Document:

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                                                                     EXHIBIT 4.1
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                              THE FIRST YEARS INC.

                                       and

                          EQUISERVE TRUST COMPANY, N.A.

                                 as Rights Agent

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

                          Common Stock Rights Agreement

                         Dated as of November 19, 2001

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

Section 2.  Appointment of Rights Agent..............................................  6

Section 3.  Issue of Rights Certificates.............................................  6

Section 4.  Form of Rights Certificates..............................................  7

Section 5.  Countersignature and Registration........................................  8

Section 6.  Transfer, Split Up, Combination and Exchange of Rights Certificates;
            Mutilated, Destroyed, Lost or Stolen Rights Certificates.................  8

Section 7.  Exercise of Rights; Purchase Price; Expiration Date of Rights............  9

Section 8.  Cancellation and Destruction of Rights Certificates...................... 11

Section 9.  Reservation and Availability of Shares of Common Stock; Other Covenants.. 11

Section 10. Common Stock Record Date; Etc............................................ 12

Section 11. Antidilution Adjustments................................................. 13

Section 12. Certificate of Adjustments............................................... 20

Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power..... 21

Section 14. Fractional Rights and Fractional Shares.................................. 23

Section 15. Rights of Action......................................................... 24

Section 16. Agreement of Rights Holders.............................................. 24

Section 17. Rights Certificate Holder Not Deemed a Stockholder....................... 25

Section 18. Concerning the Rights Agent.............................................. 25

Section 19. Merger or Consolidation or Change of Name of Rights Agent................ 26

Section 20. Duties of Rights Agent................................................... 26

Section 21. Change of Rights Agent................................................... 29

Section 22. Issuance of New Rights Certificates...................................... 29

Section 23. Redemption and Termination............................................... 30

Section 24. Exchange................................................................. 31

Section 25. Notice of Proposed Actions............................................... 31
</TABLE>

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<TABLE>
<S>                                                                                  <C>
Section 26. Notices.................................................................. 32

Section 27. Supplements and Amendments............................................... 33

Section 28. Successors............................................................... 33

Section 29. Determinations and Actions by the Board; etc............................. 34

Section 30. Benefits of This Agreement............................................... 34

Section 31. Severability............................................................. 34

Section 32. Governing Law............................................................ 34

Section 33. Counterparts............................................................. 34

Section 34. Descriptive Headings..................................................... 34
</TABLE>

                                       ii

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                        COMMON STOCK RIGHTS AGREEMENT

         This Agreement dated as of November 19, 2001 is between The First
Years Inc., a Massachusetts corporation (the "Company"), and EquiServe Trust
Company, N.A., a national banking association having its principal offices in
Canton, Massachusetts (the "Rights Agent").

                               W I T N E S S E T H

         WHEREAS, on November 19, 2001, the Board of Directors of the Company
(the "Board") authorized the issuance of rights (collectively, the "Rights", and
individually a "Right") to purchase, on the terms and subject to the provisions
of this Agreement, shares of the Company's Common Stock; and

         WHEREAS, on November 19, 2001 (the "Declaration Date") the Board (a)
authorized and declared a dividend distribution of one Right for every share of
Common Stock of the Company outstanding at the Close of Business on November
30, 2001 (the "Dividend Record Date") and (b) authorized the issuance of, and
agreed to issue, one Right (as such number may be adjusted in accordance with
Section 11(1) hereof) for every share of Common Stock of the Company issued
between the Dividend Record Date and the Distribution Date (as hereinafter
defined).

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

Section 1.        Certain Definitions.

         For purposes of this Agreement, the following terms have the meanings
indicated:

         (a) "Acquiring Person" shall mean any Person who or which, together
with all Affiliates of such Person, shall be the Beneficial Owner of 15% or more
of the shares of Common Stock 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 any trustee in respect
thereof acting in such capacity or (iv) any Person organized, appointed or
established by the Company or any Subsidiary of the Company for or pursuant to
the terms of any such employee benefit plan. Notwithstanding the foregoing, if
the Board determines in good faith that a person who would otherwise be an
"Acquiring Person" has become such inadvertently (including, without limitation,
because (a) such Person was unaware that he, she or it was the Beneficial Owner
of a percentage of Common Stock of the Company that would otherwise cause such
Person to be an Acquiring Person or (b) such Person was aware of the extent of
his, her or its Beneficial Ownership but had no actual knowledge of the
consequences of such Beneficial Ownership under this Agreement) and without
intention of changing or influencing control, management or policies of the
Company or of engaging in any of the actions specified in Item 4 of Schedule 13D
under the Exchange Act, and within 10 Business Days of being requested by the
Company to advise it regarding the same, certifies to the Company with respect
to the foregoing (provided that if the Person requested to so certify fails to
do so within 10 Business Days, then such Person shall become an Acquiring Person
on the day immediately following the last day of such 10 Business Day period),
and if such Person

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as promptly as practicable divested or divests himself, herself or itself of
Beneficial Ownership of a sufficient number of shares of Common Stock of the
Company so that such Person would no longer be an Acquiring Person, then such
Person shall not be deemed to be or to have become an Acquiring Person for any
purpose of this Agreement.

         No Person shall become an Acquiring Person as the result of an
acquisition of Common Stock by the Company which, by reducing the number of
shares outstanding, increases the proportionate number of shares beneficially
owned by such Person to 15% (or such other percentage as would otherwise result
in such person becoming an Acquiring Person) or more of the Common Stock of the
Company then outstanding, provided, however that if a Person shall so become the
Beneficial Owner of 15% (or such other percentage) or more of the Common Stock
then outstanding by reason of an acquisition of Common Stock by the Company and
shall, after such share purchases by the Company, become the Beneficial Owner of
an additional 1% of the outstanding Common Stock of the Company, then such
Person shall be deemed to be an Acquiring Person.

         (b) "Act" shall mean the Securities Act of 1933 (or any successor act),
as amended and as may from time to time be in effect.

         (c) "Affiliate", with respect to any Person, shall mean any other
Person who is, or who would be deemed to be, an "affiliate" or an "associate" of
such Person within the respective meanings ascribed to such terms in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as such Rule is in
effect on the Declaration Date.

         (d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own" or have "Beneficial Ownership" of, any securities:

which such Person or any of such Person's Affiliates has "beneficial ownership"
of within the meaning of Rule 13d-3 of the General Rules and Regulations under
the Exchange Act, as such Rule is in effect on the Declaration Date;

which such Person or any of such Person's Affiliates has, directly or
indirectly, the right to acquire (whether such right is exercisable immediately
or after the passage of time), pursuant to any agreement, arrangement or
understanding (whether or not in writing) or upon the exercise of conversion,
exchange or other rights, warrants or options, or otherwise;

which such Person or any of such Person's Affiliates has, directly or
indirectly, the right to vote or dispose of, including pursuant to any
agreement, arrangement or understanding (whether or not in writing); provided,
however, that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security for purposes of this Section 1(d) (iii) as a
result of an agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding: (A) arises solely from a revocable
proxy given in response to a public proxy or consent solicitation made pursuant
to, and in accordance with, the applicable proxy solicitation rules and
regulations promulgated under the Exchange Act or (B) is made in connection
with, or is to otherwise participate in, a proxy or consent solicitation made,
or to be made, pursuant to, and in accordance with, the applicable proxy
solicitation rules and regulations promulgated under the Exchange Act, in either
case described in clause (A) or (B) above,

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whether or not such agreement, arrangement or understanding is also then
reportable by such Person on Schedule 13D under the Exchange Act (or any
comparable or successor report); or

which are beneficially owned, directly or indirectly, by any other Person or any
Affiliate thereof with which such Person or any of such Person's Affiliates has
an agreement, arrangement or understanding (whether or not in writing), for the
purpose of acquiring, holding, voting (except pursuant to a revocable proxy or
in connection with a proxy or consent solicitation described in clause (A) or
(B) of the proviso to Section l(d)(iii) hereof) or disposing of any securities
of the Company;

provided, however, that for purposes of this Section 1(d) a Person shall not be
deemed the "Beneficial Owner" of, or to "beneficially own", (A) securities
tendered pursuant to a tender or exchange offer made by such Person or any of
such Person's Affiliates until such tendered securities are accepted for
purchase or exchange, (B) securities issuable upon exercise of Rights at any
time prior to the occurrence of a Common Stock Event, or (C) securities issuable
upon exercise of Rights which were held by a Person or its Affiliates prior to
the Distribution Date as long as such Person is not responsible for the
occurrence of the Common Stock Event giving rise to the Distribution Date;
provided, further, however, that nothing in this Section 1(d) shall cause a
Person engaged in business as an underwriter of securities to be the "Beneficial
Owner" of, or to "beneficially own", any securities acquired through such
person's participation in good faith in a firm commitment underwriting until the
expiration of 40 days after the date of such acquisition.

         For all purposes of this Agreement, any calculation of the number of
shares of Common Stock outstanding at any particular time, including for
purposes of determining the particular percentage of such outstanding shares of
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act.

         (e) "Board" shall mean have the meaning set forth in the preamble to
this Agreement.

         (f) "Business Day" shall mean any day other than a Saturday, Sunday or
a day on which banking institutions in The Commonwealth of Massachusetts are
authorized or obligated by law or executive order to close.

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

         (h) "Closing Price" shall have the meaning set forth in Section 11(d)
hereof,

         (i) "Common Stock" shall mean the Common Stock, with a par value of
$0.10 per share, of the Company, except that "Common Stock" when used with
respect to any Person other than the Company shall mean the common stock (or
other capital stock) of such Person with the greatest voting power, or the
equity securities or other equity interests having power to control or direct
the management and affairs of such Person, or if such Person is a Subsidiary of
another Person, the Person who ultimately controls such Person who is the
Subsidiary and which has outstanding such common stock (or such other equity
securities or interests).

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         (j) "Common Stock Equivalents" shall have the meaning net forth in
Section 11(a) (iii) hereof.

         (k) "Common Stock Event" shall mean the occurrence of (i) any event
described in Section 11(a)(ii) hereof or (ii) clause (a), (b) or (c) of the
first sentence of Section 13 hereof.

         (l) "Company" shall have the meaning set forth in the preamble to this
Agreement.

         (m) "Current Market Price" shall have the meaning set forth in Section
11(d) hereof.

         (n) "Current Value" shall have the meaning set forth in Section 11(a)
(iii) hereof.

         (o) "Declaration Date" shall have the meaning set forth in the preamble
to this Agreement.

         (p) "Disqualified Transferee" shall mean any Person who is a direct or
indirect Transferee of any Right from an Acquiring Person or an Affiliate of an
Acquiring Person and became such a transferee (x) after the occurrence of a
Common Stock Event or (y) prior to or concurrently with the Acquiring Person
becoming such and received such Right pursuant to a transfer (whether or not for
value) (A) from the Acquiring Person to holders of its Common Stock or other
equity securities or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement, or understanding (whether or not in writing)
regarding the transferred Right, or (B) which a majority of the Board reasonably
determine is part of a plan, arrangement, or understanding (whether or not in
writing) which has as a primary purpose or effect, the avoidance of Section 7(e)
hereof.

         (q) "Distribution Date" shall mean (A) the earlier of (x) the 10th
Business Day following the Stock Acquisition Date or (y) the 10th Business Day
following the Offer Commencement Date or (B) such later date thereafter, as may
be determined by action of the Board.

         (r) "Dividend Record Date" shall have the meaning set forth in the
preamble to this Agreement.

         (s) "Excess Amount" shall have the meaning set forth in Section
11(a)(iii) hereof.

         (t) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended (or any successor act), as in effect on the Declaration Date.

         (u) "Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.

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

         (w) "Final Expiration Date" shall mean the Close of Business on
November 19, 2006.

         (x) "Offer Commencement Date" shall mean the date of the commencement
by any Person, other than the Company, a Subsidiary of the Company, or any
employee benefit plan of

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the Company or of any Subsidiary of the Company or any Person organized,
appointed, or established by the Company or such Subsidiary pursuant to the
terms of any such plan, of a tender or exchange offer (including when such offer
is first published or sent or given within the meaning of Rule 14d-2(a) of the
General Rules and Regulations under the Exchange Act) if upon consummation
thereof the Person and Affiliates thereof would be the Beneficial Owner of 15%
or more of the then outstanding shares of Common Stock (including any such date
which is after the date of this Agreement and prior to the issuance of the
Rights on the Dividend Record Date or thereafter).

         (y) "Officers' Certificate" has the meaning set forth in Section 20(b)
hereof.

         (z) "Other Consideration" has the meaning set forth in Section 6(a)
hereof.

         (aa) "Person" shall mean a company, corporation, association,
partnership, joint venture, trust, organization, business, entity or individual.

         (bb) "Principal Office" shall have the meaning set forth in Section 5
hereof.

         (cc) "Purchase Price" shall have the meaning set forth in Section 7(b)
hereof.

         (dd) "Redemption Price" shall have the meaning set forth in Section 23
hereof.

         (ee) "Rights" shall have the meaning set forth in the preamble to this
Agreement.

         (ff) "Rights Agent" shall have the meaning set forth in the preamble of
this Agreement subject to the appointment of a Co-Rights Agent or successor
Rights Agent pursuant to Section 1 hereof.

         (gg) "Rights Certificates" shall have the meaning set forth in Section
3(a) hereof.

         (hh) "Stock Acquisition Date" shall mean the later of (i) the date of
the first public announcement by an Acquiring Person or the Company that an
Acquiring Person has become such (including the first date on which any filing
with any governmental authority disclosing that an Acquiring Person has become
such becomes available to the public), or (ii) the date on which an executive
officer of the Company has actual knowledge that an Acquiring Person has become
such.

         (ii) "Subsidiary" shall mean, as of any date, any Person of which the
Company (or other specified parent) owns directly, or indirectly through a
Subsidiary or Subsidiaries, at least a majority of the outstanding capital stock
entitled to vote generally, or holds directly, or indirectly through a
Subsidiary or Subsidiaries, at least a majority of partnership or similar
interests, or is a general partner or of which the Company (or other specified
parent) owns voting securities sufficient to elect at least a majority of the
directors of such Person.

         (jj) "Substitution Period" stall have the meaning set forth in Section
11(a) (iii) hereof.

         (kk) "Summary of Rights" shall have the meaning set forth in Section
3(b) hereof.

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         (ll) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.

Section 2.        Appointment of Rights Agent.

         The Company hereby appoints the Rights Agent to act as agent for the
Company and the holders of the Rights (who, in accordance with Section 3 hereof,
shall prior to the Distribution Date also be the holders of the Common Stock) in
accordance with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Company may from time to time, upon prior written
notice to the Rights Agent, appoint such Co-Rights Agents as it may deem
necessary or desirable upon ten (10) days' prior written notice to the Rights
Agent. The Rights Agent shall have no duty to supervise, and shall in no event
be liable for, the acts or omissions of any such Co-Rights Agent.

Section 3.        Issue of Rights Certificates.

         (a) Until the Distribution Date, (i) the Rights will be evidenced
(subject to the provisions of Section 3(b) hereof) by the certificates
representing shares of Common Stock registered in the names of holders of the
Common Stock (which certificates shall be deemed also to be certificates for the
associated Rights) and not by separate rights certificates, and (ii) the Rights
will be transferable only in connection with the transfer of the associated
shares of Common Stock. As soon as practicable after the Distribution Date, the
Rights Agent will send by first-class, insured, postage prepaid mail, to each
record holder of the Common Stock as of the Close of Business on the
Distribution Date, at the address of such holder shown on the records of the
Company, one or more rights certificates, in substantially the form of Exhibit A
hereto (the "Rights Certificates"), evidencing in the aggregate that number of
Rights to which such holder is entitled in accordance with the provisions of
this Agreement. As of and after the Distribution Date, the Rights will be
evidenced solely by such Rights Certificates. The Rights are exercisable only in
accordance with the provisions of Section 7 hereof and are redeemable only in
accordance with Section 23 hereof.

         (b) As soon as practicable after the Dividend Record Date, the Company
will cause a copy of a Summary of Common Stock Purchase Rights, in substantially
the form attached hereto as Exhibit B (the "Summary of Rights"), to be sent by
first-class, postage prepaid mail, to each record holder of the Common Stock as
of the Close of Business on the Dividend Record Date, at the address of such
holder shown on the stock transfer records of the Company. With respect to
certificates for the Common Stock outstanding as of the Dividend Record Date,
until the Distribution Date, the Rights associated with the shares of Common
Stock represented by such certificates will be evidenced by such certificates
for the Common Stock and the registered holders of the Common Stock shall also
be the registered holders of the associated Rights. Until the Distribution Date
(or the earlier redemption, exchange in accordance with Section 24 hereof,
expiration or termination of the Rights), the surrender for transfer of any of
the certificates representing shares of the Common Stock outstanding on the
Dividend Record Date, with or without a copy of the Summary of Rights, shall
also constitute the transfer of the Rights associated with the Common Stock
represented by such certificate.

         (c) Rights shall be issued in respect of all shares of Common Stock
issued (whether originally issued or delivered from the Company's treasury)
after the Dividend Record Date but

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prior to the earliest of (i) the Distribution Date, (ii) the Expiration Date, or
(iii) the redemption or exchange in accordance with Section 24 hereof of the
Rights. Certificates representing such shares of Common Stock and certificates
issued on transfer of such shares of Common Stock prior to the Distribution Date
(or earlier expiration or redemption of the Rights) shall be deemed also to be
certificates for the associated Rights and commencing as soon as reasonably
practicable following the Dividend Record Date shall bear the following legend
(or a legend substantially in the form thereof):

         This certificate also evidences and entitles the holder to Rights set
         forth in a Common Stock Rights Agreement between the issuer and
         EquiServe Trust Company, N.A. as Rights Agent (the "Rights Agent"),
         dated as of November 19, 2001 the "Rights Agreement"), the terms of
         which are incorporated herein by reference and a copy of which is on
         file at the principal offices of both the issuer and the Rights Agent.
         The Rights Agent will mail to the registered holder of this certificate
         a copy of the Rights Agreement without charge upon written request.
         Under certain circumstances set forth in the Rights Agreement, such
         Rights will be evidenced by separate certificates and will no longer be
         evidenced by this certificate. Under certain circumstances set forth in
         the Rights Agreement, Rights issued to, or held by any Person who is,
         was or becomes, or acquires shares from, an Acquiring Person or any
         Affiliate of an Acquiring Person (as each such term is defined in the
         Rights Agreement and generally relating to the ownership or purchase of
         large shareholdings), whether currently held by or on behalf of such
         Person or Affiliate or by certain subsequent holders, may become null
         and void.

         Until the Distribution Date (or the earlier redemption, exchange in
accordance with Section 24 hereof, expiration or termination of the Rights), the
Rights associated with the Common Stock shall be evidenced by the Common Stock
certificates alone and the registered holders of Common Stock shall also be the
registered holders of the associated Rights, and the surrender for transfer of
any of such certificates shall also constitute the transfer of the Rights
associated with the Common stock represented by such certificate. Rights shall
be issued to the extent provided in Section 22 hereof after the Distribution
Date and prior to the Expiration Date.

Section 4.        Form of Rights Certificates.

         (a) The Rights Certificates (and the form of assignment and the form of
exercise notice and certificate to be printed on the reverse thereof) shall each
be substantially in the form set forth in Exhibit A hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or over-the-counter
market on which the Rights may from time to time be listed, or to conform to
usage. The form of the Rights Certificate shall be in a format reasonably
satisfactory to the Rights Agent. Subject to the provisions of Sections 11 and
22 hereof, the Rights Certificates, whenever distributed, shall be dated as of
the Dividend Record Date, (or, if the shares pursuant to which the Rights are
attached are issued thereafter, such date of issuance) shall include the date of
countersignature and on their face shall entitle the holders thereof to purchase
such number of shares of Common Stock as shall be set forth therein at the

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Purchase Price, but the amount and type of securities issuable upon the exercise
of each Right and the Purchase Price shall be subject to adjustment as provided
herein.

         (b) Any Rights Certificate issued pursuant to Sections 3(a), 11(i) or
22 hereof that represents Rights beneficially owned by (i) any Acquiring Person
or any Affiliate of an Acquiring Person, or (ii) any Disqualified Transferee,
and any other Rights Certificate issued pursuant to Sections 6 or 11 hereof upon
the transfer, split up, combination, exchange, replacement, or adjustment of any
such Rights Certificate shall contain (to the extent feasible) the following
legend (or a legend substantially in the form hereof):

         The Rights represented by this Rights Certificate are or were
         beneficially owned by a Person who was or became and an Acquiring
         Person or an Affiliate (which includes both affiliates and associates)
         of an Acquiring Person (as each such term is defined in the Rights
         Agreement). Accordingly, this Rights Certificate and the Rights
         represented hereby may become null and void in the circumstances
         specified in Section 7(e) of the Rights Agreement.

Section 5.  Countersignature and Registration.

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

         Following the Distribution Date, the Rights Agent will keep or cause to
be kept, at that office of the Rights Agent at the address set forth in Section
26 hereof (its "Principal Office"), books for registration and transfer of the
Rights Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Rights Certificates, the number of
Rights evidenced on its face by each of the Rights Certificates, and the date of
countersignature thereof by the Rights Agent.

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

         (a) Subject to the provisions of Sections 4(b), 7(e), and 14 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the earlier of the Close of

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Business on the Expiration Date or the redemption of the Rights, any Rights
Certificate may be transferred, split up, combined or exchanged for another
Rights Certificate or Rights Certificates, entitling the registered holder to
purchase a like number of shares of Common Stock (or, following a Common Stock
Event, Common Stock and/or such other securities, cash, or other assets as shall
be issuable in respect of the Rights in accordance with the terms of this
Agreement (such other securities, cash or other assets being referred to herein
as "Other Consideration")) as the Rights Certificate surrendered then entitled
such holder (or former holder in the case of a transfer) to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate to be transferred, split up,
combined, or exchanged at the Principal Office of the Rights Agent, accompanied
by a signature guarantee and such other documentation as the Rights Agent may
reasonably request. Neither the Rights Agent nor the Company shall be obligated
to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed
and signed the certificate contained in the form of assignment on the reverse
side of such Rights certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner from whom the Rights evidenced by such
Rights Certificate are to be transferred (or the Beneficial Owner to whom such
Rights are to be transferred) or Affiliates thereof as the Company shall
reasonably request. Thereupon, subject to Sections 4(b), 7(e) and 14 hereof, the
Company shall execute and the Rights Agent shall countersign and deliver to the
Person entitled thereto a Rights Certificate or Rights Certificates, as the case
may be, as so requested. The Company may require payment by the holders of
Rights of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates which the Company is not required to pay in accordance with
Section 9(d) hereof.

         (b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security satisfactory to them, and reimbursement to the Company and the
Rights Agent of all reasonable expenses incidental thereto, and upon surrender
to the Rights Agent and cancellation of the Rights Certificate, if mutilated,
accompanied by a signature guarantee and such other documentation as the Rights
Agent may reasonably request, the Company will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for countersignature and delivery
to the registered owner in lieu of the Rights Certificate so lost, stolen,
destroyed, or mutilated.

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

         (a) Subject to Section 7(e) hereof, the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein including, without limitation, the restrictions set forth in
Section 9(e), Section 11(a)(iii) and Section 23(a) hereof) in whole or in part
at any time after the Distribution Date upon surrender of the Rights
Certificate, with the form of election to purchase set forth on the reverse side
thereof and the certificate contained therein completed and duly executed, to
the Rights Agent at the office of the Rights Agent designated for such purpose,
together with payment of the aggregate Purchase Price with respect to the total
number of Common Stock (or other securities, cash or other assets, as the case
may be) as to which such surrendered Rights are then

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exercisable, at or prior to the earlier of (i) the Final Expiration Date, (ii)
the time at which the Rights are redeemed as provided in Section 23 hereof (the
"Redemption Date", (iii) the time at which the Rights expire pursuant to Section
13(d) hereof or (iv) the time at which such Rights are exchanged as provided in
Section 24 hereof (the earliest of (i), (ii), (iii) or (iv) being herein
referred to as the "Expiration Date").

         (b) The purchase price for each share of Common Stock issuable pursuant
to the exercise of a Right (the "Purchase Price") shall initially be $25.00,
shall be subject to adjustment as provided in Section 11 hereof, and shall be
payable in lawful money of the United States of America.

         (c) Upon receipt of a Rights Certificate representing the Rights, with
the form of election to purchase set forth on the reverse side thereof and the
certificate contained therein duly executed, accompanied by payment of the
Purchase Price, with respect to each Right so exercised, the Rights Agent,
subject to Sections 7(e), 1l(a)(iii) and 20(k) hereof, shall thereupon promptly
(i) requisition from any transfer agent of the Common stock (or from the Company
if there shall be no such transfer agent, or make available if the Rights Agent
is such transfer agent) certificates for the total number of shares of Common
Stock to be purchased and the Company hereby irrevocably authorizes such
transfer agent to comply with any such request, (ii) after receipt of such
certificates, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such holder, and (iii) when appropriate, requisition
from the company the amount of cash to be paid in lieu of issuance of a
fractional share in accordance with Section 14 hereof and after receipt promptly
deliver such cash to or upon the order of the registered holder of such Rights
Certificate. After the occurrence of a Common Stock Event, the Company will make
all necessary arrangements so that any Other Consideration then deliverable in
respect of the Rights is available for distribution by the Rights Agent. For
purposes of this Section 7, the Rights Agent shall be entitled to rely, and
shall be protected in relying, on an Officers' Certificate from the Company to
the effect that the Distribution Date has occurred.

         (d) Subject to Sections 4(b), 7(e) and 14 hereof, in case the
registered holder of any Rights Certificate shall exercise less than all the
Rights evidenced thereby, a new Rights Certificate evidencing Rights equivalent
to the Rights remaining unexercised shall be executed and delivered by the
Company to the Rights Agent and countersigned and delivered by the Rights Agent
to the registered holder of such Rights Certificate or to his duly authorized
assigns.

         (e) Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Common Stock Event, any Rights beneficially
owned by (i) an Acquiring Person or an Affiliate of an Acquiring Person, or (ii)
a Disqualified Transferee shall become null and void without any further action,
and no holder of such Rights shall have any rights whatsoever with respect to
such Rights, whether under any provision of this Agreement or otherwise. The
Company shall use all reasonable efforts to ensure that the provisions of this
Section 7(e) and Section 4(b) hereof are complied with, but the Company shall
have no liability to any holder of Rights Certificates or other Person and none
of the terms of this Agreement or the Rights shall be deemed to be waived with
respect to such holder or other Person as a result of any failure by the Company
to make any determinations with respect to an Acquiring Person or

                                       10
<PAGE>

any Affiliate of an Acquiring Person or Disqualified Transferee hereunder or any
failure to have a legend placed on any Rights Certificate in accordance with
Section 4(b) hereof.

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

Section 8.   Cancellation and Destruction of Rights Certificates.

         All Rights Certificates surrendered for the purpose of and accepted for
exercise, or surrendered for the purpose of redemption, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents (other than the Rights Agent), be delivered to the Rights Agent for
cancellation or in cancelled form, or, if surrendered to the Rights Agent, shall
be cancelled by it, and no Rights Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement. The
Rights Agent shall deliver all cancelled Rights certificates to the Company, or
may, at the written request of the Company, but shall not be required to,
destroy such cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.

Section 9.   Reservation and Availability of Shares of Common Stock;
             Other Covenants.

         (a) The Company covenants and agrees that on and after the Distribution
Date, it will use reasonable efforts to cause to be reserved and kept available,
out of its authorized and unissued shares of Common Stock, the number of shares
of Common Stock that, except as provided in Section 11(a) (iii) hereof, would
then be sufficient to permit the exercise in full of all outstanding Rights;
provided, however, that the reservation of such shares shall be subject and
subordinate to any other reservation of such shares made by the Company at any
time for any lawful purpose; provided, further, however, that in no event shall
such failure to so reserve shares affect the rights of any holder of Rights
hereunder.

         (b) The Company covenants and agrees that on and after the Distribution
Date, so long as the Common Stock and/or Other Consideration issuable upon the
exercise of Rights may be listed on any national securities exchange, the
Company shall use its best efforts to cause all shares (or similar units)
reserved for such issuance to be listed on such exchange upon official notice of
issuance upon such exercise.

         (c) The Company covenants and agrees that it will take all such action
as may be necessary to ensure that each whole share of Common Stock or other
unit of Common Stock and/or other securities delivered upon exercise of Rights
shall, at the time of delivery of the certificates for such shares (or units),
subject to payment of the Purchase Price, be duly and validly authorized and
issued and fully paid and nonassessable.

                                       11
<PAGE>

         (d) The Company covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the issuance or delivery of the Rights Certificates or of
any shares of Common Stock or all shares or similar units of Common Stock and/or
Other Consideration upon the exercise of Rights; provided, however, that the
Company shall not be required to pay any transfer tax which may be payable in
respect of any transfer involved in the transfer or delivery of Rights
Certificates or in the issuance or delivery of certificates for any shares of
Common Stock or shares or similar units of Common Stock and/or Other
Consideration in a name other than that of the registered holder of the Rights
Certificate evidencing Rights surrendered for exercise, or to issue or deliver
any certificates for any shares of Common Stock and all shares or similar units
of Common Stock and/or Other Consideration upon the exercise of any Rights until
any such tax shall have been paid (any such tax being payable by the holder of
such Rights Certificate at the time of surrender) or until it has been
established to the Company's satisfaction that no such tax is due.

         (e) The Company shall use its best efforts to (i) file, as soon as
practicable following the earliest date after the first occurrence of a Common
Stock Event on which the consideration to be delivered by the Company upon
exercise of the Rights has been determined in accordance with this Agreement, or
as soon as is required by law following the Distribution Date, as the case may
be, a registration statement under the Act, with respect to the securities
purchasable upon exercise of the Rights on an appropriate form, (ii) cause such
registration statement to become effective as soon as practicable after such
filing, and (iii) cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Act) until the earlier
of (A) the date as of which the Rights are no longer exercisable for such
securities, or (B) the Expiration Date or earlier redemption of the Rights. The
Company will also take such action as may be appropriate under, or to ensure
compliance with, the securities or "blue sky" 1aws of the various states in
connection with the exercisability of the Rights; provided, however, that the
Company shall not be required to consent to general service of process for all
purposes in any jurisdiction where it is not then qualified. The Company may
temporarily suspend, for a period of time not to exceed ninety (90) days after
the date set forth in clause (i) of the first sentence of this Section 9(e), the
exercisability of the Rights in order to prepare and file such registration
statement or to permit it to become effective. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended. The Company shall thereafter issue a
public announcement at such time as the suspension is no longer in effect.
Notwithstanding any provision of this Agreement to the contrary, the Rights
shall not be exercisable in any jurisdiction unless the requisite qualification
in such jurisdiction shall have been obtained.

Section 10.  Common Stock Record Date; Etc.

         Each person in whose name any certificate for any shares of Common
Stock (or shares or similar units of Common Stock and/or Other Consideration) is
issued upon the exercise of Rights shall for all purposes be deemed to have
become the holder of record of such shares of Common stock (or such shares and
similar units of Common Stock and/or Other Consideration, as the case may be)
represented thereby, and such certificate shall be dated the date which is the
later of (i) the date upon which the Rights Certificate evidencing such Rights
was duly surrendered, or (ii) the date upon which payment of the Purchase Price
(and any applicable transfer taxes) in respect thereof was made; provided,
however, that if such date is a date upon which the relevant transfer

                                       12
<PAGE>

books at the Company are closed, such person shall be deemed to have become the
record holder of such shares (or Other Consideration) on, and such certificate
shall be dated, the next succeeding Business Day on which such transfer books of
the Company are open; provided, further, that the Company covenants and agrees
that it shall not close such transfer books for a period exceeding ten
consecutive days. Prior to the exercise of the Rights evidenced thereby (which
shall be deemed to have occurred on the date such certificate for shares of
Common Stock shall be dated in accordance with this Section 10), the holder of a
Rights Certificate, as such, shall not be entitled to any rights of a security
holder of the Company with respect to the shares of Common Stock (or such shares
and similar units of Common Stock and/or Other Consideration) for which the
Rights shall be exercisable, including, without limitation, the right to vote,
to receive dividends or other distributions, or to exercise any preemptive
rights, and shall not be entitled to receive any notice of any proceedings of
the Company, except as expressly provided herein.

Section 11.  Antidilution Adjustments.

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

         (a) (i) In the event that the Company shall at any time after the date
of this Agreement (A) declare and pay a dividend on the Common Stock payable in
shares of Common Stock, (B) subdivide the outstanding Common Stock, (C) combine
the outstanding Common Stock into a smaller number of shares, or (D) issue,
change, or alter any of its shares of capital stock in a reclassification or
recapitalization (including any such reclassification in connection with a
consolidation or merger in which the company is the continuing or surviving
Person), except as otherwise provided in this Section 11(a) and Section 7(e)
hereof, then, and in each such case, the Purchase Price in effect at the time of
the record date for such dividend or the effective time of such subdivision,
combination, reclassification or recapitalization, and the number and kind of
shares of capital stock issuable at such time, 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 Common Stock or other capital
stock which, if such Right had been exercised immediately prior to such time at
the Purchase Price then in effect and at a time when the transfer books for the
Common Stock (or other capital stock) 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, reclassification or recapitalization.
If an event occurs which would require an adjustment under both this Section
l1(a)(i) and Section 11(a) (ii) hereof, the adjustment provided in this Section
1l(a)(i) shall be in addition to, and shall be made prior to, any adjustment
required pursuant to Section 11(a)(ii) hereof.

             (ii)  In the event:

                   (A) any Acquiring Person or any Affiliate of any Acquiring
Person, at any time after the date of this Agreement, directly or indirectly,
(1) shall merge into the Company or otherwise combine with the Company and the
Company shall be the continuing or surviving corporation of such merger or
combination and the Common Stock of the Company shall remain outstanding and
unchanged, (2) shall merge or otherwise combine

                                       13
<PAGE>

with any Subsidiary of the Company, (3) shall, in one transaction or a series of
transactions, transfer any assets to the Company or to any of its Subsidiaries
in exchange (in whole or in part) for shares of Common Stock, for shares of
other equity securities of the Company or any Subsidiary of the Company, or for
securities exercisable for or convertible into shares of equity securities of
the Company or any Subsidiary of the Company (Common Stock or otherwise) or
otherwise obtain from the Company, with or without consideration, any additional
shares of equity securities of the Company or securities exercisable for or
convertible into shares of such equity securities of the Company (other than
pursuant to a pro rata distribution to all holders of Common Stock or upon the
exercise of a convertible security of the Company or any Subsidiary of the
Company in accordance with its terms), (4) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or dispose of, in one
transaction or a series of transactions, to, from or with (as the case may be)
the Company or any of its Subsidiaries, assets on terms and conditions less
favorable to the Company than the Company would be able to obtain in arm's
length negotiations with an unaffiliated third party, other than pursuant to a
transaction set forth in Section 13(a) hereof, (5) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or dispose of in one
transaction or a series of transactions, to, from or with (as the case may be)
the Company or any of its Subsidiaries assets having an aggregate fair market
value of more than $1,000,000, other than pursuant to a transaction set forth in
Section 13(a) hereof and other than pursuant to a transaction or series of
transactions that have been approved by the Board, (6) shall receive any
compensation from the Company or any of the Company's Subsidiaries other than
compensation for full-time employment as a regular employee at rates in
accordance with the Company's (or its Subsidiaries') past practices, or (7)
shall receive the benefit, directly or indirectly (except proportionately as a
stockholder and except if resulting from a requirement of law or governmental
regulation), of any loans, advances, guarantees, pledges or other financial
assistance or any tax credits or other tax advantages provided by the Company or
any of its Subsidiaries, or

                   (B) any Person (other than the Company, any Subsidiary of
the Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, or any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan), alone or together with
any Affiliates of such Person, shall, at any time after the Dividend Declaration
Date, become the Beneficial Owner of 15% or more of the shares of Common Stock
then outstanding, unless the event causing the 15% threshold to be met or
surpassed is a transaction set forth in Section 13(a) hereof, or is an
acquisition of shares of Common Stock pursuant to a tender offer or an exchange
offer for all outstanding shares of Common Stock at a price and on terms
determined by the Board, after receiving advice from one or more investment
banking firms, to be (a) at a price that is fair to stockholders (taking into
account all factors which such members of the Board deem relevant including,
without limitation, prices which could reasonably be achieved if the Company or
its assets were sold on an orderly basis designed to realize maximum value) and
(b) otherwise in the best interest of the Company and its stockholders, or

                   (C) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse stock split),
or recapitalization of the Company, or any merger or consolidation of the
Company with any of its Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries (whether or not
with or into or otherwise involving an Acquiring Person), other than a

                                       14
<PAGE>

transaction or transactions to which the provisions of Section 13(a) hereof
apply (whether or not with or into or otherwise involving an Acquiring Person),
which has the effect, directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity securities
of the Company or any of its Subsidiaries which is directly or indirectly
beneficially owned by any Acquiring Person or any Associate or Affiliate of any
Acquiring Person,

          then, immediately upon the occurrence of any event described in
Section 11(a)(ii)(A) or (C) hereof, and upon the Close of Business ten (10) days
after the occurrence of any event described in Section 11(a)(ii)(B) hereof,
proper provision shall be made so that each holder of a Right (except as
provided below and in Section 7(e) hereof) shall thereafter have the right to
receive, upon exercise thereof at the Purchase Price in effect at the time of
exercise in accordance with the terms of this Agreement, such number of shares
of Common Stock of the Company as shall equal the result obtained by (x)
multiplying an amount equal to the then current Purchase Price by an amount
equal to the number of shares of Common Stock for which a Right was or would
have been exercisable immediately prior to the first occurrence of any such
event whether or not such Right was then exercisable, and (y) dividing that
product by 50% of the Current Market Price per share of the Common Stock of the
Company (as defined in Section 11(d) hereof) determined as of the date of such
first occurrence.

         (iii) In the event (x) that the number of shares of Common Stock which
are authorized by the Company's restated articles of organization and not
outstanding or subscribed for, or reserved or otherwise committed for issuance
for purposes other than upon exercise of the Rights are not sufficient to permit
the exercise in full of the Rights, in accordance with Section 11(a)(ii) hereof,
or (y) should the Board determine that it would be appropriate and not contrary
to the interests of the holders of Rights (other than any Acquiring Person or
Disqualified Transferee or any Affiliate of the Acquiring Person or Disqualified
Transferee), the Company shall (A) determine an amount, if any, (the "Excess
Amount") equal to the excess of (1) the value of the shares of Common Stock
issuable upon the exercise of a Right (calculated as provided in the last
sentence of this Section 11(a)(iii)) in accordance with Section 11(a)(ii) hereof
(the "Current Value"), over (2) the Purchase Price, and (B) with respect to each
Right, (subject to Section 7(e) hereof) make adequate provision to substitute
for such shares of Common Stock, upon payment of the applicable Purchase Price,
any one or more of the following having an aggregate value determined by the
Board to be equal to the Current Value: (1) cash, (2) a reduction in the
Purchase Price, (3) Common Stock or other equity securities of the Company
(including, without limitation, shares or units of preferred stock which the
Board has deemed in good faith to have the same value as a share of Common Stock
(such shares of preferred stock being referred to herein as "Common Stock
Equivalents")), (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing (which would include the additional consideration
provided to any holder by reducing the Purchase Price) having an aggregate value
equal to the Current Value, where such aggregate value has been determined by
the Board; provided, however, subject to the provisions of Section 9(e) hereof,
that if the company shall not have made adequate provision to deliver value
pursuant to clause (B) above within 30 days following the Close of Business 10
Business Days after the first occurrence of a Common Stock Event described in
Section 11(a) (ii) hereof (a "Section 11(a)(ii) Trigger Date"), then the Company
shall be obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, shares of Common Stock (to the
extent available) and then, if

                                       15
<PAGE>

necessary, cash, securities, and/or assets which in the aggregate are equal to
the Excess Amount. If the Board shall determine in good faith that it is likely
that sufficient additional shares of Common Stock or Common Stock Equivalents
could be authorized for issuance upon exercise in full of the Rights, the 30-day
period set forth above may be extended to the extent necessary, but not more
than 90 days after the Section 11(a)(ii) Trigger Date in order that the Company
may seek stockholder approval for the authorization of such additional shares
(such period as it may be extended, the "Substitution Period"). To the extent
that the Company determines that some action is to be taken pursuant to the
preceding provisions of this Section 11(a)(iii), the Company (x) shall provide,
subject to Section 7(e) hereof, that (except as to the form of consideration
which shall be determined as appropriate by the Board) such action shall apply
uniformly to all outstanding Rights which shall not have become null and void,
and (y) may suspend the exercisability to the Rights until the expiration of the
Substitution Period in order to seek any authorization of additional shares
and/or to decide the appropriate form of distribution to be made pursuant to
such provisions and to determine the value thereof. In the event of any such
suspension, the Company shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended. The Company shall
thereafter issue a public announcement at such time as the suspension is no
longer effect. For purposes of this Section 11(a)(iii), the value of the Common
Stock issuable upon exercise of a Right in accordance with Section 11(a)(ii)
hereof shall be the Current Market Price per share of the Common Stock (as
determined pursuant to Section 11(d) hereof) on the Section 11(a)(ii) Trigger
Date and the value of any Common Stock Equivalent shall be deemed to be equal to
the Current Market Price per share of the Common Stock on such date.

         (b) In the event the Company shall after the Dividend Record Date fix a
record date for the issuance of any options, warrants, or other rights to all
holders of Common Stock entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Common Stock or
securities convertible into Common Stock at a price per share of Common Stock
(or having a conversion price per share of Common Stock, if a security is
convertible into Common Stock) less than the Current Market Price per share of
Common Stock (determined In accordance with Section 11(d) hereof) determined as
of 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 shares of Common Stock outstanding on such record date plus the number
of shares of Common Stock which the aggregate minimum offering price of the
total number of shares of Common Stock so to be offered (and/or the aggregate
minimum conversion price of such convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator of which shall be the
number of shares of Common Stock outstanding on such record date plus the
maximum number of additional shares of Common Stock to be offered for
subscription or purchase (and/or the maximum number of shares into which such
convertible securities so to be offered are convertible). In case such
subscription price may be paid by delivery of consideration part or all of which
shall be in a form other than cash, for purposes of this Section 11(b) the value
or such consideration shall be the fair market value thereof) determined in good
faith by the Board (which determination shall be described in an Officers'
Certificate filed with the Rights Agent). Shares of Common Stock owned by or
held for the account of the Company shall not be deemed outstanding for the
purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed; and in the event that such rights or
warrants are not so issued, the Purchase Price shall be

                                       16
<PAGE>

adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed (subject, however, to such other adjustments as are
provided herein).

         (c) In the event that the Company shall, after the Dividend Record
Date, fix a record date for the making of a distribution to all holders of
Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the surviving or continuing
Person) of evidences of indebtedness, cash (other than cash dividends paid out
of the earnings or retained earnings of the Company and its subsidiaries
determined on a consolidated basis in accordance with generally accepted
accounting principles consistently applied), other property (other than a
dividend payable in shares of Common Stock, but including any dividend payable
in capital stock other than Common Stock), 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, of which
the numerator shall be the Current Market Price per share of Common Stock (as
defined in Section 11(d) hereof) determined as of such record date, less the sum
of that portion of cash plus the fair market value, as determined in good faith
by the Board (which determination shall be described in an Officers' Certificate
filed with the Rights Agent) of that portion of such evidences of indebtedness,
such other property, and/or such subscription rights or warrants applicable to
one share of Common Stock and the denominator of which shall be such Current
Market Price per share of the Common Stock. Such adjustments shall be made
successively whenever such a record date is fixed; and in the event 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 (subject, however, to such other adjustments as are provided herein).

         (d) For purposes of any computation pursuant to Section 11(a) (iii)
hereof, the "Current Market Price" per share (or unit) of any security on any
date shall be deemed be the average of the daily Closing Price of such security
for the 10 consecutive Trading Days immediately after such date and for the
purpose of any other computation hereunder, the "Current Market Price" per share
(or unit) of any security on any date shall be deemed to be the average of the
daily Closing Price of such security for the 20 consecutive Trading Days
immediately prior to such date; provided, however, that in the event that the
Current Market Price per share (or unit) of such security is determined during a
period fol1owing the announcement by the issuer of such security of (i) a
dividend or distribution on such security or securities convertible into shares
(or units) of such security, or (ii) any subdivision, combination or
reclassification of such security, and prior to the expiration of such 10
Trading Days or 20 Trading Days, as the case may be, after (A) the ex-dividend
date for such dividend or distribution, or (B) the record date for such
subdivision, combination or reclassification, as the case may be, then, and in
each such case, the "Current Market Price" shall be the Closing Price of such
security on the last day of such respective 10 Trading Day or 20 Trading Day
period. The term "Trading Day" shall mean a day on which the principal national
securities exchange on which such security is listed or admitted to trading is
open for the transaction of business or, if such security is not listed or
admitted to trading on any national securities exchange, a day which is a
Business Day. For purposes of this Agreement, the "Closing Price" of any
security on any day shall be the last sale price, regular way, with respect to
shares of Common Stock, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, with respect to such
security, in either case as reported in the principal consolidated

                                       17
<PAGE>

transaction reporting system with respect to securities listed on the principal
national securities exchange on which the shares of Common Stock are listed or
admitted to trading, or if the shares of Common Stock are not listed or admitted
to trading on any national securities exchange, the last quoted price, or if not
so quoted, the average of the high bid and low asked prices in the over-the-
counter market, as reported by the Nasdaq National Market or such other system
then in use; or, if on any such date the shares of Common Stock are not quoted
by any such organization, the average of the closing bid and asked prices with
respect to such shares, as furnished by a professional market maker making a
market in the Common Stock selected by the Board; or, if no such market maker is
available, the fair market value of the shares of Common Stock as of such day as
determined in good faith by the Board (which determination shall be described in
an Officers' Certificate filed with the Rights Agent).

         (e) No adjustment in the Purchase Price shall be required unless
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest share of Common Stock. Notwithstanding the
first sentence of this Section 11(e), any adjustment required by this Section 11
shall be made no later than the earlier of (i) three years from the date of the
transaction which mandates the adjustment or (ii) the date of the expiration of
the right to exercise the Rights.

         (f) In the event that at any time, as a result of an adjustment made in
respect of a Common Stock Event, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock of the Company
other than shares of Common Stock, thereafter the number of such other shares so
receivable upon exercise of any Right and the Purchase Price thereof shall be
subject to adjustment from time to time in manner and on terms as nearly
equivalent as practicable to the provisions with respect to the shares of the
Common Stock contained in Sections 11(a), (b), (c), (e), (g), (h), (i), (j), (k)
and (m) hereof, and the provisions of Sections 7, 9, 10, 11(d) and 13 hereof
with respect to the shares of Common Stock shall apply on like terms to any such
other shares.

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

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

                                       18
<PAGE>

         (i) The Company may elect on or after the date of any adjustment of the
Purchase Price to adjust the number of Rights in substitution for any adjustment
in the number of shares of Common Stock purchasable upon the exercise of a
Right. Each of the Rights outstanding after such adjustment of the number of
Rights shall be exercisable for the number of shares of Common Stock for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest share) obtained by dividing the Purchase
Price in effect immediately prior to such adjustment of the Purchase Price by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights Certificates have been issued, shall be at least 10 days later
than the date of the public announcement. If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i) the company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof, the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the rights to which such holders
shall be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed, and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Purchase
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement.

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

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

         (l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuing to the holder of any Right exercised after such record date,
the number of shares of Common Stock and other capital stock or securities of
the Company, if any, issuable upon such exercise over and above the number of
whole or fractional shares of Common Stock or 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

                                       19
<PAGE>

appropriate instrument evidencing such holder's right, to receive such
additional securities upon the occurrence of the event requiring such
adjustment.

         (m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that it, by means of a resolution of the Board acting in good faith
(which resolution shall be conclusive on all concerned if approved by a majority
of the Board), shall determine to be advisable in order that any (i)
consolidation or subdivision of the Common Stock, (ii) issuance wholly for cash
of any Common Stock at less than the Current Market Price thereof, (iii)
issuance wholly for cash of Common Stock (or other securities which by their
terms are convertible into or exercisable or exchangeable for Common Stock),
(iv) dividends payable in shares of Common Stock or other capital stock, (v) or
issuance of rights, options, or warrants referred to hereinabove in this Section
11, hereafter made or declared by the Company to the holders of its Common
Stock, shall not be taxable to such holders.

         (n) The Company covenants and agrees that it shall not, at any time
after the Distribution Date, (i) consolidate with any other Person (other than a
Subsidiary of the Company in a transaction that complies with Section 11(o)
hereof), (ii) merge with or into any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof), or (iii)
sell or transfer (or permit any Subsidiary of the Company to sell or transfer),
in one transaction or a series of related transactions, more than 50% of (A) the
assets (taken at net asset value as stated on the books of the Company and
determined on a consolidated basis in accordance with generally accepted
accounting principles consistently applied) or (B) the earning power of the
Company and its Subsidiaries (determined on a consolidated basis in accordance
with generally accepted accounting principles consistently applied) to any other
Person or Persons (other than the Company or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o) hereof), if (x) at
the time of or immediately after such consolidation, merger or sale, there are
any rights, options, warrants or other instruments or securities outstanding or
agreements (whether or not in writing) in effect that would substantially
diminish or otherwise eliminate the benefits intended to be afforded by the
Rights or (y) prior to, simultaneously with or immediately after such
consolidation, merger or sale, the stockholders of such other Person shall have
received a distribution of Rights previously owned by such other Person or any
of its Affiliates.

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

Section 12.  Certificate of Adjustments.

         Whenever an adjustment is made as provided in Section 11 or 13 hereof,
the Company shall (a) promptly prepare an Officers' Certificate setting forth
such adjustment, including any adjustment in Purchase Price, the number of
shares of Common Stock or Other Consideration payable, and a brief statement of
the facts accounting for such adjustment, (b) promptly file with

                                       20
<PAGE>

the Rights Agent and with each transfer agent for the Common Stock a copy of
such Officers' Certificate, and (c) mail a brief summary thereof to each
registered holder of a Rights Certificate in accordance with Section 26 hereof.
The Rights Agent shall be fully protected in relying on any such Officers'
certificate and on any adjustment therein contained, and shall not be deemed to
have knowledge of any such adjustment unless and until it shall have received
such an Officers' Certificate.

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

         (a) In the event that, following the Stock Acquisition Date, directly
or indirectly, (x) the Company shall consolidate with, or merge with and into,
any other Person (other than a Subsidiary of the Company in a transaction that
complies with Section 11(o) hereof) and the Company shall not be the continuing
or surviving Person of such consolidation or merger, (y) any Person (other than
a Subsidiary of the company in a transaction that complies with Section 11(o)
hereof) shall consolidate with, or merge with and into, the Company, and the
Company shall be the continuing or surviving Person of such consolidation or
merger and, in connection with such consolidation or merger, all or part of the
Common Stock of the Company shall be changed or otherwise transformed into other
stock or other securities of any other Person (or the Company) or cash or any
other property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one transaction
or a series of related transactions, more than 50% of (A) the assets (taken at
net asset value as stated on the books of the Company and determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied) or (B) the earning power of the Company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) to any Person (other than
the Company or any Subsidiary of the Company in one or more transactions each of
which complies with Section 11(o) hereof),

          then, from and after such event, proper provision shall be made so
that (i) each holder of a Right, except as provided in Section 7(e) hereof,
shall thereafter have the right to receive, upon the exercise thereof at the
then current Purchase Price in effect at the time of such exercise in accordance
with the terms of this Agreement, such number of shares of validly authorized
and issued, fully paid, non-assessable, and freely tradable Common Stock of the
Principal Party (as such term is defined below), free and clear of any liens,
encumbrances, rights of first refusal, or other adverse claims, as shall be
equal to the result obtained by (x) multiplying the then current Purchase Price
in effect immediately prior to the first occurrence of any Common Stock Event
under this Section 13, by the number of shares of Common Stock for which a Right
is exercisable immediately prior to such first occurrence (and without taking
into account any prior adjustment made pursuant to 1l(a)(ii)) and (y) dividing
that product by 50% of the Current Market Price per share (as defined in Section
11(d) hereof) of the Common Stock of such Principal Party determined as of the
date of consummation of such consolidation, merger, sale, or transfer; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such consolidation, merger, sale, or transfer, all the obligations and duties of
the Company pursuant to this Agreement; (iii) the term "Company" shall
thereafter be deemed, for all purposes of this Agreement, to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 hereof (other than Section l1(a)(ii) hereof) shall apply only to such
Principal Party following the first occurrence of a Common Stock Event under
this Section 13;

                                       21
<PAGE>

(iv) such Principal Party shall take such steps (including, but not limited to,
the reservation of a sufficient number of shares of its Common Stock) in
connection with such consummation as may be necessary to assure that the
provisions hereof shall thereafter be applicable, as nearly as reasonably may
be, in relation to the shares of its Common Stock thereafter deliverable upon
the exercise of the Rights; and (v) the provisions of Section 11(a) (ii) hereof
shall be of no effect following the first occurrence of any Common Stock Event
described in clauses (a), (b) or (c) of this Section 13.

         (b)      "Principal Party" shall mean

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

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

provided, however, that in any such case, (1) if the common stock of such Person
is not at such time and has not been continuously over the preceding twelve (12)
month period registered under section 12 of the Exchange Act, an such Person is
a direct or indirect Subsidiary of another Person the common stock of which is
and has been so registered, "Principal Party" shall refer to such other Person;
and (2) in case such Person is a Subsidiary, directly or indirectly, of more
than one Person, the common stock of two or more of which are and have been so
registered, "Principal Party" shall refer to whichever of such Persons is the
issuer of the common stock having the greatest market value.

         (c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless (i) the Principal Party shall have a sufficient number
of authorized shares of its Common Stock which have not been issued or reserved
for issuance as will permit the exercise in full of the Rights in accordance
with this Section 13, and (ii) prior thereto the Company and such Principal
Party shall have executed and delivered to the Rights Agent a supplemental
agreement so providing and further providing that as soon as practicable after
the date of any Common Stock Event described above in this Section 13 such
Principal Party will;

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

                                       22
<PAGE>
         will deliver to holders of the Rights historical financial statements
         of such Principal Party and each of its Affiliates which comply in all
         respects with the requirements for registration on Form 10 under the
         Exchange Act.

         Furthermore, in case the Principal Party has any provision in any of
 its authorized securities or in its charter or by-laws or other agreement or
 instrument governing its affairs, which provision would have the effect of
 causing such the Principal Party to issue, in connection with, or as a
 consequence of, the consummation of a Common Stock Event described in clauses
 (a), (b), or (c) of this Section 13, shares of Common Stock of such the
 Principal Party at less than the then Current Market Price per share thereof
 (as defined in Section 11(d) hereof), or to issue securities exercisable for,
 or convertible into Common Stock of such the Principal Party at less than such
 then Current Market Price, then, in such event, the Company hereby agrees with
 each holder of the Rights that it shall not consummate any such transaction
 unless prior thereto the Company and such Principal Party shall have executed
 and delivered to the Rights Agent a supplemental agreement providing that such
 provision in question shall have been cancelled, waived, or amended so that it
 will have no effect in connection with, or as a consequence of the consummation
 of the proposed transaction.

         The provisions of this Section 13 shall similarly apply to successive
 mergers or consolidations or sales or other transfers. In the event that a
 Common Stock Event described in this Section 13 shall occur at any time after
 the occurrence of a Common Stock Event described in Section 11(a) (ii) hereof,
 the Rights which have not therefore been exercised shall thereafter become
 exercisable, except as provided in Section 7(e) hereof, in the manner described
 in this Section 13.

         (d) Notwithstanding anything in this Agreement to the contrary, Section
 13 shall not be applicable to a transaction described in subparagraphs (x) and
 (y) of Section 13(a) if (i) such transaction is consummated with a Person or
 Persons who acquired shares of Common Stock pursuant to a tender offer or
 exchange offer for all outstanding shares of Common Stock which complies with
 the provisions of Section 11(a)(ii)(B) hereof (or a wholly owned subsidiary of
 any such Person or Persons), (ii) the price per share of Common Stock offered
 in such transaction is not less than the price per share of Common Stock paid
 to all holders of shares of Common Stock whose shares were purchased pursuant
 to such tender offer or exchange offer, and (iii) the form of consideration
 being offered to the remaining holders of shares of Common Stock pursuant to
 such transaction is the same as the form of consideration paid pursuant to such
 tender offer or exchange offer. Upon consummation of any such transaction
 contemplated by this Section 13(d), all Rights hereunder shall expire.

Section 14.  Fractional Rights and Fractional Shares.

         (a) The Company shall not be required to issue fractions of Rights or
to distribute Rights Certificates which evidence fractional Rights. In lieu of
issuing such fractional Rights, at the election of the Company, there shall be
paid to the registered holders of the Rights with regard to which such
fractional rights would otherwise be issuable, an amount in cash equal to the
same fraction of the current market value of a whole Right. For the purposes of
this Section 14(a), the current market value of a whole Right shall be the
Closing Price of the Rights for the Trading Day immediately prior to the date on
which such fractional Rights would have

                                       23
<PAGE>

been otherwise issuable. The closing price of the Rights for any day shall be
the last sale price, regular way, or, in case no sale takes place on such day,
the average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system with respect
to securities listed 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 priced in the
over-the-counter market, as reported by the Nasdaq National Market 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.
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
shall be used.

         (b) The Company shall not be required to issue fractions of shares of
its capital stock upon exercise of the Rights or to distribute certificates
which evidence fractional shares. In lieu of fractional shares, at the election
of the Company, there shall be paid to the registered holders of Rights at the
time such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of a share of such capital stock. For
purposes of this Section 14(b), the current market value of a share of such
capital stock shall be the Closing Price of such capital stock for the Trading
Day immediately prior to the date of such exercise.

         (c) The holder of a Right, by the acceptance of such Right expressly
waives such holder's right to receive any fractional Rights or (except as
provided in Section 14(b) hereof) any fractional Rights upon exercise of a
Right.

Section 15.  Rights of Action.

         Excepting the rights of action given the Rights Agent under Section 18
hereof and except as set forth in Section 20(l) hereof, all rights of action in
respect of this Agreement are vested in the registered holder of each Right; and
any registered holder of any Right, without the consent of the Rights Agent or
of the holder of any other Right, may, in his own behalf and for his own
benefit, enforce, and may institute and maintain any suit, action, or proceeding
against the Company to enforce, or otherwise act in respect of, his right to
exercise the rights evidenced by such Right in the manner provided in such
Rights Certificate and in this Agreement, and the Company hereby agrees to
reimburse such registered holder for all expenses (including reasonable
attorneys' fees) incurred by such registered holder in connection therewith.
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 the obligations hereunder, and
shall be entitled to injunctive relief against actual or threatened violations
of the obligations hereunder of any Person subject to this Agreement.

Section 16.  Agreement of Rights Holders.

         Every holder of a Right by accepting the same consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:

                                       24
<PAGE>

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

         (b) after the Distribution Date, the Rights 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 with a form of assignment and certificate set
forth on the reverse side thereof duly executed, accompanied by a signature
guarantee and such other documentation as the Rights Agent may reasonably
request;

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

         (d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority prohibiting or otherwise restraining
performance of such obligation; provided, however, the Company shall use its
best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.

Section 17.  Rights Certificate Holder Not Deemed a Stockholder.

         No holder, as such, of any Rights Certificate shall be entitled to
vote, receive dividends, or otherwise be deemed for any purpose the holder of
any shares of Common Stock or the shares or similar units of any other
securities of the Company which may be issuable on the exercise of the Rights
represented thereby, nor shall anything contained herein or in any Rights
Certificate be construed to confer upon the holder of any Rights Certificate, as
such, any of the rights of a stockholder of the Company or any right to vote in
the election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any action by the Company, or
to receive notice of meetings or other actions affecting stockholders (except as
provided in Section 25 hereof), or to receive dividends or preemptive rights, or
otherwise, until the time specified in Section 10 hereof.

Section 18.  Concerning the Rights Agent.

         (a) The Company agrees to pay to the Rights Agent such reasonable
compensation as shall be agreed to in writing between the Company and the Rights
Agent for all services rendered by it hereunder and, from time to time, on
demand of the Rights Agent, its reasonable expenses and counsel fees and
disbursements and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The

                                       25
<PAGE>

Company also agrees to indemnify the Rights Agent for, and to hold it harmless
against, any and all loss, liability, damages, claims or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Rights Agent, for anything done or omitted by the Rights Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses (including reasonable attorneys' fees and expenses) of defending
against any claim of liability in the premises.

         (b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered, or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for any shares of Common Stock or for other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, instruction, direction,
consent, certificate, statement, or other paper or document believed by it to be
genuine and to be signed and executed by the proper Person or Persons, and
verified or acknowledged as required by this Agreement.

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

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

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

Section 20.  Duties of Rights Agent.

         The Rights Agent undertakes only the duties and obligations expressly
imposed upon it by this Agreement and no implied duties or obligations shall be
read into this Agreement against the Rights Agent. The Rights Agent shall
perform its duties and obligations hereunder upon the

                                       26
<PAGE>

following terms and conditions by all of which the Company and the holders of
Rights Certificates, by their acceptance thereof, shall be bound:

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

         (b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person be proved
or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein
specifically prescribed) may be deemed to be conclusively proved and established
by a certificate (an "Officers' Certificate") signed by a person believed by the
Rights Agent to be the Chairman of the Board, the President or any Vice
President and by the Treasurer or any Assistant Treasurer or the Clerk or any
Assistant Clerk of the Company and delivered to the Rights Agent; and such
Officers' Certificate shall be full authorization to the Rights Agent for any
action taken or suffered in good faith by it under the provisions of this
Agreement in reliance upon such certificate.

         (c) The Rights Agent shall only be liable hereunder only for its own
gross negligence, bad faith, or willful misconduct.

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

         (e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any adjustment required under the provisions of Sections 11
or 13 hereof or be responsib1e for the manner, method or amount of any such
adjustment or procedures or the ascertaining of the existence of facts that
would require any such adjustment or procedure (except with respect to the
exercise of Rights evidenced by Rights Certificates after receipt of a
certificate describing any such adjustment or procedures); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Common Stock or other securities to be
issued pursuant to this Agreement or any Rights Certificate or as to whether any
shares of Common Stock, or other shares or similar units of other securities,
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.

                                       27
<PAGE>

         (g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person believed by the Rights Agent to be the Chairman of the Board, the
President or any Vice President or the Clerk or any Assistant Clerk or the
Treasurer or any Assistant Treasurer of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable for any action taken or suffered to be taken by it in good faith
in accordance with instructions of any such officer. 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 or omitted by
the Rights Agent with respect to its duties or obligations under this Agreement
and the date on/or after which such action shall be taken or omitted and the
Rights Agent shall not be liable for any action taken or omitted in accordance
with a proposal included in any such application on or after the date specified
therein (which date shall not be less than three Business Days after the date
any such officer actually receives such application, unless any such officer
shall have consented in writing to an earlier date) unless, prior to taking or
omitting any such action, the Rights Agent has received written instructions
from the company in response to such application specifying the action to be
taken or omitted.

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

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

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

         (k) If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certification appearing on the
reverse side thereof following the form of election to purchase has either not
been completed or indicates an affirmative response to clause 1 or 2 thereof,
the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Company.

         (l) The provisions of this Section 20 are solely for the benefit of the
Rights Agent or the Company and any failure or omission under this Section 20
shall not affect the rights of the Company under this Agreement and the Rights
Agent or the Company shall have no liability to any holder of Rights or other
Person on account of such failure or omission.

                                       28
<PAGE>

Section 21.  Change of Rights Agent.

         The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon 30 days' notice in writing
mailed to the Company and to each transfer agent of the Common Stock by
registered or certified mail, and, subsequent to the Distribution Date, to the
holders of the Rights 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, to each transfer agent of the Common Stock by
registered or certified mail, and, subsequent to the Distribution Date, to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of 30 days after giving notice of such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate (who shall, with such notice, submit his Rights Certificate
for inspection by the Company) , then the registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Rights Agent. Any successor Rights Agent, whether appointed by the
Company or by such a court, shall be a corporation organized and doing business
under the laws of the United states, or any state of the United States, in good
standing, having any office in the Commonwealth of Massachusetts, or of any
other State of the United States so long as such corporation is authorized to do
business as a banking institution in the Commonwealth or Massachusetts, in good
standing, having a Principal Office in the Commonwealth of Massachusetts, which
is authorized under such laws to exercise corporate trust powers and is subject
to supervision or examination by federal or state authority and which has at the
time of its appointment as Rights Agent a combined capital and surplus of at
least $50,000,000. appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose; and,
except as the context herein otherwise requires, such successor Rights Agent
shall he deemed to be the "Rights Agent" for all purposes or this Agreement. Not
later than the effective date of any such appointment the Company shall file
notice thereof in writing with the predecessor Rights Agent and each transfer
agent of the Common Stock, and mail a notice thereof in writing to the
registered holders of the Rights certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the Appointment of the successor Rights Agent, as the case may be.

Section 22.  Issuance of New Rights Certificates.

         Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Company may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board to
reflect any adjustment or change in the Purchase Price per share and the number
or kind or class of shares of stock or other securities or property purchasable
under the Rights Certificates made in accordance with the provisions of this
Agreement. In addition, in connection with the issuance or sale by the Company
of shares of Common Stock following the Distribution Date and prior to the
redemption or expiration of the

                                       29
<PAGE>

Rights, the company shall, with respect to shares of Common Stock so issued or
sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by the Board, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
provided, however, that (i) no such Rights evidenced by a Rights Certificate
shall he issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights would be
issued, and (ii) no such Rights Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.

Section 23.  Redemption and Termination.

         (a) The Board may, at its option, at any time prior to the earlier of
(i) the Close of Business on the tenth day following the Stock Acquisition Date
(or if the Stock Acquisition Date shall have occurred prior to the Dividend
Record Date, the Close of Business on the tenth day following the Dividend
Record Date) or (ii) the Final Expiration Date, redeem all but not less than all
of the then outstanding Rights at a redemption price of $0.10 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"). The redemption of the Rights
by the Board may be made effective at such time, on such basis and subject to
such conditions as the Board in its sole discretion may establish.
Notwithstanding anything contained in this Agreement to the contrary, the Rights
shall not be exercisable after the first occurrence of any event described in
Section 11(a)(ii)(A)(B) or (C) hereof until such time as the Company's right of
redemption set forth in the first sentence of Section 23(a) has expired.

         (b) Immediately upon the time of the effectiveness of the redemption of
the Rights pursuant to paragraph (a) of this Section 23 or such earlier time as
may be determined by the Board in the action ordering such redemption (although
not earlier than the time of such action) (such time the "Redemption Date"), and
without any further action and without any notice, the right to exercise the
Rights shall 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 10 days after such action of the Board ordering the redemption of the
Rights pursuant to paragraph (a), the Company shall mail a notice of redemption
to all the holders of the then outstanding Rights at their last addresses as
they appear upon the registry books of the Rights Agent, or, prior to the
Distribution Date, on the registry books of the transfer agent for the Common
Stock. Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. If the payment of the
Redemption Price is not included with such notice, each such notice shall state
the method by which the payment of the Redemption Price will be made. Neither
the Company nor any of its Affiliates 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, other than in connection with the
purchase of Common Stock prior to the Distribution Date.

                                       30
<PAGE>

         (c) The Company may, at its option, pay the Redemption Price in cash,
shares of Common Stock (based on the Current Market Price, as defined in Section
11(d) hereof, of the Common Stock at the time of redemption) or any other form
of consideration deemed appropriate by the Board.

Section 24.  Exchange.

         (a) The Board may, at its option, at any time after any Person becomes
an Acquiring Person, exchange all or part of the then outstanding and
exercisable Rights for shares of Common Stock at an exchange ratio of one share
of Common Stock per Right, appropriately adjusted to reflect any stock split,
stock dividend, combination of shares of similar transaction occurring after the
date hereof (such exchange ratio being hereinafter referred to as the "Exchange
Ratio"). Notwithstanding the foregoing, the Board shall not be empowered to
effect such exchange at any time after any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan of the Company or any such
Subsidiary, or any Person holding Common Stock for or pursuant to the terms of
any such plan), together with all Affiliates of such Person, becomes the
Beneficial owner of 50% or more of the Common Stock then outstanding.

         (b) Immediately upon the action of the Board ordering the exchange of
any Rights pursuant to subsection (a) of this Section 24 and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
that number of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The company promptly shall mail a notice to any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
Common Stock for Rights will be affected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be affected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 7(e) hereof) then
held by each holder of Rights.

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

Section 25.  Notice of Proposed Actions.

         (a) In case the Company shall after the Distribution Date propose (a)
to pay any dividend payable in stock of any class to the holders of its Common
Stock or to make any other distribution to the holder of its Common Stock (other
than a cash dividend out of earnings or the retained earnings of the Company),
or (b) to offer to the holders of its Common Stock (i) rights or warrants to
subscribe for or to purchase any additional shares Common Stock or (ii) shares
of

                                       31
<PAGE>

stock of any class or (iii) any other securities, rights, or options, or (c) to
effect any reclassification of the Common Stock (other than a reclassification
involving only the subdivision of outstanding shares of Common Stock), or (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 transaction or a series of related transactions, of more
than 50% of (i) the assets of the company and its Subsidiaries (taken at net
asset value as stated on the books of the Company and determined on a
consolidated basis in accordance with generally accepted accounting principles
consistently applied) or (ii) the earning power of the company and its
Subsidiaries (determined on a consolidated basis in accordance with generally
accepted accounting principles consistently applied) to any other Person or
Persons, or (e) to effect the liquidation, dissolution or winding up of the
Company, then, in each such case, the Company shall give to the Rights Agent and
each holder of a Right, in accordance with Section 26 hereof, a notice of such
proposed action, which shall specify the record date for the purposes of such
stock dividend, 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 Common Stock, if any such date is to be fixed, and
such notice shall be so given in the case of any action covered by clause (a) or
(b) above at least [twenty] days prior to the record date for determining
holders of the Common Stock for purposes of such action, and in the case of any
such other action, at least twenty days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of Common
Stock whichever shall be the earlier. The failure to give notice required by
this Section 25 or any defect therein shall not affect the legality or validity
of the action taken by the Company or the vote upon any such action.

         (b) In case any Common Stock Event described in Section 11(a) (ii)
hereof shall occur, then, in any such case, the Company shall as soon as
practicable thereafter give to the Rights Agent and each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of the occurrence of
such Common Stock Event, which shall specify such 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 Rights Certificate to 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 in
accordance with this Section 26) as follows:

         The First Years Inc.
         One Kiddie Drive
         Avon, Massachusetts 02322
         Attn:  Ronald J. Sidman
                Chairman, President and Chief Executive Officer

Copy to:

         Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
         One Financial Center

                                       32
<PAGE>

         Boston, MA 02111
         Attn: Stanford N. Goldman

         Subject to the provisions of Sections 19 and 21 hereof, any notice or
demand authorized by this Agreement to be given or made by the Company or by the
holder of any Rights Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with that Company in accordance with this
Section 26) as follows:

         EquiServe Trust Company, N.A.
         c/o EquiServe Limited Partnership
         150 Royall Street
         Canton, MA 02021
         Attn: General Counsel

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

Section 27.  Supplements and Amendments.

         Prior to the Distribution Date, the Company may from time to time
supplement or amend this Agreement without the approval of any holders of the
Rights. From and after the Distribution Date, the Company may from time to time
amend this Agreement without the approval of any holders of the Rights in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to change any time period governing redemption of the Rights or any other
time period or (iv) to make any other provisions in regard to matters or
questions arising hereunder which the Company may deem necessary or desirable
and which shall not adversely affect the interests of the holders of the Rights
(other than any Acquiring Person or Disqualified Transferee or any Affiliate of
an Acquiring Person or Disqualified Transferee). Any amendment made pursuant to
this Section 27 after a Stock Acquisition Date shall require the approval of a
majority of the Board. The Rights Agent shall join with the Company in the
execution and delivery of any such supplement or amendment, unless such
supplement or amendment affects any of the rights, duties, or obligation of the
Rights Agent hereunder, in which case the Rights Agent may, but sha1l not be
required to, join in such execution and delivery.

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.

                                       33
<PAGE>

Section 29.  Determinations and Actions by the Board; etc.

         The Board shall have the exclusive power and authority to administer
this Agreement and to exercise all rights and powers specifically granted to the
Board, 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.

Section 30.  Benefits of This Agreement.

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

Section 31.  Severability.

         The invalidity or unenforceability of any term or provision hereof
shall not affect the validity or enforceability of any other term or provision
hereof.

Section 32.  Governing Law.

         This Agreement and each Rights Certificate issued hereunder shall be
deemed to be a contract made under the laws of The Commonwealth of Massachusetts
and for all purposes shall be governed by and construed in accordance with the
laws of said Commonwealth applicable to contracts to be made and performed
entirely within said Commonwealth.

Section 33.  Counterparts.

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

Section 34.  Descriptive Headings.

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

                                       34
<PAGE>

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

                                          THE FIRST YEARS INC.

                                          By: /s/ John R. Beals
                                              ----------------------------------
                                              Name:  John R. Beals
                                              Title: Senior Vice President,
                                                     Chief Financial Officer and
                                                     Treasurer

Attest:

By: /s/ Susan D. Novins
    -------------------------------
    Name:  Susan D. Novins
    Title: General Counsel

                                          EQUISERVE TRUST COMPANY, N.A.
                                          as Rights Agent

Attest:                                   By: /s/ Tyler Haynes
                                              ---------------------------------
                                              Name:  Tyler Haynes
                                              Title: Managing Director

By: /s/ Jennifer Proulx
    -------------------------------
    Name:  Jennifer Proulx

<PAGE>
                                                                       EXHIBIT A

                           FORM OF RIGHTS CERTIFICATE
Certificate No. R-                                        _______________ Rights

          NOT EXERCISABLE AFTER NOVEMBER 19, 2006 OR EARLIER IF ORDER OF
          REDEMPTION IS GIVEN. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
          OPTION OF THE COMPANY, AT $25.00 PER RIGHT ON THE TERMS SET FORTH IN
          THE RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY
          OWNED BY AN ACQUIRING PERSON OR AN AFFILIATE (WHICH INCLUDES
          AFFILIATES AND ASSOCIATES) OF AN ACQUIRING PERSON (AS EACH SUCH TERM
          IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
          RIGHTS MAY BECOME NULL AND VOID. THE RIGHTS SHALL NOT BE EXERCISABLE,
          AND SHALL BE VOID SO LONG AS HELD BY A HOLDER IN ANY JURISDICTION
          WHERE THE REQUISITE QUALIFICATION TO THE ISSUANCE TO SUCH HOLDER, OR
          THE EXERCISE BY SUCH HOLDER, OF THE RIGHTS IN SUCH JURISDICTION SHALL
          NOT HAVE BEEN OBTAINED OR BE OBTAINABLE. (THE RIGHTS REPRESENTED BY
          THIS CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR
          BECAME AN ACQUIRING PERSON OR AN AFFILIATE (WHICH INCLUDES AFFILIATES
          AND ASSOCIATES) OF AN ACQUIRING PERSON (AS EACH SUCH TERM IS DEFINED
          IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
          RIGHTS REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE
          CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF THE RIGHTS AGREEMENT.

                               Rights Certificate

                              THE FIRST YEARS INC.

          This certifies that, ________________________________________________,
or its 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 Common Stock Rights Agreement dated as of
November 19, 2001 (the "Rights Agreement") between The First Years Inc., a
Massachusetts corporation (the "Company"), and EquiServe Trust Company, N.A., a
national banking association (the "Rights Agent"), to purchase from the Company
at any time after the Distribution Date (as such term is defined in the Rights
Agreement) and prior to 5:00 P.M. (Boston time) on November 19, 2006 (the
"Expiration Date") at the Principal Office (as such term is defined in the
Rights Agreement) of the Rights Agent, or its successors as Rights Agent, in
Canton, Massachusetts, one share of the Common Stock, with a par value of $.10
per share ("Common Stock"), of the Company per each Right represented hereby, at
a purchase price of $25.00 per share (the "Purchase Price") upon presentation
and surrender of this Rights Certificate with the Form of Election to Purchase
set forth on the reverse side hereof and the certificate contained therein duly
executed, accompanied by a signature guarantee and such other

                                      A-36
<PAGE>

documentation as the Rights Agent may reasonably request. The number of Rights
evidenced by this Rights Certificate (and the number of whole shares which may
be purchased upon exercise thereof) set forth above, and the Purchase Price per
share set forth above, are the number and Purchase Price as of __________, 2001,
based on the shares of Common Stock of the Company as constituted at such date.

          As more fully set forth in the Rights Agreement, upon the occurrence
of a Common Stock Event (as such term is defined in the Rights Agreement), if
the Rights evidenced by this Rights Certificate are beneficially owned by (i) an
Acquiring Person or an Affiliate of an Acquiring Person (as each such term is
defined in the Rights Agreement) or (ii) a Disqualified Transferee (as defined
in the Rights Agreement), such Rights shall automatically become null and void
and no holder hereof shall have any right with respect to such Rights from and
after the occurrence of such Common Stock Event.

          The Rights evidenced by this Rights Certificate shall not be
exercisable, and shall be void so long as held, by a holder in any jurisdiction
where the requisite qualification to the issuance to such holder, or the
exercise by such holder, of the Rights in such jurisdiction shall not have been
obtained or be obtainable.

          As provided in the Rights Agreement, the Purchase Price and the number
of shares of Common Stock which may be purchased upon the exercise of the Rights
evidenced by this Rights Certificate are subject to modification and adjustment
upon the happening of certain events.

          In the circumstances described in Section 13 of the Rights Agreement,
the securities issuable upon the exercise of the Rights evidenced hereby shall
be the common stock or similar equity securities or equity interests of an
entity other than the Company.

          This Rights Certificate is subject to all of the terms, provisions,
and conditions of the Rights Agreement, which terms, provisions, and conditions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties, and immunities hereunder of the
Rights Agent, the Company, and the holders of the Rights Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the Principal Office of the Rights
Agent and may be obtained by the holder of any Rights upon written request to
the Rights Agent.

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

                                      A-37
<PAGE>

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company at the option of the Board at
a redemption price of $0.10 per Right at any time prior to the earlier of (i)
the close of business on the tenth day following the Stock Acquisition Date (or,
if the Stock Acquisition Date shall have occurred prior to the Record Date, the
close of business on the tenth day following the Record Date), and (ii) the
Final Expiration Date.

          The Company is not obligated to issue shares of Common Stock (or other
securities) upon the exercise of any Right or Rights evidenced hereby, but in
lieu thereof a cash payment may be made at the election of the Company, as
provided in the Rights Agreement.

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

                                      A-38
<PAGE>

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

          WITNESS the facsimile signature and seal of the proper officers of the
Company. Dated as of __________, ___.

                                        THE FIRST YEARS INC.

                                        ________________________________________
                                        Name:
                                        Title:

ATTEST:

________________________________________
Name:
Title:

Countersigned:

________________________________________

________________________________________

By______________________________________
          Authorized Signatory

          Date of Countersignature:

                                      A-39
<PAGE>

                  (Form of Reverse Side of Rights Certificate)

                               FORM OF ASSIGNMENT

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

         FOR VALUE RECEIVED _____________________ hereby sells, assigns and
transfers unto ________________________________________________________________
(Please print name and address of transferee)
_______________________________________________________________________________
whose social security or tax identification number, is: ____________ the Rights
evidenced by this Rights Certificate, whether with all right, title and interest
herein, and does hereby irrevocably constitute and appoint ____________________
Attorney, to transfer the within Rights Certificate on the books of the
within-named Company, with full power of substitution.

Dated: _____________________________

                                        ________________________________________
                                        Signature

Signature Guaranteed:2/

--------
2/ Signature must be guaranteed by a member firm of The New York Stock Exchange,
Inc. or a commercial bank or trust company having an office correspondent in New
York City.

                                      A-40
<PAGE>

                                   Certificate

         The undersigned hereby certifies by checking the appropriate boxes
that:

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

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

Dated: _____________________           _________________________________________
                                       Signature

Signature Guaranteed:

____________________________

NOTICE

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

                                      A-41
<PAGE>

                          FORM OF ELECTION TO PURCHASE

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

To THE FIRST YEARS INC.:

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

Please insert social security
or other identifying number

______________________________________

________________________________________________________________________________
                         (Please print name and address)

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

Please insert social security
or other identifying number

______________________________________

________________________________________________________________________________
                         (Please print name and address)

Dated: ________________________________, _______

                                          ______________________________________
                                          Signature

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

Signature Guaranteed:**

______________________________________

--------
** Signature must be guaranteed by a member firm of the New York Stock Exchange,
Inc. or a commercial bank or trust company having an office or correspondent in
New York City.

                                      A-42
<PAGE>

                                                                       Exhibit B

                               THE FIRST YEARS INC
                                 (THE "COMPANY")

                     SUMMARY OF COMMON STOCK PURCHASE RIGHTS
                               (THE "RIGHTS PLAN")

                                Summary of Terms

Distribution:             On November 19, 2001 the Board of Directors (the
                          "Board") of the First Years Inc. the "Company")
                          declared a dividend distribution of one common stock
                          purchase right (the "Right") for every outstanding
                          share of the Company's common stock, $.10 par value
                          per share (the "Common Stock").

Rights:                   The Rights will be distributed on or about November
                          30, 2001 to shareholders of record as of the close of
                          business on November 30, 2001 (the "Dividend Record
                          Date"). The terms of the Rights are set forth in a
                          Common Stock Rights Agreement (the "Rights Agreement")
                          between the Company and EquiServe Trust Company, N.A.
                          (the "Rights Agent"). The Rights Agreement provides
                          for the issuance of one Right for every share of
                          Common Stock issued and outstanding on the Dividend
                          Record Date and for each share of Common Stock which
                          is issued after that date and prior to the
                          Distribution Date (as defined below). Each Right
                          entitles the holders, at any time following the
                          Distribution Date, to purchase one share of Common
                          Stock at a price of $25.00 per share, subject to
                          adjustment in certain circumstances (the "Purchase
                          Price").

Exercisability:           The Rights become exercisable after the Distribution
                          Date. The Rights, in all likelihood, would still not
                          be exercised by the holders after the Distribution
                          Date unless and until a Flip-In Event or a Flip-Over
                          Event has occurred or does occur.

Transferability:          Until the Distribution Date, the Rights are attached
                          to the certificates representing outstanding shares of
                          Common Stock and can only be transferred in connection
                          with the underlying shares of Common Stock. Until the
                          Distribution Date, new Common Stock certificates
                          issued after the Dividend Record Date upon transfer or

                                      A-43
<PAGE>

                          new issuance of the Company's Common Stock will
                          contain a notation incorporating the Rights Agreement
                          by reference, and the surrender for transfer of any of
                          the Company's Common Stock certificates will also
                          constitute transfer of the Rights associated with the
                          Common Stock represented by such Certificate. After
                          the Distribution Date, the Rights will separate from
                          the Common Stock, Separate Rights Certificates will be
                          issued and the Rights will be separately tradable.

Distribution Date:        Unless otherwise determined by the Board, the
                          Distribution Date will be the earliest to occur of the
                          following:

                          (1) the tenth business day following the later date of
                          (a) a public announcement that a person or entity, or
                          group of affiliated or associated persons and/or
                          entities (an "Acquiring Person"), has acquired or
                          obtained the right to acquire beneficial ownership of
                          15% or more of the Common Stock then outstanding or
                          (b) the date on which an executive officer of the
                          Company has actual knowledge that an Acquiring Person
                          has become such (the "Stock Acquisition Date"); or

                          (2) the tenth business day, or such specified later
                          date as determined by the Board, following the
                          commencement of a tender offer or exchange offer for
                          the Common Stock that would result in a person or
                          group becoming an Acquiring Person.

                          In such event, separate certificates evidencing the
                          Rights (the "Rights Certificates") will be mailed to
                          holders of record of the Company's Common Stock as of
                          the close of business on the Distribution Date and
                          such separate Rights Certificates alone will evidence
                          the Rights.

Flip-In Events:           In the event, following any Distribution Date, (1) any
                          person or entity becomes an Acquiring Person, except
                          pursuant to an offer for all outstanding shares that
                          the Board determines to be fair to, and otherwise in
                          the best interests of, the Company and its
                          stockholders, (2) the Company is the surviving
                          corporation in a merger or consolidation with an
                          Acquiring Person and the Common Stock is not changed
                          or exchanged, (3) an Acquiring Person engages in one
                          or more self-dealing transactions specified in the
                          Rights Agreement, or (4) during such time as there is
                          an Acquiring Person, an event occurs which results in
                          such Acquiring Person's proportionate ownership
                          interest being increased by more than 1% (e.g., a
                          reverse stock split) (collectively, "Flip-In Events"),
                          then ten days after the occurrence of a Flip-In Event
                          specified in (1) above, and immediately upon the
                          occurrence of a Flip-In Event specified in (2), (3) or
                          (4) above, each of the Rights (other than Rights held
                          by the Acquiring Person, or its affiliates,

                                      A-44
<PAGE>

                          associates and certain transferees) becomes a Right to
                          acquire shares of the Company's Common Stock having a
                          market value of two times the exercise price of the
                          Rights. For example, if the exercise price is $25.00,
                          the holder of each Right would be entitled to receive
                          $50.00 in market value of the Company's Stock for
                          $25.00 (but such Right is not exercisable while the
                          Rights are redeemable). In sum, then, a bidder's
                          attainment of the status of a non-board-approved owner
                          of that level of stock, irrespective of the bidder's
                          intentions regarding the possible use of the stock,
                          triggers the Rights Plan so that all stockholders
                          other than the bidder automatically acquire the right
                          to purchase additional voting stock of the Company at
                          a 50% discount to market price.

                          In lieu of issuing Common Stock, if the Board
                          determines that it is necessary or appropriate and not
                          contrary to the interests of the holders of Rights
                          (other than any Acquiring Person or its affiliates or
                          associates), the Company may substitute value in the
                          form of cash, or other assets, or debt or equity
                          securities, or any combination of the foregoing, in an
                          aggregate amount equal to the value of the Common
                          Stock that would otherwise be issuable.

Flip-Over Events:         If, following the Stock Acquisition Date, the Company
                          is acquired in a merger or other business combination
                          (i.e., the Company does not survive or the Common
                          Stock is changed or exchanged), or more than 50% of
                          its assets or earning power (on a consolidated basis)
                          is sold or transferred in one transaction or a series
                          of related transactions (together, "Flip-Over
                          Events"), each Right becomes a Right to acquire that
                          number of shares of common stock (or other equity
                          securities) of the other entity to the transaction
                          having a market value equal to twice the exercise
                          price of the Right. The Rights Agreement prohibits the
                          Company from entering into any such transaction unless
                          the other party agrees to comply with the provisions
                          of the Rights Agreement.

Exclusion of Acquiror:    Rights held by an Acquiring Person and certain related
                          persons are voided after a Flip-In Event but (if no
                          Flip-In Event has occurred) not after a Flip-Over
                          Event.

Exchange                  The Board may, at its option, at any time after any
                          Person becomes an Acquiring Person, exchange all or
                          part of the then outstanding and exercisable Rights
                          for shares of Common Stock at an exchange ratio of one
                          share of Common Stock per Right, appropriately
                          adjusted to reflect any stock split, stock dividend or
                          similar transaction occurring after the Declaration
                          Date (the "Exchange Ratio"). However, the Board may
                          not effect an exchange at any time after any Person
                          other than the Company, any subsidiary of

                                      A-45
<PAGE>

                          the Company, any employee benefit plan of the Company
                          or any such subsidiary, or any entity holding Common
                          Stock for or pursuant to the terms of any such plan),
                          together with all Affiliates of such Person, becomes
                          the Beneficial Owner of 50% or more of the Common
                          Stock then outstanding. Immediately upon the action of
                          the Board ordering the exchange of any Rights and
                          without any further action or notice, the right to
                          exercise such Rights will terminate and the only right
                          thereafter of a holder of such Rights will be to
                          receive that number of shares of Common Stock equal to
                          the number of such Rights held by the holder
                          multiplied by the Exchange Ratio.

Redemption:               At any time prior to the earlier of (1) ten days
                          following the Stock Acquisition Date or (2) the Final
                          Expiration Date, the Board may redeem the Rights in
                          whole, but not in part, at a price of $.10 per Right
                          (the "Redemption Price"). The redemption price is
                          payable in cash, stock or other consideration deemed
                          appropriate by the Board.

Amendment:                In general, the provisions of the Rights Agreement may
                          be amended by the Board (1) prior to the Distribution
                          Date in any manner (including to shorten or lengthen
                          any time period such as the redemption period), and
                          (2) from or after the Distribution Date in certain
                          respects, including to cure any ambiguity, defect or
                          inconsistency, to make changes which do not adversely
                          affect the interests of holders of Rights (excluding
                          the interests of any Acquiring Person), or to change
                          any time period for redemption or any other time
                          period under the Rights Agreement.

Voting Rights:            Rights holders have no rights as stockholders of the
                          Company, including the right to vote and to receive
                          dividends.

Expiration:               The Rights will expire in five years (the "Final
                          Expiration Date") unless earlier redeemed by the
                          Company.

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

                                      A-46
<PAGE>

                          Company and certain other distributions) or of
                          subscription rights or warrants (other than those
                          referred to above).

                          With certain exceptions, no adjustment in the exercise
                          price of the Rights will be required until cumulative
                          adjustments equal at least 1% of such price. The
                          Company is not obligated to issue fractional shares of
                          any securities upon the exercise or the Rights.
                          Rather, at the election of the Company an adjustment
                          in cash may be made based on the market price of such
                          securities on the list trading date prior to the date
                          of exercise.

Common Stock
Rights Agreement Filed:   A copy of the Rights Agreement has been filed with the
                          Securities and Exchange Commission as an Exhibit to
                          the Company's Registration Statement on Form 8-A. A
                          copy of the Rights Agreement is available to
                          shareholders free of charge from the Rights Agent at
                          the following address: EquiServe Trust Company, N.A.,
                          c/o EquiServe Limited Partnership, 150 Royall Street,
                          Canton, MA 02021, Attention: Reorganization
                          Department. 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 incorporated herein by reference.

                                      A-47<PAGE>
                                                                     EXHIBIT 4.3

                    INVESTOR RIGHTS AND SHAREHOLDER AGREEMENT

     This Investor Rights and Shareholder Agreement (this "Agreement") is
entered into as of April 18, 2001, among LIQUIDMETAL TECHNOLOGIES, a California
corporation (the "Company"), ATI HOLDINGS, LLC, a Delaware limited liability
company ("ATI"), ALLOY INVESTORS, INC., a Florida corporation ("Alloy
Investors"), ALLOY VENTURES, LLP, a Florida limited liability limited
partnership (the "Partnership"), and any additional shareholders of the Company
that may become parties to this Agreement (together with the Partnership, the
"Shareholders").

                                    RECITALS

     WHEREAS, the Partnership has executed a Common Stock Purchase Agreement of
even date herewith (the "Stock Purchase Agreement") pursuant to which the
Partnership has agreed to purchase shares of the Company's common stock, no par
value (the "Common Stock");

     WHEREAS, this Agreement is being executed and delivered pursuant to Section
4.4 of the Stock Purchase Agreement;

     WHEREAS, the Company and the Shareholders deem it in the best interests of
the Company to enter into this Agreement; and

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

     1. Definitions. In addition to the capitalized terms defined elsewhere in
this Agreement, the following capitalized terms shall have the following
meanings ascribed to them when used in this Agreement:

     "Commission" means the United States Securities and Exchange Commission.

     "Common Shares" means shares of Common Stock of the Company that have not
been sold to the public (i) pursuant to a registration statement declared
effective by the Commission or (ii) after a Public Offering, pursuant to Rule
144.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     "Holder" means any person owning of record Registrable Securities that have
not been sold to the public or pursuant to Rule 144 promulgated under the
Securities Act or any Permitted Transferee to whom rights under Section 5 have
been duly assigned in accordance with Section 5.g of this Agreement.

     "Investor Shares" means, at any time, (i) any Common Shares acquired
pursuant to the Stock Purchase Agreement; (ii) any Common Shares that are issued
upon the exchange of Series A Convertible Preferred Stock of LMG pursuant to
that certain Share

<PAGE>
Exchange Agreement of even date herewith between the Company and the
Partnership, (iii) any other Securities which are deemed by an amendment to this
Agreement to be "Investor Shares", and (iv) any Securities then outstanding that
were issued as, or were issued directly or indirectly upon the conversion or
exercise of other Securities issued as, a dividend or other distribution with
respect to or in replacement of any Securities referred to in (i), (ii), or
(iii). For purposes of this Agreement, the calculation of the number of Investor
Shares (to the extent such Investor Shares are not Common Shares) shall be
determined on an as-converted basis into Common Shares.

     "LMG" means Liquidmetal Golf, a California corporation.

     "Permitted Transferee" means a lineal descendant, spouse, or parent of a
Holder who is a natural person, or, in the event of a transfer upon the Holder's
death, the executor or personal representative of the Holder's estate.

     "Person" means an individual, corporation, partnership, limited liability
company, limited partnership, syndicate, person (including, without limitation,
a "Person" as defined in Section 13(d)(3) of the Exchange Act), trust,
association, entity or government, political subdivision, agency or
instrumentality of a government.

     "Public Offering" means any offering by the Company of its equity
securities to the public pursuant to an effective registration statement under
the Securities Act.

     "Registrable Securities" means (i) all Common Shares issued or issuable
pursuant to the Stock Purchase Agreement; (ii) any Common Shares that were
issued upon the exchange of Series A Convertible Preferred Stock of LMG pursuant
to that certain Share Exchange Agreement of even date herewith between the
Company and the Partnership, (iii) any other Securities which are deemed by an
amendment to this Agreement to be "Registrable Securities," and (iv) any shares
of the Common Stock of the Company issued in connection with any stock split,
stock dividend, recapitalization or similar event occurring with respect to the
Investor Shares. Notwithstanding the foregoing, a Security shall cease to be a
"Registrable Security" upon the transfer or assignment of such Security by the
Holder thereof, except for a transfer without consideration to a Permitted
Transferee.

     "Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement.

     "Rule 144" means Rule 144 (including Rule 144(k)) of the Commission under
the Securities Act or any similar provision then in force under the Securities
Act.

     "Securities" means Common Shares or shares of capital stock or other
securities directly or indirectly exercisable for, or convertible into, Common
Shares; provided, however, that Securities shall not include any securities
which have been sold to the public pursuant to a registration statement declared
effective by the Commission or, after a Public Offering, pursuant to Rule 144.

                                       2

<PAGE>

     "Securities Act" means the Securities Act of 1933, as amended, or any
similar federal statute, as the same shall be in effect from time to time.

     2.   Disposition of Securities. Investor Shares may be transferred by the
holders thereof, subject to the restrictions set forth in Section 3 below,
provided that, as a condition precedent to any transfer of Investor Shares (a)
any Investor Shares so transferred shall remain subject to all of the
restrictions set forth in this Agreement, including the restrictions set forth
in Section 3 below, and (b) the transferee must agree to be bound by this
Agreement to such extent as if the transferee were the shareholder originally a
party hereto and must sign a counterpart signature page hereto for such purpose.
Any transfer or assignment of Investor Shares in violation of this Agreement
will be void ab initio and will have no force and effect.

     3.   Restrictions on Transfer.

          a. Legends. The certificates representing the Investor Shares will
     bear substantially the following legend:

          THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS, AND MAY
          NOT BE OFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE
          DISPOSED OF UNLESS REGISTERED PURSUANT TO THE PROVISIONS OF SUCH ACT
          AND STATE SECURITIES LAWS OR AN EXEMPTION THEREFROM IS AVAILABLE AS
          ESTABLISHED BY A WRITTEN OPINION OF COUNSEL ACCEPTABLE TO THE
          CORPORATION. THESE SECURITIES ARE SUBJECT TO ADDITIONAL RESTRICTIONS
          ON TRANSFER AND OTHER AGREEMENTS SET FORTH IN AN INVESTOR RIGHTS AND
          SHAREHOLDER AGREEMENT, A COPY OF WHICH MAY BE OBTAINED AT THE
          PRINCIPAL EXECUTIVE OFFICE OF THE CORPORATION. ANY SALE, ASSIGNMENT,
          TRANSFER, PLEDGE OR DISPOSITION IN CONFLICT WITH THE INVESTOR RIGHTS
          AND SHAREHOLDER AGREEMENT IS VOID AND OF NO LEGAL FORCE, EFFECT OR
          VALIDITY WHATSOEVER.

          b. Securities Act. No holder of Investor Shares may sell, transfer, or
dispose of any of such Investor Shares (except pursuant to an effective
registration statement under the Securities Act) without first delivering to the
Company an opinion of counsel reasonably acceptable in form and substance to
the Company that registration under the Securities Act is not required in
connection with such transfer.

                                       3

<PAGE>

          c. Holdback Agreements. Each holder of Investor Shares agrees not to
effect any public sale or distribution of equity securities of the Company, or
any securities convertible into or exchangeable or exercisable for such
securities, (i) during the seven (7) days prior to, and during the one hundred
and eighty (180) days following, the effective date of an initial Public
Offering, (except as part of such underwritten registration), or (ii) during the
seven (7) days prior to, and during the ninety (90) days following, the
effective date of any underwritten Public Offering other than an initial Public
Offering, (except as part of such underwritten registration), in each case
unless the underwriters managing the Public Offering otherwise agree. Each
holder of Investor Shares agrees to enter into customary lock-up agreements
consistent with the foregoing if requested by any underwriter of any such Public
Offering. For purposes of this Section 3.c only, following an initial Public
Offering, the term Investor Shares shall not include any shares which have been
(a) disposed of pursuant to an effective registration statement under the
Securities Act or (b) sold pursuant to Rule 144.

          d. Right of First Refusal. In addition to the other restrictions set
forth in this Agreement, a Shareholder may not sell, transfer, assign, or
otherwise dispose (other than a transfer without consideration to a Permitted
Transferee or a sale in a public offering pursuant to Section 5 hereof) of all
or any part of the Investor Shares now or hereafter owned by such Shareholder
without first offering to sell such Investor Shares to the Company in the manner
hereinafter described.

               i. The offer by the transferring Shareholder to the Company shall
be a written offer to sell all of the Investor Shares proposed to be by
transferred by the transferor, to which shall be attached a statement of
intention to transfer, the name and address of such prospective transferee, the
number of Investor Shares involved in the proposed transfer, and the terms of
such transfer. The Company shall be entitled to purchase the offered Investor
Shares at the price per share in cash offered by the prospective transferee.

               ii. Within thirty (30) days after the receipt by the Company of
such offer, the Company may, at its option, elect to purchase all, but not less
than all, of the Investor Shares proposed to be transferred by the transferor.
The Company shall exercise its election to purchase the Investor Shares by
giving notice thereof to the transferor. The notice shall specify a date for the
closing of the purchase which shall be not more than thirty (30) days after the
date of the giving of such notice.

               iii. If the offer to sell is not accepted by the Company, the
transferor may make a bona fide transfer to the prospective transferee named in
the statement attached to the offer, such transfer to be made only in strict
accordance with the terms therein stated. However, if the transferor shall fail
to make such transfer within thirty (30) days following the election by the
Company not to accept such offer, such Investor Shares shall again become
subject to all the restrictions of this Section 3.4.

               iv. Upon the transfer of any Investor Shares pursuant to
paragraph 3.d.iii above, the rights set forth in Section 3.e and Section 5 of
this Agreement will automatically and immediately terminate with respect to such
transferred Investor Shares.

                                       4

<PAGE>

               v. The provisions of this Section 3.d shall not apply to any
distribution of Investor Shares by the Partnership (as defined in Section 7
below) to any of its partners, but only if such distribution is undertaken in
accordance with the terms and provisions of the Partnership Agreement as in
effect as of the date hereof (or as amended in accordance with Section 7 below).

               vi. The obligations set forth in this Section 3.d shall terminate
at such time that the Company consummates an initial Public Offering or becomes
subject to the reporting requirements of the Exchange Act.

          e. Co-Sale Rights.

               i. In the event that ATI enters into an agreement for the sale of
50% or more of the outstanding Common Stock of the Company (a "Proposed Sale"),
then ATI shall provide to each Holder a notice describing the Proposed Sale (the
"Tag-Along Notice"). The Tag-Along Notice shall set forth: (i) the shares of
Common Stock proposed to be purchased (the "Tag-Along Offered Shares"); (ii) the
proposed purchase price, including for this purpose any other consideration
payable to ATI which is payable in connection with such sale, except to the
extent such other consideration is paid in exchange for securities of the
Company other than Common Stock (the "Tag-Along Offered Price"); and (iii) the
proposed terms of purchase (the "Tag-Along Offered Terms").

               ii. Upon receipt of a Tag-Along Notice, a Holder shall have the
right to participate in such Proposed Sale, exercisable by delivery of a notice
to ATI (the "Participation Notice") within 30 days from the date of receipt of
the Tag-Along Notice. The right of a Holder pursuant to this Section 3.e shall
terminate if not exercised within 30 days after receipt of the Tag-Along Notice.
The Participation Notice shall set forth the number of shares of Common Stock
that the participating Holder desires to include in the proposed sale.

               iii. Following the expiration of the 30-day period referred to in
subsection (ii) above, if a Holder has delivered the Participation Notice, ATI
shall notify the Holder of the number of shares of Common Stock which the Holder
may include in the proposed transfer (the "Includible Shares"), which shall be
the lesser of (A) the shares requested for inclusion by the Holder; and (B) the
product of (1) the Tag-Along Offered Shares multiplied by (2) a fraction, the
numerator of which is the total number of Investor Shares then owned by the
Holder and the denominator of which is the total number of shares of Common
Stock outstanding (calculated on a fully-diluted basis, assuming the conversion
of all convertible securities and the exercise of all options and warrants).
Upon delivery of a Participation Notice, the participating Holder shall be
entitled and obligated to sell to the proposed purchaser or purchasers his or
her Includible Shares at the Tag-Along Offered Price pursuant to the Tag-Along
Offered Terms, and the Common Stock which ATI shall be entitled to sell to the
proposed purchaser or purchasers shall be reduced accordingly.

               iv. At the closing of the Proposed Sale (notice of the date,
place and time of which shall be designated by ATI and provided to the Holder in
writing at least five

                                       5

<PAGE>
business days prior thereto), the selling Holder shall deliver an instrument
evidencing the Includible Shares, duly endorsed, or accompanied by written
instruments of transfer in form reasonably satisfactory to the purchaser or
purchasers, duly executed by such Holder.

               v. The rights set forth in this Section 3.e shall terminate at
such time that the Company consummates an initial Public Offering or becomes
subject to the reporting requirements of the Exchange Act. Additionally, upon
the transfer or assignment of any Investor Shares by the Holder thereof, other
than a transfer without consideration to a Permitted Transferee, the rights set
forth in this Section 3.e shall automatically and immediately terminate.

     4.   Information Rights.

          a. Financial Information. The Company will provide to each holder of
at least 2,500 Investor Shares (as adjusted for stock splits, dividends,
conversions, and the like):

               i. as soon as practicable, but in any event within one-hundred
twenty (120) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a balance sheet of the Company as of the end of
such year, a statement of shareholder's equity as of the end of such year, and a
statement of cash flows for such fiscal year, such year-end financial reports to
be in reasonable detail and to be prepared in accordance with generally accepted
accounting principles ("GAAP"); and

               ii. as soon as practicable, but in any event within forty-five
(45) days after the end of the first three quarters of each fiscal year of the
Company, an income statement and a balance sheet as of the end of such fiscal
quarter prepared in accordance with GAAP consistently applied with prior
practice for earlier periods (with the exception of footnotes that may be
required by GAAP), subject to changes resulting from any year-end audit
adjustments.

          b. Termination of Rights. The rights set forth in this Section 4 shall
terminate at such time that the Company consummates an initial Public Offering
or becomes subject to the reporting requirements of the Exchange Act.

     5.   Piggyback Registration Rights.

          a. Notice of Registration. The Company shall notify all Holders of
Registrable Securities in writing at least 30 days prior to filing any
registration statement under the Securities Act for purposes of effecting a
public offering of securities of the Company solely for cash (including, but not
limited to, registration statements relating to secondary offerings of
securities of the Company). If the holders of at least a majority of the
Registrable Securities elect in writing to exercise their registration rights
under this Section 5, and if such written election is made within 15 days after
the delivery of the Company's notice, then the Company will afford the Holders
an opportunity to include in such registration statement all or any part of the
Registrable Securities then held by such Holders; provided, however, that the
Company shall not be obligated to effect, or take any action to effect, any such
registration pursuant to

                                       6

<PAGE>
this Section 5 after the Company has effected two (2) such registrations that
are subject to this Section 5.a and such registrations have been declared or
ordered effective. Each Holder desiring to include in any such registration
statement all or any part of the Registrable Securities held by such Holder
shall, within 15 days after delivery of the above-described notice from the
Company, so notify the Company in writing, and in such notice shall inform the
Company of the number of Registrable Securities such Holder wishes to include in
such registration statement. However, if, at any time after giving notice to the
Holders under this Section 5.a and before the effective date of the registration
statement filed in connection with the proposed registration, the Company shall
determine for any reason not to register or to delay registration of the
securities proposed to be registered, the Company may, at its sole option, give
written notice of such determination to the Holders who elected to participate
in such registration, and (i) in the case of a determination not to register,
shall be relieved of its obligation to register any Registrable Securities in
connection with such registration, and (ii) in the case of a determination to
delay registration, shall be permitted to delay registering any Registrable
Securities for the same period of delay in registering the other securities
proposed to be registered. Notwithstanding the foregoing, the provisions of this
Section 5 shall not apply to (i) any registration statement relating to the sale
of securities to participants in a Company stock option plan, equity incentive
plan, or any other employee benefit plan, (ii) a registration on a form which
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of the Registrable
Securities, (iii) a registration in which the only Common Stock being registered
is Common Stock issuable upon conversion of debt securities which are also being
registered, or (iv) an SEC Rule 145 transaction or a registration relating to a
corporate reorganization.

          b. Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 5 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be reasonably required to effect the registration of such Holder's
Registrable Securities.

          c. Expenses of Company Registration. The Company shall bear and pay
all expenses (other than underwriting discounts and commissions, stock transfer
taxes, and fees of counsel to the Holders) incurred in connection with any
registration, filing or qualification of Registrable Securities with respect to
the registrations pursuant to Section 5.1 for each Holder, including (without
limitation) all registration, filing, and qualification fees, and printers' and
accounting fees.

          d. Underwriting Requirements. If a registration statement under which
the Company gives notice under Section 5.1 is for an underwritten offering, then
the Company shall so advise the Holders of Registrable Securities. In such
event, the right of any such Holder's Registrable Securities to be included in a
registration pursuant to Section 5.1 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into

                                       7

<PAGE>

an underwriting agreement in customary form with the managing underwriter or
underwriter(s) selected for such underwriting. Notwithstanding any other
provision of this Agreement, if the managing underwriter(s) determine(s) in good
faith that marketing factors require a limitation of the number of shares to be
underwritten, then the amount of Registrable Securities to be included in the
registration for the account of the Holders will be reduced (to zero if
necessary) pro rata among the Holders on the basis of the Registrable Securities
to be included therein by each Holder, to the extent necessary to reduce the
total amount of securities to be included in such offering to the amount
recommended by such managing underwriter(s).

          e. Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 5.

          f. Indemnification. In the event any Registrable Securities are
included in an underwritten registration statement under this Agreement:

               i. To the extent permitted by law, the Company will indemnify and
hold harmless each Holder against any losses, claims, damages, or liabilities to
which they may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
state securities law; and the Company will pay to each such Holder any legal or
other expenses reasonably incurred by the Holder in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section 5.f
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder or
such Holder's agent or representative; provided, further, that the Company shall
not be liable to: i) any individual or entity that participates as an
underwriter in the offering or sale of Registrable Securities or ii) any other
individual or entity who controls such underwriter within the meaning of the
Securities Act, to the extent that any loss, claim, damage, liability, or action
arises out of the failure of such individual(s) or entity(ies) to send or give a
copy of the final prospectus, as the same may be supplemented or amended, to the
party asserting an untrue statement or alleged untrue statement or omission or
alleged omission

                                        8

<PAGE>

at or prior to the written confirmation of the sale of Registrable Securities to
such party if such statement or omission was corrected in the final prospectus.

               ii. To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon written information furnished by such Holder for use in connection
with such registration; and each such Holder will pay any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this Section 5.f, in connection with investigating or defending any such
loss, claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 5.f shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld.

               iii. Promptly after receipt by an indemnified party under this
Section 5.f of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 5.f, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the indemnified and indemnifying parties; provided, however,
that an indemnified party (together with all other indemnified parties which may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, to the extent prejudicial to its ability to defend such action,
shall relieve such indemnifying party of its liability to the indemnified party
under this Section 5.f, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party other than under this Section 5.f.

               iv. If the indemnification provided for in this Section 5.f is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense

                                       9

<PAGE>
in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.

               v. Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with an underwritten Public Offering are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.

               vi. The obligations of the Company and Holders under this Section
5.f shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 5, and otherwise.

          g. Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Section 5 may not be
assigned except in connection with the transfer of Registrable Securities
without consideration to a Permitted Trasnferee (and only with all related
obligations) provided that (i) the transfer of the Registrable Securities by the
Holder is undertaken in accordance with the terms and provisions of this
Agreement, including the provisions of Section 2 of this Agreement, (ii) the
Company is, within a reasonable time before such transfer, furnished with
written notice of the name and address of such Permitted Transferee and the
securities with respect to which such registration rights are being assigned.
The transfer of Registrable Securities under this Section 5.g is only permitted
when any transferee or assignee agrees in writing to be bound by and subject to
all of the terms and conditions of this Agreement.

          h. Termination of Registration Rights. The registration rights granted
pursuant to this Section 5 will terminate as to any Holder upon the later to
occur of (a) such time as the Company and the Holder are satisfied that Rule
144(k) is available for the resale of all of the Holder's Registrable
Securities, (b) the three-year anniversary following the date of the
consummation of the Company's initial Public Offering, or (c) such time as a
Holder has less than one percent of the outstanding shares of Company Common
Stock and can sell all of its remaining Registrable Securities under Rule 144
during any three-month period.

          i. Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:

               i. Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration

                                       10

<PAGE>
statement to become effective, and keep such registration statement effective
until the distribution is completed, but not more than 150 days, provided that
no such registration shall constitute a shelf registration under Rule 415
promulgated by the SEC under the Securities Act.

               ii. Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.

               iii. Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and all amendments and supplements thereto,
and such other documents as they may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by them that are included in
such registration.

               iv. Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.

               v. In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.

               vi. Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing and, following such notification, promptly deliver to each Holder
copies of all amendments or supplements referred to in paragraphs (i) and (ii)
of this Section 5.i.

               vii. Furnish, at the request of any Holder registering
Registrable Securities, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, (i) a copy of the opinion of the counsel representing the
Company for the purposes of such registration addressed to the underwriters for
such registration and (ii) a copy of the "comfort letter" addressed to the
underwriters for such registration from the independent certified public
accountants of the Company.

     6.   [Intentionally left blank]

                                       11

<PAGE>

     7.   Matters relating to the Partnership. The Partnership and Alloy
Investors, as the general partner of the Partnership, each hereby agree that
they shall not permit any amendment to be made to Section 3.5(a) or Section 5.5
of the Agreement of Limited Partnership of the Partnership, dated April 18, 2001
(the "Partnership Agreement"), without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Furthermore, the Partnership
and Alloy Investors hereby agree that the Partnership may not make any
distributions of any Investor Shares to the partners of such partnership except
in accordance with the Partnership Agreement as in effect on the date hereof (or
pursuant to any amendment to the Partnership Agreement approved by the Company
in accordance with the preceding sentence). The Partnership and Alloy Investors
agree and acknowledge that the provisions of this Section 7 are a material
inducement with respect to the Company's execution and delivery of the Stock
Purchase Agreement and this Agreement.

     8.   Execution; Counterparts. A Person who has executed the Stock Purchase
Agreement and signs a signature page hereto shall become a party hereto upon the
issuance to such Person of Investor Shares for which such Person has subscribed.
This Agreement may be executed in any number of counterparts, each of which when
so executed and delivered will be deemed an original, and such counterparts
together will constitute one instrument.

     9.   Notices. Any notices desired, required or permitted to be given
hereunder shall be delivered personally or mailed, certified or registered mail,
return receipt requested, or delivered by overnight courier service, to the
following addresses, or such other addresses as shall be given by notice
delivered hereunder, and shall be deemed to have been given upon delivery, if
delivered personally, three days after mailing, if mailed, or one business day
after delivery to the overnight courier service, if delivered by overnight
courier service:

     If to the Company, to:

               Liquidmetal  Technologies
               25800 Commercentre Dr., Suite 100
               Lake Forest, California  92630
               Attention:  James Kang, Chief Executive Officer

     If to the Shareholders, to the addresses set forth on the stock record
books of the Company.

     If to ATI, to:

               ATI Holdings, LLC, c/o Iliant Corporation
               4300 West Cypress Street, Suite 900
               Tampa, Florida 33607
               Attention:  John Kang

                                       12

<PAGE>

     If to Alloy Investors, to:

               Alloy Investors, Inc.
               11103 Winthrop Way
               Tampa, Florida 33612
               Attention:  Roger Overby, President

     10.  Amendments and Waivers. The provisions of this Agreement may be
amended upon the written agreement of the Company and the holder or holders of a
majority of the Investor Shares. Any waiver, permit, consent or approval of any
kind or character on the part of any holders of any provision or condition of
this Agreement must be made in writing and shall be effective only to the extent
specifically set forth in writing.

     11.  Severability. Whenever possible, each provision of this Agreement will
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed, and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

     12.  Complete Agreement. This Agreement supersedes and preempts any prior
and contemporaneous understandings, agreements or representations by or among
the parties, written or oral, which may have related to the subject matter
hereof in any way.

     13.  Successors and Assigns. All covenants and agreements in this Agreement
by or on behalf of any of the parties hereto will bind and inure to the benefit
of the respective successors and permitted assigns of the parties hereto, and
each transferee of all or any portion of the Securities held by the parties
hereto, whether so expressed or not.

     14.  Governing Law. This Agreement shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Agreement shall be governed by, the laws
of the State of Florida, without giving effect to provisions thereof regarding
conflict of laws.

     15.  Headings. The captions set forth in this Agreement are for convenience
only and shall not be considered as part of this Agreement or as in any way
limiting the terms and provisions hereof.

                                       13
<PAGE>

     IN WITNESS WHEREOF, this Investor Rights and Shareholder Agreement was
executed as of the date first set forth above.

                                LIQUIDMETAL TECHNOLOGIES

                                By:                /s/ John Kang
                                   ---------------------------------------------
                                   John Kang, Chairman of the Board of Directors

                                ATI HOLDINGS, LLC

                                By:  J. Holdsworth Capital Management, LLC,
                                        its manager

                                By:                /s/ John Kang
                                   ---------------------------------------------
                                   John Kang, Manager

                                ALLOY INVESTORS, INC.

                                By:              /s/ Roger Overby
                                   ---------------------------------------------
                                   Roger Overby, President

                                       14

<PAGE>

                            LIQUIDMETAL TECHNOLOGIES

                           COUNTERPART SIGNATURE PAGE
                                       TO
                    INVESTOR RIGHTS AND SHAREHOLDER AGREEMENT

     The undersigned hereby executes the Investor Rights and Shareholder
Agreement among Liquidmetal Technologies (the "Company") and certain
shareholders of the Company and hereby authorizes this signature page to be
attached as a counterpart of such document executed by the Company. The
undersigned hereby agrees to be bound by, and shall be entitled to the rights
and benefits of the terms and provisions of the Investor Rights and Shareholder
Agreement.

Dated:  April 18, 2001

                                 ALLOY VENTURES, LLP

                                 By:  Alloy Investors, Inc., its general partner

                                 By:               /s/ Roger Overby
                                    --------------------------------------------
                                    Roger Overby, President

                                       15

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