<PAGE>   1

                                                                  EXHIBIT 10.46


NEITHER THE WARRANT NOR THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). NO
SALE, TRANSFER OR OTHER DISPOSITION OF THIS WARRANT OR SAID SHARES MAY BE
EFFECTED WITHOUT (i) AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO, (ii)
AN OPINION OF COUNSEL FOR THE PURCHASER, REASONABLY SATISFACTORY TO THE COMPANY,
THAT SUCH REGISTRATION IS NOT REQUIRED OR (iii) RECEIPT OF A NO-ACTION LETTER
FROM THE SECURITIES AND EXCHANGE COMMISSION TO THE EFFECT THAT REGISTRATION
UNDER THE ACT IS NOT REQUIRED.


Date of Issuance: December 24, 1999 ("Date of Issuance")       Warrant No.: W-4


                       WARRANT TO PURCHASE UP TO 1,357,016
                  SHARES OF COMMON STOCK OF ARTISTDIRECT, INC.

         THIS CERTIFIES THAT Yahoo! Inc., a Delaware company ("Purchaser"), is
entitled to purchase under this Warrant up to One Million Three Hundred
Fifty-Seven Thousand Sixteen (1,357,016) shares (as may be adjusted pursuant to
provisions hereof, the "Shares") of Common Stock of ARTISTdirect, Inc., a
Delaware corporation (the "Company") at the prices per share set forth in
Section 1.1 and 1.2 below (as applicable, the "Exercise Price"), subject to the
provisions and upon the terms and conditions hereinafter set forth.

         1.       Exercise Price; Exercisibility and Term.
                  ----------------------------------------

                  1.1 First Shares. This Warrant shall be exercisable with
respect to Fifty Percent (50%) of the Shares (the "First Shares") at any time
and from time to time during the period commencing on Date of Issuance and,
subject to Section 1.3, ending at 5:00 p.m. California time on the date three
(3) years after the Date of Issuance. The Exercise Price for each of the First
Shares shall be $3.482.

                  1.2 Second Shares. This Warrant shall be exercisable with
respect to Fifty Percent (50%) of the Shares (the "Second Shares") at any time
and from time to time during the period commencing on the earlier of (a) the
date two (2) years after the Date of Issuance or (b) the effective date of
termination of the Promotion Agreement because of Company's breach pursuant to
Section 12.2(b) of the Promotion Agreement (the "Second Shares Vesting Date")
and, subject to Section 1.3, ending at 5:00 p.m. California time on the date
three (3) years after the Second Shares Vesting Date. The Exercise Price for
each of the Second Shares shall be the initial offering price per share of the
Company's Common Stock in the Company's first public offering of Common Stock
pursuant to a registration statement filed with, and declared effective by, the
Securities and Exchange Commission under the Securities Act (an "IPO") or, if an
IPO has not occurred on or before the Second Shares Vesting Date, then the
Exercise Price for each of the Second Shares shall be fair market value per
share of the Company's Common Stock, as determined by the Company's Board of
Directors in good faith and memorialized by written resolution.





                                       1
<PAGE>   2

                  1.3 Termination. Notwithstanding anything herein to the
contrary, this Warrant shall immediately terminate (and shall not thereafter be
exercisable) with respect to any unexercised Shares in the event that the
Promotion Agreement is terminated for Purchaser's breach pursuant to Section
12.2 of the Promotion Agreement.

                  1.4 Capitalization. The Company hereby represents and warrants
to the Purchaser that, as of November 12, 1999, its capitalization consisted of
(i) Seventy-Five Million (75,000,000) shares of Preferred Stock (the "Preferred
Stock"), of which (A) Fifteen Million (15,000,000) shares have been designated
Series A Preferred Stock, of which Twelve Million Eight Hundred Thirty-One
Thousand Two Hundred Sixty-One (12,831,261) shares were issued and outstanding;
and (B) Fifteen Million (15,000,000) shares have been designated Series B
Preferred Stock, of which Fifteen Million (15,000,000) shares were issued and
outstanding; and (ii) Two Hundred Million (200,000,000) shares of common stock
("Common Stock"), of which Fifty-Six Million Four Hundred Twenty-Nine Thousand
Eight Hundred Seven (56,429,807) shares were issued and outstanding. As of
November 12, 1999, except for (i) the conversion privileges of the Series A
Preferred Stock and the Series B Preferred Stock, (ii) the rights provided in
the Company's existing Stockholders Agreement dated as of October 6, 1999, (iii)
an aggregate of Twenty-One Million (21,000,000) shares of Common Stock reserved
for issuance under the Company's Stock Option Plan (the "Employee Plan"), of
which Fifteen Million One Hundred Ninety-Three Thousand One Hundred Twenty
(15,193,120) shares are subject to outstanding options, (iv) an aggregate of
Sixteen Million (16,000,000) shares of Common Stock reserved for issuance under
the Company's Artist Option Plan (the "Artist Plan"), of which Eight Million
Eight Hundred Fifty-Six Thousand Two Hundred Forty-Three (8,856,243) shares are
subject to outstanding options, (v) an aggregate of Five million (5,000,000)
shares of Common Stock reserved for issuance under the Company's Artist and
Artist Advisors Option Plan (the "Advisor Plan"), of which 4,196,251 shares are
subject to outstanding options, (vi) outstanding warrants to purchase Three
Million Six Hundred Twenty Thousand Five Hundred Fifty-Eight (3,620,558) shares
of Common Stock, (vii) accrued dividends on Preferred Stock which were payable
as Fifty-Seven Thousand Seven Hundred Sixty-Two (57,762) shares of Common Stock,
(viii) options granted to William Elson to purchase the lesser of (A) 100,000
shares of Common Stock and (B) 2.5% of the shares offered in the Company's
initial public offering, and (ix) agreements to issue shares of the Company's
Series C Preferred Stock, there were not outstanding any options, warrants,
rights (including conversion, exchange or preemptive rights) or agreements for
the purchase or acquisition from the Company of any shares of its capital stock.

                  Since November 12, 1999, the Company has not issued any shares
of its capital stock or any options, warrants, rights (including conversion,
exchange or preemptive rights) or entered into agreements for the purchase or
acquisition from the Company of any shares of its capital stock, other than (i)
amending its Certificate of Incorporation to designate Thirty-Four Million Two
Hundred Thousand (34,200,000) shares as Series C Preferred Stock, of which the
Company issued Twenty-One Million Three Hundred Ninety-Five Thousand Seven
Hundred Forty-Nine (21,395,749) shares, each of which is currently issued and
outstanding, (ii) entering into a Series C Preferred Stock Purchase Agreement
dated as of November 12, 1999 with Meadowlane Enterprises Ltd. and Universal
Music Group, Inc., pursuant to which the Company may be obligated to issue up to
an aggregate of Five Million Eight Hundred Eighty-Seven






                                       2
<PAGE>   3

Thousand Four Hundred Twenty-One (5,887,421) additional shares of Series C
Preferred Stock, (iii) entering into a Series C Preferred Stock Purchase
Agreement dated as of December 17, 1999 with the Purchaser to issue Seven
Hundred Seventeen Thousand Nine Hundred Seventy-Eight (717,978) shares of Series
C Preferred Stock, (iv) issuing options to purchase Common Stock under the
Company's existing stock option plans, and (v) additional accrued dividends on
Preferred Stock since November 12, 1999, including the possible obligation of
the Company to issue dividends on its Series C Preferred Stock.

         2.       Conversion.
                  -----------

                  2.1 Method of Exercise; Payment; Issuance of New Warrant. This
Warrant may be exercised by the Purchaser, in whole or in part and from time to
time, by the surrender of this Warrant (with a notice of exercise in the form
attached as Exhibit A and the investment representation certificate in the form
attached as Exhibit B duly executed) at the principal office of the Company and
by the payment to the Company by check or wire transfer, of an amount equal to
the then applicable Exercise Price per share multiplied by the number of Shares
then being purchased (the "Aggregate Exercise Price"). The person or persons in
whose name(s) any certificate(s) representing shares of Common Stock shall be
issuable upon exercise of this Warrant shall be deemed to have become the
Purchaser(s) of record of, and shall be treated for all purposes as the record
Purchaser(s) of the shares represented thereby (and such shares shall be deemed
to have been issued) immediately prior to the close of business on the date or
dates upon which this Warrant is exercised. In the event of any exercise of this
Warrant, certificates for the shares of stock so purchased shall be delivered
promptly (and, if the Company has consummated its initial public offering,
within 10 business days of receipt of notice of exercise) to the Purchaser and,
unless this Warrant has been fully exercised or expired, a new Warrant
representing the portion of the Shares, if any, with respect to which this
Warrant shall not then have been exercised shall also be issued promptly (and,
if the Company has consummated its initial public offering, within 10 business
days of receipt of notice of exercise) to the Purchaser.

                  2.2 Right to Convert Warrant into Stock; Net Issuance. In
addition to and without limiting the rights of the Purchaser under the terms of
this Warrant, the Purchaser may elect to convert this Warrant or any portion
thereof (the "Conversion Right"), but only to the extent that the Purchaser then
has a right to exercise this Warrant, into shares of Common Stock, as set forth
below. The Conversion Right may be exercised by the Purchaser by surrender of
this Warrant at the principal office of the Company together with notice of the
Purchaser's intention to exercise the Conversion Right, in which event the
Company shall issue to the Purchaser the number of shares of the Company's
Common Stock computed using the following formula:

                  X = Y(A-B)
                      ------
                         A





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<PAGE>   4

Where:

X   The number of shares of Common Stock to be issued to the
    Purchaser.

Y   The number of shares of Common Stock representing the
    portion of this Warrant that is being converted.

A   The fair market value of one share of the Company's Common Stock.

B   The Exercise Price (as adjusted to the date of such calculations).

For purposes of this Section 2.2, the "fair market value" per share of the
Company's Common Stock shall mean, the average daily Market Price (as defined
below) during the period of the most recent 20 days, ending on the last business
day before the effective date of exercise of the Conversion Right, on which the
national securities exchanges were open for trading, except that if no class of
the Common Stock is then listed or admitted to trading on any national
securities exchange or quoted in the over-counter market, the fair market value
shall be the Market Price on the last business day before the effective date of
exercise of the Conversion Right. If the Common Stock is traded on a national
securities exchange or admitted to unlisted trading privileges on such an
exchange, or is listed on the National Market System (the "National Market
System") of the National Association of Securities Dealers Automated Quotations
System (the "NASDAQ"), the Market Price as of a specified day shall be the last
reported sale price of the Common Stock on such exchange or on the National
Market System on such date or if no such sale is made on such day, the mean of
the closing bid and asked prices for such day on such exchange or on the
National Market System. If the Common Stock is not so listed or admitted to
unlisted trading privileges, the Market Price as of a specified day shall be the
mean of the last bid and asked prices reported on such date (x) by the NASDAQ or
(y) if reports are unavailable





                                       4
<PAGE>   5

under clause (x) above by the National Quotation Bureau Incorporated. If the
Common Stock is not so listed or admitted to unlisted trading privileges and bid
and ask prices are not reported, the Market Price as of a specified day shall be
determined in good faith by written resolution of the Board of Directors of the
Company.

                  2.3 Automatic Exercise. Subject to Section 1.3, in the event
that this Warrant would otherwise expire unexercised with respect to any First
Shares or Second Shares for which this Warrant is then exercisable and the
Conversion Right for such exercisable Shares would entitle Purchaser to the
issuance of shares of Common Stock pursuant to Section 2.2, Purchaser shall be
deemed to have automatically converted this Warrant pursuant to Section 2.2
immediately prior to the time at which it would have otherwise expired.

         3.       Securities Fully Paid; Reservation of Shares/Stockholder
Rights. All shares of Common Stock that may be issued upon the exercise of the
rights represented by this Warrant, upon issuance, will be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issue thereof. During the period within which the rights represented by the
Warrant may be exercised, the Company will at all times have authorized and
reserved for the purpose of issuance upon exercise of the purchase rights
evidenced by this Warrant, a sufficient number of shares of its Common Stock to
provide for the exercise of the rights represented by this Warrant. Until this
Warrant is exercised by the Purchaser in accordance with the terms and
conditions hereof, Purchaser shall have no rights as a stockholder of the
Company with respect to the Shares issuable upon exercise of this Warrant.

         4.       Adjustment of Exercise Price and Number of Shares.  The number
and kind of securities purchasable upon the exercise of the Warrant and the
Exercise Price shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:

                  4.1 Reclassification or Merger. In case of any
reclassification, change or conversion of securities in the class issuable upon
exercise of this Warrant (other than a change in par value, or from par value to
no par value, or from no par value to par value, or as a result of a subdivision
or combination), or in case of any merger of the Company with or into another
corporation (other than a merger with another corporation in which the Company
is a continuing corporation and which does not result in any reclassification or
change of outstanding securities issuable upon exercise of this Warrant), or in
case of any sale of all or substantially all of the assets of the Company,
unless this Warrant shall have been exercised or terminated in accordance with
its terms, the Purchaser of this Warrant shall have the right to exercise this
Warrant and upon such exercise to receive, in lieu of each share of Common Stock
theretofore issuable upon exercise of this Warrant, the kind and amount of
shares of stock, other securities, money and





                                       5
<PAGE>   6

property receivable upon such reclassification, change or merger by a holder of
one share of Common Stock. The provisions of this subparagraph shall similarly
apply to successive reclassifications, changes, mergers and transfers.

                  4.2 Subdivisions or Combination of Shares. If the Company at
any time while this Warrant remains outstanding and unexpired shall subdivide or
combine its Common Stock, the applicable Exercise Price and the number of Shares
issuable upon exercise hereof shall be proportionately adjusted.

                  4.3 Stock Dividends. If the Company at any time while this
Warrant is outstanding and unexpired shall pay a dividend payable in shares of
Common Stock (except any distribution specifically provided for in the foregoing
subparagraphs 4.1 and 4.2), then each applicable Exercise Price shall be
adjusted, from and after the date of determination of stockholders entitled to
receive such dividend or distribution, to that price determined by multiplying
such Exercise Price in effect immediately prior to such date of determination by
a fraction (a) the numerator of which shall be the total number of shares of
Common Stock outstanding immediately prior to such dividend or distribution, and
(b) the denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend or distribution and the number of
Shares subject to this Warrant shall be proportionately adjusted.

                  4.4 Notice of Adjustments. Whenever any applicable Exercise
Price shall be adjusted pursuant to the provisions hereof, the Company shall
within thirty (30) days of such adjustment deliver a certificate signed by its
chief financial officer to Purchaser setting forth, in reasonable detail, the
event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated, and the applicable Exercise Price after
giving effect to such adjustment.

         5.        Compliance with Securities Laws and other Restrictions.

                  5.1 Accredited Investor. This Warrant is conditioned upon, and
by its acceptance hereof Purchaser hereby confirms, that Purchaser is an
"accredited investor" as that term is defined under Regulation D under the
Securities Act of 1933.

                  5.2 Legend. Upon issuance, the Shares shall be imprinted with
a legend in substantially the following form:

         "The securities represented by this certificate have not been
         registered under the Securities Act of 1933. The securities may not be
         sold or offered for sale in the absence of (a) an effective
         registration statement for the securities under such Act, (b) a "no
         action" letter of the Securities and Exchange Commission with respect
         to such sale or offer or (c) satisfactory assurances to the Company
         that registration under such Act is not required with respect to such
         sale or offer."

together with any other legend required under applicable federal or state
securities laws.





                                       6
<PAGE>   7

                  5.3 Restrictions on Transfer. This Warrant and the Shares
issuable upon exercise this Warrant may not be transferred or assigned in whole
or in part without compliance with applicable federal and state securities laws
by the transferor and the transferee. In addition, the Purchaser agrees not to
make any disposition of this Warrant or any Shares issued upon exercise hereof
unless and until the transferee has agreed in writing for the benefit of the
Company to be bound by (a) this Section 5.3, (b) Section 6 of that certain
Registration Rights Agreement dated as of November 12, 1999, as amended, among
the Company and certain of its stockholders, and (c) Article V of that certain
Stockholders Agreement dated as of November 12, 1999, as amended, among the
Company and certain of its stockholders; provided, and to the extent, this
Section and such agreements are then applicable, and:

                  (a) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or

                  (b) Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (ii) if reasonably
requested by the Company, Purchaser shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company that such disposition
will not require registration of such shares under the Securities Act. It is
agreed that the Company will not require opinions of counsel from the Purchaser
for transactions made pursuant to Rule 144 under the Securities Act except in
unusual circumstances and will not require opinions of counsel in transactions
involving the transfer or distribution of Securities by the Purchaser to any
direct or indirect subsidiary, parent or affiliate of the Purchaser.

         6.       Fractional Shares.  No fractional shares of Common Stock will
be issued in connection with any exercise hereunder, but in lieu of such
fractional shares the Company shall make a cash payment therefor upon the basis
of the Exercise Price then in effect.

         7.       Modification and Waiver. This Warrant and any provision hereof
may be changed, waived, discharged or terminated only by an instrument in
writing signed by the party against which enforcement of the same is sought.

         8.       Notices.

                  8.1 Notice of Certain Events. The Company shall provide the
Purchaser with at least thirty (30) business days notice (or such greater amount
of notice as Delaware law requires to be given to stockholders having the right
to vote at a meeting on any Sale Event) prior to (i) a merger of the Company
with and into, the consolidation of the Company with, or the sale by the Company
of all or substantially all of its assets to, another company (other than such a
transaction wherein the stockholders of the Company retain or obtain a majority
of the voting capital stock of the surviving, resulting or purchasing company)(a
"Sale Event"), (ii) any liquidation, dissolution or winding up of the Company or
(iii) the record date for any cash dividend declared on the Company's Common
Stock (each, a "Notice Event"). If the notice is provided pursuant to subsection
(i) or (ii) of the previous sentence, the notice will indicate the expected date
of the Notice Event.





                                       7
<PAGE>   8


                  8.2 Notice Procedure. Any notice required or permitted
pursuant to this Warrant shall be in writing and shall be deemed sufficient when
either (a) delivered personally, (b) sent by e-mail or fax with confirmation of
receipt or (c) deposited in the U.S. mail, as certified or registered mail, with
postage prepaid, addressed as follows:

         IF TO THE PURCHASER:


         Yahoo! Inc.
         3420 Central Expressway
         Santa Clara, California 95051
         Attention: Senior Vice President Corporate Development
         e-mail: ellen@yahoo-inc.com
         Fax: (408) 731-3510


         with a copy to:

         Yahoo! Inc.
         3420 Central Expressway
         Santa Clara, California 95051
         Attention: General Counsel
         e-mail: jplace@yahoo-inc.com
         Fax: (408) 731-3400


         IF TO THE COMPANY:

         ARTISTdirect, Inc.
         17835 Ventura Boulevard, Suite 310
         Encino, California  91316
         Attention:  Chief Financial Officer
         Facsimile: (818) 758-8722

         with a copy to:

         Brobeck, Phleger & Harrison LLP
         38 Technology Drive
         Irvine, California  92618
         Attention: Richard Fink, Esq.
         Facsimile: (949) 790-6301

         Each of the foregoing parties shall be entitled to specify a different
address by giving five (5) days advance written notice as aforesaid to the other
parties. All such notices and communications shall be deemed to have been
received (i) in the case of personal delivery or delivery be e-mail or fax, on
the date of such delivery (provided there is confirmation of such delivery) and
(ii) in the case of mailing, on the third business day following the date of
such mailing.





                                       8
<PAGE>   9

         9. Lost Warrants or Stock Certificates. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant or any stock certificate and, in the case of any such
loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory
to the Company, or in the case of any such mutilation upon surrender and
cancellation of such Warrant or stock certificate, the Company will make and
deliver a new Warrant or stock certificate, or like tenor, in lieu of the lost,
stolen, destroyed or mutilated Warrant or stock certificate.

         10. Non-Disclosure. The terms and conditions of this Warrant shall be
considered confidential and shall not be disclosed to any third parties except
to Company's or Purchasers's accountants, attorneys, or except as otherwise
required by law. Neither Company nor Purchaser shall make any public
announcement regarding the existence of this Warrant without the other party's
prior written approval and consent. If Company or Purchaser desires to make a
public announcement regarding the existence of this Warrant, it shall provide
the other with a minimum of three (3) business days notice of the intended
disclosure. If this Agreement or any of its terms must be disclosed by Company
under any law, rule or regulation, Company shall (i) give written notice of the
intended disclosure to Purchaser at least five (5) days in advance of the date
of disclosure, (ii) redact portions of this Agreement to the fullest extent
permitted under any applicable laws, rules and regulations, and (iii) submit a
request, to be agreed upon by Purchaser, that such portions and other provisions
of this Agreement requested by Purchaser receive confidential treatment under
the laws, rules and regulations of the body or tribunal to which disclosure is
being made or otherwise be held in the strictest confidence to the fullest
extent permitted under the laws, rules or regulations of any other applicable
governing body.

         11. No Impairment. The Company will not, through any reorganization,
recapitalization, transfer of assets, consolidation, merger, dissolution,
issuance or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this Warrant and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of the holder of this Warrant against impairment.

         12.      Governing Law. This Warrant shall be construed and enforced
in accordance with, and the rights of the parties shall be governed by, the laws
of the State of California.






                                       9
<PAGE>   10

         IN WITNESS WHEREOF, this Warrant has been executed as of the Date of
Issuance.


                                        ARTISTDIRECT, INC.


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



                                        YAHOO! INC.


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






                                       10
<PAGE>   11

                                   EXHIBIT "A"

                             NOTICE OF EXERCISE FORM

                    (To be executed only upon partial or full
                         exercise of the within Warrant)


     The undersigned registered Purchaser of the within Warrant hereby
irrevocably exercises the within Warrant for and purchases shares of Common
Stock of ARTISTdirect, Inc. and herewith makes payment therefor in the amount of
$______, all at the price and on the terms and conditions specified in the
within Warrant and requests that a certificate (or _______certificates in
denominations of shares) for the shares of Common Stock of ARTISTdirect, Inc.
hereby purchased be issued in the name of and delivered to (choose one) (a) the
undersigned or (b) [NAME], whose address is____________________________________
and, if such shares of Common Stock shall not include all the shares of Common
Stock issuable as provided in the within Warrant, that a new Warrant of like
tenor for the number of shares of Common Stock of ARTISTdirect, Inc. not being
purchased hereunder be issued in the name of and delivered to (choose one) (a)
the undersigned or (b) [NAME], whose address is ______________________________.

Date: ______________________






                                       By:
                                          -------------------------------------
                                           (Signature of Registered Purchaser)

                                     Title:
                                           ------------------------------------

NOTICE:           The signature to this Notice of Exercise must correspond with
                  the name as written upon the face of the within Warrant in
                  every particular, without alteration or enlargement or any
                  change whatever.







                                       11
<PAGE>   12

                                   EXHIBIT "B"

                      INVESTMENT REPRESENTATION CERTIFICATE


Purchaser:

Company:          ARTISTdirect, Inc.

Security:         Common Stock

Amount:

Date:

         In connection with the purchase of the above-listed securities (the
"Securities"), the undersigned (the "Purchaser") represents to the Company as
follows:

         The Purchaser is aware of the Company's business affairs and financial
condition, and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Securities. The Purchaser is
purchasing the Securities for its own account for investment purposes only and
not with a view to, or for the resale in connection with, any "distribution"
thereof for purposes of the Securities Act of 1933, as amended (the "Securities
Act");

         The Purchaser understands that the Securities have not been registered
under the Securities Act in reliance upon a specific exemption therefor, which
exemption depends upon, among other things, the bona fide nature of the
Purchaser's investment intent as expressed herein. In this connection, the
Purchaser understands that, in the view of the Securities and Exchange
Commission ("SEC"), the statutory basis for such exemption may be unavailable if
the Purchaser's representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. The Purchaser is an "accredited investor" as that term is
defined under Regulation D promulgated by the Securities Exchange Commission
under the Securities Act;

         The Purchaser further understands that the Securities must be held
indefinitely unless subsequently registered under the Securities Act or unless
an exemption from registration is otherwise available. Moreover, except as
provided in that certain Third Amended and Restated Registration Rights
Agreement dated as of November 12, 1999, as amended, among the Company and
certain of its stockholders, the Purchaser understands that the Company is under
no obligation to register the Securities. In addition, the Purchaser understands
that the certificate evidencing the Securities will be imprinted with the
legends referred to in this Warrant under which the Securities are being
purchased;

         The Purchaser is aware of the provisions of Rule 144, promulgated under
the Securities






                                       12
<PAGE>   13

Act, which, in substance, permit limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering subject
to the satisfaction of certain conditions, if applicable, including, among other
things: (i) the availability of certain public information about the Company;
(ii) the resale occurring not less than one (1) year after the party has
purchased and paid for the securities to be sold; (iii) the sale being made
through a broker in an unsolicited "broker's transaction" or in transactions
directly with a market maker (as said term is defined under the Securities
Exchange Act of 1934) and the amount of securities being sold during any
three-month period not exceeding the specified limitations stated therein;

         The Purchaser further understands that at the time it wishes to sell
the Securities there may be no public market upon which to make such a sale, and
that, even if such a public market upon which to make such a sale then exists,
the Company may not be satisfying the current public information requirements of
Rule 144, and that, in such event, the Purchaser may be precluded from selling
the Securities under Rule 144 even if the one-year minimum holding period had
been satisfied; and

         The Purchaser further understands that in the event all of the
requirements of Rule 144 are not satisfied, registration under the Securities
Act, compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not exclusive, the
staff of the SEC has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rule 144 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in
such transactions do so at their own risk.


Date: ______________________

                                            PURCHASER:







                                       13