<PAGE>



                                     WARRANT

                           To Purchase Common Stock of

                             AM COMMUNICATIONS, INC.

                                    Issued to

                SCIENTIFIC-ATLANTA STRATEGIC INVESTMENTS, L.L.C.

                                 August 24, 2001

                                  Warrant No. 2

                                2,027,027 Shares




<PAGE>
<TABLE>
<CAPTION>
                                                  TABLE OF CONTENTS
                                                                                                               Page
<S>  <C>                                                                                                       <C>
1.   DEFINITIONS..................................................................................................1
   1.1    "Additional Shares of Common Stock......................................................................1
   1.2    "Appraised Value........................................................................................2
   1.3    "Block of Shares........................................................................................2
   1.4    "Book Value.............................................................................................2
   1.5    "Business Day...........................................................................................2
   1.6    "Closing Date...........................................................................................2
   1.7    "Commission.............................................................................................2
   1.8    "Common Stock...........................................................................................2
   1.9    "Convertible Securities.................................................................................2
   1.10   "Current Market Price...................................................................................3
   1.11   "Current Warrant Price..................................................................................3
   1.12   "Exchange Act...........................................................................................3
   1.13   "Exercise Period........................................................................................3
   1.14   "Expiration Date........................................................................................3
   1.15   "Fully Diluted Outstanding..............................................................................3
   1.16   "GAAP...................................................................................................4
   1.17   "Holder.................................................................................................4
   1.18   "Majority Holders.......................................................................................4
   1.19      "NASD................................................................................................4
   1.20   "Other Property.........................................................................................4
   1.21   "Outstanding............................................................................................4
   1.22   "Person.................................................................................................4
   1.23   "Preferred Stock........................................................................................4
   1.24   "Registration Rights Agreement..........................................................................4
   1.25   "Restricted Common Stock................................................................................4
   1.26   "Scientific-Atlanta.....................................................................................4
   1.27   "Securities Act.........................................................................................4
   1.28   "Transfer...............................................................................................5
   1.29   "Transfer Notice........................................................................................5
   1.30   "Vesting Date...........................................................................................5
   1.31   "Warrants...............................................................................................5
   1.32   "Warrant Price..........................................................................................5
   1.33   "Warrant Stock..........................................................................................5

2.   EXERCISE OF WARRANT..........................................................................................5
   2.1    Exercise Period.........................................................................................5
   2.2    Manner of Exercise......................................................................................6
   2.3    Payment.................................................................................................6
   2.4    Payment of Taxes........................................................................................6
   2.5    Fractional Shares.......................................................................................7
   2.6    Continued Validity......................................................................................7

3.   TRANSFER, DIVISION AND COMBINATION...........................................................................7
   3.1    Transfer................................................................................................7
   3.2    Division and Combination................................................................................7
   3.3    Expenses................................................................................................8
   3.4    Maintenance of Books....................................................................................8

4.   ADJUSTMENTS..................................................................................................8
   4.1    Stock Dividends, Subdivisions and Combinations..........................................................8
   4.2    Certain Other Distributions.............................................................................8
   4.3    Issuance of Additional Shares of Common Stock...........................................................9
   4.4    Issuance of Warrants or Other Rights...................................................................11
   4.5    Issuance of Convertible Securities.....................................................................11
   4.6    Superseding Adjustment.................................................................................12
   4.7    Other Provisions Applicable to Adjustments under this Section..........................................12
   4.8    Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets.......................14
   4.9    Other Action Affecting Common Stock....................................................................15
   4.10      Allocation Among Blocks of Shares...................................................................15
   4.11   Certain Limitations....................................................................................16
</TABLE>
                                       ii

<PAGE>
<TABLE>
<CAPTION>
<S> <C>                                                                                                         <C>
5.   NOTICES TO WARRANT HOLDERS..................................................................................16
   5.1    Notice of Adjustments..................................................................................16
   5.2    Notice of Corporate Action.............................................................................16

6.   NO IMPAIRMENT...............................................................................................17

7.   RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL
     AUTHORITY...................................................................................................18

8.   TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS..........................................................18

9.   RESTRICTIONS ON TRANSFERABILITY.............................................................................18
   9.1    Restrictive Legend.....................................................................................19
   9.2    Notice of Proposed Transfers...........................................................................19
   9.3    Registration Rights Agreement..........................................................................20
   9.4    Termination of Restrictions............................................................................20
   9.5    Listing on Securities Exchange.........................................................................20

10.     SUPPLYING INFORMATION....................................................................................21

11.     LOSS OR MUTILATION.......................................................................................21

12.     OFFICE OF THE COMPANY....................................................................................21

13.     FINANCIAL AND BUSINESS INFORMATION.......................................................................21
   13.1   Quarterly Information..................................................................................21
   13.2   Annual Information.....................................................................................21
   13.3   Filings................................................................................................22

14.     APPRAISAL................................................................................................22

15.     LIMITATION OF LIABILITY..................................................................................22

16.     MISCELLANEOUS............................................................................................23
   16.1   Nonwaiver and Expenses.................................................................................23
   16.2   Notice Generally.......................................................................................23
   16.3   Indemnification........................................................................................23
   16.4   Remedies...............................................................................................24
   16.5   Successors and Assigns.................................................................................24
   16.6   Amendment..............................................................................................24
   16.7   Severability...........................................................................................24
   16.8   Headings...............................................................................................24
   16.9   Governing Law..........................................................................................24


EXHIBITS

Exhibit A - Subscription Form....................................................................................26
Exhibit B - Assignment Form......................................................................................27
</TABLE>

                                      iii
<PAGE>


THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED IN
VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS THEREUNDER OR THE PROVISIONS OF
THIS WARRANT.

No. of Shares of Common Stock: 2,027,027                     Warrant No. 2



                                     WARRANT
                           To Purchase Common Stock of
                             AM COMMUNICATIONS, INC.


         THIS IS TO CERTIFY THAT SCIENTIFIC-ATLANTA STRATEGIC INVESTMENTS,
L.L.C. ("SASI"), a Delaware limited liability company, or registered assigns, is
entitled to purchase from AM COMMUNICATIONS, INC., a Delaware corporation ("the
Company"), an aggregate number of 2,027,027 shares of Common Stock (as
hereinafter defined and subject to adjustment as provided herein), in whole or
in part, including fractional parts, at a purchase price of $0.74 per share, all
on the terms and conditions and in accordance with the following hereinafter set
forth:

               Number of Shares           Vesting Date      Expiration Date
               of Common Stock              for Block         for Block
             --------------------          ------------      ------------
Block  1         675,675-1/3               July 1, 1997      July 1, 2002
Block  2         675,675-1/3               July 1, 1998      July 1, 2003
Block  3         675,677-1/3               July 1, 1999      July 1, 2004

         This Warrant was originally issued to Scientific-Atlanta, Inc., a
Georgia corporation, and is being reissued to SASI as a result of the transfer
of this Warrant from Scientific-Atlanta, Inc. to SAMMEX, Inc., a Texas
corporation, and subsequent transfer to SASI as of August 21, 2000.

1.       DEFINITIONS

         As used in this Warrant, the following terms have the respective
meanings set forth below:

         1.1 "Additional Shares of Common Stock" shall mean all shares of Common
Stock issued by the Company after the Closing Date, other than Warrant Stock.



                                        1
<PAGE>

         1.2 "Appraised Value" shall mean, in respect of any share of Common
Stock on any date herein specified, the fair saleable value of such share of
Common Stock (determined without giving effect to the discount for (i) a
minority interest or (ii) any lack of liquidity of the Common Stock or due to
the fact that the Company may have no class of equity registered under the
Exchange Act) as of the last day of the most recent fiscal month to end within
60 days prior to such date specified, based on the value of the Company, as
determined by an investment banking firm selected in accordance with the terms
of Section 15, divided by the number of Fully Diluted Outstanding shares of
Common Stock.

         1.3 "Block of Shares" shall mean a number of shares of Common Stock
equal to one-third of the total shares of Common Stock for which this Warrant
can be exercised in the aggregate, each Block of Shares being initially
675,675-1/3 shares of Common Stock; there being three Blocks of Shares
hereunder, with the Vesting Date and Expiration Date for each such Block of
Shares being as set forth above in the initial paragraph granting this Warrant.

         1.4 "Book Value" shall mean, in respect of any share of Common Stock on
any date herein specified, the consolidated book value of the Company as of the
last day of any month immediately preceding such date, divided by the number of
Fully Diluted Outstanding shares of Common Stock as determined in accordance
with GAAP by Deloitte & Touche LLP or any other firm of independent certified
public accountants of recognized national standing selected by the Company and
reasonably acceptable to the Majority Holders.

         1.5 "Business Day" shall mean any day that is not a Saturday or Sunday
or a day on which banks are required or permitted to be closed in the State of
Georgia.

         1.6 "Closing Date" shall mean the date of the original issuance of this
Warrant.

         1.7 "Commission" shall mean the Securities and Exchange Commission or
any other federal agency then administering the Securities Act and other federal
securities laws.

         1.8 "Common Stock" shall mean (except where the context otherwise
indicates) the Common Stock, $0.10 par value, of the Company as constituted on
the Closing Date, and any capital stock into which such Common Stock may
thereafter be changed, and shall also include (i) capital stock of the Company
of any other class (regardless of how denominated) issued to the holders of
shares of Common Stock upon any reclassification thereof which is also not
preferred as to dividends or assets over any other class of stock of the Company
and which is not subject to redemption and (ii) shares of common stock of any
successor or acquiring corporation (as defined in Section 4.8) received by or
distributed to the holders of Common Stock of the Company in the circumstances
contemplated by Section 4.8.

         1.9 "Convertible Securities" shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable,
with or without payment of additional consideration in cash or property, for
Additional Shares of Common Stock, either immediately or upon the occurrence of
a specified date or a specified event.



                                        2
<PAGE>

         1.10 "Current Market Price" shall mean, in respect of any share of
Common Stock on any date herein specified, the higher of (a) the Book Value per
share of Common Stock at such date, and (b) the Appraised Value per share of
Common Stock as at such date, or if there shall then be a public market for the
Common Stock, the higher of (x) the Book Value per share of Common Stock at such
date, and (y) the average of the daily market prices for 30 consecutive Business
Days commencing 45 days before such date. The daily market price for each such
Business Day shall be (i) the last sale price on such day on the principal stock
exchange on which such Common Stock is then listed or admitted to trading, (ii)
if no sale takes place on such day on any such exchange, the average of the last
reported closing bid and asked prices on such day as officially quoted on any
such exchange, (iii) if the Common Stock is not then listed or admitted to
trading on any stock exchange, the average of the last reported closing bid and
asked prices on such day in the over-the-counter market, as furnished by the
National Association of Securities Dealers Automatic Quotation System or the
National Quotation Bureau, Inc.; provided, however, that if neither such
corporation at the time is engaged in the business of reporting such prices,
then such prices shall be as furnished by any similar firm then engaged in such
business or, if there is no such firm, as furnished by any member of the NASD
selected mutually by the Majority Holders and the Company or, if they cannot
agree upon such selection, then as selected by two such members of the NASD, one
of which shall be selected by the Majority Holders and one of which shall be
selected by the Company.

         1.11 "Current Warrant Price" shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of Common
Stock may be purchased pursuant to this Warrant on such date.

         1.12 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect from time to time.

         1.13 "Exercise Period" shall mean, with respect to each Block of Shares
hereunder, the period during which this Warrant is exercisable pursuant to
Section 2. 1.

         1.14 "Expiration Date" shall mean, with respect to each Block of Shares
hereunder, except as otherwise provided in Section 2.1(b) hereof, the following
dates:

                                                   Expiration
                                               Date for Such Block
                                               -------------------
                  Block 1                         July 1, 2002
                  Block 2                         July 1, 2003
                  Block 3                         July 1, 2004

         1.15 "Fully Diluted Outstanding" shall mean, when used with reference
to Common Stock, at any date as of which the number of shares thereof is to be
determined, all shares of Common Stock Outstanding at such date and all shares
of Common Stock issuable in respect of this Warrant and other options or
warrants to purchase, or securities convertible into, shares of Common Stock
outstanding on such date which would be deemed outstanding in accordance with
GAAP for purposes of determining Book Value or net income per share.


                                        3

<PAGE>

         1.16 "GAAP" shall mean generally accepted accounting principles in the
United States of America as from time to time in effect.

         1.17 "Holder" shall mean the Person in whose name the Warrant set forth
herein is registered on the books of the Company maintained for such purpose.

         1.18 "Majority Holders" shall mean the holders of Warrants exercisable
for in excess of 50% of the aggregate number of shares of Common Stock then
purchasable upon exercise of all Warrants, whether or not then exercisable.

         1.19 "NASD" shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.

         1.20 "Other Property" shall have the meaning set forth in Section 4.8.

         1.21 "Outstanding" shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be determined,
all issued shares of Common Stock, except shares then owned or held by or for
the account of the Company or any subsidiary thereof, and shall include all
shares issuable in respect of outstanding scrip or any certificates representing
fractional interests in shares of Common Stock.

         1.22 "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).

         1.23 "Preferred Stock" shall have the meaning set forth in Section 2.1.

         1.24 "Registration Rights Agreement" shall have the meaning set forth
in Section 9.

         1.25 "Restricted Common Stock" shall mean shares of Common Stock which
are, or which upon their issuance on the exercise of this Warrant would be,
evidenced by a certificate bearing the restrictive legend set forth in Section
9.1(a).

         1.26 "Scientific-Atlanta" shall mean Scientific-Atlanta, Inc., a
Georgia corporation.

         1.27 "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.


                                        4

<PAGE>

         1.28 "Transfer" shall mean any disposition of any Warrant or Warrant
Stock or of any interest in either thereof, which would constitute a sale
thereof within the meaning of the Securities Act.

         1.29 "Transfer Notice" shall have the meaning set forth in Section 9.2.

         1.30 "Vesting Date" shall mean, with respect to each Block of Shares
hereunder, except as otherwise provided in Section 2.1(b) hereof, the following
dates:

                                              Vesting Date for
                                                 Such Block
                                              ----------------
                  Block 1                       July 1, 1997
                  Block 2                       July 1, 1998
                  Block 3                       July 1, 1999

         1.31 "Warrants" shall mean this Warrant and all warrants issued upon
transfer, division or combination of, or in substitution for, any thereof. All
Warrants shall at all times be identical as to terms and conditions and date,
except as to the number of shares of Common Stock for which they may be
exercised.

         1.32 "Warrant Price" shall mean an amount equal to (i) the number of
shares of Common Stock being purchased upon exercise of this Warrant pursuant to
Section 2. 1, multiplied by (ii) the Current Warrant Price as of the date of
such exercise.

         1.33 "Warrant Stock" shall mean the shares of Common Stock purchased by
the holders of the Warrants upon the exercise thereof.

2.       EXERCISE OF WARRANT

         2.1      Exercise Period.

                  (a) On and after the Vesting Date for each Block of Shares
         hereunder and until 5:00 P.M., Eastern time, on the Expiration Date for
         such Block of Shares, Holder may exercise this Warrant, on any Business
         Day, for all or any part of the number of shares of Common Stock
         purchasable under this Warrant with respect to such Block of Shares.

                  (b) In addition, in the event that the Distribution Agreement
         and Manufacturing License between the Company and Scientific-Atlanta
         dated June 14, 1996 is terminated on or before the Vesting Date, then,
         with respect to any Block of Shares: (i) any Block of Shares not
         previously vested shall be deemed vested, and shall be vested, on the
         day before such date of termination and (ii) the Expiration Date for
         such Block of Shares shall be the 180th day (or the next succeeding
         business day if such 180th day is not a business day) after such date
         of termination.



                                        5
<PAGE>

         2.2 Manner of Exercise. In order to exercise this Warrant, whether in
whole or in part, and with respect to any portion of any Block of Shares, Holder
shall deliver to the Company at its principal office at 100 Commerce Drive,
Quakertown, Pennsylvania 18951-9004 or at the office or agency designated by the
Company pursuant to Section 12, (i) a written notice of Holder's election to
exercise this Warrant, which notice shall specify the number of shares of Common
Stock to be purchased, (ii) payment of the Warrant Price and (iii) this Warrant.
Such notice shall be substantially in the form of the subscription form
appearing at the end of this Warrant as Exhibit A, duly executed by Holder or
its agent or attorney. Upon receipt thereof, the Company shall, as promptly as
practicable, and in any event within five (5) Business Days thereafter, execute
or cause to be executed and deliver or cause to be delivered to Holder a
certificate or certificates representing the aggregate number of full shares of
Common Stock issuable upon such exercise, together with cash in lieu of any
fraction of a share, as hereinafter provided. The stock certificate or
certificates so delivered shall be, to the extent possible, in such denomination
or denominations as such Holder shall request in the notice and shall be
registered in the name of Holder or, subject to Section 9, such other name as
shall be designated in the notice. This Warrant shall be deemed to have been
exercised and such certificate or certificates shall be deemed to have been
issued, and Holder or any other Person so designated to be named therein shall
be deemed to have become a holder of record of such shares for all purposes, as
of the date the notice, together with the cash or check or checks and this
Warrant, is received by the Company as described above and all taxes required to
be paid by Holder, if any, pursuant to Section 2.4 prior to the issuance of such
shares have been paid. If this Warrant shall have been exercised in part, the
Company shall, at the time of delivery of the certificate or certificates
representing Warrant Stock, deliver to Holder a new Warrant evidencing the
rights of Holder to purchase the unpurchased shares of Common Stock called for
by this Warrant, which new Warrant shall in all other respects be identical with
this Warrant, or, at the request of Holder, appropriate notation may be made on
this Warrant and the same returned to Holder. Notwithstanding any provision
herein to the contrary, the Company shall not be required to register shares in
the name of any Person who acquired this Warrant (or part hereof) or any Warrant
Stock otherwise than in accordance with this Warrant.

         2.3 Payment. Payment of the Warrant Price shall be made at the option
of the Holder by (a) certified or official bank check, (b) the cancellation by
Holder of indebtedness of the Company to Holder (if any) in an amount equal to
such sum, or (c) a combination of (a) and (b) as Holder may determine.

         2.4 Payment of Taxes. All shares of Common Stock issuable upon the
exercise of this Warrant pursuant to the terms hereof shall be validly issued,
fully paid and nonassessable and without any preemptive rights. The Company
shall pay all expenses in connection with, and all taxes and other governmental
charges that may be imposed with respect to, the issue or delivery thereof,
unless such tax or charge is imposed by law upon Holder, in which case such
taxes or charges shall be paid by Holder. The Company shall not be required,
however, to pay any tax or other charge imposed in connection with any transfer
involved in the issue of any certificate for shares of Common Stock issuable
upon exercise of this Warrant in any name other than that of Holder, and in such
case the Company shall not be required to issue or deliver any stock certificate
until such tax or other charge has been paid or it has been established to the
satisfaction of the Company that no such tax or other charge is due.



                                        6
<PAGE>

         2.5 Fractional Shares. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants, the rights under
which are exercised in the same transaction, would otherwise be entitled to
purchase upon such exercise, the Company shall pay a cash adjustment in respect
of such final fraction in an amount equal to the same fraction of the Current
Market Price per share of Common Stock on the date of exercise.

         2.6 Continued Validity. A holder of shares of Common Stock issued upon
the exercise of this Warrant, in whole or in part (other than a holder who
acquires such shares after the same have been publicly sold pursuant to a
Registration Statement under the Securities Act or sold pursuant to Rule 144
thereunder), shall continue to be entitled with respect to such shares to all
rights to which it would have been entitled as Holder under Sections 9, 10, 14
and 17 of this Warrant. The Company will, at the time of each exercise of this
Warrant, in whole or in part, upon the request of the holder of the shares of
Common Stock issued upon such exercise hereof, acknowledge in writing, in form
reasonably satisfactory to such holder, its continuing obligation to afford to
such holder all such rights; provided, however, that if such holder shall fail
to make any such request, such failure shall not affect the continuing
obligation of the Company to afford to such holder all such rights.

3.       TRANSFER, DIVISION AND COMBINATION

         3.1 Transfer. Subject to compliance with Sections 9 hereof, transfer of
this Warrant and all rights hereunder, in whole or in part, shall be registered
on the books of the Company to be maintained for such purpose, upon surrender of
this Warrant at the principal office of the Company referred to in Section 2.1
or the office or agency designated by the Company pursuant to Section 12,
together with a written assignment of this Warrant substantially in the form of
Exhibit B hereto duly executed by Holder or its agent or attorney and funds
sufficient to pay any transfer taxes payable upon the making of such transfer.
Upon such surrender and, if required, such payment, the Company shall, subject
to Section 9, execute and deliver a new Warrant or Warrants in the name of the
assignee or assignees and in the denomination specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A
Warrant, if properly assigned in compliance with Section 9, may be exercised by
a new Holder for the purchase of shares of Common Stock without having a new
Warrant issued.

         3.2 Division and Combination. Subject to Section 9, this Warrant may be
divided or combined with other Warrants upon presentation hereof at the
aforesaid office or agency of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by Holder or its agent or attorney. Subject to compliance with Section
3.1 and with Section 9, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.


                                        7
<PAGE>

         3.3 Expenses. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 3.

         3.4 Maintenance of Books. The Company agrees to maintain, at its
aforesaid office or agency, books for the registration and the registration of
transfer of the warrants.


4.       ADJUSTMENTS

         The number of shares of Common Stock for which this Warrant is
exercisable, or the price at which such shares may be purchased upon exercise of
this Warrant, shall be subject to adjustment from time to time as set forth in
this Section 4. The Company shall give each Holder notice of any event described
below which requires an adjustment pursuant to this Section 4 at the time of
such event.

         4.1 Stock Dividends, Subdivisions and Combinations. If at any time the
Company shall:

             (a) take a record of the holders of its Common Stock for the
         purpose of entitling them to receive a dividend payable in, or other
         distribution of, Additional Shares of Common Stock,

             (b) subdivide its outstanding shares of Common Stock into a larger
         number of shares of Common Stock, or

             (c) combine its outstanding shares of Common Stock into a smaller
         number of shares of Common Stock,

then (i) the number of shares of Common Stock for which this Warrant is
exercisable immediately after the occurrence of any such event shall be adjusted
to equal the number of shares of Common Stock which a record holder of the same
number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to
receive after the happening of such event, and (ii) the Current Warrant Price
shall be adjusted to equal (A) the Current Warrant Price multiplied by (B) a
ratio, the numerator of which is the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to the adjustment and the
denominator of which is the number of shares for which this Warrant is
exercisable immediately after such adjustment.

         4.2 Certain Other Distributions. If at any time the Company shall take
a record of the holders of its Common Stock for the purpose of entitling them to
receive any dividend or other distribution of:

             (a) cash,

                                       8
<PAGE>

             (b) any evidences of its indebtedness, any shares of its stock or
         any other securities or property of any nature whatsoever (other than
         Convertible Securities or Additional Shares of Common Stock), or

             (c) any warrants or other rights to subscribe for or purchase any
         evidences of its indebtedness, any shares of its stock or any other
         securities or property of any nature whatsoever (other than Convertible
         Securities or Additional Shares of Common Stock),

then and in such event (unless and until such divided or other distribution is
legally abandoned) provision shall be made so that Holder, upon exercise of this
Warrant, shall receive, in addition to the number of shares of Common Stock
receivable thereupon, the amount of such cash, evidences of indebtedness, shares
of stock, other securities or property or warrants or other subscription or
purchase rights so distributable which Holder would have received had Holder
exercised prior to the date of such event and had thereafter, during the period
from the date of such event to and including the exercise date, retained the
same during such period, subject to all other adjustments called for during such
period under this Section 4 with respect to the rights of Holders of the
Warrants. A reclassification of the Common Stock (other than a change in par
value, or from par value to no par value or from no par value to par value) into
shares of Common Stock and shares of any other class of stock shall be deemed a
distribution by the Company to the holders of its Common Stock of such shares of
such other class of stock within the meaning of this Section 4.2 and, if the
outstanding shares of Common Stock shall be changed into a larger or smaller
number of shares of Common Stock as a part of such reclassification, such change
shall be deemed a subdivision or combination, as the case may be, of the
outstanding shares of Common Stock within the meaning of Section 4. 1.

         4.3      Issuance of Additional Shares of Common Stock.

                  (a) If the Company shall (except as hereinafter provided) at
         any time issue or sell any Additional Shares of Common Stock in
         exchange for consideration in an amount per Additional Share of Common
         Stock less than the Current Warrant Price at the time the Additional
         Shares of Common Stock are issued, then (i) the Current Warrant Price
         as to the number of shares for which this Warrant is exercisable prior
         to such adjustment shall be reduced to a price determined by dividing
         (A) an amount equal to the sum of (x) the number of shares of Common
         Stock Outstanding immediately prior to such issue or sale multiplied by
         the then existing Current Warrant Price, plus (y) the consideration, if
         any, received by the Company upon such issue or sale, by (B) the total
         number of shares of Common Stock Outstanding immediately after such
         issue or sale; and (ii) the number of shares of Common Stock for which
         this Warrant is exercisable shall be adjusted to equal the product
         obtained by multiplying the Current Warrant Price in effect immediately
         prior to such issue or sale by the number of shares of Common Stock for
         which this Warrant is exercisable immediately prior to such issue or
         sale and dividing the product thereof by the Current Warrant Price
         resulting from the adjustment made pursuant to clause (i) above.



                                       9
<PAGE>

                  (b) If the Company shall (except as hereinafter provided) at
         any time issue or sell any Additional Shares of Common Stock, in
         exchange for consideration in an amount per Additional Share of Common
         Stock less than the Current Market Price at the time the Additional
         Shares of Common Stock are issued, then (i) the number of shares of
         Common Stock for which this Warrant is exercisable shall be adjusted to
         equal the product obtained by multiplying the number of shares of
         Common Stock for which this Warrant is exercisable immediately prior to
         such issue or sale by a fraction (A) the numerator of which shall be
         the number of shares of Common Stock Outstanding immediately after such
         issue or sale, and (B) the denominator of which shall be the number of
         shares of Common Stock Outstanding immediately prior to such issue or
         sale plus the number of shares which the aggregate offering price of
         the total number of such Additional Shares of Common Stock would
         purchase at the then Current Market Price; and (ii) the Current Warrant
         Price as to the number of shares for which this Warrant is exercisable
         prior to such adjustment shall be adjusted by multiplying such Current
         Warrant Price by a fraction (X) the numerator of which shall be the
         number of shares for which this Warrant is exercisable immediately
         prior to such issue or sale; and (Y) the denominator of which shall be
         the number of shares of Common Stock purchasable immediately after such
         issue or sale.

                  (c) If at any time the Company (except as hereinafter
         provided) shall issue or sell any Additional Shares of Common Stock, in
         exchange for consideration in an amount per Additional Shares of Common
         Stock which is less than the Current Warrant Price and Current Market
         Price at the time the Additional Shares of Common Stock are issued, the
         adjustment required under Section 4.3 shall be made in accordance with
         the formula in paragraph (a) or (b) above which results in the lower
         Current Warrant Price following such adjustment. The provisions of
         paragraphs (a) and (b) of Section 4.3 shall not apply to any issuance
         of Additional Shares of Common Stock for which an adjustment is
         provided under Section 4.1 or 4.2. No adjustment of the number of
         shares of Common Stock for which this Warrant shall be exercisable
         shall be made under paragraph (a) or (b) of Section 4.3 upon the
         issuance of any Additional Shares of Common Stock which are issued
         pursuant to the exercise of any warrants or other subscription or
         purchase rights or pursuant to the exercise of any conversion or
         exchange rights in any Convertible Securities, if any such adjustment
         shall previously have been made upon the issuance of such warrants or
         other rights or upon the issuance of such Convertible Securities (or
         upon the issuance of any warrant or other rights therefor) pursuant to
         Section 4.4 or Section 4.5.

                  (d) For the purposes of this Section 4.3 only, "Additional
         Shares of Common Stock" shall not include the following: (i) 4,000,000
         shares of Common Stock issuable under the Company's 1991 Incentive
         Stock Option Plan; (ii) 2,100,000 shares of Common Stock issuable under
         the Company's 1982 Incentive Stock Option Plan; (iii) warrants issued
         in 1988 (not Series D), 1989 and 1993 covering 300,000 shares of Common
         Stock in the aggregate; and (iv) 2,582,500 shares of Common Stock
         issuable upon the conversion of 25,825 currently outstanding shares of
         Senior Convertible Redeemable Preferred Stock.

                                       10
<PAGE>

         4.4 Issuance of Warrants or Other Rights. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible Securities,
whether or not the rights to exchange or convert thereunder are immediately
exercisable, and the price per share for which Common Stock is issuable upon the
exercise of such Warrants or other rights or upon conversion or exchange of such
Convertible Securities shall be less than the Current Warrant Price or the
Current Market Price in effect immediately prior to the time of such issue or
sale, then the number of shares for which this Warrant is exercisable and the
Current Warrant Price shall be adjusted as provided in Section 4.3 on the basis
that the maximum number of Additional Shares of Common Stock issuable pursuant
to all such warrants or other rights or necessary to effect the conversion or
exchange of all such Convertible Securities shall be deemed to have been issued
and outstanding and the Company shall be deemed to have received all of the
consideration payable therefor, if any, as of the date of the issuance of such
warrants or other rights. No further adjustments of the Current Warrant Price
shall be made upon the actual issue of such Common Stock or of such Convertible
Securities upon exercise of such warrants or other rights or upon the actual
issue of such Common Stock upon such conversion or, exchange of such Convertible
Securities.

         4.5 Issuance of Convertible Securities. If at any time the Company
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a distribution of, or shall in any manner (whether
directly or by assumption in a merger in which the Company is the surviving
corporation) issue or sell, any Convertible Securities, whether or not the
rights to exchange or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such conversion or
exchange shall be less than the Current Warrant Price or Current Market Price in
effect immediately prior to the time of such issue or sale, then the number of
Shares for which this Warrant, is exercisable and the Current Warrant Price
shall be adjusted as provided in Section 4.3 on the basis that the maximum
number of Additional Shares of Common Stock necessary to effect the conversion
or exchange of all such Convertible Securities shall be deemed to have been
issued and outstanding and the Company shall be deemed to have received all of
the consideration payable therefor, if any, as of the date of actual issuance of
such Convertible Securities. No adjustment of the number of Shares for which
this Warrant is exercisable and the Current Warrant Price shall be made under
this Section 4.5 upon the issuance of any Convertible Securities which are
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any such adjustment shall previously have been made
upon the issuance of such warrants or other rights pursuant to Section 4.4. No
further adjustments of the number of Shares for which this Warrant is
exercisable and the Current Warrant Price shall be made upon the actual issue of
such Common Stock upon conversion or exchange of such Convertible Securities
and, if any issue or sale of such Convertible Securities is made upon exercise
of any warrant or other right to subscribe for or to purchase any such
Convertible Securities for which adjustments of the number of Shares for which
this Warrant is exercisable and the Current Warrant Price have been or are to be
made pursuant to other provisions of this Section 4, no further adjustments of
the number of Shares for which this Warrant is exercisable and the Current
Warrant Price shall be made by reason of such issue or sale.

                                       11
<PAGE>

         4.6 Superseding Adjustment. If, at any time after any adjustment of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price shall have been made pursuant to Section 4.4 or Section
4.5 as the result of any issuance of warrants, rights or Convertible Securities,

                  (a) such warrants or rights, or the right of conversion or
         exchange in such other Convertible Securities, shall expire, and all or
         a portion of such warrants or rights, or the right of conversion or
         exchange with respect to all or a portion of such other Convertible
         Securities, as the case may be, shall not have been exercised, or

                  (b) the consideration per share for which shares of Common
         Stock are issuable pursuant to such warrants or rights, or the terms of
         such other Convertible Securities, shall be increased solely by virtue
         of provisions therein contained for an automatic increase in such
         consideration per share upon the occurrence of a specified date or
         event,

then for each outstanding Warrant such previous adjustment shall be rescinded
and annulled and the Additional Shares of Common Stock which were deemed to have
been issued by virtue of the computation made in connection with the adjustment
so rescinded and annulled shall no longer be deemed to have been issued by
virtue of such computation. Thereupon, a recomputation shall be made of the
effect of such rights or options or other Convertible Securities on the basis of

                  (y) treating the number of Additional Shares of Common Stock
         or other property, if any, theretofore actually issued or issuable
         pursuant to the previous exercise of any such warrants or rights or any
         such right of conversion or exchange, as having been issued on the date
         or dates of any such exercise and for the consideration actually
         received and receivable therefor, and

                  (z) treating any such warrants or rights or any such other
         Convertible Securities which then remain outstanding as having been
         granted or issued immediately after the time of such increase of the
         consideration per share for which shares of Common Stock or other
         property are issuable under such warrants or rights or other
         Convertible Securities; whereupon a new adjustment of the number of
         shares of Common Stock for which this Warrant is exercisable and the
         Current Warrant Price shall be made, which new adjustment shall
         supersede the previous adjustment so rescinded and annulled.

         4.7 Other Provisions Applicable to Adjustments under this Section. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock for which this Warrant is exercisable and the
Current Warrant Price provided for in this Section 4:

                                       12
<PAGE>

                  (a) Computation of Consideration. To the extent that any
         Additional Shares of Common Stock or any Convertible Securities or any
         warrants or other rights to subscribe for or purchase any Additional
         Shares of Common Stock or any Convertible Securities shall be issued
         for cash consideration, the consideration received by the Company
         therefor shall be the amount of the cash received by the Company
         therefor, or, if such Additional Shares of Common Stock or Convertible
         Securities are offered by the Company for subscription, the
         subscription price, or, if such Additional Shares of Common Stock or
         Convertible Securities are sold to underwriters or dealers for public
         offering without a subscription offering, the initial public-offering
         price (in any such case subtracting any amounts paid or receivable for
         accrued interest or accrued dividends and without taking into account
         any compensation, discounts or expenses paid or incurred by the Company
         for and in the underwriting of, or otherwise in connection with, the
         issuance thereof). To the extent that such issuance shall be for a
         consideration other than cash, then, except as herein otherwise
         expressly provided, the amount of such consideration shall be deemed to
         be the fair value of such consideration at the time of such issuance as
         determined in good faith by the Board of Directors of the Company. In
         case any Additional Shares of Common Stock or any Convertible
         Securities or any warrants or other rights to subscribe for or purchase
         such Additional Shares of Common Stock or Convertible Securities shall
         be issued in connection with any merger in which the Company issues any
         securities, the amount of consideration therefor shall be deemed to be
         the fair value, as determined in good faith by the Board of Directors
         of the Company, of such portion of the assets and business of the
         nonsurviving corporation as such Board in good faith shall determine to
         be attributable to such Additional Shares of Common Stock, Convertible
         Securities, warrants or other rights, as the case may be. The
         consideration for any Additional Shares of Common Stock issuable
         pursuant to any warrants or other rights to subscribe for or purchase
         the same shall be the consideration received by the Company for issuing
         such warrants or other rights plus the additional consideration payable
         to the Company upon exercise of such warrants or other rights. The
         consideration for any Additional Shares of Common Stock issuable
         pursuant to the terms of any Convertible Securities shall be the
         consideration received by the Company for issuing warrants or other
         rights to subscribe for or purchase such Convertible Securities, plus
         the consideration paid or payable to the Company in respect of the
         subscription for or purchase of such Convertible Securities, plus the
         additional consideration, if any, payable to the Company upon the
         exercise of the right of conversion or exchange in such Convertible
         Securities. In case of the issuance at any time of any Additional
         Shares of Common Stock or Convertible Securities in payment or
         satisfaction of any dividends upon any class of stock other than Common
         Stock, the Company shall be deemed to have received for such Additional
         Shares of Common Stock or Convertible Securities a consideration equal
         to the amount of such dividend so paid or satisfied.

                                       13
<PAGE>

                  (b) When Adjustments to Be Made. The adjustments required by
         this Section 4 shall be made whenever and as often as any specified
         event requiring an adjustment shall occur, except that any adjustment
         of the number of shares of Common Stock for which this Warrant is
         exercisable that would otherwise be required may be postponed (except
         in the case of a subdivision or combination of shares of the Common
         Stock, as provided for in Section 4.1) up to, but not beyond the date
         of exercise if such adjustment either by itself or with other
         adjustments not previously made adds or subtracts less than 1% of the
         shares of Common Stock for which this Warrant is exercisable
         immediately prior to the making of such adjustment. Any adjustment
         representing a change of less than such minimum amount (except as
         aforesaid) which is postponed shall be carried forward and made as soon
         as such adjustment, together with other adjustments required by this
         Section 4 and not previously made, would result in a minimum adjustment
         or on the date of exercise. For the purpose of any adjustment, any
         specified event shall be deemed to have occurred at the close of
         business on the date of its occurrence.

                  (c) Fractional Interests. In computing adjustments under this
         Section 4, fractional interests in Common Stock shall be taken into
         account to the nearest 1/10th of a share.

                  (d) Escrow of Warrant Stock. If after any property becomes
         distributable pursuant to this Section 4 by reason of the taking of any
         record of the holders of Common Stock, but prior to the occurrence of
         the event for which such record is taken, and Holder exercises this
         Warrant, any such property or Additional Shares of Common Stock
         issuable upon exercise by reason of such adjustment shall be deemed the
         last shares of Common Stock for which this Warrant is exercised
         (notwithstanding any other provision to the contrary herein) and such
         shares or other property shall be held in escrow for Holder by the
         Company to be issued to Holder upon and to the extent that the event
         actually takes place. Notwithstanding any other provision to the
         contrary herein, if the event for which such record was taken fails to
         occur or is rescinded, then such escrowed shares shall be cancelled by
         the Company and escrowed property returned.

                  (e) Challenge to Good Faith Determination. Whenever the Board
         of Directors of the Company shall be required to make a determination
         in good faith of the fair value of any item under this Section 4, such
         determination may be challenged in good faith by the Majority Holders,
         and any dispute shall be resolved by an investment banking firm of
         recognized national standing selected by the Company and acceptable to
         the Majority Holders.



                                       14
<PAGE>

         4.8 Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Company shall reorganize its capital,
reclassify its capital stock, consolidate or merge with or into another
corporation (where the Company is not the surviving corporation or where there
is a change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its property,
assets or business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition of
assets, shares of common stock of the successor or acquiring corporation, or any
cash, shares of stock or other securities or property of any nature whatsoever
(including warrants or other subscription or purchase rights) in addition to or
in lieu of common stock of the successor or acquiring corporation ("Other
Property"), are to be received by or distributed to the holders of Common Stock
of the Company, then each Holder shall have the right thereafter to receive,
upon exercise of such Warrant, the number of shares of common stock of the
successor or acquiring corporation or of the Company, if it is the surviving
corporation, and Other Property receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets
by a holder of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined by resolution of the Board of Directors of
the Company) in order to provide for adjustments of shares of the Common Stock
for which this Warrant is exercisable which shall be as nearly equivalent as
practicable to the adjustments provided for in this Section 4. For purposes of
this Section 4.8, "common stock of the successor or acquiring corporation" shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and which
is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible into or
exchangeable for any such stock, either immediately or upon the arrival of a
specified date or the happening of a specified event and any warrants or other
rights to subscribe for or purchase any such stock. The foregoing provisions of
this Section 4.8 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or disposition of assets.

         4.9 Other Action Affecting Common Stock. In case at any time or from
time to time the Company shall take any action in respect of its Common Stock
other than action described in this Section 4, then, unless such action will not
have a materially adverse effect upon the rights of the Holders, the number of
shares of Common Stock or other stock for which this Warrant is exercisable
and/or the purchase price thereof shall be adjusted in such manner as may be
equitable in the circumstances.



                                       15
<PAGE>

         4.10 Allocation Among Blocks of Shares. In the event of any adjustment,
made pursuant to this Section 4, to the number of shares of Common Stock for
which this Warrant is exercisable, the number of shares constituting such
adjustment, whether an increase or a decrease (such number of shares, the
"Adjusting Number of Shares") shall be allocated among the three Blocks of
Shares in equal amounts; and, if the Adjusting Number of Shares is a positive
number, the Vesting Date for the incremental shares so allocated shall be the
same as the Vesting Date for the Block of Shares to which such shares are
allocated. Provided, however, that: (i) if the date of such adjustment is after
a date which is later than thirty (30) days prior to the Expiration Date for any
Block of Shares, no portion of the Adjusting Number of Shares shall be allocated
to such expiring or expired Block of Shares and, instead, the Adjusting Number
of Shares shall be allocated to the remaining one or two Block of Shares, as the
case may be; and (ii) in the event the Adjusting Number of Shares is not equally
divisible by two or three (as the case may be, where allocation is being made
among two or three Blocks of Shares), the excess amount of shares shall be
allocated to the Block of Shares having the latest Expiration Date.

         4.11 Certain Limitations. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by reason
of any adjustment hereunder, would cause the Current Warrant Price to be less
than the par value per share of Common Stock.

5.       NOTICES TO WARRANT HOLDERS

         5.1 Notice of Adjustments. Whenever the number of shares of Common
Stock for which this Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of the Warrants, shall
be adjusted pursuant to Section 4, the Company shall forthwith prepare a
certificate to be executed by the chief financial officer of the Company setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated (including a description of the basis on
which the Board of Directors of the Company determined the fair value of any
evidences of indebtedness, shares of stock, other securities or property or
warrants or other subscription or purchase rights referred to in Section
4.7(a)), specifying the number of shares of Common Stock for which this Warrant
is exercisable and (if such adjustment was made pursuant to Section 4.8 or 4.9)
describing the number and kind of any other shares of stock or Other Property
for which this Warrant is exercisable, and any change in the purchase price or
prices thereof, after giving effect to such adjustment or change. The Company
shall promptly cause a signed copy of such certificate to be delivered to each
Holder in accordance with Section 17.2. The Company shall keep at its office or
agency designated pursuant to Section 12 copies of all such certificates and
cause the same to be available for inspection at said office during normal
business hours by any Holder or any prospective purchaser of a Warrant
designated by a Holder thereof.

         5.2      Notice of Corporate Action.  If at any time

                  (a) The Company shall take a record of the holders of its
         Common Stock for the purpose of entitling them to receive a dividend or
         other distribution, or any right to subscribe for or purchase any
         evidences of its indebtedness, any shares of stock of any class or any
         other securities or property, or to receive any other right, or

                  (b) there shall be any capital reorganization of the Company,
         any reclassification or recapitalization of the capital stock of the
         Company or any consolidation or merger of the Company with, or any
         sale, transfer or other disposition of all or substantially all the
         property, assets or business of the Company to, another corporation, or

                  (c) there shall be a voluntary or involuntary dissolution,
         liquidation or winding up of the Company;

                                       16
<PAGE>

then, in any one or more of such cases, the Company shall give to Holder (i) at
least 30 days' prior written notice of the date on which a record date shall be
selected for such dividend, distribution or right or for determining rights to
vote in respect of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, and (ii) in the case of any such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up, at least 30 days' prior written notice of the date when the same shall take
place. Such notice in accordance with the foregoing clause also shall specify
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, the date on which the holders of Common Stock
shall be entitled to any such dividend, distribution or right, and the amount
and character thereof, and (ii) the date on which any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up is to take place and the time, if any
such time is to be fixed, as of which the holders of Common Stock shall be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification, merger,
consolidation, sale, transfer, disposition, dissolution, liquidation or winding
up. Each such written notice shall be sufficiently given if addressed to Holder
at the last address of Holder appearing on the books of the Company and
delivered in accordance with Section 17.2.

6.       NO IMPAIRMENT

         The Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Warrant, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of Holder
against impairment. Without limiting the generality of the foregoing, the
Company will (a) not increase the par value of any shares of Common Stock
receivable upon the exercise of this Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (b) take all
such action as may be necessary or appropriate in order that the Company may
validly and legally issue fully paid and nonassessable shares of Common Stock
upon the exercise of this Warrant, and (c) use its best efforts to obtain all
such authorizations, exemptions or consents from any public regulatory body
having jurisdiction thereof as may be necessary to enable the Company to perform
its obligations under this Warrant.

         Upon the request of Holder, the Company will at any time during the
period this Warrant is outstanding acknowledge in writing, in form satisfactory
to Holder, the continuing validity of this Warrant and the obligations of the
Company hereunder.


                                       17
<PAGE>


7.       RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
         APPROVAL OF ANY GOVERNMENTAL AUTHORITY

         From and after the Closing Date, the Company shall at all times reserve
and keep available for issue upon the exercise of Warrants such number of its
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of all outstanding Warrants. All shares of Common Stock
which shall be so issuable, when issued upon exercise of any Warrant and payment
therefor in accordance with the terms of such Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive rights.

         Before taking any action which would cause an adjustment reducing the
Current Warrant Price below the then par value, if any, of the shares of Common
Stock issuable upon exercise of the Warrants, the Company shall take any
corporate action which may be necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Common Stock at
such adjusted Current Warrant Price.

         Before taking any action which would result in an adjustment in the
number of shares of Common Stock for which this Warrant is exercisable or in the
Current Warrant Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from any public
regulatory body or bodies having jurisdiction thereof.

         If any shares of Common Stock required to be reserved for issuance upon
exercise of Warrants require registration or qualification with any governmental
authority or other governmental approval or filing under any federal or state
law before such shares may be so issued, the Company will in good faith and as
expeditiously as possible and at its expense endeavor to cause such shares to be
duly registered.

8.       TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS

         In the case of all dividends or other distributions by the Company to
the holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such
case take such a record and will take such record as of the close of business on
a Business Day. The Company will not at any time, except upon dissolution,
liquidation or winding up of the Company, close its stock transfer books or
Warrant transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.

9.       RESTRICTIONS ON TRANSFERABILITY

         This Warrant shall amend, restate and replace in its entirety Warrant
No. 1 dated June 17, 1996, originally issued by the Company to
Scientific-Atlanta. The Warrants with respect to any Block of Shares shall not
be transferred prior to the Vesting Date for such Block of Shares. The Warrants
and the Warrant Stock shall not otherwise be transferred, hypothecated or
assigned before satisfaction of the conditions specified in this Section 9,
which conditions are intended to ensure compliance with the provisions of the
Securities Act with respect to the Transfer of any Warrant or any Warrant Stock.
Holder, by acceptance of this Warrant, agrees to be bound by the provisions of
this Section 9.

                                       18
<PAGE>

         9.1      Restrictive Legend.

                  (a) Except as otherwise provided in this Section 9, each
         certificate for Warrant Stock initially issued upon the exercise of
         this Warrant, and each certificate for Warrant Stock issued to any
         subsequent transferee of any such certificate, shall be stamped or
         otherwise imprinted with a legend in substantially the following form:

                           "The shares represented by this certificate have not
                  been registered under the Securities Act of 1933, as amended,
                  and are subject to the conditions specified in a certain
                  Warrant dated August 24, 2001, originally issued by AM
                  COMMUNICATIONS, INC. No transfer of the shares represented by
                  this certificate shall be valid or effective until such
                  conditions have been fulfilled. A copy of the form of said
                  Warrant is on file with the Secretary of AM COMMUNICATIONS,
                  INC. The holder of this certificate, by acceptance of this
                  certificate, agrees to be bound by the provisions of such
                  Warrant."

                  (b) Except as otherwise provided in this Section 9, each
         Warrant shall be stamped or otherwise imprinted with a legend in
         substantially the following form:

                           "This Warrant and the securities represented hereby
                  have not been registered under the Securities Act of 1933, as
                  amended, and may not be transferred in violation of such Act,
                  the rules and regulations thereunder or the provisions of this
                  Warrant."

         9.2 Notice of Proposed Transfers. Prior to any Transfer or attempted
Transfer of any Warrants or any shares of Restricted Common Stock, the holder of
such Warrants or Restricted Common Stock shall give ten days' prior written
notice (a "Transfer Notice") to the Company of such holder's intention to effect
such Transfer, describing the manner and circumstances of the proposed Transfer,
and obtain from counsel to such holder who shall be reasonably satisfactory to
the Company, an opinion that the proposed Transfer of such Warrants or such
Restricted Common Stock may be effected without registration under the
Securities Act. After receipt of the Transfer Notice and opinion, the Company
shall, within five days thereof, notify the holder of such Warrants or such
Restricted Common Stock as to whether such opinion is reasonably satisfactory
and, if so, such holder shall thereupon be entitled to Transfer such Warrants or
such Restricted Common Stock, in accordance with the terms of the Transfer
Notice. Each certificate, if any, evidencing such shares of Restricted Common
Stock issued upon such Transfer shall bear the restrictive legend set forth in
Section 9.l(a), and each Warrant issued upon such Transfer shall bear the
restrictive legend set forth in Section 9.1(b), unless in the opinion of such
counsel such legend is not required in order to ensure compliance with the
Securities Act. The holder of the Warrants or the Restricted Common Stock, as
the case may be, giving the Transfer Notice shall not be entitled to Transfer
such Warrants or such Restricted Common Stock until receipt of notice from the
Company under this Section 9.2(a) that such opinion is reasonably satisfactory.

                                       19
<PAGE>

         9.3 Registration Rights Agreement. The holders of Warrants and Warrant
Stock shall have the right to request registration of such Warrant Stock
pursuant to the Registration Rights Agreement dated as of June 17, 1996 (the
"Registration Rights Agreement") between the Company and Scientific-Atlanta.

         9.4 Termination of Restrictions. Notwithstanding the foregoing
provisions of Section 9, the restrictions imposed by this Section upon the
transferability of the Warrants, the Warrant Stock and the Restricted Common
Stock (or Common Stock issuable upon the exercise of the Warrants) and the
legend requirements of Section 9.1 shall terminate as to any particular Warrant
or share of Warrant Stock or Restricted Common Stock (or Common Stock issuable
upon the exercise of the Warrants) (i) when and so long as such security shall
have been effectively registered under the Securities Act and disposed of
pursuant thereto or (ii) when the Company shall have received an opinion of
counsel reasonably satisfactory to it that such shares may be transferred
without registration thereof under the Securities Act. Whenever the restrictions
imposed by Section 9 shall terminate as to this Warrant, as hereinabove
provided, the Holder hereof shall be entitled to receive from the Company, at
the expense of the Company, a new Warrant bearing the following legend in place
of the restrictive legend set forth hereon:

                           "THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN
                  WARRANT CONTAINED IN SECTION 9 HEREOF TERMINATED ON _______
                  __, ____, AND ARE OF NO FURTHER FORCE AND EFFECT."

All Warrants issued upon registration of transfer, division or combination of,
or in substitution for, any Warrant or Warrants entitled to bear such legend
shall have a similar legend endorsed thereon. Whenever the restrictions imposed
by this Section shall terminate as to any share of Restricted Common Stock, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, at the Company's expense, a new certificate representing such Common
Stock not bearing the restrictive legend set forth in Section 9.1(a).

         9.5 Listing on Securities Exchange. If the Company shall list any
shares of Common Stock on any securities exchange, it will, at its expense, list
thereon, maintain and, when necessary, increase such listing of, all shares of
Common Stock issued or, to the extent permissible under the applicable
securities exchange rules, issuable upon the exercise of this Warrant so long as
any shares of Common Stock shall be so listed during any such Exercise Period.


                                       20
<PAGE>

10.      SUPPLYING INFORMATION

         The Company shall cooperate with each Holder of a Warrant and each
holder of Restricted Common Stock in supplying such information as may be
reasonably necessary for such holder to complete and file any information
reporting forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act for the sale of any
Warrant or Restricted Common Stock.

11.      LOSS OR MUTILATION

         Upon receipt by the Company from any Holder of evidence reasonably
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of this Warrant and indemnity reasonably satisfactory to it and in
case of mutilation upon surrender and cancellation hereof, the Company will
execute and deliver in lieu hereof a new Warrant of like tenor to such Holder;
provided, in the case of mutilation, no indemnity shall be required if this
Warrant in identifiable form is surrendered to the Company for cancellation.

12.      OFFICE OF THE COMPANY

         As long as any of the Warrants remain outstanding, the Company shall
maintain an office or agency (which may be the Principal executive offices of
the Company) where the Warrants may be presented for exercise, registration of
transfer, division or combination as provided in this Warrant.

13.      FINANCIAL AND BUSINESS INFORMATION

         13.1 Quarterly Information. The Company will deliver to each Holder, as
soon as practicable after the end of each of the first three quarters of the
Company, and in any event within 45 days thereafter, one copy of an unaudited
consolidated balance sheet of the Company and its subsidiaries as at the close
of such quarter, and the related unaudited consolidated statements of income and
cash flows of the Company for such quarter and, in the case of the second and
third quarters, for the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year. Such financial statements shall be prepared
by the Company in accordance with GAAP and accompanied by the certification of
the Company's chief executive officer or chief financial officer that such
financial statements are complete and correct and present fairly the
consolidated financial position, results of operations and cash flows of the
Company and its subsidiaries as at the end of such quarter and for such
year-to-date period, as the case may be.

         13.2 Annual Information. The Company will deliver to each Holder as
soon as practicable after the end of each fiscal year of the Company, and in any
event within 90 days thereafter, one copy of:

                                       21
<PAGE>

                  (i) an audited consolidated balance sheet of the Company and
         its subsidiaries as at the end of such year, and

                  (ii) audited consolidated statements of income, retained
         earnings and cash flows of the Company and its subsidiaries for such
         year;

setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all prepared in accordance with GAAP, and
which audited financial statements shall be accompanied by (i) an opinion
thereon of the independent certified public accountants regularly retained by
the Company, or any other firm of independent certified public accountants of
recognized national standing selected by the Company and (ii) a report of such
independent certified public accountants confirming any adjustment made pursuant
to Section 4 during such year.

         13.3 Filings. The Company will file on or before the required date all
regular or periodic reports (pursuant to the Exchange Act) with the Commission
and will deliver to Holder promptly upon their becoming available one copy of
each report, notice or proxy statement sent by the Company to its stockholders
generally, and of each regular or periodic report (pursuant to the Exchange Act)
and any Registration Statement, prospectus or written communication (other than
transmittal letters) (pursuant to the Securities Act), filed by the Company with
(i) the Commission or (ii) any securities exchange on which shares of Common
Stock are listed.

14.      APPRAISAL

         Any determination of the Appraised Value per share of Common Stock
pursuant to the terms hereof shall be made by an investment banking firm of
nationally recognized standing selected by the Company and acceptable to the
Majority Holders. If the investment banking firm selected by the Company is not
acceptable to the Majority Holders and the Company and the Majority Holders
cannot agree on a mutually acceptable investment banking firm, then the Majority
Holders and the Company shall each choose one such investment banking firm and
the respective chosen firms shall agree on another investment banking firm which
shall make the determination. The Company shall retain, at its sole cost, such
investment banking firm as may be necessary for the determination of Appraised
Value required by the terms of this Warrant.

15.      LIMITATION OF LIABILITY

         No provision hereof, in the absence of affirmative action by Holder to
purchase shares of Common Stock, and no enumeration herein of the rights or
privileges of Holder hereof, shall give rise to any liability of such Holder for
the purchase price of any Common Stock or as a stockholder of the Company,
whether such liability is asserted by the Company or by creditors of the
Company.

                                       22
<PAGE>

16.      MISCELLANEOUS

         16.1 Nonwaiver and Expenses. No course of dealing or any delay or
failure to exercise any right hereunder on the part of Holder shall operate as a
waiver of such right or otherwise prejudice Holder's rights, powers or remedies.
If the Company fails to make, when due, any payments provided for hereunder, or
fails to comply with any other provision of this Warrant, the Company shall pay
to Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees, including those of
appellate proceedings, incurred by Holder in collecting any amounts due pursuant
hereto or in otherwise enforcing any of its rights, powers or remedies
hereunder.

         16.2 Notice Generally. Any notice, demand, request, consent, approval,
declaration, delivery or other communication hereunder to be made pursuant to
the provisions of this Warrant shall be sufficiently given or made if in writing
and (a) delivered in person with receipt acknowledged; or (b) sent by
registered, certified or express mail, return receipt requested, postage
prepaid, or (c) by reputable overnight courier service, or (d) by confirmed
facsimile transmission with a copy sent by means of (a), (b) or (c) hereof,
addressed as follows:

                  (a) If to any Holder or holder of Warrant Stock, at its last
         known address appearing on the books of the Company maintained for such
         purpose.

                  (b) If to the Company at

                      AM COMMUNICATIONS, INC.
                      100 Commerce Drive
                      Quakertown, Pennsylvania 18951-9004
                      Attention: President
                      Facsimile Number:     (215) 536-1475

or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing
by the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration, delivery or other communication hereunder shall
be deemed to have been duly given or served on the date on which personally
delivered, acknowledged, transmitted by confirmed facsimile, or three (3)
Business Days after the same shall have been deposited in the United States
mail. Failure or delay in delivering copies of any notice, demand, request,
approval, declaration, delivery or other communication to the person designated
above to receive a copy shall in no way adversely affect the effectiveness of
such notice, demand, request, approval, declaration, delivery or other
communication.

         16.3 Indemnification. The Company agrees to indemnify and hold harmless
Holder from and against any liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses
and disbursements of any kind which may be imposed upon, incurred by or asserted
against Holder in any manner relating to or arising out of (i) Holder's exercise
of this Warrant and/or ownership of any shares of Warrant Stock issued in
consequence thereof, or (ii) any litigation to which Holder is made a party in
its capacity as a stockholder of the Company; provided, however, that the
Company will not be liable hereunder to the extent that any liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, attorneys' fees, expenses or disbursements are found in a final
non-appealable judgment by a court to have resulted from Holder's gross
negligence, bad faith or willful misconduct in its capacity as a stockholder or
warrantholder of the Company.

                                       23
<PAGE>

         16.4 Remedies. Each holder of Warrant and Warrant Stock, in addition to
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Warrant. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Warrant and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.

         16.5 Successors and Assigns. Subject to the provisions of Sections 3.1
and 9, this Warrant and the rights evidenced hereby shall inure to the benefit
of and be binding upon the successors of the Company and the successors and
assigns of Holder. The provisions of this Warrant and the Registration Rights
Agreement are intended to be for the benefit of all Holders from time to time of
this Warrant or holder of Warrant Stock, as the case may be, and shall be
enforceable by any such Holder or holder of Warrant Stock.

         16.6 Amendment. This Warrant and all other Warrants may be modified or
amended or the provisions hereof waived with the written consent of the Company
and the Majority Holders, provided that no such Warrant may be modified or
amended to reduce the number of shares of Common Stock for which such Warrant is
exercisable or to increase the price at which such shares may be purchased upon
exercise of such Warrant (before giving effect to any adjustment as provided
therein) without the prior written consent of the Holder thereof.

         16.7 Severability. Wherever possible, each provision of this Warrant
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Warrant.

         16.8 Headings. The headings used in this Warrant are for the
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.

         16.9 Governing Law. This Warrant shall be governed by the laws of the
State of Delaware, without regard to the provisions thereof relating to conflict
of laws.

                                       24
<PAGE>


         IN WITNESS WHEREOF, the Company has caused this Warrant to be duly
executed and its corporate seal to be impressed hereon and attested by its
Secretary or an Assistant Secretary.

Dated:

                                      AM COMMUNICATIONS, INC.
                                      a Delaware corporation

                                      By:_____________________________________
                                      Name:
                                      Title:








ATTEST:


By: _____________________________________
    Name:
    Title:



                                       25
<PAGE>


                                    Exhibit A

                                SUBSCRIPTION FORM

                  To be executed only upon exercise of Warrant



         The undersigned registered owner of this Warrant irrevocably exercises
this Warrant for the purchase of ______ Shares of Common Stock of AM
COMMUNICATIONS, INC. for the Blocks of Shares set forth in the schedule below
and in accordance with the schedule set forth below, and the undersigned
herewith makes payment therefor, all at the price and on the terms and
conditions specified in this Warrant and requests that certificates for the
shares of Common Stock hereby purchased (and any securities or other property
issuable upon such exercise) be issued in the name of and delivered to
__________________________ whose address is _________________ and, if such
shares of Common Stock shall not include all of the shares of Common Stock
issuable as provided in this Warrant, the undersigned requests that a new
Warrant of like tenor and date for the balance of the shares of Common Stock
issuable hereunder be delivered to the undersigned.

Block of     Vesting           Total No. of        Shares
Shares       Date              Shares in Block     Purchased
--------     -------           ---------------     ---------

Block 1      July 1,1997       _____________       ________
Block 2      July 1,1998       _____________       ________
Block 3      July 1,1999       _____________       ________


                               ___________________________________
                               (Name of Registered Owner)


                               ___________________________________
                               (Signature of Registered Owner or Authorized
                               Representative of Registered Owner)




                               (Street Address)



                               (City)             (State)         (Zip Code)


                                       26
<PAGE>



                                    EXHIBIT B
                                 ASSIGNMENT FORM

         FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under this Warrant, with respect to the Block of
Shares and the number of shares of Common Stock set forth below:

Assignee Name:            _________________________

Address of Assignee:      _________________________

                          _________________________

                          _________________________



Block of     Vesting           Total No. of        Shares
Shares       Date              Shares in Block     Purchased
--------     -------           ---------------     ---------

Block 1      July 1,1997       _____________       ________
Block 2      July 1,1998       _____________       ________
Block 3      July 1,1999       _____________       ________


and does hereby irrevocably constitute and appoint ________________
attorney-in-fact to register such transfer on the books of AM COMMUNICATIONS,
INC. maintained for the purpose, with full power of substitution in the
premises.


Dated:   ________________                   Print Name: _______________________

                                            Signature of Registered
                                            Owner (or Authorized
                                            Representative of
                                            Registered Owner): ________________

                                            Witness:  _________________________

959245v2


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