POLYCOM INC
8-K, 1998-07-22
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<PAGE>

                          SECURITIES AND EXCHANGE COMMISSION

                               WASHINGTON, D.C.  20549

                                       FORM 8-K

                                   CURRENT REPORT 



Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported) July 15, 1998.


                                    POLYCOM, INC.
                -----------------------------------------------------
                (Exact name of registrant as specified in its charter)


            Delaware                  0-27130            94-3128324
           --------------------------------------------------------
   (State or other jurisdiction    (Commission          (IRS Employer 
         of incorporation)         File Number)       Identification No.)


                   2584 Junction Avenue  San Jose, California 95134
                 ----------------------------------------------------
               (Address of principal executive offices)     (Zip Code)


          Registrant's telephone number, including area code (408) 526-9000


                                         NONE
             ------------------------------------------------------------
            (Former name or former address, if changed since last report)


<PAGE>

ITEM 5.  OTHER EVENTS

          On July 15, 1998, pursuant to a Preferred Shares Rights Agreement (the
"Rights Agreement") between Polycom, Inc.  (the "Company") and BankBoston N.A.,
as Rights Agent (the "Rights Agent"), the Company's Board of Directors declared
a dividend of one right (a "Right") to purchase one one-thousandth share of the
Company's Series A Preferred Stock ("Series A Preferred") for each outstanding
share of Common Stock, par value of $0.0005 per share  ("Common Shares"), of the
Company.  The dividend is payable on July 31, 1998 (the "Record Date") to
stockholders of record as of the close of business on that day.  Each Right
entitles the registered holder to purchase from the Company one one-thousandth
of a share of Series A Preferred at an exercise price of $90.00 (the "Purchase
Price"), subject to adjustment.

     The following summary of the principal terms of the Rights Agreement is a
general description only and is subject to the detailed terms and conditions of
the Rights Agreement.  A copy of the Rights Agreement is attached as Exhibit 1
to this Registration Statement and is incorporated herein by reference.

RIGHTS EVIDENCED BY COMMON SHARE CERTIFICATES

     The Rights will not be exercisable until the Distribution Date (defined
below).  Certificates for the Rights ("Rights Certificates") will not be sent to
stockholders and the Rights will attach to and trade only together with the
Common Shares.  Accordingly, Common Share certificates outstanding on the Record
Date will evidence the Rights related thereto, and Common Share certificates
issued after the Record Date will contain a notation incorporating the Rights
Agreement by reference.  Until the Distribution Date (or earlier redemption or
expiration of the Rights), the surrender or transfer of any certificates for
Common Shares, outstanding as of the Record Date, even without notation or a
copy of the Summary of Rights being attached thereto, will also constitute the
transfer of the Rights associated with the Common Shares represented by such
certificate.

DISTRIBUTION DATE

     The Rights will separate from the Common Shares, Rights Certificates will
be issued and the Rights will become exercisable upon the earlier of:  (i)
fifteen days following the first date a public announcement by the Company or an
Acquiring Person (as defined below) that an Acquiring Person has become such
(the "Shares Acquisition Date") and (ii) fifteen days (or such later date as may
be determined by the Board of Directors) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer, the
consummation of which would result in a person or group becoming an Acquiring
Person.  The earlier of such dates is referred to as the "Distribution Date."  A
person or group of affiliated or associated persons that beneficially owns, or
has the right to acquire beneficial ownership of, 20% or more of the outstanding
Common Shares is referred to as an "Acquiring Person."


                                         -2-
<PAGE>

ISSUANCE OF RIGHTS CERTIFICATES; EXPIRATION OF RIGHTS

     As soon as practicable following the Distribution Date, separate 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 Rights Certificates
alone will evidence the Rights from and after the Distribution Date.  The Rights
will expire on the earliest of (i) July 15, 2008 (the "Final Expiration Date")
or (ii) redemption or exchange of the Rights as described below.

INITIAL EXERCISE OF THE RIGHTS

     Following the Distribution Date, and until one of the further events
described below, holders of the Rights will be entitled to receive, upon
exercise and the payment of the Purchase Price, one one-thousandth of a share of
the Series A Preferred. 

RIGHT TO BUY COMPANY COMMON SHARES

     Unless the Rights are earlier redeemed, in the event that a person becomes
an Acquiring Person (a "Triggering Event"), then proper provision will be made
so that each holder of a Right which has not theretofore been exercised (other
than Rights beneficially owned by the Acquiring Person or any affiliate of the
Acquiring Person, which will thereafter be void) will thereafter have the right
to receive, upon exercise, Common Shares having a value equal to two times the
Purchase Price.  In the event that the Company does not have sufficient Common
Shares available for all Rights to be exercised, or the Board decides that such
action is necessary and not contrary to the interests of Rights holders, the
Company may instead substitute cash, assets or other securities for the Common
Shares for which the Rights would have been exercisable.

RIGHT TO BUY ACQUIRING COMPANY STOCK

     Similarly, unless the Rights are earlier redeemed, in the event that, after
a Triggering Event, (i) the Company is acquired in a merger or other business
combination transaction, or (ii) 50% or more of the Company's consolidated
assets or earning power are sold (other than in transactions in the ordinary
course of business), proper provision must be made so that each holder of a
Right which has not theretofore been exercised (other than Rights beneficially
owned by the Acquiring Person or any affiliate of the Acquiring Person, which
will thereafter be void) will thereafter have the right to receive, upon
exercise, shares of common stock of the acquiring company having a value equal
to two times the Purchase Price.

EXCHANGE PROVISION

     At any time after a Triggering Event and prior to the acquisition by any
person or entity of beneficial ownership of 50% or more of the Company's
outstanding Common Shares, the Board of Directors of the Company may exchange
the Rights (other than Rights owned by the Acquiring Person), in whole or in
part, at an exchange ratio of one Common Share per Right.


                                         -3-
<PAGE>

REDEMPTION

     At any time on or prior to the close of business on the earlier of (i) the
Shares Acquisition Date and (ii) the Final Expiration Date of the Rights, the
Company may redeem the Rights in whole, but not in part, at a price of $0.005
per Right.

     Notwithstanding the foregoing, in the event that a majority of the Board of
Directors of the Company is elected by stockholder action by written consent or
at a special meeting of stockholders (a meeting other than a regularly scheduled
annual meeting) then until the earlier to occur of (i) the 180th day following
the effectiveness of such election or (ii) the next regular annual meeting of
stockholders of the Company following the effectiveness of such election
(including any postponement or adjournment thereof), the Rights shall not be
redeemed if such redemption is reasonably likely to have the purpose or effect
of facilitating any Transaction (defined as merger, consolidation or sale of
assets or any acquisition of Common Shares which would result in a person
becoming an Acquiring Person) with an Interested Person (defined as person or
group who is or will become an Acquiring Person if the Transaction were to be
consummated. 

ADJUSTMENTS TO PREVENT DILUTION

     The Purchase Price payable, the number of Rights, and the number of 
Series A Preferred or Common Shares or other securities or property issuable 
upon exercise of the Rights are subject to adjustment from time to time in 
connection with the dilutive issuances by the Company as set forth in the 
Rights Agreement. 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. 

CASH PAID INSTEAD OF ISSUING FRACTIONAL SHARES

     No fractional portion less than integral multiples of one Common Share or
one one-thousandth of a share of Series A Preferred will be issued upon exercise
of a Right and in lieu thereof, an adjustment in cash will be made based on the
market price of the security to be so issued on the last trading date prior to
the date of exercise. 

NO STOCKHOLDERS' RIGHTS PRIOR TO EXERCISE

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

AMENDMENT OF RIGHTS AGREEMENT

     The provisions of the Rights Agreement may be supplemented or amended by
the Board of Directors in any manner prior to the Distribution Date.  After such
date, the provisions of the Rights Agreement may be amended by the Board in
order to cure any ambiguity, defect or inconsistency, to make changes which do
not adversely affect the interests of holders of Rights (excluding the interests


                                         -4-
<PAGE>

of any Acquiring Person), or to shorten or lengthen any time period under the
Rights Agreement; PROVIDED, HOWEVER, that no amendment to adjust the time period
governing redemption shall be made at such time as the Rights are not
redeemable.

     In the event that a majority of the Board of Directors of the Company is
elected by stockholder action by written consent, then until the earlier to
occur of (i) the 180th day following the effectiveness of such election or
(ii) the next regular annual meeting of stockholders of the Company following
the effectiveness of such election (including any postponement or adjournment
thereof), the Rights Agreement shall not be supplemented or amended in any
manner reasonably likely to have the purpose or effect of facilitating a
Transaction with an Interested Person.

RIGHTS AND PREFERENCES OF THE SERIES A PREFERRED

     Series A Preferred purchasable upon exercise of the Rights will not be
redeemable.  Each share of Series A Preferred will be entitled to an aggregate
dividend of 1,000 times the dividend declared per Common Share.  In the event of
liquidation, the holders of the Series A Preferred will be entitled to 1,000
times the amount paid per Common Share plus an amount equal to accrued and
unpaid dividends and distributions thereon, whether or not declared, to the date
of such payment.  Each share of Series A Preferred will have 1,000 votes, voting
together with the Common Shares.  These rights are protected by customary
anti-dilution provisions.

     Because of the nature of the dividend, liquidation and voting rights of the
shares of Series A Preferred, the value of the one one-thousandth interest in a
share of Series A Preferred purchasable upon exercise of each Right should
approximate the value of one Common Share.

CERTAIN ANTI-TAKEOVER EFFECTS

     The Rights approved by the Board are designed to protect and maximize the
value of the outstanding equity interests in the Company in the event of an
unsolicited attempt by an acquiror to take over the Company, in a manner or on
terms not approved by the Board of Directors.  Takeover attempts frequently
include coercive tactics to deprive the Company's Board of Directors and its
stockholders of any real opportunity to determine the destiny of the Company. 
The Rights have been declared by the Board in order to deter such tactics,
including a gradual accumulation of shares in the open market of a 20% or
greater position to be followed by a merger or a partial or two-tier tender
offer that does not treat all stockholders equally.  These tactics unfairly
pressure stockholders, squeeze them out of their investment without giving them
any real choice and deprive them of the full value of their shares.

     The Rights are not intended to prevent a takeover of the Company and will
not do so.  The Rights may be redeemed by the Company at $0.005 per Right within
fifteen days after the accumulation of 20% or more of the Company's shares by a
single acquiror or group.  Accordingly, the Rights should not interfere with any
merger or business combination approved by the Board of Directors.


                                         -5-
<PAGE>

     Issuance of the Rights does not in any way weaken the financial strength of
the Company or interfere with its business plans.  The issuance of the Rights
themselves has no dilutive effect, will not affect reported earnings per share,
should not be taxable to the Company or to its stockholders, and will not change
the way in which the Company's shares are presently traded.  The Company's Board
of Directors believes that the Rights represent a sound and reasonable means of
addressing the complex issues of corporate policy created by the current
takeover environment.

     However, the Rights may have the effect of rendering more difficult or
discouraging an acquisition of the Company deemed undesirable by the Board of
Directors.  The Rights may cause substantial dilution to a person or group that
attempts to acquire the Company on terms or in a manner not approved by the
Company's Board of Directors, except pursuant to an offer conditioned upon the
negation, purchase or redemption of the Rights.

ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

(A)  Not Applicable

(B)  Not Applicable

(C)  EXHIBITS

     Exhibit 4 Preferred Shares Rights Agreement dated as of  July 15, 1998,
               between Polycom, Inc. and BankBoston N.A., including the
               Certificate of Designation, the form of Rights Certificate and
               the Summary of Rights Attached thereto as Exhibits A, B and C,
               respectively.


                                         -6-
<PAGE>

                                          
                                          
                                     SIGNATURE

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

                                   POLYCOM, INC.

Date: July 21, 1998
                                    /s/ Michael R. Kourey
                                   -----------------------------------
                                   Michael R. Kourey
                                   Vice President, Finance and Administration, 
                                   Chief Financial Officer and Secretary


                                         -7-
<PAGE>

EXHIBIT INDEX



EXHIBIT 
NUMBER
- --------
                                 DOCUMENT DESCRIPTION

                                 --------------------
   4      Preferred Shares Rights Agreement dated as of  July 15, 1998, between
          Polycom, Inc. and BankBoston N.A., including the Certificate of
          Designation, the form of Rights Certificate and the Summary of Rights
          Attached thereto as Exhibits A, B and C, respectively.



<PAGE>







                                    POLYCOM, INC.

                                         and

                                  BANKBOSTON, N.A.

                                     Rights Agent

                          PREFERRED SHARES RIGHTS AGREEMENT

                              DATED AS OF JULY 15, 1998





<PAGE>

                                  TABLE OF CONTENTS
                                                                           PAGE

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

Section 2.  Appointment of Rights Agent. . . . . . . . . . . . . . . . .   7

Section 3.  Issuance of Rights Certificates. . . . . . . . . . . . . . .   7

Section 4.  Form of Rights Certificates. . . . . . . . . . . . . . . . .   9

Section 5.  Countersignature and Registration. . . . . . . . . . . . . .   10

Section 6.  Transfer, Split Up, Combination and Exchange of
            Rights Certificates; Mutilated, Destroyed, Lost or Stolen
            Rights Certificates. . . . . . . . . . . . . . . . . . . . .   11

Section 7.  Exercise of Rights; Exercise Price; Expiration Date
            of Rights. . . . . . . . . . . . . . . . . . . . . . . . . .   11

Section 8.  Cancellation and Destruction of Rights Certificates. . . . .   13

Section 9.  Reservation and Availability of Preferred Shares . . . . . .   14

Section 10.  Record Date . . . . . . . . . . . . . . . . . . . . . . . .   15

Section 11.  Adjustment of Exercise Price, Number of Shares or
             Number of Rights. . . . . . . . . . . . . . . . . . . . . .   15

Section 12.  Certificate of Adjusted Exercise Price or Number
             of Shares . . . . . . . . . . . . . . . . . . . . . . . . .   22

Section 13.  Consolidation, Merger or Sale or Transfer of
             Assets or Earning Power . . . . . . . . . . . . . . . . . .   22

Section 14.  Fractional Rights and Fractional Shares . . . . . . . . . .   26

Section 15.  Rights of Action. . . . . . . . . . . . . . . . . . . . . .   27

Section 16.  Agreement of Rights Holders . . . . . . . . . . . . . . . .   27

Section 17.  Rights Certificate Holder Not Deemed a Stockholder. . . . .   28

Section 18.  Concerning the Rights Agent . . . . . . . . . . . . . . . .   28

Section 19.  Merger or Consolidation or Change of Name of
             Rights Agent. . . . . . . . . . . . . . . . . . . . . . . .   29

Section 20.  Duties of Rights Agent. . . . . . . . . . . . . . . . . . .   29

Section 21.  Change of Rights Agent. . . . . . . . . . . . . . . . . . .   31


                                         -i-

<PAGE>

                                  TABLE OF CONTENTS
                                     (CONTINUED)
                                                                           PAGE

Section 22.  Issuance of New Rights Certificates . . . . . . . . . . . .   32

Section 23.  Redemption. . . . . . . . . . . . . . . . . . . . . . . . .   33

Section 24.  Exchange. . . . . . . . . . . . . . . . . . . . . . . . . .   34

Section 25.  Notice of Certain Events. . . . . . . . . . . . . . . . . .   35

Section 26.  Notices . . . . . . . . . . . . . . . . . . . . . . . . . .   36

Section 27.  Supplements and Amendments. . . . . . . . . . . . . . . . .   37

Section 28.  Successors. . . . . . . . . . . . . . . . . . . . . . . . .   37

Section 29.  Determinations and Actions by the Board of
             Directors, etc. . . . . . . . . . . . . . . . . . . . . . .   37

Section 30.  Benefits of this Agreement. . . . . . . . . . . . . . . . .   38

Section 31.  Severability. . . . . . . . . . . . . . . . . . . . . . . .   38

Section 32.  Governing Law . . . . . . . . . . . . . . . . . . . . . . .   38

Section 33.  Counterparts. . . . . . . . . . . . . . . . . . . . . . . .   38

Section 34.  Descriptive Headings. . . . . . . . . . . . . . . . . . . .   38


EXHIBITS

Exhibit A    Form of Certificate of Designation

Exhibit B    Form of Rights Certificate

Exhibit C    Summary of Rights


                                         -ii-

<PAGE>

                                   RIGHTS AGREEMENT


     Agreement ("AGREEMENT"), dated as of July 15, 1998, between Polycom, Inc.,
a Delaware corporation (the "COMPANY"), and BankBoston, N.A.

     On July 15, 1998 (the "RIGHTS DIVIDEND DECLARATION DATE"), the Board of
Directors of the Company authorized and declared a dividend of one Preferred
Share Purchase Right (a "RIGHT") for each Common Share (as hereinafter defined)
of the Company outstanding as of the Close of Business (as hereinafter defined)
on July 31, 1998 (the "RECORD DATE"), each Right representing the right to
purchase one one-thousandth of a share of Series A Preferred Stock (as such
number may be adjusted pursuant to the provisions of this Agreement), having the
rights, preferences and privileges set forth in the form of Certificate of
Designation of Rights, Preferences and Privileges of Series A Preferred Stock
attached hereto as EXHIBIT A, upon the terms and subject to the conditions
herein set forth, and further authorized and directed the issuance of one Right
(as such number may be adjusted pursuant to the provisions of this Agreement)
with respect to each Common Share that shall become outstanding between the
Record Date and the earlier of the Distribution Date and the Expiration Date (as
such terms are hereinafter defined), and in certain circumstances after the
Distribution Date.

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

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

          (a)  "ACQUIRING PERSON" shall mean any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 20% or more of the Common Shares then outstanding, but shall not include the
Company, any Subsidiary of the Company or any employee benefit plan of the
Company or of any Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan.  Notwithstanding the foregoing,
no Person shall be deemed to be an Acquiring Person as the result of an
acquisition of Common Shares 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 Shares of the Company then
outstanding; PROVIDED, HOWEVER, that if a Person shall become the Beneficial
Owner of 20% or more of the Common Shares 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 Shares of
the Company (other than pursuant to a dividend or distribution of Common Shares
paid or made by the Company on the outstanding Common Shares or pursuant to a
split or subdivision of the outstanding Common Shares), then such Person shall
be deemed to be an Acquiring Person unless upon becoming the Beneficial Owner of
such additional Common Shares of the Company such Person does not beneficially
own 20% or more of the Common Shares of the Company then outstanding.
Notwithstanding the foregoing, (i) if the Company's Board of Directors
determines in good faith that a Person who would otherwise be an "Acquiring
Person,"


<PAGE>

as defined pursuant to the foregoing provisions of this paragraph (a), has
become such inadvertently (including, without limitation, because (A) such
Person was unaware that it beneficially owned a percentage of the Common Shares
that would otherwise cause such Person to be an "Acquiring Person," as defined
pursuant to the foregoing provisions of this paragraph (a), or (B) such Person
was aware of the extent of the Common Shares it beneficially owned but had no
actual knowledge of the consequences of such beneficial ownership under this
Agreement) and without any intention of changing or influencing control of the
Company, and if such Person divested or divests as promptly as practicable a
sufficient number of Common Shares so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the foregoing provisions of this
paragraph (a), then such Person shall not be deemed to be or to have become an
"Acquiring Person" for any purposes of this Agreement; and (ii) if, as of the
date hereof, any Person is the Beneficial Owner of 20% or more of the Common
Shares outstanding, such Person shall not be or become an "Acquiring Person," as
defined pursuant to the foregoing provisions of this paragraph (a), unless and
until such time as such Person shall become the Beneficial Owner of additional
Common Shares (other than pursuant to a dividend or distribution of Common
Shares paid or made by the Company on the outstanding Common Shares or pursuant
to a split or subdivision of the outstanding Common Shares), unless, upon
becoming the Beneficial Owner of such additional Common Shares, such Person is
not then the Beneficial Owner of 20% or more of the Common Shares then
outstanding.

          (b)  "ADJUSTMENT FRACTION" shall have the meaning set forth in Section
11(a)(i) hereof.

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

          (d)  A Person shall be deemed the "BENEFICIAL OWNER" of and shall be
deemed to "BENEFICIALLY OWN" any securities:

               (i)  which such Person or any of such Person's Affiliates or
     Associates beneficially owns, directly or indirectly, for purposes of
     Section 13(d) of the Exchange Act and Rule 13d-3 thereunder (or any 
     comparable or successor law or regulation);

              (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 (other than customary agreements with and
     between underwriters and selling group members with respect to a bona fide
     public offering of securities), or upon the exercise of conversion rights,
     exchange rights, rights (other than the Rights), warrants or options, or
     otherwise; PROVIDED, HOWEVER, that a Person shall not be deemed pursuant to
     this Section 1(d)(ii)(A) to be the Beneficial Owner of, or to beneficially
     own, (1) securities tendered pursuant to a tender or exchange offer made by
     or on behalf of such Person or any of such Person's Affiliates or
     Associates until such tendered securities are accepted for purchase or
     exchange, or


                                         -2-
<PAGE>

     (2) securities which a Person or any of such Person's Affiliates or
     Associates may be deemed to have the right to acquire pursuant to any
     merger or other acquisition agreement between the Company and such Person
     (or one or more of its Affiliates or Associates) if such agreement has been
     approved by the Board of Directors of the Company prior to there being an
     Acquiring Person; or (B) the right to vote pursuant to any agreement,
     arrangement or understanding; PROVIDED, HOWEVER, that a Person shall not be
     deemed the Beneficial Owner of, or to beneficially own, any security under
     this Section 1(d)(ii)(B) 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 of 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 (or any Affiliate or Associate thereof) with which such
     Person or any of such Person's Affiliates or Associates has any agreement,
     arrangement or understanding, whether or not in writing (other than
     customary agreements with and between underwriters and selling group
     members with respect to a bona fide public offering of securities) for the
     purpose of acquiring, holding, voting (except to the extent contemplated by
     the proviso to Section 1(d)(ii)(B)) or disposing of any securities of the
     Company; PROVIDED, HOWEVER, that in no case shall an officer or director of
     the Company be deemed (x) the Beneficial Owner of any securities
     beneficially owned by another officer or director of the Company solely by
     reason of actions undertaken by such persons in their capacity as officers
     or directors of the Company or (y) the Beneficial Owner of securities held
     of record by the trustee of any employee benefit plan of the Company or any
     Subsidiary of the Company for the benefit of any employee of the Company or
     any Subsidiary of the Company, other than the officer or director, by
     reason of any influence that such officer or director may have over the
     voting of the securities held in the plan.

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

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

          (g)  "COMMON SHARES" when used with reference to the Company shall
mean the shares of Common Stock of the Company, $0.0005 par value.  Common
Shares when used with reference to any Person other than the Company shall mean
the capital stock (or equity interest) with the greatest voting power of such
Person or, if such Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.


                                         -3-
<PAGE>

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

          (i)  "COMPANY" shall mean Polycom, Inc., a Delaware corporation,
subject to the terms of Section 13(a)(iii)(C) hereof.

          (j)  "CURRENT PER SHARE MARKET PRICE" of any security (a "Security"
for purposes of this definition), for all computations other than those made
pursuant to Section 11(a)(iii) hereof, shall mean the average of the daily
closing prices per share of such Security for the thirty (30) consecutive
Trading Days immediately prior to such date, and for purposes of computations
made pursuant to Section 11(a)(iii) hereof, the Current Per Share Market Price
of any Security on any date shall be deemed to be the average of the daily
closing prices per share of such Security for the ten (10) consecutive Trading
Days immediately prior to such date; PROVIDED, HOWEVER, that in the event that
the Current Per Share Market Price of the Security is determined during a period
following the announcement by the issuer of such Security of (i) a dividend or
distribution on such Security payable in shares of such Security or securities
convertible into such shares or (ii) any subdivision, combination or
reclassification of such Security, and prior to the expiration of the applicable
thirty (30) Trading Day or ten (10) Trading Day period, after the ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the Current Per
Share Market Price shall be appropriately adjusted to reflect the current market
price per share equivalent of such Security.  The closing price for each day
shall be the last sale price, regular way, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, regular way, in
either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national securities
exchange, the last sale price or, if such last sale price is not reported, 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
Security is not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Security selected by the Board of Directors of the Company.  If on any such
date no market maker is making a market in the Security, the fair value of such
shares on such date as determined in good faith by the Board of Directors of the
Company shall be used.  If the Preferred Shares are not publicly traded, the
Current Per Share Market Price of the Preferred Shares shall be conclusively
deemed to be the Current Per Share Market Price of the Common Shares as
determined pursuant to this Section 1(j), as appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof, multiplied by 1000.  If the Security is not publicly held or so listed
or traded, Current Per Share Market Price shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company, whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.


                                         -4-
<PAGE>

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

          (l)  "DISTRIBUTION DATE" shall mean the earlier of (i) the Close of
Business on the fifteenth day after the Shares Acquisition Date (or, if the
fifteenth day after the Shares Acquisition Date occurs before the Record Date,
the Close of Business on the Record Date) or (ii) the Close of Business on the
fifteenth day (or such later date as may be determined by action of the
Company's Board of Directors) after the date that a tender or exchange offer by
any Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
or entity organized, appointed or established by the Company for or pursuant to
the terms of any such plan) is first published or sent or given within the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act, if, assuming the successful consummation thereof, such Person would be an
Acquiring Person.

          (m)  "EQUIVALENT SHARES" shall mean Preferred Shares and any other
class or series of capital stock of the Company which is entitled to the same
rights, privileges and preferences as the Preferred Shares.

          (n)  "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

          (o)  "EXCHANGE RATIO" shall have the meaning set forth in Section 
24(a) hereof.

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

          (q)  "EXPIRATION DATE" shall mean the earliest to occur of: (i) the
Close of Business on the Final Expiration Date, (ii) the Redemption Date, or
(iii) the time at which the Board of Directors orders the exchange of the Rights
as provided in Section 24 hereof.

          (r)  "FINAL EXPIRATION DATE" shall mean July 15, 2008.

          (s)  "INTERESTED PERSON" with respect to a Transaction shall mean any
Person who is or will become an Acquiring Person if the Transaction were to be
consummated or an Affiliate or Associate of such a Person.

          (t)  "NASDAQ" shall mean the Nasdaq Stock Market.

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

          (v)  "POST-EVENT TRANSFEREE" shall have the meaning set forth in
Section 7(e) hereof.

          (w)  "PREFERRED SHARES" shall mean shares of Series A Preferred Stock,
$0.001 per share par value, of the Company.


                                         -5-
<PAGE>

          (x)  "PRE-EVENT TRANSFEREE" shall have the meaning set forth in
Section 7(e) hereof.

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

          (z)  "RECORD DATE" shall have the meaning set forth in the recitals at
the beginning of this Agreement.

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

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

          (cc) "RIGHTS AGENT" shall mean BankBoston, N.A. or its successor or
replacement as provided in Sections  and  hereof.

          (dd) "RIGHTS CERTIFICATE" shall mean a certificate substantially in
the form attached hereto as EXHIBIT B.

          (ee) "RIGHTS DIVIDEND DECLARATION DATE" shall have the meaning set
forth in the recitals at the beginning of this Agreement.

          (ff) "SECTION 11(a)(ii) TRIGGER DATE" shall have the meaning set 
forth in Section 11(a)(iii) hereof.

          (gg) "SECTION 13 EVENT" shall mean any event described in clause (i),
(ii) or (iii) of Section 13(a) hereof.

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

          (ii) "SHARES ACQUISITION DATE" shall mean the first date of public 
announcement (which, for purposes of this definition, shall include, without 
limitation, a report filed pursuant to Section 13(d) under the Exchange Act) 
by the Company or an Acquiring Person that an Acquiring Person has become 
such; PROVIDED THAT, if such Person is determined not to have become an 
Acquiring Person pursuant to Section 1(a) hereof, then no Shares Acquisition 
Date shall be deemed to have occurred.

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

          (kk) "SUBSIDIARY" of any Person shall mean any corporation or other
entity of which an amount of voting securities sufficient to elect a majority of
the directors or Persons having similar authority of such corporation or other
entity is beneficially owned, directly or indirectly, by such Person, or any
corporation or other entity otherwise controlled by such Person.


                                         -6-
<PAGE>

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

          (mm) "SUMMARY OF RIGHTS" shall mean a summary of this Agreement
substantially in the form attached hereto as EXHIBIT C.


          (nn) "TOTAL EXERCISE PRICE" shall have the meaning set forth in
Section 4(a) hereof.

          (oo) "TRADING DAY" shall mean a day on which the principal national
securities exchange on which a referenced security is listed or admitted to
trading is open for the transaction of business or, if a referenced security is
not listed or admitted to trading on any national securities exchange, a
Business Day.

          (pp) "TRANSACTION" shall mean any merger, consolidation or sale of
assets described in Section 13(a) hereof or any acquisition of Common Shares
which would result in a Person becoming an Acquiring Person.

          (qq) A "TRIGGERING EVENT" shall be deemed to have occurred upon any
Person becoming an Acquiring Person.

     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  hereof, shall prior to the Distribution Date also be
the holders of the Common Shares) in accordance with the terms and conditions
hereof, and the Rights Agent hereby accepts such appointment.  The Company may
from time to time appoint such co-rights agents as it may deem necessary or
desirable upon ten (10) days prior written notice to the Rights Agent.  The
Rights Agent shall have no duty to supervise, and shall in no event be liable
for, the acts or omissions of any such co-rights agents.

     Section 3.  ISSUANCE OF RIGHTS CERTIFICATES.

          (a)       Until the Distribution Date, (i) the Rights will be 
evidenced (subject to the provisions of Sections 3(b) and 3(c) hereof) by the 
certificates for Common Shares registered in the names of the holders thereof 
(which certificates shall also be deemed to be Rights Certificates) and not 
by separate Rights Certificates and (ii) the right to receive Rights 
Certificates will be transferable only in connection with the transfer of 
Common Shares. Until the earlier of the Distribution Date or the Expiration 
Date, the surrender for transfer of certificates for Common Shares shall also 
constitute the surrender for transfer of the Rights associated with the 
Common Shares represented thereby.  As soon as practicable after the 
Distribution Date, the Company will prepare and execute, the Rights Agent 
will countersign, and the Company will send or cause to be sent (and the 
Rights Agent will, if requested, send) by first-class, postage-prepaid mail, 
to each record holder of Common Shares as of the Close of Business on the 
Distribution Date, at the address of such holder shown on the records of the 
Company, a Rights Certificate evidencing one Right for each Common Share so 
held, subject to adjustment as provided herein.  In the event that an 
adjustment in the number of Rights per

                                         -7-
<PAGE>

Common Share has been made pursuant to Section 11 hereof, then at the time of 
distribution of the Rights Certificates, the Company shall make the necessary 
and appropriate rounding adjustments (in accordance with Section 14(a) 
hereof) so that Rights Certificates representing only whole numbers of Rights 
are distributed and cash is paid in lieu of any fractional Rights.  As of the 
Distribution Date, the Rights will be evidenced solely by such Rights 
Certificates and may be transferred by the transfer of the Rights 
Certificates as permitted hereby, separately and apart from any transfer of 
Common Shares, and the holders of such Rights Certificates as listed in the 
records of the Company or any transfer agent or registrar for the Rights 
shall be the record holders thereof.

          (b)  On the Record Date or as soon as practicable thereafter, the
Company will send a copy of the Summary of Rights by first-class,
postage-prepaid mail, to each record holder of Common Shares as of the Close of
Business on the Record Date, at the address of such holder shown on the records
of the Company's transfer agent and registrar.  With respect to certificates for
Common Shares outstanding as of the Record Date, until the Distribution Date,
the Rights will be evidenced by such certificates registered in the names of the
holders thereof together with the Summary of Rights.  Until the Distribution
Date (or, if earlier, the Expiration Date), the surrender for transfer of any
certificate for Common Shares outstanding on the Record Date, with or without a
copy of the Summary of Rights, shall also constitute the transfer of the Rights
associated with the Common Shares represented thereby.

          (c)  Unless the Board of Directors by resolution adopted at or 
before the time of the issuance of any Common Shares specifies to the 
contrary, Rights shall be issued in respect of all Common Shares that are 
issued after the Record Date but prior to the earlier of the Distribution 
Date or the Expiration Date or, in certain circumstances provided in Section 
22 hereof, after the Distribution Date.  Certificates representing such 
Common Shares shall also be deemed to be certificates for Rights, and shall 
bear the following legend:

     THIS CERTIFICATE ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO
     CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN POLYCOM,
     INC. AND BANKBOSTON, N.A. AS THE RIGHTS AGENT, DATED AS OF JULY 15,
     1998 (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 POLYCOM, 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.  POLYCOM, INC. WILL MAIL TO THE HOLDER OF THIS
     CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER
     RECEIPT OF A WRITTEN REQUEST THEREFOR.  UNDER CERTAIN CIRCUMSTANCES
     SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY
     PERSON WHO IS, WAS OR BECOMES AN ACQUIRING PERSON OR ANY AFFILIATE OR
     ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT),
     WHETHER


                                         -8-
<PAGE>

     CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER,
     MAY BECOME NULL AND VOID.

With respect to such certificates containing the foregoing legend, until the
earlier of (i) the Distribution Date or (ii) the Expiration Date, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby.

          (d)  In the event that the Company purchases or acquires any Common
Shares after the Record Date but prior to the Distribution Date, any Rights
associated with such Common Shares shall be deemed canceled and retired so that
the Company shall not be entitled to exercise any Rights associated with the
Common Shares which are no longer outstanding.

     Section 4.  FORM OF RIGHTS CERTIFICATES.

          (a)       The Rights Certificates (and the forms of election to
purchase Common Shares and of assignment to be printed on the reverse thereof)
shall be substantially in the form of EXHIBIT B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or with any
rule or regulation of any stock exchange or a national market system, on which
the Rights may from time to time be listed or included, or to conform to usage.
Subject to the provisions of Section  and Section  hereof, the Rights
Certificates, whenever distributed, shall be dated as of the Record Date (or in
the case of Rights issued with respect to Common Shares issued by the Company
after the Record Date, as of the date of issuance of such Common Shares) and on
their face shall entitle the holders thereof to purchase such number of
one-thousandths of a Preferred Share as shall be set forth therein at the price
set forth therein (such exercise price per one one-thousandth of a Preferred
Share being hereinafter referred to as the "EXERCISE PRICE" and the aggregate
Exercise Price of all Preferred Shares issuable upon exercise of one Right being
hereinafter referred to as the "TOTAL EXERCISE PRICE"), but the number and type
of securities purchasable upon the exercise of each Right and the Exercise Price
shall be subject to adjustment as provided herein.

          (b)       Any Rights Certificate issued pursuant to Section  or
Section  hereof that represents Rights beneficially owned by:  (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring Person, (ii) a transferee
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such or (iii) a transferee of an
Acquiring Person (or of any such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom such Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B) a transfer which a majority of


                                         -9-
<PAGE>

the Company's Board of Directors has determined is part of a plan, 
arrangement or understanding which has as a primary purpose or effect 
avoidance of Section 7(e) hereof, and any Rights Certificate issued pursuant 
to Section 6 or Section 11 hereof upon transfer, exchange, replacement or 
adjustment of any other Rights Certificate referred to in this sentence, 
shall contain (to the extent feasible) the following legend:

     THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR WERE
     BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON
     OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE
     DEFINED IN THE RIGHTS AGREEMENT).  ACCORDINGLY, THIS RIGHTS
     CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
     IN THE CIRCUMSTANCES SPECIFIED IN SECTION  OF THE RIGHTS AGREEMENT.

     Section 5.  COUNTERSIGNATURE AND REGISTRATION.

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

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


                                         -10-
<PAGE>

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

          (a)       Subject to the provisions of Sections 7(e), 14 and 24 
hereof, at any time after the Close of Business on the Distribution Date, and 
at or prior to the Close of Business on the Expiration Date, any Rights 
Certificate or Rights Certificates may be transferred, split up, combined or 
exchanged for another Rights Certificate or Rights Certificates, entitling 
the registered holder to purchase a like number of one-thousandths of a 
Preferred Share (or, following a Triggering Event, other securities, cash or 
other assets, as the case may be) as the Rights Certificate or Rights 
Certificates surrendered then entitle such holder to purchase.  Any 
registered holder desiring to transfer, split up, combine or exchange any 
Rights Certificate or Rights Certificates shall make such request in writing 
delivered to the Rights Agent, and shall surrender the Rights Certificate or 
Rights Certificates to be transferred, split up, combined or exchanged at the 
office of the Rights Agent designated for such purpose. Neither the Rights 
Agent nor the Company shall be obligated to take any action whatsoever with 
respect to the transfer of any such surrendered Rights Certificate until the 
registered holder shall have completed and signed the certificate contained 
in the form of assignment on the reverse side of such Rights Certificate and 
shall have provided such additional evidence of the identity of the 
Beneficial Owner (or former Beneficial Owner) or Affiliates or Associates 
thereof as the Company shall reasonably request.  Thereupon the Rights Agent 
shall, subject to Sections 7(e), 14 and 24 hereof, countersign and deliver to 
the person entitled thereto a Rights Certificate or Rights Certificates, as 
the case may be, as so requested.  The Company may require payment of a sum 
sufficient to cover any tax or governmental charge that may be imposed in 
connection with any transfer, split up, combination or exchange of Rights 
Certificates.

          (b)       Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security 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 Rights Certificate if mutilated, the Company will make and deliver a new
Rights Certificate of like tenor to the Rights Agent for delivery to the
registered holder in lieu of the Rights Certificate so lost, stolen, destroyed
or mutilated.

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

          (a)       Subject to Sections 7(e), 23(b), 23(c) and 24(b) hereof, 
the registered holder of any Rights Certificate may exercise the Rights 
evidenced thereby (except as otherwise provided herein) in whole or in part 
at any time after the Distribution Date and prior to the Close of Business on 
the Expiration Date by surrender of the Rights Certificate, with the form of 
election to purchase on the reverse side thereof duly executed, to the Rights 
Agent at the office of the Rights Agent designated for such purpose, together 
with payment of the Exercise Price for each one-thousandth of a Preferred 
Share (or, following a Triggering Event, other securities, cash or other 
assets as the case may be) as to which the Rights are exercised.

                                         -11-
<PAGE>

          (b)       The Exercise Price for each one-thousandth of a Preferred
Share issuable pursuant to the exercise of a Right shall initially be ninety
dollars ($90.00), shall be subject to adjustment from time to time as provided
in Sections 11 and 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.

          (c)       Upon receipt of a Rights Certificate representing 
exercisable Rights, with the form of election to purchase duly executed, 
accompanied by payment of the Exercise Price for the number of 
one-thousandths of a Preferred Share (or, following a Triggering Event, other 
securities, cash or other assets as the case may be) to be purchased and an 
amount equal to any applicable transfer tax required to be paid by the holder 
of such Rights Certificate in accordance with Section 9(e) hereof, the Rights 
Agent shall, subject to Section 20(k) hereof, thereupon promptly (i) (A) 
requisition from any transfer agent of the Preferred Shares (or make 
available, if the Rights Agent is the transfer agent for the Preferred 
Shares) a certificate or certificates for the number of one-thousandths of a 
Preferred Share (or, following a Triggering Event, other securities, cash or 
other assets as the case may be) to be purchased and the Company hereby 
irrevocably authorizes its transfer agent to comply with all such requests or 
(B) if the Company shall have elected to deposit the total number of 
one-thousandths of a Preferred Share (or, following a Triggering Event, other 
securities, cash or other assets as the case may be) issuable upon exercise 
of the Rights hereunder with a depositary agent, requisition from the 
depositary agent depositary receipts representing such number of 
one-thousandths of a Preferred Share (or, following a Triggering Event, other 
securities, cash or other assets as the case may be) as are to be purchased 
(in which case certificates for the Preferred Shares (or, following a 
Triggering Event, other securities, cash or other assets as the case may be) 
represented by such receipts shall be deposited by the transfer agent with 
the depositary agent) and the Company hereby directs the depositary agent to 
comply with such request, (ii) when appropriate, requisition from the Company 
the amount of cash to be paid in lieu of issuance of fractional shares in 
accordance with Section 14 hereof, (iii) after receipt of such certificates 
or depositary receipts, cause the same to be delivered to or upon the order 
of the registered holder of such Rights Certificate, registered in such name 
or names as may be designated by such holder and (iv) when appropriate, after 
receipt thereof, deliver such cash to or upon the order of the registered 
holder of such Rights Certificate.  The payment of the Exercise Price (as 
such amount may be reduced (including to zero) pursuant to Section 11(a)(iii) 
hereof) and an amount equal to any applicable transfer tax required to be 
paid by the holder of such Rights Certificate in accordance with Section 9(e) 
hereof, may be made in cash or by certified bank check, cashier's check or 
bank draft payable to the order of the Company.  In the event that the 
Company is obligated to issue securities of the Company other than Preferred 
Shares, pay cash and/or distribute other property pursuant to Section 11(a) 
hereof, the Company will make all arrangements necessary so that such other 
securities, cash and/or other property are available for distribution by the 
Rights Agent, if and when appropriate.

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


                                         -12-
<PAGE>

          (e)       Notwithstanding anything in this Agreement to the 
contrary, from and after the first occurrence of a Triggering Event, any 
Rights beneficially owned by (i) an Acquiring Person or an Associate or 
Affiliate of an Acquiring Person, (ii) a transferee of an Acquiring Person 
(or of any such Associate or Affiliate) who becomes a transferee after the 
Acquiring Person becomes such (a "POST-EVENT TRANSFEREE"), (iii) a transferee 
of an Acquiring Person (or of any such Associate or Affiliate) who becomes a 
transferee prior to or concurrently with the Acquiring Person becoming such 
and receives such Rights pursuant to either (A) a transfer (whether or not 
for consideration) from the Acquiring Person to holders of equity interests 
in such Acquiring Person or to any Person with whom the Acquiring Person has 
any continuing agreement, arrangement or understanding regarding the 
transferred Rights or (B) a transfer which a majority of the Company's Board 
of Directors has determined is part of a plan, arrangement or understanding 
which has as a primary purpose or effect the avoidance of this Section 7(e) 
(a "PRE-EVENT TRANSFEREE") or (iv) any subsequent transferee receiving 
transferred Rights from a Post-Event Transferee or a Pre-Event Transferee, 
either directly or through one or more intermediate transferees, shall become 
null and void without any further action and no holder of such Rights shall 
have any rights whatsoever with respect to such Rights, whether under any 
provision of this Agreement or otherwise.  The Company shall use all 
reasonable efforts to ensure that the provisions of this Section 7(e) and 
Section 4(b) hereof are complied with, but shall have no liability to any 
holder of Rights Certificates or to any other Person as a result of its 
failure to make any determinations with respect to an Acquiring Person or any 
of such Acquiring Person's Affiliates, Associates or transferees hereunder.

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

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


                                         -13-
<PAGE>

     Section 9.  RESERVATION AND AVAILABILITY OF PREFERRED SHARES.

          (a)       The Company covenants and agrees that it will use its best
efforts to cause to be reserved and kept available out of its authorized and
unissued Preferred Shares not reserved for another purpose (and, following the
occurrence of a Triggering Event, out of its authorized and unissued Common
Shares and/or other securities), the number of Preferred Shares (and, following
the occurrence of the Triggering Event, Common Shares and/or other securities)
that will be sufficient to permit the exercise in full of all outstanding
Rights.

          (b)       If the Company shall hereafter list any of its Preferred
Shares on a national securities exchange, then so long as the Preferred Shares
(and, following the occurrence of a Triggering Event, Common Shares and/or other
securities) issuable and deliverable upon exercise of the Rights may be listed
on such exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable (but only to the extent that it
is reasonably likely that the Rights will be exercised), all shares reserved for
such issuance to be listed on such exchange upon official notice of issuance
upon such exercise.

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

          (d)       The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all Preferred Shares (or other
securities of the Company) delivered upon exercise of Rights shall, at the time
of delivery of the certificates for such securities (subject to


                                         -14-
<PAGE>

payment of the Exercise Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.

          (e)       The Company further covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
which may be payable in respect of the original issuance or delivery of the
Rights Certificates or of any Preferred Shares (or other securities of the
Company) 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 Rights Certificates to a person other than, or the issuance or
delivery of certificates or depositary receipts for the Preferred Shares (or
other securities of the Company) in a name other than that of, the registered
holder of the Rights Certificate evidencing Rights surrendered for exercise or
to issue or to deliver any certificates or depositary receipts for Preferred
Shares (or other securities of the Company) upon the exercise of any Rights
until any such tax shall have been paid (any such tax being payable by the
holder of such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.

     Section 10.  RECORD DATE.  Each Person in whose name any certificate for a
number of one-thousandths of a Preferred Share (or other securities of the
Company) is issued upon the exercise of Rights shall for all purposes be deemed
to have become the holder of record of Preferred Shares (or other securities of
the Company)  represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Total Exercise Price with respect to which the
Rights have been exercised (and any applicable transfer taxes) was made;
PROVIDED, HOWEVER, that if the date of such surrender and payment is a date upon
which the transfer books of the Company 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 transfer books of the
Company are open.  Prior to the exercise of the Rights evidenced thereby, the
holder of a Rights Certificate shall not be entitled to any rights of a holder
of Preferred Shares (or other securities of the Company) 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 EXERCISE PRICE, NUMBER OF SHARES OR NUMBER OF
RIGHTS.  The Exercise Price, the number and kind of shares or other property
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)  Anything in this Agreement to the contrary notwithstanding,
in the event the Company shall at any time after the date of this Agreement (A)
declare a dividend on the Preferred Shares payable in Preferred Shares, (B)
subdivide the outstanding Preferred Shares, (C) combine the outstanding
Preferred Shares (by reverse stock split or otherwise) into a smaller number of
Preferred Shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such reclassification in
connection with a consolidation or merger in which the


                                         -15-
<PAGE>

Company is the continuing or surviving corporation), then, in each such event,
except as otherwise provided in this Section 11 and Section 7(e) hereof: (1) the
Exercise Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification shall be
adjusted so that the Exercise Price thereafter shall equal the result obtained
by dividing the Exercise Price in effect immediately prior to such time by a
fraction (the "ADJUSTMENT FRACTION"), the numerator of which shall be the total
number of Preferred Shares (or shares of capital stock issued in such
reclassification of the Preferred Shares) outstanding immediately following such
time and the denominator of which shall be the total number of Preferred Shares
outstanding immediately prior to such time; 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 such Right; and (2) the number of one-thousandths of a
Preferred Share (or share of such other capital stock) issuable upon the
exercise of each Right shall equal the number of one-thousandths of a Preferred
Share (or share of such other capital stock) as was issuable upon exercise of a
Right immediately prior to the occurrence of the event described in clauses
(A)-(D) of this Section 11(a)(i), multiplied by the Adjustment Fraction;
provided, however, that, no such adjustment shall be made pursuant to this
Section 11(a)(i) to the extent that there shall have simultaneously occurred an
event described in clause (A), (B), (C) or (D) of Section 11(n) with a
proportionate adjustment being made thereunder.  Each Common Share that shall
become outstanding after an adjustment has been made pursuant to this Section
11(a)(i) shall have associated with it the number of Rights, exercisable at the
Exercise Price and for the number of one-thousandths of a Preferred Share (or
shares of such other capital stock) as one Common Share has associated with it
immediately following the adjustment made pursuant to this Section 11(a)(i).

              (ii)  Subject to Section 24 of this Agreement, in the event a
Triggering Event shall have occurred, then promptly following such Triggering
Event each holder of a Right, except as provided in Section 7(e) hereof, shall
thereafter have the right to receive for each Right, upon exercise thereof in
accordance with the terms of this Agreement and payment of the Total Exercise
Price in effect immediately prior to the occurrence of the Triggering Event, in
lieu of a number of one-thousandths of a Preferred Share, such number of Common
Shares of the Company as shall equal the result obtained by multiplying the
Exercise Price in effect immediately prior to the occurrence of the Triggering
Event by the number of one-thousandths of a Preferred Share for which a Right
was exercisable (or would have been exercisable if the Distribution Date had
occurred) immediately prior to the first occurrence of a Triggering Event, and
dividing that product by 50% of the Current Per Share Market Price for Common
Shares on the date of occurrence of the Triggering Event; provided, however,
that the Exercise Price and the number of Common Shares of the Company so
receivable upon exercise of a Right shall be subject to further adjustment as
appropriate in accordance with Section 11(e) hereof to reflect any events
occurring in respect of the Common Shares of the Company after the occurrence of
the Triggering Event.

              (iii) In lieu of issuing Common Shares in accordance with 
Section 11(a)(ii) hereof, the Company may, if a majority of the Company's 
Board of Directors determines that such action is necessary or appropriate 
and not contrary to the interest of holders of Rights and, in the event that 
the number of Common Shares which are authorized by the Company's Certificate 
of

                                         -16-
<PAGE>

Incorporation but not outstanding or reserved for issuance for purposes other 
than upon exercise of the Rights are not sufficient to permit the exercise in 
full of the Rights, or if any necessary regulatory approval for such issuance 
has not been obtained by the Company, the Company shall:  (A) determine the 
excess of (1) the value of the Common Shares issuable upon the exercise of a 
Right (the "CURRENT VALUE") over (2) the Exercise Price (such excess, the 
"SPREAD") and (B) with respect to each Right, make adequate provision to 
substitute for such Common Shares, upon exercise of the Rights, (1) cash, (2) 
a reduction in the Exercise Price, (3) other equity securities of the Company 
(including, without limitation, shares or units of shares of any series of 
preferred stock which a majority of the Company's Board of Directors has 
deemed to have the same value as Common Shares (such shares or units of 
shares of preferred stock are herein called "COMMON STOCK EQUIVALENTS")), 
except to the extent that the Company has not obtained any necessary 
stockholder or regulatory approval for such issuance, (4) debt securities of 
the Company, except to the extent that the Company has not obtained any 
necessary stockholder or regulatory approval for such issuance, (5) other 
assets or (6) any combination of the foregoing, having an aggregate value 
equal to the Current Value, where such aggregate value has been determined by 
a majority of the Company's Board of Directors based upon the advice of a 
nationally recognized investment banking firm selected by a majority of the 
Company's Board of Directors; PROVIDED, HOWEVER, if the Company shall not 
have made adequate provision to deliver value pursuant to clause (B) above 
within thirty (30) days following the later of (x) the first occurrence of a 
Triggering Event and (y) the date on which the Company's right of redemption 
pursuant to Section 23(a) expires (the later of (x) and (y) being referred to 
herein as the "SECTION 11(a)(ii) TRIGGER DATE"), then the Company shall be 
obligated to deliver, upon the surrender for exercise of a Right and without 
requiring payment of the Exercise Price, Common Shares (to the extent 
available), except to the extent that the Company has not obtained any 
necessary stockholder or regulatory approval for such issuance, and then, if 
necessary, cash, which shares and/or cash have an aggregate value equal to 
the Spread.  If a majority of the Company's Board of Directors shall 
determine in good faith that it is likely that sufficient additional Common 
Shares could be authorized for issuance upon exercise in full of the Rights 
or that any necessary regulatory approval for such issuance will be obtained, 
the thirty (30) day period set forth above may be extended to the extent 
necessary, but not more than ninety (90) days after the Section 11(a)(ii) 
Trigger Date, in order that the Company may seek stockholder approval for the 
authorization of such additional shares or take action to obtain such 
regulatory approval (such period, as it may be extended, the "SUBSTITUTION 
PERIOD").  To the extent that the Company determines that some action need be 
taken pursuant to the first and/or second sentences of this Section 
11(a)(iii), the Company (x) shall provide, subject to Section 7(e) hereof, 
that such action shall apply uniformly to all outstanding Rights and (y) may 
suspend the exercisability of the Rights until the expiration of the 
Substitution Period in order to seek any authorization of additional shares, 
to take any action to obtain any required regulatory approval and/or to 
decide the appropriate form of distribution to be made pursuant to such first 
sentence and to determine the value thereof.  In the event of any such 
suspension, the Company shall issue a public announcement stating that the 
exercisability of the Rights has been temporarily suspended, as well as a 
public announcement at such time as the suspension is no longer in effect.  
For purposes of this Section 11(a)(iii), the value of the Common Shares shall 
be the Current Per Share Market Price of the Common Shares on the Section 
11(a)(ii) Trigger Date and the value of any Common Stock Equivalent shall be 
deemed to have the same value as the Common Shares on such date.

                                         -17-
<PAGE>

          (b)  In case the Company shall, at any time after the date of this
Agreement, fix a record date for the issuance of rights, options or warrants to
all holders of Preferred Shares entitling such holders (for a period expiring
within forty-five (45) calendar days after such record date) to subscribe for or
purchase Preferred Shares or Equivalent Shares or securities convertible into
Preferred Shares or Equivalent Shares at a price per share (or having a
conversion price per share, if a security convertible into Preferred Shares or
Equivalent Shares) less than the then Current Per Share Market Price of the
Preferred Shares or Equivalent Shares on such record date, then, in each such
case, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of
Preferred Shares and Equivalent Shares (if any) outstanding on such record date,
plus the number of Preferred Shares or Equivalent Shares, as the case may be,
which the aggregate offering price of the total number of Preferred Shares or
Equivalent Shares, as the case may be, to be offered or issued (and/or the
aggregate initial conversion price of the convertible securities to be offered
or issued) would purchase at such current market price, and the denominator of
which shall be the number of Preferred Shares and Equivalent Shares (if any)
outstanding on such record date, plus the number of additional Preferred Shares
or Equivalent Shares, as the case may be, 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 case 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 a majority of the
Company's Board of Directors, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights.  Preferred Shares and Equivalent Shares owned by
or held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation.  Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights, options
or warrants are not so issued, the Exercise Price shall be adjusted to be the
Exercise Price which would then be in effect if such record date had not been
fixed.

          (c)  In case the Company shall, at any time after the date of this 
Agreement, fix a record date for the making of a distribution to all holders 
of the Preferred Shares or of any class or series of Equivalent Shares 
(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 quarterly cash 
dividend, if any, or a dividend payable in Preferred Shares) or subscription 
rights, options or warrants (excluding those referred to in Section 11(b), 
then, in each such case, the Exercise Price to be in effect after such record 
date shall be determined by multiplying the Exercise Price in effect 
immediately prior to such record date by a fraction, the numerator of which 
shall be the Current Per Share Market Price of a Preferred Share or an 
Equivalent Share on such record date, less the fair market value per 
Preferred Share or Equivalent 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) of the portion of the cash, assets or 
evidences of indebtedness so to be distributed or of such subscription rights 
or warrants applicable to a Preferred Share or Equivalent Share, as the case 
may be, and the denominator of which shall be such Current

                                         -18-
<PAGE>

Per Share Market Price of a Preferred Share or Equivalent Share on such record
date; 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.
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 Exercise
Price shall be adjusted to be the Exercise Price which would have been in effect
if such record date had not been fixed.

          (d)  Anything herein to the contrary notwithstanding, no adjustment 
in the Exercise Price shall be required unless such adjustment would require 
an increase or decrease of at least 1% in the Exercise Price; PROVIDED, 
HOWEVER, that any adjustments which by reason of this Section 11(d) are not 
required to be made shall be carried forward and taken into account in any 
subsequent adjustment.  All calculations under this Section 11 shall be made 
to the nearest cent or to the nearest ten-thousandth of a Common Share or 
other share or one hundred-thousandth of a Preferred Share, as the case may 
be.  Notwithstanding the first sentence of this Section 11(d), any adjustment 
required by this Section 11 shall be made no later than the earlier of (i) 
three (3) years from the date of the transaction which requires such 
adjustment or (ii) the Expiration Date.

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

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

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

          (h)  The Company may elect on or after the date of any adjustment 
of the Exercise Price as a result of the calculations made in Section 11(b) 
or (c) to adjust the number of Rights, in

                                         -19-
<PAGE>

substitution for any adjustment in the number of Preferred Shares purchasable
upon the exercise of a Right.  Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment.  Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one hundred-thousandth) obtained by dividing the
Exercise Price in effect immediately prior to adjustment of the Exercise Price
by the Exercise Price in effect immediately after adjustment of the Exercise
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 Exercise Price is adjusted or any day thereafter,
but, if the Rights Certificates have been issued, shall be at least ten (10)
days later than the date of the public announcement.  If Rights Certificates
have been issued, upon each adjustment of the number of Rights pursuant to this
Section 11(h), the Company shall, as promptly as practicable, cause to be
distributed to holders of record of Rights Certificates on such record date
Rights Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such adjustment,
or, at the option of the Company, shall cause to be distributed to such holders
of record in substitution and replacement for the Rights Certificates held by
such holders prior to the date of adjustment, and upon surrender thereof, if
required by the Company, new Rights Certificates evidencing all the Rights to
which such holders shall be entitled after such adjustment.  Rights Certificates
so to be distributed shall be issued, executed and countersigned in the manner
provided for herein (and may bear, at the option of the Company, the adjusted
Exercise Price) and shall be registered in the names of the holders of record of
Rights Certificates on the record date specified in the public announcement.

          (i)  Irrespective of any adjustment or change in the Exercise Price or
the number of Preferred Shares issuable upon the exercise of the Rights, the
Rights Certificates theretofore and thereafter issued may continue to express
the Exercise Price per one one-thousandth of a Preferred Share and the number of
one-thousandths of a Preferred Share which were expressed in the initial Rights
Certificates issued hereunder.

          (j)  Before taking any action that would cause an adjustment reducing
the Exercise Price below the par or stated value, if any, of the number of
one-thousandths of a Preferred Share 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 as
fully paid and nonassessable shares such number of one-thousandths of a
Preferred Share at such adjusted Exercise Price.

          (k)  In any case in which this Section 11 shall require that an 
adjustment in the Exercise Price be made effective as of a record date for a 
specified event, the Company may elect to defer until the occurrence of such 
event the issuing to the holder of any Right exercised after such record date 
of the number of one-thousandths of a Preferred Share and other capital stock 
or securities of the Company, if any, issuable upon such exercise over and 
above the number of one-thousandths of a Preferred Share and other capital 
stock or securities of the Company, if any, issuable upon such

                                         -20-
<PAGE>


exercise on the basis of the Exercise Price in effect prior to such adjustment;
PROVIDED, HOWEVER, that the Company shall deliver to such holder a due bill or
other appropriate instrument evidencing such holder's right to receive such
additional shares (fractional or otherwise) upon the occurrence of the event
requiring such adjustment.

          (l)  Anything in this Section 11 to the contrary notwithstanding, 
prior to the Distribution Date, the Company shall be entitled to make such 
reductions in the Exercise 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 (i) 
consolidation or subdivision of the Preferred or Common Shares, (ii) issuance 
wholly for cash of any Preferred or Common Shares at less than the current 
market price, (iii) issuance wholly for cash of Preferred or Common Shares or 
securities which by their terms are convertible into or exchangeable for 
Preferred or Common Shares, (iv) stock dividends or (v) issuance of rights, 
options or warrants referred to in this Section , hereafter made by the 
Company to holders of its Preferred or Common Shares shall not be taxable to 
such stockholders.

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

          (n)  In the event the Company shall at any time after the date of 
this Agreement (A) declare a dividend on the Common Shares payable in Common 
Shares, (B) subdivide the outstanding Common Shares, (C) combine the 
outstanding Common Shares (by reverse stock split or otherwise) into a 
smaller number of Common Shares, or (D) issue any shares of its capital stock 
in a reclassification of the Common Shares (including any such 
reclassification in connection with a consolidation or merger in which the 
Company is the continuing or surviving corporation), then, in each such 
event, except as otherwise provided in this Section 11(a) and Section 7(e) 
hereof: (1) each Common Share (or shares of capital stock issued in such 
reclassification of the Common Shares) outstanding immediately following such 
time shall have associated with it the number of Rights as were associated 
with one Common Share immediately prior to the occurrence of the event 
described in clauses (A)-(D) above; (2) the Exercise Price in effect at the 
time of the record date for such dividend or of the effective date of such 
subdivision, combination or reclassification shall be adjusted so that the 
Exercise Price thereafter shall equal the result obtained by multiplying the 
Exercise Price in effect immediately prior to such time by a fraction, the 
numerator of which shall be the total number of Common Shares outstanding 
immediately prior to the event described in clauses (A)-(D) above, and the 
denominator of which shall be the total number of Common Shares outstanding 
immediately after such event; 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 such Right; and (3) the number of one-thousandths of a 
Preferred Share (or shares of such other capital stock) issuable upon the 
exercise of each Right outstanding after such event shall equal the number of 
one-thousandths of a Preferred Share (or shares of such other capital stock) 
as were issuable with respect to one Right immediately prior to such event.

                                         -21-
<PAGE>

Each Common Share that shall become outstanding after an adjustment has been 
made pursuant to this Section 11(n) shall have associated with it the number 
of Rights, exercisable at the Exercise Price and for the number of 
one-thousandths of a Preferred Share (or shares of such other capital stock) 
as one Common Share has associated with it immediately following the 
adjustment made pursuant to this Section 11(n).  If an event occurs which 
would require an adjustment under both this Section 11(n) and Section 
11(a)(ii) hereof, the adjustment provided for in this Section 11(n) shall be 
in addition to, and shall be made prior to, any adjustment required pursuant 
to Section 11(a)(ii) hereof.

     Section 12.  CERTIFICATE OF ADJUSTED EXERCISE PRICE OR NUMBER OF SHARES. 
Whenever an adjustment is made as provided in Sections 11 and 13 hereof, the 
Company shall promptly (a) prepare a certificate setting forth such 
adjustment and a brief statement of the facts accounting for such adjustment, 
(b) file with the Rights Agent and with each transfer agent for the Preferred 
Shares a copy of such certificate and (c) mail a brief summary thereof to 
each holder of a Rights Certificate in accordance with Section 26 hereof.  
Notwithstanding the foregoing sentence, the failure of the Company to make 
such certification or give such notice shall not affect the validity of such 
adjustment or the force or effect of the requirement for such adjustment.  
The Rights Agent shall be fully protected in relying on any such certificate 
and on any adjustment contained therein and shall not be deemed to have 
knowledge of such adjustment unless and until it shall have received such 
certificate.

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

          (a)  In the event that, following a Triggering Event, directly or
indirectly:

                    (i)  the Company shall consolidate with, or merge with and
     into, any other Person (other than a wholly-owned Subsidiary of the Company
     in a transaction the principal purpose of which is to change the state of
     incorporation of the Company and which complies with Section 11(n) hereof);

                   (ii)  any Person shall consolidate with the Company, or merge
     with and into the Company and the Company shall be the continuing or
     surviving corporation of such consolidation or merger and, in connection
     with such merger, all or part of the Common Shares shall be changed into or
     exchanged for stock or other securities of any other person (or of the
     Company); or

                   (iii) the Company shall sell or otherwise transfer (or one or
     more of its Subsidiaries shall sell or otherwise transfer), in one or more
     transactions, assets or earning power aggregating 50% or more of the assets
     or earning power of the Company and its Subsidiaries (taken as a whole) to
     any other Person or Persons (other than the Company or one or more of its
     wholly-owned Subsidiaries in one or more transactions, each of which
     individually (and together) complies with Section 11(n) hereof),

                         then, concurrent with and in each such case,


                                         -22-
<PAGE>

                         (A)  each holder of a Right (except as provided in
          Section 7(e) hereof) shall thereafter have the right to receive, upon
          the exercise thereof at a price equal to the Total Exercise Price
          applicable immediately prior to the occurrence of the Section 13 Event
          in accordance with the terms of this Agreement, such number of validly
          authorized and issued, fully paid, nonassessable and freely tradeable
          Common Shares of the Principal Party (as hereinafter defined), free of
          any liens, encumbrances, rights of first refusal or other adverse
          claims, as shall be equal to the result obtained by dividing such
          Total Exercise Price by 50% of the Current Per Share Market Price of
          the Common Shares of such Principal Party on the date of consummation
          of such Section 13 Event, PROVIDED, HOWEVER, that the Exercise Price
          and the number of Common Shares of such Principal Party so receivable
          upon exercise of a Right shall be subject to further adjustment as
          appropriate in accordance with Section 11(e) hereof;

                         (B)  such Principal Party shall thereafter be liable
          for, and shall assume, by virtue of such Section 13 Event, all the
          obligations and duties of the Company pursuant to this Agreement;

                         (C)  the term "Company" shall thereafter be deemed to
          refer to such Principal Party, it being specifically intended that the
          provisions of Section 11 hereof shall apply only to such Principal
          Party following the first occurrence of a Section 13 Event;

                         (D)  such Principal Party shall take such steps
          (including, but not limited to, the reservation of a sufficient number
          of its Common Shares) in connection with the consummation of any such
          transaction as may be necessary to ensure that the provisions hereof
          shall thereafter be applicable, as nearly as reasonably may be, in
          relation to its Common Shares thereafter deliverable upon the exercise
          of the Rights;

                         (E)  upon the subsequent occurrence of any
          consolidation, merger, sale or transfer of assets or other
          extraordinary transaction in respect of such Principal Party, each
          holder of a Right shall thereupon be entitled to receive, upon
          exercise of a Right and payment of the Total Exercise Price as
          provided in this Section 13(a), such cash, shares, rights, warrants
          and other property which such holder would have been entitled to
          receive had such holder, at the time of such transaction, owned the
          Common Shares of the Principal Party receivable upon the exercise of
          such Right pursuant to this Section 13(a), and such Principal Party
          shall take such steps (including, but not limited to, reservation of
          shares of stock) as may be necessary to permit the subsequent exercise
          of the Rights in accordance with the terms hereof for such cash,
          shares, rights, warrants and other property; and

                         (F)  For purposes hereof, the "earning power" of the
          Company and its Subsidiaries shall be determined in good faith by the
          Company's Board of Directors on the basis of the operating earnings of
          each business operated by the Company and


                                         -23-
<PAGE>

          its Subsidiaries during the three fiscal years preceding the date of
          such determination (or, in the case of any business not operated by
          the Company or any Subsidiary during three full fiscal years preceding
          such date, during the period such business was operated by the Company
          or any Subsidiary).

          (b)  For purposes of this Agreement, the term "PRINCIPAL PARTY" shall
mean:

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

              (ii)  in the case of any transaction described in clause (iii) of
     Section 13(a) hereof, the Person that is the party receiving the greatest
     portion of the assets or earning power transferred pursuant to such
     transaction or transactions, or, if more than one Person that is a party to
     such transaction or transactions receives the same portion of the assets or
     earning power so transferred and each such portion would, were it not for
     the other equal portions, constitute the greatest portion of the assets or
     earning power so transferred, or if the Person receiving the greatest
     portion of the assets or earning power cannot be determined, whichever of
     such Persons is the issuer of Common Shares having the greatest aggregate
     market value of shares outstanding;

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


                                         -24-
<PAGE>

          (c)  The Company shall not consummate any Section 13 Event unless 
the Principal Party shall have a sufficient number of authorized Common 
Shares that have not been issued or reserved for issuance to permit the 
exercise in full of the Rights in accordance with this Section 13 and unless 
prior thereto the Company and such issuer shall have executed and delivered 
to the Rights Agent a supplemental agreement confirming that such Principal 
Party shall, upon consummation of such Section 13 Event, assume this 
Agreement in accordance with Sections 13(a) and 13(b) hereof, that all rights 
of first refusal or preemptive rights in respect of the issuance of Common 
Shares of such Principal Party upon exercise of outstanding Rights have been 
waived, that there are no 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 and that such transaction 
shall not result in a default by such Principal Party under this Agreement, 
and further providing that, as soon as practicable after the date of such 
Section 13 Event, such Principal Party will:

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

                   (ii)  use its best efforts to list (or continue the listing
     of) the Rights and the securities purchasable upon exercise of the Rights
     on a national securities exchange or to meet the eligibility requirements
     for quotation on Nasdaq and list (or continue the listing of) the Rights
     and the securities purchasable upon exercise of the Rights on Nasdaq; and

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

     In the event that at any time after the occurrence of a Triggering Event
some or all of the Rights shall not have been exercised at the time of a
transaction described in this Section 13, the Rights which have not theretofore
been exercised shall thereafter be exercisable in the manner described in
Section 13(a) (without taking into account any prior adjustment required by 
Section 11(a)(ii).

          (d)  In case the "Principal Party" for purposes of Section 13(b) 
hereof has a provision in any of its authorized securities or in its 
certificate of incorporation or by-laws or other instrument governing its 
corporate affairs, which provision would have the effect of (i) causing such 
Principal Party to issue (other than to holders of Rights pursuant to Section 
13 hereof), in connection with, or as a consequence of, the consummation of a 
Section 13 Event, Common Shares or Equivalent Shares of such Principal Party 
at less than the then Current Per Share Market Price thereof or

                                         -25-
<PAGE>

securities exercisable for, or convertible into, Common Shares or Equivalent
Shares of such Principal Party at less than the then Current Per Share Market
Price, or (ii) providing for any special payment, tax or similar provision in
connection with the issuance of the Common Shares of such Principal Party
pursuant to the provisions of Section 13 hereof, then, in such event, the
Company hereby agrees with each holder of Rights that it shall not consummate
any such transaction unless prior thereto the Company and such Principal Party
shall have executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall have been
canceled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with or as a consequence of, the consummation of the proposed transaction.

          (e)  The Company covenants and agrees that it shall not, at any time
after the Distribution Date, effect or permit to occur any Section 13 Event, if
(i) at the time or immediately after such Section 13 Event there are any rights,
warrants or other instruments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights, (ii) prior to, simultaneously with or immediately
after such Section 13 Event, the stockholders of the Person who constitutes, or
would constitute, the "Principal Party" for purposes of Section 13(b) hereof
shall have received a distribution of Rights previously owned by such Person or
any of its Affiliates or Associates or (iii) the form or nature of organization
of the Principal Party would preclude or limit the exercisability of the Rights.

          (f)  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 Rights Certificates which evidence fractional Rights.  In lieu of
such fractional Rights, there shall be paid to the registered holders of the
Rights Certificates with regard to which such fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the current market
value of a whole Right.  For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would have
been otherwise issuable, as determined pursuant to the second sentence of
Section 1(j) hereof.

          (b)  The Company shall not be required to issue fractions of Preferred
Shares (other than fractions that are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of the Rights or to distribute certificates
which evidence fractional Preferred Shares (other than fractions that are
integral multiples of one one-thousandth of a Preferred Share).  Interests in
fractions of Preferred Shares in integral multiples of one one-thousandth of a
Preferred Share may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; PROVIDED, that such agreement shall provide that the
holders of such depositary receipts shall have all the rights, privileges and
preferences to which


                                         -26-
<PAGE>

they are entitled as beneficial owners of the Preferred Shares represented by
such depositary receipts.  In lieu of fractional Preferred Shares that are not
integral multiples of one one-thousandth of a Preferred Share, the Company shall
pay to the registered holders of Rights Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction of the
current market value of a Preferred Share.  For purposes of this Section 14(b),
the current market value of a Preferred Share shall be one thousand times the
closing price of a Common Share (as determined pursuant to the second sentence
of Section 1(j) hereof) for the Trading Day immediately prior to the date of
such exercise.

          (c)  The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares
upon the exercise or exchange of Rights.   In lieu of such fractional Common
Shares, the Company shall pay to the registered holders of Rights Certificates
at the time such Rights are exercised as herein provided an amount in cash equal
to the same fraction of the current market value of a Common Share.  For
purposes of this Section 14(c), the current market value of a Common Share shall
be the closing price of a Common Share (as determined pursuant to the second
sentence of Section 1(j) hereof) for the Trading Day immediately prior to the
date of such exercise.

          (d)  The holder of a Right by the acceptance of the Right expressly
waives his or her right to receive any fractional Rights or any fractional
shares (other than fractions that are integral multiples of one one-thousandth
of a Preferred Share) upon exercise of a Right.

     Section 15.  RIGHTS OF ACTION.  All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Rights Certificate (or, prior
to the Distribution Date, of the Common Shares), without the consent of the
Rights Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of the Common Shares), may, in his or her own behalf and for
his or her 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 or her right to exercise the Rights evidenced by such Rights Certificate in
the manner provided in such Rights Certificate and in this Agreement.  Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and 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 RIGHTS HOLDERS.  Every holder of a Right, by
accepting the same, consents and agrees with the Company and the Rights Agent
and with every other holder of a Right that:

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



                                         -27-
<PAGE>

          (b)  after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed; and

          (c)  subject to Sections 6(a) and 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name the Rights Certificate
(or, prior to the Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Common Shares certificate made by anyone other
than the Company or the Rights Agent) for all purposes whatsoever, and neither
the Company nor the Rights Agent shall be affected by any notice to the
contrary.

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

     Section 18.  CONCERNING THE RIGHTS AGENT.

          (a)  The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder.  The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability or expense, incurred without gross negligence, bad faith or
willful misconduct on the part of the Rights Agent, for anything done or omitted
by the Rights Agent in connection with the acceptance and administration of this
Agreement, including the costs and expenses of defending against any claim of
liability in the premises.  In no event will the Rights Agent be liable for
special, indirect, incidental or consequential loss or damage of any kind
whatsoever, even if the Rights Agent has been advised of the possibility of such
loss or damage.

          (b)  The Rights Agent shall be protected and shall incur no liability
for, or in respect of any action taken, suffered or omitted by it in connection
with, its administration of this Agreement in reliance upon any Rights
Certificate or certificate for the Preferred Shares or Common Shares or for
other securities of the Company, instrument of assignment or transfer, power of
attorney,


                                         -28-
<PAGE>

endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document reasonably believed by it to be genuine and
to be signed, executed and, where necessary, verified or acknowledged, by the
proper Person or Persons, or otherwise upon the advice of counsel as set forth
in Section 20 hereof.

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

          (a)       Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the corporate trust business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; PROVIDED, HOWEVER, that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 21
hereof.  In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of the predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor
Rights Agent or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.

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

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

          (a)  The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the 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
(including, without limitation, the identity of any Acquiring Person and the
determination of Current Per Share Market Price) be proved


                                         -29-
<PAGE>

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

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

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

          (e)  The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights or any
adjustment in the terms of the Rights (including the manner, method or amount
thereof) provided for in Sections 3, 11, 13, 23 or 24, or the ascertaining of
the existence of facts that would require any such change or adjustment (except
with respect to the exercise of Rights evidenced by Rights Certificates after
receipt by the Rights Agent of a certificate furnished pursuant to Section 12
describing such change or adjustment); nor shall it by any act hereunder be
deemed to make any representation or warranty as to the authorization or
reservation of any Preferred Shares to be issued pursuant to this Agreement or
any Rights Certificate or as to whether any Preferred Shares will, when issued,
be validly authorized and issued, fully paid and nonassessable.

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

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


                                         -30-
<PAGE>

at the option of the Rights Agent, set forth in writing any action proposed to
be taken or omitted by the Rights Agent under this Rights Agreement and the date
on and/or after which such action shall be taken or such omission shall be
effective.  The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five (5) Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.

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

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

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

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

     Section 21.  CHANGE OF RIGHTS AGENT.  The Rights Agent or any successor 
Rights Agent may resign and be discharged from its duties under this 
Agreement upon thirty (30) days' notice in writing mailed to the Company and 
to each transfer agent of the Preferred Shares and the Common Shares by 
registered or certified mail, and to the holders of the Rights Certificates 
by first-class mail.  The Company may remove the Rights Agent or any 
successor Rights Agent upon thirty (30) days' notice in writing, mailed to 
the Rights Agent or successor Rights Agent, as the case may be, and to each 
transfer agent of the Preferred Shares and the Common Shares by registered or 
certified mail, and to

                                         -31-
<PAGE>

the holders of the Rights Certificates by first-class mail.  If the Rights 
Agent shall resign or be removed or shall otherwise become incapable of 
acting, the Company shall appoint a successor to the Rights Agent.  If the 
Company shall fail to make such appointment within a period of thirty (30) 
days after giving notice of such removal or after it has been notified in 
writing of such resignation or incapacity by the resigning or incapacitated 
Rights Agent or by the holder of a Rights Certificate (who shall, with such 
notice, submit his or her Rights Certificate for inspection by the Company), 
then the registered holder of any Rights Certificate may apply to any court 
of competent jurisdiction for the appointment of a new Rights Agent.  Any 
successor Rights Agent, whether appointed by the Company or by such a court, 
shall be a corporation organized and doing business under the laws of the 
United States or of any state of the United States, in good standing, which 
is authorized under such laws to exercise corporate trust or stockholder 
services powers and is subject to supervision or examination by federal or 
state authority and which has at the time of its appointment as Rights Agent 
a combined capital and surplus of at least $50 million.  After appointment, 
the successor Rights Agent shall be vested with the same powers, rights, 
duties and responsibilities as if it had been originally named as Rights 
Agent without further act or deed; but the predecessor Rights Agent shall 
deliver and transfer to the successor Rights Agent any property at the time 
held by it hereunder, and execute and deliver any further assurance, 
conveyance, act or deed necessary for the purpose.  Not later than the 
effective date of any such appointment, the Company shall file notice thereof 
in writing with the predecessor Rights Agent and each transfer agent of the 
Preferred Shares and the Common Shares, and mail a notice thereof in writing 
to the registered holders of the Rights Certificates.  Failure to give any 
notice provided for in this Section 21, however, or any defect therein, shall 
not affect the legality or validity of the resignation or removal of the 
Rights Agent or the appointment of the successor Rights Agent, as the case 
may be.

     Section 22.  ISSUANCE OF NEW RIGHTS CERTIFICATES.  Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Exercise Price and the number or kind or class of shares or other
securities or property purchasable under the Rights Certificates made in
accordance with the provisions of this Agreement.  In addition, in connection
with the issuance or sale of Common Shares following the Distribution Date and
prior to the redemption or expiration of the Rights, the Company (a) shall, with
respect to Common Shares so issued or sold pursuant to the exercise of stock
options or under any employee plan or arrangement or upon the exercise,
conversion or exchange of other securities of the Company outstanding at the
date hereof or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company and (b) may, in any other case, if deemed
necessary or appropriate by the Board of Directors of the Company, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; PROVIDED, HOWEVER, that (i) no such Rights Certificate
shall be issued and this sentence shall be null and void AB INITIO if, and to
the extent that, such issuance or this sentence would create a significant risk
of or result in material adverse tax consequences to the Company or the Person
to whom such Rights Certificate would be issued or would create a significant
risk of or result in such options' or employee plans' or arrangements' failing
to qualify for otherwise available special tax treatment and (ii) no such Rights


                                         -32-
<PAGE>

Certificate shall be issued if, and to the extent that, appropriate adjustment
shall otherwise have been made in lieu of the issuance thereof.

     Section 23.  REDEMPTION.

          (a)  The Company may, at its option and with the approval of the Board
of Directors, at any time prior to the Close of Business on the earlier of (i)
the fifteenth day following the Shares Acquisition Date (or such later date as
may be determined by action of a majority of the Company's Board of Directors
and publicly announced by the Company) and (ii) the Final Expiration Date,
redeem all but not less than all the then outstanding Rights at a redemption
price of $0.005 per Right, appropriately adjusted to reflect any stock split,
stock dividend or similar transaction occurring after the date hereof (such
redemption price being herein referred to as the "REDEMPTION PRICE") and the
Company may, at its option, pay the Redemption Price either in Common Shares
(based on the Current Per Share Market Price thereof at the time of redemption)
or cash.  Such redemption of the Rights by the Company may be made effective at
such time, on such basis and with such conditions as the Board of Directors in
its sole discretion may establish.  The date on which the Board of Directors
elects to make the redemption effective shall be referred to as the "REDEMPTION
DATE."

          (b)  Notwithstanding the provision of Section 23(a), in the event that
a majority of the Board of Directors of the Company is elected by stockholder
action by written consent or at a special meeting of stockholders (a meeting
other than a regularly scheduled annual meeting), then until the earlier to
occur of (i) the 180th day following the effectiveness of such election or (ii)
the next regular annual meeting of shareholders of the Company following the
effectiveness of such election (including any postponement or adjournment
thereof), the Rights shall not be redeemed if such redemption is reasonably
likely to have the purpose or effect of facilitating a Transaction with an
Interested Person.


          (c)  Immediately upon the action of the Board of Directors of the
Company ordering the redemption of the Rights, evidence of which shall have been
filed with the Rights Agent, and without any further action and without any
notice, the right to exercise the Rights will terminate and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.
The Company shall promptly give public notice of any such redemption; PROVIDED,
HOWEVER, that the failure to give or any defect in, any such notice shall not
affect the validity of such redemption.  Within ten (10) days after the action
of the Board of Directors ordering the redemption of the Rights, the Company
shall give notice of such redemption to the Rights Agent and the holders of the
then outstanding Rights by mailing such notice to all such holders at their last
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent for the
Common Shares.  Any notice which is mailed in the manner herein provided shall
be deemed given, whether or not the holder receives the notice.  Each such
notice of redemption 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


                                         -33-
<PAGE>

Section 24 hereof, and other than in connection with the purchase of Common
Shares prior to the Distribution Date.

     Section 24.  EXCHANGE.

          (a)  Subject to applicable laws, rules and regulations, and subject to
subsection 24(c) below, the Company may, at its option, by action of the Board
of Directors, at any time after the occurrence of a Triggering Event, exchange
all or part of the then outstanding and exercisable Rights (which shall not
include Rights that have become void pursuant to the provisions of Section 7(e)
hereof) for Common Shares at an exchange ratio of one Common Share per Right,
appropriately adjusted to reflect any 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 Common Shares then outstanding.

          (b)  Immediately upon the action of the Board of Directors ordering
the exchange of any Rights pursuant to subsection (a) of this Section 24 and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Shares equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio.  The Company shall
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 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 Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged.  Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) held
by each holder of Rights.

          (c)  In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with Section 24(a), the Company shall
either take such action as may be necessary to authorize additional Common
Shares for issuance upon exchange of the Rights or alternatively, at the option
of a majority of the Board of Directors, with respect to each Right (i) pay cash
in an amount equal to the Current Value (as hereinafter defined), in lieu of
issuing Common Shares in exchange therefor, or (ii) issue debt or equity
securities or a combination thereof, having a value equal to the Current Value,
in lieu of issuing Common Shares in exchange for each such Right, where the
value of such securities shall be determined by a nationally recognized
investment banking firm selected by majority vote of the Board of Directors, or
(iii) deliver any combination of cash, property, Common Shares and/or


                                         -34-
<PAGE>

other securities having a value equal to the Current Value in exchange for each
Right.  For purposes of this Section 24(c) only, the Current Value shall mean
the product of the Current Per Share Market Price of Common Shares on the date
of the occurrence of the event described above in subparagraph (a), multiplied
by the number of Common Shares for which the Right otherwise would be
exchangeable if there were sufficient shares available.  To the extent that the
Company determines that some action need be taken pursuant to clauses (i), (ii)
or (iii) of this Section 24(c), the Board of Directors may temporarily suspend
the exercisability of the Rights for a period of up to sixty (60) days following
the date on which the event described in Section 24(a) shall have occurred, in
order to seek any authorization of additional Common Shares and/or to decide the
appropriate form of distribution to be made pursuant to the above provision and
to determine the value thereof.  In the event of any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended.

          (d)  The Company shall not be required to issue fractions of Common
Shares or to distribute certificates which evidence fractional Common Shares.
In lieu of such fractional Common Shares, there shall be paid to the registered
holders of the Rights Certificates with regard to which such fractional Common
Shares would otherwise be issuable, an amount in cash equal to the same fraction
of the current market value of a whole Common Share (as determined pursuant to
the second sentence of Section 1(j) hereof).

          (e)  The Company may, at its option, by majority vote of the Board of
Directors, at any time before any Person has become an Acquiring Person,
exchange all or part of the then outstanding Rights for rights of substantially
equivalent value, as determined reasonably and with good faith by the Board of
Directors, based upon the advice of one or more nationally recognized investment
banking firms.

          (f)  Immediately upon the action of the Board of Directors ordering
the exchange of any Rights pursuant to subsection 24(e) 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 rights in exchange therefor as has been
determined by the Board of Directors in accordance with subsection 24(e) above.
The Company shall 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 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 transfer agent for the Common Shares of the Company.
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 Rights will be effected.

     Section 25.  NOTICE OF CERTAIN EVENTS.

          (a)  In case the Company shall propose to effect or permit to occur
any Triggering Event or Section 13 Event, the Company shall give notice thereof
to each holder of Rights in


                                         -35-
<PAGE>

accordance with Section 26 hereof at least twenty (20) days prior to occurrence
of such Triggering Event or such Section 13 Event.

          (b)  In case any Triggering Event or Section 13 Event shall occur,
then, in any such case, the Company shall as soon as practicable thereafter give
to each holder of a Rights Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which shall specify the event and the
consequences of the event to holders of Rights under Sections 11(a)(ii) and 13
hereof.

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

                    Polycom, Inc.
                    2584 Junction Avenue
                    San Jose, CA 95134
                    Attention:  Chief Executive Officer


                    with a copy to:

                    Wilson Sonsini Goodrich & Rosati
                    Professional Corporation
                    650 Page Mill Road
                    Palo Alto, California 94304-1050
                    Attention: Mark A. Bertelsen, Esq.

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

                    BankBoston, N.A.
                    c/o Boston Equiserve Limited Partnership
                    150 Royall Street
                    Canton, MA 02021
                    Attention: Client Administration

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate 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.


                                         -36-
<PAGE>

     Section 27.  SUPPLEMENTS AND AMENDMENTS.

          (a)  Prior to the occurrence of a Distribution Date, the Company may
supplement or amend this Agreement in any respect without the approval of any
holders of Rights and the Rights Agent shall, if the Company so directs, execute
such supplement or amendment.  From and after the occurrence of a Distribution
Date, the Company and the Rights Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Rights in order to (i)
cure any ambiguity, (ii) correct or supplement any provision contained herein
which may be defective or inconsistent with any other provisions herein, (iii)
shorten or lengthen any time period hereunder, or (iv) to change or supplement
the provisions hereunder in any manner that the Company may deem necessary or
desirable and that shall not adversely affect the interests of the holders of
Rights (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person); PROVIDED, this Agreement may not be supplemented or amended
to lengthen, pursuant to clause (iii) of this sentence, (A) a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights (other than an Acquiring Person or an
Affiliate or Associate of an Acquiring Person).  Upon the delivery of a
certificate from an appropriate officer of the Company that states that the
proposed supplement or amendment is in compliance with the terms of this Section
27, the Rights Agent shall execute such supplement or amendment.  Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Common Shares.

          (b)  Notwithstanding the provisions of Section 27(a), in the event
that a majority of the Board of Directors of the Company is elected by
stockholder action by written consent or at a special meeting of stockholders (a
meeting other than a regularly scheduled annual meeting), then until the earlier
to occur of (i) the 180th day following the effectiveness of such election or
(ii) the next regular annual meeting of stockholders of the Company following
the effectiveness of such election (including any postponement or adjournment
thereof), this Rights Agreement shall not be supplemented or amended in any
manner reasonably likely to have the purpose or effect of facilitating a
Transaction with an Interested Person.

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

     Section 29.  DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of Common
Shares outstanding at any particular time, including for purposes of determining
the particular percentage of such outstanding Common Shares of which any Person
is the Beneficial Owner, shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.
The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the


                                         -37-
<PAGE>

right and power to (i) interpret the provisions of this Agreement and (ii) make
all determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend the Agreement).  All such actions, calculations, interpretations and
determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board in good faith,
shall (x) be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights Certificates and all other parties and (y) not subject the
Board to any liability to the holders of the Rights.

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

     Section 31.  SEVERABILITY.  If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
PROVIDED, HOWEVER, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and the Board of
Directors of the Company determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be reinstated and shall not expire until the Close of Business on the
fifteenth day following the date of such determination by the Board of
Directors.

     Section 32.  GOVERNING LAW.  This Agreement and each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Delaware and for all purposes shall be governed by and
construed in accordance with the laws of such State applicable to contracts to
be made and performed entirely within such State.

     Section 33.  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 34.  DESCRIPTIVE HEADINGS.  Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and shall not
control or affect the meaning or construction of any of the provisions hereof.


                                         -38-
<PAGE>

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


"COMPANY"                          POLYCOM, INC.


                                   By:  /s/ Michael R. Kourey
                                       ----------------------------------------
                                        Name:  Michael R. Kourey
                                        Title: Vice President, Finance and 
                                               Administration, Chief Financial
                                               Officer and Secretary


"RIGHTS AGENT"                          BANKBOSTON, N.A.


                                   By:  /s/ Geoffrey D. Anderson
                                       ----------------------------------------
                                        Name:  Geoffrey D. Anderson
                                        Title: Director


                                         -39-
<PAGE>

                                      EXHIBIT A



                  CERTIFICATE OF DESIGNATION OF RIGHTS, PREFERENCES
                                  AND PRIVILEGES OF
                               SERIES A PREFERRED STOCK
                                   OF POLYCOM, INC.


     The undersigned, Robert C. Hagerty and Michael R. Kourey do hereby certify:

     1.   That they are the duly elected and acting Chief Executive Officer and
Secretary, respectively, of Polycom, Inc., a Delaware corporation (the
"CORPORATION").

     2.   That pursuant to the authority conferred upon the Board of Directors
by the Amended and Restated Certificate of Incorporation of the said
Corporation, the said Board of Directors on July 15, 1998 adopted the following
resolution creating a series of 50,000 shares of Preferred Stock designated as
Series A Preferred Stock:

     "RESOLVED, that pursuant to the authority vested in the Board of Directors
of the corporation by the Certificate of Incorporation, the Board of Directors
does hereby provide for the issue of a series of Preferred Stock of the
Corporation and does hereby fix and herein state and express the designations,
powers, preferences and relative and other special rights and the
qualifications, limitations and restrictions of such series of Preferred Stock
as follows:

     Section 1.     DESIGNATION AND AMOUNT.  The shares of such series shall be
designated as "SERIES A PREFERRED STOCK." The Series A Preferred Stock shall
have a par value of $0.001 per share, and the number of shares constituting such
series shall be 50,000.

     Section 2.     PROPORTIONAL ADJUSTMENT.  In the event the Corporation shall
at any time after the issuance of any share or shares of Series A Preferred
Stock (i) declare any dividend on Common Stock of the Corporation ("COMMON
STOCK") payable in shares of Common Stock, (ii) subdivide the outstanding Common
Stock or (iii) combine the outstanding Common Stock into a smaller number of
shares, then in each such case the Corporation shall simultaneously effect a
proportional adjustment to the number of outstanding shares of Series A
Preferred Stock.

     Section  3.    DIVIDENDS AND DISTRIBUTIONS.

          (a)  Subject to the prior and superior right of the holders of any
shares of any series of Preferred Stock ranking prior and superior to the shares
of Series A Preferred Stock with respect to dividends, the holders of shares of
Series A Preferred Stock shall be entitled to receive when, as and if declared
by the Board of Directors out of funds legally available for such purpose,
quarterly dividends payable in cash on the last day of January, April, July and
October in each year (each such



<PAGE>

date being referred to herein as a "QUARTERLY DIVIDEND PAYMENT DATE"),
commencing on the first Quarterly Dividend Payment Date after the first issuance
of a share or fraction of a share of Series A Preferred Stock, in an amount per
share (rounded to the nearest cent) equal to 1,000 times the aggregate per share
amount of all cash dividends, and 1,000 times the aggregate per share amount
(payable in kind) of all non-cash dividends or other distributions other than a
dividend payable in shares of Common Stock or a subdivision of the outstanding
shares of Common Stock (by reclassification or otherwise), declared on the
Common Stock since the immediately preceding Quarterly Dividend Payment Date,
or, with respect to the first Quarterly Dividend Payment Date, since the first
issuance of any share or fraction of a share of Series A Preferred Stock.


          (b)  The Corporation shall declare a dividend or distribution on the
Series A Preferred Stock as provided in paragraph (a) above immediately after it
declares a dividend or distribution on the Common Stock (other than a dividend
payable in shares of Common Stock).

          (c)  Dividends shall begin to accrue on outstanding shares of Series A
Preferred Stock from the Quarterly Dividend Payment Date next preceding the date
of issue of such shares of Series A Preferred Stock, unless the date of issue of
such shares is prior to the record date for the first Quarterly Dividend Payment
Date, in which case dividends on such shares shall begin to accrue from the date
of issue of such shares, or unless the date of issue is a Quarterly Dividend
Payment Date or is a date after the record date for the determination of holders
of shares of Series A Preferred Stock entitled to receive a quarterly dividend
and before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue from such Quarterly Dividend Payment Date.
Accrued but unpaid dividends shall not bear interest.  Dividends paid on the
shares of Series A Preferred Stock in an amount less than the total amount of
such dividends at the time accrued and payable on such shares shall be allocated
pro rata on a share-by-share basis among all such shares at the time
outstanding.  The Board of Directors may fix a record date for the determination
of holders of shares of Series A Preferred Stock entitled to receive payment of
a dividend or distribution declared thereon, which record date shall be no more
than 30 days prior to the date fixed for the payment thereof.

     Section 4.     VOTING RIGHTS.  The holders of shares of Series A Preferred
Stock shall have the following voting rights:

          (a)  Each share of Series A Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the stockholders of
the Corporation.

          (b)  Except as otherwise provided herein or by law, the holders of
shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.

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


                                         -2-

<PAGE>

     Section 5.     CERTAIN RESTRICTIONS.

          (a)  The Corporation shall not declare any dividend on, make any
distribution on, or redeem or purchase or otherwise acquire for consideration
any shares of Common Stock after the first issuance of a share or fraction of a
share of Series A Preferred Stock unless concurrently therewith it shall declare
a dividend on the Series A Preferred Stock as required by Section 3 hereof.

          (b)  Whenever quarterly dividends or other dividends or distributions
payable on the Series A Preferred Stock as provided in Section 3 are in arrears,
thereafter and until all accrued and unpaid dividends and distributions, whether
or not declared, on shares of Series A Preferred Stock outstanding shall have
been paid in full, the Corporation shall not:

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

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

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

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

          (c)  The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares of
stock of the Corporation unless the Corporation could, under paragraph (a) of
this Section 5, purchase or otherwise acquire such shares at such time and in
such manner.


                                         -3-
<PAGE>

     Section 6.     REACQUIRED SHARES.  Any shares of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof.  All such
shares shall upon their cancellation become authorized but unissued shares of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein and, in the
Restated Certificate of Incorporation, as then amended.

     Section 7.     LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, the holders of shares
of Series A Preferred Stock shall be entitled to receive an aggregate amount per
share equal to 1,000 times the aggregate amount to be distributed per share to
holders of shares of Common Stock plus an amount equal to any accrued and unpaid
dividends on such shares of Series A Preferred Stock.

     Section 8.     CONSOLIDATION, MERGER, ETC.  In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged or
changed in an amount per share equal to 1,000 times the aggregate amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be, into which or for which each share of Common Stock is changed or
exchanged.

     Section 9.     NO REDEMPTION.  The shares of Series A Preferred Stock shall
not be redeemable.

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

     Section 11.    AMENDMENT.  The Amended and Restated Certificate of
Incorporation of the Corporation shall not be further amended in any manner
which would materially alter or change the powers, preference or special rights
of the Series A Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority of the outstanding shares of
Series A Preferred Stock, voting separately as a class.

     Section 12.    FRACTIONAL SHARES.  Series A Preferred Stock may be issued
in fractions of a share which shall entitle the holder, in proportion to such
holder's fractional shares, to exercise voting rights, receive dividends,
participate in distributions and to have the benefit of all other rights of
holders of Series A Preferred Stock.

     RESOLVED FURTHER, that the President or any Vice President and the
Secretary or any Assistant Secretary of this corporation be, and they hereby
are, authorized and directed to prepare and file a Certificate of Designation of
Rights, Preferences and Privileges in accordance with the foregoing


                                         -4-

<PAGE>


resolution and the provisions of Delaware law and to take such actions as they
may deem necessary or appropriate to carry out the intent of the foregoing
resolution."


                    [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]











                                        -5-

<PAGE>

     We further declare under penalty of perjury that the matters set forth in
the foregoing Certificate of Designation are true and correct of our own
knowledge.

     Executed at San Jose, California on July 15, 1998.



                                   ------------------------------------------
                                   Robert C. Hagerty, Chief Executive Officer



                                   ------------------------------------------
                                   Michael R. Kourey, Secretary





                                         -6-

<PAGE>

                                      EXHIBIT B


                              FORM OF RIGHTS CERTIFICATE


Certificate No. R-                                              _________ Rights


     NOT EXERCISABLE AFTER THE EARLIER OF (i) JULY 15, 2008, (ii) THE DATE
     TERMINATED BY THE COMPANY OR (iii) THE DATE THE COMPANY EXCHANGES THE
     RIGHTS PURSUANT TO THE RIGHTS AGREEMENT.  THE RIGHTS ARE SUBJECT TO
     REDEMPTION, AT THE OPTION OF THE COMPANY, AT $0.005 PER RIGHT ON THE
     TERMS SET FORTH IN THE RIGHTS AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES,
     RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE OR
     ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
     RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME
     NULL AND VOID.  [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE
     OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
     PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH
     TERMS ARE DEFINED IN THE RIGHTS AGREEMENT).  ACCORDINGLY, THIS RIGHTS
     CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID
     IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH RIGHTS
     AGREEMENT.]*


                                  RIGHTS CERTIFICATE

                                    POLYCOM, 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 July 15, 1998 (the "RIGHTS AGREEMENT"), between
Polycom, Inc., a Delaware corporation (the "COMPANY"), and BankBoston, N.A. 
(the "RIGHTS AGENT"), to purchase from the Company at any time after the
Distribution Date (as such term is defined in the Rights Agreement) and prior to
5:00 P.M., New York time, on July 15, 2008 at the office of the Rights Agent
designated for such purpose, or at the office of its successor as Rights Agent,
one one-thousandth (1/1,000) of a fully paid non-assessable share of Series A
Preferred

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

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


<PAGE>

Stock, $0.001 par value, (the "PREFERRED SHARES"), of the Company, at an
Exercise Price of Ninety Dollars ($90.00) per one-thousandth of a Preferred
Share (the "EXERCISE PRICE"), upon presentation and surrender of this Rights
Certificate with the Form of Election to Purchase and related Certificate duly
executed.  The number of Rights evidenced by this Rights Certificate (and the
number of one-thousandths of a Preferred Share which may be purchased upon
exercise hereof) set forth above are the number and Exercise Price as of July
15, 1998, based on the Preferred Shares as constituted at such date.  As
provided in the Rights Agreement, the Exercise Price and the number and kind of
Preferred Shares or other securities which may be purchased upon the exercise of
the Rights evidenced by this Rights Certificate are subject to modification and
adjustment upon the happening of certain events.

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

          Subject to the provisions of the Rights Agreement, the Rights
evidenced by this Rights Certificate (i) may be redeemed by the Company, at its
option, at a redemption price of $0.005 per Right or (ii) may be exchanged by
the Company in whole or in part for Common Shares, substantially equivalent
rights or other consideration as determined by the Company.

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

          No fractional portion of less than one one-thousandth of a Preferred
Share 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 Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of the
Preferred Shares or of any other securities of the Company 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


                                         -2-

<PAGE>


any corporate action, or to receive notice of meetings or other actions
affecting stockholders (except as provided in the Rights Agreement), or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.

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

     WITNESS the facsimile signature of the proper officers of the Company and
its corporate seal.  Dated as of  _______________, 19____.


ATTEST:                                 POLYCOM, INC.


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



Countersigned:

BANKBOSTON, N.A.
as Rights Agent

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


                                         -3-

<PAGE>

                      FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE

                                  FORM OF ASSIGNMENT

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


          FOR VALUE RECEIVED ____________________________________ hereby sells,
assigns and transfers unto
_______________________________________________________________________________
                    (Please print name and address of transferee)
_______________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint __________________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.


Dated: _______________, 19____


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


Signature Guaranteed:

          Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.



<PAGE>

                                     CERTIFICATE


     The undersigned hereby certifies by checking the appropriate boxes that:


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

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

Dated: _______________, 19____



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


Signature Guaranteed:

          Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.




<PAGE>

               FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE -- CONTINUED

                             FORM OF ELECTION TO PURCHASE

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

To:  Polycom, Inc.

          The undersigned hereby irrevocably elects to exercise
_____________________ Rights represented by this Rights Certificate to purchase
the number of one-thousandths of a Preferred Share issuable upon the exercise of
such Rights and requests that certificates for such number of one-thousandths of
a Preferred Share issued in the name of:

Please insert social security
or other identifying number

_______________________________________________________________________________
                           (Please print name and address)

________________________________________________________________________________

If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights 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

_______________________________________________________________________________
                           (Please print name and address)
_______________________________________________________________________________

Dated: ___________________ , 19____



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

Signature Guaranteed:

          Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.


<PAGE>

                                     CERTIFICATE


     The undersigned hereby certifies by checking the appropriate boxes that:

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

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

Dated: _______________, 19____


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


Signature Guaranteed:

          Signatures must be guaranteed by an eligible guarantor institution (a
bank, stockbroker, savings and loan association or credit union with membership
in an approved signature guarantee medallion program) pursuant to Rule 17Ad-15
of the Securities Exchange Act of 1934.



<PAGE>

               FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE -- CONTINUED


                                        NOTICE


          The signature in the foregoing Forms of Assignment and Election must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.






<PAGE>

                                      EXHIBIT C
                               STOCKHOLDER RIGHTS PLAN
                                    POLYCOM, INC.

                                  SUMMARY OF RIGHTS

DISTRIBUTION AND    The Board of Directors has declared a dividend of one Right
TRANSFER OF RIGHTS; for each share of Polycom, Inc. Common Stock outstanding.
RIGHTS CERTIFICATE: Prior to the Distribution Date referred to below, the Rights
                    will be evidenced by and trade with the certificates for
                    the Common Stock.  After the Distribution Date, Polycom,
                    Inc. (the "COMPANY") will mail Rights certificates to the
                    Company's stockholders and the Rights will become
                    transferable apart from the Common Stock.

DISTRIBUTION DATE:  Rights will separate from the Common Stock and become
                    exercisable following (a) the fifteenth day (or such later
                    date as may be determined by a majority of the Board of
                    Directors) after a person or group acquires beneficial
                    ownership of 20% or more of the Company's Common Stock or
                    (b) the fifteenth day (or such later date as may be
                    determined by a majority of the Board of Directors) after a
                    person or group announces a tender or exchange offer, the
                    consummation of which would result in ownership by a person
                    or group of 20% or more of the Company's Common Stock.

PREFERRED STOCK     After the Distribution Date, each Right will entitle the
PURCHASABLE UPON    holder to purchase for $90.00, a fraction of a share of the
EXERCISE OF RIGHTS: Company's Preferred Stock with economic terms similar to
                    that of one share of the Company's Common Stock.

FLIP-IN:            If an acquiror (an "ACQUIRING PERSON") obtains 20% or more
                    of the Company's Common Stock, THEN each Right (other than
                    Rights owned by an Acquiring Person or its affiliates) will
                    entitle the holder thereof to purchase, for the Exercise
                    Price, a number of shares of the Company's Common Stock
                    having a then current market value of twice the Exercise
                    Price.

FLIP-OVER:          If, after an Acquiring Person obtains 20% or more of the
                    Company's Common Stock, (a) the Company merges into another
                    entity, (b) an acquiring entity merges into the Company or
                    (c) the Company sells more than 50% of the Company's assets
                    or earning power, THEN each Right (other than Rights owned
                    by an Acquiring Person or its affiliates) will entitle the
                    holder thereof to purchase, for the Exercise Price, a number
                    of shares of Common Stock of the Person engaging in the
                    transaction having a then current market value of twice the
                    Exercise Price (unless the

<PAGE>

                    transaction satisfies certain conditions and is consummated
                    with a Person who acquired shares pursuant to a Permitted
                    Offer, in which case the Rights will expire).

EXCHANGE PROVISION: At any time after the date an Acquiring Person obtains 20%
                    or  more of the Company's Common Stock and prior to the
                    acquisition by the Acquiring Person of 50% of the
                    outstanding Common Stock, a majority of the Board of
                    Directors of the Company may exchange the Rights (other than
                    Rights owned by the Acquiring Person or its affiliates), in
                    whole or in part, for shares of Common Stock of the Company
                    at an exchange ratio of one share of Common Stock per Right
                    (subject to adjustment).

REDEMPTION OF       Rights will be redeemable at the Company's option for $0.005
THE RIGHTS:         per Right at any time on or prior to the fifteenth day (or
                    such later date as may be determined by a majority of the
                    Board of Directors) after public announcement that a Person
                    has acquired beneficial ownership of 20% or more of the
                    Company's Common Stock.

EXPIRATION OF       The Rights expire on the earliest of (a) July 15, 2008, (b)
THE RIGHTS:         exchange or redemption of the Rights as described above, or
                    (c) consummation of a merger, consolidation or asset sale
                    resulting in expiration of the Rights as described above.

AMENDMENT OF        The terms of the Rights and the Rights Agreement may be
TERMS OF RIGHTS:    amended in any respect without the consent of the Rights
                    holders on or prior to Distribution Date; thereafter, the
                    terms of the Rights and the Rights Agreement may be amended
                    without the consent of the Rights holders in order to cure
                    any ambiguities or to make changes which do not adversely
                    affect the interests of Rights holders (other than the
                    Acquiring Person).

VOTING RIGHTS:      Rights will not have any voting rights.

ANTI-DILUTION       Rights will have the benefit of certain customary anti-
PROVISIONS:         dilution provisions.

TAXES:              The Rights distribution should not be taxable for federal
                    income tax purposes.  However, following an event which
                    renders the Rights exercisable or upon redemption of the
                    Rights, stockholders may recognize taxable income.

The foregoing is a summary of certain principal terms of the Stockholder Rights
Plan only and is qualified in its entirety by reference to the detailed terms of
the Rights Agreement dated as of July 15, 1998, between the Company and the
Rights Agent.


                                         -2-


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