office in the State of New York, which is authorized under such laws to exercise
corporate  trust 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 $100,000,000.  After appointment, the
successor Rights Agent shall be vested with the same powers,  rights, duties and
responsibilities  as if it had been  originally  named as Rights  Agent  without
further act or deed; but the predecessor Rights Agent shall deliver and transfer
to the successor Rights Agent any property at the time held by it hereunder, and



execute and deliver any further assurance, conveyance, act or deed necessary for
the  purpose.  Not later than the  effective  date of any such  appointment  the
Company shall file notice thereof in writing with the  predecessor  Rights Agent
and each  transfer  agent of the  Common  Stock,  and 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 per share and the number or kind or class of shares of stock
or other securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.

     Section 23.  Redemption.  The Company may, at its option, at any time prior
to 5:00 P.M.,  New York City time,  on the earlier of (x) the date any Person or
group of Affiliated or Associated Persons has acquired  Beneficial  Ownership of
50% or more of the  outstanding  Common  Stock of the  Company  or (y) the Final
Expiration Date, redeem all but not less than all the then outstanding Rights at
a  redemption  price of $.001 per Right  appropriately  adjusted  to reflect any
stock split,  stock  dividend or similar  transaction  occurring  after the date
hereof (such redemption price being  hereinafter  referred to as the "Redemption
Price").  Immediately  upon the action of the Board of  Directors of the Company
ordering  the  redemption  of the Rights,  and  without  any further  action and
without any notice, the right to exercise the Rights will terminate and the only
right  thereafter  of the holders of Rights  shall be to receive the  Redemption
Price.  Within 10 days after the action of the Board of  Directors  ordering the
redemption of the Rights,  the Company  shall give notice of such  redemption to
the holders of the then  outstanding  Rights by mailing  such notice to all such
holders at their last  addresses as they appear upon the  registry  books of the
Rights Agent or, prior to the  Distribution  Date, on the registry  books of the
Transfer  Agent for the Common  Stock.  Any notice which is mailed in the manner
herein  provided shall be deemed given,  whether or not the holder  receives the
notice.  Each  such  notice of  redemption  will  state the  method by which the
payment of the Redemption Price will be made. Neither the Company nor any of its
Affiliates or Associates may redeem, acquire or purchase for value any Rights at
any time in any manner other than that specifically set forth in this Section 23
or in Section  24 hereof,  and other than in  connection  with the  purchase  of
Common Stock prior to the Distribution Date.



         Section 24. Exchange. (a) The Board of Directors of the Company may, at
its option, at any time after any Person becomes an Acquiring Person, 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
11(a)(ii)) for Common Stock at an exchange ratio of one share of a Common Share
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such exchange ratio being
hereinafter referred to as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than the Company, any Subsidiary of the Company,
any employee benefit plan of the Company or any such Subsidiary, 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 shares of Common Stock 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 share of Common Stock equal to
the number of such Rights held by such holder multiplied by the Exchange Ratio.
The Company shall promptly give public notice of any such exchange; provided,
however, that the failure to give, or any defect in, such notice shall not
affect the validity of such exchange. The Company promptly shall mail a notice
of any such exchange to all of the holders of such Rights at their last
addresses as they appear upon the registry books of the Rights Agent. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of exchange will state the
method by which the exchange of the Common Stock for Rights will be effected
and, in the event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the number
of Rights (other than Rights which have become void pursuant to the provisions
of Section 11(a)(ii) hereof) held by each holder of Rights.

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

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



     Section 25. Notice of Certain Events. In case the Company shall propose (a)
to pay any  dividend  payable in stock of any class to the holders of its Common
Stock or to make any other  distribution  to the  holders  of its  Common  Stock
(other than a regular  periodic cash dividend at a rate not in excess of 125% of
the rate of the last cash  dividend  theretofore  paid),  or (b) to offer to the
holders of its Common Stock  rights or warrants to subscribe  for or to purchase
any  additional  shares of  Common  Stock or shares of stock of any class or any
other securities,  rights or options,  or (c) to effect any  reclassification of
its Common Stock (other than a  reclassification  involving only the subdivision
of outstanding  shares of Common Stock),  or (d) 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 more  than 50% of the  assets  of  earning  power of the
Company and its subsidiaries  (taken as a whole) to, any other Person, or (e) to
effect the liquidation,  dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Right,  in accordance with
Section 26, a notice of such  proposed  action,  which shall  specify the record
date for the purposes of such stock dividend,  distribution of rights or Rights,
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 Common Stock, if any such date is to
be fixed, and such notice shall be so given in the case of any action covered by
clause  (a) or (b)  above at least  twenty  days  prior to the  record  date for
determining  holders of the Common Stock for purposes of such action, and in the
case of any such other  action,  at least  twenty  days prior to the date of the
taxing of such  proposed  action  or the date of  participation  therein  by the
holders of Common Stock, whichever shall be the earlier.

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

     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:

                             Vicon Industries, Inc.
                             89 Arkay Drive,
                             Hauppauge, New York 11788
                             Attn: Chairman



Subject to the provisions of Section 21, any notice or demand authorized by this
Agreement to be given or made by the Company or by the holder of any 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:

                             Computershare Investor Services, LLC
                             Attn:  Relationship Manager
                             Two North LaSalle Street
                             Chicago, Illinois  60602
with a copy to:
                             Computershare Investor Services, LLC
                             Attn:  Keith Bradley
                             Two North LaSalle Street
                             Chicago, Illinois 60602


Notice  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 and the Rights Agent
may from time to time supplement or amend this Agreement without the approval of
any holders of Right Certificates in order to cure any ambiguity,  to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provisions  herein,  or to make any other provisions in regard to
matters or questions  arising  hereunder  which the Company and the Rights Agent
may deem  necessary  or  desirable  and which  shall not  adversely  affect  the
interests of the holders of Right Certificates.

     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 or  corporation  other than the  Company,  the
Rights Agent and the registered holders of the Right Certificates (and, prior to
the Distribution Date, the Common Stock) any legal or equitable right, remedy or
claim  under  this  Agreement;  but  this  Agreement  shall  be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates.



     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
New York and for all purposes  shall be governed by and  construed in accordance
with the laws of such state without regard to its choice of law principles.

     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 several
Sections of this  Agreement  are  inserted  for  convenience  only and shall not
control or affect the meaning or construction of any of the provisions hereof.

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

VICON INDUSTRIES, INC.


By:________________________________


Title:_______________________________







COMPUTERSHARE INVESTOR SERVICES, LLC


By:_________________________________


Title:_______________________________









                                                                    Exhibit A
                                                                    ---------



                           [Form of Right Certificate]




Certificate No. R-                                                _____Rights



NOT EXERCISABLE AFTER NOVEMBER 30, 2011 OR AT EARLIER IF REDEEMED. THE RIGHTS
ARE SUBJECT TO REDEMPTION, THE OPTION OF THE COMPANY, AT $.001 PER RIGHT ON THE
TERMS SET FORTH IN THE RIGHTS AGREEMENT.


                                      VICON INDUSTRIES, INC.


     This  certifies that  ______________________________________  or registered
assigns,  is the registered owner of the number of Rights set forth above,  each
of which  entitles  the owner  thereof,  subject  to the terms,  provisions  and
conditions  of the Rights  Agreement  dated as of December 4, 2001 (the  "Rights
Agreement")  between  Vicon  Industries,  Inc.,  a  New  York  corporation  (the
"Company"),  and  Computershare  Investor  Services,  LLC,  a  Delaware  limited
liability company (the "Right 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 PM (New York City time) on November 30, 2011 at the  principal
office of the Rights Agent,  or its  successors as Rights Agent,  one fully paid
non-assessable  share of the Common  Stock,  par value $0.01 per share  ("Common
Stock"),  of the Company,  at a purchase  price of $15 per share (the  "Purchase
Price"), upon presentation and surrender of this Right Certificate with the Form
of Election to Purchase duly  executed.  The number of Rights  evidenced by this
Right Certificate (and the number of shares which may be purchased upon exercise
thereof) set forth above,  and the Purchase Price per share set forth above, are
the number and Purchase  Price as of December  14, 2001,  based on the shares of
Common Stock of the Company as constituted at such date.

     As provided in the Rights  Agreement,  the Purchase Price and the number of
shares of Common  Stock 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.  Copies of
the Rights  Agreement  are on file at the  above-mentioned  office of the Rights
Agent.

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

     Subject to the provisions of the Rights Agreement,  the Rights evidenced by
this  Certificate  may be redeemed by the Company at its option at a  redemption
price of $.001 per Right.

     No  fractional  shares of Common  Stock will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.

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



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

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


 Dated as of _________________.


                                                        VICON INDUSTRIES, INC.

                                                   By: ________________________


                                                Title: _______________________



                                                                 Countersigned:

                                          COMPUTERSHARE INVESTOR SERVICES, LLC

                                        By: __________________________________


                                     Title: _________________________________





                          FORM OF ELECTION TO PURCHASE
                          ----------------------------
                        (To be executed if holder desires
                         to exercise Right Certificate)

         The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Right Certificate to purchase the shares of Common
Stock issuable upon the exercise of such Rights and requests that certificates
for such shares be issued in the name of:

Please insert social security or other identifying number

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

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

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

Please insert social security
or other identifying number

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

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


Dated: _________________, 20__

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

                                              (Signature must conform in all
respects to name of holder as specified on the face of this Right Certificate)

Signature Guaranteed:





                  (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 Certificates.)

         FOR VALUE RECEIVED, _______________________________________ hereby

sells, assigns and transfers unto ------------------------------------------

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

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

Dated: ______, 20__


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

Signature Guaranteed:



                                     NOTICE
                                     ------


The signature of the foregoing Assignment 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.








                                                                    Exhibit B
                                                                    ---------



                               VICON INDUSTRIES, INC.


                          SUMMARY OF RIGHTS TO PURCHASE
                                  COMMON STOCK

     On November  14, 2001,  the Board of  Directors  of the Company  declared a
dividend  distribution  of one Common Stock  Purchase Right (a "Right") for each
outstanding  share  of  Common  Stock  of  the  Company.  The  Rights  are to be
distributed as a dividend  payable on December 21, 2001, to the  stockholders of
record on that date. The  description and terms of the Rights are set forth in a
Rights Agreement (the "Rights  Agreement") between the Company and Computershare
Investor Services, LLC, as Rights Agent (the "Rights Agent").

     In the event of the acquisition of 20% or more of the Company's outstanding
Common Stock by certain persons or the commencement of a tender offer for 20% or
more  of the  Company's  outstanding  Common  Stock,  each  Right  entitles  the
registered  holder to purchase  from the Company one share of Common  Stock at a
purchase price of $15 per share (the "Purchase  Price"),  subject to adjustment.
Under certain circumstances and with certain  qualifications,  the price will be
adjusted to equal fifty  percent of the average  market  price of the  Company's
Common Stock for the 30 consecutive  trading days  immediately  prior to time of
the adjustment.

     The  Rights  will  be  exercisable  on  or  after  the  Distribution   Date
(hereinafter  defined)  and until  November  30,  2011,  unless  redeemed by the
Company.

     The Distribution Date is the earlier to occur of (i) the 10th day after the
first date of public  announcement  of the  acquisition or right to acquire by a
person or group of affiliated or associated  persons (an "Acquiring  Person") of
beneficial  ownership of 20% or more of the outstanding Common Stock or (ii) the
10th day after the  commencement  of a tender offer or exchange offer for 20% or
more of the outstanding  Common Stock.  Until the Distribution  Date, the Rights
will be evidenced  solely by the certificates for the Common Stock together with
the  Summary  of Rights  and will be  transferred  with and only with the Common
Stock.



     Until the  Distribution  Date (or earlier  redemption  or expiration of the
Rights),  the surrender for transfer of any  certificates  for Common Stock will
also  constitute  the  transfer  of  Rights  associated  with the  Common  Stock
represented  by  such  certificate.   As  soon  as  practicable   following  the
Distribution  Date,  separate   certificates   evidencing  the  Rights  ("Rights
Certificates")  will be mailed to holders  of record of the Common  Shares as of
the  close  of  business  on the  Distribution  Date  and  such  separate  Right
Certificates alone will thereafter evidence the Rights.

     At any  time  prior to the  earlier  of the  date  any  person  or group of
affiliated or  associated  persons has acquired  beneficial  ownership of 50% or
more of the  outstanding  Common  Stock or November  30,  2011,  the Company may
redeem the Rights in whole, but not in part, at a price of $.001 per Right.

     Until a Right is exercised,  a Right,  as such, does not provide the holder
with any rights as a stockholder of the Company, including,  without limitation,
the right to vote or to receive dividends.

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

     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. No fractional shares will be issued and in lieu thereof, an
adjustment in cash will be made based on the market price of the Common Stock on
the last trading date prior to the date of exercise.

     As of  November  30,  2001,  there were  4,656,983  shares of Common  Stock
outstanding  and 308,760 shares  reserved for issuance  pursuant to rights under
the Company's  stock option  plans.  Each  outstanding  share of Common Stock on
December 21, 2001 will receive one Right.

     The Rights  have  certain  anti-takeover  effects.  The  Rights  will cause
substantial  dilution to a person who  attempts  to acquire the Company  without
conditioning  his offer on a substantial  number of Rights being  acquired.  The
Rights will also adversely  affect a person who desires to obtain control of the
Company  without  acquiring  100%  ownership.  The  Rights  will  not  affect  a
transaction  approved by the Company prior to the existence of a 50% stockholder
because, to the extent the Rights have not yet been exercised, the Rights can be
redeemed before the consummation of such transaction.