Document:

<PAGE>   1
                                                                     EXHIBIT 4.3

                                  ORGANIC, INC.

                                       and

                             EquiServe Trust Company

                                 as Rights Agent

                                RIGHTS AGREEMENT

                           Dated as of ______________

<PAGE>   2

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
SECTION                                                                                      PAGE
-------                                                                                      ----
<S>             <C>                                                                          <C>
Section 1.      Certain Definitions........................................................     1

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

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

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

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

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

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

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

Section 9.      Reservation and Availability of Capital Stock.............................     11

Section 10.     Preferred Stock Record Date...............................................     13

Section 11.     Adjustment of Purchase Price, Number and Kind of Shares or
                Number of Rights..........................................................     13

Section 12.     Certificate of Adjusted Purchase Price or Number of Shares................     22

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...............................................     26

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....................................................     31
</TABLE>

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<PAGE>   3

<TABLE>
<S>             <C>                                                                          <C>
Section 22.     Issuance of New Rights Certificates.......................................     31

Section 23.     Redemption and Termination................................................     32

Section 24.     Notice of Certain Events..................................................     33

Section 25.     Notices...................................................................     33

Section 26.     Supplements and Amendments................................................     34

Section 27.     Successors................................................................     35

Section 28.     Determinations and Actions by the Board of Directors, etc.................     35

Section 29.     Benefits of this Agreement................................................     35

Section 30.     Severability..............................................................     35

Section 31.     Governing Law.............................................................     36

Section 32.     Counterparts..............................................................     36

Section 33.     Descriptive Headings......................................................     36

Section 34.     Exchange..................................................................     36

Exhibit A       Form of Rights Certificate................................................     A-1

Exhibit B       Form of Summary of Rights.................................................     B-1

Exhibit C       Certificate of Designation................................................     C-1
</TABLE>

                                       ii
<PAGE>   4

                                RIGHTS AGREEMENT

        RIGHTS AGREEMENT, dated as of ____________ (the "Agreement"), between
Organic, Inc., a Delaware corporation (the "Company"), and EquiServe Trust
Company, a Delaware corporation (the "Rights Agent").

        WHEREAS, effective __________ (the "Rights Dividend Declaration Date"),
the Board of Directors of the Company (the "Board of Directors") (i) authorized
and declared a dividend distribution of one Right for each share of Common
Stock, par value $.0001 per share, of the Company (the "Company Common Stock")
outstanding at the Close of Business on ____________ (the "Record Date"), and
(ii) authorized the issuance of one Right (as such number may hereinafter be
adjusted pursuant hereto) for each share of Company Common Stock issued between
the Record Date (whether originally issued or delivered from the Company's
treasury) and, except as otherwise provided in Section 22, the Distribution
Date, each Right initially representing the right to purchase upon the terms and
subject to the conditions hereinafter set forth one Unit of Series C Preferred
Stock (the "Rights"); and

        WHEREAS, the Board of Directors of the Company has determined that it is
in the best interest of the Company and the holders of the Company Common Stock
to amend the Agreement with respect to the provisions governing supplements and
amendments to the Agreement;

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

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

                (a) "Acquiring Person" shall mean any Person who or which,
        together with all Affiliates or Associates of such Person, shall be the
        Beneficial Owner of 15% or more of the shares of Company Common Stock
        then outstanding. Notwithstanding the foregoing: (i) an "Acquiring
        Person" shall not include: (A) the Company; (B) any Subsidiary of the
        Company; (C) any employee benefit plan maintained by the Company or any
        of its Subsidiaries; (D) any trustee or fiduciary with respect to such
        employee benefit plan acting in such capacity or a trustee or fiduciary
        holding shares of Company Common Stock for the purpose of funding any
        such plan or employee benefits; (E) Organic Holdings, Inc./Omnicom Group
        Inc. ("Holdings/Omnicom"), not including any of its transferees or
        assignees, but only so long as (x) Holdings/Omincom is not required to
        report such ownership on Schedule 13(D) under the Exchange Act (or any
        comparable or successor report), and (y) Holdings/Omincom's Beneficial
        Ownership of the shares of Company Common Stock does not exceed the sum
        of Holdings/Omincom's Beneficial Ownership of Company Common Stock on
        the date of this Agreement plus 1% of the shares of Company Common Stock
        outstanding on such date; (F) any Person if the Board of Directors of
        the Company determines in good faith that such Person who would
        otherwise be an "Acquiring Person" became such inadvertently (including,
        without limitation, because (x) such Person was unaware that it
        beneficially owned a percentage

                                       1
<PAGE>   5

        of Company Common Stock that would otherwise cause such Person to be an
        "Acquiring Person" or (y) such Person was aware of the extent of its
        Beneficial Ownership of Company Common Stock 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 does not acquire any additional shares of
        Company Common Stock and as promptly as practicable divested or divests
        itself of Beneficial Ownership of a sufficient number of shares of
        Company Common Stock so that such Person would no longer be an
        "Acquiring Person;" or (G) any Person who becomes the Beneficial Owner
        of 15% or more of the then outstanding shares of Company Common Stock as
        a result of the acquisition of shares of Company Common Stock directly
        from the Company in one or more transactions approved by a majority of
        the Board of Directors, and (ii) no Person shall be deemed an "Acquiring
        Person" as a result of the acquisition of shares of Company Common Stock
        by the Company which, by reducing the number of shares of Company Common
        Stock outstanding, increases the proportional number of shares
        beneficially owned by such Person; provided, however, that if (A) a
        Person would become an Acquiring Person (but for the operation of this
        subclause (ii)) as a result of the acquisition of shares of Company
        Common Stock by the Company and (B) after such share acquisition by the
        Company, such Person becomes the Beneficial Owner of any additional
        shares of Company Common Stock, then such Person shall be deemed an
        Acquiring Person unless upon becoming the Beneficial Owner of such
        additional shares such Person is the Beneficial Owner of less than 15%
        of the then outstanding shares of Company Common Stock. Each Person
        identified in subclauses (A), (B), (C) and (D) of this Section (1)(a) is
        individually an "Exempt Person" and collectively "Exempt Persons."

                (b) "Affiliate" and "Associate" shall have the respective
        meanings ascribed to such terms in Rule 12b-2 of the General Rules and
        Regulations under the Securities Exchange Act of 1934, as amended (the
        "Exchange Act"), as in effect on the date hereof.

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

                        (i) of which such Person or any of such Person's
                Affiliates or Associates is considered to be a "beneficial
                owner" under Rule 13d-3 of the General Rules and Regulations
                under the Exchange Act (the "Exchange Act Regulations") as in
                effect on the date hereof; provided, however, that a Person
                shall not be deemed the "Beneficial Owner" of, or to
                "beneficially own", any securities under this subparagraph (i)
                as a result of an agreement, arrangement or understanding to
                vote such securities if such agreement, arrangement or
                understanding (A) arises solely from a revocable proxy or
                consent given in response to a public proxy or consent
                solicitation made pursuant to, and in accordance with, the
                applicable provisions of the Exchange Act and the Exchange Act
                Regulations, and (B) is not reportable by such Person on
                Schedule 13D under the Exchange Act (or any comparable or
                successor report);

                                       2
<PAGE>   6

                        (ii) which are beneficially owned, directly or
                indirectly, by any other Person (or any Affiliate or Associate
                of such other Person) with which such Person (or any of such
                Person's Affiliates or Associates) has any agreement,
                arrangement or understanding (whether or not in writing), for
                the purpose of acquiring, holding, voting (except pursuant to a
                revocable proxy or consent as described in the proviso to
                subparagraph (i) of this paragraph (c)) or disposing of such
                securities; or

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

        provided, however, that under this paragraph (c) a Person shall not be
        deemed the "Beneficial Owner" of, to have "Beneficial Ownership" of, or
        to "beneficially own", (A) securities tendered pursuant to a tender or
        exchange offer made in accordance with Exchange Act Regulations by such
        Person or any of such Person's Affiliates or Associates until such
        tendered securities are accepted for purchase or exchange, (B)
        securities that may be issued upon exercise of Rights at any time prior
        to the occurrence of a Triggering Event, or (C) securities that may be
        issued upon exercise of Rights from and after the occurrence of a
        Triggering Event, which Rights were acquired by such Person or any of
        such Person's Affiliates or Associates prior to the Distribution Date or
        pursuant to Section 3(c) or Section 22 hereof (the "Original Rights") or
        pursuant to Section 11(i) hereof in connection with an adjustment made
        with respect to any Original Rights; and further provided, however, that
        (x) nothing in this paragraph (c) shall cause a Person engaged in
        business as an underwriter of securities to be the "Beneficial Owner"
        of, or to "beneficially own," any securities acquired through such
        Person's participation in good faith in a firm commitment underwriting
        until the expiration of forty days after the date of such acquisition,
        (y) no decision reached, or action taken, by the Board of Directors of
        the Company or any committee thereof shall cause any Person (or any
        Affiliate or Associate of such Person) who is a member of the Board of
        Directors of the Company or such committee to be deemed, for the
        purposes of this Agreement, to be a Beneficial Owner of any securities
        beneficially owned by any other Person (or any Affiliate or Associate of
        such Person) who is a member of the Board of Directors of the Company or
        any committee thereof solely by reason of such membership of the Board
        of Directors or any committee thereof or participation in the decisions
        or actions thereof on the part of either or both of such Persons and (z)
        no Person who is an officer, director or employee of an Exempt Person
        shall be deemed, solely by reason of such Person's status or authority
        as such, to be the "Beneficial Owner" of, to have "Beneficial Ownership"
        of or to "beneficially own" any securities that are "beneficially owned"
        (as defined in this paragraph (c)), including, without limitation, in a
        fiduciary capacity, by an Exempt Person or by any other such officer,
        director or employee of an Exempt Person.

                                       3
<PAGE>   7

                (d) "Business Day" shall mean any day other than a Saturday,
        Sunday or a day on which banking institutions in the city of San
        Francisco, California is authorized or obligated by law or executive
        order to close.

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

                (f) "Common Stock" of any Person other than the Company shall
        mean the capital stock of such Person with the greatest voting power,
        or, if such Person shall have no capital stock, the equity securities or
        other equity interest having power to control or direct the management
        of such Person.

                (g) "Company" means Organic, Inc., a Delaware corporation, and
        also means a Principal Party to the extent provided in Section 13(a).

                (h) "Company Common Stock" has the meaning set forth in the
        Whereas Clause.

                (i) "Distribution Date" has the meaning set forth in Section
        3(a).

                (j) "Expiration Date" has the meaning set forth in Section 7(a).

                (k) "Person" shall mean any individual, partnership, firm,
        corporation, association, trust, unincorporated organization or other
        entity, as well as any syndicate or group deemed to be a person under
        Section 14(d)(2) of the Exchange Act as in effect on the date hereof.

                (l) "Preferred Stock" shall mean the Series C Preferred Stock,
        par value $.001 per share, of the Company having the voting powers,
        designation, preferences and relative, participating, optional or other
        special rights and qualifications, limitations and restrictions
        described in the Certificate of Designation set forth as Exhibit C
        hereto and as amended from time to time.

                (m) "Purchase Price" has the meaning set forth in Section 7(b).

                (n) "Record Date" has the meaning set forth in the Whereas
        Clause.

                (o) "Right" has the meaning set forth in the Whereas Clause.

                (p) "Rights Certificate" has the meaning set forth in Section
        3(a).

                (q) "Rights Dividend Declaration Date" has the meaning set forth
        in the Whereas Clause.

                (r) "Section 11(a)(ii) Event" shall mean the event described in
        Section 11(a)(ii) hereof.

                                       4
<PAGE>   8

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

                (t) "Stock Acquisition Date" shall mean the first date of public
        announcement (including, without limitation, the filing of any report
        pursuant to Section 13(d) of the Exchange Act (or any comparable or
        successor report)) by the Company or an Acquiring Person that an
        Acquiring Person has become such.

                (u) "Subsidiary" shall mean, with reference to any Person, any
        other Person of which an amount of voting securities or equity interests
        sufficient to elect at least a majority of the directors or equivalent
        governing body of such other Person is beneficially owned, directly or
        indirectly, by such Person, or otherwise controlled by such
        first-mentioned Person.

                (v) "Summary of Rights" has the meaning set forth in Section
        3(b).

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

                (x) "Unit" has the meaning set forth in Section 7(b).

                In addition, the following terms are defined in the Sections
        indicated below:

<TABLE>
<CAPTION>
Defined Term                          Section Number
------------                          --------------
<S>                                   <C>
Adjustment Shares                     11(a)(ii)
Adjustment Spread                     34(a)
common stock equivalents              11(a)(iii)
Current Value                         11(a)(iii)
Depositary Agent                      7(c)
Distribution Date                     3(a)
Equivalent Preferred Stock            11(b)
Exchange Act                          1(b)
Exchange Act Regulations              1(c)
Exchange Ratio                        34(a)
Exempt Person                         1(a)
Expiration Date                       7(a)
Final Expiration Date                 7(a)
Nasdaq                                11(d)(i)
Original Rights                       1(c)
Purchase Price                        7(b)
Redemption Price                      23(a)
Registered Common Stock               13(b)(ii)
Registration Date                     9(c)
Registration Statement                9(c)
Rights Certificates                   3(a)
Section 11(a)(ii) Event               11(a)(ii)(C)
Section 11(a)(iii) Trigger Date       11(a)(iii)
Section 13 Event                      13(a)
Securities Act                        9(c)
</TABLE>

                                       5
<PAGE>   9

<TABLE>
<S>                                   <C>
Spread                                11(a)(iii)
Summary of Rights                     3(b)
Trading Day                           11(d)(i)
Unit                                  7(b)
</TABLE>

        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 such co-Rights Agent.

        Section 3. Issue of Rights Certificates. (a) Until the earlier of (i)
the Close of Business on the tenth Business Day after the Stock Acquisition
Date, and (ii) the Close of Business on the tenth Business Day (or such later
date as may be determined by action of a majority of the Board of Directors of
the Company prior to the occurrence of a Section 11(a)(ii) Event) after the date
that a tender or exchange offer by any Person (other than an Exempt Person) is
first published or sent or given within the meaning of Rule 14d-4(a) of the
Exchange Act Regulations or any successor rule, if upon consummation thereof
such Person would be an Acquiring Person (including, in the case of both clause
(i) and (ii), any such date which is after the date of this Agreement and prior
to the issuance of the Rights)(the earlier of (i) and (ii) above being the
"Distribution Date"), (x) the Rights will be evidenced (subject to the
provisions of paragraph (b) of this Section 3) by the certificates for shares of
Company Common Stock registered in the names of the holders of shares of Company
Common Stock as of and subsequent to the Record Date (which certificates for
shares of Company Common Stock shall be deemed also to be certificates for
Rights) and not by separate certificates, and (y) the Rights will be
transferable only in connection with the transfer of the underlying shares of
Company Common Stock including a transfer to the Company; provided, however,
that if a tender or exchange offer is terminated prior to the occurrence of a
Distribution Date, then no Distribution Date shall occur as a result of such
tender or exchange offer. As soon as practicable after the Distribution Date,
the Rights Agent will send by first-class, insured, postage prepaid mail, to
each record holder of shares of Company Common Stock as of the Close of Business
on the Distribution Date, at the address of such holder shown on the records of
the Company, one or more rights certificates, in substantially the form of
Exhibit A hereto (the "Rights Certificates"), evidencing one Right for each
share of Company Common Stock so held, subject to adjustment as provided herein.

        In the event that an adjustment in the number of Rights per share of
Company Common Stock has been made pursuant to Section 11(p) hereof, at the time
of distribution of the Rights Certificates, the Company may 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 and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.

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<PAGE>   10

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

                (c) Rights shall, without any further action, be issued in
respect of all shares of Company Common Stock which are issued (including any
shares of Company Common Stock held in treasury) after the Record Date but prior
to the earlier of the Distribution Date and the Expiration Date. Certificates,
representing such shares of Company Common Stock, issued after the Record Date
shall bear the following legend:

        This certificate also evidences and entitles the holder hereof to
        certain Rights as set forth in the Rights Agreement between Organic,
        Inc. (the "Company") and ______________ (the "Rights Agent") dated as of
        ___________, as amended from time to time (the "Rights Agreement"), the
        terms of which are hereby incorporated herein by reference and a copy of
        which is on file at the principal office of the stock transfer
        administration office of the Rights Agent. 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. The Company will mail to the holder of this certificate a
        copy of the Rights Agreement, as in effect on the date of mailing,
        without charge promptly after receipt of a written request therefor.
        UNDER CERTAIN 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 certificates representing shares of Company Common Stock that
bear the foregoing legend until the earlier of the Distribution Date and the
Expiration Date, the Rights associated with the shares of Company Common Stock
represented by such certificates shall be evidenced by such certificates alone
and registered holders of the shares of Company Common Stock shall also be the
registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock represented by such certificates.

        Section 4. Form of Rights Certificates. (a) The Rights Certificates (and
the forms of election to purchase, assignment and certificate to be printed on
the reverse thereof) shall each be

                                       7
<PAGE>   11

substantially in the form set forth in Exhibit A hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or any rule or regulation thereunder or with any rule or
regulation of any stock exchange or automated quotation system on which the
Rights may from time to time be listed 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 and on their face
shall entitle the holders thereof to purchase such number of Units of Preferred
Stock as shall be set forth therein at the price set forth therein, but the
amount and type of securities, cash or other assets that may be acquired upon
the exercise of each Right and the Purchase Price thereof shall be subject to
adjustment as provided herein.

        Section 5. Countersignature and Registration . (a) Rights Certificates
shall be executed on behalf of the Company by its Chairman, the President or one
of its Vice Presidents under its corporate seal reproduced thereon attested by
its Secretary, Treasurer or one of its Assistant Secretaries. The signature of
any of these officers on the Rights Certificates may be manual or facsimile.
Rights Certificates bearing the manual or facsimile signatures of the
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature of such Rights Certificates or
did not hold such offices at the date of such Rights Certificates. No Rights
Certificate shall be entitled to any benefit under this Agreement or be valid
for any purpose unless there appears on such Rights Certificate a
countersignature duly executed by the Rights Agent by manual signature of an
authorized signatory, and such countersignature upon any Rights Certificate
shall be conclusive evidence, and the only evidence, that such Rights
Certificate has been duly countersigned as required hereunder.

                (b) Following the Distribution Date, the Rights Agent will keep
or cause to be kept, at its office designated for surrender of Rights
Certificates upon exercise or transfer, books for registration and transfer of
the Rights Certificates issued hereunder. Such books shall show the name and
address of each holder of the Rights Certificates, the number of Rights
evidenced on its face by each Rights Certificate and the date of each Rights
Certificate.

        Section 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen Rights Certificates. (a)
Subject to the provisions of Sections 4, 7(e) and 14 hereof, at any time after
the Close of Business on the Distribution Date, and at or prior to the Close of
Business on the Expiration Date, any Rights Certificate or Certificates may be
transferred, split up, combined or exchanged for another Rights Certificate or
Certificates, entitling the registered holder to purchase a like number of Units
of Preferred Stock (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) as the Rights Certificate or Certificates
surrendered then entitled such holder to purchase. Any registered holder
desiring to transfer, split up, combine or exchange any Rights Certificate or
Certificates shall make such request in writing delivered to the Rights Agent,
and shall surrender the Rights Certificate or 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

                                       8
<PAGE>   12

such surrendered Rights Certificate until the registered holder shall have
completed and executed the certificate set forth 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) of the Rights represented by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request;
whereupon the Rights Agent shall, subject to the provisions of Section 7(e) and
Section 14 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) Subject to Section 7(e) hereof, if a Rights Certificate
shall be mutilated, lost, stolen or destroyed, upon request by the registered
holder of the Rights represented thereby and upon payment to the Company and the
Rights Agent of all reasonable expenses incident thereto, there shall be issued,
in exchange for and upon cancellation of the mutilated Rights Certificate, or in
substitution for the lost, stolen or destroyed Rights Certificate, a new Rights
Certificate, in substantially the form of the prior Rights Certificate, of like
tenor and representing the equivalent number of Rights, but, in the case of
loss, theft or destruction, only upon receipt of evidence satisfactory to the
Company and the Rights Agent of such loss, theft or destruction of such Rights
Certificate and, if requested by the Company or the Rights Agent, indemnity also
satisfactory to it.

        Section 7. Exercise of Rights; Purchase Price; Expiration Date of
Rights. (a) Prior to the earlier of (i) the Close of Business on the tenth
anniversary hereof (the "Final Expiration Date"), (ii) the time at which the
Rights are redeemed as provided in Section 23 hereof and (iii) the time at which
the Rights are exchanged as provided in Section 34 hereof (the earlier of (i),
(ii) and (iii) being the "Expiration Date"), the registered holder of any Rights
Certificate may, subject to the provisions of Sections 7(e) and 9(c) hereof,
exercise the Rights evidenced thereby, in whole or in part, at any time after
the Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate 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 aggregate Purchase Price (as
hereinafter defined) for the number of Units of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be)
for which such surrendered Rights are then exercisable.

                (b) The purchase price for each one one-hundredth of a share
(each such one one-hundredth of a share being a "Unit") of Preferred Stock upon
exercise of Rights shall be [___], subject to adjustment from time to time as
provided in Sections 11 and 13(a) hereof (such purchase price, as so adjusted,
being the "Purchase Price"), and shall be payable in accordance with paragraph
(c) below.

                (c) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with the Rights Agent or other
corporation in good standing organized under the laws of the United States or
any State of the United States, which is authorized under such laws to exercise
corporate trust or stock transfer powers and is subject to supervision or

                                       9
<PAGE>   13

examination by federal or state authority (such institution being the
"Depositary Agent"), certificates representing the shares of Preferred Stock
that may be acquired upon exercise of the Rights and shall cause such Depositary
Agent to enter into an agreement pursuant to which the Depositary Agent shall
issue receipts representing interests in the shares of Preferred Stock so
deposited. Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment, with respect to each Right so exercised, of the Purchase
Price for the Units of Preferred Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) to be purchased thereby as
set forth below and an amount equal to any applicable transfer tax or evidence
satisfactory to the Company of payment of such tax, the Rights Agent shall,
subject to Section 20(k) hereof, thereupon promptly (i) requisition from the
Depositary Agent depositary receipts representing such number of Units of
Preferred Stock as are to be purchased and the Company will direct the
Depositary Agent to comply with such request, (ii) requisition from the Company
the amount of cash, if any, to be paid in lieu of fractional shares in
accordance with Section 14 hereof, (iii) after receipt of such 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) after receipt thereof, deliver such cash, if
any, to or upon the order of the registered holder of such Rights Certificate.
In the event that the Company is obligated to issue Company Common Stock, other
securities of the Company, pay cash and/or distribute other property pursuant to
Section 11(a) hereof, the Company will make all arrangements necessary so that
such Company Common Stock, other securities, cash and/or other property are
available for distribution by the Rights Agent, if and when appropriate. The
payment of the Purchase Price (as such amount may be reduced pursuant to Section
11(a)(iii) hereof) may be made in cash or by certified or bank check or money
order payable to the order of the Company.

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

                (e) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of any Section 11(a)(ii) 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) which becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and which receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or any such Associate or Affiliate) or to any Person with
whom the Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding the transferred Rights, shares
of Company Common Stock or the Company or (B) a transfer which the Board of
Directors has determined to be part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of

                                       10
<PAGE>   14

this Section 7(e), shall be 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) hereof are complied with, but shall have no liability to any holder of
Rights or any other Person as a result of its failure to make any determination
under this Section 7(e) with respect to an Acquiring Person or its Affiliates,
Associates or transferees.

                (f) Notwithstanding anything in this Agreement or any Rights
Certificate 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 by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following 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) of the Rights represented by such Rights Certificate 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 any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
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
Certificates acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.

        Section 9. Reservation and Availability of Capital Stock. (a) The
Company shall at all times prior to the Expiration Date cause to be reserved and
kept available, out of its authorized and unissued shares of preferred stock,
the number of shares of Preferred Stock that, as provided in this Agreement,
will be sufficient to permit the exercise in full of all outstanding Rights.
Upon the occurrence of any events resulting in an increase in the aggregate
number of shares of Preferred Stock (or other equity securities of the Company)
issuable upon exercise of all outstanding Rights above the number then reserved,
the Company shall make appropriate increases in the number of shares so reserved
to the extent practicable.

                (b) If the shares of Preferred Stock to be issued and delivered
upon the exercise of the Rights may be listed on any national securities
exchange or automated quotation system, the Company shall during the period from
the Distribution Date through the Expiration Date use its best efforts to cause
all securities 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 (i) as soon as
practicable following the occurrence of a Section 11(a)(ii) Event and a
determination by the Company in accordance with

                                       11
<PAGE>   15

Section 11(a)(iii) hereof of the consideration to be delivered by the Company
upon exercise of the Rights or, if so required by law, as soon as practicable
following the Distribution Date (such date being the "Registration Date"), to
file a registration statement on an appropriate form under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities that may
be acquired upon exercise of the Rights (the "Registration Statement"), (ii) to
cause the Registration Statement to become effective as soon as practicable
after such filing, (iii) to cause the Registration Statement to continue to be
effective (and to include a prospectus complying with the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for the securities covered by the Registration Statement, and
(B) the Expiration Date and (iv) to take as soon as practicable following the
Registration Date such action as may be required to ensure that any acquisition
of securities upon exercise of the Rights complies with any applicable state
securities or "blue sky" laws. The Company may temporarily suspend, for a period
of time not to exceed one hundred twenty (120) 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 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. In addition, if the Company shall determine that a
registration statement is required following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained, the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been declared
effective.

                (d) The Company shall take such action as may be necessary to
ensure that all shares of Preferred Stock (and, following the occurrence of a
Triggering Event, any other securities that may be delivered upon exercise of
Rights) shall be, at the time of delivery of the certificates or depositary
receipts for such securities (subject to payment of the Purchase Price), duly
and validly authorized and issued and fully paid and non-assessable.

                (e) The Company shall pay any documentary, stamp or transfer tax
imposed in connection with the issuance or delivery of the Rights Certificates
or upon the exercise of Rights; provided, however, the Company shall not be
required to pay any such tax imposed in connection with the issuance or delivery
of Units of Preferred Stock, or any certificates or depositary receipts for such
Units of Preferred Stock (or, following the occurrence of a Triggering Event,
any other securities, cash or assets, as the case may be) to any person other
than the registered holder of the Rights Certificates evidencing the Rights
surrendered for exercise. The Company shall not be required to issue or deliver
any certificates or depositary receipts for Units of Preferred Stock (or,
following the occurrence of a Triggering Event, any other securities, cash or
assets, as the case may be) to, or in a name other than that of, the registered
holder upon the exercise of any Rights until any such tax shall have been paid
(any such tax being payable by the holder of such Rights Certificate at the time
of surrender) or until it has been established to the Company's satisfaction
that no such tax is due.

                                       12
<PAGE>   16

        Section 10. Preferred Stock Record Date. Each Person in whose name any
certificate or depositary receipt for Units of Preferred Stock (or, following
the occurrence of a Triggering Event, other securities) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Units of Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Preferred Stock (or, following
the occurrence of a Triggering Event, other securities) transfer books of the
Company are closed, such Person shall be deemed to have become the record holder
of such securities on, and such certificate shall be dated, the next succeeding
Business Day on which the Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) transfer books of the Company are open and,
further provided, however, that if delivery of Units of Preferred Stock is
delayed pursuant to Section 9(c) hereof, such Persons shall be deemed to have
become the record holders of such Units of Preferred Stock only when such Units
first become deliverable. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to securities 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 Purchase Price, Number and Kind of Shares or
Number of Rights. The Purchase Price, the number and kind of securities
purchasable upon exercise of each Right and the number of Rights outstanding are
subject to adjustment from time to time as provided in this Section 11.

                (a) (i) In the event the Company shall at any time after the
        date of this Agreement (A) declare a dividend on the Preferred Stock
        payable in shares of Preferred Stock, (B) subdivide the outstanding
        Preferred Stock, (C) combine the outstanding Preferred Stock into a
        smaller number of shares, or (D) issue any shares of its capital stock
        in a reclassification of the Preferred Stock (including any such
        reclassification in connection with a consolidation or merger in which
        the Company is the continuing or surviving corporation), except as
        otherwise provided in this Section 11(a), the Purchase Price in effect
        at the time of the record date for such dividend or of the effective
        date of such subdivision, combination or reclassification, and the
        number and kind of shares of Preferred Stock or capital stock, as the
        case may be, issuable on such date upon exercise of the Rights, shall be
        proportionately adjusted so that the holder of any Right exercised after
        such time shall be entitled to receive, upon payment of the Purchase
        Price then in effect, the aggregate number and kind of shares of
        Preferred Stock or capital stock, as the case may be, which, if such
        Right had been exercised immediately prior to such date, such holder
        would have owned upon such exercise and been entitled to receive by
        virtue of such dividend, subdivision, combination or reclassification;
        provided, however, that in no event shall the consideration to be paid
        upon the exercise of one Right be less than the aggregate par value of
        the shares of capital stock of the Company issuable upon the exercise of
        one Right. If an event occurs which would require an adjustment under
        both

                                       13
<PAGE>   17

        this Section 11(a)(i) and Section 11(a)(ii) hereof, the adjustment
        provided for in this Section 11(a)(i) shall be in addition to, and shall
        be made prior to, any adjustment required pursuant to Section 11(a)(ii)
        hereof.

                (ii) In the event any Person shall become an Acquiring Person,
        other than pursuant to any transaction set forth in Section 13(a)
        hereof, then, immediately upon the occurrence of such event (a "Section
        11(a)(ii) Event"), proper provision shall be made so that each holder of
        a Right (except as provided below and in Section 7(e) hereof) shall,
        subject to Section 34 hereof, thereafter have the right to receive, upon
        exercise of such Right at the then current Purchase Price in accordance
        with the terms of this Agreement, in lieu of the number of Units of
        Preferred Stock for which a Right was exercisable immediately prior to
        the first occurrence of a Section 11(a)(ii) Event (whether or not such
        Right was then exercisable), such number of Units of Preferred Stock as
        shall equal the result obtained by (x) multiplying the then current
        Purchase Price by the then number of Units of Preferred Stock for which
        a Right was exercisable immediately prior to the first occurrence of a
        Section 11(a)(ii) Event (whether or not such Right was then exercisable)
        (such product thereafter being, for all purposes of this Agreement,
        other than Section 13 hereof, the "Purchase Price"), and (y) dividing
        that product by 50% of the then current market price (determined
        pursuant to Section 11(d) hereof) per Unit of Preferred Stock on the
        date of such first occurrence (such Units of Preferred Stock being the
        "Adjustment Shares"); provided, however, that the Purchase Price and the
        number of Units of Preferred Stock so receivable upon exercise of a
        Right shall, following the Section 11(a)(ii) Event, be subject to
        further adjustment as appropriate in accordance with Section 11 hereof.
        Notwithstanding the foregoing, the Rights shall not be exercisable
        pursuant to this Section 11(a)(ii) until the time period during which
        the Rights may be redeemed pursuant to Section 23 hereof shall have
        expired.

                (iii) The Company, by the vote of a majority of the Board of
        Directors, may at its option substitute for a Unit of Preferred Stock
        issuable upon the exercise of Rights in accordance with the foregoing
        subparagraph (ii), shares of Company Common Stock or fractions thereof
        having a current market price (as determined by Section 11(d) hereof)
        equal to the current market price of a Unit of Preferred Stock on the
        date of the Section 11(a)(ii) Event. In the event that the number of
        shares of Preferred Stock which are authorized by the Company's Restated
        Certificate of Incorporation but not outstanding or reserved for
        issuance for purposes other than upon exercise of the Rights is not
        sufficient to permit the exercise in full of the Rights in accordance
        with the foregoing subparagraph (ii) of this Section 11(a), the Company,
        by the vote of a majority of the Board of Directors, shall to the extent
        permitted by applicable law and any material agreements then in effect
        to which the Company is a party or by which it is bound: (A) determine
        the excess of (1) the value of the Adjustment Shares issuable upon the
        exercise of a Right (the "Current Value") over (2) the Purchase Price
        (such excess being the "Spread"), and (B) with respect to each Right
        (other than Rights which have become void pursuant to Section 7(e)),
        make adequate provision to substitute, in whole or in part, for such
        Adjustment Shares, upon exercise of a Right and payment of the
        applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
        Price, (3) shares of Company Common

                                       14
<PAGE>   18

        Stock or other equity securities of the Company (including, without
        limitation, shares, or units of shares, of preferred stock (such other
        shares being "common stock equivalents")), (4) debt securities of the
        Company, (5) other assets, or (6) any combination of the foregoing,
        having an aggregate value which, when added to the value of the Units of
        Preferred Stock actually issued upon exercise of such Right, shall have
        an aggregate value equal to the Current Value (less the amount of any
        reduction in such Purchase Price), where such aggregate value has been
        determined by a majority of the Board of Directors, after receiving
        advice from a nationally recognized investment banking firm; provided,
        however, that if the Company shall not have made adequate provision to
        deliver value pursuant to clause (B) above within thirty days following
        the later of (x) the first occurrence of a Section 11(a)(ii) Event and
        (y) the date on which the Company's right of redemption pursuant to
        Section 23(a) expires (the later of (x) and (y) being referred to herein
        as the "Section 11(a)(iii) Trigger Date"), then, subject to Section 34
        hereof, the Company shall be obligated (to the extent permitted by
        applicable law and any material agreements then in effect to which the
        Company is a party or by which it is bound) to deliver, upon the
        surrender for exercise of a Right and without requiring payment of the
        Purchase Price, Units of Preferred Stock (to the extent available) and
        then, if necessary, shares (or fractions of shares, at the discretion of
        the Board of Directors) of Company Common Stock, cash or a combination
        thereof, which Units of Preferred Stock, shares (or fractions of shares)
        of Company Common Stock and/or cash shall have an aggregate value equal
        to the Spread; further provided, however, that if the Company is unable
        to comply with the immediately foregoing provision within such thirty
        day period, then the Company shall (to the extent permitted by law) take
        all such action as may be necessary to comply with such provision,
        including the calling of a meeting of stockholders to authorize
        additional shares of Preferred Stock or Company Common Stock. To the
        extent that the Company determines that some action need be taken
        pursuant to the first sentence of this Section 11(a)(iii), the Company
        shall provide, subject to Section 7(e) hereof, that such action shall
        apply uniformly to all outstanding Rights. For purposes of this Section
        11(a)(iii), the value of a Unit of Preferred Stock or share of Company
        Common Stock shall be the current market price (as determined pursuant
        to Section 11(d) hereof) per Unit of Preferred Stock or share of Company
        Common Stock, as the case may be, on the Section 11(a)(iii) Trigger Date
        and the value of any common stock equivalent shall be deemed to have the
        same value as the Preferred Stock on such date.

                (b) In case the Company shall fix a record date for the issuance
        of rights, options or warrants to all holders of Preferred Stock
        entitling them to subscribe for or purchase (for a period expiring
        within forty-five calendar days after such record date) shares of
        Preferred Stock (or shares having substantially the same rights,
        privileges and preferences as shares of Preferred Stock ("Equivalent
        Preferred Stock")) or securities convertible into Preferred Stock or
        Equivalent Preferred Stock at a price per share of Preferred Stock or
        per share of Equivalent Preferred Stock (or having a conversion price
        per share, if a security convertible into Preferred Stock or Equivalent
        Preferred Stock) less than the current market price (as determined
        pursuant to Section 11(d) hereof) per share of Preferred Stock on such
        record date, the Purchase Price to be in effect after such record

                                       15
<PAGE>   19

        date shall be determined by multiplying the Purchase Price in effect
        immediately prior to such record date by a fraction, the numerator of
        which shall be the sum of the number of shares of Preferred Stock
        outstanding on such record date plus the number of shares of Preferred
        Stock which the aggregate offering price of the total number of shares
        of Preferred Stock and/or Equivalent Preferred Stock so to be offered
        (and/or the aggregate initial conversion price of the convertible
        securities so to be offered) would purchase at such current market
        price, and the denominator of which shall be the number of shares of
        Preferred Stock outstanding on such record date plus the number of
        additional shares of Preferred Stock and/or Equivalent Preferred Stock
        to be offered for subscription or purchase (or into which the
        convertible securities so to be offered are initially convertible). In
        case such subscription price may be paid by delivery of consideration
        part or all of which may be in a form other than cash, the value of such
        consideration shall be as determined in good faith by a majority of the
        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. Shares of Preferred Stock owned by
        or held for the account of the Company or any Subsidiary 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 Purchase Price shall be adjusted to be the Purchase Price
        which would then be in effect if such record date had not been fixed.

                (c) In case the Company shall fix a record date for a
        distribution to all holders of shares of Preferred Stock (including any
        such distribution made in connection with a consolidation or merger in
        which the Company is the continuing or surviving corporation) of
        evidences of indebtedness, cash (other than a regular quarterly cash
        dividend paid out of funds legally available therefor), assets (other
        than a dividend payable in shares of Preferred Stock, but including any
        dividend payable in stock other than Preferred Stock) or subscription
        rights, options or warrants (excluding those referred to in Section
        11(b) hereof), the Purchase Price to be in effect after such record date
        shall be determined by multiplying the Purchase Price in effect
        immediately prior to such record date by a fraction, the numerator of
        which shall be the current market price (as determined pursuant to
        Section 11(d) hereof) per share of Preferred Stock on such record date
        less the fair market value (as determined in good faith by a majority of
        the 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 holder of the Rights) of the cash, assets or evidences of
        indebtedness so to be distributed or of such subscription rights,
        options or warrants distributable in respect of a share of Preferred
        Stock and the denominator of which shall be such current market price
        (as determined pursuant to Section 11(d) hereof) per share of Preferred
        Stock. Such adjustments shall be made successively whenever such a
        record date is fixed, and in the event that such distribution is not so
        made, the Purchase Price shall be adjusted to be the Purchase Price
        which would have been in effect if such record date had not been fixed.

                (d) (i) For the purpose of any computation hereunder, the
        "current market price" per share of Company Common Stock or Common Stock
        on any date shall be deemed to

                                       16
<PAGE>   20

        be the average of the daily closing prices per share of such shares for
        the ten consecutive Trading Days (as such term is hereinafter defined)
        immediately prior to such date; provided, however, if prior to the
        expiration of such requisite ten Trading Day period the issuer announces
        either (A) a dividend or distribution on such shares payable in such
        shares or securities convertible into such shares (other than the
        Rights), or (B) any subdivision, combination or reclassification of such
        shares, then, following the ex-dividend date for such dividend or the
        record date for such subdivision, combination or reclassification, as
        the case may be, the "current market price" shall be properly adjusted
        to take into account such event. The closing price for each day shall
        be, if the shares are listed and admitted to trading on a national
        securities exchange, as reported in the principal consolidated
        transaction reporting system with respect to securities listed on the
        principal national securities exchange on which such shares are listed
        or admitted to trading or, if such shares are not listed or admitted to
        trading on any national securities exchange, the last quoted price or,
        if not so quoted, the average of the high bid and low asked prices in
        the over-the-counter market, as reported by the Nasdaq National Market
        ("Nasdaq") or such other system then in use, or, if on any such date
        such shares are not quoted by any such organization, the average of the
        closing bid and asked prices as furnished by a professional market maker
        making a market in such shares selected by a majority of the Board of
        Directors. If on any such date no market maker is making a market in
        such shares, the fair value of such shares on such date as determined in
        good faith by a majority of the Board of Directors shall be used. If
        such shares are not publicly held or not so listed or traded, "current
        market price" per share shall mean the fair value per share as
        determined in good faith by a majority of the Board of Directors, whose
        determination shall be described in a statement filed with the Rights
        Agent and shall be conclusive for all purposes. The term "Trading Day"
        shall mean, if such shares are listed or admitted to trading on any
        national securities exchange, a day on which the principal national
        securities exchange on which such shares are listed or admitted to
        trading is open for the transaction of business or, if such shares are
        not so listed or admitted, a Business Day.

                (ii) For the purpose of any computation hereunder, the "current
        market price" per share of Preferred Stock shall be determined in the
        same manner as set forth above for Company Common Stock in clause (i) of
        this Section 11(d) (other than the fourth sentence thereof). If the
        current market price per share of Preferred Stock cannot be determined
        in the manner provided above or if the Preferred Stock is not publicly
        held or listed or traded in a manner described in clause (i) of this
        Section 11(d), the "current market price" per share of Preferred Stock
        shall be conclusively deemed to be an amount equal to 100 (as such
        amount may be appropriately adjusted for such events as stock splits,
        stock dividends and recapitalizations with respect to Company Common
        Stock occurring after the date of this Agreement) multiplied by the
        current market price per share of Company Common Stock. If neither
        Company Common Stock nor Preferred Stock is publicly held or so listed
        or traded, "current market price" per share of the Preferred Stock shall
        mean the fair value per share as determined in good faith by a majority
        of the 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

                                       17
<PAGE>   21

        the Rights. For all purposes of this Agreement, the "current market
        price" of a Unit of Preferred Stock shall be equal to the "current
        market price" of one share of Preferred Stock divided by 100.

                (e) Anything herein to the contrary notwithstanding, no
        adjustment in the Purchase Price shall be required unless such
        adjustment would require an increase or decrease of at least 1% in the
        Purchase Price; provided, however, that any adjustments which by reason
        of this Section 11(e) are not required to be made shall be carried
        forward and taken into account in any subsequent adjustment. All
        calculations under this Section 11 shall be made to the nearest cent or
        to the nearest one-hundredth of a share of Company Common Stock or
        Common Stock or other share or ten-thousandth of a share of Preferred
        Stock, as the case may be. Notwithstanding the first sentence of this
        Section 11(e), any adjustment required by this Section 11 shall be made
        no later than the earlier of (i) three years from the date of the
        transaction which mandates such adjustment and (ii) the Expiration Date.

                (f) If as a result of an adjustment made pursuant to Section
        11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised
        shall become entitled to receive any shares of capital stock other than
        Preferred Stock, thereafter the number of such other shares so
        receivable upon exercise of any Right and the Purchase Price thereof
        shall be subject to adjustment from time to time in a manner and on
        terms as nearly equivalent as practicable to the provisions with respect
        to the Preferred Stock contained in Sections 11(a), (b), (c), (d), (e),
        (g), (h), (i), (j), (k), (l) and (m), and the provisions of Sections 7,
        9, 10, 13 and 14 hereof with respect to the Preferred Stock shall apply
        on like terms to any such other shares.

                (g) All Rights originally issued by the Company subsequent to
        any adjustment made to the Purchase Price hereunder shall evidence the
        right to purchase, at the adjusted Purchase Price, the number of Units
        of Preferred Stock (or other securities or amount of cash or combination
        thereof) that may be acquired from time to time hereunder upon exercise
        of the Rights, all subject to further adjustment as provided herein.

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

                (i) The Company may elect on or after the date of any adjustment
        of the Purchase Price to adjust the number of Rights, in lieu of any
        adjustment in the number of Units of

                                       18
<PAGE>   22

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

                (j) Irrespective of any adjustment or change in the Purchase
        Price or the number of Units of Preferred Stock issuable upon the
        exercise of the Rights, the Rights Certificates theretofore and
        thereafter issued may continue to express the Purchase Price per Unit
        and the number of Units of Preferred Stock which were expressed in the
        Initial Rights Certificates issued hereunder.

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

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

                                       19
<PAGE>   23

        capital stock or securities of the Company, if any, issuable upon such
        exercise on the basis of the Purchase Price in effect prior to such
        adjustment; provided, however, that the Company shall deliver to such
        holder a due bill or other appropriate instrument evidencing such
        holder's right to receive such additional shares (fractional or
        otherwise) or securities upon the occurrence of the event requiring such
        adjustment.

                (m) Anything in this Section 11 to the contrary notwithstanding,
        the Company shall be entitled to make such reductions in the Purchase
        Price, in addition to those adjustments expressly required by this
        Section 11, as and to the extent that in their good faith judgment a
        majority of the Board of Directors shall determine to be advisable in
        order that any (i) consolidation or subdivision of the Preferred Stock,
        (ii) issuance wholly for cash of any shares of Preferred Stock at less
        than the current market price, (iii) issuance wholly for cash of shares
        of Preferred Stock or securities which by their terms are convertible
        into or exchangeable for shares of Preferred Stock, (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
        Stock, shall not be taxable to such holders or shall reduce the taxes
        payable by such holders.

                (n) The Company shall not, at any time after the Distribution
        Date, (i) consolidate with any other Person (other than a wholly owned
        Subsidiary of the Company in a transaction which complies with Section
        11(o) hereof), (ii) merge with or into any other Person (other than a
        wholly owned Subsidiary of the Company in a transaction which complies
        with Section 11(o) hereof), or (iii) sell or transfer (or permit any
        Subsidiary to sell or transfer), in one transaction, or a series of
        transactions, assets or earning power aggregating more than 50% of the
        assets or earning power of the Company and its Subsidiaries (taken as a
        whole) to any other Person or Persons (other than the Company and/or any
        of its Subsidiaries in one or more transactions each of which complies
        with Section 11(o) hereof), if (x) at the time of or immediately after
        such consolidation, merger or sale there are any rights, warrants or
        other instruments or securities outstanding or agreements in effect
        which would substantially diminish or otherwise eliminate the benefits
        intended to be afforded by the Rights or (y) prior to, simultaneously
        with or immediately after such consolidation, merger or sale, the Person
        which constitutes, or would constitute, the "Principal Party" for
        purposes of Section 13(a) hereof shall have distributed or otherwise
        transferred to its shareholders or other persons holding an equity
        interest in such Person Rights previously owned by such Person or any of
        its Affiliates and Associates; provided, however, this Section 11(n)
        shall not affect the ability of any wholly owned Subsidiary of the
        Company to consolidate with, merge with or into, or sell or transfer
        assets or earning power to, any other wholly owned Subsidiary of the
        Company.

                (o) After the Distribution Date, the Company shall not, except
        as permitted by Section 23, Section 26 or Section 34 hereof, take (or
        permit any Subsidiary to take) any action if at the time such action is
        taken it is reasonably foreseeable that such action will diminish
        substantially or otherwise eliminate the benefits intended to be
        afforded by the Rights.

                                       20
<PAGE>   24

                (p) Anything in this Agreement to the contrary notwithstanding,
        in the event that the Company shall at any time after the Rights
        Dividend Declaration Date and prior to the Distribution Date (i) declare
        a dividend on the outstanding shares of Company Common Stock payable in
        shares of Company Common Stock, (ii) subdivide the outstanding shares of
        Company Common Stock, (iii) combine the outstanding shares of Company
        Common Stock into a smaller number of shares, or (iv) issue any shares
        of its capital stock in a reclassification of Company Common Stock
        (including any such reclassification in connection with a consolidation
        or merger in which the Company is the continuing or surviving
        corporation), the number of Rights associated with each share of Company
        Common Stock then outstanding, or issued or delivered thereafter prior
        to the Distribution Date or in accordance with Section 22 hereof, shall
        be proportionately adjusted so that the number of Rights thereafter
        associated with each share of Company Common Stock following any such
        event shall equal the result obtained by multiplying the number of
        Rights associated with each share of Company Common Stock immediately
        prior to such event by a fraction the numerator of which shall be the
        total number of shares of Company Common Stock outstanding immediately
        prior to the occurrence of the event and the denominator of which shall
        be the total number of shares of Company Common Stock outstanding
        immediately following the occurrence of such event.

        Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Company Common Stock, a copy of such certificate, and
(c) mail a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Company Common Stock) in accordance with Section 25 hereof. The Rights
Agent shall be fully protected in relying on any such certificate and on any
adjustment therein contained and shall not be deemed to have knowledge of any
such adjustment unless and until it shall have received such certificate.

        Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power. (a) In the event that, following the first occurrence of a
Section 11(a)(ii) Event, directly or indirectly, either (x) 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 which complies with Section
11(o) hereof), and the Company shall not be the continuing or surviving
corporation of such consolidation or merger, (y) any Person (other than a wholly
owned Subsidiary of the Company in a transaction which compiles with Section
11(o) hereof) shall consolidate with, or merge with or into, the Company, and
the Company shall be the continuing or surviving corporation of such
consolidation or merger and, in connection with such consolidation or merger,
all or part of the outstanding shares of Company Common Stock shall be changed
into or exchanged for stock or other securities of the Company or any other
Person or cash or any other property, or (z) the Company shall sell or otherwise
transfer (or one or more of its Subsidiaries shall sell or otherwise transfer)
to any Person or Persons (other than the Company or any of its wholly owned
Subsidiaries in one or more transactions each of which complies with Section
11(o) hereof), in

                                       21
<PAGE>   25

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)
(any such event being a "Section 13 Event"), then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, (other than Rights
which have become void as provided in Section 7(e) hereof), shall thereafter
have the right to receive, upon the exercise thereof at the then current
Purchase Price, in accordance with this Agreement and in lieu of Units of
Preferred Stock or shares of Company Common Stock, such number of validly
authorized and issued, fully paid, non-assessable and freely tradeable shares of
Common Stock of the Principal Party (as such term is hereinafter defined), which
shares shall not be subject to any liens, encumbrances, rights of call or first
refusal, transfer restrictions or other adverse claims, as shall be equal to the
result obtained by (1) multiplying the then current Purchase Price by the number
of Units of Preferred Stock for which a Right is exercisable immediately prior
to the first occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event
has occurred prior to the first occurrence of a Section 13 Event, multiplying
the number of such Units for which a Right would be exercisable hereunder but
for the occurrence of such Section 11(a)(ii) Event by the Purchase Price which
would be in effect hereunder but for such first occurrence) and (2) dividing
that product (which, following the first occurrence of a Section 13 Event, shall
be the "Purchase Price" for all purposes of this Agreement) by 50% of the
current market price (determined pursuant to Section 11(d) hereof) per share of
the Common Stock of such Principal Party on the date of consummation of such
Section 13 Event, provided, however, that the Purchase Price (as theretofore
adjusted in accordance with Section 11(a)(ii) hereof) and the number of shares
of Common Stock of such Principal Party so receivable upon exercise of a Right
shall be subject to further adjustment as appropriate in accordance with Section
11(f) hereof to reflect any events occurring in respect of the Common Stock of
such Principal Party after the occurrence of such Section 13 Event; (ii) such
Principal Party shall thereafter be liable for, and shall assume, by virtue of
such Section 13 Event, all the obligations and duties of the Company pursuant to
this Agreement; (iii) the term "Company" shall thereafter be deemed to refer to
such Principal Party in all respects; (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
shares of its Common Stock in accordance with Section 9 hereof) in connection
with the consummation of any such transaction as may be necessary to assure that
the provisions of this Agreement shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights, to its shares of Common Stock;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all of the assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Purchase Price,
such cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had it, at the time of such transaction, owned the
shares of Common Stock of the Principal Party purchasable upon the exercise of a
Right, and such Principal Party shall take such steps (including, but not
limited to, reservation of shares of stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for such
cash, shares, rights, warrants and other property; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no further effect following the first
occurrence of any Section 13 Event.

                                       22
<PAGE>   26

                (b) "Principal Party" shall mean:

                        (i) in the case of any transaction described in clause
                (x) or (y) of the first sentence of Section 13(a), (A) the
                Person that is the issuer of any securities into which shares of
                Company Common Stock are converted in such merger or
                consolidation, or, if there is more than one such issuer, the
                issuer of Common Stock that has the highest aggregate current
                market price (determined pursuant to Section 11(d) hereof) and
                (B) if no securities are so issued, the Person that is the other
                party to such merger or consolidation, or, if there is more than
                one such Person, the Person the Common Stock of which has the
                highest aggregate current market price (determined pursuant to
                Section 11(d) hereof); and

                        (ii) in the case of any transaction described in clause
                (z) of the first sentence of Section 13(a) hereof, the Person
                that is the party receiving the largest portion of the assets or
                earning power transferred pursuant to such transaction or
                transactions, or, if each Person that is a party to such
                transaction or transactions receives the same portion of the
                assets or earning power transferred pursuant to such transaction
                or transactions or if the Person receiving the largest portion
                of the assets or earning power cannot be determined, whichever
                Person the Common Stock of which has the highest aggregate
                current market price (determined pursuant to Section 11(d)
                hereof); provided, however, that in any such case, (1) if the
                Common Stock of such Person is not at such time and has not been
                continuously over the preceding twelve-month period registered
                under Section 12 of the Exchange Act ("Registered Common
                Stock"), or such Person is not a corporation, and such Person is
                a direct or indirect Subsidiary of another Person that has
                Registered Common Stock outstanding, "Principal Party" shall
                refer to such other Person; (2) if the Common Stock of such
                Person is not Registered Common Stock or such Person is not a
                corporation, and such Person is a direct or indirect Subsidiary
                of another Person but is not a direct or indirect Subsidiary of
                another Person which has Registered Common Stock outstanding,
                "Principal Party" shall refer to the ultimate parent entity of
                such first-mentioned Person; (3) if the Common Stock of such
                Person is not Registered Common Stock or such Person is not a
                corporation, and such Person is directly or indirectly
                controlled by more than one Person, and one or more of such
                other Persons has Registered Common Stock outstanding,
                "Principal Party" shall refer to whichever of such other Persons
                is the issuer of the Registered Common Stock having the highest
                aggregate current market price (determined pursuant to Section
                11(d) hereof); and (4) if the Common Stock of such Person is not
                Registered Common Stock or such Person is not a corporation, and
                such Person is directly or indirectly controlled by more than
                one Person, and none of such other Persons have Registered
                Common Stock outstanding, "Principal Party" shall refer to
                whichever ultimate parent entity is the corporation having the
                greatest shareholders equity or, if no such ultimate parent
                entity is a corporation, shall refer to whichever ultimate
                parent entity is the entity having the greatest net assets

                                       23
<PAGE>   27

                (c) The Company shall not consummate any such consolidation,
        merger, sale or transfer unless the Principal Party shall have a
        sufficient number of authorized shares of its Common Stock which have
        not been issued or reserved for issuance to permit the exercise in full
        of the Rights in accordance with this Section 13, and unless prior
        thereto the Company and such Principal Party shall have executed and
        delivered to the Rights Agent a supplemental agreement providing for the
        terms set forth in paragraphs (a) and (b) of this Section 13 and further
        providing that the Principal Party, at its own expense, shall:

                        (i) (A) file on an appropriate form, as soon as
                practicable following the execution of such agreement, a
                registration statement under the Securities Act with respect to
                the Common Stock that may be acquired upon exercise of the
                Rights, (B) cause such registration statement to remain
                effective (and to include a prospectus complying with the
                requirements of the Securities Act) until the Expiration Date,
                and (C) as soon as practicable following the execution of such
                agreement, take such action as may be required to assure that
                any acquisition of such Common Stock upon the exercise of the
                Rights complies with any applicable state securities or "blue
                sky" laws; and

                        (ii) as soon as practicable following the execution of
                such agreement, deliver to holders of the Rights historical
                financial statements for the Principal Party and each of its
                Affiliates which comply in all respects with the requirements
                for registration on Form 10 under the Exchange Act.

                (d) In case the Principal Party which is to be a party to a
        transaction referred to in this Section 13 has a provision in any of its
        authorized securities or in its Certificate of Incorporation or By-laws
        or other instrument governing its corporate affairs, which provision
        would have the effect of (i) causing such Principal Party to issue, in
        connection with, or as a consequence of, the consummation of a
        transaction referred to in this Section 13, shares of Common Stock of
        such Principal Party at less than the then current market price per
        share (determined pursuant to Section 11(d) hereof) or securities
        exercisable for, or convertible into, Common Stock of such Principal
        Party at less than such then current market price (other than to holders
        of Rights pursuant to this Section 13) or (ii) providing for any special
        payment, tax or similar provisions in connection with the issuance of
        the Common Stock of such Principal Party pursuant to the provisions of
        this Section 13; then, in such event, the Company 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 cancelled, 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 provisions of this Section 13 shall similarly apply to
        successive mergers or consolidations or sales or other transfers. In the
        event that a Section 13 Event shall occur at any time after the
        occurrence of a Section 11(a)(ii) Event, the Rights which have

                                       24
<PAGE>   28

        not theretofore been exercised shall thereafter become exercisable, in
        the manner and for the securities described in Section 13(a).

                (f) Notwithstanding anything contained herein to the contrary,
        in the event of any merger or other acquisition transaction involving
        the Company pursuant to a merger or other acquisition agreement between
        the Company and any Person (or one or more of such Person's Affiliates
        or Associates) which agreement has been approved by the Board of
        Directors prior to any Person becoming an Acquiring Person, this
        Agreement and the rights of holders of Rights hereunder shall be
        terminated in accordance with Section 7(a) hereof.

        Section 14. Fractional Rights and Fractional Shares. (a) The Company
shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of issuing such
fractional Rights, there shall be paid to the Persons to which such fractional
Rights would otherwise be issuable, an amount in cash equal to such fraction of
the market value of a whole Right. For purposes of this Section 14(a), the
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. The closing price of the Rights for any day shall
be, if the Rights are listed or admitted to trading on a national securities
exchange, as reported in the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by a majority
of the Board of Directors. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined in
good faith by a majority of the Board of Directors shall be used and such
determination shall be described in a statement filed with the Rights Agent and
the holders of the Rights.

                (b) The Company shall not be required to issue fractions of
shares of Preferred Stock (other than fractions which are integral multiples of
one one-hundredth of a share of Preferred Stock) upon exercise of the Rights or
to distribute certificates which evidence such fractional shares of Preferred
Stock (other than fractions which are integral multiples of one one-hundredth of
a share of Preferred Stock); provided, however, that in lieu of fractions of
shares of Preferred Stock which are integral multiples of one one-hundredth of a
share of Preferred Stock, the Company may provide for the issuance of depositary
receipts pursuant to Section 7(c) hereof. In lieu of such fractional shares of
Preferred Stock that are not integral multiples of one one-hundredth of a share,
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the then current market price of a share of Preferred Stock on the
day of exercise, determined in accordance with Section 11(d) hereof.

                                       25
<PAGE>   29

                (c) The holder of a Right by the acceptance of the Rights
expressly waives his right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.

        Section 15. Rights of Action. All rights of action in respect of this
Agreement, other than rights of action vested in 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
certificates representing shares of Company Common Stock); and any registered
holder of a Rights Certificate (or, prior to the Distribution Date, of a
certificate representing shares of Company Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of a certificate representing shares of Company Common
Stock), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company or any
other Person to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Rights Certificate 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 shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.

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

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

                (b) after the Distribution Date, the Rights Certificates are
        transferable only on the registry books of the Rights Agent if
        surrendered at the office 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 duly executed;

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

                (d) notwithstanding anything in this Agreement to the contrary,
        neither the Company nor the Rights Agent shall have any liability to any
        holder of a Right or any other Person as a result of its inability to
        perform any of its obligations under this

                                       26
<PAGE>   30

        Agreement by reason of any preliminary or permanent injunction or other
        order, decree or ruling issued by a court of competent jurisdiction or
        by a governmental, regulatory or administrative agency or commission, or
        any statute, rule, regulation or executive order promulgated or enacted
        by any governmental authority, prohibiting or otherwise restraining
        performance of such obligation; provided, however, the Company must use
        its best efforts to have any such order, decree or ruling lifted or
        otherwise overturned as promptly as practicable.

        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 the holder of the number of shares of
Preferred Stock 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, except as provided in Section 24 hereof, to
receive notice of meetings or other actions affecting stockholders, 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. This Section 17 shall also apply to
holders, as such, of Rights prior to the issuance of Rights Certificates.

        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, including reasonable fees and disbursements of its counsel, incurred
in connection with the execution and administration of this Agreement and the
exercise and performance of its duties hereunder. The Company shall indemnify
the Rights Agent for any loss, liability, or expenses incurred in connection
with its performance under the Agreement, unless caused by the Rights Agent's
gross negligence, bad faith or willful misconduct.

                (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 Preferred Stock 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 have been signed, executed
and, where necessary, verified or acknowledged by the proper Person or Persons.

                (c) The indemnity provided herein shall survive the expiration
of the Rights and the termination of this Agreement. In no case will the Rights
Agent be liable for special, indirect, incidental or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits), even
if the Rights Agent has been advised of the possibility of such loss or damage.

                                       27
<PAGE>   31

        Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust or shareholder services businesses 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 document 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 a 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 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 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 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 specified herein) may be deemed to be conclusively proved and
        established by a certificate signed by the Chairman of the Board, the
        Chief Executive Officer, the President, any Vice President, the
        Treasurer, any Assistant Treasurer, the Secretary or any Assistant
        Secretary of the Company and delivered to the Rights Agent; provided,
        however, that so long as any Person is an Acquiring Person hereunder,
        such certificate shall be signed and

                                       28
<PAGE>   32

        delivered by a majority of the Board of Directors; 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 only be liable to the Company in the
        event of loss, liability or damages caused by the Rights Agent's 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 or be required to verify the same (except as to
        its countersignature on such Rights Certificates), 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 have any responsibility for the
        validity of this Agreement or the execution and delivery hereof (except
        the due execution hereof by the Rights Agent) or for 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 failure by the Company to satisfy conditions contained
        in this Agreement or in any Rights Certificate; nor shall it be
        responsible for any adjustment required under the provisions of Section
        11 or Section 13 hereof or for the manner, method or amount of any such
        adjustment or the ascertaining of the existence of facts that would
        require any such adjustment (except with respect to the exercise of
        Rights evidenced by Rights Certificates after receipt by the Rights
        Agent of the certificate describing any such adjustment contemplated by
        Section 12); nor shall it by any act hereunder be deemed to make any
        representation or warranty as to the authorization or reservation of any
        shares of Preferred Stock or any other securities to be issued pursuant
        to this Agreement or any Rights Certificate or as to whether any shares
        of Preferred Stock or any other securities will, when so issued, be
        validly authorized and issued, fully paid and non-assessable.

                (f) The Company shall perform, execute, acknowledge and deliver
        or cause to be performed, executed, acknowledged and delivered all such
        further acts, instruments and assurances as may reasonably be required
        by the Rights Agent for the performance by the Rights Agent of its
        duties under this Agreement.

                (g) The Rights Agent is hereby authorized and directed to accept
        instructions with respect to the performance of its duties hereunder
        from the Chairman of the Board, the Chief Executive Officer, the
        President, any Vice President, the Secretary, any Assistant Secretary,
        the Treasurer or any Assistant Treasurer of the Company, and to apply to
        such officers for advice or instructions in connection with its duties,
        and it shall not be liable for any action taken or suffered to be taken
        by it in good faith in accordance with instructions of any such officer;
        provided, however, that so long as any Person is an Acquiring Person
        hereunder, the Rights Agent shall accept such instructions and advice
        only from a majority of the Board of Directors and shall not be liable
        for any action taken or suffered to be taken by it in good faith in
        accordance with such instructions of the

                                       29
<PAGE>   33

        majority of the Board of Directors. 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 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 Business Days after
        the date any such 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 shareholder, 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 have a pecuniary interest 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.

                (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 or in the exercise of
        its rights hereunder if the Rights Agent shall have 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, not signed 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. If such
        certificate has been completed and signed and shows a negative response
        to clauses 1 and 2 of such certificate, unless previously instructed
        otherwise in writing by the Company (which instructions may impose on
        the Rights Agent additional ministerial responsibilities, but no
        discretionary responsibilities), the Rights Agent may assume without
        further inquiry that the Rights Certificate is not owned by a Person
        described in Section 7(e) hereof and shall not be charged with any
        knowledge to the contrary.

                                       30
<PAGE>   34

        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 days' prior notice in writing mailed to the Company, and to each
transfer agent of the Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty days' prior 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 Stock and the Company Common Stock, 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 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Rights Certificate (who shall, with such notice, submit his
Rights Certificate for inspection by the Company), then any 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) a corporation organized and
doing business under the laws of the United States or any state of the United
States in good standing, shall be authorized under applicable laws to exercise
corporate trust or stock transfer powers and shall be subject to supervision or
examination by federal or state authorities or (b) an Affiliate of a corporation
described in clause (a). 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 Stock and the Company Common Stock, and mail a notice thereof in
writing to the registered holders of the Rights Certificates. Failure to give
any notice provided for in this Section 21, however, or any defect therein,
shall not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent.

        Section 22. Issuance of New Rights Certificates. Notwithstanding any of
the provisions of this Agreement or 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 a majority of the Board of Directors to reflect any
adjustment or change made in accordance with the provisions of this Agreement in
the Purchase Price or the number or kind or class of shares or other securities
or property that may be acquired under the Rights Certificates. In addition, in
connection with the issuance or sale of shares of Company Common Stock following
the Distribution Date and prior to the Expiration Date, the Company (a) shall,
with respect to shares of Company Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by a
majority of the Board of Directors, 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

                                       31
<PAGE>   35

be issued if, and to the extent that, the Company shall be advised by counsel
that such issuance would create a significant risk of material adverse tax
consequences to the Company or the Person to whom such Rights Certificate would
be issued, and (ii) no such Rights Certificate shall be issued if, and to the
extent that, appropriate adjustment shall otherwise have been made in lieu of
the issuance thereof.

        Section 23. Redemption and Termination. (a) Subject to Section 30
hereof, the Company may, at its option, by action of a majority of the Board of
Directors, at any time prior to the earlier of (i) the Close of Business on the
tenth Business Day following the Stock Acquisition Date or (ii) the Final
Expiration Date, redeem all but not less than all of the then outstanding Rights
at a redemption price of $.01 per Right, as such amount may be appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such redemption price being the "Redemption
Price"). The Company may, at its option, by action of a majority of the Board of
Directors, pay the Redemption Price either in shares of Company Common Stock
(based on the "current market price", as defined in Section 11(d) hereof, of the
shares of Company Common Stock at the time of redemption) or cash and the
redemption of the Rights shall be effective on the basis and with such
conditions as the Board of Directors may in its sole discretion establish.

                (b) Immediately upon the action of a majority of the Board of
Directors ordering the redemption of the Rights, evidence of which shall be
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 for
each Right so held. 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. Promptly after the
action of a majority of the Board of Directors ordering the redemption of the
Rights, the Company shall give notice of such redemption to the Rights Agent and
the holders of the then outstanding Rights by mailing such notice to all such
holders at each holder's last address as it appears upon the registry books of
the Rights Agent or, prior to the Distribution Date, on the registry books of
the transfer agent for the Company Common Stock. Any notice which is mailed in
the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made.

        Section 24. Notice of Certain Events. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend paid out of funds legally available therefor), (ii) to
offer to the holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), (iv) to effect
any consolidation or merger into or with any other Person, or to effect any sale
or other transfer (or to permit one or more of its Subsidiaries to effect any
sale or other transfer), in one or more transactions, of more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
to any

                                       32
<PAGE>   36

other Person or Persons (other than a transfer by the Company and/or any of its
wholly owned Subsidiaries in one or more transactions each of which complies
with Section 11(o) hereof), or (v) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
each holder of a Rights Certificate, to the extent feasible and in accordance
with Section 25 hereof, a notice of such proposed action, which shall specify
the record date for the purposes of such stock dividend, distribution of rights
or warrants, or the date on which such reclassification, consolidation, merger,
sale, transfer, liquidation, dissolution, or winding up is to take place and the
date of participation therein by the holders of the shares of Preferred Stock,
if any such date is to be fixed, and such notice shall be so given in the case
of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the shares of Preferred
Stock whichever shall be the earlier; provided, however, no such notice shall be
required pursuant to this Section 24, if any wholly owned Subsidiary of the
Company effects a consolidation or merger with or into, or effects a sale or
other transfer of assets or earnings power to, any other wholly owned Subsidiary
of the Company.

                (b) In case any Triggering Event shall occur, then, in any such
case, (i) the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 25 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 Section
11(a)(ii) or Section 13 hereof, as the case may be.

        Section 25. Notices. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including by
telex, telegram or cable) and mailed or sent or delivered, if to the Company, at
its address at:

        Organic, Inc.

        --------------------------
        --------------------------
        --------------------------
        Attention:
                  ----------------

        and if to the Rights Agent, at its address at:

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

        Attention:
                  --------------------------------

        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 (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.

                                       33
<PAGE>   37

        Section 26. Supplements and Amendments. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement in any respect without the approval of any holders of
certificates representing shares of Company Common Stock. From and after the
Distribution Date and subject to the penultimate sentence of this Section 26,
the Company and the Rights Agent shall, if the Company so directs, supplement or
amend this Agreement without the approval of any holders of Rights Certificates
in order (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder, or
(iv) to change or supplement the provisions hereunder in any manner which the
Company may deem necessary or desirable and which shall not adversely affect the
interests of the holders of Rights Certificates (other than an Acquiring Person
or an Affiliate or Associate of an Acquiring Person); provided, however, that
this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence, (A) subject to Section 30 hereof, 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. Upon the delivery of a certificate from an
appropriate officer of the Company or, so long as any Person is an Acquiring
Person hereunder, from the majority of the Board of Directors which states that
the proposed supplement or amendment is in compliance with the terms of this
Section 26, the Rights Agent shall execute such supplement or amendment.
Notwithstanding anything contained in this Agreement to the contrary, (i) no
supplement or amendment shall be made which changes the Redemption Price, the
Purchase Price, the Expiration Date or the number of Units of Preferred Stock or
other securities or assets for which a Right is exercisable without the approval
of a majority of the Board of Directors, and (ii) following the occurrence of a
Section 11(a)(ii) Event, no supplement or amendment whatsoever shall be made
without the approval of the Board of Directors. Prior to the Distribution Date,
the interests of the holders of Rights shall be deemed coincident with the
interests of the holders of Company Common Stock.

        Section 27. 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 28. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of shares of
Company Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Company
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof. Except as otherwise specifically
provided herein, the Board of Directors shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board of Directors or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power (i) to interpret the provisions of this
Agreement, and (ii) to make all determinations deemed necessary or advisable for
the administration of this Agreement. All such actions, calculations,
interpretations and

                                       34
<PAGE>   38

determinations (including, for purposes of clause (y) below, all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject the
Board of Directors or any member thereof to any liability to the holders of the
Rights.

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

        Section 30. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated;
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 a majority of the
Board of Directors determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement and the Rights shall not then be redeemable, 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 Business Day following the date
of such determination by a majority of the Board of Directors.

        Section 31. Governing Law. This Agreement, each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of Delaware applicable to contracts executed in and
to be performed entirely in such State.

        Section 32. Counterparts. This Agreement may be executed (including by
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.

        Section 33. Descriptive Headings. The headings contained in this
Agreement are for descriptive purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

        Section 34. Exchange. (a) The Company, upon resolution of a majority of
the Board of Directors may, at its option, at any time after the first
occurrence of a Section 11(a)(ii) Event, exchange all or part of the then
outstanding and exercisable Rights (which shall not include Rights that have
become void pursuant to Section 7(e) hereof) for Units of Preferred Stock or
shares of Company Common Stock (at the election of the Board of Directors) at an
exchange ratio of one Unit of Preferred Stock or one share of Company Common
Stock, as the case may

                                       35
<PAGE>   39

be, per Right, as appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such exchange
ratio being the "Exchange Ratio"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than an Exempt Person), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of shares of Company
Common Stock aggregating 50% or more of the shares of Company Common Stock then
outstanding. From and after the occurrence of a Section 13(a) Event, any Rights
that theretofore have not been exchanged pursuant to this Section 34(a) shall
thereafter be exercisable only in accordance with Section 13 and may not be
exchanged pursuant to this Section 34(a). The exchange of the Rights by the
Board of Directors 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.

                (b) Immediately upon the action of a majority of the Board of
Directors ordering the exchange of any Rights pursuant to Section 34(a) and
without any further action and without any notice, the right to exercise such
Rights shall terminate and the only right thereafter of a holder of such Rights
shall be to receive that number of Units of Preferred Stock or shares of Company
Common Stock, as the case may be, equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company promptly shall mail a notice 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 shall state the method by which the exchange of
Units of Preferred Stock or shares of Company Common Stock, as the case may be,
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 the number of shares of Preferred Stock or
Company Common Stock, as the case may be, which are authorized by the Company's
Restated Certificate of Incorporation but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not sufficient
to permit any exchange of Rights as contemplated in accordance with this Section
34, the Company, upon a resolution of a majority of the Board of Directors,
shall take all such action as may be necessary to authorize additional shares of
Preferred Stock or Company Common Stock, as the case may be, for issuance upon
exchange of the Rights or make adequate provision to substitute, in whole or in
part, (1) cash, (2) other equity securities of the Company, (3) debt securities
of the Company, (4) other assets, or (5) any combination of the foregoing,
having an aggregate value for each Right to be exchanged equal to the per share
market price of one Unit of Preferred Stock or share of Company Common Stock, as
the case may be (determined pursuant to Section 11(d) hereof) as of the date of
a Section 11(a)(ii) Event, where such aggregate value has been determined by a
majority of the Board of Directors.

                (d) The Company shall not be required to issue fractions of
Units of Preferred Stock or fractions of shares of Company Common Stock or to
distribute certificates which evidence

                                       36
<PAGE>   40

fractional Units or fractional shares. In lieu of issuing fractional Units or
fractional shares, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exchanged as herein provided an amount
in cash equal to the same fraction of the current market price (determined
pursuant to Section 11(d) hereof) of one Unit of Preferred Stock or one share of
Company Common Stock, as the case may be, on the Trading Day immediately prior
to the date of exchange pursuant to this Section 34.

                                       37
<PAGE>   41

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

ORGANIC, INC.

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

[                        ]
 ------------------------

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

                                       38<PAGE>   1
                                                                    EXHIBIT 10.2

                                  ORGANIC, INC.

                             1997 STOCK OPTION PLAN

                             ADOPTED APRIL 25, 1997

                 AMENDED NOVEMBER 25, 1998 (TO INCREASE SHARES)
                   AMENDED FEBRUARY 25, 1999 (TO CHANGE NAME)
                 AMENDED SEPTEMBER 24, 1999 (TO INCREASE SHARES)
       AMENDED NOVEMBER 22, 1999 (TO INCLUDE CHANGE OF CONTROL PROVISIONS)

1.   PURPOSES.

     (a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company, and its Affiliates,
may be given an opportunity to purchase stock of the Company.

     (b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees or Directors of or Consultants to the Company or
its Affiliates, to secure and retain the services of new Employees, Directors
and Consultants, and to provide incentives for such persons to exert maximum
efforts for the success of the Company and its Affiliates.

     (c) The Company intends that the Options issued under the Plan shall, in
the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either Incentive Stock Options or Nonstatutory Stock Options. All Options shall
be separately designated incentive Stock Options or Nonstatutory Stock Options
at the time of grant, and in such form as issued pursuant to Section 6, and a
separate certificate or certificates will be issued for shares purchased on
exercise of each type of Option.

2.   DEFINITIONS.

     (a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f), respectively, of the Code.

     (b) "BOARD" means the Board of Directors of the Company.

     (c) "CODE" means the Internal Revenue Code of 1986, as amended.

     (d) "COMMITTEE" means a Committee appointed by the Board in accordance with
subsection 3(c) of the Plan.

     (e) "COMMON STOCK" means the Company's common stock, or any stock resulting
from the conversion of such common stock.

                                       1
<PAGE>   2

     (f) "COMPANY" means Organic, Inc., a Delaware corporation.

     (g) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.

     (h) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means that
the service of an individual to the Company, whether as an Employee, Director or
Consultant, is not interrupted or terminated. The Board or the chief executive
officer of the Company may determine, in that party's sole discretion, whether
Continuous Status as an Employee, Director or Consultant shall be considered
interrupted in the case of: (i) any leave of absence approved by the Board or
the chief executive officer of the Company, including sick leave, military
leave, or any other personal leave; or (ii) transfers between the Company,
Affiliates or their successors.

     (i) "COVERED EMPLOYEE" means the chief executive officer and the four (4)
other highest compensated officers of the Company for whom total compensation is
required to be reported to stockholders under the Exchange Act, as determined
for purposes of Section 162(m) of the Code.

     (j) "DIRECTOR" means a member of the Board.

     (k) "EMPLOYEE" means any person, including Officers and Directors, employed
by the Company or any Affiliate of the Company. Neither service as a Director
nor payment of a director's fee by the Company shall be sufficient to constitute
"employment" by the Company.

     (l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

     (m) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock of the Company determined as follows and in each case in a manner
consistent with Section 260.140.50 of Title 10 of the California Code of
Regulations:

          (1) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the Nasdaq National
Market or The Nasdaq SmallCap, the Fair Market Value of a share of Common Stock
shall be the closing sales price for such stock (or the closing bid, if no sales
were reported) as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the last market trading day prior
to the day of determination, as reported in the Wall Street Journal or such
other source as the Board deems reliable; or

          (2) In the absence of an established market for the Common Stock,
the Fair Market Value shall be determined in good faith by the Board.

     (n) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock Option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

                                       2
<PAGE>   3

     (o) "LISTING DATE" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange, or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in
accordance with the provisions of Section 25100(o) of the Securities Law.

     (p) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
("Regulation S-K")), does not possess an interest in any other transaction as to
which disclosure would be required under Item 404(a) of Regulation S-K, and is
not engaged in a business relationship as to which disclosure would be required
under Item 404(b) of Regulation S-K; or (ii) is otherwise considered a
"non-employee director" for purposes of Rule 16b-3.

     (q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.

     (r) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

     (s) "OPTION" means a stock option granted pursuant to the Plan.

     (t) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. Each
Option Agreement shall be subject to the terms and conditions of the Plan.

     (u) "OPTIONEE" means a person to whom an Option is granted pursuant to the
Plan or, if applicable, such other person who holds an outstanding Option.

     (v) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

     (w) "PLAN" means this 1997 Stock Option Plan.

     (x) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3 as in effect with respect to the Company at the time discretion is
being exercised regarding the Plan.

     (y) "SECURITIES ACT" means the Securities Act of 1933, as amended.

                                       3
<PAGE>   4

     (z) "SECURITIES LAW" means the California Corporate Securities Law of 1968.

3.   ADMINISTRATION.

     (a) The Plan shall be administered by the Board unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).

     (b) The Board shall have the power, subject to, and within the limitations
of, the express provisions of the Plan:

          (1) To determine from time to time which of the persons eligible under
the Plan shall be granted Options; when and how each Option shall be granted;
whether an Option will be an Incentive Stock Option or a Nonstatutory Stock
Option; the provisions of each Option granted (which need not be identical),
including the time or times such Option may be exercised in whole or in part;
and the number of shares for which an Option shall be granted to each such
person.

          (2) To construe and interpret the Plan and Options granted under it,
and to establish, amend and revoke rules and regulations for its administration.
The Board, in the exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Option Agreement, in a manner and to the
extent it shall deem necessary or expedient to make the Plan fully effective.

          (3) To amend the Plan or an Option as provided in Section 11.

          (4) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company.

     (c) The Board may delegate administration of the Plan to a Committee of the
Board composed of not fewer than two (2) members (the "Committee"), all of the
members of which Committee may be, in the discretion of the Board, Non-Employee
Directors and/or Outside Directors. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Board, including the power to
delegate to a subcommittee of two (2) or more Non-Employee Directors and/or
Outside Directors any of the administrative powers the Committee is authorized
to exercise (and references in this Plan to the Board shall thereafter be to the
Committee or such a subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the Board the administration of the Plan. Additionally, prior to the Listing
Date, and notwithstanding anything to the contrary contained herein, the Board
may delegate administration of the Plan to any person or persons and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. Notwithstanding anything in this Section 3 to the contrary, the Board
or the Committee may delegate to a committee of one or more members of the Board
the authority to grant Options to eligible persons who (1) are not then subject
to Section 16 of the Exchange Act and/or (2) are either (i) not then Covered
Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Option, or (ii) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code.

                                       4
<PAGE>   5

4.   SHARES SUBJECT TO THE PLAN.

     (a) Subject to the provisions of Section 10 relating to adjustments upon
changes in stock, the stock that may be sold pursuant to Options shall not
exceed in the aggregate Seven Million Five Hundred Seventy Five Thousand
(7,575,000) shares of Common Stock. If any Option shall for any reason expire or
otherwise terminate, in whole or in part, without having been exercised in full,
the stock not purchased under such Option shall revert to and again become
available for issuance under the Plan.

     (b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.

5.   ELIGIBILITY.

     (a) Incentive Stock Options may be granted only to Employees. Nonstatutory
Stock Options may be granted only to Employees, Directors or Consultants.

     (b) No person shall be eligible for the grant of an Option if, at the time
of grant, such person owns (or is deemed to own pursuant to Section 424(d) of
the Code) stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or of any of its Affiliates
unless the exercise price of such Option is at least one hundred ten percent
(110%) of the Fair Market Value of such stock at the date of grant and the
Option is not exercisable after the expiration of five (5) years from the date
of grant.

     (c) Subject to the provisions of Section 10 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Options covering
more than Three Hundred Eighteen Thousand Seven Hundred Fifty (318,750) shares
of Common Stock in any calendar year. This subsection 5(c) shall not apply prior
to the Listing Date and, following the Listing Date, shall not apply until (i)
the earliest of: (A) the first material modification of the Plan (including any
increase to the number of shares reserved for issuance under the Plan in
accordance with Section 4); (B) the issuance of all of the shares of Common
Stock reserved for issuance under the Plan; (C) the expiration of the Plan; or
(D) the first meeting of stockholders at which directors are to be elected that
occurs after the close of the third calendar year following the calendar year in
which occurred the first registration of an equity security under Section 12 of
the Exchange Act; or (ii) such other date required by Section 162(m) of the Code
and the rules and regulations promulgated thereunder.

6.   OPTION PROVISIONS.

     Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

     (a) TERM. No Option shall be exercisable after the expiration of ten (10)
years from the date it was granted.

                                       5
<PAGE>   6

     (b) PRICE. The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted; the exercise price of
each Nonstatutory Stock Option shall be not less than eighty-five percent (85%)
of the Fair Market Value of the stock subject to the Option on the date the
Option is granted. Notwithstanding the foregoing, an Option (whether an
Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an
exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another Option
in a manner satisfying the provisions of Section 424(a) of the Code.

     (c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or the Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other Common Stock held for the
requisite period to avoid a charge to the Company's earnings, (B) according to a
deferred payment or other arrangement (which may include, without limiting the
generality of the foregoing, the use of other Common Stock) with the person to
whom the Option is granted or to whom the Option is transferred pursuant to
subsection 6(d), or (C) in any other form of legal consideration that may be
acceptable to the Board. In the case of any deferred payment arrangement,
interest shall be compounded at least annually and shall be charged at the
minimum rate of interest necessary to avoid the treatment as interest, under any
applicable provisions of the Code, of any amounts other than amounts stated to
be interest under the deferred payment arrangement. In addition, the "par value"
of the stock will be paid in cash to the extent required by applicable law.

     (d) TRANSFERABILITY. An Option shall not be transferable except by will or
by the laws of descent and distribution, and shall be exercisable during the
lifetime of the person to whom the Option is granted only by such person. The
person to whom the Option is granted may, by delivering written notice to the
Company, in a form satisfactory to the Company, designate a third party who, in
the event of the death of the Optionee, shall thereafter be entitled to exercise
the Option.

     (e) VESTING. The total number of shares of stock subject to an Option may,
but need not, be allotted in periodic installments (which may, but need not, be
equal). The Option Agreement may provide that from time to time during each of
such installment periods, the Option may become exercisable ("vest") with
respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The vesting provisions of
individual Options may vary but, to the extent necessary under then applicable
law, in each case will provide for vesting of at least twenty percent (20%) per
year of the total number of shares subject to the Option. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.

                                       6
<PAGE>   7

     (f) SECURITIES LAW COMPLIANCE. The Company may require any Optionee, or any
person to whom an Option is transferred under subsection 6(d), as a condition of
exercising any such Option, (1) to give written assurances satisfactory to the
Company as to the Optionee's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory to
the Company who is knowledgeable and experienced in financial and business
matters, and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Option; and (2)
to give written assurances satisfactory to the Company stating that such person
is acquiring the stock subject to the Option for such person's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the Option has been registered under a then currently effective
registration statement under the Securities Act, or (ii) as to any particular
requirement, a determination is made by counsel for the Company that such
requirement need not be met in the circumstances under the then applicable
securities laws. The Company may require the Optionee to provide such other
representations, written assurances or information which the Company shall
determine is necessary, desirable or appropriate to comply with applicable
securities and other laws as a condition of granting an Option to such Optionee
or permitting the Optionee to exercise such Option. The Company may, upon advice
of counsel to the Company, place legends on stock certificates issued under the
Plan as such counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to, legends restricting
the transfer of the stock.

     (g) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR CONSULTANT.
In the event an Optionee's Continuous Status as an Employee, Director or
Consultant terminates (other than upon the Optionee's death or disability), the
Optionee may exercise his or her Option (to the extent that the Optionee was
entitled to exercise it as of the date of termination) but only within such
period of time ending on the earlier of (i) the date three (3) months following
the termination of the Optionee's Continuous Status as an Employee, Director or
Consultant (or such longer period as specified in the Option Agreement), or (ii)
the expiration of the term of the Option as set forth in the Option Agreement.
If, at the date of termination, the Optionee is not entitled to exercise his or
her entire Option, the shares covered by the unexercisable portion of the Option
shall revert to and again become available for issuance under the Plan. If,
after termination, the Optionee does not exercise his or her Option within the
time specified in the Option Agreement, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.

     (h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status as
an Employee, Director or Consultant terminates as a result of the Optionee's
disability, the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer period as specified in the
Option Agreement), or (ii) the expiration of the term of the Option as set forth
in the Option Agreement. If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the

                                       7
<PAGE>   8

shares covered by such Option shall revert to and again become available for
issuance under the Plan.

     (i) DEATH OF OPTIONEE. In the event of the death of an Optionee during, or
within a period specified in the Option Agreement after the termination of, the
Optionee's Continuous Status as an Employee, Director or Consultant, the Option
may be exercised (to the extent the Optionee was entitled to exercise the option
as of the date of death) by the Optionee's estate, by a person who acquired the
right to exercise the Option by bequest or inheritance or by a person designated
to exercise the Option upon the Optionee's death pursuant to subsection 6(d),
but only within the period ending on the earlier of (i) the date twelve (12)
months following the date of death (or such longer or shorter period, which in
no event shall be less than six (6) months, specified in the Option Agreement),
or (ii) the expiration of the term of such Option as set forth in the Option
Agreement. If, at the time of death, the Optionee was not entitled to exercise
his or her entire Option, the shares covered by the unexercisable portion of the
Option shall revert to and again become available for issuance under the Plan.
If, after death, the Option is not exercised within the time specified herein,
the Option shall terminate, and the shares covered by such Option shall revert
to and again become available for issuance under the Plan.

     (j) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option. Any unvested shares so
purchased shall be subject to a repurchase right in favor of the Company, with
the repurchase price to be equal to the original purchase price of the stock, or
to any other restriction the Board determines to be appropriate; provided,
however, that (i) the right to repurchase at the original purchase price shall
lapse at a minimum rate of twenty percent (20%) per year over five (5) years
from the date the Option was granted, and (ii) such right shall be exercisable
only within (A) the ninety (90) day period following the termination of
employment or the relationship as a Director or Consultant, or (B) such longer
period as may be agreed to by the Company and the Optionee (for example, for
purposes of satisfying the requirements of Section 1202(c)(3) of the Code
(regarding "qualified small business stock")), and (iii) such right shall be
exercisable only for cash or cancellation of purchase money indebtedness for the
shares. Should the right of repurchase be assigned by the Company, the assignee
shall pay the Company cash equal to the difference between the original purchase
price and the stock's Fair Market Value if the original purchase price is less
than the stock's Fair Market Value.

     (k) RIGHT OF REPURCHASE. The Option may, but need not, include a provision
whereby the Company may elect, prior to the Listing Date, to repurchase all or
any part of the vested shares exercised pursuant to the Option; provided,
however, that (i) such repurchase right shall be exercisable only within (A) the
ninety (90) day period following the termination of employment or the
relationship as a Director or Consultant, or (B) such longer period as may be
agreed to by the Company and the Optionee (for example, for purposes of
satisfying the requirements of Section 1202(c)(3) of the Code (regarding
"qualified small business stock")), (ii) such repurchase right shall be
exercisable for less than all of the vested shares only with the Optionee's
consent, and (iii) such right shall be exercisable only for cash or cancellation
of purchase money indebtedness for the shares at a repurchase price equal to the
greater of (A) the stock's Fair Market Value at the time of such termination or
(B) the original purchase price paid for such shares by the Optionee. Should the
right of repurchase be assigned by the Company, the

                                       8
<PAGE>   9

assignee shall pay the Company cash equal to the difference between the original
purchase price and the stock's Fair Market Value if the original purchase price
is less than the stock's Fair Market Value.

     (l) RIGHT OF FIRST REFUSAL. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to exercise
a right of first refusal following receipt of notice from the Optionee of the
intent to transfer all or any part of the shares exercised pursuant to the
Option.

     (m) WITHHOLDING. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such Option by any of the following means
or by a combination of such means: (1) tendering a cash payment; (2) authorizing
the Company to withhold shares from the shares of Common Stock otherwise
issuable to the Optionee as a result of the exercise of the Option; or (3)
delivering to the Company owned and unencumbered shares of Common Stock.

7.   COVENANTS OF THE COMPANY.

     (a) During the terms of the Options, the Company shall keep available at
all times the number of shares of stock required to satisfy such Options.

     (b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Options; provided, however,
that this undertaking shall not require the Company to register under the
Securities Act either the Plan, any Option or any stock issued or issuable
pursuant to any such Option. If, after reasonable efforts, the Company is unable
to obtain from any such regulatory commission or agency the authority which
counsel for the Company deems necessary for the lawful issuance and sale of
stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Options unless and until
such authority is obtained.

8.   USE OF PROCEEDS FROM STOCK.

     Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.

9.   MISCELLANEOUS.

     (a) Subject to any applicable provisions of the Securities Law and related
regulations relied upon as a condition of issuing securities pursuant to the
Plan, the Board shall have the power to accelerate the time at which an Option
may first be exercised or the time during which an Option or any part thereof
will vest pursuant to subsection 6(e), notwithstanding the provisions in the
Option stating the time at which it may first be exercised or the time during
which it will vest.

     (b) Neither an Optionee nor any person to whom an Option is transferred
under subsection 6(d) shall be deemed to be the holder of, or to have any of the
rights of a holder with

                                       9
<PAGE>   10

respect to, any shares subject to such Option unless and until such person has
satisfied all requirements for exercise of the Option pursuant to its terms.

     (c) Throughout the term of any Option, the Company shall deliver to the
holder of such Option, not later than one hundred twenty (120) days after the
close of each of the Company's fiscal years during the Option term, a balance
sheet and an income statement. This Section shall not apply (i) after the
Listing Date, or (ii) when issuance is limited to key employees whose duties in
connection with the Company assure them access to equivalent information.

     (d) Nothing in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Employee, Director, Consultant or
Optionee any right to continue in the employ of the Company or any Affiliate (or
to continue acting as a Director or Consultant or shall affect the right of the
Company or any Affiliate to terminate the employment of any Employee, with or
without cause, to remove any Director as provided in the Company's Bylaws and
the provisions of the Delaware General Corporation Law, or to terminate the
relationship of any Consultant subject to the terms of that Consultant's
agreement with the Company or Affiliate to which such Consultant is providing
services.

     (e) To the extent that the aggregate Fair Market Value (determined at the
time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.

     (f)  (1) The Board or the Committee shall have the authority to effect, at
any time and from time to time, and with the consent of the affected holders of
Options, (i) the repricing of any outstanding Options under the Plan and/or (ii)
the cancellation of any outstanding Options and the grant in substitution
therefor of new Options under the Plan covering the same or different numbers of
shares of Common Stock, but having an exercise price per share not less than
eighty-five percent (85%) of the Fair Market Value (one hundred percent (100%)
of the Fair Market Value in the case of an Incentive Stock Option or, in the
case of a ten percent (10%) stockholder (as defined in subsection 5(b)), not
less than one hundred and ten percent (110%) of the Fair Market Value) per share
of Common Stock on the new grant date.

          (2) shares subject to an Option canceled under this subsection
9(f) shall continue to be counted, for the applicable period in which it was
granted, against the maximum award of Options permitted to be granted pursuant
to subsection 5(c) of the Plan. The repricing of an Option under this subsection
9(f), resulting in a reduction of the exercise price, shall be deemed to be a
cancellation of the original Option and the grant of a substitute Option; in the
event of such repricing, both the original and the substituted Options shall be
counted for the applicable period against the maximum awards of Options
permitted to be granted pursuant to subsection 5(c) of the Plan. The provisions
of this subsection 9(f)(2) shall be applicable only to the extent required by
Section 162(m) of the Code.

                                       10
<PAGE>   11

10.  ADJUSTMENTS UPON CHANGES IN STOCK.

     (a) If any change is made in the stock subject to the Plan, or subject to
any Option (through merger, consolidation, reorganization, recapitalization,
stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the type(s) and maximum
number of securities subject to the Plan pursuant to subsection 4(a) and the
maximum number of securities subject to award to any person during any calendar
year pursuant to subsection 5(c), and the outstanding Options will be
appropriately adjusted in the type(s) and number of securities and price per
share of stock subject to such outstanding Options. Such adjustments shall be
made by the Board or Committee, the determination of which shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a "transaction not involving the receipt of
consideration by the Company.")

     (b) In the event of: (1) a dissolution, liquidation, or sale of all or
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation; or (3) a reverse merger in
which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, then: (i) any surviving or acquiring corporation shall assume Options
outstanding under the Plan or shall substitute similar options (including an
option to acquire the same consideration paid to stockholders in the transaction
described in this Subsection 10(b)) for those outstanding under the Plan, or
(ii) in the event any surviving or acquiring corporation refuses to assume such
Options or to substitute similar Options for those outstanding under the Plan,
(A) with respect to Options held by persons then performing services as
Employees, Directors or Consultants and subject to any applicable provisions of
the Securities Law and related regulations relied upon as a condition of issuing
securities pursuant to the Plan, the vesting of such Options and the time during
which such Options may be exercised shall be accelerated prior to such event and
the Options terminated if not exercised after such acceleration and at or prior
to such event, and (B) with respect to any other Options outstanding under the
Plan, such Options shall be terminated if not exercised prior to such event. The
Board shall use its best efforts to provide Optionees with prior notice of such
transaction.

11.   AMENDMENT OF THE PLAN AND OPTIONS.

     (a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 10 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary for the Plan to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 under the
Exchange Act or any Nasdaq or securities exchange listing requirements.

     (b) The Board may in its sole discretion submit any other amendment to the
Plan for stockholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the
regulations promulgated thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.

                                       11
<PAGE>   12

     (c) It is expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide Optionees with the
maximum benefits provided or to be provided under the provisions of the Code and
the regulations promulgated thereunder relating to Incentive Stock Options
and/or to bring the Plan and/or Incentive Stock Options granted under it into
compliance therewith.

     (d) Rights and obligations under any Option granted before amendment of the
Plan shall not be impaired by any amendment of the Plan unless (i) the Company
requests the consent of the person to whom the Option was granted and (ii) such
person consents in writing.

     (e) The Board at any time, and from time to time, may amend the terms of
any one or more Options; provided, however, that the rights and obligations
under any Option shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom the Option was granted and
(ii) such person consents in writing.

12.  TERMINATION OR SUSPENSION OF THE PLAN.

     (a) The Board may suspend or terminate the Plan at any time. Unless sooner
terminated, the Plan shall terminate on April 24, 2007, which shall be within
ten (10) years from the date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier. No Options may be granted
under the Plan while the Plan is suspended or after it is terminated

     (b) All nights and obligations under any Option granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with the written consent of the person to whom the Option was granted.

13.  EFFECTIVE DATE OF PLAN.

     The Plan shall become effective as determined by the Board, but no Options
granted under the Plan shall be exercised unless and until the Plan has been
approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board.

14.  CHANGE IN CONTROL.

     (a) Subject to the provisions of Section 10 (relating to the adjustment of
shares), and except as otherwise provided in the Plan or the Option Agreement
reflecting the applicable Option, upon the occurrence of a Change in Control:

          (1) If an Optionee who is employed by the Company or an Affiliate at
the time of a Change in Control holds one or more outstanding Options, such
Optionee shall be credited with two years of additional vesting service for
purposes of the vesting of Options, and the vesting of any Common Stock
purchased by the Optionee under an Option.

          (2) If an Optionee who is employed by the Company or an Affiliate at
the time of a Change in Control holds any Option granted under the Plan and
prior to the one-year anniversary of the Change in Control such Optionee is
either (i) terminated by the Company for

                                       12
<PAGE>   13

reasons other than Cause or (ii) terminates employment for Good Reason, such
Optionee shall become fully vested in any Options granted under the Plan and
shall have the greater of (i) 90 days from the date of such termination or (ii)
the period otherwise specified for exercise after termination had the Optionee
been fully vested in the Options on the date of termination to exercise such
Options; provided, however, that in no event shall the Option be exercisable at
a date that is later than the date it would have been exercisable if the
Optionee had remained employed by the Company or an Affiliate.

     (b) For purposes of the Plan, the term "Change in Control" means the
occurrence, after an initial public offering of the stock of the Company of the
events described in any of paragraphs (1), (2), (3), (4) or (5) below:

          (1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act") (a "Person") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of
twenty-five percent (25%) or more of either (i) the then outstanding shares of
common stock of the Company (the "Outstanding Company Common Stock"), or (ii)
the combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for purposes
of this subsection (i), the following acquisitions shall not constitute a Change
in Control: (A) any acquisition directly from the Company (excluding any
acquisition resulting from the exercise of an exercise, conversion or exchange
privilege unless the security being so exercised, converted or exchanged was
acquired directly from the Company), (B) any acquisition by the Company, (C) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company (a
"Company Plan"), (D) any acquisition by an underwriter temporarily holding
securities pursuant to an offering of such securities; or (E) any acquisition by
any corporation pursuant to a transaction which complies with subsections
(b)(3)(A), (b)(3)(B), and (b)(3)(C) of this definition; provided further, that
for purposes of clause (B), if any Person (other than the Company or any Company
Plan) shall become the beneficial owner of twenty-five percent (25%) or more of
the Outstanding Company Common Stock or twenty-five percent (25%) or more of the
Outstanding Company Voting Securities by reason of an acquisition by the
Company, and such Person shall, after such acquisition by the Company, become
the beneficial owner of any additional shares of the Outstanding Company Common
Stock or any additional Outstanding Company Voting Securities (other than
pursuant to any dividend reinvestment plan or arrangement maintained by the
Company) and such beneficial ownership is publicly announced, such additional
beneficial ownership shall constitute a Change in Control.

          (2) Individuals who, as of the date hereof, constitute the
Board of Directors of the Company (for purposes of this subsection (b), the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Incumbent Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company shareholders, was approved by a vote of a least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest (as such terms

                                       13
<PAGE>   14

are used in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors of the Company.

          (3) Consummation, including receipt of any necessary regulatory
approval, of (i) a reorganization, merger or consolidation involving the Company
or (ii) the sale or other disposition of more than 50% of the operating assets
of the Company (determined on a consolidated basis), other than in connection
with a sale-leaseback or other arrangement resulting in the continued
utilization of such assets (or the operating products of such assets) by the
Company (any transaction described in part (i) or (ii) being referred to as a
"Corporate Transaction"); excluding, however, a Corporate Transaction pursuant
to which all of paragraphs (A), (B), and (C) below are applicable:

               (A) All or substantially of the individuals and entities who are
the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Corporate
Transaction beneficially own, directly or indirectly, more than 60% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Corporate Transaction (including, without limitation, a
corporation which, as a result of such transaction, owns the Company or all or
substantially all of the assets of the Company either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may be.

               (B) No Person (other than the Company, any Company Plan or
related trust, the corporation resulting from such Corporate Transaction, and
any Person which beneficially owned, immediately prior to such Corporate
Transaction, directly or indirectly, twenty-five percent (25%) or more than the
Outstanding Company Common Stock or the Outstanding Company Voting Securities,
as the case may be) will beneficially own, directly or indirectly, twenty-five
percent (25%) or more of, respectively, the then outstanding common stock of the
corporation resulting from such Corporate Transaction or the combined voting
power of the then outstanding voting securities of such corporation.

               (C) Individuals who were members of the Incumbent Board will
constitute at least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction.

          (4) A tender offer (for which a filing has been made with the
Securities and Exchange Commission (the "SEC") which purports to comply with the
requirements of Section 14(d) of the Exchange Act and the corresponding SEC
rules) is made for the stock of the Company, which has not been negotiated and
approved by the Board, provided that in case of a tender offer described in this
subsection (b)(4), the Change in Control will be deemed to have occurred upon
the first to occur of (A) any time during the offer period when the Person (as
defined in subsection (b)(1), above) making the offer beneficially owns or has
accepted for payment stock of the Company with 25% or more of the combined
voting power of the then

                                       14
<PAGE>   15

Outstanding Company Voting Securities or (B) 3 business days before the offer is
to terminate, unless the offer is withdrawn first, if the Person making the
offer could own, by the terms of the offer plus any shares beneficially owned by
that Person, stock with 50% or more of the combined voting power of the then
Outstanding Company Voting Securities when the offer terminates.

          (5) Approval by the shareholders of the Company of a plan of
complete liquidation or dissolution of the Company.

     (c) For purposes of the Plan the term "Cause" shall mean any of the
following: (1) the willful and continued failure by the Optionee to
substantially perform his duties, other than by reason of his being Disabled (as
defined below), (2) the willful engaging by the Optionee in conduct which is
demonstrably and materially injurious to the Company or its affiliates, (3)
conduct by the Optionee that involves theft or fraud or, dishonesty in
connection with his duties, (4) Optionee's violation of a non-compete or
confidentiality agreement, or (5) conviction of a felony involving moral
turpitude.

     (d) For purposes of the Plan, the term "Good Reason" shall mean any of the
following which occur without the Optionee's consent and which are not corrected
by the Company within 10 days of written notice to the Company by the Optionee:
(1) a diminution of the Optionee's duties or the assignment to him of duties
that are inconsistent in any substantial respect with the position, authority or
responsibilities associated with his position, (2) a reduction in the Optionee's
salary rate or bonus potential; or (3) a relocation of the Optionee, that occurs
after a Change of Control and without the Optionee's consent, of over 100 miles
from the Optionee's primary employment location as of the date of the Change of
Control, except for required travel on Company business to an extent
substantially consistent with the Optionee's business travel obligations prior
to the date of the Change of Control.

     (e) The term "Disability" shall mean the inability of the Optionee, after
reasonable accommodation, to continue to perform his duties on a full-time basis
as a result of mental or physical illness, sickness or injury and the Company
determines that such disability is of a long-term nature.

15.  POTENTIAL CHANGE IN CONTROL.

     If the Optionee's employment is terminated by the Company without Cause
during a Potential Change in Control, and such date of termination occurs not
more than 60 days prior to the occurrence of a Change in Control, then the
Optionee shall be entitled to receive the benefits that he would have received
under Section 14, determined as though his employment was terminated by the
Company without Cause immediately after the Change in Control. A "Potential
Change in Control" shall exist during any period in which the circumstances
described in subsections (a), (b), or (c) below exist (provided, however, that a
Potential Change in Control shall cease to exist not later than the occurrence
of a Change in Control):

     (a) The Company enters into an agreement, the consummation of which would
result in the occurrence of a Change in Control, provided that a Potential
Change in Control described

                                       15
<PAGE>   16

in this subsection 15(a) shall cease to exist upon the expiration or other
termination of all such agreements.

     (b) Any person (including the Company) publicly announces an intention to
take or to consider taking actions the consummation of which would constitute a
Change in Control; provided that a Potential Change in Control described in this
subsection 15(b) shall cease to exist upon the withdrawal of such intention, or
upon a reasonable determination by the Board that there is no reasonable chance
that such actions would be consummated.

     (c) The Board adopts a resolution to the effect that, for purposes of the
Plan, a Potential Change in Control exists; provided that a Potential Change in
Control described in this paragraph 15(c) shall cease to exist upon a reasonable
determination by the Board that the reasons that gave rise to the resolution
providing for the existence of a Potential Change in Control have expired or no
longer exist.

                                       16
<PAGE>   17

                             INCENTIVE STOCK OPTION

[[1]], Optionee:

     Organic Online, Inc. (the "Company"), pursuant to its 1997 Stock Option
Plan, as amended (the "Plan"), has granted to you, the optionee named above, an
option to purchase shares of the common stock of the Company ("Common Stock").
This option is intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").

     The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of (i) Rule 701 promulgated by the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act") and (ii) Section 25102(o) of the California Corporate
Securities Law of 1968. Defined terms not explicitly defined in this option but
defined in the Plan shall have the same definitions as in the Plan.

     The details of your option are as follows:

1.   Total Number of Shares Subject to this Option. THE TOTAL NUMBER OF SHARES
     OF COMMON STOCK SUBJECT TO THIS OPTION IS [[2]].

2.   Vesting. SUBJECT TO THE LIMITATIONS CONTAINED HEREIN, TWENTY-FIVE PERCENT
     (25%) OF THE SHARES WILL VEST (BECOME EXERCISABLE) ON [[3]] AND THE
     REMAINING SHARES WILL VEST IN THIRTY-SIX (36) EQUAL MONTHLY INSTALLMENTS
     THEREAFTER UNTIL EITHER (i) YOU CEASE TO PROVIDE SERVICES TO THE COMPANY
     FOR ANY REASON, OR (ii) THIS OPTION BECOMES FULLY VESTED.

3.   Exercise Price and Method of Payment.

     (a) EXERCISE PRICE. The exercise price of this option is $0.88 per share,
being not less than the fair market value of the Common Stock on the date of
grant of this option.

     (b) METHOD OF PAYMENT. Payment of the exercise price per share is due in
full upon exercise of all or any part of each installment which has accrued to
you. You may elect, to the extent permitted by applicable statutes and
regulations, to make payment of the exercise price under one of the following
alternatives:

          (1) Payment of the exercise price per share in cash (including check)
at the time of exercise;

          (2) Payment pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board which, prior to the issuance of Common
Stock, results in either the receipt of cash (or check) by the Company or the
receipt of irrevocable instructions to pay the aggregate exercise price to the
Company from the sales proceeds;

                                       17
<PAGE>   18

          (3) Provided that at the time of exercise the Company's Common Stock
is publicly traded and quoted regularly in the Wall Street Journal, payment by
delivery of already-owned shares of Common Stock, held for the period required
to avoid a charge to the Company's reported earnings, and owned free and clear
of any liens, claims, encumbrances or security interests, which Common Stock
shall be valued at its fair market value on the date of exercise; or

          (4) Provided that the option exercise price for the installment, or
portion thereof, being purchased exceeds $500, payment pursuant to the deferred
payment alternative as described in paragraph 3(c) hereof; or

          (5) Payment by a combination of the methods of payment permitted by
subparagraph 3(b)(i) through 3(b)(iv) above.

     (c) CONDITIONS OF DEFERRED PAYMENT. In the event that you elect to make
payment of the exercise price pursuant to the deferred payment alternative:

          (1) Not less than twenty-five percent (25%) of the aggregate exercise
price shall be due at the time of exercise, not less than twenty-five percent
(25%) of said exercise price, plus accrued interest, shall be due each year
after the date of exercise, and final payment of the remainder of the exercise
price, plus accrued interest, shall be due three (3) years from date of exercise
or, at the Company's election, upon termination of your Continuous Status as an
Employee, Director or Consultant with the Company or an Affiliate of the
Company;

          (2) Interest shall be payable at least annually and shall be charged
at the minimum rate of interest necessary to avoid the treatment as interest,
under any applicable provisions of the Code, of any portion of any amounts other
than amounts stated to be interest under the deferred payment arrangement; and

          (3) In order to elect the deferred payment alternative, you must, as a
part of your written notice of exercise, give notice of the election of this
payment alternative and, in order to secure the payment of the deferred exercise
price to the Company hereunder, if the Company so requests, you must tender to
the Company a promissory note and a security agreement covering the purchased
shares, both in form and substance satisfactory to the Company, or such other or
additional documentation as the Company may request.

4.    Exercise Prior to Vesting Permitted.

     (a) CONDITIONS OF EARLY EXERCISE. Subject to the provisions of this option
you may elect, at any time during your Continuous Status as an Employee,
Director or Consultant with the Company or an Affiliate of the Company, to
exercise the option as to any part or all of the shares subject to this option
at any time during the term hereof, including without limitation, a time prior
to the date of earliest exercise ("vesting") stated in paragraph 2 hereof;
provided, however, that:

          (1) a partial exercise of this option shall be deemed to cover first
vested shares and then the earliest vesting installment of unvested shares;

                                       2
<PAGE>   19

          (2) any shares so purchased from installments which have not vested as
of the date of exercise shall be subject to the purchase option in favor of the
Company as described in the Early Exercise Stock Purchase Agreement;

          (3) you shall enter into an Early Exercise Stock Purchase Agreement in
the form provided by the Company with a vesting schedule that will result in the
same vesting as if no early exercise had occurred; and

          (4) this option shall not be exercisable under this paragraph 4 to the
extent such exercise would cause the aggregate fair market value of any shares
subject to incentive stock options granted you by the Company or any Affiliate
(valued as of their grant date) which would become exercisable for the first
time during any calendar year to exceed $100,000.

     (b) EXPIRATION OF EARLY EXERCISE ELECTION. The election provided in this
paragraph 4 to purchase shares upon the exercise of this option prior to the
vesting dates shall cease upon termination of your Continuous Status as an
Employee, Director or Consultant with the Company or an Affiliate of the Company
and may not be exercised after the date thereof.

5.   Whole Shares. THIS OPTION MAY ONLY BE EXERCISED FOR WHOLE SHARES.

6.   Securities Law Compliance. NOTWITHSTANDING ANYTHING TO THE CONTRARY
     CONTAINED HEREIN, THIS OPTION MAY NOT BE EXERCISED UNLESS THE SHARES
     ISSUABLE UPON EXERCISE OF THIS OPTION ARE THEN REGISTERED UNDER THE
     SECURITIES ACT OR, IF SUCH SHARES ARE NOT THEN SO REGISTERED, THE COMPANY
     HAS DETERMINED THAT SUCH EXERCISE AND ISSUANCE WOULD BE EXEMPT FROM THE
     REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

7.   Term. THE TERM OF THIS OPTION COMMENCES ON JULY 21, 1997, THE DATE OF
     GRANT, AND EXPIRES ON JULY 20, 2007 (THE "EXPIRATION DATE"), WHICH DATE
     SHALL BE NO MORE THAN TEN (10) YEARS FROM DATE THIS OPTION IS GRANTED,
     UNLESS THIS OPTION EXPIRES SOONER AS SET FORTH BELOW OR IN THE PLAN. IN NO
     EVENT MAY THIS OPTION BE EXERCISED ON OR AFTER THE EXPIRATION DATE. THIS
     OPTION SHALL TERMINATE PRIOR TO THE EXPIRATION DATE AS FOLLOWS: THREE
     MONTHS AFTER JANUARY 1, 1998 IF THE TERMINATION OF YOUR CONTINUOUS STATUS
     AS AN EMPLOYEE, DIRECTOR OR CONSULTANT WITH THE COMPANY OR AN AFFILIATE OF
     THE COMPANY OCCURS PRIOR TO JANUARY 1, 1998, OR THREE MONTHS AFTER THE
     TERMINATION OF YOUR CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR
     CONSULTANT WITH THE COMPANY OR AN AFFILIATE OF THE COMPANY IF SUCH
     TERMINATION OCCURS AFTER JANUARY 1, 1998, UNLESS ONE OF THE FOLLOWING
     CIRCUMSTANCES EXISTS:

     (a) Your termination of Continuous Status as an Employee, Director or
Consultant is due to your disability. This option will then expire on the
earlier of the Expiration Date set forth above or twelve (12) months following
such termination of Continuous Status as an Employee, Director or Consultant.
You should be aware that if your disability is not considered a permanent and
total disability within the meaning of Section 422(c)(6) of the Code, and you
exercise this option more than three (3) months following the date of your
termination of employment, your exercise will be treated for tax purposes as the
exercise of a "nonstatutory stock option" instead of an "incentive stock
option."

                                       3
<PAGE>   20

     (b) Your termination of Continuous Status as an Employee, Director or
Consultant is due to your death or your death occurs within three (3) months
following your termination of Continuous Status as an Employee, Director or
Consultant for any other reason. This option will then expire on the earlier of
the Expiration Date set forth above or twelve (12) months after your death.

     (c) If during any part of such three (3)-month period you may not exercise
your option solely because of the condition set forth in paragraph 6 above, then
your option will not expire until the earlier of the Expiration Date set forth
above or until this option shall have been exercisable for an aggregate period
of three (3) months after your termination of Continuous Status as an Employee,
Director or Consultant.

     (d) If your exercise of the option within three (3) months after
termination of your Continuous Status as an Employee, Director or Consultant
with the Company or with an Affiliate of the Company would result in liability
under section 16(b) of the Securities Exchange Act of 1934, then your option
will expire on the earlier of (i) the Expiration Date set forth above, (ii) the
tenth (10th) day after the last date upon which exercise would result in such
liability or (iii) six (6) months and ten (10) days after the termination of
your Continuous Status as an Employee, Director or Consultant with the Company
or an Affiliate of the Company.

     However, this option may be exercised following termination of Continuous
Status as an Employee, Director or Consultant only as to that number of shares
as to which it was exercisable on the date of termination of Continuous Status
as an Employee, Director or Consultant under the provisions of paragraph 2 of
this option.

     In order to obtain the federal income tax advantages associated with an
"incentive stock option," the Code requires that at all times beginning on the
date of grant of the option and ending on the day three (3) months before the
date of the option's exercise, you must be an employee of the Company or an
Affiliate of the Company, except in the event of your death or permanent and
total disability. The Company has provided for continued vesting or extended
exercisability of your option under certain circumstances for your benefit, but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option" if you provide services to the Company or an Affiliate of the
Company as a consultant or exercise your option more than three (3) months after
the date your employment with the Company and all Affiliates of the Company
terminates.

8.   Exercise.

     (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in the form attached hereto or as otherwise
designated by the Company) together with the exercise price to the Secretary of
the Company, or to such other person as the Company may designate, during
regular business hours, together with such additional documents as the Company
may then require pursuant to subsection 6(f) of the Plan.

     (b) By exercising this option you agree that:

          (1) as a precondition to the completion of any exercise of this
option, the Company may require you to enter an arrangement providing for the
payment by you to the

                                       4
<PAGE>   21

Company of any tax withholding obligation of the Company arising by reason of
(1) the exercise of this option; (2) the lapse of any substantial risk of
forfeiture to which the shares are subject at the time of exercise; or (3) the
disposition of shares acquired upon such exercise;

          (2) you will notify the Company in writing within fifteen (15) days
after the date of any disposition of any of the shares of the Common Stock
issued upon exercise of this option that occurs within two (2) years after the
date of this option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of this option; and

          (3) the Company (or a representative of the underwriters) may, in
connection with the first underwritten registration of the offering of any
securities of the Company under the Securities Act, require that you not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the Company filed
under the Securities Act as may be requested by the Company or the
representative of the underwriters. You further agree that the Company may
impose stoptransfer instructions with respect to securities subject to the
foregoing restrictions until the end of such period.

                                       5
<PAGE>   22

9.   Transferability. THIS OPTION IS NOT TRANSFERABLE, EXCEPT BY WILL OR BY THE
     LAWS OF DESCENT AND DISTRIBUTION, AND IS EXERCISABLE DURING YOUR LIFE ONLY
     BY YOU. NOTWITHSTANDING THE FOREGOING, BY DELIVERING WRITTEN NOTICE TO THE
     COMPANY, IN A FORM SATISFACTORY TO THE COMPANY, YOU MAY DESIGNATE A THIRD
     PARTY WHO, IN THE EVENT OF YOUR DEATH, SHALL THEREAFTER BE ENTITLED TO
     EXERCISE THIS OPTION.

10.  Option Not a Service Contract. THIS OPTION IS NOT AN EMPLOYMENT CONTRACT
     AND NOTHING IN THIS OPTION SHALL BE DEEMED TO CREATE IN ANY WAY WHATSOEVER
     ANY OBLIGATION ON YOUR PART TO CONTINUE IN THE EMPLOY OF THE COMPANY, OR OF
     THE COMPANY TO CONTINUE YOUR EMPLOYMENT WITH THE COMPANY. IN ADDITION,
     NOTHING IN THIS OPTION SHALL OBLIGATE THE COMPANY OR ANY AFFILIATE OF THE
     COMPANY, OR THEIR RESPECTIVE STOCKHOLDERS, BOARD OF DIRECTORS, OFFICERS OR
     EMPLOYEES TO CONTINUE ANY RELATIONSHIP WHICH YOU MIGHT HAVE AS A DIRECTOR
     OR CONSULTANT FOR THE COMPANY OR AFFILIATE OF THE COMPANY.

11.  Notices. ANY NOTICES PROVIDED FOR IN THIS OPTION OR THE PLAN SHALL BE GIVEN
     IN WRITING AND SHALL BE DEEMED EFFECTIVELY GIVEN UPON RECEIPT OR, IN THE
     CASE OF NOTICES DELIVERED BY THE COMPANY TO YOU, FIVE (5) DAYS AFTER
     DEPOSIT IN THE UNITED STATES MAIL, POSTAGE PREPAID, ADDRESSED TO YOU AT THE
     ADDRESS SPECIFIED BELOW OR AT SUCH OTHER ADDRESS AS YOU HEREAFTER DESIGNATE
     BY WRITTEN NOTICE TO THE COMPANY.

12.  Governing Plan Document. THIS OPTION IS SUBJECT TO ALL THE PROVISIONS OF
     THE PLAN, A COPY OF WHICH IS ATTACHED HERETO AND ITS PROVISIONS ARE HEREBY
     MADE A PART OF THIS OPTION, INCLUDING WITHOUT LIMITATION THE PROVISIONS OF
     SECTION 6 OF THE PLAN RELATING TO OPTION PROVISIONS, AND IS FURTHER SUBJECT
     TO ALL INTERPRETATIONS, AMENDMENTS, RULES AND REGULATIONS WHICH MAY FROM
     TIME TO TIME BE PROMULGATED AND ADOPTED PURSUANT TO THE PLAN. IN THE EVENT
     OF ANY CONFLICT BETWEEN THE PROVISIONS OF THIS OPTION AND THOSE OF THE
     PLAN, THE PROVISIONS OF THE PLAN SHALL CONTROL.

13.  Right of First Refusal. NO OPTIONEE SHALL SELL, ASSIGN, PLEDGE, OR IN ANY
     MANNER TRANSFER ANY OF THE SHARES OF STOCK OF THE COMPANY OR ANY RIGHT OR
     INTEREST THEREIN, WHETHER VOLUNTARILY OR BY OPERATION OF LAW, OR BY GIFT OR
     OTHERWISE, EXCEPT BY A TRANSFER WHICH MEETS THE REQUIREMENTS SET FORTH
     HEREIN:

     (a) If the optionee desires to sell or otherwise transfer any of its shares
of stock acquired upon exercise of this option in an "arms-length" transaction,
then the optionee shall first give written notice thereof to the Company. The
notice shall name the proposed transferee and state the number of shares to be
transferred, the proposed consideration, and all other terms and conditions of
the proposed transfer.

     (b) For thirty (30) days following receipt of such notice, the Company
shall have the option to purchase all (by not less than all) of the shares
specified in the notice at the price and upon the terms set forth in such
notice; provided, however, that, with the consent of the optionee, the Company
shall have the option to purchase a lesser portion of the shares specified in
said notice at the price and upon the terms set forth therein. In the event of a
gift, property settlement or other transfer which would not be considered to
have been made on an "arms length" basis and in which the proposed transferee is
not paying the full price for the shares, the price shall be

                                       6
<PAGE>   23

deemed to be the Fair Market Value of the stock at such time as determined in
good faith by the Board. In the event the Company elects to purchase all of the
shares or, with consent of the optionee, a lesser portion of the shares, it
shall give written notice to the transferring optionee of its election and
settlement for said shares shall be made as provided below in paragraph (d).

     (c) The Company may assign its rights hereunder.

     (d) In the event the Company and/or its assignee(s) elect to acquire any of
the shares of the transferring optionee as specified in said transferring
optionee's notice, the Secretary of the Company shall so notify the transferring
optionee and settlement thereof shall be made in cash within thirty (30) days
after the Secretary of the Company receives said transferring optionee's notice;
provided that if the terms of payment set forth in said transferring optionee's
notice were other than cash against delivery, the Company and/or its assignee(s)
shall pay for said shares on the same terms and conditions set forth in said
transferring optionee's notice.

     (e) In the event the Company and/or its assignees(s) do not elect to
acquire all of the shares specified in the transferring optionee's notice, said
transferring optionee may, within the sixty (60)-day period following the
expiration of the option rights granted to the Company and/or its assignees(s)
herein, transfer the shares specified in said transferring optionee's notice
which were not acquired by the Company and/or its assignees(s) as specified in
said transferring optionee's notice.

     (f) Notwithstanding anything to the contrary contained herein, the
following transaction shall be exempt from the provisions of this paragraph 13:
an optionee's bona fide pledge or mortgage of any shares with a commercial
lending institution, provided that any subsequent transfer of said shares by
said institution shall be conducted in the manner set forth in this paragraph
13.

     In any such case, the transferee, assignee, or other recipient shall
receive and hold such stock subject to the provisions of this paragraph 13, and
there shall be no further transfer of such stock except in accord with this
paragraph 13.

     (g) The provisions of this paragraph 13 may be waived with respect to any
transfer either by the Company, upon duly authorized action of its Board, or by
the stockholders, upon the express written consent of the owners of a majority
of the voting power of the Company (excluding the votes represented by those
shares to be transferred by the transferring optionee).

     (h) Any sale or transfer, or purported sale or transfer, of securities of
the Company shall be null and void unless the terms, conditions, and provisions
of this paragraph 13 are strictly observed and followed.

     (i) The foregoing right of first refusal shall terminate upon the date
securities of the Company are first offered to the public pursuant to a
registration statement filed with, and declared effective by, the SEC under the
Securities Act.

     (j) The certificates representing shares of stock of the Company shall bear
on their face the following legend so long as the foregoing right of first
refusal remains in effect:

                                       7
<PAGE>   24

     "The shares represented by this Certificate are subject to a right of first
refusal option in favor of the Corporation and/or its Assignee(s)."

Dated July 21, 1997.

                                        Very truly yours,

                                        Organic Online, Inc.

                                        By:__________________________________
                                            Duly authorized on behalf of the
                                            Board of Directors

ATTACHMENTS:
    1997 Stock Option Plan
    Notice of Exercise

                                       8
<PAGE>   25

The undersigned:

         (a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and

         (b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:

NONE      ____________
           (Initial)

OTHER    _______________________

         _______________________

         _______________________

                                    ______________________________
                                    OPTIONEE
                                    Address:

                                       9
<PAGE>   26

                            NONSTATUTORY STOCK OPTION

1~, Optionee:

     Organic Online, Inc. (the "Company"), pursuant to its 1997 Stock Option
Plan, as amended (the "Plan"), has granted to you, the optionee named above, an
option to purchase shares of the common stock of the Company ("Common Stock").
This option is not intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").

     The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of (i) Rule 701 promulgated by the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the
"Securities Act") and (ii) Section 25102(o) of the California Corporate
Securities Law of 1968. Defined terms not explicitly defined in this agreement
but defined in the Plan shall have the same definitions as in the Plan.

     The details of your option are as follows:

1.   TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. THE TOTAL NUMBER OF SHARES
     OF COMMON STOCK SUBJECT TO THIS OPTION IS 2~.

2.   VESTING. SUBJECT TO THE LIMITATIONS CONTAINED HEREIN, TWENTY-FIVE PERCENT
     (25%) OF THE SHARES WILL VEST (BECOME EXERCISABLE) ON 3 ~ AND THE REMAINING
     SHARES WILL VEST IN THIRTY-SIX (36) EQUAL MONTHLY INSTALLMENTS THEREAFTER
     UNTIL EITHER (i) YOU CEASE TO PROVIDE SERVICES TO THE COMPANY FOR ANY
     REASON, OR (ii) THIS OPTION BECOMES FULLY VESTED.

3.   EXERCISE PRICE AND METHOD OF PAYMENT.

     (a) EXERCISE PRICE. The exercise price of this option is $_____ per share,
being not less than eighty-five percent (85%) of the fair market value of the
Common Stock on the date of grant of this option.

     (b) METHOD OF PAYMENT. Payment of the exercise price per share is due in
full upon exercise of all or any part of each installment which has accrued to
you. You may elect, to the extent permitted by applicable statutes and
regulations, to make payment of the exercise price under one of the following
alternatives:

          (1) Payment of the exercise price per share in cash (including check)
at the time of exercise;

          (2) Payment pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board which, prior to the issuance of Common
Stock, results in either the receipt of cash (or check) by the Company or the
receipt of irrevocable instructions to pay the aggregate exercise price to the
Company from the sales proceeds;

<PAGE>   27

          (3) Provided that at the time of exercise the Company's Common Stock
is publicly traded and quoted regularly in the Wall Street Journal, payment by
delivery of already-owned shares of Common Stock, held for the period required
to avoid a charge to the Company's reported earnings, and owned free and clear
of any liens, claims, encumbrances or security interests, which Common Stock
shall be valued at its fair market value on the date of exercise;

          (4) Provided that the option exercise price for the installment, or
portion thereof, being purchased exceeds five hundred dollars ($500), payment
pursuant to the deferred payment alternative as described in paragraph 3(c)
hereof; or

          (5) Payment by a combination of the methods of payment permitted by
subparagraph 3(b)(i) through 3(b)(iv) above.

     (c) CONDITIONS OF DEFERRED PAYMENT. In the event that you elect to make
payment of the exercise price pursuant to the deferred payment alternative:

          (1) Not less than twenty-five percent (25%) of the aggregate exercise
price shall be due at the time of exercise, not less than twenty-five percent
(25%) of said exercise price, plus accrued interest, shall be due each year
after the date of exercise, and final payment of the remainder of the exercise
price, plus accrued interest, shall be due three (3) years from date of exercise
or, at the Company's election, upon termination of your Continuous Status as an
Employee, Director or Consultant with the Company or an Affiliate of the
Company;

          (2) Interest shall be payable at least annually and shall be charged
at the minimum rate of interest necessary to avoid the treatment as interest,
under any applicable provisions of the Code, of any portion of any amounts other
than amounts stated to be interest under the deferred payment arrangement; and

          (3) In order to elect the deferred payment alternative, you must, as a
part of your written notice of exercise, give notice of the election of this
payment alternative and, in order to secure the payment of the deferred exercise
price to the Company hereunder, if the Company so requests, you must tender to
the Company a promissory note and a security agreement covering the purchased
shares, both in form and substance satisfactory to the Company, or such other or
additional documentation as the Company may request.

4.   EXERCISE PRIOR TO VESTING PERMITTED.

     (a) CONDITIONS OF EARLY EXERCISE. Subject to the provisions of this option
you may elect, at any time during your Continuous Status as an Employee,
Director or Consultant with the Company or an Affiliate of the Company, to
exercise the option as to any part or all of the shares subject to this option
at any time during the term hereof, including without limitation, a time prior
to the date of earliest exercise ("vesting") stated in paragraph 2 hereof;
provided, however, that:

          (1) a partial exercise of this option shall be deemed to cover first
vested shares and then the earliest vesting installment of unvested shares;

                                       2
<PAGE>   28

          (2) any shares so purchased from installments which have not vested as
of the date of exercise shall be subject to the purchase option in favor of the
Company as described in the Early Exercise Stock Purchase Agreement; and

          (3) you shall enter into an Early Exercise Stock Purchase Agreement in
the form provided by the Company with a vesting schedule that will result in the
same vesting as if no early exercise had occurred.

     (b) EXPIRATION OF EARLY EXERCISE ELECTION. The election provided in this
paragraph 4 to purchase shares upon the exercise of this option prior to the
vesting dates shall cease upon termination of your Continuous Status as an
Employee, Director or Consultant with the Company or an Affiliate of the Company
and may not be exercised after the date thereof.

5.   WHOLE SHARES. THIS OPTION MAY ONLY BE EXERCISED FOR WHOLE SHARES.

6.   SECURITIES LAW COMPLIANCE. NOTWITHSTANDING ANYTHING TO THE CONTRARY
     CONTAINED HEREIN, THIS OPTION MAY NOT BE EXERCISED UNLESS THE SHARES
     ISSUABLE UPON EXERCISE OF THIS OPTION ARE THEN REGISTERED UNDER THE
     SECURITIES ACT OR, IF SUCH SHARES ARE NOT THEN SO REGISTERED, THE COMPANY
     HAS DETERMINED THAT SUCH EXERCISE AND ISSUANCE WOULD BE EXEMPT FROM THE
     REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.

7.   TERM. THE TERM OF THIS OPTION COMMENCES ON _______________________, THE
     DATE OF GRANT, AND EXPIRES ON __________________________ (THE "EXPIRATION
     DATE"), WHICH DATE SHALL BE NO MORE THAN TEN (10) YEARS FROM DATE THIS
     OPTION IS GRANTED, UNLESS THIS OPTION EXPIRES SOONER AS SET FORTH BELOW OR
     IN THE PLAN. IN NO EVENT MAY THIS OPTION BE EXERCISED ON OR AFTER THE
     EXPIRATION DATE. THIS OPTION SHALL TERMINATE PRIOR TO THE EXPIRATION DATE
     AS FOLLOWS: THREE MONTHS AFTER JANUARY 1, 1998 IF THE TERMINATION OF YOUR
     CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT WITH THE COMPANY
     OR AN AFFILIATE OF THE COMPANY OCCURS PRIOR TO JANUARY 1, 1998, OR THREE
     MONTHS AFTER THE TERMINATION OF YOUR CONTINUOUS STATUS AS AN EMPLOYEE,
     DIRECTOR OR CONSULTANT WITH THE COMPANY OR AN AFFILIATE OF THE COMPANY IF
     SUCH TERMINATION OCCURS AFTER JANUARY 1, 1998, UNLESS ONE OF THE FOLLOWING
     CIRCUMSTANCES EXISTS:

     (a) Your termination of Continuous Status as an Employee, Director or
Consultant is due to your disability. This option will then expire on the
earlier of the Expiration Date set forth above or twelve (12) months following
such termination of Continuous Status as an Employee, Director or Consultant.

     (b) Your termination of Continuous Status as an Employee, Director or
Consultant is due to your death or your death occurs within three (3) months
following your termination of Continuous Status as an Employee, Director or
Consultant for any other reason. This option will then expire on the earlier of
the Expiration Date set forth above or twelve (12) months after your death.

     (c) If during any part of such three (3)-month period you may not exercise
your option solely because of the condition set forth in paragraph 6 above, then
your option will not expire until the earlier of the Expiration Date set forth
above or until this option shall have been

                                       3
<PAGE>   29

exercisable for an aggregate period of three (3) months after your termination
of Continuous Status as an Employee, Director or Consultant.

     (d) If your exercise of the option within three (3) months after
termination of your Continuous Status as an Employee, Director or Consultant
with the Company or with an Affiliate of the Company would result in liability
under Section 16(b) of the Securities Exchange Act of 1934, then your option
will expire on the earlier of (i) the Expiration Date set forth above, (ii) the
tenth (10th) day after the last date upon which exercise would result in such
liability or (iii) six (6) months and ten (10) days after the termination of
your Continuous Status as an Employee, Director or Consultant with the Company
or an Affiliate of the Company.

     However, this option may be exercised following termination of Continuous
Status as an Employee, Director or Consultant only as to that number of shares
as to which it was exercisable on the date of termination of Continuous Status
as an Employee, Director or Consultant under the provisions of paragraph 2 of
this option.

8.   EXERCISE.

     (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to subsection 6(f)
of the Plan.

     (b) By exercising this option you agree that:

          (1) as a precondition to the completion of any exercise of this
option, the Company may require you to enter an arrangement providing for the
payment by you to the Company of any tax withholding obligation of the Company
arising by reason of (1) the exercise of this option; (2) the lapse of any
substantial risk of forfeiture to which the shares are subject at the time of
exercise; or (3) the disposition of shares acquired upon such exercise. You also
agree that the exercise of this option has not been completed and that the
Company is under no obligation to issue any shares of Common Stock to you until
such an arrangement is established or the Company's tax withholding obligations
are satisfied, as determined by the Company; and

          (2) the Company (or a representative of the underwriters) may, in
connection with the first underwritten registration of the offering of any
securities of the Company under the Securities Act, require that you not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the Company filed
under the Securities Act as may be requested by the Company or the
representative of the underwriters. You further agree that the Company may
impose stop transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such period.

9.   TRANSFERABILITY. THIS OPTION IS NOT TRANSFERABLE, EXCEPT BY WILL OR BY THE
     LAWS OF DESCENT AND DISTRIBUTION, AND IS EXERCISABLE DURING YOUR LIFE ONLY
     BY YOU. NOTWITHSTANDING THE FOREGOING, BY DELIVERING WRITTEN NOTICE TO THE
     COMPANY, IN A

                                       4
<PAGE>   30

     FORM SATISFACTORY TO THE COMPANY, YOU MAY DESIGNATE A THIRD PARTY WHO, IN
     THE EVENT OF YOUR DEATH, SHALL THEREAFTER BE ENTITLED TO EXERCISE THIS
     OPTION.

10.  OPTION NOT A SERVICE CONTRACT. THIS OPTION IS NOT AN EMPLOYMENT CONTRACT
     AND NOTHING IN THIS OPTION SHALL BE DEEMED TO CREATE IN ANY WAY WHATSOEVER
     ANY OBLIGATION ON YOUR PART TO CONTINUE IN THE EMPLOY OF THE COMPANY, OR OF
     THE COMPANY TO CONTINUE YOUR EMPLOYMENT WITH THE COMPANY. IN ADDITION,
     NOTHING IN THIS OPTION SHALL OBLIGATE THE COMPANY OR ANY AFFILIATE OF THE
     COMPANY, OR THEIR RESPECTIVE STOCKHOLDERS, BOARD OF DIRECTORS, OFFICERS OR
     EMPLOYEES TO CONTINUE ANY RELATIONSHIP WHICH YOU MIGHT HAVE AS A DIRECTOR
     OR CONSULTANT FOR THE COMPANY OR AFFILIATE OF THE COMPANY.

11.  NOTICES. ANY NOTICES PROVIDED FOR IN THIS OPTION OR THE PLAN SHALL BE GIVEN
     IN WRITING AND SHALL BE DEEMED EFFECTIVELY GIVEN UPON RECEIPT OR, IN THE
     CASE OF NOTICES DELIVERED BY THE COMPANY TO YOU, FIVE (5) DAYS AFTER
     DEPOSIT IN THE UNITED STATES MAIL, POSTAGE PREPAID, ADDRESSED TO YOU AT THE
     ADDRESS SPECIFIED BELOW OR AT SUCH OTHER ADDRESS AS YOU HEREAFTER DESIGNATE
     BY WRITTEN NOTICE TO THE COMPANY.

12.  GOVERNING PLAN DOCUMENT. THIS OPTION IS SUBJECT TO ALL THE PROVISIONS OF
     THE PLAN, A COPY OF WHICH IS ATTACHED HERETO AND ITS PROVISIONS ARE HEREBY
     MADE A PART OF THIS OPTION, INCLUDING WITHOUT LIMITATION THE PROVISIONS OF
     SECTION 6 OF THE PLAN RELATING TO OPTION PROVISIONS, AND IS FURTHER SUBJECT
     TO ALL INTERPRETATIONS, AMENDMENTS, RULES AND REGULATIONS WHICH MAY FROM
     TIME TO TIME BE PROMULGATED AND ADOPTED PURSUANT TO THE PLAN. IN THE EVENT
     OF ANY CONFLICT BETWEEN THE PROVISIONS OF THIS OPTION AND THOSE OF THE
     PLAN, THE PROVISIONS OF THE PLAN SHALL CONTROL.

13.  RIGHT OF FIRST REFUSAL. NO OPTIONEE SHALL SELL, ASSIGN, PLEDGE, OR IN ANY
     MANNER TRANSFER ANY OF THE SHARES OF STOCK OF THE COMPANY OR ANY RIGHT OR
     INTEREST THEREIN, WHETHER VOLUNTARILY OR BY OPERATION OF LAW, OR BY GIFT OR
     OTHERWISE, EXCEPT BY A TRANSFER WHICH MEETS THE REQUIREMENTS SET FORTH
     HEREIN:

     (a) If the optionee desires to sell or otherwise transfer any of his shares
of stock acquired upon exercise of this option in an "arms-length" transaction,
then the optionee shall first give written notice thereof to the Company. The
notice shall name the proposed transferee and state the number of shares to be
transferred, the proposed consideration, and all other terms and conditions of
the proposed transfer.

     (b) For thirty (30) days following receipt of such notice, the Company
shall have the option to purchase all (by not less than all) of the shares
specified in the notice at the price and upon the terms set forth in such
notice; provided, however, that, with the consent of the optionee, the Company
shall have the option to purchase a lesser portion of the shares specified in
said notice at the price and upon the terms set forth therein. In the event of a
gift, property settlement or other transfer which would not be considered to
have been made on an "arms-length" basis and in which the proposed transferee is
not paying the full price for the shares, the price shall be deemed to be the
Fair Market Value of the stock at such time as determined in good faith by the
Board. In the event the Company elects to purchase all of the shares or, with
consent of the

                                       5
<PAGE>   31

optionee, a lesser portion of the shares, it shall give written notice to the
transferring optionee of its election and settlement for said shares shall be
made as provided below in paragraph (d).

     (c) The Company may assign its rights hereunder.

     (d) In the event the Company and/or its assignee(s) elect to acquire any of
the shares of the transferring optionee as specified in said transferring
optionee's notice, the Secretary of the Company shall so notify the transferring
optionee and settlement thereof shall be made in cash within thirty (30) days
after the Secretary of the Company receives said transferring optionee's notice;
provided that if the terms of payment set forth in said transferring optionee's
notice were other than cash against delivery, the Company and/or its assignee(s)
shall pay for said shares on the same terms and conditions set forth in said
transferring optionee's notice.

     (e) In the event the Company and/or its assignees(s) do not elect to
acquire all of the shares specified in the transferring optionee's notice, said
transferring optionee may, within the sixty (60)-day period following the
expiration of the option rights granted to the Company and/or its assignees(s)
herein, transfer the shares specified in said transferring optionee's notice
which were not acquired by the Company and/or its assignees(s) as specified in
said transferring optionee's notice.

     (f) Notwithstanding anything to the contrary contained herein, the
following transaction shall be exempt from the provisions of this paragraph 13:
a optionee's bona fide pledge or mortgage of any shares with a commercial
lending institution, provided that any subsequent transfer of said shares by
said institution shall be conducted in the manner set forth in this paragraph
13.

     In any such case, the transferee, assignee, or other recipient shall
receive and hold such stock subject to the provisions of this paragraph 13, and
there shall be no further transfer of such stock except in accord with this
paragraph 13.

     (g) The provisions of this paragraph 13 may be waived with respect to any
transfer either by the Company, upon duly authorized action of its Board, or by
the stockholders, upon the express written consent of the owners of a majority
of the voting power of the Company (excluding the votes represented by those
shares to be transferred by the transferring optionee).

     (h) Any sale or transfer, or purported sale or transfer, of securities of
the Company shall be null and void unless the terms, conditions, and provisions
of this paragraph 13 are strictly observed and followed.

     (i) The foregoing right of first refusal shall terminate upon the date
securities of the Company are first offered to the public pursuant to a
registration statement filed with, and declared effective by, the SEC under the
Securities Act.

                                       6
<PAGE>   32

     (j) The certificates representing shares of stock of the Company shall bear
on their face the following legend so long as the foregoing right of first
refusal remains in effect:

          "The shares represented by this Certificate are subject to a right of
     first refusal option in favor of the Corporation and/or its Assignee(s).

     Dated _____________.

                                      Very truly yours,
                                      Organic Online, Inc.

                                      By: ___________________________________
                                               Duly authorized on behalf
                                               of the Board of Directors

ATTACHMENTS:

         1997 Stock Option Plan
         Amendment No. 1 to 1997 Stock Option Plan
         Notice of Exercise

                                       7
<PAGE>   33

The undersigned:

     (a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and

     (b) Acknowledges that as of the date of grant of this option, it sets forth
the entire understanding between the undersigned optionee and the Company and
its Affiliates regarding the acquisition of stock in the Company and supersedes
all prior oral and written agreements on that subject with the exception of (i)
the options previously granted and delivered to the undersigned under stock
option plans of the Company, and (ii) the following agreements only:

         NONE           __________
                        (Initial)

         OTHER    ______________________________

                  ______________________________

                  ______________________________

                                         ________________________________
                                         OPTIONEE

                                         Address:________________________

                                                 ________________________

                                       8
<PAGE>   34

                               NOTICE OF EXERCISE

Organic Online, Inc.
510 Third Street, Suite 540
San Francisco, CA 94107

                                            Date of Exercise:_____________

Ladies and Gentlemen:

         This constitutes notice under my stock option that I elect to purchase
the number of shares for the price set forth below.

<TABLE>
<CAPTION>
         Type of option:                             Nonstatutory
         <S>                                         <C>
         Stock option dated:                         __________________

         Number of shares as
         to which option is
         exercised:                                  __________________

         Certificates to be
         issued in name of:                          __________________

         Total exercise price:                      $__________________

         Cash payment delivered
         herewith:                                  $__________________

         Promissory note delivered
         herewith:                                  $__________________

         Value of _______ shares
         of common stock delivered
         herewith(1):                               $__________________
</TABLE>

         By this exercise, I agree (i) to provide such additional documents as
you may require pursuant to the terms of the Company's 1997 Stock Option Plan,
as amended, and (ii) to provide for the payment by me to you (in the mariner
designated by you) of your withholding obligation, if any, relating to the
exercise of this option.

--------
(1) Shares must meet the public trading requirements set forth in the option.
Shares must be valued in accordance with the terms of the option being
exercised, must have been owned for the minimum period required in the option,
and must be owned free and clear of any liens, claims, encumbrances or security
interests. Certificates must be endorsed or accompanied by an executed
assignment separate from certificate.

                                       1
<PAGE>   35

         I hereby make the following certifications and representations with
respect to the number of shares of Common Stock (the "Shares"), which are being
acquired by me for my own account upon exercise of the Option as set forth
above:

         I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and are deemed to
constitute "restricted securities" under Rule 701 and Rule 144 promulgated under
the Securities Act. I warrant and represent to the Company that I have no
present intention of distributing or selling said Shares, except as permitted
under the Securities Act and any applicable state securities laws.

         I further acknowledge that I will not be able to resell the Shares for
at least ninety (90) days after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended) under Rule 701 and that more
restrictive conditions apply to affiliates of the Company under Rule 144.

         I further acknowledge that all certificates representing any of the
Shares subject to the provisions of the Option shall have endorsed thereon
appropriate legends reflecting the foregoing limitations, as well as any legends
reflecting restrictions pursuant to the Company's Articles of Incorporation,
Bylaws and/or applicable securities laws.

         I further agree that, if required by the Company (or a representative
of the underwriters) in connection with the first underwritten registration of
the offering of any securities of the Company under the Securities Act, I will
not sell or otherwise transfer or dispose of any shares of Common Stock or other
securities of the Company during such period (not to exceed one hundred eighty
(180) days following the effective date of the registration statement of the
Company filed under the Securities Act as may be requested by the Company or
representatives of the underwriters. I further agree that the Company may impose
stop-transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such period.

                                       Very truly yours,

                                       __________________________________
                                       1~

                                       2

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