Document:

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                                                                     EXHIBIT 4.1

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                               ILEX ONCOLOGY, INC.

                                       AND

                       AMERICAN STOCK TRANSFER & TRUST CO.

                                 AS RIGHTS AGENT

                                RIGHTS AGREEMENT

                      DATED EFFECTIVE AS OF APRIL 10, 2001

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                                TABLE OF CONTENTS

<TABLE>

<S>          <C>                                                                                            <C>
Section 1.   Certain Definitions.............................................................................1

Section 2.   Appointment of Rights Agent.....................................................................3

Section 3.   Issue of Right Certificates.....................................................................4

Section 4.   Form of Right Certificates......................................................................5

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

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

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

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

Section 9.   Availability of Preferred Shares; Transfer Taxes; Securities Registration.......................8

Section 10.  Preferred Shares Record Date....................................................................9

Section 11.  Adjustment of Purchase Price, Number of Shares or Number of Rights..............................9

Section 12.  Certificate of Adjusted Purchase Price or Number of Shares.....................................16

Section 13.  Consolidation, Merger or Sale or Transfer of Assets or Earning Power...........................16

Section 14.  Fractional Rights and Fractional Shares........................................................17

Section 15.  Rights of Action...............................................................................18

Section 16.  Agreement of Right Holders.....................................................................19

Section 17.  Right Certificate Holder Not Deemed a Stockholder..............................................19

Section 18.  Concerning the Rights Agent....................................................................19

Section 19.  Merger or Consolidation or Change of Name of Rights Agent......................................20

Section 20.  Duties of Rights Agent.........................................................................21

Section 21.  Change of Rights Agent.........................................................................23
</TABLE>

                                      (i)

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<TABLE>

<S>          <C>                                                                                            <C>
Section 22.  Issuance of New Right Certificates.............................................................24

Section 23.  Redemption.....................................................................................24

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

Section 25.  Notice of Certain Events.......................................................................26

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

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

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

Section 29.  Benefits of this Agreement.....................................................................28

Section 30.  Severability...................................................................................28

Section 31.  Governing Law..................................................................................28

Section 32.  Counterparts...................................................................................28

Section 33.  Descriptive Headings...........................................................................28

Section 34.  Determinations and Actions by the Board of Directors...........................................28

Exhibit A -  Certificate of Designation, Powers, Preferences and Rights                                   A-1
             of Series I Preferred Stock

Exhibit B -  Form of Right Certificate                                                                    B-1

Exhibit C -  Summary of Rights to Purchase Preferred Shares                                               C-1
</TABLE>

                                      (ii)

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                                RIGHTS AGREEMENT

         This Rights Agreement (this "Agreement") dated effective as of April
10, 2001, between ILEX Oncology, Inc., a Delaware corporation (the "Company"),
and American Stock Transfer & Trust Co., a New York banking corporation, as
Rights Agent (the "Rights Agent").

         The Board of Directors of the Company has authorized and declared a
dividend, and thereby directed the issuance, of one Preferred Share (as such
term is hereinafter defined) purchase right (a "Right") for and in respect of
each Common Share (as such term is hereinafter defined) outstanding on April 20,
2001 (the "Record Date"), each Right representing the right to purchase one one-
thousandth interest in a Preferred Share, upon the terms and subject to the
conditions herein set forth, and has further authorized and directed the
issuance of one Right with respect to each Common Share that shall become
outstanding between the Record Date and the earliest of the Distribution Date,
the Redemption Date and the Final Expiration Date (as such terms are hereinafter
defined).

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

         Section 1. Certain Definitions. For purposes of this Agreement, the
following terms (in addition to those defined above or elsewhere herein) have
the meanings indicated:

                  (a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 20% or more of the Common Shares then outstanding, but shall
not include (i) the Company, (ii) any Subsidiary of the Company, (iii) any
employee benefit plan of the Company or of any Subsidiary of the Company, or
(iv) any Person holding Common Shares for or pursuant to the terms of any such
plan to the extent, and only to the extent, of the Common Shares so held.
Notwithstanding the foregoing, (i) no Person shall become an "Acquiring Person"
as the result of an acquisition of Common Shares by the Company which, by
reducing the number of shares outstanding, increases the proportionate number of
shares beneficially owned by such Person to 20% or more of the Common Shares
then outstanding; provided, however, that if a Person becomes the Beneficial
Owner of 20% or more of the Common Shares then outstanding by reason of share
acquisitions by the Company and shall, after such share acquisitions by the
Company, become the Beneficial Owner of any additional Common Shares, then such
Person shall be deemed to be an "Acquiring Person".

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

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

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

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

                           (iii) which are beneficially owned, directly or
         indirectly, by any other Person with which such Person or any of such
         Person's Affiliates or Associates has any agreement, arrangement or
         understanding (other than customary agreements with and between
         underwriters and selling group members with respect to a bona fide
         public offering of securities) for the purpose of acquiring, holding,
         voting or consenting to action (except to the extent contemplated by
         the proviso to Section 1(c)(iii) hereof) or disposing of any securities
         of the Company.

Notwithstanding the foregoing, any securities that are owned or held by the
Company, by any Subsidiary of the Company, or by any employee benefit plan of
the Company or of any Subsidiary of the Company, and any securities that are
owned or held by any Person pursuant to the terms of any such plan (to the
extent, and only to the extent, of the securities so held), shall not be deemed
to be beneficially owned by any other Person and no other Person shall be deemed
to be the Beneficial Owner of such securities. Further, notwithstanding anything
in this definition of Beneficial Ownership to the contrary, the phrase "then
outstanding", when used with reference to a Person's Beneficial Ownership of
securities of the Company, shall mean the number of such securities then issued
and outstanding together with the number of such securities not then actually
issued and outstanding which such Person would be deemed to own beneficially
hereunder.

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

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

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                  (f) "Common Shares" when used with reference to the Company
(specifically or in context) shall mean the shares of common stock, par value
$.01 per share, of the Company. "Common Shares" when used with reference to any
Person other than the Company shall mean the capital stock (or equity interest)
with the greatest voting power of such other Person or, if such other Person is
a Subsidiary of another Person, of the Person or Persons which ultimately
control such first-mentioned Person.

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

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

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

                  (j) "Person" shall mean any individual, trust, estate, firm,
corporation, incorporated or unincorporated association, limited liability
company, partnership or other entity, and shall include any successor (by merger
or otherwise) of any such Person.

                  (k) "Preferred Shares" shall mean shares of Series I Preferred
Stock, par value $.01 per share, of the Company having the rights and
preferences set forth in the form of the Certificate of Designation, Powers,
Preferences and Rights attached to this Agreement as Exhibit A.

                  (l) "Purchase Price" shall have the meaning set forth in
Section 4 hereof, as the same may be adjusted from time to time in accordance
with the terms of this Agreement.

                  (m) "Rights Certificate" shall have the meaning set forth in
Section 3 hereof.

                  (n) "Redemption Date" shall have the meaning set forth in
Section 7(a) hereof.

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

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

                  (q) "Subsidiary" of any Person shall mean any corporation,
incorporated or unincorporated association, limited liability company,
partnership or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly, by
such Person.

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

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         Section 3. Issue of Right Certificates.

                  (a) Until the earlier (the earlier of such dates being herein
referred to as the "Distribution Date") of (i) the Close of Business on the
tenth Business Day after the Shares Acquisition Date and (ii) the Close of
Business on the tenth Business Day after the date of the commencement by any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or any Person
holding Common Shares for or pursuant to the terms of any such plan to the
extent such Person is so acting with the approval or consent of the Company) of,
or of the first public announcement of the intention of any Person (other than
the Company, any Subsidiary of the Company, any employee benefit plan of the
Company or of any Subsidiary of the Company, or any Person holding Common Shares
for or pursuant to the terms of any such plan to the extent such Person is so
acting with the approval or consent of the Company) to commence, a tender or
exchange offer the consummation of which would result in any Person becoming the
Beneficial Owner of 20% or more of the Common Shares then outstanding, including
any such date which is after the date of this Agreement and prior to the
issuance of the Rights, (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also be
deemed to be Right Certificates) and not by separate Right Certificates, and (y)
the right to receive Right Certificates will be transferable only in connection
with the transfer of Common Shares of the Company. As soon as practicable after
the Distribution Date, the Company will prepare and execute, the Rights Agent
will countersign, and the Company will send or cause to be sent (and the Rights
Agent will, if requested and provided with all necessary information, send), by
first-class, insured, postage prepaid mail, to each record holder of Common
Shares as of the Close of Business on the Distribution Date, at the address of
such holder shown on the records of the Company, a Right Certificate, in
substantially the form of Exhibit B hereto (a "Right Certificate"), evidencing
one Right for each Common Share of the Company so held. As of the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.

                  (b) As promptly as practicable following the Record Date, the
Company will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage prepaid mail, to each record holder of Common Shares as of
the Close of Business on the Record Date, at the address of such holder shown on
the records of the Company. With respect to certificates for Common Shares
outstanding as of the Record Date, until the Distribution Date, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates and the Summary of Rights. Until the Distribution
Date (or the earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares outstanding on the
Record Date, with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby.

                  (c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) after the Record Date but prior to the earliest
of the Distribution Date, the Redemption Date or the Final Expiration Date shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:

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                  This certificate also evidences and entitles
                  the holder hereof to certain rights as set
                  forth in a Rights Agreement between ILEX
                  Oncology, Inc. and American Stock Transfer &
                  Trust Co., as Rights Agent, dated effective as
                  of April 10, 2001, as amended from time to time
                  (the "Rights Agreement"), the terms of which
                  are hereby incorporated herein by reference and
                  a copy of which is on file at the principal
                  executive offices of ILEX Oncology, Inc. Under
                  certain circumstances, as set forth in the
                  Rights Agreement, the Rights described therein
                  will be evidenced by separate certificates and
                  will no longer be evidenced by this
                  certificate. ILEX Oncology, Inc. will mail to
                  the holder of this certificate a copy of the
                  Rights Agreement without charge after receipt
                  of a written request therefor. As described in
                  the Rights Agreement, Rights issued to any
                  Person who becomes an Acquiring Person (as
                  those terms are defined in the Rights
                  Agreement) shall become null and void and will
                  no longer be transferable.

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

         Notwithstanding this paragraph (c), the omission of a legend shall not
affect the enforceability of any part of this Agreement or the Rights of any
holder of the Rights.

         Section 4. Form of Right Certificates. The Right Certificates (and the
forms of election to purchase Preferred Shares and of assignment to be printed
on the reverse thereof) shall be in substantially the form of Exhibit B hereto
and may have such marks of identification or designation and such legends,
summaries or endorsements printed thereon as the Company may deem appropriate
which do not affect the duties or responsibilities of the Rights Agent and as
are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange on which
the Rights may from time to time be listed, or to conform to usage. Subject to
the provisions of Section 22 of this Agreement, the Right Certificates shall
entitle the holders thereof to purchase such number of one one-thousandth
interests in a Preferred Share as shall be set forth therein at the price per
one one-thousandth interest in a Preferred Share set forth therein (the
"Purchase Price"), but the amount and type of securities purchasable upon the
exercise of each Right and the Purchase Price shall be subject to adjustment as
provided herein.

         Section 5. Countersignature and Registration. The Right Certificates
shall be executed on behalf of the Company by its Chairman of the Board of
Directors, its President or any Vice

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

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

         Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Section 14 hereof, at any time after the Close of Business
on the Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date and the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined or exchanged for another Right Certificate or Right Certificates,
entitling the registered holder to purchase a like number of one one-thousandth
interests in a Preferred Share as the Right Certificate or Right Certificates
surrendered then entitle such holder to purchase. Any registered holder desiring
to transfer, split up, combine or exchange any Right Certificate or Right
Certificates shall make such request in writing delivered to the Rights Agent
and shall endorse and surrender the Right Certificate or Right Certificates to
be transferred, split up, combined or exchanged at the office of the Rights
Agent designated for such purpose. Neither the Rights Agent nor the Company
shall be obligated to take any action whatsoever with respect to the transfer of
such surrendered Right Certificate unless and until the registered holder shall
have (i) completed, executed and delivered a certificate contained in the form
of assignment set forth on the reverse side of such Right Certificate and (ii)
provided such additional evidence of the identity of the Beneficial Owner (or
former Beneficial Owner) or Affiliates or Associates thereof as the Company or
the Rights Agent shall have reasonably requested. Thereupon, the Rights Agent
shall countersign and deliver to the Person entitled thereto a Right Certificate
or Right Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Right Certificates. The Rights Agent shall have no duty or obligation under this
Section unless and until it is satisfied that all such taxes and/or charges have
been paid.

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         Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of loss, theft or destruction, of indemnity or
security satisfactory to them, and, at the Company's request, reimbursement to
the Company and the Rights Agent of all reasonable expenses incidental thereto,
and upon surrender to the Rights Agent and cancellation of the Right Certificate
if mutilated, the Company will make and deliver a new Right Certificate of like
tenor to the Rights Agent for delivery to the registered holder in lieu of the
Right Certificate so lost, stolen, destroyed or mutilated.

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

                  (a) The registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in
whole or in part at any time, subject to the last sentence of Section 23(a)
hereof, after the Distribution Date upon surrender of the Right Certificate,
with the form of election to purchase on the reverse side thereof duly completed
and properly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the Purchase Price for
each one one-thousandth interest in a Preferred Share as to which the Rights are
exercised, at or prior to the earliest of (i) the Close of Business on April 10,
2011 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date"), and (iii) the
time at which such Rights are exchanged as provided in Section 24 hereof.

                  (b) The Purchase Price for each one one-thousandth interest in
a Preferred Share pursuant to the exercise of a Right shall initially be
$120.00, shall be subject to adjustment from time to time as provided in Section
11 and Section 13 hereof, and shall be payable in lawful money of the United
States of America in accordance with Section 7(c) below.

                  (c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase duly properly
executed, accompanied by payment of the Purchase Price for the shares to be
purchased (plus an amount equal to any applicable tax or charge required to be
paid by the holder of such Right Certificate in accordance with Section 9
hereof) by certified check, cashier's check or money order payable to the order
of the Company, the Rights Agent shall thereupon promptly (i) (A) requisition
from any transfer agent of the Preferred Shares certificates for the number of
Preferred Shares to be purchased, and the Company hereby irrevocably authorizes
and directs its transfer agent to comply with all such requests, or (B)
requisition from the depositary agent (if one exists as hereinafter
contemplated) depositary receipts representing such number of one one-thousandth
interests in a Preferred Share as are to be purchased (in which case
certificates for the Preferred Shares represented by such receipts shall be
deposited by the transfer agent of the Preferred Shares with the depositary
agent), and the Company hereby directs the depositary agent to comply with all
such requests, (ii) when appropriate, requisition from the Company the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof, and, if applicable, requisition from the Company, or any
transfer agent for securities thereof (any such transfer agent being hereby
authorized to comply with all such requests or both), the number of Common
Shares to be issued in lieu of the issuance of Preferred Shares in accordance
with Section 11(a)(ii) hereof or the amount of cash, property or other
securities to be paid or issued in lieu of the issuance of Common Shares in
accordance with Section 11(a)(iii) hereof, (iii) after receipt of such

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<PAGE>   11

certificates or depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Right Certificate, registered in such
name or names as may be designated by such holder and (iv) when appropriate in
accordance with Section 11(a)(iii) hereof, after receipt, deliver such cash,
property or other securities to or upon the order of the registered holder of
such Right Certificate.

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

                  (e) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action whatsoever with respect to a purported exercise of any
Right as contemplated by this Section 7 unless and until such registered holder
shall have (i) completed, executed and delivered a certificate contained in the
form of election to purchase set forth on the reverse side of the Right
Certificate surrendered in connection with such exercise and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company or the
Rights Agent shall have reasonably requested.

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

         Section 9. Availability of Preferred Shares; Transfer Taxes; Securities
Registration.

                  (a) The Company covenants and agrees that it will cause to be
kept available out of its authorized and unissued Preferred Shares, the number
of Preferred Shares that will be sufficient to permit the exercise in full of
all outstanding Rights. The Company further covenants and agrees that it will
take all such action as may be necessary to ensure that all Preferred Shares
delivered upon exercise of Rights shall, at the time of delivery of the
certificates for such Preferred Shares (subject to payment of the Purchase
Price), be duly authorized and validly issued and fully paid and nonassessable
shares.

                  (b) The Company covenants and agrees that it will pay when due
and payable any and all taxes and charges that are payable in respect of the
issuance or delivery of the Right Certificates or of any Preferred Shares (or
other securities which may become or be issuable under

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<PAGE>   12

the terms of this Agreement) upon the exercise of Rights. The Company shall not,
however, be required to pay any tax or charge that may be payable in respect of
any transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares (or other securities that may become or be issuable under the terms of
this Agreement) in a name other than that of, the registered holder of the Right
Certificates evidencing Rights surrendered for transfer, delivery or exercise or
to issue or to deliver any certificates or depositary receipts for Preferred
Shares (or other securities that may become or be issuable under the terms of
this Agreement) upon the exercise of any Rights until any such tax or charge
shall have been paid (any such tax or charge being payable by the holder of such
Right Certificates at the time of surrender) or until it has been established to
the Company's reasonable satisfaction that no such tax or charge is due.

                  (c) The Company shall (i) prepare and file, as soon as
reasonably possible following the Distribution Date, a registration statement
under the Securities Act with respect to the securities purchasable upon
exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as reasonably possible after such filing,
and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until no
longer required to do so under the Securities Act with respect to securities
purchasable upon exercise of the Rights. The Company also shall take all such
action as may be required or as is appropriate under the securities or Blue Sky
laws of such jurisdictions as may be necessary or appropriate with respect to
the securities purchasable upon the exercise of the Rights.

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

         Section 11. Adjustment of Purchase Price, Number of Shares or Number of
Rights. The Purchase Price, the number of Preferred Shares or interests therein
that the holder of a Right Certificate is entitled to purchase on the exercise
of the Rights evidenced thereby, and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.

                           (a) (i) In the event the Company shall at any time
         after the date of this Agreement (A) declare a dividend on the
         Preferred Shares payable in Preferred Shares, (B) subdivide the
         outstanding Preferred Shares, (C) combine the outstanding Preferred
         Shares into a smaller number of Preferred Shares or (D) issue any
         shares of its capital stock in a reclassification of the Preferred
         Shares (including any such reclassification in connection with a
         consolidation or merger in which the Company is the continuing or
         surviving corporation), except as otherwise provided in this Section
         11(a), the Purchase Price in effect

                                      - 9 -

<PAGE>   13

         at the time of the record date for such dividend or at the effective
         date of such subdivision, combination or reclassification, and the
         number and kind of shares of capital stock or interests therein
         issuable on such date, shall be proportionately adjusted so that the
         holder of any Right exercised after such time shall be entitled to
         receive the aggregate number and kind of shares of capital stock or
         interests therein which, if such Right had been exercised immediately
         prior to such date and at a time when the Preferred Shares transfer
         books of the Company were open, such holder would have owned upon such
         exercise and been entitled to receive by virtue of such dividend,
         subdivision, combination or reclassification; provided, however, that
         in no event shall the consideration to be paid upon the exercise of one
         Right be less than the aggregate par value of the shares of capital
         stock or interests therein of the Company issuable upon exercisable of
         one Right. If an event occurs which would require an adjustment under
         both this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
         provided for in this Section 11(a)(i) shall be in addition to, and
         shall be made prior to, any adjustment required pursuant to Section
         11(a)(ii) hereof.

                           (ii) Subject to Section 23 and Section 24 of this
         Agreement, in the event any Person shall become an Acquiring Person,
         each holder of a Right shall thereafter have a right to receive, upon
         exercise thereof at a price equal to the then current Purchase Price
         multiplied by the number of one one-thousandth interests in a Preferred
         Share for which a Right is then exercisable, in accordance with the
         terms of this Agreement and in lieu of interests in Preferred Shares,
         such number of Common Shares as shall equal the result obtained by (A)
         multiplying the then current Purchase Price by the number of one one-
         thousandth interests in a Preferred Share for which a Right is then
         exercisable and dividing that product by (B) 50% of the then current
         per share market price of the Company's Common Shares (determined
         pursuant to Section 11(d) hereof) on the date such Person became an
         Acquiring Person. In the event that any Person shall become an
         Acquiring Person and the Rights shall then be outstanding, the Company
         shall not take any action that would eliminate or diminish the benefits
         intended to be afforded by the Rights. Notwithstanding the foregoing or
         anything in this Agreement to the contrary, from and after the time any
         Person becomes an Acquiring Person, any Rights that are or were
         acquired or beneficially owned by such Acquiring Person (or any
         Associate or Affiliate of such Acquiring Person) shall be null and void
         without any further action by the Company, the Rights Agent, the
         Acquiring Person or any other Person, and any holder of such Rights
         shall thereafter have no rights whatsoever with respect to such Rights,
         whether under this Agreement or otherwise (including the right to
         exercise such Rights under any provision of this Agreement). No Right
         Certificate shall be issued pursuant to Section 3 that represents
         Rights beneficially owned by an Acquiring Person whose Rights would be
         null and void pursuant to the preceding sentence or by any Associate or
         Affiliate thereof; no Right Certificate shall be issued at any time
         upon the transfer of any Rights to an Acquiring Person whose Rights
         would be null and void pursuant to the preceding sentence or to any
         Associate or Affiliate thereof or to any nominee of such Acquiring
         Person, Associate or Affiliate; and any Right Certificate delivered to
         the Rights Agent for transfer to an Acquiring Person whose Rights would
         be null and void pursuant to the preceding sentence shall be canceled.

                                     - 10 -

<PAGE>   14

                           (iii) In lieu of issuing Common Shares in accordance
         with Section 11(a)(ii) hereof, the Company may, if the Board of
         Directors determines that such action is necessary or appropriate,
         elect to issue or pay, upon the exercise of the Rights, cash, property,
         Common Shares, shares of preferred stock, notes, debentures or other
         securities, or any combination thereof, having an aggregate value equal
         to the value of the Common Shares which otherwise would have been
         issuable pursuant to Section 11(a)(ii) hereof, which value shall be
         determined by a nationally recognized investment banking firm selected
         by the Board of Directors; provided, however, that, except as provided
         in the second and third sentences of subparagraph (ii) of this
         paragraph (a), all holders of Rights must receive the same
         consideration upon the exercise of a Right. For purposes of this
         subparagraph (iii), the value of Common Shares shall be as determined
         pursuant to Section 11(d) hereof and the value of any preferred stock
         or other securities that the Board of Directors determines to be the
         substantial equivalent of Common Shares shall be deemed to have the
         same value as the Common Shares of the Company.

                           (iv) Subject to subparagraph (iii) of this paragraph
         (a), in the event that there shall not be sufficient Common Shares
         issued but not outstanding or authorized but unissued to permit the
         exercise in full of the Rights in accordance with subparagraph (ii) of
         this paragraph (a), the Company shall take all such action as may be
         necessary to authorize additional Common Shares for issuance upon
         exercise of the Rights or, if unable to do so, shall take action
         permitted by subparagraph (iii) of this paragraph (a) in respect of
         substitute consideration in order to satisfy fully its obligations to a
         holder of Rights exercising such Rights as contemplated hereby.

                  (b) In case the Company shall fix a record date for the
issuance of rights, options or warrants to all holders of Preferred Shares
entitling them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the same
rights, privileges and preferences as the Preferred Shares ("equivalent
preferred shares")) or securities convertible into Preferred Shares or
equivalent preferred shares at a price per Preferred Share or equivalent
preferred share (or having a conversion price per share, if a security
convertible into Preferred Shares or equivalent preferred shares) less than the
then current per share market price of the Preferred Shares (as defined in
Section 11(d)) on such record date, the Purchase Price to be in effect after
such record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current market price and the denominator
of which shall be the number of Preferred Shares outstanding on such record date
plus the number of additional Preferred Shares and/or equivalent preferred
shares to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the Preferred Shares issuable upon exercise
of one Right. In case such subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of Directors of
the Company,

                                     - 11 -

<PAGE>   15

whose determination shall be described in a Statement filed with the Rights
Agent. Preferred Shares owned by or held for the account of the Company shall
not be deemed outstanding for the purpose of any such computation. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such rights, options or warrants are not so issued, the
Purchase Price shall be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.

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

                           (d) (i) For the purpose of any computation hereunder,
         the "current per share market price" of any security (a "Security") for
         the purpose of this Section 11(d)(i)) on any date shall be deemed to be
         the average of the daily closing prices per share of such Security for
         the 30 consecutive Trading Days (as such term is hereinafter defined)
         immediately prior to but not including such date; provided, however,
         that in the event that the current per share market price of the
         Security is determined during a period following the announcement by
         the issuer of such Security of (A) a dividend or distribution on such
         Security payable in shares of such Security or securities convertible
         into such shares, or (B) any subdivision, combination or
         reclassification of such Security and prior to the expiration of 30
         Trading Days after but not including the ex-dividend date for such
         dividend or distribution, or the record date for such subdivision,
         combination or reclassification, then, and in each such case, the
         current per share market price shall be appropriately adjusted to
         reflect the current market price per share equivalent of such Security
         taking into account ex- dividend trading. The closing price for each
         day shall be the last sale price, or, in case no such sale takes place
         on such day, the average of the closing bid and asked prices, in either
         case as reported in the principal consolidated transaction reporting
         system with respect to securities listed on the National Association of
         Securities Dealers, Inc. Automated Quotations Systems ("NASDAQ")
         National Market or, if the Security is not listed on the NASDAQ
         National Market, as reported in the principal consolidated transaction
         reporting

                                     - 12 -

<PAGE>   16

         system with respect to securities listed on the principal national
         securities exchange on which the Security is listed or admitted to
         trading or, if the Security is not listed or admitted to trading on any
         national securities exchange, the last quoted sales price or, if not so
         quoted, the average of the high bid and low asked prices in the
         over-the-counter market, as reported by NASDAQ or such other system
         then in use or, if on any such date the Security is not quoted by any
         such organization, the average of the closing bid and asked prices as
         furnished by a professional market maker making a market in the
         Securities selected by the Board of Directors of the Company. The term
         "Trading Day" shall mean a day on which the principal national
         securities exchange on which the Security is listed or admitted to
         trading is open for the transaction of business or, if the Security is
         not listed or admitted to trading on any national securities exchange,
         a Business Day.

                           (ii) For the purpose of any computation hereunder,
         the "current per share market price" of the Preferred Shares shall be
         determined in accordance with the methods set forth in Section
         11(d)(i). If the Preferred Shares are not publicly traded, the "current
         per share market price" of the Preferred Shares shall be conclusively
         deemed to be the current per share market price of the Common Shares as
         determined pursuant to Section 11(d)(i) (appropriately adjusted to
         reflect any stock split, stock dividend or similar transaction
         occurring after the date hereof), multiplied by one thousand. If
         neither the Common Shares nor the Preferred Shares are publicly held or
         so listed or traded, and no market maker is making, or has made during
         the relevant period, a market in the Common Shares or the Preferred
         Shares, "current per share market price" shall mean the fair value per
         share as determined in good faith by the Board of Directors of the
         Company, whose determination shall be described in a statement filed
         with the Rights Agent and shall be conclusive for all purposes.

                  (e) No adjustment in the Purchase Price shall be required
unless such adjustment would require an increase or decrease of at least 1% in
the Purchase Price; provided, however, that any adjustments which by reason of
this Section 11(e) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 11 shall be made to the nearest cent or to the nearest one ten-millionth
interest in a Preferred Share or one ten-thousandth interest in any other share
or security, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three years from the date of the transaction that
requires such adjustment and (ii) the date of the expiration of the right to
exercise any Rights.

                  (f) If as a result of an adjustment made pursuant to Section
11(a) or Section 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than Preferred Shares or interests therein, thereafter the number of such
other shares so receivable upon exercise of any Right shall be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions of this Section 11 with respect to the Preferred
Shares, and the provisions of Section 7, Section 9, Section 10, Section 12,
Section 13 and Section 14 with respect to the Preferred Shares shall apply on
like terms to any such other shares.

                                     - 13 -

<PAGE>   17

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

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

                  (i) The Company may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in substitution
for any adjustment in the number of one one- thousandth interests in a Preferred
Share purchasable upon the exercise of a Right. Each of the Rights outstanding
after such adjustment of the number of Rights shall be exercisable for the
number of one one-thousandth interests in a Preferred Share for which a Right
was exercisable immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election, if any, to
adjust the number of Rights, indicating the record date for the adjustment and,
if known at the time, the amount of the adjustment to be made with prompt notice
thereof to the Rights Agent. Such record date may be the date on which the
Purchase Price is adjusted or any date thereafter, but, if the Right
Certificates have been issued, shall be at least ten days later than the date of
the public announcement. If Right Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Right Certificates on such record date Right Certificates evidencing, subject
to Section 14 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Company, shall
cause to be distributed to such holders of record in substitution and
replacement for the Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new Right
Certificates evidencing all the Rights to which such holders shall be entitled
after such adjustment. Right Certificates so to be distributed shall be issued,
executed and countersigned in the manner provided for herein and shall be
registered in the names of the holders of record of Right Certificates on the
record date specified in the public announcement.

                  (j) Irrespective of any adjustment or change in the Purchase
Price or the number of one one-thousandth interests in a Preferred Share
issuable upon the exercise of the Rights, the Right Certificates theretofore and
thereafter issued may continue to express the Purchase Price and

                                     - 14 -

<PAGE>   18

the number of one one-thousandth interests in a Preferred Shares which were
expressed in the initial Right Certificates issued hereunder.

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

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

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

                  (n) In the event that at any time after the date of this
Agreement and prior to the Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares, (ii) reclassify
the Common Shares or (iii) otherwise effect a split-up, division or combination
of the Common Shares, then in any such case (i) the number of one one-thousandth
interests in a Preferred Share purchasable after such event upon proper exercise
of each Right shall be determined by multiplying the number of one
one-thousandth interests in a Preferred Share so purchasable immediately prior
to such event by a fraction, the numerator of which shall be the number of
Common Shares that were outstanding immediately before such event and the
denominator of which shall be the number of Common Shares that are outstanding
immediately after such event, and (ii) each Common Share outstanding immediately
after such event shall have issued with respect to it that number of Rights
which each Common Share outstanding immediately prior to such event had issued
with respect to it. The adjustments provided for in this Section 11(n) shall be
made successively whenever any such event occurs.

                                     - 15 -

<PAGE>   19

         Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall promptly (a) prepare a certificate setting forth such
adjustment and a brief statement of the facts and computation and accounting for
such adjustment, (b) file with the Rights Agent and with each transfer agent for
the Common Shares or the Preferred Shares a copy of such certificate and (c)
mail a brief summary thereof to each holder of a Right Certificate in accordance
with Section 25 hereof. The Rights Agent shall be fully protected in relying on
any such certificate and on any adjustment therein contained and shall have no
duty with respect to, and shall not be deemed to have knowledge of, any such
adjustment unless and until it shall have received such certificate.

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

                  (a) In the event, directly or indirectly, (i) the Company
shall consolidate with, or merge with and into, or effect a share exchange or
conversion with or into, any Person, (ii) any Person shall merge with and into
the Company or effect a share exchange or conversion with or into, the Company,
the Company shall be the continuing or surviving corporation in such transaction
and, in connection with such transaction, all or part of the Common Shares shall
be changed into or exchanged for stock or other securities of any other Person
(or the Company) or cash or any other property, or (iii) the Company shall sell
or otherwise transfer (or one or more of its Subsidiaries shall sell or
otherwise transfer), in one or more transactions, assets or earning power
aggregating 50% or more of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to any Person or Persons other than the Company
or one or more of its wholly-owned Subsidiaries, then, and in each such case,
proper provision shall be made so that (i) each holder of a Right (except as
otherwise provided herein) shall thereafter have the right to receive, upon the
exercise thereof at a price equal to the then current Purchase Price multiplied
by the number of one one-thousandth interests in a Preferred Share for which a
Right is then exercisable, in accordance with the terms of this Agreement and in
lieu of Preferred Shares, such number of duly authorized and validly issued,
fully paid and non-assessable Common Shares of the Principal Party (as defined
in Section 13(b) hereof) as shall equal the result obtained by (A) multiplying
the then current Purchase Price by the number of one one-thousandth interests in
a Preferred Share for which a Right is then exercisable and dividing that
product by (B) 50% of the then current per share market price of the Common
Shares of the Principal Party (determined pursuant to Section 11(d) hereof) on
the date of consummation of such transaction; (ii) the Principal Party shall
thereafter be liable for, and shall assume, by virtue of such transaction, all
the obligations and duties of the Company pursuant to this Agreement; (iii) the
term "Company", as used in this Agreement, shall thereafter be deemed to mean
the Principal Party; and (iv) such Principal Party shall take such steps
(including, but not limited to, the authorization by all necessary corporate
action and the reservation of a sufficient number of its Common Shares in
accordance with Section 9 of this Agreement) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
Common Shares of the Principal Party thereafter deliverable upon the exercise of
the Rights. The Company shall not consummate any such transaction unless prior
thereto the Company and the Principal Party shall have executed and delivered to
the Rights Agent a supplemental agreement so providing and further providing
that, immediately after the date of any such transaction mentioned in this
paragraph (a) of this Section 13, the Principal Party at its own expense will
(i) prepare and file a registration statement under the

                                     - 16 -

<PAGE>   20

Securities Act with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, will cause such registration
statement to become effective as soon as possible after such filing and will
cause such registration statement to remain effective (with a prospectus at all
times meeting the requirements of the Securities Act) until no longer required
under the Act with respect to securities purchasable upon exercise of the
Rights; and (ii) qualify or register the Rights and the securities purchasable
upon exercise of the Rights, and take all such other action as may be required
or as is appropriate, under the securities or Blue Sky laws of such
jurisdictions as may be necessary or appropriate. The Company shall not enter
into any transaction of the kind referred to in this Section 13 if at the time
of such transaction there are any rights, warrants, instruments or securities
outstanding or any agreements or arrangements which, as a result of the
consummation of such transaction, would eliminate or substantially diminish the
benefits intended to be afforded by the Rights. The provisions of this Section
13 shall similarly apply to successive mergers, consolidations, exchanges,
conversions, sales or other transfers.

                  (b) "Principal Party" shall mean

                           (i) in the case of any transaction described in
         clause (i) or (ii) of the first sentence of Section 13(a), the Person
         that is the issuer of any securities into which Common Shares are
         converted in such merger or consolidation, and if no securities are so
         issued, the Person that is the other party to the merger or
         consolidation; and

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

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

         Section 14. Fractional Rights and Fractional Shares.

                  (a) The Company shall not be required to issue fractions of
Rights or to distribute Right Certificates which evidence fractional Rights. In
lieu of such fractional Rights, there shall be paid to the registered holders of
the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market

                                     - 17 -

<PAGE>   21

value of a whole Right. For purposes of this Section 14(a), the current market
value of a whole Right shall be the closing price of the Rights for the Trading
Day immediately prior to the date on which such fractional Rights would
otherwise be issuable. The closing price for any day shall be the last sale
price, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the NASDAQ National Market or, if the Rights are not
listed on the NASDAQ National Market, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the Rights are listed or admitted to
trading or, if the Rights are not listed or admitted to trading on any national
securities exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as reported by
NASDAQ or such other system then in use or, if on any such date the Rights are
not quoted by any such organization, the average of the closing bid and asked
prices as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Company. If on any such date no such
market maker is making a market in the Rights, the fair value of the Rights on
such date as determined in good faith by the Board of Directors of the Company
shall be used to determine the current market value of a Right for purposes of
this Section 14(a). Notwithstanding anything in this Section 14(a) to the
contrary, prior to the Distribution Date, the current market value of the Right
for purposes of this Section 14(a) shall be deemed to be zero.

                  (b) The Company shall not be required to issue fractional
interests in Preferred Shares (other than fractional interests which are
integral multiples of one one-thousandth of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional interests in
Preferred Shares (other than fractional interests which are integral multiples
of one one- thousandth of a Preferred Share). Fractional interests in Preferred
Shares in integral multiples of one one-thousandth of a Preferred Share may, at
the election of the Company, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Company and a depositary selected by it;
provided, however, that such agreement shall provide that holders of such
depositary receipts shall have all the rights, privileges and preferences to
which they are entitled as beneficial owners of the Preferred Shares represented
by such depositary receipts. In lieu of fractional interests in Preferred Shares
that are not integral multiples of one one-thousandth of a Preferred Share, the
Company shall pay to the registered holders of Right Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the current market value of one Preferred Share. For purposes of
this Section 14(b), the current market value of a Preferred Share shall be the
closing price of a Preferred Share (as determined pursuant to the second
sentence of Section 11(d)(i) hereof) for the Trading Day immediately prior to
the date of such exercise.

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

         Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under this
Agreement, are vested in the respective registered holders of the Right
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares of the Company); and any registered holder of any Right
Certificate (or, prior

                                     - 18 -

<PAGE>   22

to the Distribution Date, of the Common Shares of the Company), without the
consent of the Rights Agent or of the holder of any other Right Certificate (or,
prior to the Distribution Date, of the Common Shares of the Company), may, in
his own behalf and for his own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company to enforce, or otherwise act
in respect of, such holder's right to exercise the Rights evidenced by such
Right Certificate in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.

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

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

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

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

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

         Section 18. Concerning the Rights Agent. The Company agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on

                                     - 19 -

<PAGE>   23

demand of the Rights Agent, its reasonable expenses and counsel fees and other
disbursements incurred in the administration, preparation, delivery, amendment
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, demand, judgment, fine, penalty,
claim, damage, settlement, cost or expense, incurred without gross negligence,
bad faith or willful misconduct on the part of the Rights Agent, for any action
taken, suffered or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including without limitation the costs and
expenses of defending against any claim of liability in the premises. The
indemnity provided herein shall survive the termination of this Agreement and
the termination and the expiration of the Rights. The costs and expenses
incurred in enforcing this right of indemnification shall be paid by the
Company. Anything to the contrary notwithstanding, in no event shall the Rights
Agent be liable for special, punitive, indirect, consequential or incidental
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Rights Agent has been advised of the likelihood of such
loss or damage. Any liability of the Rights Agent under this Rights Agreement
will be limited to the amount of fees paid by the Company to the Rights Agent.

         The Rights Agent shall be authorized and protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any Right
Certificate or certificate for the Common Shares or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement, or other
paper or document believed by it to be genuine and to be signed, executed and,
where necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 20 hereof.

         Section 19. Merger or Consolidation or Change of Name of Rights Agent.
Any Person into which the Rights Agent or any successor Rights Agent may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any Person succeeding to the Shareholder Services
business of the Rights Agent or any successor Rights Agent, shall be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided that such Person would be eligible for appointment as a successor
Rights Agent under the provisions of Section 21 hereof. In case, at the time
such successor Rights Agent shall succeed to the agency created by this
Agreement, any of the Right Certificates shall have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature of the
predecessor Rights Agent and deliver such Right Certificates so countersigned;
and in case at that time any of the Right Certificates shall not have been
countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Right Certificates
shall have the full force provided in the Right Certificates and in this
Agreement.

         In case at any time the name of the Rights Agent shall be changed and
at such time any of the Right Certificates shall have been countersigned but not
delivered, the Rights Agent may adopt

                                     - 20 -

<PAGE>   24

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

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

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

                  (b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including without limitation, the identity of any Acquiring Person and
the determination of current per share market price) be proved or established by
the Company prior to taking, suffering or omitting any action hereunder, such
fact or matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established by a
certificate signed by any one of the Chairman of the Board of Directors,
President, any Vice President, the Secretary or the Treasurer of the Company and
delivered to the Rights Agent; and such certificate shall be full authorization
and protection to the Rights Agent and the Rights Agent shall incur no liability
for or in respect of any action taken, omitted or suffered in good faith by it
under the provisions of this Agreement in reliance upon such certificate.

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

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

                  (e) The Rights Agent shall not be under any liability or
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Right
Certificate; nor shall it be responsible for any change in the exercisability of
the Rights (including any Rights that become null and void pursuant to Section
11(a)(ii) hereof) or any adjustment in the terms of the Rights (including the
manner, method or amount thereof) provided for in Section 3, Section 11, Section
13, Section 23 or Section 24 hereof, or the ascertaining of the existence of
facts that would require any such

                                     - 21 -

<PAGE>   25

change or adjustment (except with respect to the exercise of Rights evidenced by
Right Certificates after actual notice that such change or adjustment is
required); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares to be issued pursuant to this Agreement or any Right
Certificate or as to whether any Preferred Shares will, when issued, be validly
authorized and issued, fully paid and nonassessable.

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

                  (g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board of Directors, President, any Senior Vice
President or Vice President, the Secretary or the Treasurer of the Company, and
to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken, suffered or omitted by
it in good faith in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Company may, at the option of the
Rights Agent, set forth in writing any action proposed to be taken, suffered or
omitted by the Rights Agent under this Agreement and the date on and/or after
which such action shall be taken or suffered or such omission shall be
effective. The Rights Agent shall not be liable for any action taken or suffered
by, or omission of, the Rights Agent in accordance with a proposal included in
any such application on or after the date specified in such application (which
date shall not be less than five Business Days after the date any officer of the
Company actually receives such application unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken, suffered or omitted.

                  (h) The Rights Agent and any stockholder, director, affiliate,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Company or become pecuniarily interested in
any transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Rights Agent under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Company (including, without
limitation, acting as transfer agent for the Common Shares of the Company) or
for any other Person.

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

                                     - 22 -

<PAGE>   26

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

                  (k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate contained in the form
of assignment or the form of election to purchase set forth on the reverse
thereof, as the case may be, has not been completed to certify the holder is not
an Acquiring Person (or any Affiliate or Associate thereof), the Rights Agent
shall not take any further action with respect to such requested exercise or
transfer without first consulting with the Company.

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

                                     - 23 -

<PAGE>   27

         Section 22. Issuance of New Right Certificates. Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the Company
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.

         Section 23. Redemption.

                  (a) The Rights may be redeemed by action of the Board of
Directors of the Company pursuant to Section 23(b) and shall not be redeemed in
any other manner. Notwithstanding anything contained or implied in this
Agreement to the contrary, the Rights shall not be exercisable after the
occurrence of an event described in Section 11(a)(ii) hereof until such time as
the Company's rights of redemption hereunder have expired.

                  (b) The Board of Directors of the Company may, at its option,
at any time prior to the close of business on the tenth Business Day after the
Shares Acquisition Date, redeem all, but not less than all, the then outstanding
Rights at a redemption price of $.001 per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such redemption price being hereinafter referred to as the
"Redemption Price"), which may be paid in cash, in Common Shares, Preferred
Shares or other consideration deemed appropriate by the Board of Directors of
the Company.

                  (c) Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to Section 23(b), and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. The Company shall promptly give public
notice of any such redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Within ten days after such action of the Board of Directors ordering the
redemption of the Rights pursuant to Section 23(b), the Company shall mail a
notice of redemption to the Rights Agent and to all the holders of the then
outstanding Rights at their addresses as they appear upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Common Shares of the Company. Any notice that is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. Neither the Company
nor any of its Affiliates or Associates may redeem, acquire or purchase for
value any Rights at any time in any manner other than that specifically set
forth in this Section 23 or in Section 24 hereof, and other than in connection
with the purchase of Common Shares prior to the Distribution Date.

         Section 24. Exchange.

                  (a) The Board of Directors of the Company may, at its option,
at any time after any Person becomes an Acquiring Person, exchange all or any
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become null and void pursuant to the

                                     - 24 -

<PAGE>   28

provisions of Section 11(a)(ii) hereof) for Common Shares at an exchange ratio
of one Common Share of the Company per Right, appropriately adjusted to reflect
any stock split, stock dividend or similar transaction occurring after the date
hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio").

                  (b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of the holder of such
Rights shall be to receive that number of Common Shares equal to the number of
such Rights held by such holder multiplied by the Exchange Ratio. The Company
shall promptly give public notice of any such exchange with prompt notice
thereof to the Rights Agent; provided, however, that the failure to give, or any
defect in, such notice shall not affect the validity of such exchange. The
Company shall promptly mail a notice of any such exchange to all of the holders
of such Rights at their addresses as they appear upon the registry books of the
Rights Agent. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice of
exchange will state the method by which the exchange of the Common Shares for
Rights will be effected and, in the event of any partial exchange, the number of
Rights which will be exchanged. Any partial exchange shall be effected pro rata
based on the number of Rights (other than Rights which have become null and void
pursuant to the provisions of Section 11(a)(ii) hereof) held by each holder of
Rights.

                  (c) In any exchange pursuant to this Section 24, the Company,
at its option, may substitute interests in Preferred Shares (or equivalent
preferred shares, as such term is defined in Section 11(b) hereof) for Common
Shares exchangeable for Rights, at the initial rate of one one- thousandth
interest in a Preferred Share (or equivalent preferred share) for each Common
Share, as appropriately adjusted to reflect adjustments in the voting rights of
the Preferred Shares pursuant to Section 3 of the Certificate of Designation,
Powers, Preferences and Rights attached hereto as Exhibit A, so that the
fraction of a Preferred Share delivered in lieu of each Common Share shall have
the same voting rights as one Common Share.

                  (d) In the event that there shall not be sufficient Common
Shares or Preferred Shares issued but not outstanding or authorized but unissued
to permit any exchange of Rights as contemplated in accordance with this Section
24, the Company shall take all such action as may be necessary to authorize
additional Common Shares or Preferred Shares for issuance upon exchange of the
Rights. In the event that the Company, after good faith effort, shall be unable
to take shall such action as may be necessary to authorize such additional
Common Shares or Preferred Shares, the Company shall substitute, for each Common
Share or Preferred Share that would otherwise be issuable upon exchange of a
Right, a number of Common Shares, Preferred Shares or shares of preferred stock,
notes, debentures or other securities, or any combination thereof, having an
aggregate value equal to the Rights to be exchanged, which value shall be
determined by a nationally recognized investment banking firm selected by the
Board of Directors.

                  (e) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with

                                     - 25 -

<PAGE>   29

regard to which such fractional Common Shares would otherwise be issuable an
amount in cash equal to the same fraction of the current market value of a whole
Common Share. For the purposes of this Section 24(e), the current market value
of a whole Common Share of the Company shall be the closing price of a Common
Share of the Company (as determined pursuant to the second sentence of Section
11(d)(i) hereof) for the Trading Day immediately prior to the date of exchange
pursuant to this Section 24.

         Section 25. Notice of Certain Events.

                  (a) In case the Company shall propose (i) to pay any dividend
payable in stock of any class to the holders of Preferred Shares or to make any
other distribution to the holders of Preferred Shares (other than a regular
quarterly cash dividend), (ii) to offer to the holders of Preferred Shares
rights (preemptive or otherwise) or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of Preferred
Shares (other than a reclassification involving only the subdivision of
outstanding Preferred Shares), (iv) to effect any consolidation or merger into
or with, or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or pay
any dividend on the Common Shares payable in Common Shares, to reclassify the
Common Shares, or to otherwise effect a split- up, division or combination of
the Common Shares, then, in each such case, the Company shall give to each
holder of a Right Certificate and the Rights Agent, in accordance with Section
26 hereof, a notice of such proposed action, which shall specify the record date
for purposes of such stock dividend, or distribution of rights or warrants, or
the date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, if any such date is to be fixed, and such notice shall be so given in
the case of any action described by clause (i) or (ii) above at least ten days
prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at least ten
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.

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

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

                                     - 26 -

<PAGE>   30

                          ILEX Oncology, Inc.
                          4545 Horizon Hill Blvd.
                          San Antonio, Texas   78229
                          Attention:  President

with copy to:             ILEX Oncology, Inc.
                          4545 Horizon Hill Blvd.
                          San Antonio, Texas   78229
                          Attention: General Counsel

with copy to:             Fulbright & Jaworski L.L.P.
                          300 Convent Street, Suite 2200
                          San Antonio, Texas 78205
                          Attn: Phillip M. Renfro

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

                          American Stock Transfer & Trust Co.
                          59 Maiden Lane
                          New York, New York   10038
                          Attention:  Isaac Kagan

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Company.

         Section 27. Supplements and Amendments. The Company may (and the Rights
Agent shall at the direction of the Company) from time to time supplement or
amend this Agreement without the approval of any holders of Right Certificates
in order (i) at any time, to cure any ambiguity, (ii) at any time, to amend,
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) prior to the Distribution
Date, to change or supplement any of the provisions hereof in any manner which
the Company may deem necessary or desirable (including, but without any
limitation, changing the percentage of ownership of Common Shares at which a
Person becomes an Acquiring Person, the Distribution Date, the time for
redemption of Rights or the time for, or limits on, amendment of this Agreement)
or (iv) after the Distribution Date, to change or supplement the provisions
hereof in any manner which the Company may deem necessary or desirable and which
shall not adversely affect the interests of the holders of the Rights
Certificates (other than an Acquiring Person or an Affiliate or Associate of an
Acquiring Person), any such supplement or amendment to be evidenced by a writing
signed by the Company and the Rights Agent; provided, however, that the Rights
Agent receive a certificate from

                                     - 27 -

<PAGE>   31

an appropriate officer of the Company which states that the proposed supplement
or amendment is in compliance with the provisions of this Section 27, and such
supplement or amendment does not change or increase the Rights Agent's duties,
liabilities or obligations under this Agreement.

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

         Section 29. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares of the Company) any legal or equitable right, remedy or
claim under this Agreement; and this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares
of the Company).

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

         Section 31. Governing Law. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in
accordance with the laws of such State applicable to contracts to be made and
performed entirely within such State, provided, however, that all provisions
regarding the rights, duties and obligations of the Rights Agent shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed entirely within such State.

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

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

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

                                     - 28 -

<PAGE>   32

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

             [The remainder of this page intentionally left blank.]

                                     - 29 -

<PAGE>   33

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested on this 10th day of April, 2001, to be effective as
of the day and year first above written.

                                        ILEX ONCOLOGY, INC.

                                        By
                                          -------------------------------------
                                                       Richard L. Love
                                          President and Chief Executive Officer

                                        AMERICAN STOCK TRANSFER & TRUST CO.,
                                        as Rights Agent

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

                                     - 30 -

<PAGE>   34

                               ILEX ONCOLOGY, INC.
                                RIGHTS AGREEMENT

                                Table of Contents

<TABLE>
<CAPTION>

                                                                                          Tab
                                                                                          ---
<S>                                                                                       <C>
Rights Agreement dated effective as of April 10, 2001 between
ILEX Oncology, Inc. and American Stock Transfer & Trust
Co., as Rights Agent .....................................................................  1

ILEX Oncology, Inc. Board of Directors Resolution of March 30, 2001
adopting Rights Agreement ................................................................  2

Opinion of Fulbright & Jaworski L.L.P. regarding Rights Agreement.........................  3

Form 8-A, as filed with the Securities and Exchange Commission on
April 12, 2001 ...........................................................................  4

Form 8-K, as filed with the Securities and Exchange Commission on
April 11, 2001 ...........................................................................  5

Executed Listing Application with the NASDAQ National Market .............................  6

Press Release of April 11, 2001, announcing Rights Agreement .............................  7

Letter regarding Rights Agreement from ILEX Oncology, Inc. to
Stockholders dated April 20, 2001 ........................................................  8
</TABLE>

<PAGE>   35

                                                                       EXHIBIT A

                       CERTIFICATE OF DESIGNATION, POWERS,
                             PREFERENCES AND RIGHTS

                                       of

                            SERIES I PREFERRED STOCK

                                       of

                               ILEX ONCOLOGY, INC.

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

                  The undersigned, Ronald G. Tefteller, the Vice President,
General Counsel and Corporate Secretary of ILEX Oncology, Inc., a Delaware
corporation (the "Company"), hereby certifies that pursuant to authority granted
to and vested in the Board of Directors of the Company by the provisions of the
Restated Certificate of Incorporation of the Company, the Board of Directors of
the Company has duly adopted the following resolutions creating a series of
Preferred Stock designated as the Series I Preferred Stock:

                  "RESOLVED, that pursuant to Article Fourth of the Restated
Certificate of Incorporation of ILEX Oncology, Inc., a Delaware corporation (the
"Corporation"), which (a) authorizes the Corporation to issue 20,000,000 shares
of Preferred Stock, par value $.01 per share ("Preferred Stock"), none of which
are issued and outstanding at the date hereof, and (b) expressly vests in the
Board of Directors of the Corporation (the "Board"), subject to the limitations
prescribed by law and the provisions of said Article Fourth, the authority to
provide by resolution or resolutions for the issuance of shares of Preferred
Stock in series and, by filing a certificate pursuant to the General Corporation
Law of the State of Delaware, to establish from time to time the number of
shares to be included in each of such series and to fix the designation, powers,
preferences and rights of the shares of each of such series, or of particular
holders thereof, the Board hereby fixes the powers, preferences and rights of
the shares of a series of Preferred Stock and the qualifications, limitations
and restrictions thereof, as follows:

                  Section 1. Designation and Amount. The shares of such series
shall be designated "Series I Preferred Stock", and the number of shares
constituting the Series I Preferred Stock shall initially be 50,000. The number
of shares of Series I Preferred Stock may be increased or decreased from time to
time by resolution of the Board, provided that no such decrease shall reduce the
number of shares of Series I Preferred Stock to less than the sum of (a) the
number of shares of Series I Preferred Stock then outstanding, (b) the number of
shares of Series I Preferred Stock that the

                                       A-1

<PAGE>   36

Corporation is obligated to issue upon the exercise of then outstanding rights,
options or warrants and (c) the number of shares of Series I Preferred Stock
that the Corporation is obligated to issue upon the conversion of then
outstanding convertible securities.

                  Section 2. Dividends and Distributions.

                  (a) Subject to the rights of holders of shares of any series
of Preferred Stock that ranks prior to the Series I Preferred Stock with respect
to dividends, the holders of shares of Series I Preferred Stock, in preference
to the rights of holders of shares of Common Stock, par value $.01 per share
("Common Stock"), of the Corporation with respect to dividends, and in
preference to the rights of holders of shares of any series of Preferred Stock
that ranks junior to the Series I Preferred Stock with respect to dividends,
shall be entitled to receive, when, as and if declared by the Board out of funds
legally available for that purpose, quarterly dividends, which shall be payable
in cash except as hereinafter provided, on the first day of January, April, July
and October in each year during which a share or fraction of a share of Series I
Preferred Stock is outstanding (each such date being referred to herein as a
"Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share of
Series I Preferred Stock, each such dividend to be in an amount per share
(rounded to the nearest cent) equal to:

                  (i) subject to the provision for adjustment set forth in the
         next succeeding sentence,

                           (A) 1,000 times the aggregate per share amount of all
                  cash dividends declared on the Common Stock after the
                  immediately preceding Quarterly Dividend Payment Date or, with
                  respect to the first Quarterly Dividend Payment Date, after
                  the first issuance of any share or fraction of a share of
                  Series I Preferred Stock, plus

                           (B) 1,000 times the aggregate per share amount, which
                  shall be payable in kind, of all non-cash dividends or other
                  distributions (other than (x) a dividend on the Common Stock
                  that is payable in shares of Common Stock or (y) a
                  distribution solely on account of a reclassification of, or
                  other split-up, division or combination of shares of, Common
                  Stock) declared on the Common Stock after the immediately
                  preceding Quarterly Dividend Payment Date or, with respect to
                  the first Quarterly Dividend Payment Date, after the first
                  issuance of any share or fraction of a share of Series I
                  Preferred Stock; or

                  (ii) if no dividend or other distribution (other than (x) a
         dividend on the Common Stock that is payable in shares of Common Stock
         or (y) a distribution solely on account of a reclassification of, or
         other split-up, division or combination of shares of, Common Stock)
         shall have been declared on the Common Stock after the immediately
         preceding Quarterly Dividend Payment Date or, with respect to the first
         Quarterly Dividend Payment Date, after the first issuance of any share
         or fraction of a share of Series I Preferred Stock, $.01.

In the event that the Corporation shall at any time after April 10, 2001, (1)
declare a dividend on the Common Stock that is payable in shares of Common
Stock, (2) reclassify the Common Stock or (3)

                                       A-2

<PAGE>   37

otherwise effect a split-up, division or combination of shares of Common Stock,
then in each such case the amount per share to which holders of shares of Series
I Preferred Stock were entitled immediately prior to such event under Section
2(a)(i) shall be adjusted by multiplying such amount by a fraction, the
numerator of which shall be the number of shares of Common Stock that are
outstanding immediately after such event and the denominator of which shall be
the number of shares of Common Stock that were outstanding immediately prior to
such event.

         (b) Immediately after the Board declares a dividend or other
distribution on the Common Stock (other than (x) a dividend on the Common Stock
that is payable in shares of Common Stock or (y) a distribution solely on
account of a reclassification of, or other split-up, division or combination of
shares of, Common Stock), if any share or fraction of a share of Series I
Preferred Stock is then outstanding, the Board shall declare a dividend on the
Series I Preferred Stock, which shall be payable at the time and in the amount
provided in Section 2(a). If (i) any share or fraction of a share of Series I
Preferred stock is then outstanding, (ii) no dividend or other distribution
(other than (x) a dividend on the Common Stock that is payable in shares of
Common Stock or (y) a distribution solely on account of a reclassification of,
or other split-up, division or combination of shares of, Common Stock) shall
have been declared on the Common Stock during the period between the immediately
preceding Quarterly Dividend Payment Date and the next succeeding Quarterly
Dividend Payment Date or, with respect to the first Quarterly Dividend Payment
Date, between the date of the first issuance of any share or fraction of a share
of Series I Preferred Stock and such first Quarterly Dividend Payment Date, and
(iii) there are funds legally available for the payment of a dividend on the
Series I Preferred Stock, the Board shall, at any time prior to such next
succeeding Quarterly Dividend Payment Date or such first Quarterly Dividend
Payment Date, as the case may be, declare a dividend of $1.00 per share on the
Series I Preferred Stock, which shall be payable on such next succeeding
Quarterly Dividend Payment Date or such first Quarterly Dividend Payment Date,
as the case may be.

         (c) Dividends on shares of Series I Preferred Stock shall begin to
accrue and be cumulative from the Quarterly Dividend Payment Date that
immediately precedes the date of issuance of such shares unless (i) the date of
issuance of such shares is prior to the record date for the determination of
holders of shares of Series I Preferred Stock entitled to receive a dividend on
the first Quarterly Dividend Payment Date, in which event dividends on such
shares shall begin to accrue and be cumulative from the date of issuance of such
shares, (ii) the date of issuance of such shares is a Quarterly Dividend Payment
Date, in which event dividends on such shares shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date, or (iii) the date of
issuance of such shares is a date after the record date for the determination of
holders of shares of Series I Preferred Stock entitled to receive a dividend on
the Quarterly Dividend Payment Date that next succeeds the date of issuance of
such shares, in which event dividends on such shares shall begin to accrue and
be cumulative from such next succeeding Quarterly Dividend Payment Date. Accrued
but unpaid dividends on shares of Series I Preferred Stock shall not bear
interest. If a dividend is declared on the Series I Preferred Stock and the
total amount of that dividend is less than the total amount of all dividends
accrued and payable on all shares of Series I Preferred Stock at the time of
payment of that dividend, then the portion of the total amount of that dividend
to be allocated to each of such shares shall be determined by multiplying the
total amount of that dividend by a fraction, the numerator of which shall be the
total amount of all dividends accrued and payable on

                                       A-3

<PAGE>   38

that share at that time and the denominator of which shall be the total amount
of all dividends accrued and payable on all such shares at that time. The Board
may fix a record date for the determination of holders of shares of Series I
Preferred Stock entitled to receive a dividend or other distribution on the
Series I Preferred Stock, which record date shall be no more than 30 days prior
to the date fixed for the payment of that dividend or other distribution.

         (d) If at any time (i) any holder of shares of Series I Preferred Stock
would have been entitled under the foregoing provisions of this Section 2 to
have received by that time a dividend on such shares, assuming that such
dividend had been declared, out of funds legally available for that purpose, at
the time and in the amount provided in the foregoing provisions of this Section
2, and (ii) such dividend or any part thereof has not been paid to such holder,
then such dividend or part thereof shall be considered accrued and payable at
that time.

         Section 3. Voting.

         (a) Subject to the provision for adjustment set forth in the next
succeeding sentence, each share of Series I Preferred Stock shall, except as
otherwise provided by law, entitle the holder thereof to 1,000 votes on each
matter that is submitted to a vote of stockholders of the Corporation. In the
event that the Corporation shall at any time after April 10, 2001, (i) declare a
dividend on the Common Stock that is payable in shares of Common Stock, (ii)
reclassify the Common Stock or (iii) otherwise effect a split-up, division or
combination of shares of Common Stock, then in each such case the number of
votes per share to which holders of shares of Series I Preferred Stock were
entitled immediately prior to such event shall be adjusted by multiplying such
number by a fraction, the numerator of which shall be the number of shares of
Common Stock that are outstanding immediately after such event and the
denominator of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.

         (b) Except as otherwise provided by law or in the Restated Certificate
of Incorporation of the Corporation or the resolution or resolutions of the
Board providing for the issuance of shares of Preferred Stock (including but not
limited to these resolutions):

                  (i) the holders of shares of Series I Preferred Stock, the
         holders of shares of Common Stock and the holders of shares of any
         other class or series of capital stock of the Corporation having
         general voting rights shall vote together as a single class on each
         matter that is submitted to a vote of stockholders of the Corporation,
         and

                  (ii) the holders of shares of Series I Preferred Stock shall
         not have any special voting rights.

         Section 4. Certain Restrictions. Unless and until all dividends at the
time accrued and payable on all shares of Series I Preferred Stock have been
paid in full, the Corporation shall not:

                  (a) declare or pay any dividend, or make any other
         distribution, on any class or series of capital stock of the
         Corporation that ranks junior, either with respect to dividends

                                       A-4

<PAGE>   39

         or upon liquidation, dissolution or winding up, to the Series I
         Preferred Stock (any such class or series being referred to herein as
         "Junior Stock");

                  (b) declare or pay any dividend, or make any other
         distribution, on any class or series of capital stock of the
         Corporation that ranks in parity, either with respect to dividends or
         upon liquidation, dissolution or winding up, with the Series I
         Preferred Stock (any such class or series being referred to herein as
         "Parity Stock"), except dividends that are paid ratably on all shares
         of Series I Preferred Stock on which dividends are at the time accrued
         and payable and all shares of Parity Stock on which dividends are at
         the time accrued and payable in proportion to the total amounts of
         dividends at the time accrued and payable on all such shares;

                  (c) redeem, purchase or otherwise acquire for consideration
         any shares of Junior Stock, provided that the Corporation may at any
         time redeem, purchase or otherwise acquire shares of Junior Stock in
         exchange for shares of other Junior Stock; or

                  (d) redeem, purchase or otherwise acquire for consideration
         any shares of Series I Preferred Stock or any shares of Parity Stock,
         except in accordance with an offer to purchase made in writing to all
         holders of such shares upon terms that the Board, after considering the
         relative rights and preferences of the respective series and classes of
         such shares, considers in good faith will result in fair and equitable
         treatment among the holders of such shares.

                  Section 5. Reacquired Shares. Any shares of Series I Preferred
Stock that are purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
Upon their cancellation, all of such shares shall become authorized but unissued
shares of Preferred Stock and thereafter may be issued as part of another series
of Preferred Stock, subject to the rights of holders (if any) of shares of
Series I Preferred Stock set forth in these resolutions.

                  Section 6. Liquidation, Dissolution or Winding Up. Upon any
liquidation, dissolution or winding up of the Corporation:

                  (a) no distribution shall be made to the holders of shares of
         Junior Stock unless, prior to such distribution, the Corporation shall
         have paid to each holder of shares of Series I Preferred Stock the sum
         of (i) $100 per share of Series I Preferred Stock held by such holder
         (such amount per share being referred to herein as the "Preference
         Amount") plus (ii) the total amount of all dividends at the time
         accrued and payable on all shares of Series I Preferred Stock held by
         such holder;

                  (b) no distribution shall be made to the holders of shares of
         Parity Stock, except distributions that are made ratably on both all
         shares of Series I Preferred Stock and all shares of Parity Stock in
         proportion to the total amounts to which the holders of all such shares
         are entitled upon such liquidation, dissolution or winding up; and

                                       A-5

<PAGE>   40

                  (c) each holder of shares of Series I Preferred Stock shall be
         entitled to receive the sum of (i) the total amount of all dividends at
         the time accrued and payable on all shares of Series I Preferred Stock
         held by such holder plus (ii) an aggregate amount per share (such
         amount per share being referred to herein as the "Distributable
         Amount"), inclusive of the Preference Amount but subject to the
         provision for adjustment set forth in the next succeeding sentence, of
         Series I Preferred Stock held by such holder that is equal to 1,000
         times the aggregate per share amount to be distributed to holders of
         shares of Common Stock upon such liquidation, dissolution or winding
         up.

In the event that the Corporation shall at any time after April 10, 2001, (1)
declare a dividend on the Common Stock that is payable in shares of Common
Stock, (2) reclassify the Common Stock or (3) otherwise effect a split-up,
division or combination of shares of Common Stock, then in each such case the
Distributable Amount to which a holder of shares of Series I Preferred Stock was
entitled immediately prior to such event shall be adjusted by multiplying such
Distributable Amount by a fraction, the numerator of which shall be the number
of shares of Common Stock that are outstanding immediately after such event and
the denominator of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.

         Section 7. Consolidation, Merger, etc. If the Corporation shall enter
into any consolidation, merger, share exchange or other transaction in which all
outstanding shares of Common Stock are exchanged for or changed into other
securities, cash, other property or any combination thereof, then each
outstanding share of Series I Preferred Stock shall at the same time be
similarly exchanged for or changed into an amount per share, subject to the
provision for adjustment set forth in the next succeeding sentence, equal to
1,000 times the aggregate amount of securities, cash and other property for
which each outstanding share of Common Stock is exchanged or into which each
outstanding share of Common Stock is changed. In the event that the Corporation
shall at any time after April 10, 2001, (1) declare a dividend on the Common
Stock that is payable in shares of Common Stock, (2) reclassify the Common Stock
or (3) otherwise effect a split-up, division or combination of shares of Common
Stock, then in each such case the amount per share for which Series I Preferred
Stock would be exchanged, or into the amount which Series I Preferred Stock
would be changed, immediately prior to such event under the immediately
preceding sentence of this Section 7, shall be adjusted by multiplying such
amount by a fraction, the numerator of which shall be the number of shares of
Common Stock that are outstanding immediately after such event and the
denominator of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.

         Section 8. Redemption. The shares of Series I Preferred Stock shall not
be redeemable.

         Section 9. Ranking. The Series I Preferred Stock shall rank junior to
each other series of Preferred Stock, both with respect to dividends and upon
liquidation, dissolution or winding up, unless the certificate of designation,
powers, preferences and rights of such other series of Preferred Stock shall
provide otherwise.

         Section 10. Amendment. If any share or fraction of a share of Series I
Preferred Stock is outstanding, neither the Restated Certificate of
Incorporation of the Corporation nor the resolution

                                       A-6

<PAGE>   41

or resolutions of the Board providing for the issuance of shares of Preferred
Stock (including but not limited to these resolutions) shall be amended in any
manner that would materially alter or change the powers, preferences or rights
of holders of shares of Series I Preferred Stock so as to affect such holders
adversely unless that amendment shall have received the affirmative vote of the
holders of a majority of the outstanding shares of Series I Preferred Stock
voting separately as a class. Notwithstanding the foregoing provisions of this
Section 10, whether or not a share or a fraction of a share of Series I
Preferred Stock is outstanding, (a) the Board may from time to time provide by
resolution or resolutions for the issuance of shares of Preferred Stock of one
or more series that rank prior to the Series I Preferred Stock, either with
respect to dividends or upon liquidation, dissolution or winding up, or both
with respect to dividends and upon liquidation, dissolution or winding up, and
(b) no vote or consent of any holder of shares of Series I Preferred Stock shall
be required either as a condition to the adoption of such resolution or
resolutions or as a condition to the issuance of such shares of Preferred Stock.

         Section 11. Fractional Shares. Series I Preferred Stock may be issued
in fractions of a share. Each holder of a fraction of a share of Series I
Preferred Stock shall be entitled to exercise voting rights, to receive
dividends and other distributions, and to have all other rights of the holders
of whole shares of Series I Preferred Stock in proportion to the fraction of a
share of Series I Preferred Stock held by that holder.

         RESOLVED FURTHER, that the proper officers of the Corporation be, and
each of them hereby is, authorized to execute a Certificate of Designation,
Powers, Preferences and Rights of Series I Preferred Stock of the Corporation
pursuant to Section 151 of the General Corporation Law of the State of Delaware
and to take all appropriate action to cause that Certificate to be filed,
recorded and become effective in accordance with Section 103 of the General
Corporation Law of the State of Delaware."

         IN WITNESS WHEREOF, this Certificate has been executed effective the
10th day of April, 2001.

                                  ---------------------------------------------
                                                 Ronald G. Tefteller
                                  Vice President, General Counsel and Corporate
                                  Secretary

                                       A-7

<PAGE>   42

                                                                       EXHIBIT B

                            FORM OF RIGHT CERTIFICATE

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

         NOT EXERCISABLE AFTER APRIL 10, 2011, OR EARLIER IF
         REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE SUBJECT TO
         REDEMPTION AT $.001 PER RIGHT AND TO EXCHANGE ON THE TERMS
         SET FORTH IN THE RIGHTS AGREEMENT.

                           Right Certificate

                          ILEX Oncology, Inc.

         This certifies that _________________________________, or registered
assigns, is the registered owner of the number of Rights set forth above, each
of which entitles the owner thereof, subject to the terms, provisions and
conditions of the Rights Agreement, dated as of April 10, 2001 (the "Rights
Agreement"), between ILEX Oncology, Inc., a Delaware corporation (the
"Company"), and American Stock Transfer & Trust Co., as rights agent (the
"Rights Agent"), to purchase from the Company at any time after the Distribution
Date (as such term is defined in the Rights Agreement) and prior to the close of
business (as defined in the Rights Agreement) on April 10, 2011, at the
principal offices of the Rights Agent, or at the offices of its successor as
Rights Agent, one one-thousandth interest in one share of Series I Preferred
Stock, par value $.01 per share (the "Preferred Shares"), of the Company, at a
purchase price of $120.00 per one one-thousandth interest in a Preferred Share
(the "Purchase Price"), upon presentation and surrender of this Right
Certificate with the Form of Election to Purchase duly executed. The number of
Rights evidenced by this Right Certificate (and the number of one one-thousandth
interests in a Preferred Share which may be purchased upon exercise hereof) set
forth above, and the Purchase Price set forth above, are the number and Purchase
Price as of April 10, 2001, based on the Preferred Shares as constituted at such
date. As provided in the Rights Agreement, the Purchase Price and the number of
one one-thousandth interests in a Preferred Share which may be purchased upon
the exercise of the Rights evidenced by this Right Certificate are subject to
modification and adjustment upon the happening of certain events.

         This Right Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the above-mentioned offices of the Rights Agent.

         This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right

                                  B-1

<PAGE>   43

Certificates of like tenor and date evidencing Rights entitling the holder to
purchase a like aggregate number of interests in Preferred Shares as the Rights
evidenced by the Right Certificate or Right Certificates surrendered shall have
entitled such holder to purchase. If this Right Certificate shall be exercised
in part, the holder shall be entitled to receive upon surrender hereof another
Right Certificate or Right Certificates for the number of whole Rights not
exercised.

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate (i) may be redeemed by the Company at a redemption price of
$.001 per Right payable in cash, Preferred Shares or other consideration or (ii)
may be exchanged in whole or in part for Preferred Shares or shares of the
Company's Common Stock, par value $.001 per share.

         No fractional interests in Preferred Shares will be issued upon the
exercise of any Right or Rights evidenced hereby (other than fractional
interests which are integral multiples of one one- thousandth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.

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

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

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

         Dated as of                  ,     .
                     -----------------  ----

                                        ILEX ONCOLOGY, INC.

                                        By
                                          -------------------------------------

Countersigned:
                                        ---------------------------------------

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

                                  B-2

<PAGE>   44

                    FORM OF REVERSE SIDE OF RIGHT CERTIFICATE

                               FORM OF ASSIGNMENT

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

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

         Dated:                          ,         .
                 ------------------------  --------

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

Signature Guarantee:

         Signatures must be guaranteed by an "eligible guarantor institution"
(such as a bank, stockbroker, credit union or savings association) pursuant to
Rule 17Ad-15 of the Rules and Regulations of the Securities Exchange Act of
1934, as amended.

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

         The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and that
after due inquiry and to the best of the knowledge of the undersigned, it did
not acquire the Rights evidenced by this Rights Certificate for any Person who
is, was or subsequently became an Acquiring Person or an Affiliate or Associate
of such Person.

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

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

                                       B-3

<PAGE>   45

             FORM OF REVERSE SIDE OF RIGHT CERTIFICATE -- CONTINUED

                          FORM OF ELECTION TO PURCHASE

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

To:  ILEX Oncology, Inc.

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

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

--------------------------------------------------------------------------------
           (Please insert social security or other identifying number)

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

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

--------------------------------------------------------------------------------
           (Please insert social security or other identifying number)

Dated:                          ,        .
        ------------------------  -------

                                        ---------------------------------------
                                                        Signature
Signature Guarantee:

         Signatures must be guaranteed by an "eligible guarantor institution"
(such as a bank, stockbroker, credit union or savings association) pursuant to
Rule 17Ad-15 of the Rules and Regulations of the Securities Exchange Act of
1934, as amended.

                                       B-4

<PAGE>   46

             FORM OF REVERSE SIDE OF RIGHT CERTIFICATE -- CONTINUED

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

         The undersigned hereby certifies that the Rights evidenced by this
Right Certificate are not beneficially owned by an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and that
after due inquiry and to the best of the knowledge of the undersigned, it did
not acquire the Rights evidenced by this Rights Certificate for any Person who
is, was or subsequently became an Acquiring Person or an Affiliate or Associate
of such Person.

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

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

                                     NOTICE

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

         In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Company and the Rights Agent will deem the beneficial owner of
the Rights evidenced by this Right Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and such
Assignment or Election to Purchase will not be honored.

                                       B-5

<PAGE>   47

                                                                       EXHIBIT C

                 SUMMARY OF RIGHTS TO PURCHASE PREFERRED SHARES

         On March 30, 2001, the Board of Directors of ILEX Oncology, Inc. (the
"Company") declared a dividend of one Preferred Share purchase right (a "Right")
for each outstanding share of common stock, par value $.01 per share (the
"Common Shares"), of the Company and authorized the issuance of one Right for
each Common Share which shall become outstanding between the Record Date and the
earlier of the Distribution Date (as hereinafter defined) or the final
expiration date of the Rights. The dividend is payable on April 20, 2001 (the
"Record Date") to the stockholders of record on that date. Each Right entitles
the registered holder to purchase from the Company one one-thousandth interest
in one share of Series I Preferred Stock, par value $.01 per share (the
"Preferred Shares"), of the Company at a price of $120.00 per one one-thousandth
interest in a Preferred Share (the "Purchase Price"), subject to adjustment. The
description and terms of the Rights are set forth in a Rights Agreement (the
"Rights Agreement") between the Company and American Stock Transfer & Trust Co.,
as Rights Agent (the "Rights Agent").

         Until the earlier to occur of (i) ten business days following a public
announcement that a person or group of affiliated or associated persons (an
"Acquiring Person") have acquired beneficial ownership of 20% or more of the
outstanding Common Shares and (ii) ten business days following the commencement
of, or announcement of an intention to make, a tender offer or exchange offer
the consummation of which would result in the beneficial ownership by a person
or group of 20% or more of such outstanding Common Shares (the earlier of such
dates being called the "Distribution Date"), the Rights will be evidenced, with
respect to any Common Share certificate outstanding as of the Record Date, by
such Common Share certificate. The Rights Agreement provides that, until the
Distribution Date, the Rights will be transferred with and only with the Common
Shares.

         Until the Distribution Date (or earlier redemption, exchange or
expiration of the Rights), new Common Share certificates issued after the Record
Date, upon transfer or new issuance of Common Shares, will contain a notation
incorporating the Rights Agreement by reference.

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

         The Rights are not exercisable until the Distribution Date. The Rights
will expire on April 10, 2011, (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.

         The Purchase Price payable, and the number of interests in Preferred
Shares or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares, (ii) upon the grant to holders of the Preferred Shares of

                                       C-1

<PAGE>   48

certain rights, options or warrants to subscribe for or purchase Preferred
Shares at a price, or securities convertible into Preferred Shares with a
conversion price, less than the then current market price of the Preferred
Shares or (iii) upon the distribution to holders of the Preferred Shares of
evidences of indebtedness or assets (excluding regular periodic cash dividends
paid out of earnings or retained earnings or dividends payable in Preferred
Shares) or of subscription rights or warrants (other than those referred to
above).

         The number of outstanding Rights and the number of one one-thousandth
interests in a Preferred Share issuable upon exercise of each Right are also
subject to adjustment in the event of a stock split of the Preferred Shares or a
stock dividend on the Preferred Shares payable in Preferred Shares or
subdivisions, consolidations or combinations of the Preferred Shares occurring,
in any such case, prior to the Distribution Date.

         Interests in Preferred Shares purchasable upon exercise of the Rights
will not be redeemable. Each Preferred Share will be entitled to a minimum
preferential quarterly dividend payment of $1 per share but will be entitled to
an aggregate dividend of 1,000 times the dividend declared per Common Share. In
the event of a liquidation, the holders of the interests in Preferred Shares
will be entitled to a minimum preferential liquidation payment of $100 per share
but will be entitled to an aggregate payment of 1,000 times the payment made per
Common Share. Each Preferred Share will have 1,000 votes, voting together with
the Common Shares. Finally, in the event of any merger, consolidation or other
transaction in which Common Shares are exchanged, each Preferred Share will be
entitled to receive 1,000 times the amount received per Common Share. These
rights are protected by customary antidilution provisions.

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

         In the event any person becomes an Acquiring Person, proper provision
shall be made so that each holder of a Right, other than Rights beneficially
owned by the Acquiring Person (which will thereafter be null and void for all
purposes of the Rights Agreement and the holder thereof shall thereafter have no
rights with respect to such Rights, whether under the Rights Agreement or
otherwise), will thereafter have the right to receive upon exercise of the Right
that number of Common Shares which equals the then current Purchase Price of the
Right divided by 50% of the then current per share market price (as defined in
the Rights Agreement) of the Common Shares. Under some circumstances, in lieu of
Common Shares, other equity and debt securities, property, cash or combinations
thereof, including combinations with Common Shares, may be issued upon payment
of the Purchase Price if of equal value to the number of Common Shares for which
the Right is exercisable.

         For example, at an exercise price of $120.00 per Right, each Right not
owned by an Acquiring Person (or by certain related parties) following the
Distribution Date, would entitle its holder to purchase for $120.00 such number
of Common Shares (or other consideration, as noted above) as equals $120.00
divided by one-half of the current per share market price (as defined in the
Rights Agreement) of the Common Shares. Assuming that the Common Shares had a
per share market price of $15.00 at such time, the holder of each valid Right
would be entitled to purchase sixteen Common Shares, having a market value of
16 x $15, or $240, for $120.00.

                                       C-2

<PAGE>   49

         In the event the Company is, in effect, acquired in a merger or other
business combination transaction or 50% or more of its consolidated assets or
earning power is sold (each, a "Qualifying Transaction"), proper provision will
be made so that each holder of a Right will thereafter generally have the right
to receive, upon the exercise thereof at the then current exercise price of the
Right, that number of shares of common stock of the acquiring company which
equals the then current Purchase Price of the Right divided by 50% of the then
current per share market price of the common stock of the acquiring company.

         For example, at an exercise price of $120.00 per Right, each valid
Right following a Qualifying Transaction would entitle its holder to purchase
for $120.00 such number of shares of common stock of the acquiring company as
equals $120.00 divided by one-half of the current per share market price (as
defined in the Rights Agreement) of such common stock. Assuming that such common
stock had a per share market price of $15.00 at such time, the holder of each
valid Right would be entitled to purchase sixteen shares of common stock of the
acquiring company, having a market value of 16 x $15, or $240, for $120.00.

         Under certain circumstances, after a Person has become an Acquiring
Person, the Board of Directors of the Company may exchange the Rights (other
than Rights that were or are beneficially owned by an Acquiring Person), in
whole or in part, at an exchange ratio of one Common Share per Right (subject to
adjustment).

         With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional interests in Preferred Shares (other than
fractions which are integral multiples of one one-thousandth of a Preferred
Share, which may, at the election of the Company be evidenced by depositary
receipts) will be issued, and in lieu thereof, an adjustment in cash will be
made based on the market price of the Preferred Shares on the last trading day
prior to the date of exercise. No fractional Common Shares will be issued, and
in lieu thereof, an adjustment in cash will be made based on the market price of
the Common Shares on the last trading day prior to the date of exercise.

         At any time prior to the close of business on the tenth business day
after the Distribution Date, the Board of Directors of the Company may redeem
the Rights in whole, but not in part, at a price of $.001 per right (the
"Redemption Price"), which may be paid in cash or with Common Shares, Preferred
Shares or other consideration deemed appropriate by the Board of Directors of
the Company. Immediately upon any redemption of the Rights, the right to
exercise the Rights will terminate and the only right of the holders of Rights
will be to receive the Redemption Price.

         Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends.

         The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights at any time to cure any
ambiguity or to correct or supplement any defective or inconsistent provisions
and may, prior to the Distribution Date, be amended to change or supplement any
other provision in any manner which the Company may deem necessary or desirable.
After the Distribution Date, the terms of the Rights may be amended (other than
to cure ambiguities or correct or supplement defective or inconsistent
provisions) only so long as such

                                       C-3

<PAGE>   50

amendment shall not adversely affect the interests of the holders of the Rights
(which may not be an Acquiring Person in whose hands Rights are void).

         A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Current Report on Form 8-K dated April
11, 2001. A copy of the Rights Agreement is available free of charge from the
Company. This summary description of the Rights does not purport to be complete
and is qualified in its entirety by reference to the Rights Agreement, which is
hereby incorporated herein by reference.

                                       C-4<PAGE>   1
                                                                   EXHIBIT 10.19

                      SECOND AMENDMENT TO PROMISSORY NOTES
                     AND FIFTH AMENDMENT TO LOAN AGREEMENT

         THIS SECOND AMENDMENT TO PROMISSORY NOTES AND FIFTH AMENDMENT TO LOAN
AGREEMENT ("Amendment") is made as of February 1, 2001, by and between U.S.
BANK NATIONAL ASSOCIATION, a national banking association ("Bank") and QUALMARK
CORPORATION, a Colorado corporation ("Borrower").

                                   RECITALS:

         A. Bank made a revolving loan to Borrower, as evidenced by that
certain Promissory Note dated December 22, 1998 made by Borrower payable to
Bank in the original principal amount of $3,000,000 (the "Original Revolving
Note"), as amended and supplemented by that certain Modification/Extension
Agreement effective as of August 23, 1999 between Bank and Borrower (the
"Amendment to Revolving Note"). Pursuant to the Amendment to Revolving Note,
the principal amount of the Revolving Note was reduced to $2,000,000. The
Original Revolving Note, as amended and supplemented by the Amendment to
Revolving Note, is hereinafter called the "Revolving Note."

         B. Bank made a term loan to Borrower, as evidenced by that certain
Promissory Note dated December 22, 1998 made by Borrower payable to Bank in the
original principal amount of $2,000,000 (the "Original Term Note"), as amended
and supplemented by that certain Modification/Extension Agreement effective as
of August 23, 1999 between Bank and Borrower (the "Amendment to Term Note").
Pursuant to the Amendment to Term Note, the principal amount of the Term Note
was reduced to $1,261,017.47. The Original Term Note, as amended and
supplemented by the Amendment to Term Note, is hereinafter called the "Term
Note."

         C. The Revolving Note and the Term Note (collectively, the "Notes")
are subject to the provisions of that certain Revolving Credit and Term Loan
Agreement dated as of December 22, 1998 between Borrower and Bank, as amended
by (i) Waiver and Amendment to Loan Agreement dated as of March 15, 1999, (ii)
Second Amendment to Loan Agreement dated as of August 23, 1999, (iii) Third
Amendment to Loan Agreement dated as of March 31, 2000, and (iv) Fourth
Amendment to Loan Agreement dated as of August 2, 2000 (as so amended, the
"Loan Agreement").

         D. All obligations of the Borrower to Bank are secured by a security
interest in (among other collateral) the Borrower's inventory, equipment,
rights to payment and general intangibles pursuant to Borrower's Security
Agreement between Borrower and Bank and the Addendum thereto, each dated
December 22, 1998 (the "Security Agreement"), and that security interest has
been properly perfected. In addition, Borrower specifically assigned six (6)
trademarks and ten (10) patents pursuant to an Assignment of Security Interest
in United States Trademarks and Patents (the "Assignment," and collectively
with the Security Agreement, the "Security Documents") dated as of December 22,
1998 between Borrower, as assignor, and Bank, as assignee. The Assignment was
properly recorded with the United States Patent and Trademark Office effective
on January 14, 1999.
<PAGE>   2
         E. Borrower and Bank desire to amend and supplement the Revolving Note,
the Term Note and the Loan Agreement, all as specifically hereinafter set forth.

                                   AGREEMENT:

         NOW, THEREFORE, in consideration of the foregoing recitals, the
agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:

         1. Incorporation of Recitals. The foregoing recitals are hereby
incorporated herein and made a part hereof.

         2. Confirmation of Indebtedness. The outstanding principal balance
under the Revolving Note as of January 29, 2001 is $2,000,000. The outstanding
principal balance under the Term Note as of January 29, 2001 is $811,107.47.
Interest has and continues to accrue under the Notes in accordance with the
terms thereof.

         3. Amendments to Revolving Note. The terms of the Revolving Note are
changed as follows:

            A.  The principal amount of the Revolving Note is hereby reduced
                to $1,000,000.

            B.  The maturity date of the Revolving Note is extended to March 15,
                2002. All principal remaining outstanding under the Revolving
                Note and all interest accrued thereon is payable in full on
                March 15, 2002.

            C.  Borrower will pay all accrued interest under the Revolving Note
                on March 31, 2001. Commencing on April 1, 2001, Borrower will
                pay all accrued interest on the last day of each calendar month
                until maturity.

            D.  The outstanding principal balance of the Revolving Note shall be
                reduced to an amount which results after $2,000,000 is
                subtracted from (x), with (x) being equal to the sum of:

                i.    $5,000 extension fee due as part of this Amendment;

                ii.   $750 in attorneys' fees incurred by Bank as part of this
                      Amendment;

                iii.  all amounts currently due under the Revolving Note; and

                iv.   all amounts currently due under the Term Note.

            E.  Borrower authorizes Bank to debit its account number
                103656099183 with the Bank for all sums due under the Revolving
                Note.

                                       2
<PAGE>   3
         4. Amendments to Term Note. The terms of the Term Note are changed as
follows:

                  A. The principal amount of the Term Note is hereby increased
                  to $2,000,000.

                  B. The maturity date of the Term Note is extended to March 15,
                  2002. All principal remaining outstanding under the Term Note
                  and all interest accrued thereon is payable in full on March
                  15, 2002.

                  C. Borrower will pay all accrued interest under the Term Note,
                  plus $35,000 in principal, on March 31, 2001. Commencing on
                  April 1, 2001, Borrower agrees to pay all interest accrued
                  under the Term Note, plus $35,000.00 in principal, on the last
                  day of each month until maturity.

                  D. Borrower authorizes Bank to debit its account number
                  103656099183 with the Bank for all sums due under the Term
                  Note.

         5. Amendment to Loan Agreement. The Loan Agreement is amended as
follows:

                  A. Section 1.01.1 of the Loan Agreement is amended by changing
                  the figure "$2,000,000" to the figure "$1,000,000."

                  B. Section 1.01.4 of the Loan Agreement is amended by deleting
                  the last sentence thereof and replacing it with the following:

                  "Borrower will pay all accrued interest on March 31, 2001.
                  Commencing on April 1, 2001, accrued interest shall be due and
                  payable (i) for LIBOR Rate Advances and Reference Rate
                  Advances, on the last day of each calendar month, (ii) at
                  final maturity of the Line Note, and (iii) on demand after
                  such maturity."

                  C. The definition of "EBITDA" contained in section 1.01.5 of
                  the Loan Agreement is deleted in its entirety and replaced
                  with the following:

                  "EBITDA" means the amount of earnings before interest, taxes,
                  depreciation and amortization, measured on a quarterly basis."

                  D. Section 1.01.6 of the Loan Agreement is amended by changing
                  the date "December 22, 2001" to "March 15, 2002."

                  E. Section 1.02.1 of the Loan Agreement is deleted in its
                  entirety and replaced with the following:

                  "Commitment. Subject to the following terms and conditions,
                  Bank agrees to make a loan to Borrower (the "Term Loan") in
                  the maximum aggregate amount of $2,000,000, the proceeds of
                  which shall be used for general corporate purposes.

                                       3
<PAGE>   4
                  Borrower acknowledges that the Term Loan has been fully
                  advanced, and that the Bank has no obligation to advance any
                  additional amount under the Term Loan."

                  F. Section 1.02.3 of the Loan Agreement is amended by deleting
                  the last sentence thereof and replacing it with the following:

                  "Borrower will pay all accrued interest on March 31, 2001.
                  Commencing on April 1, 2001, accrued interest shall be due and
                  payable (i) on the last day of each calendar month, (ii) at
                  final maturity of the Term Loan, and (iii) on demand after
                  such maturity."

                  G. Section 1.02.4 of the Loan Agreement is amended by deleting
                  the first sentence thereof and replacing it with the
                  following:

                  "Borrower agrees to repay the Term Loan made hereunder in
                  monthly payments in the amount of $35,000, each due on the
                  last day of each calendar month, commencing March 31, 2001,
                  and the final installment of all unpaid principal and accrued
                  interest due and payable in full at the final maturity of the
                  Term Loan, which will be March 15, 2002, subject to
                  acceleration upon the occurrence of an Event of Default."

                  H. The following is added as section 1.03.3 of the Loan
                  Agreement:

                  "1.03.3 Direct Debit. Borrower authorizes Bank to debit its
                  account number 103656099183 with the Bank for all sums due
                  under the Term Note and the Revolving Note."

                  I. Section 5.09 is deleted in its entirety and replaced with
                  the following:

                  "5.09 Financial Condition. Maintain the financial condition of
                  Borrower, determined in accordance with GAAP, so that it meets
                  the following requirements all determined on a quarterly basis
                  as of the end of each fiscal quarter and, where indicated, for
                  the preceding or trailing 12 month period (the "TTMP"):

                           (a)      Commencing with the quarter ending December
                                    31, 2000 and thereafter:

                                    i.       Borrower's Tangible Net Worth will
                                             be not less than $3,400,000 as of
                                             the end of each fiscal quarter; and

                                    ii.      Borrower's ratio of Free Cash Flow
                                             to Debt Service will be not less
                                             than 1.1:1 for the TTMP.

                                       4
<PAGE>   5
                           (b)      Commencing with the quarter ending December
                                    31, 2000 and continuing through the quarter
                                    ending June 30, 2001:

                                    i.       Borrower's EBITDA will not be less
                                             than $350,000 at 3/31/01 and
                                             6/30/01.

                           (c)      Commencing with the quarter ending June 30,
                                    2001 and continuing through the quarter
                                    ending March 31, 2002:

                                    i.       Borrower's EBITDA will not be less
                                             than $400,000 at 9/30/01, 12/31/01
                                             and 3/31/02.

                           For purposes hereof, "Free Cash Flow" means EBITDA
                           less cash taxes, cash capital expenditures and cash
                           dividends; "Debt Service" means interest expense plus
                           all mandatory principal payments on Debt; and
                           "Tangible Net Worth" means stockholders' equity less
                           intangible assets."

         6. Limited Waiver. Subject to the Borrower's agreement hereto, Bank
hereby waives any default which has occurred by reason of Borrower's failure to
comply with the covenants set forth in section 5.09 of the Loan Agreement as of
December 31, 2000.

         7. Conditions to Effectiveness of Amendment. This Amendment shall
become effective as of the date first above written when the Bank shall have
received and, as applicable, executed each of the following: (i) an original of
this Amendment, duly executed by the Borrower; (ii) an extension fee equal to
$5,000; (iii) attorneys' fees incurred by Bank equal to $750.00; and (iv) such
additional information or documentation as the Bank may require. If the Bank has
not received all of the foregoing on or before February 9, 2001, then the Bank's
offer to make the agreements set forth herein may be terminated, at the Bank's
option, by giving notice to the Borrower.

         8. General Release. Borrower, for and on behalf of itself and its legal
representatives, heirs, successors and assigns, does hereby waive, release,
relinquish and forever discharge Bank and its past and present directors,
officers, agents, employees, parents, subsidiaries, affiliates, insurers,
attorneys, representatives and assigns, and each and all thereof (collectively,
the "Released Parties"), of and from any and all manner of action or causes of
action, suits, claims, demands, judgments, damages, levies, and the execution of
whatsoever kind, nature and /or description arising on or before the date
hereof, including, without limitation, any claims, losses, costs or damages,
including compensatory and punitive damages, in each case whether known or
unknown, liquidated or unliquidated, fixed or contingent, direct or indirect,
which Borrower, or its legal representatives, heirs, successors or assigns, ever
had or now has or may claim to have against any of the Released Parties, with
respect to any matter whatsoever, including, without limitation, this Amendment
and any other instruments and agreements executed by Borrower in connection
herewith, arising on or before the date hereof.

                                       5
<PAGE>   6
         9. Effect of Amendment; Representations and Warranties; Nonwaiver. Bank
and Borrower agree that the Term Note, the Revolving Note and the Loan
Agreement, all as amended by this Amendment, and the Security Documents remain
in full force and effect. Borrower represents and warrants that its has the
power and legal right and authority to enter into this Amendment, and that
neither this Amendment, nor the agreements contained herein, contravene or
constitute a default under any agreement, instrument or indenture to which
Borrower is a party or signatory, or, to the best knowledge of Borrower, any
other agreement or requirement of law. Borrower represents and warrants that no
consent, approval or authorization of or registration or declaration with any
party, including but not limited to any governmental authority, is required in
connection with the execution and delivery by Borrower of this Amendment, or the
performance of its obligations herein described.

         10. Ratification of Notes, Loan Agreement and Security Documents. All
of the terms, conditions, provisions, agreements, requirements, promises,
obligations, duties, covenants and representations under the Revolving Note, the
Term Note, the Loan Agreement, all as amended and supplemented by this
Amendment, and the Security Documents are hereby ratified and affirmed in all
respects by Borrower. Borrower further represents and warrants that the Security
Documents continue to secure the obligations of Borrower under the Revolving
Note, the Term Note, the Loan Agreement, all as amended and supplemented by this
Amendment.

         11. Further Assurances. The Borrower shall promptly correct any defect
or error that may be discovered in any Security Document or in the execution,
acknowledgment or recordation thereof. Promptly upon request by the Bank, the
Borrower also shall do, execute, acknowledge, deliver, record, re-record, file,
re-file, register and re-register, any and all deeds, conveyances, mortgages,
deeds of trust, trust deeds, assignments, estoppel certificates, financing
statements and continuations thereof, notices of assignment, transfers,
certificates, assurances and other instruments as Bank may reasonably require
from time to time in order: (a) to carry out more effectively the purposes of
the Security Documents; (b) to perfect and maintain the validity, effectiveness
and priority of any security interests intended to be created by the Security
Documents; (c) to grant the Bank, to secure the Notes, a perfected lien in any
intellectual property or other assets owned by the Borrower; and (d) to better
assure, convey, grant, assign, transfer, preserve, protect and confirm unto Bank
the rights granted now or hereafter intended to be granted to Bank under any
Security Document or under any other instrument executed in connection with any
Security Document or that the Borrower may be or become bound to convey,
mortgage or assign to Bank in order to carry out the intention or facilitate the
performance of the provisions of any Security Document. The Borrower shall
furnish evidence satisfactory to Bank of every such recording, filing or
registration.

         12. Merger and Integration, Superseding Effect. This Amendment embodies
the entire agreement and understanding between the parties hereto with respect
to the subject matter hereof and supersedes and has merged into it all prior and
written agreements in the same subjects by and between the parties hereto with
the effect that this Amendment shall control.

                                       6
<PAGE>   7
         13. Counterparts. This Amendment may be executed in different
counterparts with the same effect as if the signatures thereon were in the same
instrument, and will be effective upon delivery of all such counterparts to
Bank.

         14. Governing Law. THE LAWS OF THE STATE OF COLORADO GOVERN THIS
AMENDMENT.

         15. Advice of Counsel. Borrower acknowledges and agrees that it has
received the advice of independent counsel selected by it, or the opportunity to
obtain such advice, before entering into this Amendment and any other
instruments and agreements executed by Borrower in connection herewith, and has
not relied upon Bank or any of its officers, directors, employees, agents or
attorneys concerning any aspect of the transactions contemplated by this
Amendment or any of the other said instruments and agreements.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date and year first above written.

                                       U.S. BANK NATIONAL ASSOCIATION

                                       By /s/ DANIEL J. FALSTAD
                                         ---------------------------------------
                                         Daniel J. Falstad, Vice President

                                       QUALMARK CORPORATION

                                       By /s/ CHARLES D. JOHNSTON
                                         ---------------------------------------
                                         Charles D. Johnston President/CEO
                                         ---------------------------------------
                                         (Print Name and Title)

STATE OF          )
         --------
                  ) ss.
COUNTY OF         )
          -------

         The foregoing instrument was acknowledged before me this ___ day of
February, 2001, by _________________________, the _________________________ of
Qualmark Corporation, a Colorado corporation, on behalf of the corporation.

                                              ----------------------------------
                                              Notary Public

                                       7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00023-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00023-of-00352.parquet"}]]