Document:

SPECTRIAN CORPORATION

                                       and

                    ChaseMellon Shareholder Services, L.L.C.

                                  Rights Agent

               SECOND AMENDED AND RESTATED PREFERRED SHARES RIGHTS
                                   AGREEMENT

                           Dated as of August 14, 2000

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<TABLE>
<CAPTION>
                                                      TABLE OF CONTENTS
<S>               <C>                                                                                               <C>
                                                                                                                   Page

Section 1.        Certain Definitions.................................................................................1

Section 2.        Appointment of Rights Agent.........................................................................7

Section 3.        Issuance of Rights Certificates.....................................................................7

Section 4.        Form of Rights Certificates.........................................................................9

Section 5.        Countersignature and Registration..................................................................10

Section 6.        Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
                  Destroyed, Lost or Stolen Rights Certificates......................................................10

Section 7.        Exercise of Rights; Exercise Price; Expiration Date of Rights......................................11

Section 8.        Cancellation and Destruction of Rights Certificates................................................13

Section 9.        Reservation and Availability of Preferred Shares...................................................13

Section 10.       Record Date........................................................................................15

Section 11.       Adjustment of Exercise Price, Number of Shares or Number of Rights.................................15

Section 12.       Certificate of Adjusted Exercise Price or Number of Shares.........................................21

Section 13.       Consolidation, Merger or Sale or Transfer of Assets or Earning Power...............................22

Section 14.       Fractional Rights and Fractional Shares............................................................25

Section 15.       Rights of Action...................................................................................26

Section 16.       Agreement of Rights Holders........................................................................27

Section 17.       Rights Certificate Holder Not Deemed a Stockholder.................................................27

Section 18.       Concerning the Rights Agent........................................................................27

Section 19.       Merger or Consolidation or Change of Name of Rights Agent..........................................28

Section 20.       Duties of Rights Agent.............................................................................28

Section 21.       Change of Rights Agent.............................................................................30

                                                          -ii-

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                                                     TABLE OF CONTENTS
                                                       (continued)

                                                                                                                   Page

Section 22.       Issuance of New Rights Certificates................................................................31

Section 23.       Redemption.........................................................................................32

Section 24.       Exchange...........................................................................................32

Section 25.       Notice of Certain Events...........................................................................34

Section 26.       Notices............................................................................................34

Section 27.       Supplements and Amendments.........................................................................35

Section 28.       Successors.........................................................................................36

Section 29.       Determinations and Actions by the Board of Directors, etc..........................................36

Section 30.       Benefits of this Agreement.........................................................................36

Section 31.       Severability.......................................................................................36

Section 32.       Governing Law......................................................................................36

Section 33.       Counterparts.......................................................................................37

Section 34.       Descriptive Headings...............................................................................37

EXHIBITS

Exhibit A         Form of Certificate of Incorporation

Exhibit B         Form of Rights Certificate

Exhibit C         Summary of Rights

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                                                         -iii-

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          SECOND AMENDED AND RESTATED PREFERRED SHARES RIGHTS AGREEMENT

         This Second Amended and Restated Preferred Shares Rights Agreement,  is
dated  as  of  August  4,  2000,  between  Spectrian  Corporation,   a  Delaware
corporation,  and ChaseMellon Shareholder Services, L.L.C., a New Jersey limited
liability company, as rights agent (the "Rights Agent").

         WHEREAS,  the Company and the Rights  Agent are parties to that certain
Rights  Agreement  entered into as of October 23, 1996 and amended and rested in
full as of January 15, 1997 (the "Prior Agreement");

         WHEREAS, on December 30, 1996 (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company  authorized and declared a dividend of one
Preferred Share purchase right (a "Right") for each Common Share (as hereinafter
defined) of the Company  outstanding as of the Close of Business (as hereinafter
defined) on March 21, 1997 (the  "Record  Date"),  each Right  representing  the
right  to  purchase  one  one-thousandth  of a share of  Series A  Participating
Preferred  Stock (as such number may be adjusted  pursuant to the  provisions of
this Agreement),  having the rights, preferences and privileges set forth in the
form of Certificate of  Designations  of Rights,  Preferences  and Privileges of
Series A  Participating  Preferred  Stock attached hereto as Exhibit A, upon the
terms and subject to the conditions herein set forth, and further authorized and
directed the  issuance of one Right (as such number may be adjusted  pursuant to
the provisions of this  Agreement)  with respect to each Common Share that shall
become  outstanding  between the Record Date and the earlier of the Distribution
Date and the Expiration  Date (as such terms are  hereinafter  defined),  and in
certain circumstances after the Distribution Date.

         WHEREAS, the Company has determined that, pursuant to Section 27 of the
Prior  Agreement,  the Prior  Agreement may be amended and restated as set forth
herein  without  the  approval  of the  holders of the  Rights  (as  hereinafter
defined)  and the Company  wishes to amend and restate  that Prior  Agreement to
provide as follows.

         NOW,  THEREFORE,  in  consideration  of the  promises  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 Common Shares then outstanding, but shall
not include the Company,  any Subsidiary of the Company or any employee  benefit
plan of the Company or of any  Subsidiary of the Company,  or any entity holding
Common Shares for or pursuant to the terms of any such plan; provided,  however,
that Kopp Investment  Advisors,  Inc. ("Kopp") shall not be deemed an "Acquiring
Person" until such time as Kopp shall be the  Beneficial  Owner of more than 25%
of the  Common  Shares  then

<PAGE>

outstanding  or until  such time as Kopp shall be  required  to file a report of
beneficial ownership on Schedule 13D with the Securities and Exchange Commission
with respect to its holdings of the  Company's  Common Stock  (collectively  the
"Limitations").  Notwithstanding the foregoing,  no Person shall be deemed to be
an  Acquiring  Person as the result of an  acquisition  of Common  Shares by the
Company  which,  by reducing  the number of shares  outstanding,  increases  the
proportionate  number of shares beneficially owned by such Person to 15% or more
of the Common  Shares of the Company then  outstanding  or with respect to Kopp,
Kopp is not in compliance with the  Limitations;  provided,  however,  that if a
Person shall become the Beneficial  Owner of 15% or more of the Common Shares of
the Company then outstanding, or with respect to Kopp, Kopp shall fail to comply
with the  Limitations,  by reason of share  purchases  by the Company and shall,
after such share  purchases by the Company,  become the Beneficial  Owner of any
additional  Common  Shares of the Company  (other than pursuant to a dividend or
distribution  paid or made by the Company on the  outstanding  Common  Shares in
Common Shares or pursuant to a split or subdivision of the  outstanding,  Common
Shares),  then such Person shall be deemed to be an Acquiring Person unless upon
becoming the Beneficial  Owner of such  additional  Common Shares of the Company
such Person does not  beneficially  own 15% or more of the Common  Shares of the
Company then outstanding or with respect to Kopp, Kopp is in compliance with the
Limitations.  Notwithstanding  the  foregoing,  (i) if the  Company's  Board  of
Directors  determines  in good  faith that a Person  who would  otherwise  be an
"Acquiring  Person," as defined  pursuant to the  foregoing  provisions  of this
paragraph (a), has become such  inadvertently  (including,  without  limitation,
because (A) such Person was unaware that it  beneficially  owned a percentage of
the Common  Shares that would  otherwise  cause such Person to be an  "Acquiring
Person," as defined pursuant to the foregoing  provisions of this paragraph (a),
or (B) such Person was aware of the extent of the Common Shares it  beneficially
owned  but had no  actual  knowledge  of the  consequences  of  such  beneficial
ownership  under this  Agreement)  and  without  any  intention  of  changing or
influencing  control of the Company,  and if such Person  divested or divests as
promptly as practicable a sufficient number of Common Shares so that such Person
would no longer be an "Acquiring  Person," as defined  pursuant to the foregoing
provisions of this  paragraph (a), then such Person shall not be deemed to be or
to have become an  "Acquiring  Person" for any purposes of this  Agreement;  and
(ii) if, as of the date  hereof,  any Person is the  Beneficial  Owner of 15% or
more of the Common  Shares  outstanding,  or with  respect  to Kopp,  Kopp is in
compliance  with  the  Limitations,  such  Person  shall  not  be or  become  an
"Acquiring  Person," as defined  pursuant to the  foregoing  provisions  of this
paragraph  (a),  unless  and until  such time as such  Person  shall  become the
Beneficial Owner of additional  Common Shares (other than pursuant to a dividend
or distribution paid or made by the Company on the outstanding  Common Shares in
Common Shares or pursuant to a split or  subdivision of the  outstanding  Common
Shares),  unless,  upon becoming the Beneficial Owner of such additional  Common
Shares,  such  Person  is not  then the  Beneficial  Owner of 15% or more of the
Common  Shares  then  outstanding  or  with  respect  to  Kopp,  Kopp  is not in
compliance.

                  (b) "Adjustment  Fraction" shall have the meaning set forth in
Section 11(a)(i) hereof.

                                      -2-

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                  (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, for purposes
of  Section  13(d)  of the  Exchange  Act  and  Rule  13d-3  thereunder  (or any
comparable  or successor  law or  regulation);

                           (ii)  which  such  Person  or  any of  such  Person's
Affiliates  or  Associates  has (A) the right to acquire  (whether such right is
exercisable  immediately  or only  after the  passage of time)  pursuant  to any
agreement,  arrangement or understanding  (other than customary  agreements with
and between  underwriters  and selling group members with respect to a bona fide
public  offering of  securities),  or upon the  exercise of  conversion  rights,
exchange  rights,  rights  (other than the  Rights),  warrants  or  options,  or
otherwise; provided, however, that a Person shall not be deemed pursuant to this
Section  1(d)(ii)(A) to be the Beneficial Owner of, or to beneficially  own, (1)
securities  tendered pursuant to a tender or exchange offer made by or on behalf
of such  Person or any of such  Person's  Affiliates  or  Associates  until such
tendered  securities  are accepted for purchase or exchange,  or (2)  securities
which a Person or any of such Person's Affiliates or Associates may be deemed to
have the right to acquire pursuant to any merger or other acquisition  agreement
between  the  Company  and  such  Person  (or one or more of its  Affiliates  or
Associates) if such agreement has been approved by the Board of Directors of the
Company  prior to there  being an  Acquiring  Person;  or (B) the  right to vote
pursuant to any agreement, arrangement or understanding; provided, however, that
a Person shall not be deemed the Beneficial  Owner of, or to  beneficially  own,
any security under this Section  1(d)(ii)(B)  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 applicable rules and
regulations of the Exchange Act and (2) is not also then  reportable on Schedule
13D under the Exchange Act (or any comparable or successor report); or

                           (iii)  which  are  beneficially  owned,  directly  or
indirectly,  by any other Person (or any  Affiliate or Associate  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 (other than
customary  agreements  with and between  underwriters  and selling group members
with respect to a bona fide public  offering of  securities)  for the purpose of
acquiring,  holding, voting (except to the extent contemplated by the proviso to
Section  1(d)(ii)(B))  or disposing of any securities of the Company;  provided,
however,  that in no case shall an officer or  director of the Company be deemed
(x) the Beneficial Owner of any securities beneficially owned by another officer
or  director  of the  Company  solely by reason of  actions  undertaken  by such
persons in their  capacity as officers  or  directors  of the Company or (y) the
Beneficial  Owner of  securities  held of record by the trustee of any  employee
benefit plan of the Company or any  Subsidiary of the Company for the benefit of
any employee of the Company or any  Subsidiary  of the  Company,  other

                                      -3-

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than the officer or director,  by reason of any  influence  that such officer or
director may have over the voting of the securities held in the plan.

                  (e)  "Business  Day" shall mean any day other than a Saturday,
Sunday or a day on which  banking  institutions  in New York 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., New York time, on such date; provided,  however,  that if such date is not a
Business  Day it shall mean 5:00 P.M.,  New York  time,  on the next  succeeding
Business Day.

                  (g) "Common  Shares"  when used with  reference to the Company
shall  mean the  shares of Common  Stock of the  Company,  par value  $0.001 per
share.  Common  Shares  when used with  reference  to any Person  other than the
Company  shall mean the capital  stock (or equity  interest)  with the  greatest
voting power of such other  Person or, if such other  Person is a Subsidiary  of
another   Person,   the  Person  or  Persons  which   ultimately   control  such
first-mentioned Person.

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

                  (i) "Company"  shall mean  Spectrian  Corporation,  a Delaware
corporation, subject to the terms of Section 13(a)(iii)(C) hereof.

                  (j)  "Current  Per  Share  Market  Price" of any  security  (a
"Security" for purposes of this  definition),  for all  computations  other than
those made pursuant to Section 11(a)(iii) hereof,  shall mean the average of the
daily closing prices per share of such Security for the thirty (30)  consecutive
Trading Days  immediately  prior to such date, and for purposes of  computations
made pursuant to Section  11(a)(iii)  hereof, the Current Per Share Market Price
of any  Security  on any date  shall be  deemed to be the  average  of the daily
closing prices per share of such Security for the ten (10)  consecutive  Trading
Days immediately prior to such date; provided,  however,  that in the event that
the Current Per Share Market Price of the Security is determined during a period
following the  announcement  by the issuer of such Security of (i) a dividend or
distribution  on such Security  payable in shares of such Security or securities
convertible   into  such  shares  or  (ii)  any   subdivision,   combination  or
reclassification of such Security, and prior to the expiration of the applicable
thirty (30)  Trading Day or ten (10) Trading Day period,  after the  ex-dividend
date for such dividend or distribution, or the record date for such subdivision,
combination  or  reclassification,  then, and in each such case, the Current Per
Share Market Price shall be appropriately adjusted to reflect the current market
price per share  equivalent  of such  Security.  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 with respect to securities  listed or admitted to trading on the New York
Stock  Exchange  or, if the Security is not listed or admitted to trading on the
New York Stock Exchange, as reported in the principal  consolidated  transaction
reporting  system with respect to securities  listed on the  principal  national
securities  exchange on which the  Security is listed or admitted to trading or,
if the Security is not listed or admitted to trading on any national  securities

                                      -4-

<PAGE>

exchange,  the last sale price or, if such last sale price is not reported,  the
average of the high bid and low asked prices in the over-the-counter  market, as
reported by Nasdaq or such other system then in use, or, if on any such date the
Security is not quoted by any such organization,  the average of the closing bid
and asked prices as furnished by a professional  market maker making a market in
the Security  selected by the Board of Directors of the Company.  If on any such
date no market maker is making a market in the Security,  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.  If the Preferred  Shares are not publicly  traded,  the
Current Per Share Market  Price of the  Preferred  Shares shall be  conclusively
deemed to be the product of (x) the Current Per Share Market Price of the Common
Shares as determined pursuant to this Section 1(j), as appropriately adjusted to
reflect any stock split, stock dividend or similar  transaction  occurring after
the date hereof, multiplied by (y) 1000. If the Security is not publicly held or
so listed or traded,  Current Per Share  Market  Price shall mean the fair value
per share as  determined in good faith by the Board of Directors of the Company,
whose  determination  shall be  described  in a statement  filed with the Rights
Agent and shall be conclusive for all purposes.

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

                  (l)  "Distribution  Date"  shall  mean the  earlier of (i) the
Close of Business on the tenth day (or such later date as may be  determined  by
action of the Company's Board of Directors)  after the Shares  Acquisition  Date
(or, if the tenth day after the Shares Acquisition Date occurs before the Record
Date, the Close of Business on the Record Date) or (ii) the Close of Business on
the tenth Business Day (or such later date as may be determined by action of the
Company's Board of Directors)  after the date that a tender or exchange offer by
any Person (other than the Company,  any Subsidiary of the Company, any employee
benefit plan of the Company or of any  Subsidiary of the Company,  or any Person
or entity organized,  appointed or established by the Company for or pursuant to
the  terms of any such  plan) is first  published  or sent or given  within  the
meaning of Rule 14d-2(a) of the General Rules and Regulations under the Exchange
Act, if, assuming the successful  consummation  thereof, such Person would be an
Acquiring Person.

                  (m)  "Equivalent  Shares" shall mean Preferred  Shares and any
other class or series of capital  stock of the Company  which is entitled to the
same rights, privileges and preferences as the Preferred Shares.

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

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

                  (p)  "Exercise  Price"  shall  have the  meaning  set forth in
Section 4(a) hereof.

                  (q) "Expiration Date" shall mean the earliest to occur of: (i)
the Close of Business on the Final Expiration Date, (ii) the Redemption Date, or
(iii) the time at which the Board of Directors orders the exchange of the Rights
as provided in Section 24 hereof.

                                      -5-

<PAGE>

                  (r) "Final Expiration Date" shall mean August 14, 2010.

                  (s) "Nasdaq" shall mean the National Association of Securities
Dealers, Inc. Automated Quotations System.

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

                  (u) "Post-Event  Transferee"  shall have the meaning set forth
in Section 7(e) hereof.

                  (v)   "Preferred   Shares"  shall  mean  shares  of  Series  A
Participating Preferred Stock, par value $0.001 per share, of the Company.

                  (w) "Pre-Event Transferee" shall have the meaning set forth in
Section 7(e) hereof.

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

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

                  (z)  "Redemption  Date"  shall have the  meaning  set forth in
Section 23(a) hereof.

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

                  (bb)  "Rights  Agent" shall mean (i)  ChaseMellon  Shareholder
Services,  L.L.C.,  (ii) its successor or replacement as provided in Sections 19
and 21 hereof or (iii) any  additional  Person  appointed  pursuant to Section 2
hereof.

                  (cc)   "Rights   Certificate"   shall   mean   a   certificate
substantially in the form attached hereto as Exhibit B.

                  (dd) "Rights  Amendment Date" shall have the meaning set forth
in the recitals at the beginning of this Agreement.

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

                  (ff)  "Section  13 Event"  shall mean any event  described  in
clause (i), (ii) or (iii) of Section 13(a) hereof.

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

                  (hh)  "Shares  Acquisition  Date" shall mean the first date of
public  announcement  (which,  for purposes of this  definition,  shall include,
without limitation, a report filed pursuant to

                                      -6-

<PAGE>

Section 13(d) under the Exchange Act) by the Company or an Acquiring Person that
an Acquiring Person has become such; provided that, if such Person is determined
not to have become an Acquiring Person pursuant to Section 1(a) hereof,  then no
Shares Acquisition Date shall be deemed to have occurred.

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

                  (jj)  "Subsidiary" of any Person shall mean any corporation or
other  entity  of which an amount of  voting  securities  sufficient  to elect a
majority  of  the  directors  or  Persons  having  similar   authority  of  such
corporation or other entity is beneficially  owned,  directly or indirectly,  by
such Person,  or any  corporation or other entity  otherwise  controlled by such
Person.

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

                  (ll)  "Summary  of  Rights"  shall  mean  a  summary  of  this
Agreement substantially in the form attached hereto as Exhibit C.

                  (mm) "Total  Exercise  Price" shall have the meaning set forth
in Section 4(a) hereof.

                  (nn)  "Trading  Day" shall  mean a day on which the  principal
national  securities  exchange  on which a  referenced  security  is  listed  or
admitted to trading is open for the  transaction of business or, if a referenced
security  is not  listed or  admitted  to  trading  on any  national  securities
exchange, a Business Day.

                  (oo) A  "Triggering  Event"  shall be deemed to have  occurred
upon any Person becoming an Acquiring Person.

         Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights  Agent to act as agent for the Company in  accordance  with the terms and
conditions  hereof,  and the Rights Agent hereby accepts such  appointment.  The
Company  may from  time to time  appoint  such  co-Rights  Agents as it may deem
necessary or desirable,  upon ten (10) days' prior written  notice to the Rights
Agent.  The Rights Agent shall have no duty to supervise,  and shall in no event
be liable for, the acts or omissions of any co-Rights Agent.

         Section 3. Issuance of Rights Certificates.

                  (a)  Until  the  Distribution  Date,  (i) the  Rights  will be
evidenced  (subject to the  provisions  of Sections 3(b) and 3(c) hereof) by the
certificates  for Common Shares  registered in the names of the holders  thereof
(which  certificates shall also be deemed to be Rights  Certificates) and not by
separate Rights  Certificates and (ii) the right to receive Rights  Certificates
will be  transferable  only in  connection  with the transfer of Common  Shares.
Until the earlier of the Distribution Date or the Expiration Date, the surrender
for  transfer  of  certificates  for Common  Shares  shall also  constitute  the
surrender  for  transfer  of  the  Rights  associated  with  the  Common  Shares
represented thereby. As

                                      -7-

<PAGE>

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,
postage-prepaid  mail, to each record holder of Common Shares as of the Close of
Business on the  Distribution  Date,  at the address of such holder shown on the
records  of the  Company,  a Rights  Certificate  evidencing  one Right for each
Common Share so held,  subject to  adjustment as provided  herein.  In the event
that an  adjustment  in the  number of  Rights  per  Common  Share has been made
pursuant to Section 11 hereof,  then at the time of  distribution  of the Rights
Certificates,  the Company  shall make the necessary  and  appropriate  rounding
adjustments   (in   accordance   with  Section  14(a)  hereof)  so  that  Rights
Certificates  representing only whole numbers of Rights are distributed and cash
is paid in lieu of any  fractional  Rights.  As of the  Distribution  Date,  the
Rights  will  be  evidenced  solely  by  such  Rights  Certificates  and  may be
transferred  by the transfer of the Rights  Certificates  as  permitted  hereby,
separately and apart from any transfer of Common Shares, and the holders of such
Rights  Certificates  as listed in the  records of the  Company or any  transfer
agent or registrar for the Rights shall be the record holders thereof.

                  (b) On the Record Date or as soon as  practicable  thereafter,
the  Company  will  send a  copy  of  the  Summary  of  Rights  by  first-class,
postage-prepaid  mail, to each record holder of Common Shares as of the Close of
Business on the Record Date,  at the address of such holder shown on the records
of the Company's transfer agent and registrar.  With respect to certificates for
Common Shares  outstanding as of the Record Date, until the  Distribution  Date,
the Rights will be evidenced by such certificates registered in the names of the
holders thereof together with the Summary of Rights.

                  (c) Unless the Board of Directors by resolution  adopted at or
before the time of the  issuance of any Common  Shares after the Record Date but
prior to the earlier of the  Distribution  Date or the  Expiration  Date (or, in
certain  circumstances  provided  in Section 22 hereof,  after the  Distribution
Date) specifies to the contrary, Rights shall be issued in respect of all Common
Shares that are so issued,  and  Certificates  representing  such Common  Shares
shall also be deemed to be certificates for Rights, and shall bear the following
legend:

         THIS  CERTIFICATE  ALSO  EVIDENCES  AND ENTITLES  THE HOLDER  HEREOF TO
         CERTAIN RIGHTS AS SET FORTH IN THE SECOND  AMENDED AND RESTATED  RIGHTS
         AGREEMENT  BETWEEN  SPECTRIAN  CORPORATION AND CHASEMELLON  SHAREHOLDER
         SERVICES,  L.L.C.,  AS THE RIGHTS  AGENT,  DATED AS OF AUGUST 14, 2000,
         (THE "RIGHTS  AGREEMENT"),  THE TERMS OF WHICH ARE HEREBY  INCORPORATED
         HEREIN  BY  REFERENCE  AND A COPY OF WHICH IS ON FILE AT THE  PRINCIPAL
         EXECUTIVE OFFICES OF SPECTRIAN CORPORATION 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.  SPECTRIAN  CORPORATION  WILL  MAIL TO THE  HOLDER OF THIS
         CERTIFICATE A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE AFTER RECEIPT
         OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN

                                      -8-

<PAGE>

         CIRCUMSTANCES SET FORTH IN THE RIGHTS  AGREEMENT,  RIGHTS ISSUED TO, OR
         HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN  ACQUIRING  PERSON OR ANY
         AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS
         AGREEMENT), WHETHER CURRENTLY HELD BY OR ON BEHALF OF SUCH PERSON OR BY
         ANY SUBSEQUENT HOLDER, MAY BECOME NULL AND VOID.

With respect to such  certificates  containing the foregoing  legend,  until the
earlier of the Distribution  Date or the Expiration Date, the Rights  associated
with the Common Shares  represented by such  certificates  shall be evidenced by
such certificates  alone, and the surrender for transfer of any such certificate
shall also  constitute  the  transfer of the Rights  associated  with the Common
Shares  represented  thereby.

                  (d) In the event that the Company  purchases  or acquires  any
Common  Shares  after the Record Date but prior to the  Distribution  Date,  any
Rights  associated  with such Common Shares shall be deemed canceled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding.

         Sectionn 4. Form of Rights Certificates.

                  (a) The  Rights  Certificates  (and the forms of  election  to
purchase  Common Shares and of assignment to be printed on the reverse  thereof)
shall be  substantially  in the form of Exhibit B hereto and may have such marks
of  identification  or designation  and such legends,  summaries or endorsements
printed thereon as the Company may deem  appropriate 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 a national  market system,  on which
the Rights may from time to time be listed or included,  or to conform to usage.
Subject  to the  provisions  of Section  11 and  Section  22 hereof,  the Rights
Certificates,  whenever distributed, shall be dated as of the Record Date (or in
the case of Rights  issued with respect to Common  Shares  issued by the Company
after the Record Date, as of the date of issuance of such Common  Shares) and on
their  face  shall  entitle  the  holders  thereof to  purchase  such  number of
one-thousandths  of a Preferred Share as shall be set forth therein at the price
set forth therein (such  exercise  price per one  one-thousandth  of a Preferred
Share being  hereinafter  referred to as the "Exercise  Price" and the aggregate
Exercise Price of all Preferred Shares issuable upon exercise of one Right being
hereinafter  referred to as the "Total Exercise Price"), but the number and type
of securities purchasable upon the exercise of each Right and the Exercise Price
shall be subject to adjustment as provided herein.

                  (b) Any Rights  Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights beneficially owned by: (i) an Acquiring
Person or any Associate or Affiliate of an Acquiring  Person,  (ii) a Post-Event
Transferee,  (iii) a  Pre-Event  Transferee  or (iv) any  subsequent  transferee
receiving  transferred  Rights  from  a  Post-Event  Transferee  or a  Pre-Event
Transferee, either directly or through one or more intermediate transferees, and
any Rights  Certificate  issued  pursuant to Section 6 or Section 11 hereof upon
transfer,  exchange,  replacement or

                                      -9-

<PAGE>

adjustment of any other Rights Certificate  referred to in this sentence,  shall
contain (to the extent feasible) the following legend:

         THE  RIGHTS   REPRESENTED  BY  THIS  RIGHTS  CERTIFICATE  ARE  OR  WERE
         BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR
         AN AFFILIATE  OR  ASSOCIATE  OF AN ACQUIRING  PERSON (AS SUCH TERMS ARE
         DEFINED  IN  THE  SECOND  AMENDED  AND  RESTATED   RIGHTS   AGREEMENT).
         ACCORDINGLY,  THIS RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY
         MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(e)
         OF THE SECOND AMENDED AND RESTATED RIGHTS AGREEMENT.

         Section 5. Countersignature and Registration.

                  (a) The Rights Certificates shall be executed on behalf of the
Company by its Chairman of the Board,  its Chief  Executive  Officer,  its Chief
Financial  Officer,  its President or any Vice President,  either manually or by
facsimile  signature,  and by the  Secretary  or an  Assistant  Secretary of the
Company,  either  manually or by  facsimile  signature,  and shall have  affixed
thereto  the  Company's  seal  (if  any)  or a  facsimile  thereof.  The  Rights
Certificates  shall be manually  countersigned by the Rights Agent and shall not
be valid  for any  purpose  unless  countersigned.  In case any  officer  of the
Company who shall have signed any of the 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  on behalf of the Company 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  Rights  Certificate,
although at the date of the  execution of this Rights  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  hereunder.  Such
books shall show the names and addresses of the respective holders of the Rights
Certificates,  the number of Rights  evidenced on its face by each of the Rights
Certificates and the date of 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 Sections  7(e),  14 and 24
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the Expiration Date, any Rights Certificate
or Rights  Certificates may be transferred,  split up, combined or exchanged for
another  Rights  Certificate  or Rights  Certificates,  entitling the registered
holder to purchase a like number of  one-thousandths  of a Preferred  Share (or,
following a Triggering  Event,

                                      -10-

<PAGE>

other  securities,  cash or other  assets,  as the  case  may be) as the  Rights
Certificate  or Rights  Certificates  surrendered  then  entitled such holder to
purchase.  Any  registered  holder  desiring to transfer,  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  transferred,  split up,  combined or
exchanged at the office of the Rights Agent designated for such purpose. Neither
the  Rights  Agent  nor the  Company  shall  be  obligated  to take  any  action
whatsoever  with  respect  to  the  transfer  of  any  such  surrendered  Rights
Certificate  until the  registered  holder shall have  completed  and signed the
certificate  contained  in the form of  assignment  on the reverse  side of such
Rights  Certificate  and shall have  provided  such  additional  evidence of the
identity of the Beneficial Owner (or former  Beneficial  Owner) or Affiliates or
Associates thereof as the Company shall reasonably request. Thereupon the Rights
Agent shall, subject to Sections 7(e), 14 and 24 hereof, 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, at the Company's
request,  reimbursement  to the Company and the Rights  Agent of all  reasonable
expenses  incidental  thereto,  and  upon  surrender  to the  Rights  Agent  and
cancellation of the Rights  Certificate if mutilated,  the Company will make 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;  Exercise  Price;  Expiration  Date of
Rights.

                  (a)  Subject to Sections  7(e),  23(b) and 24(b)  hereof,  the
registered  holder of any Rights  Certificate may exercise the Rights  evidenced
thereby  (except as otherwise  provided  herein) in whole or in part at any time
after the Distribution Date and prior to the Close of Business on the Expiration
Date by  surrender  of the  Rights  Certificate,  with the form of  election  to
purchase on the reverse side thereof duly  executed,  to the Rights Agent at the
office of the Rights Agent designated for such purpose, together with payment of
the Exercise Price for each one-thousandth of a Preferred Share (or, following a
Triggering Event, other securities,  cash or other assets as the case may be) as
to which the Rights are exercised.

                  (b) The Exercise Price for each  one-thousandth of a Preferred
Share  issuable  pursuant  to the  exercise of a Right  shall  initially  be One
Hundred Twenty Six Dollars ($126.  00), shall be subject to adjustment from time
to time as  provided in Sections 11 and 13 hereof and shall be payable in lawful
money of the United States of America in accordance with paragraph (c) below.

                  (c)  Upon  receipt  of  a  Rights   Certificate   representing
exercisable  Rights,  with the  form of  election  to  purchase  duly  executed,
accompanied by payment of the Exercise  Price for the number of  one-thousandths
of a Preferred Share (or, following a Triggering Event,  other securities,  cash
or other assets as the case may be) to be  purchased  and an amount equal to any
applicable

                                      -11-

<PAGE>

transfer  tax  required to be paid by the holder of such Rights  Certificate  in
accordance with Section 9(e) hereof, the Rights Agent shall,  subject to Section
20(k) hereof,  thereupon promptly (i) (A) requisition from any transfer agent of
the  Preferred  Shares (or make  available,  if the Rights Agent is the transfer
agent for the Preferred  Shares) a certificate or certificates for the number of
one-thousandths  of a Preferred Share (or,  following a Triggering Event,  other
securities,  cash or other  assets as the case may be) to be  purchased  and the
Company hereby irrevocably authorizes its transfer agent to comply with all such
requests or (B) if the Company shall have elected to deposit the total number of
one-thousandths  of a Preferred Share (or,  following a Triggering Event,  other
securities,  cash or other assets as the case may be) issuable  upon exercise of
the Rights  hereunder with a depositary  agent,  requisition from the depositary
agent  depositary  receipts  representing  such number of  one-thousandths  of a
Preferred Share (or,  following a Triggering Event,  other  securities,  cash or
other  assets  as  the  case  may  be) as are to be  purchased  (in  which  case
certificates for the Preferred Shares (or,  following a Triggering Event,  other
securities,  cash or  other  assets  as the  case  may be)  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 to be
paid in lieu of issuance of  fractional  shares in  accordance  with  Section 14
hereof, (iii) after receipt of such certificates or depositary  receipts,  cause
the same to be delivered to or upon the order of the  registered  holder of such
Rights  Certificate,  registered  in such name or names as may be  designated by
such holder and (iv) when appropriate,  after receipt thereof, deliver such cash
to or upon the order of the registered  holder of such Rights  Certificate.  The
payment of the Exercise Price (as such amount may be reduced (including to zero)
pursuant to Section  11(a)(iii)  hereof) and an amount  equal to any  applicable
transfer  tax  required to be paid by the holder of such Rights  Certificate  in
accordance  with Section 9(e) hereof,  may be made in cash or by certified  bank
check, cashier's check or bank draft payable to the order of the Company. In the
event that the Company is obligated  to issue  securities  of the Company  other
than Preferred  Shares,  pay cash and/or  distribute other property  pursuant to
Section 11(a) hereof,  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.

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

                  (e)   Notwithstanding   anything  in  this  Agreement  to  the
contrary,  from and after the first 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  of an  Acquiring  Person (or of any such
Associate or  Affiliate)  who becomes a transferee  after the  Acquiring  Person
becomes such (a  "Post-Event  Transferee"),  (iii) a transferee  of an Acquiring
Person (or of any 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

                                      -12-

<PAGE>

regarding the transferred  Rights or (B) a transfer which the Company's Board of
Directors has determined is part of a plan,  arrangement or understanding  which
has as a primary  purpose  or  effect  the  avoidance  of this  Section  7(e) (a
"Pre-Event  Transferee") or (iv) any subsequent transferee receiving transferred
Rights from a Post-Event Transferee or a Pre-Event  Transferee,  either directly
or through  one or more  intermediate  transferees,  shall  become null and void
without  any further  action and no holder of such Rights  shall have any rights
whatsoever  with respect to such  Rights,  whether  under any  provision of this
Agreement or otherwise.  The Company shall use all reasonable  efforts to ensure
that the  provisions  of this  Section 7(e) and Section 4(b) hereof are complied
with, but shall have no liability to any holder of Rights Certificates or to any
other Person as a result of its failure to make any determinations  with respect
to an Acquiring Person or any of such Acquiring Person's 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 registered  holder upon the occurrence of
any  purported  exercise as set forth in this  Section 7 unless such  registered
holder shall,  in addition to having  complied with the  requirements of Section
7(a),  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 reasonably 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 Rights  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  such  canceled  Rights  Certificates,  and in such case shall
deliver a certificate evidencing the destruction thereof to the Company.

         Section 9. Reservation and Availability of Preferred Shares.

                  (a) The Company covenants and agrees that it will use its best
efforts to cause to be reserved and kept  available  out of its  authorized  and
unissued  Preferred Shares not reserved for another purpose (and,  following the
occurrence of a Triggering  Event,  out of its  authorized  and unissued  Common
Shares and/or other securities),  the number of Preferred Shares (and, following
the occurrence of the Triggering  Event,  Common Shares and/or other securities)
that  will be  sufficient  to permit  the  exercise  in full of all  outstanding
Rights.

                  (b) If the Company shall  hereafter  list any of its Preferred
Shares on a national securities  exchange,  then so long as the Preferred Shares
(and, following the occurrence of a Triggering Event, Common Shares and/or other
securities) issuable and deliverable upon exercise of

                                      -13-

<PAGE>

the  Rights  may be  listed on such  exchange,  the  Company  shall use its best
efforts to cause, from and after such time as the Rights become exercisable (but
only  to the  extent  that it is  reasonably  likely  that  the  Rights  will be
exercised),  all shares reserved for such issuance to be listed on such exchange
upon official notice of issuance upon such exercise.

                  (c) The  Company  shall use its best  efforts to (i) file,  as
soon as practicable  following the earliest date after the first occurrence of a
Triggering Event in which the  consideration to be delivered by the Company upon
exercise of the Rights is described in Section  11(a)(ii) or Section  11(a)(iii)
hereof, or as soon as is required by law following the Distribution Date, as the
case may be, a registration  statement  under the Securities Act with respect to
the securities  purchasable upon exercise of the Rights on an appropriate  form,
(ii)  cause  such  registration   statement  to  become  effective  as  soon  as
practicable  after such filing and (iii) cause such  registration  statement  to
remain effective (with a prospectus at all times meeting the requirements of the
Securities  Act) until the earlier of (A) the date as of which the Rights are no
longer  exercisable  for such  securities  and (B) the date of expiration of the
Rights. The Company may temporarily  suspend,  for a period not to exceed ninety
(90) days after the date set forth in clause (i) of the first  sentence  of this
Section 9(c), the exercisability of the Rights in order to prepare and file such
registration  statement  and  permit  it to  become  effective.  Upon  any  such
suspension,  the Company shall issue a public announcement  stating,  and notify
the Rights Agent,  that the  exercisability  of the Rights has been  temporarily
suspended, as well as a public announcement and notification to the Rights Agent
at such time as the  suspension  is no longer in effect.  The Company  will also
take such action as may be appropriate  under, or to ensure compliance with, the
securities  or "blue  sky" laws of the  various  states in  connection  with the
exercisability of the Rights. Notwithstanding any provision of this Agreement to
the contrary,  the Rights shall not be exercisable in any  jurisdiction,  unless
the requisite qualification in such jurisdiction shall have been obtained, or an
exemption therefrom shall be available,  and until a registration  statement has
been declared and remains effective.

                  (d) The  Company  covenants  and agrees  that it will take all
such action as may be  necessary to ensure that all  Preferred  Shares (or other
securities of the Company)  delivered upon exercise of Rights shall, at the time
of delivery of the certificates  for such securities  (subject to payment of the
Exercise  Price),  be duly and validly  authorized and issued and fully paid and
nonassessable.

                  (e) 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  original  issuance  or  delivery  of the
Rights  Certificates  or of any  Preferred  Shares (or other  securities  of the
Company)  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
delivery of  certificates  or depositary  receipts for the Preferred  Shares (or
other  securities  of the Company) in a name other than that of, the  registered
holder of the Rights  Certificate  evidencing Rights surrendered for exercise or
to issue or to deliver any  certificates  or  depositary  receipts for Preferred
Shares (or other  securities  of the  Company)  upon the  exercise of any Rights
until any such tax shall have been paid (any such tax

                                      -14-

<PAGE>

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. Record Date.  Each Person in whose name any certificate for
a number of  one-thousandths  of a Preferred  Share (or other  securities of the
Company) is issued upon the  exercise of Rights shall for all purposes be deemed
to have become the holder of record of Preferred  Shares (or other securities of
the Company)  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 Total  Exercise  Price with respect to which the
Rights  have  been  exercised  (and any  applicable  transfer  taxes)  was made;
provided, however, that if the date of such surrender and payment is a date upon
which the 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 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 holder
of Preferred  Shares (or other  securities  of the Company) for which the Rights
shall be  exercisable,  including,  without  limitation,  the right to vote,  to
receive dividends or other  distributions or to exercise any preemptive  rights,
and shall not be  entitled  to  receive  any  notice of any  proceedings  of the
Company, except as provided herein.

         Section 11. Adjustment of Exercise Price, Number of Shares or Number of
Rights.  The  Exercise  Price,  the number and kind of shares or other  property
covered  by each  Right and the  number of Rights  outstanding  are  subject  to
adjustment from time to time as provided in this Section 11.

                  (a)  (i)   Anything  in  this   Agreement   to  the   contrary
notwithstanding,  in the event that the Company shall at any time after the date
of this  Agreement  (A) declare a dividend on the  Preferred  Shares  payable in
Preferred Shares,  (B) subdivide the outstanding  Preferred Shares,  (C) combine
the  outstanding  Preferred  Shares (by reverse stock split or otherwise) into a
smaller number of Preferred Shares, or (D) issue any shares of its capital stock
in  a   reclassification   of  the   Preferred   Shares   (including   any  such
reclassification  in  connection  with a  consolidation  or  merger in which the
Company is the continuing or surviving  corporation),  then, in each such event,
except as otherwise provided in this Section 11 and Section 7(e) hereof: (1) the
Exercise  Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification shall be
adjusted so that the Exercise Price  thereafter  shall equal the result obtained
by dividing the  Exercise  Price in effect  immediately  prior to such time by a
fraction (the "Adjustment Fraction"),  the numerator of which shall be the total
number  of  Preferred  Shares  (or  shares  of  capital  stock  issued  in  such
reclassification of the Preferred Shares) outstanding immediately following such
time and the denominator of which shall be the total number of Preferred  Shares
outstanding immediately prior to such time; provided,  however, that in no event
shall the  consideration  to be paid upon the exercise of one Right be less than
the aggregate pare value of the shares of capital stock of the Company  issuable
upon  exercise  of such  Right;  and  (2) the  number  of  one-thousandths  of a
Preferred  Share  (or  share of such  other  capital  stock)  issuable  upon the
exercise of each Right shall equal the number of  one-thousandths of a Preferred
Share (or share of such other capital  stock) as was issuable upon exercise of a
Right  immediately  prior to the

                                      -15-

<PAGE>

occurrence of the event described in clauses  (A)-(D) of this Section  11(a)(i),
multiplied  by  the  Adjustment  Fraction;  provided,  however,  that,  no  such
adjustment  shall be made  pursuant to this Section  11(a)(i) to the extent that
there shall have simultaneously  occurred an event described in clause (A), (B),
(C)  or  (D)  of  Section  11(n)  with a  proportionate  adjustment  being  made
thereunder.  Each Common Share that shall become outstanding after an adjustment
has been made pursuant to this Section  11(a)(i) shall have  associated  with it
the number of Rights,  exercisable  at the Exercise  Price and for the number of
one-thousandths  of a Preferred Share (or shares of such other capital stock) as
one Common Share has  associated  with it  immediately  following the adjustment
made pursuant to this Section 11(a)(i).

                  (ii)  Subject to Section  24 of this  Agreement,  in the event
that a  Triggering  Event shall have  occurred,  then  promptly  following  such
Triggering  Event each holder of a Right,  except as  provided  in Section  7(e)
hereof, shall thereafter have the right to receive for each Right, upon exercise
thereof  in  accordance  with the terms of this  Agreement  and  payment  of the
Exercise Price in effect  immediately  prior to the occurrence of the Triggering
Event, in lieu of a number of  one-thousandths of a Preferred Share, such number
of Common Shares of the Company as shall equal the quotient obtained by dividing
(A) the  product  obtained  by  multiplying  (1) the  Exercise  Price in  effect
immediately prior to the occurrence of the Triggering Event by (2) the number of
one-thousandths of a Preferred Share for which a Right was exercisable (or would
have been exercisable if the Distribution  Date had occurred)  immediately prior
to the first  occurrence  of a Triggering  Event,  by (B) 50% of the Current Per
Share Market Price for Common Shares on the date of occurrence of the Triggering
Event;  provided,  however,  that the  Exercise  Price and the  number of Common
Shares of the Company so receivable upon exercise of a Right shall be subject to
further  adjustment as  appropriate  in accordance  with Section 11(e) hereof to
reflect  any events  occurring  in respect of the Common  Shares of the  Company
after the occurrence of the Triggering Event.

                  (iii) In lieu of  issuing  Common  Shares in  accordance  with
Section 11(a)(ii)  hereof,  the Company may, if the Company's Board of Directors
determines  that such action is necessary or appropriate and not contrary to the
interest of holders of Rights and, in the event that the number of Common Shares
which are  authorized  by the Company's  Certificate  of  Incorporation  but not
outstanding  or reserved for issuance for purposes  other than upon  exercise of
the Rights are not  sufficient to permit the exercise in full of the Rights,  or
if any necessary  regulatory approval for such issuance has not been obtained by
the Company, the Company shall: (A) determine the excess of (1) the value of the
Common Shares  issuable upon the exercise of a Right (the "Current  Value") over
(2) the Exercise Price (such excess,  the "Spread") and (B) with respect to each
Right,  make  adequate  provision to  substitute  for such Common  Shares,  upon
exercise of the Rights,  (1) cash,  (2) a reduction in the Exercise  Price,  (3)
other equity securities of the Company (including, without limitation, shares or
units of shares of any series of preferred  stock which the  Company's  Board of
Directors  has deemed to have the same value as Common  Shares  (such  shares or
units  of  shares  of  preferred   stock  are  herein   called   "Common   Stock
Equivalents")),  except to the extent  that the  Company  has not  obtained  any
necessary  stockholder  or  regulatory  approval  for  such  issuance,  (4) debt
securities  of the  Company,  except  to the  extent  that the  Company  has not
obtained any necessary stockholder or regulatory approval for such issuance, (5)
other assets or (6) any combination of the foregoing,  having an aggregate value
equal to the Current Value,  where such

                                      -16-

<PAGE>

aggregate  value has been  determined by the Company's  Board of Directors based
upon the advice of a nationally  recognized  investment banking firm selected by
the Company's Board of Directors;  provided,  however, that if the Company shall
not have made adequate  provision to deliver value  pursuant to clause (B) above
within  thirty (30) days  following  the later of (x) the first  occurrence of a
Triggering  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
herein 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  Exercise  Price,   Common  Shares  (to  the  extent
available), except to the extent that the Company has not obtained any necessary
stockholder or regulatory  approval for such  issuance,  and then, if necessary,
cash,  which shares and/or cash have an aggregate value equal to the Spread.  If
the Company's Board of Directors shall determine in good faith that it is likely
that sufficient  additional  Common Shares could be authorized for issuance upon
exercise in full of the Rights or that any  necessary  regulatory  approval  for
such issuance  will be obtained,  the thirty (30) day period set forth above may
be  extended to the extent  necessary,  but not more than ninety (90) days after
the  Section  11(a)(ii)  Trigger  Date,  in  order  that  the  Company  may seek
stockholder  approval for the  authorization  of such additional  shares or take
action to obtain such regulatory  approval (such period,  as it may be extended,
the "Substitution  Period"). To the extent that the Company determines that some
action  need be taken  pursuant to the first  and/or  second  sentences  of this
Section  11(a)(iii),  the Company  (x) shall  provide,  subject to Section  7(e)
hereof, 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, to
take any action to obtain any required  regulatory approval 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 Section  11(a)(iii),
the value of the Common  Shares  shall be the Current Per Share  Market Price of
the Common  Shares on the Section  11(a)(ii)  Trigger  Date and the value of any
Common  Stock  Equivalent  shall be deemed to have the same  value as the Common
Shares on such date.

                  (b) In case the Company  shall,  at any time after the date of
this  Agreement,  fix a record  date for the  issuance  of  rights,  options  or
warrants to all holders of Preferred Shares entitling such holders (for a period
expiring  within  forty-five  (45)  calendar  days  after such  record  date) to
subscribe for or purchase  Preferred  Shares or Equivalent  Shares or securities
convertible into Preferred Shares or Equivalent  Shares at a price per share (or
having a conversion  price per share, if a security  convertible  into Preferred
Shares or  Equivalent  Shares) less than the then Current Per Share Market Price
of the Preferred Shares or Equivalent  Shares on such record date, then, in each
such case,  the  Exercise  Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record  date by a  fraction,  the  numerator  of which  shall be the  number  of
Preferred Shares and Equivalent Shares (if any) outstanding on such record date,
plus the number of Preferred  Shares or Equivalent  Shares,  as the case may be,
which the aggregate  offering  price of the total number of Preferred  Shares or
Equivalent  Shares,  as the case may be, to be  offered  or issued  (and/or  the
aggregate initial  conversion price of the convertible  securities to be offered
or issued) would purchase at such current market price,  and the  denominator

                                      -17-

<PAGE>

of which shall be the number of Preferred Shares and Equivalent  Shares (if any)
outstanding on such record date, plus the number of additional  Preferred Shares
or  Equivalent  Shares,  as the case may be, to be offered for  subscription  or
purchase  (or  into  which  the  convertible  securities  so to be  offered  are
initially  convertible);   provided,   however,  that  in  no  event  shall  the
consideration  be paid upon the exercise of one Right be less than the aggregate
par value of the shares of capital  stock of the Company  issuable upon exercise
of on Right. In case such subscription price may be paid in a consideration part
or  all of  which  shall  be in a form  other  than  cash,  the  value  of  such
consideration  shall be as determined  in good faith by the  Company's  Board of
Directors,  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.  Preferred Shares and Equivalent 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 in the event that such rights, options or warrants are not so
issued,  the  Exercise  Price shall be adjusted to be the  Exercise  Price which
would then be in effect if such record date had not been fixed.

                  (c) In case the Company  shall,  at any time after the date of
this  Agreement,  fix a record  date for the  making  of a  distribution  to all
holders of the Preferred  Shares or of any class or series of Equivalent  Shares
(including any such  distribution  made in connection  with a  consolidation  or
merger in which the  Company is the  continuing  or  surviving  corporation)  of
evidences  of  indebtedness  or  assets  (other  than a regular  quarterly  cash
dividend,  if any, or a dividend  payable in Preferred  Shares) or  subscription
rights,  options or warrants  (excluding  those  referred to in Section  11(b)),
then,  in each such case,  the Exercise  Price to be in effect after such record
date shall be determined by multiplying the Exercise Price in effect immediately
prior to such  record date by a fraction,  the  numerator  of which shall be the
Current Per Share Market Price of a Preferred  Share or an  Equivalent  Share on
such record date,  less the fair market value per Preferred  Share or Equivalent
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) of the portion of the cash,  assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to a Preferred
Share or  Equivalent  Share,  as the case may be, and the  denominator  of which
shall be such Current Per Share Market Price of a Preferred  Share or Equivalent
Share  on such  record  date;  provided,  however,  that in no event  shall  the
consideration  to be paid  upon  the  exercise  of one  Right  be less  than the
aggregate par value of the shares of capital stock of the Company  issuable upon
exercise of one Right. Such adjustments shall be made successively whenever such
a record date is fixed, and in the event that such  distribution is not so made,
the Exercise  Price shall be adjusted to be the Exercise  Price which would have
been in effect if such record date had not been fixed.

                  (d)  Anything  herein  to  the  contrary  notwithstanding,  no
adjustment in the Exercise Price shall be required unless such adjustment  would
require an increase or decrease of at least one percent  (1.0%) of the  Exercise
Price;  provided,  however, that any adjustments which by reason of this Section
11(d) 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 share or one hundred-thousandth of a Preferred Share, as the case
may be. Notwithstanding the first sentence of this

                                      -18-

<PAGE>

Section 11(d), any adjustment required by this Section 11 shall be made no later
than the earlier of (i) three (3) years from the date of the  transaction  which
requires such adjustment or (ii) the Expiration Date.

                  (e) If as a result of an  adjustment  made pursuant to Section
11(a) or Section  13(a)  hereof,  the holder of any Right  thereafter  exercised
shall  become  entitled  to  receive  any  shares of  capital  stock  other than
Preferred Shares,  thereafter the number of such other shares so receivable upon
exercise of any Right and, if required,  the Exercise  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 Preferred Shares
contained in Sections 11(a),  11(b),  11(c),  11(d), 11(g), 11(h), 11(i), 11(j),
11(k) and 11(l), and the provisions of Sections 7, 9, 10, 13 and 14 with respect
to the Preferred Shares shall apply on like terms to any such other shares.

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

                  (g) Unless the Company  shall have  exercised  its election as
provided in Section  11(h),  upon each  adjustment  of the  Exercise  Price as a
result of the calculations made in Section 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  Exercise  Price,  that number of Preferred
Shares (calculated to the nearest one hundred-thousandth of a share) obtained by
(i)  multiplying  (x)  the  number  of  Preferred  Shares  covered  by  a  Right
immediately  prior to this  adjustment,  by (y) the  Exercise  Price  in  effect
immediately  prior to such adjustment of the Exercise  Price,  and (ii) dividing
the product so obtained by the Exercise Price in effect  immediately  after such
adjustment of the Exercise Price.

                  (h)  The  Company  may  elect  on or  after  the  date  of any
adjustment of the Exercise Price as a result of the calculations made in Section
11(b) or (c) to adjust the number of Rights,  in substitution for any adjustment
in the number of Preferred Shares purchasable upon the exercise of a Right. Each
of the Rights outstanding after such adjustment of the number of Rights shall be
exercisable for the number of  one-thousandths  of a Preferred Share for which a
Right was exercisable imme]diately 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  hundred-thousandth)  obtained  by
dividing the Exercise  Price in effect  immediately  prior to  adjustment of the
Exercise Price by the Exercise Price in effect  immediately  after adjustment of
the Exercise 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  Exercise  Price  is  adjusted  or any day
thereafter,  but, if any Rights Certificates have been issued, shall be at least
ten (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(h),  the Company shall,  as promptly as practicable,
cause to be  distributed  to  holders of record of Rights  Certificates  on such
record date

                                      -19-

<PAGE>

Rights  Certificates  evidencing,  subject to Section 14 hereof,  the additional
Rights to which such holders  shall be entitled as a result of such  adjustment,
or, at the option of the Company,  shall cause to be distributed to such holders
of record in substitution  and replacement for the Rights  Certificates  held by
such holders prior to the date of  adjustment,  and upon surrender  thereof,  if
required by the Company,  new Rights  Certificates  evidencing all the Rights to
which such holders shall be entitled after such adjustment.  Rights Certificates
so to be distributed  shall be issued,  executed and countersigned in the manner
provided for herein (and may bear,  at the option of the  Company,  the adjusted
Exercise 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.

                  (i)  Irrespective  of any adjustment or change in the Exercise
Price or the  number of  Preferred  Shares  issuable  upon the  exercise  of the
Rights, the Rights  Certificates  theretofore and thereafter issued may continue
to express the Exercise Price per one  one-thousandth  of a Preferred  Share and
the number of  one-thousandths  of a Preferred Share which were expressed in the
initial Rights Certificates issued hereunder.

                  (j) Before  taking any action that would  cause an  adjustment
reducing the Exercise Price below the par or stated value, if any, of the number
of  one-thousandths  of a Preferred  Share issuable upon exercise of the Rights,
the Company  shall take any  corporate  action  which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue as
fully  paid  and  nonassessable  shares  such  number  of  one-thousandths  of a
Preferred Share at such adjusted  Exercise Price.

                  (k) In any case in which this Section 11 shall require that an
adjustment  in the  Exercise  Price be made  effective as of a record date for a
specified  event,  the Company may elect to defer until the  occurrence  of such
event the issuing to the holder of any Right exercised after such record date of
the number of  one-thousandths  of a Preferred  Share and other capital stock or
securities  of the Company,  if any,  issuable upon such exercise over and above
the number of  one-thousandths  of a Preferred  Share and other capital stock or
securities of the Company,  if any,  issuable upon such exercise on the basis of
the Exercise 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)  upon the  occurrence  of the event  requiring  such
adjustment.

                  (l)   Anything   in   this   Section   11  to   the   contrary
notwithstanding,  prior to the Distribution  Date, the Company shall be entitled
to make such reductions in the Exercise Price, in addition to those  adjustments
expressly  required by this Section 11, as and to the extent that it in its sole
discretion  shall determine to be advisable in order that any (i)  consolidation
or subdivision of the Preferred or Common Shares,  (ii) issuance wholly for cash
of any Preferred or Common Shares at less than the current  market price,  (iii)
issuance  wholly for cash of Preferred or Common Shares or  securities  which by
their terms are convertible into or exchangeable for Preferred or Common 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 Preferred or
Common Shares shall not be taxable to such stockholders.

                                      -20-

<PAGE>

                  (m)  The  Company   covenants  and  agrees  that,   after  the
Distribution  Date,  it will not,  except as  permitted by Sections 23, 24 or 27
hereof,  take (or permit to be taken)  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.

                  (n) In the event that the Company  shall at any time after the
date of this  Agreement (A) declare a dividend on the Common  Shares  payable in
Common Shares,  (B) subdivide the  outstanding  Common  Shares,  (C) combine the
outstanding  Common Shares (by reverse stock split or otherwise)  into a smaller
number of Common  Shares,  or (D) issue  any  shares of its  capital  stock in a
reclassification  of the Common Shares (including any such  reclassification  in
connection with a consolidation or merger in which the Company is the continuing
or  surviving  corporation),  then,  in each such  event,  except  as  otherwise
provided in this Section  11(a) and Section  7(e) hereof:  (1) each Common Share
(or  shares of  capital  stock  issued in such  reclassification  of the  Common
Shares) outstanding  immediately  following such time shall have associated with
it the number of Rights as were  associated  with one Common  Share  immediately
prior to the occurrence of the event described in clauses (A)-(D) above; (2) the
Exercise  Price in effect at the time of the record date for such dividend or of
the effective date of such subdivision, combination or reclassification shall be
adjusted so that the Exercise Price  thereafter  shall equal the result obtained
by multiplying the Exercise Price in effect  immediately prior to such time by a
fraction,  the  numerator  of which shall be the total  number of Common  Shares
outstanding  immediately  prior to the event described in clauses (A)-(D) above,
and the  denominator  of which  shall  be the  total  number  of  Common  Shares
outstanding  immediately after such event;  provided,  however, that in no event
shall the  consideration  to be paid upon the exercise of one Right be less than
the aggregate  par value of the shares of capital stock of the Company  issuable
upon  exercise  of such  Right;  and  (3) the  number  of  one-thousandths  of a
Preferred  Share (or  shares of such  other  capital  stock)  issuable  upon the
exercise  of each Right  outstanding  after such event shall equal the number of
one-thousandths  of a Preferred Share (or shares of such other capital stock) as
were issuable with respect to one Right  immediately  prior to such event.  Each
Common Share that shall become  outstanding  after an  adjustment  has been made
pursuant  to this  Section  11(n)  shall have  associated  with it the number of
Rights,  exercisable at the Exercise Price and for the number of one-thousandths
of a Preferred Share (or shares of such other capital stock) as one Common Share
has  associated  with it immediately  following the adjustment  made pursuant to
this Section 11(n).  If an event occurs which would require an adjustment  under
both this Section 11(n) and Section  11(a)(ii) hereof,  the adjustment  provided
for in this  Section  11(n) shall be in addition to, and shall be made prior to,
any adjustment required pursuant to Section 11(a)(ii) hereof.

         Section 12 Certificate of Adjusted  Exercise Price or Number of Shares.
Whenever an  adjustment  is made as  provided in Sections 11 and 13 hereof,  the
Company shall promptly (a) prepare a certificate  setting forth such  adjustment
and a brief statement of the facts accounting for such adjustment, (b) file with
the Rights Agent and with each transfer agent for the Preferred Shares a copy of
such certificate and (c) mail a brief summary thereof to each holder of a Rights
Certificate in accordance with Section 26 hereof.  Notwithstanding the foregoing
sentence,  the  failure of the Company to make such  certification  or give such
notice shall not affect the validity of such  adjustment  or the force or effect
of the  requirement  for  such  adjustment.  The  Rights  Agent  shall  be

                                      -21-

<PAGE>

fully  protected  in  relying  on any  such  certificate  and on any  adjustment
contained  therein and shall not be deemed to have knowledge of such  adjustment
unless and until it shall have received such certificate.

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

                  (a) In the event that, following a Triggering Event,  directly
or indirectly:

                           (i) the Company shall consolidate with, or merge with
and into, any other Person (other than a wholly-owned  Subsidiary of the Company
in a  transaction  the  principal  purpose  of which is to  change  the state of
incorporation of the Company and which complies with Section 11(m) hereof);

                           (ii) any Person shall  consolidate  with the Company,
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 merger, all or part of the Common Shares shall be changed into or exchanged
for stock or other securities of any other person (or the Company); or

                           (iii) the Company  shall sell or  otherwise  transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer), in one or
more transactions, assets or earning power aggregating 50% or more of the assets
or earning power of the Company and its  Subsidiaries  (taken as a whole) to any
other  Person or Persons  (other  than the  Company or one or more of its wholly
owned Subsidiaries in one or more transactions,  each of which individually (and
together) complies with Section 11(m) hereof),

                  then, concurrent with and in each such case,

each  holder of a Right  (except as  provided  in  Section  7(e)  hereof)  shall
thereafter have the right to receive, upon the exercise thereof at a price equal
to the Total Exercise Price  applicable  immediately  prior to the occurrence of
the Section 13 Event in accordance with the terms of this Agreement, such number
of validly authorized and issued, fully paid, nonassessable and freely tradeable
Common  Shares of the  Principal  Party (as  hereinafter  defined),  free of any
liens,  encumbrances,  rights of first refusal or other adverse claims, as shall
be equal to the result  obtained by  dividing  such Total  Exercise  Price by an
amount equal to fifty percent (50%) of the Current Per Share Market Price of the
Common  Shares  of such  Principal  Party  on the date of  consummation  of such
Section 13 Event,  provided,  however, that the Exercise Price and the number of
Common Shares of such  Principal  Party so  receivable  upon exercise of a Right
shall be subject to further adjustment as appropriate in accordance with Section
11(e) hereof;

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;

the term "Company" shall  thereafter be deemed to refer to such Principal Party,
it being  specifically  intended that the  provisions of Section 11 hereof shall
apply only to such Principal Party  following the first  occurrence of a Section
13 Event;

                                      -22-

<PAGE>

such Principal Party shall take such steps  (including,  but not limited to, the
reservation of a sufficient  number of its Common Shares) in connection with the
consummation  of any such  transaction  as may be  necessary  to ensure 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; and

upon the subsequent occurrence of any consolidation, merger, sale or transfer of
assets 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 Total  Exercise  Price as  provided  in this  Section
13(a), such cash, shares, rights,  warrants and other property which such holder
would  have  been  entitled  to  receive  had such  holder,  at the time of such
transaction,  owned the Common Shares of the Principal Party receivable upon the
exercise of such Right pursuant to this Section 13(a),  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.

For purposes  hereof,  the "earning  power" of the Company and its  Subsidiaries
shall be  determined  in good faith by the  Company's  Board of Directors on the
basis of the operating  income of each business  operated by the Company and its
Subsidiaries   during  the  three  fiscal  years  preceding  the  date  of  such
determination  (or, in the case of any  business  not operated by the Company or
any Subsidiary  during three full fiscal years  preceding such date,  during the
period such business was operated by the Company or any Subsidiary).

                  (b) For purposes of this Agreement, the term "Principal Party"
shall mean:

                           (i)  in the  case  of any  transaction  described  in
clause (i) or (ii) of Section 13(a) hereof: (A) the Person that is the issuer of
the  securities  into which the Common  Shares are  converted  in such merger or
consolidation,  or, if there is more than one such issuer, the issuer the Common
Shares of which have the greatest aggregate market value of shares  outstanding,
or (B) if no securities are so issued, (x) the Person that is the other party to
the merger,  if such Person survives said merger,  or, if there is more than one
such Person,  the Person the Common Shares of which have the greatest  aggregate
market value of shares  outstanding or (y) if the Person that is the other party
to the merger  does not survive  the  merger,  the Person that does  survive the
merger  (including the Company if it survives) or (z) the Person  resulting from
the consolidation; and

                           (ii) in the  case  of any  transaction  described  in
clause (iii) of Section 13(a) hereof, the Person that is the party receiving the
greatest  portion of the assets or earning  power  transferred  pursuant to such
transaction or transactions, or, if more than one Person that is a party to such
transaction or  transactions  receives the same portion of the assets or earning
power so  transferred  and each such  portion  would,  were it not for the other
equal portions,  constitute the greatest  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 is the issuer of
Common Shares having the greatest aggregate market value of shares  outstanding;
provided,  however,  that in any such case  described  in the  foregoing  clause
(b)(i) or (b)(ii),  if the Common  Shares of such Person are not at such time or
have not been continuously over the preceding 12-month

                                      -23-

<PAGE>

period  registered under Section 12 of the Exchange Act, then (1) if 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 (2) 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 Common  Shares  having the greatest  aggregate  market value of
shares outstanding, or (3) if such Person is owned, directly or indirectly, by a
joint  venture  formed by two or more  Persons  that are not owned,  directly or
indirectly by the same Person,  the rules set forth in clauses (1) and (2) above
shall  apply to each of the owners  having an  interest in the venture as if the
Person owned by the joint  venture was a Subsidiary of both or all of such joint
venturers,  and the Principal Party in each such case shall bear the obligations
set forth in this  Section 13 in the same ration as its  interest in such Person
bears to the total of such  interests.

                  (c) The  Company  shall not  consummate  any  Section 13 Event
unless the Principal Party shall have a sufficient  number of authorized  Common
Shares that 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 such issuer  shall have  executed  and  delivered to the
Rights Agent a  supplemental  agreement  confirming  that such  Principal  Party
shall,  upon  consummation  of such Section 13 Event,  assume this  Agreement in
accordance  with  Sections  13(a) and  13(b)  hereof,  that all  rights of first
refusal or preemptive rights in respect of the issuance of Common Shares of such
Principal Party upon exercise of outstanding Rights have been waived, that there
are no rights, warrants, instruments or securities outstanding or any agreements
or  arrangements  which, as a result of the  consummation  of such  transaction,
would eliminate or substantially  diminish the benefits  intended to be afforded
by the  Rights and that such  transaction  shall not result in a default by such
Principal  Party under this  Agreement,  and further  providing that, as soon as
practicable after the date of such Section 13 Event, such Principal Party will:

                           (i) prepare and file a registration  statement  under
the  Securities  Act 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  Expiration  Date,  and  similarly  comply  with
applicable state securities laws;

                           (ii) use its best  efforts to list (or  continue  the
listing  of) the Rights and the  securities  purchasable  upon  exercise  of the
Rights on a national securities exchange or to meet the eligibility requirements
for quotation on Nasdaq and list (or continue the listing of) the Rights and the
securities purchasable upon exercise of the Rights on Nasdaq; and

                           (iii)  deliver to  holders  of the Rights  historical
financial  statements for such Principal Party which comply in all respects with
the  requirements  for registration on Form 10 (or any successor form) under the
Exchange Act.

         In the event  that at any time  after the  occurrence  of a  Triggering
Event some or all of the Rights  shall not have been  exercised at the time of a
transaction  described in this Section 13, the

                                      -24-

<PAGE>

Rights which have not theretofore been exercised shall thereafter be exercisable
in the manner  described in Section 13(a) (without taking into account any prior
adjustment required by Section 11(a)(ii)).

                  (d) In case the  "Principal  Party"  for  purposes  of Section
13(b)  hereof  has  provision  in  any of its  authorized  securities  or in its
certificate  of  incorporation  or by-laws  or other  instrument  governing  its
corporate  affairs,  which  provision  would have the effect of (i) causing such
Principal Party to issue (other than to holders of Rights pursuant to Section 13
hereof),  in  connection  with, or as a consequence  of, the  consummation  of a
Section 13 Event,  Common Shares or Equivalent Shares of such Principal Party at
less  than the then  Current  Per  Share  Market  Price  thereof  or  securities
exercisable for, or convertible into, Common Shares or Equivalent Shares of such
Principal  Party at less than such then Current Per Share Market Price,  or (ii)
providing for any special payment,  tax or similar  provision in connection with
the  issuance  of the Common  Shares of such  Principal  Party  pursuant  to the
provisions of Section 13 hereof,  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 redeemed,  so that the
applicable  provision will have no effect in connection with or as a consequence
of, the consummation of the proposed transaction.

                  (e) The Company covenants and agrees that it shall not, at any
time  after the  Distribution  Date,  effect or permit to occur any  Section  13
Event,  if (i) at the time or immediately  after such Section 13 Event 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,   (ii)  prior  to,
simultaneously with or immediately after such Section 13 Event, the stockholders
of the Person who constitutes,  or would  constitute,  the "Principal Party" for
purposes of Section  13(b) hereof shall have received a  distribution  of Rights
previously  owned by such Person or any of its Affiliates or Associates or (iii)
the form or nature of  organization  of the  Principal  Party would  preclude or
limit the exercisability of the Rights.

                  (f) The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or sales or other transfers.

         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 registered holders 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
current  market value of a whole Right.  For the purposes of this Section 14(a),
the current  market  value of a whole  Right  shall be the closing  price of the
Rights  for  the  Trading  Day  immediately  prior  to the  date on  which  such
fractional Rights would have been otherwise issuable,  as determined pursuant to
the second sentence of Section 1(j) hereof.

                                      -25-

<PAGE>

                  (b) The Company  shall not be required to issue  fractions  of
Preferred  Shares  (other than  fractions  that are  integral  multiples  of one
one-thousandth  of a  Preferred  Share)  upon  exercise  of  the  Rights  or  to
distribute  certificates which evidence fractional  Preferred Shares (other than
fractions  that are  integral  multiples  of one  one-thousandth  of a Preferred
Share).  Interests in fractions of Preferred Shares in integral multiples of one
one-thousandth  of a Preferred  Share may, at the  election of the  Company,  be
evidenced by depositary receipts,  pursuant to an appropriate  agreement between
the Company and a depositary selected by it; provided, 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  Preferred  Shares  represented  by  such  depositary  receipts.  In lieu of
fractional   Preferred   Shares  that  are  not   integral   multiples   of  one
one-thousandth  of a Preferred  Share,  the Company shall 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  market
value of a Preferred  Share.  For  purposes of this Section  14(b),  the current
market  value  of a  Preferred  Share  shall  be the  product  equal  to (x) one
thousandth  multiplied by (y) the closing price of a Common Share (as determined
pursuant  to the second  sentence  of Section  1(j)  hereof) for the Trading Day
immediately prior to the date of such exercise.

                  (c) The Company  shall not be required to issue  fractions  of
Common Shares or to distribute  certificates  which evidence  fractional  Common
Shares  upon the  exercise or  exchange  of Rights.  In lieu of such  fractional
Common  Shares,  the  Company  shall  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  market  value of a Common
Share.  For purposes of this Section 14(c), the current market value of a Common
Share shall be the closing  price of a Common Share (as  determined  pursuant to
the second  sentence of Section  1(j)  hereof)  for the Trading Day  immediately
prior to the date of such exercise.

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

         Section 15.  Rights of Action.  All rights of action in respect of this
Agreement,  excepting the rights of action given to the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the
Common Shares);  and any registered holder of any Rights  Certificate (or, prior
to the  Distribution  Date,  of the Common  Shares),  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),  may, in his or her own behalf and for
his or her own benefit, enforce, and may institute and maintain any suit, action
or  proceeding  against the Company to enforce,  or otherwise act in respect of,
his or her right to exercise the Rights evidenced by such Rights  Certificate 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 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.

                                      -26-

<PAGE>

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

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

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

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

         Section 17.  Rights  Certificate  Holder Not Deemed a  Stockholder.  No
holder, as such, of any Rights  Certificate  shall be entitled to vote,  receive
dividends or be deemed for any purpose to be the holder of the Preferred  Shares
or any other  securities of the Company which may at any time be issuable on the
exercise of the Rights represented  thereby, nor shall anything contained herein
or in any  Rights  Certificate  be  construed  to confer  upon the holder of any
Rights  Certificate,  as such, any of the rights of a stockholder of the Company
or any right to vote 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  specifically  provided  in Section 25  hereof),  or to
receive  dividends or  subscription  rights,  or  otherwise,  until the Right or
Rights  evidenced  by such  Rights  Certificate  shall  have been  exercised  in
accordance with the provisions hereof.

         Section 18. Concerning the Rights Agent.

                  (a) The Company  agrees to pay to the Rights Agent  reasonable
compensation  for all services  rendered by it hereunder and, from time to time,
on demand of the Rights  Agent,  its  reasonable  expenses  and counsel fees and
other  disbursements  incurred  in the  administration  and  execution  of  this
Agreement and the exercise and performance of its duties hereunder.  The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless  against,
any loss, liability or expense, incurred without gross negligence,  bad faith or
willful misconduct as finally determined by a court of competent jurisdiction on
the part of the Rights Agent, for any action taken,  suffered, or omitted by the
Rights  Agent in  connection  with the  acceptance  and  administration  of this
Agreement,  including  the costs and expenses of defending  against any claim of
liability  in the  premises.  In no event  will the  Rights  Agent be liable for
special, punitive, indirect, incidental or

                                      -27-

<PAGE>

consequential  loss or damage of any kind  whatsoever,  even if the Rights Agent
has been advised of the possibility of such loss or damage.

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

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

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

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

         Section 20. Duties of Rights  Agent.  The Rights Agent  undertakes  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

                                      -28-

<PAGE>

protection  to the Rights  Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion.

                  (b)  Whenever  in the  performance  of its  duties  under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including,  without limitation, the identity of any Acquiring Person and
the determination of Current Per Share Market Price) be proved or established by
the Company  prior to taking or  suffering  any action  hereunder,  such fact or
matter  (unless  other  evidence  in  respect  thereof  be  herein  specifically
prescribed)  may be  deemed  to be  conclusively  proved  and  established  by a
certificate  signed by any one of the Chairman of the Board, the Chief Executive
Officer,  the President,  any Vice President,  the Chief Financial Officer,  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 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 to the Company
and any other  Person  only for its own gross  negligence,  bad faith or willful
misconduct.

                  (d) The Rights  Agent  shall not be liable for or by reason of
any of the statements of fact or recitals  contained in this Agreement or in the
Rights  Certificates  (except  its  countersignature  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  hereof
(except  the due  execution  hereof by the  Rights  Agent) or in  respect of the
validity or execution  of any Rights  Certificate  (except its  countersignature
thereof);  nor shall it be  responsible  for any  breach by the  Company  of any
covenant or condition  contained in this Agreement or in any Rights Certificate;
nor shall it be responsible for any change in the  exercisability  of the Rights
or any adjustment in the terms of the Rights  (including  the manner,  method or
amount  thereof)  provided  for  in  Sections  3,  11,  13,  23 or  24,  or  the
ascertaining  of the  existence  of facts that would  require any such change or
adjustment  (except with  respect to the exercise of Rights  evidenced by Rights
Certificates  after  receipt  by the  Rights  Agent of a  certificate  furnished
pursuant to Section 12 describing  such change or  adjustment);  nor shall it by
any act  hereunder  be deemed to make any  representation  or warranty as to the
authorization  or reservation of any Preferred  Shares to be issued  pursuant to
this Agreement or any Rights  Certificate or as to whether any Preferred  Shares
will,  when  issued,   be  validly   authorized  and  issued,   fully  paid  and
nonassessable.

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

                  (g) The Rights  Agent is hereby  authorized  and  directed  to
accept instructions with respect to the performance of its duties hereunder from
any  one  of the  Chairman  of the  Board,  the  Chief  Executive  Officer,  the
President, any Vice President, the Chief Financial Officer, the Secretary

                                      -29-

<PAGE>

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  by it in good  faith  in  accordance  with
instructions  of any such officer or for any delay in acting  while  waiting for
those instructions. Any application by the Rights Agent for written instructions
from the Company  may, at the option of the Rights  Agent,  set forth in writing
any action proposed to be taken or omitted by the Rights Agent under this Second
Amended and Restated  Rights  Agreement  and the date on and/or after which such
action  shall be taken or such  omission  shall be  effective.  The Rights Agent
shall not be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified  in such  application  (which  date  shall  not be less  than five (5)
Business  Days  after  the date on which any  officer  of the  Company  actually
receives  such  application,  unless any such  officer  shall have  consented in
writing  to an earlier  date)  unless,  prior to taking any such  action (or the
effective date in the case of an omission), the Rights Agent shall have received
written instructions in response to such application specifying the action to be
taken or omitted.

                  (h) The Rights Agent and any stockholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction in
which the  Company  may be  interested,  or  contract  with or lend money to the
Company or otherwise  act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company 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 hereunder either itself
or by or through  its  attorneys  or agents,  and the Rights  Agent shall not be
answerable or  accountable  for any act,  default,  neglect or misconduct of any
such attorneys or agents or for any loss to the Company  resulting from any such
act, default,  neglect or misconduct,  provided reasonable care was exercised in
the selection and continued employment thereof.

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

                  (k) If, with respect to any Rights Certificate  surrendered to
the Rights Agent for exercise or transfer,  the certificate attached to the form
of  assignment  or form of election to purchase,  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  thirty  (30) days'  notice in writing  mailed to the  Company  and to each
transfer  agent of the  Preferred  Shares and the Common Shares by registered or
certified  mail,  and to the holders of the Rights  Certificates  by first-class
mail.

                                      -30-

<PAGE>

The  Company  may remove the Rights  Agent or any  successor  Rights  Agent upon
thirty (30) days'  notice in writing,  mailed to the Rights  Agent or  successor
Rights Agent,  as the case may be, and to each  transfer  agent of the Preferred
Shares and the Common 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.  If the Company shall fail to make such
appointment  within a period of thirty  (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 or her Rights
Certificate  for inspection by the Company),  then the registered  holder of any
Rights  Certificate  may apply to any court of  competent  jurisdiction  for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court,  shall be a  corporation  organized and doing
business  under the laws of the  United  States  or of any  state of the  United
States,  in good  standing,  which is  authorized  under  such laws to  exercise
corporate trust or stockholder  services powers and is subject to supervision or
examination  by  federal  or state  authority  and  which has at the time of its
appointment  as Rights  Agent a combined  capital  and  surplus of at least $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  hereunder,  and execute and deliver any further  assurance,
conveyance,  act or deed necessary for the purpose. Not later than the effective
date of any such  appointment,  the Company shall file notice thereof in writing
with the  predecessor  Rights  Agent and each  transfer  agent of the  Preferred
Shares  and the  Common  Shares,  and mail a notice  thereof  in  writing to the
registered  holders  of the  Rights  Certificates.  Failure  to give any  notice
provided  for in this  Section 21,  however,  or any defect  therein,  shall not
affect the  legality  or validity  of the  resignation  or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

         Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this  Agreement or of the Rights to the contrary,  the Company
may, at its option, issue new Rights Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the  Exercise  Price  and the  number  or kind or  class of  shares  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 following the  Distribution  Date and
prior to the redemption or expiration of the Rights, the Company (a) shall, with
respect to Common  Shares so issued or sold  pursuant  to the  exercise of stock
options  or  under  any  employee  plan or  arrangement  or upon  the  exercise,
conversion  or exchange of other  securities of the Company  outstanding  at the
date  hereof  or  upon  the  exercise,  conversion  or  exchange  of  securities
hereinafter  issued by the Company  and (b) may,  in any other  case,  if deemed
necessary or appropriate by the Board of Directors of the Company,  issue Rights
Certificates  representing  the appropriate  number of Rights in connection with
such issuance or sale;  provided,  however,  that (i) no such Rights Certificate
shall be issued  and this  sentence  shall be null and void ab initio if, and to
the extent that, such issuance or this sentence would create a significant  risk
of or result in material  adverse tax  consequences to the Company or the Person
to whom such Rights  Certificate  would be issued or would create a  significant
risk of or result in such options' or

                                      -31-

<PAGE>

employee  plans' or  arrangements'  failing to qualify for  otherwise  available
special tax  treatment and (ii) no such Rights  Certificate  shall be issued if,
and to the extent that, appropriate adjustment shall otherwise have been made in
lieu of the issuance thereof.

         Section 23. Redemption.

                  (a) The Company  may,  at its option and with the  approval of
the  Board of  Directors,  at any time  prior to the  Close of  Business  on the
earlier  of (i) the fifth day  following  the Shares  Acquisition  Date (or such
later date as may be determined  by action of the  Company's  Board of Directors
and  publicly  announced by the  Company)  and (ii) the Final  Expiration  Date,
redeem  all but not less than all the then  outstanding  Rights at a  redemption
price of $0.001 per Right,  appropriately  adjusted to reflect any stock  split,
stock  dividend or similar  transaction  occurring  after the date hereof  (such
redemption  price being herein  referred to as the  "Redemption  Price") and the
Company may, at its option,  pay the  Redemption  Price either in Common  Shares
(based on the Current Per Share Market Price thereof at the time of  redemption)
or cash.  Such  redemption of the Rights by the Company may be made effective at
such time,  on such basis and with such  conditions as the Board of Directors in
its sole  discretion  may  establish.  The date on which the Board of  Directors
elects to make the redemption  effective shall be referred to as the "Redemption
Date."

                  (b)  Immediately  upon the action of the Board of Directors of
the Company ordering the redemption of the Rights,  evidence of which shall have
been filed with the Rights Agent, and without any further action and without any
notice,  the right to  exercise  the Rights  will  terminate  and the only right
thereafter  of the holders of Rights shall be to receive the  Redemption  Price.
The Company shall promptly give public notice of any such redemption;  provided,
however,  that the failure to give,  or any defect in, any such notice shall not
affect the validity of such redemption. Within ten (10) days after the 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 their last
addresses as they appear upon the  registry  books of the Rights Agent or, prior
to the  Distribution  Date, on the registry  books of the transfer agent for the
Common Shares. 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
redemption  will state the method by which the payment of the  Redemption  Price
will be made.  Neither the Company nor any of its  Affiliates or Associates  may
redeem, acquire or purchase for value any Rights at any time in any manner other
than that specifically set forth in this Section 23 or in Section 24 hereof, and
other  than in  connection  with the  purchase  of  Common  Shares  prior to the
Distribution Date.

         Section 24. Exchange.

                  (a) Subject to applicable  laws,  rules and  regulations,  and
subject to subsection 24(c) below, the Company may, at its option,  by action of
the Board of Directors,  at any time after the occurrence of a Triggering Event,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include  Rights that have become void pursuant to the  provisions of Section
7(e)  hereof)  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

                                      -32-

<PAGE>

the date  hereof  (such  exchange  ratio  being  hereinafter  referred to 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 the Company,  any Subsidiary of the Company,  any employee  benefit plan of
the Company or any such  Subsidiary,  or any entity holding Common Shares for or
pursuant  to the  terms of any such  plan),  together  with all  Affiliates  and
Associates of such Person,  becomes the  Beneficial  Owner of 50% or more of the
Common Shares then outstanding.

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

         (c) In the event  that  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 Section  24(a),  the Company shall
either take such  action as may be  necessary  to  authorize  additional  Common
Shares for issuance upon exchange of the Rights or alternatively,  at the option
of a majority of the Board of Directors, with respect to each Right (i) pay cash
in an amount equal to the Current  Value (as  hereinafter  defined),  in lieu of
issuing  Common  Shares  in  exchange  therefor,  or (ii)  issue  debt or equity
securities or a combination thereof,  having a value equal to the Current Value,
in lieu of issuing  Common  Shares in exchange  for each such  Right,  where the
value  of  such  securities  shall  be  determined  by a  nationally  recognized
investment banking firm selected by majority vote of the Board of Directors,  or
(iii)  deliver any  combination  of cash,  property,  Common Shares and/or other
securities having a value equal to the Current Value in exchange for each Right.
For  purposes  of this  Section  24(c) only,  the  Current  Value shall mean the
product of the Current Per Share  Market  Price of Common  Shares on the date of
the occurrence of the event described above in subparagraph  (a),  multiplied by
the number of Common Shares for which the Right  otherwise would be exchangeable
if there  were  sufficient  shares  available.  To the extent  that the  Company
determines that some action need be taken pursuant to clauses (i), (ii) or (iii)
of this  Section  24(c),  the Board of  Directors  may  temporarily  suspend the
exercisability of the Rights for a period of up to sixty (60) days following the
date on which the event described in Section 24(a) shall have occurred, in order
to seek any  authorization  of  additional  Common  Shares  and/or to decide the
appropriate  form of distribution to be made pursuant to the above provision and

                                      -33-

<PAGE>

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.

                  (d) 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,  there shall be paid 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 a whole  Common  Share (as
determined pursuant to the second sentence of Section 1(j) hereof).

                  (e) The Company  may, at its option,  by majority  vote of the
Board of  Directors,  at any time  before any  Person  has  become an  Acquiring
Person,  exchange  all or part of the then  outstanding  Rights  for  rights  of
substantially  equivalent value, as determined reasonably and with good faith by
the  Board  of  Directors  based  upon  the  advice  of one or  more  nationally
recognized investment banking firms.

                  (f)  Immediately  upon the  action of the  Board of  Directors
ordering the exchange of any Rights pursuant to subsection 24(e) of this Section
24 and without any further action and without any notice,  the right to exercise
such Rights shall  terminate  and the only right  thereafter of a holder of such
Rights  shall be to receive  that number of rights in  exchange  therefor as has
been determined by the Board of Directors in accordance  with  subsection  24(e)
above.  The Company  shall 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 mail a notice of any
such  exchange to all of the holders of such Rights at their last  addresses  as
they appear upon the registry  books of the transfer agent for the Common Shares
of the Company.  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 Rights will be
effected.

         Section 25. Notice of Certain Events.

                  (a) In case the Company  shall  propose to effect or permit to
occur any  Triggering  Event or Section 13 Event,  the Company shall give notice
thereof to each holder of Rights in  accordance  with Section 26 hereof at least
twenty (20) days prior to occurrence of such Triggering Event or such Section 13
Event.

                  (b) In case any  Triggering  Event or Section  13 Event  shall
occur,  then,  in any  such  case,  the  Company  shall  as soon as  practicable
thereafter  give to each  holder of a Rights  Certificate,  in  accordance  with
Section 26 hereof, a notice of the occurrence of such event, which shall specify
the event and the  consequences of the event to holders of Rights under Sections
11(a)(ii) and 13 hereof.

         Section 26. Notices. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Rights  Certificate
to or on the Company shall be

                                      -34-

<PAGE>

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:

                              Spectrian Corporation
                              350 West Jave Drive
                              Sunnyvale, CA 94089
                              Attention: Garrett A. Garrettson

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

                              CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
                              50 California Street, 10th Floor
                              San Francisco, California 94111
                              Attention: Relationship Manager

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

         Section 27.  Supplements and  Amendments.  Prior to the occurrence of a
Distribution  Date,  the Company may  supplement or amend this  Agreement in any
respect  without  the  approval  of any  holders of Rights and the Rights  Agent
shall, if the Company so directs, execute such supplement or amendment. From and
after the  occurrence of a  Distribution  Date, the Company and the Rights Agent
may from time to time supplement or amend this Agreement without the approval of
any  holders  of  Rights in order to (i) cure any  ambiguity,  (ii)  correct  or
supplement any provision contained herein which may be defective or inconsistent
with any other  provisions  herein,  (iii)  shorten or lengthen  any time period
hereunder or (iv) to change or supplement the provisions hereunder in any manner
that the Company may deem  necessary or desirable  and that shall not  adversely
affect the interests of the holders of Rights (other than an Acquiring Person or
an Affiliate or Associate of an Acquiring Person);  provided, this Agreement may
not be  supplemented  or amended to  lengthen,  pursuant to clause (iii) of this
sentence,  (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then  redeemable  or (B) any other time period unless
such  lengthening is for the purpose of protecting,  enhancing or clarifying the
rights  of,  and/or  the  benefits  to, the  holders  of Rights  (other  than 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 that 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 Common Shares.

                                      -35-

<PAGE>

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

         Section 29. Determinations and Actions by the Board of Directors,  etc.
For all  purposes of this  Agreement,  any  calculation  of the number of Common
Shares outstanding at any particular time, including for purposes of determining
the particular  percentage of such outstanding Common Shares of which any Person
is the Beneficial  Owner,  shall be made in accordance with the last sentence of
Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Exchange Act.
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,  or the  Company,  or as may be necessary or
advisable  in  the   administration  of  this  Agreement,   including,   without
limitation,  the  right  and  power  (i) to  interpret  the  provisions  of this
Agreement and (ii) to make all determinations  deemed necessary or advisable for
the administration of this Agreement (including a determination to redeem or not
redeem the Rights or to amend the  Agreement).  All such actions,  calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
in good faith,  shall (x) be final,  conclusive and binding on the Company,  the
Rights Agent,  the holders of the Rights  Certificates and all other parties and
(y) not subject the Board or the  Continuing  Directors to any  liability to the
holders of the Rights.

         Section 30. Benefits of this Agreement. Nothing in this Agreement shall
be construed to give to any Person other than the Company,  the Rights Agent and
the  registered   holders  of  the  Rights   Certificates  (and,  prior  to  the
Distribution  Date, the Common Shares) any legal or equitable  right,  remedy or
claim pursuant to this  Agreement;  but this Agreement shall be for the sole and
exclusive benefit of the Company, the Rights Agent and the registered holders of
the  Rights  Certificates  (and,  prior to the  Distribution  Date,  the  Common
Shares).

         Section  31.  Severability.   If  any  term,  provision,   covenant  or
restriction  of this Agreement is held by a court of competent  jurisdiction  or
other  authority  to be invalid,  void or  unenforceable,  the  remainder of the
terms, provisions,  covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected,  impaired or invalidated;
provided,  however,  that  notwithstanding  anything  in this  Agreement  to the
contrary, if any such term,  provision,  covenant or restriction is held by such
court  or  authority  to be  invalid,  void or  unenforceable  and the  Board of
Directors of the Company determines in its good faith judgment that severing the
invalid  language  from this  Agreement  would  adversely  affect the purpose or
effect of this Agreement, the right of redemption set forth in Section 23 hereof
shall be  reinstated  and shall not expire  until the Close of  Business  on the
tenth day following the date of such determination by the Board of Directors.

         Section  32.  Governing  Law.  This  Agreement  and each Right and each
Rights  Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Delaware and for all purposes  shall be governed by and
construed in accordance  with the laws of such State  applicable to contracts to
be made and performed entirely within such State.

                                      -36-

<PAGE>

         Section 33. Counterparts.  This Agreement may be executed in any number
of counterparts and each of such  counterparts  shall for all purposes be deemed
to be an original,  and all such counterparts shall together  constitute but one
and the same instrument.

         Section 34. Descriptive  Headings.  Descriptive headings of the several
Sections of this  Agreement  are  inserted  for  convenience  only and shall not
control or affect the meaning or construction of any of the provisions hereof.

                                      -37-

<PAGE>

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

"COMPANY"                                   Spectrian Corporation

                                            By: /s/ Michael D. Angel
                                                --------------------------------

                                            Name:   Michael D. Angel
                                                  ------------------------------

                                            Title:  Chief Financial Officer and
                                                    Secretary

"RIGHTS AGENT"                              CHASEMELLON SHAREHOLDER
                                            SERVICES, L.L.C.

                                            By: /s/ William A. Dougherty
                                                --------------------------------

                                            Name:   William A. Dougherty
                                                  ------------------------------

                                            Title:  Assistant Vice President
                                                   -----------------------------

                                      -38-

<PAGE>

                                    EXHIBIT A

                          CERTIFICATE OF INCORPORATION

                                       OF

                              SPECTRIAN CORPORATION

         FIRST:  The  name of the  Corporation  is  Spectrian  Corporation  (the
"Corporation").

         SECOND: The address of the Corporation's registered office in the State
of Delaware is  Corporation  Trust Center,  1209 Orange  Street,  in the City of
Wilmington,  County of New Castle,  zip code 19801.  The name of its  registered
agent at such address is The Corporation Trust Company.

         THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which  corporations may be organized under the General  Corporation
Law of Delaware.

         FOURTH:  The Corporation is authorized to issue two classes of stock to
be designated respectively Common Stock and Preferred Stock. The total number of
shares of all classes of stock which the  Corporation  has authority to issue is
Twenty-five  Million  (25,000,000),  consisting of Twenty  Million  (20,000,000)
shares of Common Stock, $0.001 par value (the "Common Stock"),  and Five Million
(5,000,000) shares of Preferred Stock, $0.001 par value (the "Preferred Stock").
Of the authorized  shares of Preferred  Stock,  Twenty Thousand  (20,000) shares
shall be designated "Series A Participating Preferred Stock" (sometimes referred
to herein as "Series A Preferred").

         The  Preferred  Stock  may be  issued  from time to time in one or more
series.  The Board of  Directors  is hereby  authorized  subject to  limitations
prescribed by law, to fix by resolution or resolutions the designations, powers,
preferences  and rights,  and the  qualifications,  limitations or  restrictions
thereof,  of each such series of Preferred Stock,  including without  limitation
authority to fix by resolution or  resolutions,  the dividend  rights,  dividend
rate,   conversion  rights,  voting  rights,  rights  and  terms  of  redemption
(including sinking fund provisions), redemption price or prices, and liquidation
preferences of any wholly unissued series of Preferred  Stock, and the number of
shares  constituting any such series and the designation  thereof, or any of the
foregoing.

         The Board of Directors is further authorized to increase (but not above
the total number of  authorized  shares of the class) or decrease (but not below
the number of shares of any such series then  outstanding)  the number of shares
of any series,  the number of which was fixed by it,  subsequent to the issue of
shares of such series then outstanding,  subject to the powers,  preferences and
rights, and the qualifications,  limitations and restrictions  thereof stated in
the resolution of the Board of Directors  originally fixing the number of shares
of such series. If the number of shares of any series is so decreased,  then the
shares  constituting  such decrease shall resume the status which they had prior
to the adoption of the resolution originally fixing the number of shares of such
series.

<PAGE>

         The relative rights, preferences,  privileges, and restrictions granted
to or imposed  upon the Common  Stock,  the Series A  Preferred  and the holders
thereof (collectively,  the "Stockholders") are as follows:

         Section 1. Dividends and Distributions.

                  (a) Subject to the prior and superior  right of the holders of
any shares of any series of Preferred  Stock  ranking  prior and superior to the
shares of Series A Participating Preferred Stock with respect to dividends,  the
holders of shares of Series A Participating Preferred Stock shall be entitled to
receive  when, as and if declared by the Board of Directors out of funds legally
available for the purpose,  quarterly  dividends payable in cash on the last day
of January,  April, July and October in each year (each such date being referred
to herein as a  "Quarterly  Dividend  Payment  Date"),  commencing  on the first
Quarterly  Dividend Payment Date after the first issuance of a share or fraction
of a share of Series A  Participating  Preferred  Stock,  in an amount per share
(rounded to the nearest cent) equal to,  subject to the provision for adjustment
hereinafter  set forth,  1,000 times the  aggregate per share amount of all cash
dividends,  and 1,000 times the aggregate per share amount  (payable in kind) of
all non-cash dividends or other  distributions  other than a dividend payable in
shares of Common  Stock or a  subdivision  of the  outstanding  shares of Common
Stock (by  reclassification  or otherwise),  declared on the Common Stock of the
Corporation  (the "Common  Stock")  since the  immediately  preceding  Quarterly
Dividend Payment Date, or, with respect to the first Quarterly  Dividend Payment
Date,  since the first  issuance of any share or fraction of a share of Series A
Participating  Preferred  Stock. In the event the Corporation  shall at any time
after October 23, 1996 (the "Rights Dividend  Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock,  (ii)  subdivide the
outstanding  Common Stock, or (iii) combine the outstanding  Common Stock into a
smaller number of shares,  then in each such case the amount to which holders of
shares of Series A Participating Preferred Stock were entitled immediately prior
to such event under the preceding sentence shall be adjusted by multiplying such
amount by a fraction,  the  numerator of which is the number of shares of Common
Stock  outstanding  immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding  immediately prior to
such event.

                  (b) The  Corporation  shall declare a dividend or distribution
on the Series A Participating Preferred Stock as provided in paragraph (a) above
immediately  after it declares a dividend or  distribution  on the Common  Stock
(other than a dividend payable in shares of Common Stock).

                  (c) Dividends  shall begin to accrue on outstanding  shares of
Series A Participating  Preferred Stock from the Quarterly Dividend Payment Date
next  preceding  the date of  issue of such  shares  of  Series A  Participating
Preferred Stock,  unless the date of issue of such shares is prior to the record
date for the first Quarterly  Dividend  Payment Date, in which case dividends on
such  shares  shall begin to accrue  from the date of issue of such  shares,  or
unless the date of issue is a Quarterly Dividend Payment Date or is a date after
the  record  date  for the  determination  of  holders  of  shares  of  Series A
Participating  Preferred  Stock  entitled  to receive a quarterly  dividend  and
before such  Quarterly  Dividend  Payment  Date,  in either of which events such
dividends  shall  begin to accrue

                                      -2-

<PAGE>

from such Quarterly  Dividend  Payment Date.  Accrued but unpaid dividends shall
not bear  interest.  Dividends  paid on the  shares  of  Series A  Participating
Preferred Stock 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 at the time outstanding. The Board of
Directors  may fix a record date for the  determination  of holders of shares of
Series A Participating Preferred Stock entitled to receive payment of a dividend
or  distribution  declared  thereon,  which record date shall be no more than 30
days prior to the date fixed for the payment thereof.

         Section  2.  Voting   Rights.   The  holders  of  shares  of  Series  A
Participating Preferred Stock shall have the following voting rights:

                  (a) Subject to the provision for  adjustment  hereinafter  set
forth,  each share of Series A  Participating  Preferred Stock shall entitle the
holder  thereof  to  1,000  votes  on all  matters  submitted  to a vote  of the
shareholders of the Corporation.  In the event the Corporation shall at any time
after the Rights  Dividend  Declaration  Date (i) declare any dividend on Common
Stock payable in shares of Common Stock,  (ii) subdivide the outstanding  Common
Stock,  or (iii) combine the  outstanding  Common Stock into a smaller number of
shares, then in each such case the number of votes per share to which holders of
shares of Series A Participating Preferred Stock were entitled immediately prior
to such event shall be adjusted by  multiplying  such number by a fraction,  the
numerator  of  which  is the  number  of  shares  of  Common  Stock  outstanding
immediately  after  such  event and the  denominator  of which is the  number of
shares of Common Stock that were outstanding immediately prior to such event.

                  (b) Except as otherwise provided herein or by law, the holders
of shares of Series A Participating Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to a vote
of stockholders of the Corporation.

                  (c)  Except  as   required   by  law,   holders  of  Series  A
Participating  Preferred  Stock  shall have no special  voting  rights and their
consent  shall not be required  (except to the extent they are  entitled to vote
with  holders of Common  Stock as set forth  herein)  for  taking any  corporate
action.

         Section 3. Certain Restrictions.

                  (a) The  Corporation  shall not declare any  dividend on, make
any   distribution   on,  or  redeem  or  purchase  or  otherwise   acquire  for
consideration  any shares of Common Stock after the first issuance of a share or
fraction  of  a  share  of  Series  A   Participating   Preferred  Stock  unless
concurrently therewith it shall declare a dividend on the Series A Participating
Preferred Stock as required by Section 1 hereof.

                  (b)  Whenever  quarterly   dividends  or  other  dividends  or
distributions payable on the Series A Participating  Preferred Stock as provided
in  Section  1 are in  arrears,  thereafter  and until all  accrued  and  unpaid
dividends  and  distributions,  whether or not  declared,  on shares of Series A
Participating  Preferred  Stock  outstanding  shall have been paid in full,  the
Corporation shall not

                                      -3-

<PAGE>

                           (i)  declare  or pay  dividends  on,  make any  other
distributions  on, or redeem or purchase or otherwise  acquire for consideration
any shares of stock ranking junior (either as to dividends or upon  liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock;

                           (ii) declare or pay  dividends  on, or make any other
distributions  on,  any  shares  of  stock  ranking  on a parity  (either  as to
dividends  or upon  liquidation,  dissolution  or  winding  up)  with  Series  A
Participating  Preferred  Stock,  except  dividends paid ratably on the Series A
Participating  Preferred  Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the holders of
all such shares are then entitled;

                           (iii)  redeem or  purchase or  otherwise  acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon  liquidation,  dissolution  or winding up) with the Series A  Participating
Preferred Stock, provided that the Corporation may at any time redeem,  purchase
or otherwise  acquire  shares of any such parity stock in exchange for shares of
any stock of the  Corporation  ranking  junior  (either as to  dividends or upon
dissolution,  liquidation or winding up) to the Series A Participating Preferred
Stock;

                           (iv) purchase or otherwise  acquire for consideration
any shares of Series A  Participating  Preferred  Stock,  or any shares of stock
ranking on a parity with the Series A Participating  Preferred Stock,  except in
accordance  with  a  purchase  offer  made  in  writing  or by  publication  (as
determined  by the Board of  Directors)  to all holders of such shares upon such
terms as the Board of Directors,  after  consideration of the respective  annual
dividend  rates and other  relative  rights and  preferences  of the  respective
series and  classes,  shall  determine  in good  faith  will  result in fair and
equitable treatment among the respective series or classes.

                  (c) The  Corporation  shall not permit any  subsidiary  of the
Corporation  to purchase or otherwise  acquire for  consideration  any shares of
stock of the Corporation  unless the Corporation  could,  under paragraph (a) of
this Section 3,  purchase or  otherwise  acquire such shares at such time and in
such manner.

         Section 4.  Reacquired  Shares.  Any  shares of Series A  Participating
Preferred Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and canceled promptly after the acquisition thereof.
All such shares shall upon their  cancellation  become  authorized  but unissued
shares  of  Preferred  Stock  and may be  reissued  as part of a new  series  of
Preferred  Stock to be  created by  resolution  or  resolutions  of the Board of
Directors,  subject to the  conditions  and  restrictions  on issuance set forth
herein.

         Section 5. Liquidation, Dissolution or Winding Up.

                  (a) Upon any liquidation (voluntary or otherwise), dissolution
or winding up of the Corporation,  no distribution  shall be made to the holders
of shares of stock ranking junior  (either as to dividends or upon  liquidation,
dissolution or winding up) to the Series A Participating Preferred Stock unless,
prior thereto,  the holders of shares of Series A Participating  Preferred Stock
shall have received one hundred  twenty-six  thousand  dollars  ($126,  000) per
share, plus an amount equal to

                                      -4-

<PAGE>

accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment (the "Series A Liquidation  Preference").  Following
the  payment  of the full  amount of the  Series A  Liquidation  Preference,  no
additional  distributions  shall be made to the  holders  of  shares of Series A
Participating  Preferred Stock unless,  prior thereto,  the holders of shares of
Common Stock shall have  received an amount per share (the "Common  Adjustment")
equal  to the  quotient  obtained  by  dividing  (i) the  Series  A  Liquidation
Preference by (ii) 1,000 (as appropriately adjusted as set forth in subparagraph
(c)  below  to  reflect  such  events  as  stock  splits,  stock  dividends  and
recapitalization  with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the Series
A Liquidation Preference and the Common Adjustment in respect of all outstanding
shares of Series A Participating Preferred Stock and Common Stock, respectively,
holders  of Series A  Participating  Preferred  Stock and  holders  of shares of
Common  Stock  shall  receive  their  ratable  and  proportionate  share  of the
remaining  assets to be distributed  in the ratio of the Adjustment  Number to 1
with respect to such  Preferred  Stock and Common  Stock,  on a per share basis,
respectively.

                  (b) In the  event,  however,  that  there  are not  sufficient
assets  available  to  permit  payment  in  full  to the  Series  A  Liquidation
Preference  and the  liquidation  preferences  of all other  series of Preferred
Stock, if any, which rank on a parity with the Series A Participating  Preferred
Stock, then such remaining assets shall be distributed ratably to the holders of
such parity shares in proportion to their respective liquidation preferences. In
the event,  however,  that there are not sufficient  assets  available to permit
payment in full of the Common  Adjustment,  then such remaining  assets shall be
distributed ratably to the holders of Common Stock.

                  (c) In the event the  Corporation  shall at any time after the
Rights  Dividend  Declaration  Date (i)  declare any  dividend  on Common  Stock
payable in shares of Common Stock, (ii) subdivide the outstanding  Common Stock,
or (iii) combine the  outstanding  Common Stock into a smaller number of shares,
then in each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment  Number by a fraction the
numerator  of  which  is the  number  of  shares  of  Common  Stock  outstanding
immediately  after  such  event and the  denominator  of which is the  number of
shares of Common Stock that were outstanding immediately prior to such event.

                  (d) Consolidation,  Merger, etc. In case the Corporation shall
enter into any consolidation,  merger, combination or other transaction in which
the shares of Common  Stock are  exchanged  for or changed  into other  stock or
securities,  cash and/or any other property, then in any such case the shares of
Series A  Participating  Preferred  Stock  shall at the same  time be  similarly
exchanged  or changed  in an amount  per share  (subject  to the  provision  for
adjustment  hereinafter set forth) equal to 1,000 times the aggregate  amount of
stock, securities, cash and/or any other property (payable in kind), as the case
may be,  into  which or for which  each  share of  Common  Stock is  changed  or
exchanged.  In the  event the  Corporation  shall at any time  after the  Rights
Dividend  Declaration  Date (i) declare any dividend on Common Stock  payable in
shares of Common Stock,  (ii) subdivide the  outstanding  Common Stock, or (iii)
combine the  outstanding  Common Stock into a smaller number of shares,  then in
each such case the amount set forth in the  preceding  sentence  with respect to
the exchange or change of shares of Series A Participating Preferred Stock shall
be

                                      -5-

<PAGE>

adjusted by multiplying  such amount by a fraction the numerator of which is the
number of shares of Common Stock  outstanding  immediately  after such event and
the  denominator  of which is the  number of shares  of Common  Stock  that were
outstanding immediately prior to such event.

         Section  6.  No  Redemption.  The  shares  of  Series  A  Participating
Preferred Stock shall not be redeemable.

         Section 7. Ranking.  The Series A  Participating  Preferred Stock shall
rank junior to all other series of the  Corporation's  Preferred Stock as to the
payment of dividends  and the  distribution  of assets,  unless the terms of any
such series shall provide otherwise. Section

         8.  Amendment.  This  Certificate of  Incorporation  of the Corporation
shall not be further  amended  in any manner  which  would  materially  alter or
change the powers,  preference or special  rights of the Series A  Participating
Preferred Stock so as to affect them adversely  without the affirmative  vote of
the  holders  of a  majority  or more of the  outstanding  shares  of  Series  A
Participating Preferred Stock, voting separately as a class.

         Section 9. Fractional  Shares.  Series A Participating  Preferred Stock
may be issued in  fractions  of a share  which  shall  entitle  the  holder,  in
proportion  to such  holder's  fractional  shares,  to exercise  voting  rights,
receive  dividends,  participate in distributions and to have the benefit of all
other rights of holders of Series A Participating Preferred Stock.

         FIFTH: The name and mailing address of the incorporator are as follows:

                                    Bruce R. Wright
                                    Spectrian Corporation
                                    350 W. Java Drive
                                    Sunnyvale, CA 94089

         SIXTH: The Corporation is to have perpetual existence.

         SEVENTH: The election of directors need not be by written ballot unless
a stockholder  demands  election by written ballot at a meeting of  stockholders
and  before  voting  begins or unless  the  Bylaws of the  Corporation  shall so
provide.

         EIGHTH:  The number of directors  which  constitute  the whole Board of
Directors  of  the  Corporation  shall  be  designated  in  the  Bylaws  of  the
Corporation.

         NINTH: In furtherance and not in limitation of the powers  conferred by
the  laws of the  State  of  Delaware,  the  Board  of  Directors  is  expressly
authorized to adopt, alter, amend or repeal the Bylaws of the Corporation.

         TENTH:  To  the  fullest  extent  permitted  by  the  Delaware  General
Corporation  Law as the same exists or may hereafter be amended,  no director of
the  Corporation   shall  be  personally

                                      -6-

<PAGE>

liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.

         Neither any amendment  nor repeal of this Article,  nor the adoption of
any  provision  of this  Certificate  of  Incorporation  inconsistent  with this
Article,  shall eliminate or reduce the effect of this Article in respect of any
matter  occurring,  or any cause of  action,  suit or claim  that,  but for this
Article,  would accrue or arise, prior to such amendment,  repeal or adoption of
an inconsistent provision.

         ELEVENTH: At the election of directors of the Corporation,  each holder
of stock or of any class or series of stock  shall be  entitled to as many votes
as shall equal the number of votes which such  stockholder  would be entitled to
cast for the  election of  directors  with respect to his or her shares of stock
multiplied  by the number of directors to be elected and may cast all such votes
for any director or for any two or more of them as such stockholder may see fit.

         TWELFTH:  Meetings  of  stockholders  may be held within or without the
State of Delaware,  as the Bylaws may provide.  The books of the Corporation may
be  kept  (subject  to any  provision  contained  in the  laws of the  State  of
Delaware)  outside  of the State of  Delaware  at such place or places as may be
designated  from time to time by the Board of  Directors or in the Bylaws of the
Corporation.

         THIRTEENTH:  The Corporation reserves the right to amend, alter, change
or repeal any provision  contained in this Certificate of Incorporation,  in the
manner now or hereafter prescribed by the laws of the State of Delaware, and all
rights conferred herein are granted subject to this reservation.

         The undersigned  incorporator  hereby  acknowledges  that the foregoing
Certificate  of  Incorporation  is his act and deed and  that the  facts  stated
herein are true.

Dated:  May 21, 1997                           /s/ Bruce R. Wright
                                             -----------------------------------
                                                      Bruce R. Wright
                                                      Incorporator

                                      -7-

<PAGE>

                                    EXHIBIT B

                           FORM OF RIGHTS CERTIFICATE

Certificate No. R-                                              _________ Rights

    NOT EXERCISABLE  AFTER THE EARLIER OF (i) AUGUST 14, 2010, (ii) THE DATE
    TERMINATED  BY THE COMPANY OR (iii) THE DATE THE COMPANY  EXCHANGES  THE
    RIGHTS PURSUANT TO THE SECOND AMENDED AND RESTATED RIGHTS AGREEMENT. THE
    RIGHTS ARE  SUBJECT TO  REDEMPTION,  AT THE  OPTION OF THE  COMPANY,  AT
    $0.001  PER  RIGHT ON THE  TERMS SET  FORTH IN THE  SECOND  AMENDED  AND
    RESTATED  RIGHTS   AGREEMENT.   UNDER  CERTAIN   CIRCUMSTANCES,   RIGHTS
    BENEFICIALLY  OWNED BY AN ACQUIRING  PERSON OR AN AFFILIATE OR ASSOCIATE
    OF AN ACQUIRING  PERSON (AS SUCH TERMS ARE DEFINED IN THE SECOND AMENDED
    AND RESTATED RIGHTS  AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS
    MAY  BECOME  NULL AND  VOID.  [THE  RIGHTS  REPRESENTED  BY THIS  RIGHTS
    CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME
    AN ACQUIRING  PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON
    (AS SUCH TERMS ARE  DEFINED IN THE SECOND  AMENDED AND  RESTATED  RIGHTS
    AGREEMENT).   ACCORDINGLY,   THIS  RIGHTS  CERTIFICATE  AND  THE  RIGHTS
    REPRESENTED  HEREBY  MAY  BECOME  NULL  AND  VOID  IN THE  CIRCUMSTANCES
    SPECIFIED  IN SECTION 7(e) OF SUCH SECOND  AMENDED AND  RESTATED  RIGHTS
    AGREEMENT.]*

                               RIGHTS CERTIFICATE

                              Spectrian Corporation

         This  certifies  that  ______________________________,   or  registered
assigns,  is the registered owner of the number of Rights set forth above,  each
of which  entitles  the owner  thereof,  subject  to the terms,  provisions  and
conditions  of the Second  Amended and  Restated  Rights  Agreement  dated as of
August 14, 2000, (the "Rights  Agreement"),  between  Spectrian  Corporation,  a
Delaware  corporation (the  "Company"),  and ChaseMellon  Shareholder  Services,
L.L.C.,  ( the "Rights  Agent"),  to purchase from the Company at any time after
the  Distribution  Date (as such

___________________
* The portion of the legend in bracket shall be inserted only if applicable  and
shall replace the preceding sentence.

                                    -8-

<PAGE>

term is defined in the Rights  Agreement) and prior to 5:00 P.M., New York time,
on  August  14,  2010 at the  office of the  Rights  Agent  designated  for such
purpose,  or at the office of its successor as Rights Agent, one  one-thousandth
(1/1,000)  of a fully paid and  non-assessable  share of Series A  Participating
Preferred  Stock,  par value $0.001 per share (the "Preferred  Shares"),  of the
Company,  at an Exercise Price of One Hundred  Twenty Six Dollars  ($126.00) per
one-thousandth  of a Preferred Share (the "Exercise  Price"),  upon presentation
and surrender of this Rights  Certificate  with the Form of Election to Purchase
and related  Certificate  duly executed.  The number of Rights evidenced by this
Rights Certificate (and the number of one-thousandths of a Preferred Share which
may be  purchased  upon  exercise  hereof)  set forth  above are the  number and
Exercise  Price  as of  August  __,  2000  based  on  the  Preferred  Shares  as
constituted  at such date.  As provided in the Rights  Agreement,  the  Exercise
Price and the number and kind of Preferred  Shares or other securities which may
be  purchased  upon  the  exercise  of  the  Rights  evidenced  by  this  Rights
Certificate  are subject to  modification  and adjustment  upon the happening of
certain events.

         This Rights Certificate is subject to all of the terms,  provisions and
conditions of the Rights Agreement,  which terms,  provisions and conditions are
hereby  incorporated  herein by  reference  and made a part  hereof and to which
Rights Agreement  reference is hereby made for a full description of the rights,
limitations  of rights,  obligations,  duties and  immunities  hereunder  of the
Rights  Agent,  the Company and the  holders of the Rights  Certificates,  which
limitations of rights include the temporary  suspension of the exercisability of
such Rights under the specific  circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Company and the above-mentioned office of the Rights Agent.

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Rights Certificate (i) may be redeemed by the Company, at its option, at
a  redemption  price of $0.001 per Right or (ii) may be exchanged by the Company
in whole or in part for Common Shares,  substantially equivalent rights or other
consideration as determined by the Company.

         This Rights  Certificate,  with or without  other Rights  Certificates,
upon  surrender at the office of the Rights Agent  designated  for such purpose,
may be exchanged for another Rights  Certificate or Rights  Certificates of like
tenor  and date  evidencing  Rights  entitling  the  holder to  purchase  a like
aggregate amount of securities as the Rights evidenced by the Rights Certificate
or Rights Certificates  surrendered shall have entitled such holder to purchase.
If this Rights  Certificate  shall be  exercised  in part,  the holder  shall be
entitled to receive upon surrender  hereof another Rights  Certificate or Rights
Certificates for the number of whole Rights not exercised.

         No fractional  portion of less than one  one-thousandth  of a Preferred
Share will be issued upon the exercise of any Right or Rights  evidenced  hereby
but in lieu  thereof a cash  payment  will be made,  as  provided  in the Rights
Agreement.

         No holder of this  Rights  Certificate,  as such,  shall be entitled to
vote or  receive  dividends  or be  deemed  for any  purpose  the  holder of the
Preferred Shares or of any other securities of the Company which may at any time
be issuable on the exercise hereof,  nor shall anything  contained in the Rights
Agreement or herein be construed to confer upon the holder hereof,  as such, any
of the  rights  of a  stockholder  of the  Company  or any right to vote for the
election  of  directors  or

                                      -9-

<PAGE>

upon any matter submitted to stockholders at any meeting thereof,  or to give or
withhold  consent to any corporate  action,  or to receive notice of meetings or
other  actions  affecting   stockholders  (except  as  provided  in  the  Rights
Agreement), or to receive dividends or subscription rights, or otherwise,  until
the  Right or  Rights  evidenced  by this  Rights  Certificate  shall  have been
exercised as provided in the Rights Agreement.

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

         WITNESS the facsimile  signature of the proper  officers of the Company
and its corporate seal. Dated as of _______________, 2000.

ATTEST:                               SPECTRIAN CORPORATION

                                      By:
------------------------------------       -------------------------------------
Secretary

                                      Its:
                                          --------------------------------------

Countersigned:

CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Rights Agent

By:
   ---------------------------------

Its:
    --------------------------------

                                      -10-

<PAGE>

                   Form of Reverse Side of Rights Certificate

                               FORM OF ASSIGNMENT

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

   FOR VALUE RECEIVED _______________ hereby sells, assigns and transfers unto
--------------------------------------------------------------------------------
                 (Please print name and address of transferee)

--------------------------------------------------------------------------------
this Rights  Certificate,  together with all right,  title and interest therein,
and does hereby  irrevocably  constitute and appoint  __________________________
Attorney,  to  transfer  the  within  Rights  Certificate  on the  books  of the
within-named Company, with full power of substitution.

Dated: _______________,____

                                               _________________________________
                                               Signature

Signature Guaranteed:

         Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.

<PAGE>

                                   CERTIFICATE

         The  undersigned  hereby  certifies by checking the  appropriate  boxes
that:

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

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

Dated: _______________,____

                                               _________________________________
                                               Signature

Signature Guaranteed:

         Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.

<PAGE>

             Form of Reverse Side of Rights Certificate -- continued

                          FORM OF ELECTION TO PURCHASE

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

To:___________________________

                  The  undersigned   hereby   irrevocably   elects  to  exercise
_________________________  Rights  represented  by this  Rights  Certificate  to
purchase the number of  one-thousandths  of a Preferred  Share issuable upon the
exercise  of such  Rights and  requests  that  certificates  for such  number of
one-thousandths of a Preferred Share issued in the name of:

Please insert social security
or other identifying number

________________________________________________________________________________
                         (Please print name and address)
________________________________________________________________________________

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

Please insert social security
or other identifying number

________________________________________________________________________________
                         (Please print name and address)
________________________________________________________________________________

Dated: _______________,____

                                               _________________________________
                                               Signature

Signature Guaranteed:

         Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.

<PAGE>

                                   CERTIFICATE

         The  undersigned  hereby  certifies by checking the  appropriate  boxes
that:

         (1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an  Affiliate  or Associate of any such Person (as such terms are defined in the
Rights Agreement);

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

Dated: _______________,____

                                               _________________________________
                                               Signature

Signature Guaranteed:

         Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.

<PAGE>

             Form of Reverse Side of Rights Certificate -- continued

                                     NOTICE

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

<PAGE>

                                    EXHIBIT C

  SUMMARY OF THE SECOND AMENDED AND RESTATED PREFERRED SHARES RIGHTS AGREEMENT
                              SPECTRIAN CORPORATION

         On December 30, 1996, The Board of Directors declared a dividend of one
Right for each share of Common Stock of Spectrian  Corporation  (the  "Company")
outstanding as of March 21, 1997 (the "Record Date") and further  authorized the
issuance  of one Right for each  Common  Share  that  shall  become  outstanding
between  the  Record  Date  and the  earlier  of the  Distribution  Date and the
Expiration Date. On August 9, 2000, the Board of Directors determined that it is
in the best  interest of the Company to amend and restate the  Preferred  Shares
Rights Agreement to provide as follows:

                                Summary of Rights

Distribution and             Prior to the  Distribution  Date referred to below,
Transfer of Rights;          the Rights  will  continue to be  evidenced  by and
Rights Certificate:          trade with the  certificates  for the Common Stock.
                             After the Distribution  Date, the Company will mail
                             Rights  certificates to the Company's  stockholders
                             and the Rights will become  transferable apart from
                             the Common Stock.

Distribution Date:           Rights  will  separate  from the  Common  Stock and
                             become exercisable  following (a) the tenth day (or
                             such  later  date  as  may  be  determined  by  the
                             Company's  Board of  Directors)  after a person  or
                             group acquires beneficial  ownership of 15% or more
                             of the  Company's  Common  Stock  or (b) the  tenth
                             business   day  (or  such  later  date  as  may  be
                             determined  by the  Company's  Board of  Directors)
                             after a person  or  group  announces  a  tender  or
                             exchange  offer,  the  consummation  of which would
                             result in  ownership by a person or group of 15% or
                             more of the Company's Common Stock.  However,  with
                             respect  to shares of the  Company's  Common  Stock
                             held or acquired by Kopp Investment Advisors,  Inc.
                             ("Kopp"),  an existing shareholder whose beneficial
                             ownership  exceeded  15% on the date of the  Rights
                             Plan was adopted,  no Distribution  Date will occur
                             until such time as Kopp  acquired  more than 25% of
                             the  Company's  Common  Stock or announces a tender
                             offer to  acquire  more  than 25% of the  Company's
                             Common  Stock,  or until such time as Kopp shall be
                             required to file a report of  beneficial  ownership
                             on Schedule  13D with the  Securities  and Exchange
                             Commission  with  respect  to its  holdings  of the
                             Company's    Common   Stock    (collectively    the
                             "Limitations").

<PAGE>

Preferred                    Stock After the Distribution  Date, each Right will
Purchasable                  entitle  the  holder  to  purchase  for  $126  (the
Upon Exercise of             "Exercise  Price"),  a  fraction  of a share of the
Rights:                      Company's   Preferred  Stock  with  economic  terms
                             similar  to  that  of one  share  of the  Company's
                             Common Stock.

Flip-In:                     If an acquiror obtains 15% or more of the Company's
                             Common Stock (or with respect to Kopp,  Kopp is not
                             in  compliance  with  the   Limitations),   thereby
                             becoming  an  "Acquiring  Person",  then each Right
                             (other than Rights owned by an Acquiring  Person or
                             its affiliates)  will entitle the holder thereof to
                             purchase,  for the  exercise  price,  a  number  of
                             shares of the Company's  Common Stock having a then
                             current market value of twice the exercise price.

Flip-Over:                   If,  after an  acquiror  obtains 15% or more of the
                             Company's  Common  Stock (or with  respect to Kopp,
                             Kopp is not in  compliance  with the  Limitations),
                             (a) the Company merges into another entity,  (b) an
                             acquiring  entity  mergers  into the Company or (c)
                             the  Company  sells more than 50% of the  Company's
                             assets or earning  power,  then each  Right  (other
                             than  Rights  owned by an  Acquiring  Person or its
                             affiliates)  will  entitle  the  holder  thereof to
                             purchase,  for the  exercise  price,  a  number  of
                             shares of Common  Stock of the person  engaging  in
                             the transaction  having a then current market value
                             of twice the exercise price.

Exchange                     At any time  after  the date on which an  Acquiring
Provision:                   Person obtains 15% or more of the Company's  Common
                             Stock and prior to the acquisition by the Acquiring
                             Person of 50% of the  outstanding  Common Stock,  a
                             majority of the Board of Directors and the Board of
                             Directors  of the Company may  exchange  the Rights
                             (other than Rights owned by the Acquiring Person or
                             its affiliates), in whole or in part, for shares of
                             Common Stock of the Company at an exchange ratio of
                             one share of Common  Stock  per Right  (subject  to
                             adjustment).

Redemption of the            Rights will be redeemable  at the Company's  option
Rights:                      for $0.001 per Right at any time on or prior to the
                             fifth day (or such later date as may be  determined
                             by the Company's  Board of Directors)  after public
                             announcement that a Person has acquired  beneficial
                             ownership  of 15% or more of the  Company's  Common
                             Stock  (or in the  case  of  Kopp,  Kopp  is not in
                             compliance  with  the  Limitations)   (the  "Shares
                             Acquisition Date").

                                      -2-

<PAGE>

Expiration of the            The Rights expire on the earliest of (a) August 14,
Rights:                      2010 or (b) exchange or redemption of the Rights as
                             described above.

Amendment of                 The terms of the Rights and the Second  Amended and
Terms of Rights:             Restated  Preferred  Shares Rights Agreement may be
                             amended in any  respect  without the consent of the
                             Rights  holders  on or  prior  to the  Distribution
                             Date;  thereafter,  the terms of the Rights and the
                             Second Amended and Restated Preferred Shares Rights
                             Agreement may be amended without the consent of the
                             Rights holders in order to cure any  ambiguities or
                             to make changes which do not  adversely  affect the
                             interests  of  Rights   holders   (other  than  the
                             Acquiring Person).

Voting Rights:               Rights will not have any voting rights.

Anti-Dilution                Rights will have the  benefit of certain  customary
Provisions:                  anti-dilution provisions.

Taxes:                       The Rights  distribution  should not be taxable for
                             federal income tax purposes.  However, following an
                             event which renders the Rights  exercisable or upon
                             redemption   of  the   Rights,   stockholders   may
                             recognize taxable income.

The foregoing is a summary of certain  principal terms of the Second Amended and
Restated Preferred Shares Rights Agreement. It may be amended from time to time.
A copy of the Second Amended and Restated  Preferred Share Rights Agreement will
be filed  with  the  Securities  and  Exchange  Commission  as an  Exhibit  to a
Registration Statement on Form 8-A/A dated August 14, 2000. A copy of the Second
Amended and Restated  Preferred  Shares  Rights  Agreement is available  free of
charge from the Company.<PAGE>   1
                                                                     EXHIBIT 4.1

                       AFFILIATED COMPUTER SERVICES, INC.

                            401(k) SUPPLEMENTAL PLAN

                          EFFECTIVE AS OF JULY 1, 2000

<PAGE>   2

                       AFFILIATED COMPUTER SERVICES, INC.

                            401(k) SUPPLEMENTAL PLAN

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
ARTICLE                                                                                                        PAGE
-------                                                                                                        ----

<S>           <C>                                                                                              <C>
ARTICLE I     DEFINITIONS.........................................................................................1

              1.1     Account.....................................................................................1
              1.2     Administrative Committee....................................................................1
              1.3     Base Pay....................................................................................1
              1.4     Beneficiary.................................................................................1
              1.5     Board.......................................................................................1
              1.6     Bonus.......................................................................................1
              1.7     Business Day................................................................................1
              1.8     Code........................................................................................1
              1.9     Company.....................................................................................1
              1.10    Compensation................................................................................1
              1.11    Controlled Group............................................................................1
              1.12    Controlling Company.........................................................................2
              1.13    Deferral Election...........................................................................2
              1.14    Deferred Compensation.......................................................................2
              1.15    Effective Date..............................................................................2
              1.16    Eligible Employee...........................................................................2
              1.17    Entry Date..................................................................................2
              1.18    ERISA.......................................................................................2
              1.19    Financial Hardship..........................................................................2
              1.20    401(k) Plan.................................................................................3
              1.21    Investment Return...........................................................................3
              1.22    Matching Contributions......................................................................3
              1.23    Participant.................................................................................3
              1.24    Plan........................................................................................3
              1.25    Plan Year...................................................................................3
              1.26    Retirement..................................................................................3
              1.27    Salary......................................................................................3
              1.28    Surviving Spouse............................................................................4
              1.29    Trust or Trust Agreement....................................................................4
              1.30    Trustee.....................................................................................4
              1.31    Trust Fund..................................................................................4
              1.32    Valuation Date..............................................................................4
</TABLE>

                                       i
<PAGE>   3

                       AFFILIATED COMPUTER SERVICES, INC.

                            401(k) SUPPLEMENTAL PLAN

                          TABLE OF CONTENTS (CONTINUED)

<TABLE>
<CAPTION>
ARTICLE                                                                                                        PAGE
-------                                                                                                        ----

<S>           <C>                                                                                              <C>
ARTICLE II    ELIGIBILITY AND PARTICIPATION.......................................................................5

              2.1     Eligibility.................................................................................5
              2.2     Procedure for Admission.....................................................................5
              2.3     Cessation of Eligibility....................................................................5

ARTICLE III   PARTICIPANTS' ACCOUNTS: DEFERRALS AND CREDITING.....................................................6

              3.1     Participants' Accounts......................................................................6
              3.2     Deferral Elections..........................................................................6
              3.3     Crediting of Matching Contributions.........................................................7
              3.4     Debiting of Distributions...................................................................8
              3.5     Crediting of Investment Return..............................................................8
              3.6     Vesting.....................................................................................8
              3.7     Notice to Participants of Account Balances..................................................9
              3.8     Good Faith Valuation Binding................................................................9
              3.9     Errors and Omissions in Accounts............................................................9

ARTICLE IV    PARTICIPANT DIRECTION OF ACCOUNT BALANCES..........................................................10

              4.1     Selection of Investment Funds..............................................................10
              4.2     Participant Direction of Deemed Investments................................................10
              4.3     Participation Direction Not Binding........................................................11

ARTICLE V     PAYMENT OF ACCOUNT BALANCES........................................................................12

              5.1     Benefit Payments upon Termination of Service for Reasons Other
                      than Death.................................................................................12
              5.2     Benefits Payable Upon Death................................................................12
              5.3     Retirement Benefits........................................................................12
              5.4     In Service Distributions...................................................................13
              5.5     Accelerated Distributions..................................................................14
              5.6     Hardship Distributions.....................................................................14
              5.7     Beneficiary Designation....................................................................15
              5.8     Taxes......................................................................................15
</TABLE>

                                       ii
<PAGE>   4

                       AFFILIATED COMPUTER SERVICES, INC.

                            401(k) SUPPLEMENTAL PLAN

                          TABLE OF CONTENTS (CONTINUED)

<TABLE>
<CAPTION>
ARTICLE                                                                                                        PAGE
-------                                                                                                        ----

<S>           <C>                                                                                              <C>
ARTICLE VI    CLAIMS.............................................................................................16

              6.1     Claims.....................................................................................16
              6.2     Exhaustion of Administrative Remedies......................................................16
              6.3     Action for Recovery........................................................................17
              6.4     Participant's Responsibilities.............................................................17
              6.5     Unclaimed Benefits.........................................................................17

ARTICLE VII   SOURCE OF FUNDS: TRUST.............................................................................18

              7.1     Source of Funds............................................................................18
              7.2     Trust......................................................................................18

ARTICLE VIII  ADMINISTRATIVE COMMITTEE...........................................................................19

              8.1     Action.....................................................................................19
              8.2     Rights and Duties..........................................................................19
              8.3     Compensation, Indemnity and Liability......................................................20

ARTICLE IX    AMENDMENT AND TERMINATION..........................................................................21

              9.1     Amendments.................................................................................21
              9.2     Termination of Plan........................................................................21

ARTICLE X     MISCELLANEOUS......................................................................................22

              10.1    Taxation...................................................................................22
              10.2    Withholding................................................................................22
              10.3    No Employment Contract.....................................................................22
              10.4    Headings...................................................................................22
              10.5    Gender and Number..........................................................................22
              10.6    Assignment of Benefits.....................................................................22
              10.7    Legally Incompetent........................................................................23
              10.8    Governing Law..............................................................................23
              10.9    Severability...............................................................................23
              10.10   Overpayments...............................................................................23
              10.11   Entire Plan................................................................................23

              SIGNATURES.........................................................................................24
</TABLE>

                                      iii
<PAGE>   5

                       AFFILIATED COMPUTER SERVICES, INC.

                            401(k) SUPPLEMENTAL PLAN

         Effective as of the 1st day of July, 2000, Affiliated Computer
Services, Inc. (the "Controlling Company") hereby adopts the Affiliated Computer
Services, Inc. 401(k) Supplemental Plan (the "Plan").

                             BACKGROUND AND PURPOSE

         A. GENERAL PURPOSE. The Controlling Company desires to provide its
designated key management and highly compensated employees (and those of its
affiliated companies that participate in the Plan) with an opportunity to defer
the receipt and income taxation of a portion of such employees' annual
compensation. The purpose of the Plan is to set forth the terms and conditions
pursuant to which these deferrals may be made and to describe the nature and
extent of the employees' rights to their deferred amounts.

         B. TYPE OF PLAN. The Plan constitutes an unfunded, nonqualified
deferred compensation plan that benefits certain designated employees who are
within a select group of key management or highly compensated employees. This
Plan and the participation in the Plan by Eligible Employees is not intended to
create and shall not be deemed to create a security which would be subject to
regulation by the United States Securities and Exchange Commission or any state
agency.

                             STATEMENT OF AGREEMENT

         To establish the Plan with the purposes and goals as hereinabove
described, the Controlling Company hereby sets forth the terms and provisions as
follows:

<PAGE>   6

                                    ARTICLE I

                                   DEFINITIONS

         For purposes of the Plan, the following terms, when used with an
initial capital letter, shall have the meaning set forth below unless a
different meaning plainly is required by the context.

         1.1 ACCOUNT shall mean, with respect to a Participant or Beneficiary,
the total dollar amount or value evidenced by the last balance posted in
accordance with the terms of the Plan to the account record established for such
Participant or Beneficiary.

         1.2 ADMINISTRATIVE COMMITTEE shall mean the administrative committee of
the 401(k) Plan, or such other committee as shall be appointed by the Board of
Directors of Affiliated Computer Services, Inc., which shall act on behalf of
the Controlling Company to administer the Plan, all as provided in Article VIII.

         1.3 BASE PAY shall mean the Participant's regular annual salary plus
commissions.

         1.4 BENEFICIARY shall mean, with respect to a Participant, the
person(s) designated in accordance with Section 5.6 to receive any benefits that
may be payable under the Plan upon the death of the Participant.

         1.5 BOARD shall mean the Board of Directors of the Controlling Company.

         1.6 BONUS shall mean the actual bonus paid to the Participant under the
ACS Management Bonus Plan (or comparable plan of the Company employing the
Participant).

         1.7 BUSINESS DAY shall mean each day on which national banks generally
operate and are open to the public for business.

         1.8 CODE shall mean the Internal Revenue Code of 1986, as amended, and
any succeeding federal tax provisions.

         1.9 COMPANY shall mean Affiliated Computer Services, Inc. or other
member of the Controlled Group of the Controlling Company who actually employs
the Participant.

         1.10 COMPENSATION shall mean, for a Participant for any Plan Year, such
Participant's Base Pay plus Bonus.

         1.11 CONTROLLED GROUP shall mean all of the companies that are either
(i) members of the same controlled group of corporations (within the meaning of
Code Section 414(b)) or (ii) under common control (within the meaning of Code
Section 414(c)), with the Controlling Company.

                                       1
<PAGE>   7

         1.12 CONTROLLING COMPANY shall mean Affiliated Computer Services, Inc.,
a Delaware corporation with its principal place of business in Dallas, Texas.

         1.13 DEFERRAL ELECTION shall mean a written election form on which a
Participant may elect to defer under the Plan a portion of his Compensation.

         1.14 DEFERRED COMPENSATION shall mean the amount of Compensation that a
Participant elects to defer under this Plan pursuant to a timely, written
Deferral Election for a given period.

         1.15 EFFECTIVE DATE shall mean July 1, 2000, the date that the Plan
initially shall be effective.

         1.16 ELIGIBLE EMPLOYEE shall mean, for a Plan Year, an individual:

                  (a) Who is a member of a select group of key management or
highly compensated employees of a Company;

                  (b) Whose Salary at the date or dates the Administrative
Committee makes its determination of eligibility for such Plan Year (as
described below), or for newly hired employees, whose Salary on the date of his
hire is at least $85,000, or such higher or lower threshold as the
Administrative Committee in its sole discretion may establish from time to time;
and

                  (c) Who is designated and notified by the Administrative
Committee as eligible to participate in this Plan.

The Administrative Committee shall determine, from time to time and in its sole
discretion, which employees satisfy said criteria and the Administrative
Committee's determination, whether or not accurate, shall be binding.

         1.17 ENTRY DATE shall mean the first day of every calendar quarter
during the period in which the Plan remains in effect.

         1.18 ERISA shall mean the Employee Retirement Income Security Act of
1974, as amended.

         1.19 FINANCIAL HARDSHIP shall mean a severe financial hardship to the
Participant resulting from a sudden and unexpected illness or accident of the
Participant or of the Participant's dependent (as defined in Code Section
152(a)), loss of the Participant's property due to casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant. Financial Hardship shall be determined by
the Administrative Committee on the basis of the facts of each case, including
information supplied by the Participant in accordance with uniform guidelines
prescribed from time to time by the

                                       2
<PAGE>   8

Administrative Committee; provided, the Participant will be deemed not to have a
Financial Hardship to the extent that such hardship is or may be relieved:

                  (a) Through reimbursement or compensation by insurance or
otherwise;

                  (b) By liquidation of the Participant's assets, to the extent
the liquidation of assets would not itself cause severe financial hardship; or

                  (c) By cessation of deferrals under the Plan.

Examples of what are not considered to be unforeseeable emergencies include the
need to send a Participant's child to college or the desire to purchase a home.

         1.20 401(k) PLAN shall mean the Affiliated Computer Services, Inc.
401(k) Plan, as amended from time to time, regardless of the 401(k) plan in
which the Participant actually participates.

         1.21 INVESTMENT RETURN shall mean the amounts credited (as income,
gains or appreciation on the deemed investments provided under Article IV) or
charged (as losses or depreciation on the deemed investments provided under
Article IV) to the balances in the Participant's Accounts pursuant to Section
3.5.

         1.22 MATCHING CONTRIBUTIONS shall mean, for each Plan Year, the amount
credited to a Participant's Account pursuant to Section 3.3.

         1.23 PARTICIPANT shall mean any person who has been admitted to, and
has not been removed from, participation in the Plan pursuant to the provisions
of Article II.

         1.24 PLAN shall mean the Affiliated Computer Services, Inc. 401(k)
Supplemental Plan, as contained herein and all amendments hereto. For tax
purposes and purposes of Title I of ERISA, the Plan is intended to be an
unfunded, nonqualified deferred compensation plan covering certain designated
employees who are within a select group of key management or highly compensated
employees.

         1.25 PLAN YEAR shall mean the 12-consecutive month period ending on
December 31 of each year. The first Plan Year shall be a short Plan Year
beginning on the Effective Date, July 1, 2000, and ending on December 31, 2000.

         1.26 RETIREMENT shall mean the termination of employment with the
Company and all other members of the Controlled Group on or after age fifty-five
(55) with five (5) or more years of service (determined in accordance with the
401(k) Plan).

         1.27 SALARY shall mean an Employee's regular annual salary.

                                       3
<PAGE>   9

         1.28 SURVIVING SPOUSE shall mean, with respect to a Participant, the
person who is treated as married to such Participant under the laws of the state
in which the Participant resides. The determination of a Participant's Surviving
Spouse shall be made as of the date of such Participant's death.

         1.29 TRUST OR TRUST AGREEMENT shall mean a separate agreement or
agreements between the Controlling Company and the Trustee governing the
creation of the Trust Fund, if any, and any amendments thereto.

         1.30 TRUSTEE shall mean the party or parties so designated from time to
time pursuant to the terms of the Trust Agreement, if any.

         1.31 TRUST FUND shall mean the total amount of cash and other property
held by the Trustee (or any nominee thereof) at any time under the Trust
Agreement, if any.

         1.32 VALUATION DATE shall mean each Business Day.

                                       4
<PAGE>   10

                                   ARTICLE II
                          ELIGIBILITY AND PARTICIPATION

         2.1 ELIGIBILITY.

                  (a) ANNUAL PARTICIPATION. Each individual who is an Eligible
Employee for a Plan Year as of the first day of such Plan Year shall be eligible
to participate in the Plan for the entire Plan Year. Such individual's
participation shall become effective as of the first day of such Plan Year
(assuming he satisfies the procedures for admission described below).

                  (b) INTERIM PLAN YEAR PARTICIPATION. Each newly hired employee
who becomes an Eligible Employee during a Plan Year shall be eligible to
participate in the Plan for a portion of such Plan Year. Such individual's
participation shall become effective as of the Entry Date coinciding with or
next following the date he becomes an Eligible Employee (assuming he satisfies
the procedures for admission described below). If the newly Eligible Employee
does not make a Deferral Election prior to the first Entry Date for which he is
eligible, the newly Eligible Employee may make a Deferral Election to defer
Compensation for services to be performed subsequent to the Deferral Election
within thirty (30) days after the date the Employee first becomes an Eligible
Employee.

         2.2 PROCEDURE FOR ADMISSION.

         Each Eligible Employee shall become a Participant for a Plan Year by
completing such forms and providing such data in a timely manner, as are
required by the Administrative Committee as a precondition of participation in
the Plan. Such forms and data may include, without limitation, a Deferral
Election, the Eligible Employee's acceptance of the terms and conditions of the
Plan, and the designation of a Beneficiary to receive any benefits payable
hereunder.

         2.3 CESSATION OF ELIGIBILITY.

         The Administrative Committee may remove an employee from active
participation in the Plan if, as of any day during a Plan Year, he ceases to
satisfy the criteria that qualified him as an Eligible Employee, in which case
his deferrals under the Plan shall cease. Even if his active participation in
the Plan ends, an employee shall remain an inactive Participant in the Plan
until the earlier of (i) the date the full amount of his Account (if any) is
distributed from the Plan, or (ii) the date he again becomes an Eligible
Employee and recommences participation in the Plan. During the period of time
that an employee is an inactive Participant in the Plan his Account shall
continue to be credited with Investment Return as provided for in Section 3.5.

                                       5
<PAGE>   11

                                  ARTICLE III.
                 PARTICIPANTS' ACCOUNTS: DEFERRALS AND CREDITING

         3.1 PARTICIPANTS' ACCOUNTS.

                  (a) ESTABLISHMENT OF ACCOUNTS. The Administrative Committee
shall establish and maintain, on behalf of each Participant, an Account. The
Account shall be credited with (i) the Participant's Deferred Compensation, (ii)
the Participant's Matching Contributions, and (iii) Investment Return
attributable to such Account.

                  (b) NATURE OF CONTRIBUTIONS AND ACCOUNTS. The Deferred
Compensation and the Matching Contributions and Investment Return credited to a
Participant's Account shall, at the Controlling Company's election, either, (i)
be represented solely by bookkeeping entries, and no moneys or other assets
shall actually be set aside for such Participant or (ii) credited to a Trust
established pursuant to Section 7.2. The Administrative Committee or the Board
shall allocate the total liability to pay benefits under the Plan among the
Controlling Company and the members of its Controlled Group comprising the
Company in such manner and amount as the Administrative Committee or the Board
(as applicable) in its sole discretion deems appropriate. Any assets, which may
be acquired by the Controlling Company in anticipation of its obligations under
the Plan, shall be part of the general assets of the Controlling Company. The
Controlling Company's obligation to pay benefits under the Plan constitutes a
mere promise of the Controlling Company to pay such benefits, and a Participant
or Beneficiary shall be and remain no more than an unsecured, general creditor
of the Controlling Company.

         3.2 DEFERRAL ELECTIONS.

         Each Eligible Employee who is or becomes eligible to participate in the
Plan for all or any portion of a Plan Year may elect to become an active
Participant for such Plan Year by completing and delivering to the Controlling
Company (or its designee) a Deferral Election setting forth the terms of his
election and such other forms as required by the Administrative Committee.
Subject to the terms and conditions set forth below, a Deferral Election shall
provide for the reduction of an Eligible Employee's Compensation paid during the
Plan Year for which the Deferral Election is in effect. Each Participant shall
make a Deferral Election for each Plan Year, with such Deferral Elections being
made and effective at the times provided below. Subject to any modifications,
additions or exceptions that the Administrative Committee, in its sole
discretion, deems necessary, appropriate or helpful, the following shall apply
to such Deferral Elections:

                  (a) EFFECTIVE DATE. A Participant's initial Deferral Election
with respect to his Compensation for any Plan Year shall be effective for the
first paycheck earned after the date the Deferral Election becomes effective. To
be effective, a Participant's initial Deferral Election must be made within the
time period prescribed by the Administrative Committee (generally, on or before
the first day of the Plan Year, or, if later, on or before the Entry Date
coinciding with or next following the date he first becomes eligible to
participate in the Plan, subject to Section 2.1).

                                       6
<PAGE>   12

An Eligible Employee's subsequent Deferral Election with respect to his
Compensation for any Plan Year must be made on or before the last day of the
Plan Year immediately preceding the Plan Year for which he desires to
participate. If an Eligible Employee fails to submit a Deferral Election in a
timely manner, he shall be deemed to have elected not to participate in the Plan
for that Plan Year. Notwithstanding the foregoing, each Eligible Employee may
make an initial Deferral Election for the Plan prior to or within the first
thirty (30) days after (i) the Effective Date of the Plan or (ii) the Entry Date
coinciding with or next following the date that the individual first becomes an
Eligible Employee, provided that the initial Deferral Election shall be
effective for the first paycheck earned after the date the Deferral Election is
received.

                  (b) TERM. Each Eligible Employee's Deferral Election for a
Plan Year shall remain in effect for all such Compensation paid during such Plan
Year unless prior to the end of such Plan Year the Participant ceases to be an
active Participant.

                  (c) AMOUNT. An Eligible Employee may elect to defer his
Compensation (i) payable as Base Pay by a minimum of 1 percent and a maximum of
15 percent and (ii) payable as Bonus by a minimum of 1 percent and a maximum of
50 percent (or such other minimum or maximum percentage and/or amount, if any,
established by the Administrative Committee from time-to-time).

                  (d) MINIMUM DEFERRAL AMOUNT. An Eligible Employee must elect
to defer at least $2,000 of Compensation each Plan Year (or such other minimum
or maximum percentage and/or amount, if any, established by the Administrative
Committee from time-to-time). If an Eligible Employee's deferral election is
projected to result in less than an annual deferral of the minimum amount
established under this Section, the Eligible Employee's Deferral Election shall
not be given effect and the Participant shall not be an active Participant for
such Plan Year.

                  (e) CREDITING OF DEFERRED COMPENSATION. For each Plan Year
that a Participant has a Deferral Election in effect, the Administrative
Committee shall credit the amount of such Participant's Deferred Compensation to
his Account on, or as soon as practicable after, the Valuation Date such amount
would have been paid to him but for his Deferral Election.

         3.3 CREDITING OF MATCHING CONTRIBUTIONS.

                  (a) MATCH. As of each Valuation Date within the Plan Year that
Deferred Compensation is credited to the Participant's Account (or such other
date or time as the Administrative Committee, in its sole discretion, determines
from time-to-time), a Matching Contribution attributable to such Deferred
Compensation, if any, shall also be credited to the Participant's Account. The
Administrative Committee shall determine the amount of the Matching
Contribution, if any, to be credited to each Participant's Account. The amount
of the Matching Contribution to be credited to a Participant, if any, shall be
an amount equal to the Matching Contribution that would have been credited to
the Participant under the 401(k) plan in which the Participant participates if
the Participant's Deferred Compensation payable as Base

                                       7
<PAGE>   13

Pay had been contributed as 401(k) contributions to such plan, but which were
not credited to such plan due to IRS limitations, provided that the Matching
Contributions credited to the Participant's Account for the Plan Year shall not
exceed the maximum limits described in Section 3.3(b).

                  (b) LIMITATIONS. Notwithstanding anything to the contrary
contained herein, Matching Contributions shall not be credited to a
Participant's Account to the extent that doing so would cause the following
limits to be exceeded:

                           (1) Compensation shall not be taken into account to
         the extent it exceeds the limitation of Code Section 401(a)(17)
         ($170,000 for 2000); and

                           (2) The elective deferral limitation of Code Section
         402(g) ($10,500 for 2000 shall be applied).

         3.4 DEBITING OF DISTRIBUTIONS.

         As of each Valuation Date, the Administrative Committee shall debit
each Participant's Account for any amount distributed from such Account since
the immediately preceding Valuation Date.

         3.5 CREDITING OF INVESTMENT RETURN.

                  (a) INVESTMENT RETURN. The Administrative Committee shall
credit to each Participant's Account as of each Valuation Date the amount of
Investment Return applicable thereto for the period since the immediately
preceding Valuation Date.

                  (b) TIMING. Investment Return shall ordinarily be credited as
of each Valuation Date, provided the Administrative Committee may, in its sole
discretion, designate another date or dates for crediting of Investment Return.

         3.6 VESTING.

         A Participant shall at all times be fully vested in his Deferred
Compensation and the Investment Return credited to his Account with respect to
such Deferred Compensation. The Matching Contributions credited to a
Participant's Account and the Investment Return credited with respect thereto
shall vest in accordance with the vesting schedule under the Affiliated Computer
Services, Inc. Savings Plan, two "years of service" - 50% vested; three "years
of service" - 100% vested. For purposes of determining "years of service" for
this Plan, a Participant shall be credited with the same number of years of
service as the Participant is credited with in the 401(k) plan in which the
Participant participates. Notwithstanding the foregoing, a Participant shall
become immediately 100 percent vested upon the occurrence of any of the
following: (i) death, (ii) total and permanent disability (as defined in the ACS
Long-Term Disability Plan), (iii) Retirement, or (iv) Change of Control of the
Controlling Company.

                                       8
<PAGE>   14

If a Participant terminates employment with the Company and all Controlled Group
Members before becoming 100 percent fully vested, the unvested portion of the
Participant's account shall be immediately forfeited.

A "Change of Control" shall have occurred if the Controlling Company is merged,
consolidated, or reorganized into or with another person, entity, or group of
entities under common control or if a majority of the outstanding capital stock
or all or substantially all of the assets of the Controlling Company are sold to
any other person, entity, or group of entities under common control and as a
result of such merger, consolidation, reorganization, or sale of capital stock
or assets, more than 51% of the combined voting power of the then outstanding
voting securities of the surviving person or entity immediately after such
transaction are held in the aggregate by a person, entity, or group of entities
under common control who beneficially owned less than 51% of the combined voting
power of the Company prior to such transaction.

Upon distribution of a Participant's entire vested Account balance under Section
5.1, any unvested amounts in the Participant's Account shall be immediately
forfeited. Forfeitures shall be applied to pay administrative expenses of the
Plan or to reduce Matching Contributions payable to the Plan, as determined by
the Administrative Committee, in its sole discretion.

         3.7 NOTICE TO PARTICIPANTS OF ACCOUNT BALANCES.

         At least once for each Plan Year, the Administrative Committee shall
cause a written statement of a Participant's Account balance to be distributed
to the Participant.

         3.8 GOOD FAITH VALUATION BINDING.

         In determining the value of the Accounts, the Administrative Committee
shall exercise its best judgment, and all such determinations of value (in the
absence of bad faith) shall be binding upon all Participants and their
Beneficiaries.

         3.9 ERRORS AND OMISSIONS IN ACCOUNTS.

         If an error or omission is discovered in the Account of a Participant
or in the amount of a Participant's deferrals, the Administrative Committee, in
its sole discretion, shall cause appropriate, equitable adjustments to be made
as soon as administratively practicable following the discovery of such error or
omission.

                                       9
<PAGE>   15

                                   ARTICLE IV
                    PARTICIPANT DIRECTION OF ACCOUNT BALANCES

         4.1 SELECTION OF INVESTMENT FUNDS.

         From time to time, the Administrative Committee shall select two or
more investment funds (the "Investment Funds") for purposes of determining the
Investment Return on amounts deemed invested in accordance with the terms of the
Plan. The Administrative Committee will notify Participants in writing prior to
the beginning of each Plan Year and at such other times as the Administrative
Committee deems necessary or desirable of the Investment Funds available under
the Plan for such Plan Year. The Administrative Committee may change, add or
remove Investment Funds on a prospective basis at any time and in any manner it
deems appropriate. In the discretion of the Administrative Committee, the
Investment Funds available under the Plan for Participant direction may be
mirrored by investment funds that are actually maintained under the Trust, if
any, but shall not be required to do so. In the event that such investment funds
are maintained under the Trust, the Trustee shall invest the assets of the Trust
as directed by the Administrative Committee in accordance with the Trust
Agreement.

         4.2 PARTICIPANT DIRECTION OF DEEMED INVESTMENTS.

         Each Participant generally may direct the manner in which his Account
shall be deemed invested in and among the Investment Funds, provided, such
investment directions shall be made in accordance with the following terms:

                  (a) NATURE OF PARTICIPANT DIRECTION. The selection of
Investment Funds by a Participant shall be for the sole purpose of determining
the Investment Return to be credited to his Account, and shall not be treated or
interpreted in any manner whatsoever as a requirement or direction to actually
invest assets in any Investment Fund or any other investment media. The Plan, as
an unfunded, nonqualified deferred compensation plan, at no time shall have any
actual investment of assets relative to the benefits or Account hereunder.

                  (b) INVESTMENT OF CONTRIBUTIONS. Except as otherwise provided
in this Section, each Participant may make an investment election prescribing
the percentage of his future Deferred Compensation and Matching Contributions
that will be deemed invested in each Investment Fund. An initial investment
election of a Participant shall be made as of the date the Participant commences
participation in the Plan and shall apply to all Deferred Compensation and
Matching Contributions credited to such Participant's Account after such date.
Such Participant may make subsequent investment elections at such times as
permitted by the Administrative Committee, and such elections shall apply to all
such specified Deferred Compensation and Matching Contributions credited to such
Participant's Account after the effective date of such election. Any investment
election timely and properly made pursuant to this subsection with respect to
future contributions shall remain effective until changed by the Participant.

                                       10
<PAGE>   16

                  (c) INVESTMENT OF EXISTING ACCOUNT BALANCES. Each Participant
may make an investment election, effective as of the date the Participant
commences participation in the Plan, prescribing a different percentage of his
existing Account balances that will be deemed invested in each Investment Fund.
Such Participant may make subsequent investment elections at such times as
permitted by the Administrative Committee prescribing a different percentage of
his existing Account balances that will be deemed invested in each Investment
Fund. Each such election which is timely and properly made shall remain in
effect until changed by such Participant.

                  (d) PROCEDURES FOR INVESTMENT DIRECTION. Except as otherwise
provided herein, with respect to deemed investments made available under the
Trust, if any, the Administrative Committee (or its delegate) shall then relate
to the Trustee the directions of each Participant as to which deemed investments
are to be made for each Participant. The Participant's directions, if any, shall
be in a form and manner and in the minimum increments prescribed by the
Administrative Committee. The Administrative Committee may, in its sole
discretion, permit such Participant to communicate directly with the Trustee or
his delegate to direct a change in the investment fund or funds in which his
Account is invested. The Administrative Committee may prescribe the fund in
which the Participants' Account shall be deemed invested in the absence of a
direction by any such Participant.

                  (e) ADMINISTRATIVE COMMITTEE DISCRETION. The Administrative
Committee shall have complete discretion to adopt and revise procedures to be
followed in making such investment elections. Such procedures may include, but
are not limited to, the process of making elections, the permitted frequency of
making elections, the incremental size of elections, the deadline for making
elections and the effective date of such elections. Any procedures adopted by
the Administrative Committee that are inconsistent with the deadlines or
procedures specified in this Section shall supersede such provisions of this
Section without the necessity of a Plan amendment.

         4.3 PARTICIPATION DIRECTION NOT BINDING

         Notwithstanding any provision of the Plan to the contrary, neither the
Administrative Committee nor the Trustee of the Trust, if any, shall be bound to
follow investment directions of each Participant, but the Participant
nevertheless shall be credited with the deemed performance in the deemed
investment or investments selected by the Participant with respect to the
Investment Funds made available under the Plan. The Company shall have the
right, at any time and from time to time, in its sole discretion, to substitute
assets of equal fair market value for any asset held by the Trust, if any.

                                       11
<PAGE>   17

                                    ARTICLE V
                           PAYMENT OF ACCOUNT BALANCES

         5.1 BENEFIT PAYMENTS UPON TERMINATION OF SERVICE FOR REASONS OTHER
             THAN DEATH OR RETIREMENT.

         If a Participant terminates his employment with the Company and all
other members of the Controlled Group for any reason other than death or
Retirement, he (or his Beneficiary, if he dies after such termination of
employment but before distribution of his Account) shall be entitled to receive
a distribution of the total of: (i) the entire vested amount credited to his
Account, determined as of the Valuation Date coinciding with or next following
the date on which the Participant terminated employment; plus (ii) the vested
amount of Deferred Compensation and Matching Contributions, deferred and/or
credited to his Account since such Valuation Date plus (iii) Investment Return
on such amounts since such Valuation Date. The vested benefit payable to a
Participant under this Section shall be distributed in a single lump sum cash
payment as soon as administratively feasible after the date the Participant
terminates his employment with the Company and all other members of the
Controlled Group for any reason other than death or Retirement.

         5.2 BENEFITS PAYABLE UPON DEATH.

         If a Participant dies before payment of his benefit from the Plan is
made or commenced, the Beneficiary or Beneficiaries designated by such
Participant in his latest beneficiary designation form filed with the
Administrative Committee shall be entitled to receive a distribution of the
total of (i) the entire vested amount credited to such Participant's Account,
determined as of the Valuation Date coinciding with or next following the date
of the Participant's death; plus (ii) the vested amount of Compensation and
Matching Contributions, deferred and/or credited to his Account since such
Valuation Date plus (iii) Investment Return on such amounts since such Valuation
Date. The benefit shall be distributed to such Beneficiary or Beneficiaries, as
soon as administratively feasible after the date of the Participant's death, in
the form of a single lump sum payment.

         5.3 RETIREMENT BENEFITS.

         If a Participant terminates his employment with the Company and all
other members of the Controlled Group due to Retirement, he (or his Beneficiary,
if he dies after such termination of employment but before full distribution of
his Account) shall be entitled to receive or begin receiving a distribution of
the total of: (i) the entire vested amount credited to his Account, determined
as of the Valuation Date coinciding with or next following the date on which
such Participant terminated employment; plus (ii) the vested amount of Deferred
Compensation and Matching Contributions, deferred and/or credited to his Account
since such Valuation Date plus (iii) Investment Return on such amounts since
such Valuation Date. The vested benefit payable to a Participant under this
Section shall be distributed or distribution shall commence as soon as

                                       12
<PAGE>   18

administratively feasible after the Participant's Retirement and shall be
payable in one of the following forms:

                  (a) SINGLE-SUM PAYMENT. Except as provided in subsection (b)
hereof the benefit payable to a Participant following Retirement shall be
distributed in the form of a single lump sum payment.

                  (b) ANNUAL INSTALLMENTS. A Participant may elect, at the time
he makes his initial Deferral Election, to have his benefit payable in the event
of Retirement paid in the form of annual installment payments. The following
terms and conditions shall apply to installment payments made under the Plan:

                           (1) The installment payments shall be made annually
         as soon as practicable after December 31st of each year during the
         installment term (the first installment shall be paid as soon as
         practicable after the Participant's termination of employment). The
         installment term shall be either a five (5) year period or a ten (10)
         year period, as elected by the Participant at the time of his Initial
         Election. The initial value of the obligation for the installment
         payments shall be equal to the amount of the Participant's Account
         balance calculated in accordance with the terms of this Section 5.3 and
         the amount of the initial installment payment shall be an amount equal
         to 1/5th or 1/10th, as the case may be, of such value. The amount of
         each subsequent installment shall be determined by dividing the
         Participant's remaining Account balance as of the preceding December
         31st by the number of remaining installments.

                           (2) If a Participant dies after payment of his
         benefit from the Plan has begun, but before his entire benefit has been
         distributed, the remaining amount of his Account balance shall be
         distributed to the Participant's designated Beneficiary in the form of
         a single lump sum payment.

                           (3) Notwithstanding anything to the contrary
         contained herein, if the Account balance of the Participant as of the
         Valuation Date coinciding with or next following the date of the
         Participant's Retirement is $50,000 or less, the entire benefit shall
         be paid in a single lump sum cash payment as soon as practicable
         following the date of the Participant's Retirement as provided in
         Section 5.3(a).

         5.4 IN SERVICE DISTRIBUTIONS.

         At the time a Participant makes a Deferral Election, the Participant
may elect to have all or a portion of his Account balance attributable to his
Deferred Compensation credited pursuant to such Deferral Election paid in a
specified future year that is not earlier than the third Plan Year after the
Plan Year for which such Deferral Election applies. A Participant may make a
separate election under this Section 5.4 for each annual Deferral Election.
After a Participant makes his Deferral Election choosing a Plan Year for
payment, a Participant may not subsequently elect to change the time of payment
specified in such Deferral Election.

                                       13
<PAGE>   19

Provided that the Participant has not terminated employment prior to the time
for payment of a portion of his Deferred Compensation subject to this Section
5.4, the applicable portion of his Account balance shall be paid to the
Participant as soon as administratively practicable after January 1st of the
Plan Year chosen by the Participant. If the Participant has terminated
employment with the Company and all other members of the Controlled Group prior
to the time for payment of a portion of his Account under this Section 5.4, the
time of payment shall be accelerated and paid in accordance with the provisions
of Sections 5.1, 5.2 or 5.3, as applicable. In no event, shall a Participant be
permitted to have any portion of his Account attributable to Matching
Contributions paid prior to his termination of employment with the Company and
all members of the Controlled Group.

It is expressly contemplated that a Participant may elect separate, fixed
payment dates with regard to all or a portion of the annual Deferral Election
for each Plan Year. Notwithstanding anything to the contrary contained herein,
the Administrative Committee may establish limits on the payment dates available
to Participants.

         5.5 ACCELERATED DISTRIBUTIONS.

         Subsequent to making a Deferral Election and prior to the time that
payment is to commence under this Article V, a Participant may elect to have the
accelerated payment of part or all of his vested Account balance. Upon receipt
of an application for an accelerated distribution and approval of the
distribution by the Administrative Committee, made in its sole discretion, the
Controlling Company shall pay the accelerated distribution to such Participant.
Such distribution shall be paid in a single lump sum payment as soon as
administratively practicable after the Administrative Committee approves the
distribution. In determining whether or not to approve an accelerated
distribution, the Committee shall treat similarly situated Participants
similarly.

Effective with the date of distribution, the Participant's Deferral Election
shall be discontinued and the Participant shall not be permitted to elect to
defer any additional Compensation for the remainder of that Plan Year and all of
the following Plan Year. Upon payment, the amount of such distribution, plus an
additional 10% of such amount, shall be deducted from the Participant's Account
balance in accordance with Section 3.4. The additional 10% deducted and any
unvested portions of the Participant's Account Balance associated with the
accelerated distribution amount from the Account of a Participant receiving an
accelerated distribution under this Section 5.5 shall be added to forfeitures
and applied as provided in Section 3.6.

         5.6 HARDSHIP DISTRIBUTIONS.

         Upon receipt of an application for a hardship distribution, the
Administrative Committee shall make a decision, in its sole discretion, whether
the Participant has suffered a Financial Hardship and the distribution amount
necessary to satisfy the Financial Hardship. If the Administrative Committee
determines that the Participant has suffered a Financial Hardship, distribution
of the amount determined to be necessary to satisfy the Financial Hardship shall
be made in a single lump sum payment as soon as administratively feasible after
the Administrative

                                       14
<PAGE>   20

Committee's determination. The amount of such distribution shall reduce the
Participant's Account balance as provided in Section 3.4.

         5.7 BENEFICIARY DESIGNATION.

                  (a) GENERAL. Participants shall designate and from time to
time may redesignate their Beneficiaries in such form and manner as the
Administrative Committee may determine.

                  (b) NO DESIGNATION OR DESIGNEE DEAD OR MISSING. In the event
that:

                           (1) a Participant dies without designating a
         Beneficiary;

                           (2) the Beneficiary designated by a Participant is
         not surviving when a payment is to be made to such person under the
         Plan, and no contingent Beneficiary has been designated; or

                           (3) the Beneficiary designated by a Participant
         cannot be located by the Administrative Committee within one (1) year
         from the date benefits are to be paid to such person;

then, in any of such events, the Beneficiary of such Participant with respect to
any benefits that remain payable under the Plan shall be the Participant's
Surviving Spouse, if any, and if not, the estate of the Participant.

         5.8 TAXES.

         If the whole or any part of any Participant's or Beneficiary's benefit
hereunder shall become subject to any estate, inheritance, income or other tax
which the Company shall be required to pay or withhold, the Company shall have
the full power and authority to withhold and pay such tax out of any monies or
other property in its hand for the account of the Participant or Beneficiary
whose interests hereunder are so affected. Prior to making any payment, the
Company may require such releases or other documents from any lawful taxing
authority as it shall deem necessary.

                                       15
<PAGE>   21

                                   ARTICLE VI
                                     CLAIMS

         6.1 CLAIMS.

                  (a) INITIAL CLAIM. Claims for benefits under the Plan may be
filed with the Administrative Committee on forms or in such other written
documents, as the Administrative Committee may prescribe. The Administrative
Committee shall furnish to the claimant written notice of the disposition of a
claim within ninety (90) days after the application therefor is filed In the
event the claim is denied, the notice of the disposition of the claim shall
provide the specific reasons for the denial, citations of the pertinent
provisions of the Plan, and, where appropriate, an explanation as to how the
claimant can perfect the claim and/or submit the claim for review.

                  (b) APPEAL. Any Participant or Beneficiary who has been denied
a benefit shall be entitled, upon request to the Administrative Committee, to
appeal the denial of his claim. The claimant (or his duly authorized
representative) may review pertinent documents related to the Plan and in the
Administrative Committee's possession in order to prepare the appeal. The
request for review, together with written statement of the claimant's position,
must be filed with the Administrative Committee no later than sixty (60) days
after receipt of the written notification of denial of a claim provided for in
subsection (a). The Administrative Committee's decision shall be made within
sixty (60) days following the filing of the request for review. If unfavorable,
the notice of the decision shall explain the reasons for denial and indicate the
provisions of the Plan or other documents used to arrive at the decision.

                  (c) SATISFACTION OF CLAIMS. Any payment to a Participant or
Beneficiary shall to the extent thereof be in full satisfaction of all claims
hereunder against the Administrative Committee and the Company, any of whom may
require such Participant or Beneficiary, as a condition to such payment, to
execute a receipt and release therefor in such form as shall be determined by
the Administrative Committee or the Company. If receipt and release is required
but the Participant or Beneficiary (as applicable) does not provide such receipt
and release in a timely enough manner to permit a timely distribution in
accordance with the general timing of distribution provisions in the Plan, the
payment of any affected distribution may be delayed until the Administrative
Committee or the Company receive a proper receipt and release.

         6.2 EXHAUSTION OF ADMINISTRATIVE REMEDIES.

         No action at law or in equity may be brought to recover under this Plan
until all administrative remedies under the Plan have been exhausted. If a
claimant fails to file a timely claim or, if a claim is denied, fails to timely
appeal to the Administrative Committee and timely request review by the
Administrative Committee in accordance with the procedures outlined herein, such
claimant shall have no rights of review and shall have no right to bring any
action in any court and the claim decision shall become final and binding on all
persons for all purposes.

                                       16
<PAGE>   22

         6.3 ACTION FOR RECOVERY.

         No action at law or in equity may be brought for recovery under this
Plan sooner than the date that the Plan's administrative appeals pursuant to
Section 6.1 have been exhausted nor later than two (2) years from the time the
claim for benefit was made.

         6.4 PARTICIPANT'S RESPONSIBILITIES.

         Each Participant shall be responsible for providing the Administrative
Committee with the Participant's and each Beneficiary's current address. Any
notices required or permitted to be given hereunder shall be deemed given if
directed to such address and mailed by regular United States mail. The
Administrative Committee and the Company shall not have any obligation or duty
to locate a Participant or Beneficiary. In the event that a Participant or
Beneficiary becomes entitled to a payment under this Plan and such payment is
delayed or cannot be made:

         (a)      because the current address according to Company records is
                  incorrect;

         (b)      because the Participant, Dependent or Beneficiary fails to
                  respond to the notice sent to the current address according to
                  Company records;

         (c)      because of conflicting claims to such payments; or

         (d)      because of any other reason;

the amount of such payment, if and when made, shall be determined under the
provisions of this Plan without payment of any Investment Return for the period
of delay.

         6.5 UNCLAIMED BENEFITS.

         If, within twelve (12) months after any amount becomes payable
hereunder to a Participant or Beneficiary and the same shall not have been
claimed or any check issued under the Plan remains uncashed, provided reasonable
care shall have been exercised in attempting to make such payments, the amount
thereof shall be forfeited and shall cease to be a liability of the Plan.
Notwithstanding the foregoing, if the Participant or Beneficiary thereafter
makes a claim for benefit in accordance with this Article VI, the amount payable
shall be restored and shall be paid to the Participant or Beneficiary without
payment of any Investment Return from the date of forfeiture. The amount
forfeited under this Section 6.6 shall be added to forfeitures and applied as
provided in Section 3.6.

                                       17
<PAGE>   23

                                   ARTICLE VII
                             SOURCE OF FUNDS: TRUST

         7.1 SOURCE OF FUNDS.

         Except as provided in this Section and Section 7.2, the Company shall
provide the benefits described in the Plan from the general assets of the
Company. The Controlling Company may, but shall not be required to, establish a
Trust and may pay over funds from time to time to such Trust (as described in
Section 7.2), and, to the extent that funds in such Trust allocable to the
benefits payable under the Plan are sufficient, the Trust assets shall be used
to pay benefits under the Plan. If such Trust assets are not sufficient to pay
all benefits due under the Plan, then the Company shall have the obligation, and
the Participant or Beneficiary, who is due such benefits, shall look to the
Company to provide such benefits. The Administrative Committee shall allocate
the total liability to pay benefits under the Plan among the Controlling Company
and the members of its Controlled Group comprising the Company in such manner
and amount as the Administrative Committee or the Board (as applicable) in its
sole discretion deems appropriate. To the extent that either the Company or the
Trust pays an amount to the Participant or a Beneficiary, such payment shall
operate as a complete discharge for such amount.

         7.2 TRUST.

         The Controlling Company may transfer all or any portion of the funds
necessary to fund benefits accrued hereunder to the Trustee to be held and
administered by the Trustee pursuant to the terms of the Trust Agreement. The
assets contributed for the Eligible Employees of each Company, and earnings and
losses thereon, shall be accounted for separately under the Trust. The assets
held by the Trust, to the extent attributable to contributions for the Eligible
Employees of a given Company, are and shall remain at all times subject to the
claims of the general creditors of such Company. No Participant or Beneficiary
shall have any interest in the assets held by the Trust or in the general assets
of the Company other than as a general, unsecured creditor. Accordingly, the
Controlling Company shall not grant a security interest in the assets held by
the Trust in favor of the Participants, Beneficiaries or any creditor.

                                       18
<PAGE>   24

                                  ARTICLE VIII
                            ADMINISTRATIVE COMMITTEE

         8.1 ACTION.

         Action of the Administrative Committee may be taken with or without a
meeting of committee members; provided, action shall be taken only upon the vote
or other affirmative expression of a majority of the committee members qualified
to vote with respect to such action If a member of the committee is a
Participant or Beneficiary, he shall not participate in any decision which
solely affects his own benefit under the Plan. For purposes of administering the
Plan, the Administrative' Committee shall choose a secretary who shall keep
minutes of the committee's proceedings and all records and documents pertaining
to the administration of the Plan. The secretary may execute any certificate or
any other written direction on behalf of the Administrative Committee.

         8.2 RIGHTS AND DUTIES.

         The Administrative Committee shall administer the Plan and shall have
all powers necessary to accomplish that purpose, including (but not limited to)
the following:

                  (a) To construe, interpret and administer the Plan;

                  (b) To make determinations required by the Plan, and to
maintain records regarding Participants' and Beneficiaries' benefits hereunder;

                  (c) To compute and certify to the Controlling Company or the
Trustee, if any, the amount and kinds of benefits payable to Participants and
Beneficiaries, and to determine the time and manner in which such benefits are
to be paid;

                  (d) To authorize all disbursements by the Controlling Company
pursuant to the Plan;

                  (e) To maintain all the necessary records of the
administration of the Plan;

                  (f) To make and publish such rules for the regulation of the
Plan as are not inconsistent with the terms hereof;

                  (g) To delegate to other individuals or entities from time to
time the performance of any of its duties or responsibilities hereunder;

                  (h) To hire agents, accountants, actuaries, consultants and
legal counsel to assist in operating and administering the Plan.

                                       19
<PAGE>   25

The Administrative Committee shall have the exclusive right to construe and
interpret the Plan, to decide all questions of eligibility for benefits and to
determine the amount of such benefits, and its decisions on such matters shall
be final and conclusive on all parties.

         8.3 COMPENSATION, INDEMNITY AND LIABILITY.

         The Administrative Committee and its members shall serve as such
without bond and without compensation for services hereunder. All expenses of
the Administrative Committee shall be paid by the Company. No member of the
committee shall be liable for any act or omission of any other member of the
committee, nor for any act or omission on his own part, excepting his own
willful misconduct. The Company shall indemnify and hold harmless the
Administrative Committee and each member thereof against any and all expenses
and liabilities, including reasonable legal fees and expenses, arising out of
his membership on the committee, excepting only expenses and liabilities arising
out of his own willful misconduct.

                                       20
<PAGE>   26

                                   ARTICLE IX
                            AMENDMENT AND TERMINATION

         9.1 AMENDMENTS.

                  (a) The Controlling Company, through action of the Board,
shall have the right, in its sole discretion, to amend the Plan in whole or in
part at any time and from time to time. Any amendment shall be in writing and
executed by a duly authorized officer of the Controlling Company. An amendment
to the Plan may modify its terms in any respect whatsoever, and may include,
without limitation, a permanent or temporary freezing of the Plan such that the
Plan shall remain in effect with respect to existing Account balances without
permitting any new contributions, provided, no such action may reduce the amount
already credited to a Participant's Account without the affected Participant's
written consent. All Participants and Beneficiaries shall be bound by such
amendment.

                  (b) The Administrative Committee may make administrative
amendments to the Plan including but not limited to amendments to clarify the
Plan language and to simplify and implement various administrative procedures,
including matters relating to the calculation of benefits and payments to
Beneficiaries, which the Administrative Committee determines are consistent with
the purpose and intent of the Plan.

         9.2 TERMINATION OF PLAN.

         The Controlling Company expects to continue the Plan but reserves the
right to discontinue and terminate the Plan at any time, for any reason. Any
action to terminate the Plan shall be taken by the Board in the form of a
written Plan amendment executed by a duly authorized officer of the Controlling
Company. If the Plan is terminated, each Participant shall become 100 percent
vested in his Account which shall be distributed in a single-sum as soon as
practicable after the date the Plan is terminated. The amount of any such
distribution shall be determined as of the date such termination distribution is
processed. Such termination shall be binding on all Participants and
Beneficiaries.

                                       21
<PAGE>   27

                                    ARTICLE X
                                  MISCELLANEOUS

         10.1 TAXATION.

         It is the intention of the Company that the benefits payable hereunder
shall not be deductible by the Company nor taxable for federal income tax
purposes to Participants or Beneficiaries until such benefits are paid by the
Company, or the Trust, as the case may be, to such Participants or
Beneficiaries. When such benefits are so paid, it is the intention of the
Company that they shall be deductible by the Company under Code Section 162.

         10.2 WITHHOLDING.

         All payments made to a Participant or Beneficiary hereunder shall be
reduced by any applicable federal, state or local withholding or other taxes or
charges as may be required under applicable law.

         10.3 NO EMPLOYMENT CONTRACT.

         Nothing herein contained is intended to be nor shall be construed as
constituting a contract or other arrangement between the Company and any
Participant to the effect that the Participant will be employed by the Company
for any specific period of time.

         10.4 HEADINGS.

         The headings of the various articles and sections in the Plan are
solely for convenience and shall not be relied upon in construing any provisions
hereof. Any reference to a section shall refer to a section of the Plan unless
specified otherwise.

         10.5 GENDER AND NUMBER.

         Use of any gender in the Plan will be deemed to include all genders
when appropriate, and use of the singular number will be deemed to include the
plural when appropriate, and vice versa in each instance.

         10.6 ASSIGNMENT OF BENEFITS.

         Neither the Participant nor any other person shall have any right to
commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise
encumber, transfer, hypothecate, or convey in advance of actual receipt the
amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be unassignable and nontransferable.
No part of the amounts payable shall, prior to actual payment, be subject to
seizure or sequestration for the payment of any debts, judgments, alimony, or
separate maintenance owed by the Participant or

                                       22
<PAGE>   28

any other person, nor be transferable by operation of law in the event of the
Participant's or any other person's bankruptcy or insolvency.

         10.7 LEGALLY INCOMPETENT.

         The Administrative Committee, in its sole discretion, may direct that
payment be made to an incompetent or disabled person, whether because of
minority or mental or physical disability, to the guardian of such person or to
the person having custody of such person, without further liability on the part
of the Company for the amount of such payment to the person on whose account
such payment is made.

         10.8 GOVERNING LAW.

         The Plan shall be construed, administered and governed in all respects
in accordance with applicable federal law (including ERISA) and, to the extent
not preempted by federal law, in accordance with the laws of the State of Texas.
Exclusive jurisdiction and venue of all disputes arising out of and relating to
the Plan shall be in any court of appropriate jurisdiction in Dallas County,
Texas.

         10.9 SEVERABILITY.

         If any provision of the Plan is held invalid or unenforceable, its
invalidity or unenforceability shall not affect any other provision of the Plan,
and the Plan shall be construed and enforced as if such invalid or unenforceable
provision had not been included herein.

         10.10 OVERPAYMENTS.

         If for any reason, any benefit under this Plan is erroneously paid to a
Participant or Beneficiary, the Participant or Beneficiary, as the case may be,
shall be responsible for refunding the overpayment to this Plan. The refund
shall be a lump-sum payment paid directly by the Participant or Beneficiary, a
reduction of the amount of future benefits otherwise payable, or any other
method which the Administrative Committee shall deem appropriate, including
payroll deduction in which case the Participant shall execute such forms
authorizing payroll deduction as the Administrative Committee shall request.

         10.11 ENTIRE PLAN.

         This document constitutes the entire Plan and there are no oral items
or conditions to the contrary. Any change, modification or amendment to the Plan
must be in writing.

                                       23
<PAGE>   29

         IN WITNESS WHEREOF, the Controlling Company has caused the Plan to be
executed by its duly authorized officer effective as of the 1st day of July,
2000.

                                       AFFILIATED COMPUTER SERVICES, INC.

                                       By:
                                          --------------------------------------

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

                                       24

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