Document:

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                                                                     EXHIBIT 4.8

                            Z-TEL TECHNOLOGIES, INC.

              AMENDED AND RESTATED CERTIFICATE OF DESIGNATION OF 8%
            CONVERTIBLE PREFERRED STOCK, SERIES E, SETTING FORTH THE
            POWERS, PREFERENCES, RIGHTS, QUALIFICATIONS, LIMITATIONS
               AND RESTRICTIONS OF SUCH SERIES OF PREFERRED STOCK

                  Pursuant to Section 151 of the Delaware General Corporation
Law, Z-Tel Technologies, Inc., a Delaware corporation (the "Corporation"), DOES
HEREBY CERTIFY:

                  FIRST: That pursuant to the authority conferred upon the Board
of Directors of the Corporation by the Certificate of Incorporation of the
Corporation (the "Charter"), the Board of Directors of the Corporation on
October 17, 2000 duly adopted resolutions creating a series of Preferred Stock
designated as 8% Convertible Preferred Stock, Series E.

                  SECOND: Resolutions, setting forth a proposed Amended and
Restated Certificate of Designation of Series E Convertible Preferred Stock (the
"Amended Certificate"), declaring the Amended Certificate to be advisable and
directing that this Amended Certificate be considered by the stockholders of the
Corporation entitled to vote thereon, were duly adopted by unanimous written
consent of the Board of Directors of the Corporation.

                  THIRD: Thereafter, the Amended Certificate was approved at a
special meeting, duly called and convened in accordance with Section 222 of the
General Corporation Law of the State of Delaware on June 29, 2001, by vote in
respect thereof of the requisite percentage of the stockholders of the
Corporation entitled to vote thereon.

                  FOURTH: The Amended Certificate was duly adopted in accordance
with Section 242 of the General Corporation Law of the State of Delaware.

                  FIFTH: The Amended Certificate would amend and restate the
Corporation's Certificate of Designation of Series E Convertible Preferred Stock
in its entirety and replace it with the following:

Section 1.        Designation and Number; Ranking.

                  (a)      The shares of such series shall be designated as
Series E Convertible Preferred Stock (the "Series E Preferred"). The number of
authorized shares of the Series E Preferred shall be 6,250,000, which number may
be decreased (but not increased) by the Board of Directors without a vote of
stockholders; provided, however, that such number may not be decreased below the
number of then outstanding shares of Series E Preferred or shares of Series E
Preferred to be issued pursuant to the Stock Purchase Agreement (as defined
below).
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                  (b)      The Series E Preferred shall, with respect to
dividend rights and rights on liquidation, dissolution or winding up, rank on a
parity with the Series D Convertible Preferred Stock, par value of $0.01 per
share of the Corporation and prior to all other classes and series of Junior
Stock (as defined below) of the Corporation now or hereafter authorized
including, without limitation, the Common Stock (as defined below).

                  (c)      Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in Section 11.

Section 2.        Dividends and Distributions.

                  (a)      Series E Dividends. The holders of shares of Series E
Preferred, in preference to the holders of shares of Common Stock and of any
shares of other Junior Stock of the Corporation, shall be entitled to receive,
when, as and if declared by the Board of Directors, out of the assets of the
Corporation legally available therefor, cumulative cash dividends at an annual
rate per share of Series E Preferred equal to 8.00% of the Liquidation
Preference with respect to such share per annum ("Series E Dividend Rate"),
calculated on the basis of a 360-day year consisting of twelve 30-day months,
accruing and payable in equal quarterly payments, in immediately available
funds, on the last day of March, June, September and December or, if any such
day is not a Business Day, the next succeeding Business Day, in each year (each
such date being referred to herein as a "Quarterly Dividend Payment Date"),
commencing on the first quarterly dividend date to occur after the issue date of
such shares; provided that the dividend payable on the first Quarterly Dividend
Payment Date to occur after the original issue date shall be computed based on
the number of days prior to such date that the Series E Preferred has been
issued and outstanding; and provided further that, notwithstanding the foregoing
(i) no dividends shall be paid or payable in cash with respect to any share of
Series E Preferred until the earliest of the date (x) such share is redeemed in
accordance with the terms of the Series E Preferred and (y) payment is made to
the Series E Preferred pursuant to Section 7 and (ii) upon conversion of any
share of Series E Preferred, accrued dividends shall be treated as contemplated
by Section 8 or Section 10.

                  (b)      Dividend Arrearage. If as of any Quarterly Dividend
Payment Date there is a Dividend Arrearage (as hereinafter defined), an
additional dividend (the "Additional Dividend") shall accrue on each share of
the Series E Preferred for the period from such Quarterly Dividend Payment Date
through the earlier of (x) the date on which such Dividend Arrearage is paid in
full and (y) the next succeeding Quarterly Dividend Payment Date, in an amount
equal to the product of (i) the Series E Dividend Rate and (ii) the amount of
such Dividend Arrearage as of such Quarterly Dividend Payment Date. For purposes
of this Section 2(b), "Dividend Arrearage" shall mean, with respect to each
share of Series E Preferred, as of any Quarterly Dividend Payment Date, the
excess, if any of (i) the sum of all dividends theretofore accrued on such share
in accordance with Section 2(a) (including those accrued as of and including
such Quarterly Dividend Payment Date) plus all Additional Dividends, if any,
theretofore accrued on such share in accordance with this Section 2(b)
(including those accrued as of and including such
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Quarterly Dividend Payment Date), over (ii) all dividends actually paid with
respect to such share on or before such Quarterly Dividend Payment Date.

                  (c)      Accrual of Dividends. Dividends payable pursuant to
Section 2(a) shall begin to accrue and be cumulative from the Issue Date, and
shall accrue on a daily basis, in each case whether or not declared. Dividends
paid on the shares of Series E Preferred in an amount less than the total amount
of such dividends at the time accrued and payable on such shares shall be
allocated pro rata on a share-by-share basis among all such shares of Series E
Preferred at the time outstanding. The Board of Directors may fix a record date
for the determination of holders of shares of Series E Preferred entitled to
receive payment of a dividend declared thereon, which record date shall be no
more than 60 days or less than 10 days prior to the date fixed for the payment
thereof. Accumulated but unpaid dividends for any past quarterly dividend
periods may be declared and paid at any time, without reference to any regular
Quarterly Dividend Payment Date, to holders of record on such date, not more
than 60 nor less than 10 days preceding the payment date thereof, as may be
fixed by the Board of Directors.

                  (d)      Other Dividends. In addition to the dividends or
distributions on the Series E Preferred described in Section 2(a), in the event
that the Corporation shall declare a dividend or make any other distribution
(including, without limitation, in cash, in capital stock (which shall include,
without limitation, any options, warrants or other rights to acquire capital
stock) of the Corporation, whether or not pursuant to a shareholder rights plan,
"poison pill" or similar arrangement, or other property or assets)) to holders
of Common Stock, then the Board of Directors shall declare and the holder of
each share of Series E Preferred shall be entitled to receive a dividend or
distribution in an amount equal to the amount of such dividend or distribution
received by a holder of the number of shares of Common Stock for which such
share of Series E Preferred is convertible on the record date for such dividend
or distribution. Any such amount shall be paid to the holders of shares of
Series E Preferred at the same time such dividend or distribution is made to
holders of Common Stock.

Section 3.        Voting Rights.

                  In addition to any voting rights provided by law, the holders
of shares of Series E Preferred shall have the following voting rights:

                  (a)      So long as the Series E Preferred is outstanding,
each share of Series E Preferred shall entitle the holder thereof to vote, in
person or by proxy, at a special or annual meeting of stockholders, on all
matters voted on by holders of Common Stock voting together as a single class
with other shares entitled to vote thereon. With respect to any such vote, each
share of Series E Preferred shall entitle the holder thereof to cast that number
of votes per share as is equal to the number of votes that such holder would be
entitled to cast had such holder converted such share of Series E Preferred into
Common Stock on the record date for determining the stockholders of the
Corporation eligible to vote on any such matters.
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                  (b)      Protective Provisions. Unless the consent or approval
of a greater number of shares shall then be required by law, the affirmative
vote of the holders of at least 50% of the outstanding shares of Series E
Preferred, voting separately as a single class, shall be necessary to:

                           (i)      authorize, increase the authorized number of
shares of, or issue (including on conversion or exchange of any convertible or
exchangeable securities or by reclassification), any shares of any class or
classes of Senior Stock, Parity Stock, the Series E Preferred or Junior Stock,
if in the case of Junior Stock, such Stock has a mandatory or optional
redemption date and such dates could be earlier than the Mandatory Redemption
Date or the Optional Redemption Date;

                           (ii)     authorize, adopt or approve an amendment to
the Charter that would increase or decrease the par value of the shares of
Series E Preferred, or alter or change the powers, preferences or special rights
of the shares of Series E Preferred or the shares of any class of Parity Stock
or Senior Stock;

                           (iii)    amend or alter the Charter so as to affect
the shares of Series E Preferred adversely, including by granting any voting
right to any holder of notes, bonds, debentures or other debt obligations of the
Corporation, by reclassifying any capital stock into Senior Stock or Parity
Stock or by amending the terms of any class of Parity Stock or Senior Stock or
amending the terms covering redemption of any Junior Stock;

                           (iv)     authorize or issue any security convertible
into, exchangeable for or evidencing the right to purchase or otherwise receive
any shares of any class or classes of Senior Stock or Parity Stock;

                           (v)      effect any sale or merger of a Material
Subsidiary or effect a sale of assets of the Corporation in any transaction or
series of transactions having an aggregate fair market value of more than $50
million during any 365 day period;

                           (vi)     incur any indebtedness for borrowed money
other than indebtedness under receivable financing arrangements not to exceed
$50 million in the aggregate total if, after giving effect to the incurrence of
such indebtedness, the indebtedness for borrowed money of the Corporation
exceeds the Permissible Amount;

                           (vii)    take any action which would have the effect
of reducing stockholders equity as defined by GAAP by more than 10% during any
365 day period;

                           (viii)   issue shares of Common Stock or securities
convertible into Common Stock (other than issuances for cash or issuances
pursuant to a stock option plan approved by the Board of Directors of the
Corporation) if such issuance would increase, during any 365 day period, the
number of shares of Common Stock outstanding on a fully-diluted basis by more
than 20%;
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                                                                               5

                           (ix)     effect any Change of Control of the
Corporation in connection with which a vote of shareholders of the Corporation
is required; or

                           (x)      effect the voluntary liquidation,
dissolution, winding up, recapitalization or reorganization of the Corporation,
or the consolidation or merger of the Corporation with or into any other Person
(except a wholly-owned subsidiary of the Corporation), or the sale or other
distribution to another Person of all or substantially all of the assets of the
Corporation in each case not constituting a Change of Control in connection with
which a vote of shareholders of the Corporation is required; provided, however,
that no separate vote of the holders of the Series E Preferred as a class shall
be required under this clause (x) in the case of a recapitalization,
reorganization, consolidation or merger of the Corporation if:

                                    (A)      the resulting or surviving
corporation will have after such recapitalization, reorganization, consolidation
or merger no Senior Stock or Parity Stock either authorized or outstanding
(except such Senior Stock or Parity Stock of the Corporation as may have been
authorized or outstanding immediately preceding such consolidation or merger, or
such stock of the resulting or surviving corporation (having the same powers,
preferences and special rights of any such Senior Stock or Parity Stock) as may
be issued in exchange therefor),

                                    (B)      each holder of shares of Series E
Preferred immediately preceding such recapitalization, reorganization,
consolidation or merger will receive in exchange therefor the same number of
shares of stock, with the same preferences, rights and powers, of the resulting
or surviving corporation, and

                                    (C)      after such recapitalization,
reorganization, consolidation or merger the resulting or surviving corporation
shall not be in breach of any of the terms hereof.

                  (c)      Exercise of Voting Rights. The foregoing right of
holders of shares of Series E Preferred to take any action as provided in
Section 3(b) may be exercised at any annual meeting of stockholders or at a
special meeting of holders of shares of Series E Preferred held for such purpose
or at any adjournment thereof, or by the written consent, delivered to the
Secretary of the Corporation, of the holders of the minimum number of shares
required to take such action.

                  In connection with the exercise of such right (and unless such
right has been exercised by written consent of the minimum number of shares
required to take such action), the President of the Corporation may call, and
upon the written request of holders of record of at least 5% of the outstanding
shares of Series E Preferred, addressed to the Secretary of the Corporation at
the principal office of the Corporation, shall call, a special meeting of the
holders of Series E Preferred. Such meeting shall be held within 30 days after
delivery of such request to the Secretary, at the place and upon the notice
provided by law and in the by-laws of the Corporation for the holding of
meetings of stockholders.
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                                                                               6

                           (i)      At each meeting of stockholders at which the
holders of shares of Series E Preferred shall have the right, voting separately
as a single class, to take any action, the presence in person or by proxy of the
holders of record of one third of the total number of shares of Series E
Preferred then outstanding and entitled to vote on the matter shall be necessary
and sufficient to constitute a quorum of such holders. At any such meeting or at
any adjournment thereof:

                                    (A)      the absence of a quorum of the
holders of shares of Series E Preferred shall not prevent the election of
directors, and the absence of a quorum of the holders of shares of any other
class of series of capital stock shall not prevent the taking of any action as
provided in this Section 3; and

                                    (B)      in the absence of a quorum of the
holders of shares of Series E Preferred, a majority of the holders of such
shares present in person or by proxy shall have the power to adjourn the meeting
as to the actions to be taken by the holders of shares of Series E Preferred
from time to time and place to place without notice other than announcement at
the meeting until a quorum shall be present.

                  For taking of any action by the holders of shares of Series E
Preferred, voting separately as a class, each such holder shall have one vote
for each share of such stock standing in his name on the transfer books of the
Corporation as of any record date fixed for such purpose or, if no such date be
fixed, at the close of business on the Business Day next preceding the day on
which notice is given, or if notice is waived, at the close of business on the
Business Day next preceding the day on which the meeting is held; provided,
however, that shares of Series E Preferred held by the Corporation or any
Affiliate of the Corporation shall not be deemed to be outstanding for purposes
of taking any action as provided in this Section 3.

Section 4.        Certain Restrictions.

                  (a)      No Dividends. Whenever quarterly dividends payable on
shares of Series E Preferred as provided in Section 2 are not paid in full in
cash, at such time and thereafter until all unpaid dividends payable, whether or
not declared, on the outstanding shares of Series E Preferred shall have been
paid in full in cash or declared and set apart in cash for payment, or whenever
the Corporation shall not have converted or exchanged shares of Series E
Preferred at a time required by Section 8 or 10, at such time and thereafter
until all conversion and exchange obligations provided in Section 8 or 10 that
have come due shall have been satisfied the Corporation shall not: (A) declare
or pay dividends, or make any other distributions, on any shares of Junior Stock
or (B) declare or pay dividends, or make any other distributions, on any shares
of Parity Stock, except (i) dividends or distributions paid ratably on the
Series E Preferred and all Parity Stock on which dividends are payable or in
arrears, in proportion to the total amounts to which the holders of all shares
of the Series E Preferred and such Parity Stock are then entitled and (ii)
dividends paid on the Series D Convertible Preferred Stock pursuant to the
Certificate of Designation of the Series D Convertible Preferred Stock dated
July 13, 2000 so long as dividends on the Series E Preferred are not payable at
that time.
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                  (b)      No Redemption. Whenever dividends payable on shares
of Series E Preferred as provided in Section 2(a) are not paid in full in cash,
at such time and thereafter until all unpaid dividends payable, whether or not
declared, on the outstanding shares of Series E Preferred shall have been paid
in full in cash or declared and set apart in cash for payment, or whenever the
Corporation shall not have converted or exchanged shares of Series E Preferred
at a time required by Section 8 or 10, at such time and thereafter until all
conversion and exchange obligations provided in Section 8 or 10 that have come
due shall have been satisfied, the Corporation shall not redeem, purchase or
otherwise acquire for consideration any shares of Junior Stock or Parity Stock;
provided, however, that (A) the Corporation may accept shares of any Senior
Stock, Parity Stock or Junior Stock for conversion into Junior Stock and (B) the
Corporation may at any time redeem, purchase or otherwise acquire shares of any
Parity Stock pursuant to any mandatory redemption, put, sinking fund or other
similar obligation contained in such Parity Stock, pro rata with the Series E
Preferred in proportion to the total amount then required to be applied by the
Corporation to redeem, repurchase, convert, exchange or otherwise acquire shares
of Series E Preferred and shares of such Parity Stock.

                  (c)      Subsidiary Action. The Corporation shall not permit
any Subsidiary of the Corporation, or cause any other Person, to purchase or
otherwise acquire for consideration any shares of capital stock of the
Corporation unless the Corporation could, pursuant to Section 4(b), purchase
such shares at such time and in such manner; provided that this provision shall
not prohibit sales of shares of capital stock by the Corporation to any third
party.

Section 5.        Redemption.

                  (a)      Optional Redemption. Except as otherwise set forth in
this Section 5, the Corporation shall not have any right to redeem any shares of
Series E Preferred prior to the fifth anniversary of the Effective Date. On and
after the fifth anniversary of the Effective Date, or during a Change of Control
Window, the Corporation shall have the right, at its sole option and election,
to redeem the shares of Series E Preferred, in whole but not in part, on not
less than 30 days notice of the date of redemption (any such date an "Optional
Redemption Date") at a price per share (the "Optional Redemption Price") equal
to the applicable percentage set forth below of the sum of the (i) Liquidation
Preference per share and (ii) any accrued and unpaid dividends thereon
(including Additional Dividends), whether or not declared or payable, to the
applicable Optional Redemption Date, in immediately available funds.
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<TABLE>
<CAPTION>
IF REDEEMED ON OR AFTER THE           AND REDEEMED BEFORE THE
ANNIVERSARY OF THE EFFECTIVE     ANNIVERSARY OF THE EFFECTIVE DATE
     DATE OCCURRING IN                     OCCURRING IN                   APPLICABLE PERCENTAGE
----------------------------     ---------------------------------        ---------------------
<S>                              <C>                                      <C>
           2006                                2007                                102%
           2007                          October 19, 2008                          101%
</TABLE>

                  (b)      Mandatory Redemption. To the extent permitted by law,
the Corporation shall redeem, on the eighth anniversary of the Original Issue
Date (or, if such day is not a Business Day, on the first Business Day
thereafter) (the "Mandatory Redemption Date"), all remaining shares of Series E
Preferred then outstanding, for an amount equal to the Liquidation Preference
for each share outstanding, plus an amount in cash equal to all accrued but
unpaid dividends thereon (including Additional Dividends) to the Mandatory
Redemption Date (the "Mandatory Redemption Price"), in immediately available
funds. Prior to authorizing or making such redemption with respect to the Series
E Preferred, the Corporation, by resolution of the Board of Directors shall, to
the extent of funds legally available therefor, declare a dividend on the Series
E Preferred payable on the Mandatory Redemption Date in an amount equal to any
accrued and unpaid dividends on the Series E Preferred as of such date
(including Additional Dividends) and, if the Corporation does not have
sufficient legally available funds to declare and pay all dividends accrued at
the time of such redemption, any remaining accrued and unpaid dividends
(including Additional Dividends) shall be added to the Mandatory Redemption
Price. After paying any accrued and unpaid dividends pursuant to the foregoing
sentence, if the funds of the Corporation legally available for redemption of
shares of the Series E Preferred then required to be redeemed are insufficient
to redeem the total number of such shares then outstanding, those funds which
are legally available shall be used to redeem the maximum possible number of
shares of the Series E Preferred, which shares to be redeemed shall be allocated
pro rata among the holders of the Series E Preferred based on the number of
shares of Series E Preferred held by such holders. At any time and from time to
time thereafter, when additional funds of the Corporation are legally available
to discharge its obligation to redeem all of the outstanding shares of Series E
Preferred required to be redeemed pursuant to this Section (the "Mandatory
Redemption Obligation"), such funds shall be immediately used to discharge such
Mandatory Redemption Obligation until the balance of such shares have been
redeemed. If and so long as the Mandatory Redemption Obligation shall not be
fully discharged, dividends on any remaining outstanding shares of Series E
Preferred shall continue to accrue and be added to the dividend payable pursuant
to the second preceding sentence.

                  (c)      Change of Control. If, on or prior to the fifth
anniversary of the Effective Date, (i) a Change of Control occurs, a holder of
Series E Preferred may require the Corporation to redeem the holder's shares of
Series E Preferred, in whole but not in part (the "Holder's Put Right") or (ii)
the corporation wishes to effect a Change of Control in connection with which a
vote of the shareholders is required and the holders of a majority of the shares
of Series E Preferred notify the Corporation that they intend to exercise their
right under Section 3(b)(ix) to vote against a proposed transaction that
<PAGE>   9

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would result in a Change of Control, the Corporation may require the holders of
Series E Preferred to surrender all but not less than all their shares of Series
E Preferred for redemption (the "Company Call Right"), in either case at a price
per share (the "Control Redemption Price") equal to 125% of the sum of (A) the
Liquidation Preference plus (B) an amount per share equal to all accrued and
unpaid dividends thereon (including Additional Dividends), whether or not
declared or payable, in immediately available funds. (The Control Redemption
Price, Optional Redemption Price and Mandatory Redemption Price are sometimes
referred to as the "Applicable Redemption Price," which Price in all cases,
includes full cumulative dividends accrued and unpaid (including Additional
Dividends) on the shares of Series E Preferred being redeemed. The Control
Redemption Date (as defined below), Optional Redemption Date, and Mandatory
Redemption Date are sometimes referred to as the "Applicable Redemption Date.")

                  (d)      Notice.

                           (i)      The Corporation will provide notice to
holders of record of the Series E Preferred (x) of any redemption pursuant to
Section 5(a) or 5(b) not less than 30 nor more than 60 days prior to the date
fixed for such redemption (a "Redemption Notice") and (y) of any Change of
Control within 30 days of such Change of Control, provided that in the case of a
Change of Control requiring a shareholder vote, the Corporation shall provide
such notice at least 30 days prior to the date fixed for the meeting of holders
of Series E Preferred called to vote on that proposed transaction (a "Change of
Control Notice"). Any Notice provided pursuant to this Section 8(d) shall be
provided by first-class mail postage prepaid, to each holder of record of the
Series E Preferred, at such holder's address as it appears on the stock transfer
books of the Corporation.

                           (ii)     Each Redemption Notice shall state, as
appropriate, (x) the Applicable Redemption Date; (y) the number of shares of
Series E Preferred to be redeemed and, if fewer than all the shares held by any
holder are to be redeemed, the number of such shares to be redeemed from such
holder; and (z) the Optional Redemption Price or Mandatory Redemption Price.

                           (iii)    Each Change of Control Notice shall state
that: (v) the Corporation proposes to effect a Change of Control in connection
with which a vote of shareholders is required and the holders of the Series E
Preferred have the right to approve such transaction; (w) if holders of 50% or
more of the outstanding shares of Series E Preferred notify the Corporation that
they will not approve such transaction within 20 days of the receipt of the
Change of Control Notice, the Corporation may redeem all but not less than all
the shares of Series E Preferred; (x) if a Change of Control occurs, each holder
has the right to require the Company to redeem its shares of Series E Preferred
and any shares of Series E Preferred not tendered for redemption will remain
outstanding and continue to accrue dividends (including Additional Dividends);
(y) the Control Redemption Price; and (z) the date on which the Corporation must
redeem the shares upon exercise of the Holder's Put Right or the Company Call
Right, whichever is applicable (in either case, the "Control Redemption Date"),
which shall be not later than
<PAGE>   10

                                                                              10

30 days from the date the Change of Control Notice is mailed. Within 20 days of
receipt of the Change of Control Notice notifying that the Corporation proposes
to effect a Change of Control in connection with which a shareholder vote is
required, each holder of Series E Preferred shall notify the Corporation as to
whether it will vote to approve or vote against such transaction. If it states
it will approve such transaction, then that holder of Series E Preferred agrees
to vote in favor of the transaction.

                           (iv)     In addition, each Redemption Notice and
Change of Control Notice shall state, as appropriate, (v) the place or places
where certificates for such shares are to be surrendered for redemption; (w) the
amount of full cumulative dividends per share of Series E Preferred to be
redeemed (including Additional Dividends) up to but excluding the Applicable
Redemption Date, and that dividends on shares of Series E Preferred to be
redeemed will cease to accrue on such Redemption Date unless the Corporation
shall default in payment of the Applicable Redemption Price; (x) the name and
location of any bank or trust company with which the Corporation will deposit
redemption funds pursuant to subsection (f) below; (y) the then-effective
Conversion Price; and (z) that the right of holders to convert shares of Series
E Preferred to be redeemed will terminate at the close of business on the
Business Day next preceding the date fixed for redemption (unless the
Corporation shall default in the payment of the Applicable Redemption Price).

Any Notice that is mailed pursuant to clause (i) shall be conclusively presumed
to have been duly given, whether or not the holder of shares of Series E
Preferred receives such notice, and failure to give such notice by mail, or any
defect in such notice, to the holders of any shares designated for redemption
shall not affect the validity of the proceedings for the redemption of any other
shares of Series E Preferred.

                  (e)      Mechanics of Redemption. Upon surrender in accordance
with any notice referred to in subsection (d) above of the certificate for any
shares redeemed pursuant to Section 8(a), (b) or (c) (duly endorsed or
accompanied by appropriate instruments of transfer if so required by the
Corporation), the holders of record of such shares shall be entitled to receive
the Applicable Redemption Price, without interest, up to but excluding such
Redemption Date out of funds legally available therefor. If fewer than all the
shares represented by any such certificate are redeemed, a new certificate
representing the unredeemed shares shall be issued without cost to the holder
thereof.

                  (f)      Redemption Funds. On the date of any redemption being
made pursuant to this Section, the Corporation shall, and at any time after
mailing the Redemption Notice or Change of Control Notice and before the
Applicable Redemption Date the Corporation may, deposit for the benefit of the
holders of shares of Series E Preferred to be redeemed the funds necessary for
such redemption with a bank or trust company having a capital and surplus of at
least $1 billion, with instructions to such bank or trust company to pay the
full redemption as provided herein to the holders of shares of Series E
Preferred upon surrender of certificates for such shares; provided, however,
that the making of such deposit shall not release the Corporation from any of
its obligations hereunder. Any moneys so deposited by the Corporation and
unclaimed at the end of two
<PAGE>   11

                                                                              11

years from the Applicable Redemption Date shall revert to the general funds of
the Corporation and, upon demand, such bank or trust company shall pay over to
the Corporation such unclaimed amounts and thereupon such bank or trust company
shall be relieved of all responsibility in respect thereof and any holder of
shares of Series E Preferred so redeemed shall look only to the Corporation for
the payment of the full redemption amounts, as provided herein.

                  (g)      Rights After Redemption. Notice of redemption having
been given as provided in Section 8(d), upon the deposit pursuant to subsection
(f) of the full redemption amounts as provided herein in respect of all shares
of Series E Preferred then to be redeemed, notwithstanding that any certificates
for such shares shall not have been surrendered in accordance with subsection
(e), from and after the Applicable Redemption Date: (i) the shares represented
thereby shall no longer be deemed outstanding, (ii) the right to receive
dividends thereon shall cease to accrue, and (iii) all rights of the holders of
such shares of Series E Preferred shall cease and terminate, excepting only the
right to receive the full redemption amounts as provided herein without interest
thereon. If the funds deposited are not sufficient for redemption of the shares
of the Series E Preferred that were to be redeemed, then no certificates
evidencing such shares shall be deemed surrendered and such shares shall remain
outstanding and the rights of holders of shares of Series E Preferred shall
continue to be those of holders of shares of the Series E Preferred.

Section  6. Reacquired Shares.

                  Any shares of Series E Preferred converted, exchanged,
redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares of Series E Preferred shall upon their cancellation become
authorized but unissued shares of preferred stock, par value $.01 per share, of
the Corporation and, upon the filing of an appropriate Certificate of
Designation with the Secretary of State of the State of Delaware, may be
reissued as part of another series of preferred stock, par value $.01 per share,
of the Corporation subject to the conditions or restrictions on issuance set
forth therein, but in any event may not be reissued as shares of Series E
Preferred unless all shares of the Series E Preferred issued on the Issue Date
shall have already been redeemed, converted or exchanged.

Section 7.        Liquidation, Dissolution or Winding Up.

                  (a)      Effect of Liquidation. If the Corporation shall
commence a voluntary case under the United States bankruptcy laws or any
applicable bankruptcy, insolvency or similar law of any other country, or
consent to the entry of an order for relief in an involuntary case under any
such law or to the appointment of a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or make an assignment for the benefit of its
creditors, or admit in writing its inability to pay its debts generally as they
become due (any such event, a "Voluntary Liquidation Event"), or if a decree or
order for relief in respect of the Corporation shall be entered by a court
having jurisdiction in the
<PAGE>   12

                                                                              12

premises in an involuntary case under the United States bankruptcy laws or any
applicable bankruptcy, insolvency or similar law of any other country, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Corporation or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and on
account of any such event the Corporation shall liquidate, dissolve or wind up,
or if the Corporation shall otherwise liquidate, dissolve or wind up, no
distribution shall be made:

                           (i)      to the holders of shares of Junior Stock
unless, prior thereto, the holders of shares of Series E Preferred, subject to
Section 8, shall have received the greater of (A) (1) if a Voluntary Liquidation
Event shall have occurred, the Optional Redemption Price with respect to each
share (or if such event is a Change of Control, the amount payable under Section
5(c) with respect to such share) and (2) if a Voluntary Liquidation Event shall
not have occurred, the Liquidation Preference, plus all accrued and unpaid
dividends, whether or not declared or currently payable, to the date of
distribution, with respect to each share and (B) the amount per share (subject
to adjustment to reflect stock splits, stock dividends, stock combinations,
recapitalizations and like occurrences) for each outstanding share of Series E
Preferred as if the holders had converted such shares into shares of Common
Stock immediately prior to the liquidation, dissolution or winding up, or

                           (ii)     to the holders of shares of Parity Stock,
except distributions made ratably on the Series E Preferred and all other Parity
Stock in proportion to the total amounts to which the holders of all shares of
the Series E Preferred and other Parity Stock are entitled upon such
liquidation, dissolution or winding up;

provided that any distributions referred to in clauses (i) and (ii) shall also
include all amounts payable to the holders of shares of Series E Preferred under
this Section 7 or Section 5(c) as a result of a Change of Control.

Nothing in this section shall affect the rights of holders of shares of Series E
Preferred under Section 3 with respect to a Voluntary Liquidation Event.

                  (b)      Voluntary Liquidation. For purposes of this Section
7, the holders of a majority of the outstanding shares of the Series E Preferred
may elect to have treated as a Voluntary Liquidation Event the consolidation or
merger of the Corporation with or into any other corporation or the sale or
other transfer in a single transaction or a series of related transactions of
all or substantially all of the assets of the Corporation, or any other
reorganization or business combination of the Corporation or a Change of
Control.

Section 8.        Voluntary Conversion.

                  (a)      Conversion Right. Any holder of Series E Preferred
shall have the right, at its option, at any time and from time to time, to
convert, subject to the terms and provisions of this Section 8, any or all of
such holder's shares of Series E Preferred into such number of fully paid and
non-assessable shares of Common Stock as is equal, subject to Section 8(f), to
the product of the number of shares of Series E Preferred being
<PAGE>   13

                                                                              13

so converted multiplied by the quotient of (i) the sum of the Liquidation
Preference and (x) in the event of a conversion during a Change of Control
Window, an amount equal to the Additional Amount, or (y) in the event of a
conversion other than during a Change of Control Window, all dividends accrued
and unpaid (including Additional Dividends) on the Series E Preferred so
converted to the date of conversion divided by (ii) the Conversion Price (as
defined below) then in effect, except that with respect to any shares which
shall be called for exchange or redemption, such right shall terminate at the
close of business on the date of exchange or redemption for such shares, unless
in any such case the Corporation shall default in performance or payment due
upon exchange or redemption thereof. The Conversion Price shall be $12.00,
subject to adjustment as set forth in Section 8(c). Such conversion right shall
be exercised by the surrender of the shares to be converted to the Corporation
at any time during usual business hours at its principal place of business to be
maintained by it, accompanied by written notice that the holder elects to
convert such Shares and, subject to Section 8(j), specifying the name or names
(with address) in which a certificate or certificates for shares of Common Stock
are to be issued and (if so required by the Corporation) by a written instrument
or instruments of transfer in form reasonably satisfactory to the Corporation
duly executed by the holder or its duly authorized legal representative and
transfer tax stamps or funds therefor, if required pursuant to Section 8(j). All
shares of Series E Preferred surrendered for conversion shall be delivered to
the Corporation for cancellation and canceled by it and no shares of Series E
Preferred shall be issued in lieu thereof.

                  (b)      Mechanics of Conversion. As promptly as practicable
after the surrender, as herein provided, of any shares of Series E Preferred for
conversion pursuant to Section 8(a), the Corporation shall deliver to or upon
the written order of the holder of such shares so surrendered a certificate or
certificates representing the number of fully paid and non-assessable shares of
Common Stock into which such shares of Series E Preferred have been converted in
accordance with the provisions of this Section 8. Subject to the following
provisions of this paragraph and of Section 8(c), such conversion shall be
deemed to have been made immediately prior to the close of business on the date
that such shares of Series E Preferred shall have been surrendered in
satisfactory form for conversion, and the Person or Persons entitled to receive
the Common Stock deliverable upon conversion of such shares of Series E
Preferred shall be treated for all purposes as having become the record holder
or holders of such Common Stock at such time, and such conversion shall be at
the Conversion Price in effect at such time; provided, however, that no
surrender shall be effective to constitute the Person or Persons entitled to
receive the Common Stock deliverable upon such conversion as the record holder
or holders of such Common Stock while the share transfer books of the
Corporation shall be closed (but not for any period in excess of five days), but
such surrender shall be effective to constitute the Person or Persons entitled
to receive such Common Stock as the record holder or holders thereof for all
purposes immediately prior to the close of business on the next succeeding day
on which such share transfer books are open, and such conversion shall be deemed
to have been made at, and shall be made at the Conversion Price in effect at,
such time on such next succeeding day.
<PAGE>   14

                                                                              14

                  (c)      Adjustment of Conversion Price. The Conversion Price
(and the price at which a share of Common Stock is valued pursuant to Section
10) shall be subject to adjustment as follows:

                           (i)      In case the Corporation shall at any time or
from time to time after the Issue Date (A) pay a dividend or make a distribution
(other than a dividend or distribution paid or made to holders of shares of
Series E Preferred in the manner provided in Section 2(d)) on the outstanding
shares of Common Stock in capital stock (which, for purposes of this Section
8(c) shall include, without limitation, any options, warrants or other rights to
acquire capital stock) of the Corporation, (B) subdivide the outstanding shares
of Common Stock into a larger number of shares, (C) combine the outstanding
shares of Common Stock into a smaller number of shares, (D) issue any shares of
its capital stock in a reclassification of the Common Stock or (E) pay a
dividend or make a distribution (other than a dividend or distribution paid or
made to holders of shares of Series E Preferred in the manner provided in
Section 2(d)) on the outstanding shares of Common Stock in securities of the
Corporation pursuant to a shareholder rights plan, "poison pill" or similar
arrangement,

then, and in each such case, the Conversion Price in effect immediately prior to
such event shall be adjusted (and any other appropriate actions shall be taken
by the Corporation) so that the holder of any share of Series E Preferred
thereafter surrendered for conversion shall be entitled to receive the number of
shares of Common Stock or other securities of the Corporation that such holder
would have owned or would have been entitled to receive upon or by reason of any
of the events described above, had such share of Series E Preferred been
converted immediately prior to the occurrence of such event. An adjustment made
pursuant to this Section 8(c)(i) shall become effective retroactively (A) in the
case of any such dividend or distribution, to a date immediately following the
close of business on the record date for the determination of holders of Common
Stock entitled to receive such dividend or distribution or (B) in the case of
any such subdivision, combination or reclassification, to the close of business
on the day upon which such corporate action becomes effective.

                           (ii)     In case the Corporation shall at any time or
from time to time after the Issue Date issue shares of Common Stock (or
securities convertible into or exchangeable for Common Stock, or any options,
warrants or other rights to acquire shares of Common Stock) for a consideration
per share less than either the Conversion Price or the Current Market Price per
share of Common Stock then in effect at the record date or issuance date, as the
case may be (the "Date"), referred to in the following sentence (treating the
price per share of any security convertible or exchangeable or exercisable into
Common Stock as equal to (A) the sum of the price for such security convertible,
exchangeable or exercisable into Common Stock plus any additional consideration
payable (without regard to any anti-dilution adjustments) upon the conversion,
exchange or exercise of such security into Common Stock divided by (B) the
number of shares of Common Stock initially underlying such convertible,
exchangeable or exercisable security),
<PAGE>   15

                                                                              15

then, and in each such case, the Conversion Price then in effect shall be
adjusted by dividing the Conversion Price in effect on the day immediately prior
to the Date by a fraction (x) the numerator of which shall be the sum of the
number of shares of Common Stock outstanding on the Date plus the number of
additional shares of Common Stock issued or to be issued (or the maximum number
into which such convertible or exchangeable securities initially may convert or
exchange or for which such options, warrants or other rights initially may be
exercised) and (y) the denominator of which shall be the sum of the number of
shares of Common Stock outstanding on the Date plus the number of shares of
Common Stock which the aggregate consideration for the total number of such
additional shares of Common Stock so issued or to be issued upon the conversion,
exchange or exercise of such convertible or exchangeable securities or options,
warrants or other rights (plus the aggregate amount of any additional
consideration initially payable upon such conversion, exchange or exercise of
such security) would purchase at the greater of the Conversion Price or Current
Market Price per share of Common Stock on the Date, as the case may be.

Such adjustment shall be made whenever such shares, securities, options,
warrants or other rights are issued, and shall, in each case, become effective,
in each case, retroactively to a date immediately following the close of
business (1) in the case of issuance to stockholders of the Corporation, as
such, on the record date for the determination of stockholders entitled to
receive such shares, securities, options, warrants or other rights and (2) in
all other cases, on the date ("issuance date") of such issuance; provided that:

                                    (A)      the determination as to whether an
adjustment is required to be made pursuant to this Section 8(d)(ii) shall be
made upon the issuance of such shares or such convertible or exchangeable
securities, options, warrants or other rights;

                                    (B)      if any convertible or exchangeable
securities, options, warrants or other rights (or any portions thereof) which
shall have given rise to an adjustment pursuant to this Section 8(d)(ii) shall
have expired or terminated without the exercise thereof and/or if by reason of
the terms of such convertible or exchangeable securities, options, warrants or
other rights there shall have been an increase or increases, with the passage of
time or otherwise, in the price payable upon the exercise or conversion thereof,
then the Conversion Price hereunder shall be readjusted (but to no greater
extent than originally adjusted) on the basis of (1) eliminating from the
computation any additional shares of Common Stock corresponding to such
convertible or exchangeable securities, options, warrants or other rights as
shall have expired or terminated, (2) treating the additional shares of Common
Stock, if any, actually issued or issuable pursuant to the previous exercise of
such convertible or exchangeable securities, options, warrants or other rights
as having been issued for the consideration actually received and receivable
therefor and (3) treating any of such convertible or exchangeable securities,
options, warrants or other rights which remain outstanding as being subject to
exercise or conversion on the basis of such exercise or conversion price as
shall be in effect at this time; and
<PAGE>   16

                                                                              16

                                    (C)      no adjustment in the Conversion
Price shall be made pursuant to this Section 8(d)(ii) as a result of any
issuance of securities by the Corporation in respect of which an adjustment to
the Conversion Price is made pursuant to Section 8(c)(i).

                           (iii)    In case the Corporation shall at any time or
from time to time after the Issue Date distribute to all holders of shares of
its Common Stock (including any such distribution made in connection with a
consolidation or merger in which the Corporation is the resulting or surviving
corporation and the Common Stock is not changed or exchanged) cash, evidences of
indebtedness of the Corporation or another issuer, securities of the Corporation
or another issuer or other assets (excluding (A) dividends or distributions paid
or made to holders of shares of Series E Preferred in the manner provided in
Section 2(d), and (B) dividends payable in shares of Common Stock for which
adjustment is made under Section 8(c)(i)) or rights or warrants to subscribe for
or purchase securities of the Corporation (excluding those referred to in
Section 8(c)(ii) or those in respect of which an adjustment in the Conversion
Price is made pursuant to Section 8(c)(i) or (ii)), then, and in each such case,
the Conversion Price then in effect shall be adjusted by dividing the Conversion
Price in effect immediately prior to the date of such distribution by a fraction
(x) the numerator of which shall be the Market Price of the Common Stock on the
record date referred to below and (y) the denominator of which shall be such
Market Price of the Common Stock less the then Fair Market Value (as determined
by the Board of Directors of the Corporation) of the portion of the cash,
evidences of indebtedness, securities or other assets so distributed or of such
subscription rights or warrants applicable to one share of Common Stock (but
such denominator not to be less than one). Such adjustment shall be made
whenever any such distribution is made and shall become effective retroactively
to a date immediately following the close of business on the record date for the
determination of stockholders entitled to receive such distribution.

                           (iv)     In the case the Corporation, at any time or
from time to time after the Issue Date, shall take any action affecting its
Common Stock similar to or having an effect similar to any of the actions
described in any of Section 8(c)(i) through Section 8(c)(iii), inclusive, or
Section 8(g) (but not including any action described in any such Section) and
the Board of Directors of the Corporation in good faith determines that it would
be equitable in the circumstances to adjust the Conversion Price as a result of
such action, then, and in each such case, the Conversion Price shall be adjusted
in such manner and at such time as the Board of Directors of the Corporation in
good faith determines would be equitable in the circumstances (such
determination to be evidenced in a resolution, a certified copy of which shall
be mailed to the holders of the Series E Preferred).

                           (v)      Notwithstanding anything herein to the
contrary, no adjustment under this Section 8(c) need be made to the Conversion
Price unless such adjustment would require an increase or decrease of at least
1% of the Conversion Price then in effect. Any lesser adjustment shall be
carried forward and shall be made at the time of and together with the next
subsequent adjustment, which, together with any adjustment or adjustments so
carried forward, shall amount to an increase or decrease of
<PAGE>   17

                                                                              17

at least 1% of such Conversion Price. Any adjustment to the Conversion Price
carried forward and not theretofore made shall be made immediately prior to the
conversion of any shares of Series E Preferred pursuant hereto.

                           (vi)     Notwithstanding anything herein to the
contrary, no adjustment under this Section 8(c)(ii) or (iii) shall be made upon
(A) the grant of options to employees or directors of the Corporation permitted
under benefit plans in existence on the Issue Date pursuant to the terms of such
plans in effect on the Issue Date, (B) the issuance of any Common Stock upon
conversion of the Series E Preferred in accordance with the terms of its
Certificate of Designation, (C) the issuance of any Common Stock upon conversion
of the Series D Preferred in accordance with the terms of its Certificate of
Designation in effect on the Issue Date and (D) the issuance of any Common Stock
upon conversion or exercise of any convertible securities outstanding on the
Issue Date in accordance with terms of such security in effect on the Issue
Date.

                  (d)      Effect of Setting Record Date. If the Corporation
shall take a record of the holders of its Common Stock for the purpose of
entitling them to receive a dividend or other distribution, and shall thereafter
and before the distribution to stockholders thereof legally abandon its plan to
pay or deliver such dividend or distribution, then thereafter no adjustment in
the Conversion Price then in effect shall be required by reason of the taking of
such record.

                  (e)      Certificate of Adjustment. Upon any increase or
decrease in the Conversion Price, then, and in each such case, the Corporation
promptly shall deliver to each registered holder of Series E Preferred at least
five Business Days prior to effecting any of the foregoing transactions a
certificate, signed by the President or a Vice-President and by the Treasurer or
an Assistant Treasurer or the Secretary or an Assistant Secretary of the
Corporation, setting forth in reasonable detail the event requiring the
adjustment and specifying, to the extent feasible, (x) the method by which such
adjustment was calculated and (y) the increased or decreased Conversion Price
then in effect following such adjustment.

                  (f)      No Fractional Shares. No fractional shares or scrip
representing fractional shares shall be issued upon the conversion of any shares
of Series E Preferred. If more than one share of Series E Preferred shall be
surrendered for conversion at one time by the same holder, the number of full
shares of Common Stock issuable upon conversion thereof shall be computed on the
basis of the aggregate Liquidation Preference (plus accrued and unpaid
dividends, including any Additional Dividends) of the shares of Series E
Preferred so surrendered. If the conversion of any share or shares of Series E
Preferred results in a fraction, an amount equal to such fraction multiplied by
the Current Market Price of the Common Stock on the Business Day preceding the
day of conversion shall be paid to such holder in cash by the Corporation.

                  (g)      Transactions. In case of any capital reorganization
or reclassification or other change of outstanding shares of Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to par value), or in case of any consolidation or merger of the
Corporation with or into another Person
<PAGE>   18

                                                                              18

(other than a consolidation or merger in which the Corporation is the resulting
or surviving Person and which does not result in any reclassification or change
of outstanding Common Stock) (any of the foregoing, a "Transaction"), the
Corporation, or such successor or purchasing Person, as the case may be, shall
execute and deliver to each holder of Series E Preferred at least 10 Business
Days prior to effecting any of the foregoing Transactions a certificate that the
holder of each share of Series E Preferred then outstanding shall have the right
after the Transaction to convert such share of Series E Preferred into the kind
and amount of shares of stock or other securities (of the Corporation or another
issuer) or property or cash receivable upon such Transaction by a holder of the
number of shares of Common Stock into which such share of Series E Preferred
could have been converted immediately prior to such Transaction. Such
certificate shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 8. If, in the
case of any such Transaction, the stock, other securities, cash or property
receivable thereupon by a holder of Common Stock includes shares of stock or
other securities of a Person other than the successor or purchasing Person and
other than the Corporation, which controls or is controlled by the successor or
purchasing Person or which, in connection with such Transaction, issues stock,
securities, other property or cash to holders of Common Stock, then such
certificate also shall be executed by such Person, and such Person shall, in
such certificate, specifically acknowledge the obligations of such successor or
purchasing Person and acknowledge its obligations to issue such stock,
securities, other property or cash to the holders of Series E Preferred upon
conversion of the shares of Series E Preferred as provided above. The provisions
of this Section 8(h) and any equivalent thereof in any such certificate
similarly shall apply to successive Transactions.

                  (h)      Notice. In case at any time or from time to time:

                           (i)      the Corporation shall declare a dividend (or
any other distribution) on its Common Stock;

                           (ii)     the Corporation shall authorize the granting
to the holders of its Common Stock of rights or warrants to subscribe for or
purchase any shares of stock of any class or of any other rights or warrants;

                           (iii)    there shall be any reclassification of the
Common Stock, or any consolidation or merger to which the Corporation is a party
and for which approval of any shareholders of the Corporation is required, or
any sale or other disposition of all or substantially all of the assets of the
Corporation; or

                           (iv)     there shall be any voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;

then the Corporation shall mail to each holder of shares of Series E Preferred
at such holder's address as it appears on the transfer books of the Corporation,
as promptly as possible but in any event at least 10 days prior to the
applicable date hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend, distribution or rights
or warrants or, if a record is not to be taken, the date as of
<PAGE>   19

                                                                              19

which the holders of Common Stock of record to be entitled to such dividend,
distribution or rights are to be determined, or (y) the date on which such
reclassification, consolidation, merger, sale, conveyance, dissolution,
liquidation or winding up is expected to become effective. Such notice also
shall specify the date as of which it is expected that holders of Common Stock
of record shall be entitled to exchange their Common Stock for shares of stock
or other securities or property or cash deliverable upon such reclassification,
consolidation, merger, sale, conveyance, dissolution, liquidation or winding up.

                  (i)      Reservation of Common Stock. The Corporation shall at
all times reserve and keep available for issuance upon the conversion of the
Series E Preferred pursuant to Section 8(a) or 10(a), such number of its
authorized but unissued shares of Common Stock as will from time to time be
sufficient to permit the conversion of all outstanding shares of Series E
Preferred, and shall take all action required to increase the authorized number
of shares of Common Stock if at any time there shall be insufficient authorized
but unissued shares of Common Stock to permit such reservation or to permit the
conversion of all outstanding shares of Series E Preferred.

                  (j)      Issuance of Certificates. The issuance or delivery of
certificates for Common Stock upon the conversion of shares of Series E
Preferred pursuant to Section 8(a) or 10(a) shall be made without charge to the
converting holder of shares of Series E Preferred for such certificates or for
any tax in respect of the issuance or delivery of such certificates or the
securities represented thereby, and such certificates shall be issued or
delivered in the respective names of, or (subject to compliance with the
applicable provisions of federal and state securities laws) in such names as may
be directed by, the holders of the shares of Series E Preferred converted;
provided, however, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the holder of the
shares of Series E Preferred converted, and the Corporation shall not be
required to issue or deliver such certificate unless or until the Person or
Persons requesting the issuance or delivery thereof shall have paid to the
Corporation the amount of such tax or shall have established to the reasonable
satisfaction of the Corporation that such tax has been paid.

Section 9.        Certain Remedies.

                  Any registered holder of Series E Preferred shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Certificate of Designation and to enforce specifically the terms and provisions
of this Certificate of Designation in any court of the United States or any
state thereof having jurisdiction, this being in addition to any other remedy to
which such holder may be entitled at law or in equity.

Section 10.       Conversion at the Option of the Corporation.

                  (a)      Time of Conversion. At any time after the fifth
anniversary of the Effective Date, if for 20 consecutive Trading Days beginning
on or after such
<PAGE>   20

                                                                              20

anniversary, the Market Price of the Common Stock at the end of each such
Trading Day during such period exceeds 250% of the Conversion Price in effect on
each such Trading Day, then on the 20th Business Day following such 20-day
period (the "Optional Conversion Date"), the Corporation shall have the right to
cause all, but not less then all, of the outstanding shares of Series E
Preferred to be converted automatically into such number of fully paid and
non-assessable shares of Common Stock as is equal, subject to Section 8(g), to
the product of the number of shares of Series E Preferred being so converted
multiplied by the quotient of (i) the Liquidation Preference (plus accrued and
unpaid dividends, including any Additional Dividends) divided by (ii) the
Conversion Price in effect on the Optional Conversion Date.

                  (b)      Officer's Certificate. The Corporation will provide
notice to holders of record of Series E Preferred of its election to cause all
the Series E Preferred to be converted pursuant to Section 10(a) on the Optional
Conversion Date. The Corporation shall deliver such notice at least ten Business
Days prior to the Optional Conversion Date, by first-class mail postage prepaid,
to each holder of record of the Series E Preferred, at such holder's address as
it appears on the stock transfer books of the Corporation. Such notice shall
include an officer's certificate attesting to the satisfaction of the condition
precedent to optional conversion, stating the Conversion Price and the number of
fully paid and non-assessable shares of Common Stock into which such shares of
Series E Preferred will be converted in accordance with Section 8 and this
Section 10.

                  (c)      The Corporation shall deposit for the benefit of the
holders of shares of Series E Preferred the share certificates representing the
shares of Common Stock deliverable upon conversion of the shares of Series E
Preferred with a bank or trust company having a capital and surplus of at least
$1 billion, with instructions to such bank or trust company to deliver the
certificates to the holders of shares of Series E Preferred upon surrender of
the certificates for such shares; provided, however, that the making of such
deposit shall not release the Corporation from any of its obligations hereunder.
Any certificates so deposited by the Corporation and unclaimed at the end of two
years from the Optional Redemption Date shall revert to the Corporation and the
bank or trust company shall be relieved of all responsibility in respect thereof
and any holder of shares of Series E Preferred so converted shall look only to
the Corporation for the certificate representing the Common Stock issued upon
the conversion, as provided herein.

                  (d)      Effect of Conversion. Notice of conversion having
been given as provided in Section 10(b), upon the deposit pursuant to subsection
(c) of the certificates representing the shares of Common Stock issuable upon
conversion of the shares of Series E Preferred, notwithstanding that any
certificates for such shares shall not have been surrendered for cancellation,
from and after the Optional Conversion Date (i) the shares represented thereby
shall no longer be deemed outstanding, (ii) the rights to receive dividends
thereon shall cease to accrue, and (iii) all rights of the holders of shares of
Series E Preferred to be converted shall cease and terminate, excepting only the
right to receive the shares of Common Stock and Dividends. If the Corporation
shall default in the execution and delivery of the shares of Common Stock, then
no certificates
<PAGE>   21

                                                                              21

evidencing such shares shall be deemed surrendered and such shares shall remain
outstanding and the rights of holders of Series E Preferred shall continue to be
those of holders of shares of the Series E Preferred.

Section 11.       Definitions.

                  For the purposes of this Certificate of Designation, the
following terms shall have the meanings indicated:

                  "Additional Amount" means an amount equal to the amount of
dividends to accrue on a share of Series E Preferred pursuant to Section 2(a)
hereof from the date of issuance of such share to and including the fifth
anniversary of the Effective Date, assuming that on each Quarterly Dividend
Payment Date such dividends to be paid on such date were added to the
Liquidation Preference on such Quarterly Dividend Payment Date for purposes of
Section 2(a).

                  "Affiliate" shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act; provided
that for purposes of this Certificate, the Purchaser shall not be considered an
Affiliate of the Corporation.

                  "Business Day" shall mean any day other than a Saturday,
Sunday or other day on which commercial banks in the State of Delaware are
authorized or required by law or executive order to close.

                  A "Change of Control" of the Corporation shall mean such times
as:

                           (i)      Any Person or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) is or becomes the beneficial owner,
directly or indirectly, of outstanding shares of stock of the Corporation
entitling such Person or Persons to exercise 50% or more of the total votes
(excluding the Series E Preferred) entitled to be cast at a regular or special
meeting, or by action by written consent, of shareholders of the Corporation
(the term "beneficial owner" shall be determined in accordance with Rule 13d-3,
promulgated by the Commission under the Exchange Act);

                           (ii)     A majority of the Board of Directors of the
Corporation shall consist of Persons other than Continuing Directors. The term
"Continuing Director" shall mean any member of the Board of Directors on the
Closing Date (as defined in the Stock Purchase Agreement) and any other member
of the Board of Directors who shall be recommended or elected to succeed or
become a Continuing Director by a majority of Continuing Directors who are then
members of the Board of Directors;

                           (iii)    The shareholders of the Corporation shall
have approved a recapitalization, reorganization, merger, consolidation or
similar transaction, in each case with respect to which all or substantially all
the Persons who were the respective beneficial owners, directly or indirectly,
of the outstanding shares of capital stock of the Corporation immediately prior
to such recapitalization, reorganization, merger, consolidation or similar
transaction, will own less than 50% of the combined voting
<PAGE>   22

                                                                              22

power of the then outstanding shares of capital stock of the Corporation
resulting from such recapitalization, reorganization, merger, consolidation or
similar transaction; provided that any such recapitalization shall not be
considered a Change of Control if the holders of Series E Preferred have the
right to participate on at least a pari passu basis;

                           (iv)     The shareholders of the Corporation shall
have approved of the sale or other disposition of all or substantially all the
assets of the Corporation in one transaction or in a series of related
transactions;

                           (v)      Any transaction occurs (other than one
described in (iii) above or (vi) below), the result of which is that the Common
Stock is not required to be registered under Section 12 of the Exchange Act and
that the holders of Common Stock do not receive common stock of the Person
surviving such transaction which is required to be registered under Section 12
of the Exchange Act; or

                           (vi)     Immediately after any merger, consolidation,
recapitalization or similar transaction, D. Gregory Smith or a "group" (within
the meaning of Section 13(d)(3) of the Exchange Act) shall be the beneficial
owners, directly or indirectly, of outstanding shares of capital stock of the
Corporation (or any Person surviving such transaction) entitling them
collectively to exercise 50% or more of the total voting power of shares of
capital stock of the Corporation (or the surviving Person in such transaction)
and in connection with or as a result of such transaction, the Corporation (or
such surviving Person) shall have incurred or issued additional indebtedness
such that the total indebtedness so incurred or issued equals at least 50% of
the consideration payable in such transaction; provided that any such
transactions shall not be considered a Change of Control if the holders of
Series E Preferred have the right to participate on at least a pari passu basis.

                  "Change of Control Window" shall mean, as to any Change of
Control, the period beginning on the earlier of (x) the date such Change of
Control occurs and (y) the first date as of which the Corporation has given
written notice of such Change of Control to each registered holder of Series G
Preferred, and ending on the date 180 days after the later to occur of (i) the
date such Change of Control occurs and (ii) the first date as of which the
Corporation has given written notice of such Change of Control to each
registered holder of Series G Preferred.

                  "Common Stock" shall mean the common stock, par value $.01 per
share, and each other class of capital stock of the Corporation into which such
stock is reclassified or reconstituted.

                  "Consolidated EBITDA" shall mean for any period, the
Consolidated Net Income for such period, plus, to the extent deducted in
determining such Consolidated Net Income (i) Consolidated Interest Expense; (ii)
depreciation; (iii) depletion; (iv) amortization; (v) all federal, state, local
and foreign income taxes; and (vi) all other non-cash expenses, minus, to the
extent added in determining such Consolidated Net Income, any non-cash income or
non-cash gains, all as determined on a consolidated basis in accordance with
GAAP.
<PAGE>   23

                                                                              23

                  "Consolidated Interest Expense" shall mean for any period, the
net interest expense of the Corporation and its Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.

                  "Consolidated Net Income" shall mean for any period, the net
income of the Corporation and its Subsidiaries for such period as determined on
a consolidated basis in accordance with GAAP, but excluding from the
determination of Consolidated Net Income (without duplication) (a) any
extraordinary or non-recurring gains or losses or gains or losses from asset
sales; (b) effects of discontinued operations; (c) the income (or loss) of any
Person in which any other Person (other than the Corporation or any of the
Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid in cash to the Corporation or any
of its Subsidiaries by such Person during such period; and (d) the income (or
loss) of any Person accrued prior to the date it becomes a Subsidiary of the
Corporation or is merged into or consolidated with the Corporation or any of its
Subsidiaries or the date such Person's assets are acquired by the Corporation or
any of its Subsidiaries.

                  "Current Market Price" per share shall mean, on any date
specified herein for the determination thereof, (a) the average daily Market
Price of the Common Stock for those days during the period of 20 days, ending on
such date, which are Trading Days, and (b) if the Common Stock is not then
listed or admitted to trading on any national securities exchange or quoted in
the over-the-counter market, the Market Price on such date.

                  "Effective Date" shall mean July 2, 2001.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Securities and Exchange
Commission thereunder.

                  "Fair Market Value" shall mean the amount which a willing
buyer, under no compulsion to buy, would pay a willing seller, under no
compulsion to sell, in an arm's-length transaction (assuming that the Common
Stock is valued "as if fully distributed" so that, among other things, there is
no consideration given for minority investment discounts or discounts related to
illiquidity or restrictions on transferability).

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

                  "Issue Date" shall mean the original date of issuance of
shares of Series E Preferred to the holders pursuant to the Stock Purchase
Agreement.

                  "Junior Stock" shall mean any capital stock of the corporation
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series E Preferred including, without limitation, the Common
Stock.
<PAGE>   24

                                                                              24

                  "Liquidation Preference" with respect to a share of Series E
Preferred shall mean $12.00.

                  "Market Price" shall mean, per share of Common Stock on any
date specified herein: (a) the closing price per share of the Common Stock on
such date published in The Wall Street Journal or, if no such closing price on
such date is published in The Wall Street Journal, the average of the closing
bid and asked prices on such date, as officially reported on the principal
national securities exchange on which the Common Stock is then listed or
admitted to trading; (b) if the Common Stock is not then listed or admitted to
trading on any national securities exchange but is designated as a national
market system security, the last trading price of the Common Stock on such date;
or (c) if there shall have been no trading on such date or if the Common Stock
is not so designated, the average of the reported closing bid and asked prices
of the Common Stock on such date as shown by NASDAQ and reported by any member
firm of the NYSE, selected by the Corporation. If neither (a), (b) or (c) is
applicable, Market Price shall mean the Fair Market Value per share determined
in good faith by the Board of Directors of the Corporation which shall be deemed
to be Fair Market Value unless holders of at least 15% of the outstanding shares
of Series E Preferred request that the Corporation obtain an opinion of a
nationally recognized investment banking firm chosen by such holders and the
Corporation (at the Corporation's expense), in which event Fair Market Value
shall be as determined by such investment banking firm.

                  "Material Subsidiary" shall mean the subsidiaries of the
Corporation set forth on the Schedule attached hereto and any other Subsidiary
that would constitute a Significant Subsidiary (as defined in Article 1 of
Regulation S-X promulgated under the Securities Act of 1933, as amended).

                  "NASDAQ" shall mean the National Market System of the NASDAQ
Stock Market.

                  "NYSE" shall mean the New York Stock Exchange, Inc.

                  "Parity Stock" shall mean any capital stock of the
corporation, including the Series D Preferred, ranking on a par (either as to
dividends or upon liquidation, dissolution or winding up) with the Series E
Preferred.

                  "Permissible Amount" shall mean:

                           (i)      if the Consolidated EBITDA for the
immediately preceding four fiscal quarters is $25 million or less, $100 million;
or

                           (ii)     if the Consolidated EBITDA for the
immediately preceding four fiscal quarters is greater than $25 million, an
amount equal to the Consolidated EBITDA for the immediately preceding four
fiscal quarters multiplied by 4.

                  "Per Share Equity Value" of a share of Common Stock shall mean
the quotient obtained by dividing (a) the "as if fully distributed value" (so
that, among other
<PAGE>   25

                                                                              25

things, there is no consideration given for any minority investment discounts or
discounts related to illiquidity or restrictions on transferability) of all the
Corporation's outstanding shares of Common Stock (on a fully diluted basis), by
(b) the number of outstanding shares of Common Stock on a fully diluted basis.

                  "Person" shall mean any individual, firm, corporation,
partnership, limited liability company trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind, and shall any
successor (by merger) of such entity.

                  "Senior Stock" shall mean any capital stock of the Corporation
ranking senior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series E Preferred.

                  "Stock Purchase Agreement" shall mean the Stock Purchase
Agreement, dated October 19, 2000 between the Corporation, The 1818 Fund III,
L.P. and the other persons listed therein, as the same may be amended from time
to time.

                  "Subsidiary" shall mean, with respect to any Person, a
corporation or other entity of which 50% or more of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly, by
such Person.

                  "Trading Days" shall mean a day on which the national
securities exchanges are open for trading.

Section 12.       Modification or Amendment.

                  Except as specifically set forth herein, modifications or
amendments to this Certificate of Designation may be made by the Corporation
with the consent of the holders of at least 50% of the outstanding shares of
Series E Preferred.
<PAGE>   26

                                                                              26

                  IN WITNESS WHEREOF, Z-Tel Technologies, Inc. has caused this
Certificate of Designation to be duly executed in its corporate name on this 2nd
day of July, 2001.

                                             Z-TEL TECHNOLOGIES, INC.

                                             By:  /S/ D. Gregory Smith
                                                ----------------------
                                                Name: D. Gregory Smith
                                                Title: CEO<PAGE>   1

                                                                    EXHIBIT 4.12

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

                            Z-TEL TECHNOLOGIES, INC.

                                       AND

                     AMERICAN STOCK TRANSFER & TRUST COMPANY

                                  RIGHTS AGENT

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

                                RIGHTS AGREEMENT

                          DATED AS OF FEBRUARY 19, 2001
                             AS AMENDED JULY 2, 2001

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

<PAGE>   2

                                RIGHTS AGREEMENT

         THIS AGREEMENT (this "Agreement"), dated as of February 19, 2001 and
amended July 2, 2001, between Z-TEL TECHNOLOGIES, INC., a Delaware corporation
(the "Company"), and AMERICAN STOCK TRANSFER & TRUST COMPANY, a New York
corporation, as rights agent (the "Rights Agent");

                              W I T N E S S E T H:

         WHEREAS, the Board of Directors of the Company has (i) authorized and
declared a dividend distribution of one preferred share purchase right (a
"Right") for each Common Share (as defined herein) outstanding as of the Close
of Business (as defined herein) on March 7, 2001 (the "Record Date") and a
dividend distribution for each share of Series D Preferred Stock and Series E
Preferred Stock (each as defined below) of such number of Rights as would be
received by a holder of the number of Common Shares for which such share of
Series D Preferred Stock or Series E Preferred Stock is convertible on the
Record Date, each Right initially representing the right to purchase one
one-thousandth of a Junior Preferred Share (as defined herein), upon the terms
and subject to the conditions set forth in this Agreement, and (ii) further
authorized the issuance of one (as such number may hereinafter be adjusted
pursuant to the provisions of Section 11(p)) Right with respect to each Common
Share and each share of Series D Preferred Stock, Series E Preferred Stock and
Series G Preferred Stock, in each case that shall become outstanding between the
Record Date and the earliest of the Distribution Date, the Expiration Date or
the Final Expiration Date (each such term as defined in this Agreement).

<PAGE>   3

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

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

                  (a)      "Acquiring Person" shall mean any Person who or
which, together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the Voting Power of the Common Shares of the
Company then outstanding; provided, however, that:

                           (i)      the term "Acquiring Person" shall not
include an Exempt Person (so long as such Person remains an Exempt Person);

                           (ii)     a Person shall not be deemed to have become
an "Acquiring Person" solely as a result of the acquisition by the Company of
shares of capital stock of the Company which, by reducing the number or Voting
Power of shares outstanding, increases the Voting Power of the shares
beneficially owned by such Person to 15% or more of the Voting Power of the
Common Shares; provided, however, that if a Person shall so become the
Beneficial Owner of Common Shares of the Company representing 15% or more of the
Voting Power of the Common Shares of the Company then outstanding by reason of
the acquisition by the Company of shares of capital stock of the Company and
shall, after such share purchases by the Company, purchase or otherwise take
action to cause it to become the Beneficial Owner of any additional Common
Shares of the Company, then such Person shall be an Acquiring Person;

                           (iii)    a Person shall not be deemed to have become
an "Acquiring Person" if the Board of Directors of the Company in its good faith
judgment determines that a Person has inadvertently become the Beneficial Owner
of Common Shares of the Company that would otherwise cause such Person to become
an Acquiring Person and the Board of Directors in

                                      -2-
<PAGE>   4

its sole discretion provides such Person with a designated period to divest a
sufficient number of shares so that such Person no longer is the Beneficial
Owner of Common Shares of the Company that would otherwise cause such Person to
be an Acquiring Person, and such Person has so divested such shares at the end
of any such designated period and has not acquired any additional shares of
capital stock of the Company prior to the end of such designated period; and

                           (iv)     Common Shares of the Company Beneficially
Owned by the Company or any Subsidiary of the Company shall not be considered
outstanding for purposes of calculating any Person's percentage ownership of the
Voting Power of the outstanding Common Shares of the Company.

                  (b)      "Adjustment Shares" shall have the meaning set forth
in Section 11(a)(ii).

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

                  (d)      A Person shall be deemed the "Beneficial Owner" of
and shall be deemed to "Beneficially Own" any securities:

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

                           (ii)     which such Person or any of such Person's
Affiliates or Associates, directly or indirectly, has (A) the right to acquire
(whether such right is exercisable immediately or only after the passage of
time) pursuant to any agreement, arrangement or understanding, whether or not in
writing (other than customary agreements with and between underwriters and
selling group members with respect to a bona fide public offering of
securities), or upon the exercise of conversion rights, exchange rights, rights
(other than the Rights),

                                      -3-
<PAGE>   5

warrants or options, or otherwise; provided, however, that a Person shall not be
deemed the "Beneficial Owner" of or to "Beneficially Own" securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates pursuant to, and in accordance
with the General Rules and Regulations promulgated under the Exchange Act, until
such tendered securities are accepted for purchase or exchange; or (B) the right
to vote or dispose of or "beneficial ownership" (as defined in Rule 13d-3 of the
General Rules and Regulations under the Exchange Act as in effect on the date of
this Agreement) 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
securities if the agreement, arrangement or understanding to vote such security
(1) arises solely from a revocable proxy or consent given to such Person in
response to a public proxy or consent solicitation made pursuant to, and in
accordance with, the General Rules and Regulations under the Exchange Act, (2)
is not also then reportable by such Person on Schedule 13D under the Exchange
Act (or any comparable or successor report) and (3) does not constitute a trust,
proxy, power of attorney or other device with the purpose or effect of allowing
two or more persons, acting in concert, to avoid being deemed "Beneficial
Owners" of such security or otherwise avoid the status of "Acquiring Person"
under the terms of this Agreement or as part of a plan or scheme to avoid the
reporting requirements under Schedule 13D or Sections 13(d) or 13(g) of the
Exchange Act; or

                  (iii)    which are beneficially owned, directly or indirectly,
by any other Person (or any Affiliates or Associates thereof) with which such
Person or any of such Person's Affiliates or Associates has any agreement,
arrangement or understanding (whether or not in writing) for the purpose of
acquiring, holding, voting (except as described in the proviso to

                                      -4-
<PAGE>   6

clause (B) of subparagraph (ii) of this Section 1(d)) or disposing of any
securities of the Company.

         Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to Beneficially Own under this Agreement.

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

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

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

                  (h)      "Common Share Equivalents" shall have the meaning set
forth in Section 11(a)(iii).

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

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

                                      -5-
<PAGE>   7

                  (k)      "Distribution Date" shall have the meaning set forth
in Section 3(a).

                  (l)      "Equivalent Preferred Share" shall have the meaning
set forth in Section 11(b).

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

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

                  (o)      "Exempt Person" shall mean (i) the Company, (ii) any
Subsidiary of the Company, (iii) any employee benefit plan of the Company or of
any Subsidiary of the Company, (iv) any Person or entity organized, appointed,
established or holding Common Shares of the Company for or pursuant to the terms
of any such employee benefit plan, (v) D. Gregory Smith, Carol Jane Smith, G/CJ
Investments, L.P., a Delaware limited partnership, and G/CJ Investments, Inc., a
Delaware corporation, and their respective Affiliates and Associates, and (vi)
Brown Brothers Harriman & Co., The 1818 Fund III L.P., T. Michael Long and
Lawrence C. Tucker and their respective Affiliates and Associates (collectively,
the "BBH Parties"), provided that no BBH Party shall be an Exempt Person (A) if
after the date hereof, the BBH Parties, individually or collectively, acquire in
one or more transactions (whether related or unrelated) additional Beneficial
Ownership of Common Shares (other than (i) the acquisition, Beneficial Ownership
or exercise of one or more Series E Warrants or Series G Warrants, or of the
Common Shares acquired upon exercise of any Series E Warrant or Series G
Warrant, (ii) the acquisition, Beneficial Ownership or conversion of shares of
Series E Preferred Stock or Series G Preferred Stock, or of the Common Shares
acquired upon conversion of any Series E Preferred Stock or Series G Preferred
Stock, (iii) otherwise pursuant to, in connection with or as contemplated by the
Series E Purchase Agreement or Series G Investment Agreement or (iv) the

                                      -6-
<PAGE>   8

acquisition, Beneficial Ownership or exercise of Common Shares or options
granted under the Company's 2000 Equity Participation Plan, or of the Common
Shares acquired upon exercise of any such option) of the Company representing
more than 1% of the outstanding Common Shares of the Company, or (B) from and
after such time as the BBH Parties collectively no longer Beneficially Own 15%
or more of the Voting Power of the outstanding Common Shares of the Company.

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

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

                  (r)      "Junior Preferred Shares" shall mean shares of Series
F Junior Participating Preferred Stock, par value $.001 per share, of the
Company, having the rights, preferences and limitations set forth in the
Certificate of Designations attached to this Agreement as Exhibit A, and, to the
extent there are not a sufficient number of shares of Series F Junior
Participating Preferred Stock authorized to permit the full exercise of the then
outstanding Rights, any other series of preferred stock of the Company
designated for such purpose by the Board of Directors of the Company containing
terms substantially similar to the terms of the Series F Junior Participating
Preferred Stock.

                  (s)      "Nasdaq National Market" shall have the meaning set
forth in Section 9(b).

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

                  (u)      "Principal Party" shall have the meaning set forth in
Section 13(b).

                  (v)      "Purchase Price" shall have the meaning set forth in
Section 4(a).

                                      -7-
<PAGE>   9

                  (w)      "Record Date" shall have the meaning set forth in the
recitals clause at the beginning of this Agreement.

                  (x)      "Redemption Date" shall mean the date on which the
Rights are redeemed as provided in Section 23.

                  (y)      "Redemption Price" shall have the meaning set forth
in Section 23(a).

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

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

                  (bb)     "Section 11(a)(ii) Event" shall have the meaning set
forth in Section 11(a)(ii).

                  (cc)     "Section 11(a)(ii) Trigger Date" shall have the
meaning set forth in Section 11(a)(iii).

                  (dd)     "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a).

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

                  (ff)     "Series D Preferred Stock" shall mean the Series D
Convertible Preferred Stock, par value $.01 per share, of the Company.

                  (gg)     "Series E Preferred Stock" shall mean the Series E
Convertible Preferred Stock, par value $.01 per share, of the Company.

                  (hh)     "Subsidiary" of a Person shall mean any corporation
or other entity of which securities or other ownership interests having ordinary
voting power sufficient to elect a majority of the board of directors or other
persons performing similar functions are Beneficially Owned, directly or
indirectly, or otherwise controlled by such Person.

                                      -8-
<PAGE>   10

                  (ii)     "Substitution Period" shall have the meaning set
forth in Section 11(a)(iii).

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

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

                  (ll)     "Triggering Event" shall mean any Section 11(a)(ii)
Event or Section 13 Event.

                  (mm)     "Voting Power" shall mean the total number of votes
entitled to be cast generally by the holders of the Common Shares of the Company
then outstanding.

                  (nn)     "Series E Purchase Agreement" shall mean that certain
Purchase Agreement, dated as of October 19, 2000, by and among the Company and
The 1818 Fund III, L.P.

                  (oo)     "Series E Warrant" shall mean a warrant to purchase
Common Shares granted or issues pursuant to the Series E Purchase Agreement.

                  (pp)     "Series G Investment Agreement" shall mean that
certain Stock And Warrant Purchase Agreement dated July 2, 2001 by and among the
Company, The 1818 Fund III, L.P. and certain additional investors listed on
Schedule 1 thereto.

                  (qq)     "Series G Preferred Stock" shall mean the 12% Junior
Redeemable Convertible Preferred Stock, Series G, par value $.01 per share, of
the Company.

                  (rr)     "Series G Warrant" shall mean a warrant to purchase
Common Shares granted or issues pursuant to the Series G Investment Agreement.

         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, shall prior to the Distribution Date
also be the holders of the Common Shares of the

                                      -9-
<PAGE>   11

Company or the Series D Preferred Stock, Series E Preferred Stock or Series G
Preferred Stock, as the case may be) in accordance with the terms and conditions
of this Agreement, and the Rights Agent hereby accepts such appointment. The
Company from time to time may appoint such co-Rights Agents as it may deem
necessary or desirable. If the Company appoints one or more co-Rights Agents,
the respective duties of the Rights Agent and any co-Rights Agents shall be as
the Company shall determine.

         Section 3.        Issuance of Rights Certificates.

                  (a)      Until the earlier of (i) the first public
announcement (which for this purpose shall include, without limitation, a report
filed pursuant to Section 13(d) of the Exchange Act) by the Company or an
Acquiring Person that an Acquiring Person has become such(or if such
announcement occurs before the Record Date, the Close of Business on the Record
Date); provided, however, that if such Person is determined not to have become
an Acquiring Person pursuant to Section 1(a), then no such Distribution Date
shall be deemed to have occurred; or (ii) the Close of Business on the tenth
Business Day (or such later date as may be determined by action of the Board of
Directors of the Company prior to such time as any Person becomes an Acquiring
Person) after the date of the commencement by any Person (other than an Exempt
Person) of, or of the first public announcement of the intent of any Person
(other than an Exempt Person) to commence, a tender or exchange offer the
consummation of which would result in any Person, together with its Affiliates
and Associates, becoming the Beneficial Owner of 15% or more of the Voting Power
of the then outstanding Common Shares of the Company (irrespective of whether
any shares are actually purchased pursuant to such offer) (the earlier of such
events described in clauses (i) and (ii) being referred to in this Agreement as
the "Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of Section 3(c)) by the certificates for

                                      -10-
<PAGE>   12

the Common Shares or the Series D Preferred Stock, Series E Preferred Stock or
Series G Preferred Stock, as the case may be, registered in the names of the
holders thereof (which certificates for such Common Shares of the Company or the
Series D Preferred Stock, Series E Preferred Stock or Series G Preferred Stock,
as the case may be, shall be deemed also to be certificates for such Rights
other than for purposes of this Section 3 and any provision of this Agreement
referring to the issuance or distribution of Rights Certificates) and not by
separate Rights Certificates, and (y) the Rights (and the right to receive
separate Rights Certificates) will be transferable only in connection with the
transfer of the underlying Common Shares of the Company or the Series D
Preferred Stock, Series E Preferred Stock or Series G Preferred Stock (including
a transfer to the Company). As soon as practicable after the Distribution Date,
the Company will prepare and execute, the Rights Agent will countersign, and the
Company will send or cause to be sent (and the Rights Agent will, if requested,
send) by first class, insured, postage prepaid mail, to each record holder of
Common Shares, Series D Preferred Stock, Series E Preferred Stock and Series G
Preferred Stock, as of the Close of Business on the Distribution Date, as shown
by the records of the Company, at the address of such holder shown on such
records, one or more rights certificates in substantially the form of Exhibit B
hereto, evidencing one Right for each Common Share and an appropriate number of
Rights for each share of Series D Preferred Stock, Series E Preferred Stock and
Series G Preferred Stock (a "Rights Certificate"), so held, subject to
adjustment as provided in this Agreement. As of and after the Distribution Date,
the Rights will be evidenced solely by such Rights Certificates and will be
transferable separately from the Common Shares of the Company, the Series D
Preferred Stock, Series E Preferred Stock and Series G Preferred Stock.

                                      -11-
<PAGE>   13

                  (b)      As promptly as practicable following the Record Date,
the Company will send a copy of a Summary of Rights to Purchase Preferred
Shares, substantially in the form attached hereto as Exhibit C ("Summary of
Rights"), by first-class, postage prepaid mail, to each record holder of Common
Shares of the Company and Series D Preferred Stock and Series E Preferred Stock
as of the Close of Business on the Record Date, at the address of such holder
shown on the records of the Company. The Rights Agent will mail to any holder of
the Rights Certificate a copy of this Agreement without charge to the holder but
at the expense of the Company after receipt of a written request therefor.

                  (c)      With respect to certificates for Common Shares of the
Company, Series D Preferred Stock and Series E Preferred Stock outstanding as of
the Close of Business on the Record Date, until the Distribution Date (or, if
earlier, the Expiration Date or the Final Expiration Date), the Rights will be
evidenced by certificates for Common Shares of the Company or the Series D
Preferred Stock or Series E Preferred Stock, as the case may be, registered in
the names of the holders thereof together with a copy of the Summary of Rights.
Until the Distribution Date (or, if earlier, the Expiration Date or Final
Expiration Date), the surrender for transfer of any certificate for Common
Shares of the Company or Series D Preferred Stock or Series E Preferred Stock
(including pursuant to the conversion of such Series D Preferred Stock or Series
E Preferred Stock into Common Shares of the Company) outstanding on the Record
Date, with or without a copy of the Summary of Rights, also shall constitute the
surrender for transfer of the Rights associated with the Common Shares of the
Company, Series D Preferred Stock or Series E Preferred Stock represented
thereby; it being agreed that in the case of the conversion of such Series D
Preferred Stockor Series E Preferred Stock into Common Shares of the Company, in
accordance with this Agreement there shall be issued one Right with

                                      -12-
<PAGE>   14

respect to each Common Share that shall be issued upon such conversion (as such
number may hereinafter be adjusted pursuant to the provisions of Section 11(p)).

                  (d)      Rights shall be issued in respect of all Common
Shares of the Company or Series D Preferred Stock, Series E Preferred Stock or
Series G Preferred Stock (including upon the exercise of conversion rights
(including pursuant to the conversion of the Series D Preferred Stock, Series E
Preferred Stock or Series G Preferred Stock into Common Shares), exchange
rights, rights (other than the Rights), warrants or options, or otherwise) which
are issued (whether originally issued or from the Company's treasury) after the
Record Date but prior to the earliest of the Distribution Date, the Expiration
Date or the Final Expiration Date. Until the Distribution Date, certificates
representing Common Shares, Series D Preferred Stock, Series E Preferred Stock
or Series G Preferred Stock also shall be deemed to be certificates for the
associated Rights, and shall have impressed on, printed on, written on or
otherwise affixed to them substantially the following legend:

                  This certificate also evidences and entitles the
                  holder hereof to certain Rights as set forth in a
                  Rights Agreement between Z-Tel Technologies, Inc.
                  and American Stock Transfer & Trust Company, as
                  Rights Agent, dated as of February 19, 2001, as
                  amended (the "Rights Agreement"), the terms of which
                  are incorporated herein by reference and a copy of
                  which is on file at the principal executive offices
                  of Z-Tel Technologies, Inc. Under certain
                  circumstances, as set forth in the Rights Agreement,
                  such Rights will be evidenced by separate
                  certificates and will no longer be evidenced by this
                  certificate. Z-Tel Technologies, Inc. will mail to
                  the holder of this certificate a copy of the Rights
                  Agreement, as in effect on the date of mailing,
                  without charge, after receipt by it of a written
                  request therefor. Under certain circumstances as
                  provided in the Rights Agreement, Rights issued to,
                  held by or Beneficially Owned by Acquiring Persons
                  or their Associates or Affiliates (as such terms are
                  defined in the Rights Agreement) or any subsequent
                  holder of such Rights will become null and void.

                                      -13-
<PAGE>   15

With respect to such certificates containing the foregoing legends, the Rights
associated with the Common Shares of the Company, Series D Preferred Stock,
Series E Preferred Stock or Series G Preferred Stock represented by such
certificates, as the case may be, shall, until the earliest of the Expiration
Date, the Final Expiration Date or the Distribution Date, be evidenced by such
certificates alone and holders of record of Common Shares of the Company, Series
D Preferred Stock, Series E Preferred Stock or Series G Preferred Stock, as the
case may be, also shall be the holders of record of the associated Rights, and
the surrender for transfer of any such certificate shall also constitute the
surrender for transfer of the Rights associated with the Common Shares of the
Company, Series D Preferred Stock, Series E Preferred Stock or Series G
Preferred Stock represented thereby. If the Company purchases or acquires any
Common Shares of the Company, Series D Preferred Stock, Series E Preferred Stock
or Series G Preferred Stock (including pursuant to the conversion of the Series
D Preferred Stock, Series E Preferred Stock or Series G Preferred Stock into
Common Shares) after the Record Date but prior to the Distribution Date, any
Rights associated with such Common Shares, Series D Preferred Stock, Series E
Preferred Stock or Series G Preferred Stock shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares of the Company, Series D Preferred Stock, Series E Preferred
Stock or Series G Preferred Stock which are no longer outstanding; it being
agreed that in the case of the conversion of the Series D Preferred Stock,
Series E Preferred Stock or Series G Preferred Stock into Common Shares, in
accordance with this Agreement there shall be issued one Right with respect to
each Common Share that shall be issued upon such conversion (as such number may
hereinafter be adjusted pursuant to the provisions of Section 11(p)).

         Section 4.        Form of Rights Certificates.

                                      -14-
<PAGE>   16

                  (a)      Rights Certificates (and the forms of election to
purchase shares and of assignment to be printed on the reverse thereof), when,
as and if issued, shall be substantially in the form set forth in Exhibit B
hereto, and may have such marks of identification or designation and such
legends, summaries or endorsements printed thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement,
or as may be required to comply with any applicable law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any stock
exchange or trading system on which the Rights may from time to time be listed
or traded, or to conform to usage. Subject to the provisions of Sections 11 and
22, the Rights Certificates, whenever distributed, shall entitle the holders
thereof to purchase such number of one one-thousandths of a Junior Preferred
Share, as shall be set forth therein at the price per one one-thousandth of a
Junior Preferred Share set forth therein (the "Purchase Price"), but the amount
and type of securities purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided therein and in
this Agreement.

                  (b)      Notwithstanding any other provision of this
Agreement, any Rights Certificate that represents Rights that are or were at any
time on or after the Distribution Date Beneficially Owned by an Acquiring Person
or any Affiliate or Associate thereof (or any transferee of such Rights) shall
have impressed on, printed on, written on or otherwise affixed to it (if the
Company or the Rights Agent has knowledge that such Person is an Acquiring
Person or an Associate or Affiliate thereof or transferee of such Person or a
nominee of any of the foregoing) the following legend:

                  The Beneficial Owner of the Rights represented by
                  this Rights Certificate is an Acquiring Person or an
                  Affiliate or Associate (as

                                      -15-
<PAGE>   17

                  such terms are defined in the Rights Agreement) of
                  an Acquiring Person or a subsequent holder of such
                  Rights Certificate Beneficially Owned by such
                  Persons. Accordingly, under circumstances specified
                  in the Rights Agreement, this Rights Certificate and
                  the Rights represented hereby will become null and
                  void.

Notwithstanding the above provision, failure to place such legend on any Rights
Certificate representing Rights which are otherwise null and void pursuant to
the terms of this Agreement shall not affect the null and void status of such
Rights.

         Section 5.        Countersignature and Registration.

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

                                      -16-
<PAGE>   18

Rights Certificate, although at the date of the execution of this Agreement any
such person was not such an officer.

                  (b)      Following the Distribution Date, the Rights Agent
will keep or cause to be kept, at its office designated for such purposes, books
for registration and transfer of the Rights Certificates issued under this
Agreement. 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, the date of each of the Rights Certificates,
and the certificate numbers for each of the Rights Certificates.

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

                  (a)      Subject to the provisions of Section 4(b), Section
7(e) and Section 14, at any time after the Close of Business on the Distribution
Date and at or prior to the Close of Business on the earlier of the Expiration
Date or the Final Expiration Date, any Rights Certificate or Rights Certificates
(other than such Rights Certificates representing Rights that have become null
and void pursuant to this Agreement or that have been exchanged pursuant to
Section 24) may be transferred, split up, combined or exchanged for another
Rights Certificate or Rights Certificates, entitling the holder of record to
purchase a like number of one one-thousandths of a Junior Preferred Share (or,
following a Triggering Event, Common Shares of the Company, other securities,
cash or other assets, as the case may be) as the Rights Certificate or Rights
Certificates surrendered then entitles such holder (or former holder in the case
of a transfer) to purchase. Any holder of record desiring to transfer any Rights
Certificate or Rights Certificates shall surrender the Rights Certificate or
Rights Certificates at the office of the Rights Agent designated for such
purposes with the form of assignment on the reverse side thereof (or enclose

                                      -17-
<PAGE>   19

with such Rights Certificate or Rights Certificates a written instrument of
transfer in a form satisfactory to the Company and the Rights Agent), duly
executed by the holder of record thereof or his attorney duly authorized in
writing, and with such signature duly guaranteed. Any holder of record desiring
to split up, combine or exchange any Rights Certificate or Rights Certificates
shall make such request in writing delivered to the Rights Agent, and shall
surrender the Rights Certificate or Rights Certificates to be split up, combined
or exchanged at the office of the Rights Agent designated for such purposes.
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 holder of record shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates of
Associates thereof as the Company shall request. Thereupon the Rights Agent
(subject to Section 4(b), Section 7(e), Section 14 and Section 24) 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 of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer, split up, combination or
exchange of Rights Certificates.

                  (b)      Upon receipt by the Company and the Rights Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Rights Certificate, and, in case of loss, theft or destruction,
of indemnity or security reasonably satisfactory to them, and, if requested by
the Company, reimbursement to the Company and the Rights Agent of all reasonable
expenses incidental thereto, and upon surrender to the Rights Agent and
cancellation of the Rights Certificate if mutilated, the Company, subject to the
provisions of Section 4(b),

                                      -18-
<PAGE>   20

Section 7(e), Section 14 and Section 24, will execute and deliver a new Rights
Certificate of like tenor to the Rights Agent for delivery to the registered
holder in lieu of the Rights Certificate so lost, stolen, destroyed or
mutilated.

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

                  (a)      Subject to Section 7(e), at any time after the
Distribution Date, the holder of record of any Rights Certificate may exercise
the Rights evidenced thereby (except as otherwise provided in this Agreement,
including without limitation, the restrictions on exercisability set forth in
Section 9(b), Section 11(a)(iii) and Section 23(a)), in whole or in part upon
surrender of the Rights Certificate, with the form of election to purchase and
the certificate contained in the form of election to purchase on the reverse
side thereof duly executed (with such signature duly guaranteed), 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
one one-thousandths of a Junior Preferred Share (or other securities, cash or
other assets, as the case may be, as to which such surrendered Rights are then
exercisable), subject to adjustment as provided in this Agreement, at or prior
to the earlier of (i) the Close of Business on February 19, 2011 (the "Final
Expiration Date"), (ii) the time at which the Rights are redeemed as provided in
Section 23 (such date being herein referred to as the "Expiration Date"), or
(iii) the time at which such Rights are exchanged as provided in Section 24.

                  (b)      The Purchase Price with respect to each Right shall
initially be $45 for each one one-thousandth of a Junior Preferred Share issued
pursuant to the exercise of a Right. The Purchase Price and the number of one
one-thousandths of a Junior Preferred Share or other securities or consideration
to be acquired upon exercise of a Right shall be subject to adjustment

                                      -19-
<PAGE>   21

from time to time as provided in Sections 11 and 13. The Purchase Price shall be
payable in lawful money of the United States of America in accordance with
Section 7(c).

                  (c)      Except as provided in Section 7(e), upon receipt of a
Rights Certificate representing exercisable Rights, with the form of election to
purchase and the certificate contained in the form of election to purchase duly
executed, accompanied by payment of the Purchase Price for the shares or other
securities or assets to be purchased and an amount equal to any applicable
transfer tax, by cash, certified check or official bank check payable to the
order of the Company, the Rights Agent, subject to Section 20(j), shall
thereupon promptly (i) (A) requisition from any transfer agent of the Junior
Preferred Shares (or make available, if the Rights Agent is the transfer agent
for such shares) certificates for the total number of Junior Preferred Shares so
elected to be purchased and the Company will comply and hereby authorizes and
directs such transfer agent to comply with all such requests, or (B) if the
Company shall have elected to deposit the total number of Junior Preferred
Shares issuable upon exercise of the Rights hereunder with a depositary agent,
requisition from the depositary agent depositary receipts representing such
number of one one-thousandths of a Junior Preferred Share as are to be purchased
(in which case certificates for the Junior Preferred Shares represented by such
receipts shall be deposited by the transfer agent with the depositary agent) and
the Company hereby directs the depositary agent to comply with such request,
(ii) when appropriate, requisition from the Company the amount of cash, if any,
to be paid in lieu of issuance of fractional shares in accordance with Section
14, (iii) promptly after receipt of such certificates or depositary receipts,
cause the same to be delivered to or upon the order of the holder of record of
such Rights Certificate, registered in such name or names as may be designated
by such holder, and (iv) when appropriate, after receipt promptly deliver such
cash to or upon the order of the

                                      -20-
<PAGE>   22

holder of record of such Rights Certificate; provided, however, that in the case
of a purchase of securities, other than Junior Preferred Shares, pursuant to
Section 13, the Rights Agent shall promptly take the appropriate actions
corresponding to the foregoing clauses (i) through (iv). If the Company is
obligated to issue other securities (including Common Shares) of the Company,
pay cash and/or distribute other property pursuant to Section 11(a), the Company
will make all arrangements necessary so that such other securities, cash and/or
other property are available for distribution by the Rights Agent, if and when
appropriate. The Company reserves the right to require prior to the occurrence
of a Triggering Event that, upon an exercise of Rights, a number of Rights be
exercised so that only whole Junior Preferred Shares would be issued.

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

                  (e)      Notwithstanding anything in this Agreement to the
contrary, from and after the occurrence of a Triggering Event, any Rights
Beneficially Owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee from an Acquiring Person (or of any such
Associate or Affiliate) who becomes a transferee after the Acquiring Person
becomes such (and any subsequent transferees of such transferee), or (iii) a
transferee of an Acquiring Person (or such Associate or Affiliate) who becomes a
transferee prior to or concurrently with the Acquiring Person becoming such and
receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person to holders of equity interests in such
Acquiring Person or to any Person with whom the Acquiring Person has any
continuing agreement, arrangement or understanding regarding the transferred
Rights or (B)

                                      -21-
<PAGE>   23

a transfer which the Board of Directors of the Company has determined is part of
a plan, arrangement or understanding which has a primary purpose or effect the
avoidance of this Section 7(e), shall become null and void without any further
action, and any holder (including any subsequent holder) of such Rights shall
thereupon have no rights whatsoever with respect to such Rights, whether under
any provision of this Agreement or otherwise. The Company shall use all
reasonable efforts to insure that the provisions of this Section 7(e) are
complied with, but shall have no liability to any holder of Right Certificates
or other Person as a result of its failure or inability to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.

                  (f)      Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a holder of record upon the occurrence of
any purported exercise as set forth in this Section 7 unless such holder of
record 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 (or former Beneficial Owner) or Affiliates or
Associates thereof as the Company shall request.

         Section 8.        Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise, transfer, split
up, combination or exchange shall, if surrendered to the Company or to any of
its agents, be delivered to the Rights Agent for cancellation or in canceled
form, or, if surrendered to the Rights Agent, shall be canceled by it, and no
Rights Certificates shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Agreement. The Company shall deliver
to the Rights Agent for cancellation and retirement, and the Rights Agent shall
so cancel and retire, any other Rights

                                      -22-
<PAGE>   24

Certificate purchased or acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all canceled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy or cause to be destroyed such canceled Rights Certificates, and in such
case shall deliver a certificate of destruction thereof to the Company.

         Section 9.        Reservation and Availability of Capital Stock.

                  (a)      The Company covenants and agrees that it will cause
to be reserved and kept available, out of and to the extent of its authorized
and unissued Junior Preferred Shares not reserved for another purpose (and,
following the occurrence of a Triggering Event, out of its authorized and
unissued Common Shares or other securities) or shares held in its treasury, the
number of Junior Preferred Shares (and, following the occurrence of a Triggering
Event, Common Shares or other securities) that, as provided in this Agreement,
including Section 11(a)(iii), will be sufficient to permit the exercise in full
of all outstanding Rights. Prior to the occurrence of a Triggering Event, the
Company shall not be obligated to cause to be reserved and kept available out of
its authorized and unissued Common Shares or shares of preferred stock (other
than Junior Preferred Shares), any such Common Shares or any shares of preferred
stock (other than Junior Preferred Shares) to permit exercise of outstanding
Rights.

                  (b)      The Company shall (i) cause, from and after such time
as the Rights become exercisable, the Rights and all Junior Preferred Shares
(and following the occurrence of a Triggering Event, Common Shares, issued or
reserved for issuance upon exercise thereof) to be listed or admitted for
trading by the NASDAQ National Market ("Nasdaq National Market") or any other
national securities exchange upon notice of issuance upon such exercise and (ii)
if then necessary to permit the offer and issuance of such Junior Preferred
Shares (and, following the occurrence of a Triggering Event, Common Shares or
other securities), register and qualify such

                                      -23-
<PAGE>   25

Junior Preferred Shares (and, following the occurrence of a Triggering Event,
Common Shares or other securities) under the Securities Act and any applicable
state securities or "blue sky" laws (to the extent exemptions therefrom are not
available), cause such registration statement and qualifications to become
effective as soon as possible after such filing and keep such registration and
qualifications effective until the earlier of the Expiration Date or the Final
Expiration Date. The Company may temporarily suspend, for a period of time not
to exceed ninety days, the exercisability of the Rights in order to prepare and
file a registration statement under the Securities Act and permit it to become
effective or to comply with such blue sky laws. Upon any such suspension, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended, as well as a public announcement at such
time as the suspension is no longer in effect.

                  (c)      The Company covenants and agrees that it will take
all such action as may be necessary to insure that all Junior Preferred Shares
(and following the occurrence of a Triggering Event, Common Shares or other
securities) delivered upon exercise of Rights shall, at the time of delivery of
the certificates for such shares (subject to payment of the Purchase Price in
respect thereof), be duly and validly authorized and issued and fully paid and
nonassessable shares in accordance with applicable law.

                  (d)      The Company further covenants and agrees that it will
pay when due and payable any and all federal and state transfer taxes and
charges which may be payable in respect of the issuance or delivery of the
Rights Certificates or of any Junior Preferred Shares (or Common Shares or other
securities, as the case may be) upon the exercise of Rights. The Company shall
not, however, be required to pay any transfer tax which may be payable in
respect of any transfer or delivery of Rights Certificates to a Person other
than, or the issuance or

                                      -24-
<PAGE>   26

delivery of certificates for Junior Preferred Shares (or Common Shares or other
securities, as the case may be) upon exercise of Rights in a name other than
that of, the holder of record of the Rights Certificate, and the Company shall
not be required to issue or deliver a Rights Certificate or certificate for
Junior Preferred Shares (or Common Shares or other securities, as the case may
be) to a Person other than such holder of record, until any such tax shall have
been paid (any such tax being payable by the holder of such Rights Certificate
at the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.

         Section 10.       Preferred Shares Record Date. Each Person in whose
name any certificate for Junior Preferred Shares (or Common Shares or other
securities, as the case may be) is issued upon the exercise of Rights shall for
all purposes be deemed to have become the holder of record of the Junior
Preferred Shares (or Common Shares or other securities, as the case may be)
represented thereby on, and such certificate shall be dated, the date upon which
the Rights Certificate evidencing such Rights was duly surrendered and payment
of the Purchase Price (and any applicable transfer taxes) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
Junior Preferred Shares (or Common Shares or other securities, as the case may
be) transfer books of the Company are closed, such Person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Junior Preferred Shares (or
Common Shares or other securities) transfer books of the Company are open. Prior
to the exercise of the Rights evidenced thereby, the holder of a Rights
Certificate shall not be entitled to any rights of a stockholder of the Company
with respect to shares for which the Rights shall be exercisable, including,
without limitation, the right to vote, to receive dividends or other
distributions or to

                                      -25-
<PAGE>   27

exercise any preemptive rights and shall not be entitled to receive any notice
of any proceedings of the Company, except as otherwise provided in this
Agreement.

         Section 11.       Adjustments to Number and Kind of Shares; Number of
Rights or Purchase Price. The number and kind of shares subject to purchase upon
the exercise of each Right, the number of Rights outstanding and the Purchase
Price are subject to adjustment from time to time as provided in this Section
11.

                  (a)      (i)      If the Company shall at any time after the
date of this Agreement (A) declare or pay any dividend on Junior Preferred
Shares payable in Junior Preferred Shares, (B) subdivide or split the
outstanding Junior Preferred Shares into a greater number of shares, (C) combine
or consolidate the outstanding Junior Preferred Shares into a smaller number of
shares or effect a reverse split of the outstanding Junior Preferred Shares or
(D) issue any shares of its capital stock in a reclassification of the Junior
Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Company is the continuing or surviving
corporation), except as otherwise provided in Section 7(e) or this Section
11(a), the Purchase Price in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination or
reclassification, and the number and kind of Junior Preferred Shares or capital
stock, as the case may be, issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall be
entitled to receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of Junior Preferred Shares or capital stock, as the
case may be, which, if such Right had been exercised immediately prior to such
date and at a time when the Junior Preferred Shares transfer books of the
Company were open, the holder thereof would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision, combination or
reclassification;

                                      -26-
<PAGE>   28

provided, however, that in no event shall the consideration to be paid upon the
exercise of one such Right be less than the per share par value of the shares of
capital stock of the Company issuable upon exercise of the Right. If an event
occurs which would require an adjustment under both this Section 11(a)(i) and
Section 11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii).

                           (ii)     Subject to Section 23(a) and Section 24, if
any Person shall at any time after the date of this Agreement become an
Acquiring Person (a "Section 11(a)(ii) Event"), then, except as otherwise
provided in this Section 11, promptly following the occurrence of such event,
proper provision shall be made so that each holder of a Right (except as
provided in Section 7(e)) shall thereafter have the right to receive, upon
exercise thereof at the then current Purchase Price in accordance with the terms
of this Agreement in lieu of the number of one one-thousandths of a Junior
Preferred Share, such number of Common Shares, as shall equal the result
obtained by (x) multiplying the then current Purchase Price by the then number
of one one-thousandths of a Junior Preferred Share for which a Right was
exercisable immediately prior to the first occurrence of a Section 11(a)(ii)
Event, and (y) dividing that product (such product, following such first
occurrence, shall be referred to as the "Purchase Price" with respect to each
Right for all purposes of this Agreement) by 50% of the Current Market Price
(determined pursuant to Section 11(d)) per share of such class of Common Shares
for which a Right is exercisable on the date of such first occurrence (such
number of shares is herein called the "Adjustment Shares"); provided that the
Purchase Price and the number of Adjustment Shares shall be further adjusted as
provided in this Agreement to reflect any events occurring after the date of
such first occurrence; and provided, further, that if the transaction that would
otherwise

                                      -27-
<PAGE>   29

give rise to the foregoing adjustment is also subject to the
provisions of Section 13, then only the provisions of Section 13 shall apply and
no adjustment shall be made pursuant to this Section 11(a)(ii).

                           (iii)    If the number of Common Shares which are
authorized by the Company's certificate of incorporation but which are not
outstanding or reserved for issuance for purposes other than upon exercise of
the Rights, is not sufficient to permit the exercise in full of the Rights in
accordance with Section 11(a)(ii) and the Rights shall become so exercisable,
the Company shall take all such action as may be necessary (including seeking
stockholder approval for the authorization of additional shares) to authorize
additional Common Shares for issuance upon exercise in full of the Rights;
provided, however, that if the Company after using its reasonable best efforts
to do so is unable to cause the authorization of a sufficient number of
additional Common Shares within 120 days (the "Substitution Period"), the
Company shall: (A) determine the value of the Adjustment Shares issuable upon
the exercise of a Right (the "Current Value") and (B) with respect to each Right
(subject to Section 7(e)), upon the exercise of such Right and payment of the
applicable Purchase Price, make adequate provision to substitute for the
Adjustment Shares (1) cash, (2) a reduction in the Purchase Price, (3) Common
Shares or other equity securities of the Company (including, without limitation,
shares, or units of shares, of preferred stock of the Company which, by virtue
of having dividend, voting and liquidation rights substantially comparable to
the class of Common Shares of the Company for which a Right is exercisable are
deemed in good faith by the Board of Directors of the Company to have
essentially the same value as the class of Common Shares of the Company for
which a Right is exercisable (such shares or units of shares of preferred stock
are herein called "Common Share Equivalents")), (4) debt securities of the
Company, (5) other assets, or (6) any combination

                                      -28-
<PAGE>   30

of the foregoing, having an aggregate value which, when added to the value of
the Common Shares of the Company actually issued upon exercise of such Right,
shall have an aggregate value equal to the Current Value (less the amount of any
reduction in the Purchase Price), where such aggregate value has been determined
in good faith by the Board of Directors of the Company based upon the advice of
a nationally recognized independent investment banking firm selected in good
faith by the Board of Directors of the Company; provided, however, that if the
Company shall not have made adequate provision to deliver value pursuant to
clause (B) above within 120 days following the later of (x) the first occurrence
of a Section 11(a)(ii) Event and (y) the date on which the Company's right of
redemption pursuant to Section 23(a) expires (the later of (x) and (y) being
referred to as the "Section 11(a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Purchase Price, Common Shares of the Company for which
a Right is exercisable (to the extent available) and then, if necessary, cash or
shares of capital stock of the Company, which shares and/or cash have an
aggregate value equal to the excess of the Current Value over the Purchase
Price. To the extent that the Company determines that some action need be taken
pursuant to the first and/or second sentence of this Section 11(a)(iii), the
Company (x) shall provide, subject to Section 7(e), that such action shall apply
uniformly to all outstanding Rights, and (y) may suspend the exercisability of
the Rights until the expiration of the Substitution Period in order to seek any
authorization of additional shares and/or to decide the appropriate form of
distribution to be made pursuant to such first sentence and to determine the
value thereof. In the event of any such suspension, the Company shall issue a
public announcement stating that the exercisability of the Rights has been
temporarily suspended, as well as a public announcement at such time as the
suspension is no longer in effect. For purposes of this

                                      -29-
<PAGE>   31

Section 11(a)(iii), the value of each Adjustment Share shall be the Current
Market Price per Common Share of the Company on the Section 11(a)(ii) Trigger
Date and the per share or per unit value of any Common Share Equivalent shall be
deemed to equal the Current Market Price per Common Share of the Company on such
date.

                  (b)      If the Company shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all holders
of Junior Preferred Shares entitling them to subscribe for or purchase (for a
period expiring within 45 calendar days after such record date) Junior Preferred
Shares, shares having the same rights, privileges and preferences as the Junior
Preferred Shares ("Equivalent Preferred Shares") or securities convertible into
Junior Preferred Shares or Equivalent Preferred Shares at a price per Junior
Preferred Share or Equivalent Preferred Share (or having a conversion price per
share, if a security convertible into Junior Preferred Shares or Equivalent
Preferred Shares) less than the Current Market Price (as determined pursuant to
Section 11(d)) per Junior Preferred Share on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the number of Junior Preferred Shares
outstanding on such record date, plus the number of Junior Preferred Shares
which the aggregate offering price of the total number of Junior Preferred
Shares and/or Equivalent Preferred Shares so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such Current Market Price, and the denominator of which shall be the
number of Junior Preferred Shares outstanding on such record date, plus the
number of additional Junior Preferred Shares and/or Equivalent Preferred Shares
to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). If such subscription
price may be

                                      -30-
<PAGE>   32

paid by delivery of consideration, part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose determination shall be described
in a statement filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of the Rights. Junior Preferred Shares owned by or held
for the account of the Company shall not be deemed outstanding for the purpose
of any such computation. Such adjustment shall be made successively whenever
such a record date is fixed, and if such rights or warrants are not so issued,
the Purchase Price shall be adjusted to be the Purchase Price which would then
be in effect if such record date had not been fixed.

                  (c)      If the Company shall fix a record date for a
distribution to all holders of Junior Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend out of the
earnings or retained earnings of the Company), assets (other than a dividend
payable in Junior Preferred Shares, but including any dividend payable in stock
other than Junior Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b)), 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 Current Market Price (as determined pursuant to
Section 11(d)) per Junior Preferred Share on such record date, less the fair
market value (as determined in good faith by the Board of Directors of the
Company, whose determination shall be described in a statement filed with the
Rights Agent) of the portion of the cash, assets or evidences of indebtedness so
to be distributed or of such subscription rights or warrants applicable to one
Junior Preferred Share and the denominator of which shall be such

                                      -31-
<PAGE>   33

Current Market Price (as determined pursuant to Section 11(d)) per Junior
Preferred Share. Such adjustments shall be made successively whenever such a
record date is fixed; and if such distribution is not so made, the Purchase
Price shall be adjusted to be the Purchase Price which would have been in effect
if such record date had not been fixed.

                  (d)      (i)      For the purpose of any computation under
this Agreement, other than computations made pursuant to Section 11(a)(iii), the
"Current Market Price" per Common Share on any date shall be deemed to be the
average of the daily closing prices per share of the Common Shares for the 30
consecutive Trading Days (as such term is hereinafter defined) immediately prior
to such date, and for purposes of computations made pursuant to Section
11(a)(iii), the "Current Market Price" per Common Share on any date shall be
deemed to be the average of the daily closing prices per Common Share for the 10
consecutive Trading Days immediately following such date; provided, however,
that if the Current Market Price per Common Share is determined during a period
following the announcement by the issuer of such Common Shares of (A) any
dividend or distribution on such Common Shares payable in Common Shares or
securities convertible into Common Shares (other than a regular quarterly cash
dividend and other than the Rights), or (B) any subdivision, combination or
reclassification of such Common Shares, and prior to the expiration of the
requisite 30 Trading Day or 10 Trading Day period, as set forth above, the
ex-dividend date for such dividend or distribution, or the record date for such
subdivision, combination or reclassification occurs, then, and in each such
case, the Current Market Price shall be appropriately adjusted to take into
account ex-dividend trading. The closing price for each day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported in the principal consolidated transaction reporting system

                                      -32-
<PAGE>   34

with respect to securities listed or admitted to trading on the Nasdaq National
Market or, if the Common Shares are not listed or admitted to trading on the
Nasdaq National Market, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which the Common Shares are listed or admitted to trading
or, if the Common Shares are not listed or admitted to trading on any national
securities exchange, the last quoted sale 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 National Association of Securities Dealers, Inc., Automated
Quotations System or such other system then in use, or, if on any such date the
Common Shares 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 Common Shares selected by the Board of Directors of the Company.
If on any such date no market maker is making a market in the Common Shares, the
fair value of such shares on such date as determined in good faith by the Board
of Directors of the Company shall be used. The term "Trading Day" shall mean a
day on which the principal national securities exchange or national market
system on which the Common Shares are listed or admitted to trading is open for
the transaction of business or, if the Common Shares are not listed or admitted
to trading on any national securities exchange or national market system, a
Business Day. If the Common Shares are not publicly held or not so listed or
traded, "Current Market Price" per share shall mean the fair value per share as
determined in good faith by the Board of Directors of the Company whose
determination shall be described in a statement filed with the Rights Agent and
shall be conclusive for all purposes.

                           (ii)     For the purpose of any computation under
this Agreement, the "Current Market Price" of the Junior Preferred Shares shall
be determined in the same manner as

                                      -33-
<PAGE>   35

set forth above for the Common Shares in Section 11(d)(i) (other than the last 2
sentences thereof). If the Current Market Price per Junior Preferred Share
cannot be determined in the manner provided above, the "Current Market Price"
per Junior Preferred Share shall be conclusively deemed to be an amount equal to
1000 (as such number may be appropriately adjusted for such events as stock
splits, stock dividends and recapitalizations with respect to the Common Shares
of the Company occurring after the date of this Agreement) multiplied by the
Current Market Price per Common Share. If neither the Common Shares nor the
Junior Preferred Shares are publicly held or so listed or traded, "Current
Market Price" per share of the Junior Preferred Shares shall mean the fair value
per share as determined in good faith by the Board of Directors of the Company,
whose determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. For all purposes of this
Agreement, the "Current Market Price" of one one-thousandth of a Junior
Preferred Share shall be equal to the "Current Market Price" of one Junior
Preferred Share divided by 1000.

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

                                      -34-
<PAGE>   36

transaction which mandates such adjustment, or (ii) immediately prior to the
Expiration Date or the Final Expiration Date.

                  (f)      If as a result of an adjustment made pursuant to
Section 11(a) or Section 13(a), the holder of any Right thereafter exercised
shall become entitled to receive any property or shares of capital stock other
than Junior Preferred Shares, thereafter the amount of such property and 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 a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Junior Preferred Shares contained in this Section 11, and the
provisions of Sections 7, 9, 10, 13 and 14 with respect to the Junior Preferred
Shares shall apply on like terms to any such other property or 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 one
one-thousandths of a Junior Preferred Share purchasable from time to time
hereunder upon exercise of the Rights, all subject to further adjustment as
provided herein.

                  (h)      Unless the Company shall have exercised its election
as provided in Section 11(i), upon each adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and (c), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-thousandths of a Junior Preferred Share (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one one-thousandths
of a share covered by a Right immediately prior to this adjustment, by (y) the
Purchase Price in effect immediately

                                      -35-
<PAGE>   37

prior to such adjustment of the Purchase Price, and (ii) dividing the product so
obtained by the Purchase Price in effect immediately after such adjustment of
the Purchase Price.

                  (i)      The Company may elect on or after the date of any
adjustment of the Purchase Price or any adjustment to the number of one
one-thousandths of a Junior Preferred Share for which a Right may be exercised,
to adjust the number of Rights, in lieu of any adjustment in the number of one
one-thousandths of a Junior Preferred Share purchasable upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of one one-thousandths of a Junior
Preferred Share for which such Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest one
ten-thousandth) obtained by dividing the Purchase Price in effect immediately
prior to adjustment of the Purchase Price by the Purchase Price in effect
immediately after adjustment of the Purchase Price. The Company shall make a
public announcement of its election 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, 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

                                      -36-
<PAGE>   38

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 one one-thousandths of a Junior Preferred Share
issuable upon the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Purchase Price per one
one-thousandth of a Junior Preferred Share and the number of one one-thousandths
of a share 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 of one one-thousandths of a Junior Preferred Share issuable upon exercise
of the Rights, the Company shall take any corporate action, including using its
best efforts to obtain any required stockholder approvals, which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue fully paid and nonassessable one one-thousandths of a Junior
Preferred Share 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 issuance to the holder of any Right exercised after such record
date of the number of one one-thousandths of a Junior Preferred Share and other
capital stock or securities of the Company, if any, issuable upon such exercise
over and

                                      -37-
<PAGE>   39

above the number of one one-thousandths of a Junior Preferred Share and other
capital stock or securities of the Company, if any, issuable upon such exercise
on the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares (fractional or otherwise) or 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 in its good faith judgment the Board of
Directors of the Company shall determine to be advisable in order that any (i)
consolidation or subdivision of the Junior Preferred Shares, (ii) issuance
wholly for cash of any Junior Preferred Shares at less than the Current Market
Price, (iii) issuance wholly for cash of Junior Preferred Shares or securities
which by their terms are convertible into or exchangeable for Junior Preferred
Shares, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of its
Junior Preferred Shares shall not be taxable to such stockholders.

                  (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 which complies with
Section 11(o)), (ii) merge with or into any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)),
or (iii) sell or transfer (or permit any Subsidiary to sell or transfer), in one
transaction or a series of related transactions not in the ordinary course of
the Company's business, assets, cash flow or earning power aggregating more than
50% of the assets, cash flow or earning power of the

                                      -38-
<PAGE>   40

Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than the Company and/or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o)), if (x) at the time of
or immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in effect
which would substantially diminish or otherwise eliminate the benefits intended
to be afforded by the Rights or (y) prior to, simultaneously with or immediately
after such consolidation, merger or sale, the stockholders of the Person who
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.

                  (o)      The Company covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23 or Section 27,
take (or permit any Subsidiary 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.

                  (p)      Anything in this Agreement to the contrary
notwithstanding, if the Company shall at any time after the date of this
Agreement and prior to the Distribution Date (i) declare a dividend on the
outstanding Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares, or (iii) combine the outstanding Common Shares into a
smaller number of shares, the number of Rights associated with each Common Share
or share of Series D Preferred Stock, Series E Preferred Stock or Series G
Preferred Stock, as the case may be, then outstanding, or issued or delivered
thereafter but prior to the Distribution Date, shall be proportionately adjusted
so that the number of Rights thereafter associated with each Common Share or
share of Series D Preferred Stock, Series E Preferred Stock or Series G
Preferred Stock, as the case may be, following any such event shall equal the
result obtained by multiplying the

                                      -39-
<PAGE>   41

number of Rights associated with each Common Share or share of Series D
Preferred Stock, Series E Preferred Stock or Series G Preferred Stock, as the
case may be, immediately prior to such event by a fraction the numerator which
shall be the aggregate number of Common Shares outstanding immediately prior to
the occurrence of the event (including Common Shares issuable in respect of the
conversion of the Series D Preferred Stock, Series E Preferred Stock and Series
G Preferred Stock) and the denominator of which shall be the aggregate number of
Common Shares outstanding immediately following the occurrence of such event
(including Common Shares issuable in respect of the conversion of the Series D
Preferred Stock, Series E Preferred Stock and Series G Preferred Stock).

         Section 12.       Certification of Adjustments. Whenever an adjustment
is made as provided in Sections 11 and 13, the Company shall (a) promptly
prepare a certificate setting forth such adjustment and a brief statement of the
facts giving rise to such adjustment, (b) promptly file with the Rights Agent
and with each transfer agent for the Common Shares, Series D Preferred Stock,
Series E Preferred Stock, Series G Preferred Stock or Junior Preferred Shares a
copy of such certificate and (c) if a Distribution Date has occurred, mail a
brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing Common
Shares, Series D Preferred Stock, Series E Preferred Stock or Series G Preferred
Stock) in accordance with Section 26. Notwithstanding the foregoing sentence,
the failure of the Company to give such notice shall not affect the validity of
or the force or effect of or the requirement for such adjustment. The Rights
Agent shall be fully protected in relying on any certificate prepared by the
Company pursuant to Sections 11 and 13 and on any adjustment therein contained.
Any adjustment to be made pursuant to Sections 11

                                      -40-
<PAGE>   42

and 13 of this Agreement shall be effective as of the date of the event giving
rise to such adjustment.

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

                  (a)      If at any time following the time an Acquiring Person
becomes such, directly or indirectly, (x) the Company shall consolidate with, or
merge with and into, any other Person or Persons (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o)), and the Company
shall not be the surviving or continuing corporation of such consolidation or
merger, (y) any Person or Persons (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o)), shall consolidate with, or merge
with and into, the Company, and the Company shall be the continuing or surviving
corporation of such consolidation or merger and, in connection with such
consolidation or merger, all or part of the outstanding Common Shares shall be
changed into or exchanged for stock or other securities of any other Person or
of the Company or cash or any other property, or (z) the Company or one or more
of its Subsidiaries shall sell or otherwise transfer to any other Person or any
Affiliate or Associate of such Person (other than the Company or any Subsidiary
of the Company in one or more transactions each of which complies with Section
11(o)), in one transaction or a series of related transactions not in the
ordinary course of the Company's business, assets, cash flow, or earning power
aggregating more than 50% of the assets, cash flow or earning power of the
Company and its Subsidiaries (taken as a whole), then, on the first occurrence
of any such event, proper provision shall be made so that (i) each holder of
record of a Right, except as provided in Section 7(e), shall thereafter have the
right to receive, upon the exercise thereof at the then current Purchase Price
in accordance with the terms of this Agreement, such number of shares of validly
issued, fully paid and nonassessable and freely tradeable Common Shares of the
Principal

                                      -41-
<PAGE>   43

Party (as defined herein) not subject to any liens, encumbrances, rights of
first refusal or other adverse claims, as shall be equal to the result obtained
by (1) multiplying the then current Purchase Price by the number of one
one-thousandths of a Junior Preferred Share for which a Right was exercisable
immediately prior to the first occurrence of a Section 13 Event (or, if a
Section 11(a)(ii) Event has occurred prior to the first occurrence of a Section
13 Event, multiplying the Purchase Price in effect immediately prior to the
first occurrence of a Section 11(a)(ii) Event by the number of one
one-thousandths of a Junior Preferred Share for which a Right was exercisable
immediately prior to such first occurrence of a Section 11(a)(ii) Event) and (2)
dividing that product (such product, following the first occurrence of a Section
13 Event, shall be referred to as the "Purchase Price" for each Right and for
all purposes of this Agreement) by 50% of the Current Market Price (determined
as provided in Section 11(d)) per Common Share of such Principal Party on the
date of consummation of such Section 13 Event (or the fair market value on such
date of other securities or property of the Principal Party, as provided for
herein); provided that the Purchase Price and the number of Common Shares of
such Principal Party issuable upon exercise of each Right shall be further
adjusted as provided in this Agreement to reflect any events occurring after the
date of the first occurrence of a Section 13 Event; (ii) such Principal Party
shall thereafter be liable for, and shall assume, by virtue of such Section 13
Event, all the obligations and duties of the Company pursuant to this Agreement;
(iii) the term "Company" for all purposes of this Agreement shall thereafter be
deemed to refer to such Principal Party, it being specifically intended that the
provisions of Section 11 shall only apply to such Principal Party following the
first occurrence of a Section 13 Event; and (iv) such Principal Party shall take
such steps (including, but not limited to, the reservation of a sufficient
number of its Common Shares in accordance with Section 9) in

                                      -42-
<PAGE>   44

connection with the consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as nearly as
reasonably may be, in relation to its Common Shares thereafter deliverable upon
the exercise of the Rights; provided, however, that, upon the subsequent
occurrence of any merger, consolidation, sale of all or substantially all
assets, recapitalization, reclassification of shares, reorganization or other
extraordinary transaction in respect of such Principal Party, each holder of a
Right shall thereupon be entitled to receive, upon exercise of a Right and
payment of the Purchase Price, such cash, shares, rights, warrants and other
property which such holder would have been entitled to receive had he, at the
time of such transaction, owned the Common Shares of the Principal Party
purchasable upon the exercise of a Right, and such Principal Party shall take
such steps (including, but not limited to, reservation of shares of stock) as
may be necessary to permit the subsequent exercise of the Rights in accordance
with the terms hereof for such cash, shares, rights, warrants and other
property. The provisions of Section 11(a)(ii) shall be of no effect following
the first occurrence of any Section 13 Event.

                  (b)      "Principal Party" shall mean

                           (1)      in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a): (A) the Person that is
the issuer of any securities into which Common Shares of the Company are
converted in such merger or consolidation, or, if there is more than one such
issuer, the issuer the Common Shares of which has the greatest market value or
(B) if no securities are so issued, (x) the Person that is the other party to
the merger or consolidation and that survives said merger or consolidation, or,
if there is more than one such Person, the Person the Common Shares of which has
the greatest market value or (y) if the Person that is the other party to the
merger or consolidation does not survive the merger or

                                      -43-
<PAGE>   45

consolidation, the Person that does survive the merger or consolidation
(including the Company if it survives); and

                           (2)      in the case of any transaction described in
clause (z) of the first sentence in Section 13(a), the Person that is the party
receiving the greatest portion of the assets or earning power transferred
pursuant to such transaction or transactions, or, if each Person that is a party
to such transaction or transactions receives the same portion of the assets or
earning power so transferred or if the Person receiving the greatest portion of
the assets or earning power cannot be determined, whichever of such Persons as
is the issuer of Common Shares having the greatest market value of shares
outstanding; provided, however, that in any such case described in the foregoing
(b)(i) or (b)(ii), if the Common Shares of such Person are not at such time and
have not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the Common Shares of which are and have been so
registered, the term "Principal Party" shall refer to such other Person, or if
such Person is a Subsidiary, directly or indirectly, of more than one Person,
the Common Shares of which are and have been so registered, the term "Principal
Party" shall refer to whichever of such Persons is the issuer of the Common
Shares having the greatest market value of shares outstanding.

                  (c)      The Company shall not consummate any consolidation,
merger, sale or transfer referred to in Section 13(a) unless the Principal Party
shall have a sufficient number of authorized Common Shares which have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Company and the
Principal Party involved therein shall have executed and delivered to the Rights
Agent an agreement confirming that the requirements of Sections 13(a) and (b)
shall

                                      -44-
<PAGE>   46

promptly be performed in accordance with their terms and that such
consolidation, merger, sale or transfer shall not result in a default by the
Principal Party under this Agreement as the same shall have been assumed by the
Principal Party pursuant to Sections 13(a) and (b) hereof and further providing
that, as soon as practicable after executing such agreement pursuant to this
Section 13, the Principal Party will:

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

                           (2)      use its best efforts, if the Common Shares
of the Principal Party shall become listed on a national securities exchange, to
list (or continue the listing of) the Rights and the securities purchasable upon
exercise of the Rights on such securities exchange and, if the Common Shares of
the Principal Party shall not be listed on a national securities exchange, to
cause the Rights and the securities purchasable upon exercise of the Rights to
be listed by a national securities exchange or admitted for trading on the
Nasdaq National Market;

                           (3)      deliver to holders of the Rights historical
financial statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10 (or any
successor form) under the Exchange Act; and

                                      -45-
<PAGE>   47
         (4) obtain waivers of any rights of first refusal or preemptive rights
in respect of the Common Shares of the Principal Party subject to purchase upon
exercise of outstanding Rights.

If any of the transactions described in Section 13(a) shall occur at any time
after the occurrence of a transaction described in Section 11(a)(ii), the Rights
which have not theretofore been exercised shall thereafter be exercisable in the
manner described in Section 13(a). The provisions of this Section 13 shall
similarly apply to all successive mergers, consolidations, sales, transfers or
other Section 13 Events.

         (d) Furthermore, if the Principal Party which is to be a party to a
transaction referred to in this Section 13 has a provision in any of its
authorized securities or in its certificate of incorporation, articles of
incorporation, bylaws or other instrument governing its corporate affairs, which
provision would have the effect of (i) causing such Principal Party to issue, in
connection with, or as a consequence of, the consummation of a transaction
referred to in this Section 13, Common Shares of such Principal Party at less
than the then Current Market Price per share (determined pursuant to Section
11(d)(i)) or securities exercisable for, or convertible into, Common Shares of
such Principal Party at less than such then Current Market Price (other than to
holders of Rights pursuant to this Section 13) or (ii) providing for any special
payment, tax or similar provisions in connection with the issuance of Common
Shares of such Principal Party pursuant to the provisions of this Section 13;
then, in such event, the Company hereby agrees with each holder of Rights that
it shall not consummate any such transaction unless prior thereto the Company
and such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing that the provision in question of such
Principal Party shall have been canceled, waived or amended, or that the
authorized securities shall be

                                      -46-

<PAGE>   48

redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.

         Section 14. Fractional Rights and Fractional Shares.

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

                (b)  The Company shall not be required to issue fractions of
Junior Preferred Shares (other than fractions which are integral multiples of
one one-thousandths of a Junior Preferred Share) upon exercise of the Rights, or
to exchange the Rights pursuant to Section 24 of this Agreement for fractions of
Common Shares. Fractions of Junior Preferred Shares in integral multiples of one
one-thousandth of a Junior Preferred Share may, at the election of the Company,
be evidenced by depositary receipts, pursuant to an appropriate agreement
between the Company and a depositary selected by it, provided that such
agreement shall provide that the holders of such depositary receipts shall have
all the rights, privileges and preferences to which they are entitled as
beneficial owners of the Junior Preferred Shares. With respect to fractional
Junior Preferred Shares that are not integral multiples of one one-thousandth of
a Junior Preferred Share, if the Company does not issue fractional shares or
depositary receipts in lieu thereof, the Company shall pay to the registered
holders of Rights Certificates at the time such Rights

                                      -47-

<PAGE>   49

Certificates are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one one-thousandth of a Junior
Preferred Share. For purposes of this Section 14(b), the current market value of
one one-thousandth of a Junior Preferred Share shall be the Current Market Price
of one one-thousandth of a Junior Preferred Share (as determined pursuant to
Section 11(d)(ii)).

                (c)  Following the occurrence of a Triggering Event, the Company
shall not be required to issue fractions of Common Shares upon exercise of the
Rights or to distribute certificates which evidence fractional Common Shares. In
lieu of fractional Common Shares, the Company may pay to the registered holders
of Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the current per share market
value of one Common Share for which a Right is exercisable. For the purposes of
this Section 14(c), the current per share market value of one Common Share for
which a Right is exercisable shall be the closing price of one Common Share (as
determined pursuant to Section 11(d)(i) hereof) for the Trading Day immediately
prior to the date of such exercise.

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

         Section 15. Rights of Action. All rights of action in respect of this
Agreement, except the rights of action given to the Rights Agent under Section
18, are vested in the respective holders of record of the Rights Certificates
(and, prior to the Distribution Date, the holders of record of the Common
Shares, Series D Preferred Stock, Series E Preferred Stock and Series G

                                      -48-

<PAGE>   50

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

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

                (a)  prior to the Distribution Date, the Rights will not be
evidenced by a Rights Certificate and will be transferable only in connection
with the transfer of Common Shares, Series D Preferred Stock, Series E Preferred
Stock or Series G Preferred Stock;

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

                                      -49-

<PAGE>   51

                  (c) subject to Section 6(a) and Section 7(f), the Company and
the Rights Agent may deem and treat the Person in whose name the Rights
Certificate (or, prior to the Distribution Date, the associated Common Shares,
Series D Preferred Stock, Series E Preferred Stock or Series G Preferred 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 the associated Common Shares, Series D Preferred Stock,
Series E Preferred Stock or Series G Preferred Stock certificate made by anyone
other than the Company or the Rights Agent or the transfer agent of the Common
Shares of the Company, the Series D Preferred Stock, Series E Preferred Stock or
Series G Preferred Stock) for all purposes whatsoever, and, subject to Section
7(e), 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 a beneficial interest in 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, that the Company must 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 of a Right or a Rights Certificate, as such, shall be entitled to vote,
receive dividends in respect of or be deemed for any purpose to be the holder of
Junior Preferred Shares or any other securities of

                                      -50-

<PAGE>   52

the Company which may at any time be issuable upon the exercise of the Rights,
nor shall anything contained in this Agreement or in any Rights Certificate be
construed to confer upon the holder of any Rights Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting stockholders (except as set forth
in Section 25), or to receive dividends or subscription rights in respect of any
such stock or securities, or otherwise, until the Right or Rights evidenced by
such certificate for Common Shares, Series D Preferred Stock, Series E Preferred
Stock or Series G Preferred Stock or Rights Certificate, as the case may be,
shall have been exercised in accordance with the provisions of this Agreement.

         Section 18. Concerning the Rights Agent.

                (a)  The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it under this Agreement and, from time
to time, on demand of the Rights Agent, its reasonable expenses and counsel fees
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties under this Agreement.
The Company also agrees to indemnify the Rights Agent for, and to hold it
harmless against, any loss, liability or expense incurred without negligence,
bad faith or willful misconduct on the part of the Rights Agent for anything
done or omitted to be done by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability in the premises.

                (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, certificate for Common Shares, Series D

                                      -51-

<PAGE>   53

Preferred Stock, Series E Preferred Stock, Series G Preferred Stock or other
securities of the Company, instrument of assignment or transfer, power of
attorney, endorsement, affidavit, letter, notice, direction, consent,
certificate, statement or other paper or document believed by it to be genuine
and to be signed, executed and, where necessary, guaranteed, verified or
acknowledged, by the proper Person or Persons.

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

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

                                      -52-

<PAGE>   54

                (b)  If 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 such Rights Certificates so countersigned; and
if at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.

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

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

                (b)  Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company prior to taking or suffering any
action under this Agreement, such fact or matter (unless other evidence in
respect thereof be specifically prescribed in this Agreement) may be deemed to
be conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the Chief Executive Officer, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company and delivered to the Rights Agent; and such
certificate shall be full authorization to the Rights Agent

                                      -53-

<PAGE>   55

for any action taken or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.

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

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

                (e)  The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery of this
Agreement (except the due execution of this Agreement by the Rights Agent) or in
respect of the validity or execution of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights or any adjustment required under the provisions of
this Agreement or responsible for the manner, method or amount of any such
change or adjustment or the ascertaining of the existence of facts that would
require any such change in the exercisability of the Rights or any change or
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after actual notice of any such change or adjustment); nor shall it
by any act under this Agreement be deemed to make any representation or warranty
as to the authorization or reservation of any Common Shares or Junior Preferred
Shares or other securities to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any Common Shares or Junior Preferred

                                      -54-

<PAGE>   56

Shares or 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.

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

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

                (i)  The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty under this Agreement 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

                                      -55-
<PAGE>   57

resulting from any such act, default, neglect or misconduct, provided reasonable
care was exercised in the selection and continued employment thereof.

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

         Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Company and to each transfer agent
of the Common Shares, Series D Preferred Stock, Series E Preferred Stock, Series
G Preferred Stock and the Junior Preferred Shares by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. The
Company may remove the Rights Agent or any successor Rights Agent (with or
without cause) upon 30 days' notice in writing, mailed to the Rights Agent or
any successor Rights Agent, as the case may be, and to each transfer agent of
the Common Shares, Series D Preferred Stock, Series E Preferred Stock, Series G
Preferred Stock and the Junior Preferred Shares by registered or certified mail,
and 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. Notwithstanding the
foregoing provisions of this Section 21, in no event shall the resignation or
removal of a Rights Agent be effective until a successor Rights Agent shall have
been appointed and have accepted such appointment. If the Company shall fail to
make such appointment within a period of

                                      -56-

<PAGE>   58

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
incumbent Rights Agent or the holder of record 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 thereof, in good standing, which is authorized under
such laws to exercise corporate trust or stock transfer powers and is subject to
supervision or examination by federal or state authority and which has, or
together with its parent entity has, at the time of its appointment as Rights
Agent a combined capital and surplus of at least $100 million. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it under this Agreement, and execute and deliver any further assurance,
conveyance, act or deed necessary for the purpose. Not later than the effective
date of any such appointment, the Company shall file notice thereof in writing
with the predecessor Rights Agent and each transfer agent of the Common Shares,
the Series D Preferred Stock, the Series E Preferred Stock, the Series G
Preferred Stock and the Junior Preferred Shares, and mail a notice thereof in
writing to the holders of record of the Rights Certificates or, if prior to the
Distribution Date, the holders of record of the Common Shares, the Series D
Preferred Stock, the Series E Preferred Stock and the Series G Preferred Stock.
Failure to give any notice provided for in this Section 21, however, or

                                      -57-

<PAGE>   59

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 of Directors to reflect any adjustment or change
in the Expiration Date, the Purchase Price 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 of Common Shares, Series D
Preferred Stock, Series E Preferred Stock or Series G Preferred Stock following
the Distribution Date and prior to the redemption or expiration of the Rights,
the Company (i) shall, with respect to Common Shares, Series D Preferred Stock,
Series E Preferred Stock or Series G Preferred Stock so issued or sold pursuant
to the exercise of stock options or under any employee plan or arrangement,
granted or awarded as of the Distribution Date, or upon the exercise, conversion
or exchange of securities issued by the Company hereinafter but prior to the
Distribution Date, and (ii) may, in any other case, if deemed necessary or
appropriate by the Board of Directors of the Company, issue Rights Certificates
representing the appropriate number of Rights in connection with such issuance
or sale; provided, however, that (x) no such Rights Certificate shall be 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 Certificate would be issued, and
(y) 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.

                                      -58-

<PAGE>   60

         Section 23. Redemption and Termination.

                (a)  The Board of Directors of the Company may, at its option,
at any time prior to the earlier of (i) any Person becoming an Acquiring Person
(or, if any Person becomes an Acquiring Person prior to the Record Date, by
action taken by the Board of Directors of the Company prior to any Person
becoming an Acquiring Person but effective as of the Close of Business on the
Record Date), or (ii) the Final Expiration Date, redeem all but not less than
all the then outstanding Rights at a redemption price of $.001 per Right, as
such amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date of this Agreement (such
redemption price being referred to in this Agreement as the "Redemption Price").
The redemption of the Rights by the Board of Directors of the Company may be
made effective at such time, on such basis and with such conditions as the Board
of Directors of the Company may establish in good faith.

                (b)  Immediately upon the action of the Board of Directors of
the Company ordering the redemption of the Rights pursuant to Section 23(a), and
without any further action and without any notice, the right to exercise the
Rights will terminate and the only right thereafter of the holders of Rights
shall be to receive the Redemption Price. Promptly after such action of the
Board of Directors ordering the redemption of the Rights, the Company shall give
notice of such redemption to the Rights Agent and the holders of the then
outstanding Rights by mailing such notice to all such holders at each holder's
last address as it appears upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent of the
Common Shares, the Series D Preferred Stock, the Series E Preferred Stock and
the Series G Preferred Stock. 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

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<PAGE>   61

redemption will state the method by which the payment of the Redemption Price
will be made. The failure to give notice required by this Section 23 or any
defect therein shall not affect the legality or validity of any redemption
hereunder. Neither the Company nor any of its Affiliates or Associates may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24, and other
than in connection with the purchase of Common Shares, Series D Preferred Stock,
Series E Preferred Stock or Series G Preferred Stock prior to the Distribution
Date.

         Section 24. Exchange.

                (a)  The Board of Directors of the Company may, at its option,
at any time after any Person becomes an Acquiring Person, exchange all or part
of the then outstanding and exercisable Rights (which shall not include Rights
that have become null and void pursuant to the provisions of Section 7(e)) for
Common Shares at an exchange ratio of one Common Share per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date of this Agreement (such exchange ratio being referred
to in this Agreement as the "Exchange Ratio"). Notwithstanding the foregoing,
the Board of Directors shall not be empowered to effect such exchange at any
time after any Person (other than an Exempt Person), together with all
Affiliates and Associates of such Person, becomes the Beneficial Owner of 50% or
more of the Voting Power of the Common Shares then outstanding.

                  (b) Immediately upon the action of the Board of Directors of
the Company ordering the exchange of any Rights pursuant to Section 24(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Common Shares equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company

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<PAGE>   62

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 shall promptly mail a notice of any such exchange
to all of the holders of such Rights at the last addresses of the holders as
they appear upon the registry books of the Rights Agent. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of exchange will state the method
by which the exchange of the Common Shares for Rights will be effected and, in
the event of any partial exchange, the number and kind of Rights which will be
exchanged. The failure to give notice required by this Section 24 or any defect
therein shall not affect the legality or validity of any exchange hereunder.

                (c)  Any partial exchange shall be effected pro rata based on
the number of Rights being exchanged (other than Rights which have become null
and void pursuant to the provisions of Section 7(e)) held by each holder of
Rights.

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

                  (e) The Company shall not be required to issue fractions of
Common Shares or to distribute certificates which evidence fractional Common
Shares. In lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Rights Certificates with regard to which such
fractional Common Shares would otherwise be issuable, an amount in cash equal to
the same fraction of the current market value of such whole Common Shares. For
purposes of this Section 24(d), the current market value of a whole Common Share
shall be the

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<PAGE>   63

closing price of a Common Share (as determined pursuant to the second sentence
of Section 11(d)(i)) for the Trading Day immediately prior to the date of
exchange pursuant to this Section 24.

         Section 25. Notice of Proposed Actions.

                (a)  If the Company, at any time after the Distribution Date,
shall propose to (i) effect any of the transactions referred to in Section
11(a)(i) or to pay any dividend to the holders of record of its Junior Preferred
Shares payable in stock of any class or to make any other distribution to the
holders of record of its Junior Preferred Shares (other than a regular quarterly
cash dividend out of earnings or retained earnings of the Company), (ii) offer
to the holders of record of its Junior Preferred Shares options, warrants or
other rights to subscribe for or to purchase Junior Preferred Shares (including
any security convertible into or exchangeable for Junior Preferred Shares) or
shares of stock of any class or any other securities, options, warrants,
convertible or exchangeable securities or other rights, (iii) effect any
reclassification of its Junior Preferred Shares or any recapitalization or
reorganization of the Company, (iv) effect any consolidation or merger with or
into, 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 not in the ordinary course of the Company's
business, of more than 50% of the assets or earning power of the Company and its
Subsidiaries (taken as a whole) to, any other Person or Persons, or (v) effect
the liquidation, dissolution or winding up of the Company, then, in each such
case, the Company shall give to each holder of record of Rights, in accordance
with Section 26, notice of such proposed action, which shall specify the record
date for the purposes of such transaction referred to in Section 11(a)(i), or
such dividend or distribution, or the date on which such reclassification,
recapitalization, reorganization, consolidation, merger, sale or

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<PAGE>   64

transfer of assets, liquidation, dissolution, or winding up is to take place and
the record date for determining participation therein by the holders of record
of Junior Preferred Shares, if any such date is to be fixed, and such notice
shall be so given in the case of any action covered by clause (i) or (ii) above
at least 10 days prior to the record date for determining holders of record of
the Junior Preferred Shares for purposes of such action, and in the case of any
such other action, at least 10 days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of record of
Junior Preferred Shares, whichever shall be the earlier.

                (b)  If any of the transactions referred to in Section 11(a)(ii)
or Section 13 of this Agreement are proposed, then, in any such case, the
Company shall give to each holder of Rights, in accordance with Section 26,
notice of the proposal of such transaction at least 10 days prior to
consummating such transaction, which notice shall specify the proposed event and
the consequences of the event to holders of Rights under Section 11(a)(ii) or
Section 13, as the case may be, and, upon consummating such transaction, shall
similarly give notice thereof to each holder of Rights.

                (c)  If any Section 11(a)(ii) Event shall occur, then all
references in this Section 25 to Junior Preferred Shares shall be deemed
thereafter to refer to the class of Common Shares or other securities for which
the Rights are then exercisable.

         Section 26. Notices. Except as provided in Section 21, notices or
demands authorized by this Agreement to be given or made by the Rights Agent or
by the holder of record of any Rights Certificate or Right to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:

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<PAGE>   65

                           Z-Tel Technologies, Inc.
                           601 South Harbour Island Boulevard
                           Suite 220
                           Tampa, Florida 33602
                           Attention: General Counsel

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

                           American Stock Transfer & Trust Company
                           59 Maiden Lane
                           New York, New York 10038
                           Attention: Wilbert Myles

Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of record of any Rights Certificate or
Right (or, if prior to the Distribution Date, to the holder of certificates
representing Common Shares, Series D Preferred Stock, Series E Preferred Stock
or Series G Preferred Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as it appears upon the registry books of the Rights Agent or, prior
to the Distribution Date, on the registry books of the transfer agent of the
Company.

         Section 27. Supplements and Amendments. Prior to any Person becoming an
Acquiring Person, the Company may and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of the Rights, the Common Shares, the Series D Preferred
Stock, the Series E Preferred Stock or the Series G Preferred Stock. From and
after any Person becoming an Acquiring Person, the Company may and the Rights
Agent shall, if the Company so directs, supplement or amend this

                                      -64-

<PAGE>   66

Agreement without the approval of any holders of Rights in order to (i) cure any
ambiguity, (ii) correct or supplement any provision contained in this Agreement
which may be defective or inconsistent with any other provisions in this
Agreement, or (iii) change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable; provided, that no such
supplement or amendment shall adversely affect the interests of the holders of
Rights (other than any interest of an Acquiring Person or an Affiliate or
Associate of an Acquiring Person). Upon the delivery of a certificate from an
appropriate officer of the Company which states that the proposed supplement or
amendment is in compliance with the terms of this Section 27, the Rights Agent
shall execute such supplement or amendment. Prior to the Distribution Date, the
interests of the holders of Rights shall be deemed coincident with the interests
of the holders of the Common Shares, the Series D Preferred Stock, the Series E
Preferred Stock or the Series G Preferred Stock, as the case may be.
Notwithstanding anything contained in this Agreement to the contrary, this
Agreement may not be amended at a time when the Rights are not redeemable.

         Section 28. Determinations and Actions by the Board. The Board of
Directors of the Company shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Board of Directors or to the Company or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power to (i) interpret the provisions of this
Agreement, and (ii) make all determinations deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend this Agreement). All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in

                                      -65-

<PAGE>   67

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

         Section 29. Successors. All of 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 under 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 holders of record of the Rights Certificates (and, prior to the Distribution
Date, the Common Shares, the Series D Preferred Stock, the Series E Preferred
Stock and the Series G Preferred Stock) any legal or equitable right, remedy or
claim under this Agreement; but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the holders of record of
the Rights Certificates (and, prior to the Distribution Date, the Common Shares,
the Series D Preferred Stock, the Series E Preferred Stock and the Series G
Preferred Stock).

         Section 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued under this Agreement shall be deemed to be a contract made
under the laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts made and to be performed entirely within such State.

         Section 32. 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.

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<PAGE>   68

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

         Section 34. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, illegal, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated.

                                      -67-

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